HomeMy WebLinkAbout21CV-0734 - Opposition Filed1
Opposition to Demurrer
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John Armstrong
Armstrong Law Group
23232 Peralta Drive
Suite 102
Laguna Hills, CA 92653
Tel. 949-942-6069
Cell. 949-390-4307
Attorneys for Petitioner/Plaintiff
NHC SLO, LLC
john@armstronglawgroup.co
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN LUIS OBISPO
NHC SLO, LLC,
Petitioner and Plaintiff,
versus
CITY OF SAN LUIS OBISPO; CITY
COUNCIL OF AND FOR THE CITY OF
SAN LUIS OBISPO; AND DOES 1-10,
INCLUSIVE,
Defendants and
Respondents.
Case No.: 21CV-0734
Assigned to: Judge Rita Federman
OPPOSITION TO DEMURRER;
MEMORANDUM; FILED
CONCURRENTLY WITH
DECLARATION OF HELIOS
DAYSPRING
Dept.: 2
Time: 8:30a.m.
Date: 07-07-2022
ELECTRONICALLY
FILED6/23/2022 10:18 PM
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Opposition to Demurrer
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MEMORANDUM
1.Introduction
NHC SLO, LLC sues the City of San Luis Obispo for unlawfully revoking its issued cannabis
business permit on October 6, 2021 by not following the City’s own Cannabis Ordinance providing
the procedures and reasons for such revoking of an issued cannabis business operator’s permit. The
City did this without a hearing, citing its Ordinances that apply only to cannabis applications to
justify its actions. As set out below and as set out in the City Ordinances and Regulations of which
the City seeks Judicial Notice of, the City does not have the power to terminate or revoke an issued
cannabis permit after it has approved a cannabis business permit application that has ripened into a
permit.
Under the City’s own ordinances, once an application ripens into a permit, the City must follow
its ordinances regulating permit holders to revoke or a terminate a permit. Under the City’s own
Ordinances and Regulations, a permit holder is entitled to a hearing and must be shown to have
wrongfully operated the permit.
Since Petitioner never opened to the public, Petition has never been given the chance to operate
the permit in public. Thus, there is no proper legal basis for the City’s adverse action unless this
Court believes that the words “application” and “permit” are synonyms. If they are, then the City’s
action is correct. If they are not synonyms, then the City has violated its own Ordinances and
Regulations and so abused its discretion in the manner that it has applied its own local laws, requiring
the instant demurrer to be overruled.
2.Statement of Facts
The City does not dispute the facts pled in the Petition at issue. On demurrer, all material facts
pled are admitted and all inferences are drawn in favor of entitlement to relief. In April of 2019,
NHC SLO provided the City of San Luis Obispo information regarding the members of NHC SLO
their experience in cannabis, their financial information, and information the City requested in its
Cannabis Background Questionnaire,” which requested information if the members had committed
any crimes or were presently aware of any tax issues.
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Helios Dayspring completed this questionnaire disclosing that he had committed cannabis-related
crimes and other criminal conduct, and was the primary financier for NHC SLO, LLC, disclosing his
finances and all his federal and state tax returns.
In April of 2019, there were no state or federal tax liens or claims against Mr. Dayspring. It was
also expressly disclosed to the City around this time that Helios Dayspring owned the property where
NHC SLO was to operate in the City of San Luis Obispo. (City’s RJN, at Ex. 3, p. 36 (pdf 43) and
Ex. 4, p. 41 (pdf p. 47).
On October 22, 2019, the City awarded NHC SLO a Cannabis Business Operator’s Permit.
Around October of 2020, Helios Dayspring determined that it would be good for business to have
NHC SLO primarily owned and controlled by a minority woman, and to such end, gifted his shares in
NHC SLO to Valnette Garcia, who the City already had approved as a co-owner of NHC SLO on the
original application. Also in October of 2020, the City approved of Helios Dayspring’s withdrawal
and Valnette Garcia’s acquiring all of Helios Dayspring’s majority equity position in NHC SLO in
exchange for a Promissory Note.
