No Steps Forward, No Steps Back? Council's Rejection of Cannabis Ordinance Changes Perpetuates Current Legal Quagmire

The “no” vote on cannabis ordinance amendments could lead to even more lawsuits

Published : Wednesday, November 27, 2019 | 6:39 AM

[Updated]  The City Council’s rejection of proposed cannabis ordinance changes Monday puts the focus back on the current unfolding legal actions and city processes that will ultimately decide which commercial marijuana retailers will open their doors in Pasadena.

Millions — potentially hundreds of millions of dollars of revenue in coming years — are at stake.

The unanimous vote came over Planning Department concerns that the City might be unable to accommodate all six cannabis shop finalists selected by the City’s rigorous vetting process.

The changes would have increased the maximum number of shops to three per Council District, but only one per Business Improvement District, and would have changed distance separation requirements for cannabis shops operating in the same area.

Mayor Terry Tornek said he viewed the rejection as simply a part of the City’s licensing process.

“I think,” said Tornek Tuesday after the Council discussion, “that the [Planning Department] staff reached the conclusion that because of the various restrictions that we applied to the ordinance, that we would not get to six dispensaries. So they were making a suggestion on how we could resolve that, and allow six, or up to six, to open.

“It’s as simple as that,” said Tornek. “And the Council was not amenable to those suggestions.”

Tornek acknowledged that the licensing process could be open to more lawsuits from all of the finalists, as they wrangle tenaciously for position.

“It’s a problem with the fact that we have a litigious society,” he explained, “and the competitors are trying to knock out the opposition using litigation and the appeal process as vehicles to further their own needs.”

Tornek said it’s “not surprising” that the situation has become such a pitched fight, because the limited number of possible locations are “likely to be very lucrative.”

“The stakes are high,” he said, “and they’re willing to do whatever it takes to try to be successful.”

But Councilmember Andy Wilson, for his part, not only sees six as a reasonable number, but a doable number. The City simply needs to continue the permitting process.

As he told Pasadena Now Tuesday, “I think six is a reasonable number. We’ve had a lot more than six illegal operators doing business in this city. But I think fundamentally, the point is before we even know about how these are going to operate, let’s get the four up and going, before we start tinkering around with setbacks and putting more across the street.”

Continued Wilson, “These are things that are worth considering. But in the abstract of not having any of them operating, it was hard to have a strong point of view around what type of assessments were appropriate.”

Attorney Richard McDonald, who represents applicant Integral LLC, sees the current scene as a very small fight between just two applicants.

“I think the ordinance language is straightforward and clear,” said McDonald Tuesday. “I think [City] staff tried to articulate that when Councilman Gordo and Vice Mayor Hampton misread it, and I think staff did a good job explaining the clarity of it.”

But, says McDonald, there is something else happening.

“There is an applied issue,” said McDonald. “You can read it and it can look good and it can make perfect sense, but as you then try to apply it, a bit of confusion can come up. And that’s where I think some of the applicants, notably two, Atrium and Sweet Flower are complaining. And so it’s not all the applicants complaining amongst themselves, it’s just two applicants complaining.”

McDonald, whose own client, Integral, will go before City Council on December 16 for a Conditional Use Permit appeal, is sanguine about Integral’s chances in becoming a licensed cannabis retailer in Pasadena. Integral is appealing their disqualification. The new ordinance would have allowed their permit.

But, says McDonald, of the appeal process, “That’s all you can do. You can’t worry about it, you just have to march forward.”

Atrium CEO Chris Berman, whose company also lost out in getting a desired retail location, said Monday, “I think that City Council is letting perfect be the enemy of good and I think that there’s going to be some unintended consequences. They didn’t make a decision. They decided to sort of kick the can down the road and wait and see.”

Arium was denied a permit since their desired location in District 3 was already “claimed” by applicant Harvest LLC.

Tim Dodd, founder and CEO of applicant Sweet Flower, said he is not surprised that most hopefuls set their sights on that particular district.

“Council district 3,” explained Berman, “has the most commercial retail real estate. And those districts that have zoning for retail commercial districts are primarily in council district three. So it’s no surprise that most of the operators or, or a preponderance of them found themselves having to set themselves up in council district three. So I was hopeful that we would have a resolution that acknowledged and reflected that, acknowledging that that’s actually the case. “

City Council will decide at least the fate of Atrium and Sweet Flower come December 16, although regardless of that outcome and others, the City’s cannabis permitting dilemma will likely see a host of lawsuits before the matter is completely decided.

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