California Cannabis Deliveries May Soon Change, Again

31 Mar California Cannabis Deliveries May Soon Change, Again

For a few moments there, it seemed like the California cannabis delivery companies could deliver anywhere in the state—even to cities that said no. It now looks like that may not be allowed.

In January 2019, the California Bureau of Cannabis Control (“BCC”)—which regulates cannabis delivery companies—issued Rule 5416(d), which says that “A delivery employee may deliver to any jurisdiction within the State of California provided that such delivery is conducted in compliance with all delivery provisions of this division.” In plain English, this rule clearly allows licensed retailers to deliver cannabis to any jurisdiction in the state—even ones that didn’t allow it. This rule immediately drew the ire of cities across the state.

I’ve been writing about this rule since it was first proposed back in October 2018. In a post just after the rule was passed, I wrote that we expected litigation to ensue over this rule. Many—if not most—of the cities in the state either ban or heavily restrict cannabis operators, and many of them vocally opposed this rule in the rulemaking period. In spite of their opposition, the BCC still passed the rule. This is probably the best example of the BCC siding with the industry over municipalities, but was destined to cause a stir.

As of mid-February, it looks like at least one city was poised to sue the BCC. The City of Sonora, one of many anti-delivery cities, announced that it would file a lawsuit. If that lawsuit proceeds, however, it will be a while before there’s a final resolution unless there is some early injunction motion to hold off implementation of the rule, as litigation can take years to be resolved.

There may be another, faster way in which deliveries will be banned—state legislation. California Assembly Bill 1530 (“AB-1530”) would amend existing state law to state: “A local jurisdiction may adopt an ordinance or resolution pursuant to Section 26200 that permits, restricts, limits, or bans the delivery of cannabis or cannabis products to a location within its jurisdictional boundaries.”

If AB-1530 is passed, it will put an end to the issue. The rule would be a major disruption for cannabis delivery companies who invested heavily in a multi-city delivery business model. Some delivery licensees are permitted in small cities surrounded by numerous cities that don’t allow delivery, and if the new law is passed, it could spell major trouble for these operators.

The bill is still in its relative infancy and there may still be public hearings on it in the future. To be clear, just because the bill is up for consideration doesn’t mean it’s going to be passed. So it’s important for anyone in support of statewide delivery to oppose the legislation.