July 29, 2011

(Marijuana Collective)

(Property Owner)

(Collective Owner/Manager)

(Property Manager)

This is a Cease and Desist letter that explains the legal status of medical marijuana dispensaries in the City of Santa Fe Springs, orders abatement of the dispensaries in a reasonable time, and explains what will happen if the dispensaries do not in the required time either cease operation or relocate to another jurisdiction where they are allowed. This Cease and Desist letter includes an analysis of: • Medical marijuana from the standpoint of the United States government, particularly the Drug Enforcement Administration and the Department of Justice, • Medical marijuana in the State of California, • Medical marijuana in the California local government zoning context, and • Medical marijuana under the City of Santa Fe Springs zoning law. It includes an order to stop all medical marijuana dispensary activities by September 26, 2011 and notice that enforcement activities, if required, will be directed at both the property owners who are violating the law and the dispensary operators and management. This is serious; it is not an exercise. The City of Santa Fe Springs has specific anti-drug provisions in its municipal code. Under the California Government Code, land use activities cannot take place within a city unless that city authorizes that use. And any use

of land or structures within a land use zone must be in accord with its State-mandated General Plan. Santa Fe Springs has a General Plan that is fully compliant with State law. Santa Fe Springs has never authorized medical marijuana uses in any zone within its boundaries. Neither California’s Compassionate Use Act of 1996 nor the Medical Marijuana Program Act, Cal. Health & Safety Code §11362.7 and following, overruled local land use zoning authority. If you are a medical marijuana landlord with a lease that requires your tenants to comply with the law, this Cease and Desist letter clarifies that your medical marijuana tenant is violating the law.

MEDICAL MARIJUANA IS A PROHIBITED DRUG UNDER FEDERAL LAW Under 21 United States Code §812, marijuana is a Schedule I controlled substance, the possession and use of which is illegal. Schedule I substances have been determined by the United States Congress to have a high potential for abuse, to have no currently accepted medical use in treatment in the United States, and to lack accepted safety for use of the drug under medical supervision. On June 21, 2011, Drug Enforcement Administration Administrator Michele Leonhart, in a letter to a Mr. Kennedy of the Coalition For Rescheduling Cannabis, denied a petition to remove marijuana from Schedule I and place it on a different schedule. DEA Administrator Leonhart’s letter of denial stated, in part: In accordance with the Controlled Substances Act rescheduling provisions, after gathering the necessary data, DEA requested a scientific and medical evaluation and scheduling recommendation from the Department of Health and Human Services (DHHS). DHHS concluded that marijuana has a high potential for abuse, has no accepted medical use in the United States, and lacks an acceptable level of safety for use even under medical supervision. Therefore, DHHS recommended that marijuana remain in schedule I. In short, marijuana continues to meet the criteria for schedule I control under the CSA because: 1) Marijuana has a high potential for abuse. The DHHS evaluation and the additional data gathered by DEA show that marijuana has a high potential for abuse.

2) Marijuana has no currently accepted medical use in treatment in the United States. According to established case law, marijuana has no “currently accepted medical use” because: the drug’s chemistry is not known and reproducible; there are no adequate safety studies; there are no adequate and well-controlled studies proving efficacy; the drug is not accepted by qualified experts; and the scientific evidence is not widely available. 3) Marijuana lacks accepted safety for use under medical supervision. At present, there are no U.S. Food and Drug Administration (FDA)-approved marijuana products, nor is marijuana under a New Drug Application (NDA) evaluation at the FDA for any indication. Marijuana does not have a currently accepted medical use in treatment in the United States or a currently accepted medical use with severe restrictions. At this time, the known risks of marijuana use have not been shown to be outweighed by specific benefits in well-controlled clinical trials that scientifically evaluate safety and efficacy. You also argued that cannabis has a dependence liability that is lower than schedule I or II drugs. Findings as to the physical or psychological dependence of a drug are only one of eight factors to be considered. As discussed further in the attached documents, DHHS states that long-term, regular use of marijuana can lead to physical dependence and withdrawal following discontinuation as well as psychic addiction or dependence…. Your petition is, therefore, hereby denied. The detailed attachments to Administrator Leonhart’s letter may be viewed at http://tinyurl.com/63hljw7. Regarding federal enforcement of the Controlled Substances Act, in a June 29, 2011 memorandum to United States Attorneys, Deputy Attorney General James Cole stated: “Persons who are in the business of cultivating, selling, or distributing marijuana, and those who knowingly facilitate such activities, are in violation of the Controlled Substances Act, regardless of state law. Consistent with the resource constraints and the discretion you may exercise in your district, such

