Cannabis, Collectives, Cooperatives And The California Corporations Code

Allen Matkins

In reviewing recent California cases involving the Corporations Code, I was surprised to see several recent, published and and unpublished opinions dealing with marijuana dispensaries.  I never would have imagined that California’s laws governing marijuana would require the courts to refer to the Corporations Code.

By way of background, California’s voters passed Proposition 215 (the “Compassionate Use Act”) in November 1996. Proposition 215 decriminalized under California law the cultivation and use of marijuana by seriously ill individuals upon a physician’s recommendation.  Several years later, the Legislature enacted a statute requiring the Attorney General to adopt “guidelines to ensure the security and nondiversion of marijuana grown for medical use.”  Health & Saf. Code, § 11362.81(d).  Then Attorney General Jerry Brown published these Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use (August 2008).  The Guidelines note that California law permits medical marijuana patients and primary caregivers to “associate within the State of California in order collectively or cooperatively to cultivate marijuana for medical purposes.”  The Guidelines further note that no business may call itself a “cooperative” (or “coop”) unless it is properly incorporated under California’s Consumer Cooperative Corporations Law (Corp. Code § 12200 et seq.) or the Food and Agricultural Code.  Corp. Code § 12311(b).  The Guidelines note that California law does not define “collectives”.

In a published decision last month, the Second District Court of Appeal considered the question of whether a cooperative could be too big to qualify as a cooperative.  In People v. Colvin, 203 Cal. App. 4th 1029 (2012), the defendant appealed from his conviction for transporting about a pound of marijuana from one medical marijuana establishment to another.  On appeal, the Attorney General argued that the defendant’s cooperative was simply too big to allow any “meaningful” participation in the cooperative process; hence, it cannot  be a “cooperative” or a “collective” in the way intended by the applicable statutes.  The Court of Appeal rejected this argument noting that

“It may be that the Legislature, in trying to implement voters’ wishes, envisioned small community or neighborhood marijuana gardens.  That may be good policy.  But nothing on the face of [Health & Safety Code] section 11362.775, or in the inherent nature of a cooperative or collective, requires some unspecified number of members to engage in unspecified ‘united action or participation’ to qualify for the protection of section 11362.775.

California’s marijuana and corporate laws were also at issue in these other recent (unpublished) decisions:  People ex rel. City of Dana Point v. Beach Cities Collective, Cal. Ct. Appeals No. No. G044971 (March 29, 2012) and People v. McNelis, Cal. Ct. Appeals No. No. B230425 (March 22, 2012).

Marijuana is a member of the genus, Cannabis, a plant genus with a long history of human use.  The fifth century BCE historian had this to say about how the Scythians used Cannabis as a substitute for bathing in water:

ταύτης ὦν οἱ Σκύθαι τῆς καννάβιος τὸ σπέρμα ἐπεὰν λάβωσι, ὑποδύνουσι ὑπὸ τοὺς πίλους, καὶ ἔπειτα ἐπιβάλλουσι τὸ σπέρμα ἐπὶ τοὺς διαφανέας λίθους τῷ πυρί: τὸ δὲ θυμιᾶται ἐπιβαλλόμενον καὶ ἀτμίδα παρέχεται τοσαύτην ὥστε Ἑλληνικὴ οὐδεμία ἄν μιν πυρίη ἀποκρατήσειε. (Whenever the Scythians take the Cannabis seed, carried under their hats, and throw the seeds upon red-hot stones in the fire: being thrown upon to burn smokely and throwing off such fumes as not one Greek vapor bath exceeds it.)

Histories, Book 4, chapter 75 (my translation).  Herodotus continues that the Scythians howled in admiration at their “bath”.  This description must be taken with a grain of salt as Herodotus was alternatively known as the “Father of History” (M.T. Cicero, De Legibus, Book 1, Section 5) or the “Father of Lies” (I’m not sure who first came up with this calumny.)

n.b. - This blog is an informal discussion of legal issues.  It is not intended to constitute legal advice.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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