HomeMy WebLinkAboutStaff Report 4.A 11/06/2017Agenda Item #4.A
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DATE: November 6, 2017
TO: Honorable Mayor and Members of the City Council
FROM: John C. Brown, City Manag
SUBJECT: Ordinance Revising Local Cannabis Regulations
RECOMMENDATION
It is recommended that Council approve, for first reading, an Ordinance Repealing and
Replacing Chapter 10.15 of the Petaluma Municipal Code "Medical Marijuana ", Retitling the
Chapter "Cannabis" and Extending the City's Regulations to Medical and Non - Medical
Cannabis Uses in the City.
BACKGROUND
Petaluma adopted an ordinance regulating medical marijuana on January 21, 2007, and updated
it on January 6, 2016. The ordinance bans medical marijuana - 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.
In November 2016, California voters passed Proposition 64 (Prop. 64) legalizing recreational
cannabis. Prop. 64 went into effect on November 9, 2016; commercial sales provisions are
effective January 1, 2018. The City needs to update its regulations prior to January 1, 2018 to
conform to provisions of Prop. 64; to impose local preferences where discretion exists; and to
provide clarity for those wishing to operate cannabis - related businesses.
The City Council conducted two public discussions earlier this year, related to the City's
cannabis regulations. The first was a workshop conducted on June 26, 2017; the second was part
of the regular City Council meeting of October 2, 2017.
Discussion in June 2017 focused on extending the City's current bans on medical marijuana to
recreational activities associated with cultivation, sales and delivery, manufacturing, and testing,
Council members did not want to allow commercial -scale cultivation, or extending small -scale
cultivation outside the existing exceptions provided in residential zoning. The Council expressed
a range of opinions, however, regarding other cannabis - related issues. Several Councilmembers
indicated a desire to review more data before offering direction to amend the City's ordinance.
Areas of interest were: crime rates associated with dispensaries in the cities that have permitted
them; how cannabis - related businesses address Federal banking restrictions; how other
jurisdictions justified permitting schemes in conflict with Federal law; whether any criminal
prosecution of an elected or appointed official has occurred in jurisdictions with permitting
schemes; impacts on emergency rooms and emergency medical calls related to cannabis; and
whether other cities had issued permits, then revoked them, and why.
Staff conducted research between June and October, including contact with law enforcement
agencies in California Colorado and Washington; local first responders and hospital emergency
room staff; and professionals assigned to cannabis regulation in other California agencies. Staff
also conducted extensive review of reports, studies, news articles and other written material.
Findings were presented to the City Council at the October 2, 2017 meeting. A copy of the
October 2, 2017 staff report is provided as Attachment 2.
Staff reported that dispensaries and commercial cannabis outlets can increase localized crime,
but have not thus far been shown to have appreciably done so. Increased crime as a definitive
trend, particularly in California, remains to be shown. Negative long -term health effects,
associated with children and adolescents in particular, may occur but it does not appear cannabis
use has appreciably increased demands on emergency medical services. Given the status of
federal enforcement, banking and cash handling are problematic for cannabis - related businesses,
but some solutions have been implemented and others are being further explored. It was
determined other cities have addressed legalization utilizing 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. Associated with this question was the concern
that decision makers may be liable for permitting uses involving a substance classified as illegal
under federal law. Staff researched this question relying on 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.
Following that portion of the October 2, 2017 meeting, staff discussed with Council its
recommendations for amendments to the City's cannabis regulations. Those recommendations
attempted to preserve the City's ban with exclusions approach, recognizing cannabis - 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.
Based on these findings, staff recommended the existing bans contained in Chapter 10. 15, with
certain exceptions, be retained and made applicable to both medical and non - medical cannabis.
Exempt from the ban would be cultivation in residential zones of up to 6 plants, consistent with
Proposition 64; commercial sales, for a limited number of businesses that serve no customers on
site and fill mail, phone, and e- commerce orders by delivery only; and manufacturing and testing
businesses that do not employ volatile means of extracting or concentrating cannabis or its
constituent properties, for which cannabis - related activities are ancillary to primary activities.
Suggestions regarding restrictions and limiting conditions on these activities were also
recommended or discussed, as detailed in Attachment 2. Staff recommended that these
exceptions be addressed through a limited term, revocable, permitting approach, and allowed
only in zoning that provides for the particular kind of business activity.
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The City Council considered, and accepted these recommendations, but requested that staff
broaden the exception for manufacturing and testing to allow for a broader range of activities
beyond those considered ancillary, and including small -scale production and boutique products.
DISCUSSION
The attached draft ordinance, which repeals and replaces Chapter 10.15 of the Petaluma
Municipal Code "Medical Marijuana" and retitles the chapter "Cannabis ", extends the City's
current marijuana regulations to Non - Medical Cannabis Uses, incorporates the changes directed
by the City Council on October 2, 2017, and is provided for your consideration, first reading and
approval. Globally, the draft ordinance replaces references to "marijuana" with "cannabis,
consistent with the enabling legislation authorized by Proposition 64. It makes a series of
changes to recitals, to provide the findings for expanding the City's ban to recreational cannabis,
changing cultivation allowances, the additional exemptions for manufacturing testing, and retail
delivery; and environmental review. Changes also modify definitions to incorporate the
language of Proposition 64 enabling legislation and to address the changes directed by the City
Council. Key sections of the draft Ordinance are Sections 10. 15.040 — "Commercial Cannabis
Activity ", 10. 15.050 — "Marijuana Cultivation, 10. 15.060 — "Cannabis Delivery ", and 10. 15.080
— "Regulations ".
