Whether Statewide Initiative Establishing System For Licensing Marijuana Producers, Processors, And Retailers Preempts Local Ordinances

STATUTES—INITIATIVE AND REFERENDUM—ORDINANCES—COUNTIES—CITIES AND TOWNS—PREEMPTION—POLICE POWERS—Whether Statewide Initiative Establishing System For Licensing Marijuana Producers, Processors, And Retailers Preempts Local Ordinances

1. Initiative 502, which establishes a licensing and regulatory system for marijuana producers, processors, and retailers, does not preempt counties, cities, and towns from banning such businesses within their jurisdictions.
    
2. Local ordinances that do not expressly ban state-licensed marijuana licensees from operating within the jurisdiction but make such operation impractical are valid if they properly exercise the local jurisdiction’s police power.
   

January 16, 2014

Dear Chair Foster:

By letter previously acknowledged, you have requested our opinion on the following paraphrased questions:

1. Are local governments preempted by state law from banning the location of a Washington State Liquor Control Board licensed marijuana producer, processor, or retailer within their jurisdiction? 
     
2. May a local government establish land use regulations (in excess of the Initiative 502 buffer and other Liquor Control Board requirements) or business license requirements in a fashion that makes it impractical for a licensed marijuana business to locate within their jurisdiction?

BRIEF ANSWERS

1. No.  Under Washington law, there is a strong presumption against finding that state law preempts local ordinances.  Although Initiative 502 (I-502) establishes a licensing and regulatory system for marijuana producers, processors, and retailers in Washington State, it includes no clear indication that it was intended to preempt local authority to regulate such
    
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   businesses.  We therefore conclude that I-502 left in place the normal powers of local governments to regulate within their jurisdictions.

2. Yes.  Local governments have broad authority to regulate within their jurisdictions, and nothing in I-502 limits that authority with respect to licensed marijuana businesses. 

 
 BACKGROUND  

    I-502 was approved by Washington voters on November 6, 2012, became effective 30 days thereafter, and is codified in RCW 69.50.  It decriminalized under state law the possession of limited amounts of useable marijuana[1] and marijuana-infused products by persons twenty-one years or older.  It also decriminalized under state law the production, delivery, distribution, and sale of marijuana, so long as such activities are conducted in accordance with the initiative’s provisions and implementing regulations.  It amended the implied consent laws to specify that anyone operating a motor vehicle is deemed to have consented to testing for the active chemical in marijuana, and amended the driving under the influence laws to make it a criminal offense to operate a motor vehicle under the influence of certain levels of marijuana.

    I-502 also established a detailed licensing program for three categories of marijuana businesses:  production, processing, and retail sales.  The marijuana producer’s license governs the production of marijuana for sale at wholesale to marijuana processors and other marijuana producers.  RCW 69.50.325(1).  The marijuana processor’s license governs the processing, packaging, and labeling of useable marijuana and marijuana-infused products for sale at wholesale to marijuana retailers.  RCW 69.50.325(2).  The marijuana retailer’s license governs  the sale of useable marijuana and marijuana-infused products in retail stores.  RCW 69.50.325(3).

    Applicants for producer, processor, and retail sales licenses must identify the location of the proposed business.  RCW 69.50.325(1), (2), (3).  This helps ensure compliance with the requirement that “no license may be issued authorizing a marijuana business within one thousand feet of the perimeter of the grounds of any elementary or secondary school, playground, recreation center or facility, child care center, public park, public transit center, or library, or any game arcade admission to which is not restricted to persons aged twenty-one years or older.”  RCW 69.50.331(8).

    Upon receipt of an application for a producer, processor, or retail sales license, the Liquor Control Board must give notice of the application to the appropriate local jurisdiction.  RCW 69.50.331(7)(a) (requiring notice to the chief executive officer of the incorporated city or town if the application is for a license within an incorporated city or town, or the county legislative authority if the application is for a license outside the boundaries of incorporated

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cities or towns).  The local jurisdiction may file written objections with respect to the applicant or the premises for which the new or renewed license is sought.  RCW 69.50.331(7)(b).

