In Ani Creation v. City of Myrtle Beach, decided last week, the SC Supreme Court held that Myrtle Beach’s ban on smoke shops in the Ocean Boulevard Entertainment Overlay District (OBEOD) is constitutional – stores that sell CBD or vape products are no longer welcome in downtown Myrtle Beach…
Below, we will discuss the Supreme Court’s opinion and its impact on Myrtle Beach businesses, including:
- Why the City of Myrtle Beach banned smoke shops in the OBEOD,
- What the OBEOD is and where smoke shops can still operate in the city, and
- Why the Supreme Court says the ban is constitutional.
Myrtle Beach Officials Say Smoke Shops in the OBEOD are not “Family Friendly” and Encourage Crime
A few years ago, we blogged about Myrtle Beach’s ban on smoke shops in the City of Myrtle Beach.
In the end, the ban was limited to the Ocean Boulevard Entertainment Overlay District (OBEOD). Within the OBEOD, the new zoning ordinance bans:
- Smoke shops and tobacco stores,
- Any tobacco paraphernalia,
- All CBD products including lotions, oils, and food,
- Any tobacco products that make up more than 10% of a store’s inventory, and
- Any sexually oriented material.
If a store is outside of the OBEOD, but within city limits, it is unaffected by the ban.
What is the “OBEOD?”
The Ocean Boulevard Entertainment Overlay District, or “OBEOD,” roughly corresponds with the boundaries of the historic downtown area of Myrtle Beach – an area covering approximately 50 city blocks in downtown Myrtle Beach in a rectangle that is roughly two miles long (north-south) by a quarter-mile wide.
As a result, business owners have been forced to stop selling prohibited merchandise or relocate their stores.
Why?
According to the City, vape shops, tobacco shops, and CBD products are dangerous, hurt the City’s “family-friendly” image, and somehow contribute to crime in downtown Myrtle Beach…
How is the Ban on Smoke Shops Constitutional?
You may think the City’s justifications for forcing business owners to only sell products that are pre-approved sound ridiculous. City officials, whether their stated reasons are valid or not, would disagree.
How is this constitutional, and not a forced taking of private property by the local government?
In Ani Creation v. City of Myrtle Beach, the SC Supreme Court explains why, ridiculous or not, the zoning ordinance passes constitutional muster:
City Council Changed the Law Before the Second Reading
The plaintiffs claimed that the ordinance was “defective as a matter of law because it was not adopted following the procedure set forth in section 5-7-270 of the South Carolina Code” requiring that a municipal ordinance be “read two times on two separate days with at least six days between each reading.”
Except, “Section 6-29-760(D) of the South Carolina Code (2004) requires parties to challenge the validity of an ordinance within sixty days of the decision of the governing body,” and the plaintiffs did not challenge the ordinance until four months after it was passed.
The Court points out that it would not matter if they had challenged it within the 60 days because 1) the plaintiffs argue that the City did follow the correct procedure but the ordinance was changed between the first and second readings (therefore, the City would have needed to start over and read the ordinance again), but 2) the ordinance didn’t change – although the City added to the “purpose and intent” section, “the prohibited retail uses in the final version were identical to those in the original version.”
Equal Protection Clause Violation
The plaintiffs alleged that the ordinance violated the Equal Protection Clause because they cannot sell merchandise that other businesses are still allowed to sell in other parts of the city.
The Court found that there is no Equal Protection Clause violation, addressing each claim in turn.
Reverse spot zoning: the plaintiffs alleged that the ordinance consisted of impermissible “reverse spot zoning,” which would have been a novel question in SC. The Court points out that there was no traditional or reverse spot zoning in this case. Spot zoning usually involves a single landowner’s parcel being singled out, and the OBEOD is a large area that covers approximately 50 city blocks with multiple property owners.
The boundaries are arbitrary and irrational: the plaintiffs also alleged that “the OBEOD’s boundaries are irrational and, to be constitutional, must ban the prohibited retail uses throughout the entire city.”
Because “there is no suspect or quasi-suspect class and no fundamental right is involved, zoning ordinances should be tested under the ‘rational basis’ standard.”
A law analyzed under the rational basis standard does not violate the Equal Protection Clause so long as:
- There is a plausible policy reason for the classification,
- The facts on which the classification is based rationally may have been considered to be true by the decision maker, and
- The relationship of the classification to the goal is not so attenuated as to render the distinction arbitrary or irrational.
A plaintiff challenging a law under rational basis review “must negate every conceivable basis which might support” the enactment and, therefore, has a “steep hill to climb.”
Essentially, the City says “families” have complained about the prohibited products, and, in the City Council’s opinion, prohibiting the merchandise will encourage a more “family-friendly” atmosphere and reduce crime in the area.
Reasonable people may disagree, but that’s the point. If reasonable people disagree, the City’s basis is “rational.” The plaintiffs had the burden of proving by clear and convincing evidence that the OBEOD’s boundaries were arbitrary and capricious, but there was a clear plan and rationale behind the boundary location.
Furthermore, the plaintiffs argued the ordinance was arbitrary and capricious because the City did not prove that the prohibited merchandise impacted public safety.
That sounds like a good argument (do vape stores and tobacco sales really promote crime?), except the burden of proof was on the plaintiffs, not the City. The plaintiffs presented zero evidence that the prohibited merchandise doesn’t affect public safety, so they lose on this issue…
Due Process
The plaintiffs argued that Due Process was violated because the ordinance does not provide for a hearing to challenge the zoning administrator’s finding that merchandise violates the ordinance.
The Court disagreed because there is an opportunity for hearing and appeal: 1) to the Board of Zoning Appeals, then 2) to the circuit court, then 3) to the SC Supreme Court.
The plaintiffs also argued that the “amortization period” was insufficient to allow the plaintiffs to come into compliance with the ordinance. The Court also disagreed with this argument, noting that the plaintiffs “have had nearly five years to come into compliance with the ordinance and, apparently, have failed to do so.”
Takings Clause
Can the City force businesses to close or stop selling merchandise without compensating the businesses?
In this case, we don’t know, because, according to the Court, the plaintiffs did not present any evidence of the ordinance’s economic impact on their properties. They claimed that the impact was “dire” and “severe,” but never presented evidence of actual monetary damages that they suffered because of the ordinance; therefore, the circuit court and the SC Supreme Court denied this claim.
Conflicts with State Law
The Court also rejected the plaintiffs’ argument that the ordinance violates the SC Constitution because it criminalizes merchandise sales that are legal under state law, but the ordinance doesn’t have criminal penalties.
The ordinance’s only penalty is civil in nature – suspension or revocation of the store’s business license.
Although many will disagree with the City’s decision to force business owners to sell pre-approved merchandise that aligns with the city council’s moral values, and the City’s stated justifications are transparently pretextual, the ordinance will be enforced and there will no longer be any smoke shops or vape stores in the downtown/ OBEOD area.
Business Law Attorneys in Myrtle Beach, SC
If you have been charged with a crime on Ocean Boulevard, or if you are a business owner who needs help understanding the laws and regulations for CBD, vape, or smoke products in South Carolina, call Coastal Law now at (843) 488-5000 or send us a message to talk with a business attorney or criminal defense attorney in Myrtle Beach.
