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January 23, 2024 Did You Know?

Location, Location, Location—Zoning is Becoming the New Cannabis Battleground

Michael Martin

Over 20 states have created recreational adult-use cannabis business rules and regulations, but local zoning boards, city councils, and county commissions determine where you can build the facilities necessary to participate. Zoning is a fundamental local power. Cities and counties, under their police powers, have long been able to guide the growth and development of their communities by enacting regulations that govern where someone can build or operate a specific type of property. This article illustrates how zoning laws are being used both as a sword and a shield for the growth of the cannabis industry.

Zoning Moratoriums

Some cities and counties have enacted moratoriums to halt approval of any cannabis-related zoning or permit applications. Courts have upheld these types of moratoriums, but only for new cannabis zoning or permit applications. Under the vested rights doctrine, cities and counties cannot apply such moratoriums to pre-existing cannabis operations or pending applications.

For example, in Seven Hills, LLC v. Chelan County, the Washington Supreme Court overturned a series of code citations issued to a company for violating a county cannabis zoning moratorium.

Seven Hills, LLC (Seven Hills) applied for a state cannabis license in 2014. After applying for its license, Seven Hills signed a lease and began preparing its cannabis operations. In late 2015, Chelan County, Washington (the County) adopted a countywide cannabis zoning moratorium. The County subsequently began citing Seven Hills for violating the zoning moratorium. Seven Hills challenged the citations.

The court held that the company’s cannabis operations were not subject to the moratorium because the operations began before the moratorium was adopted. The court explained that under the vested rights doctrine, the company’s operations could continue as a nonconforming use.

School Buffer Zones

Many local zoning ordinances include school buffer zones. These buffer zones prohibit certain types of businesses from being located near a school. But what happens in very dense areas where these buffer zones would serve as a de facto ban on cannabis-related facilities? In response, several cities allow exceptions to these buffer zones, but only by obtaining a conditional use permit or zoning variance on a case-by-case basis.

For example, in Hoboken for Responsible Cannabis, Inc. v. City of Hoboken Planning Board and Blue Violets, LLC, a New Jersey state court vacated a City of Hoboken Planning Board (Planning Board) approval of an adult-use cannabis retail site plan for violating a city ordinance prohibiting cannabis facilities from being located within 600 feet of a primary or secondary school.

The City of Hoboken’s zoning ordinance prohibits cannabis-related businesses within 600 feet of a primary or secondary school. However, because of Hoboken’s high density, the city would allow exceptions to this requirement if the applicant obtained a special use permit or zoning variance from the city’s Zoning Board of Adjustment.

After leasing a facility and obtaining several city permits, Blue Violets, LLC (Blue Violets) submitted its facility site plan to the Planning Board. Blue Violets’ proposed cannabis facility was within 200 feet of two schools. The Planning Board approved Blue Violets’ site plan, even though Blue Violets had not applied for or obtained a special use permit or variance.

A non-profit organization—Hoboken for Responsible Cannabis, Inc. (HFRC)—filed suit claiming that the Planning Board’s approval of Blue Violets’ site plan violated the city’s zoning ordinance.

The court agreed with HFRC. The court held that the Planning Board violated the city’s ordinance and vacated the Planning Board’s site plan approval. The court explained that the city’s approval of other cannabis-related permits did not waive the special use permit or zoning variance requirement.

But what if zoning boards do not apply the same standards for all special use permit or variance applicants?

In Cannabis Professional Design, LLC, et al. v. the City of Detroit, four Detroit-area cannabis companies (Companies) filed suit challenging the City Board of Zoning Appeals (BZA) decision to revoke the Companies’ cannabis cultivation and processing facility permits following a zoning map update that placed the Companies’ facilities within a school drug-free zone.

Earlier this year, the City of Detroit updated its zoning map. The updates included adding a new high school, Detroit Community High School (DCHS). DCHS, which had been in operation since 2009, had not been included in the city’s former zoning map.

Under the city’s cannabis ordinance, cannabis facilities may not be located within 1,000 feet of a school. The Companies’ facilities were located near DCHS. Six weeks after the zoning map update, the BZA revoked the Companies’ cannabis permits.

The Companies filed suit in state court seeking to reverse the BZA’s revocation of their permits and a declaration that the Companies’ permits are valid and enforceable. The City removed the suit to the U.S. District Court for the Eastern District of Michigan.

The Companies concede that their cannabis facilities fall within a school drug-free zone, but they argue that the BZA wrongfully revoked their permits because past zoning violations did not result in permit revocations.

A hearing on the Companies’ request for a preliminary injunction request is scheduled for January 2024.

Can a City Zone Cannabis Facilities under Federal Law?

Some residents have challenged whether a city can even approve a cannabis facility zoning or permit application under federal law. For example, in Stamford Neighborhood Coalition, et al. v. Zoning Board of the City of Stamford, et al., a group of residents recently filed suit against the Mayor and City Zoning Board seeking in part to enjoin all cannabis facility zoning and permit approvals. The plaintiffs argue that the city cannot approve any cannabis facility zoning or permit applications because cannabis possession and sales remain illegal under the federal Controlled Substances Act.

Conclusion

Where you can build a cannabis facility is quickly becoming one of the most important questions facing cannabis companies today. And as these cases show, the answer to this question is far from resolved.

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Michael Martin

Texas Municipal League

Michael Martin serves as Legislative Counsel for the Texas Municipal League.