City of Cave Junction v. State

          Argued and submitted February 9, 2016.

         Josephine County Circuit Court 14CV0588; Pat Wolke, Judge.

          J. Ryan Kirchoff argued the cause for appellant-cross-respondent. With him on the opening brief was James Holmbeck Kirchoff, LLC. With him on the supplemental brief was Kirchoff Law Offces, LLC.

          Peenesh H. Shah, Assistant Attorney General, argued the cause for respondents-cross-appellants. With him on the answering and cross-opening brief were Ellen F. Rosenblum, Attorney General, and Anna M. Joyce, Solicitor General. With him on the cross-reply and supplemental briefs were Ellen F. Rosenblum, Attorney General, and Paul L. Smith, Deputy Solicitor General.

          [289 Or. 217] Rob Bovett and Sean E. O'Day argued the cause and fled the joint supplemental brief for respondents-cross-respondents. With them on the joint answering and cross-answering brief was Katherine Thomas.

          No appearance for respondent Susan Hayes.

          Before Ortega, Presiding Judge, and Lagesen, Judge, and Garrett, Judge.

         Case Summary:

         At the time the underlying action was initiated, Cave Junction's municipal code required its businesses to obtain licenses and comply with municipal, state, and federal laws. The city initiated this declaratory judgment action to clarify its obligations in light of the conflict between the federal Controlled Substances Act (CSA) and state marijuana laws. The city sought a declaration that House Bill 3460 (2013), Senate Bill 1531 (2014), and Senate Bill 863 (2013) were preempted by the CSA and, for that reason, did not displace the city's authority to require marijuana business licensees to comply with federal law, even though such compliance would be impossible. Held: Due to two changes in state and local law, the appeal no longer presented a justiciable controversy; House Bill 3400 (2015) authorized local governments to enact bans on medical marijuana dispensaries and Cave Junction no longer bans such dispensaries. Resolution of the issue presented by this appeal would not have a practical effect on the city because the city no longer seeks to prohibit medical marijuana dispensaries. The Court of Appeals also rejected intervenors' argument that the appeal was not moot, holding that the declaration that the intervenors sought in their complaint (and obtained) was narrower, and, even if it could be construed more broadly, the issue was not ripe for review.

         Appeal and cross-appeal dismissed.

          [289 Or. 218]

          LAGESEN, J.

         As we explain, state and local changes in law and policy regarding Oregon's evolving legal marijuana industry have overtaken this declaratory judgment appeal and cross-appeal, such that they no longer present a justiciable controversy. We therefore dismiss both.

         The City of Cave Junction filed this declaratory judgment action to resolve a perceived conflict between the city's then-current business licensing requirements and the Oregon Medical Marijuana Act (OMMA). The city's municipal code generally requires businesses operating in the city to obtain a license and further requires licensees to conduct their businesses in a manner that comports with municipal, state, and federal laws. Cave Junction Municipal Code (CJMC) §§ 5.04.070 (C), 5.04.080, 5.04.100. The requirement of federal law compliance, if enforced, poses an obstacle to the marijuana businesses allowed under Oregon law. That is because, with narrow exception, the cultivation, possession, and distribution of marijuana remains illegal under the federal Controlled Substances Act (CSA), notwithstanding Oregon's decision to decriminalize and formally regulate the marijuana industry. See 21 USC §§ 841(a), 844(a); United States v. Mcintosh, 833 F.3d 1163, 1179 n 5 (9th Cir 2016). As the United States Court of Appeals for the Ninth Circuit recently reiterated in a case addressing the intersection of competing federal and state marijuana laws,

"[t]he CSA prohibits the manufacture, distribution, and possession of marijuana. Anyone in any state who possesses, distributes, or manufactures marijuana for medical or recreational purposes (or attempts or conspires to do so) is committing a federal crime."

Mcintosh, 833 F.3d at 1179 n 5.^[1]

         [289 Or. 219] Concerned that granting business licenses to medical marijuana dispensaries could jeopardize the city's access to federal grant funds and potentially expose city officials to federal criminal liability, the city initiated this declaratory judgment action to clarify its obligations in light of the conflicting federal and state marijuana laws. Specifically, the city sought a declaration that House Bill (HB) 3460 (2013), codified at former ORS 475.314 (2013), renumbered as ORS 475B.450 (2015), and Senate Bill (SB) 1531 (2014), amending former ORS 475.314 (2013), were preempted by the CSA and, for that reason, did not displace the city's authority to require business licensees, including marijuana businesses, to comply with federal law, even though such compliance is impossible under current federal law.^[2] In so doing, the city acknowledged that the state law provisions at issue preempted its authority to prohibit medical marijuana dispensaries otherwise authorized by state law, but contended that federal law displaced state law.

         In response, the state agreed that HB 3460 and SB 1531, together with Senate Bill (SB) 863 (2013), codified at ORS 633.738, preempted the city's authority to preclude state-registered marijuana facilities from possessing and transferring marijuana in a manner that complies with state law. However, the ...