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Apr"8,2022RECEIVEDTo-JudgeFederman4/1/2022 4:43 PM RF 04/11/2022
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IN THE COURT 0F APPEAL,
THE STATE 0F CALIFORNIA,
SECOND APPELLATE DISTRICT
DIVISION 6
Court of Appeal
N0.
Superior Court
No.21-CV—0734
PETITION FOR WRIT OF MANDAMUS,
PROHIBITION,OR OTHER WARRANTED RELIEF
Honorable Rita Federman,Judge
San Luis Obispo Superior Court
Civil Department 2
John Armstrong,Bar No.183912
Armstrong Law Group
23232 Peralta Drive,Suite 102
Laguna Hills,CA 92653
Tel.949-942-6069
Cel.949-390-4307
John @ArmstrongLawGrouDCo
John @ArmstrongLaw.Group
Attorney for Petitioner and
Petitioner,NHC SLO,LLC
NHC SLO,LLC
Petitioner and Petitioner
versus
San Luis Obispo Superior Court,
Respondent and Respondent.
City of San Luis Obispo,
Real Party in Interest
2
CERTIFICATE OF INTERESTED ENTITIES OR
PERSONS
The following entities or persons have either (1) an
ownership interest of 10% or more in the party filing this
Certificate or (2) a financial or other interest in the outcome of
the proceeding that the justices should consider in determining
whether to disqualify themselves: Valnette Garcia.
Dated: March 29, 2022
John Armstrong
3
TABLE OF CONTENTS
PAGES
CERTIFICATE OF INTERESTED ENTITIES OR PERSONS ..... 2
TABLE OF CONTENTS .............................................................. 3
TABLE OF AUTHORITIES ......................................................... 5
INTRODUCTION ........................................................................ 6
PETITION FOR WRIT OF MANDATE, PROHIBITION, OR
OTHER PROPER RELIEF .......................................................... 9
Authenticity of Exhibits .............................................................. 9
Beneficial Interest of Petitioner; Capacities of Respondent ....... 9
Chronology of Events .................................................................. 9
Basis for Relief .......................................................................... 18
Absence of Other Remedies ...................................................... 20
REQUEST FOR RELIEF ........................................................... 21
VERIFICATION ........................................................................ 23
MEMORANDUM ...................................................................... 25
WRIT RELIEF IS ESSENTIAL TO RESOLVE AN IMPORTANT
LEGAL ISSUE ........................................................................... 25
A.Must Cities Comply with Their Own Municipal Code
Regarding Revoking Issued Permits? ....................................... 25
4
B. A Review of the City’s Own Cannabis Ordinances Shows It
Lacked the Right to Revoke NHC SLO’s Cannabis Business
Permits ...................................................................................... 25
C. Delayed Review By Appeal Or By Respondent Superior
Court Results in Irreparable Harm to Petitioner ...................... 33
CONCLUSION .......................................................................... 36
CERTIFICATION OF WORD COUNT ...................................... 39
PROOF OF SERVICE ................................................................ 40
5
TABLE OF AUTHORITIES
CASES
American Internat. Group, Inc. v. Superior Court (1989)
234 Cal.App.3d 749 .................................................................. 34
Andreini v. Superior Court (1998)
60 Cal.App.4th 1415 ................................................................. 35
Avco Community. Devs., Inc. (1976)
17 Cal.3d 790 ............................................................................ 33
Berlinghieri v. Dep’t of Motor Vehicles (1983) 33 Cal.3d 392 . 33
Clerici v. Dep’t of Motor Vehicles (1990)
224 Cal.App.3d 1016 ................................................................ 33
Feminist Women’s Health Center v. Superior Court (1997)
52 Cal.App.4th 1234 ................................................................. 35
Hunt Superior Court (1999) 2 Cal.4th 984 .............................. 29
Malibu 21 Mountains Recreation, Inc. v. County. of L.A. (1998)
67 Cal.App.4th 359 ................................................................. 33
STATUTES
California Constitution, Article 11, section 7 ............................ 29
California Constitution, Article I, § 7 ........................................ 29
OTHER AUTHORITIES
San Luis Obispo Muncipal Code, § 9.10.090 ............................ 28
San Luis Obispo Municipal Code, § 9.10.070 .......................... 27
San Luis Obispo Municipal Code, 17.86.080……………………….29
6
IN THE COURT OF APPEAL
OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION 6
NHC SLO, LLC,
Petitioner and Petitioner,
versus
San Luis Obispo Superior Court,
Respondent and Respondent.
