New California law authorizes lawsuits by licensed cannabis businesses against unlicensed cannabis operators
by Omar Figueroa
October 8, 2023
On October 8, 2023, Governor Gavin Newsom signed into law Assembly Bill 1171, a bill which authorizes persons licensed by the California Department of Cannabis Control to engage in commercial cannabis activities to bring civil lawsuits against those engaging in commercial cannabis activity without a license.
AB 1171 authorizes the Superior Court to enter an order enjoining a defendant from engaging in commercial cannabis activity without a license. The bill also entitles a licensee prevailing in the lawsuit to reasonable attorney’s fees and costs and either of the following: actual damages or statutory damages not to exceed $75,000. AB 1171 requires Department of Cannabis Control licensees to demonstrate actual harm resulting from the unlicensed commercial cannabis activity.
AB 1171 adds Section 26038.1 to the Business and Professions Code as follows:
(a) In addition to other remedies permitted by law, a licensee under this division may bring an action in superior court against a person engaging in commercial cannabis activity without a license as required by this division.(b) In order to prevail in an action brought pursuant to subdivision (a), a licensee shall demonstrate actual harm resulting from the unlicensed commercial cannabis activity.(c) In an action pursuant to subdivision (a), the court may enter an order enjoining the defendant from engaging in commercial cannabis activity without a license as required by this division.(d) A licensee that prevails in an action brought pursuant to subdivision (a) shall be entitled to both of the following:(1) Either of the following damages, at the election of the prevailing licensee:(A) Actual damages caused by the unlicensed commercial cannabis activity.(B) Statutory damages not to exceed seventy-five thousand dollars ($75,000).(2) Reasonable attorney’s fees and costs.(e) This section does not apply to any violation of the Labor Code committed by a person engaging in unlicensed cannabis activity and shall not form the basis for a cause of action under the Labor Code Private Attorneys General Act of 2004 (Part 13 (commencing with Section 2698) of Division 2 of the Labor Code).
An in-depth analysis by the Senate Rules Committee is below and can be downloaded here.
This information is provided as a public educational service and is not intended, nor should be construed, as legal advice. For specific questions regarding AB 1171 or lawsuits against unlicensed operators, please contact the Law Offices of Omar Figueroa at info@omarfigueroa.com or 707-829-0215 to schedule a confidential consultation.