HomeMy WebLinkAboutStaff Report 4.A 10/02/2017DATE:
TO:
FROM:
SUBJECT
October 2, 2017
Honorable Mayor and Members of the City Council
John C. Brown, City Manager
Local Cannabis Regulations
RECOMMENDATION
Agenda Item #4.A
It is recommended that the City Council provide direction to staff regarding regulation of the
cultivation, sales, manufacturing, and testing of medical and recreational cannabis in the City of
Petaluma.
BACKGROUND
Petaluma adopted an ordinance regulating medical cannabis on January 21, 2007, and updated it
on January 6, 2016. The ordinance bans medical cannabis- related activities, except those
protected by the State Compassionate Care Act. The ban excludes residential grows under 100
square feet (including three mature plants grown outdoors), and deliveries to legal cardholders
from suppliers that comply with the Compassionate Care Act. The Ordinance was structured to
ban all medical cannabis related activities, excluding State protected uses, to avoid active
permitting by the City. This approach seeks to protect City decision makers from potential
federal enforcement of laws that currently classify cannabis as a Class 1 illegal substance.
In November 2016, California voters passed Proposition 64 (Prop. 64) by a 14.2 percent margin,
legalizing recreational cannabis use. In Sonoma County, the measure passed by an 18.2 percent
margin. Support in Petaluma was even greater, where the measure passed by a 24 percent
margin.
A detailed summary of Prop.64's provisions is found on pages 8 to 11 of Attachment 1. In brief,
Prop. 64 allows for the recreational use of cannabis within the following guidelines:
Adults 21 years and older can consume cannabis, on private property, without a doctor's
recommendation for medical use. They can also legally possess up to an ounce of
cannabis buds or 8 grams of cannabis concentrates.
Residents are allowed to grow six plants, indoors or in enclosed structures, and may
possess the materials from these plants so long as they are stored securely on the
premises. Local governments can set standards for outdoor cultivation, or ban it outright.
Cannabis sales are restricted to state licensed establishments and can be regulated or
banned by local government.
Prop. 64 went into effect on November 9, 2016; commercial sales provisions are effective
January 1, 2018. The City should update its cannabis regulations to: conform to provisions of
Prop. 64, to reflect local preferences regarding commercial activities where discretion exists, and
to provide clarity for those wishing to operate cannabis- related businesses. Any changes need to
be made by January 1, 2018; otherwise, State regulations will apply. The basic policy question
associated with this issue is, should the City's ban on medical cannabis, with attendant
exclusions, be broadened to apply to recreational cannabis, or should a different set of
requirements apply. Within that question are at least the following others:
• Should cultivation be allowed outside residential areas?
• Should retail sales be excluded from the ban?
• Should exclusions on delivery of medical cannabis be expanded to provide for delivery of
recreational camiabis?
• Should any manufacturing /testing activities be excluded from the ban, and if so, should
an exclusion apply to all such activities or be limited to ancillary activities of a primarily
non - cannabis oriented business?
A City Council workshop was conducted on June 26, 2017, to discuss the City's cannabis
regulations. Staff proposed continuing the current ban on medical camlabis and extending it to
recreational cannabis (Attaclunent 1). That proposal would allow residential cultivation of up to
six (6) plants, and adults 21 and over to consume cannabis on private property without a medical
cannabis card. It would prohibit all other recreational cannabis activities.
Council members were not interested in allowing commercial -scale cultivation, or extending
small -scale cultivation outside the exceptions provided in residential zoning. They expressed a
range of opinions, however, regarding other cannabis - related issues during the workshop. Some
were concerned the proposed ordinance was too restrictive, citing the high level of local voter
approval for Prop. 64. Sor_ne favored proceeding rmitin,usly to let experience show whether
legalization results in the negative impacts Petaluma wishes to avoid. Several indicated a desire
to review more data before offering direction to amend the City's ordinance. Council members
were interested in knowing:
• Crime rates associated with dispensaries in the cities that have permitted them;
• How dispensaries and delivery businesses address Federal banking restrictions;
• How other jurisdictions justified permitting schemes in conflict with Federal law, and
whether any criminal prosecution of an elected or appointed official has occurred in
jurisdictions with permitting schemes;
• Whether emergency room visits or other emergency medical calls related to cannabis use
have increased due to legalization; and
• Have any other cities issued permits, then revoked them, and if so, why?
At my request, the Council also asked to see the same information for businesses with expanded
cannabis- related product lines operating in other communities. Staff indicated information
would be returned to the City Council to seek further direction regarding revisions to the City's
cannabis ordinance, to be implemented by January 2018.
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DISCUSSION
Since the June workshop, Economic Development and Police Department staff contacted
individuals responsible for local government cannabis programs: neighboring, and in- and out -
of -state law enforcement agencies; hospitals; and our Fire Department. To supplement
information gained through contacts, staff researched articles, law reviews, scientific reports and
academic studies to gather information about how legalized cannabis is affecting the places
where its use, sale and manufacturing are permitted. Attachment 2 is a list of the agencies
contacted and reference materials reviewed for this report. As an industry that is still evolving,
cannabis- related statistics are limited. Law enforcement agency reporting has not been
organized to capture cannabis- specific data, and much of what staff heard through direct contacts
is anecdotal. Our inquiries were not exhaustive, but rather limited to what could be
accomplished by staff resources working within the demands of their primary job
responsibilities. Based on their efforts, however, staff does not believe a more intensive inquiry
would net information that is more definitive or information contrary to what was found.
Crime Rates
One of the challenges to understanding the possible link between legalized cannabis use and
crime is that the FBI's Uniform Crime Reporting (UCR) protocol, which agencies use to comply
with Federal reporting requirements, does not segregate for cannabis - related crimes. Crimes are
reported more broadly, by year and by type. For example, the crime of robbery as captured in
UCR does not differentiate between robberies of a bank, or a cannabis - related business. Local
law enforcement must track crimes more specifically if there is a particular area of interest or the
need /desire to identify a local trend. Another aspect of this challenge is any reporting developed
after legalization will capture all cannabis - related activity, including that which was occurring
prior to legalization, and furthering the difficulty of quantifying the effects of any legalized
commercialization.
Crime rates in Sonoma County are generally down, vary city by city, and have no discernable
connection to cannabis - related businesses (Attachment 3). Crime in Santa Rosa, where
dispensaries and manufacturing of medical marijuana is permitted, is down in both the violent
and property categories. Crime in Petaluma, where neither dispensaries nor manufacturing are
permitted, is down in the violent category but up in the property category. Sebastopol currently
allows two dispensaries. Their violent crime rate is up but their property crime rate is down.
Sebastopol reported the increase in violent crime was not related to the marijuana industry.
Cotati currently allows one dispensary. The Cotati Police Department reports a negligible
impact on calls for service or crime connected to that establishment. The Sonoma County Public
Safety Consortium's crime analyst group did not include cannabis - related crime in its top -five
priority projects list, which suggests cannabis- related crime has not been significant enough to
merit special attention and tracking relative to other crimes.
The two largest law enforcement agencies in Sonoma County, the Sheriffs Office and the Santa
Rosa Police Department, are taking a closer look at their caseloads to identify possible
burgeoning trends. The Santa Rosa Police Department's Violent Crimes Investigations Unit
(SRPD VCI) recently completed a review of its criminal investigations spanning four years
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(2012- 2016), examining whether cannabis - related activities were linked to violent crimes, and
found 86 cases and 77 arrests between 2012 — 2016 that could be linked to cannabis activities.
VCI drew attention to and expressed concern about recent armed robberies within its jurisdiction
(including two separate incidents in August 2017 in which dispensary employees were
confronted at gunpoint as they were leaving the facility) as a possible indicator of a developing
trend surrounding dispensaries and sanctioned commercial establishments.
Contact with other law enforcement agencies suggests that a trend may be developing in other
jurisdictions that have permitted commercial activities, but is not widespread. In the region,
Petaluma's police staff solicited data from law enforcement agencies in Lake, Marin, and
Mendocino counties on crime related specifically to cannabis dispensaries and
sanctioned /permitted cannabis - related businesses. Most of the agencies contacted were unable to
report a definitive causal link between sanctioned cannabis- related businesses and increased
violent or property crime. In some jurisdictions, there was simply no evidence to suggest a
problem exists while in others, the data was not specific to dispensaries /commercial
establishments, or it was incomplete /unavailable because such data has not historically been
captured and analyzed. The Clearlake Police Department found only "a couple of false alanns"
relating to its dispensary. The Mendocino County Sheriff's Office noted only one of their
dispensaries had any calls for service, none of which were for serious crimes.
Not all the information gained was as positive. A Los Angeles Police Department crime analyst
reported 3 homicides and 56 robberies associated with over 400 dispensaries operating during a
portion of that period. A study in the City of Lang Beach linked a reduction in dispensaries to
reductions of both violent and property crimes, all in the areas around where the dispensaries
were previously located. The study associated a 3.9 percent decline in violent crimes and a 1.7
percent decline in property crimes to a reduction in the number of dispensaries from 37 to 5. The
reduction was due to a lawsuit challenging the City's lottery -based permitting system, and
occurred between March 2012 and September 2013. By comparison, a similar reduction of 32
alcohol outlets in Long Beach (a 3.97 percent decline in total alcohol outlets) was linked to a 0.5
percent decline in violent crimes and a 0.9 percent decline in property crimes.
