Wed. Oct 20th, 2021

California marijuana businesses sue state over revoked licenses

Several California marijuana companies filed lawsuits after being revoked provisional business licenses by state regulators, alleging unfair treatment and being denied an independent appeals process. Additionally, legal experts believe the newly-established Department of Cannabis Control will increase inspections and enforcement activities, leading to more lawsuits by business owners who claim that their temporary permits were revoked without due process.

The cases are being led by Oakland attorney James Anthony, who anticipates hundreds of lawsuits. “There are going to be a lot of cancellations and revocations in the coming weeks and months, and every one of those is going to cause a lawsuit.”

A few of the four cases have had an impact. Two have been resolved; regulators restored the business licenses for two of the companies; and two are still under review. Lawmakers and attorneys are feuding due to the slowness with which regulators have issued annual permits for marijuana businesses.

Most cannabis licenses are considered temporary by law, with three-quarters of all permits classified as “provisional.” Furthermore, attorneys from the industry noted a lack of due process to manage the investigation could be remedied if participants weigh in by September 20 on a set of proposed industry rules.

After Monday, industry officials wont be able to submit suggestions for changes as part of a public comment period. La Weed attorney Dana Cisneros, who represents one of the four companies suing the state over a revoked license, says everyone should alert the DCC that it has exceeded its responsibilities by enacting regulations that rob our operators of their due process rights.

The Problem

According to data from the DCC, there were 11,642 active marijuana business licenses in California as of Sept. 15. Of those, 2,929 were considered “annual” licenses. Around 75% of the remaining 8,713 active permits are categorized as provisional licenses, which require businesses to meet a lower threshold in order to obtain them.

They provide fewer protections than state laws, which are a stopgap measure. Due process rights are not afforded to provisional license holders in the same way as those who hold annual licenses. In addition to complying with state environmental laws, annual licenses are subject to much more stringent requirements. “The state law permits regulators to prevent licenses from being renewed (at any time),” Deputy Attorney General Patrick Boyne said in a statement on June 11 in one of the lawsuits.

Cisneros’ client, Harbor Caregivers, filed the lawsuit after the business owner complained that a state cannabis inspector made a rude gesture to him as he departed the store. This gives rise to the claim inspectors and regulators can’t be trusted to make impartial decisions about the marijuana business licenses.

In the midst of reworking regulations for marijuana companies, Cisneros said the due process question should dominate the conversation for the industry at the moment.

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