Section 10. 15.040 enumerates exceptions to the ban on commercial activities. Included in
exceptions is manufacture of certain products utilizing cannabis infusions, or infusion processes.
The section does not allow manufacture of cannabis products involving cannabis using volatile
solvents. The section allows for testing, which would include quality control, potency, and
constituent testing, but would not allow for testing requiring extractions utilizing volatile
compounds. The section provided for very limited sale of recreational cannabis and dispensing
of medicinal products, but only with no sale of cannabis products on site, no customers permitted
on site at any tune, no on -site or on- delivery vehicle signage indicating the presence of cannabis
products, and at a maximum of only two locations in Petaluma. These exceptions will only be
allowed with valid, unexpired, unrevoked, fully -paid, licenses, permits, or other authorization
issued by the City in accordance with all applicable state and laws and only when consistent with
zoning.
Section 10. 15.050 amends the residential cultivation exemption to allow for no more than six
plants, consistent with Proposition 64, which may be grown indoors or outdoors, with conditions
regulating and restricting such cultivation.
Section 10. 15.060 provides that the only delivery that may be conducted in Petaluma is that
consistent with Section 10.15.040, makes consistent with Proposition 64 the minimum allowable
age of delivery personnel, and limits hours of delivery operation between 8:00 am and 8:00 pm.
Section 10. 15.080 provides that regulations will be developed to promulgate the requirements of
this chapter. The Council will note that the recommended ordinance does not, for the most part,
detail requirements, conditions, limitations, and restrictions to be placed on cannabis related
businesses. These will be addressed in a separate set of regulations currently under development.
A resolution providing for the approval of these regulations will be presented to the City Council
for consideration in December 2017. This approach provides greater flexibility; changes to the
regulations that may be necessary or desirable in the future will not require an ordinance
amendment.
As noted, changes to the City's cannabis regulations need to be completed and effective by
January 1, 2018 when State regulations regarding commercial activity go into effect. A first
reading of the draft ordinance on November 6, 2017, second reading and adoption on November
20, and the requisite 30 day waiting period that follows will assure the January 2018 deadline is
met. In addition to the regulations being developed for the December 4, 2017 meeting, and a
recommended fee structure, staff will also develop application and permit formats during the
next two months, so that Petaluma is prepared to process applications in January 2018.
FINANCIAL IMPACTS
Staff is currently determining an appropriate fee structure to accompany permits for cannabis -
related businesses, based on a full cost recovery methodology. These will be provided to the
City Council in December 2017 for consideration. As noted, the narrow approach to retail,
manufacturing, and testing activities reflected in the recommended ordinance take into
consideration the City's existing resources and the need limit staff time and expense taken in
regulatory activities.
ATTACHMENTS
Draft Ordinance
2. October 2, 2017 staff report
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ATTACHMENT 1
ORDINANCE NO.
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PETALUMA
REPEALING AND REPLACING CHAPTER 10.15, "MEDICAL MARIJUANA," OF
THE CITY OF PETALUMA MUNICIPAL CODE, RETITLING THE CHAPTER
"CANNABIS," AND EXTENDING THE CITY'S CANNABIS REGULATIONS TO
MEDICAL AND NON - MEDICAL CANNABIS USES IN THE CITY
WHEREAS, in 1996 the voters of the state of California approved Proposition 215
which was codified as Health and Safety Code Section 113 62.5, et seq., and entitled "The
Compassionate Use Act of 1996" ( "CUA "); and
WHEREAS, the intent of the CUA was to enable persons who are in need of marijuana
for medical purposes to obtain and use it under specified circumstances; and
WHEREAS, on January 1, 2004, Senate Bill 420, known as the "Medical Marijuana
Program" (codified in Health and Safety Code Sections 11362.7 through 11362.85) ( "MMP ")
became effective to clarify the scope of the CUA; and
WHEREAS, the CUA was limited in scope in that it provided a defense from criminal
prosecution under state law for possession and cultivation of marijuana for qualified patients and
their primary caregivers; established a statewide identification program and afforded qualified
patients, persons with identification cards and their primary caregivers an affirmative defense to
certain enumerated criminal sanctions that otherwise applied to transporting, processing,
administering or distributing marijuana; and
WHEREAS, neither the CUA nor the MMP required or imposed an affirmative duty or
mandate upon local governments, such as the City of Petaluma, to allow, authorize or sanction
the establishment and the operation of facilities cultivating, distributing, or processing medical
marijuana within their boundaries; and
WHEREAS, in 2007 the Petaluma City Council adopted Chapter 10.15 of the Petaluma
Municipal Code prohibiting medical marijuana dispensaries in the City to promote the public
health, safety and welfare and protect citizens from impacts associated with medical marijuana
dispensaries, including, but not limited to, increased public consumption of marijuana and the
potential for increased marijuana DUIs, illegal resale of marijuana obtained at low cost from
dispensaries, loitering, fraud in obtaining or use of medical marijuana identification cards,
robbery, assaults and other crimes, and increased demands for police response resulting from
