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HomeMy WebLinkAbout02-20-2018 Item 13 - Cannabis Regulations Ordinance Policy Direction Meeting Date: 2/20/2018 FROM: Michael Codron, Community Development Director Prepared By: Michael Codron, Community Development Director Rachel Cohen, Associate Planner Anne Russell, Interim Assistant City Attorney SUBJECT: OVERVIEW OF PROPOSED DRAFT CANNABIS REGULATIONS RECOMMENDATION Receive a presentation, take public testimony, and provide the following direction to staff: 1. Prepare draft regulations based on direction provided by the City Council with input from the community and Planning Commission, and return to the Council on May 1, 2018, with the resolutions and ordinances necessary to adopt Cannabis Regulations; and 2. Return to the City Council on March 6, 2018, for approval of a Request for Proposals (RFP) to identify a consultant to process applications and establish a list of eligible cannabis business operators. REPORT-IN-BRIEF On March 14, 2017, the City Council adopted Ordinance No. 1633 (Attachment A), reaffirming that all commercial cannabis activity is currently illegal in the City of San Luis Obispo . At the same time, Council directed staff to engage with the community and return with recommendations regarding the regulation of cannabis business activity within the City. Proposition 64 was overwhelmingly supported by City voters (15,447 total yes votes or 67.52% of the ballots cast), however, there are many policy questions and regulatory details that must be determined before cannabis business activity can be permitted. The purpose of this agenda report is to highlight those policy issues and provide the City Council with an opportunity to chart a course forward that is acceptable to the City Council and community. Staff has followed the City’s Public Engagement and Notification Manual and used a “Consult” level of public engagement to gain feedback on proposed regulations. Staff performed outreach with individuals and community groups to develop an outline of proposed regulations, allowing members of the public to better evaluate a possible framework for a regulated cannabis marketplace in the City. An overview of a proposed regulatory framework was published on the City’s website and presented in different forums for feedback to inform further refinement prior to presentation of fully drafted regulations for Council consideration. Based on initial Council direction and subsequent public outreach, staff’s currently contemplated approach to draft regulations envisions a market with specific limits imposed, including a limit of three storefronts for commercial cannabis sales, a limit of 70,000 square feet of canopy for indoor cultivation, no outdoor commercial cultivation, manufacturing limited to non-volatile processes, buffers from schools and residential neighborhoods, and a vetting process for business Packet Pg 211 13 operators among other limitations and criteria. That approach is reflected in the published outline presentation. A set of questions is posed to determine the scope of regulations that the City Council is comfortable moving forward with. With direction from the City Council, staff will move forward and publish comprehensive draft regulations for presentation to the community and the Planning Commission before returning the City Council for potential adoption of regulations on May 1, 2018. DISCUSSION Background The San Luis Obispo City Council last discussed Cannabis Regulations on March 14, 2017. At that time, Proposition 64 (the Adult Use of Marijuana Act) had been approved by California voters and state regulators were in the process of developing plans to implement a regulated cannabis market. Since that time, the State has established new regulatory agencies and SB 94, the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), was approved by the legislature. MAUCRSA is the operational law that consolidates all of California’s cannabis-related statutes and is the basis for regulations still under development by three State licensing entities. 1. Bureau of Cannabis Control – licenses all activities associated with the testing, distribution, and sale of cannabis products to the end user. 2. California Department of Public Health, Manufactured Cannabis Safety Branch – licenses all activities associated with the manufacture of cannabis into various concentrates, edibles, supplements, or any other product whether intended for the wholesale market or the end user. 3. California Department of Food and Agriculture – licenses all cultivator activities under the CalCannabis program. Attachments B through F to this report include the latest information from these agencies regarding the permitting process. At the March 2017 meeting, the Council acted to confirm long standing City policy to prohibit all cannabis related business activity in the City and provided staff with the following direction: 1. Monitor developments in other jurisdictions 2. Monitor development at the Federal level 3. Engage the community regarding various land use and taxation alternatives that may be appropriate 4. Return to the City Council with a recommendation Packet Pg 212 13 Local Agency Responsibilities (Dual Licensing) Presently, Ordinance 1633 prohibits all cannabis related business activity in the City of San Luis Obispo. Prior to issuing a license, state regulators must contact the local jurisdiction where a business intends to operate to ensure the business is allowed under local rules. If Ordinance 1633 is not replaced by new regulations, all cannabis-related business activity, including deliveries, will continue to be illegal under both state and local law in the City of San Luis Obispo, even if the business has a state license to operate in other jurisdictions. Process to Develop Draft Regulations and Public Engagement The City Council has directed staff to engage the community regarding various land use and taxation alternatives that may be appropriate. Staff has engaged the community in a consultative manner, seeking input from community members through a variety of channels and outreach methods. Per the City’s Public Engagement and Notification Manual, a “Consult” level of public engagement was implemented. Central to the effort has been the Cit y’s website, which has been updated with information throughout the process. The City has also used its Open City Hall platform to deliver important information about the proposed regulations and gain direct community feedback. The following is the list of engagement activities conducted by staff during the outreach process. • Zoning Regulations Public Workshop – June 2017 • POSAFY Consultation – June 2017 • Chamber of Commerce, Legislative Action Committee –September 2017 • Downtown SLO Board, Issues Committee – September 2017 • Open City Hall – October 13, 2017 • Public Open House, Panel Discussion – October 23, 2017 • Publication of Draft Regulations – January 11, 2018 • Open City Hall – January 11, 2018 • City Council Policy Level Discussion – February 20, 2018 For more information, community members can visit the web site at the following address: http://www.slocity.org/government/department-directory/community-development/cannabis In addition, comments may be provided via Open City Hall until February 19, 2018. https://www.peakdemocracy.com/portals/189/Issue_5827 Overview of Draft Regulations City staff is in the process of drafting cannabis regulations under two Municipal Code Chapters. The first set of regulations would be found in San Luis Obispo Municipal Code (SLOMC) Chapter 9 and are focused on public health and safety standards that would be enforced by the Police Department. The second set of regulations would be located in SLOMC Chapter 17 (Zoning Regulations) and are focused on business activity and land use. Business activities would be regulated through Cannabis Activity Permits and land use regulations would be enforced via performance standards set forth in the regulations themselves and/or conditional use Packet Pg 213 13 permits linked to the Cannabis Activity Permit. Legal operation of a cannabis business would require alignment of a permitted business operator and a physical location zoned for such uses. While these areas of expertise will be required to implement an effective regulatory program, the exact method for enforcing and regulating the program will be developed based on adopted regulations and in consultation with other agencies in the region that will likely have similar needs. Overall, the draft regulations are intended to protect public health, safety, and welfare – and support the local cannabis economy – by permitting and regulating a wide range of cannabis uses, summarized as follows: 1. Allows for access to medical and recreational marijuana in the City, with storefront and delivery options 2. Prohibits events and onsite consumption 3. Requires vendors to be certified and ranked prior to applying for a permit 4. Includes requirements for energy and water efficiency, and limits total amount of cultivation, to ensure consistency with City climate action goals 5. Limits manufacturing uses to non-volatile processes only 6. Limits cultivation to indoors only, and total amount of cultivation allowed to 70,000 square feet of total canopy coverage within an indoor area, cumulatively (includes total canopy of either horizontal or vertical growing situations) 7. Establishes buffers from cannabis businesses of 200 feet from residential zones, and 600 feet from schools 8. Requires retail storefronts to be located at least 1,000 ft. apart 9. Provides for full cost recovery of city expenses related to all cannabis business monitoring, enforcement and administration 1. Definitions The following definitions describe the different cannabis business activities that are proposed for regulation within the City of San Luis Obispo. 1. Specialty cultivator – indoor only grows under 5,000 s.f. of canopy, includes processing. 2. Small cultivator – indoor only grows under 10,000 s.f. of canopy, includes processing 3. Nursery – indoor only propagation under 10,000 s.f. of canopy 4. Manufacturer I – non-volatile processing of cannabis into any other product 5. Testing – lab testing is required by the State prior to distribution to a retailer 6. Retailer – includes storefront and delivery 7. Distributor – retailers must purchase from licensed distributors 8. Microbusiness – allows a single business to integrate cultivation (10,000 s.f. of canopy max.), manufacturing, distribution and retail sales 2. State License Categories – Difference Between Medical and Adult Use Each of the three licensing agencies have published guidelines for licensing. All licenses except testing labs will have two categories, M (Medi cinal) or A (Adult-Use). Business to business Packet Pg 214 13 activity is only allowed between businesses in the same category (e.g. a manufacturer with an M license can only purchase raw material from a cultivator or distributor with an M license). However, the minimum product labeling standards are the same, and retailers may hold both M and A licenses. As a result, there is no need for the City to distinguish between medical and adult use in its regulations, unless it intends to prohibit adult use business activity. 3. Allowed Uses by Zone Zoning District Cannabis Activity Permits Available Area or Use Restrictions Buffers Service Commercial (CS), Manufacturing (M), Business Park (BP) Specialty Cultivator, Small Cultivator, Nursery, Manufacturing I, Distributor, Testing, Retailer (delivery), Microbusiness 10,000 square feet canopy maximum for individual cultivators, 70,000 square feet canopy maximum citywide 200 feet from premises to residence located R-1, R-2, R- 3, or R-4 zones, and 600 feet to any day- care, pre-school, elementary, middle, or secondary school Retail Commercial (CR), Tourist Commercial (CT), Community Commercial (CC) Retailer (storefront), Microbusiness 3 retail storefronts maximum, citywide Retail storefronts must be separated by a distance of 1,000 feet Office (O) Testing None None No cannabis business activity permits are recommended for the City’s downtown core (Downtown Commercial (CD) zone). This recommendation follows public input, input from Downtown SLO, and the recommendations of the City’s Police Department. Special Provisions for Microbusinesses State regulations limit vertical integration of license types with the exception of “microbusinesses,” a license type created to support the cottage/craft cannabis industry. Similar to microbrewers, cannabis microbusinesses are limited in size, but are allowed (actually required) to conduct business in a minimum of three of the following four license areas: cultivation, manufacturing, retail, distributor. The City’s draft regulations support microbusinesses in several zoning districts, however, staff is proposing limitations based on the location of the business. Specifically, a microbusiness located in a commercial district (CR, CT, CC) would have to have a storefront and at least 50% of the gross revenue of the business would have to come from retail sales. A microbusiness located in a services and manufacturing area (CS, M, BP), could also have a storefront but 50% of the gross revenue of the business would have to come from non-storefront activities such as cultivation, manufacturing, distribution, or delivery services. Packet Pg 215 13 This is very similar to the type of limitation that the City has established for warehouse stores. For example, Tennis Warehouse has a small retail store that allows for direct sale to customers, while online sales account for the majority of revenue generated onsite. 4. Buffers and Downtown Expansion Buffers Staff has produced maps to allow the community and decision-makers to see how buffers limit potential locations for cannabis businesses. Maps were prepared that show buffers of 600 feet and 1000 feet for educational uses, including pre-schools. Maps have also been prepared showing buffers of 200 feet and 300 feet from R-1, R-2, R-3 and R-4 zoned land. (The maps are available on the website and attached as a Council Reading File because they are too large to print as attachments.) The State recommends 300-foot buffers from residential neighborhoods, and the Police Department concurs with this recommendation. However, the Council and community should review the difference between the 200-foot and 300-foot buffer maps. The 300-foot buffer map eliminates many properties from potential cannabis business use, which could drive speculation and inflate the price of real estate for properties outside of the buffer area. The 200-foot buffer provides a more even distribution of properties across the City that would be zoned appropriately for what would be a limited number of storefronts. In short, the City Council should consider whether a 300-foot buffer is necessary given the proposed limitation of retail storefronts to three. Staff is seeking Council direction on the appropriate balance between the value of greater residential buffers and the potential economic consequences of restrictions that may constrain permissible business locations in a manner that leads to unintended property speculation and price spiking. Downtown Expansion The Community Development Department has in its work program a project to look at the expansion of the Downtown Commercial zone north of Santa Rosa and up Monterey Street. Based on the buffer maps, this is an area that could potentially support cannabis business activity, including the potential for a retail storefront. However, if storefronts are not allowed downtown, and downtown expands, this could create a non-conforming use. This issue was identified as a concern by the Police Department, which is recommending that storefronts be prohibited from downtown because downtown is already impacted by a higher rate of calls for service than other parts of the City, complicating law enforcement activities. 