Cannabis Businesses Laws: It’s Almost All Local

Think locally and act locally.
Think locally and act locally.

Cannabis businesses far too often come to one of our cannabis lawyers after they’ve opened their doors in violation of applicable local laws. Making matters worse is that they never learn of their violation by poring over their city or county code in their spare time; they find out by being on the wrong end of a notice of violation from their city or county.

These notices can carry heavy monetary penalties, can lead to lawsuits, can jeopardize a business’s relationship and contract with its landlord, and sometimes can lead to a shutdown of the business entirely. Consider this post a public service announcement to the unwary and also to those who do not respect how quickly and unmercifully local cannabis laws can change. As a cannabis entrepreneur, you must make it your job (or that of someone you trust) to be aware of local laws one year, one month, one week and one day before you open your marijuana business, and for every single day thereafter.

The common trend for states with robust cannabis regulations is to try to dictate what city and county laws can and cannot do. For example, Oregon’s Medical Marijuana Program dictates that state-registered dispensaries “must be located in an area zoned by the local governing agency for commercial, industrial or mixed use or as agricultural land.” Oftentimes though, a state will leave its cities and counties to their own legislative devices to determine where and how many cannabis businesses can locate within their borders. Washington State for example, imposes no requirements on city or county licensing or zoning for either medical or adult use cannabis businesses, beyond requiring that they be more than 1,000 feet from a school.

So, what should a cannabis business do to stay abreast of relevant local laws? And where should it look and how often?

The first step is to check state law. Depending on the state, the governing statute and/or regulations likely will tell you the following:

1.  Whether you need to locate in a certain type of local zone or obtain some type of local approval.

2.  Whether you need to be in compliance with local law before getting approval from the state to open your doors.

3.  Whether compliance with local law a priority for state approval of your business.

The main issue cannabis businesses face in dealing with numbers 1 and 2 above is keeping current with city and county laws, all which can change frequently. We will get to how to stay abreast of local laws in just a second.

Number 3 is the most difficult situation for cannabis businesses. For example, Washington State will issue a cannabis operational license to a business even if it is not in compliance with local law, though that issuance does not operate as a state-endorsement for that cannabis business to violate local laws. You can easily imagine a situation where a cannabis business obtains a state license even though it isn’t in the right local zone, for example. What this means is that cannabis businesses cannot rely on the state to keep them on the straight and narrow with respect to local laws: cannabis businesses must do that themselves.

If you are going to operate a cannabis business, you also should know where to look for local laws and who locally controls enforcement of those laws. The typical city or county that allows in pot businesses is going to require some form of business licensing, property permitting, and/or local zoning, all of which will likely be controlled by various local government agencies with different standards. For business licensing, you usually will need to check in with your city or county’s tax and licensing division. For permitting and zoning, you will likely want to speak with your local zoning and/or community planning and development department. The good news is that most cities and counties clarify who’s who on their websites and most also now usually put their pending and existing ordinances online as well. Again though, do not forget that today’s ordinance may be in tomorrow’s trash, with a new one put up fresh to replace it.

Knowing what’s actually being regulated by the local government requires a certain level of attention to the relevant local ordinances in play. We’ve seen cities and counties time and time again change their minds on interim and permanent cannabis ordinances, each of which has a tremendous impact on our client’s bottom-lines. Get to know your city or county council/commission’s voting agenda and make yourself a part of the local lawmaking process. This can give you a place at the table in drafting or effect change on pending ordinances while at the same time enabling you to stay on top of potential and actual changes.

If you sit on the sidelines and fail to pay attention to local law, you will likely find yourself on the wrong end of a civil citation from the local government. Not only will such an infraction cost you time and money, it will not bode well for your local reputation as a responsible businessperson. Staying on top of local laws requires action and vigilance. If you are not going to stay alert so as to benefit your business, hire someone to do that for you.