By Ronnie Cohen
SAN FRANCISCO (Reuters) - The California Supreme Court dealt a blow to the state's faltering medical-marijuana industry on Monday by ruling that local governments may outlaw dispensaries that sell the federally banned drug.
The unanimous opinion, which comes as elected officials across the nation grapple with regulating a growing medical pot industry, upheld a ban the southern California city of Riverside enacted on pot shops in 2010.
California's highest court concluded that nothing in California law preempts the authority of the state's cities and counties from using their authority to "allow, restrict, limit, or entirely exclude facilities that distribute medical marijuana."
The case pitted Riverside against the Inland Empire Patients Health and Wellness Center, a medical-pot dispensary it has sought to shut down. The decision allows the city to use its power to shutter all marijuana stores.
California became the first state in the nation to approve medical marijuana 17 years ago, but some residents have complained that pot stores blight their neighborhoods. Court papers show more than 180 California cities and counties have imposed bans on marijuana dispensaries.
The seven justices agreed with Jeffrey Dunn, the city of Riverside's attorney, who argued in oral arguments on the case in February that California legislation on medical pot in no way diluted local governments' ability to regulate land use.
The dispensary's attorney, J. David Nick, had argued that a 2003 law setting out rules governing medicinal pot, as well as subsequent amendments, directed municipalities to regulate, not prohibit, dispensaries.
In Monday's decision, the justices described state laws as "incremental steps toward freer access to medical marijuana." But they said the law did not "mandate that local jurisdictions permit such activities."
The District of Columbia and 18 states currently allow pot as medicine. Washington state and Colorado legalized it for recreational use in November, though federal law continues to classify cannabis as an illegal narcotic.
The conflicting state and federal laws have set up confrontations in some states that allow medical marijuana. U.S. prosecutors in California began using civil-forfeiture laws last year to threaten to seize properties in which dispensaries operate, forcing scores of evictions and dispensary shutdowns.
After the federal government cracked down on the world's largest dispensary, the city of Oakland sued the government in an effort to allow Harborside Health Center to continue selling marijuana to its 100,000 patients.
Steve DeAngelo, director of Harborside, bemoaned Monday's ruling. "The court's decision will force patients to obtain cannabis from gangs and cartels instead of from licensed dispensaries, needlessly exposing those patients, and the communities they live in, to potential harm," he said.
(Editing by Cynthia Johnston; Editing by Richard Chang)