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HomeMy WebLinkAbout2017-10-18 e-packet@6:00Wednesday, October 18, 2017 6:00 PM City of South San Francisco P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA City Hall, City Manager's Conference Room 400 Grand Avenue, South San Francisco, CA Special City Council Special Meeting Agenda October 18, 2017Special City Council Special Meeting Agenda NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the State of California, the City Council of the City of South San Francisco will hold a Special Meeting on Wednesday, October 18, 2017, at 6:00 p.m., at City Hall, City Manager's Conference Room, 400 Grand Avenue, South San Francisco, California. Purpose of the meeting: Call to Order. Roll Call. Agenda Review. Public Comments - comments are limited to items on the Special Meeting Agenda. ADMINISTRATIVE BUSINESS Report regarding a study session on regulating indoor cultivation, distribution, delivery only retail, and microbusiness cannabis businesses. (Rozalynne Thompson, Associate Planner and Deborah Gill, Special Projects Manager) 1. Study Session on Police Department functions and strategies. (Jeff Azzopardi, Police Chief) 2. Report regarding a resolution authorizing the filing of a grant application for State of California Department of Housing and Community Development Department Grant funds not to exceed $260,000 through the Housing-Related Parks Program for the renovation of Gardiner Park in Fiscal Year 2017-18. (Sharon Ranals, Parks and Recreation Director) 3. Resolution authorizing the filing of a grant application for State of California Department of Housing and Community Development Department Grant funds not to exceed $260,000 through the Housing-Related Parks Program for the renovation of Gardiner Park in Fiscal Year 2017-18. 3a. Report regarding a study session on the increase of funding for the Scoop carpool program. (Justin Lovell, Public Works Administrator) 4. Adjournment. Page 2 City of South San Francisco Printed on 12/7/2017 City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:17-1001 Agenda Date:10/18/2017 Version:1 Item #:1. Report regarding a study session on regulating indoor cultivation,distribution,delivery only retail,and microbusiness cannabis businesses.(Rozalynne Thompson,Associate Planner and Deborah Gill,Special Projects Manager) RECOMMENDATION It is recommended that the City Council receive information from a study session on potential indoor cultivation,delivery only retail,distribution,and microbusiness cannabis businesses,and provide direction to staff regarding next steps. BACKGROUND/DISCUSSION On November 8,2016,California voters approved Proposition 64,which is the initiative known as the Adult Use of Marijuana Act (AUMA).Subject to local and state restrictions and regulations,AUMA generally legalizes the nonmedical,recreational use of cannabis by persons 21 years of age and over.AUMA created a comprehensive state regulatory and licensing structure governing commercial nonmedical cannabis activities, including the commercial cultivation,testing,manufacturing,distribution,and retail sale of nonmedical cannabis. On April 4,2017,Governor Brown released a budget trailer bill (“Trailer Bill”)that aimed to reconcile the existing medical marijuana statutory framework under the Medical Cannabis Regulation and Safety Act (MCRSA)and the recreational statutory framework adopted under the AUMA.After some revision,the state Senate and Assembly passed a modified version of the original proposal in the form of AB 110/SB 94,known as the Medical and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA),on June 15,2017 and the Governor signed it into law. COUNCIL ACTIONS TO DATE On January 25,2017,the City Council adopted an interim urgency ordinance placing a moratorium on all commercial cannabis activity within the City of South San Francisco in order to comprehensively study the issue.On March 8,2017,the City Council extended the moratorium for an additional ten months and 15 days. Unless it is further extended, the moratorium will expire on January 23, 2018. On January 11,2017,Council held a study session on an overview and update on cannabis laws;please see Attachment 1 for the staff report. On April 12,2017,Council held a study session on retail dispensary licenses (Type 10);please see Attachment 2 for the staff report. On July 26,2017,Council held a study session on testing labs and licensing,and on manufacturing facilitiesCity of South San Francisco Printed on 10/13/2017Page 1 of 11 powered by Legistar™ File #:17-1001 Agenda Date:10/18/2017 Version:1 Item #:1. On July 26,2017,Council held a study session on testing labs and licensing,and on manufacturing facilities state license types 6, 7, and 8; please see Attachment 3 for the staff report. On September 14,2017,Council held a study session on commercial cannabis cultivation licenses (Types 1-5); on commercial distribution (Type 11);and on microbusinesses (Type 12);please see Attachment 4 for the staff report. Note there is no Type 9 license. A reference guide including the 20 California state cannabis license types and definitions can be found in Attachment 5. STUDY SESSION ON (1)INDOOR CULTIVATION,(2)DELIVERY ONLY RETAIL,(3)DISTRIBUTION, AND (4) MICROBUSINESSES At the September 14,2017 study session,Council asked to revisit the covered topics,namely indoor cultivation, delivery only retail, distribution, and microbusinesses. Each is dealt with in detail below: Indoor Commercial Cultivation Cannabis “cultivation”is defined by MAUCRSA as “any activity involving the planting,growing,harvesting, drying,curing,grading,or trimming of cannabis.”Indoor commercial cultivation licenses available under MAUCRSA include the following: 1.Type 1A = Cultivation; Specialty indoor; Small (up to 5,000 sq ft) 2.Type 2A = Cultivation; Indoor; Small (5,001 - 10,000 sq ft) 3.Type 3A = Cultivation; Indoor; Medium (10,001 - 22,000 sq ft) 4.Type 4 =Cultivation;Nursery -allows the growth of cannabis only as a nursery indoors,outdoors,or mixed light; up to one acre; license holders may also transport live plants 5.Type 5A = Cultivation; Indoor; Large, (over 22,000 sq ft) - not being issued before January 1, 2023 The definition of cannabis “cultivation”under state law is similar to the definition of “Crop Production, Limited”in Section 20.620.004 of the South San Francisco Municipal Code,which is the “[u]se of land for agricultural production,vine or tree farm,truck garden,apiary,horticulture,vineyard,hopyard,and associated crop preparation and harvesting activities or any other type of agriculture determined to be substantially similar to the above.”Section 20.620.004 of the South San Francisco Municipal Code excludes “nurseries, greenhouses,processing,or retail sales of agricultural products”from the “Crop Production,Limited”use classification. “Crop Production, Limited” uses are permitted in the Low Density Residential (RL), Medium Density Residential (RM),High Density Residential (RH),Mixed Industrial (MI),Open Space (OS),and Parks and Recreation (PR) zoning districts. If the City permitted indoor commercial cultivation,indoor cannabis cultivation facilities could be located in the zoning districts that permit “Crop Production,Limited”,but do not contain residential areas and are not in close proximity to sensitive receptors.Under these parameters,indoor commercial cultivation would be permitted in the Mixed Industrial (MI)zoning district,subject to a conditional use permit.Attachment 6 is a City of South San Francisco Printed on 10/13/2017Page 2 of 11 powered by Legistar™ File #:17-1001 Agenda Date:10/18/2017 Version:1 Item #:1. map of the city indicating which areas make up the MI zoning district. With respect to cannabis cultivation uses,of the cities surveyed,several limited the size of operations for cannabis cultivation uses by limiting the canopy area and the cultivation area.Several canopy area limits were based on the limits in the proposed state licensing structure,which are divided into three tiers.The first tier limits indoor canopy area from 0 to 5,000 square feet,the second tier limits indoor canopy area from 5,001 to 10,000 square feet,and the third tier limits indoor canopy area from 10,000 to 22,000.In addition to canopy area limits,several jurisdictions imposed limits on cultivation area,which is the space that is needed for drying, curing,and processing as well as space for immature young plants,walkways,storage,and bathrooms. Approximately 1/3 of commercial cultivation space is needed for drying,curing,processing,immature young plants, walkways, storage, and bathrooms. Indoor cultivation requires a high input of electricity.Requiring LED lights is one way to reduce the demand of electricity.Another possible permit requirement that the City could impose is to require that all energy used in the cannabis cultivation operation be 100 percent renewable.The City of Richmond is one city which has adopted this requirement. The California Water Resources Control Board is currently accepting comments on a draft Cannabis Cultivation Policy and General Order including addressing water quality,water diversion,waste discharge requirements, and environmental management plans,and will hold public hearings in October 2017.Staff would recommend any cannabis cultivation business be required to adhere to the future adopted state Cannabis Cultivation Policy. In addition to any pending recommendations and requirements from the Regional Water Quality Control Board, the City would regulate any activity through the existing Local Discharge Limits in the Municipal Code and Federal National Pollutant Discharge Elimination System (NPDES) regulations. Note that staff has been contacted by the California Life Sciences Association (CLSA)and informed that there are companies in South San Francisco that are interested in FDA-regulated research on cannabinoid drug products,similar to other drug research.Companies involved in this research use traditional cultivation techniques to develop new types of cannabis plants,as well as new methods for extraction and purification of the active compounds (e.g., THC, CBD). Considering indoor commercial cannabis cultivation, pros and cons are: Pros §South San Francisco has large warehouses which could accommodate indoor cultivation §They are not public facing businesses,meaning if properly regulated no one would likely know the facility was an indoor cannabis grow operation City of South San Francisco Printed on 10/13/2017Page 3 of 11 powered by Legistar™ File #:17-1001 Agenda Date:10/18/2017 Version:1 Item #:1. §There is potential for job creation Cons §An all cash business, presents additional security risk §Cannabis cultivation uses a large amount of water and electricity §Cannabis cultivation can produce an unpleasant odor if no ventilation/filtering is used §State law is new; there could be unforeseen results from this new use The central questions for Council concerning indoor commercial cannabis cultivations are: ·Should indoor commercial cannabis cultivation be allowed in South San Francisco? ·If allowed, does Council want to limit the size of the indoor cultivation operations? Commercial Distribution Under MAUCRSA,the State can issue distribution licenses (Type 11).Distribution is defined as “the procurement,sale,and transport of cannabis and cannabis products between licensees,”also known as business to business distribution.Cannabis distribution facilities typically receive cannabis from cultivators,transport cannabis to quality assurance and batch testing facilities,distribute cannabis to and from manufacturing operations,and then distribute cannabis to licensed dispensaries.No retail sales can take place from a cannabis distribution facility. A cannabis “distribution”use under MAUCRSA is akin to “Wholesaling and Distribution”uses in Section 20.620.005 of the South San Francisco Municipal Code.Section 20.620.005 defines “Wholesaling and Distribution”uses as “[i]ndoor storage and sale of goods to other firms for resale;storage of goods for transfer to retail outlets of the same firm;or storage and sale of materials and supplies used in production or operation, including janitorial and restaurant supplies.”Furthermore,“Wholesaling and Distribution”uses primarily involve transfer of products between businesses and are not designed to solicit walk-in traffic. . If cannabis distribution were to be permitted,facilities could be located in zoning districts where “Wholesaling and Distribution”uses are allowed.Under the Municipal Code,these uses are currently allowed in the Business Professional Office (BPO),Business Technology Park (BTP),Gateway Specific Plan (GSPD),and Mixed Industrial (MI)zoning districts.Attachment 7 is a map of the city indicating possible zoned areas,with areas excluded in accordance with the restrictions contained in MAUCRSA. Concerning distribution,none of the cities surveyed have a size limit for cannabis distribution uses.It is unclear how much square footage a distribution facility will need,because of the wide variety of cannabis products that can be stored and transported,with each having different space requirements.Rather than set a limit on the square footage,square footage for each distribution facility could be determined through the development City of South San Francisco Printed on 10/13/2017Page 4 of 11 powered by Legistar™ File #:17-1001 Agenda Date:10/18/2017 Version:1 Item #:1. square footage,square footage for each distribution facility could be determined through the development standards in the Zoning Ordinance and a discretionary review process.Applicants will be required to submit a business plan as well as a detailed floor plan that outlines their space needs,including,storage,kitchen, packaging, shipping, equipment, and office areas. Considering commercial cannabis distribution, pros and cons are: Pros §South San Francisco has large warehouses which could accommodate distribution operations §South San Francisco has a history of hosting distribution operations §They are not public facing businesses,meaning if properly regulated no one would likely know the facility was a cannabis distribution operation §There is potential for job creation §Yearly permit renewals and potential operating standards described would allow for local regulation and control of distribution operations,including requirements for per order tracking for drivers and real time order tracking for all vehicles;driver background checks;regular vehicle inspections;secure in-vehicle storage requirements; and vehicle signage requirements. Cons §An all cash business, presents additional security risk §Cannabis can produce an unpleasant odor if no ventilation/filtering is used §Distribution likely uses trucks, putting more delivery trucks on the road in the city §State law is new; there could be unforeseen results from this new use The central question for Council concerning commercial distribution is: ·Should commercial cannabis distribution be allowed in South San Francisco? Delivery Only Retail State retail licenses (Type 10)are for the retail sale or delivery of cannabis or cannabis products to customers. Under the new MAUCRSA regulations,retail cannabis businesses that sell cannabis or cannabis products directly to the consumer are classified as “retailers”(formerly referred to as “dispensaries”).The MAUCRSA includes businesses that close their stores to the public and sell their products exclusively by delivery as retailers.Like storefront cannabis retailers,deliveries may only originate from a licensed retailer and the retailer must have a physical premise where its business activities take place.Deliveries may only be made by City of South San Francisco Printed on 10/13/2017Page 5 of 11 powered by Legistar™ File #:17-1001 Agenda Date:10/18/2017 Version:1 Item #:1. licensed retailer or microbusiness, or a licensed nonprofit. Although “delivery-only retail”businesses are deemed retailers under state law,such uses are similar to the “Wholesale and Distribution”use classification in the Zoning Ordinance.