California's cannabis laws broadly protects local governments' authority to regulate or prohibit the "establishment or operation" of state-licensed cannabis businesses within their jurisdiction. This was a key feature of both Proposition 64, which legalized adult use cannabis activities, and the prior medical cannabis licensing laws enacted by the Legislature. In late 2018, the Bureau of Cannabis Control (BCC) adopted "Regulation 5416(d)" stating that “[a] delivery employee may deliver [cannabis] to any jurisdiction within the State of California.” The intent and effect of this regulation was not immediately clear, but BCC initially took the position that it granted state-licensed cannabis retailers the "right" to deliver cannabis into any jurisdiction, and preempted any local ordinance restricting or prohibiting such deliveries.
A coalition of local governments promptly sued BCC, arguing that Regulation 5416(d) contradicts cannabis laws that expressly provide local control over the "operation" of cannabis businesses. (County of Santa Cruz v. Bureau of Cannabis Control, Fresno County Superior Court Case No. 19CECG01224.) In response to the lawsuit, the State of California changed its position, and conceded in court filings that the regulation merely sets forth what the BCC itself permits as far as delivery, and does not override more restrictive local ordinances. On November 17th, the Superior Court issued a ruling accepting BCC's new interpretation, and holding that Regulation 5416(d) "does not command local jurisdictions...to permit delivery. Nor does it override their local ordinances prohibiting or regulating delivery." The court acknowledged that BCC had shifted positions, and admonished that "the court wishes to make clear that it is persuaded by, agrees with and adopts the BCC’s argument that Regulation 5416(d) is not inconsistent with and does not preempt plaintiffs’ local ordinances." The litigation was therefore dismissed, as there is no longer a live dispute.
This ruling represents a victory for local governments as the court specifically affirmed that state regulations do not preempt cannabis delivery ordinances "whether the ordinance bans all commercial deliveries, bans cannabis deliveries by non-local businesses, requires local licenses for delivery, or regulates local delivery in some other way."