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Zoning Shift Can Mean Review, Calif. Court Says in Pot Case (1)

Aug. 19, 2019, 9:56 PM; Updated: Aug. 20, 2019, 12:09 AM

Zoning changes can be sufficient to trigger a state environmental review, the California Supreme Court ruled Aug. 19 in a case involving medical marijuana cooperatives.

The case stems from a dispute in San Diego over where and how legal marijuana operations are permitted and situated.

The decision will force cities and counties that haven’t regulated marijuana-related activities to do so, including considering the environmental implications of locating those activities far from residential areas and forcing people into their cars, said Jamie T. Hall, a litigator with the Channel Law Group in Beverly Hills. The firm represents the Union of Medical Marijuana Patients that sued San Diego.

“I think it’s a very positive step for responsible regulation and also normalization of this activity,” Hall said.

California voters legalized medical marijuana in 1996 and recreational pot in 2016. The unanimous court decision also gives some direction for what municipalities and the California Coastal Commission should consider as foreseeable impacts from permitting certain land uses and requiring environmental reviews.

The California Coastal Commission—which was named as a real party in interest—and San Diego argued that review under the California Environmental Quality Act (CEQA) isn’t required when the impact is speculative. A trial court denied the Union of Medical Marijuana Patients Inc.’s challenge to the city’s failure to conduct an environmental review under the act.

“If the proposed activity is the sort that is capable of causing direct or reasonably foreseeable indirect effects on the environment, some type of environmental review is justified, and the activity must be deemed a project. CEQA analysis is then undertaken to evaluate the likelihood and nature of the project’s environmental impacts, in order to determine the extent of environmental review required,” Chief Justice Tani Cantil-Sakauye said in an opinion.

Not Automatic for the Environment

The court instructed that the environmental analysis, while not automatic for zoning changes, must take place in the abstract, said Edward Grutzmacher, a land-use partner with Meyers Nave in Sacramento, Calif.

That means agencies should look at whether the type of approval could have an environmental impact rather than whether the specific approval would have an impact, he said.

“As a practical matter, this is likely to result in agencies relying more on CEQA exemptions and less on making findings that an approval is not a ‘project’ subject to CEQA,” Grutzmacher said.

The opinion “should squelch agencies’ improper attempts to avoid CEQA review and analysis by the simple expedient of declaring an activity ‘not a project’ based on a half-baked or no evidentiary record,” said Arthur Coon, an attorney with Miller Starr Regalia in Walnut Creek, Calif.

San Diego is studying the opinion to determine its potential impacts on city operations, said Hilary Nemchik, a city spokeswoman.

The significance of the court’s holding that San Diego’s ordinance required CEQA compliance is unclear, Patrick Whitnell, the League of California Cities’ general counsel, said in a statement.

“In 2017 the Legislature enacted an exemption from CEQA for any regulation that requires discretionary review of licenses to engage in commercial cannabis activity. Therefore, under this new law, the City may be able to simply readopt the ordinance without having to comply with CEQA,” Whitnell said.

The league and California State Association of Counties filed a brief in support of San Diego.

Agreed With Lower Court

The court agreed with an appellate court that one section of CEQA doesn’t override another section.

The lower court, however, misapplied the test for determining whether a proposed activity has the potential to cause environmental change under Public Resource Code section 21065. The appeals court also erred in affirming San Diego’s finding that adopting the ordinance didn’t constitute a project, the Supreme Court opinion finds.

CEQA requires review when, among other instances, there’s a reasonably foreseeable change in the environment from a project. The Court of Appeal in this case held a zoning change permitting 30 marijuana dispensaries throughout the city lacked the potential for “a reasonably foreseeable indirect physical change in the environment” under CEQA.

Cantil-Sakauye, writing for the court, said the decision in Muzzy Ranch Co. v. Solano County Airport Land Use Commission “clearly requires a public agency to consider the substance of a proposed activity in determining its status as a project. What need not be considered is the activity’s actual impact in the specific circumstances presented.”

The court reversed the appellate decision and remanded the case.

The case is Union of Medical Marijuana Patients, Inc. v. City of San Diego (California Coastal Commission), Cal., No. S238563, 8/19/19.

(Added California League of Cities comments.)

To contact the reporter on this story: Joyce E. Cutler in San Francisco at jcutler@bloomberglaw.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergenvironment.com; Steven Gibb at sgibb@bloombergenvironment.com

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