The Cortez City Council waded into new procedural waters Tuesday night in light of a recent order handed down by a local judge – and faced some tough legal quandaries.
The order involved NuVue Pharma LLC, a marijuana dispensary that sought to open its doors in 2018, but was denied by council after facing rousing community opposition to the business. The marijuana business sued, however, alleging “capricious” and “arbitrary” treatment, and Judge Todd Plewe of the 22nd Judicial District Court agreed with them, ordering the council to give NuVue Pharma another public hearing.
The hearing was set for Tuesday’s regular meeting and would operate slightly differently. During the work session prior to the hearing, City Attorney Mike Green laid out guidelines for how “quasi-judicial” hearings like this one should operate moving forward – essentially treating the council chambers as a sort of courtroom and limiting who is allowed to “give testimony.”
“It’s different than public speaking at an ordinance, for example, or a resolution,” Green said at the work session. The new rules he presented are aligned with Colorado state statute, he said.
However, while the hearing was set for Tuesday, it was continued to a March meeting because of another complication: only three councilors would have been voting on the issue because of one vacancy, two absences and one abstention.
“We want to be sure that it’s fair to you, so that when you leave this council chamber, whenever that evening is, that you feel that you have gotten a fair hearing,” Mayor Karen Sheek told NuVue attorney Greg Whitehair at the regular meeting. Green said they could have voted on the item with only three councilors, but the three present preferred to wait.
The NuVue attorneys agreed to push the hearing, although they were frustrated with the delay.
“We would love to proceed tonight, but we understand that your feeling is you give a more full, fair hearing opportunity if more of your members were able to participate,” Whitehair said.
Councilor Gary Noyes and Mayor Pro-Tem Orly Lucero were absent Tuesday because of emergencies, according to Green. The council vacancy occurred in December when former councilor Jill Carlson announced her resignation. And Councilor Sue Betts wished to abstain from this vote, citing a conflict of interest because mother is a state attorney with a connection to the applicant, Green said.
The rescheduled hearing is set for either March 10 or 24, depending on NuVue’s representation. The council voted 3-0 to push the hearing.
BackgroundNuVue Pharma LLC, based in Pueblo, applied to open a marijuana dispensary in Cortez in summer 2018, looking to set up shop at 503 Patton St., across U.S. Highway 160 near Denny Lake.
The dispensary met distance requirements set by the city and state, and the company’s owner, Dr. Malik Hasan, passed a background check, according to the Sept. 11 meeting minutes. By law, marijuana shops must be at least 1,500 feet from a school, day care center or other dispensary.
But several community members opposed the dispensary, voicing concerns in letters to the city and at a public hearing on Sept. 11, 2018, with some opponents saying Cortez already had too many marijuana shops.
At that public hearing, the council unanimously voted to deny NuVue’s proposed retail marijuana license, later saying that their primary reasons for denial had to do with neighborhood concerns, and that most other marijuana dispensaries are in more commercial areas of town.
On Nov. 8, 2018, NuVue Pharma filed a complaint for judicial review, alleging that the council exercised “arbitrary and capricious abuse of discretion” in its denial, that the residents opposing the motion didn’t live close enough to the proposed location to be directly affected, and that the concerns were ungrounded.
And after about a year of litigation proceedings, the court agreed with the marijuana company, ruling Nov. 7 that the council’s denial was a “misapplication” of the Cortez Retail Marijuana Code, adopted in 2014.
“It is hereby ordered that this matter is remanded to Defendant – City Council in and for the City of Cortez with directions to vacate the ‘Findings and Decision Regarding the Application of NuVue Pharma LLC for a Retail Marijuana Store at 503 Patton Street’ and to grant Plaintiff a new hearing to be held in accordance with applicable law as directed in this Order,” Judge Plewe wrote in the ruling.
One of the issues Plewe found with the council’s previous denial was that people who were not residents or business owners of the “neighborhood under consideration” were allowed to speak at the public hearing, which he said was not in line with the city’s Retail Marijuana Code.
At the time of the ruling, the city’s Retail Marijuana Code didn’t specify what a “neighborhood under consideration” is, so Plewe added that the city should determine what a “neighborhood under consideration” means for each retail marijuana application before proceeding.
Since then, the city amended the code – on Jan. 14, the council voted 4-1 to approve an updated Retail Marijuana Code, which included the new definition of “neighborhood” as referring to the city of Cortez.
Quasi-judicial hearingsQuasi-judicial hearings are cases in which a non-judicial body – like a City Council – can interpret law and act in a courtlike capacity. Over the past year, the Cortez City Council has held quasi-judicial hearings for several liquor- and marijuana-related items.
After the judge’s order, the council will now be following Colorado State Statute as it applies to a quasi-judicial hearing. Speakers will be required to be sworn in and will be treated as “witnesses.” Depending on the hearing, only certain “witnesses” will be allowed to submit “testimony” – in the NuVue hearing, for example, only residents or business owners in the city of Cortez would be allowed to give “testimony,” as being members of the “neighborhood under consideration.”
During the work session before the hearing, Councilor Ty Keel expressed some frustration with the late notice, and asked why council hadn’t been following these rules before.
“I’ve been sitting on council for almost eight years, and all of a sudden to have this about-face – it doesn’t put a lot of faith in us and the system as a whole,” Keel said.
Green said that the recent court order had brought the discrepancy in practices to the city’s attention, and that moving forward staff would be looking at other city rules and codes for inconsistencies.
The new system was put to a test that night with two scheduled quasi-judicial hearings. The first one was for an application to change the liquor license location for the Mi Mexico restaurant from 550 S. Broadway to 801 E. Main St., at the site of the former Jack and Janelle’s Country Kitchen. The restaurant owners have purchased the new Main Street building and are leasing their former site, according to City Clerk Linda Smith.
That hearing proceeded fairly smoothly, with just one public speaker who felt that there are already many businesses serving alcohol along Main Street, and that perhaps Broadway should be built up more. The item passed unanimously 4-0.
But councilors ran into a more difficult situation once the NuVue hearing came up, even though that one was rescheduled for March. After Greg Whitehair departed from the speakers’ podium, NuVue’s owner Dr. Malik Hasan, who was in attendance, was offered a chance to speak, as he would likely not be able to travel down for the subsequent hearing.
Hasan, a retired neurosurgeon who also worked in real estate and operated different health care businesses, recounted his life path that led him to becoming the owner of NuVue, along with his interest in cannabis research.
He said he believed there was a place in Cortez for another marijuana store, disagreeing with the comments at the previous hearing stating there are too many already.
“There is a place, not so much to provide marijuana – and that’s why we chose the location we chose – to the local population, but marijuana to people who are passing through, going to Arizona, going to Utah, going to New Mexico,” Hasan said.
He added that if he is wrong, then his business will fail.
But later on, a Cortez resident asked to speak too, saying that he also could not attend any hearing in March. After some back-and-forth, this was ultimately not permitted.
“What I’m thinking is this would not be appropriate and I would recommend against it,” Green said. “Because that’s the cleanest way – we are not taking comments at this time about this license application, and to do anything that jeopardizes the process at the next hearing I think is ill-advised.”
Even if someone was just presenting an opinion, it could be perceived as testimony by the courts later on, council and staff said.
The three participating councilors expressed frustration with their inability to let the man speak on the topic, but also said they did not wish to undergo more litigation in this case.
“I sit on this council as a voice for the people,” Keel said. “And when we stifle that, I have a problem with it.”