City of San Luis Obispo,
Real Party in Interest
PETITION FOR WRIT OF MANDATE,
PROHIBITION, OR OTHER PROPER RELIEF
INTRODUCTION
This case presents a purely legal issue that significantly
impacts the parties, and which warrants urgent consideration
by this Court. In sum, the City of San Luis Obispo issued NHC
SLO, LLC a cannabis business permit, confirmed that with the
California Department of Cannabis Control that this license was
7
validly issued, and had authorized a change of ownership of the
entity, whereby the City approved removing Helios Dayspring
from NHC SLO, LLC months before his federal proceedings
were brought against Mr. Dayspring for federal tax evasion, to
which Dayspring pleaded guilty to.
The City, without a hearing, unilaterally revoked NHC
SLO, LLC’s cannabis business permit with the City. NHC SLO,
LLC filed a Petition for writ review. NHC SLO, LLC also filed an
Ex Parte Application to re-instate its local, City cannabis
business permit, to avoid losing its California State cannabis
business license.
The City opposed the Ex Parte Application, claiming it
could, under its Municipal Code, revoke an issued cannabis
license. However, the Code sections that the City cited to revoke
the subject permit to the Superior Court below show only that
the City has the right to revoke an application for cannabis
permits, as the City Municipal Code requires a hearing and
improper use of an issued City cannabis business permit to
revoke such City Permit.
8
This is a purely legal question based on interpretation of
the City’s own Municipal Code, which is the central bone of
contention between the Parties. NHC SLO claims that had the
City followed its own Code, it lacked the authority to revoke its
issued permit, which NHC SLO spent hundreds of thousands of
dollars on reliance on in completing the build out of its facility
to meet the City’s stringent, retail cannabis requirements.
The other problem, is that the second part of the Ex Parte
Application, was to specially set a hearing on a motion for
preliminary injunction based on the evidence submitted in
Petitioner’s Ex Parte Application. The Superior Court denied
that the request, and gave July 7, 2022, as the first available
date to hear such motion, which is why Respondent City has set
its Demurrer on the same facts and evidence for this same date.
By July of 2022, NHC SLO, LLC will be out of business,
and will have lost its State Cannabis License, which it will take
at least a year to get back, as it will have to start a new
application, making delayed justice against the City justice
denied.
9
Since Petition has no other remedy and no other
expedient remedy, Petitioner is forced to seek writ relief with
this Court.
PETITION FOR WRIT OF MANDATE, PROHIBITION,
OR OTHER PROPER RELIEF
Authenticity of Exhibits
1. All exhibits filed concurrently with this Petition are true
and correct copies of original documents filed with the
Superior Court, and are filed in Compliance with the
Rules of Court, and this Court’s local rules.
Beneficial Interest of Petitioner; Capacities of
Respondent
2. Petitioner NHC SLO, LLC is a limited liability company
and the Petitioner in the superior court below, seeking to
reverse Respondent City o San Luis Obispo’s unilateral
revocation of its cannabis business permit without a
hearing.
Chronology of Events
10
3. The following facts are not disputed. The legal
significance of the facts, however, are.
4. In 2019, NHC SLO, LLC applied for a cannabis business
permit.
5. On April 9, 2019, Helios Dayspring completed a police
background check, admitting to engaging in criminal
activities but indicating he was then aware of any claims
of tax evasion against Mr. Dayspring or that his taxes
were incorrect. (Ex. A to Officer Pfarr Decl.)
6. Despite the express disclosure of criminal activities, the
City nevertheless issued NHC SLO, LLC a cannabis
business permit to operate a cannabis dispensary within
City limits while Helios Dayspring was a significant owner
of the entity. (Opposition to Ex Parte Application, Page 5,
Lines 9-20.)
