Breaking News!!: Needles, CA: Needles City Council approved amending Needles Municipal Code related to medical marijuana businesses, cooperatives, collectives, cultivation, and transportation.

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Breaking News!!: Needles, CA: Needles City Council approved amending Needles Municipal Code related to medical marijuana businesses, cooperatives, collectives, cultivation, and transportation.

Members of the Needles City Council approved amending the Needles Municipal Code related to marijuana businesses, cooperatives / collectives, cultivation and transportation adding provisions to Part III, Article VI “Table of Permissible Uses”.

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The vote came at a public hearing during a Needles City Council Meeting held on Tuesday, January 12th, 2016.

** Video from ZachNews on YouTube: **

– Agenda Item #4: Public hearing opened and continued open at the Tuesday, December 8th, 2015 Needles City Council Meeting to the regular meeting of Tuesday, January 12th, 2016 to consider all evidence and testimony for or against amending the Needles Municipal Code related to marijuana businesses, cooperatives / collectives, cultivation and transportation adding provisions to Part III, Article VI “Table of Permissible Uses”.

(Action Needed Agenda Item)

http://www.cityofneedles.com/2016%20website%20file%20posting%20(Needlesserver)/1%20CITY%20COUNCIL/01%20JANUARY/CC_011216-04.pdf

**** Background information from the City of Needles: ****

** A. Current Medical Marijuana Ordinance: **

– Medical Marijuana Cooperatives/Collectives:

In November 2014, the City adopted the current ordinance regulating Medical Marijuana Cooperatives/Collectives, as defined (“Ordinance”). The Ordinance, as written, places a total ban on all Cooperatives/Collectives operating within the City, but provides immunity to those Cooperatives/Collectives that were “in existence, open and operating” within the City at the time the Ordinance was adopted.

As defined by the Ordinance, a “Cooperative/Collective” means any “non-residential facility or location, whether fixed or mobile, where marijuana is cultivated, made available, and/or distributed…” [Emphasis added]. Our office interprets this provision to mean that Cooperatives/Collectives may not expand or relocate an existing facility, or open ancillary facilities within the City. As such, the Ordinance has worked to preclude any additional Cooperatives/Collectives from opening.

– Marijuana Business Tax:

On November 26, 2012, the City voters approved the adoption of the Marijuana Business Tax Ordinance and authorized the collection of a Marijuana Business Tax of up to 10% of gross receipts (“Tax ordinance”). In December 2012, the City Council set the Marijuana Business Tax at 10%. The current Tax Ordinance places a 10% “gross receipts” tax on all “marijuana businesses” operating within the City. Such marijuana businesses include cultivation, as explained below.

Per Section 20-40.16(a) of the City Code, “[t]here are imposed on all persons engaged in marijuana business in the City taxes in the amount [of 10% of gross receipts). It shall be unlawful for any person, either for him or herself or for any other person, to commence, transactor carry on any marijuana business in the City without first having procured a business tax certificate from the City under Chapter 20 and having paid the tax set forth therein, and without complying with any and all provisions contained in this Article.”

Each person owing [the tax] shall, on or before the last day of each calendar month, prepare a tax return to the Director [of Finance] of the total gross receipts and the amount of tax owed for the preceding calendar month. At the time the tax return is filed, the full amount of the tax owed for the preceding calendar month shall be remitted to the Director.” (Section 20-40.21.)

As defined in the Tax Ordinance, “Marijuana Business” means “business activity including but not limited to, planting, cultivation, harvesting, transporting, manufacturing, compounding, converting, processing, preparing, storing, packaging, wholesale, and/or retail sales of marijuana and any ancillary products in the City, whether or not carried on for gain or profit.” (Section 20-40.11) [Emphasis added.] “Sale” means and includes any sale, exchange, or barter. (Section 20-40.14.) A copy of the complete Marijuana Tax Ordinance is attached hereto as Exhibit “1”.

** B. State Legislation: **

On October 9, 2015, Governor Brown signed into law three bills (Assembly Bill 266 (“AB 266), Assembly Bill 243 (“AB 243″), and Senate Bill 643 (“SB 643″) (collectively the “Medical Marijuana Regulation and Safety Act”)) establishing a statewide regulatory scheme for the licensing, cultivating, processing, transporting, testing, and distributing of medical cannabis.