While Ms. Garcia was the primary owner of NHC SLO and while Helios Dayspring had no
equity in NHC SLO it applied for and obtained a license to operate a cannabis retail dispensary in the
City of San Luis Obispo in June of 2021.
As part of this process, the City confirmed with the California Bureau of Cannabis Control
that NHC SLO had a local permit to operate a cannabis dispensary at its location in the City of San
Luis Obispo.
On July 28, 2021, the U.S. Department of Justice issued a press release that Helios Dayspring
intended to plead guilty to federal tax evasion charges and to bribing SLO County Supervisor Adam
Hill to gain favorable treatment to his cannabis businesses. Local City news had been reporting.
On August 25, 2021, local news media in SLO County reported that SLO Mayor, Heidi
Harmon intended to resign as Mayor of the City of San Luis Obispo amid Helios Dayspring’s
pleading guilty to tax evasion and bribing County Supervisor Adam Hill, as Dayspring had helped
Harmon raise campaign funds for her and other SLO City Council Members. (See SLO Mayor
Harmon to announce career change, timing suspect (calcoastnews.com).)
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As set out in Dayspring’s Declaration filed concurrently with this Opposition, Dayspring
spent over $4,200,000 to acquire and build out the property to the City’s specification, and, at the
City’s urging, another $3,700,000 to build the dispensary to the City’s liking on reliance on the City’s
grant of the subject cannabis permit to NHC SLO.
Despite being fully aware of the criminal charges against Dayspring and having NHC SLO’s
response to the City’s Questionnaire regarding Dayspring’s involvement in NHC SLO and the two
other successful applicants who the City awarded Cannabis Business Operator Permits, on September
13, 2021, the City sent NHC SLO two letters. (See Exs. C and D to the concurrently filed Dayspring
Declaration).
These September 13, 2021 letters: (1) Confirmed that NHC SLO had a valid Cannabis
Business Operator’s Permit; (2) confirmed that the City had removed and replaced Helios Dayspring
with Valnette Garcia as the principal owner of NHC SLO; and (3) warned NHC SLO that it had to
move quickly to complete all City inspection by October 22, 2021 so that it NHC SLO could
activate” its existing permit and be open to the public.
As a result, NHC SLO and Dayspring, as landlord, pumped hundreds of thousands of dollars
into this project to ensure meeting the City’s October 22, 2022 deadline.
When the City realized that NHC SLO as going to be able to meet the October 22, 2021
deadline, the City notified NHC SLO by letter that it was unilaterally “terminating” its SLO City
Cannabis Business Operator’s Permit on October 6, 2022, citing on relying on the City’s Ordinances
granting the City discretion to reject cannabis permit applications for misstatements or omissions in
the application. ignoring that the City’s specific ordinance governing permit revocation fails to grant
the City such power.
After unsuccessfully trying to resolve this matter with the City, NHC SLO filed the instant
writ to compel the City to follow its own enacted cannabis ordinances, as had the City complied with
its own ordinances regulating permit holders, it would have to reinstate Petitioner’s cannabis permit,
as the City has no grounds under its Ordinance regarding suspension and revocation of issued permits
to terminate or revoke Petitioner’s permit.
In support of the Demurrer, the City does not explain why it does not have to follow its
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ordinance regarding the suspension and revocation of issued cannabis permits to Petitioner, namely
City Ordinance 9.10.090 Suspension or revocation of permit.
Instead, the City argues that since it never allowed Petitioner to “activate” its issued permit. it
can treat the awarded permit as if it is still a mere “application” under City Ordinance 9.10.070
Commercial cannabis operator permit application procedures and requirements, which enable
the City to terminate a cannabis application at any time for nearly any reason. The City then cites and
relies on an unpublished superior court decision in violation of the California Rules of Court, rule
8.1115(a), which simply held that under Ordinance 9.10.070, the City can deny a permit to an
applicant for making even “good faith” or innocent errors on its application, so long as the City has
not issued the applicant a permit.