Outside California, staff contacted communities in the states of Washington and Colorado
between 50,000 and 100,000 in population that allow commercial cannabis - related activities or
are in the process of review and action like Petaluma. This included the Cities of Redmond,
Renton, Marysville, and Pascoe in Washington, and Littleton, Grand Junction, and Commerce
City in Colorado. Staff also reviewed two Colorado reports: "Colorado's Legalization of
Marijuana and the Irnpact on Public Safety ", (2015) which included the involvement of 23 law
enforcement agencies in Colorado, and "Marijuana Legalization in Colorado: Early Findings"
(2016), which represented statewide research. The former report was compiled by the Police
Foundation (PF) and the Colorado Police Chiefs Association (CPCA), the latter by the Colorado
Department of Public Safety (CDPS).
The PF /CPCA report underscores the lack of available data, and notes that law enforcement
leaders involved in the study warmed that until there is a statewide data collection system, it will
not be possible to fully understand the impact of legalized marijuana and related crime in the
state of Colorado; however, they feel crime is increasing.
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Of interest, the report indicates legalization increased homelessness in the 18 to 26 year old age
group, as individuals migrated to Colorado for perceived opportunities in the cannabis industry.
Some who were not employed became homeless. A portion of this population is responsible for
burglaries and other offenses, which increases crime rates and contacts with law enforcement.
With respect to crime in and around dispensaries, the CDPS report notes the number is difficult
to measure without a statewide database that places all crimes at a single location. The Denver
Police Department (DPD), however, does review all reported crime to determine if there is a
clear connection or relationship to marijuana, and collects data specific to cannabis - related
crimes. DPD codes whether the crime is industry - related (offenses directly related to licensed
marijuana facilities) or non - industry - related (marijuana taken during the commission of a crime
that did not involve a licensed marijuana facility). The total number of industry - related crimes
has remained stable and comprised a small portion of overall crime in Denver between 2012 and
2015. The most common industry related crime is burglary, which accounts for 62 percent of all
industry crime. Burglaries at licensed marijuana facilities were higher than other retail outlets.
Burglaries occurred at 13 percent of Denver's licensed marijuana facilities, compared with just 2
percent of liquor stores. While the frequency of these events was not statistically significant
when compared to other financial targets, the creation of additional opportunities in a cash based
industry has been attractive to criminals. There has been concern in Colorado, due to the cash -
only nature of the industry, that robbery would be prevalent. This has not proven to be the case.
The number of non - industry - related marijuana crimes in Colorado is statistically smaller than the
following percentages suggest, and has remained stable. Robbery accounted for 33 percent of
non - industry - related crime in 2015 compared to 26 percent in 2014. Burglary was 30 percent in
2015 compared to 39 percent in 2014, and larceny /theft was 20 percent in 2015 to 39 percent in
2014. While the exact cause is hard to confirm, law enforcement officials in Colorado have two
theories. The first is the transient population and related theft and crimes of opportunity and the
other is the known connection to property crime rates and substance abuse users who commit
crime to support their habit. Colorado also reported crime trends related to marijuana and
Organized Crime (gangs). Between 2006 and 2014, the yearly average number of marijuana
cases filed under the Organized Crime Control Act was 11.44. In 2015, the number of cases
filed was 40.
Colorado appears to have implemented the legalization of recreational cannabis without the same
advance planning or regulatory framework as is attendant to California's implementation of
Prop. 64. How that is responsible for or affects the crime rates noted in the two studies cited
above is unknown, but is worth noting.
With respect to other literature, studies that examined crime related to recreational cannabis on a
national level have found few, if any links, between increased cannabis use and increased crime.
The Harvard Kennedy School — Shorenstein Center completed a review on research of crime and
impaired driving related to legalized cannabis. (Trilling, 2017) The review evaluates several
studies looking at how legalized cannabis affects crime. This body of research generally
concludes that legalized cannabis has had little or no effect on crime rates. Interestingly and
counter to the Colorado studies cited elsewhere in this section, one study cited, by Robert G.
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Morris of the University of Texas and colleagues, "[saw] crime fall in every state that has
introduced medical cannabis laws."
Banking / Cash Handling
The ability for cannabis -based businesses to manage their money in banks is problematic. A
memo from the Department of the Treasury's Financial Crimes Enforcement Network provides
guidance to banks on how to handle cannabis - related deposits (United States Department of
Treasury, 2014). That memo references another memo from the US Department of Justice, often
referred to as the "Cole Memo" (written by then -US Attorney General James M. Cole in 2013),
in which the Federal Government outlined its priorities related to marijuana enforcement. The
"Cole Memo stated that while cannabis remains a "dangerous drug" insofar as the Federal
Government is concerned, limited Federal resources and more pressing drug enforcement
priorities mean that as a matter of policy, the Federal Government would be inclined not to
interfere with states that have legalized cannabis, provided that those states take steps to enact a
strict regulatory and tracking framework to mitigate its most harmful effects on society (for
example, cartel /gang involvement in sales and trafficking, violent crimes, use by minors, etc.).
While the Federal Government has provided guidance indicating some willingness to support
state and local laws, many banks and related businesses shy away from this uncertainty. The
uncertainty has increased since the Federal Government issued warnings this policy may change
in the future. Colorado's U.S. Senators are currently leading an effort to provide banking for
cannabis - related businesses through proposed legislation called The Secure and Fair
Enforcement (SAFE) Banking Act of 2017 that would allow banks to accept money for
cannabis - related businesses.
Several banks and credit unions are accepting cannabis- related deposits in the State of
Washington. According to an article in "The Stranger ", an alternative weekly Seattle newspaper,
311 banking institutions were working with the cannabis industry nationwide as of September
2016. Another way cannabis -based companies handle their cash is converting it to money orders
to pay taxes and other expenses. Spokane's Numerica Credit Union has more than 200 cannabis-
related business accounts. One Seattle credit union will open accounts for cannabis - related
businesses, but they are particular about the accounts they accept and limit them to professional
business people with strong business acumen, because of arduous guidelines and reporting
requirements.
The California State Treasurer is currently leading a task force called the Cannabis Banking
Working Group. It will develop recommendations designed to open access for cannabis - related
industries to the banking system. To date, the working group has not identified solutions to the
banking problem. Three large California cities, Los Angeles, San Francisco, and Oakland, are
considering proposals to open a public bank, along the lines of the Bank of North Dakota (BND).
The BND was established by the North Dakota legislature in 1919, and was formed to promote
agriculture, commerce and industry. The theory is a public bank can handle cannabis money
without the restrictions of federal law. None of these three cities has taken an affirmative action,
but if such a bank were established in Oakland or San Francisco it would be near- enough in
proximity to serve cannabis - related businesses in Sonoma County. In the meanwhile, it appears
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that local cannabis businesses will continue to operate in cash as long as they are unable to make
deposits in local banks.
Cannabis Permitting in Other Cities
Half of the other cities in Sonoma County allow some form of legal cannabis activity: sales,
cultivation, and manufacturing (Attachment 4). Dispensaries are permitted in Santa Rosa, Cotati,
Sebastopol, Cloverdale, and in unincorporated Sonoma County. Santa Rosa and the County
permit manufacturing; it is under consideration in Cloverdale and Cotati. Cultivation beyond
small amounts on residential property for personal use is only allowed in Santa Rosa and the
County. Cotati and Cloverdale are considering expansions to their rules to allow some
commercial cultivation. Permitting methods vary, but in most cases take the form of time
limited permits or licenses that are reviewed administratively. Santa Rosa permits cannabis uses
with conditional use permits that run with the land, so should the City change its policy, those
uses could .continue to operate in those locations if they complied with the conditions of their use
permits. This is worth considering for Petaluma. While there may be some aversion to licensing
or permitting, these approaches appear to offer the most effective means of ceasing business
activity in the event such action should become necessary.
On a statewide basis, staff found over 20 cities that have legalized dispensaries or manufacturing
uses. Counties have also legalized these activities, and cultivation, but only those in the
immediate region were contacted. Of these cities, staff found all rely on a permitting scheme,
rather than exclusions to a ban as has been implemented in Petaluma.
Conflicts Between State and Federal Law
Discussed again at the June workshop was the concern that decision makers may be liable for
permitting uses involving a substance classified as illegal under federal law. This concern is at
the foundation of the City's approach to regulating medical marijuana, which is not permissive,
but rather a ban on all activities with limited exclusions. Staff researched this question by
reviewing legal articles, federal court cases, and consultation with the Opinions Unit of the State
Attorney General's Office, the local office of the Federal Drug Enforcement Agency, and staff
from cities that issue permits. Staff found no instance of a city official held liable for violating
federal law by permitting cannabis - related activities that are consistent with State law. Nor did
staff find any significant concerns expressed by cities that approved permitting schemes. One
respondent cited the "Cole Memo" and the Rohrabacher —Farr Amendment as reasons they are no
longer concerned about federal government penalties associated with locally issued permits. The
Rohrabacher -Farr Amendment is a part of a budget rider and blocks the Department of Justice
from spending money on medical marijuana prosecutions. 'A U.S. District Court judge recently
cited the Rohrabacher -Farr Amendment as the basis for blocking federal prosecutions of
cannabis growers in California.