1. Enacts the Medical Marijuana Regulation and Safety Act (“Act”), which provides for the licensure and regulation of medical marijuana, and establishes within the Department of Consumer Affairs (“Department”) the Bureau of Medical Marijuana Regulation (“Bureau”), under the control of the Department. The Act establishes a dual licensing structure requiring both a state license and a local license or permit to operate a medical marijuana business in the State. Jurisdictions that regulate or ban medical marijuana will be able to retain their regulations or ban.

2. Establishes seventeen (17) license classifications (including sub classifications), which provides licenses for cultivation, manufacturing, testing, dispensaries, distribution, and transportation.

3. Provides that a city may adopt ordinances that establish additional standards, requirements, and regulations for local licenses and permits for commercial cannabis activities.

4. Provides that the Act will not be interpreted to Ilmit the authority or remedies of a local agency under any provision of law, including Article XI, section 7 of the California Constitution.’

5. Provides that actions of a licensee are not unlawful if they are: (1) permitted pursuant to both State and local law, and (2) conducted in accordance with the requirements of the Act. Licensees shall not commence activity until they receive a license from both the State and local agency,

6. Provides that “local jurisdictions retain the power to assess fees and taxes, as applicable, on facilities that are licensed pursuant to this [Act] and the business activities of those licenses.”

7. Provides rules regarding the regulation, testing, transporting, delivery, etc. of medical Cannabis.

8. Provides that deliveries can only be made by a dispensary and in a City that does not explicitly prohibit it by local ordinance. Provides that the Bureau must post information on the internet regarding the status of licenses issued.

9. Provides that the Bureau will make and prescribe reasonable rules as necessary or proper to carry out the purposes/intent of the Act, and allows the Bureau to convene an advisory committee to advise on the development of such standards.

10. Provides that each licensing authority may suspend or revoke licenses, after proper notice and hearing, or take other disciplinary action for violations of the Act.

11. Requires the Board of Equalization to adopt a system for reporting the movement of commercial cannabis and cannabis product

12. Phases out existing model of marijuana cooperatives and collectives one year after announcing that state licensing has begun.

Nothing in the Act shall be interpreted to supersede or limit local authority for law enforcement, enforcement of local zoning requirements, of local ordinances, permit or licensing requirements. Nothing In the Act shall be interpreted to require the Department to undertake local law enforcement responsibilities, enforce local zoning requirements, or enforce local licensing requirements.

AB 243 requires the Department of Food and Agriculture, the Department of Pesticide Regulation, the State Department of Public Health, the Department of Fish and Wildlife, and the State Water Resources Control Board to promulgate regulations related to medical marijuana and its cultivation, as well as requires various State agencies to take actions to mitigate the impact of marijuana cultivation on the environment. AB 243 also requires cities, counties, and their local law enforcement agencies to coordinate with State agencies to enforce laws addressing the environmental impacts of medical marijuana cultivation. Most importantly, AB 243 provides that if a City “does not have land use regulations or ordinances regulating or prohibiting the cultivation of marijuana, either expressly or otherwise under principles of permissive zoning, or chooses not to administer a conditional permit program…then commencing March 1, 2016, the [State] shall be the sole licensing authority for medical marijuana cultivation applicants in that city…”

Finally, SB 643 provides rules and regulations for the recommendation and licensing of cannabis to qualified patients. In particular, it sets forth standards for a physician and surgeon prescribing medical cannabis, and requires the Medical Board of California to prioritize, investigate, and discipline physicians and surgeons that repeatedly recommend excessive cannabis, or repeatedly recommend cannabis without a good faith examination. SB 643 further requires applicants of certain specified State boards to submit a set of fingerprints for the purpose of conducting a criminal background check and to submit their application under penalty of perjury. SB 643 also provides for provisions related to and associated with the manufacturing and testing of medical cannabis. SB 643 affirmatively authorizes counties to impose a tax upon specified cannabis-related activities,

** C. Draft Ordinance: **

On December 8, 2015, the City Council held a public hearing to consider all evidence and testimony for and against amending the Needles Municipal Code related to marijuana businesses, including cooperatives/collectives, cultivation, manufacturing, and testing, repealing Ordinance No. 564AC (amending Chapter 12A “Marijuana Businesses” of the Needles Municipal Code) and amending Section 96,01 “Table of Permissible Uses” (adding Section “17.00 Medical Marijuana”). After some deliberation, the Council opted to table the discussion and continue the public hearing on the matter to January 12, 2016, in order for the City Attorney to make amendments to the draft ordinance. In particular, the Council desires to regulate only Cooperatives/Collectives and Cultivation Facilities within the City and to limit the number of those Cooperatives/Collectives and Cultivation Facilities permitted to operate within the City. The draft ordinance has been updated to reflect those changes. (The proposed draft ordinance is attached hereto as Exhibit “2”.) As currently drafted, the proposed ordinance does the following:

A. Provides that Marijuana Businesses, as defined, must obtain: (1) a marijuana business license for the particular purpose it seeks to operate (i.e. a Cooperatives/Collective License and/or a Marijuana Cultivation License, as applicable); (2) either a zoning permit or conditional use permit, as applicable; and (3) a City business license. Additionally, once the State begins issuing permits/licenses for commercial marijuana activities, the Marijuana Business must also obtain a state permit or license for that purpose.