    The local jurisdictions’ written objections must include a statement of all facts upon which the objections are based, and may include a request for a hearing, which the Liquor Control Board may grant at its discretion.  RCW 69.50.331(7)(c).  The Board must give “substantial weight” to a local jurisdiction’s objections based upon chronic illegal activity associated with the applicant’s operation of the premises proposed to be licensed, the applicant’s operation of any other licensed premises, or the conduct of the applicant’s patrons inside or outside the licensed premises.  RCW 69.50.331(9).  Chronic illegal activity is defined as a pervasive pattern of activity that threatens the public health, safety, and welfare, or an unreasonably high number of citations for driving under the influence associated with the applicant’s or licensee’s operation of any licensed premises.  RCW 69.50.331(9).[2]

    In addition to the licensing provisions in statute, I-502 directed the Board to adopt rules establishing the procedures and criteria necessary to supplement the licensing and regulatory system.  This includes determining the maximum number of retail outlets that may be licensed in each county, taking into consideration population distribution, security and safety issues, and the provision of adequate access to licensed sources of useable marijuana and marijuana-infused products to discourage purchases from the illegal market.  RCW 69.50.345(2).  The Board has done so, capping the number of retail licenses in the least populated counties of Columbia County, Ferry County, and Wahkiakum County at one and the number in the most populated county of King County at 61, with a broad range in between.  See WAC 314-55-081.

    The Board also adopted rules establishing various requirements mandated or authorized by I-502 for locating and operating marijuana businesses on licensed premises, including minimum residency requirements, age restrictions, and background checks for licensees and employees; signage and advertising limitations; requirements for insurance, recordkeeping, reporting, and taxes; and detailed operating plans for security, traceability, employee qualifications and training, and destruction of waste.  See generally WAC 314-55.

    Additional requirements apply for each license category.  Producers must describe plans for transporting products, growing operations, and testing procedures and protocols.  WAC 314‑55-020(9).  Processors must describe plans for transporting products, processing operations, testing procedures and protocols, and packaging and labeling.  WAC 314-55-020(9).  Finally, retailers must also describe which products will be sold and how they will be displayed, and may only operate between 8 a.m. and 12 midnight.  WAC 314-55-020(9), -147.

    The rules also make clear that receipt of a license from the Liquor Control Board does not entitle the licensee to locate or operate a marijuana processing, producing, or retail business in violation of local rules or without any necessary approval from local jurisdictions.  WAC 314-

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‑55-020(11) provides as follows:  “The issuance or approval of a license shall not be construed as a license for, or an approval of, any violations of local rules or ordinances including, but not limited to:  Building and fire codes, zoning ordinances, and business licensing requirements.
 

ANALYSIS

    Your question acknowledges that local governments have jurisdiction over land use issues like zoning and may exercise the option to issue business licenses.  This authority comes from article XI, section 11 of the Washington Constitution, which provides that “[a]ny county, city, town or township may make and enforce within its limits all such local police, sanitary and other regulations as are not in conflict with general laws.”  The limitation on this broad local authority requiring that such regulations not be “in conflict with general laws” means that state law can preempt local regulations and render them unconstitutional either by occupying the field of regulation, leaving no room for concurrent local jurisdiction, or by creating a conflict such that state and local laws cannot be harmonized.  Lawson v. City of Pasco, 168 Wn.2d 675, 679, 230 P.3d 1038 (2010).

    Local ordinances are entitled to a presumption of constitutionality.  State v. Kirwin, 165 Wn.2d 818, 825, 203 P.3d 1044 (2009).  Challengers to a local ordinance bear a heavy burden of proving it unconstitutional.  Id.   “Every presumption will be in favor of constitutionality.”  HJS Dev., Inc. v. Pierce County ex rel. Dep’t of Planning & Land Servs., 148 Wn.2d 451, 477, 61 P.3d 1141 (2003) (internal quotation marks omitted).

