Posted by: Patricia Salkin | May 6, 2016

CA Appeals Court Holds Controlled Substances Act Did Not Preempt City’s Ordinance Requiring a Permit to Operate a Medical Marijuana Dispensary

Defendant, Luna Crest Inc. opened a medical marijuana dispensary within the city limits of plaintiff, City of Palm Springs. The Palm Springs Municipal Code requires a permit to operate a marijuana dispensary in the City, which Luna did not obtain. At trial court, Luna contended that the City ordinance requiring a permit is preempted by federal law and, therefore, invalid and unenforceable. This appeal arose from the trial court’s order denying Luna’s motion for a preliminary injunction.

At the outset, the court noted there was standing since Luna opened a medical marijuana dispensary and was forced to shut it down when the City brought suit and obtained an injunction enforcing the City’s permit requirement: thus, an actual injury had occurred. Luna’s primary argument was that the City’s regulatory program for medical marijuana dispensaries was preempted by federal law – arguing that by not just decriminalizing, but affirmatively permitting the operation of medical marijuana dispensaries, the City violated federal drug laws. With regard to conflict preemption, Luna failed to provide any specific provision of the City’s regulation of medical marijuana dispensaries that was in “positive conflict” with federal drug laws. Furthermore, the City’s permitting requirements did not require anything that the federal Controlled Substances Act forbid. The court likewise found that a strong local regulatory regime governing medical marijuana related conduct would tend to prevent the transformation of purported nonprofit medical marijuana dispensaries into “profiteering enterprises” that could contribute to recreational drug abuse and drug trafficking. Accordingly, Luna’s obstacle preemption argument also failed.

The court therefore held that the trial court properly denied Luna’s request for an injunction against the enforcement of the Palm Springs Municipal Code.

City of Palm Springs v Luna Crest, Inc., 200 Cal. Rptr. 3d 128 (3/17/2016)

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