Cannabis dispensary takes Arcata to court over cultivation ban

– July 1, 2008

 

ARCATA – An Arcata cannabis dispensary has filed a petition in Humboldt County Superior Court over the Planning Commission's decision to prohibit commercial cultivation of medical marijuana downtown.  The petition names the City of Arcata, City Council and Planning Commission as respondents.

In papers filed Tuesday, July 1, Humboldt Medical Supply (HMS) asks that the Planco's decision, later upheld by the City Council, be stayed so that it may cultivate cannabis at its new facility at 855 Eighth Street next to the Arcata Post Office.

At its Feb. 26 meeting, the Planco determined that dispensary-scale marijuana cultivation qualifies as agriculture, and that agriculture is not an allowable activity in the Central Business District under the General Plan and Land Use Development Guide (LUDG). The decision was appealed to the City Council, but upheld by the council on April 22.

The Planco had taken up the matter after another nearby dispensary, The Humboldt Cooperative (THC), applied for a building permit for its pre-existing on-site grow, which forced the issue to come before the commission. THC and the neighboring Humboldt Patient Resource Center (HPRC) have for years cultivated cannabis at the former Isackson Ford dealership located on I Street between Sixth and Seventh streets.

However, HMS, which had just completed construction of its new offices and relatively modest grow rooms the month before, was unable to initiate cultivation because of the City decision. This, alleges the dispensary, means the "clear loss" of its $188,000-plus investment in the new facility, which was designed to integrate cultivation, processing and dispensing at the same location.

Deal or no deal?

 

HMS is represented by Oakland land use attorney James Anthony and local attorney Gregory Allen. Both say they have gone to court reluctantly and only after exhausting procedural remedies.

Anthony said his preference is that the City to simply suspend the Planco decision and restore what he called the "status quo" ¹ HMS's previously permitted ability to grow as well as process and dispense cannabis at its downtown facility.

"We just want the original deal," Anthony said. "HMS was fully permitted and approved, and on the basis of those permits, the landlord and tenant spent an enormous amount of money on these facilities. In that situation, the government doesn't get to change its mind and say, `No, you don't get to do this.'"

He said timely suspension of the council/commission decision would render moot any further legal action, such as suing for an actual reversal of the decision or for damages. He said judges are "very sensitive" to property rights, and expressed confidence that the court would be sympathetic to HMS's request.

City attorney Nancy Diamond, who had just completed a preliminary review of HMS's court filings, said Tuesday afternoon that she is optimistic that the dispute will not reach the lawsuit level. "My hope is that we can stay any action on the lawsuit pending development of City guidelines," Diamond said.

She said the HMS petition doesn't inhibit the Planning Commission or City staff from continuing to consider new guidelines under which the dispensaries may operate.

Tuesday afternoon, Community Development Director Larry Oetker met in closed-door session with representatives of all four Arcata cannabis dispensaries to discuss the draft body of dispensary regulations pending before the Planco. Oetker had invited each dispensary to send one representative. In attendance were Tim Littlefield of the Arcata iCenter, Eric Heimstadt of HMS, Mariellen Jurkovich of the HPRC and Carla Ritter of THC.

The nature of the discussions was not immediately known. At Jurkovich's request, no pictures of the group gathering to meet at City Hall were allowed, with Oetker closing the door of the City Manager's Conference Room on a photographer as participants took their seats.

Oetker will likely summarize for the public the issues discussed at the meeting during the Tuesday, July 8 Planco meeting.

Cannabis contradictions

 

HMS's application for a stay notes that while THC and HPRC continue to grow marijuana within two blocks of its location, despite THC having been denied the required building permit on Feb. 26. States the HMS petition, "That the City has done nothing to stop growing or dispensing again shows that the City has little interest in affecting the other medical cannabis dispensaries."

The petition further casts the Planco decision as groundless and inconsistent with City policies, since nothing on the medical cannabis scene had changed between the time HMS received its operating permits and the subsequent Planco ruling that downtown growing isn't allowed.

The petition claims that the loss of on-site growing will render HMS "unable to continue in business." This, it says, will result in loss of employment for the dispensary's 10 employees.

Plans, permits and process

 

Planning commissioners have staunchly defended the integrity of the General Plan in this and other, unrelated land use matters such as the Trillium Creek subdivision, which was denied June 24 on grounds that would have violated grading regulations.

In denying THC's building permit, commissioners have stated that prime retail space downtown ought not be displaced by non-retail use such as agriculture.

The Planco decision still allows cultivation in industrial and agricultural zones, but dispensary operators have resisted relocating their grows off-site, citing security and safety concerns, plus the expense of maintaining a separate facility.

The HMS petition contests the commission's definition of its planned 248 square foot grow as agriculture, and casts the Planco ruling as an after-the-fact reversal of policy for the City, rendered without adequate notice or due process.

This, HMS claims, abruptly revoked previously-issued City permits and negated the dispensary's good-faith efforts at compliance.

