Placentia City Council AGENDA REPORT TO: VIA: FROM: CITY COUNCIL CITY ADMINISTRATOR INTERIM DEVELOPMENT SERVICES DIRECTOR DATE: MAY 17, 2016 SUBJECT: FISCAL IMPACT: ORDINANCE RELATED TO THE ESTABLISHMENT OF MEDICAL MARIJUANA BUSINESSES No fiscal impacts are anticipated with this ordinance as all costs will be recovered through the application and selection process. SUMMARY: This is a proposed ordinance allowing for the establishment of medical marijuana businesses and regulations on the location and operational requirements of said businesses. The draft ordinance is particularly detailed and encompasses areas of the land use application process, selection method, definition of terms, operational requirements, security measures, location restrictions, and renewal and revocation procedures. RECOMMENDATION: It is recommended that the City Council take the following actions: 1. Open the Public Hearing concerning Zoning Code Amendment ZCA-2016-02; and 2. Receive the Staff Report and consider all Public Testimony; and 3. Close the Public Hearing; and 4. Approve Resolution No. 2016-XX: A Resolution Of The City Council Of The City Of Placentia, State Of California, Approving A Notice Of Exemption (Ordinance No. 2006-XX Medical Marijuana Businesses); and 5. Waive full reading, by title only, and Introduce for first reading Ordinance No O-2016-XX, An Ordinance Repealing Chapter 8.42 of Title 8 of the Placentia Municipal Code regarding Medical Marijuana Dispensaries, adding Title 12 Entitled Medical Marijuana Businesses and Activity and Chapter 23.45 entitled Medical Marijuana Uses and Activity and Amending Section 23.46.040 pertaining to Marijuana Cultivation.
Page 2 of 8 BACKGROUND: In 1996, the voters of the State of California approved Proposition 215 (codified as Health and Safety Code Section 11362.5 and entitled The Compassionate Use Act of 1996 ). The intent of the Compassionate Use Act (CUA) was to enable persons in need of marijuana for medical purposes to obtain and use marijuana without the threat of criminal prosecution under limited and specified circumstances. Under the CUA, qualified patients with a physician s recommendation for medical cannabis and primary caregivers are exempted from being prosecuted under Health and Safety Code Section 11357 (possession of marijuana) and 11358 (cultivation of marijuana) for specified amounts. On January 1, 2004, the California State Legislature enacted Senate Bill 420 (the Medical Marijuana Program Act or MMPA) to clarify the scope of the CUA to allow cities and other governing bodies to adopt and to enforce rules, regulations, and laws consistent with Senate Bill 420. In 2008, the Placentia City Council adopted Ordinance No. O-2008-09 adding Chapter 8.42 to the Placentia Municipal Code prohibiting marijuana dispensaries from operating within the City. On January 19, 2016, the Placentia City Council adopted Ordinance No. O-2016-01, adding Chapter 23.46 to the Placentia Municipal Code prohibiting marijuana cultivation in the City. The California Supreme Court has made clear that neither the CUA nor the MMPA expressly or impliedly preempts the authority of cities or counties, under their traditional land use and police powers, to allow, restrict, limit or entirely exclude marijuana cultivation or distribution within their jurisdictions. The MMPA allows cities and counties to adopt local ordinances that regulate the location, operation or establishment of medical marijuana collectives and to enforce such ordinances. The safe distribution of marijuana, as contemplated by the CUA, and the safe distribution of marijuana edibles should include consideration of the safety of all residents and businesses, not just the users of marijuana or the consumers of the marijuana edibles. The proposed ordinance is designed to address safety and professional management in the operation of any proposed medical marijuana business. On October 9, 2015, the Governor signed three pieces of state legislation which comprise the Medical Marijuana Regulation and Safety Act (MMRSA): AB 266, AB 243, and SB 643. AB 266 establishes a dual licensing structure requiring a state license and a local license or land use permit. The Department of Consumer Affairs will coordinate the overall regulatory structure establishing minimum health and safety and testing standards. AB 243 establishes a regulatory and licensing structure for cultivation sites under the Department of Food and Agriculture. SB 643 establishes criteria for licensing of medical marijuana businesses, regulates physicians, and recognizes local authority to levy taxes and fees. Generally, and altogether, the MMRSA governs the licensing and control of all medical marijuana businesses in the state and provides criminal immunity for licensees. The legislation protects local control in several ways: it requires dual licensing; local governments may enforce state law in addition to local ordinance (upon request by the local jurisdiction); civil and criminal penalties are available for unlicensed activity;