5. Public Health and Safety Standards Standards related to the following issue areas are recommended to be included in SLOMC Chapter 9, which likely will be enforced primarily by the Police Department. Packet Pg 216 13 1. Prohibition of outdoor commercial cultivation 2. Prohibition of outdoor cultivation of more than 6 plants per residential parcel for personal adult or medicinal use-regardless of number or residents, and regardless of number of residences per parcel. All other cultivation would have to be done indoors. 3. Personal outdoor cultivation accessibility, visibility and setback requirements 4. Prohibition of: a. On-site consumption b. Consumption in public c. Consumption in or about other (non-cannabis) businesses open to the public d. More than six plants per residence, indoors and out, cumulatively e. No cultivation on a parcel that does not have a private residence that is used for dwelling purposes f. Cultivation of live plants, indoor or out, if doing so creates a public or private nuisance from odors, noise, light or other causes g. Sale or gift or consumption of alcohol in or about premises conducting a commercial cannabis activity There are two additional areas for the City Council and community to consider relative to its health and safety standards. The first relates to the concentration of THC (the psychoactive component of the cannabis plant) in products that are manufactured or sold in the City. The second issue relates to access to medical cannabis by persons under 21 years of age, which is primarily a consideration because of the large number of college-age residents living in the City and on campus. Concentrates The extraction of cannabinoids from the cannabis plant into concentrates that are high in THC is an area of concern for law enforcement and public health, both in terms of the hazardous processes associated with concentrate production and the extreme potency of the resulting product. Concentrated forms of cannabis have been documented public safety issues in other states that already have active adult use programs. THC limits are regulated by the State. Concentrates, commonly known as “shatter, wax, crumble, budder, and oil” are used for various purposes (e.g. they can be used directly or can be infused into a cannabis product such as a brownie). Edibles, such as brownies, have a maximum dose of 10 milligrams of THC per serving, and 100 milligrams of THC per package (the strength of the product must be clearly labeled per the State regulations). Other products, including those that can be smoked, dabbed, or vaped (three common methods of consumption), have a maximum concentration of 1,000 milligrams per package (adult-use), and 2,000 milligrams per package (medicinal). The sale of concentrates for smoking, dabbing, or vaping at such high concentrations of THC is an area that the City could choose to regulate. Medicinal Use by Adults Under 21 and Minors Although adult use of cannabis is now legal in California for adults 21 years of age and older, adults under 21 and minors (with parent/guardian approval) can only use cannabis with a doctor’s recommendation. The City of San Luis Obispo could choose to prohibit its storefront Packet Pg 217 13 retailers from selling to any person under 21 years of age. While this would limit access for adults and minors who would otherwise be allowed to have access with a doctor’s recommendation, it may also have the benefit of limiting access for recreational use by adults under 21 years of age. The City could still allow delivery of medicinal cannabis to patients under 21 within the City limits. This is a trade-off that the City Council may wish to consider given the large number of college students under 21 that live in San Luis Obispo and on the Cal Poly campus. 6. Application Requirements Applications for “Cannabis Business Activity Permits” will have minimum information requirements to ensure that any decision to permit a cannabis business is based on a complete understanding of the scope of the business and how well it complies with City standards. The following list is considered the minimum amount of information that would-be part of a complete application. 1) Site plan, floor plans, and a general description of the nature, square-footage, parking and type of cannabis activity(ies) being requested. 
 2) An operations plan including: a) On-site security measures both physical and operational and, if applicable, security measures for the delivery of cannabis associated with the commercial cannabis business; b) Customer eligibility and age verification procedures; c) Odor management plan; 
 d) Proposed signage: i) Must comply with City’s Sign Regulations for size, area and type of sign, no exceptions allowed. ii) Internal illumination of signs is prohibited. iii) No portion of the cannabis plant may be used in any sign visible from the public right-of-way. iv) No cannabis products may be displayed in store windows and visible from the public right-of-way. v) Provide sign size, height, colors, and design of any proposed signage at the site. e) Employee safety and training plan; 
 f) Cash management and City tax and fee payment plan; g) A statement on neighborhood compatibility and a plan for addressing potential compatibility issues; h) Energy efficiency plan; i) Water efficiency plans; and 
 j) Waste management plan.
 k) Vicinity map showing distances to the following uses: any day-care, pre-school, elementary school, junior high school, or high school; and, any residentially zoned area. 3) Proof of ownership or lease agreement with landowner’s consent; 4) A list of all other uses on the property; Packet Pg 218 13 5) City of San Luis Obispo Certificate of Eligibility to Conduct Cannabis Business Activities 7. Legal and Financial Regulation Considerations While marijuana businesses and activities have been decriminaliz ed and expressly authorized under state law, such businesses and activities remain in conflict with federal law. Since the passage of the Controlled Substances Act (CSA) in 1970, Congress has generally prohibited the cultivation, distribution, and possession of marijuana. Beginning in 2009, the Obama administration and the U.S. Attorney General’s Office began to address the emerging trend of state laws authorizing certain medical and recreational cannabis activities via the issuance of federal prosecutorial guidance memoranda designed to address the conflict between state and federal law. That guidance culminated in the 2013 issuance of a Department of Justice memorandum to all United States Attorneys (federal prosecutors responsible for federal controlled substances prosecutions) known as the “Cole Memo” (https://www.justice.gov/iso/opa/resources/3052013829132756857467.pdf). While the memo did not change federal law, combined with other Obama administration internal enforcement guidelines, it did de-prioritize enforcement of federal marijuana prohibitions against individuals and businesses complying with state laws regarding marijuana, which provided a level of assurance that federal enforcement and prosecution resources would not be directed against individuals and businesses operating lawfully within the parameters established in their states. The emerging industry and state and local regulatory authorities have relied on that guidance and federal enforcement approach in their approach to the establishment, licensing, permitting and taxation of state authorized marijuana activities. In January of this year, Attorney General Jeff Sessions issued a new guidance memo to all United States Attorneys superseding and rescinding the Cole memo. In issuing the memo, Attorney General Session stated “Therefore, today's memo on federal marijuana enforcement simply directs all U.S. Attorneys to use previously established prosecutorial principles that provide them all the necessary tools to disrupt criminal organizations, tackle the growing drug crisis, and thwart violent crime across our country." It is too early to know what the practical impact of the Sessions memo will be from a federal enforcement standpoint. Analysis to date has ranged from conclusions that there will be little or no change in federal enforcement approach in California to speculation that the memo may be an indicator that the Trump administration and Sessions intend to escalate enforcement through increased arrests, prosecutions, and asset forfeitures related to marijuana businesses. Regardless of speculation as to future federal action, the Cole Memo was generally regarded as establishing useful and reliable guidance on a consistent nationwide federal policy, while the new Sessions Memo, returns to a less predictable environment where there is a potential for each U.S. Attorney to have an individualized prosecutorial approach. San Luis Obispo County is under the federal jurisdiction of the Central District, which includes Los Angeles, Riverside, San Bernadino, Ventura, Santa Barbara, and San Luis Obispo. Nearly concurrent with the release of the memo, Sessions appointed a new interim U.S. Attorney for the Central District, Nicola Hanna. Hanna has not made any clear public statements on the intended Packet Pg 219 13 approach to enforcement in this District and given the interim nature of the appointment, it is not likely we will have any clear direction or commitment in the immediate future. Banking Issues Banking issues arising from the conflicts between state and federal law have been an ongoing area of concern, the prosecutorial approach to which had also been previously addressed via a follow up 2014 Cole memo (the 2014 Department of Justice (DOJ) Financial Crimes memo). Shortly following the 2014 Cole memo, and heavily relying on its guidance, The Department of the Treasury Financial Crimes Enforcement Network (“FinCEN”) issued “guidance to clarify Bank Secrecy Act (“BSA”) expectations for financial institutions seeking to provide services to marijuana-related businesses.” https://www.fincen.gov/resources/statutes- regulations/guidance/bsa-expectations-regarding-marijuana-related-businesses. FinCEN issued its guidance “…in light of recent state initiatives to legalize certain marijuana-related activity and related guidance by the U.S. Department of Justice (“DOJ”) concerning marijuana-related enforcement priorities. This FinCEN guidance clarifies how financial institutions can provide services to marijuana-related businesses consistent with their BSA obligations, and aligns the information provided by financial institutions in BSA reports with federal and state law enforcement priorities.” The stated purpose of the FinCEN guidance was to “…enhance the availability of financial services for, and the financial transparency of, marijuana-related businesses.” The FinCEN guidance has not yet been rescinded, but its utility has been called into questions because of the its relationship to and reliance on the Cole Financial Crimes Memo, which the Sessions memo also rescinded. The Department of Treasury is currently looking at their guidance in the wake of Sessions memo. If FinCEN withdraws that guidance, it is unclear how bank regulators will respond and what effect that will have in California’s emerging market. This month, Treasurer John Chiang announced that his office (along with the California State Attorney General’s office) would undertake a two-part feasibility study around forming a state- backed bank to serve California cannabis businesses. However, there are significant hurdles to any state backed approach, discussed more extensively in Chiang’s report http://www.treasurer.ca.gov/cbwg/resources/reports/110717-cannabis-report.pdf. Thus, it remains fairly clear is that continued state and federal conflicts of law will continue to yield an industry that involves significant cash transactions and creates difficulties for local jurisdictions from both a public safety and financial transactions standpoint. The City will need to continue to closely monitor this evolving area and will need to work closely with industry applicants to ensure that any potential operational issues arising from these cash intensive issues are fully addressed via robust operational plans that demonstrate strict adherence to state law and federal guidance on these issues. Policy Considerations The City Council has many policy considerations to make as it contemplates allowing for a regulated cannabis market to be established in the City of San Luis Obispo. The following discussion looks at the issue through the perspective of social, economic, and environmental Packet Pg 220 13 considerations to evaluate the “triple bottom line1” associated with the decisions in front of the Council. Additional public engagement, and discussion and direction by decision-makers, will continue to inform staff’s recommendations as this process moves forward. 