There is no City ordinance that states that an issued permit is treated as cannabis application
until the City expressly “activates” the permit.
In contrast here, NHC SLO, SLO Cal Roots, and Megan’s Organic Market (“MOM”), were the
only three successful applicants to whom the City issued City permits to. Notably, Helios Dayspring
funded all three of these applications, even though the other two dispensaries failed to disclosure this
in their application disclosures, but subsequently provided information to the City of Dayspring’s
financing. To date, the City has taken no action terminate or revoke the other two permit
holders for their material failure to disclose Dayspring’s financing of their businesses and
cannabis applications.
After the Demurer sets up its straw man argument that “substantively” it can treat NHC SLO as a
mere applicant and ignore that the City awarded NHC SLO a permit, and so does not have to follow
its express Ordinance regulating when and how to revoke an awarded cannabis permit from an
existing permit holder, the City proceeds to attack Helios Dayspring’s disclosures regarding NHC
SLO’s Cannabis Disclosure Questionnaire, crying that he defrauded the City to win NHC SLO’s
application.
On close examination, this argument is a red herring. The City ignores that Helios Dayspring
disclosed he had committed crimes that he had not been convicted of and other illegal acts, and that is
primary source of income was the cannabis empire he created. So, the City either negligently, or
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worse, intentionally omitted the fact that Mr. Dayspring expressly admitted to having committed
crimes in NHC SLO’s cannabis application, but approved NHC SLO’s application anyway, against
the recommendation of the City’s Police Department. (See City’s RJN, Ex. 5, pp. 74-76 [pdf pages
85-87].) Thus, the City knew that Dayspring could be criminally prosecuted by either the federal
government or by California for cannabis crimes, meaning that all his finances were at risk. After
such disclosures were expressly made, for the City to ignore that it glossed over these disclosures
now is at best disingenuous.
Regarding Dayspring’s Cannabis Disclosure for NHC SLO, this document, at page 76 [pdf p. 85]
states that, “I acknowledge any information omitted, not disclosed, or found to be false is subject to
disqualification for a Cannabis Operator Permit.” That is, an applicant might not be awarded a permit
if there are errors, omissions, or false statement in the application. This language does not state that
such errors subject an issued permit to immediate disqualification, as argued by the City.
In addition to other problems with the City’s punitive action against NHC SLO, the City is aware
that Mr. Dayspring financially supported the other two successful cannabis applicants in the City,
namely, SLO Cal Roots and Megan’s Organic Market, yet the City has singled out only NHC SLO,
LLC for “disqualification” of NHC SLO’s permit (see City’s RJN Ex. 4 p. 68 [pdf p. 76]), but there is
nothing in the City’s Ordinances that prevents even a convicted felon from owning property that is
leased to a cannabis business within the City.
Moreover, there is obviously false tax information supporting SLO Cal Root’s cannabis
application, as one its members touted substantial success selling cannabis but submitted tax returns
showing earnings below the federal poverty level. (See Dayspring Decl., Ex. E-H at ¶¶ 55-60.)
3. Procedural Posture
Previously, Petitioner sought emergency, ex parte relief to maintain the status quo by having its
cannabis permit immediately reinstated during the pendency of this litigation. This Court denied that
request, finding that Petitioner had not met its extraordinary burden of proof of exigence
circumstances and a high probability of prevailing on the merits.
This court’s earlier decision is an interim ruling that may be changed any time up until the time a
final judgment is entered in the case. (See Francois v. Goel (2005) 35 Cal.4th 1094, 1107-1109 [trial
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courts have inherent power to reconsider all interim rulings until final judgment entered].)
For fear of losing its California State license before a hearing on the merits of its instant Petition,
Petitioner sought appellate writ review to the Second District Court of Appeal and to the California
Supreme Court, which writs were summarily denied without decision. The summary denial of a writ
is not law of the case and does create issue or claim preclusion. (See Kowis v. Howard (1992) 3
Cal.4th 888, 899; and see Cal. Const., art. VI, § 14.)