7. On September 8, 2020, Helios Dayspring transferred all
his interest in NHC SLO, LLC to Valnette Garcia, on
October 9, 2020, sought and obtained the City’s approval
of this transfer. (Ex. A to City Attorney Dietrick’s Decl.)
There were no criminal charges pending against Mr.
11
Dayspring at this time (however, the City argues that Mr.
Dayspring “must have suspected” a problem, as opposed
to the NHC SLO having the advantages of a
predominantly woman/minority owned business).
8. By Spring of 2021, federal prosecutors investigating the
City of San Luis Obispo’s City Council for corruption, had
indicated that they were also considering prosecuting
Helios Dayspring for federal tax evasion, arising out of his
disclosed previous illegal cannabis activities, occurring
year earlier given the long statute of limitations for federal
tax-related crimes, and requested Mr. Dayspring’s
assistance regarding the investigation of the City of San
Luis Obispo in exchange for a plea deal.
9. By June 25, 2021, more than a year after Mr. Dayspring
was no longer a member of NHC SLO, LLC, the City again
confirmed that it had issued NHC SLO, LLC a cannabis
business permit that was in good standing and was able to
operate with the State of California’s Department of
Cannabis Control, resulting in the State of California
issuing NHC SLO, LLC a California State Cannabis Retail
12
License. (But still had not issued NHC SLO a formal
document, entitled “cannabis business permit.”)
10. The City repeatedly represented to NHC SLO, LLC
and third parties, like the State of California, that the City
of San Luis Obispo had issued NHC SLO a cannabis
business permit, but never provided NHC SLO an actual
copy of such permit: it only provided correspondence that
one existed.
11. By July 27, 2021, Helios Dayspring, whose only
connection to NHC SLO, LLC was as lessor, on the advice
of counsel, pled guilty to federal tax evasion, and to lesser
bribery charge involving then San Luis Obispo City
Councilmember Adam Hill, who later committed suicide
after prosecutors started charges against him.
12. Thereafter, the City of San Luis Obispo reviewed all
of Adam Hill’s decisions, and determined that he had
voted in favor of NHC SLO’s cannabis business permits.
The City of San Luis Obispo informed NHC SLO, LLC
that it met the requirements of the conditional use permit
for its location and its cannabis business operator’s
13
permit. The City never provided either formal permit to
Petitioner but represented to Petitioner that it met the
requirements, and later indicated it was revoking its
permits” (as opposed to Petitioner’s “application”).
13. In the response to the sting of public backlash
regarding the corruption within the San Luis Obispo City
Council, on October 6, 2021, the City of San Luis Obispo
wrote NHC SLO, LLC that it was immediately revoking its
cannabis business permit for “fraud in the application
process.” The City cited as legal authority for this its
Municipal Code section regulating cannabis business
permit applications, and, to date, has not pointed to an
authorizing Municipal Code section authorizing
revocation of an issued license, as opposed to a mere
application.
14. On October 19, 2021, the City again “re-affirmed”
its October 6, 2021 decision to revoke NHC SLO’s
cannabis business permit.
14
15. On December 23. 2021, NHC SLO filed a Petition
for Writ of Mandate/Other Relief with the San Luis
Obispo Superior Court.
16. Out of concern that the California Department of
Cannabis Control may revoke NHC SLO’s State cannabis
license while waiting for the Superior Court to decide the
legality of the City’s action, NHC SLO filed an Ex Parte
Application on January 28, 2022, and decided on
February 1, 2022.
17. The Ex Parte Application, like NHC SLO’s Petition,
argued that the City regulates permit holders differently
than cannabis business permit applications: Under the
City Code, the City may revoke a cannabis business permit
application at anytime without notice or hearing: In
contrast, under the City’s Municipal Code, a permit holder
can only have its permit revoked for the improper use of
the permit. Since NHC SLO never opened to the public, it
never could improperly “use” its permit improperly, and
was well passed the application process when the City
wrongfully revoked its permit.
15
18. The Ex Parte argued that there is a distinction with
a difference between a mere cannabis application and
issuance of a formal permit, and once a permit is issued, a
permittee has a right to rely on the Municipal Code
sections regulating permit holders as opposed to having to
comply, after-the-fact, with the provisions regulating
mere cannabis permit applicants—especially when, as
here, the City allowed a change of control of the entity,
and waited until just before NHC SLO was scheduled to
open and had invested hundreds of thousands of dollars
in reliance on being able to open before the City revoked
its permit without notice or hearing.
