THE PEOPLE ex rel. MICHAEL N. FEUER, as City Attorney, etc., Plaintiff and Respondent, v. NESTDROP, LLC, et al., Defendants and Appellants.
No. B262174
Second Dist., Div. Five.
March 14, 2016.
245 Cal.App.4th 664
Counsel
Law Offices of Michael D. Grahn and Michael D. Grahn for Defendants and Appellants.
Michael N. Feuer, City Attorney, Asha Greenberg, Assistant City Attorney, and Anh Truong, Assistant Deputy City Attorney, for Plaintiff and Respondent.
Opinion
BAKER, J.—Defendants and appellants Michael Joseph Pycher (Pycher) and Roddy Radnia (Radnia) are founders of defendant and appellant Nestdrop, LLC, a company that developed a software application (app) allowing a user to make arrangements for a driver to deliver marijuana products from one of certain medical marijuana businesses in the City of Los Angeles (City). Michael N. Feuer, as City Attorney and on behalf of the People, filed a complaint charging defendants with causing, aiding, and abetting the illegal delivery of marijuana. The People sought a preliminary injunction barring defendants from further developing or marketing their marijuana delivery app, and the trial court issued the injunction. Defendants ask us to overturn it because the People failed to demonstrate a likelihood of success on the merits of their complaint. Defendants’ argument for reversal turns on an interpretive question that we shall decide: does Proposition D, which City voters enacted in 2013 to regulate medical marijuana businesses, generally prohibit the delivery of marijuana by vehicles?
I. BACKGROUND
A. State Statutes and Proposition D
California law generally prohibits the cultivation, possession, use, and distribution of marijuana.1 (Health & Saf. Code, §§ 11357-11361, 11366, 11366.5, 11570.) However, in 1996, California voters adopted the Compassionate Use Act of 1996 (Health & Saf. Code, § 11362.5), and in 2003, the Legislature enacted the Medical Marijuana Program. (Health & Saf. Code, §§ 11362.7-11362.83.)
In 2013, City voters approved just such a regulatory measure, Proposition D, which “(a) prohibits medical marijuana businesses, but (b) grants a limited immunity from the enforcement of its prohibition to those medical marijuana businesses that do not violate the restrictions set forth in [the] ordinance . . . .” (L.A. Mun. Code,2 § 45.19.6.) Proposition D makes it “unlawful to own, establish, operate, use, or permit the establishment or operation of a medical marijuana business, or to participate as an employee, contractor, agent or volunteer, or in any other manner or capacity in any medical marijuana business.” (§ 45.19.6.2, subd. A.) The prohibition extends to “renting, leasing, or otherwise permitting a medical marijuana business to occupy or use a location, vehicle, or other mode of transportation.” (§ 45.19.6.2, subd. B.)
Proposition D employs a two-part definition of a “medical marijuana business.” Part one of that definition covers fixed locations, bringing within the ambit of the ordinance “[a]ny location where marijuana is cultivated, processed, distributed, delivered, or given away to a qualified patient, a person with an identification card, or a primary caregiver.” (§ 45.19.6.1, subd. A.) A “location” is further defined to mean “any parcel of land, whether vacant or occupied by a building, group of buildings, or accessory buildings, and includes the buildings, structures, yards, open spaces, lot width, and lot area.” (§ 45.19.6.1, subd. A.) Part two of the definition of a medical marijuana business covers vehicles, thereby making section 45.19.6.2, subdivision A of the ordinance (the general prohibition provision we have already quoted) applicable to “[a]ny vehicle or other mode of transportation, stationary or mobile, which is used to transport, distribute, deliver, or give away marijuana to a qualified patient, a person with an identification card, or a primary
Proposition D excludes from its definition of a medical marijuana business—and thus, from the ordinance’s general ban on such businesses—a very narrow set of locations and vehicles under specified circumstances. These exclusions parallel provisions in the Medical Marijuana Program and other state statutes that provide a defense to prosecution for certain facilities and for certain activities involving medical marijuana. More specifically, Proposition D provides that a medical marijuana business shall not include any of the following: dwelling units where three or fewer qualified patients, persons with an identification card, and/or primary caregivers cultivate marijuana (cf. Health & Saf. Code, §§ 11362.5, 11362.7); any location during only that time reasonably required for a designated primary caregiver to provide marijuana to a qualified patient or person with an identification card (cf. Health & Saf. Code, §§ 11362.5, 11362.7); and locations of certain clinics and health facilities licensed under state law (cf., e.g., Health & Saf. Code, § 1200 et seq.). (§ 45.19.6.1, subd. A.) Particularly relevant for our purposes, Proposition D also excludes from the medical marijuana business definition “vehicle[s] during only that time reasonably required for [their] use by: (i) a qualified patient or person with an identification card to transport marijuana for his or her personal medical use, or (ii) a primary caregiver to transport, distribute, deliver, or give away marijuana to a qualified patient or person with an identification card who has designated the individual as a primary caregiver, for the personal medical use of the qualified patient or person with an identification card, in accordance with [the Medical Marijuana Program].” (§ 45.19.6.1, subd. A; cf. Health & Saf. Code, § 11362.765.)