1. Social Considerations The social issues that surround the legal cannabis market relate to citizens’ desire to obtain and use legal cannabis under Proposition 64 and SB 94. There is a strong desire for access in a legal and controlled manner. This is evidenced by the passage of Proposition 64 in California, public sentiment (64% of Americans support legalization according to a 2017 Gallup Poll), and decisions being made at the State level across the Country (Vermont being the most recent, and several other states including Arizona, Arkansas, Connecticut, Delaware, and Florida are moving towards legalization under state laws). There are no doubt negative social impacts and aspects of legalization, similar to those associated with alcohol use. However, these must be considered in light of the alternative, which is ongoing participation in an unregulated local market. This report cannot weigh all of the negative impacts that the unregulated local market for cannabis has produced and compare those with the impacts that we expect to come out of the regulated market (which will certainly increase the use of cannabis across the City). However, because the decision in front of the City Council is a local decision about if and how to regulate cannabis in the City of San Luis Obispo, there are some important considerations to be made in the areas of public safety, public health, personal responsibility and access to medicine that should be thought through and discussed prior to a decision being made. Public Health and Safety The public safety impacts include: • Instances of public intoxication; • Instances of driving under the influence; • Instances of crime and theft associated with managing large amounts of cash; • Emergency medical incidents and emergency room visits resulting from consumption or misuse; • Instances of mental health and other health problems experienced by cann abis users, particularly with high concentration products; and • Potential for increased fires or other emergencies from processing and/or consumption. Staff believes that - while legalization may mitigate some of the crime and calls for emergency response currently associated with the illegal cannabis market - legalization will still increase the 1 The phrase “the triple bottom line” was first coined in 1994 by John Elkington, the founder of a British consultancy called SustainAbility. His argument was that companies should be preparing three different (and quite separate) bottom lines. The triple bottom line thus consists of three Ps: profit, people and planet. It aims to measure the financial, social and environmental performance of the corporation over a period of time. More recently public agencies have begun to use the triple bottom line as a way of better understanding all of the ramifications of the policy choices available. Packet Pg 221 13 usage of cannabis resulting in increased public safety impacts. Personal Responsibility and the Role of Government Concerns about public health and public safety are countered with arguments about personal responsibility and the negative impacts that the “war on drugs” has had in communities across the United States. In the course of conducting public outreach, staff received feedback that many people in our community feel that the classification of cannabis as a Schedule I drug with no beneficial medical use is inappropriate in the face of individuals’ experiences with the use of cannabinoids for pain management and a variety of other conditions. Access With the approval of SB94 (the so-called “trailer bill”), California has consolidated its regulations with respect to recreational and medicinal use of cannabis and decriminalized most cannabis activities under state law. However, local control provisions in the law allow communities to decide for themselves if they want to allow specific uses within their jurisdictions. Retailers in the State have the option of selling recreational only, medicinal only, or both, depending on their individual business plans and local regulations. The effect of SB94 is to increase access to cannabis for all residents of the state, whether for recreational or medicinal purposes. If the City of San Luis Obispo chooses to restrict retail sales locally, residents who wish to consume cannabis products will need to travel to a location where they can legally purchase from a licensed retailer (currently the closest locations for adult use are in Los Angeles, and multiple delivery services exist in SLO County for medicinal) or continue to procure cannabis outside of the regulated marketplace. There are many options whereby the City could focus on enhanced access to adult use and medicinal cannabis for residents, rather than move forward with a more comprehensive set of regulations for a variety of business types as discussed in this report. 2. Economic Considerations If the City Council is interested in moving forward with regulating commercial cannabis business activity in the City, then it should consider how to support local business success in this new market. Like many industries in the area, the local cannabis industry will be challenged by the geographic isolation of the Central Coast, the cost of housing, the relatively small labor pool, supply chain concerns, and other factors that can make it difficult to establish a professionally managed and legally compliant local cannabis business market. By many accounts, the cannabis industry has the potential to grow significantly in the years to come. Growth in the supplement and health-care market for non-psychoactive cannabis concentrates in particular could be substantial if the health benefits are proven. Proposition 64 makes specific allocations of funding for research on efficacy. For instance, $2 million in annual funding is directed to the University of California San Diego Center for Medical Cannabis Research to study the risks and benefits of medical cannabis. Once reliable studies on the use of cannabinoids are published, there is the potential that beneficial uses will be identified that could Packet Pg 222 13 become more mainstream and support industry growth. There is also a chance that studies will more clearly identify substantial health risks associated with cannabis use, leading to tighter regulation at the state or Federal level - so there is a measure of risk associated with investment and entry into the cannabis industry. Creating A Sustainable Local Market If the City Council is interested in creating a sustainable local market, it should consider permitting a variety of uses that would help establish and support the local supply chain. Manufacturers who have an idea for a product need access to a reliable supply of raw materials to effectively plan and implement a product launch and to be positioned to accommodate the evolution of this emerging market. Manufacturers who need plant material to create concentrates – whether for use in hand creams, edibles, or pet care products – want a predictable supply that they can tap into to support their processes. All business to business transactions in the regulated cannabis marketplace occur through the use of licensed distributors, and all raw materials must go through appropriate testing. As a result, it is recommended that the City Council allow for permitting of distribution and testing businesses, if it wants to allow cultivation and manufacturing locally. If the City Council chooses only to allow retailers, then local retailers would have to rely on distributors and testing facilities outside of the City (and potentially outside of the County depending on what uses other jurisdictions in SLO County allow) to acquire their products for sale. Real Property Use and Impacts to Adjacent Businesses/Properties Cannabis business activity is still prohibited under Federal law. As a result, use of real property may be constrained if the property has been used to secure a mortgage that is Federally insured. This also limits the ability of cannabis businesses to engage in credit card transactions, and means that most business activity in this industry is done on a cash basis. In practice, this means that businesses are more likely to be established on discrete properties where the land and improvements can be purchased outright, rather than within a suite or on a property with an existing building to be leased or built to suit. In addition, the impacts on adjacent businesses – whether real or perceived –mean that property owners and leasing agents may simply prefer not to allow cannabis uses to locate within a commercial center because of co-tenancy concerns. Co-tenancy refers to the beneficial relationship between businesses next to one another or within the same shopping center. In some cases, major anchors in shopping centers negotiate lease restrictions that prohibit certain uses from being established adjacent to the anchor. As a result, the Council should keep in mind that many of the properties identified as possible locations for future cannabis business activity will not actually be made available for this purpose. These are private market driven decisions and there is no ready means by which the City can access comprehensive and reliable data that would permit reliable analysis of practically available locations for cannabis businesses within the City. Packet Pg 223 13 3. Environmental Considerations The third factor to consider in a “triple bottom line” evaluation of possible cannabis regulations are the environmental concerns. Overall, cultivation is the most resource intensive activity associated with the cannabis market. City staff is recommending significant limits on cultivation (70,000 square feet of canopy coverage, with no single grow larger than 10,000 square feet) of canopy for the following reasons. 1. The City of San Luis Obispo is an urban area and does not have sufficient acreage with Agricultural zoning to allow for outdoor cultivation; and 2. The City is committed to maintaining a compact urban form and rezoning areas for agricultural use, or allowing cultivation of cannabis in open space areas, is not recommended for a variety of reasons, including potential conflicts with the City’s Housing Major City Goal; and 3. Indoor cultivation is potentially a very lucrative use of land within the City’s Services and Manufacturing and Business Park areas. Other communities have experienced major fluctuations in real estate prices due to speculation about future regulations. Limiting the amount of floor area that can be used for cultivation will help to ensure that our local real estate market doesn’t experience a major spike in values that could disrupt existing business operations; and 4. Indoor cultivation is very energy intensive. As a result, staff is recommending limits on the total amount of canopy area for cultivation and requiring energy efficiency plans to achieve Zero Net Energy usage by 2020 in order to support consistency with the City’s climate action goals. There is no magic to the 70,000 square-foot canopy limitation. The limit is recommended solely to achieve the purposes described above. A limit of 50,000 square feet of building floor area was initially proposed and presented to the public during workshops and other forums. However, the limit was expanded in consideration of an additional use – nurseries – and the limit was switched from building floor area to canopy, which allows cultivators to be more efficient with building floor area by growing vertically. Water As with other water-using industries, a proposed cannabis manufacturing and/or cultivating business will be required to submit a water efficiency plan for approval. The plan will provide information about the business’s planned management practices and the water conservation/efficiency measures it will deploy. The water used to support cannabis businesses will be made available, as it is for any other user connected to the water system, in compliance with the City’s municipal code. Packet Pg 224 13 Wastewater A cannabis business will be treated as any other industrial user connected to the City’s wastewater conveyance system in compliance with the City’s municipal code. A cannabis manufacturer or cultivator will be required to apply for, receive, and maintain an Industrial User Permit to operate whether or not it is a zero-discharge facility (zero-discharge facility means that no process water gets put down the drain; it is all recycled). If the process discharges to the wastewater conveyance system, depending on the fertilizers or other chemicals used, metering, secondary containment, and pretreatment may be required before discharge. Energy Use Another area for consideration is the amount of energy that commercial cannabis operations use. This issue is primarily related to cultivation, which requires a significant amount of lighting to maximize the grow cycle and produce a sufficient amount of cannabis for the business to be economically sustainable. The City has the ability to require that this energy use be offset, either in total or in part. The required offset could be required to be achieved through on-site generation (e.g. solar panels), or via the purchase of Renewable Energy Credits through a company such as Terrapass, Direct Energy, or 3Degrees. Zero Net Energy will be required for all single-family residential construction beginning in 2020, however, the standards for commercial are not expected to be implemented in California until 2030. Staff recommends that the Council require all cannabis businesses to submit energy conservation plans as part of a complete application for a cannabis business activity permit. For cultivators, staff recommends that businesses be required to achieve zero net energy through on-site generation by 2020. Questions for Council Consideration/Direction The following questions are organized in a logical progression and are intended to help individual City Council Members develop their positions. The Council’s collective response to these questions will guide staff as it continues to work on the precise language of the proposed regulations. If Council Members find that additional information is needed to answer any of the questions below, please follow up with staff so that additional analysis or documentation can be provided in advance of the study session. • Does the City Council want to allow access to commercial cannabis by City residents? • If yes, would the Council want to limit access to medicinal only, or medicinal and adult use? • If either, does the Council want to allow storefront sales in the City, or delivery only? • If delivery only, does the Council want the delivery business to be located in the City, or only allow deliveries from outside of the City? • Does the City Council want to prohibit persons under 21 on the premises of a cannabis business, with the result that persons 18-21 years old will only be able to get medicinal cannabis by delivery? • If the City Council wants to allow retail sales either via storefront or delivery by businesses located within the City, does the City Council support other types of cannabis businesses inside the City, or retail only? Packet Pg 225 13 • If the City Council is interested in allowing other types of businesses, does the City Council support allowing a range of license types (cultivation, manufacturing, distribution, microbusiness, testing) to support a local supply chain, and craft producers? • If the City Council is interested in allowing cannabis business activity in the City, is a 200-foot buffer from residential areas sufficient, or should the City stick with the State recommended 300-foot buffer from residential areas (buffer maps to be provided)? • If the City Council is interested in allowing retail sales and manufacturing of cannabis products within the City, does it want to prohibit certain types of concentrates (shatter, wax, hash, etc.) that are typically smoked, vaped, or dabbed? • If the City Council wants to allow indoor cultivation in the City, does it want to require these businesses to achieve Zero Net Energy compliance upon establishment of the business, by a date certain, or require other energy efficiency compliance methods such as purchasing green energy offsets? • Does the City Council support the concept of using a third-party consultant to develop and implement standards for qualifying and ranking future cannabis business operators? Next Steps Based on the City Council’s direction, staff will move forward with the preparation of the appropriate resolutions and ordinances for consideration by the Planning Commission. The Planning Commission will be asked to review the specific provisions of the Cannabis Regulations that relate to land use (i.e. zoning related issues). Staff plans to return to the City Council on May 1, 2018, for consideration of regulations for adoption. CONCURRENCES A steering committee of City staff members including the Community Development Director, City Attorney, Police Chief, Fire Chief, and Finance Director was convened to guide the process of developing regulations for consideration by the City Council. In addition, the