B. Contemplates the permitting of two (2) types of Marijuana Businesses within the City: (1) Cooperatives/Collectives (retail); and (2) Cultivation Facilities (grow). All Cooperatives/Collectives that are in existence, open and operating within the City as of December 25, 2014, shall file an application with the City for a Cooperative/Collective License in order to operate a Cooperative/Collective within the City. Each Cooperative/Collective that is in existence, open, and operating within the City as of December 25, 2014, and which applies for and obtains a Cooperative/Collective License, may file an application for a Marijuana Cultivation License to operate a Cultivation Facility within the City. Each Cooperative/Collective may operate and maintain one (1) Cultivation Facility within the City, subject to the requirements of the Chapter, the City Code, and applicable State law. (The provisions in the proposed ordinance allowing only existing Cooperatives/Collectives to apply for a Marijuana Cultivation License is modeled after the marijuana ordinance adopted by the City of Palm Springs, California, on June 17, 2015.)

C. Provides procedures for the application, issuance, and denial of marijuana business licenses.

D. Provides procedures for the suspension and/or revocation of marijuana business licenses. This includes providing written notice to the permittee and the record owner of the property of the reason for the suspension/revocation, as well as providing for a hearing and appeal of the suspension/revocation.

E. Regulates delivery of marijuana and/or mobile marijuana dispensaries by providing that any mobile dispensary/delivery must be attached to an existing Cooperatives/Collective operating within the City. Stand-alone delivery/mobile dispensaries and out of City delivery/mobile dispensaries are prohibited.

F. Provides an enforcement mechanism for violations of the proposed ordinance, State law, and/or the City Code, including suspension/revocation of the marijuana business license, declaration of a public nuisance and abatement, and temporary and permanent injunctive relief. The ordinance further provides that any person violating the ordinance is guilty of a misdemeanor and subject to imprisonment for not more than six (6) months and/or a fine, Moreover, the City is permitted to reduce the misdemeanor to an infraction, and/or issue an administrative citation in lieu of a misdemeanor?

G. Establishes rules and regulations applicable to the operation and management of Cooperatives/Collectives and Cultivation Facilities permitted within the City, including requiring that the business comply with State law, (including the Compassionate Use Act, the Medical Marijuana Program Act, and the Medical Marijuana Regulation and Safety Act), as well as the Department of Justice’s eight priorities outlined in the Cole Memorandum (see footnote 3).

H. Requires applicants for a Cooperatives collective License and/or Marijuana Cultivation License, and a zoning or conditional use permit, as applicable, to be responsible for all costs associated with CEQA compliance.

I. Provides that the City shall not assume any liability whatsoever in respect to approving any Cooperative/Collective License, Marijuana Cultivation License, and/or a zoning or conditional use permit, as applicable, requires any applicant/ permittee to indemnify the City for any enforcement or administrative action, as well as name the City as an additional insured.

J. Amends the City Zoning Code to provide which zones each type of Marijuana Business is permitted in, as well as identifies which type of land use permit (Zoning Permit or CUP) is required.

The Planning Commission met on November 23, 2015 regarding the proposed amendment and made the following zoning recommendations as are applicable to the updated draft ordinance:

** Medical Marijuana: **

17.10 Cooperatives/ Collective Existing: C2 and C3

17.20 Cooperatives/ Collectives New: C1, C2, C3, M1, and M2

17. 30 Cultivation Facilities: C1, C2, C3, M1, and M2

(See Page 5 In Agenda Item #4 Packet).

In addition to the permitted zones, the Planning Commission also recommended that the Council: (1) require the City to notify the State which Marijuana Businesses the City locally permits/licenses; (2) add location restrictions to Cultivation Facilities; and (3) permit the City to Issue administrative fines in the maximum amount allowable by law and/or the Code.