19. The City Opposed the Ex Parte Application. The City
argued that it has wide discretion to revoke a cannabis
application, and further argued that, despite it lacking an
express Code section authorizing immediately revocation
of a cannabis permit for what the City perceived as fraud
in the application process, it argued that its Code sections
authorizing its revocation of permits should impliedly
apply to issued cannabis permits, despite the lack of such
16
an express Code section in its Municipal Code, and
despite that the express sections of its Municipal Code
only authorize revocation of a cannabis business permit
for wrongful use of the permit after notice and hearing.
20. Additionally, the City argued that its grounds for
revocation NHC SLO’s cannabis business permit was
fraud” in that, despite Helios Daysprings exhaustive
disclosures of his past illegal cannabis activities, he did
not affirmatively disclose (and was unlikely unaware of at
the time), that he may have violated federal tax income
laws in connection with his disclosed illegal cannabis
activities.
21. The Superior Court below found that NHC SLO
failed to meet its burden for a temporary restraining order
or to advance the hearing on its requested motion for
preliminary injunction because, “As to the merits,
Petitioner fails to show a likelihood of success on the
merits sufficient to warrant temporary relief. Mr.
Dayspring personally signed Petitioner’s application fora
cannabis operator’s permit under penalty of perjury and
17
made other representations during the permitting
process. Respondents have presented persuasive evidence
to show that Mr. Dayspring made material
misrepresentations in the application process that
adversely impacted the approval of the permit. Such acts
violate the San Luis Obispo City Municipal Code. The fact
that Mr. Dayspring is no longer a member or owner of
Petitioner is of no moment, given that his statements
formed the basis of the approval. In short, Petitioner fails
to show that this is an ‘extreme case’ where the right to a
mandatory temporary restraining order is clearly
established.” (Order on Ex Parte Application, Page 3,
Lines 17-26.)
22. The Superior Court below, like Respondent City of
San Luis Obispo, failed to provide a citation to which City
Municipal Code section regulating permit holders
authorized the City to belated but immediately revoke an
issued permit retroactively for alleged fraud in the
application process.
18
23. The Superior Court never cited which section of the
City’s Municipal Code allowed the City to unilateral
revoke an issued cannabis business permit, but adopted
the City’s argument that such right was implied, and on
that basis found that NHC SLO could not meet its burden
to show a probability of prevailing, and since NHC SLO
could not show a “probability of prevailing,” its request to
have its local permit re-instated on condition that it not
open to the public until a full determination on the merits
was denied. This Petition followed.
Basis for Relief
24. The issue presented in this writ petition is whether
the City of San Luis Obispo can revoke an already issued
cannabis business permit without following its own
enacted procedures to do so, but may instead utilize its
Municipal Code sections regulation cannabis business
permit applications to revoke an otherwise issued permit.
25. Respondent superior court concluded that the City
did not have to follow its own Municipal Code regulating
how and when to revoke issued cannabis business permits
19
but could instead use its Municipal Code sections
regulating applicants to revoke a City-issued cannabis
business permit at any time—even months (and
presumably years) after a permit issued whenever the
City belatedly decides that there was a problem with the
cannabis permit applicant’s application with the City.
26. This was error, and the error is prejudicial. Because
the superior court below wrongly found that the City
could lawfully revoke NHC SLO’s permit without
following the City’s own regulations regarding how and
when to revoke issued cannabis permits, the superior
court found NHC SLO could not meet its burden of
showing a “probability of prevailing” to warrant an order
to maintain the status quo. As NHC SLO is concerned that
the State may revoke its State License, which will take a
year to get back, which delay in opening the business to
the public by such time will put a permanent financial end
to NHC SLO.
27. Had the superior court determined that the City had
not followed its own Municipal Code, which is an error or
20
law subject to independent review, then the superior court
could and should have found that NHC SLO had shown a
probability of prevailing” and could have issued an order
to maintain the status quo ante during the pendency of
the litigation, but wrongly chose not to do so.
