Pushing Back Against Local Power

As many in the industry know all too well, Colorado law gives cities and counties broad power to regulate cannabis businesses, including the right to ban them altogether. As a result, different locations have different licensing procedures and different requirements. Local regulators seem to wield almost total control over whether to issue or renew licenses.

But local power does have its limits, as the Colorado Court of Appeals recently showed when it reversed the dismissal of a lawsuit in Shroyer v. City of Boulder (2015CA1460).

Dustin Shroyer sued after the City of Boulder said it would only renew the dispensary license held by Skinny Pineapple, Inc. if the business removed Shroyer as a part owner. The City set this condition because Shoyer had been arrested in Texas in the previous year. Shroyer attempted to provide paperwork showing that his arrest was a misunderstanding and that he was never charged with a crime, but the City refused to consider his submissions. It even refused to point him to the section of the City code that it relied upon in setting the condition. In response, Shoyer sued.

At the City’s urging, the Boulder County District Court dismissed Shoyer’s suit, concluding that he lacked standing to sue (since Skinny Pineapple held the license, not Shoyer individually) and that the renewal condition was not reviewable by the court because it was not a final decision (such as a license denial).

In reversing the district court, the Court of Appeals observed that the City code states that persons may submit additional documents to show suitability for licensing and that the City must consider such documents. So the City injured Shoyer personally, giving him standing to sue. The Court of Appeals also concluded that the renewal condition was reviewable because the City code states that licensing conditions are final decisions subject to judicial review. As a result, Shoyer can proceed with his suit against the City of Boulder.

Though it is a nonpublished opinion and not binding precedent, Shoyer is an encouraging sign for the cannabis industry. It shows that local licensing decisions must comply with local laws, and that judicial review is available when local authorities act outside of their power or do not follow lawful procedure. Businesses are not always obligated to accept unfavorable local licensing decisions.

Author: Jeff Wilson, Esq.