Although Proposition D bans all medical marijuana businesses, it does grant limited immunity from prosecution under Los Angeles Municipal Code sections 11.00 (code violations generally) and 12.27.1 (administrative nuisance abatement) to some establishments that are medical marijuana businesses as defined under the ordinance. As stated in section 45.19.6.3, this limited immunity extends “only [to] a medical marijuana business at the one
These subdivisions permit a medical marijuana business to assert the ordinance’s limited immunity defense only if the business: was established as of September 14, 2007, and registered with the City Clerk by November 13, 2007 (§ 45.19.6.3, subds. A & B); submits proof of continual “operation at the location set forth in its original or any amended business tax registration or tax exemption certificate” (id., subd. D); registered to pay and pays applicable taxes to the City (id., subds. E & F); refrains from “remain[ing] open and/or operating between the hours of 8 PM and 10 AM” (id., subd. G); forbids minors unaccompanied by a parent or guardian from “enter[ing] its premises,” and forbids anyone from consuming marijuana or alcohol “at the premises or in any area of the location used for parking any vehicle” (id., subds. I & H); does not allow “ingress or egress to [the] premises on any side of the location” abutting or closely neighboring any land zoned residential (id., subd. L); is not situated “within a 1,000-foot radius of a school, or within a 600-foot radius of a public park, public library, religious institution, child care facility, youth center, alcoholism, drug abuse recovery or treatment facility, or other medical marijuana business” (id., subd. O); and satisfies additional specified conditions we find it unnecessary to mention here. (§ 45.19.6.3.) In effect, these prerequisites for asserting the ordinance’s limited immunity defense capped the number of medical marijuana businesses entitled to operate in the City at approximately 135, rather than the estimated 1,600 businesses that operated prior to Proposition D’s passage. (L.A. Ballot Pamp., Gen. Mun. Elec. (May 21, 2013) Impartial Summary; Argument in Favor of Prop. D.)
B. Factual and Procedural History
Pycher, Radnia, and Adam Larson founded Nestdrop in 2013. Initially, the Nestdrop app allowed Los Angeles-area users to order alcohol for local delivery within the hour. In October or November of 2014, Nestdrop’s developers expanded the app to allow deliveries of medical marijuana in parts of the City. To procure marijuana through the app, a user orders from a menu of products. The order is then placed with a medical marijuana business with which Nestdrop has partnered. According to defendants, an employee of the providing medical marijuana business or a “volunteer” then delivers the marijuana to the purchaser.