Utilities Department reviewed the water, wastewater, and energy sections of this report and concurs with the recommendation. The Police Department does not concur with the concept of a 200-foot buffer from residential neighborhoods and is recommending that the City Council adopt a 300-foot buffer. The Police Department concurs with the recommendation not to allow retail storefronts in the Downtown Commercial zone. ENVIRONMENTAL REVIEW SB 94 amends the Business and Professions Code to exempt from CEQA review the adoption of an ordinance, rule, or regulation by a local jurisdiction requiring discretionary review and approval of permits and licenses for commercial cannabis activity (until July 1, 2019). Depending on the nature of the activity for which an application is received, individual project Packet Pg 226 13 level environmental review may be required. FISCAL IMPACT This Council Agenda item addresses regulations separately from fiscal impact. Fiscal impacts will be addressed through financial analysis, the budget process, and revenue actions to recoup directs costs through fees. The policy discussion is independent of the fiscal impacts considerations. Ultimately, if the City moves forward with regulations, it should establish fees and licenses that allow it to recover 100% of the allowable costs associated with regulation. These are the costs that can be quantified based on the amount of staff time in various departments to administer and license the cannabis industry. Community Development, Attorney’s Office, Administration, Police, Fire, Utilities, and Finance will experience costs associated with regulation and staff will be developing a fee structure based on approved regulations to recover the allowable costs. The Council may give staff policy direction to pursue additional revenues associated with a tax on cannabis business activity, but that question will be considered separately from the regulations. In addition, cities that choose to regulate cannabis business activity rather than prohibit such activities are eligible for grant funding from the state. There may be additional indirect costs due to cannabis activities such as public safety activities not covered by the fees. These indirect costs may be present regardless of the Council direction on regulations due to passage of Proposition 64. The issues around taxation and the ability of cannabis business activity to drive the collection of new General Fund revenues are important considerations for the City’s fiscal health and are part of Fiscal Health Response strategy. Once the City Council has decided how it wants to proceed with respect to regulations, the City’s Finance Department will take the lead in evaluating fiscal impacts and recommending a cost recovery and taxation approach. ALTERNATIVES Various alternatives are available to the City Council for moving forward with cannabis regulations depending on how the majority of the City Council answers the key policy questions outlined in this report. If the City Council chooses not to make any determinations on February 20, the following alternatives are available for consideration. 1. Continue Consideration of Regulations to a Future Date. The City Council could decide not to provide City staff with direction on cannabis regulations at this time. If this alternative is taken, the Council should provide direction to staff regarding additional information needed to answer the core policy questions presented. 2. Direct Staff Not to Move Forward with Changes to Ordinance No. 1633. The City Council could decide to direct its staff to focus on other priorities and not pursue changes to the current ordinance that prohibits all commercial cannabis business activity within City limits. Packet Pg 227 13 Attachments: a - O-1633 Ordinance Prohibiting All Commercial Cannabis Activity In City b - Overview of Bureau of Cannabis Control Licensing Regulations c - CalCannabis Cultivation FAQ d - State Licensing Authorities Brochure e - Cultivation Licensing Presentation f - Manufacturing Licensing Presentation g - Council Reading File - Cannabis Planning Survey (Open City Hall 1) h - Council Reading File - Residential Buffers i - Council Reading File - School Buffers j - Council Reading File - Combined Buffers Packet Pg 228 13 ORDINANCE NO. 1633 (2017 SERIES) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, CODIFYING AND REAFFIRMING CURRENT CITY LAW, POLICY AND PRACTICE BY EXPRESSLY PROHIBITING ALL COMMERCIAL AND INDUSTRIAL RECREATIONAL AND MEDICAL MARIJUANA USES, ACTIVITIES AND OPERATIONS AND LIMITING OUTDOOR CULTIVATION OF MEDICAL AND RECREATIONAL MARIJUANA WITHIN THE CITY WHEREAS, in 1996, California voters approved Proposition 215, entitled "The Compassionate Use Act of 1996", providing a defense to state criminal prosecution for specified medical marijuana use, and the Medical Marijuana Program Act established a voluntary participation, State -authorized medical marijuana identification card and registry database for verification of qualified patients and their primary caregivers; and WHEREAS, in 2015, the State Legislature approved the Medical Marijuana Regulation and Safety Act ("MMRSA"), which created an extensive statewide regulatory and licensing system for the cultivation, manufacture, testing, dispensing, distribution and transport of medical marijuana. MMRSA exempted from its regulatory and licensing system, certain medical marijuana cultivation by individual qualified patients and primary caregivers with no more than five qualified patients. In 2016, the State Legislature updated MMRSA by approving AB 21 and SB 837 to address issues not previously addressed in prior legislation and changed the name of MMRSA to the Medical Cannabis Regulation and Safety Act (MCRSA); and WHEREAS, under MCRSA, the State will not issue licenses to operators in jurisdictions that prohibit medical marijuana uses and activities, either expressly or under principles of permissive zoning; and WHEREAS, the City historically has relied on permissive zoning principles to decline permitting of marijuana businesses and uses within the City, and reaffirmed that position by adoption of Resolution 10683 on January 14, 2016; and WHEREAS, on November 8, 2016, California voters passed Proposition 64, entitled "The Control, Regulate, and Tax Adult Use of Marijuana Act" ("AUMA"). AUMA legalized under California law non-medicinal/recreational marijuana use for those 21 years of age and over, and created a comprehensive regulatory, licensing and tax system for the non-medical marijuana industry, including 19 different types of licenses for cultivation, manufacturing, testing, retailer, distributor and microbusiness; and WHEREAS, AUMA allows local governments to ban recreational marijuana businesses entirely, or regulate such businesses, and to reasonably regulate cultivation through zoning and other public health and safety laws, including prohibiting outdoor cultivation outright, but AUMA does require local governments to allow limited indoor cultivation in private residences; and 01633 Packet Pg 229 13 Ordinance No. 1633 (2017 Series) Page 2 WHEREAS, despite the changes in California law, the Federal Controlled Substances Act still makes it illegal under federal law for any person to cultivate, manufacture, distribute or dispense, or possess with intent to manufacture, distribute or dispense, marijuana, and the future of federal government enforcement actions under a new Presidential administration is uncertain in states that have legalized the recreational use of marijuana; and WHEREAS, it will take a substantial amount of time: to conduct public outreach regarding the direction the City should take regarding both medical and recreational marijuana businesses; to draft comprehensive zoning and other regulations relating to commercial recreational and/or medical marijuana activities within the City; to determine whether to pursue certain taxes related to commercial recreational marijuana; and to analyze the potential impacts and health and safety issues relating to such businesses, including, but not limited to, environmental, water, indoor electrical fire hazards, mold, odors and criminal activity; and WHEREAS, AUMA does not contain the protective language relating to permissive zoning that MCRSA does, and, in the absence of an express ordinance either prohibiting or regulating non-medical marijuana business or activities, the City could become subject to State licensing of marijuana businesses and activities within its jurisdiction and/or may not be able preclude the State from issuing licenses to marijuana businesses anywhere in the City; and WHEREAS, it is unclear to the full extent to which AUMA and MCRSA may conflict, how state regulatory provisions ultimately may reconcile the two licensing structures, and whether the provisions of AUMA will control over MCRSA; and WHEREAS, the City has had odor complaints relating to outdoor cultivation of marijuana, resulting in the addition of Chapter 8.22 to the Municipal Code, prohibiting persistent offensive odors from emanating across property or parcel lines; and WHEREAS, the City currently prohibits smoking and controls secondhand smoke, including marijuana smoke and vapors, in public and other places under Chapter 8.16, of its Municipal Code; and WHEREAS, the City Council wishes to preserve its ability to continue its current licensing, permitting, regulation and enforcement practices regarding marijuana uses within its boundaries in order to receive and consider council direction and public outreach to define the appropriate nature and scope of regulations. NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo as follows: SECTION 1. The foregoing recitals are adopted by the City Council as findings in support of the Ordinance. SECTION 2. This Ordinance constitutes an exercise of the City's police powers under the California Constitution and codifies existing law, policy and practice in the City of San Luis Obispo prohibiting marijuana uses and activities. 01633 Packet Pg 230 13 Ordinance No. 1633 (2017 Series) Page 3 SECTION 3. Chapter 9.10 is added to the San Luis Obispo Municipal Code, to read as follows: Chapter 9.10 MARIJUANA REGULATION 9.07.010 Purpose and Intent A. The purpose and intent of this chapter is to maintain the status quo while the city conducts public outreach by limiting the outdoor cultivation, and prohibiting manufacturing, processing, laboratory testing, labeling, storing and wholesale and retail distribution and sale of recreational and medical marijuana to protect the health, safety and welfare of the city consistent with state law. B. This chapter is not intended to, nor shall it be construed as, prohibiting or interfering with any right, defense or immunity afforded to qualified patients or their caregivers relating to medical marijuana under the Compassionate Use Act of 1996, the Medical Marijuana Program Act, the Medical Cannabis Regulatory and Safety Act and other applicable California law. C. This chapter is not intended to, and shall not be construed as, prohibiting or interfering with any right, defense or immunity of any individual relating to the recreational use or possession or indoor cultivation of marijuana as permitted by the Control, Regulation and Tax Adult Use of Marijuana Act; provided, nothing in this subsection is to be construed to permit actions violating or not permitted by other provisions of the Municipal Code, including, but not limited to, Chapter 5.01 Business License Program, Chapter 8.16 Smoking Prohibited and Secondhand Smoke Control, Chapter 8.22 Offensive Odors and Chapter 17.22 Use Regulations. 9.10.020 Limitation of Outdoor Cultivation of Marijuana No person shall cultivate, plant, grow, maintain or store more than six marijuana plants outdoors in any location within the City, whether or not located in a greenhouse or other structure designed or used for such activities. 9.10.030 Prohibition of Marijuana -Related Businesses A. Except as otherwise specifically required by California law, any and all commercial or industrial recreational and medical marijuana/cannabis-related uses, activities, businesses, or operations, are prohibited and unlawful within the City of San Luis Obispo. B. This prohibition applies to both for profit and nonprofit commercial and industrial uses, activities, businesses, operations, even if a State license under the Control, Regulate and Tax Adult Use of Marijuana Act or the Medical Cannabis Regulation and Safety Act is not required. C. This prohibition includes, but is not limited to, commercial and/or industrial: cultivation (both indoor and outdoor); manufacturing; processing; laboratory testing; 01633 Packet Pg 231 13 Ordinance No. 1633 (2017 Series) Page 4 wholesale or retail distribution, delivery and sale; labeling; storage; or permitting of smoking/vaporizing/ingesting on any business premises, of marijuana/cannabis, marijuana/cannabis products and all marijuana/cannabis derivatives for any purpose. 9.10.40 Violation and Penalties A. Misdemeanor. Any violation of the provisions of this chapter shall be a misdemeanor; provided, that where the city attorney determines that such action would be in the interest of justice, he/she may specify in the accusatory pleading that the offense shall be an infraction. B. Infraction Violation. Where the city attorney determines that, in the interest of justice, a violation of this chapter is an infraction, such infraction is punishable by a fine not exceeding one hundred dollars for a first violation, a fine not exceeding two hundred dollars for a second violation of the same provision within one year, and a fine not exceeding five hundred dollars for each additional infraction violation of the same provision within one year. C. The fine amounts set forth above may be modified, from time to time, by city council resolution. In no event shall such fine amounts exceed the amounts authorized by state law. D. Each person committing, causing, or maintaining a violation of this chapter or failing to comply with the requirements set forth herein shall be deemed guilty of a separate offense for each and every day during any portion of which any violation of any provision of this chapter is committed, continued, maintained, or permitted by such person and shall be punishable accordingly. E. The violation of any provision of this chapter shall be and is hereby declared to be a public nuisance and contrary to the public interest. Any public nuisance under this chapter may, at the city's discretion, be abated by the city by civil process by means of a restraining order, preliminary or permanent injunction or in any manner provided by law for the abatement of such nuisance. The city shall also be entitled to recover its full reasonable costs of abatement. The prevailing party in any proceeding associated with the abatement of a public nuisance shall be entitled to recovery of attorneys' fees incurred in any such proceeding if the city has elected at the initiation of that individual action or proceeding to seek recovery of its own attorneys' fees. F. In lieu of issuing a criminal citation, the city may issue an administrative citation to any person responsible for committing, causing or maintaining a violation of this chapter. Nothing in this section shall preclude