Absence of Other Remedies
28. The order denying NHC SLO’s Ex Parte Application
is not appealable. (See Code Civ. Proc., § 904.1) The
earliest date NHC SLO can get on its motion for
preliminary injunction is July 7, 2022. This delay puts
NHC SLO’s license with the California Department of
Cannabis Control at risk, meaning that “even if” NHC SLO
prevails on its motion for preliminary injunction, it would
be hollow victory as it will be out of business from the loss
of its State cannabis retail license. This is because, under
present regulations, a cannabis retailer must have both a
local authorization (permit or local cannabis license) and
its State cannabis license to be open. Thus, petitioner has
no other remedy other than the relief sought in this
petition.
21
REQUEST FOR RELIEF
Petitioner NHC SLO, LLC requests that this Court:
1. Issue and alternative writ directing respondent
superior court to set aside and vacate its order of
February 1, 2022, and issue a new order granting the
Ex Parte Application such the City of San Luis Obispo
must re-instate NHC SLO’s cannabis permit; to
specially set hearing on NHC SLO’s requested motion
for preliminary injunction, at which time the superior
court will confirm or dissolve its Order on Petitioner’s
Ex Parte Application, or show cause why it should not
be ordered to do so, and upon return of the alternative
writ, issue a preemptory writ of mandate, prohibition,
or other proper relief as is warranted, directing
respondent superior court to set aside and vacate its
order of February 1, 2022;
2. Award petitioner its costs; and
3. Grant such other or further relief as is just and proper
22
under the facts presented to this Court.
Dated March 30, 2022 Respectfully submitted,
By: ___________________
John Armstrong,
attorneys for Petitioner NHC
SLO, LLC
9051/flMwnf’9051/flMwnf’9051/flMwnf’
23
VERIFICATION
I, John Armstrong, declare as follows:
I am the attorney for the petitioner herein. I have read the
foregoing Petition for Writ of Mandate, Prohibition, Or Other
Proper Relief, and know its contents. The facts alleged in the
Petition are within my knowledge and I know these facts to be
true, based on the evidence supporting my client’s Petition and
Ex Parte Application filed in the superior court below. Because
of my familiarity with the relevant facts regarding the Ex Parte
Hearing and hearings thereafter, I, rather than Petition, make
this verification to this Petition. Additionally, there was no
court reporter for the oral hearing on the Ex Parte Application,
which was done via Zoom.
I declare under penalty of perjury under the laws of
California that the foregoing is true and correct, and that this
declaration was executed on March 30, 2022 in Laguna Hills,
California.
John Armstrong, declarant
24
25
MEMORANDUM
WRIT RELIEF IS ESSENTIAL TO RESOLVE AN
IMPORTANT LEGAL ISSUE
A. Must Cities Comply with Their Own Municipal
Code Regarding Revoking Issued Permits?
This writ application is of interest to business permit holders
who have a passed the application process, but who
nevertheless have their licenses nevertheless at risk of
revocation based on later acquired evidence by the City who
issued a permit, even though such Cities have no express
Ordinance or Municipal Code authorizing such immediate
revocation.
Additionally, such policy seems against the weight of present
appellate authority recognizing that permit holders, unlike
permit applicants, have vested right to operate such permits in
a lawful manner.
B. A Review of the City’s Own Cannabis Ordinances
Shows It Lacked the Right to Revoke NHC SLO’s
Cannabis Business Permits
No one disputes the contents of the City’s Municipal Code
and related cannabis ordinances. The proper legal
interpretation of the City’s Municipal Code is however dispute.
Specifically, the City wrote:
Subject: Notice of Automatic
Disqualification and Termination of
Permit: CANN-0070-2019
26
2640 Broad St., 93401): NHC SLO, LLC
Dear Ms. Garcia,
This letter is to inform you that NHC SLO,
LLC (NHC) is automatically disqualified from
activating, obtaining or holding a Commercial
Cannabis Operator Permit (Operator Permit)
to conduct commercial cannabis activity
located at 2640 Broad St. and the Operator
Permit issued to NHC is hereby immediately
terminated, and/or shall not be permitted to
be activated, pursuant to San Luis Obispo
Municipal Code (SLOMC) Sections 9.10.070,
Subsections C.4 and D, as well as the express
terms of the Operator Permit application
submitted by NHC.