“Wholesale and Distribution”uses, as defined in Section 20.620.005 of the South San Francisco Municipal Code,generally engage in “business-to- business sales”,but also may “sell to individual consumers through mail or internet orders”.Given that “delivery-only retailers”do not solicit walk-in traffic,they are similar to “Wholesale and Distribution”uses that “normally operate from a warehouse or office having little or no display of merchandise”. As a use similar to “Wholesale and Distribution”uses,delivery-only cannabis retailers could be allowed in the same zoning districts recommended for “Cannabis Distribution”uses:Business Professional Office (BPO), Business Technology Park (BTP),Gateway Specific Plan (GSPD),and Mixed Industrial (MI)zoning districts. Attachment 8 is a map indicating potential areas within the BPO,BTP,GSPD,and MI zoning districts where “delivery-only retailers”could be located that meet the minimum distance requirement under the MAUCRSA. Attachment 7 is a map of the city indicating which zoned areas apply,with areas excluded according to the requirements of MAUCRSA. As for delivery-only retail operations,none of the cities surveyed specifically limit the size of a delivery-only retailer.However,since delivery-only cannabis businesses are deemed cannabis “retailers”under state law,staff opines that the size of delivery-only establishments could be either limited to a size comparable to storefront retailers or could be determined through the development standards in the Zoning Ordinance and a discretionary review process. Considering commercial cannabis delivery, pros and cons are: Pros §Home delivery will likely occur whether South San Francisco allows the service or not;therefore,if South San Francisco allows delivery companies to “home base”in the city,then the city has the ability to regulate delivery operations,including requirements for per order tracking for drivers and real time order tracking for all vehicles;driver background checks;regular vehicle inspections;secure in-vehicle storage requirements; and vehicle signage requirements. §They are not public facing businesses,meaning if properly regulated no one would likely know the facility was a delivery operation §There is potential for job creation §Potentially more convenient service to South San Francisco residents -delivery would provide safe and convenient access to legal and tested cannabis,rather than residents having to rely on out of town delivery services Cons City of South San Francisco Printed on 10/13/2017Page 6 of 11 powered by Legistar™ File #:17-1001 Agenda Date:10/18/2017 Version:1 Item #:1. §An all cash business, delivery presents additional security risk §State law is new; there could be unforeseen results from this new use The central questions for Council concerning Delivery Only Retail is: ·Should Delivery Only Retail outlets be allowed in South San Francisco? Microbusinesses MAUCRSA provides for microbusiness licenses (Type 12).Microbusinesses are defined as businesses which cultivate cannabis on an area less than 10,000 square feet and can also be a licensed distributor,manufacturer using non-volatile solvents,and retailer.The microbusiness license enables small-scale growers to operate on the model of craft microbreweries or boutique wineries -the cannabis may be grown,processed,and sold onsite at the retail and wholesale levels.There are many reports of tobacco giants buying in to the California cannabis industry,raising the risk that small operators will be forced out.Microbusiness licenses provide a means for small operators to survive.Note,if the city bans commercial retail,a microbusiness could home delivery if allowed. Unlike other license types,even though microbusinesses are authorized to engage in multiple activities,they only require one license.An applicant for a microbusiness license must be able to demonstrate compliance with all the requirements under state law for the activities that will be conducted under the license. Given that a microbusiness may distribute,manufacture,and sell cannabis in addition to cultivation operations in one location,microbusinesses (if allowed)should only be allowed in zones that allow all such uses,subject to conditional use permit.The only zoning district that allows such uses is the Mixed Industrial (MI)zoning district.Attachment 6 is a map of the city indicating which zoned areas are MI,with areas excluded according to MAUCRSA. Considering microbusinesses, pros and cons are: Pros §Small entrepreneurs could enter the cannabis industry §Microbusinesses can be required to be non-public facing businesses,meaning if properly regulated no one would likely know the facility was a microbusiness §There is potential for job creation §Yearly permit renewals and potential operating standards would allow for local regulation and control City of South San Francisco Printed on 10/13/2017Page 7 of 11 powered by Legistar™ File #:17-1001 Agenda Date:10/18/2017 Version:1 Item #:1. Cons §An all cash business, presents additional security risk §Cannabis cultivation uses a large amount of water and electricity §Cannabis cultivation can produce an unpleasant odor if no ventilation/filtering is used §State law is new; there could be unforeseen results from this new use The central questions for Council concerning Microbusinesses are: ·Should Microbusinesses be permitted in the City? ·Would non-volatile manufacturing and/or delivery only retail also be permitted as part of this license? Additional Mechanisms to Regulate Cannabis Businesses Based on research of cannabis-related business regulations of several jurisdictions in Colorado,Washington, Oregon,and California,common mechanisms used to regulate cannabis businesses are siting limitations (zoning)and size limits as described above,as well as operational standards,security,signage,minimum distance requirements, fire codes, and building codes, as outlined below. Operational Standards The City may consider developing cannabis business operating standards.These may be part of the Zoning Code amendments,or could also be addressed in Title 6 of the Municipal Code,“Business Regulations”. Operational standards typically involve specific requirements designed to mitigate impacts of a particular use on surrounding properties These standards help ensure that cannabis businesses are “good neighbors”to the communities in which they are located by reducing potential negative impacts. Businesses will be subject to design review and approval as part of the permitting process.City regulations could include requirements for landscaping,fencing,and building design.It is unlikely that cannabis operations will construct new buildings,and will instead occupy existing buildings.Any operations must comply with the existing Zoning Ordinance. State cannabis licenses would be valid for one year.The City can add performance standards,when if not met would justify revocation or prevent re-issuing of a license.Conducting background checks of the business operators and their employees and requiring extensive security measures could be considered.MAUCRSA also requires licensees to implement a track and trace program,which includes an electronic seed to sale software tracking system with data points for the different stages of commercial activity including,but not limited to, cultivation, harvest, processing, distribution, inventory, and sale. Security The City could require these businesses to submit a security plan for review by the Police Chief as part of the City of South San Francisco Printed on 10/13/2017Page 8 of 11 powered by Legistar™ File #:17-1001 Agenda Date:10/18/2017 Version:1 Item #:1. The City could require these businesses to submit a security plan for review by the Police Chief as part of the permitting process. Security measures that could be considered are the following: ·Video cameras, both on site and in vehicles ·Alarms ·Lighting ·Safes ·Hired on and off-site security, including a minimum number of security officers ·Limiting amount of product ·Armored vehicles, safes in vehicles, requiring vehicles to register with PD ·Product and inventory tracking software and accounting software As these are not public facing businesses,if Council were to regulate cannabis businesses in the City staff recommends prohibiting physical and online signage advertising the location of a cannabis facility to the general public.Discouraging public facing signage for cannabis businesses would be possible through performance standards adopted by ordinance. Examples include: ·No on-street signage or other building markings, ·No signage on vehicles, and ·No physical addresses on websites,business cards,and promotional materials (could say something like “located in South San Francisco, serving South San Francisco…”, or list a P.O Box) Security and Cash:In terms of cash,if cannabis businesses were to be permitted,it could be stated that businesses should work with credit unions that are not federally insured.There is also an option for debit payments from credit unions via an app for cannabis transactions in six states,including California and Colorado.In September 2017 the state of Hawaii decided that starting Oct.1 all cannabis sales are to be handled without cash. Security enforcement:For state Alcoholic Beverage Control (ABC)license issues for alcohol,police can enter and reasonably inspect premises during business hours to ensure compliance;this could similarly be written into the cannabis ordinance for cannabis businesses. Security concerns:From comparative research in other states which permit cannabis businesses,once cannabis is available legally to adults over 21,staff expect an increase in cannabis related traffic accidents and impaired driving,irrespective of whether cannabis related businesses are sited in the City.If cannabis businesses were to be permitted in the City,potential extra calls to the Police Department are expected,but staff doesn’t expect the impact to be significant with the additional security requirements and regulations. Space and Distance Requirements MAUCRSA requires that commercial marijuana businesses locate at least 600 feet from K-12 schools,day care centers,or youth centers that are in existence at the time the license is issued.In addition to this requirement,a minimum distance requirement between cannabis businesses may be considered.The City City of South San Francisco Printed on 10/13/2017Page 9 of 11 powered by Legistar™ File #:17-1001 Agenda Date:10/18/2017 Version:1 Item #:1. requirement,a minimum distance requirement between cannabis businesses may be considered.The City may adopt a more restrictive distance requirement than the AUMA and seek to distance cannabis businesses from sensitive uses such as: ·Parks ·Churches ·Drug and alcohol rehabilitation facilities ·Group homes ·Any publicly owned or maintained properties, and ·Any other sensitive uses as deemed appropriate. Building Requirements Any cannabis businesses would need to meet the ventilation,egress,and electrical requirements of the California Building Code.Building permits with plans will be required for any modification to framing, electrical,mechanical or plumbing as it relates to cannabis.Plans will be reviewed by the Building Division and Planning department, and may be subject to a third party peer review. Staff would recommend that if cannabis businesses were permitted,it would be a requirement in the ordinances as part of operational standards that permitees are required to provide sufficient odor absorbing ventilation and exhaust systems,so that odors outside the premises are not a nuisance to any adjacent property or public right- of-way. The ventilation system could be reviewed by a third party engineering firm. Fire Code Requirements Any cannabis businesses would need to meet all requirements of the California Fire Code,National Fire Protection Association’s (NFPA)and all other applicable codes related to the nature of the business and its method of operations.Approval of its equipment,facility and closed-loop manufacturing system will be subject to a third party peer review from an authorized agency approved by the AHJ (authority having jurisdiction). The Fire Department conducts annual inspections as required by the Fire Code,and would confirm that the ventilation systems are working properly. With the exception of odor and ventilation,no supplementary building or fire codes are recommended as necessary. Other Cities in San Mateo County Jurisdictions in San Mateo County have had a variety of responses to the new state cannabis regulations. Burlingame and Menlo Park have adopted temporary moratoriums on both medical and recreational commercial uses.East Palo Alto,Foster City,Menlo Park San Bruno,and Woodside have instituted temporary moratoriums on recreational commercial uses.Atherton,Belmont,Colma,Half Moon Bay,and San Mateo have permanent prohibitions on commercial activities for recreational and medical in their respective Municipal Codes.In addition,San Bruno,East Palo Alto,Daly City,Foster City,Redwood City,San Carlos and Woodside have permanent prohibitions on medical commercial activities in their respective Municipal Code.Brisbane permits manufacturing,testing,distribution and delivery for medical and recreational.Pacifica permits City of South San Francisco Printed on 10/13/2017Page 10 of 11 powered by Legistar™ File #:17-1001 Agenda Date:10/18/2017 Version:1 Item #:1. permits manufacturing,testing,distribution and delivery for medical and recreational.Pacifica permits recreational retail, manufacturing and testing activities. Attachment 8 provides a chart of what other cities in San Mateo County currently have in place in terms of cannabis and/or their plans. CONCLUSION Staff is seeking City Council feedback on whether to allow indoor commercial cultivation,delivery only retail, distribution, and/or microbusiness cannabis businesses in South San Francisco. Attachments: 1.Overview Staff Report - 1/11/17 2.Retail Staff Report - 4/12/17 3.Manufacturing and Testing Staff Report - 7/26/17 4.Cultivation, Distribution, and Microbusinesses Staff Report - 9/11/17 5.California State Cannabis License Types 6.Map - Suggested Zones, Cultivation or Microbusiness 7.Map - Suggested Zones, Delivery Only Retail or Distribution 8.Chart of Regulations for San Mateo County Jurisdictions 9.PowerPoint Presentation City of South San Francisco Printed on 10/13/2017Page 11 of 11 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:17-110 Agenda Date:1/11/2017 Version:2 Item #:2. Study Session:Overview and Update on Marijuana Laws and Council Direction on Possible Next Steps.(Mike Futrell) RECOMMENDATION It is recommended that the City Council receive this report regarding a general overview and update on marijuana laws in California and the impact they have on the City,including the passage of Proposition 64 legalizing recreational marijuana use for adults 21 years and older. BACKGROUND/DISCUSSION The Vote On November 8,2016,California voters passed Proposition 64 which legalized the use of marijuana for adults 21 and older under state law.In South San Francisco,77.4%of the City’s 31,548 registered voters turned out to vote,and Proposition 64 passed in South San Francisco with 57.8%yes and 42.2%no.The actual vote was 13,543 votes in favor and 9,872 votes against.As a total of 24,433 ballots were cast in the City,1,018 South San Francisco voters that cast ballots did not vote on Proposition 64.Statewide,Proposition 64 passed with 57.13% of Californians voting yes. Examining the vote precinct by precinct in South San Francisco,Proposition 64 passed in every precinct in the City except Precinct 1820, a small precinct near Alta Loma school where it failed by a vote of 91 no to 87 yes. Adult use of marijuana became legal as of 12:01 a.m.November 9,2016,although as noted below there are still restrictions on this use and certain portions of the law do not practically go into effect until January 1, 2018. Proposition 64 In Detail Proposition 64 -the Control,Regulate,and Tax Adult Use of Marijuana Act (“AUMA”or “the Act”),legalizes recreational marijuana use for adults 21 and older and establishes a commercial licensing and regulatory structure for recreational marijuana businesses. Personal Use Effective November 9, 2016, AUMA makes it legal for anyone 21 and older to: ·Smoke or ingest marijuana and marijuana products (subject to certain limitations outlined below); and ·Possess,obtain,give away,purchase,and process up to one ounce of marijuana and up to 8 grams of concentrated marijuana; and ·Possess,plant,harvest,dry,or process up to six living plants within a single private residence or an enclosed and secure accessory structure to a private residence (“private residence”includes a house,an apartment,a mobile home,or other similar dwelling);or possess,plant,harvest,dry,or process up to six living plants upon the grounds of a private residence,unless outdoor cultivation is prohibited by local City of South San Francisco Printed on 9/11/2017Page 1 of 9 powered by Legistar™ File #:17-110 Agenda Date:1/11/2017 Version:2 Item #:2. regulations. (Health and Safety Code §§ 11362.1 and 11362.2) Personal Cultivation AUMA allows for adults 21 and older to possess plant,harvest,dry,or process up to six living plants within a single private residence or an enclosed and secure accessory structure to a private residence or upon the grounds of a private residence.“Private residence”includes a house,an apartment,a mobile home,or other similar dwelling. Local jurisdictions may prohibit outdoor cultivation entirely under AUMA,but may not prohibit the cultivation of up to six plants indoors per residence.(Health and Safety Code §11362.2(b)(3))The City may establish reasonable regulations for indoor cultivation.These could include a permit requirement,proof of property owner permission,location restrictions (i.e.only in a backyard out of public view),security requirements,or other reasonable requirements related to health and safety.If a city completely prohibits outdoor cultivation,it would not be eligible for certain public safety grants from taxes collected under AUMA. (Revenue & Tax Code § 34019(f)(3)(C)) Marijuana plants cultivated at a private residence and the marijuana from them in excess of 28.5 grams must be kept in a locked space not visible by normal unaided vision from a public place.(Health and Safety Code §11362.2(a)(2))The law does not allow individuals to manufacture concentrated marijuana using any volatile solvents at a private residence.(Health and Safety Code §11362.3(a)(6))Cultivation, possession,and processing activities that go beyond the limited personal use allowances under AUMA are illegal unless one obtains a state license for commercial activities. The law allows property owners,including landlords,to prohibit cultivation as well as the use of marijuana entirely on their property. (Health and Safety Code §11362.45(h)) Personal Use Although AUMA legalizes marijuana use for adults 21 and older,this right is not completely unfettered. The new law establishes that marijuana may not be smoked in “public places,”anywhere tobacco smoking is prohibited,or within 1,000 feet of a school,day care or youth center while children are present.It is also illegal under AUMA to possess or smoke marijuana on school grounds,or at day care or youth centers when children are present.