4. Standard of Review on Demurrer
A demurrer is, in essence, a request that the case be dismissed because the facts alleged in the
complaint are insufficient as a matter of law to justify any relief.” (Apple Inc. v. Superior Court
2013) 56 Cal.4th 128, 152.) The standards of review for general demurrers are well-settled. The
reviewing court treats the demurrer as “admitting all material facts as properly pleaded.” (Zelig v.
County of Los Angeles (2002) 27 Cal.4th 1112, 1126 26 quoting Blank v. Kirwan (1985) 39 Cal.3d
311, 318.)
T]he allegations of the complaint must be read in the light most favorable to the plaintiff and
liberally construed with a view to attaining substantial justice among the parties.” (Venice Town
Council v. City of L.A. (1996) 47 Cal.App.4th 1547, 1557; Code Civ. Proc. § 452.) The Court “may
affirm the sustaining of a demurrer only if the complaint fails to state a cause of action under any
possible legal theory.” (Sheehan v. San Francisco 49ers, Ltd. (2009) 45 Cal.4th 992, 998; see also
Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 810; C.A. v. William S. Hart Union High
School Dist. (2012) 53 Cal.4th 861 (“To survive a demurrer, the complaint need only allege facts
sufficient to state a cause of action.”).)
Any valid cause of action in whole or in part overrules a demurrer. (Code Civ. Proc., § 430.10,
subd. (e).) Each evidentiary fact that might eventually prove plaintiff’s claim need not be alleged in
the complaint to survive demurrer. (C.A., supra, 53 Cal.4th at p. 861.) The truth of the allegations or
probability that plaintiffs may prove the accuracy of their allegations at trial is outside the scope of a
demurrer. (McKenney v. Purepac Pharmaceutical Co. (2008) 167 Cal.App.4th 72, 83.)
A demurrer only tests the legal sufficiency of the pleading. (Ibid.) “[A] general demurrer is
usually not an appropriate method for testing the merits of a declaratory relief action, because the
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plaintiff is entitled to a declaration of rights even if it is averse to the plaintiff's interest.” (Qualified
Patients Assn. v. City of Anaheim (2010) 187 Cal.App.4th 22 734, 751 quoting Cal. Judges
Benchbook: Civil Proceedings Before Trial (CJER 2d ed. 2008) 23 Attacks on Pleadings, § 12.83, p.
52.)
5. The City Could Not Lawfully Revoke Petitioner’s Awarded Cannabis Permit Without a
Hearing Consistent with the City Ordinance Regulating Permit Revocations
As admitted in the City’s Demurrer, the City unilaterally revoked NHC SLO, LLC’s Cannabis
Operator Permit without a hearing for the reasons stated in the City’s Memorandum Decision marked
as Exhibit H to Petitioner’s Petition, at Bates Nos. NHCSLO60-72. There, the City cited its
Ordinance regulating cannabis applications as applying to issued cannabis permits—however, the
express words in the City’s Ordinance do not allow for this.
When construing statutes, courts look first to the words of the statute, which should be given their
usual, ordinary, and commonsense meaning (People v. Mejia (2012) 211 Cal.App.4th 586, 611). The
purpose of utilizing the plain meaning of statutory language is to spare the courts the necessity of
trying to divine the voters’ intent by resorting to secondary or subjective indicators.
For example, the City’s based its ability to revoke an issued permit without a hearing “pursuant to
San Luis Obispo Municipal Code (SLOMC) Sections 9.10.070, subsections C.4. (Petition, Ex. H, p.
76 [last paragraph].)
This Ordinance however expressly only applies to Cannabis applications by its express terms:
C. Grounds for Automatic Disqualification. In addition to any other reason that may be
established by the city council as a basis for disqualification, an applicant shall be disqualified
from applying for, or obtaining, a commercial cannabis operator permit if… 4. The applicant
made one or more false or misleading statements or omissions in the application process.” (Bold
added.) (See Ch. 9.10 Cannabis Regulations | San Luis Obispo Municipal Code.)