The trial court held a hearing on December 23, 2014, to hear argument on whether it should issue a preliminary injunction. Defendants argued an injunction should not issue because the People were unlikely to prevail. Specifically, defendants maintained that Proposition D “ties the immunity to a medical marijuana business at the location, not to a location,” meaning that once a business is entitled to immunity at its “location” (i.e., parcel of land), the scope of the immunity would permit the business to make vehicle deliveries from that location to other areas of the City. The trial court rejected defendants’ argument and granted the People’s request for a preliminary injunction; defendants did not ask the court to make specific findings or explain its rationale on the record. The injunction bars defendants from “develop[ing] or market[ing] any computer program or App, including Nestdrop, that facilitates in any way the delivery of marijuana in the City of Los Angeles; . . . solicit[ing] or perform[ing] any agreement with any vendor to deliver marijuana in the City of Los Angeles through an App or any other means; . . . [and] engag[ing] in any conduct that would facilitate, aid, or abet the delivery of marijuana in the City of Los Angeles.”
II. DISCUSSION
Defendants argue Proposition D permits medical marijuana dispensaries that are entitled to limited immunity under the ordinance to deliver marijuana to qualified patients by vehicle. If that interpretation is correct, defendants maintain the People have not shown a likelihood of success on the merits because the People did not proffer sufficient evidence to show defendants intended to
A. Standard of Review
“‘In deciding whether to issue a preliminary injunction, a trial court must evaluate two interrelated factors: (i) the likelihood that the party seeking the injunction will ultimately prevail on the merits of his [or her] claim, and (ii) the balance of harm presented, i.e., the comparative consequences of the issuance and nonissuance of the injunction. [Citations.]’ [Citation.]” (Law School Admission Council, Inc. v. State of California (2014) 222 Cal.App.4th 1265, 1280 [166 Cal.Rptr.3d 647].) On appeal, “questions underlying the preliminary injunction are reviewed under the appropriate standard of review. Thus, for example, issues of fact are subject to review under the substantial evidence standard; issues of pure law are subject to independent review. [Citation.]” (People ex rel. Gallo v. Acuna (1997) 14 Cal.4th 1090, 1136-1137 [60 Cal.Rptr.2d 277, 929 P.2d 596]; accord, 420 Caregivers, LLC v. City of Los Angeles (2012) 219 Cal.App.4th 1316, 1331 [163 Cal.Rptr.3d 17].)
Because the propriety of the preliminary injunction in this case turns on a legal issue, the interpretation of a local ordinance, our review is de novo. (See, e.g., Efstratis v. First Northern Bank (1997) 59 Cal.App.4th 667, 671-672 [69 Cal.Rptr.2d 445] [“Where the ‘likelihood of prevailing on the merits’ factor depends upon a question of law . . . , the standard of review is not abuse of discretion but whether the superior court correctly interpreted and applied statutory law, which we review de novo.”]; see also Evangelatos v. Superior Court (1988) 44 Cal.3d 1188, 1206 [246 Cal.Rptr. 629, 753 P.2d 585] [applying rules of statutory construction to voter initiative].)
B. The People Established They Are Likely to Prevail Because Proposition D Virtually Bans Delivery of Medical Marijuana by Vehicles
Proposition D’s definition of a “‘[m]edical marijuana business’” comprises two distinct elements: (1) “[a]ny location,” meaning a “parcel of
To avoid operating illegally under Proposition D, a medical marijuana business must qualify for limited immunity, which a business can do only if it meets each and every condition set forth in section 45.19.6.3. The plain text of these various conditions demonstrates the drafters of Proposition D, and the voters who enacted it, contemplated that only fixed establishments, not vehicles, would be permitted to assert the ordinance’s immunity defense.