(Health and Safety Code §11632.3)There are two exceptions to these restrictions: AUMA allows marijuana to be smoked within 1,000 feet of a school,day care or youth center when children are present if it occurs at a private residence or a business licensed to allow for on-site marijuana smoking and such smoking is not detectable by others at the nearby school,day care center,or youth center. This exception would not be met if one were using marijuana in an area that qualified as a public place and refers only to private areas of a residence or businesses where marijuana consumption is only allowed indoors, out of public view. Although AUMA prohibits the use of marijuana in “public places,”the term “public places”is not defined in the law.The term “public places”is not synonymous with “public property,”but instead “encompasses not only publicly-owned locations such as streets,sidewalks and bus stops,but also those portions of private property which are readily accessible to the public.It includes any location where the public has general access,such as shopping centers,businesses and parking lots,and also likely includes front yards and driveways unless the area is fenced-in or otherwise not “readily accessible.”Note a chain-link fence would likely suffice to meet the “not readily accessible”test of a “public place.”The term “public places” generally includes hallways and stairways of multiple unit dwellings which are open to delivery men, service men,solicitors,visitors and other strangers,whether those hallways are interior or exterior to the City of South San Francisco Printed on 9/11/2017Page 2 of 9 powered by Legistar™ File #:17-110 Agenda Date:1/11/2017 Version:2 Item #:2. service men,solicitors,visitors and other strangers,whether those hallways are interior or exterior to the buildings.In other words,a “public place”is a location readily accessible to all those who wish to go there and without barriers to entry. Cities may create more stringent smoking restrictions as well.The City’s current tobacco smoking ordinances apply automatically to marijuana smoking. Our ordinances currently prohibit smoking: ·In City buildings and City-owned parking lots ·On Grand Avenue ·In multi-unit residential buildings ·Within all parks within the City As noted above,the Act does allow for private property owners to prohibit any of AUMA’s permitted personal use and cultivation activities.Thus,an apartment complex owner or landlord could prohibit use or cultivation of marijuana in rental units. Government agencies may prohibit such activities within buildings owned,leased,or occupied by the government agency.And private employers may maintain or adopt a drug-free workplace policy that prohibits the use of marijuana by employees. Additionally, marijuana may not be smoked while driving or riding in a moving vehicle or boat. Commercial Use AUMA creates a licensing and regulatory system for “nonmedical”(recreational)commercial marijuana activities,including sales,distribution,cultivation,manufacturing,and testing.The regulatory structure is very similar to the one created under the Medical Cannabis Regulation and Safety Act (“MCRSA”).AUMA expands the duties of the California Bureau of Medical Cannabis Regulation (renamed the Bureau of Marijuana Control),Department of Consumer Affairs,Department of Food and Agriculture,and Department of Public Health. It is anticipated that the regulations and state licensing for nonmedical marijuana businesses will be developed by January 1,2018.Until then,legal marijuana businesses that may operate should be doing so only under the medical marijuana collective and cooperative model.It is illegal for a commercial nonmedical marijuana business to operate without a state license. The Commercial Production Cycle AUMA creates a licensing system for recreational commercial marijuana activities containing 19 different commercial licenses covering every step of the commercial marijuana production cycle, which is generally: ·Nursery ·Cultivation/Harvesting ·Testing ·Manufacturing/Processing ·Distribution ·Retail A person or business may obtain multiple licenses under AUMA.Under MCRSA one is limited to just two licenses in particular categories.Under both MCRSA and AUMA,one holding a testing facility licensee may City of South San Francisco Printed on 9/11/2017Page 3 of 9 powered by Legistar™ File #:17-110 Agenda Date:1/11/2017 Version:2 Item #:2. not hold any other license. The 19 types of licenses under AUMA are: (1)Type 1,“cultivation;specialty outdoor;small”(for outdoor cultivation using no artificial lighting of less than or equal to 5,000 square feet of total canopy size on one premises,or up to 50 mature plants on noncontiguous plots) (2)Type 1A,“cultivation;specialty indoor;small”(for indoor cultivation using exclusively artificial lighting of less than or equal to 5,000 square feet of total canopy size on one premises) (3)Type 1B,“cultivation;specialty mixed-light;small”(for cultivation using a combination of natural and supplemental artificial lighting at a maximum threshold to be determined by the Department,of less than or equal to 5,000 square feet of total canopy size on one premises)) (4)Type 2,“cultivation;outdoor;small”(for outdoor cultivation using no artificial lighting between 5,001 and 10,000 square feet, inclusive, of total canopy size on one premises) (5)Type 2A,“cultivation;indoor;small”(for indoor cultivation using exclusively artificial lighting between 5,001 and 10,000 square feet, inclusive, of total canopy size on one premises) (6)Type 2B,“cultivation;mixed-light;small”(for cultivation using a combination of natural and supplemental artificial lighting at a maximum threshold to be determined by the Department,between 5,001 and 10,000 square feet, inclusive, of total canopy size on one premises) (7)Type 3,“cultivation;outdoor;medium”(for outdoor cultivation using no artificial lighting from 10,001 square feet to one acre, inclusive, of total canopy size on one premises) (8)Type 3A,“cultivation;indoor;medium”(for indoor cultivation using exclusively artificial lighting between 10,001 and 22,000 square feet, inclusive, of total canopy size on one premises) (9)Type 3B,“cultivation;mixed-light;medium”(for cultivation using a combination of natural and supplemental artificial lighting at a maximum threshold to be determined by the Department,between 10,001 and 22,000 square feet, inclusive, of total canopy size on one premises) (10)Type 4,“cultivation;nursery”(for cultivation of medical cannabis solely as a nursery,which produces only clones,immature plants,seeds,and other agricultural products used for planting and cultivation of marijuana)) (11)Type 5,“cultivation;outdoor;large,”means for outdoor cultivation using no artificial lighting greater than one acre, inclusive, of total canopy size on one premises. (Not issued before 1/1/2023.) (12)Type 5A,“cultivation;indoor;large,”means for indoor cultivation using exclusively artificial lighting greater than 22,000 square feet,inclusive,of total canopy size on one premises.(Not issued before 1/1/2023.) (13)Type 5B,“cultivation;mixed-light;large,”means for cultivation using a combination of natural and supplemental artificial lighting at a maximum threshold to be determined by the licensing authority,greater than 22,000 square feet, inclusive, of total canopy size on one premises. (Not issued before 1/1/2023.) (14)Type 6,“manufacturer 1,”for sites that manufacture marijuana products using nonvolatile solvents,or City of South San Francisco Printed on 9/11/2017Page 4 of 9 powered by Legistar™ File #:17-110 Agenda Date:1/11/2017 Version:2 Item #:2. (14)Type 6,“manufacturer 1,”for sites that manufacture marijuana products using nonvolatile solvents,or no solvents. (15) Type 7, “manufacturer 2,” for sites that manufacture marijuana products using volatile solvents. (16) Type 8, “testing,” for testing of marijuana and marijuana products. (May not hold any other license.) (17)Type 10,“retailer,”for the retail sale and delivery of marijuana or marijuana products to customers.If allowed by local jurisdiction, may allow for on-site consumption within particular standards. (18) Type 11, “distributor,” for the distribution of marijuana and marijuana products. (19)Type 12,“microbusiness,”for the cultivation of marijuana on an area less than 10,000 square feet and to act as a licensed distributor,Level 1 manufacturer,and retailer under this division,provided such licensee complies with all requirements imposed by this division on licensed cultivators,distributors,Level 1 manufacturers, and retailers to the extent the licensee engages in such activities. AUMA prohibits licensees from also holding an alcohol or tobacco sales license. Cities have land use authority over the regulation of these businesses.This means that all marijuana business types may be prohibited or only some may be allowed;and if some are allowed they may be required to comply with a variety of zoning,development,and operational standards specific to these uses. Some cities choose to allow only non-dispensary businesses,such as storage or distribution facilities. Others allow a limited amount of dispensaries.While others still,particularly cities with a large amount of industrial properties,are focusing on regulations to attract testing,manufacturing,and/or indoor and mixed-light cultivation businesses. Local Authority Chapter 20 of AUMA sets out regulations related to local control.Specifically,section 26200 of the Business and Professions Code states: (a)Nothing in this division shall be interpreted to supersede or limit the authority of a local jurisdiction to adopt and enforce local ordinances to regulate businesses licensed under this division,including,but not limited to,local zoning and land use requirements,business license requirements,and requirements related to reducing exposure to second hand smoke,or to completely prohibit the establishment or operation of one or more types of businesses licensed under this division within the local jurisdiction. ·State versus Local Licensing State licensing authorities shall not approve an application for a state license under AUMA if it would violate a local ordinance or regulation adopted pursuant to proposed Business and Professions Code section 26200.(Bus.&Prof Code §26055(e).)But unlike the MCRSA,the Act does not require applicants seeking a state license to provide documentation that they have permission from local authorities to operate their cannabis business.Local jurisdictions may no longer rely on “permissive zoning”policies (the idea that unless a land use is specifically allowed it is presumed to be prohibited) regarding recreational marijuana uses.If the City desires to restrict or prohibit certain commercial marijuana activities,specific zoning code language should be enacted to ensure the state licensing City of South San Francisco Printed on 9/11/2017Page 5 of 9 powered by Legistar™ File #:17-110 Agenda Date:1/11/2017 Version:2 Item #:2. marijuana activities,specific zoning code language should be enacted to ensure the state licensing authorities do not issue licenses to prohibited businesses. A city may prohibit all or some of marijuana related activities in the marijuana production cycle.A city may also use its local land use authority to limit the location of various marijuana commercial activities within the city.For those activities allowed,a city may set up local licensing requirements,as well as life-safety code requirements as needed to ensure public safety. ·State and Local Taxes Starting January 1,2018,AUMA implements an excise tax on retail marijuana sales,and a tax on the cultivation of marijuana.The excise tax is 15%of the gross retail sales receipts for medical and nonmedical marijuana. The cultivation tax will be imposed on harvested marijuana,with the exception of personal cultivation. The tax is nine dollars and twenty-five cents ($9.25)per dry weight ounce.The tax for marijuana leaves is two dollars and seventy-five cents ($2.75) per dry weight ounce. The excise tax and the cultivation tax shall be “in addition to any other tax imposed by a city,county or city and county,”but medical marijuana purchases by qualified patients and caregivers will be exempt from all sales and use taxes. (Rev. & Tax. §§ 34021 and34011.) The City may,if approved by four-fifths of the City Council,place a tax measure before voters related to marijuana businesses in a regular election year.A simple majority of voters is required to pass a marijuana tax,if it is proposed as a general tax;two-thirds is required if it is proposed as a tax for a specific or dedicated purpose.Any local tax would be in addition to the 15%state excise tax that will be assessed on all medical and recreational marijuana purchases. As noted above,medical marijuana sales are exempt from state and local sales and use taxes (but not a local business license or excise tax).The state is also exploring the idea of allowing nonprofit marijuana businesses to obtain special licenses and be exempt from all taxes. State analysts estimate state taxes could generate up to $1 billion annually to be used for expenses including: ·Covering the state’s cost of running the program and enforcing its regulations ·Allowing state universities to research and evaluate the impact of Proposition 64 on issues including health and safety ·Enabling the California Highway Patrol to develop processes for determining when a motorist is impaired by marijuana use ·Programs to reduce driving under the influence of marijuana ·Grants to local health departments and community-based nonprofits for job placement,mental health treatment, drug abuse treatment and legal services for low-income communities ·Youth programs, including drug education, prevention and treatment ·Programs to prevent and reduce environmental damage from illegal marijuana producers ·Grants to local governments to assist with law enforcement,fire protection,and other local programs addressing health and safety regarding the implementation of AUMA (These particular grants will not be available to a local jurisdiction that prohibits any type of personal cultivation or City of South San Francisco Printed on 9/11/2017Page 6 of 9 powered by Legistar™ File #:17-110 Agenda Date:1/11/2017 Version:2 Item #:2. retail marijuana sales allowed under the Act. Revenue & Tax Code § 34019(f)(3)(C).) In the beginning of 2016,there were approximately 20 cities in California with marijuana taxes on the books.The November 2016 election brought 63 local marijuana taxes before voters -61 passed.The vast majority of these are business license or business excise taxes that tax a percentage of gross receipts.Some cities,such as Davis,will only tax recreational marijuana businesses.Others,such as Cloverdale,have established a tax that allows for the City Council to set a different rate for different business types.The tax rates are generally between about 4-10%.The City of Sacramento,for example, has a tax rate of 4%and collects about $2.9 million in revenues annually from its marijuana businesses (some 30 retail dispensaries).Many cities have taxes in place,but are not implementing them because policy discussions are still under way regarding whether to allow commercial marijuana businesses. The County of San Mateo estimates that the recreational marijuana business will generate $100 million in annual sales countywide.Based on South San Francisco’s pro rata population,taxable sales in South San Francisco is estimated to be $8.4 million.The most common form of excise tax that was proposed by local agencies and approved by residents in November 2016 was a business license tax,based on a percentage of gross receipts,with the highest excise tax at 20%.If a similar tax were in place in South San Francisco, the estimated annual tax revenue would be approximately $1.7 million. Federal Law Marijuana remains an illegal Schedule I controlled substance under the Federal Controlled Substances Act. Under federal law, cultivation, possession, use, and sale of marijuana are criminal acts. However,federal officials have emphasized in recent years that their enforcement efforts in California will focus on individuals and organizations who:transport marijuana to states where it is not legal,allow minors to access the drug,and use the marijuana trade to fund criminal activities.This information has come in the form of an official memorandum from the U.S.Attorney’s Office,under the authority of the U.S.Attorney General. It is unknown how the new Trump administration’s U.S.Attorney General and new U.S.Attorneys will approach this issue. Marijuana related activity is still subject to federal prosecution,regardless of any protections granted by state law.Should the City choose to allow commercial marijuana activities,any local regulations should prioritize the guidelines issued by the Department of Justice,including public health and safety,protecting minors,and the prevention of illegal trafficking of marijuana. As marijuana remains prohibited under federal law,banks are not allowed to accept deposits from marijuana sales.Therefore,marijuana remains an all cash business,increasing concerns related to internal control, accountability and susceptibility to robbery or burglary. Comparison with Medical Marijuana Law In 1996,California voters enacted The Compassionate Use Act (the CUA).Codified in the State’s Health and Safety Code,it provides qualified patients with an affirmative defense to criminal charges for possession of a reasonable amount of marijuana needed for medical conditions.In 2004,the California Legislature adopted the Medical Marijuana Program Act (the MMP).This law enhanced access to medical marijuana for qualified patients and caregivers by allowing for collective, cooperative cultivation projects (known as “dispensaries”). Neither the CUA nor the MMP prevent a city from enacting nuisance and land use regulations regarding City of South San Francisco Printed on 9/11/2017Page 7 of 9 powered by Legistar™ File #:17-110 Agenda Date:1/11/2017 Version:2 Item #:2. Neither the CUA nor the MMP prevent a city from enacting nuisance and land use regulations regarding marijuana cultivation.The California Supreme Court held in 2013 that neither the CUA nor the MMP grant qualified patients a “broad right”to access medical marijuana and therefore local governments may regulate and prohibit dispensaries.Later in 2013,the Third District Court of Appeal,in Maral v.City of Live Oak, upheld the City of Live Oak’s ordinance prohibiting all cultivation of marijuana,for any purpose,within the city.The court held that “there is no right -and certainly no constitutional right -to cultivate medical marijuana.”A city,the court held,may prohibit all cultivation of marijuana within its boundaries pursuant to its police power.Proposition 64 as detailed above,however,does specifically grant individuals limited indoor personal cultivation rights that cities may not limit. In 2015,the Legislature passed the Medical Cannabis Regulation and Safety Act (“MCRSA”).It establishes a regulatory and licensing structure for medical marijuana businesses in California.Until the enactment of MCRSA,all marijuana “businesses,”with the exception of cooperatives and collectives (dispensaries and their associated growers),were illegal.MCRSA changed that by creating licensing categories for every aspect