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CANNABIS POLICY AMENDMENT DISCUSSION
recommended action
RECOMMENDATION
Staff recommends that the Legislation and Environmental Committee provide direction and feedback on the proposed ordinance to amend the City’s policy on cannabis regulation.
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SUMMARY
On February 2, 2021, City Council provided direction to evaluate the cannabis regulatory program and develop recommendations to improve the current program. The City conducted an Equity Assessment and research on best practices. Community outreach was also conducted to gather feedback from the community and stakeholders. As a result, recommendations were developed and are being presented to gather additional feedback from the Legislation and Environmental Committee.
DISCUSSION
Background
On March 5, 2019, City Council approved changes to the City’s cannabis regulatory program to: (a) align state/local regulation; (b) allow additional business types; (c) establish a method to control the pace of new business openings; and (d) establish a method to address historic racial inequities.
New business types were introduced, including manufacturing, distribution, testing laboratories, delivery-only non-storefront retailers, and microbusinesses. The program also included additional cultivators and storefront retailers (dispensaries) as well as an equity program. The changes were to align local regulation with the Medical Cannabis Regulation and Safety Act and the Adult-Use of Marijuana Act of 2016 (Proposition 64). In addition to achieving regulatory consistency, the program was changed to eliminate the limit (i.e. caps) on the total number of Operator Permits regulated by the Stockton Police Department under Stockton Municipal Code (SMC) Chapter 5.100.
For certain permit types where there is concern about the potential impact on public safety, public health, or community character, a controlled expansion was established. A controlled expansion program allows the City and the existing industry to adapt to an evolving industry and gives the City ongoing flexibility to accelerate or decelerate industry expansion over time. The controlled expansion also has the benefit of allowing the City to give preference to equity applicants.
The controlled expansion is accomplished on an annual basis through a lottery process for the following business types:
a. storefront retailer
b. cultivation
c. volatile-manufacturing
d. microbusinesses, which include storefront retail and/or cultivation business types
Applicants for the above business types are evenly selected by the lottery process from two pools for a total of eight (8) applications per year, as described below:
Equity Pool
a. One (1) storefront retailer permit
b. One (1) cultivation permit
c. One (1) volatile-manufacturing permit
d. One (1) microbusiness permit
General Pool
a. One (1) storefront retailer permit
b. One (1) cultivation permit
c. One (1) volatile-manufacturing permit
d. One (1) microbusiness permit
The lottery includes an equity component to enable Stockton residents from disadvantaged neighborhoods to obtain cannabis business permits. Applicants for the above business types are evenly selected from 1) a general pool of applicants and 2) an equity pool of applicants. Equity pool applicants must meet certain criteria and are also eligible to be a part of the general pool. To qualify as an equity applicant, an applicant must own more than 50 percent of the business, be a resident of Stockton, and meet one of the following: be an Minority Business Enterprise (MBE)/Women Owned Business Enterprise (WBE), live in an opportunity zone, live in the Senate Bill 535 disadvantaged area, or live in a Housing and Urban Department (HUD) designated area.
On February 2, 2021, City Council provided direction to evaluate the cannabis regulatory program and develop recommendations to improve the current program. City Council expreseed concern with overconcentration, encouragement of certain business types, location requirements and issues related to the equity program. On March 17, 2021, Staff provided a presentation on the cannabis amendment project to the Legislation and Environmental Committee where additional feedback for the project was received. Additionally, the City’s cannabis equity consultant hosted a virtual community meeting on May 3, 2021 where public feedback and suggestions were received. Sixteen members (16) of the public particiated in the virtual community meeting. Over 700 emails were distributed to notify the public of the virtual community meeting. In addition, the consultant interviewed twelve (12) stakeholders. All of this input was gathered and analyzed for the drafting of the proposed ordinance.
Present Situation
The proposed Ordinance (Attachment A) provides the recommendations as a result of extensive research conducted to provide enhancements to the City’s Commercial Cannabis Regulatory Program. Several areas will be addressed as a result of this update, including location requirements, equity lottery program, enhancing the customer experience, balancing oversaturation with economic development efforts, and zoning allowances. The proposed recommendations are summarized in the Recommendation Summary Matrix (Attachment B).
The recommendations were based, in part, on an analysis of location requirement scenarios (Attachment C), which provides options for consideration. The City also conducted an analysis of the current statewide best practices to assist with data driven decision making. The report includes zoning information for seven (7) jurisdictions (Attachment D) known for their robust programs. They include the Cities of Adelanto, Greenfield, Long Beach, Los Angeles, Oakland, San Francisco, and Santa Rosa. The report also includes zoning requirements for local jurisdictions, including the Cities of Ceres, Elk Grove, Modesto, Tracy, Turlock, Sacramento, San Joaquin County, Stanislaus County, , and Sacramento County.
Lastly, the City, through a consultant, conducted an equity assessment to determine areas of improvement for the City’s Commercial Cannabis Equity Lottery Program. The details and results of the assessment are found in the Equity Assessment Report (Attachment E). The recommendations in the proposed Ordinance balance the results found in the Best Practices Report, the Equity Assessment Report, and the feedback received by City Council, Legislation and Environmental Committee, and the Public.
Attachment A - Proposed Ordinance - Redlines
Attachment B - Recommendation Summary Matrix
Attachment C - Location Requirement Options
Attachment D - Best Practices Report
Attachment E - Equity Assessment Report