This Ordinance states that the City should disqualify a person from applying for a cannabis
operator’s permit and should disqualify an applicant for a permit if false or misleading statements or
omission are found in the application. By its terms, however, this Section does not apply when the
City has already awarded the applicant a permit. At that point, the City must resort to its permit
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revocation procedures. Here, the City’s permit revocation procedures do not authorize the City to
terminate awarded permits without a hearing and without proof of that permit has been operated
improperly, as a permit holder has passed the City’s application procedures when the applicant is
awarded a permit.
The plain language of this Ordinance states that the City may disqualify an applicant from being
awarded a Cannabis Operator Permit: It does not expressly grant the City the power to revoke an
already awarded Cannabis Operator Permit. As per Ordinance 9.10.070, the City is entitled to and did
conduct extensive background checks, interviews, use of police, and required applicants to sign
consents to all kinds of investigations that law enforcement would not otherwise be entitled to do in
order to apply for the City’s Cannabis Operator Permit.
Once the City does approve an application, however, it no longer has plenary authority to revoke
an issued Permit—a result that California appellate courts have rejected multiple local governmental
efforts to do, because once a permit/entitlement is issued, third parties rely on and make significant
business decisions on providing capital and resources to permit holders who have passed the rigorous
local government vetting process.
The SLO Ordinance regulating Permit Holders like NHC SLO, LLC provides as follows
regarding suspension of revocation of issued permits:
9.10.090 Suspension or revocation of permit.
In addition to any other penalty authorized by law, a commercial cannabis
operator permit may be suspended or revoked if the city finds, after notice
to the permittee and opportunity to be heard, that the permittee or his or her
agents or employees have violated any condition of the permit imposed
pursuant to, or any provision of, this chapter.
A. Upon a finding by the city of a first permit violation within any five-year
period, the permit shall be suspended for thirty days.
B. Upon a finding by the city of a second permit violation within any five-year
period, the permit shall be suspended for ninety days.
C. Upon a finding by the city of a third permit violation within any five-
year period, the permit shall be revoked. (Ord. 1647 § 4 (Exh. A (part)),
2018)” [Bold added for emphasis.]
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The City Ordinance governing the revocation of a cannabis operator permit does not allow
the City to terminate an issued Permit for misstatements or misinformation in the cannabis
license application process. If it did, this is where that language would and should have appeared.
Rather, by its express terms, revocation of a Permit is limited to active misconduct by the
licensee in the operation of the permit. (See S.L.O. City Ordinance 9.10.090, "Suspension of
revocation of permit," Ch. 9.10 Cannabis Regulations | San Luis Obispo Municipal Code.)
Because the City is not following its own set of rules that it created is the reason why
Petitioner/Plaintiff NHC now seeks relief here. The Petition at issue is made under Code of Civil
Procedure, § 1094.5 which makes administrative mandamus available for review of ‘any final
administrative order or decision made as the result of a proceeding in which by law a hearing is
required to be given, evidence is required to be taken and discretion in the determination of facts is
vested in the inferior tribunal, corporation, board or officer.’Topanga Assn. for a Scenic
Community v. County of Los Angeles (1974) 11 Cal.3d at p. 515, fn. 12.) “[I]mplicit in section 1094.5
is a requirement that the agency which renders the challenged decision must set forth findings to
bridge the analytic gap between the raw evidence and ultimate decision or order.” (Id. at p. 515.)
Here, the record shows that Petitioner was entitled to a hearing SLO Ordinance 9.10.090
before the City could revoke its Cannabis Operator Permit, which the City failed and refused to do.
In reviewing an agency's decision under Code of Civil Procedure section 1094.5, the trial
court determines whether
1) the agency proceeded without, or in excess of, jurisdiction;
2) there was a fair hearing; and
3) the agency abused its discretion. [Citation.]”
McAllister v. California Coastal Com. (2008) 169 Cal.App.4th 912, 921; C.C.P., 1094.5, subd.
b).)