A. Field Preemption

    Field preemption arises when a state regulatory system occupies the entire field of regulation on a particular issue, leaving no room for local regulation.  Lawson, 168 Wn.2d at 679.  Field preemption may be expressly stated or may be implicit in the purposes or facts and circumstances of the state regulatory system.  Id.

    I-502 does not express any indication that the state licensing and operating system preempts the field of marijuana regulation.  Although I-502 was structured as a series of amendments to the controlled substances act, which does contain a preemption section, that section makes clear that state law “fully occupies and preempts the entire field of setting penalties for violations of the controlled substances act.”  RCW 69.50.608 (emphasis added).[3]  It also allows  “[c]ities, towns, and counties or other municipalities [to] enact only those laws and
 

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ordinances relating to controlled substances that are consistent with this chapter.”  RCW 69.50.608.  Nothing in this language expresses an intent to preempt the entire field of regulating businesses licensed under I-502.

    With respect to implied field preemption, the “legislative intent” of an initiative is derived from the collective intent of the people and can be ascertained by material in the official voter’s pamphlet.  Dep’t of Revenue v. Hoppe, 82 Wn.2d 549, 552, 512 P.2d 1094 (1973); see also Roe v. TeleTech Customer Care Mgmt., LLC, 171 Wn.2d 736, 752-53, 257 P.3d 586 (2011).  Nothing in the official voter’s pamphlet evidences a collective intent for the state regulatory system to preempt the entire field of marijuana business licensing or operation.  Voters’ Pamphlet 23-30 (2012).  Moreover, both your letter and the Liquor Control Board’s rules recognize the authority of local jurisdictions to impose regulations on state licensees.  These facts, in addition to the absence of express intent suggesting otherwise, make clear that I-502 and its implementing regulations do not occupy the entire field of marijuana business regulation.

B. Conflict Preemption

    Conflict preemption arises “when an ordinance permits what state law forbids or forbids what state law permits.”  Lawson, 168 Wn.2d at 682.  An ordinance is constitutionally invalid if it directly and irreconcilably conflicts with the statute such that the two cannot be harmonized.  Id.; Weden v. San Juan County, 135 Wn.2d 678, 693, 958 P.2d 273 (1998).  Because “[e]very presumption will be in favor of constitutionality,” courts make every effort to reconcile state and local law if possible.  HJS Dev., 148 Wn.2d at 477 (internal quotation marks omitted).  We adopt this same deference to local jurisdictions.

    An ordinance banning a particular activity directly and irreconcilably conflicts with state law when state law specifically entitles one to engage in that same activity in circumstances outlawed by the local ordinance.  For example, in Entertainment Industry Coalition v. Tacoma-Pierce County Health Department, 153 Wn.2d 657, 661-63, 105 P.3d 985 (2005), the state law in effect at the time banned smoking in public places except in designated smoking areas, and specifically authorized owners of certain businesses to designate smoking areas.  The state law provided, in relevant part:  “A smoking area may be designated in a public place by the owner . . . .”  Former RCW 70.160.040(1) (2004), repealed by Laws of 2006, ch. 2, § 7(2) (Initiative Measure 901).  The Tacoma-Pierce County Health Department ordinance at issue banned smoking in all public places.  The Washington Supreme Court struck down the ordinance as directly and irreconcilably conflicting with state law because it prohibited what the state law authorized:  the business owner’s choice whether to authorize a smoking area.

    Similarly, in Parkland Light & Water Co. v. Tacoma-Pierce County Board of Health, 151 Wn.2d 428, 90 P.3d 37 (2004), the Washington Supreme Court invalidated a Tacoma-Pierce County Health Department ordinance requiring fluoridated water.  The state law at issue authorized the water districts to decide whether to fluoridate, saying:  “A water district by a
 

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majority vote of its board of commissioners may fluoridate the water supply system of the water district.”  RCW 57.08.012.  The Court interpreted this provision as giving water districts the ability to regulate the content and supply of their water systems.  Parkland Light & Water Co., 151 Wn.2d at 433.  The local health department’s attempt to require fluoridation conflicted with the state law expressly giving that choice to the water districts.  As they could not be reconciled, the Court struck down the ordinance as unconstitutional under conflict preemption analysis.