Please be advised that the business is
not permitted to operate in any form
from the date of this notice.
This action is the result of NHC's submission
of false or misleading information in obtaining
and maintaining the Operator Permit, as set
forth below, which results in automatic
disqualification from the City's permitting
process and precludes NHC from obtaining or
maintaining an Operator Permit to operate a
cannabis business in the City.”
While not in its Municipal Code expressly, the City claims
that even after its issues a cannabis conditional use permit and
cannabis business operator permit, the permit holder must wait
until it obtains its license with the California Department of
Cannabis Control, and then obtain the City’s consent to
activate” the license. Petitioner had met all qualifications and
was waiting for the City’s approval to “activate” its license as it
27
got ready to open to the public when the City unilaterally
revoked its previously issued City permit.
San Luis Obispo Municipal Code § 9.10.070, Commercial
cannabis operator permit application procedures and
requirements, provides:
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.
D. Duration and Activation of Permit. Each
commercial cannabis operator permit issued
pursuant to this chapter shall expire twelve
months after the date of its activation. The
permittee may apply for renewal prior to expiration
in accordance with this chapter. Each commercial
cannabis operator permit must be activated within
twelve months of issuance. The permit is activated
by the issuance of a use permit for the commercial
cannabis activity pursuant to Section 17.86.080,
together with all other applicable city permits and
state licenses, and the commercial cannabis
operator thereafter opening and continuously
operating the commercial cannabis activity. Failure
to timely activate the permit shall be deemed
abandonment of the permit and the permit shall
automatically lapse.
28
See https://sanluisobispo.municipal.codes/Code/9.10.070.
Bold added for emphasis.)
In contrast, the City’s Municipal Code reads as follows
regarding cannabis permit revocation:
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.
See https://sanluisobispo.municipal.codes/Code/9.10.070.
Bold added.)
29
Read together, a reasonable permit holder would believe
that any imperfection in the application process could lead
disqualification from getting a permit, but once a permit is
issued, a permit would only be revoked for improper conduct
while operating the permit.
The usual starting point in interpreting any statute, not
surprisingly, is the plain language of the statute itself. (Hunt
Superior Court (1999) 2 Cal.4th 984, 1000.) Words are given
their usual and ordinary meaning and read in the context of the
statutory scheme. (Ibid.) Article 11, section 7 of our
constitution promises that "[a] county or city may make and
enforce within its limits all local, police, sanitary, and other
ordinances and regulations not in conflict with general laws.” In
this context, “may” generally means “must” to ensure
compliance with due process of law, under Article I, § 7 of our
Constitution.
Later, in an effort to support its claim that an
unactivated” cannabis permit holder is still subject to rules
applicable to mere applicants, Respondent City cited §
17.86.080 of its Municipal Code, which provides that there are
no “vested rights” to cannabis permit (apparently a legislative
effort to overturn California appellate cases finding as a matter
of state constitutional law and due process, permit holders have
vested rights that cannot be arbitrarily terminated).
The Ordinance provides as follows:
17.86.080 Cannabis.
30
Commercial Cannabis Businesses.
1. Commercial Cannabis Operator Permit.
a. No person or entity shall operate or
conduct a commercial cannabis activity
or commercial cannabis business
without first obtaining both a
commercial cannabis operator permit
from the city pursuant to Chapter 9.10,
Cannabis Regulations, and a use permit
from the city pursuant to this chapter to
conduct the commercial cannabis
activity at a specific location. Any
permit authorizing commercial
cannabis activity pursuant to this
chapter shall be conditioned upon the
holder obtaining and maintaining a city
commercial cannabis operator permit
and the appropriate state license for the
activity.
b. A commercial cannabis activity pursuant to
this chapter may be transferred, assigned, or
bequeathed, by operation of law or otherwise
as described in Section 9.10.120.
c. The commercial cannabis operator permit
must be renewed each year.
d. Expiration of the use permit shall be
consistent with Section 17.104.070.