activities at medical marijuana dispensaries reducing the ability of the city's public safety
officers to respond to other calls for service; and
WHEREAS, on May 5, 2013, the California Supreme Court issued its opinion in City of
Riverside v, Inland Empire Patients Health and Wellness Center, Inc„ (2013) 56 Ca1.4th 729,
which held that neither the CUA nor the MMP expressly or impliedly preempts the authority of
California cities and counties, under their traditional land use and police powers, to restrict, limit,
or entirely exclude facilities that distribute medical marijuana, and to enforce such policies by
nuisance actions; and
WHEREAS, on August 29, 2013, Deputy U.S. Attorney General James Cole issued a
memorandum to all federal prosecutors providing guidance on the enforcement of the federal
Controlled Substances Act, 21 U.S.C. 801, et seq., regarding cannabis, indicating that
enforcement of state law by state and local law enforcement and regulatory bodies should remain
the primary means of addressing marijuana related activity in jurisdictions that have enacted
laws legalizing marijuana in some form and that have also implemented strong and effective
regulatory and enforcement systems to control the cultivation, distribution, sale and possession
of marijuana; and
WHEREAS, on November 26, 2013, the Third District Court of Appeal issued its
opinion in Maral v. City of Live Oak (2013) 221 Cal.App.4th 975, which held that the CUA and
the MMP do not preempt a city's police power to prohibit the cultivation of all marijuana within
that city; and
WHEREAS, during the 2014/2015 legislative session, the California State Legislature
enacted three bills: AB -243, AB- 266, and SB -6 that together established a regulatory scheme
governing medical marijuana that was collectively entitled the "Medical Marijuana Regulation
and Safety Act" ( "MMRSA "): 43; and
WHEREAS, on December 16, 2014, President Obama signed an omnibus spending bill,
including a budget rider, referred to as the Rohrbacher -Farr amendment, which prohibited the
U.S. Justice Department from using federally- appropriated funds to prosecute medical marijuana
use that complied with state law in states that had legalized medical marijuana; and
WHEREAS, on December 1, 2015, the Fifth District Court of Appeal issued its opinion
in Kirby v. County of Fresno, (2015) 242 Ca1.App.41h 940, 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, holding that section
113662.71 of the California Health and Safety Code, a provision of the MMP, preempts local
criminalization of medical marijuana cultivation; and
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WHEREAS, although the court in Kirby invalidated on preemption grounds the local
criminalization of medical marijuana cultivation as a misdemeanor, the court noted that local
prosecution of the failure to abate a public nuisance involving medical marijuana cultivation is
not preempted, because the Legislature recognizes the failure to abate a public nuisance after
notice as a separate crime; and
WHEREAS, in January, 2016, the City Council adopted amendments to Chapter 10.15
of the Petaluma Municipal Code, partly in response to the MMRSA, to: prohibit commercial
cannabis activity in the City; to prohibit marijuana cultivation in the City (except for limited
indoor and outdoor cultivation by qualified patients and primary caregivers in residential areas,
subject to limitations intended to avoid nuisance conditions); to restrict medical marijuana
delivery in the City; to prohibit granting of entitlements for marijuana uses in the City; and to
declare violations of the chapter to be a public nuisance; and
WHEREAS, in United States v. McIntosh, (2016) 833 F3d 1163, filed August 16, 2016,
the Ninth Circuit Court of appeals construed the Rohrbacher -Farr budget rider as prohibiting the
U. S. Department of Justice from spending funds from relevant appropriations acts for the
prosecution of individuals who engaged in conduct permitted by state medical marijuana laws
and who fully complied with such laws; and
WHEREAS, in November, 2016, California voters approved the Control, Regulate and
Tax Adult Use of Marijuana Act, referred to in ballot materials as the Adult Use of Marijuana
Act ("AUMA "), which established a regulatory scheme for nonmedical marijuana similar to that
established for medical marijuana under the MMRSA; and
WHEREAS, following its adoption by California voters, the AUMA was codified in
various provisions of state law, including in Article 2 entitled "Cannabis" in the Uniform
Controlled Substances Act within the California Health and Safety Code, and in Division 10
entitled the "Medicinal and Adult -Use Cannabis Regulation and Safety Act" of the California
Business and Professions Code; and
WHEREAS, the AUMA decriminalized for purposes of state law, subject to specified
restrictions, certain specified cannabis uses pursuant to California Health and Safety Code
section 11362.1, including: possession, processing, transporting, purchasing, obtaining and
giving away to persons 21 years old or older without compensation not more than 28.5 grams of
non - concentrated cannabis or not more than 8 grams of concentrated cannabis, including
cannabis contained in cannabis products; possessing, planting, cultivating, harvesting, drying or
processing not more than six living cannabis plants and possessing the cannabis produced by the
plants; smoking or ingesting cannabis or cannabis products, and possessing, transporting,
purchasing, obtaining, using, manufacturing, or giving away to persons 21 years of age or older
without compensation cannabis accessories,; and
WHEREAS, in accordance with California Health and Safety Code section 113 62.2,
subdivision (a), the personal cultivation of cannabis permitted under the AUMA must be in
accordance with reasonable local regulations; must ensure that living plants and cannabis they
