Recently, the City of Denver’s Department of Public Health and Environment (DDPHE) ordered, among other things, the destruction of Titan Health LLC’s (Titan Health) marijuana plants that it deemed to “hav[e] evidence of spider mite influx.” Titan Health appealed the DDPHE’s Notice of Violation (NOV), not only due to the lack of evidence warranting such an extreme remedy, but also because the NOV exceeded the City of Denver’s authority.[1] In fact, according to Titan Health, Colorado state law specifically preempted the NOV. While the merits of the appeal were not ultimately heard, this case exemplifies the importance of understanding state preemption and the limitations placed on localities’ authority.
An Introduction to Local Government Authority and State Preemption
In each state, the local governments’ authority is determined by state constitution or statute. Many states, including Colorado, employ a combination of “Dillon’s Rule” and “Home Rule.” Dillon’s Rule is the principal that local governments are restricted to powers that are explicitly granted by the state, whereas Home Rule grants localities autonomy to address certain issues.
In Colorado, when a home rule locality’s position on a regulatory matter “conflicts with state law in a matter of either statewide or mixed state and local concern the state law supersedes” the conflicting position.[2] The Colorado Supreme Court has identified four factors to determine whether a regulatory matter is of state, local, or mixed state and local concern: “(1) the need for statewide uniformity of regulation, (2) the extraterritorial impact of the local regulation, (3) whether the state or local governments have traditionally regulated the matter, and (4) whether the Colorado Constitution specifically commits the matter to either state or local regulation.”[3] Where these factors determine that a home rule locality is regulating a matter in which the state has an interest, it is subject to three types of preemption: express, implied, or operational.[4]
Application of the Principles of State Preemption in the Titan Health Appeal
In the case of Titan Health’s appeal, the relevant locality, the City and County of Denver, is a home-rule locality.[5] Thus, the question was whether the regulation of marijuana, and more specifically the required destruction of plants based on a theory of public health, was of an area of state interest, and if so, whether the DDPHE’s NOV was preempted by state law. Titan Health’s position is that the answer to both questions is yes.
First, all four factors identified above weigh in favor of finding that the state has an interest in regulating marijuana. As to the first factor, the need for statewide uniformity, has been clearly addressed by the Colorado Generally Assembly, which expressly identified the regulation of marijuana as an area of statewide interest by implementing a comprehensive statutory scheme in the form of the Colorado Marijuana Code.[6] The second factor, extraterritorial impact, also weighs in favor of finding that that the state has an interest in the regulation of marijuana. Specifically, the state has an interest in ensuring that localities do not take actions that would result in a piecemeal regulation of marijuana cultivation, processing, and sale. In this case, through the NOV, the DDPHE took it upon itself to regulate marijuana in a way that discourages a business by ordering the arbitrary destruction of plants. If one locality were allowed to take such arbitrary actions, the result would be a domino effect resulting in the patchwork of regulation that the state expressly tried to avoid through implementation of the Colorado Marijuana Code.
The final two factors, historical regulation and the text of the Colorado Constitution, clearly weigh in the favor of finding the state has an interest in the regulation of marijuana and prevention of arbitrary destruction. Colorado has a 20+ year history of regulating marijuana in a way that limits the localities’ ability to do so,[7] and the Colorado constitution specifically commits the authority to regulate marijuana to the state. The Colorado Constitution Article XVIII, § 16(1)(d) plainly states that “[t]he people of the state of Colorado further find and declare that it is necessary to ensure consistency and fairness in the application of this section through the state and that, therefore, the matters addressed by this section are, except as specified herein, matters of statewide concern.”
Second, because all four factors weigh in favor of the existence of a state interest, Titan Health’s appeal then turned to the question of preemption. Per Titan Health’s briefing, DDPHE’s order to destroy approximately 900 marijuana plants due to a minor influx of spider mites is expressly preempted by state law. More generally, the Colorado Constitution and the Colorado Marijuana Code expressly prohibit localities from enacting regulations other than those that control time, place, and manner.