Page 3 of 8 and it expressly protects local licensing practices, zoning ordinances, and local actions taken under the constitutional police power. City staff and elected officials have for some time been receiving inquiries regarding the opening and operating of medical marijuana businesses in the City, including dispensaries, cultivation facilities, and manufacturing facilities. Based upon Council direction, Staff, the City Attorney, and an expert from HdL have drafted an ordinance to initially allow one medical marijuana dispensary; one cultivation business; one manufacturing business, one transporting business; one testing center business; and one distribution business. One more cultivation permit may be issued to the permitted medical marijuana manufacturer business if the owner would like to cultivate products to be manufactured into medical marijuana products, making a total of 2 cultivation permits possible. After eighteen (18) months the City Council would have the opportunity to vote to grant one additional permit in the categories of cultivation and dispensary businesses, and The City Council Planning & Development Ad Hoc Committee has provided direction to City Administration and the City Attorney s office regarding the regulation of medical marijuana businesses. That direction is reflected in the draft ordinance. DISCUSSION The ordinance creates a Title 12 to the Municipal Code and adds Chapter 23.45 of Title 23 (Zoning Code). The current draft of the proposed ordinance is extremely detailed. It covers the application and selection procedure, definition of terms, operational requirements, security measures and locational requirements. Title 12 generally includes the following provisions: 1. Purpose and Intent which is generally to accommodate the needs of medically-ill persons in need of marijuana for medical purposes. 2. Legal Authority and Definitions. 3. Permit Application and Selection Process including: a. City approved employee work permits; b. Maximum number of medical marijuana businesses permitted; c. Initial application review process; d. Application renewals; e. Appeal procedure; and f. Permitee selection process. 4. Security measures, including employee background checks, work permits, and identification cards, limited access, storage and transportation plan, surveillance cameras and alarm system. 5. Operating requirements including recordkeeping and inventory control, hours of operation, limiting graphics, signage and notices, odor control, restriction of minors, loitering prohibition, community relations contact, inspections, and additional requirements for dispensaries and cultivation facilities. 6. Dispensaries will be permitted in C-O (Commercial Office), C-1 (Neighborhood Commercial), and C-2 (Community Commercial) zones, subject to the distance
Page 4 of 8 requirements explained below. Other medical marijuana businesses will be permitted in M (Manufacturing) zones, subject to the distances requirements explained below. a. Dispensary locations must be within 1,000 feet of the hospital, and must be located at least 600 feet away from any school, church, park, large daycare, library, or drug and alcohol rehabilitation center. Dispensaries may not be located on the same parcel or in the same retail center as another dispensary. b. Other medical marijuana businesses in M (Manufacturing) zones must be located a minimum of 200 feet from any residentially zoned property within the City. They also must be at least 600 feet away from any school, church, park, large daycare, library, or drug and alcohol rehabilitation center. Other medical marijuana businesses may not be located on a parcel or in the same business or industrial complex where a medical marijuana dispensary is located. The applicants for medical marijuana businesses will apply to the City. After being fully vetted, a scoring and interview process (as outlined in the ordinance) will be completed by a review committee. The City Administrator will then bring forward recommendations for medical marijuana businesses to the City Council s consideration. The City Council will evaluate the top candidate for each type of permit, using a ranking process which has been pre-established, which outlines the entire application process in detail. Top candidates may be provisionally approved, subject to review by planning staff through the Building and Zoning approval process and any environmental review as required. The City Council in its discretion retains the right to reject one or more proposals, or all of them. Attached to this report are illustrations mapping out the distancing requirements for both dispensaries in the designated commercial zones and other medical marijuana businesses permitted in the M zones. These maps also illustrate any parks, schools, and large daycare facilities located within the vicinity of the areas permitting the medical marijuana businesses and appropriate distancing requirements would apply as outlined above. Section 1 of the draft ordinance will delete Chapter 8.42 of the Municipal Code which