The lack of alignment between state and federal policy is one of the biggest challenges cannabis operators face. A business owner following their individual state regulations to a T may still struggle due to marijuana remaining illegal nationally. Some of the problems include lack of access to safe banking, marketing restrictions, and the inability to engage in interstate commerce.
Despite the discrepancy, the federal government has mostly taken a hands-off approach with regard to state-legal pot businesses. However, a recent court ruling in California has some legal operators anxious they could still be at risk.
The case in question centers on a Santa Barbara county property owner in Santa Barbara who challenged a conditional-use permit awarded to a neighbor who planned to cultivate cannabis. The property owner, referred to as JCCrandall LLC in court filings, objected to the grower transporting weed through an easement on her land. The easement is the only way in and out of the neighboring cannabis cultivation property.
JCCRandall took issue with a federally illegal substance crossing onto their property despite the fact that cannabis is legal in California. A county judge sided with the grower, but a challenge saw a decision in JCCRandall’s favor.
A panel of three judges in the state’s second appellate district delivered the unanimous decision in late October. Presiding Justice Arthur Gilbert wrote in his opinion that people are allowed to keep unwanted individuals off their private property—and that concerns over the legality of cannabis is a sufficient reason to execute that right.
“The right to exclude others is the essence of the right of property ownership,” Gilbert said in the ruling.
“Under federal law cannabis is illegal in California and everywhere else in the United States,” he added. “The servient tenant’s objection on this ground is sufficient to defeat the [conditional use permit]. No matter how much California voters and the Legislature might try, cannabis cultivation and transportation are illegal in California as long as it remains illegal under federal law.”
State-legal rights could be in peril
The decision could set a precedent that may lead to more headaches for canna-businesses in California and across the country.
“Licensed cannabis operators can no longer confidently rely on the protection of California courts to protect their legal rights,” cannabis attorney Jason Horst said in an interview with Law.com.
Until cannabis is removed from its Schedule I designation, compliant business owners will continue to face barriers to success. The Drug Enforcement Agency is currently debating a bid to reclassify the plant to Schedule III, but it’s unclear what the outcome will be. As pro-pot advocates await a decision, anxiety will likely remain high for operators hoping to thrive.