Five of the 15 specified conditions use the term “premises” when stating their respective requirements (§ 45.19.6.3, subds. H-L),8 and in ordinary, everyday usage, that term means land or structures built on land—not vehicles. (Oxford English Dict. Online (2007) <http://www.oed.com/view/Entry/150302?isAdvanced=false&result=1&rskey=831Cu9&> [as of Mar. 14, 2016] [“premises” means “[a] house or building together with its grounds, outhouses, etc., esp. a building or part of a building that houses a business”]; Webster’s 3d New Internat. Dict. (2002) p. 1789 [“premises” is “a specified piece or tract of land with the structures on it”].) In two separate places, section 45.19.6.3 also ties a medical marijuana business’s ability to assert the ordinance’s limited immunity to its operation at the “location” identified in its business tax registration certificate, and as we have already seen, Proposition D defines a “location” to exclude vehicles. (§ 45.19.6.1, subd. A.) In addition, subdivision O of section 45.19.6.3 prohibits medical marijuana businesses that are located within 1,000 feet of a school or within 600 feet of a public park, public library, religious institution, child care facility, youth center, alcoholism or drug abuse recovery or treatment facility, or any “other medical marijuana business.” With such a robust list of geographic restrictions, it
Defendants, however, point to other language in Proposition D in support of their contrary reading, specifically, the reference to “delivered” that appears in the definition of a medical marijuana business (“[a]ny location where marijuana is cultivated, processed, distributed, delivered, or given away to a qualified patient . . . .”). (§ 45.19.6.1, subd. A(1).) Defendants reason that this use of the term “deliver” is an indication that the limited immunity that extends to the fixed locations in the City that dispense medical marijuana likewise extends to any vehicles those businesses would use to “deliver” marijuana to customers. This is a misreading of the provision. When read in context—the key word is “where” (i.e., “[a]ny location where . . . .”)—the provision can only mean delivery at the fixed premises of the business. The definition therefore cannot be construed as evidence that the drafters of Proposition D or City voters contemplated that a medical marijuana business would be authorized to make deliveries elsewhere in the City by vehicle.
This derivative immunity argument defendants make, i.e., the immunity which extends to a location should likewise extend to any vehicles such a business might decide to use to make deliveries elsewhere in the City, is also inconsistent with the structure of the two-part medical marijuana business definition. If the ordinance were silent as to the treatment of vehicles, defendants might find some takers for their argument that vehicle delivery was implicitly understood to be an attendant function of a medical marijuana business that is, like other business functions, covered by a grant of limited
To be sure, there are more direct ways in which the drafters of Proposition D could have conveyed the intention to ban vehicle delivery of medical marijuana by otherwise immune businesses. A single sentence so stating would suffice. But we do not discard a meaning that is apparent upon review of a text merely because additional wordsmithing might have produced a more elegant phrasing. (See, e.g., General Development Co., L.P. v. City of Santa Maria (2012) 202 Cal.App.4th 1391, 1396 [136 Cal.Rptr.3d 490].) Our task is to discern the intention of the voters who approved Proposition D, and we reject defendants’ derivative immunity interpretation as inconsistent with the language and structure of the ordinance for the reasons we have described.
Our reading of Proposition D to ban, except in very limited circumstances, vehicle delivery of marijuana to patients is also consistent with the declared purpose of the ordinance: “[T]o stem the negative impacts and secondary effects associated with the ongoing medical marijuana businesses in the City, including but not limited to the extraordinary and unsustainable demands that have been placed upon scarce City policing, legal, policy, and administrative resources; neighborhood disruption, increased transient visitors, and intimidation; the exposure of school-age children and other sensitive residents to medical marijuana; drug sales to both minors and adults; fraud in issuing, obtaining or using medical marijuana recommendations; and murders, robberies, burglaries, assaults, drug trafficking and other violent crimes.” (§ 45.19.6.) The intent of Proposition D was not to make medical marijuana obtainable in more areas of the City than existed before its enactment, which permitting vehicle delivery would surely do, but rather to limit the number of businesses in operation and to minimize the “negative impacts and secondary effects” of such businesses by tightly regulating their locations and avoiding close proximity to sensitive areas like schools, churches, residential neighborhoods, and places where drug abusers go seeking help to fight their addiction. Allowing the medical marijuana businesses that may assert Proposition D’s limited immunity to deliver anywhere in the City would subvert that fundamental purpose.