of the industry,including cultivation,testing,distribution,and sales.MCRSA allows for seventeen different licenses for medical marijuana, covering all steps in the production cycle. MCRSA also established a new regulatory agency,the Bureau of Medical Cannabis Regulation,within the Department of Consumer Affairs to create and implement the licensing regulations.Regulations for cultivation businesses will be developed by the Department of Food and Agriculture.Retail business regulations will be developed and implemented by the Department of Consumer Affairs,and the Department of Public Health will establish regulations for the manufacturing (extraction and edibles businesses) and testing businesses. The passage of Prop 64 did not affect the regulatory structure established for commercial medical marijuana activities,and in fact mirrors it in many ways.The City’s Zoning Code,in Chapter 20.410,prohibits medical marijuana businesses in all zones of the City. Next Steps The City Council has the authority to regulate the cultivation,processing and use of marijuana in South San Francisco,subject to the limitations discussed above.Staff is seeking direction concerning which areas,if any, Council may want to regulate under AUMA and MCRSA: Personal cultivation, processing and use of marijuana ·Indoor Cultivation and Processing:Under AUMA,the City must allow for the personal cultivation of up to six marijuana plants inside a private residence,but may create reasonable regulations for indoor cultivation and processing.These could include a permit requirement,proof of property owner permission,security requirements,or other reasonable requirements related to health and safety. ·Outdoor Cultivation:The City may outright prohibit outdoor cultivation of medical and recreational marijuana,or may allow some cultivation with regulations.Absent City regulation, outdoor cultivation of recreational marijuana (up to six plants)on private property is allowed as long as it is in a locked space not visible from a public place,even if close to a school,park or other location where use is prohibited. ·Personal Use:Marijuana may not be smoked in public places,anywhere tobacco smoking is prohibited,or within 1,000 feet of a school,day care center,or youth center where children are City of South San Francisco Printed on 9/11/2017Page 8 of 9 powered by Legistar™ File #:17-110 Agenda Date:1/11/2017 Version:2 Item #:2. prohibited,or within 1,000 feet of a school,day care center,or youth center where children are present,and it is illegal under AUMA to possess or smoke marijuana on school grounds,or at day care or youth centers when children are present.The City currently bans tobacco smoking on Grand Avenue and in multi-unit residential units; thus, smoking marijuana is also prohibited in these venues. Commercial cultivation, processing, distribution and selling of marijuana The City may completely prohibit all commercial marijuana uses in South San Francisco,or allow some commercial marijuana activities.If the City takes no action,or is silent as to one or more aspects of commercial marijuana operations,then there is a risk that it is assumed the use is allowed by the City.If the City Council is interested in potentially allowing some commercial marijuana uses,the following should be considered: ·Types of uses allowed (indoor cultivation,outdoor cultivation,mixed-light cultivation,indoor storage or distribution, testing facilities, dispensaries, or delivery; medical, nonmedical, etc.) ·Zones where each use is allowed (freeway commercial, mixed industrial, commercial mixed use) ·Development standards (maximum square footage,distance requirements from sensitive uses, etc.) ·Operational standards (security plans and measures,odor control,employee background checks, record keeping, etc.) ·Permit process (minimum requirements,fees,term,nontransferable,approval authority, revocation, etc.) It is advisable to have regulations on commercial marijuana uses in place prior to January 2018 when the state will begin issuing licenses. Temporary Moratorium State law authorizes adoption of an interim urgency ordinance which would take effect immediately to preserve the public peace,health or safety.The City could enact a moratorium to immediately prohibit all commercial cultivation,processing,laboratory testing,labeling,storing,wholesale distribution and retail sale,and personal marijuana cultivation and processing,with the exception of the minimum personal cultivation allowed by AUMA (six plants indoors),allowing staff time develop health and safety regulations consistent with Council direction. It is advisable to have personal cultivation regulations in place by April 1,2017,prior to the planting season for outdoor cultivation. CONCLUSION It is recommended that the City Council consider this report,direct questions to staff,and give direction to staff on possible next steps related to personal marijuana cultivation regulations and/or commercial marijuana uses in the City. Attachment: Marijuana Study Session Power Point City of South San Francisco Printed on 9/11/2017Page 9 of 9 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:17-277 Agenda Date:4/12/2017 Version:1 Item #:9. Report regarding a study session on regulating retail cannabis businesses.(Rozalynne Thompson,Associate Planner and Deborah Gill, Special Projects Manager) RECOMMENDATION It is recommended that the City Council receive information from a study session on potential retail cannabis businesses, and provide direction to staff regarding next steps. BACKGROUND On November 8,2016,California voters approved Proposition 64,which is the initiative known as the Adult Use of Marijuana Act (AUMA).Subject to local and state restrictions and regulations,AUMA generally legalizes the nonmedical,recreational use of cannabis by persons 21 years of age and over.Under AUMA,a person 21 years of age or older may now possess,process,transport,purchase,or give away (to persons 21 years of age or older)not more than 28.5 grams of cannabis in the non-concentrated form and not more than eight grams of cannabis in a concentrated form (such as pills,oils,etc.).Note that the AUMA provides that local jurisdictions continue to have full authority to regulate or prohibit any business establishment dispensing recreational or medical cannabis. AUMA allows local jurisdictions the authority to adopt and enforce local ordinances to regulate cannabis businesses,including,but not limited to,local zoning and land use requirements,business license requirements, and requirements related to reducing exposure to second hand smoke,or to completely prohibit the establishment or operation of one or more types of businesses licensed under the AUMA.If a local jurisdiction fails to adopt local ordinances,cannabis businesses will fall under state law by default and could obtain state licenses starting January 1, 2018. On January 25,2017,the City Council adopted an interim urgency ordinance placing a moratorium on all commercial cannabis activity within the City of South San Francisco in order to comprehensively study the issue. On March 8, 2017, the City Council extended the moratorium for an additional ten months and 15 days. Staff is requesting direction from City Council on developing regulations applicable to commercial cannabis businesses.To do so,two separate study sessions will be held to address two categories of commercial cannabis businesses:1)retail businesses (dispensaries),and 2)cultivation,testing,distribution,delivery,and manufacturing businesses.The focus of this study session is the potential regulation of retail cannabis businesses. Regulation of Retail Cannabis Businesses AUMA creates a comprehensive state regulatory and licensing structure governing commercial nonmedical City of South San Francisco Printed on 5/3/2017Page 1 of 7 powered by Legistar™ File #:17-277 Agenda Date:4/12/2017 Version:1 Item #:9. AUMA creates a comprehensive state regulatory and licensing structure governing commercial nonmedical cannabis activities,including the commercial cultivation,testing,manufacturing,distribution,and retail sale of nonmedical cannabis.Under this structure,cities may adopt local ordinances regulating or completely prohibiting nonmedical cannabis businesses,including retail cannabis businesses (dispensaries).The state regulations being developed under AUMA will be minimum requirements.If commercial cannabis operations are permitted in a jurisdiction, the local agency may establish additional standards. Currently,Section 20.410.003 the City Zoning Ordinance prohibits medical cannabis cooperatives and collectives,but does not specifically encompass all commercial cannabis license categories established by the recently adopted state laws.Under the AUMA,the City may regulate or prohibit retail cannabis businesses altogether.If the City Council determines to regulate rather than prohibit retail cannabis businesses,the following are some topics staff recommends for City Council consideration: ·How many retail cannabis establishments (dispensaries), if any, should be allowed in the City? ·In which zoning districts should retail cannabis businesses be allowed?Is there interest in creating a specified zone, or overlay district, where retail cannabis businesses would be allowed? ·What are appropriate locations for retail cannabis businesses relative to sensitive uses,such as schools and parks?Should a minimum distance from sensitive uses between retail cannabis businesses and sensitive uses be established? ·Should retail cannabis businesses locate at a minimum distance from other cannabis businesses? ·What should the application procedure and permitting process look like for cannabis businesses?Many cities have different processes for retail/dispensary operations and for other commercial cannabis businesses.For example,the dispensary permit process may be more like a request for proposals process with final approval given by the Planning Commission or City Council,while other businesses may submit applications for a discretionary non-transferable special use permit. ·Should aesthetic standards be imposed on retail cannabis uses? What should those standards consider? ·What operational standards to address potential noise,odor,security,traffic,and fire safety concerns should be imposed? ·Should there be additional signage regulations applicant to retail cannabis business limiting the number and size of signs? ·Should the businesses also provide delivery? Land Use Controls Based on research of cannabis-related business regulations of several jurisdictions in Colorado,Washington, City of South San Francisco Printed on 5/3/2017Page 2 of 7 powered by Legistar™ File #:17-277 Agenda Date:4/12/2017 Version:1 Item #:9. Based on research of cannabis-related business regulations of several jurisdictions in Colorado,Washington, Oregon,and California,the common land use mechanisms used to regulate retail cannabis business are siting limitations (zoning),operational standards,minimum distance requirements,signage regulations,limitation of the number of facilities, and aesthetic controls. Each land use control is outlined below. Zoning In siting retail cannabis businesses in zoning districts, the above mentioned jurisdictions considered: ·Uses analogous to retail cannabis businesses, ·The potential impacts of strong odors, ·The temptation for theft, ·The safety and security issues associated with all-cash transactions, and ·The proximity to sensitive land uses, especially residential districts. If the City decides to allow retail cannabis businesses,City Council may wish to consider locating them in districts farther from residential districts that also allow retail uses. The two districts that fit these criteria are: ·The “Freeway Commercial”district,which provides areas for regional-serving retail uses and prohibits residential development, and ·The “Mixed Industrial” district, which allows retail sales, but prohibits residential development. Please see Attachment 1,which shows a map of the city indicating which areas are within the Freeway Commercial and Mixed Industrial zoning districts. Operational Standards The City may consider developing cannabis business operating standards.These may be part of the Zoning Code amendments,or could also be addressed in Title 6 of the Municipal Code,“Business Regulations”.These standards help ensure that cannabis businesses are “good neighbors”to the communities in which they are located by reducing potential negative impacts. Operational standards typically involve specific requirements designed to mitigate impacts of a particular use on surrounding properties. The following operational standards may be considered: ·Limiting the operational hours, ·Conducting background checks of the business operators and their employees, ·Requiring extensive security measures, and ·Requiring a ventilation system to control and contain odors. AUMA includes security provisions that require cannabis retailers and microbusinesses to implement security measures,including but not limited to,restricting access to areas containing cannabis products and storing products in secure and locked areas to prevent theft.Other security measures that could be considered are the following: ·Video cameras, City of South San Francisco Printed on 5/3/2017Page 3 of 7 powered by Legistar™ File #:17-277 Agenda Date:4/12/2017 Version:1 Item #:9. ·Lighting, ·Requiring a behind the counter dispensary environment, ·Safes, ·Hired on and off-site security, including a minimum number of security officers, ·Excessive calls for service, and ·Limiting amount of product. In addition,the City could require these businesses to submit a security plan for review by the Police Chief as part of the permitting process. Cannabis retail licenses,along with the other 18 AUMA licenses,would be valid for one year.The City can add performance standards,when if not met would prevent re-issuing of a license.Cannabis retailers may not hold tobacco or alcohol retail licenses concurrently. Distance Requirements AUMA requires that commercial marijuana businesses are located at least 600 feet from K-12 schools,day care centers,or youth centers that are in existence at the time the license is issued.Many jurisdictions go beyond AUMA with a larger common minimum distance requirement.Please see Attachment 2 which shows the areas within the Freeway and Commercial and Mixed Industrial zoning district that comply with the minimum distance requirement under the AUMA. The City may adopt a more restrictive distance requirement than the AUMA and seek to distance cannabis businesses from: ·Parks, ·Churches, ·Drug and alcohol rehabilitation facilities, ·Group homes, ·Any publicly owned or maintained properties, and ·Any other sensitive uses as deemed appropriate. Staff recommends including the additional sensitive areas listed above in this distance requirement.Please see Attachment 3 which shows the areas within the Freeway Commercial and Mixed Industrial zoning district that comply with the minimum distance requirement under the AUMA as well as excluding the above sensitive areas. Of these possible sites,please see Attachment 4 which shows where staff would recommend an area to consider for retail cannabis locations.Staff would suggest this area as it is not within a residential area or the biotech core,away from sensitive areas,and it is comparably easier to patrol and maintain public safety than other possible areas. City of South San Francisco Printed on 5/3/2017Page 4 of 7 powered by Legistar™ File #:17-277 Agenda Date:4/12/2017 Version:1 Item #:9. Space and Distance Requirements Many jurisdictions also limit the number of cannabis businesses with the aim of balancing the demand to purchase cannabis while controlling the possibility of the proliferation of such uses in any one area. In the City, existing distance requirements for other sensitive uses are: ·Other Financial Services (aka “Payday Lenders”) - 1,000 feet (20.350.011) ·Adult Oriented Businesses - 600 feet (20.350.003) ·Convenience store that sells alcohol - 1,000 feet (20.350.014) ·Massage - 500 feet (20.350.026.5) ·Tattoo - 500 feet (20.350.037) ·Pawnbroker - 1,000 feet (20.350.039) A distance requirement is very common for cannabis retail businesses (dispensaries and storefronts).Also,the number of retail cannabis businesses in other jurisdictions was either capped citywide or limited per geographic area or zoning district.Some jurisdictions had a dual cap system where retail cannabis businesses were limited citywide and by geographic area.A dual cap system could limit the proliferation of cannabis businesses while also incentivizing their equitable distribution throughout geographic areas within the City.The following limitations could be considered: ·Cannabis businesses are restricted to specific zones as described above, ·Spaced at a minimum of 1,000 feet from each other so as to avoid excessive concentration, and ·Retail locations are permitted at a maximum of 1,500 to 2,000 square feet. Signage Most of the cities surveyed regulated signage.Under AUMA,licensees may not advertise or market cannabis so as to encourage persons under the age of 21 years to consume.Advertising signs may also not be located with 1,000 feet of schools,day care centers,or youth centers.In addition,the City Council may wish to consider the following additional standards: ·Not allowing neon signs, ·Signs no larger than 20 feet, and ·Requiring design review. Aesthetic Controls City regulations could include requirements for landscaping,fencing,and building design.It is unlikely that cannabis operations will construct new buildings,and will instead occupy existing buildings.Any operations must comply with the existing Zoning Ordinance design standards applicable to the zoning district. In addition, the City Council could consider: ·Prohibiting security bars from the exterior of the building, ·Prohibiting frosted glass from being used, and City of South San Francisco Printed on 5/3/2017Page 5 of 7 powered by Legistar™ File #:17-277 Agenda Date:4/12/2017 Version:1 Item #:9. ·Businesses will be subject to design review and approval as part of the permitting process. Delivery If retail cannabis businesses were permitted within the City,the opportunity for businesses