    By contrast, Washington courts have consistently upheld local ordinances banning an activity when state law regulates the activity but does not grant an unfettered right or entitlement to engage in that activity.  In Weden v. San Juan County, the Court upheld the constitutionality of the County’s prohibition on motorized personal watercraft in all marine waters and one lake in San Juan County.  The state laws at issue created registration and safety requirements for vessels and prohibited operation of unregistered vessels.  The Court rejected the argument that state regulation of vessels constituted permission to operate vessels anywhere in the state, saying, “[n]owhere in the language of the statute can it be suggested that the statute creates an unabridged right to operate [personal watercraft] in all waters throughout the state.”  Weden, 135 Wn.2d at 695.  The Court further explained that “[r]egistration of a vessel is nothing more than a precondition to operating a boat.”  Id.  “No unconditional right is granted by obtaining such registration.”  Id.  Recognizing that statutes often impose preconditions without granting unrestricted permission to participate in an activity, the Court also noted the following examples:  “[p]urchasing a hunting license is a precondition to hunting, but the license certainly does not allow hunting of endangered species or hunting inside the Seattle city limits,” and “[r]eaching the age of 16 is a precondition to driving a car, but reaching 16 does not create an unrestricted right to drive a car however and wherever one desires.”  Id. at 695 (internal citation omitted).

    Relevant here, the dissent in Weden argued:  “Where a state statute licenses a particular activity, counties may enact reasonable regulations of the licensed activity within their borders but they may not prohibit same outright[,]” and that an ordinance banning the activity “renders the state permit a license to do nothing at all.”  Weden, 135 Wn.2d at 720, 722 (Sanders, J., dissenting).  The majority rejected this approach, characterizing the state law as creating not an unabridged right to operate personal watercraft in the state, but rather a registration requirement that amounted only to a precondition to operating a boat in the state.

    In State ex rel. Schillberg v. Everett District Justice Court, 92 Wn.2d 106, 594 P.2d 448 (1979), the Washington Supreme Court similarly upheld a local ban on internal combustion motors on certain lakes.  The Court explained:  “A statute will not be construed as taking away the power of a municipality to legislate unless this intent is clearly and expressly stated.”  Id. at 108.  The Court found no conflict because nothing in the state laws requiring safe operation of vessels either expressly or impliedly provided that vessels would be allowed on all waters of the state.
 

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    The Washington Supreme Court also rejected a conflict preemption challenge to the City of Pasco’s ordinance prohibiting placement of recreational vehicles within mobile home parks.  Lawson, 168 Wn.2d at 683-84.  Although state law regulated rights and duties arising from mobile home tenancies and recognized that such tenancies may include recreational vehicles, the Court reasoned “[t]he statute does not forbid recreational vehicles from being placed in the lots, nor does it create a right enabling their placement.”  Id. at 683.  The state law simply regulated recreational vehicle tenancies, where such tenancies exist, but did not prevent municipalities from deciding whether or not to allow them.  Id. at 684.

    Accordingly, the question whether “an ordinance . . . forbids what state law permits” is more complex than it initially appears.  Lawson, 168 Wn.2d at 682.  The question is not whether state law permits an activity in some places or in some general sense; even “[t]he fact that an activity may be licensed under state law does not lead to the conclusion that it must be permitted under local law.”  Rabon v. City of Seattle, 135 Wn.2d 278, 292, 957 P.2d 621 (1998) (finding no preemption where state law authorized licensing of “dangerous dogs” while city ordinance forbade ownership of “vicious animals”).  Rather, a challenger must meet the heavy burden of proving that state law creates an entitlement to engage in an activity in circumstances outlawed by the local ordinance.  For example, the state laws authorizing business owners to designate smoking areas and water districts to decide whether to fluoridate their water systems amounted to statewide entitlements that local jurisdictions could not take away.  But the state laws requiring that vessels be registered and operated safely and regulating recreational vehicles in mobile home tenancies simply contemplated that those activities would occur in some places and established preconditions; they did not, however, override the local jurisdictions’ decisions to prohibit such activities.

