Medical marijuana: Lawsuits likely if new Denver regs shut down grows, attorney says

Could a compromise agreement about medical marijuana grows that passed through the Denver City Council's special issues committee this week still close a huge number of MMJ operations? Looks that way, says attorney Christian Sederberg -- and if the measure is enacted as presently written, he's confident litigation will follow.

Sederberg, who spoke with us in early January about the importance of grandfathering MMJ grows under new Denver zoning regulations, shares his understanding of three operator requirements under the measure.

"The zoning permit for the lot had to have been applied for on or before July 1, 2010," he says. "The second one asks that the applicant previously applied for the lot with the state on or before August 1, 2010. And the third one requires that the applicant produce documentary or other empirical evidence that cultivation of medical marijuana commenced prior to January 1, 2011."

The first of these dictates doesn't seem especially onerous to Sederberg. But the next two strike him as problematic -- particularly the one with the August 2010 deadline. Why?

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"Let's say there's a grow facility in an industrial area," he says. "That facility can't have switched its affiliation from Dispensary A to Dispensary B after August. It has to be with the same dispensary -- and that's the killer. A lot of these dispensaries and growers had to get involved in forced marriages, shotgun weddings," because of the rule that each medical-marijuana center grow 70 percent of its product. "And a lot of those relationships haven't worked out for one reason or another."

For example, he says some dispensaries have actually gone out of business, putting grow operators in the position of switching their partnerships. But even under those circumstances, Sederberg believes "the grower might be out of luck, and might not be able to continue operating as a grow facility -- which is particularly harmful when the grower was at no fault or things happened outside the grower's control."

Regarding the third requirement -- that cultivation got underway by January 1 of this year -- Sederberg has more questions than answers at this point.

"Does it mean building out a space or actually growing?" he wonders. "Because a lot of people have spent a lot of money trying to get buildings up to code and get a certificate of occupancy -- and they may not have actually started growing by the deadline. Would that still count? Or not? We need some clarity on these things."

The same goes for a plan to require grows allowed to continue operating in certain areas where zoning has changed to go before a group in the city's excise and licensing department every two years for permission to continue. Not only is the criteria extremely vague at this point, Sederberg says, but it puts MMJ facilities at long-term risks that don't confront any other type of business.

"It's important that this not be a way to place-hold locations for future development," he stresses. "Meaning, 'We'll take your positive economic impact now, but as soon as we can find something more desirable to go in there, we're going to push you out.' That seems fundamentally unfair to me."

Earlier this week, attorney Warren Edson estimated that 137 of 150 grows in Denver might be closed under the proposal, and while Sederberg can't speak to those numbers, he says "I've gotten calls from a handful of people in the past few days saying, 'This is going to make it impossible for me to continue doing business.' Some of these people made changes in their dispensary partnerships months ago, and they can't undo the changes they made. Like if they were affiliated with a center whose application was denied because they missed their deadline" -- December 15, 2010. "They wouldn't be able to switch to a dispensary they could operate under."

Public comment on these proposals is scheduled for February 14 -- Valentine's Day -- and Sederberg says advocates are revving up lobbying in an effort to adjust the compromise agreement before its passage. If they don't succeed, could the City of Denver be required to compensate businesses for their losses -- a theory put forward by attorney Jessica Corry in an ongoing dispensary lawsuit? Very possible, Sederberg feels.

"None of this has been litigated to the point where we can predict how judges at the district court here will act," he says. "But I think there is certainly the potential for lawsuits and just compensation being awarded to people whose facilities have been forced out by using zoning codes to justify a criteria for licensing. People have put too much money in to just be shut down and not at least try to receive some compensation."

More from our Marijuana archive: "Medical marijuana: MMC co-owner Morgan Carr says council amendments could cost 1000s."


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