Per the Opinions Unit of the California Attorney General's Office, the Federal Governnent's
policy,during the previous Administration of deferring to the states per the Cole Memo left little
concern that individual members of state and local governments would be targeted for Federal
prosecution, and to -date there have been no cases where that occurred. However, the change in
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Administration has left uncertainty as to whether the Cole Memo guidelines will be amended,
rescinded, or continued. Per the State Attorney General's Office, the Federal Government
reserves the right to enforce its laws regardless of whether it chooses to do so as a matter of
policy, so while state and local governments may not likely face Federal criminal penalties for
permitting cannabis - related business, it cannot be guaranteed.
Whether the federal government would initiate punitive actions against individual decision
makers, rather than or in addition to seeking strict enforcement of federal law, should the current
or a future administration take a more aggressive approach to enforcement, is a matter of
conjecture. Considering our own regulatory enforcement practices, it seems reasonable to expect
the federal government would seek compliance rather than take punitive action, with punitive
action reserved for those failing to comply. The City's response under such circumstances would
likely be to comply with federal directives.
A related question arose at the June workshop: are there instances where other cities issued
permits, then later revoked them? Previously discussed was the City of Long Beach's reduction
of the number of permitted dispensaries from 37 to 5, due to a challenge to its lottery system.
Another instance was found, in which the City of Santa Barbara recently revoked one of three
dispensary permits allowed pursuant to the City's ordinance, because of an unapproved change
of ownership. The dispensary has the right to re -apply for a permit, but has no grandfathered
rights.
Public Health / Emergency Room Visits
Discussions with Emergency Room (ER) nurse supervisors at Sutter, Santa Rosa Memorial, and
Petaluma Valley hospitals suggest local hospitals are not experiencing a notable increase in
emergency room visits specifically or primarily related to cannabis use. These hospitals do not
track ER visits related to cannabis, for two main reasons: 1) due to the prevalence of cannabis it
has been found that many persons visiting the ER for other health reasons also test positive for
cannabis; and 2) none have seen any significant medical conditions or medical emergencies
specific to cannabis use they believe merits tracking them. Petaluma Valley Hospital offered
anecdotal evidence of youth visiting the ER suffering from nausea and vomiting connected to
heavy use of cannabis. However, beyond that, there have not been any life - threatening or
chronic health problems noted locally. Each of the hospitals reported that while cannabis use and
its potential health effects are of general concern, methamphetamine and opioid abuse are a far
more significant problem with regard to use of ER resources and immediate, life - endangering
risks to ER patients.
In Colorado, reports show incidence of cannabis overdoses in children 9 and under who
accidentally ingested edible cannabis products doubled in the two years following legalization of
recreational cannabis. This statistic is concerning, but it should be noted marijuana exposure
cases now account for about six out of every 1,000 emergency room visits for ingestions,
according to the study. Colorado reports also show that cannabis- related emergency room visits
increased from 739 to 956 per 100,000 visits following legalization. Again, local hospitals do not
currently track these cases and do not yet consider it a concerning trend.
As first- responders, Petaluma Fire Department (PFD) personel were also contacted. In their
experience, neither ER visits nor calls for medical assistance have increased due to cannabis use.
As an aside, the PFD has noted a decrease in the number of fires related to grow houses,
following the January 2016 revisions to the to the City's cannabis regulations regarding
residential cultivation. The PFD responded to several such calls before the changes, and have
not responded to any recently.
National studies have also looked at the health effects of cannabis. Earlier this year the National
Academies of Sciences, Engineering, and Medicine completed a review, "The Health Effects of
Cannabis and Cannabinoids: The Current State of Evidence and Recommendations for
Research ". This review indicates legalized cannabis may lead to more cannabis use among
youth, and a higher perception of safety regarding the substance but does not identify immediate
health risks. Several studies cited in the review indicate a connection between adolescent
cannabis use and negative cognitive, psychiatric, and health outcomes, as well as permanent
negative effects to a fetus exposed to cannabis during gestation. It is generally agreed more
study in this area is needed.
Local Interest
Several individuals and businesses have inquired about cannabis - related opportunities in
Petaluma since voters approved Prop. 64. Planning staff estimates they receive two such inquires
a month, focused on cultivation, delivery, or commercial sales. Callers are informed cannabis -
related business activity is not allowed in Petaluma. As such, they have looked elsewhere to
locate. Businesses considering cannabis as part of their business models appear to have learned
to check with cities before buying or leasing real estate. Thus, it is hard to know how many and
what kind of business Petaluma would have located but for the current cannabis ban.
During the Council's June workshop, two examples of businesses prevented from operating in
Petaluma due to the current ban were discussed. One, a local testing company, wanted to extend
its services to cannabis- related testing. The other, a chocolatier, wants to expand its product line
to include camlabis infiised chocolates. The testing company purchased a building outside City
limits. The chocolatier has suspended its real estate search. These are the only specific instances
of which staff is aware where these kinds of business have been lost. Any estimate of how many
have not inquired because they know the ban exists would be speculative. Neither specific crime
statistics nor anecdotes associated with these kinds of businesses were identified through staff's
inquiries.
Conclusion and Recommendations
While effort has been expended to respond to questions from the June 26, 2017 workshop, the
information obtained is inconclusive. It appears dispensaries and commercial retail carmabis
business can increase localized crime, but not appreciably. Press searches will turn up stories but
increased crime as a definitive trend, particularly in California, remains to be shown. As well,
negative long -term health effects, in particular associated with children and adolescents, may
occur, but it does not appear cannabis use has appreciably increased demands on emergency
medical service. Given the status of federal enforcement, banking and cash handling are
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problematic for cannabis - related businesses, but solutions to that problem are being sought.
With respect to the question of how other cities have addressed legalization, it appears they
utilize a permissive approach, issuing time limited permits or licenses, and have done so in
conformance with their respective state laws irrespective of the Federal government's position.
Whether the Petaluma City Council takes a more permissive approach to cannabis - related
businesses comes down to the Council's aversion to risk: risk of increased crime; risk to public
health; and risk of prosecution for having permitted the cultivation, sales, delivery, and
processing of a drug legalized in the State of California but still classified as illegal under federal
law. Based on staff research, it appears perceived risk is greater than actual risk, and the Council
is not placing the City or itself particularly in harm's way by permitting certain cannabis related
businesses in any revisions made to our ordinance. The recommendations that follow attempt to
preserve the City's ban with the exclusions approach, recognizing camlabis- related businesses
would need a business license, and should be licensed or permitted to provide the City the
greatest flexibility to cease business operations should circumstances warrant that action.
Returning to the issues for consideration summarized in the Background section of this report:
• Should cultivation be allowed outside residential areas?
• Should retail sales be excluded from the ban?
• Should exclusions on delivery of medical cannabis be expanded to provide for delivery of
recreational cannabis?
• Should any manufacturing /testing activities be excluded from the ban, and if so, should
an exclusion apply to all such activities or be limited to ancillary activities of a primarily
non - cannabis oriented business?
As noted in the Background, the City Council does not appear to want to allow commercial
cultivation or expansion of small -scale cultivation outside residential zones. Accordingly, staff
recommends that the following requirements apply to cultivation of nonmedical marijuana:
• No cultivation of nonmedical marijuana in any agricultural, commercial, office,
industrial, open space, special purpose, or overlay /combining zoning districts.
• Cultivation may not use grow lights that exceed one thousand two hundred (1, 200) watts
or generators or gas products.
• Only cultivation totaling no more than 6 plants (including indoor and outdoor cultivation
in an enclosure) per residence is exempt.
• Cultivation that can be seen or smelled from the public right of way or private property is
not exempt.
• Cultivation inside of residences that are not in full compliance with the City's Municipal
Code, including its building code and fire code, is not exempt.
• Subject to the exception for 6 plants, indoor cultivation that exceeds the lesser of
50% of the non - living area/ garage area of a residence or 100 square feet, or -that
displaces required on -site parking is not exempt.
• Cultivation must remain at all times a secondary or accessory use to the residential use of
the residence to be exempt.
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With respect to retail sales and delivery, it appears both public and Council interest exists in
allowing some form of this business. Because of what may be developing trends related to crime
at and around dispensaries and retail establishments, it is recommended the City retain the ban on
dispensaries and extend that to retailers open to the public. This recommendation acknowledges
public safety concerns expressed by Council members and a stated desire to proceed cautiously.
To balance those concerns with the will of the voters and other Council interests, it is
recommended that exclusions related to delivery of medical cannabis be expanded to allow
establishments who fill mail, phone, and e- commerce orders through delivery only to operate in
Petaluma. It is expected the sale of non - medical cannabis occurring at these locations will be
taxable, and that Petaluma would receive its proportionate share of that sales tax.