2. No Vested Right to Operate. No
person shall have any entitlement or
vested right to operate a cannabis
business solely by virtue of licensing
under these regulations. Operation of
cannabis activity(ies) requires both the
31
approval of a conditional use permit
and a commercial cannabis operator
permit under Chapter 9.10, which is a
revocable privilege and not a right in
the city. The applicant bears the burden
of proving that all qualifications for
licensure have been satisfied and
continuously maintained prior to
conducting a cannabis business at an
otherwise allowed location within the
city.
3. State Application Required. Filing a local
application for cannabis activity(ies) with the
city does not constitute an application with
the state of California. A separate state
application and license process must be
followed through with the state.
4. Application Requirements. All
commercial cannabis activities require
qualification through the commercial
cannabis operator selection approval
process in Chapter 9.10, Cannabis
Regulations, a state license and a use
permit for a specific location pursuant
to this chapter. The application for a use
permit shall include the following
information:
a. Site plan, floor plans, and a general
description of the nature, square-footage,
parking and type of cannabis activity(ies)
being requested.
b. An operations plan including:
32
See
https://sanluisobispo.municipal.codes/Code/17.86.080.
Bold added for emphasis, showing that this section
intends to guide applicants on how to get the requisite
City permits to operate a cannabis business.)
Notably, Respondent City admitted that it had issued
Petitioner permits in revocation letters because these letters say
that the City is revoking NHC SLO’s permits, not its application.
The Ordinances Respondent City rely on to justify the
revocation of NHC SLO’s permits show that that City was
required to give notice and a hearing to determine what conduct
of NHC SLO would warrant revocation of its local cannabis
permits, not an after-the-fact adjudication of its application.
Because the City never allowed NHC SLO to open, there is no
lawful basis to treat NHC SLO as a mere applicant once the City
issued the local cannabis business permits to it, resulting in
NHC SLO spending hundreds of thousands of dollars on
reliance on the City’s issuance of the relevant permit.
Moreover, the City cannot overturn judicially recognized
California constitutional requirements of due process, fair play,
and substantial justice by enacting in its cannabis ordinance
that issuance of permit cannot create vested rights.
The California Supreme Court and numerous appellate cases
since have held that whether rights are vested depends on the
investment of the business owner on reliance of the permit, and
not on the whims of the City. (See, e.g., Avco Community.
33
Devs., Inc. (1976) 17 Cal.3d 790, 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”]; 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”]; 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)”]; see Malibu 21 Mountains Recreation, Inc. v.
County. of L.A. (1998) 67 Cal.App.4th 359, 367; see Cal. Const.,
art. XI, § 7 [every California city possesses the general power to
make and enforce within its limits all local, police, sanitary, and
other ordinances and regulations “not in conflict with general
laws”].)
That is, California law holds that there is a distinction with a
difference between a mere applicant and an actual holder of
permit in terms of how a City may revoke an issued permit as
opposed to ending a mere application.
C. Delayed Review By Appeal Or By Respondent
Superior Court Results in Irreparable Harm to
Petitioner
34
As set out in Petitioner’s Ex Parte Application, every day
that goes by, Petitioner’s California State cannabis license is at
risk without having its local city cannabis permits in place.
Petitioner has agreed it could delay opening its business and
incur costs without income for several months, but cannot do so
for a year until this litigation resolves.
Additionally, because of court clog, Petitioner has no
adequate or speedy remedy in the superior court either, as July
7, 2022 is the earliest date it could reserve for the hearing on its
preliminary injunction motion, and the superior court refused
to advance that date because of superior court’s busy calendar.
Thus, waiting for appellate review here results in defeat for
Petitioner, even if the Respondent City is found to have
wrongfully revoked its local licenses in violation of the City’s
own ordinances.
Thus, writ review is proper, when, as here, the underlying
facts are undisputed, the question before this court is one
statutory construction, which is purely legal in nature, and the
issue is of significant legal import, in that the Respondent City
and other cities may believe that they can, years after the
cannabis application process is completed, unilaterally revoke
issued cannabis permits without a hearing, despite having the
permitee spending and incurring hundreds of thousands of
dollars in reliance on the issued permits. (See American
Internat. Group, Inc. v. Superior Court (1989) 234 Cal.App.3d
749, 755 and see Andreini v. Superior Court (1998) 60
35
Cal.App.4th 1415, 1421 [writ review proper if issue has wide
spread interest].)