produce in excess of 28.5 grams are kept within a private residence or upon the grounds of a
private residence in a locked space not visible from a public place; and cannot exceed six living
plants cultivated, hai vested, dried or processed within a single private residence at one time; and
WHEREAS, in accordance with California Health and Safety Code section 11362.2,
subdivision (b), paragraphs (1) and (2), the AUMA permits local agencies to impose reasonable
regulations on personal cannabis cultivation and processing, so long as such regulations are not a
complete prohibition on such activity within a private residence or an accessory structure to a
private residence that is fully enclosed and secure; and
WHEREAS, in accordance with California Business and Professions Code section
26080, subdivision (b), the AUMA prohibits local jurisdictions from preventing those that are
licensed under the AUMA from transporting cannabis or cannabis products on public roads; and
WHEREAS, in accordance with California Health and Safety Code section 113 62,2, subdivision
(b), paragraph (3), the AUMA authorizes local agencies to completely ban outdoor cultivation of
cannabis on the grounds of private residences, unless and until the California Attorney General
determines that adult use of cannabis is lawful under federal law, and
WHEREAS, in accordance with California Health and Safety Code section 11362.45,
subdivisions (f) and (g), the AUMA permits public and private employers to maintain drug and
alcohol free workplaces, to prohibit cannabis use by employees, and to restrict or prohibit
cannabis activity in buildings owned, leased or occupied by a local agency; and
WHEREAS, in accordance with California Business and Professions Code section
26200, subdivision (a), nothing in the AUMA supersedes or limits the authority of a local
jurisdiction to regulate or prohibit within the local jurisdiction the establishment or operation of
cannabis businesses that are subject to state license requirements under the AUMA ; and
WHEREAS, cannabis remains an illegal substance under the Federal Controlled
Substances Act, 21 U.S.C. 801, et seq., which makes it unlawful for any person to cultivate,
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manufacture, distribute, dispense, or possess with intent to manufacture, distribute or dispense
cannabis for any reason, even though state law decriminalizes under specified state statutes
specified use of cannabis by specified persons; and
WHEREAS, the Rohrbacher -Farr Amendment, which prohibits the U.S. Justice
Department from using federally - appropriated funds to prosecute medical marijuana use that
complies with state law in states that have legalized medical marijuana, has been extended most
recently in the spending bill President Trump signed on May 5, 2017, and remains in effect; and
WHEREAS, the August 29, 2013 memorandum issued by Deputy U.S. Attorney General
James Cole has not been rescinded and remains in effect directing that enforcement of state law
by state and local law enforcement and regulatory bodies should remain the primary means of
addressing marijuana related activity in jurisdictions that have enacted laws legalizing marijuana
in some form and that have also implemented strong and effective regulatory and enforcement
systems to control the cultivation, distribution, sale and possession of marijuana; and
WHEREAS, the City Council has held workshops and discussed potential updates to the
City's cannabis regulations in response to the AUMA on June 26, 2017 and on October 2, 2017,
at which workshops the City Council received comments from various stakeholders and
interested parties, and provided City staff policy direction; and
WHEREAS, the City Council's direction to staff regarding adoption of local cannabis
regulations following enactment of the AUMA reflects a dual focus on recognizing and
respecting the will of the California voters in approving the AUMA, through adoption of less
restrictive local cannabis regulations, while at the same time promoting the public health, safety
and welfare of the Petaluma community through strong and effective local regulatory and
enforcement systems to, in conjunction with state law, control the cultivation, distribution, sale
and possession of cannabis in the City; and
FINDINGS
WHEREAS, the City of Petaluma Police Department, City residents and other public
entities have reported adverse impacts from the outdoor cultivation of cannabis within the City,
including offensive odors, increased risk of trespassing and burglary, and acts of violence in
connection with the commission of such crimes or the occupants' attempts to prevent such
crimes; and
WHEREAS, the strong odor of cannabis plants, which increases as the plants mature, is
offensive to many individuals and creates an attractive nuisance, alerting people to the location
of valuable cannabis plants and creating an increased risk of crime; and
WHEREAS, Petaluma has experienced structure fires and building damage threatening
the quality and safety of City neighborhoods as a result of indoor cannabis cultivation within the
City, with 7 such incidents occurring between December, 2010 and May, 2015, and a total of 33
structure fires within the Sonoma County area attributed to illegal indoor cannabis cultivation
operations; and
WHEREAS, to protect the public health, safety, and welfare, it is the desire of the City
Council to replace Chapter 10.15 of the City of Petaluma Municipal Code prohibiting medical
marijuana dispensaries and commercial marijuana activity, and limiting medical marijuana
cultivation, and delivery of marijuana within the City, with a new chapter 10.15 entitled
"Cannabis" making medical and nonmedical cannabis subject to the City's cannabis regulations
in accordance with the City's general police power pursuant to Article XI, Section 7 of the