Within current exclusions, dispensaries outside city limits operating in accordance with State law
can deliver medicinal cannabis to qualified patients or caregivers in Petaluma. Deliveries are
limited to one pound of medical cannabis, can be made only between 8 am and 8 pm, and only
delivered by a person 18 years of age or older. It is recommended these requirements be retained
in expanding this exclusion to recreational cannabis, and that the amount of product that can be
delivered is consistent with that allowed under Prop. 64 and the State regulations effective
January 1, 2018. The Council may wish to limit the number of these businesses, and their
locations to zoning which allows delivery uses. A time limited license could define conditions of
operation, to prohibit on site sales or pick -up orders, the manner in which the business may be
signed and vehicles identified, require on -site security, and include conditions under which the
license can be revoked — for example. In this scenario, it does not appear zoning code
amendments would be required.
With respect to manufacturing and testing, these activities can provide living wage employment
that compliment business park uses. Although there does not appear to be great demand at this
time, it is recommended the City Council expand exclusions to enable these businesses to
operate in Petaluma. To minimize the effect of these businesses on their neighbors, and public
health and safety risks, it is recommended the exclusion extend to only those activities where the
cannabis- related business is an ancillary component of a non - cannabis - related business. For
instance, a local food manufacturer might add a line of edibles to the food they are already
manufacturing. Such businesses could site where zoning permits the primary use, and a license
could limit total manufacturing volumes, maximum allowable dosages, and stipulate that sales of
the product occur through a licensed retailer or through online or phone sales only — for example.
Staff further recommends all other existing bans contained in Chapter 10.15 be retained, and
made applicable to both medical and non - medical cannabis.
Based on the Council's direction, staff is prepared to revise the draft ordinance presented on June
26, 2017 to incorporate some or all of the recommendations contained in this report, and return
with it to Council on November 6, 2017 for a first reading. In the alternative, should the Council
wish to enact the June 26, 2017 draft ordinance without changes, to institute a permanent ban or
to allow additional time to pass before re- considering liberalizing that legislation, staff is
prepared to return to Council with that document. In any case, the ordinance must address both
sides of the cannabis issue, medicinal and recreational, and must be in place by January 2018 to
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preserve Petaluma's jurisdiction and avoid the consequences of not having legislation in place
that addresses recreational cannabis.
I want to acknowledge the assistance of Economic Development and Police Department staff in
conducting the research for this report. Staff will be available at your October 2, 2017 meeting
to assist me in answering any questions you may have.
FINANCIAL IMPACTS
The financial impacts of the recommended actions have not been calculated at this time.
Recommendations have been offered, however, taking into consideration the City's existing
resources and the need to limit staff time and expense taken in regulatory activities. Additional
work is needed, based on Council direction in this matter, to attribute a meaningful estimate of
financial impact.
ATTACHMENTS
1. Staff Report from June 26, 2017 Workshop
2. Staff Outreach and Research List
3. Regional Crime Statistics — 2007 -2017
4. Summary of Cannabis Regulations, by Jurisdiction, in Sonoma County
12
ATTACHMENT 1
r1
DATE: June 26, 2017
TO: Honorable Mayor and Members of the City Council through City Manager
FROM: Ken Savano, Police Chief
Eric Danly, City Attorney
SUBJECT: Workshop to Discuss Current Federal, State, and Local Marijuana Regulations
and Petaluma Neighborhood Preservation and Enforcement Issues Since Adoption
in January, 2016 of the Current Petaluma Medical Marijuana Regulations in
Chapter 10.15 of the City of Petaluma Municipal Code and to Receive Council
Direction Regarding Potential Amendments to Petaluma's Marijuana Regulations
RECOMMENDATION
It is recommended that the City Council discuss the agenda materials and staff presentation
regarding current Federal, State and local marijuana regulations and Petaluma neighborhood
preservation and enforcement issues since adoption in January, 2016 of the current Petaluma .
medical marijuana regulations in Chapter 10.15 of the Petaluma Municipal Code. As part of the
Council's deliberation on current marijuana regulations, staff recommends that the Council
consider and provide staff direction on potential amendments to Petaluma's existing medical
marijuana regulations to make them applicable also to non - medical marijuana, in accordance
with the following analysis and recommendations.
BACKGROUND
Intl- oduction
On January 26, 2016, the Petaluma City, Council adopted the current ordinance found in Chapter
10.15 of the Petaluma Municipal Code regulating medical marijuana in the City. In November
2016, Proposition 64, the "Adult Use of Marijuana Act" was approved by California voters.
Chapter 10.15 of the Petaluma Municipal Code does not address a variety of community and
public safety issues related to the passage of Proposition 64. This workshop is intended to assist
the City Council in considering legal developments related to marijuana through and including
passage of Proposition 64, community and public safety issues in the context of Proposition 64
and marijuana law generally, and policy and regulatory options avail4ble to California cities.
The workshop materials include staff recommendations for possible amendments to the City's
medical marijuana regulations intended to ensure public safety and neighborhood preservation in
Petaluma. Following is a sitminary of the history of federal, state and local marijuana legislation
and case law, as background for a discussion of current marijuana issues in Petaluma.
History of Marijuana Laty
Controlled Substances Act
In 1970, Congress enacted the Controlled Substances Act ( "CSA ") which, among other things,
makes it illegal to import, manufacture, distribute, possess, or use marijuana in the United States.
Marijuana is still illegal under federal law as it exists today.1
Compassionate Use Act
In 1996, California voters approved. Proposition 215 entitled "The Compassionate Use Act of
1996" ( "CUA "), which creates a limited exception from criminal liability under state law for
seriously ill persons who are in need of medical marijuana for specified medical purposes and
who obtain and use medical marijuana under limited, specified circumstances.2 The CUA
expressly anticipated the enactment of additional local legislation.. It provides: "Nothing in this
section shall be construed to supersede legislation prohibiting persons from engaging in conduct
that endangers others, nor to condone the diversion of marijuana for non - medical purposes. "3
Medical Marijuana Program
On January 1, 2004, the Legislature adopted Senate Bill 420, known as the Medical Marijuana
Program ( "MMP ").4 The MMP establishes the term "qualified patient," defined as a person
whose. physician has recommended the use of marijuana to treat a serious illness or any other
illness for which marijuana provides reliefs The MMP also establishes the term "primary
caregiver," defined as a person who is designated by a qualified patient and "has consistently
assumed responsibility for the housing, health, or safety" of the patient. "6 Qualified patients and
primary caregivers for qualified patients have immunity from state criminal liability for
possession of marijuana.7
Petaluma Municipal Code Chapter 10.15
On January 21, 2007, the` City Council adopted Ordinance No. 2269 N.C.S., adding Chapter
10.15 to the Municipal Code, which prohibited dispensaries within Petaluma City limits. The
ordinance was intended to protect residents from the secondary impacts associated with
dispensaries, such as illegal sales, loitering, fraud, assaults and other crimes, and to prevent
increased demands for police response resulting from those activities. Chapter 10.15 did not
address marijuana cultivation.
1 21 U.S.C. 801 et seq.
2 Health and Safety Code §11362.5, et seq.
3 Health and Safety Code §11362.5(b)(2).
4 Health and Safety Code § §11362.7 - 11362.83.
5 Health and Safety Code §11362.7(1); see also §11362.5(b)(1)(a).
G Health and Safety Code §11362.7(d); see also §11362.5(e).
Health and Safety Code, §I1362.7(e).
01
Medical Marijuana Case Law
Following enactment of the CUA and MMP, there was extensive litigation regarding the extent
that cities and counties could regulate medical marijuana. In 2013, the California Supreme Court
finally settled the issue of dispensary bans. In Cite of Riverside, the California Supreme Court
held that cities have the authority under their land use and police powers to restrict, limit or
entirely exclude facilities that distribute medical marijuana and to enforce such policies by
nuisance actions.8 In the same year, following the Riverside case, the Third District Court of
Appeal held in Maral that cities have the authority to ban marijuana cultivation within their
boundaries.9 At the time of the City of Riverside and Maral rulings, it was well settled that
California cities had the authority to ban both marijuana dispensaries and cultivation.
Subsequently, on December 1, 2015, the Fifth District Court of Appeal issued its opinion in
Kirby, which upheld a county ordinance banning medical marijuana dispensaries, cultivation and
storage, but invalidated the ordinance's classification of local medical marijuana cultivation as a
misdemeanor. 10 The court held that Section 11362.71 of the MMP preempts local
criminalization of medical marijuana cultivation. Although the court in Kirby invalidated the
local criminalization of medical marijuana cultivation, the court noted that local prosecution of
medical marijuana cultivation public nuisances is not preempted, because the Legislature
recognizes the failure to abate a public nuisance after notice as a separate crime.
Medical Marijuana Regulation and Safety Act
Three bills, AB 243, AB 266, and SB 643, collectively entitled the "Medical Marijuana
Regulation and Safety Act" ( "MMRSA ") were signed by the Governor October 9, 2015.11 The
three bills were triple joined and signed as a package., The legislation created a statewide
regulatory and licensing program covering a broad range of medical marijuana related activities,
including cultivation, commercial cannabis activity, transport, delivery, and physician
recommendations of medical marijuana. In some ways the MMRSA regulatory scheme is
similar to that governing alcohol, with the state licensing distributers/retailers, and local
governments retaining some local control through exercise of their police powers.
