The Fight by California Cities to Prohibit Cannabis Courier Network Service Deliveries

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                     Source: Eaze

A lawsuit filed in early April in Fresno County Superior Court alleges that the new rules codified by California’s Bureau of Cannabis Control to clarify discrepancies in state law regarding local control over cannabis courier network services (CNSs) usurp local control granted to cities. At stake is the question of whether or not California cities are able to prohibit commercial marijuana deliveries from taking place within local jurisdictional limits.

As the group that presented on CNSs earlier in the quarter described, cities have limited regulatory authority in this space – certainly less regulatory power than they have with respect to transportation network companies, which are regulated via the California Public Utilities Code (CPUC). This lack of local regulatory authority appears even more pronounced for cannabis CNSs. 

Cities indisputably possess local authority to regulate cannabis CNSs, but, according to the state’s Bureau of Cannabis Control, they lack the authority to prohibit local cannabis deliveries. State law was previously ambiguous and – at times – contradictory on the question of whether cities could prohibit commercial cannabis deliveries by CNSs within city limits, but the Bureau of Cannabis Control’s new rules state unequivocally that commercial cannabis deliveries by licensed operators may occur in “any jurisdiction within the State of California provided that such delivery is conducted in compliance with all delivery provisions of this division.” (16 CCR § 5416(d)) This new guidance appears to contradict regulations codified in 2015 by Assembly Bill 266 (also known as “the Medical Marijuana Regulation and Safety Act”), which seemed to suggest California cities can prohibit or regulate commercial marijuana deliveries (i.e., at origin and destination) within their jurisdictional limits: “Deliveries […] can only be made by a dispensary and in a city, county, or city and county that does not explicitly prohibit it by local ordinance.” (AB 266, § 19340(a)) This legal ambiguity seems poised to continue: a bill was introduced (and later sidelined) in the State Assembly that would have again allowed cities to prohibit commercial cannabis deliveries.

This lawsuit may have implications that reach far beyond the cannabis CNS sector and speak to larger questions regarding local control over CNS companies. Unlike transportation network companies, which are in the business of transporting people (and, thus, are subject to a greater degree of regulatory scrutiny by cities, who can cite police powers to regulate businesses), courier network services are not held to particularly high local regulatory standards. This is somewhat different in the cannabis CNS space, where cities are granted clear authority to regulate the operations of commercial cannabis deliveries (though not to prohibit the practice). Thus, this lawsuit may represent an opportunity for cities to establish legal precedent in favor of more local control over CNSs and their operations, generally. It seems to me that this is very much in the public’s interest given, for example, that CNSs are likely increasing total VMT in cities and contributing to other negative externalities that cities are currently hard pressed to address.

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