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Marijuana – Sale or No Sale?

On Behalf of | Mar 26, 2018 | Business And Corporate Law

Local Jurisdictions Can Ban Cannabis Sales Under Washington Law

According to a line of cases from the lower courts, and the first appellate court decision in the State of Washington: a local government can shut out any kind of cannabis business. In Emerald Enterprises, LLC v. Clark County, the Washington Court of Appeals Division II ruled that Clark County may ban the retail sale of cannabis within its unincorporated areas.

Cannabis Timeline

2012 —

Washington voters approved Initiative I-502.  The express purposes of I-502 was to allow law enforcement to “focus on violent and property crimes, generating “new state and local tax revenue for education, health care, research, and substance abuse prevention,” and taking “cannabis out of the hands of illegal drug organizations.”

2013 —

The Washington State Liquor and Cannabis Board (WSLCB) adopted rules governing cannabis sales.  Retail licenses were especially coveted and due to the number of applications received, the WLSCB created a lottery system for issuing retail licenses.  After determining the maximum number of stores per county, the lottery was held and licenses were issued to the lucky winners.

The WSLCB regulations allow for cities, counties, or other authorities to object to a business receiving a license.  Local governments presumably misinterpreted this provision and thought that an objection would block a license, which is not the case.  An objection is weighed by the WSLCB and most often, ignored and the license is issued over the objection.  This created litigation among local governments and licensees battling to establish or continue their business operations.

January 2014 —

The State of Washington Attorney General (AG) issued an Opinion on the topic of what we call “preemption.”  The AG Opinion provides that state law does not preempt local government action to ban cannabis sales within their respective jurisdictions.  Plainly, it is the AG’s opinion that the local governments have the ability to ban cannabis operations.

The Ban Paved The Way

The ban of cannabis sales is exactly what Emerald Enterprises, LLC (Emerald) used in its case against Clark County.

May 2014 —

Clark County passed an Ordinance which stated, among other things, that the retail sale of recreational cannabis was banned within unincorporated Clark County.

Emerald (who received its retail license in September, 2014) challenged the Ordinance and sought declaratory and injunctive relief against the County in Cowlitz County Superior Court.

December 2014 —

The superior court ruled that the I-502 did not preempt the Ordinance, and the County could ban the sale of recreational cannabis.  Emerald appealed the court’s ruling.

With this appeal stayed, Emerald went forward with the establishment of its retail sale of cannabis business.  It was granted a building permit to make improvements to the retail space it rented in a commercial building in the County.  Emerald described the proposed use of its rented retail space as “general retail . . . sell novelties, crafts, collectibles, and general merchandise.”

December 2015 —

The County issued a building permit to Emerald.  Emerald completed the improvements to its rented retail space and began it Board licensed retail sales of cannabis.

January 2016 —

The County became aware of Emerald’s activities and ordered Emerald to cease all sales of cannabis and cannabis products.  The County further revoked Emerald’s building permit.  Emerald appealed, but the Clark County Hearing Examiner (Examiner) ruled in favor of the County and found that Emerald sold cannabis in violation of the General Zoning District and obtained a building permit based upon a misrepresentation.

March 2018: The higher courts, including the Washington Court of Appeals Division II, ruled that Clark County has the legal ability to ban the retail sale of cannabis within its unincorporated areas.

Why Is This Important?

This is the first case to be decided by the appellate courts, in the State of Washington, regarding the retail sales of cannabis in unincorporated counties.

This ruling is consistent with the AG Opinion that stated the I-502 does not preempt local government to pass laws to ban cannabis sales.  In addition, the decision follows the Board’s regulations, allowing all local governments to retain zoning authority over the businesses that sell cannabis within their respective jurisdictions.

Don’t Delay

If you should have questions, or need legal assistance – the attorneys at JDSA are experienced in Cannabis Law, and can help you navigate the evolving policies, regulations and requirements. Stay up to date by reading all the latest Cannabis topics on the JDSA Blog.