California Constitution and the authority for local cannabis regulations contained in the AUMA;
and
WHEREAS, mindful of the fact that cannabis possession and use is prohibited under
federal law and decriminalized under state law, it is the Council's intention that nothing in this
chapter shall be construed, in any way, to expand the rights of anyone to use or possess cannabis
under state law, or to engage in any public nuisance; and
WHEREAS, for purposes of compliance with the California Environmental Quality Act
( "CEQA ") and the CEQA Guidelines, the City Council finds that new Petaluma Municipal Code
Chapter 10.15 will result in negligible environmental impacts, if any, because a) the exceptions
in Section 10. 15.040 for manufacture of topical or edible cannabis products, cannabis testing
laboratories and cannabis delivery -only sales are, pursuant to that section, subject to granting of a
license, permit or other authorization or notice issued by an authorized city official, which
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discretionary approval will be subject to CEQA review for each such proposed use; and b) the
revisions to the City's cannabis cultivation regulations pursuant to Section 10, 15,050 are minor
and intended only to harmonize the regulations with the AUMA, with negligible anticipated
environmental impacts; and
WHEREAS, in view of the negligible environmental impacts anticipated from new
Chapter 10.15 (that will not be subject to subsequent CEQA review), this ordinance is exempt
from CEQA pursuant to Section 15061(b)(3) of the CEQA Guidelines because there is no
possibility that the activity may have a significant impact on the environment, as well as pursuant
to Section 15301 of the CEQA Guidelines, which applies to the operation, repair maintenance,
permitting, and licensing or minor alteration of existing public or private structures, facilities, or
mechanical equipment involving negligible or no expansion of use beyond that existing at the
time of the lead agency's determination, and pursuant to Section 15303 of the CEQA Guidelines,
which applies to construction and location of limited numbers of new, small facilities or
structures, installation of small new equipment and facilities in small structures, and the
conversion of existing small structures from one use to another where only minor modifications
are made in the exterior of the structure;
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
PETALUMA AS FOLLOWS:
Section 1: Chapter 10.15, Entitled "Medical Marijuana," of the Petaluma Municipal
Code, is hereby repealed in its entirety.
Section 2: The above recitals are hereby declared to be true and correct are incorporated
into this ordinance by this reference.
Section 3: A New Chapter 10.15, Entitled "Cannabis," is hereby added to the Petaluma
Municipal Code, to read as follows:
CHAPTER 10.15
CANNABIS
Section 10.15.010 Purpose.
The dual purpose of this chapter is to recognize and respect the will of the California
voters in approving in November, 2016, Proposition 64, the Control, Regulate and Tax
Adult Use of Marijuana Act, referred to as the Adult Use of Marijuana Act ( "AUMA "),
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which legalized, subject to certain restrictions, specified cannabis uses for purposes of
state law, through adoption of less restrictive local cannabis regulations, while at the
same time promoting the public health, safety and welfare of the Petaluma community
by:
A. Protecting citizens from the secondary impacts associated with cannabis
dispensaries and commercial cannabis activity, including, but not limited to, increased
public consumption of cannabis and the potential for increased cannabis DUIs, illegal
resale of cannabis obtained at low cost from dispensaries, loitering, robbery, assaults, and
other crimes.
B. Protecting citizens from secondary impacts associated with commercial cannabis
activity such as cannabis cultivation, including, but not limited to, electrical fires and
ignition of chemical substances utilized in the cultivation process, crimes occurring at
grow sites, and neighborhood concerns regarding odors, late night traffic, and related
nuisances.
C. Protecting citizens from secondary impacts of cannabis delivery, including, but
not limited to, delivery during nighttime hours and delivery by minors.
D. Preventing increased demands for police response resulting from activities at
cannabis dispensaries and cultivation sites, commercial cannabis activity and .cannabis
delivery and thereby avoiding reduction in the ability of the city's public safety officers
to respond to other calls for service.
Section 10.15.020 Definitions
For purposes of this chapter, the following terms are defined as follows:
A. "Cannabis" means all parts of the plant Cannabis sativa Linnaeus, Cannabis
indica, or Cannabis ruderalis, whether growing or not; the seeds thereof; the resin,
whether crude or purified, extracted from any part of the plant; and every compound,
manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin, as
defined in California Business and Professions Code section 26001, subdivision (f), as
that section and subdivision may be amended or interpreted by the California courts or
superseded by any successor statute, "Cannabis" also means the separated resin, whether
crude or purified, obtained from cannabis. "Cannabis" does not include the mature stalks
of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant,
any other compound, manufacture, salt, derivative, mixture, or preparation of the mature
stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of
the plant which is incapable of germination. "Cannabis" does not mean "industrial hemp"
as defined by Section 11018.5 of the California Health and Safety Code, as that section
may be amended or interpreted by the California courts or superseded by any successor
statute.