As listed in the petition, those efforts include:

• Extensive discussions beginning in late 2006 with City planning and building officials, Community Development and members of the City Council.

• Retention of an architect, creation of blueprints and construction plans and obtaining of a 10-year lease on the Danco Group-owned property on Eighth Street.

• Obtaining a City-issued building permit in October, 2007.

• Obtaining a City-issued final occupancy permit on Jan. 17 of this year.

The petition claims that no notice was given HMS prior to the game-changing Feb. 26 decision. It cites case law to support its claim of a "vested" right to cultivate on site, in that HMS had complied with and completed a City-defined process over a period of a year and a half.  

Now they tell us

 

Alleges the petition, "At no time from initial discussions with the City to the issuance of the final vested permit was there ever a suggestion from anyone in the building department or City Council that there was any possible problem with this project." 

Since the February Planco ruling, both THC and HPRC have continued to cultivate on a much larger scale than HMS had planned. THC maintains several active grow rooms to cultivate medicine for its 6,000-plus patients. THC, like the Arcata iCenter, augments its cannabis supply with purchases of unknown origin from private vendors.

In contrast, HMS expected to use just 248 square feet – about six percent of its 4,040 square foot leased space – to grow cannabis for an eventual 200 or so patients.

Heimstadt, HMS's CEO, has extolled his unused downtown cultivation facility as state-of-the-art and overcompliant with all safety requirements and building codes, utilizing stringent fire prevention measures and NASA-grade ventilation.

HMS currently carries 80 patients and cultivates medicine in Heimstadt's private home outside city limits ¹ an arrangement HMS would like to end.

"We do this with heavy hearts," Heimstadt said, calling the court filing a "last resort." The law allows 90 days from the April 5 council rejection of HMS's appeal to file a legal challenge, the last day being July 1, the day the petition was filed.

"If we had had the same information a year ago, or even six or eight months ago, we would have rented an industrial space. But the City said, `go go go.'" Now, he said, after making the nearly $200,000 investment in a fully integrated facility, HMS can't afford to construct an entirely new off-site grow facility.

Heimstadt said he has had expressions of support from several planning commissioners and city councilmembers. Some neighbors active with the anti-grow house "Nip It In The Bud" movement have stated support for cultivation at dispensaries and HMS in particular as a means of reducing residential grows.

"It's everyone but four planning [commission] people," Heimstadt said.

Some HMS personnel have publicly called for dismissal of Planning Commission members who have ignored instructions from the City Council. In sending the matter of dispensary regulation back to the Planco on April 2, the council specifically directed that the commission look for ways to allow dispensaries to cultivate on site.

But commissioners have resisted that direction, holding fast to their finding that commercial cannabis cultivation is agriculture and that ag isn't allowed downtown under the General Plan and LUDG

Precedents, PDPs and permits

 

The City has routinely granted building permits allowing medical cannabis cultivation since the late 1990s, when the now-defunct Humboldt Cannabis Center operated an upstairs grow at its former H Street location.

Heimstadt said his permits explicitly refer to on-site cultivation and were signed by City officials. But after the Planco decision, "they crossed off the sign off," he said.
During a later study session, the City Council seemed to settle on limited on-site dispensary cultivation as an alternative to residential medical grows, previous decisions notwithstanding.

The Planco has discussed the possibility of implementing Planned Development Permits (PDPs) for the existing dispensaries in the Central Business District. The PDPs would enable "overlays," which in effect allow exemptions to existing land use regulations such as the ban on agriculture.

Though non-compliant in the wake of the Planco's building permit denial, THC has not applied for a PDP. Nor has HPRC. Prior to the meeting with Oetker and other dispensary representatives Tuesday, July 1, HPRC's Jurkovich said that her dispensary is fully permitted to cultivate, process and dispense, and doesn't need a PDP to continue its current operations.

Respecting regulation

 

The HMS petition and possible lawsuit added yet another cross-current to Arcata's roiling cannabis scene, now caught up in controversies over residential cultivation, neighborhood impacts, environmental issues, patient and property rights, the proper role of media and government, contradictions between local, state and federal law and other related matters.  
HMS attorney Anthony said he and his client recognize the City's authority to regulate cannabis, from grow houses to dispensaries. But he said he also expects the City to adhere to its agreements.

"The City Council and the Planning Commission are our regulators," he said. "We want to be regulated, controlled and taxed. We thought we had a deal, and they reneged on it."
If the City doesn't suspend its ban on agriculture downtown, he said HMS could petition for an outright reversal of the decision, or press ahead with a damage claim. It might even consider a City buyout of the dispensary. "That's a possibility, I suppose," he said.

Anthony, considered one of California's leading attorneys with regard to cannabis and related land use issues, said that the City is fully within its rights to set guidelines for grow houses. "It's completely legal for them to have some rational set of regulations for high-intensity agriculture in residential areas," he said.

That opinion contradicts assertions by some Arcata cannabis activists and dispensary operators that the recent state Supreme Court ruling on SB420 renders illegal any City efforts to regulate Prop 215-related cultivation in private residences.

 

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