Finally, writ relief is proper to prevent a trial on a
nonactionable claim. Here, a central legal issue in the case is
one that this court may decide now. If Petitioner’s position is
wrong, then there is no point in going forward with its Petition.
That is, a decision on the proper legal interpretation of the
City’s Municipal Code as applied to the undisputed facts will
avoid a trial on an unactionable claim, warranting writ relief.
See, e.g., Feminist Women’s Health Center v. Superior Court
1997) 52 Cal.App.4th 1234, 1238.)
36
CONCLUSION
Because of public outcry against the City of San Luis
Obispo once its public corruption was exposed, the City sought
to retaliate against all permit holders involved with its disgraced
City Council Member Adam Hill.
The City’s corruption led federal prosecutors to
investigate Helios Dayspring’s taxes, resulting in a plea deal.
Even though federal prosecutors had not started contacting Mr.
Dayspring until 2021, a year after he had divested all his
interest in Petitioner NHC SLO, LLC with the City’s own
approval, the City is seeking to punish NHC SLO, LLC for Mr.
Dayspring’s past sins, long after his only involvement with NHC
SLO is as its landlord. (There are no City regulations limiting
who a permittee may lease land or property from.)
The Respondent City is not applying its own enacted
Municipal Code by the express terms in its ordinance. The City’s
Cannabis Ordinance do not use the terms “applicant” and
permit” interchangeably. These terms are reasonable
understood to mean different things, and the City’s own
Municipal Code expressly treats permit holders differently than
mere applicants, despite its Code’s general denial of vested
rights—the vested rights are implied from the City’s own
requirement that permit holders may only have their permits
revoked under its Code for wrongful conduct after notice and a
37
hearing, whereas applicants may have their application rejected
anytime up to issuance of a permit.
Because the trial court cannot hear a motion for
preliminary injunction until July 7, 2021, and refused to
advance the hearing at the January 2022 Ex Parte Hearing, by
such time, Petitioner will lose its state cannabis license and be
forced to re-apply, delaying its opening to the public for at least
another year—thereby effectively putting NHC SLO out of
business—even if Petitioner’s legal interpretation is correct.
Additionally, respondent superior court refused to grant
an order to reinstate Petitioner’s local cannabis permits because
the respondent superior court incorrectly concluded that the
City could lawfully revoke issued cannabis permits under its
Municipal Code, without explaining that such authority did not
exist in the express Municipal Code provisions governing
license revocation and the Code sections the City cited and
relied on to oppose the Ex Parte Application expressly applied
to cannabis applications, not permit holders.
38
Accordingly, the superior court’s denial of Petitioner’s Ex
Parte Application should be reversed, or alternatively, the
superior court should be ordered to show cause why it should
not require the immediate reinstatement of Petitioner’s City of
San Luis Obispo cannabis permits, on condition Petitioner not
open until after the superior court holds a hearing on
Petitioner’s request for a preliminary injunction hearing, which
hearing should be advanced to the earliest reasonable available
date that the superior court may hear such motion.
Dated: March 30, 2022 Respectfully submitted,
John Armstrong
Attorneys for Petitioner,
NHC SLO, LLC
39
CERTIFICATION OF WORD COUNT
I, John Armstong, hereby certify that this petition
contains 5,280 words as calculated by the Word® software in
which it was written.
I declare under penalty of perjury under the laws of
California that the foregoing is true and correct.
Dated: March 30, 2022 Respectfully submitted,
John Armstrong
40
PROOF OF SERVICE
I, John Armstrong, electronically served a copy of Petitioner’s Writ Petition and
supporting Exhibits (Volumes 1 and 2), on the City of San Luis Obispo’s attorneys of
record using their email addresses used for electronic filing in the Superior Court and
mailed a copy of these pleadings to the San Luis Obispo Superior Court on April 1,
2022, using my email address, john@armstronglawgroup.co, by email Jeff Dunn at
jefffrey.dunn@bbklaw.com, ; and Daniel Richards at daniel.richards@bbklaw.com
I further declare under penalty of perjury under the laws of California that the
foregoing is true and correct.
Dated: April 1, 2022 ______________________
John Armstrong, declarant