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Rocky Mountain Retail Management, LLC v. City of Northglenn

Supreme Court of Colorado, En Banc

April 24, 2017

Rocky Mountain Retail Management, LLC, d/b/a Rocky Mountain High, Plaintiff-Appellee.
v.
City of Northglenn, acting by and through its City Council. Defendant-Appellant.

         Appeal from the District Court Adams County District Court Case No. 14CV30842 Honorable Mark D. Warner, Judge.

          Attorneys for Defendant-Appellant: Hoffmann, Parker, Wilson & Carberry, P.C. Corey Y. Hoffmann Elizabeth R. Cross Denver, Colorado.

          Attorneys for Amicus Curiae The Colorado Department of Revenue: Cynthia H. Coffman, Attorney General Glen E. Roper, Deputy Solicitor General Claudia Brett Goldin, First Assistant Attorney General Denver, Colorado.

          Attorney for Amicus Curiae The Colorado Municipal League: Rachel L. Allen Denver, Colorado No appearance on behalf of Plaintiff-Appellee Rocky Mountain Retail Management, LLC.

          OPINION

          MÁRQUEZ JUSTICE.

         ¶1 Rocky Mountain Retail Management, LLC, d/b/a Rocky Mountain High, filed an application for a license to operate a medical marijuana center in the City of Northglenn. The Northglenn City Council, acting as the City's medical marijuana local licensing authority, denied Rocky Mountain's application after receiving evidence at two public hearings. Rocky Mountain sought judicial review of the City's decision in the district court, arguing that the denial was not based on substantial evidence in the record and was therefore arbitrary and capricious and an abuse of discretion. Rocky Mountain also asked the district court to declare certain licensing provisions of the Northglenn City Code unconstitutionally vague, including section 18-14-7(h), which sets forth factors a local licensing authority may consider before approving or denying a medical marijuana center license. The district court ruled that section 18-14-7(h) is unconstitutionally vague, and that the City's denial of the license in reliance on that invalid provision was arbitrary and capricious. The City appeals these rulings.

         ¶2 Section 18-14-7(h) of the Northglenn City Code, which contains language identical to a provision in the Colorado Medical Marijuana Code, permits the local licensing authority to consider the "number, type, and availability" of existing medical marijuana facilities before approving or denying an application for a local license. We are asked to decide whether section 18-14-7(h) is impermissibly vague. We are also asked to determine whether the City's decision to deny Rocky Mountain's application was supported by substantial evidence. Because the phrase "number, type, and availability" in section 18-14-7(h) provides sufficient notice to applicants and reasonably constrains the exercise of the City's discretion, we hold that section 18-14-7(h) is not void for vagueness. We further hold that the City's decision to deny Rocky Mountain's license application was supported by substantial evidence in the record, and therefore was not arbitrary and capricious.

         ¶3 To provide background for our analysis, we first explain the framework for medical marijuana licensing at the state and local level and then provide the factual and procedural history of this case. We then consider the vagueness doctrine and its applicability to the licensing framework at issue here and hold that the district court erred in concluding that the Northglenn Code provision was unconstitutionally vague. Finally, we consider the City's decision to deny Rocky Mountain's license application and conclude that the decision was supported by substantial evidence. Accordingly, we reverse the judgment of the district court.

         I. Background

         ¶4 In 2010, the General Assembly enacted the Colorado Medical Marijuana Code, sections 12-43.3-101 to -1102, C.R.S. (2016), which sets forth "the exclusive means by which manufacture, sale, distribution, and dispensing of medical marijuana may occur in the state of Colorado." § 12-43.3-103(e).[1] The Medical Marijuana Code authorizes local governments to prohibit the operation of medical marijuana centers or to adopt licensing standards and requirements that may be in addition to, or more restrictive than, the standards set forth in state law. See §§ 12-43.3-301(2)(b), -310(1). The local governing body may serve as the local licensing authority or designate an authority to serve this role. § 12-43.3-104(5).

