Colorado Health Consultants, d/b/a Starbuds, Plaintiff-Appellant,
City and County of Denver, through its Department of Excise and Licenses; and Ashley Kilroy, in her official capacity as Director of Denver Department of Excise and Licenses, Defendants-Appellees.
and County of Denver District Court No. 16CV32618 Honorable
Ross B.H. Buchanan, Judge
Law Office of Emilio De Simone, LLC, Emilio G. De Simone,
Denver, Colorado; Law Office of Trevor McFee, Trevor M.
McFee, Denver, Colorado, for Plaintiff-Appellant
Kristin M. Bronson, City Attorney, Reginald D. Nubine,
Rebekah B. Watada, Assistant City Attorneys, Denver,
Colorado, for Defendants-Appellees
1 Sometimes a retail marijuana business wishes to grow the
marijuana it sells. To do so legally in Denver, such a
business must be located in a zone that permits both
cultivation and retail sales, and it must obtain a zoning
permit from Denver's Zoning Authority. Additionally, such
a business must obtain a retail marijuana cultivation (RMC)
license from the Director of the Denver Department of Excise
and Licenses (Department), which is subject to an annual
2 This case involves the interplay between a zoning permit
and a RMC license. Plaintiff, Colorado Health Consultants,
d/b/a Starbuds (Starbuds), appeals from the district
court's judgment affirming the Department's decision
to deny Starbuds' 2016 RMC license renewal application.
For the reasons described below, we affirm.
3 Starbuds is a retail marijuana business located in an
I-MX-3 zone - a special context zone for industrial mixed
use. In March 2013, the zoning authority issued Starbuds a
zoning permit for retail sales. The application included
attached floor plans identifying retail space on the first
floor and a "veg" and "bloom" space on
the second floor. Starbuds separately applied with the
Department for a RMC license. The Department issued the RMC
license in March 2014.
4 The following year, Starbuds sought renewal of the RMC
license and, after an uncontested hearing required by Denver
Revised Municipal Code (D.R.M.C.) section 6-214(a)(3), the
Department renewed Starbuds' RMC license.
5 Starbuds again sought renewal on February 17, 2016. Because
changes to the D.R.M.C. no longer mandated a hearing, but
allowed one in the Department's discretion, the
Department immediately renewed the RMC license. However,
several days later, the Department discovered that an
interested party had requested a hearing on Starbuds'
license renewal. The Department then notified Starbuds that
based on this request, it needed to schedule a public
hearing. Starbuds agreed to the hearing, which occurred on
April 25, 2016. However, during the hearing, Starbuds changed
course. It argued that it sought renewal under D.R.M.C.
section 6-214(a)(1) and that this provision did not authorize
the Department to conduct a hearing.
6 At the hearing, six witnesses opposed the renewal.
Starbuds' managing member and owner testified in support
of the renewal. The hearing officer also accepted petitions
containing signatures of neighborhood residents, both in
opposition to and in support of the renewal.
7 In a detailed written recommendation, the hearing officer
applied D.R.M.C. section 6-214(a)(3) and recommended that the
Department deny Starbuds' request to renew the RMC
license. She first found that plant husbandry was not a
permitted use in an I-MX-3 zone and that the Department had
issued the original license in error. She then rejected
Starbuds' assertion that plant husbandry was a permitted
"accessory use" under section 6-214(a)(1) and,
instead, found that the RMC license was subject to the
requirements of section 6-214(a)(2) and (3). After weighing
the evidence, the hearing officer found that the opposition
had established, by a preponderance of the evidence, that
Starbuds failed to satisfy four of the five requirements for
renewal under section 6-214(a)(3). Consequently, she
recommended that the Department deny Starbuds' RMC
license renewal application. After considering Starbuds'
formal objections to the hearing officer's
recommendation, the Department adopted the hearing
officer's findings and denied Starbuds' renewal
8 Starbuds filed a C.R.C.P. 106(a)(4) complaint in the Denver
District Court alleging that the Department did not have the
authority to hold a public hearing on its renewal application
because plant husbandry was a permitted accessory use in an
I-MX-3 zone. Starbuds also alleged that the Department was
equitably estopped from denying its renewal application and
that the Department's denial was an unconstitutional
taking. The district court affirmed the Department's
order, found that equitable estoppel did not apply, and
concluded that the denial was not an unconstitutional taking.
Department Properly Denied Starbuds' RMC License Renewal
9 Starbuds first contends that the Department abused its
discretion and legally erred in concluding that plant
husbandry is not a permitted accessory use in an I-MX-3 zone
and that its zoning permit did not authorize plant husbandry.
Specifically, Starbuds argues that its license is governed by
D.R.M.C. section 6-214(a)(1), which does not permit a public
hearing, rather than section 6-214(a)(2) and (3), under which
the Department denied its application. Because Starbuds
concedes that it did not meet the requirements of section
6-214(a)(2) and (3), we need not analyze those provisions
further. Instead, we conclude that the Department's
findings and conclusions under those provisions also support
denial under section 6-214(a)(1). We therefore affirm the
Department's order and the district court's judgment,
albeit on a slightly different basis.
Standard of Review
10 C.R.C.P. 106(a)(4) provides as follows:
Where any governmental body or officer or any lower judicial
body exercising judicial or quasi-judicial functions has
exceeded its jurisdiction or abused its discretion, and there
is no plain, speedy and adequate remedy otherwise provided by
(I) Review shall be limited to a determination of whether the
body or officer has exceeded its jurisdiction or abused its
discretion, based on the evidence in the record before the
defendant body or officer.
in a C.R.C.P. 106(a)(4) action, "judicial review of a
governmental agency exercising its quasi-judicial role . . .
is limited to whether the body has exceeded its jurisdiction
or abused its discretion." City of Commerce City v.
