hoban & feola letter to denver city councilman charlie brown

8/8/2019 Hoban & Feola Letter to Denver City Councilman Charlie Brown

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November 22, 2010

Councilman Charlie Brown2324 East Exposition Avenue

Denver, CO 80209-4701

Sent by U.S. mail and via electronic mail to: [email protected]

Re: Proposed Changes to Denvers Medical Marijuana Ordinance

Dear Councilman Brown,

Thank you for your continued willingness to communicate with us concerning proposed changes

to Denvers medical marijuana ordinance. As you are aware, our firm specializes in land use

law, including municipal compliance, are we welcome the opportunity to speak with you

regarding our concerns about draft language relating to Medical Marijuana Centers (MMCs) and

Optional Premises Cultivation (OPC) facilities.

After reviewing a November 8th

draft, introduced by you and Councilman Nevitt, we haveprovided below questions and concerns about the language, as it appears in its current firm. As

we discussed with you, we plan to attend the December 1, 2010 medical marijuana sub-

committee hearing where we will plan to address the panel briefly to provide more context to

these concerns. In the meantime, please feel free to circulate this memorandum to your fellow

council members and encourage them to contact us if we can provide any assistance.

1. According to the draft language (see Sec. 24-503(c), the City will make MMC

applications ready On and After January 3, 2011 and MMCs will be required to return

completed versions by March 1, 2011. Based on our prior conversation with you, the

City will likely delay both dates. Please confirm the new dates, if you know them now,or keep us in the loop as to when you anticipate the new applications being made

available.

2. We have had several clients express concern about the Citys methods for measuring

distances between MMCs for purpose of ordinance compliance. Under Sec. 24-507

Criteria for licensing; waiver of public hearings, the language states that the director

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shall deny any application for a license that is not in full compliance with the CMMC,

this Article XII, and any other applicable state or city law or regulation. While a plain

reading of this section appears to merely codify a previously recognized authority granted

under law to municipal agencies, it may raise questions concerning whether it affords the

director adequate discretion to consider extenuating circumstances some applicants face,

as well as confusing or complicated language appearing in the Citys Code.

As an example, we have represented multiple clients who have appealed recommended

denials of their City dispensary applications due to their alleged failure to meet the 1,000

foot distance requirement between the clients dispensary and the closest other

dispensary. While the City has maintained that this distance should be measured without

consideration of starting points that measure the nearest points between the two buildings

housing the dispensaries, prior case law concerning other industries, including Denver

liquors stores, suggests that the methodology for measuring such distances could be

reasonably measured by using at least two or three different methodologies, and that in

fact, courts have recognized that utilizing the two nearest points of any two buildings to

be measured (a methodology commonly referred to as the crow flies can present a more

accurate measurement consistent with an ordinances plain language, as well as its

drafters legislative intent.

In addition, the code as written may improperly deny administrative relief as it does

afford the licensing director the opportunity or authority to provide stays or delays of

enforcement. While licensing is certainly a distinct issue from zoning or any authority

afforded to the Board of Adjustment, fairness and good public policy demands that

wherever possible, the City consider the unintended consequences arising from

regulatory attempts relating to this young industry, and in doing so, provide relief to those

applicants who have been penalized for reasons outside their control or own doing.

3. Sec. 24-508(b)Prohibited locations prohibits any MMC license from being granted in

any residential zone district as defined by the zoning code of the city, or in any other

location where retail sales are prohibited by the zoning code or by any ordinance

governing a planned unit development.

In light of the City Councils July 2010 passage of Blueprint Denver this language is

overly broad and subject to possible contradictory interpretations. We are very

concerned that a strict reading of this language could be used to force MMCs or OPCsout of business due to the fact that much of the City now permits mixed use zoning,

including residential and commercial uses being allowed in a single dwelling or location.

4. Sec. 24-510 Licensing requirementsoptional premises cultivation licensesaddresses requirements for OPC licenses and articulates that A local optional premises

cultivation license may be issued in any location where commercial plant husbandry and

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wholesale distribution of plant products is permitted by the zoning code. [Any location

that qualified as a locally approved optional premises cultivation operation as of July 1,

2010 in accordance with section 24-411 (c) and the CMMC shall also qualify forlicensing under this section, regardless of the current zoning of the property, so long as

application is made by the same owner for the same location under this Article XII.]