    Here, I-502 authorizes the Liquor Control Board to issue licenses for marijuana producers, processors, and retailers.  Whether these licenses amount to an entitlement to engage in such businesses regardless of local law or constitute regulatory preconditions to engaging in such businesses is the key question, and requires a close examination of the statutory language.

    RCW 69.50.325 provides, in relevant part:

(1)  There shall be a marijuana producer’s license to produce marijuana for sale at wholesale to marijuana processors and other marijuana producers, regulated by the state liquor control board and subject to annual renewal. . . .

(2)  There shall be a marijuana processor’s license to process, package, and label useable marijuana and marijuana-infused products for sale at wholesale to marijuana retailers, regulated by the state liquor control board and subject to annual renewal. . . .

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(3)  There shall be a marijuana retailer’s license to sell useable marijuana and marijuana-infused products at retail in retail outlets, regulated by the state liquor control board and subject to annual renewal. . . .

RCW 69.50.325(1)-(3).  Each of these subsections also includes language providing that activities related to such licenses are not criminal or civil offenses under Washington state law, provided they comply with I-502 and the Board’s rules, and that the licenses shall be issued in the name of the applicant and shall specify the location at which the applicant intends to operate.  They also establish fees for issuance and renewal and clarify that a separate license is required for each location at which the applicant intends to operate.  RCW 69.50.325.

    While these provisions clearly authorize the Board to issue licenses for marijuana producers, processors, and retail sales, they lack the definitive sort of language that would be necessary to meet the heavy burden of showing state preemption.  They simply state that there “shall be a . . . license” and that engaging in such activities with a license “shall not be a criminal or civil offense under Washington state law.”  RCW 69.50.325(1).  Decriminalizing such activities under state law and imposing restrictions on licensees does not amount to entitling one to engage in such businesses regardless of local law.  Given that “every presumption” is in favor of upholding local ordinances (HJS Dev., Inc., 148 Wn.2d at 477), we find no irreconcilable conflict between I-502’s licensing system and the ability of local governments to prohibit licensees from operating in their jurisdictions.

    We have considered and rejected a number of counterarguments in reaching this conclusion.  First, one could argue that the statute, in allowing Board approval of licenses at specific locations (RCW 69.50.325(1), (2), (3)), assumes that the Board can approve a license at any location in any jurisdiction.  This argument proves far too much, however, for it suggests that a license from the Board could override any local zoning ordinance, even one unrelated to I‑502.  For example, I-502 plainly would not authorize a licensed marijuana retailer to locate in an area where a local jurisdiction’s zoning allows no retail stores of any kind.  The Board’s own rules confirm this:  “The issuance or approval of a license shall not be construed as a license for, or an approval of, any violations of local rules or ordinances including, but not limited to:  Building and fire codes, zoning ordinances, and business licensing requirements.”  WAC 314-55-020(11).

    Second, one could argue that a local jurisdiction’s prohibition on marijuana licensees conflicts with the provision in I-502 authorizing the Board to establish a maximum number of licensed retail outlets in each county.  RCW 69.50.345(2); see also RCW 69.50.354.  But there is no irreconcilable conflict here, because the Board is allowed to set only a maximum, and nothing in I-502 mandates a minimum number of licensees in any jurisdiction.  The drafters of I-502 certainly could have provided for a minimum number of licensees per jurisdiction, which would have been a stronger indicator of preemptive intent, but they did not.
 