Enclave W., Inc., 185 P.3d 174, 178 (Colo. 2008). We sit
in the same position as the district court when reviewing an
agency decision under C.R.C.P. 106(a)(4). Marshall v.
Civil Serv. Comm'n, 2016 COA 156, ¶ 10;
Roalstad v. City of Lafayette, 2015 COA 146, ¶
13. We review de novo whether the agency abused its
discretion. Roalstad, ¶ 13.
11 An agency abuses its discretion if its decision is not
reasonably supported by any competent evidence in the record,
or if the agency has misconstrued or misapplied applicable
law. Freedom Colo. Info., Inc. v. El Paso Cty.
Sheriff's Dep't, 196 P.3d 892, 899-900 (Colo.
2008); Roalstad, ¶ 13. An action by an agency
is not arbitrary or an abuse of discretion when the
reasonableness of the agency's action is open to a fair
difference of opinion, or when there is room for more than
one opinion. Bennett v. Price, 167 Colo. 168, 172,
446 P.2d 419, 420-21 (1968).
12 Generally, a reviewing court should defer to the
agency's construction of a law it is charged with
enforcing. City & Cty. of Denver v. Bd. of
Adjustment, 55 P.3d 252, 254 (Colo.App. 2002). And we
presume that the governing body intended a just and
reasonable result. Steamboat Springs Rental &
Leasing, Inc. v. City & Cty. of Denver, 15 P.3d 785,
787 (Colo.App. 2000).
13 "In reviewing the agency's construction, we rely
on the basic rules of statutory construction, affording the
language of the provisions at issue their ordinary and common
sense meaning." Enclave W., Inc., 185 P.3d at
178. "Our primary task in interpreting statutes and
municipal enactments is to give effect to the intent of the
drafters, which we do by looking to the plain language."
Waste Mgmt. of Colo., Inc. v. City of Commerce City,
250 P.3d 722, 725 (Colo.App. 2010). If the language of the
provision at issue is clear and the intent of the legislative
body that enacted it may be discerned with certainty, we may
not resort to other rules of statutory interpretation.
Id. When construing an ordinance in the C.R.C.P.
106(a)(4) context, "we give effect to every word and, if
possible, harmonize potentially conflicting provisions."
Enclave W., Inc., 185 P.3d at 178.
14 Our review of the agency's factual, discretionary
determinations is more deferential. We must uphold the
Department's decision unless there is no competent
evidence in the record to support it. Carney v. Civil
Serv. Comm'n, 30 P.3d 861, 863 (Colo.App.
2001). "No competent evidence" means
that the Department's decision is "so devoid of
evidentiary support that it can only be explained as an
arbitrary and capricious exercise of authority."
Id. (quoting Bd. of Cty. Comm'rs v.
O'Dell, 920 P.2d 48, 50 (Colo. 1996)); accord
Turney v. Civil Serv. Comm'n, 222 P.3d 343, 347
(Colo.App. 2009). "An action by an administrative [body]
is not arbitrary or an abuse of discretion when the
reasonableness of the [body's] action is open to a fair
difference of opinion, or when there is room for more than
one opinion." Khelik v. City & Cty. of
Denver, 2016 COA 55, ¶ 13. Because we are not the
fact finder, we "cannot weigh the evidence or substitute
our own judgment for that of the [administrative body]."
Kruse v. Town of Castle Rock, 192 P.3d 591, 601
15 It is unlawful to cultivate, manufacture, distribute, or
sell retail marijuana, except in compliance with the terms,
conditions, limitations, and restrictions set forth in
article XVIII, section 16 of the Colorado Constitution and in
the Colorado Retail Marijuana Code (CRMC). §
12-43.4-102(2), C.R.S. 2017. The General Assembly has
authorized the Executive Director of the Department of
Revenue (Director) to regulate and control the licensing of
the cultivation, manufacture, distribution, and sale of
medical and retail marijuana. §§ 12-43.3-201,
12-43.4-201, C.R.S. 2017. The Director may grant or refuse
state licenses for cultivation and may suspend, fine,
restrict, or revoke such licenses, whether active, expired,
or surrendered, upon a violation of the CRMC or any rule
promulgated pursuant to the CRMC. § 12-43.4-202(2)(a),
C.R.S. 2017. The Director may also hear and determine, at a
public hearing, any contested state license denial and any
complaints against a licensee. § 12-43.4-202(2)(c).
16 Additionally, the Colorado Constitution permits local
governments to (1) prohibit state licensing of marijuana
establishments; (2) regulate the time, place, and manner in
which marijuana establishments may operate; and (3) limit the
total number of marijuana establishments within its
jurisdiction. Colo. Const. art. XVIII, § 16(5)(f);
D.R.M.C. § 6-200. The Department is Denver's
designated local licensing authority for retail marijuana
establishments. D.R.M.C. §§ 6-204, 32-2(a). Its
authority includes the licensing of several kinds of local
marijuana establishments. D.R.M.C. §
6-200. Indeed, the purpose of D.R.M.C.'s
chapter 6, article V, the "Denver Retail Marijuana
Code," "is to exercise the authority of the City
and County of Denver to allow state-licensed marijuana