to deliver could be considered.Restricting a retailer to on-site sales without delivery would impact the value of the business;if permitting on-site sales,it may make sense to include a delivery option as well.Another option to consider would be to permit retail cannabis businesses that are delivery only without on-site sales.This could mitigate issues concerning signage, aesthetic controls, and potentially other neighborhood concerns. Financial Impact In addition to California state and local sales tax of 9.25 percent,and California state 15 percent excise tax, local jurisdictions can choose to enact a local excise tax on retail cannabis.Most local jurisdictions with a cannabis business tax have enacted a general tax in the form of an excise tax on gross receipts.Such a tax would require a public hearing of the ordinance and voter approval in order to comply with Proposition 218, requiring 2/3 approval from City Council and 50 percent plus one of a ballot vote.Jurisdictions also have a special cannabis retail business permit,which helps to alleviate the cost burden on the jurisdiction for regulation and processing. Excise Tax The attached table (Attachment 3:Estimated Local Excise Tax)is an estimation of the annual local tax revenue that could be generated from retail cannabis per year.The estimate is based on the County's estimate that cannabis is a $100 million industry,and that South San Francisco could receive a pro-rata share of the industry based on population.Colorado,Washington,and Oregon have taken steps to lower their excise tax after their initial rates did not reduce the black market sufficiently.Staff recommends setting the excise tax at 10 percent, which would generate an estimated annual revenue of $850,000.This tax rate is within the middle range of other agencies that have passed a cannabis excise tax in 2016.If enacted,staff recommends commissioning a study in order to calculate the most effective local tax rate. Business License Permit The City’s general business license tax would apply.The current tax rate is $88.75,plus $18 dollars multiplied by the number of employees with a cap of $100,000 per location.The City has the option to create a special business license permit for retail cannabis businesses.A retail business permit in other locales costs $1,300 - $5,000 per year,and cities of comparable size in Colorado charge approximately $2,000.If the City were to move forward,staff would recommend commissioning a study in order to calculate the cost burden before final recommendation. Attachments: 1.Map - Freeway Commercial and Mixed Industrial Zoning Districts 2.Map -Areas Within the Freeway Commercial and Mixed Industrial Zoning District that Comply with AUMA Minimum Distance Requirement 3.Map -Areas Within the Freeway Commercial and Mixed Industrial Zoning District that Comply with City of South San Francisco Printed on 5/3/2017Page 6 of 7 powered by Legistar™ File #:17-277 Agenda Date:4/12/2017 Version:1 Item #:9. AUMA Minimum Distance Requirement and Sensitive Areas 4.Map - Suggested Siting Area 5.Local Excise Tax Estimates 6.Powerpoint presentation City of South San Francisco Printed on 5/3/2017Page 7 of 7 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:17-188 Agenda Date:7/26/2017 Version:2 Item #:4. Study session:cannabis -testing and manufacturing businesses.(Rozalynne Thompson,Associate Planner and Deborah Gill, Special Projects Manager) RECOMMENDATION It is recommended that the City Council hold a study session on potential testing and manufacturing cannabis businesses within the City, and provide direction to staff regarding next steps. BACKGROUND/DISCUSSION On November 8,2016,California voters approved Proposition 64,which is the initiative known as the Adult Use of Marijuana Act (AUMA).Subject to local and state restrictions and regulations,AUMA generally legalizes the nonmedical, recreational use of cannabis by persons 21 years of age and over. AUMA created a comprehensive state regulatory and licensing structure governing commercial nonmedical cannabis activities,including the commercial cultivation,testing,manufacturing,distribution,and retail sale of nonmedical cannabis. On April 4,2017,Governor Brown released a budget trailer bill (“Trailer Bill”)that aimed to reconcile the existing medical marijuana statutory framework under the Medical Marijuana Regulation and Safety Act (MMRSA)and the recreational statutory framework adopted under the AUMA.After some revision,the state Senate and Assembly passed a modified version of the original proposal in the form of AB 110/SB 94 on June 15th and the Governor signed it into law. Some important elements of the Trailer Bill include: •Permits co-location of medical and adult-use commercial facilities-Medical and adult-use commercial facilities may be located on the same premises,so long as licensees obtain separate medical and non- medical licenses for each use. •Preservation of the state Medical ID Card-Many cities were pleased with this element of the Trailer Bill because jurisdictions were concerned that elimination of this requirement would encourage individuals to migrate to medical cannabis to avoid paying sales and use tax, regardless of why they use cannabis •Permits non-storefront retailers-Non-storefront retail operations are permitted.Under this category of use,licensees must have licensed physical locations,but such locations may be closed to the public with all sales conducted exclusively by delivery. •Fire and safety standards-The Trailer Bill includes language clarifying that local fire officials retain authority to carry out fire and life-safety requirements. •Local Control-The Trailer Bill includes language specifying that it shall not be interpreted to supersede or limit the authority of local jurisdictions to adopt and enforce local ordinances to regulate state- City of South San Francisco Printed on 7/24/2017Page 1 of 9 powered by Legistar™ File #:17-188 Agenda Date:7/26/2017 Version:2 Item #:4. or limit the authority of local jurisdictions to adopt and enforce local ordinances to regulate state- licensed businesses,including,but not limited to,local zoning and land use requirements,business license requirements,and requirements related to reducing exposure to secondhand smoke,or to completely prohibit the establishment or operation of one or more types of state-licensed businesses within local jurisdictions. •Residency Requirements-The Trailer Bill eliminated the California residency requirement for commercial cannabis licensees. •Local verification process-Local jurisdictions are required to provide the Bureau of Cannabis Control with a copy of any local ordinances regulating commercial cannabis and the name of a contact person to serve as liaison between the state licensing entities and the local jurisdiction. On January 25,2017,the City Council adopted an interim urgency ordinance placing a moratorium on all commercial cannabis activity within the City of South San Francisco in order to comprehensively study the issue. On March 8, 2017, the City Council extended the moratorium for an additional ten months and 15 days. On January 11,2017 City Council held a study session on an overview and update on cannabis laws.Retailer dispensary licenses (Type 10)were discussed at the April 12,2017 City Council study session.The focus of this study session is the potential regulation of testing and manufacturing cannabis businesses,state license types 6, 7, and 8. If the City Council determines to regulate rather than prohibit cannabis businesses,the following are some topics staff recommends for City Council consideration regarding cannabis manufacturing and testing: •Would testing and manufacturing be allowed in the city? And if yes, in which zones? •Would businesses be allowed within the biotech core? •Would the city require businesses locate at a minimum distance from each other, or from sensitive uses? •Would the City impose limits to the size of operations? •What ventilation,noise,odor,lighting,electrical,water,security and other operational standards should be imposed to address fire and safety concerns? State Licenses State cannabis manufacturing is defined as to compound,blend,extract,infuse,or otherwise make or prepare a cannabis product. There are two types of licenses: •Type 6 =Manufacturer 1,sites that manufacture cannabis products using nonvolatile solvents,or no solvents, and •Type 7 = Manufacturer 2, sites that manufacture cannabis products using volatile solvents. State testing licenses (Type 8)are independent licensed testing laboratories that acquire batch samples of cannabis and cannabis products from distributors prior to retail sale and tests them for: •Whether the chemical profile of the sample conforms to the labeled content of cannabis compounds, and •The presence of contaminants does not exceed the levels in the most current version of the American Herbal Pharmacopoeia monograph. City of South San Francisco Printed on 7/24/2017Page 2 of 9 powered by Legistar™ File #:17-188 Agenda Date:7/26/2017 Version:2 Item #:4. Under the Trailer Bill vertical integration,or having more than one license,is generally allowed with the exception of testing and large cultivation.Testing facilities cannot hold any other license under the Trailer Bill. In addition, large cultivation licensees cannot hold distributor or microbusiness licenses Land Use Controls . Based on research of cannabis-related business regulations of several jurisdictions in Colorado,Washington, Oregon,and California,the common land use mechanisms used to regulate cannabis manufacturing and testing businesses are siting limitations (zoning),space and distance requirements,and operational standards.Each land use control is outlined below. Zoning - Manufacturing Section 20.620.005 of the South San Francisco Municipal Code would include cannabis manufacturing with the “General Industry”use classification,which is the “manufacturing of products from extracted or raw materials or recycled or secondary materials,or bulk storage and handling of such products and materials.”Cannabis manufacturers produce a variety of goods that contain cannabis including baked goods,candies,beverages,oil, lotions,and capsules.The manufacturers produce these products by extracting various substances from cannabis plants. Staff recommends that it would be appropriate to allow manufacturing of cannabis and cannabis-infused products in the same zones that other manufacturing is permitted.The only zoning districts that cannabis manufacturing uses could be located is within the Mixed Industrial (MI)zoning district and the Business Professional Office (BPO) zoning district. The Trailer Bill requires that commercial cannabis businesses locate at least 600 feet from K-12 schools,day care centers,or youth centers that are in existence at the time the license is issued.Please see Attachment 1, which shows a map of the city indicating the MI and BPO zoning districts with areas excluded according to the Trailer Bill, and Attachment 2, which shows suggested cannabis manufacturing zones. Zoning - Testing Under the Trailer Bill,cannabis testing facilities would test samples of cannabis grown in California as well as analyze and certify the safety and potency of cannabis.Under the Municipal Code,cannabis testing facilities would be classified under the “Research and Development”use classification,which is “a facility for scientific research and the design,development,and testing of electrical,electronic,magnetic,optical,pharmaceutical, chemical, and biotechnology components and products in advance of product manufacturing.” “Research and Development”uses are currently allowed in the Business Commercial (BC),Business Professional Office (BPO),Business Technology Park (BTP),Bay West Cove Specific Plan District (BWCSPD),Downtown Transit Core (DTC),El Camino Real Mixed Use (ECRMX),El Camino Real/Chestnut Mixed Use,High Density (ECR/C-MXH),El Camino Real/Chestnut Mixed Use,Medium Density (ECR/C-MXM),ECR/C-MXM,Gateway Specific Plan (GSPD),Grand Avenue Core (GAC),Linden Commercial Corridor (LCC),Linden Neighborhood Center (LNC),Mixed Industrial (MI),Oyster Point City of South San Francisco Printed on 7/24/2017Page 3 of 9 powered by Legistar™ File #:17-188 Agenda Date:7/26/2017 Version:2 Item #:4. Commercial Corridor (LCC),Linden Neighborhood Center (LNC),Mixed Industrial (MI),Oyster Point Specific Plan District (OPSD),Terra Bay Specific Plan District (TSPD),and the Transit Office/R&D Core (TO/RD) zoning districts. Staff suggests allowing cannabis testing facilities in zones that do not contain residential areas:BC,BPO,BTP, BWCSPD,GSPD,MI,and portions of the OPSD zoning districts.Please see Attachment 3,which shows City testing zones excluding BC,BPO,BTP,BWCSPD,GSPD,MI,and portions of the OPSD zoning districts,with areas excluded according to the Trailer Bill.Please also see Attachment 4,which shows a map of the city indicating which zoning areas are suggested,with certain areas excluded in accordance with the restrictions in the Trailer Bill. Space and Distance Requirements - Manufacturing and Testing Staff would recommend that manufacturing facilities could be located in areas indicated in Attachment 2. These zoning districts have historically encompassed similar manufacturing uses. In terms of public safety,staff does not have any concerns for testing facilities as long as they adhere to security standards and have limited product. Size of Operations for Manufacturing and Testing Most of the cities in California,Colorado,Oregon,and Washington surveyed do not have a size limit for cannabis manufacturing and testing facilities.Those that do have size limitations range from 2,000 to 6,400 square feet by right;if a manufacturing or testing facility is allowed to exceed the by right limitation,it is done through a Conditional Use Permit process.It is unclear how much square footage each manufacturing or testing facility will need,because of the wide variety of cannabis products that can be manufactured and the equipment necessary for testing facilities,with each having different space requirements.Rather than set a limit on the square footage,staff recommends that the square footage for each manufacturing and testing facility should be determined through the development standards in the Zoning Ordinance and a discretionary review process.Applicants will be required to submit a business plan as well as a detailed floor plan that outlines their space needs,including manufacturing,storage,kitchen,packaging,shipping,equipment,and office areas. Operational Standards for Manufacturing and Testing Operational standards typically involve specific requirements designed to mitigate impacts of a particular use on surrounding properties.The following operational standards for manufacturing and testing facilities may be considered: •Conducting background checks of the business operators and their employees •Requiring extensive security measures, •Requiring a ventilation system to control and contain odors •Manufacturing must be within a fully enclosed building and must not be visible from the public right-of -way, •The manufacturing must comply with all applicable state and local laws, and •Abide by same requirements that are placed on other manufacturers and testing facilities in the zoning City of South San Francisco Printed on 7/24/2017Page 4 of 9 powered by Legistar™ File #:17-188 Agenda Date:7/26/2017 Version:2 Item #:4. districts where such uses are permitted. Fire/Building Codes In manufacturing cannabis products,there are two classifications:using nonvolatile solvents or no solvents (Type 6),or manufacturing products using volatile solvents (Type 7).Non-solvent extraction or non-volatile extractions include processes such as: •Mechanical extraction using screens or presses •Non-volatile chemical extraction such as water,vegetable glycerin,vegetable oils,animal fats,or food- grade glycerin Solvent processes used to extract cannabis include: •Chemical extraction using a professional closed loop CO2 gas extraction systems •Chemical extraction using a volatile solvent such as n-butane (hydrocarbons,which includes butane and propane) and ethanol; is volatile and flammable In the Trailer Bill,manufacture of cannabis products is generally permitted if it is done using non-toxic,non- flammable,or solventless processes.If a manufacturing process utilizes volatile solvents,then it is only permitted if it is conducted exclusively within a closed-loop system that meets all of the following requirements: i.The system uses only solvents that are generally recognized as safe pursuant to the federal Food, Drug, and Cosmetic Act (21 U.S.C. Sec. 301 et seq.). ii.The system is designed to recapture and contain solvents during the manufacturing process,and otherwise prevent the off-gassing of solvents into the ambient atmosphere to mitigate the risks of ignition and explosion during the manufacturing process. iii.A licensed engineer certifies that the system was commercially manufactured,safe for its intended use,and built to codes of recognized and generally accepted good engineering practices, including,but not limited to,the American Society of Mechanical Engineers (ASME),the American National Standards Institute (ANSI),Underwriters Laboratories (UL),the American Society for Testing and Materials (ASTM), or OSHA Nationally Recognized Testing Laboratories (NRTLs). iv.The system has a certification document that contains the signature and stamp of a professional engineer and the serial number of the extraction unit being certified. In Washington,extraction equipment certification requires an engineer peer review (EPR).An EPR is a certification from a licensed engineer who meticulously reviews the equipment in question for safety, functionality and to ensure it meets applicable national safety codes.Other states like Colorado and Nevada also require similar EPR reports,with the city of Denver having the most meticulous compliance requirements in the nation.Staff would recommend additional safety requirements similar to Washington’s be required for all manufacturing equipment if manufacturing were to be permitted in the City. For hydrocarbons,staff would recommend facilities have a separate room for running a light hydrocarbon