         ¶5 A medical marijuana center must obtain licensing approval from both the state and local licensing authorities, and the denial of an application by a local licensing authority shall be considered a basis for the state licensing authority to revoke any state-issued license. §§ 12-43.3-305(2), -310(2). Licensing decisions made by the state and local licensing authorities are subject to judicial review under section 24-4-106, C.R.S. (2016), of Colorado's Administrative Procedure Act ("state APA"). § 12-43.3-801.

         ¶6 To implement the provisions of the Medical Marijuana Code, the City of Northglenn adopted Article 14 of the Northglenn Code, sections 18-14-1 to -44. Northglenn, Colo., Code § 18-14-2 (2017). Under the Northglenn Code, applicants for a license to operate a medical marijuana facility must submit an application and fee to the City showing that they meet several basic requirements and are not otherwise prohibited from receiving a license under the Northglenn Code.[2] See id. § 18-14-7(a), (e). After the City receives an application for a new license, the local licensing authority must schedule a public hearing on the application and must disclose the findings of its preliminary investigation regarding the application in advance of that hearing. Id. § 18-14-7(f)-(g).

         ¶7 Relevant here, section 18-14-7(h) of the Northglenn Code contains language identical to section 12-43.3-303(2) of the Medical Marijuana Code. This language describes the information the local licensing authority may consider before entering a decision approving or denying an application for a local license, including the "number, type, and availability" of existing medical marijuana centers located nearby:

Before entering a decision approving or denying the application for a local license, the local licensing authority may consider, except where this Article specifically provides otherwise, the facts and evidence adduced as a result of its investigation, as well as any other facts pertinent to the type of license for which application has been made, including the number, type and availability of medical marijuana centers, optional premises cultivation operations, or medical marijuana-infused products manufacturers located in or near the premises under consideration, and any other pertinent matters affecting the qualifications of the applicant for the conduct of the type of business proposed.

Northglenn, Colo., Code § 18-14-7(h) (2017); § 12-43.3-303(2) (emphases added).[3] As noted by the Colorado Municipal League in its amicus brief, other Colorado municipalities have adopted local licensing ordinances derived from section 12-43.3-303(2) that similarly permit consideration of the "number, type, and availability" of existing marijuana businesses.[4] With this legal framework in mind, we turn to facts of this case.

         II. Facts and Procedural History

         ¶8 In November 2013, Rocky Mountain submitted an application to the City of Northglenn for a medical marijuana center license. The City issued a preliminary report finding that the application met preliminary requirements and that Rocky Mountain was eligible to operate as a medical marijuana center subject to, among other things, a public hearing before the City Council (acting as the Northglenn Marijuana Licensing Authority).

         ¶9 At the hearing in January 2014, the City Council heard evidence regarding Rocky Mountain's application for a medical marijuana center license under the criteria set forth in the Medical Marijuana Code and the Northglenn Code. This evidence included testimony from Rocky Mountain's principal regarding the type of products and services it would offer and its experience in the industry in other jurisdictions. City Council members asked Rocky Mountain to address whether, given the existence of another medical marijuana facility roughly a block away, there was a need for Rocky Mountain's business at the proposed location. Rocky Mountain testified that the genetics of its product are different and that it would offer unique strains of marijuana and a superior product. When pressed by a City Council member to substantiate a need for another facility in Northglenn in addition to the three already in operation, Rocky Mountain's representative said that he could not "say with certainty" that the City needed another facility or demonstrate such a need at the time of the application.

         ¶10 Another City Council member noted that the local licensing authority may consider the number, type, and availability of existing marijuana centers. She opined that Rocky Mountain's proposed location was too close to an existing center and that there were sufficient centers in Northglenn, considering the City's small square mileage. A representative from an existing medical marijuana facility in Northglenn testified that Rocky Mountain's proposed location was very close to his facility and other existing facilities. After hearing testimony in support of and in opposition to the application, the City Council voted to deny Rocky Mountain's license application. In its written findings, the City Council concluded that the evidence presented at the hearing showed that the number, type, and availability of medical marijuana centers in proximity to Rocky Mountain's proposed location and within the boundaries of the City were sufficient to serve the needs of the Northglenn community.

         ¶11 Rocky Mountain requested a rehearing, as permitted by Northglenn Code section 3-7-12, seeking to provide additional evidence regarding the adequacy of the number, type, and ...


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