AB 243, part of the MMRSA regulating medical marijuana cultivation,. generally prohibits
cultivating medical marijuana without first obtainin� both a permit from the local jurisdiction in
which the cultivation will occur, and a state license. 2 Under this bill as originally proposed, if a
local jurisdiction did not have land use regulations or ordinances regulating marijuana cultivation
in effect by March 1, 2016, the state would become the sole licensing authority for medical
marijuana cultivation in that jurisdiction. The bill's author ultimately introduced urgency
legislation that deleted the deadline.
Section 11362.777(g) of the MMRSA created an exception from state licensing requirements for
qualified patients cultivating marijuana in cultivation areas that do not exceed 100 square feet for
8 00 of Riverside v. Inland Empire Patients Health and Wellness Center, Inc., (2013) 56 CalAth 729.
9 Maral v. Cite of Live Oak, (2013) 221 Cal.App.4`' 975.
to Kirby v. County of Fresno, (2015) 242 Cal.App.4`1' 940.
11 Business and Professions Code §§ 144, 205.1, 2220.05 et seq., 19300 et seq., Fish and Game Code §11362.769 et
seq., Government Code §9147.7, Health and Safety Code § 11362.775 et seq., Labor Code § 147.5, Revenue and
Taxation Code §31020, Water Code §13276 et seq.
12 Health and Safety Code §11362.777(b)
3
the patient's personal medical use and not for sale, distribution, donation, or provision to any
other person or entity, and for primary care givers cultivating marijuana in cultivation areas that
do not exceed 500 square feet exclusively for the personal medical use of not more than five
specified qualified patients for whom they act as primary caregivers without compensation, .
except as permitted by law. 13 This exception in the MMRSA was important for local
jurisdictions like Petaluma that considered banning medical marijuana cultivation, subject to an
exception for qualified patients and primary caregivers, because it excused eligible qualified
patients and primary caregivers from obtaining state cultivation licenses, which they would be
unable to. obtain without a local permit.
Without the exception in Section 11362.777(g), Petaluma would have been required to issue
local permits for qualified patients and primary care givers to permit them to cultivate medical
marijuana without violating state law. The exemption in Section 11362:777(g) expressly
reserved local jurisdictions' authority to regulate or ban the cultivation, storage, manufacture,
transport, provision or other activity by exempt persons, and to enforce such regulations or
bans. 14 In other words, the MMRSA expressly permitted local agencies like Petaluma to ban
local cultivation of medical marijuana altogether, regardless of the exception for qualified
patients and,primary caregivers.
AB 266, part of the MMRSA regulating commercial cannabis activity such as manufacturing,
distributing, processing, storing, testing, labeling, transporting, or selling medical cannabis or
medical cannabis products, expressly did not supersede or limit existing local authority for law
enforcement activity, enforcement of local zoning requirements or local ordinances, or
enforcement of local permit or licensing requirements. 15 AB 266 provided that medical
marijuana deliveries as defined can only be made by a dispensary and in a local jurisdiction that
does not explicitly prohibit it by a local ordinance. 16 Together, these MMRSA provisions
recognized the authority of local jurisdictions to ban or otherwise regulate commercial cannabis
activity like marijuana processing, as well as local delivery of medical marijuana. S13 643, part
of the MMRSA regulating physician cannabis recommendations and commercial, cannabis
activity, provided that qualified patients and primary caregivers as defined are exempt from the
licensing requirements under that chapter. 17 These statutes provided a legal basis for local
agencies, if they wished, to ban commercial cannabis activity and marijuana delivery.
Amendments to Chapter 10.15 of the Petaluma Municipal Code
On September 28, 2015, the City Council conducted a workshop to consider the issue of local
regulation of medical marijuana cultivation and a draft ordinance that would amend the City's
existing medical marijuana regulations to include requirements regarding medical marijuana
cultivation. Interested parties, including medical marijuana and patient advocates and patients
attended the meeting. The Council did not introduce the draft ordinance and directed to staff to
conduct stakeholder meetings.
13 Health and Safety Code § 11362.777(g).
14 Health and Safety Code § 11362.777(g).
Is Business and Professions Code § 19315 (a).
16 Business and Professions Code § 19340(a).
17 Health and Safety Code § 19319(a).
0
In accordance with direction of the City Council, on November 6, 2015, staff from the Police
Department met with representatives of the Sonoma Alliance for Medical Marijuana (SAMM),
the Sonoma County Growers Alliance (SCGA), and Americans For Safe Access (AFSA). All
three local organizations provide support services for medical marijuana patients. They
expressed interest in working with the City to develop local regulations: The dialogue was
productive and the stakeholders appreciated the work by staff to address nuisance issues while
respecting patient rights. Following the stakeholder meetings staff presented and discussed the
stakeholder recommendations in the staff report prepared for City Council consideration. The
stakeholder recommendations included the following:
that the City of Petaluma adopt the same local regulations adopted by the County of
Sonoma;
removal of the restriction limiting indoor cultivation areas that are not locally prohibited
to 50% of the non - living or garage area of a residence; and
establishment of a permit process to create local tax revenue benefits.
At the time, the use of Petaluma homes for illegal cultivation of marijuana for commercial sale
was increasing, as indicated by the following:
• at the more than 30 community town hall meetings held beginning in 2013, marijuana
cultivation in neighborhoods remained one of the top five neighborhood complaints of
City residents;
• complaints from property owners who rented their homes and subsequently discovered
that renters converted the homes to indoor marijuana grows;
• a significant increase in home invasion robberies, with such attacks frequently involving
guns and violence; and
• an increase in the number of complaints from residents about indoor or outdoor
marijuana grows.
Of concern to Police Department staff at the time was the potential for using the medical
marijuana laws to skirt the law and grow marijuana illegally for commercial sale. The Police
Department was aware of people obtaining Proposition 215 cards from multiple medical
marijuana patients and using the cards to grow additional marijuana for commercial sale. The
unclear distinction between medical and illegal commercial cultivation and the lack of local
regulations governing medical marijuana. cultivation created difficulties for'law enforcement and
the community by:
• enabling large indoor cultivation areas in homes;
• increasing building and. fire code violations exposing residents and neighbors to potential
hazards and endangering first responders;
• exposing residents to health hazards from mold and water damage;
• creating increased nuisance conditions in neighborhoods; and
• increasing other illegal activities such as the frequency of home invasion robberies, and
gun use, undermining neighborly communities.
On November 16, 2015, the City Council considered for introduction, a draft ordinance prepared
in response to the Council's September guidance to staff and stakeholder input. The draft
ordinance created a single exception to a ban on cultivation: qualified individuals could utilize up
to 100 square feet of non- living, indoor space, at their residence. The exception would allow
cultivation inside a house, or in an enclosed ancillary structure, such as a garden shed, as long as
the structure consisted of opaque walls, a roof, and a door with a lock. Based on testimony
provided at the public meeting, and similar correspondence, the City Council provided further
direction related to outdoor cultivation: A majority of the Council members supported
excluding from the City's cultivation ban limited outdoor cultivation for qualified patients and
primary caregivers consisting of up to three mature plants that can be cultivated outdoors, as part
of the 100 square foot maximum. At the time, the March 1, 2016 deadline included in AB -243
was also discussed, with the Council directing that any amendments to Chapter 10,15 of the
Petaluma Municipal Code should be completed so that the ordinance would become effective
prior to March 1, 2016,
On January 4, 2016, staff presented the City Council a revised ordinance to amend Chapter 10.15
consistent with the Council's November, 2015 direction. The City Council introduced the
ordinance. Ordinance 2563 - N.C.S. was adopted January 25, 2016 and tools effect February 25,
2016. The Ordinance incorporated the following amendments into the medical marijuana
regulations in Chapter 10.15 of the Petaluma Municipal Code:
• an updated purpose section addressing the intent to expand Chapter 10.15 to regulate
medical marijuana cultivation, commercial cannabis activity, and delivery;
• a replacement definitions section adding definitions required by the expanded chapter and
updating definitions to'conform to the MMRSA;
• an updated dispensary prohibition that also prohibits commercial cannabis activity,
subject to exceptions specified in the chapter;
• a prohibition against marijuana cultivation, subject to specified exceptions for qualified
patients and primary caregivers;
• a prohibition against medical marijuana delivery, subject to specified exceptions for
qualified patients and primary caregivers;
• a revised prohibition against the granting of medical marijuana entitlements in the City,
consistent with the expanded purposes of the chapter; and
• a revised enforcement provision establishing that all activity prohibited under the chapter
is a public nuisance.
Ordinance 2563 —N.C.S required qualified patients and primary caregivers to satisfy the
following to qualify for the cultivation exception:
• They must be qualified patients or primary caregivers as defined by law.
• Either a qualified patient or primary caregiver must reside full -time at the residence
where the medical marijuana cultivation occurs.
• Cultivation of medical marijuana in any agricultural, commercial, office, industrial, open
space, special purpose, or overlay /combining zoning districts could not qualify.
• Cultivation using grow lights that exceed one thousand two hundred (1,200) watts or
generators or gas products could not qualify.