extractor,with spark-proof ventilation,electrical and fireproofing that conforms with National Fire Protection Association code,as well as a Underwriters’Laboratories (UL)listing classification and the above mentioned City of South San Francisco Printed on 7/24/2017Page 5 of 9 powered by Legistar™ File #:17-188 Agenda Date:7/26/2017 Version:2 Item #:4. Association code,as well as a Underwriters’Laboratories (UL)listing classification and the above mentioned EPR. The building and fire code requirements for manufacturing cannabis will be based on current codes at the time the application has been filed.A business license application that satisfies the requirements of the City will be reviewed and upon the completion of the review the occupancy classification will be determined by the Chief Building Official.According to the California Building Code,both volatile and non-volatile cannabis manufacturing would likely fall under F1 -moderate hazard factory industrial.It is similar to the use of manufacturing of hemp and tobacco products, where hazardous materials are kept within a closed system. The building and fire code requirements for cannabis testing facilities would be different than manufacturing facilities.The likely quantity of hazardous materials is probably going to be relatively low and similar to that found in laboratory type uses,similar to those found in biotech companies.Therefore,staff would consider this use similar to that of L occupancy (Laboratory use).L occupancies allow slightly higher amounts of hazardous materials than B occupancies,like an office,but much less than that of H occupancy,which allows a far greater amount of hazardous materials.Staff has no building code or safety concerns for testing facilities,as long as the business’building would be suitable for its intended use,e.g.laboratory space,and adheres to building and fire codes. Security The City could require cannabis businesses to submit a security plan for review by the Chief of Police as part of the permitting process. Other security measures that could be considered are the following: •Video cameras •Alarms •Lighting •Safes •Hired on and off-site security, including a minimum number of security officers •Updated window, door, and skylight standards •Limiting amount of product Staff recommends mandating ventilation systems and prohibiting physical and online signage advertising the location of a cannabis manufacturing or testing facility to the general public.Discouraging public facing signage for manufacturing and testing cannabis businesses would be possible through performance standards adopted by ordinance. Examples include: -No on-street signage or other building markings, -No signage on vehicles, and -No physical addresses on websites,business cards,and promotional materials (could say something like “located in South San Francisco, serving South San Francisco…”, or list a P.O Box) State cannabis licenses will be valid for one year.Staff recommends that local approvals also be valid for one year at a time.The City can add performance standards,when if not met would prevent re-issuing of a license. State regulation also requires the implementation of a track and trace program which includes an electronic City of South San Francisco Printed on 7/24/2017Page 6 of 9 powered by Legistar™ File #:17-188 Agenda Date:7/26/2017 Version:2 Item #:4. State regulation also requires the implementation of a track and trace program which includes an electronic seed to sale software tracking system with data points for the different stages of commercial activity including, but not limited to, cultivation, harvest, processing, distribution, inventory, and sale. Testing Specific Standards Licensed cannabis operators are authorized to have in-house (non-Type 8)testing laboratories to provide testing of cannabis and cannabis products obtained from third party cannabis cultivators and manufacturers before those products are sent to Type 8 testing laboratory for final, presale quality assurance. The Trailer Bill requires product testing by independent testing labs for labeled content of cannabis compounds and contaminants (such as pesticides and mold),a chain of custody protocols,and use of standard operating procedures to confirm or refute bad test results.Remains of the testing samples are required to be destroyed, and a lab is required to notify the Bureau of Cannabis Regulation within 24 hours of any change in the testing lab’s accreditation. Testing laboratories would be able to test both medical and adult-use cannabis. Under the Trailer Bill,the responsibility for testing cannabis or cannabis product falls on the licensee taking the product to market.In terms of food safety issues for the manufactured products,the Trailer Bill states The Department of Public Health will license and oversee manufacturing and testing,ensuring consumers receive a safe product. FUNDING California State Taxes Effective January 1,2018,all retail sales,medical and non-medical,will be subject to a 15 percent California state excise tax. Tax revenues will be allocated to the California Marijuana Tax Fund where proceeds will be directed towards repaying State agencies for regulatory costs not covered by license fees,and providing grants to California public universities to study and evaluate the implementation of the act.Remaining tax revenues will be distributed: ·60 percent to youth programs, substance abuse education, prevention and treatment ·20 percent to environmental cleanup and remediation; and ·20 percent to programs to reduce DUIs and negative health and safety impacts resulting from cannabis legislation State cannabis tax revenue grants will be distributed to those localities where cannabis businesses are permitted, even though effects of legalization may occur in other localities as well. Local Taxes In addition to California state and local sales tax of 9.25 percent,and California state 15 percent excise tax, county and local jurisdictions can choose to enact an additional local tax on cannabis.A local general cannabis tax would require a public hearing of the ordinance and voter approval,requiring 2/3 approval from City Council and 50 percent plus one of a ballot vote.As discussed below,jurisdictions also have the opportunity to City of South San Francisco Printed on 7/24/2017Page 7 of 9 powered by Legistar™ File #:17-188 Agenda Date:7/26/2017 Version:2 Item #:4. Council and 50 percent plus one of a ballot vote.As discussed below,jurisdictions also have the opportunity to impose fees on cannabis businesses to help alleviate the cost burdens on jurisdictions for regulating these types of businesses,including the costs of audits,inspections,and processing licenses.Fees cannot exceed the reasonable costs to the City of regulating these types of businesses. Local Manufacturing or Testing Tax Many localities impose a cannabis tax on gross receipts for cannabis businesses.A few examples from other localities are: ·Monterey County -5 percent gross-receipts tax on all operations in the business of distributing, manufacturing and testing cannabis ·Sonoma County - 10 percent for all cannabis businesses in unincorporated sections of the county ·Santa Rosa - a maximum rate of 8 percent on all cannabis businesses ·Watsonville - 2.5 percent for manufacture or processing of cannabis, 10 percent for sale ·Santa Cruz - initial rate of 7 percent on cannabis businesses, a maximum rate of 10 percent ·San Leandro - 10 percent on all cannabis businesses ·Hayward - a maximum rate of 15 percent on all cannabis businesses ·Richmond - 10 percent on all cannabis businesses ·Sacramento -subject to the City’s standard 4 percent business tax,not including the licensing fee and conditional use permit described below,as well as a neighborhood impact fee,which will be established by a development impact fee study Colorado,Washington,and Oregon have lowered their cannabis tax rates after their initial rates did not sufficiently reduce the black market.Staff recommends commissioning a study in order to calculate a fair tax rate that would not promote the black market.Council may consider a cannabis impact fee to be more appropriate than a local cannabis tax that would be in addition to the local sales tax;in which case,staff would recommend an impact fee study to determine the fee. Local Manufacturing or Testing Business License Fee The City has the option to create a special business license permit fee for manufacturing and testing cannabis businesses.A local cannabis business license permit fee would require 2/3 approval from City Council,public noticing of the fees,and supportive documentation outlining the City costs justifying imposition of the fee.If the City were to move forward,staff would recommend commissioning a study in order to calculate the total cost burden of providing legal,building inspection,code enforcement,finance,fire,and police support in the City for all potential cannabis businesses before a final cost allocation recommendation per license type. For example,testing facilities will have minimal amounts of cannabis on site.This is estimated to draw less on City administrative and enforcement resources,and consequently will likely result in a lower business license fee compared to manufacturing if a framework is put in place. City of South San Francisco Printed on 7/24/2017Page 8 of 9 powered by Legistar™ File #:17-188 Agenda Date:7/26/2017 Version:2 Item #:4. Other jurisdictions have also imposed a cannabis business license fee, or are planning to: ·Monterey County has assessed a permit fee of $8,200 -$9,000,to be distributed to various agencies according to cost burden (Public Works, Planning, Environmental Services, etc.) ·Sacramento -$30,900 for non-volatile manufacturing,$15,870 for testing,as well as a conditional use permit, the cost of which ranges from $16,640 to $33,610 ·San Francisco -has established an Office of Cannabis and is planning to have an ordinance set in place by September 1, 2017, with fees set in place by December 1,2017. ·Denver - $7,500 for new manufacturing license fee, $5,500 for testing ·Las Vegas -$25,000 manufacturing permit,$10,000 testing permit plus an additional $5,000 compliance permit and $1,280 special use permit for both usage types Attachments ·Attachment 1 - Map, manufacturing zones with Trailer Bill areas excluded ·Attachment 2 - Map, suggested cannabis manufacturing zones ·Attachment 3 - Map, testing zones that do not contain residential, with Trailer Bill areas excluded ·Attachment 4 - Map, suggested cannabis testing zones ·Attachment 5 - Powerpoint presentation City of South San Francisco Printed on 7/24/2017Page 9 of 9 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:17-468 Agenda Date:9/11/2017 Version:1 Item #:2. Study Session: Cannabis - cultivation and distribution businesses.(Rozalynne Thompson, Associate Planner and Deborah Gill, Special Projects Manager) RECOMMENDATION It is recommended that the City Council hold a study session on potential cultivation and distribution cannabis businesses within the City, and provide direction to staff regarding next steps. BACKGROUND/DISCUSSION On November 8, 2016, California voters approved Proposition 64, which is the initiative known as the Adult Use of Marijuana Act (AUMA). Subject to local and state restrictions and regulations, AUMA generally legalizes the nonmedical, recreational use of cannabis by persons 21 years of age and over. AUMA created a comprehensive state regulatory and licensing structure governing commercial nonmedical cannabis activities, including the commercial cultivation, testing, manufacturing, distribution, and retail sale of nonmedical cannabis. On April 4, 2017, Governor Brown released a budget trailer bill (“Trailer Bill”) that aimed to reconcile the existing medical marijuana statutory framework under the Medical Marijuana Regulation and Safety Act (MMRSA) and the recreational statutory framework adopted under the AUMA. After some revision, the state Senate and Assembly passed a modified version of the original proposal in the form of AB 110/SB 94 on June 15, 2017 and the Governor signed it into law. On January 25, 2017, the City Council adopted an interim urgency ordinance placing a moratorium on all commercial cannabis activity within the City of South San Francisco in order to comprehensively study the issue. On March 8, 2017, the City Council extended the moratorium for an additional ten months and 15 days. Unless it is further extended, the moratorium will expire on January 23, 2018. On January 11, 2017 City Council held a study session on an overview and update on cannabis laws. Retailer dispensary licenses (Type 10) were discussed at the April 12, 2017 City Council study session. On July 26, 2017 City Council held a study session regarding the potential regulation of testing and manufacturing cannabis businesses, state license types 6, 7, and 8. Today’s study session focuses on cannabis cultivation licenses (Types 1-5), distribution (Type 11), and includes microbusinesses (Type 12). There is no Type 9 license. Local Regulation The Trailer Bill allows local jurisdictions the authority to adopt and enforce local ordinances to regulate businesses licensed under this division, including, but not limited to, local zoning and land use requirements, business license requirements, and requirements related to reducing exposure to second hand smoke, or to completely prohibit the establishment or operation of one or more types of businesses licensed under this division within the local jurisdiction. If a local jurisdiction fails to adopt local ordinances, cannabis businesses will fall under state law by default and can obtain state licenses starting January 1, 2018. However, the state cannot issue licenses in the City while the City’s moratorium is in effect. Consequently, staff would recommend that the City either adopt an ordinance to regulate or prohibit commercial cannabis uses before the end of City of South San Francisco Printed on 9/7/2017Page 1 of 7 powered by Legistar™ File #:17-468 Agenda Date:9/11/2017 Version:1 Item #:2. December 2017 to ensure that the ordinances are in effect prior to the expiration of the moratorium or adopt an ordinance to further extend the moratorium. Staff is requesting direction from City Council on developing regulations applicable to commercial cannabis businesses. The focus of this study session is the potential regulation of cultivation and distribution cannabis businesses. If the City Council determines to regulate rather than prohibit cannabis businesses, the following are some topics staff recommends for City Council consideration: 1.Is there any potential for outdoor commercial cultivation within city limits?Would cannabis cultivation be permitted in warehouses? And if so, in which zones? 2.Would cannabis distribution be permitted? 3.Would the city require businesses locate at a minimum distance from each other, or from sensitive uses? 4.Would the City impose limits to the size of operations? 5.What ventilation,noise,odor,lighting,electrical,water,security and other operational standards should be imposed to address fire and safety concerns? Cannabis Cultivation - State License Types and Zoning According to the Trailer Bill,cannabis “cultivation”is defined as “any activity involving the planting,growing, harvesting,drying,curing,grading,or trimming of cannabis”.(Cal.Bus.and Prof.Code §26001(l)).Of the 20 cannabis licenses created under the Trailer Bill,11 types of cultivation licenses will be available from the state starting January 1, 2018. The proposed state licensing scheme further divides “cultivation” into “outdoor cultivation”, “indoor cultivation”, and “mixed light cultivation” sub classifications. “Outdoor cultivation” is “cultivation using no artificial lighting”, “indoor cultivation” is “cultivation using exclusively artificial lighting, and “mixed-light,” is “cultivation using a combination of natural and supplemental artificial lighting at a maximum threshold to be determined by the licensing authority” (Cal. Bus. and Prof. Code §26061(a)-(b)), such as in greenhouses. Cultivation types are grouped by size, as described below. 