prohibited marijuana dispensaries, since this Chapter will contradict Title 12. Section 3 of the draft ordinance will amend Chapter 23.46, previously adopted to prohibit cultivation of medical marijuana to state that cultivation is prohibited unless permitted by Title 12. Timing of State Medical Marijuana Business Licensing Before MMRSA was enacted, the only types of marijuana businesses allowed under state law were collectives/cooperatives where patients and primary caregiver joined a non-profit legal entity, to collectively grow and distribute marijuana to members only. The state law (the MMPA) does not require cooperatives/collectives to obtain a state permit or license to operate, but they must be authorized by the local jurisdiction and meet all of the local and state regulations pertaining to their operations. The MMRSA will revoke the Health and Safety Code section enacted under the MMPA that permitted cooperatives and collectives one year after the state begins issuing licenses for the various for-profit categories of medical marijuana businesses now permitted under MMRSA. The state is expected to begin issuing licenses in January 2018.
Page 5 of 8 Under MMRSA, these new types of for-profit medical marijuana businesses must obtain both a state license and a City permit before they can commence operations. The proposed ordinance will allow applicants to apply for a City permit to operate a medical marijuana business within the City. The proposed ordinance will become effective 30 days after final approval and adoption by the City Council. Because of the expected time gap between the effective date of the City s ordinance and the issuance of state licenses, only City permittees who are currently operating in compliance with all state laws and regulations as a cooperative/collective may commence operations immediately after receiving a City permit to operate as a dispensary, cultivator, etc. Because some of the categories of medical marijuana businesses allowed under MMRSA were not previously permitted by state law to operate as a collective or cooperative (such as testing facilities), applicants receiving City permits to open these businesses will have to wait to legally commence operations until after they have received a state license. The proposed ordinance contains language to require businesses that initially operate with a City permit as a cooperative/collective to change their legal entity and business model to meet the new state law requirements and to obtain a state license as soon as the Health and Safety Code provisions allowing cooperatives/collectives to operate is repealed (expected repeal date is January 2019). PLANNING COMMISSION RECOMMENDATION This matter was considered at the regularly scheduled April 12, 2016 Planning Commission meeting. The Planning Commission recommended approval of the draft ordinance to the City Council. The Commission had a number of questions/comments pertaining to how the ordinance would be implemented. The most prominent comment from the Planning Commission was the question as to whether these types of businesses should be located in industrial zones, rather than commercial zones. The draft ordinance proposes that medical marijuana dispensaries shall be located, ideally close to the Placentia-Linda Hospital. The reasoning behind this location is to make it available to patients who are typically already seeking other related medical treatments for their conditions. In addition to compassionate care and convenience of patients, the Commission also discussed safety and security issues for the community at large, given that dispensaries could be seen as attractive to theft activities due to the type of product to be sold and currency on hand. City Attorney staff and Planning staff represent that typically, industrial sectors of the City are usually active during the day but less populated during evening and the night hours which makes these areas more susceptible to crime because there is less activity and therefore fewer eyes on the street. It should be noted that the draft ordinance requires a stringent security plan with measures including, but not limited to, a buzz-in electronic/mechanical entry system, uniformed licensed security personnel, and specified video monitoring and recording which is made available to the Placentia Police Department. The City has the authority to review all reporting/tracking of product and of gross sales. The City has the right to approve the security