Abuse of discretion is established if the respondent has not proceeded in the manner
required by law, the order or decision is not supported by the findings, or the findings are not
supported by the evidence.”C.C.P., § 1094.5, subd. (b).) (Neighbors in Support of Appropriate
Land Use v. County of Tuolumne (2007) 157 Cal.App.4th 997, 1004 [italics added].) Here, the record
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shows that Respondent City has not “proceeded in a manner required by law” by failing to follow its
Ordinance regulating revocation of issued Cannabis Permits.
6. Cases Show Cities May Only Revoke Issued Permits for Fraud in the Permit
Application When the City’s Ordinance Expressly Makes Fraud Grounds for
Revocation And Only If the Permit Holder Hasn’t Relied on the Permit
The only appellate case that Petitioner could find where an appellate court addressed a City’s
ability to revoke an issued permit when it later learned that the applicant made material misstatements
on its application is Smith v. Kraintz (1962) 201 Cal.App.2d 698. There, the appellate court held that
the City could lawfully revoke a permit issued to a property owner who made fraudulent statements
in the permit application because the City had an Ordinance expressly stating that the City could
revoke an issued permit if it determined that the applicant lied in the application:
we advert to appellant's contention that revocation of the permit was improper, even
if there were an easement, because there was no fraud in the applying for it. This is
without merit. Ordinance No. 1372 of the County of Contra Costa permits
revocation of building permits for "fraud, misrepresentation or false statement
contained in an application." There was a false statement, although not a fraudulent
one, in the application for the building permit, wherein plaintiff described himself as
the owner of the property. We have come to the conclusion, as set forth below, that he
was not the owner in the sense referred to in the application, because of the existence
of the easement. The application contains a warning that the permit "does Not Include
any construction within the Public Right of Way." Thus, there having been no
building following the permit, and the permit having contained a false statement,
the proper authority, in this case the chief building inspector, could revoke it.
Bold added.]
Here, the appellate court found for the City because its Ordinance providing for revocation of
issued permits expressly provided that false statements in the application authorized revocation
and because the permit holder had not yet incurred monies in reliance on the permit.
In stark contrast to Smith, supra, both the permit holder and property owner incurred millions
of dollars of debt and work in reliance on the issued permit, and the City’s Ordinance regarding
revocation of issued cannabis permit does not contain a provision for revoking issued permits for
fraud or misstatements in the application.
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Rather, Respondent seeks to mislead the Court by focusing only on the City’s Ordinances
regulating cannabis applications by bootstrapping the City’s application laws to apply to issued
cannabis business permits, when its ordinances do not allow for this.
7. Once Respondent City Issued Petitioner the Cannabis Operator Permit, Petitioner
Acquired a Vested Property Right in the Permit
In Avco Community Developers, Inc. v. South Coast Regional Com. (1976) 17 Cal.3d 785, at 791,
if a property owner has performed substantial work and incurred substantial liabilities in good faith
reliance upon a permit issued by the government, he acquires a vested right.” (See Clerici v. Dep’t of
Motor Vehicles (1990) 224 Cal.App.3d 1016, 1023 (vested rights are defined “in terms of a contrast
between a right possessed and one that is merely sought in an application”); see also Berlinghieri v.
Dep’t of Motor Vehicles (1983) 33 Cal.3d 392, 396 (“[b]usiness or professional licensing cases have
distinguished between the denial of an application for a license (nonvested right) and the
suspension or revocation of an existing license (vested right)”) [bold added].)
Once the City issues a permit to a business, that business has a vested property right in the
permit that exists outside of the terms of the permit itself under binding appellate court precedent.
See Goat Hill Tavern v. City of Costa Mesa (1992) 6 Cal.App.4th 1519, at 1529-30 (that a permit
had to be renewed did not change the fact that permit holder had a vested right); Pardee Const. Co. v.
Cal. Coastal Comm’n (1979) 95 Cal.App.3d 471, 481-82 (developer still had a vested right even
though it allowed permit to lapse).)
