City of Vallejo v. NCORP4, Inc. 9./29/17 CA1/3 Case Details, A149907

Background

Vallejo's zoning code does not permit medical marijuana dispensaries and treats unpermitted uses as public nuisances; nonetheless many dispensaries operated in the city.
In 2011 voters approved Measure C, a business license tax on marijuana businesses, expressly stating the tax did not legalize dispensaries and imposing criminal and civil penalties for nonpayment.
The city suspended tax collection in February 2015, then in July 2015 adopted Ordinance No. 1715 granting "limited immunity" from nuisance enforcement to dispensaries meeting several criteria, including continuous payment of Measure C taxes from opening through February 2015.
NCORP4 (Nature’s Love Collective) operated a dispensary since 2011 but paid almost no Measure C taxes; its application for limited immunity was denied and the city sued to enjoin its operations.
The trial court denied a preliminary injunction, ruling Ordinance No. 1715 effectively amended Measure C by imposing a retroactive penalty for past tax nonpayment (an ex post facto effect).
The Court of Appeal reversed, holding the ordinance was a permissible land‑use regulation that rationally limited immunity to dispensaries with a record of prior tax compliance.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Ordinance No. 1715 impermissibly amends Measure C by imposing a retroactive/ex post facto penalty for prior tax nonpayment	Vallejo: ordinance is a lawful land‑use regulation and may deny immunity to noncompliant operators	NCORP4: ordinance retroactively increases penalties by denying ability to cure past tax defaults, amounting to an ex post facto effect	Held for Vallejo: ordinance is regulatory, not a criminal ex post facto law, and may condition immunity on prior tax compliance
Whether conditioning limited immunity on past tax payments is arbitrary or violates equal protection or other constitutional limits	Vallejo: preferring taxpayers is rational — past compliance predicts future lawful behavior	NCORP4: denying cure of past tax defaults is unfair and distinguishes similarly situated operators	Held for Vallejo: restrictions are rationally related to legitimate land‑use objectives; analogous to grandfathering upheld in precedent
Whether Measure C precludes later ordinances from using tax compliance as a criterion for regulatory relief	Vallejo: Measure C was solely a revenue measure and did not prohibit later regulatory choices	NCORP4: Measure C allowed cure of tax defaults by payment and thus ordinance unlawfully revokes that ability	Held for Vallejo: Measure C did not guarantee cure; Ordinance No. 1715 is a separate regulatory ordinance that legitimately uses past compliance as a criterion
Whether the trial court properly denied a preliminary injunction	Vallejo: trial court erred as ordinance is lawful and city likely to prevail on merits	NCORP4: trial court correctly found retroactive punishment risk and low likelihood of city prevailing	Held for Vallejo: appellate court reverses and directs issuance of a preliminary injunction pending further proceedings

Key Cases Cited

City of Riverside v. Inland Empire Patients Health & Wellness Center, Inc., 56 Cal.4th 729 (2013) (local governments may prohibit or regulate dispensaries under land‑use powers)
420 Caregivers, LLC v. City of Los Angeles, 219 Cal.App.4th 1316 (2012) (upholding grandfathering/registration requirements for dispensaries as rational)
City of Corona v. Naulls, 166 Cal.App.4th 418 (2008) (enjoining operation of dispensary where use was not an enumerated permitted land use)
Melton v. City of San Pablo, 252 Cal.App.2d 794 (1967) (ex post facto clauses apply only to criminal statutes)
Santa Barbara Patients’ Collective Health Coop. v. City of Santa Barbara, 911 F.Supp.2d 884 (C.D. Cal. 2012) (ex post facto inapplicable to local regulatory ordinances concerning dispensaries)
DeVita v. County of Napa, 9 Cal.4th 763 (1995) (local governments have broad discretion in land‑use policy)