persons are subject to federal enforcement action, including potential prosecution. State laws or local ordinances are not a defense to civil enforcement of federal law with respect to such conduct, including enforcement of the CSA. Those who engage in transactions involving the proceeds of such activity may also be in violation of federal money laundering statutes and other federal financing laws.” As stated in Deputy Attorney General Cole’s memorandum, allowing medical marijuana in a state does not change its status under federal law and does not abate federal enforcement against it. And the phrase “those who knowingly facilitate such activities” may apply to property owners who lease land and buildings to those who dispense medical marijuana. CALIFORNIA LAWS ALLOWING MEDICAL MARIJUANA USE AND DISTRIBUTION HAVE NOT OVERTHROWN LAND USE LAW The Compassionate Use Act of 1996, codified at Cal. Health and Safety Code §11362.5, is short. It decriminalizes possession, use, and cultivation for personal use of marijuana by people for whom it has been recommended by a physician. It decriminalizes recommending marijuana by a physician. It does not mention local control of land use. The Medical Marijuana Program Act, Cal. Health & Safety Code §11362.7-11362.83, was adopted by the California Legislature and signed into law as a comprehensive approach to dealing with medical marijuana as authorized by the Compassionate Use Act of 1996. Among other things, it prohibits any medical marijuana cooperative, collective, dispensary, operator, establishment, or provider who possesses, cultivates, or distributes medical marijuana from being located within a 600-foot radius of a school. It also states, at Cal. Health & Safety Code §11362.768: (f) Nothing in this section shall prohibit a city, county, or city and county from adopting ordinances or policies that further restrict the location or establishment of a medical marijuana cooperative, collective, dispensary, operator, establishment or provider. (g) Nothing in this section shall preempt local ordinances, adopted prior to January 1, 2011, that regulate the location or establishment of a medical marijuana cooperative, collective, dispensary, operator, establishment, or

provider. Neither the Compassionate Use Act of 1996 nor the Medical Marijuana Program Act diminish local governments’ ability to regulate the use of land. When cities regulate the use of land it means they adopt laws that allow only certain uses of land within their boundaries and that allocate those uses to various land use zones, such as residential, commercial, industrial, and agricultural. The California Constitution, Article 11, §7 states, “A county or city may make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws.” California Government Code §37100, a “general law,” states, “The Legislative Body may pass ordinances not in conflict with the Constitution and any laws of the State or the United States.” And Government Code §65850 states that a City may adopt ordinances that regulate the use of “buildings, structures, and land as between industry, business, residence, open space, including agriculture, recreation, enjoyment of scenic beauty, use of natural resources, and other purposes…..” While it is the public policy of the State to allow medical marijuana, there is an historic, stronger public policy regarding local land use planning and regulation. Determining that medical marijuana may be permitted in the State does not overthrow the extensive legislation at the State and local level that says cities, in accord with the California Planning Law, e.g., Cal. Gov’t Code §65850, may determine what lawful activities may be conducted on land within their boundaries. Santa Fe Springs does not allow medical marijuana, in part, because it would be a law in conflict with the laws of the United States, a violation of Cal. Gov’t Code §37100. The United States has made marijuana a Schedule I drug, sales of which incur significant criminal penalties.