• Only outdoor cultivation consisting of 3 or fewer mature plants qualified.
• Cultivation that can be seen or smelled from the public right of way or private property
could not qualify.
I
• Cultivation inside of residences that are not in full compliance with the City's Municipal'
Code, including its building code and fire code, could not qualify.
• Indoor cultivation that exceeds the lesser of 50% of the non - living area /garage area of a
residence or 100 square feet, or that displaces required on -site parking could not qualify.
• Where indoor and outdoor cultivation are both occurring at the same residence, only
cultivation that meets all the requirements for eligible indoor and outdoor cultivation and
that does not exceed a total 100 square feet for the indoor and outdoor cultivation areas
combined could qualify.
• Cultivation must remain at all times a secondary or accessory use to the residential use of
the residence to qualify.
The prohibition in Ordinance 2563 N.C.S. against commercial cannabis activity was intended to
treat commercial medical marijuana processing in the City as a nuisance. Such processing,
including extracting hash oil fiom marijuana, has resulted in property loss in the City and poses
significant risk of personal injury and property damage. To harmonize Petaluma's medical
marijuana regulations with the MMRA, it was necessary to address commercial cannabis activity
because the MMRSA covers marijuana processing under its definition of commercial cannabis
activity. The definition of cultivation in the MMRA does not cover processing. The addition of
a delivery ban, subject to a specified exception for qualified patients and primary caregivers, was
intended to address health and safety hazards, negative neighborhood impacts and increased
demands on the police department that can result from medical marijuana delivery occurring
during nighttime hours, or consisting of large amounts of marijuana, or involving medical
marijuana delivery by minors.
By adopting a cultivation ban that included an exception for qualified patients and primary
caregivers, Ordinance 2563- N.C.S, had the effect of banning all marijuana cultivation in the
City, except that of qualified patients and primary caregivers in accordance with the ordinance
requirements. As a result, eligible patients and primary caregivers could avoid violating local
and state cultivation regulations. Similarly, Ordinance 2563- N.C.S.included an exception to its
medical marijuana delivery ban for delivery to qualified patients and primary caregivers
consistent with the ordinance. By adopting commercial cannabis and delivery bans that
contained exceptions for qualified patients and primary caregivers, Ordinance 2563 - N.C.S.
provided a means for qualified patients and primary caregivers to avoid violating local and state
commercial cannabis and delivery regulations. Ordinance 2563.N.C.S. was also drafted to be
consistent with the holding in Kirby by defining violations of the chapter to be public
nuisances. 18
Throughout the City's medical marijuana regulatory process, City staff has advised against
issuing medical marijuana permits, because marijuana remains illegal under federal law, and City
authorization of marijuana activity could be a basis of liability for the City and its officials under
the CSA.19 So far the City. Council has not supported issuance of local medical marijuana
permits.
In 2011, in a case before the Second District Court of appeal, the court considered whether the
City of Long Beach permitting regulations for medical marijuana collectives was preempted by
18 Kirby v. County offresno, (2015) 242 Cal.App.4 °1 940,
19 U.S. v. Oakland Cannabis Buyers Coop (2001) 532 U.S. 483.
7
the CSA. 20 The court concluded that the Long Beach regulations were preempted, and
considered in dicta whether the city's. regulations required city officials to violate federal law by
aiding or abetting GSA violations. The court noted that the U.S. Attorneys for the Eastern and
Western Districts of Washington took the position that state employees who conducted activities
mandated by Washington proposals for licensing marijuana growers and dispensaries would not
be immune from CSA liability. The court further observed that even though a California court
held that law enforcement officials who return confiscated medical marijuana do not thereby
violate the CSA, the court was uncertain whether "the federal courts would take such a narrow
view. "21 The Long Beach case was superseded by grant of review, but in October, 2011, the
U.S. Attorneys for California also sent letters to local governments indicating that city
employees who conduct activities mandated by local marijuana ordinances were not immune
from CSA liability. The Department of Justice updated its position in 2013. However, the issue
of potential local agency and local agency official liability under the CSA related to local
marijuana permits is not a settled question.
Proposition 64 — The Adult Use of Marijuana Act
California voters approved the Control, Regulate and Tax Adult Use of Marijuana Act, referred
to as the Adult Use of Marijuana Act ( "AUMA "), in November, 2016.22 The act took effect the
day after the election on November 9, 2016. The AUMA decriminalized for state law purposes
specified personal use and cultivation of nonmedical marijuana, and established a state
regulatory and licensing program for nonmedical marijuana commercial cultivation, testing,
distribution and manufacturing. The AUMA regulatory scheme established for nonmedical
marijuana is largely similar to that established for medical marijuana under the MMRSA, with
some differences. The AUMA preserved intact regarding nonmedical marijuana much of the
authority of local agencies to regulate or ban medical marijuana pursuant to the CUA, MMP, and
the MMRSA. However, the AUMA bars local agencies from prohibiting specified personal use
and cultivation of nonmedical marijuana. More particularly, the AUMA provides that it is not a
violation of state or local law for persons 21 years old or older to:
• possess, process, transport, purchase, obtain, or give away to persons 21 years old or
older without any compensation whatsoever not more than 28.5 grams of marijuana not
in the form of concentrated cannabis or not more than 8 grams of concentrated cannabis,
including as contained in marijuana products; 23
• possess, plant, cultivate, harvest, dry, or process not more than.six living marijuana plants
and possess the marijuana produced by the plants; 24
• smoke, or ingest marijuana or marijuana products; or to 25
• possess, transport, purchase, obtain, use, manufacture, or give away marijuana
accessories to persons 21 years of age or older without any compensation whatsoever.
26
20 Pack v. Superior Court (NI 1) 199 Cal.AppAth 1070, revietiv granted and opinion superseded by Pack v. Superior
Court (2012) 136 Ca1:Rptr, 3d 665,
21 Pack v. Superior Court (2011) 199 Cal.App.4 h 1070, review granted and opinion superseded by Pack v. Superior
Court (2012) 136 Cal.Rptr. 3d 665, citing City of Garden Grove v. Superior Court (2007) 157 Cal.App.401 355.
22 Health and Safety Code § 11018 et seq., Business and Professions Code §26000 et seq., Revenue and Taxation
Code §34010 et seq., Food and Agricultural Code §81000 et seq.
23 Health and Safety Code §11362.1(a)(1),(2).
24 Health and Safety Code §11362.1(a)(3).
25 Health and Safety Code §11362,1(a)(4).
8-
Under the AUMA, permitted personal cultivation:
must be in accordance with reasonable local regulatory ordinances; 27
must ensure that living plants and any marijuana they produce in excess of 28.5 grams are
kept within the person's private residence or upon the grounds of the residence in a
locked space not visible by normal unaided vision from a public place; 28
cannot exceed six living plants cultivated, harvested, dried or processed within a single
private residence, including a house, apartment unit, mobile home, or other similar
dwelling, or upon the residence grounds at one time. 29
Although the AUMA permits local agencies to impose reasonable regulations on personal,
nonmedical marijuana cultivation, harvesting, drying, and processing, such regulations may not
take the form of a complete prohibition, as long as the permitted activities occur inside a private
residence or an accessory structure to a private residence that is fully enclosed and secure. 30
Also, local jurisdictions cannot prevent those that are licensed under the AUMA from
transporting marijuana or marijuana products on public roads.31 The AUMA authorizes local
agencies to completely prohibit outdoor cultivation of nonmedical cannabis on the grounds of
private residences. 32 If the California Attorney General determines that use of nonmedical
marijuana in California is lawful under federal law, local prohibitions of outdoor cultivation of
nonmedical marijuana on private residence grounds are deemed repealed.33 The AUMA also
permits public and private employers to maintain drug and alcohol free workplaces and to
prohibit marijuana use by employees and prospective employees, 34 Under the AUMA local
agencies may also prohibit or restrict possession, processing, transportation, purchasing,
obtaining, giving away, planting, cultivating, harvesting, drying, processing, smoking, ingesting,
or manufacturing marijuana or marijuana products in buildings owned, leased or occupied by the
local agency. 35
The nonmedical marijuana uses legalized for state law purposes under the AUMA do not
include:
smoking or ingesting marijuana or marijuana products in public places except specified