Any time that a permit holder has performed substantial work and incurred significant in good
faith reliance on the issuance of the Permit, there is a vested right to operate the business consistent
with the issued permit. (See Avco Community Devs., Inc., supra, 17 Cal.3d at 791 (where “a property
owner has performed substantial work and incurred substantial liabilities in good faith reliance upon
a permit issued by the government, he acquires a vested right to complete construction in accordance
with the terms of the permit.”).)
Vested rights outlive the permit upon which they are based, due to their vested nature. In other
words, due process protects the Petitioner’s interests, not their permits specifically.
See Traverso v. People Ex Rel Dept. of Transp. (1993) 6 Cal.4th 1152, at 1162 (“Once a permit has
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been issued, its continued possession becomes a significant factor in the [possessor]’s legitimate
pursuit of a livelihood. The revocation of a permit thus … cannot be accomplished without affording
the procedural due process required by the Constitution.”).)\
The above cases show that California law treats applicants for licenses or permits as having no
vested rights whereas those holding issued permits or licenses as having Constitutionally protected
vested rights.
Consistent with applicable case law and the City’s own Ordinances, different rules apply to
applicants for Cannabis Operator Permits and Cannabis Operator Permit holders—the latter are
entitled to hearings, etc., whereas the former may be disqualified for any of the reasons stated in the
City’s ordinance before the City issues the actual permit. Once the permit is issued, and the permit
holder has incurred expenses on reliance on the permit, due process requires notice and hearing
consistent with the City’s Ordinance governing revocation hearings.
8. Conclusion
The City admittedly has no lawfully enacted Ordinance that expressly authorizes it to revoke an
issued Cannabis Operator Permit for omissions or false statements in the cannabis operator
application.
Appellate cases have only affirmed revocation of issued permits when the City can show its
Ordinance providing for revocation of issued permits expressly lists fraud in the application process
as a grounds for permit revocation and only if the permit holder has not yet relied on the permit. The
City’s evidence fails both these tests.
Under the City’s own Ordinances, an issued Cannabis Operator Permit can only be revoked after
the third failure to comply with proper operation of the permit. The City thus demands that this Court
interpret the word “application” and “permit” as meaning the same thing, which defies not only
common sense, but such strained interpretation is also inconsistent with how the City uses those
words in its own Ordinances before this dispute arose, and despite that these words are used
differently in standard dictionaries. (See Application Definition & Meaning - Merriam-Webster and
compare with Permit Definition & Meaning - Merriam-Webster.) An “application” is a request for
permission while a permit is an express and formal grant.
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Moreover, the City is aware that the other cannabis permit holders lied about Dayspring’s
involvement in their applications but has taken no action to revoke their permits. The Pleadings and
submitted evidence show that the City’s demurrer must be overruled, as all evidence and argument
must be construed in the light most favorable to Petitioner. Petitioner has established that it and its
property owner incurred substantial debts on reliance on the issued permits that the City revoked
shortly before Petitioner was scheduled to open to the public, and after the City forced it and its
property owner to incur substantial expenses to meet the City’s October 2021 opening deadline.
ARMSTRONG LAW GROUP
Dated: June 23, 2022 _______________________________
John Armstrong, attorneys for
Petitioner NHC SLO, LLC
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DECLARATION OF SERVICE BY EMAIL
I, the undersigned, declare as follows:
I am a resident of the County of Orange and I am over the age of 18 years, and not a party to
the within action. My place of employment is 23232 Peralta Drive, Suite 102, Laguna Hills, CA
92653.
One June 23, 2022, I served Petitioner NHC SLO’s Opposition to Demurrer and supporting
Declaration of Helios Dayspring on the Respondent City of San Luis Obispo’s attorneys of record,
namely, Dan Richards, at Daniel.Richards@bbklaw.com and on Jeffrey Dunn at
Jeffrey.Dunn@bbklaw.com using OneLegal’s e-service system at the time of filing these pleadings.
I declare under penalty of perjury under the laws of the State of California that the foregoing is
true and correct, and that this declaration was executed on June 23, 2022 at Laguna Hills,
California.
John Armstrong, declarant and attorneys for
Petitioner, NHC SLO, LLC