CC 2018-08-14_09f Adopt Ordinance_Cannabis Delivery ServicesMEMORANDUM
TO: CITY COUNCIL
FROM: TERESA MCCLISH, COMMUNITY DEVELOPMENT DIRECTOR
SUBJECT: CONSIDERATION OF ADOPTION OF ORDINANCE - DEVELOPMENT
CODE AMENDMENT CASE NO. 18-002; AMENDMENTS TO CHAPTER
16.62 OF TITLE 16 AND REPEALING CHAPTER 5.95 OF TITLE 5 OF
THE ARROYO GRANDE MUNICIPAL CODE RELATING TO CANNABIS
DELIVERY SERVICES; LOCATION – CITYWIDE; APPLICANT – CITY
OF ARROYO GRANDE: AND OPPOSITION LETTER TO THE BUREAU
OF CANNABIS CONTROL
DATE: AUGUST 14, 2018
SUMMARY OF ACTION:
1)The proposed Ordinance will modify the Municipal Code to remove local permit
requirements for cannabis delivery services. All other prohibitions regarding commercial
cannabis activities will remain unaffected.
2) The letter to the California Bureau of Cannabis Control will reflect the City’s position
to maintain local control of commercial cannabis activity inside the City.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
Removal of local permitting requirements will reduce impacts and cost to Police
Department staff assigned to review applications for cannabis delivery permits.
RECOMMENDATION:
It is recommended that the City Council:
1)Adopt the Ordinance amending Chapter 16.62 of Title 16 and repealing Chapter 5.95
of Title 5 of the Arroyo Grande Municipal Code relating to cannabis delivery services;
and 2) Authorize the City Manager to send a letter to the Bureau of Cannabis Control
opposing new cannabis regulations as they relate to delivery and the time for cities to
verify if a licensee has obtained the necessary local approvals.
BACKGROUND:
On July 24, 2018, the City Council introduced an Ordinance repealing Chapter 5.95 of
the Arroyo Grande Municipal Code relating to the local regulation of cannabis delivery
services and modifying Chapter 16.62 to remove references to the City’s permitting
requirements, specify deliveries require State permitting, and clarify that deliveries must
originate from outside of the City.
Item 9.f. - Page 1
CITY COUNCIL
CONSIDERATION OF DEVELOPMENT CODE AMENDMENT CASE NO. 18-002 AND
OPPOSITION LETTER TO THE BUREAU OF CANNABIS CONTROL
AUGUST 14, 2018
PAGE 2
ANALYSIS OF ISSUES:
Ordinance: The Ordinance is now ready for adoption. The Ordinance will become
effective thirty days after final passage of the Ordinance.
Position letter: On July 13, 2018, California’s three cannabis licensing authorities
(Bureau of Cannabis Control (BCC), Department of Food & Agriculture, and Department
of Public Health) announced the publication of proposed regulations in the California
Regulatory Notice Register, the first step toward adopting non-emergency regulations.
This publication is the start of the formal rulemaking process and marks the opening of
the 45-day public comment period (ends August 27th). The current emergency
regulations will remain in effect until the non-emergency rulemaking process is
complete.
While many of the proposed regulations simply clarify the existing laws contained in the
emergency regulations, there is a significant modification to the rules regarding delivery
and the amount of time cities have to determine the validity of a cannabis business
license. Under Proposition 64, its implementing legislation, and its related emergency
regulations, cities had local control over deliveries into their city. Under the new
proposed regulations, delivery employees will be able to deliver to any jurisdiction within
the State. While the City’s proposed Ordinance complies with the proposed regulations
in that it allows cannabis businesses with physical premises located outside of the City
of Arroyo Grande that are licensed by the BCC to deliver into the City, the proposed
regulation is a departure from the language of the State legislation and the emergency
regulations.
The proposed regulations also create a ten-day period for cities to respond to the BBC’s
inquiry of the validity of either an annual or a temporary cannabis license. City staff has
already experienced that this ten-day period does not afford sufficient time to review
license applications and respond to the BCC, particularly with limited staff resources. It
is unknown at this time if this loss of local control will be challenged and/or remain a
component of the final regulations once adopted.