licensed retail establishments; 3-
smoking marijuana or marijuana products in a location where smoking tobacco is
prohibited; 37
26 Health and Safety Code § 11362.1(a)(5).
27 Health and Safety Code §11362.2(a)(1).
28 Health and Safety Code §11362.2(a)(2).
29 Health and Safety Code § 11362.2(a)(3).
30 Health and Safety Code §11362.2(b)(2).
31 Business and Professions Code §26080(b).
32 Health and Safety Code §11362.2(b)(3).
33 Health and Safety Code §11362.2(b)(4).
34 Health and Safety Code §11362.45(f).
35 Health and Safety Code §11362.45(g).
36 Health and Safety Code §11362.3(a)(1).
37 Health and Safety Code §11362.3(a)(2).
E
• smoking marijuana or marijuana products within 1000 feet of.a school, day care center,
or youth center while children are present, except in or upon the grounds of a private
residence or in specified retail establishments, but only if the smoking is not detectable
by others on the grounds of the school, day care center or youth center while children are
present; 38
• possessing an open container of marijuana or marijuana products while driving, operating
or riding in the passenger seat or compartment of a motor vehicle, boat, vessel, aircraft or
other vehicle used for transportation, 3
• possessing, smoking or ingesting marijuana or marijuana products in or upon the grounds
of a school, day care center or youth center while children are present; 40
• manufacturing concentrated cannabis using a volatile solvent, unless under license;
41
• smoking or ingesting marijuana or marijuana products while driving, or operating a
motor vehicle, boat, vessel, aircraft or other vehicle used for transportation; 42 or
• smoking or ingesting marijuana or marijuana products while riding in the passenger seat
or compartment of a-motor vehicle, boat, vessel, aircraft or other vehicle used for
transportation except as permitted on a motor vehicle, boat, vessel, aircraft or other
vehicle used for transportation that is operated as part of a licensed retail establishment
while no persons under 21 years of age are present. 43
The AUMA permits local agencies to regulate and completely prohibit nonmedical marijuana
businesses that would be subject to state license under the AUMA .44 The state cannot approve
applications for nonmedical marijuana commercial licenses if doing so would violate any lawfill
local ordinance or regulation governing nonmedical marijuana businesses, 45 Applicants for state
nonmedical marijuana business licenses need not provide documentation they have obtained an
authorization to operate from the local jurisdiction in which the business plans to operate.46
The AUMA also establishes a marijuana taxation scheme. Effective January 1, 2018, marijuana
retail sales are subject to a state excise tax of 15% of gross receipts in addition to existing state
and local sales tax. 47 In Petaluma, the total tax rate on retail nonmedical marijuana sales will be
23.125% of gross receipts. Also effective January 1, 2018, the AUMA imposes a cultivation tax
on harvested nonmedical marijuana at the rate of $9.25 per dry - weight ounce on all marijuana
flowers, and $2.75 per dry- weight ounce on all marijuana leaves. 48 After reimbursing state
agency regulatory costs, and funding grants for university research and the Governor's Office of
Business and Economic Development, the AUMA allocates proceeds from the state marijuana
taxes as follows: 60% for youth programs, substance abuse education, prevention and treatment;
20% for environmental cleanup and remediation; and 20% for state and local programs to reduce
driving while intoxicated and local government grants for law enforcement, fire protection and
38 Health and Safety Code §11362.3(a)(3).
39 Health and Safety Code §11362.3(a)(4).
40 Health and Safety Code §11362.3(x)(5).
41 Health and Safety Code §11362.3(a)(6).
42 Health and Safety Code §11362.3(a)(7).
43 Health and Safety Code §11362.3(a)(8).
4" Business and Professions Code §26200(a).
45 Business and Professions Code §26055(e).
46 Business and Professions Code §26056(a).
47 Revenue and Taxation Code §34011.
48 Revenue and Taxation Code §34012.
10
other pro rams addressing public health and safety associated with implementation of the
AUMA. 4 Local governments that ban nonmedical marijuana cultivation, retail sales or products
are ineligible for grants. 50 The AUMA exempts from taxation medical marijuana sales and
cultivation for personal use and by qualified patients and primary caregivers in accordance with
the CUA.51 The AUMA permits imposition of local taxes on nonmedical marijuana. 52 Local
taxation of nonmedical marijuana would apply in addition to the state marijuana excise tax under
the AUMA and existing local sales tax, 53 In other words, an additional local tax rate applicable
to nonmedical marijuana sales in Petaluma would be on top of the 23.125% rate.
DISCUSSION
The issue of marijuana cultivation in Petaluma continues to result in frequent reports to the
Police and Planning Departments, in requests for permits for commercial cultivation; in interest
in cultivation for personal or medicinal use; in public safety incidents that include electrical fires
or ignition of chemical substances utilized in the cultivation process; from crimes occurring at
grow sites; and from neighborhood concerns regarding odors, late night traffic, and related
nuisances, Since the enactment of the January 2016 amendments to Chapter 10. 15, the Police
Department has responded to and successfully resolved more than 29 residential marijuana
cultivation complaints. There were 13 indoor cultivation complaints and 16 outdoor cultivation
complaints. As a result of the Chapter 10,15 regulations, the Police Department was able to ,
successfully abate all 29 nuisances reported in residential neighborhoods, Of the reported cases,
Code Enforcement issued 6 "Notices to Connect," 4 "Notices of Violation," 12 violators
voluntarily collected the problem, and 7 were addressed through criminal prosecution. At the
present time, there are no outstanding marijuana cultivation complaints. None of the abatements
required significant commitment of City Attorney's Office resources or outside legal fees,
The City Council direction during the September 23, 2015 workshop recognized the need of a
segment of the community for medicinal. marijuana, as well as the importance of ensuring the
health and safety of the entire community. However, since the passage of Proposition 64, the
regulatory tools that the Police Department has used to successfully abate marijuana nuisances in
Petaluma neighborhoods are rendered ineffective.
The existing Chapter 10,15 regulations allow the City to exercise local authority recognized in
the MMRSA and in the medical marijuana case law to ban within the City of Petaluma most
medical marijuana - related activity, including dispensaries, cultivation, commercial cannabis
activity and delivery, subject to specified exceptions for qualified patients and primary
caregivers. The limited exceptions for qualified patients and primary caregivers in the existing
ordinance are intended to work in conjunction with exemptions in the MMRSA so that qualified
patients and primary caregivers in Petaluma can cultivate and receive delivery of sufficient
medical marijuana without violating local or state law and without creating nuisance conditions
in the City that create safety risks and diminish the quality of life for all citizens.
49 Revenue and Taxation Code §34019.
so Revenue and Taxation Code §34019(f)(3)(c),
5' Revenue and Taxation Code §34011(g), §340120),
12 Revenue and Taxation Code §34021,
53 Revenue and Taxation Code §34021,
11
The City's existing medical marijuana regulations created exceptions to local bans on medical
marijuana activity, as opposed to establishing a permit scheme, to avoid any potential for City or
City official liability under the CSA, as discussed earlier in this report. Accordingly, Chapter
10.15 provides for limited circumstances under which the City will not enforce its prohibition on
medical marijuana cultivation and other medical marijuana related activity without expressly
authorizing any medical marijuana related activity. This avoids involving the City and City
officials in activity that purports to authorize violations of federal law, while accommodating
access for patients.
The January, 2016 amendments to Chapter 10.15 addressed the concerns expressed by a majority
of the Council that cultivation should not occur inside the living areas of structures. A majority
of the Council members were also in favor of excluding from the City's cultivation ban limited
indoor and outdoor. cultivation for qualified patients and primary caregivers. The existing
regulations balance the health and welfare of medical marijuana patients and the health and
welfare of all Petaluma citizens by ensuring that the exceptions for qualified patients and
caregivers do not lead to public nuisances from marijuana odor, attractiveness to theft and related
criminal activity. The Council also expressed concerns regarding excessive energy use and
adequate ventilation and these considerations were addressed as well.
The passage of Proposition 64 creates the challenge as well as the opportunity to address
nonmedical marijuana regulation to maintain public safety and the quality of life in Petaluma.
Before the 2016 updates to Chapter 10. 15, the Police Department lacked the enforcement tools to
address marijuana cultivation in residential neighborhoods. The 2016 amendments provided the
necessary enforcement means needed to abate medical marijuana cultivation. Now that
Proposition 64 has decriminalized nonmedical marijuana cultivation and other related activities
for purposes of state law, staff recommends amending Chapter 10.15 again to apply the same
regulations that have been imposed on medical marijuana in the City to nonmedical marijuana,
for the same reasons the Council authorized the 2016 amendments. However, some additional
changes are needed to comply with key provisions in Proposition 64. For example, staff
recommends replacing square footage limits on medical marijuana cultivation under Chapter
10.15 with a limit of 6 plants per residence. In addition, Staff recommends that the Council
consider directing staff to prepare amendments to Chapter 10.15 of the Petaluma Municipal Code
that would establish regarding nonmedical marijuana the following, consistent with the current
regulations governing medical marijuana:
• an updated purpose section addressing the intent to expand Chapter 10.15 to regulate
nonmedical marijuana in addition to medical marijuana dispensaries, cultivation,
commercial cannabis activity, and delivery;
• a replacement definitions section adding definitions required by the expanded chapter and
updating definitions to conform to definitions in the AUMA;
• a prohibition against nonmedical marijuana cultivation, subject to an exception for 6
plants and the marijuana they produce in accordance with the AUMA;
• a prohibition against nonmedical marijuana delivery, subject to specified requirements of
the AUMA;
• a prohibition against the.granting of nonmedical marijuana entitlements in the City,
consistent with the expanded purposes of the chapter; and
12
• a revised enforcement provision establishing that all activity prohibited under the
expanded chapter is a public nuisance,
In keeping with the provisions of existing Chapter 10. 15, staff recommends that the following
requirements also be applied to nonmedical marijuana:
• No cultivation of nonmedical marijuana in any agricultural, commercial, office,
industrial, open space, special purpose, or overlay /combining zoning districts.