the city from also issuing a citation upon the occurrence of the same offense on a separate day. G. The remedies set forth in this chapter are cumulative and additional to any and all other legal remedies available whether set forth elsewhere in the San Luis Obispo Municipal Code, or in state or federal laws, regulations, or case law 01633 Packet Pg 232 13 Ordinance No. 1633 (2017 Series) Page 5 SECTION 4 The adoption of this Ordinance maintains the status quo and does not make any change in the current or historic law, policy or practice of the City, and the whole of such action is not an activity which may cause direct or reasonably foreseeable indirect physical change in the environment under Public Resources Code Section 21065 or California Environmental Quality Act ("CEQA") Guidelines Section 15378 (a) and, therefore, is exempt from, and not a project subject to, environmental review. Even if the adoption of this Ordinance codifying existing law is determined to constitute approval of a project under CEQA, and even if the project is not subject to any statutory or categorical exceptions, as a matter of common sense, it can be seen with certainty that there is no possibility that the activity in question, the adoption of the Ordinance codifying existing law, may have a significant effect on the environment under CEQA guidelines section 15061 (b) (3). SECTION 5. This Ordinance shall not be interpreted in any manner to conflict with controlling provisions of state or federal law, including, without limitation, the Constitution of the State of California. If any section, subsection or clause of this ordinance shall be deemed to be unconstitutional or otherwise invalid, the validity of the remaining sections, subsections and clauses shall not be affected thereby. SECTION 6. A summary of this ordinance, together with the names of Council members voting for and against, shall be published at least five (5) days prior to its final passage, in The Tribune, a newspaper published and circulated in this City. This ordinance shall go into effect at the expiration of thirty (30) days after its final passage. INTRODUCED on the 14th day of March 2017, AND FINALLY ADOPTED by the Council of the City of San Luis Obispo on the 4th day of April 2017, on the following roll call vote: AYES: Council Members Christianson, Gomez and Pease, Vice Mayor Rivoire and Mayor Harmon NOES: None ABSENT: None ATTEST: Zez4a Z Y Carrie Gallagher City Clerk 01633 Packet Pg 233 13 Ordinance No. 1633 (2017 Series) Page 6 APPROVED AS TO FORM: f, j J. Christine Dietrick 4 City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this day ofA.tL , 2017. Carrie Gallagher City Clerk 01633 Packet Pg 234 13 O F CANNABIS CON'TROL CALIFORNIA Emergency Regulations for Commercial Cannabis Distributors, Retailers, Microbusinesses, Temporary Cannabis Events, and Testing Laboratories. LORI AJAX BUREAU OF CANNABIS CONTROL Packet Pg 235 13 MAUCRSA The Medicinal and Adult-Use Cannabis Regulation and Safety Act •A single regulatory system for commercial cannabis activity in California •Requires all persons engaged in commercial cannabis activity to be licensed •Allows local jurisdictions to control what activities are permitted in their jurisdiction •Places the protection of the public as the highest priority Packet Pg 236 13 BUREAU O f CANNAB ,IS CON 'TROL CALIFORNIA ' / cdfa CALIFORN I A DEPAR T MENT O F FOOD & AGR I C U LTURE Administrative Structure of MAUCRSA • Lead Agency • Cultivators • Manufacturers • Distributors • Track and Trace System • Retailers • Microbusinesses • Testing Laboratories • Temporary Cannabis Events Packet Pg 237 13 Commercial Cannabis Activity Includes the cultivation, possession, manufacture, distribution, processing, storing, laboratory testing, packaging, labeling, transportation, delivery, or sale of cannabis and cannabis products Does not include personal use cultivation that is done at a private residence in accordance with Health and Safety Code sections 11362.1 and 11362.2, or by a patient or primary caregiver pursuant to Health and Safety Code section 11362.77 Beginning January 1, 2018 all commercial cannabis activity shall be conducted between licensees Packet Pg 238 13 Who needs to be licensed? All businesses conducting commercial cannabis activity A separate license is required for each location (premises) where the business engages in commercial cannabis activity How many licenses can they have? The Bureau does not have any caps on the number of licenses a person may obtain However, caps may be set by a local jurisdiction Are there any restrictions on the type of license they can have? A person that holds a testing laboratory license is prohibited from licensure for any other activity, except testing A testing laboratory is also prohibited from employing an individual who is also employed by any other licensee except for another testing laboratory licensee Packet Pg 239 13 Licenses TEMPORARY LICENSE •Valid 120 days •Submitted through the Bureau’s online licensing system or paper application •Must have a copy of a license, permit, or other authorization from the local jurisdiction Annual License Requirements: ANNUAL LICENSE •Valid 1 year •Submitted through the Bureau’s online licensing system or paper application •Must not violate the local jurisdiction’s regulations and ordinances • Information on: the business, individual owners, financial interest holders, the premises, and the business operating procedures Packet Pg 240 13 Temporary License Application Requirements • Owner applicant • Legal business name • FEIN • Business entity • Primary contact • Owner information • Attestation Required Information • Evidence of legal right to occupy • Premises diagram • Copy of valid license, permit, or other authorization by local jurisdiction Required documents • May not be effective prior to 1/1/18 • May be extended: • For 90 days • With submittal of annual application Valid for 120 days Packet Pg 241 13 BUREAU O F CANNABIS CONTROL CA I< JI On li ne Licensing About Us Licensee Information Consume r Information Media Room Sea rc h I ' Bureau of Cannabis Control Launches Online Licensing Application System -Posted 12/8/ 17 Approval of Emergency Regulations Including Final Text -Posted 12/8/17 Bureau of Cannabis Control Disciplinary Guidelines November 2017 -Posted 11 /16 /17 Bureau Emergency Medicinal and Adult-Use Regulation Fact Sheet -Posted 11 /16/17 Welcome to the Bureau of Cannabis Control Packet Pg 242 13 BUREAU OF CANNABIS CONTROL CA If Home oi App ly iLogin oi oi oi Reg i ster License Search File a Compl aint Packet Pg 243 13 License Categories: M (Medicinal) or A (Adult-Use) •Distributor (Type 11) •Distributor Transport Only (Type 13) •Retailer (Type 10) •Non-Storefront Retailer (Type 9) •Microbusiness (Type 12) •Testing Laboratory (Type 8, no M or A designation) •Cannabis Event Organizer (Type 14) •Temporary Cannabis Event Packet Pg 244 13 Compliance with Local Jurisdiction When a license, permit, or other authorization issued by the local jurisdiction is submitted with the application to demonstrate compliance with local ordinances and regulations: • Bureau contacts the local jurisdiction • No response within 10 calendar days = Bureau considers the authorization valid Packet Pg 245 13 Compliance with Local Jurisdiction When a license, permit, or other authorization issued by the local jurisdiction is NOT submitted with the application to demonstrate compliance with local ordinances and regulations: Bureau notifies the local jurisdiction No response within 60 business days = Bureau presumes compliance Response from local jurisdiction after 60 business days that applicant is not compliant= Bureau does not presume compliance and may commence disciplinary action Packet Pg 246 13 Key Requirements Premises: •Each premises requires a license •Only one licensee may occupy a premises. ◦ Exception – a licensee holding both an A-License and M-License for the same commercial cannabis activity (e.g., retail sale) may have the same premises for both types. •Should not be located within 600 feet of a school (grades K-12, day care, or youth center) unless permitted by the local jurisdiction or state. •A premises diagram is required with the application •The landowner of the land upon which a premises is located must provide approval for the cannabis activity to be conducted Bond: •Each licensee must have a $5,000 surety bond payable to the State of California to cover the cost of destruction of cannabis goods Track and Trace •All licensees must enter certain events into the track and trace system so that cannabis is tracked throughout the supply chain Packet Pg 247 13 Key Requirements Owner Means: 1. A person with an aggregate interest of 20% or more 2. The CEO of a nonprofit or other entity 3. A member of the board of directors of a nonprofit 4. An individual who will be participating in the direction, control, or management of the business. This includes: • A general partner of a cannabis business that is organized as a partnership • A non-member manager or managing member of a limited liability company of a cannabis business organized as a limited liability company • An officer or director of a cannabis business that is organized as a corporation • All applicants must have at least one member that meets the definition of owner. • All owners must submit fingerprints to the Department of Justice • Persons with a financial interest in the cannabis business must be disclosed on the application Packet Pg 248 13 General Application Requirements (Not inclusive) Business Information • Name, DBA, all fictitious business names • Contact information • Business Organizational Structure and formation documents • Financial information • Seller’s permit number • Labor peace agreement • Operating Procedures • Bond Individual Owner Premises Information Information • Physical address • Identifying information • Verification that the • Percentage of ownership premises is not within a • Government-issued ID 600-foot radius of a school • Fingerprints • Premises Diagram • Criminal history and • Evidence of the legal right evidence of rehabilitation to occupy the premises Packet Pg 249 13 Financial Interest What is a financial interest: • Investment into a commercial cannabis business • Loan provided to a commercial cannabis business • Any other equity interest in a commercial cannabis business Information required of those with a financial interest, but not owners: • Name • Birthdate • Government issued identification type and number Who is not required to be listed on the application: • A bank or financial institution providing a loan • Those with a diversified mutual fund, blind trust, or similar instrument • Those with a security interest, lien, or encumbrance on property that will be used by the business • Those with shares of stock that are less than 5% of the total shares in a publicly traded company Packet Pg 250 13 DISTRIBUTOR Activities: Distributor •Transporting cannabis goods •Arranging for laboratory testing •Conducting quality assurance review of cannabis goods to ensure they comply with all packaging and labeling requirements •Storage of cannabis goods Distributor Transport Only •Transports cannabis goods between licensed cultivators, manufacturers, and distributors •Does not transport cannabis goods to retailer except for immature live plants and seeds being transported from a licensed nursery Key Requirements: •CDTFA seller’s permit •Transport vehicles must have an alarm system •Medicinal and adult-use cannabis goods may be transported together if they are clearly identified •Must generate a shipping manifest prior to transporting Packet Pg 251 13 Vehicle Requirements Personnel Requirements Manned motor vehicle Motor carrier permit if transporting for hire Proof of ownership or valid lease Year, make, model, license plate number, and VIN Proof of insurance No person under 21 in the transport vehicle or trailer Only a licensee or employee shall be in a transport vehicle Packet Pg 252 13 Retailer Activities: Retailer (Type 10) •Sells cannabis goods to customers •May deliver cannabis goods to customers Non-Storefront Retailer (Type 9) •Sells and delivers cannabis goods to customers from a licensed premises that is not open to the public Requirements: •A licensee with an A-license and an M-license may have the same premises for both types •Sells and deliveries may only occur between 6:00 a.m. and 10:00 p.m. Pacific Time •All cannabis goods must be placed in an opaque exit package prior to leaving the premises •Deliveries may be made only by employees of the retailer •Deliveries must be to a physical address •Delivery vehicle may not contain more than $3,000 of cannabis goods at any time •The retailer must be able to immediately locate all delivery vehicles Packet Pg 253 13 Retailer-Packaging and Labeling Retailer cannot package or label cannabis goods ◦ Exception: any dried flower held in inventory by a retailer at the time of licensure that is not packaged may be packaged by the retailer into individual packages for sale beginning January 1, 2018 and before July 1, 2018. Retailer cannot accept, possess, or sell cannabis goods if they are not packaged as they will be sold at final sale Purchased cannabis goods cannot leave the premises unless in an opaque exit package Packet Pg 254 13 Microbusiness Activities: Requirements: •Cultivation less than 10,000 •Must engage in at least 3 of the 4 square feet activities •Manufacturing (non-volatile •Must indicate which activities on the extraction, infusion, packaging, application and supply the appropriate and/or labeling) information for those activities •Distribution •Must comply with all requirements for •Retail each activity the licensee engages in Packet Pg 255 13 Temporary Cannabis Event Activities: •Temporary event up to 4 days •Allows onsite sale and consumption of cannabis goods Requirements: •The organizer of the event must first obtain a cannabis event organizer license •Sales of cannabis goods must be performed by a retailer or microbusiness approved to engage in retail •Access to the area(s) where sales and/or consumption occurs is restricted to persons 21 years of age or older •Consumption of alcohol or tobacco is not allowed on the premises •Onsite consumption of cannabis goods must be done in accordance with the local jurisdiction’s requirements •Security must be present at the event Packet Pg 256 13 Testing Laboratories Activities: •Collects samples of each cannabis goods batch from the distributor’s premises •Tests cannabis goods in accordance with the Act and regulations for: •Cannabinoids •Foreign material •Heavy metals •Microbial impurities •Mycotoxins •Moisture content and water activity •Residual pesticides •Residual solvents and processing chemicals •Terpenoids •Homogeneity Requirements: •ISO/IEC 17025 accreditation •Must develop and implement a chain of custody protocol to document the transportation, handling, storage, and destruction of samples •Must generate a certificate of analysis for each primary sample the lab analyzes •Any cannabis or cannabis product sold to, or purchased by, a customer, must meet testing requirements Packet Pg 257 13 Bureau Licensing Fees •Cover the cost of administering the Bureau’s commercial cannabis program •Application fees -Paid when the