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AMENDMENT TO TITLE 16, CHAPTERS 16.20, 16.80, AND 16.240 OF THE STOCKTON MUNICIPAL CODE RELATED TO THE SALE OF ADULT-USE CANNABIS IN EXISTING MEDICAL CANNABIS DISPENSARIES
recommended action
RECOMMENDATION
Staff recommends that the Planning Commission forward a recommendation to the City Council to adopt an Ordinance amending Title 16 of the Stockton Municipal Code, Chapter 16.20, Section 16.20.020; Chapter 16.80, Section 16.80.195; and Chapter 240, Section 16.240.020, to allow the sale of Adult-Use Cannabis in existing medical cannabis dispensaries.
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Summary
In Spring of this year, City Council directed the City Manager to analyze and evaluate the potential regulation of other cannabis business lines beyond what is currently allowed under the City’s existing ordinances. Current ordinances allow four (4) medical cannabis dispensaries and four (4) medical cultivation sites. Other lines of cannabis business to be explored include adult-use cultivation, testing laboratories, distribution, manufacturing, and expansion of retail (dispensaries and delivery).
Due to the significant increase in development activity and an effort to update the City’s General Plan, staff availability to evaluate cannabis business options was limited. In April 2018, Council authorized a contract with cannabis business and regulation consultants. In conjunction with the City’s consultant, an incremental three-phased approach to update the City’s cannabis program was developed. The City’s cannabis program will be updated to reflect the Medical Cannabis Regulation and Safety Act and the Adult-Use of Marijuana Act of 2016 (Proposition 64) the authorizing legislation that legalized marijuana for adult recreational use in addition to medical use. The planned phases of the update are:
• Phase I - Allow existing medical cannabis dispensaries to sell adult-use cannabis. Present to Council in September 2018.
• Phase II - Retail (additional dispensaries and delivery), Testing laboratories, and Equity Program. Anticipated to be presented to Council in December 2018 or January 2019.
• Phase III - Cultivation, Distribution and Manufacturing. Anticipated to be presented to Council in April/May 2018.
Phase I is an ordinance amendment to allow the sale of adult-use (recreational) cannabis in existing medical cannabis dispensaries. Phase I has undergone public engagement analysis, and is now before Planning Commission for review and recommendation to City Council. The planning commission is asked to forward a recommendation to Council on the proposed Title 16 amendments (land use amendments) which will be presented to Council along with proposed Title 5 amendments (licensing amendments).
DISCUSSION
Background
Measures P and Q were passed by the voters on November 8, 2016 through the General Election.
The two initiatives removed the prohibition on medical cannabis dispensaries, allowed medical cannabis cultivation businesses within the City, and allowed an increase to the business license tax on medical cannabis and cannabis-related businesses.
Measure P did three things: lifted the ban on medical cannabis dispensaries, expanded the maximum number of medical cannabis dispensaries, and allowed the establishment of medical cannabis cultivation locations.
Measure P amended Chapters 5.10, 16.20, 16.80 and 16.240 of the Stockton Municipal Code (SMC) to:
• Remove the prohibition on dispensaries;
• Allow up to four (4) medical cannabis dispensaries in certain commercial and industrial zones, including the three (3) existing dispensaries;
• Allow up to four (4) cultivation sites in industrial zones;
• Impose location restrictions for dispensaries and cultivation operations, including distances from sensitive locations;
• Require a Conditional Use Permit (CUP), Operator Permit, and permits for all employees; and
• Prohibit dispensary owners/operators from owning/operating cultivation operations within the City.
As enacted, Measure P requires two types of permits for medical cannabis businesses: a CUP approved by the Planning Commission, and an Operators Permit approved by the Chief of Police. The measure also set zoning standards that restrict the location of dispensaries and cultivation facilities, including separation distances from sensitive land uses and from other cannabis businesses.
On February 28, 2017, in the context of an amendment to address and/or clarify confusion about Measure P in response to numerous inquiries from potential medical marijuana dispensary applicants, City Council was presented with the option of increasing the number of medical dispensaries to six; however, it declined to do so.
On June 27, 2017, the Governor signed into law Senate Bill 94, the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), which established a single system of administration for cannabis laws in California combining the Medical Cannabis Regulation and Safety Act and the Adult Use of Marijuana Act of 2016 (Proposition 64) into a single system.
