This has been particularly interesting in its development and its response. A couple of days ago we received an indication that we would be sued if we did not vote for this item. Followed today by someone going to Cesar Chavez, a state representative from district 29 that threatens us withholding state-shared tax revenues on the basis of inequity of how we have restricted or how we have zoned our city.”

Scottsdale Mayor Jim Lane

By Melissa Rosequist
Twitter: @mrosequist_

A request for a medical marijuana facility in Old Town Scottsdale has officially been withdrawn by the applicant, following a frenzied couple of weeks that has resulted in legal pressure --- and now a threat to Scottsdale to forfeit state-shared revenues.

Sunday Goods --- a Scottsdale-based company seeking a conditional use permit for a medical marijuana use and a zoning district map amendment --- has chosen to pull its application from Scottsdale City Council purview after a Nov. 12 meeting, where elected officials say they are being strong-armed into approving the project.

Earlier this fall, concerns swirled around the Sunday Goods proposal envisaged to sprout at 4255 N. Windfield Scott Plaza where a vacant tattoo parlor exists today. Scottsdale City Council initially allowed a continuance of both the conditional use permit and the rezoning requests after a legal protest was submitted in opposition to the project, which would require a super-majority vote to pass the zoning request.

Sunday Goods sought to occupy an existing two-story building that will be remodeled to include approximately 2,310 square feet on a 4,800-square-foot parcel.

Proponents of the project contend the Arizona Department of Health --- through definition of its Community Health Analysis Area --- identified southern Scottsdale as a corridor in need of a medical marijuana dispensary, which is based on state law governing the medicine distribution.

Now, under legal pressure and threats to forfeit state-shared revenues, Scottsdale City Council denied a second continuance of the application --- by a 3-4 vote --- giving Sunday Goods the option to roll the dice on its application as it was on Nov. 12, or withdraw. The latter option was chosen.

From the dais at City Hall, 3939 N. Drinkwater Blvd., Mayor Jim Lane says this application has been particularly interesting in its development and its response.

‘This is a serious matter’

Scottsdale city staff reports they have received several emails and petitions on both sides of the issue.

The petition representing area property owners in opposition to the proposed facility state concerns regarding neighborhood quality, property values, traffic and parking; meanwhile an additional petition with several more signatures has been turned into the city with signatures from Valley-wide residents in support of the facility.

Most recently, on Nov. 12, a letter on official Arizona House of Representatives letterhead signed by Cesar Chavez, state representative for Legislative District 29, landed upon the desks of Mayor Lane and his fellow members of council.

“I am concerned that Scottsdale’s zoning ordinance does not permit nonprofit medical marijuana dispensaries to operate anywhere in south Scottsdale as required by law,” Mr. Chavez’s letter states, pointing out an Arizona state law that allows nonprofit medical marijuana dispensaries to be located in specific areas.

Mr. Chavez says he is troubled to learn the city is considering denying an application seeking to locate to the only small area that Scottsdale identified as compatible with this use.

“If this is true, Scottsdale’s Zoning Ordinance is not reasonably permitting dispensaries to locate in specified areas in the city and is clearly violating the law,” Mr. Chavez states.

“State law provides members of the legislature with authority to request the Attorney General investigate a city that is taking action that violates state law. ARS 41-194.01 provides that Scottsdale could forfeit its share of state shared revenues if this investigation demonstrates Scottsdale is violating the law. This is a serious matter.”

Days earlier, a letter to Scottsdale City Attorney Sherry R. Scott from Attorney Dale Zeitlin, who states he represents Sunday Goods, shared legal claims the company would have against the city should the rezoning and CUP request be denied.

Mr. Zeitlin says, through the state’s Arizona Medical Marijuana Act, the state has preempted the city from excluding a medical marijuana dispensary at the proposed location.

“Since the City of Scottsdale has designated an extraordinarily tiny area in which a new medical marijuana dispensary can operate --- roughly a two-block area --- and because Sunday Goods has the only viable location within that area, should the City of Scottsdale not pass the pending rezoning/CUP case, the City’s actions will be illegal as exclusionary zoning and contrary to the AMMA,” Mr. Zeitlin states.

Mr. Zeitlin points out a recently lost issue, which he describes as identical to this one, where a court of appeals held that Scottsdale’s ordinance was preempted by state law. He also lists a lawsuit, “White Mountain Health Center, Inc. v Maricopa County” that aligned with the issue as well.

“However, the basic point here is that the Sunday Goods application is for a use that the City of Scottsdale is required to approval pursuant to the AMMA,” he stated.

Attached to Mr. Zeitlin’s letter was a memorandum outlining Sunday Goods’ legal claims.

Unique Circumstances

Rose Law Group, who also represents Sunday Goods, sent city officials a Nov. 12 email requesting to continue the application due to “unique circumstances.”

“We believe that as a result of the unique circumstances of this case, a continuance to a date to be determined later can provide the applicant a fair opportunity to work with city staff to identify any other locations in south Scottsdale where a nonprofit medical marijuana dispensary can locate,” Partner Court Rich stated.