B. "Cannabis concentrate" means cannabis that has undergone a process to
concentrate one or more active cannabinoids, thereby increasing the product's potency, in
accordance with the definition in California Business and Professions Code section
26001, subdivision (h), as that section and subdivision may be amended or interpreted by
the California courts or superseded by any successor statute.
C. "Cannabis products" means cannabis that has undergone a process whereby the
plant material has been transformed into a concentrate; including, but not limited to,
concentrated cannabis, or an edible or topical product containing cannabis or
concentrated cannabis and other ingredients in accordance with the definition in
California Health and Safety Code section 11018.1, as that section may be amended or
interpreted by the California courts or superseded by any successor statute.
D. "Commercial cannabis activity" means the cultivation, possession, manufacture,
distribution, processing, storing, laboratory testing, labeling, transportation, distribution,
delivery or sale of cannabis and cannabis products in accordance with the definition in
California Business and Professions Code Section 260.01, subdivision (k), as that section
and subdivision may be amended or interpreted by the California courts or superseded by
any successor statute.
E. "Cultivation" means any activity involving the planting, growing, harvesting,
drying, curing, grading, or trimming of cannabis, in accordance with the definition in
California Business and Professions Code Section 26001, subdivision (m), as that section
and subdivision may be amended or interpreted by the California courts or superseded by
any successor statute.
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F. "Customer" means a natural person 21 years of age or older in accordance with
the definition in California Business and Professions Code Section 26001, subdivision
(n), as that section and subdivision may be amended or interpreted by the California
courts or superseded by any successor statute.
G. "Delivery" means the commercial transfer of cannabis or cannabis products to a
customer and includes the use by a retailer of any technology platform in accordance with
the definition in California Business and Professions Code section 26001, subdivision
(p), as that section and subdivision may be amended or interpreted by the California
courts or superseded by any successor statute.
H. "Dispensary" means a facility where medical cannabis, medical cannabis
products, or devices for the use of medical cannabis or medical cannabis products are
offered, either individually, or in any combination, for retail sale, including an
establishment that delivers, pursuant to express authorization by local ordinance, medical
cannabis and medical cannabis products as part of a retail sale. Dispensary does not
include the following uses, so long as the location of such uses is otherwise regulated by
and strictly complies with this code and other applicable law, including California Health
and Safety Code Section11362.5, as such section may be amended or interpreted by the
California courts or superseded by any successor statute;
1. A clinic licensed pursuant to Chapter 1 of Division 2 of the Health and Safety
Code.
2. A health care facility licensed pursuant to Chapter 2 of Division 2 of the
Health and Safety Code.
3. A residential care facility for persons with chronic life - threatening illness
licensed pursuant to Chapter 3.01 of Division 2 of the Health and Safety
Code.
4. A residential care facility for the elderly licensed pursuant to Chapter 3.2 of
Division 2 of the Health and Safety Code.
5. The delivery, administration or provision of medical cannabis by a designated
primary caregiver to the qualified patient of the primary caregiver or to the
person with an identification card who has designated the individual as a
primary caregiver at the primary residence of the qualified patient or person
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with an identification card who has designated the individual as a primary
caregiver.
I. "Fully enclosed and secure structure" means a code compliant space within a
building, greenhouse or other structure which has a complete roof enclosure supported by
connecting walls extending from the ground to the roof, which is secure against
unauthorized entry, provides complete visual screening, and which is accessible only
through one or more locking doors.
J. "Licensee" means any person holding a license under Division 10, entitled
"Cannabis," of the California Business and Professions Code, and includes the holder of
a testing laboratory license, in accordance with the definition in California Business and
Professions code section 26001, subdivision (z), as that section and subdivision may be
amended or interpreted by the California courts or superseded by any successor statute.
K. "Manufacture" means to compound, blend, extract, infuse, or otherwise make or
prepare a cannabis product, in accordance with the definition in California Business and
Professions Code section 26001, subdivision (ag), as that section and subdivision may be
amended or interpreted by the California courts or superseded by any successor statute.
L. "Manufacturer" means a licensee that conducts the production, preparation,
propagation, or compounding of cannabis or cannabis products either directly or
indirectly by extraction methods, or independently by means of chemical synthesis, or by
a combination of extraction and chemical synthesis at a fixed location that packages or
repackages cannabis or cannabis products or labels or re- labels its container, in
accordance with the definition in California Business and Professions Code section
26001, subdivision (ah), as that section and subdivision may be amended or interpreted
by the California courts or superseded by any successor statute.
M. "Medical cannabis" or "medical cannabis product" means cannabis or a cannabis
product, respectively, intended to be sold for use pursuant to the Compassionate Use Act
of 1996 (Proposition 215), found at section 11362.5 of the California Health and Safety
Code, by a medicinal cannabis patient in California who possesses a physician's
recommendation, in accordance with the definition in California Business and
Professions Code section 26001, subdivision (ai), as that section and subdivision may be
amended or interpreted by the California courts or superseded by any successor statute.