application is submitted •License fees -Paid when the application is approved •Amount of license fee -Scaled based on the maximum dollar value of the licensee’s operation Packet Pg 258 13 BUREAU ·. g~:~AaiS CALIFORNIA ROL For Questions and Additional Information Contact: www.bcc.ca.gov bcc@dca.ca.gov Phone Number: 1-833-768-5880 Cannabis Portal: https://cannabis.ca.gov Social Media: https://www.facebook.com/BCCinfo.dca https://twitter.com/BCCinfo_dca https://www.instagram.com/bureauofcannabiscontrol Packet Pg 259 13 Q. A. Q. A. When can I apply for a state cannabis cultivation license? Applications will be available for all California state cannabis cultivation licenses—both medicinal and adult-use (recreational)—on January 1, 2018. How are you developing the cannabis cultivation licensing regulations? The California Department of Food and Agriculture (CDFA) is required to follow the statutory requirements found in the California Administrative Procedure Act. CDFA works with stakeholders, the public, and licensing authorities to develop the standards and regulations necessary to successfully implement a statewide cannabis cultivation regulatory structure in California. CDFA intends to use the emergency rulemaking process in 2017 for developing the state’s combined medicinal and adult-use cannabis cultivation licensing regulations. For a detailed description of this process, visit the California Office of Administrative Law (OAL) at oal.ca.gov; click on the “Rulemaking Process” link. How do I apply for a cannabis cultivation license? The California Department of Food and Agriculture (CDFA) is not issuing any cultivation licenses until January 1, 2018. However, in preparation for state licensure, CDFA recommends staying up to date on city and/or county government requirements for local cannabis cultivation licenses and permits. How can I receive updates on the status of California’s cultivation licensing regulations? The California Department of Food and Agriculture (CDFA) regularly posts information on its CalCannabis Cultivation Licensing website and via these three social media channels: Facebook, Instagram, and Twitter. Email alerts are another way to get information. For links to these resources, please go to: calcannabis.cdfa.ca.gov Q. A. Q. A. Medicinal and Adult-Use (Recreational) Cannabis Cultivation Licensing Frequently Asked Questions Packet Pg 260 13 What types of cannabis cultivation licenses will be offered in California? The California Department of Food and Agriculture (CDFA) will issue 17 types of cannabis cultivation licenses: Q. A. Specialty Cottage Outdoor An outdoor cultivation site with up to 25 mature plants Specialty Cottage Indoor An indoor cultivation site with up to 500 square feet or less of total canopy Specialty Cottage Mixed-Light A mixed-light cultivation site with 2,500 square feet or less of total canopy Specialty Outdoor An outdoor cultivation site with 5,000 square feet or less of total canopy—or up to 50 mature plants on noncontiguous plots Specialty Indoor An indoor cultivation site of between 501 and 5,000 square feet of total canopy Specialty Mixed-Light A mixed-light cultivation site of between 2,501 and 5,000 square feet of total canopy Small Outdoor An outdoor cultivation site of between 5,001 and 10,000 square feet of total canopy Small Indoor An indoor cultivation site of between 5,001 and 10,000 square feet of total canopy Small Mixed-Light A mixed-light cultivation site of between 5,001 and 10,000 square feet of total canopy Medium Outdoor An outdoor cultivation site of between 10,001 square feet and 1 acre of total canopy Medium Indoor An indoor cultivation site of between 10,001 and 22,000 square feet of total canopy Medium Mixed-Light A mixed-light cultivation site of between 10,001 and 22,000 square feet of total canopy Nursery Cultivation of cannabis solely as a nursery (examples of typical nursery activities include cloning and seed propagation) Processor A cultivation site that conducts only trimming, drying, curing, grading, or packaging of cannabis and nonmanufactured cannabis products Large Outdoor Note: CDFA will not issue any Large Outdoor licenses prior to January 1, 2023 For outdoor cultivation that uses no artificial lighting for more than 1 acre of total canopy size on one premises Large Indoor Note: CDFA will not issue any Large Indoor licenses prior to January 1, 2023 For indoor cultivation that exclusively uses artificial lighting for more than 22,000 square feet of total canopy size on one premises Large Mixed-Light Note: CDFA will not issue any Large Mixed-Light licenses prior to January 1, 2023 For cultivation using a combination of natural and supplemental artificial lighting at a maximum threshold (which will be determined by the licensing authority) for more than 22,000 square feet of total canopy size on one premises Packet Pg 261 13 Q. A. Q. A. Q. A. Q. A. What is the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA)? On June 27, 2017, California Governor Jerry Brown signed the cannabis trailer bill (also known as California Senate Bill 94), which effectively merged two existing bills—the Medical Cannabis Regulation and Safety Act (MCRSA) and the Adult Use of Marijuana Act (AUMA)—into one streamlined bill: the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA). Having one comprehensive state law will provide for a more unified regulatory process governing both medicinal and adult-use cannabis. You can read the full text of MAUCRSA on the CalCannabis Cultivation Licensing website at: calcannabis.cdfa.ca.gov How long will a license last before it must be renewed? All commercial cannabis cultivation licenses will be valid for one year; a license must be renewed to continue commercial cannabis cultivation. What is the cannabis track-and-trace system? How will it work? The California Department of Food and Agriculture (CDFA) is developing a track- and-trace system for both medicinal and adult-use (recreational) cannabis that all commercial cannabis licensees in California will be required to use. This system will record the movement of cannabis and cannabis products through the supply chain—from cultivation to sale—which will help ensure that if a public safety concern arises, the source will be identifiable. The track-and-trace system also will help prevent black-market cannabis products from entering the regulated market, and likewise help prevent regulated cannabis products from being diverted into the black market. In June 2017, CDFA selected Franwell Inc. as the state’s cannabis track-and-trace vendor. Will there be different rules for how medicinal and adult-use (recreational) cannabis may be grown in California? The California Department of Food and Agriculture (CDFA) is still developing regulations, but the cultivation requirements are expected to be the same for growing medicinal and adult-use cannabis. However, cannabis products sold to the public must be clearly differentiated as either medicinal or adult-use (recreational) products. Is cannabis considered an agricultural crop in California? California defines medicinal and adult-use (recreational) cannabis as an agricultural product. However, this identification as an agricultural product is limited to the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA). Q. A. Packet Pg 262 13 Q. A. Q. A. How can I contact CalCannabis Cultivation Licensing? Visit the CalCannabis website at calcannabis.cdfa.ca.gov; call (916) 263-0801, Monday through Friday, 8am to 5pm; or send an email to calcannabis@cdfa.ca.gov. Which department should I contact to learn about other— noncultivation—types of state cannabis licenses? The Bureau of Cannabis Control (also known as the bureau) is within the California Department of Consumer Affairs and will issue licenses for distribution, dispensaries, microbusinesses, and testing laboratories. Visit the bureau’s website at bcc.ca.gov or call (800) 952-5210, Monday through Friday, 8am to 5pm. The Manufactured Cannabis Safety Branch (MCSB) is within the California Department of Public Health and will issue licenses for manufacturing (such as edibles and topical products). Visit the MCSB website at cdph.ca.gov/Programs/CEH/DFDCS/Pages/MCSB.aspx or call (916) 440-7861, Monday through Friday, 8am to 5pm. All three of California’s cannabis licensing authorities also can be reached via the California Cannabis Portal at: cannabis.ca.gov Packet Pg 263 13 CalCannabis Cultivation Licensing, a division of the California Department of Food and Agriculture (CDFA), is accepting applications for state medicinal and adult- use (recreational) cannabis cultivation licenses as of January 1, 2018. The Three Licensing Authorities Who Does What This graphic illustrates the movement of cannabis and cannabis products through the three state agencies responsible for regulating cannabis. BUREAU OF CANNABIS CONTROL Housed within the Department of Consumer Affairs, the bureau licenses testing labs, distributors, retailers, and microbusinesses. 1-800-952-5210 bcc@dca.ca.gov bcc.ca.gov Bureau CALCANNABIS CULTIVATION LICENSING Housed within the Department of Food and Agriculture, CalCannabis licenses cannabis cultivators and manages a track-and-trace system. 1-833-CALGROW (225-4769) calcannabis@cdfa.ca.gov calcannabis.cdfa.ca.gov CalCannabis MANUFACTURED CANNABIS SAFETY BRANCH Housed within the Department of Public Health, MCSB licenses manufacturers of cannabis products, such as edibles and topical products. 1-855-421-7887 mcsb@cdph.ca.gov cdph.ca.gov/mcsb MCSB CULTIVATION CalCannabis MANUFACTURING MCSB DISTRIBUTION Bureau TESTING Bureau RETAIL Bureau MICROBUSINESS BureauDistribution PhaseRegulating ProgramPacket Pg 264 13 In spring 2017, the Department of Food and Agriculture’s CalCannabis Cultivation Licensing division, the Department of Consumer Affairs’ Bureau of Cannabis Control, and the Department of Public Health’s Manufactured Cannabis Safety Branch released draft regulations for the Medical Cannabis Regulation and Safety Act of 2015. These licensing authorities held several public hearings to accept oral and written comments regarding the draft regulations. The licensing authorities had planned to move forward with a separate draft regulatory package for implementation of Proposition 64: The Adult Use of Cannabis Act of 2016. However, in June 2017, the Legislature passed and the Governor signed into law the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), which creates one regulatory system for both medicinal and adult-use (recreational) cannabis. As a result, the three cannabis licensing authorities withdrew the proposed medical cannabis regulations and adopted emergency regulations based on the new law for the commercial medicinal and adult-use (recreational) cannabis industries. The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) For more information on cannabis cultivation licensing: calcannabis.cdfa.ca.gov For details on other types of state cannabis licensing: cannabis.ca.gov Packet Pg 265 13 Richard Parrott, Director CalCannabis Cultivation Licensing Division California Department of Food and Agriculture Cannabis Cultivation License Application Overview Packet Pg 266 13 Topics to Cover •Who does what? •Quick overview of laws and regulations •Cannabis cultivation application guide A-Z Packet Pg 267 13 Who Does What? California Department of Food and Agriculture (CDFA): CalCannabis Cultivation Licensing (CalCannabis) California Department of Public Health (CDPH): Manufactured Cannabis Safety Branch (MCSB) California Department of Consumer Affairs (DCA): Bureau of Cannabis Control (Bureau) Packet Pg 268 13 Collaborative Effort Packet Pg 269 13 California Cannabis Laws Trailer Bill (Senate Bill 94) combined two acts: 1) Medical Cannabis Regulation and Safety Act (MCRSA) 2) Proposition 64 (Adult Use of Marijuana Act) And established one new act: Medicinal and Adult-Use of Cannabis Regulation and Safety Act (MAUCRSA) Packet Pg 270 13 Regulations Apr 2017 Issued proposed medical regulations Jun 2017 MAUCRSA was adopted Oct 2017 Withdrew proposed medical regulations based on the repeal of MCRSA Jun -Nov 2017 Analyzed the proposed medical regulations to see what could be recycled; reviewed input from stakeholders on the proposed medical regulations; and drafted language for the emergency regulations Nov 16, 2017 Released emergency regulations Nov 17, 2017 Regulations posted by the Office of Administrative Law (OAL) Nov 27, 2017 Submitted emergency regulations to OAL Packet Pg 271 13 Emergency Regulations: Articles •Definitions •Application •Licensing •Site Specific Requirements •Records & Track and Trace •Inspections •Enforcement Packet Pg 272 13 Key Definitions •Canopy •Indoor •Outdoor •Mixed-Light Packet Pg 273 13 License Categories Category Outdoor Indoor Mixed-Light Specialty Cottage Up to 25 mature plants Up to 500 sq ft Up to 2,500 sq ft Specialty Up to 5,000 sq ft or up to 50 mature plants Up to 5,000 sq ft Up to 5,000 sq ft Small 5,001-10,000 sq ft 5,001-10,000 sq ft 5,001-10,000 sq ft Medium (limited) 10,001 sq ft to 1 acre 10,001 -22,000 sq ft 10,001 -22,000 sq ft Large (not issued until 2023) Greater than 1 acre Greater than 22,000 sq ft Greater than 22,000 sq ft Nursery No size limit defined in statute (no canopy) Processor Conducts only trimming, drying, curing,grading, or packaging of cannabis and nonmanufactured cannabis products Packet Pg 274 13 Temporary Licenses •Legislative effort to bring existing industry into a regulatory structure •Must have local license, permit, or other authorization •Good for 120 days •May be extended for additional 90-day periods; requires the submission of a complete annual application •FREE!!!!!! •Sunsets January 1, 2019 Packet Pg 275 13 Annual License: Local Authorization •Applicant may–but does not have to–provide local license, permit, or other written documentation •Regardless, CDFA will notify the local jurisdiction to determine whether applicant is in compliance with all local laws and ordinances Packet Pg 276 13 Annual License Application Fees Specialty Cottage Outdoor $135 Specialty Outdoor $270 Small Outdoor $535 Medium Outdoor $1,555 Specialty Cottage Indoor $205 Specialty Indoor $2,170 Small Indoor $3,935 Medium Indoor $8,655 Specialty Cottage Mixed-Light Tier 1 $340 Specialty Mixed-Light Tier 1 $655 Small Mixed-Light Tier 1 $1,310 Medium Mixed-Light Tier 1 $2,885 Specialty Cottage Mixed-Light Tier 2 $580 Specialty Mixed-Light Tier 2 $1,125 Small Mixed-Light Tier 2 $2,250 Medium Mixed-Light Tier 2 $4,945 Nursery $520 Processor $1,040 Packet Pg 277 13 Annual License Fees Specialty Cottage Outdoor $1,205 Specialty Outdoor $2,410 Small Outdoor $4,820 Medium Outdoor $13,990 Specialty Cottage Indoor $1,830 Specialty Indoor $19,540 Small Indoor $35,410 Medium Indoor $77,905 Specialty Cottage Mixed-Light Tier 1 $3,035 Specialty Mixed-Light Tier 1 $5,900 Small Mixed-Light Tier 1 $11,800 Medium Mixed-Light Tier 1 $25,970 Specialty Cottage Mixed-Light Tier 2 $5,200 Specialty Mixed-Light Tier 2 $10,120 Small Mixed-Light Tier 2 $20,235 Medium Mixed-Light Tier 2 $44,517 Nursery $4,685 Processor $9,370 Packet Pg 278 13 Application Requirements A-Z a)Business name b)License type (such as Small Outdoor) and whether it is for A (adult use) or M (medicinal) c)A list of any other valid state-issued cannabis licenses d)Physical