The state of California is set to intervene in a lawsuit between Santa Cruz County and Salinas-based cannabis distribution company East of Eden Cannabis Co. The case will determine whether the state or county has greater authority in regulating cannabis distribution within Santa Cruz County.
As a retailer and distributor in Salinas, East of Eden Cannabis Co. has official licenses from Salinas city and the state of California to sell and distribute cannabis in the municipal area.
Under Santa Cruz County codes, businesses that sell and distribute cannabis within the county must also possess a license from Santa Cruz County’s Cannabis Licensing Office. East of Eden Cannabis Co. does not currently have a license from the county. The county’s cannabis licensing manager, Sam LoForti, declined to comment on the case.
But East of Eden Cannabis Co. argues it can distribute anywhere in the state under California Bureau of Cannabis Control (BCC) regulations.
In November 2019, California Attorney General Xavier Becerra motioned to join Salinas-based East of Eden Cannabis Co.’s lawsuit to determine whether a distribution company can deliver cannabis goods with only a state license. The motion was filed on behalf of the BCC, arguing that the agency is a party of interest in the case.
The Superior Court of California, County of Santa Cruz granted the motion on Jan. 2 and set a July 16 trial date for the three parties — East of Eden Cannabis Co., the state of California and Santa Cruz County.
“I’m pleased that the state is stepping up to support licensed cannabis operators in the state who are really under siege and struggling,” said Gavin Kogan, CEO of East of Eden Cannabis Co. “So at least to have some support from the state is very helpful.”
The county argues that under Proposition 64, which legalized recreational marijuana in the state in 2016, localities can regulate both local cannabis businesses and deliveries made in their communities. The county has issued 12 official licenses, but denied one to East of Eden Cannabis Co. It does not expect to extend additional licenses any time soon, according to the county’s website.
Melissa Shaw, Santa Cruz County’s lead attorney, directed case comments to the county’s communications manager, Jason Hoppin.
“When Prop. 64 was passed, and when the state first issued regulations, one of the principles of both was that there would be local control over the time, place and manner of cannabis distribution within each location, whether that’s city or county,” Hoppin said.
The arguments in East of Eden v. Santa Cruz County, et al. are similar to an ongoing case filed in Fresno County against the BCC, in which Santa Cruz County is also a plaintiff. The lawsuit grapples with the same issue of jurisdiction in matters of cannabis delivery and cites BCC regulations and Proposition 64 as key arguments. The case’s trial date is set for April 20.
“I just want to stress this is in Prop. 64, and this is something the people of California voted for, local control, and that’s what we’re trying to enforce,” Hoppin said. “We have a long history with local cannabis regulations. We think we have a scheme that works for the community, for our growers, for our sellers, for our cannabis community as well.”