• Cultivation may not use grow lights that exceed one thousand two hundred (1,200) watts
or generators or gas products,
• Only cultivation totaling no more than 6 plants (including indoor and outdoor cultivation)
per residence is exempt.
• Cultivation that can be seen or smelled from the public right of way or private property is
not exempt,
• Cultivation inside of residences that are not in full compliance with the City's Municipal
Code, including its building code and fire code, is not exempt.
• Subject to the AUMA exception for 6 plants, indoor cultivation that exceeds the lesser of
50% of the non - living area /garage area of a residence or 100 square feet, or that displaces
required on -site parking is not exempt.
• Cultivation must remain at all times a secondary or accessory use to the residential use of
the residence to be exempt,
Staff believes that the recommended amendments to Chapter 10,15 of the Petaluma Municipal
Code to make the requirements of that chapter applicable to nonmedical marijuana can preserve
patients' access to medical marijuana, and preserve the City's existing regulatory tools for
preventing nuisances and maintaining quality of life in Petaluma neighborhoods, while at the
same time complying with changes to state marijuana .law pursuant to Proposition 64, the Adult
Use of Marijuana Act.
FISCAL IMPACT
The Police Department would continue to enforce violations of Petaluma Municipal Code
Chapter 10.15 with existing resources. If other City Council policy direction is given, associated
financial impacts would be evaluated and included in future staff recommendations and agenda
materials.
ATTACHMENTS
1, Existing Chapter 10.15 of the Petaluma Municipal Code
2. League of California Cities' Frequently Asked Questions Regarding Proposition 64
3. League of California Cities' AUMA Memo
13
ATTACHMENT 2 ATTACHMENT 2
Cannabis Impacts — Outreach and Research
CITIES CONTACTED:
Santa Rosa; Rohnert Park; City of Sonoma; Cotati; County of Sonoma; Town of Windsor;
Cloverdale; Healdsburg; San Rafael; Santa Rosa; Oakland
Sonoma County Drug Enforcement Agency Task Force; State Attorney General's Office; Lake
County Sherriff's Office; Rohnert Park Department of Public Safety; Sonoma County Sheriff;
Santa Rosa Police Department; Cotati Police Department; Sebastopol Police Department;
Petaluma Fire Department; Grover Beach Police Department; Santa Barbara Police Department;
Desert Hot Springs Police Department; Redmond, WA Police Department; Renton, WA Police
Department; Littleton, CO, Colorado Division of Justice, Pasco WA Police Department; Grand,
Junction, CO Police Department, Arcata, CA Police Department, Eureka, CA Police Department,
Redding, CA Police Department, Bellingham, WA Police Department
*Italicized agencies currently do not have dispensaries.
Sutter; Santa Rosa Memorial; Petaluma Valley
Black, L. (2017, April 19). The Credit Unions and Small Banks That Solved the Cannabis Cash Crisis. The Stranger.
Chou, E. (2017, July 26). Los Angeles Considers Creating a Bank for Pot Industry. Retrieved September 19, 2017,
from Daily Democrat: Chou, Elizabeth. "Los Angeles Considers Creating a Bank for Pot Industry." Daily
Democrat, Daily Democrat, 26 July 2017,
www.dailydemocrat.com / article/ NI /*20170726/BUSINESS/170729900.
Foundation, T. P. (2015, May). Colorado's Legalization of Marijuana and the Impact on Public Safety. Retrieved
September 25, 2017, from Police Foundation: https:/ /www.policefoundation.org /publication /colorados-
legalization-of- marijuana- and - the - impact -on- public- safety -a- practical - guide- for - law- enforcement2/
Freisthler, N. J. (2012, July). Exploring the ecological association between crime and medical marijuana
dispensaries. Retrieved July 1, 2017, from US National Library of Medicine, National Institutes of Health:
https : / /www.ncbi.nim.nih.gov /pubmed /22630790
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Retrieved July 2017, from Unites States, US Department of Justice, Office of the Deputy Attorney General:
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Governing the States and Localities. (2017, March 23). Retrieved July 1, 2017, from State Marijuana Laws in 2017
Map: http: / /www.governing.com /gov- data / state - marijuana -laws- map - medical - recreational.html
Green, E. (2017, April 21). SF looks into forming its own bank. San Francisco Chronicle.
Gruenewald, B. F. (2017, April 27). The Journal of Primary Prevention. Retrieved July 1, 2017, from From Medical to
Recreational Marijuana Sales: Marijuana Outlets and Crime in an Era of Changing Marijuana Legislation:
https:Hlink.springer.com/article/10.1007/slO935-017-0472-9
Hedin, M. (2017, January 6). Oakland to study creating community bank. Retrieved September 19, 2017, from East
Bay Times: http: / /www.eastbaytimes.com/ 2017 /01/06 /oakland -to- study- creating- community -bank/
Ingold, J. (2016, July 25). Kids' emergency room visits for marijuana increased in Colorado after legalization, study
finds. Retrieved September 21, 2017, from The Denver Post:
http: / /www.denverpost. com/ 2016 /07/25 /colorado- kids - emergency -roo m- visits -marij ua na- increased/
Kuhn, W. E. (2013). Identifying Emerging Public Health Issues in States with State -Level Marijuana Legalization.
Washington D.C.: National Attorneys General Training & Research Foundation.
Magdalena Cerda, D. M., Melanie Wall, P., Tianshu Feng, M., & al, e. (2017, February). The Jama Network.
Retrieved July 1, 2017, from Association of State Recreational Marijuana Laws With Adolescent Marijuana
Use: http: / /jamanetwork. com / journals /jamapediatrics /article- abstract /2593707
Mikos, R. (2009). On the Limits of Supremacy: Medical Marijuana and the States' Overlooked Power to Legalize
Federal Crime. The Vanderbilt Law Review.
Miles Light, A. O. (2016). The Economic Impact of Marijuan Legalization in Colorado. Denver: Marijuana Policy
Group.
Molina, J. (2017, September 13). Santa Barbara Revokes Medicinal - Marijuana Dispensary License. Retrieved
September 20, 2017, from Noozhawk:
https: / /www.noozhawk.com /article /santa_barbara_ revokes_ medicinal _marijuana_dispensary_license
Morris, R. G. (2014, March 26). The Effect of Medical Marijuana Laws on Crime: Evidence from State Panel Data,
1990 -2006. Retrieved July 1, 2017, from Plos One Tenth Anniversary:
http : / /journals.plos.org /plosone /article ?id = 10.1371 /journal.pone.0092816
National Academies of Sciences, E. a. (2017). The Health Effects of Cannabis and Connabinoids: The Current State of
Evidence and Recommendations for Research. Washington DC: The National Academies Press.
Nora D. Volkow, M. (2017, August). NIH - National Institute on Drig Abuse. Retrieved September 6, 2017, from
Marijuana - Letter from the Director: https: / /www.drugabuse.gov /publications /research-
reports /marijuana /letter - director
Pacula, R. L. (2017). Regulating Medical Marijuana Markets - Insights from Scientific Evaluations of State
Experiments. Florida House of Representatives Health & Human Services Committe, Subcommittee on
Health Quality. Florida: Rand Corporation.
Padilla, S. o. (2016). Statement of Vote. CA Secretary of State.
Pyke, A. (2017, February 28). Think Progress. Retrieved July 1, 2017, from Sessions: Legal pot drives violent crime,
statistics be damned: https:Hthinkprogress.org/ sessions - legal- pot - violent- crime- 8640413ca090/
Reed, J. K. (2016). Marijuana Legalization in Colorado: Early Findings. Denver: Colorado Department of Public
Safety.
State Marijuana Laws in 2017 Map. (2017, March 23). Governing Magazine.
The National Academies of Sciences, Engineering, Medicine. (2017). Retrieved July 1, 2017, from The Health Effects
of Cannabis and Cannabinoids: The Current State of Evidence and Recommendations for Research:
https: / /www. n p.edu /cata log /24625/the -h ea Ith- effects -of -ca n n bis -a nd- cannabinoids -th e -cu rrent -state
The National Alliance for Model State Drug Laws. (2014). Federal Preemption of State Laws. Charlottesville: The
National Alliance for Model State Drug Laws.
The Police Foundation. (2015, May). 5 Things you Need to Know About Marijuana Legalization's Impact on Public
Safety. Retrieved September 25, 2017, from Police Foundation:
https:/ /www.policefoundation.org /publication /5- things -you- need -to- know - about - marijuana-
legalizations- impact -on- public- safety/
Treeby, E. (2017, February 24). CannaBusiness Law. Retrieved July 1, 2017, from MCRSA License Types: Which
License is Right for Your Medical Cannabis Business ?: http: / /cannabusinesslaw.com /2017 /02 /mcrsa-
license- types- which - license -is- right- for - your - medical- cannabis - business/
Trilling, D. (2017). Marijuana Legalization: Research Review on Crime and Impaired Driving. Harvard Kennedy
School - Shorenstein Center on Media, Politics and Public Policy.
United States Department of Treasury, F. C. (2014, February 14). Department of the Treasury. Retrieved July 2017,
from https: / /www.fin cen.gov/ sites /default /files /shared /FIN- 2014- G001.pdf
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