** D. Required Action: **

There are two areas that require immediate attention from local governments under the Act: (1) Deliveries and Mobile Dispensaries; and (2) Cultivation.

– Deliveries and Mobile Dispensaries:

Per the Act, jurisdictions that wish to ban deliveries or mobile dispensaries will need to have an ordinance in place that affirmatively identifies and prohibits these activities. Pursuant to the current Ordinance, the City prohibits, but provides immunity to, all existing Cooperatives/Collectives, whether they are fixed or mobile. Moreover, Section 12A-4(F) provides that “[t]he Cooperative/Collective is only open between the hours of 9:00 a.m. and 7:00 p.m., excluding delivery service, which shall not operate of make deliveries between the hours of 9:00 p.m. and 9:00 a.m.” [Emphasis added.] Therefore, as written, the Ordinance contemplates the operation of mobile marijuana dispensaries and delivery services, but does not specifically identify mobile dispensaries or delivery service as a separate category of Marijuana Business, or prohibit the same. As such, if the City wishes to prohibit or regulate mobile dispensaries or delivery services, our office recommends the City take action to expressly regulate or ban those activities,

– Cultivation:

AB 243 contains a provision stating that cities that do not have an ordinance regulating or prohibiting cultivation by March 1, 2016 will lose authority to regulate or ban cultivation within the city. As explained above, the current Ordinance includes in its definition of “Cooperatives/Collectives” those facilities where “marijuana is cultivated.” Based on this language, the City may argue that although not a separate category of Marijuana Business, cultivation of marijuana is banned in all zones (with immunity provided կ: specified circumstances.) As such, the City may argue that its ordinance is not preempted by Stałe law.

** E. Options Available to City: **

Given the above, the Council has several options for regulating Marijuana Businesses within the City:

First, the Council may elect to leave the current Ordinance in place. This would mean that Cooperatives/Collectives (which include facilities where marijuana is cultivated) would remain prohibited in all zones within the City, but would be provided limited immunity if they were in existence, open, and operating as of the date the Ordinance was adopted and they comply with certain rules and regulations, as provided. Because the new State law requires the Cooperatives Collective to obtain both a state license/permit and a local license/permit or other entitlement to operate, it is unclear whether Cooperatives/Collectives would be permitted to obtain a State license without the City issuing a permit or license.

Second, the Council may elect to amend the current ordinance to adopt new regulations related to cultivation, mobile dispensaries and delivery. Although the current Ordinance contemplates mobile dispensaries and delivery, and bans (but provides immunity to) cultivation facilities, the Council may desire to more expressly regulate these types of activities, so as not to leave the Ordinance open to challenge under the Act. Exhibit “2” is a draft ordinance for the City Council’s consideration.

Third, the Council may elect to amend the Ordinance to adopt a comprehensive regulatory scheme that affirmatively permits all types of Marijuana Businesses within the City.

** F. Status of Federal Law: **

Marijuana remains unlawful under the Federal Controlled Substances Act (“CSA”); however, the current Federal administration has taken a relatively hands-off approach to enforcing the CSA (in terms of medical marijuana), provided there is a strong regulatory scheme in place, and the Cooperative/Collective is not violating one of the eight priorities outlined in the Department of Justice’s Cole Memorandum.” Given the State’s current efforts to affirmatively regulate and allow local licensing of marijuana activities, as explained above, the City would be moving forward with the adoption of regulations in reliance on the newly granted authority granted in AB 266 and the companion legislation.

– Options:

1. Leave the current Ordinance in place and ban the establishments operation of new

Cooperatives/Collectives.

2. Amend the Ordinance to affirmatively regulate cultivation and mobile dispensaries/delivery as proposed in the ordinance attached as Exhibit “2”.

3. Establish a comprehensive regulatory scheme affirmatively permitting Marijuana Businesses within the City.

** The priorities are preventing: (1) Distribution of marijuana to minors; (2) Providing revenue from the sale of marijuana to criminal enterprises, gangs and/or cartels; (3) Diverting marijuana from s state where it is legal under state law to a state where it is legal. (4) Using marijuana activity as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; (5) Using or engaging in violence or use of firearms in the cultivation and/or distribution of marijuana: (6) Contributing to drugged driving and/or the exacerbation of other adverse public health consequences associated with marijuana use; (7) Growing marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and/or (8) Possessing or use of marijuana on federal property. **

For more information regarding the Needles City Council Meetings, please contact Dale Jones in the City Clerk’s Office at the City of Needles at: 1 (760) 326-2113 Ext. 345.

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