11
N. "Primary caregiver" shall have the same definition as set forth in California
Health and Safety Code Section 11362.7, subdivision (d), as that section and subsection
may be amended or interpreted by the California courts, including but not limited, to the
California Supreme Court case of People v. Mentch (2008) 45 Cal. 4th 274, or
superseded by any successor statute.
O. "Qualified patient" shall have the same definition as set forth in California Health
and Safety Code Section 11362.7, subdivision (f), as that section and subsection may be
amended or interpreted by the California courts or superseded by any successor statute.
P. "Private residence" means a house, an apartment unit, a mobile home, or other
similar dwelling, in accordance with the definition in California Health and Safety Code
section 113 62.2, subdivision (b), paragraph (5), as that section, subdivision and paragraph
may be amended or interpreted by the California courts or superseded by any successor
statute.
Q. "Sell," "sale," and "to sell" mean any transaction whereby, for any consideration,
title to cannabis is transferred from one person to another, and includes the delivery of
cannabis or cannabis products pursuant to an order placed for the purchase of the same
and soliciting or receiving an order for the same, but does not include the return of
cannabis or cannabis products by a licensee to the licensee from whom the cannabis or
cannabis product was purchased, in accordance with the definition in California Business
and Professions Code section 26001, subdivision (as), as that section and subdivision
may be amended or interpreted by the California courts or superseded by any successor
statute.
R. "Testing laboratory" means a laboratory, facility or entity in the state that offers
or performs tests of cannabis or cannabis products and that is both of the following;
accredited by an accrediting body that is independent from all other persons involved in
commercial cannabis activity in the state and licensed by the Bureau of Cannabis Control,
in accordance with the definition in California Business and Professions Code section
26001, subdivision (at), as that section and subdivision may be amended or interpreted by
the California courts or superseded by any successor statute.
S. "Volatile solvent" means a solvent that is or produces a flammable gas or vapor
that, when present in the air in sufficient quantities, will create explosive or ignitable
mixtures, in accordance with the definition in California Health and Safety Code section
12
113 62.3, subdivision (b), paragraph (3), as that section, subdivision and paragraph may
be amended or interpreted by the California courts or superseded by any successor
statute.
Section 10.15.030 Prohibition of Dispensaries
It is unlawful for any person to engage in, conduct or carry on, or to permit to be engaged
in, conducted or carried on, in the City of Petaluma, the operation of a dispensary.
Section 10.15.040 Commercial Cannabis Activity
A. It is unlawful for any person to engage in, conduct, or carry on, or to permit to be
engaged in, conducted or carried on, in the City of Petaluma, commercial cannabis
activity, other than the commercial cannabis activity specified in paragraphs B through D
in this section. The exceptions in paragraphs B through D shall only apply; 1) while and
to the extent the activity is conducted pursuant to and in accordance with a current, valid,
unexpired, unrevoked, fully -paid, license, permit, or other authorization or notice issued
by an authorized city official, and pursuant to and in accordance with all other applicable
state and local laws and regulations, including, but not limited to, the regulations adopted
or promulgated pursuant to section 10.15.080; and 2) to commercial cannabis activity
conducted in areas of the city where such uses are permitted uses in accordance with the
city's zoning regulations.
B. Manufacture and sale of topical or edible cannabis products using cannabis
infusions or infusion processes, but excluding manufacture of cannabis products
involving volatile solvents or cannabis concentrates, including, but not limited to,
cannabis concentrates using volatile solvents, and excluding repackaging cannabis or
cannabis products or re- labeling cannabis or cannabis product containers;
C. Testing laboratories;
D. Sale of cannabis and cannabis products using a delivery -only method in
accordance with section 10.15.060, at a maximum of two different locations in the city,
with no sale of cannabis or cannabis products on site, no customers permitted on site at
any time, and no on -site or on- delivery vehicle signage indicating the presence of
cannabis or cannabis products or that the seller sells cannabis or cannabis products.
13
Section 10.15.050 Cannabis Cultivation
It is unlawful for any person to engage in, conduct or carry on, or to permit to be engaged
in, conducted or carried on, in the City of Petaluma, the cultivation of cannabis, other
than the cultivation of cannabis in accordance with and as specified in paragraphs A and
B in this section. The exceptions in paragraphs A and B are not subject to, and do not
require, issuance of a license, permit, or other authorization or notice issued by an
authorized city official.
A. Indoor cultivation of not more than six living cannabis plants in a private
residence, or a lesser number if both indoor cultivation pursuant to this paragraph A and
outdoor cultivation pursuant to paragraph B of this section is occurring at the private
residence, such that the total number of living cannabis plants at the private residence,
including indoor and outdoor cultivation, does not exceed a total of six living cannabis
plants; where the cultivation area does not exceed 50% or 100 square feet of the non-
living or garage area of the private residence; does not displace any required on -site
parking; is within a fully - enclosed and secure structure with no visual or olfactory
evidence of cultivation detectable from the public right of way or other private property;
does not utilize lighting that exceeds 1,200 watts; does not require the use of an.electric
generator; and does not involve the use of volatile solvents; and
B. Outdoor cultivation on the grounds of a private residence, but only where less
than the six living cannabis plants permitted pursuant to paragraph A are being cultivated
within a fully - enclosed and secure structure, such that the total number of living cannabis
plants at the private residence, including indoor and outdoor cultivation, does not exceed
a total of six living cannabis plants; with no visual or olfactory evidence of cultivation
detectable from the public right of way or other private property; and where the outdoor
cultivation does not utilize lighting that exceeds 1,200 watts, does not require the use of
an electric generator, and does not involve the use of volatile solvents.