“[E]xpress preemption occurs where the statute’s express language demonstrates” the state’s “intent to occupy a given field.”[8] In Titan Health’s case, the Colorado Constitution and the Colorado Marijuana Code impose an express limitation on localities’ ability to regulate marijuana and clearly preempts local regulations that go beyond time, place, or manner. More specifically, the Colorado Constitution’s only express statement authorizing marijuana regulation by a local authority is found in Article XVIII, § 16(5)(f). That section states that “[a] locality may enact ordinances or regulations, not in conflict with this section or with regulations or legislation enacted pursuant to this section, governing the time, place, manner and number of marijuana establishment operations,” and establish licensing procedures. (emphasis added). Similarly, Section 44-10-104(4) of the Colorado Marijuana Code states that “[t]his article 10 sets forth the exclusive means by which cultivation, manufacture, sale, distribution, dispensing, and testing of regulated marijuana and regulated marijuana products may occur in the state of Colorado.” (emphasis added).
Further supporting Titan Health’s argument that the NOV was expressly preempted by state law are section 44-10-203 of the marijuana code and the related Marijuana Enforcement Division (MED) regulations. Section 44-10-203(2)(d) requires the state to promulgate certain rules, including the establishment of a marijuana testing and certification program and provide quarantine procedures. Importantly, Section 44-10-203 is “the sole regulatory authority for labeling, packaging, and testing” marijuana products.[9] Pursuant to the authority granted by the Colorado Marijuana Code, the MED provides specific standards regarding contaminated product, as well as failed test results and procedures.[10] Those standards require quarantine “until the completion of the [MED’s] investigation.”[11] While the MED’s promulgated rules permit localities to conduct inspections or investigations of local facilities,[12] there is no authority for DDPHE or any other local agency to unilaterally authorize the destruction of marijuana plants.
Based on the above, Titan Health argues, Colorado expressly limits the local regulation of marijuana to time, place, and manner, thus the DDPHE’s unilateral decision to destroy plants is not within those bounds and the NOV is expressly preempted by state law.
Titan Health’s appeal was set for hearing in November, but the DDPHE withdrew the NOV based on unrelated grounds. The withdrawal occurred after briefing, but before the issue could be heard. Notably, the City of Denver did not submit a reply brief or provide any indication that it had a colorable argument in response to Titan Health’s appeal.
Conclusion: Ensure a Clear Understanding of Limitations on Local Authority
The takeaway here is twofold. First, marijuana businesses in Colorado and other states should understand the limits of localities’ authority and seek legal advice if an order appears to be beyond the bounds of such authority. Second, and more broadly, all highly regulated industries operating under state and local regulations would be well served by having a clear understanding of the limits of localities’ authority and how certain actions may be preempted by state law.
[1] In the Matter of: Petition for Appeal of Notice of Violation Filed by Titan Health, LLC d/b/a UHerbs, at 5959 E 39th Avenue, Denver, CO 80205, Docket No. BPHE #23-30.
[2] City of Longmont Colo. v. Colo. Oil & Gas Ass’n, 369 P.3d 573, 579 (Colo. 2016).
[3] Id. at 580.
[4] Id. at 582.
[5] Denver Rev. Mun. Code Title I.
[6] C.R.S. 44-10-101 et seq.
[7] See e.g., C.R. S. § 44-10-301(3) (limiting localities’ ability to impose a separate local licensing requirement for retail marijuana businesses to restrictions based on time, place, manner, and the number of marijuana businesses).
[8] Town of Carbondale v. GSS Props., LLC, 169 P.3d 675, 678, n. 3 (Colo. 2007).
[9] C.R.S. § 44-10-203(2)(d).
[10] 1 C.C.R. § 212-3-4-135(A)(1).
[11] Id.
[12] 1 C.C.R. § 212-3-3-305.
