Cannabis Conundrum

Now that recreational pot is legal, public law attorneys like Ruthann Ziegler are helping cities cut through the haze

Published in 2018 Northern California Super Lawyers Magazine

In November 2016, California voters passed Prop 64, legalizing recreational marijuana.

That was the easy part. 

The state left it up to each municipality whether to ban or regulate—and how to regulate—the cultivation, manufacturing, testing, distribution and sale of cannabis. That has created a patchwork of rules and regulations. It’s up to attorneys like Ruthann G. Ziegler, who leads Meyers Nave’s cannabis law practice, to figure out the rest. 

Ziegler serves as city attorney for Pittsburg and Citrus Heights, and general counsel for public entities including Florin Resource Conservation District/Elk Grove Water District and Truckee Sanitary District, providing advice on issues ranging from daily operations to long-term policy. 

“When you represent cities, you have to be knowledgeable about the nuanced areas that affect them,” she says.

A co-founding principal of Meyers Nave’s Sacramento office, Ziegler has more than 35 years of experience in public law. In 1996, she helped clients navigate the Compassionate Use Act, which established the state’s medical marijuana program. In 2003 she counseled clients on Senate Bill 420, the Medical Marijuana Program Act, which established guidelines for the medical program. She can’t think of another industry that has moved so quickly from square one to being practically everywhere—or for which most case law is criminal.

“I think the Legislature has moved comparatively rapidly,” Ziegler says. “But I still don’t know that the Legislature or state agencies and their regulations have kept up with the industry.”

For a sample of the issues Ziegler must evaluate, consider Ross v. RagingWire. In 2008, the California Supreme Court held that an employer may lawfully terminate an employee or refuse to hire an applicant who tests positive for marijuana—even if the use is for lawful medical purposes. The Ninth Circuit agreed. 

“With Prop 64, our clients have more inquiries about this issue,” says Ziegler.  

That’s just the beginning. May a ban on public smoking be rewritten to include cannabis? Can she help draft an ordinance that delineates the types of signs allowed for advertising cannabis? How should they think about indoor versus outdoor cultivation? If cultivation and distribution are allowed, what kind of revenue might be expected? 

She helps each city tailor policies and laws to its residents’ wishes. Some are fine with cultivation but not distribution; some the other way around. And always hanging overhead is the threat of federal prosecution. In January 2018, Attorney General Jeff Sessions rescinded the Obama administration’s policy of noninterference with marijuana-friendly state laws. 

“The degree of uncertainty has definitely been amplified by the Sessions memo,” says Ziegler. 

Whether, and how, federal prosecutors decide to crack down on marijuana is a wild card. And the uncertainty extends to banks. Most commercial banks answer to federal regulators, and since cannabis is illegal under federal law, banks often shun cannabis businesses. Consequently, it is generally a cash-only industry—a challenge for cities interested in the revenue. A cash-only business makes it difficult for governments to monitor the industry and complicates tax collection. Cities are putting cannabis-related tax money in commercial banks that will accept it, but uncertainties remain. 

Then there are practical matters. “What do you do about the person smoking in their backyard and the smoke wafts over to the neighbor’s yard, and they have a 3-year-old?” Ziegler asks.

To stay up to date on the industry, she has served on the League of California Cities’ Cannabis Regulatory Committee since it was formed in 2011. 

What does the future hold? Litigation is a sure bet for an industry predicted to be worth $5.1 billion in California in 2019. With all the inconsistencies statewide, and the conflict between state and federal law, Ziegler is hoping for more clarity. 

“I think the ideal thing,” she says, “is to have not just state legislation but federal legislation, and I think that’s very tough with this Congress.”

 


 

By-the-Number Estimates

Job-creation forecast    81,000 to 103,000 jobs

Annual labor income from new jobs    $3.57 to $4.52 billion 

Annual sales revenue    $15.9 to $20.2 billion 

Total annual value to California’s economy    $5.51 to $7.01 billion

Source: ICF International

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