In Granny Purps v. County of Santa Cruz, the Sixth District Court of Appeal green-lit a medical cannabis cultivator’s ability to pursue damages – to the tune of potentially $3.5M – from the County of Santa Cruz when it determined the County cannot rely on zoning ordinance to seize the cultivator’s plants grown in violation of local regulation. Specifically, the Sixth District found that, while the County is not compelled to return seized property if the property is illegal, the local ordinance at issue “ultimately regulates land use within the County; it does not (nor could it) render illegal a substance that is legal under state law.”

In enforcing the local regulation, which bars cultivation of more than 99 medical cannabis plants, the County Sheriff’s office seized 2,200 plants from the Granny Purps in the summer of 2015.  Granny Purps alleges this seizure forced the company to shutter.  To recoup its losses, the business brought a lawsuit seeking: (i) monetary damages for trespass, conversion and other claims; (ii) return of its plants; and (iii) a declaration that the County cannot seize product from businesses operating in compliance with state law.  The trial court sustained the County’s demurrer on the grounds that Granny Purps’s compliant failed to state a valid cause of action and that the claims were time barred.

While the Appellate Court found Granny Purps’s claims for monetary damages under the Government Claims Act were, in fact, time barred, the Court determined the cultivator’s claims for return of the plants were viable.  Moreover, the Court found the County cannot rely on a violation of land use ordinance – whether actual or alleged – to justify seizure of the cannabis plants.

In coming to this decision, the Court recognized that state law authorized the County, under its local police power, to pass ordinances limiting the cultivation of medical cannabis.  However, this authorization does not then make the cultivation of such products criminally illegal.   Therefore, contrary to the County’s argument, the Court found the cannabis plants do not qualify as “contraband” subject to exemption from well-established law that a governmental agency cannot retain an individual’s property without providing due process of law.  Per the Court: “The illegal property exception applies only where the property in question is per se illegal to possess…But individual property rights, including the right to the return of non-contraband property from the government, are not diminished by the inherent power of local governments to regulate uses of land.”  Therefore, the County’s power to penalize violations of its cannabis-related land use ordinances is limited to citation or injunction, but is not broad enough to include seizure without due process.

While this holding is hopeful, in order to be eligible for return of its product or compensation in the likely event the plants were destroyed, Granny Purps will be required to prove to the trial court on remand that its operation was entirely legal and the plants were cultivated in compliance state law.