CALIFORNIA COURTS HAVE UPHELD LOCAL CONTROL OF MEDICAL MARIJUANA LAND USES

The Medical Marijuana Program Act “does not confer on qualified patients and their caregivers the unfettered right to cultivate or dispense marijuana anywhere they choose.” (Hill v. County of Los Angeles (2011) 192 Cal.App.4th 861.) Cities and counties have broad powers to adopt and enforce ordinances and regulations pertaining to medical marijuana collectives and cooperatives. (Hill v. County of Los Angeles, supra.) In Hill, the court found an unlicensed dispensary to be a nuisance and county zoning, permitting, and licensing restrictions were upheld against a state law preemption challenge. Under City of Claremont v. Kruse (2009) 177 Cal.App.4th 1153, it was held that neither Proposition 215 nor the Medical Marijuana Program Act prohibit cities from using their zoning and licensing powers to regulate dispensaries. And in City of Corona v. Naulls (2008) 166 Cal.App.4th 418, the court held that failure to comply with the city’s procedural requirements before operating a medical marijuana dispensary created a nuisance per se pursuant to the municipal code and the court upheld issuance of a preliminary injunction. MEDICAL MARIJUANA DISPENSARIES ARE PROHIBITED IN SANTA FE SPRINGS In accord with State law, Santa Fe Springs Municipal Code §155.016 states: Except as provided in this chapter, no building or structure shall be constructed, erected, enlarged, altered, reconstructed, moved or relocated, nor shall any existing building, structure or land be used for any purpose except as specifically permitted in the zone in which such building, structure or land is located and in accordance with all provisions of this chapter [emphasis added]. Medical marijuana uses are not “specifically permitted” by the City’s zoning law. Medical marijuana uses are not allowed on any parcel of land in any zone within the City of Santa Fe Springs. Additionally, at Santa Fe Springs Municipal Code §131.02, keeping, storing, or transferring drugs to others from a location in the City is an abatable nuisance per se: The City Council as the legislative authority finds and declares that every and

any building or place used for the purpose of unlawfully selling, serving, storing, keeping, manufacturing, or giving away of any controlled substance, precursor, or analog specified in the California Health and Safety Code §§ 11000 et seq. [which includes Cannabis Sativa] and every and any building or place wherein or upon which those acts take place, is a nuisance which shall be enjoined, abated, and prevented, and for which damages may be recovered, whether it is a public or a private nuisance. Section 131.16 provides for criminal penalties in addition to civil penalties.

NOTICE AND ORDER TO CEASE ALL MEDICAL MARIJUANA-RELATED ACTIVITY, TO DESIST FROM VIOLATING THE SANTA FE SPRINGS MUNICIPAL CODE, AND TO ABATE ALL NUISANCE ACTIVITY ON PROPERTY WITHIN THE CITY OF SANTA FE SPRINGS If you are an owner of land on which a medical marijuana dispensary operates or an owner, operator, manager, employee, participant, volunteer, contractor, agent, or in any other capacity a facilitator of a medical marijuana dispensary, whether collective or cooperative, this letter is formal notice that providing medical marijuana from land in Santa Fe Springs is illegal and must stop. This notice and order does not apply to medical marijuana patients whose medical marijuana activity is limited solely to personal use of marijuana under the Medical Marijuana Program Act. But it does apply to a medical marijuana patient’s volunteering at, working at, patronizing, or in any other way assisting in the operation of, a medical marijuana dispensary in the City of Santa Fe Springs. You must stop all medical marijuana dispensary activities, including but not limited to cultivating, storing, transporting, giving away, and selling marijuana, in the City of Santa Fe Springs by September 26, 2011. You must completely remove all medical marijuana dispensary fixtures, such as marijuana display cabinets, and marijuana supplies from the City of Santa Fe Springs by September 26, 2011. You must completely remove all medical marijuana signs from the City of Santa Fe Springs by September 26, 2011.

FAILURE TO COMPLY An adequate and generous amount of time has been given for you to abate the medical marijuana nuisance. If you do not eliminate the violations of the law by September 26, 2011, the City of Santa Fe Springs will enforce the law by any means available to it, including criminal and civil penalties and fines, and it will seek maximum penalties. Any required enforcement activity will focus on both the providers of land and buildings for illegal medical marijuana dispensaries and the operators and management of illegal medical marijuana dispensaries. Because of Deputy Attorney General Cole’s statements about enforcement of the Controlled Substances Act against those who knowingly facilitate marijuana distribution, if the City of Santa Fe Springs is forced to take enforcement action, you will be identified to the Federal Bureau of Investigation and the United States Drug Enforcement Administration.

CONCLUSION Federal law does not allow the possession, transportation, or sale of medical marijuana. California law allows medical marijuana distribution but only in accord with the Compassionate Use Act of 1996 and the Medical Marijuana Program Act, neither of which requires an individual city or county to zone land for medical marijuana dispensaries. Land can only be used in accord with a local government’s zoning law. The City of Santa Fe Springs does not allow medical marijuana on any parcel of land in any zone in the city. You must stop all medical marijuana activity within the City of Santa Fe Springs by September 26, 2011. If you do not, the City will seek maximum civil and criminal penalties against you. CITY OF SANTA FE SPRINGS

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