While this language codifies the existing regulations for OPCs, the next section (b)

causes us great concern, both in its potential negative impact on several of our clients, butdue to its potential to unintentionally harm the overall supply and control of medical

marijuana, both inside Denver, as well as in or to other jurisdictions.

Titled Provisions related to cross-jurisdictional licensing, it requires thatthe licensing director shall issue optional premises cultivation licenses only when the

medical marijuana center or the medical marijuana-infused products

manufacturing to which the cultivation is related is also located in Denver County

and is owned in common with the optional premises cultivation operation as

required by the CMMC. Any applicant for a medical marijuana center license or amedical marijuana-infused products license in Denver County may obtain an optional

premise cultivation license in a jurisdiction other than Denver County and shall provide

proof of such licensing to the director.

Shall we understand this language to mean that any lawfully operating OPC whose MMC

(retail or edibles location) shall not be required to comply with this new jurisdictional

requirement, shall it be adopted?

As we discussed briefly last week, innovative property owners are increasingly exploring

opportunities to turn large vacant warehouses into legally-subdivided units properly

equipped and licensed for OPCs. This model will centralize growing, potentiallydecreasing the number of separate facilities used for growing. This will benefit law

enforcement efforts and also allow medical marijuana growers to continue operating

independently, while also gaining the economies of scale afforded through shared costs

for security, utilities, and other infrastructure requirements.

We strongly encourage Council to reconsider this language, and instead, maintain its

current position allowing for OPCs to lawfully operate in Denver even when their MMC

is located elsewhere.

As Council is aware, Denver affords one of the most open and transparent industryregulation models in the state. Unfortunately, as fate would have it, it is surrounded by

municipalities and counties that have not gone the same direction. To the West,

Lakewood has imposed strict zoning rules that make it almost impossible in all but a few

commercial/retail districts to operate a viable OPC. To the East, Aurora has banned

MMCs and OPCs altogether. And to the North and South, the majority of jurisdictions

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have imposed stringent rules on MMCs and OPCs that make Denver the only viable

location for OPCs for many of our clients.

Should Council adopt this new change, dozens of MMCs will be forced to shut down or

to find OPCs in jurisdictions located almost entirely outside the metropolitan area. While

the Citys draft ordinance language seeks to tightly limit off-site delivery of product bylicensee (see Sec. 24-508(d)), any effort to ban OPCs that do not also have their MMCs

located in Denver will mean more medical marijuana is being transported through Denver

by car as caregivers and MMCs seek to obtain and provide medical marijuana from one

municipality to the next.

In addition, the policy would inevitably result in increased vacancies in Denvers

commercial warehouse districts, areas already hard hit by the states continued economic

woes. We have spoken with Matt Cook at the Department of Revenue, as well as

Lakewood City Attorney Tim Cox to suggest that a regional collaboration may be

possible here that would prevent the harms created by competing local ordinancesadversely impacting each others citizens and businesses. While Denver is certainly

entitled to express concern about the large quantity of OPCs seeking to open and operate

within its territorial boundaries, the current proposal is overly restrictive.

Over the last year, we have spoken with several legislators who championed House Bill 1284s

comprehensive state regulatory structure for MMCs. We believe it was not their intent to put

MMCs out of business, or worse, drive them underground. Rather, lawmakers sought to impose

reasonable rules and regulations on an industry that had previously operated without adequate

standards, controls, or certainties. In codifying these rules, lawmakers also sought to afford local

governments discretion in implementing regulations best suited to their citizens. We lookforward to working with you to help Council reach this goal.

In closing, please feel free to contact us at your convenience to discuss any of the above issues in

more detail. Thank you for your service to our City and County.

Sincerely,

/s/ Robert T. Hoban

Partner

Hoban & Feola, Attorneys At Law

s/ Jessica P. Corry

Special Counsel

Hoban & Feola, Attorneys At Law

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