Councilwoman Linda Milhaven had offered to lead an attempt at a diplomatic solution between opposing parties and the applicant, Mr. Rich states in his email.

Mr. Rich says the state law requiring reasonable opportunities to zone medical marijuana facilities has collided with controversy about this location, creating a highly unusual situation.

“The current posture of the applications has created a unique set of legal and practical issues,” Mr. Rich said in his email.

“A great deal of controversy has arisen about this location, and while we worry that competitors in the medical marijuana industry are ginning up much of this opposition in an effort to stifle fair competition, we also take all concerns raised by all parties seriously. As a result, the applicant wishes to have an opportunity to work with city staff in an effort to exhaust any and all options for alternative locations within south Scottsdale and to participate in Councilwoman Milhaven’s brokered meeting.”

A sorry day

Later that evening, Ms. Milhaven made the motion to continue Sunday Goods’ application.

“There’s a lot of strong feelings on both sides of this issue,” she said. “I know in a lot of recent zoning cases, by taking a little more time we’ve been able to address folks’ concerns. So, I would certainly be supportive of the applicant’s request for continuance.”

The motion to continue was denied, with Mayor Lane, Vice Mayor Kathy Littlefield, Councilwoman Suzanne Klapp, and Councilman Guy Phillips voting against the continuance.

“This has been particularly interesting in its development and its response,” Mayor Lane said. “A couple of days ago we received an indication that we would be sued if we did not vote for this item. Followed today by someone going to Cesar Chavez, a state representative from district 29 that threatens us withholding state-shared tax revenues on the basis of inequity of how we have restricted or how we have zoned our city.”

Mayor Lane says the zoning was issued several years ago, and it was not a problem then.

“Obviously it changes the equation as far as council members are concerned, having to put taxpayers’ resources at great jeopardy when you talk about shared tax revenues with a violation that’s being alleged --- I’m not sure that there really is one,” Mayor Lane said.

“But just the allegation puts things on hold. It’s a major consequence that’s given this charge. It’s scores of millions of dollars, a significant part of the budget that’s withheld. That’s what this council will have to work with, even with a continuance.”

Prior to the vote, Mr. Lane said he wasn’t in favor of the continuance for a number of reasons.

Ms. Scott, the city attorney, gave the applicants the option to proceed with their planned agenda item or withdraw and re-submit at a later time.
Jordan Rose, the founder and president of Rose Law Group, spoke on behalf of the applicant. Ms. Rose explained that when reviewing other big projects in city history, they thought asking for a continuance because of the ongoing heated exchange would make sense.

“At the outset in 2016, we started working with city staff to try and find an appropriate location, we were directed in this area,” Ms. Rose explained. “Now, if city staff has other ideas, that is something we’re welcoming. We’re also welcoming further discussion with our neighbors.”

Ms. Rose said they want to find a solution, and also want to avoid all of the legal ramifications Mayor Lane pointed out.

However, Mayor Lane refuted the idea that city staff suggested the Winfield Scott Plaza location as an area for medical marijuana.

“The idea that staff directed you to this spot is something that is contested by staff, and it’s been told to us numerous times. They deny that’s the case,” Mr. Lane said.

“I can’t pick a side as far as that’s concerned, but I do know where the threats came from, and what’s really disappointing to me, I suppose, is most of the people involved in this are respected members in our community.

“To resort to a threat that if we choose to uphold our zoning is a sorry day, as far as I’m concerned. To go to district 29, to Cesar Chavez, who’s no friend of Scottsdale, to request that he more or less threaten us with withholding state shared revenues on the basis of a departure from state law --- which I highly would contest. The idea that the action was taken is really very disappointing.”

Follow-up

Ms. Rose defended her clients, explaining she normally is not the attorney representing the medical marijuana cases at her firm.

“The reason I’m here today and the reason I agreed to do this, is because if this is going to go in our south Scottsdale CHAA, as it has to, I sure want those guys, the guys who are most invested in this community in that area,” she said.

“I sure want those guys to do it --- not those competitors who are behind this opposition. That’s why I’m here, personally. No one has more to lose if they do it wrong.”

Mr. Lane says he understands Ms. Rose’s passion, and agreed Sunday Goods is undoubtedly a good client --- which is why he was disappointed with the way the process unfolded.

“That’s why I’m so terribly disappointed they need to influence this council into an idea of having to force us to change to accommodate our zoning ordinance or wave it,” he said.

The morning after the hearing, Rose Moser Allyn Public Relations Deputy Director of Public Affairs Mike Scerbo, says his client viewed the offer to withdraw the application as an olive branch.

“The mayor extended the option to withdraw; we saw that as an olive branch.

Hopefully now that’s taking place both sides can work out a positive outcome,” he said.

Old Town Scottsdale architect David Ortega, who has been outspoken against the Sunday Goods proposal, wrote the Independent with a quote on the matter:

“Sunday Goods was granted a one-time continuance by the Scottsdale City Council on Oct. 1. Instead of presenting Case 5-ZN-2019 and Case 2-UP-2019 on Nov. 12, they voluntarily and legally withdrew both cases. Accordingly, both case files are dead. Any future application would have to go thru the entire process,” Mr. Ortega said.