Page 6 of 8 plan, which must outline in detail the procedures for safely and securely storing and transporting all medical marijuana related products as well as any currency. Below is a summary of other comments from the Planning Commission: Provide transparency, to the greatest extent possible, to the selection process. The ordinance should identify who, besides the City Administrator shall be on the Selection/Advisory Committee. After eighteen (18) months, the City Council would have the opportunity to vote to grant a second (dual) permit in the categories of cultivation and dispensary businesses, and one more cultivation permit may be issued to the permitted medical marijuana manufacturer. Which specific categories are eligible for a second license is confusing and should be simplified? A fiscal analysis should be prepared. 4 months ago the City prohibited cultivation altogether. The Commission is puzzled as to why the City is pushing ahead with this comprehensive ordinance. The Draft ordinance should be amended to allow dispensaries in Manufacturing zones instead of the Commercial zones due to the potential for criminal activity. Instead of selecting 3 finalists, the Ordinance should select 10 finalists to compete for a permit and then the permit should be selected by a lottery instead of a point system. The draft ordinance has not been revised based on these comments because they are overall policy making concepts to be considered by the City Council. Next Steps Several additional items will be brought forward as the ordinance is set for implementation. Staff will be developing the Medical Marijuana Business Application Process the application and procedure needed to obtain the permit. This will include the applicant providing a detailed security and operations plan. The license will give the City Staff stringent oversight over security plans, all business operations and all accounting records, including product sales and distribution. As part of the licensing process, the Planning Division will be asked to verify that the location of the business is permissible pursuant to the ordinance and that the zoning allows the use. Staff will also be returning to Council with a fee resolution to cover all processing costs of implementing the ordinance including the application, review approval, and monitoring of any proposed medical marijuana businesses. In order to effectively implement the ordinance, staff will be contracting with qualified firms to provide detailed project management of the process and expert advise regarding the procedures and implementation.
Page 7 of 8 CEQA The environmental impacts of the project have been analyzed in accordance with the California Environmental Quality Act (CEQA). The proposed ordinance is exempt from environmental review under CEQA pursuant to the following sections of the CEQA Guidelines, 14 Cal. Code of Regulations, Chapter 3: A. The ordinance is exempt under Section 15061(b) (3) because it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. The ordinance permits a very limited number of medical marijuana businesses, and the medical marijuana businesses will have no impacts that are different than the farming, manufacturing, distribution, laboratory, and delivery activities already authorized within the City. Furthermore, the ordinance contains requirements that prevent any potential impacts on the environment that may be unique to businesses involving medical marijuana. For example, the ordinance establishes prohibitions on nuisance odors, glare, excess energy usage, and establishes safety protections to prevent crime or deterioration of the business area into blight, prohibition on usages of hazardous chemicals, and a prohibition on usage of excess water in violation of drought laws, etc. Further, there is no possibility that this ordinance would create cumulative impacts that are significant because this ordinance does not authorize a total number of businesses in the city than would have been otherwise authorized, does not authorize construction or other related activities or any other activities that are not already permitted, except that the ordinance allows the same activities but with a different material (medical marijuana) that is being grown, sold, transported, or otherwise utilized in some form; there are no other significant impacts that could occur as a result of this ordinance, and there are no unusual circumstances that would cause any such significant impacts; B. The ordinance is also exempt under Section 15183 (projects consistent with a community plan, general plan, or zoning) since the types of businesses permitted by the ordinance are consistent with those contemplated by general plan and zoning, such as farming, manufacture, and distribution of other agriculture products and/or products to be used as pharmaceuticals; C. The ordinance is also exempt under CEQA Guidelines Section 15301 (existing facilities) since permitted medical marijuana business under the ordinance may locate in existing facilities, and any additions to structures would be expected to be also exempt under 15301; and D. The ordinance is exempt under Section 15303 (new construction or conversion of small structures). The businesses will be established in an urban area, and given the build out of the existing city, and sufficient existing leasable property, the amount of construction that would occur is minimal to non-existent, and any such construction would be less than the thresholds established in Section 15303. Further environmental review may be required for specific medical marijuana business establishments.