Proposition D prohibits “medical marijuana businesses,” but by the ordinance’s express terms, a vehicle is such a business only when “used to transport, distribute, deliver, or give away marijuana to a qualified patient, a person with an identification card, or a primary caregiver.” (§ 45.19.6.1, subd. A(2) (italics added).) Proposition D therefore does not, as defendants suggest, prohibit a medical marijuana business entitled to limited immunity from receiving shipments from cultivators outside the City or using vehicles in connection with legitimate, essential activities associated with running the business. Rather, Proposition D prohibits (with the narrow exception we have already noted) using vehicles to deliver or transport medical marijuana to patients. Such a prohibition in no way threatens the continued existence of those medical marijuana businesses that qualify for limited immunity. Proposition D as we interpret it therefore produces not an absurd result but the precise result voters intended: guaranteeing patients access to their medicine without the harmful effects of widespread, unchecked distribution of marijuana. (§ 45.19.6 [“The purpose of this Article is to enact a materially new ordinance that . . . grants a limited immunity . . . to those medical marijuana businesses that do not violate the restrictions set forth in this ordinance” and to “stem the negative impacts and secondary effects associated with the ongoing medical marijuana businesses in the City . . . .”].)
Defendants have one final interpretive argument left. They contend the measure summary and impartial analysis that appeared in the ballot pamphlet materials for Proposition D described the ordinance as authorizing delivery of medical marijuana by vehicles and they maintain that the voters enacting the proposition adopted that construction. This argument is meritless. We do not rest our interpretation of an ordinance on statements in ballot pamphlet materials where the text of the measure is otherwise unambiguous.
The summary page for Proposition D in the ballot pamphlet states: “This measure exempts from City regulation dwelling units where three (3) or fewer patients and/or caregivers cultivate medical marijuana on-site for themselves or their patients. It also exempts licensed health care facilities and location/vehicles during the time they are used to deliver medical marijuana to a qualified patient.” (L.A. Ballot Pamp., Gen. Mun. Elec., supra, summary of Prop. D.) It is indisputable that is a reference to, and summary of, the narrow exclusions from the definition of medical marijuana business set forth in section 45.19.6.1; the summary page tracks those exclusions precisely. (See ante, at pp. 674-675.) The same is true regarding the impartial summary of Proposition D prepared by Chief Legislative Analyst Gerry F. Miller. After explaining that Proposition D will ban all medical marijuana businesses unless they qualify for immunity, and after summarizing the conditions for immunity, the impartial summary describes the specific exemptions from regulation under Proposition D: certain dwelling units, licensed health care facilities, “and both locations and vehicles during the time they are used to deliver medical marijuana to a qualified patient.” (L.A. Ballot Pamp., Gen. Mun. Elec., supra, Impartial Summary.) This reference to vehicles, given its placement and context, again refers to—and would be understood to refer to—the exclusion for vehicles driven by qualified patients, persons with an identification card, or their designated primary caregivers. Neither the summary page nor the impartial summary prepared by Miller signifies an intent to exempt all vehicles used to deliver marijuana to patients, an intent that would run contrary to the text of Proposition D, which generally prohibits vehicular medical marijuana businesses.
Because Proposition D is properly understood to prohibit virtually all vehicular delivery of medical marijuana, the trial court properly concluded the People were likely to succeed on the merits of their claims that defendants caused, aided, and abetted illegal marijuana delivery in violation of Proposition D through development of the Nestdrop app. (§ 11.00, subd. (j) [“Whenever in this Code any act or omission is made unlawful it shall include causing, permitting, aiding, abetting, suffering or concealing the fact of the act or omission.”].)
C. Defendants Forfeited Their Preemption Argument by Failing to Raise it Below*
D. Conclusion
The People established a likelihood of proving defendants’ Nestdrop app caused, aided, or abetted the violation of Proposition D because, outside of the narrow exception for designated primary caregivers, it prohibits the vehicular delivery of medical marijuana to qualified participants, identification card holders, or primary caregivers in the City. Because the People have demonstrated a likelihood of success on their claim that defendants facilitated a violation of Proposition D, defendants’ opposition to the People’s unfair competition allegations necessarily fails. Defendants made no showing at all concerning the balance of hardships, much less that the balance tipped sharply in their favor. The trial court was right to enter a preliminary injunction.
DISPOSITION
The order granting the preliminary injunction is affirmed. The City is to recover its costs on appeal.
Kriegler, Acting P. J., and Kumar, J.,† concurred.