address e)Mailing address Packet Pg 279 13 Application Requirements A-Z f) Determine the Designated Responsible Party and provide required information (name, title, address, phone, email, and a copy of your government-issued ID) •Must be an owner •Legal authority to bind applicant entity •Primary contact for the application Packet Pg 280 13 Application Requirements A-Z g) List of all owners An owner is: A person with an aggregate ownership of 20 percent or more A CEO of a nonprofit or other entity A member of a nonprofit’s board of directors An individual participating in the direction, control, or management of the commercial cannabis business, including any of the following: 1.a partner of a commercial cannabis business organized as a partnership; 2.a member of a limited liability company of a commercial cannabis business organized as a limited-liability company; 3.an officer or director of a commercial cannabis business organized as a corporation. Packet Pg 281 13 Application Requirements A-Z g)Continued -owner requirements: •Personal information •Date ownership interest was acquired •A list of valid licenses where applicant is listed as an owner or financial-interest holder •Detailed description of criminal convictions, if applicable •Copy of “Live Scan” fingerprints h) A list of Financial-Interest Holders: Any individual or business that holds a financial interest, but is not qualified as an owner as indicated in the previous section Packet Pg 282 13 Application Requirements A-Z i)Copies of documents filed with the California Secretary of State Applicants will need to contact the Secretary of State’s office to find out which required documents are required for their business structure. Packet Pg 283 13 Application Requirements A-Z j)Valid seller’s permit number from the California Department of Tax and Fee Administration (CDTFA) -or evidence that you do not need one. Applicants will need to contact CDTFA to determine what is required for their business type. k)If an applicant is a cannabis cooperative business entity, provide a list of all licensed members. Packet Pg 284 13 Application Requirements A-Z l) Legal Right to Occupy: •If the applicant is the owner of the property, provide a copy of the title or deed to the property. •If the applicant is not the owner of the property, provide the following: 1.a document from the property owner (or property owner’s agent) where the commercial cannabis activity will occur that states the applicant has the right to occupy the property and acknowledges that the applicant may use the property for commercial cannabis cultivation; 2.the property owner’s mailing address and phone number; and 3.a copy of the lease or rental agreement, or other contractual documentation. Packet Pg 285 13 Application Requirements A-Z m) Evidence of a surety bond* for no less than $5,000, payable to the California Department of Food and Agriculture (or CDFA). *Must be issued by a corporate surety that is licensed to transact business in California. n)Evidence of enrollment—or that enrollment is not necessary— with the applicable regional or state water board for water-quality protection. Applicants will need to work with the Water Board to determine what documentation is appropriate for their licensed premises. Packet Pg 286 13 Application Requirements A-Z o) Evidence that the applicant has conducted a hazardous- materials record search of the EnviroStor database for the proposed premises. If hazardous sites were encountered, the applicant shall provide documentation of protocols implemented to protect employee health and safety. Packet Pg 287 13 Application Requirements A-Z p)Evidence of exemption from, or compliance with, Division 13 of the Public Resources Code: California Environmental Quality Act (CEQA). The evidence provided shall be one of the following: 1.a copy of the applicant’s license, permit, or other authorization from the local jurisdiction if the local jurisdiction has adopted an ordinance, rule, or regulation that requires discretionary review and approval of the applicant’s license, permits or other authorization. 2.a copy of the Notice of Determination or Notice of Exemption and a copy of the CEQA document, or reference to where it can be located online; or 3.if an applicant does not have the evidence specified in subsections (1.) or (2.) of this section, or if the local jurisdiction did not prepare a CEQA document, the applicant will be responsible for preparing an environmental document that is in compliance with CEQA and can be approved or certified by CDFA. Packet Pg 288 13 Application Requirements A-Z q) For indoor and mixed-light license types, identify all power sources for cultivation activities, including but not limited to: illumination, heating, cooling, and ventilation r) A property diagram s) A proposed cultivation plan: •Detailed premises diagram •Pe st -management plan •Cannabis waste-management plan •Lighting diagram (indoor and mixed-light license types) Packet Pg 289 13 Application Requirements A-Z t) Identification of all of the water sources used for cultivation activities and the applicable supplemental information for each source: 1.a retail water supplier 2.a goundwater well 3.a rainwater-catchment system 4.a diversion from a surface water body or an underground stream flowing in a known and definite channel Packet Pg 290 13 Application Requirements A-Z u)A copy of any final lake or streambed alteration agreement issued by the California Department of Fish and Wildlife (CDFW), pursuant to Sections 1602 and 1617 of the Fish and Game Code, or written verification from CDFW that a lake -and streambed-alteration agreement is not required. v)An attestation that the proposed location is at least a 600-foot radius from sensitive sites. w) If the applicant has 20 or more employees on the payroll at any time, the applicant must attest that the entity will enter into, (or has already entered into) and will abide by the terms of a labor peace agreement. Packet Pg 291 13 Application Requirements A-Z x) The applicant must attest that the entity is an "agricultural employer," as defined by the Alatorre-Zenovich-Dunlap -Berman Agricultural Labor Relations Act of 1975; Part 3.5 (commencing with Section 1140) Div. 2 Labor Code. y)If the applicant entity is applying for an indoor license type, the applicant must attest that the local fire department has been notified of the cultivation site. z) The limited waiver of sovereign immunity: •Any applicant who is within the scope of sovereign immunity—that may be asserted by a federally recognizable tribe or other sovereign entity— shall waive any sovereign immunity defense. The applicant will have to provide documentation that establishes that the applicant has the lawful authority to enter into the waiver described above. Packet Pg 292 13 Site Requirements •No alcohol or tobacco sales allowed on premises Packet Pg 293 13 Application Options •Online Application •Paper Application For information regarding the application process, please visit calcannabis.cdfa.ca.gov Packet Pg 294 13 Contact Us! Visit our website and join our email list: calcannabis.cdfa.ca.gov 1-833-CAL-GROW calcannabis@cdfa.ca.gov Facebook.com/CACultivationLicensing Instagram.com/calcannabis.cdfa Twitter.com/cal_cannabis Packet Pg 295 13 California Department of Public Health Manufactured Cannabis Safety Branch Manufactured Cannabis Training California Department of Public Health Manufactured Cannabis Safety Branch Understanding Regulations and State Licensing Today’s Informational Session •State Laws & Regulations •State Cannabis Licensing Authorities •Regulations for Cannabis Manufacturing •Temporary License Application Process •Annual License Application Process •After You’re Licensed •Q&A California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 1 Packet Pg 296 13 California Department of Public Health Manufactured Cannabis Safety Branch State Cannabis Offices Bureau of Cannabis Control (Bureau) Retailers Distributors Testing Labs Microbusinesses California Department of Public Health Manufactured Cannabis Safety Branch CA Department of Food & Agriculture CalCannabis Cultivation Licensing Cultivators Track-and-Trace CA Department of Public Health Manufactured Cannabis Safety Branch (MCSB) Manufacturers State Cannabis Law 1996 Compassionate Use Act Proposition 215 2015 Medical Cannabis Regulation & Safety Act (MCRSA) AB 266, AB 243, SB 643 2016 Adult Use of Marijuana Act (AUMA) Proposition 64 2017 Medicinal and Adult-Use Cannabis Regulation & Safety Act (MAUCRSA) SB 94, AB 133 California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 2 Packet Pg 297 13 California Department of Public Health Manufactured Cannabis Safety Branch Principles of MAUCRSA Public Health & Consumer Safety Neither Food Nor Drug Vertical Integration Dual Licensing Structure California Department of Public Health Manufactured Cannabis Safety Branch Dual Licensing Structure Local Authorization Must comply with local ordinances Local cannabis ordinances and permitting State Licensing All cannabis businesses must be licensed State cannabis licensing authorities California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 3 Packet Pg 298 13 California Department of Public Health Manufactured Cannabis Safety Branch State Regulations •Emergency Regulations –Released by each state licensing authority –Outline requirements for specific aspects of commercial cannabis market •Permanent Regulations –Rulemaking process –Early 2018 California Department of Public Health Manufactured Cannabis Safety Branch California Track-and-Trace California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 4 Packet Pg 299 13 California Department of Public Health Manufactured Cannabis Safety Branch WHAT MANUFACTURERS NEED TO KNOW MCSB EMERGENCY REGULATIONS California Department of Public Health Role: Protect public health by promoting product and workplace safety Manufactured Cannabis Safety Branch •Regulations •Licensing •Compliance California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 5 Packet Pg 300 13 California Department of Public Health Manufactured Cannabis Safety Branch Cannabis Manufacturing Extraction –separating cannabinoids from cannabis plant material Infusion –using plant material or concentrates to create a cannabis product Packaging and Labeling - putting finished cannabis products into a container and/or marking them for sale California Department of Public Health Manufactured Cannabis Safety Branch License Categories and Types License Categories: M (Medicinal) or A (Adult-use) License Types: •Extraction: Volatile SolventsType 7 •Extraction: Non-volatile Solvents, Mechanical MethodsType 6 •InfusionsType N •Packaging & Labeling OnlyType P California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 6 Packet Pg 301 13 California Department of Public Health Manufactured Cannabis Safety Branch Operational Requirements •Good Manufacturing Practices –Clean, sanitary work environment –Control of hazards •Cannabis Product Safety –Free of contaminants –Uniform THC levels •Chemical Extraction Safety –Must adhere to local fire code and restrictions California Department of Public Health Manufactured Cannabis Safety Branch Cannabis Product Standards •Product Restrictions –Prohibited Additives –Prohibited Products –Ingredients vs. Final Products –Product Shapes •Requirements for Edibles: Servings California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 7 Packet Pg 302 13 California Department of Public Health Manufactured Cannabis Safety Branch THC Limits Edibles •10 milligrams per serving •100 milligrams per package Other Products •1000 milligrams per package (adult-use) •2000 milligrams per package (medicinal) California Department of Public Health Manufactured Cannabis Safety Branch Packaging Cannot resemble traditional food packaging Opaque packaging (Edibles) Must be packaged before release to distributor Must be tamper evident and child resistant Must be re-sealable, if there are multiple servings California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 8 Packet Pg 303 13 California Department of Public Health Manufactured Cannabis Safety Branch Labeling Primary Panel •Includes product identity, THC content, universal symbol Informational Panel: •Includes list of ingredients, warning statement, UID May not refer to product as candy Cannot be attractive to children California Department of Public Health Manufactured Cannabis Safety Branch State Licensing Begins January 1, 2018 Temporary Licenses •Valid 120 days •May be extended for 90 day periods •Submit via email or mail •Need explicit local authorization Annual Licenses •Valid 1 year •Online application process •Must be “in compliance” with local jurisdiction California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 9 Packet Pg 304 13 California Department of Public Health Manufactured Cannabis Safety Branch APPLICATION REQUIREMENTS AND PROCEDURES TEMPORARY LICENSE Temporary License Application •One page form •Available on MCSB website •Submit via email or mail with local authorization California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 10 Packet Pg 305 13 California Department of Public Health Manufactured Cannabis Safety Branch Local Authorization What is a local jurisdiction? Temporary License Requirement: •Local authorization to operate a cannabis business •Examples: Cannabis business permit, letter of acknowledgement, etc. California Department of Public Health Manufactured Cannabis Safety Branch How We Process Temporary Applications Check for Completeness Contact Local Jurisdiction (10 Days) Issue Temporary License California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 11 Packet Pg 306 13 California Department of Public Health Manufactured Cannabis Safety Branch Temporary Licenses •Temporary Licenses are valid for 120 days •Once you have your temporary license: –Do business only with other licensees –Apply for your annual license California Department of Public Health Manufactured Cannabis Safety Branch APPLICATION REQUIREMENTS AND PROCEDURES ANNUAL LICENSE Licensing Informational Sessions –Fall 2017 12 Packet Pg 307 13 California Department of Public Health Manufactured Cannabis Safety Branch Annual License Requirements •Requirements of Operating a Business in CA –CA Business Registration –CA Seller’s Permit –Federal Employer ID Number (FEIN) –Compliance with city or county ordinances •Owners and Financial Interest Holders California Department of Public Health Manufactured Cannabis Safety Branch Annual License Requirements •Who is an Owner? –At least 20% ownership –CEO, Nonprofit Board of Directors, Partners, LLC Members, Corporation Officers/Directors –Anyone involved in the direction, control or management of the company •Who is a Financial Interest Holder? –Less than 20% ownership –Not involved in day-to-day business operation California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 13 Packet Pg 308 13 California Department of Public Health Manufactured Cannabis Safety Branch Annual License Application •Online Application System –Manufactured Cannabis Licensing System (MCLS) –Launches mid-December 2017 –Access through MCSB website –Submit your application, update your information, make a payment •Resources and Guides Coming Soon California Department of Public