1.Type 1 = Cultivation; Specialty outdoor; Small (up to 5,000 sq ft) 2.Type 1A = Cultivation; Specialty indoor; Small (up to 5,000 sq ft) 3.Type 1B = Cultivation; Specialty mixed-light; Small (up to 5,000 sq ft) 4.Type 1C =Cultivation;Specialty cottage -only one cultivation site,no bigger than 2,500 square feet of mixed-light grows with 25 plants used for outdoor cultivation,or no larger than 500 square feet of indoor operations 5.Type 2 = Cultivation; Outdoor; Small (5,001 - 10,000 sq ft) 6.Type 2A = Cultivation; Indoor; Small (5,001 - 10,000 sq ft) 7.Type 2B = Cultivation; Mixed-light; Small (5,001 - 10,000 sq ft) 8.Type 3 = Cultivation; Outdoor; Medium (10,001 sq ft - 1 acre) 9.Type 3A = Cultivation; Indoor; Medium (10,001 - 22,000 sq ft) 10.Type 3B = Cultivation; Mixed-light; Medium (10,001 - 22,000 sq ft) 11.Type 4 =Cultivation;Nursery -up to one acre;allows the growth of cannabis only as a nursery,license holders may also transport live plants City of South San Francisco Printed on 9/7/2017Page 2 of 7 powered by Legistar™ File #:17-468 Agenda Date:9/11/2017 Version:1 Item #:2. Type 5 through Type 5B licenses includes any indoor or mixed light cultivation over 22,000 square feet and any outdoor cultivation over an acre: ·Type 5 = Cultivation; Outdoor; Large, ·Type 5A =Cultivation; Indoor; Large, ·Type 5B = Cultivation; Mixed-light; Large Type 5 licenses will not be issued to anyone before January 1, 2023; in effect, there will be no large scale cultivation licenses for the first five years of legalization. The definition of cannabis “cultivation” under state law is similar to the definition of “Crop Production, Limited” in Section 20.620.005 of the South San Francisco Municipal Code, which is the “[u]se of land for agricultural production, vine or tree farm, truck garden, apiary, horticulture, vineyard, hopyard, and associated crop preparation and harvesting activities or any other type of agriculture determined to be substantially similar to the above.” Section 20.620.005 of the South San Francisco Municipal Code excludes “nurseries, greenhouses, processing, or retail sales of agricultural products” from the “Crop Production, Limited” use classification. “Crop Production, Limited” uses are permitted in the Low Density Residential (RL), Medium Density Residential (RM), High Density Residential (RH), Mixed Industrial (MI), Open Space (OS), and Parks and Recreation (PR) zoning districts. Due to the potential environmental impacts from use of pesticides and other chemicals in runoff, strong odors emitted from mature plants which can interfere with the use and enjoyment of neighboring properties by their occupants, and security concerns caused by marijuana plants grown outdoors, staff does not recommend permitting outdoor commercial marijuana cultivation. Even though outdoor commercial marijuana cultivation uses could be located within a greenhouse, greenhouse structures are easily identifiable and concerns of theft and the ability to secure cannabis crops remain prevalent. Moreover, staff suggests allowing indoor cannabis cultivation facilities in zoning districts that do not contain residential areas and are not in close proximity to sensitive receptors, which is the Mixed Industrial (MI) zoning district, subject to a conditional use permit. Please see Attachment 1, which shows a map of the city indicating which zoned areas are suggested, with areas excluded according to the Trailer Bill. Cannabis Distribution - State License Type and Zoning The Trailer Bill states "Distribution" (Type 11 = Distributor) is defined as “the procurement, sale, and transport of cannabis and cannabis products between licensees.” Cannabis distribution facilities typically receive cannabis from cultivators, transport cannabis to quality assurance and batch testing, distribute to and from manufacturing operations, and then distribute cannabis to a licensed dispensary. No retail sales can take place from a cannabis distribution facility. Sale of cannabis or cannabis products to the public via a delivery service is regulated under the Type 10 retail license. A cannabis “distribution” use is akin to “Wholesaling and Distribution” uses in Section 20.620.005 of the South San Francisco Municipal Code. Section 20.620.005 of the South San Francisco Municipal Code defines “Wholesaling and Distribution” uses as “[i]ndoor storage and sale of goods to other firms for resale; storage of goods for transfer to retail outlets of the same firm; or storage and sale of materials and supplies used in production or operation, including janitorial and restaurant supplies.” Furthermore, “Wholesaling and Distribution” uses involve transfer of products between businesses and do not offer merchandise for retail. City of South San Francisco Printed on 9/7/2017Page 3 of 7 powered by Legistar™ File #:17-468 Agenda Date:9/11/2017 Version:1 Item #:2. “Wholesaling and Distribution” uses are currently allowed in the Business Professional Office (BPO), Business Technology Park (BTP), Gateway Specific Plan (GSPD), and Mixed Industrial (MI) zoning districts. Given that distribution uses have historically operated in the BPO, BTP, GSPD, and MI zoning districts and that residential uses are not allowed in those districts, staff recommends that cannabis distribution uses be permitted in the BPO, BTP, GSPD, and MI zoning districts, subject to conditional use permit. Please see Attachment 2, which shows a map of the city indicating which zoned areas are suggested, with areas excluded according to the Trailer Bill. Cannabis Microbusiness - State License Type and Zoning The Trailer Bill defines “Microbusiness” (Type 12 = Microbusiness) as a business which cultivates cannabis on an area less than 10,000 square feet and can also be a licensed distributor, Level 1 manufacturer, and retailer. Given that a microbusiness may distribute, manufacture, and sell cannabis in addition to cultivation operations, it is recommended that microbusinesses be only allowed in zones that allow all such uses. The only zoning district that allows such uses is the Mixed Industrial (MI) zoning district. Please see Attachment 3, which shows a map of the city indicating which zoned areas are suggested, with areas excluded according to the Trailer Bill. Vertical integration, or having more than one license, is allowed under state law with the exception of testing. As discussed in previous study sessions, testing facilities cannot hold any other license under the Trailer Bill. Space and Distance Requirements The Trailer Bill requires that commercial marijuana businesses locate at least 600 feet from K-12 schools, day care centers, or youth centers that are in existence at the time the license is issued. In addition to this requirement, a minimum distance requirement between cannabis businesses may be considered. Size of Operations With respect to cannabis cultivation uses, of the cities surveyed, several limited the size of operations for cannabis cultivation uses by limiting the canopy area and the cultivation area. Several canopy area limits were based on the limits in the proposed state licensing structure, which are divided into three tiers. The first tier limits indoor canopy area from 0 to 5,000 square feet, the second tier limits indoor canopy area from 5,001 to 10,000 square feet, and the third tier limits indoor canopy area from 10,000 to 22,000. In addition to canopy area limits, several jurisdictions imposed limits on cultivation area, which is the space that is need for drying, curing, and processing as well as immature young plants, walkways, storage, and bathrooms. Approximately 1/3 of commercial cultivation space is needed for drying, curing, processing, immature young plants, walkways, storage, and bathrooms. As for distribution uses, none of the cities surveyed have a size limit for cannabis distribution uses. It is unclear how much square footage each cultivation and distribution facility will need, because of the wide variety of cannabis products that can be stored and transported, with each having different space requirements. Rather than set a limit on the square footage, staff recommends that the square footage for each distribution facility should be determined through the development standards in the Zoning Ordinance and a discretionary review process. Applicants will be required to submit a business plan as well as a detailed floor plan that outlines their space needs, including, storage, kitchen, packaging, shipping, equipment, and office areas. Operational Standards Indoor cultivation requires a high input of electricity. Requiring LED lights is one way to reduce the demand of electricity. Another requirement which the City Council could consider is requiring all energy use from the City of South San Francisco Printed on 9/7/2017Page 4 of 7 powered by Legistar™ File #:17-468 Agenda Date:9/11/2017 Version:1 Item #:2. cannabis industry be 100 percent renewable in order to be eligible for a permit. The City of Richmond is one city which has adopted this requirement. The California Water Resources Control Board is currently accepting comments on a draft Cannabis Cultivation Policy and General Order including addressing water quality, water diversion, waste discharge requirements, and environmental management plans, and will hold public hearings in October 2017. Staff would recommend any cannabis cultivation business be required to adhere to the future adopted state Cannabis Cultivation Policy. Fire/Building Codes Any cannabis cultivation businesses would need to meet theventilation,egress,and electrical requirements of the California Building Code.Building permits with plans will be required for any modification to framing, electrical,mechanical or plumbing as it relates to the indoor cultivation of cannabis.Plans will be reviewed by the Building Division and Planning department, and may be subject to a third party peer review. As cannabis distribution businesses are of a similar use to warehouses in the building code, they would need to comply with the related building and fire codes. Security The City could require these businesses to submit a security plan for review by the Police Chief as part of the permitting process. Security measures that could be considered are the following: ·Video cameras, both on site and in vehicles ·Alarms ·Lighting ·Safes ·Hired on and off-site security, including a minimum number of security officers ·Updated window, door, and skylight standards ·Limiting amount of product As these are not public facing businesses, staff recommends prohibiting physical and online signage advertising the location of a cannabis cultivation or distribution facility to the general public. Discouraging public facing signage for cannabis businesses would be possible through performance standards adopted by ordinance. Examples include: -No on-street signage or other building markings, -No signage on vehicles, and -No physical addresses on websites,business cards,and promotional materials (could say something like “located in South San Francisco,serving South San Francisco…”,or list a P.O Box) Cannabis licenses would be valid for one year. The City can add performance standards, when if not met would justify revocation or prevent re-issuing of a license. The Trailer Bill also requires licensees to implement a track and trace program, which includes an electronic seed to sale software tracking system with data points for the different stages of commercial activity including, but not limited to, cultivation, harvest, processing, distribution, inventory, and sale. City of South San Francisco Printed on 9/7/2017Page 5 of 7 powered by Legistar™ File #:17-468 Agenda Date:9/11/2017 Version:1 Item #:2. FUNDING Effective January 1, 2018, all retail sales, medical and non-medical, will be subject to a 15 percent California state excise tax. The Trailer Bill also imposes a cultivation tax of $9.25 per ounce dry-weight for flowers or $2.75 for leaves. The cultivation tax will be imposed when the cannabis or cannabis products enter the commercial marketplace. The distributor is required to collect and remit the cultivation tax at the time of distribution and create a tax liability for the excise tax at the same time. Tax revenues will be allocated to the California Marijuana Tax Fund where proceeds will be directed towards repaying State agencies for regulatory costs not covered by license fees, and providing grants to California public universities to study and evaluate the implementation of the act. Remaining tax revenues will be distributed: ·60 percent to youth programs, substance abuse education, prevention and treatment ·20 percent to environmental cleanup and remediation; and ·20 percent to programs to reduce DUIs and negative health impacts resulting from cannabis legislation. State cannabis tax revenue will be distributed to those localities where cannabis businesses are permitted, even though effects of legalization may occur in other localities as well. There is an opportunity for additional taxes to be levied at the county and/or local level. A local cannabis general tax would require a public hearing of the ordinance and voter approval in order to comply with Proposition 218, requiring 2/3 approval from City Council and 50 percent plus one of a ballot vote. Jurisdictions also have the opportunity to impose a special cannabis business permit fee, which would help to alleviate the cost burden on the jurisdiction for audits, inspections, and processing licenses. Cultivation or Distribution Tax Several counties have already imposed taxes for cultivation of cannabis: ·Monterey County assesses a cultivation tax of $15 per square foot,$2 per square foot in unincorporated land ·Lake County imposes a $1,$2,and $3 per square foot tax on outdoor,mixed-light and indoor cultivation respectively ·Sonoma county -$1-2 for outdoor,$3.75 -$11.25 for indoor,and $2.25 -$6.50 for mixed light cultivation, depending on square footage ·Humboldt County - $1 to $3 per-square-foot cultivation tax ·Salinas - $15 per square foot cultivation tax ·San Leandro - 10 percent tax on gross receipts ·Hayward - up to 15 percent tax on gross receipts ·Santa Cruz - a range of 7 - 10 percent tax on gross receipts ·Watsonville - a maximum rate of $20 per square foot Staff recommends commissioning a study in order to calculate a fair tax rate that would not promote the black market. Council may consider a cannabis business license fee to be more appropriate than a local cannabis tax that would be in addition to the local sales tax; in which case, staff would City of South San Francisco Printed on 9/7/2017Page 6 of 7 powered by Legistar™ File #:17-468 Agenda Date:9/11/2017 Version:1 Item #:2. recommend a fee study to determine the appropriate amount of the fee. Cultivation or Distribution Business License Fee The California Department of Food and Agriculture will offer 14 different cultivation licenses, ranging in cost from $60 - $4,260 depending on the type. The City has the option to create a business license fee for cultivation and distribution cannabis businesses. A local cannabis business license permit fee would require City Council approval, public noticing of the fees, and supportive documentation outlining the City costs justifying imposition of the fee. If the City were to move forward, staff would recommend commissioning a study in order to calculate the total cost burden of providing legal, building inspection, code enforcement, finance, fire, and police support in the City for all potential cannabis businesses before a final cost allocation recommendation per license type. Other jurisdictions have also imposed a cannabis business license fee: ·Sacramento -$9,700 -$24,630 for cultivation depending on size,as well as a conditional use permit,the cost of which ranges from $16,640 to $33,610 ·San Francisco -has established an Office of Cannabis and is planning to have an ordinance set in place by September 1, 2017, with fees set in place by December 1, 2017. ·Denver - $4,000 for cultivation, $4,900 for distribution ·Las Vegas -$20,000 -$30,000 cultivation permit depending on size,plus an additional $5,000 compliance permit ·Monterey County has assessed a permit fee of $8,200 -$9,000,to be distributed to various agencies according to cost burden (Public Works, Planning, Environmental Services, etc.) Attachments ·Attachment 1 - Map, suggested cannabis cultivation zones ·Attachment 2 - Map, suggested cannabis distribution zones ·Attachment 3 - Map, suggested cannabis microbusiness zones ·Attachment 4 - Powerpoint presentation City of South San Francisco Printed on 9/7/2017Page 7 of 7 powered by Legistar™ Attachment 5: California Cannabis License Types Cultivation According to MAUCRSA, cannabis “cultivation” is defined as “any activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of cannabis”. (Cal. Bus. and Prof. Code §26001(l)). Of the 20 cannabis licenses created under MAUCRSA, 11 types of cultivation licenses will be available from the state starting January 1, 2018. The proposed state licensing scheme further divides “cultivation” into “outdoor cultivation”, “indoor cultivation”, and “mixed light cultivation” sub classifications. “Outdoor cultivation” is “cultivation using no artificial lighting”, “indoor cultivation” is “cultivation using exclusively artificial lighting, and “mixed-light,” is “cultivation using a combination of natural and supplemental artificial lighting at a maximum threshold to be determined by the licensing authority” (Cal. Bus. and Prof. Code §26061(a)-(b)), such as in greenhouses. Cultivation types are grouped by size, as described below. 1. Type 1 = Cultivation; Specialty outdoor; Small (up to 5,000 sq ft) 2. Type 1A = Cultivation; Specialty indoor; Small (up to 5,000 sq ft) 3. Type 1B = Cultivation; Specialty mixed-light; Small (up to 5,000 sq ft) 4. Type 1C = Cultivation; Specialty cottage - only one cultivation site, no bigger than 2,500 square feet of mixed-light grows with 25 plants used for outdoor cultivation, or no larger than 500 square feet of indoor operations 5. Type 2 = Cultivation; Outdoor; Small (5,001 - 10,000 sq ft) 6. Type 2A = Cultivation; Indoor; Small (5,001 - 10,000 sq ft) 7. Type 2B = Cultivation; Mixed-light; Small (5,001 - 10,000 sq ft) 8. Type 3 = Cultivation; Outdoor; Medium (10,001 sq ft - 1 acre) 9. Type 3A = Cultivation; Indoor; Medium (10,001 - 22,000 sq ft) 10. Type 3B = Cultivation; Mixed-light; Medium (10,001 - 22,000 sq ft) 11. Type 4 = Cultivation; Nursery - allows the growth of cannabis only as a nursery indoors, outdoors, or mixed light; up to one acre; license holders may also transport live plants Type 5 through Type 5B licenses includes any indoor or mixed light cultivation over 22,000 square feet and any outdoor cultivation over an acre: 12. Type 5 = Cultivation; Outdoor; Large, 13. Type 5A =Cultivation; Indoor; Large, 14. Type 5B = Cultivation; Mixed-light; Large Type 5 licenses will not be issued to anyone before January 1, 2023; in effect, there will be no large scale cultivation licenses for the first five years of legalization. Manufacturing State cannabis manufacturing is defined as to compound, blend, extract, infuse, or otherwise make or prepare a cannabis product. There are two types of licenses: 15. Type 6 = Manufacturer 1, sites that manufacture cannabis products using nonvolatile solvents, or no solvents, and 16. Type 7 = Manufacturer 2, sites that manufacture cannabis products using volatile solvents. Testing 17. State testing licenses (Type 8) are independent licensed testing laboratories that acquire batch samples of cannabis and cannabis products from distributors prior to retail sale and tests them for: • Whether the chemical profile of the sample conforms to the labeled content of cannabis compounds, and • The presence of contaminants does not exceed the levels in the most current version of the American Herbal Pharmacopoeia monograph. Retail 18. State retail licenses (Type 10) are for the retail sale or delivery of cannabis or cannabis products to customers. Distribution 19. State distribution licenses (Type 11) are defined as the procurement, sale, and transport of cannabis and cannabis products between licensees. Cannabis distribution facilities typically receive cannabis from cultivators, transport cannabis to quality assurance and batch testing, distribute to and from manufacturing operations, and then distribute