14
Section 10.15.060 Cannabis Delivery
Subject to the requirements of California Business and Professions Code section 26080,
subdivision (b), as that section and subdivision may be amended or interpreted by the
California courts or superseded by any successor statute, it is unlawful for any person to
engage in, conduct or carry on, or to permit to be engaged in, conducted or carried on, in
the City of Petaluma, the delivery of cannabis, except for delivery of cannabis that
qualifies for the exception in section 10.15.040(C) where:
A. The delivery is carried out by a person at least 21 years of age; and
B. The delivery occurs between the hours of 8:00 a.m. and 8:00 p.m.
Section 10.15.070 Cannabis Entitlements
No cannabis dispensary, commercial cannabis activity or cannabis delivery operation,
(other than commercial cannabis activity or cannabis delivery operations that qualify for
one or more of the exceptions specified in paragraphs b through D of section 10.15.040),
or cannabis cultivation, however described by the applicant, will eligible for or be issued
any license, permit, or other authorization, notice or other entitlement to operate in the
city, or have any such entitlement renewed, including, but not limited to, any business
license or home occupation permit, and any such application shall be denied citing this
section.
Section 10.15.080 Regulations
The City Council shall, by duly adopted resolution, adopt regulations, or authorize the
City Manager to promulgate regulations, intended to implement the requirements of this
chapter in accordance all applicable provisions of the city charter, this chapter, the
AUMA, and other applicable law. Regulations adopted or promulgated pursuant to this
section shall be reviewed from time to time as necessary to ensure effective
implementation of this chapter and protection of the public health, safety and welfare.
Section 10.15.090 Prohibited Cannabis Activities a Public Nuisance. Any
cannabis dispensary, commercial cannabis activity, cannabis cultivation, cannabis
delivery or other use or activity caused or permitted to exist in the city in violation of any
15
provision of this chapter or any of the regulations adopted or promulgated thereunder
shall be and is hereby declared a public nuisance. Violations of this chapter may be
enforced by any applicable laws or ordinances, including, but not limited to, chapter 1.10
of this code.
Section 4: The City Council finds that adoption of this ordinance is exempt from the
California Environmental Quality Act ( "CEQA "), pursuant to Section 15061(b)(3) of the CEQA
Guidelines (Title 14, Chapter 3 of the California Code of Regulations) because there is no
possibility that the activity may have a significant impact on the environment as well as pursuant
to Section 15301 of the CEQA Guidelines, which applies to the operation, repair maintenance,
permitting, and licensing or minor alteration of existing public or private structures, facilities, or
mechanical equipment involving negligible or no expansion of use beyond that existing at the
time of the lead agency's determination, and pursuant to Section 15303 of the CEQA Guidelines,
which applies to construction and location of limited numbers of new, small facilities or
structures, installation of small new equipment and facilities in small structures, and the
conversion of existing small structures from one use to another where only minor modifications
are made in the exterior of the structure.
Section 5: If any section, subsection, sentence, clause, phrase or word of this ordinance is for
any reason held to be unconstitutional, unlawful or otherwise invalid by a court of competent
jurisdiction or preempted by state or federal legislation, such decision or legislation shall not
affect the validity of the remaining portions of this ordinance. The City Council of the City of
Petaluma hereby declares that it would have passed and adopted this ordinance and each and all
provisions thereof irrespective of the fact that any one or more of said provisions be declared
unconstitutional, unlawful or otherwise invalid.
Section 6: The City Cleric is hereby directed to publish or post this ordinance or a synopsis
for the period and in the manner provided by the City Charter and any other applicable law.
16
INTRODUCED and ordered posted /published this sixth day of November 2017.
ADOPTED this twentieth day of November, 2017, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
David Glass, Mayor
APPROVED AS TO FORM:
Claire Cooper, City Clerk Eric Danly, City Attorney
17
DATE: October 2, 2017
TO: Honorable Mayor and Members of the City Council
FROM: John C. Brown, City Manager
SUBJECT: Local Cannabis Regulations
RECOMMENDATION
ATTACHMENT 2
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 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?
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 cannabis and extending it to
recreational cannabis (Attachment 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. Some favored proceeding cautiously 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 fiirther direction regarding revisions to the City's
cannabis ordinance, to be implemented by January 2018.
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 Sheriff's 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
(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 alarms"
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 Long 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 Impact 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 Chief's 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 warned 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.
4
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.
5
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
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 Government'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
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 theirs? 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) personnel 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 cannabis infused 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 cannabis
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 cannabis - 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.
IRE
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
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
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