Health Manufactured Cannabis Safety Branch CDPH Application Portal California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 14 Packet Pg 309 13 California Department of Public Health Manufactured Cannabis Safety Branch Manufactured Cannabis Licensing System (MCLS) California Department of Public Health Manufactured Cannabis Safety Branch Individual Profile All Owners must complete an Individual Profile •Live Scan •Criminal Disclosure Individual Profile Number –Keep this number California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 15 Packet Pg 310 13 California Department of Public Health Manufactured Cannabis Safety Branch Business Information •Information about the Business •Contact Information •Other Licenses (Voluntary Survey) California Department of Public Health Manufactured Cannabis Safety Branch Business Information •Add Owners to Your Business Profile –Use Individual Profile Number •List Financial Interest Holders California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 16 Packet Pg 311 13 California Department of Public Health Manufactured Cannabis Safety Branch Premises Information •What is a Premises? –Where cannabis manufacturing will occur •Physical Address •Priority Review •Operations –Gross Annual Revenue –Manufacturing Activities –Local Authorization California Department of Public Health Manufactured Cannabis Safety Branch License Information Documents: •Local Authorization •Property Owner Authorization •Diagram of the Premises •Closed-Loop System Certification •Surety Bond •List of Cannabis Products Descriptions or SOPs: •Waste Disposal •Inventory Control •Quality Control •Transportation •Security California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 17 Packet Pg 312 13 California Department of Public Health Manufactured Cannabis Safety Branch Annual License Application California Department of Public Health Manufactured Cannabis Safety Branch Application & Licensing Fees Application Fee –Paid when application is submitted License Fee –Paid when application is approved –Seven scaled tiers –Based on gross annual revenue of the licensed premises California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 18 Packet Pg 313 13 California Department of Public Health Manufactured Cannabis Safety Branch Making a Payment •Include Payment Instructions Form •Payment Forms Accepted –Application Fee: Cashier’s Check, Money Order or Credit Card –Make Payments to “California Department of Public Health” –License Fee: Credit Card, E-Check, Cash •Cash Location –Sacramento (Opening Soon) California Department of Public Health Manufactured Cannabis Safety Branch How We Process Annual Applications Check for Completeness Contact Local Jurisdiction (10 or 60 Days) Review of Operational Activities Annual License Approved License Fee Paid Annual License Issued California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 19 Packet Pg 314 13 California Department of Public Health Manufactured Cannabis Safety Branch AFTER YOU RECEIVE YOUR LICENSE ANNUAL LICENSE Next Steps •After you apply for your annual license: –Sign Up for Track-and-Trace Webinar •Tracking Movement of Cannabis Products –Temporary License –Sales Invoice –Annual License –Track-and-Trace •Compliance Through Education California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 20 Packet Pg 315 13 California Department of Public Health Manufactured Cannabis Safety Branch Transition Period (Jan 1 –July 1, 2018) License Designations: •A- and M-License overlap (until July 1, 2018) Existing manufactured products: •Secondary packaging: Child-resistant •Add: Government warning statement, amount of THC/CBD per serving and per package All products manufactured on/after January 1, 2018 must meet THC limits and product restrictions California Department of Public Health Manufactured Cannabis Safety Branch Resources Manufactured Cannabis Safety Branch (MCSB) www.cdph.ca.gov/mcsb mcsb@cdph.ca.gov Cannabis Portal www.cannabis.ca.gov Cannabizfile www.sos.ca.gov California Department of Tax & Fee Administration (CDTFA) www.cdtfa.ca.gov www.cdtfa.gov/industry/cannabis.html California Department of Public Health Manufactured Cannabis Safety Branch Licensing Informational Sessions –Fall 2017 21 Packet Pg 316 13 California Department of Public Health Manufactured Cannabis Safety Branch Thank You California Department of Public Health Manufactured Cannabis Safety Branch www.cdph.ca.gov/mcsb mcsb@cdph.ca.gov Cannabis Portal www.cannabis.ca.gov Licensing Informational Sessions –Fall 2017 22 Packet Pg 317 13 Page intentionally left blank. Packet Pg 318 13 Cannabis RegulationsPolicy DirectionCity of San Luis Obispo02-20-2018 Item 13, Staff Presentation RecommendationsReceive a presentation, take public testimony, and provide the following direction to staff:1.Prepare draft regulations based on direction provided by the City Council with input from the community and Planning Commission, and return to the Council on May 1, 2018, with the resolutions and ordinances necessary to adopt Cannabis Regulations; and 2.Return to the City Council on March 20, 2018, for approval of a Request for Proposals (RFP) to identify a consultant to process applications and establish a list of eligible cannabis business operators.02-20-2018 Item 13, Staff Presentation OverviewProposition 64Previous SLO City Council DirectionPublic Outreach and EngagementDraft RegulationsKey Policy Questions02-20-2018 Item 13, Staff Presentation Proposition 64 Legalizes Adult Use of CannabisIn November 2016, Proposition 64 was approved by California votersCity of San Luis Obispo voters approved the measure by a significant margin - 67.52% voted in favorSince the approval of Prop 64, State legislators have been at work consolidating various laws and writing the regulations02-20-2018 Item 13, Staff Presentation Council Direction (March 2017)The City Council took up the issue in March 2017, passing Ordinance 1633, which expressly prohibits all commercial and industrial cannabis business activity within the CityAt the same time, Council directed staff to:Monitor developments in other jurisdictionsMonitor development at the Federal levelEngage the community regarding various land use and taxation alternatives that may be appropriateReturn to the City Council with a recommendation02-20-2018 Item 13, Staff Presentation Public OutreachZoning Regulations Public Workshop – June 2017POSAFY Consultation – June 2017Chamber of Commerce, Legislative Action Committee –September 2017Downtown SLO Board, Issues Committee – September 2017Open City Hall – October 13, 2107Public Open House – October 23, 2017Overview of Draft Regulations Published – January 11, 2018City Council Policy Level Discussion – February 20, 201802-20-2018 Item 13, Staff Presentation Scope of Draft RegulationsIs intended to support the local cannabis economy and industry growth potential by permitting a wide range of cannabis usesAllows for access to medical and recreational marijuana in the City, with storefront and delivery optionsProhibits events and onsite consumptionRequires vendors to be certified and ranked prior to applying for a permitIncludes requirements for energy and water efficiency, and limits total amount of cultivation, to ensure consistency with City climate action goals02-20-2018 Item 13, Staff Presentation Scope of Draft RegulationsLimits manufacturing uses to non-volatile processes onlyLimits cultivation to indoors only, and total amount of canopy allowed to 70,000 square feet, cumulativelyEstablishes buffers from cannabis businesses of 200-300 feet from residential zones, and 600-1,000 feet from schoolsRequires stores to be located at least 1,000 ft. apartProvides for full cost recovery of city expenses related to all cannabis business monitoring, enforcement and administration 02-20-2018 Item 13, Staff Presentation Draft Regulations – Permit ProcessTwo-Step Process for Businesses1.Annual vendor eligibility/ranking process by 3rdparty consultant to City2.Cannabis Activity Permit application processAdministration and OversightAnnual licensing and regular inspectionsRegulatory FeesFull cost recovery for law enforcement, code enforcement, finance and administration activitiesTaxation levels and revenue estimates will be developed separately from the regulations02-20-2018 Item 13, Staff Presentation Vendor Selection Process• Open application period for vendors• Annually on July 1Submit Application• City Council to establish criteria via resolution• Applications vetted and background checks performed3rdParty Review• Eligibility list established• Priority order rankings publishedApply for Cannabis Activity Permit02-20-2018 Item 13, Staff Presentation Cannabis Activity Permits(Guide)Specialty Cultivator • 5,000 s.f.max.• Indoor only•C-S, M, BP zonesDefinitions:Specialty cultivator – indoor only grows under 5,000 s.f., includes processing. Small cultivator – indoor only grows under 10,000 s.f., includes processingNursery – indoor only propagation under 10,000 s.f.Manufacturer I – non-volatile processing of cannabis into any other productTesting – lab testing is required by the State prior to distribution to a retailer Retailer – includes storefront and deliveryDistributor – retailers must purchase from distributorsMicrobusiness – allows a single business to integrate cultivation (10,000 s.f. max.), manufacturing, distribution and retail sales Type of permitAllowed locations02-20-2018 Item 13, Staff Presentation Cannabis Activity Permits(Guide)Specialty Cultivator • 5,000 s.f.max.• Indoor only•C-S, M, BP zonesZones and Permit Types:CS – Service CommercialM – ManufacturingBP – Business ParkSpecialty Cultivator, Small Cultivator, Nursery, Manufacturing I, Testing, Retailer, Microbusiness CR – Retail CommercialCT – Tourist CommercialCC – Community CommercialRetailer, MicrobusinessO – Office zoneTestingType of permitAllowed locations02-20-2018 Item 13, Staff Presentation Cannabis Activity PermitsSpecialty Cultivator • 5,000 s.f.max.• Indoor only•C-S, M, BP zonesSmall Cultivator• 10,000 s.f. max.• Indoor only•C-S, M, BP zonesNursery• 10,000 s.f. max.• Indoor only•C-S, M, BP zones onlyMaximum of 70,000 s.f. of canopy for cultivation and nurseries, cumulatively02-20-2018 Item 13, Staff Presentation Cannabis Activity PermitsManufacturing I•Non-volatile only•C-S, M, BP zonesTesting•C-S, M, BP, O zones onlyRetailer•Up to 3 retail storefronts Citywide•Storefront retail in C-R, C-C, and C-T zones•Non-storefront retailers (delivery only) in C-S, M, BP zones02-20-2018 Item 13, Staff Presentation Cannabis Activity PermitsDistributor•C-S, M, BP zonesMicrobusiness•Indoor cultivation only (subject to limit of 70,000 s.f.city-wide)•In C-R, C-C, C-T zones, max 50% of gross receipts from cultivating, manufacturing•In C-S, M, BP zones max 50% of gross receipts from storefront retail sales (subject to limit of 3 retail storefronts city-wide)02-20-2018 Item 13, Staff Presentation Cannabis Activity Permit Locations02-20-2018 Item 13, Staff Presentation Additional Requirements for Cannabis Activity PermitsCultivators must submit energy and water efficiency plans with permit applicationsStandard: Achieve Zero-Net Energy compliance by 2020Security Plans: All cannabis permit applications shall include site specific security plans for review and approval by the Police Department to include video surveillance and other required featuresBuffers:200-300 feet from premises to any residence in a residential zone600-1,000 feet from premises to any pre-school, elementary, middle or secondary schoolRetail storefronts must be separated by at least 1,000 feet 02-20-2018 Item 13, Staff Presentation Additional Requirements for Cannabis Activity PermitsSignageMust comply with City’s Sign Regulations for size, area and type of sign, no exceptions allowedInternal illumination of signs is prohibitedNo portion of the cannabis plant may be used in any sign visible from the public right-of-wayNo cannabis products may be displayed in store windows and visible from the public right-of-wayOn-site consumption, whether at a place of business or event, should be prohibited 02-20-2018 Item 13, Staff Presentation For Discussion1.Does the City Council want to allow access to commercial cannabis by City residents?2.If yes, would the Council want to limit access to medicinal only, or medicinal and adult use?3.If either, does the Council want to allow storefront sales in the City, or delivery only?4.If delivery only, does the Council want the delivery business to be located in the City, or only allow deliveries from outside of the City?02-20-2018 Item 13, Staff Presentation For Discussion5.Does the City Council want to prohibit persons under 21 on the premises of a cannabis business, with the result that persons 18-21 years old will only be able to get medicinal cannabis by delivery?6.If the City Council wants to allow retail sales either via storefront or delivery by businesses located within the City, does the City Council support other types of cannabis businesses inside the City, or retail only?7.If the City Council is interested in allowing other types of businesses, does the City Council support allowing a range of license types (cultivation, manufacturing, distribution, microbusiness, testing) to support a local supply chain, and craft producers?8.If the City Council is interested in allowing cannabis business activity in the City, is a 200-foot buffer from residential areas sufficient, or should the City stick with the State recommended 300-foot buffer from residential areas? 600 or 1,000 foot school buffer?02-20-2018 Item 13, Staff Presentation For Discussion9.If the City Council is interested in allowing retail sales and manufacturing of cannabis products within the City, does it want to prohibit certain types of concentrates (shatter, wax, hash, etc.) that are typically smoked, vaped, or dabbed?10.If the City Council wants to allow indoor cultivation in the City, does it want to require these businesses to achieve Zero Net Energy compliance upon establishment of the business, by a date certain, or require other energy efficiency compliance methods such as purchasing green energy offsets?11.Does the City Council support the concept of using a third-party consultant to develop and implement standards for qualifying and ranking future cannabis business operators?02-20-2018 Item 13, Staff Presentation Next StepsFebruary 20 - City Council Study SessionPublic testimonyCouncil discussionCouncil policy direction to staff on proposed regulationsMarch 28 – Planning CommissionPublic testimonyReview of draft regulationsRecommendation to the City CouncilMay 1 – City Council review and potential adoption of regulations and related ordinances02-20-2018 Item 13, Staff Presentation RecommendationsReceive a presentation, take public testimony, and provide the following direction to staff:1.Prepare draft regulations based on direction provided by the City Council with input from the community and Planning Commission, and return to the Council on May 1, 2018, with the resolutions and ordinances necessary to adopt Cannabis Regulations; and 2.Return to the City Council on March 20, 2018, for approval of a Request for Proposals (RFP) to identify a consultant to process applications and establish a list of eligible cannabis business operators.02-20-2018 Item 13, Staff Presentation