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    Third, one could argue that because local jurisdictions are allowed to object to specific license applications and the Board is allowed to override those objections and grant the license anyway (RCW 69.50.331(7), (9)), local jurisdictions cannot have the power to ban licensees altogether.  But such a ban can be harmonized with the objection process; while some jurisdictions might want to ban I-502 licensees altogether, others might want to allow them but still object to specific applicants or locations.  Indeed, this is the system established under the state liquor statutes, which I-502 copied in many ways.  Compare RCW 69.50.331 with RCW 66.24.010 (governing the issuance of marijuana licenses and liquor licenses, respectively, in parallel terms and including provisions for local government input regarding licensure).  The state laws governing liquor allow local governments to object to specific applications (RCW 66.24.010), while also expressly authorizing local areas to prohibit the sale of liquor altogether.  See generally RCW 66.40.  That the liquor opt out statute coexists with the liquor licensing notice and comment process undermines any argument that a local marijuana ban irreconcilably conflicts with the marijuana licensing notice and comment opportunity.

    Fourth, RCW 66.40 expressly allows local governments to ban the sale of liquor.  Some may argue that by omitting such a provision, I-502’s drafters implied an intent to bar local governments from banning the sale of marijuana.  Intent to preempt, however, must be “clearly and expressly stated.”  State ex rel. Schillberg, 92 Wn.2d at 108.  Moreover, it is important to remember that cities, towns, and counties derive their police power from article XI, section 11 of the Washington Constitution, not from statute.  Thus, the relevant question is not whether the initiative provided local jurisdictions with such authority, but whether it removed local jurisdictions’ preexisting authority.

    Finally, in reaching this conclusion, we are mindful that if a large number of jurisdictions were to ban licensees, it could interfere with the measure’s intent to supplant the illegal marijuana market.  But this potential consequence is insufficient to overcome the lack of clear preemptive language or intent in the initiative itself.  The drafters of the initiative certainly could have used clear language preempting local bans.  They did not.  The legislature, or the people by initiative, can address this potential issue if it actually comes to pass.

    With respect to your second question, about whether local jurisdictions can impose regulations making it “impractical” for I-502 licensees to locate and operate within their boundaries, the answer depends on whether such regulations constitute a valid exercise of the police power or otherwise conflict with state law.  As a general matter, as discussed above, the Washington Constitution provides broad authority for local jurisdictions to regulate within their boundaries and impose land use and business licensing requirements.  Ordinances must be a reasonable exercise of a jurisdiction’s police power in order to pass muster under article XI, section 11 of the state constitution.  Weden, 135 Wn.2d at 700.  A law is a reasonable regulation if it promotes public safety, health, or welfare and bears a reasonable and substantial relation to accomplishing the purpose pursued.  Id. (applying this test to the personal watercraft ordinance); see also Duckworth v. City of Bonney Lake, 91 Wn.2d 19, 26, 586 P.2d 860 (1978) (applying this
 

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test to a zoning ordinance).  Assuming local ordinances satisfy this test, and that no other constitutional or statutory basis for a challenge is presented on particular facts, we see no impediment to jurisdictions imposing additional regulatory requirements, although whether a particular ordinance satisfies this standard would of course depend on the specific facts in each case.

    We trust that the foregoing will be useful to you.

ROBERT W. FERGUSON
    Attorney General     

JESSICA FOGEL
    Assistant Attorney General 

wros
  

[1] Useable marijuana means “dried marijuana flowers” and does not include marijuana-infused products.  RCW 69.50.101(ll).

[2] The provision for objections based upon chronic illegal activity is identical to one of the provisions for local jurisdictions to object to the granting or renewal of liquor licenses.  RCW 66.24.010(12).

[3] RCW 69.50.608 provides:  “The state of Washington fully occupies and preempts the entire field of setting penalties for violations of the controlled substances act.  Cities, towns, and counties or other municipalities may enact only those laws and ordinances relating to controlled substances that are consistent with this chapter.  Such local ordinances shall have the same penalties as provided for by state law.  Local laws and ordinances that are inconsistent with the requirements of state law shall not be enacted and are preempted and repealed, regardless of the nature of the code, charter, or home rule status of the city, town, county, or municipality.”  The Washington Supreme Court has interpreted this provision as giving local jurisdictions concurrent authority to criminalize drug-related activity.  City of Tacoma v. Luvene, 118 Wn.2d 826, 835, 827 P.2d 1374 (1992).