Page 8 of 8 Prepared by: Reviewed and approved: Charles L. Rangel Contract Senior Planner Jennifer Davis Interim Development Services Director Reviewed and approved: Damien R. Arrula City Administrator Attachment: 1. Draft Ordinance No O-2016-XX, Exhibits: Maps Showing Distancing and Location Opportunities
RESOLUTION NO. R-2016-XX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PLACENTIA, STATE OF CALIFORNIA, APPROVING A NOTICE OF EXEMPTION (Ordinance No. 2016-XX Medical Marijuana Businesses) WHEREAS, City planning and legal staff have reviewed the Ordinance Repealing Chapter 8.42 Of Title 8 Of The Placentia Municipal Code Regarding Medical Marijuana Dispensaries, Adding Title 12 Entitled Medical Marijuana Businesses And Activity And Chapter 23.45 Entitled Medical Marijuana Uses And Activity And Amending Section 23.46.040 Pertaining To Marijuana Cultivation ( Project ) and determined that it is exempt from review under the California Environmental Quality Act pursuant to the following Sections of Title 14, Chapter 3, California Code of Regulations: A. The ordinance is exempt under Section 15061(b) (3) because it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. The ordinance permits a very limited number of medical marijuana businesses, and the medical marijuana businesses will have no impacts that are different than the farming, manufacturing, distribution, laboratory, and delivery activities already authorized within the City. Furthermore, the ordinance contains requirements that prevent any potential impacts on the environment that may be unique to businesses involving medical marijuana. For example, the ordinance establishes prohibitions on nuisance odors, glare, excess energy usage, and establishes safety protections to prevent crime or deterioration of the business area into blight, prohibition on usages of hazardous chemicals, and a prohibition on usage of excess water in violation of drought laws etc. Further, there is no possibility that this ordinance would create cumulative impacts that are significant because this ordinance does not authorize a total number of businesses in the city than would have been otherwise authorized, does not authorize construction or other related activities or any other activities that are not already permitted, except that the ordinance allows the same activities but with a different material (medical marijuana) that is being grown, sold, transported, or otherwise utilized in some form; there are no other significant impacts that could occur as a result of this ordinance, and there are no unusual circumstances that would cause any such significant impacts; B. The ordinance is also exempt under Section 15183 (projects consistent with a community plan, general plan, or zoning) since the types of businesses permitted by the ordinance are consistent with those contemplated by general plan and zoning, such as farming, manufacture, and distribution of other agriculture products and/or products to be used as pharmaceuticals; C. The ordinance is also exempt under CEQA Guidelines Section 15301 (existing facilities) since permitted medical marijuana business under the ordinance may locate in existing facilities, and any additions to structures would be expected to be also exempt under 15301; and D. The ordinance is exempt under Section 15303 (new construction or conversion of small structures). The businesses will be established in an urban area, and given the build out of the existing city, and sufficient existing leasable property, the amount of construction that would occur is minimal to non-existent, and any such construction would be less than the thresholds established in Section 15303; and
WHEREAS, a Notice of Exemption has been prepared for the Project. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Placentia as follows: Section 1. Based on the review and determination of the Planning Department, the City Council of the City of Placentia finds that the Project is exempt from review under the California Environmental Quality Act. Section 2. A Notice of Exemption is approved for the Project. Section 3. The City Clerk may file the Notice of Exemption with the County Clerk of Orange County and, if the Project requires a discretionary approval from any state agency, with the State Office of Planning and Research, pursuant to the provisions of Section 21152(b) of the Public Resources Code and the State EIR Guidelines adopted pursuant thereto. PASSED, APPROVED AND ADOPTED by the City Council of the City of Placentia at a public meeting held on the 17th of May, 2016. JEREMY B. YAMAGUCHI, MAYOR ATTEST: By: CITY CLERK