On August 5, 2020, in Granny Purps, Inc. v. County of Santa Cruz, __ Cal.App.5th __ (2020) (Case No. H045387), the Sixth District Court of Appeal addressed several novel property rights issues related to a law enforcement action in the County of Santa Cruz in which officers seized more than 2,000 marijuana plants from a medical marijuana dispensary for violating a local ordinance restricting marijuana cultivation to no more than 99 plants.

Under a long line of cases, California laws allowing access to medical marijuana do not limit the ability of a local government to make land use decisions. A local government’s inherent police power gives it broad authority to determine the appropriate uses of land within its jurisdictional boundary. (See, e.g., City of Riverside v. Inland Empire Patients Health & Wellness Center, Inc., 56 Cal.4th 729, 738 (2013)). As a result, a local government can by zoning ordinance determine that a medical marijuana dispensary is not an allowed land use anywhere in the jurisdiction. Similarly, a local legislative body can restrict or disallow entirely the cultivation of medical cannabis. (See County of Tulare v. Nunes, 215 Cal.App.4th 1188, 1203 (2013)). The Courts have held that those local land use regulations do not conflict with state laws permitting medical marijuana because of the narrow scope of the state laws, which merely created an exception to the criminal laws regulating the possession and use of marijuana.

Relying on these laws, the County asserted that the marijuana was illegally possessed in violation of the cultivation ordinance and that the dispensary had no right to its return. The dispensary then sued the County, seeking an order requiring it to return the seized cannabis plants. The dispensary also filed claims for monetary damages, alleging causes of action for conversion, trespass, and inverse condemnation. The County demurred to the complaint on the grounds that it failed to state a valid cause of action and the claims were time barred. The trial court sustained the County’s demurrer without leave to amend.

The Court of Appeal overruled the demurrer as to the claims for return of seized property but sustained the demurrer as to the causes of action for trespass, conversion, and inverse condemnation.

The Court explained that in general a government agency cannot retain someone’s property without providing due process of law. Thus, someone whose property is wrongfully seized may bring a cause of action for an order compelling its return. But the right to regain property is not absolute. For example, there is an exception in the case of illegal property and the government may retain such property, whether it was lawfully seized or not. The County relied on that exception here, arguing that because the dispensary violated the cultivation ordinance, the marijuana was illegally possessed and plaintiff has no right to its return.

The County asserted that its ordinance is a health and safety ordinance and not a land use regulation. The Court reasoned that on its face the cultivation ordinance restricts the manner in which land can be used, effectively making it a zoning regulation, and explained that the County’s label for its ordinance is ultimately inconsequential because it is the effect of the ordinance that matters. “A valid local ordinance restricting the number of marijuana plants that can be cultivated does not change the status of medical marijuana under state criminal lawn or could it, as any attempt to do so would be preempted.”

The causes of action seeking return of the seized marijuana ultimately survived demurrer because the Court was required to assume as true the dispensary’s claim that its cultivation and possession of marijuana were compliant with applicable state laws. The Court observed that limits on law enforcement’s power to seize legitimate medical marijuana as contraband does not prevent a locality from enforcing a valid ordinance regulating medical marijuana cultivation. But individual property rights, including the right to the return of non-contraband property from the government, are not diminished by the inherent power of local governments to regulate uses of land

With respect to the dispensary’s constitutional inverse condemnation cause of action, however, the Court held that the complaint was insufficient, noting that inverse condemnation has never been applied to require a public entity to compensate a property owner for property damage resulting from law enforcement efforts to enforce criminal laws. “The complaint contains no allegation indicating the marijuana was taken for public use or damaged in connection with a public work of improvement, so it does not state a cause of action for inverse condemnation.” The demurrer was thus properly sustained as to the causes of action seeking damages.