cannabis to a licensed dispensary. No retail sales can take place from a cannabis distribution facility. Microbusiness 20. State microbusiness licenses (Type 12) are defined as a business which cultivates cannabis on an area less than 10,000 square feet and can also be a licensed distributor, Level 1 manufacturer, and retailer. Chart of Regulations for San Mateo County Jurisdictions Jurisdiction Retail Commercial Cultivation Manufacturing Testing Distribution Delivery Atherton (medical) X X X X X X Atherton (recreational) X X X X X X Belmont (medical) X X X X X X Belmont (recreational) X X X X X X Brisbane (medical) X X     Brisbane (recreational) X X     Burlingame (medical) X(m) X(m) X(m) X(m) X(m) X(m) Burlingame (recreational) X(m) X(m) X(m) X(m) X(m) X(m) Colma (medical) X X X X X X* Colma (recreational) X X X X X X Daly City X X Silent Silent X X Daly City Silent Silent Silent Silent Silent Silent East Palo Alto (medical) X X X X X X East Palo Alto (recreational) X(m) X(m) X(m) X(m) X(m) X(m) Foster City X X X X X X Foster City (recreational) X(m) X(m) X(m) X(m) X(m) X(m) Half Moon Bay (medical) X X X Silent X Silent Half Moon Bay (recreational) X X X Silent X Silent Hillsborough (medical) Silent Silent Silent Silent Silent Silent Hillsborough (recreational) Silent Silent Silent Silent Silent Silent Jurisdiction Retail Commercial Cultivation Manufacturing Testing Distribution Delivery Menlo Park (medical) X(m) X(m) X(m) X(m) X(m) X(m)* Menlo Park (recreational) X(m) X(m) X(m) X(m) X(m) X(m) Millbrae (medical) X Silent Silent Silent Silent X Millbrae (recreational) Silent Silent Silent Silent Silent Silent Pacifica (medical) Silent X Silent Silent Silent Silent Pacifica (recreational)  X   Silent Silent Portola Valley (medical) Silent Silent Silent Silent Silent Silent Portola Valley (recreational) Silent Silent Silent Silent Silent Silent Redwood City (medical) X X X Silent X X* Redwood City (recreational) Silent Silent Silent Silent Silent Silent San Bruno (medical) X X X X X X San Bruno (recreational) X(m) X(m) X(m) X(m) X(m) X(m) San Carlos (medical) X X X Silent X Silent San Carlos (recreational) Silent Silent Silent Silent Silent Silent San Mateo (medical) X X X Silent Silent Silent San Mateo (recreational) X X X Silent Silent Silent Woodside (medical) X X X X X X Woodside (recreational) X(m) X(m) X(m) X(m) X(m) X(m) * Medical delivery are permitted to deliver to locations in the Town/City. Legend X = Prohibited Use X(m) = indicates prohibited use via a temporary moratorium = Permitted Use Silent = No regulation on this use 2874721.1 Regulating Commercial Cannabis * Indoor Cultivation * Delivery Only Retail * Distribution * Microbusinesses Rozalynne Thompson, Planning Division Deborah Gill, Office of the City Manager Indoor Cannabis Cultivation Planting, growing, harvesting… Indoor Cannabis Cultivation …drying, curing, grading, or trimming of cannabis Map showing cultivation zones excluding AUMA exluded areas, with suggested zones Cannabis Distribution Procurement, sale, and transport between cannabis businesses Map showing distribution areas excluding AUMA excluded areas Cannabis Delivery Only Retail Sale to the public exclusively by delivery Cannabis Delivery Only Retail Regulate Features of Delivery Service Office Operation Map showing distribution and delivery only areas excluding AUMA excluded areas, with suggested areas Suggested Areas – Delivery-only Retail Cannabis Microbusiness Grower, manufacturer, distributor and retailer 10,000 square feet maximum size Cannabis Microbusiness Map showing microbusiness areas excluding AUMA excluded areas Operational Standards City Staff will draft ordinances covering: •Security •Fire Codes •Building Codes •Special Operating Conditions •Permitting Process and Fees Regulating Commercial Cannabis * Indoor Cultivation * Delivery Only Retail * Distribution * Microbusinesses City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:17-291 Agenda Date:10/18/2017 Version:1 Item #:2. Study Session on Police Department functions and strategies.(Jeff Azzopardi, Police Chief) City of South San Francisco Printed on 10/13/2017Page 1 of 1 powered by Legistar™ POLICE DEPARTMENT Mission Statement We are committed to proactively reducing crime, enhancing public safety and addressing quality of life issues through education, enforcement and community partnerships in order to make a better South San Francisco. •Protect and Serve the Community •Community Programs-30 plus •Community Academies •G.R.E.A.T/Every 15 Minutes •K-9 Demonstrations •Dog Walker Program •Multi-Agency Dispatch •Continued Partnerships to Combat Gang Violence MAJOR FUNCTIONS ORGANIZATIONAL CHART 83 Sworn 35 Civilian 118 Employees STRATEGIC INITIATIVES •Ongoing planning for future Police Operations Center •Implementation of Next- Generation 911 Dispatch •Implementation of Body Worn Camera System •Continue to build a robust Police Department by filling all vacancies •Continue partnership with Drug Enforcement Agency (DEA) Task Force •Recruitment / Retention City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:17-1034 Agenda Date:10/18/2017 Version:1 Item #:3. Report regarding a resolution authorizing the filing of a grant application for State of California Department of Housing and Community Development Department Grant funds not to exceed $260,000 through the Housing- Related Parks Program for the renovation of Gardiner Park in Fiscal Year 2017-18.(Sharon Ranals,Parks and Recreation Director) RECOMMENDATION It is recommended that the City Council adopt a resolution authorizing the filing of a grant application not to exceed $260,000 for State of California Department of Housing and Community Development Department Grant funds through the Housing-Related Parks (HRP)Program for the Renovation of Gardiner Park in Fiscal Year 2017-18. BACKGROUND/DISCUSSION The HRP Program was funded through Proposition 1C,the Housing and Emergency Shelter Trust Fund Act of 2006.It was designed to encourage and incentivize cities and counties to develop new residential housing by rewarding those jurisdictions that “approve housing affordable to lower-income households and are in compliance with State housing element law.”In addition to new construction,cities are also eligible to receive HRP Program funds for approving housing units that are to be “substantially rehabilitated”to prevent their removal from the housing supply due to deterioration or other causes. The HRP Program awards funds on a per-bedroom basis for each residential unit affordable to very low and low-income households.Projects must be issued a building permit during the designated HRP Program year. The HRP Program also provides funds for identified parks and recreation projects that benefit the community and add to the quality of life. South San Francisco successfully applied for HRP Program funding in 2012.Submitting affordable units that were constructed near South San Francisco High School,the City qualified for $291,350.The funds were applied to the renovation of the Paradise Valley Pocket Park, which was completed in April of 2013. In March 2017 the City applied for HRP Program funds to renovate the Gardiner Playlot,which is located on Gardiner and Randolph,and is the only playground within the neighborhood known as Pecks Lot.This site was also selected as a target for HRP Program funding since it is eligible for “bonus points”based on neighborhood demographics.Gardiner Park is an urban pocket park located in the middle of a residential neighborhood at 135 Gardiner Avenue.The one-tenth acre lot is surrounded on three sides by residential properties and bordered on the south side by Gardiner Avenue.The current configuration of the park has a two to five-year age group play area with equipment and rubber surfacing dating from 2006,both of which are in need of replacement.The park includes a half basketball court,drinking fountain and several small landscaping areas.There is a grade City of South San Francisco Printed on 10/12/2017Page 1 of 2 powered by Legistar™ File #:17-1034 Agenda Date:10/18/2017 Version:1 Item #:3. park includes a half basketball court,drinking fountain and several small landscaping areas.There is a grade change of several feet from the front to the top of the lot,necessitating a series of ramped pathways and retaining walls connecting the play spaces.The proposed project would replace the outdated play equipment, install new rubberized safety surfacing,resurface the basketball court,make structural and cosmetic improvements to the retaining walls and pathways,replace the drinking fountain,re-landscape the planting areas with drought-tolerant selections,and add new site furnishings.The planting improvements would include installation of a new high-efficiency drip irrigation system. In March 2017 the City applied for $240,000 and submitted a resolution listing the amount “not to exceed $240,000”.The HRP program has notified the City through Townsend Public Affairs,who assisted with the application,that they would like to grant a final award of $256,000.This necessitates another resolution which permits the City to apply for funds in an amount not to exceed $260,000. FISCAL IMPACT A Capital Improvement Project (CIP)has been submitted for the renovation of this playlot for the Fiscal Year 2017-18 budget. CONCLUSION It is recommended that the City Council adopt a resolution authorizing the filing of a grant application not to exceed $260,000 for State of California Department of Housing and Community Development Department Grant funds through the Housing-Related Parks (HRP)Program for the Renovation of Gardiner Park in Fiscal Year 2017-18. City of South San Francisco Printed on 10/12/2017Page 2 of 2 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:17-1035 Agenda Date:10/18/2017 Version:1 Item #:3a. Resolution authorizing the filing of a grant application for State of California Department of Housing and Community Development Department Grant funds not to exceed $260,000 through the Housing-Related Parks Program for the renovation of Gardiner Park in Fiscal Year 2017-18. WHEREAS,the State of California,Department of Housing and Community Development has issued a Notice of Funding Availability (NOFA)dated November 16,2016,under its Housing-Related Parks (HRP)Program; and WHEREAS,the City of South San Francisco (“Applicant”)desires to apply for a HRP Program grant and submit the 2016 Designated Program Year Application Package released by the Department of Housing and Community Development for the HRP Program; and WHEREAS,Gardiner Park has not been renovated since 2006,and the play equipment and safety surfacing is in need of replacement,the park has been selected as the target for these funds,if received,to be submitted in the Capital Improvement Project (CIP) for Fiscal Year (FY) 2017-18; and WHEREAS,a proposed renovation to Gardiner Park would be of invaluable benefit to the community as it is the only playground within the neighborhood known as Peck’s Lot; and WHEREAS,the Department of Housing and Community Development is authorized to approve funding allocations for the HRP Program,subject to the terms and conditions of the Notice of Funding Availability (NOFA), Program Guidelines, Application Package, and Standard Agreement. NOW,THEREFORE,BE IT RESOLVED by the City Council of the City of South San Francisco that the City Council hereby authorizes and directs the Applicant to apply for and submit to the Department the HRP Program Application Package released November 2016 for the 2016 Designated Program Year in an amount not to exceed $260,000.If the application is approved,the City is hereby authorized and directed to enter into, execute,and deliver a State of California Standard Agreement (Standard Agreement)in an amount not to exceed $260,000,and any and all other documents required or deemed necessary or appropriate to secure the HRP Program Grant from the Department,and all amendments thereto (collectively,the “HRP Grant Documents”). BE IT FURTHER RESOLVED by the City Council of the City of South San Francisco that the Applicant shall be subject to the terms and conditions as specified in the Standard Agreement.Funds are to be used for allowable capital asset project expenditures to be identified in Exhibit A of the Standard Agreement,attached herewith.The application in full is incorporated as part of the Standard Agreement.Any and all activities funded,information provided,and timelines represented in the application are enforceable through the Standard City of South San Francisco Printed on 12/7/2017Page 1 of 2 powered by Legistar™ File #:17-1035 Agenda Date:10/18/2017 Version:1 Item #:3a. funded,information provided,and timelines represented in the application are enforceable through the Standard Agreement.Applicant hereby agrees to use the funds for eligible capital asset(s)in the manner presented in the application as approved by the Department and in accordance with the NOFA and Program Guidelines and Application Package. BE IT FURTHER RESOLVED by the City Council of the City of South San Francisco that the City Manager is authorized to execute in the name of Applicant the HRP Program Application Package and the HRP Grant Documents as required by the Department for participation in the HRP Program. ***** City of South San Francisco Printed on 12/7/2017Page 2 of 2 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:17-1037 Agenda Date:10/18/2017 Version:1 Item #:4. Report regarding a study session on the increase of funding for the Scoop carpool program.(Justin Lovell, Public Works Administrator) RECOMMENDATION It is recommended that the City Council provide direction to staff on increasing the funding for the Scoop carpool program. BACKGROUND/DISCUSSION On January 25,2017,City Council approved a funding agreement for $50,000 with Scoop Technologies that provided the critical mass and momentum necessary to launch Scoop for anyone who lives or works in South San Francisco.Scoop is a carpooling app that matches drivers and riders who live near each other and are commuting to close by locations. Scoop launched the app to South San Francisco on April 25,2017.Concurrently with the launch,Scoop held a total of 14 outreach and marketing events at South San Francisco employment centers East of 101 and two community based events,one at Movie Night in the Park and one at Concert in the Park.Additionally,the East of 101 commuter coalition and the California Life Sciences Association promoted the use of Scoop to their network. There are 2,200 registered Scoop users who have completed a total of 23,000 one-way trips to or from South San Francisco since April 2017.In the month of September there were nearly 6,000 one way trips completed, which equates to approximately 112 vehicles out of parking lots every day (see attachment).With the current subsidy,drivers receive a $2 incentive per trip and riders receive a $2 discount per trip.The minimum cost for any rider who uses Scoop is $1. The $50,000 set aside to subsidize the cost of carpooling and encourage commuters to try carpooling through Scoop officially ends on Friday October 13,2017.While the South San Francisco funds are expiring,the City/County Association of Government (C/CAG)have also provided funding to Scoop to subsidize the carpoolers use of Scoop for anyone living or working in San Mateo County. There are many more South San Francisco employers who still learning about Scoop and are looking for ways to encourage alternative transportation in order to meet their transit demand management requirements.Any increase in the funding to Scoop would help grow the usage of the app and make carpooling a viable option to more people who live or work in South San Francisco. Based on current usage,every $12,000 in funding would last approximately one month.There is approximately $30,000 available in the Special Revenue Fund that can be used to increase the funding to Scoop,which would last two to three months before the funds were exhausted.If City Council decided to increase the funding, Scoop would launch a South San Francisco centric outreach campaign to increase the awareness and use of the Scoop carpool app. City of South San Francisco Printed on 10/13/2017Page 1 of 2 powered by Legistar™ File #:17-1037 Agenda Date:10/18/2017 Version:1 Item #:4. FISCAL IMPACT Should City Council decide to increase the funding for Scoop,there is approximately $30,000 available in the Special Revenue Fund,Alliance Shuttle account to pay for increased funding to Scoop.There would be no general fund money spent on the program. CONCLUSION Staff would like direction from City Council weather to increase the funding for Scoop to extend the carpooling subsidy for another two to three months.If the City Council desired to extend the funding staff will return at the November 8, 2017 City Council meeting for City Council approval to appropriate the funds. Attachment: Scoop Monthly Report September 2017 City of South San Francisco Printed on 10/13/2017Page 2 of 2 powered by Legistar™ 10-01-2017  City​ ​of​ ​South​ ​San​ ​Francisco   Overall​ ​September​ ​​Summary  2,207  5,954  23,085  Total​ ​Registered​ ​Users     Trips​ ​in​ ​September Total​ ​Trips​ ​taken  By​ ​City​ ​of​ ​South​ ​San  Francisco​ ​employees  and​ ​residents​ ​to​ ​date    City​ ​of​ ​South​ ​San​ ​Francisco​ ​​Overall​ ​Impact   Category August September All​ ​Time    New​ ​employees  registered 223 187 2,394 Matched​ ​trips 6,342 5,954 23,085 Daily​ ​Average​ ​Cars​ ​out  of​ ​parking​ ​lots 103 112 n/a Rider  Miles​ ​saved 67,500 71,993 272,353 Pounds​ ​of​ ​CO2​ ​saved 61,100 65,233 253,177             City​ ​of​ ​South​ ​San​ ​Francisco​ ​​Employee​ ​Impact   Category August September    All​ ​Time    New​ ​employees  registered 169 142 1939 Matched​ ​trips 4,953 4358 16,639 Daily​ ​Average​ ​Cars​ ​out  of​ ​parking​ ​lots 82 84 n/a Rider​ ​Miles​ ​saved 44,400 40,081 147,041 Pounds​ ​of​ ​CO2​ ​saved 40,200 36,317 133,161   City​ ​of​ ​South​ ​San​ ​Francisco​ ​​Resident​ ​Impact   Category August September    All​ ​Time    New​ ​employees  registered 54 45 455 Matched​ ​trips 1,389 1,596 6,446 Daily​ ​Average​ ​Cars​ ​out  of​ ​parking​ ​lots 21 28 n/a Rider​ ​Miles​ ​saved 23,100 31,912 125,312 Pounds​ ​of​ ​CO2​ ​saved 20,900 28,916 120,016   2