The California Supreme Court affirms that there is no shortcut to CEQA. Last week, the the court reversed an Appeals Court decision in Union of Medical Marijuana Patients, Inc. v. City of San Diego affirming that the establishment and location of medical marijuana consumer cooperatives are subject to CEQA.

"The Supreme Court's holding reversing the Court of Appeal's decision, which had upheld San Diego's decision that its medical marijuana dispensary zoning ordinance was not a "project" for CEQA purposes, was the outcome I expected," Art Coon, co-chair of the land use practice at Miller Starr Regalia, tells GlobeSt.com. "It really should not have surprised anyone familiar with this area of law, and was also the outcome signaled by the questions and comments of the Chief Justice and other justices at oral argument in the case.  Basically, the Court followed its own prior precedent—the 2007 Muzzy Ranch case and the CEQA "project" test it announced – which has been established California law for over a decade.  CEQA's definition of "projects" within its scope at the "first tier" of its process is and always has been, unsurprisingly, intentionally broad and encompassing."

The ruling—which focused on San Diego's ordinance regulating medical marijuana consumer cooperatives—proves that there is no short cut to CEQA, particularly for public agencies looking to subvert the process. "The ruling should certainly make public agencies tempted to short cut the CEQA process think twice about summarily dispensing with environmental review of proposed local land use ordinances—including, but not limited to, those regulating the location and operation of marijuana-related land uses, which would include commercial cultivation, and processing, manufacturing and retail distribution of marijuana products," says Coon.

In regulating marijuana real estate, city agencies are required to treat marijuana locations as they would any other real estate project. "Unless some statutory or categorical exemption covers the particular ordinance proposed, lead agencies will thus need to conduct an initial study that will either lead to preparation of an Environmental Impact Report (EIR) or some type of negative declaration," adds Coon. "Local conditions will undoubtedly vary widely, and CEQA review in this area will often implicate challenging issues about the environmental "baseline" – i.e., the existing physical conditions against which project impacts must be measured – because of the widespread illegal and difficult to document marijuana industry operations that currently exist in many communities."

While this particular case dealt with a city ordinance established in 2014, and marijuana usage has since been legalized in California, the core of this case was defining projects under CEQA. For that reason, it likely won't have an impact on the broader marijuana market. "State law, under Proposition 64, largely reserves to local governments the power to decide whether and how commercial cannabis businesses may operate within their jurisdictional boundaries," says Coon. "When local governments enact their own regulatory and licensing ordinances, those proposed ordinances are subject to CEQA review of their potential environmental impacts.  Due to the existing black market and local production and/or demand, even strong local restrictions or a complete ban could have their own environmental impacts, both within and outside the local jurisdiction, that must be examined under CEQA.  Nothing in state law provides an "easy out" when it comes to CEQA review in this context."