The California Supreme Court ruled unanimously on May 6 in City of Riverside v. Inland Empire Patients Health and Wellness Center that cities and counties have the right to ban medical marijuana dispensaries within their borders, despite the existence of a state law that protects patients using the drug. The Court issued its ruling in a lawsuit in which a Riverside dispensary challenged a city zoning law that prohibited such facilities.

In an exercise of its inherent land use power, the City of Riverside declared, by zoning ordinances, that a medical marijuana dispensary is a prohibited use of land within the city and may be abated as a public nuisance. The zoning ordinances are not preempted by the Compassionate Use Act of 1996 (CUA) and the Medical Marijuana Program (MMP) adopted by the Legislature in 2004, even when such regulation amounts to a total ban on such facilities within a local jurisdiction’s borders.

The CUA gave seriously ill Californians the right to obtain and use marijuana for medical purposes. The MMP merely established a program for issuance of medical marijuana identification cards to those qualified patients. The CUA and MMP do no more than exempt specific groups and specific conduct from liability under particular criminal statutes.

Neither addresses the areas of zoning and land use planning. The CUA makes no mention of medical marijuana dispensaries. No provision of the MMP guarantees the availability of medical marijuana dispensaries or requires local zoning and licensing laws to accommodate the cooperative or collective cultivation and distribution of medical marijuana.

The high court concluded that neither the CUA nor the MMP expressly or impliedly preempts the authority of California cities and counties, under their traditional land use and police powers, to allow, restrict, limit or exclude facilities that distribute medical marijuana.

Property owners who thought medical marijuana dispensaries are “legal” may find themselves saddled with unexpected municipal fines and penalties. In the event they seek insurance protection for this liability from their general liability insurers, coverage should not obtain for municipal suits seeking abatement, fines and penalties – if the policy language so provides – because fines and penalties often are excluded. In addition, a complaint that seeks only injunctive relief does not seek covered damages. Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1266 (there is generally no coverage for claims or suits seeking purely injunctive relief). Also, the cost of complying with an injunction is not covered. Bullock v. Maryland Cas. Co. (2001) 85 Cal.App.4th 1435, 1447.

Finally, it is worth noting that courts in other states are applying the same rationale endorsed in City of Riverside in other contexts. For example, a pair of intermediate appeals courts in New York recently ruled that New York’s oil and gas law does not preempt local zoning ordinances that restrict hydrofracking (see New York Appeals Court Upholds Zoning Laws Banning Hydrofracking Over State Oil and Gas Laws ). The “takeaway,” therefore, is that City of Riverside is by no means an outlier.