On November 7, 2017, City Council adopted ordinance 2017-11-07-1502, which made changes relative to the City’s medical cannabis businesses permitting program, including a ban on non-medical cannabis businesses, a ban on outdoor personal cultivation, a ban on any cannabis business engaged in delivery, distribution, manufacturing or testing of the product, and certain restrictions on indoor cultivation.
On January 9, 2018, the County of San Joaquin approved an agreement to provide consulting services for the development and implementation of a sustainable regulatory structure for commercial and personal cannabis. Its selection process deemed Freedman and Koski, Inc. as the best suited consultant to conduct this analysis. The County’s agreement allowed other jurisdictions to enter in cooperative agreements with the vendor to perform the same cannabis policy services. On April 17, 2018, the City approved a Cooperative Agreement between the City and Freedman and Koski, Inc. to conduct a review of the City’s current policy, conduct public engagement, and provide recommendations to improve the City’s current cannabis regulatory program. At this meeting, City Council directed staff to explore the plausibility of allowing current medical dispensaries to also sell adult-use cannabis, while maintaining the current allowable dispensaries limit of four dispensaries pending further review and analysis.
A three-phased approach was developed to outline the scope of the policy project. Each of the three phases will include public engagement, analysis, presentation to Planning Commission (if Title 16 amendments are necessary), and ultimately final presentation to City Council for consideration. Phase 1 will address the addition of adult-use cannabis sales for existing medical dispensaries. Phase 2 will address an equity program, retail (additional dispensaries and delivery), and testing laboratories. Equity Programs are created to either mitigate the impact of those persons disproportionately affected by cannabis sales in neighborhoods and/or lower barriers of entry to the industry. Phase 3 will address cannabis distribution, cultivation and manufacturing (Attachment A- Detailed Project Outline).
On July 18, 2018, the City hosted two community meetings to launch the public engagement for the project and to begin gathering data from the community on a variety of topics (Attachment B - Summary of Findings).
On August 2, 2018, the Planning Commission received a presentation on the scope of the entire policy project along with a summary of the feedback received from community meetings held in July. The phases of the project were reviewed and questions regarding public education and general enforcement of potential new policies were discussed.
Present Situation
On February 28, 2017, the City Council held a public hearing to discuss the option of increasing the number of medical dispensaries to six, but the amendments failed. Based on the action at that hearing there were no changes to the existing limit of medicinal dispensaries (4) nor did it allow for adult-use cannabis dispensaries, particularly stand-alone adult use sales only dispensaries. On June 27, 2017, the Governor signed into law Senate Bill 94, the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), which established a single system of administration for cannabis laws in California combining the Medical Cannabis Regulation and Safety Act and the Adult Use of Marijuana Act of 2016 (Proposition 64) into a single system and provided for additional clarification on the siting of adult use dispensaries.
Additional stand-alone adult use dispensaries will be reevaluated during the second phase of the Cannabis Policy Project in conjunction with analysis of an equity program. The current proposed changes would only allow existing medical dispensaries to also sell adult-use cannabis.
The proposed amendments will, contingent upon successful application to modify existing CUPs, allow existing medical cannabis dispensaries to also sell adult-use cannabis. If the Ordinance is approved, existing owners/operators would be required to amend current their CUP’s before the Planning Commission and if the CUP is approved, amend the Operator’s Permit, with approval by the Chief of Police. The proposal would not increase the total number of dispensaries currently allowed.
To apply for and receive amended CUP’s and Operator’s Permits, existing owners/operators would be required to:
• Pay all fees associated with processing the amendments.
• Pay taxes in accordance with SMC Section 5.99.030 in the amount of $100 per $1,000 of gross receipts (for adult use cannabis).
• New employee background investigations consistent with the expansion of sales to include adult-use cannabis.
• Submittal of documentation indicating any changes to the operation due to the expansion of including the sale of adult-use cannabis.
The medical cannabis half of the business would continue to pay taxes in accordance with SMC Section 5.98.030 in the amount of $50 per $1,000 of gross receipts (Resolution No. 2017-02-28-0401).
The proposed amendments have been incorporated into the relevant sections of the Code for consideration by the Planning Commission (Attachment C - Proposed Ordinance (Redline Version)).
Staff recommends and the Planning Commission is asked to forward a recommendation to Council approving the proposed Title 16 amendments (land use amendments) which will be presented to Council concurrent with proposed Title 5 amendments (licensing amendments).
Attachment A - Project Outline
Attachment B - Summary of Findings
Attachment C - Proposed Ordinance (Redline Version)