The City’s measured approach regarding cannabis regulation relies upon local control
assured by Proposition 64. Although the proposed Ordinance is consistent with
proposed state regulation of deliveries, the proposed legislation provides no option
should the City wish to revisit the issue in the future. The proposed regulations
undermine the fundamental pillar of Proposition 64’s safeguard that local jurisdictions
can regulate cannabis in their communities and sets a detrimental precedent.
As a result, the League of California Cities has reached out to all cities to oppose the
proposed regulations prior to the August 27, 2018 deadline. Based upon Council
concerns expressed at the July 24, 2018 public hearing during introduction of the
proposed Ordinance, a letter in opposition to the proposed regulations to the BCC has
Item 9.f. - Page 2
CITY COUNCIL
CONSIDERATION OF DEVELOPMENT CODE AMENDMENT CASE NO. 18-002 AND
OPPOSITION LETTER TO THE BUREAU OF CANNABIS CONTROL
AUGUST 14, 2018
PAGE 3
been prepared for consideration by the Council. The letter is consistent with the
League’s sample opposition letter included in Attachment 1.
ALTERNATIVES:
The following alternatives are provided for the Council’s consideration:
1. Adopt the Ordinance modifying the Municipal Code regarding cannabis delivery
services; and send the opposition letter to the BCC;
2. Adopt the Ordinance modifying the Municipal Code regarding cannabis delivery
services; and do not send the opposition letter to the BCC;
3. Modify and re-introduce the Ordinance modifying the Municipal Code regarding
cannabis delivery services; modify and send the opposition letter to the BCC; or
4. Provide direction to staff.
ADVANTAGES:
Amending the City’s cannabis ordinance as directed by Council will remove a
duplicative local delivery permitting requirement, will continue to be consistent with
State law, reduces impacts and cost to Police Department staff, increases the
opportunities for cannabis delivery within the City, and maintains a measured approach
to cannabis regulation that may best protect the public health, safety, and welfare while
leaving options to reconsider the industry in the future.
Sending the opposition letter to the BCC supports the City’s position to maintain local
control.
DISADVANTAGES:
Repealing the City’s local cannabis delivery licensing scheme will give up some local
control; however, the City’s concerns are adequately addressed by the State
regulations.
Sending the opposition letter to the BCC may be considered irrelevant as it asserts the
need for local control at the same time the City takes action to leave control of deliveries
to the State.
ENVIRONMENTAL REVIEW:
The project has been reviewed in compliance with the California Environmental Quality
Act (CEQA) and determined to be exempt pursuant to Sections 15061(b)(3) (general
rule) and 15308 (actions by regulatory agencies for the protection of the environment) of
the CEQA Guidelines.
PUBLIC NOTIFICATION:
The Agenda was posted at City Hall and on the City’s website in accordance with
Government Code Section 54954.2. At the time of report publication, no comments
have been received.
Item 9.f. - Page 3
CITY COUNCIL
CONSIDERATION OF DEVELOPMENT CODE AMENDMENT CASE NO. 18-002 AND
OPPOSITION LETTER TO THE BUREAU OF CANNABIS CONTROL
AUGUST 14, 2018
PAGE 4
ATTACHMENTS:
1. Correspondence from League of California Cities regarding Bureau of Cannabis
Control Project Regulations – July 2018
Item 9.f. - Page 4
ORDINANCE NO.
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARROYO
GRANDE AMENDING CHAPTER 16.62 OF TITLE 16 AND REPEALING
CHAPTER 5.95 OF TITLE 5 OF THE ARROYO GRANDE MUNICIPAL
CODE RELATING TO CANNABIS DELIVERY SERVICES
WHEREAS, on January 26, 2016 the City Council of the City of Arroyo Grande adopted
Ordinance No. 675 which added Chapter 16.62 to Title 16 of the Arroyo Grande Municipal
Code (AGMC), prohibiting medical marijuana dispensaries, cooperatives and collectives,
deliveries of medical marijuana, and the cultivation of marijuana within the City; and
WHEREAS, the City Council subsequently determined that it was appropriate to allow
limited cultivation and strictly regulated deliveries of medical marijuana and on June 28,
2016, adopted Ordinance 678, amending AGMC Chapter 16.62 to allow limited indoor
cultivation of medical marijuana and adding Chapter 5.95 relating to delivery services;
and
WHEREAS, on November 9, 2016, the Adult Use of Marijuana Act (AUMA), also known
as Proposition 64, became effective, authorizing certain personal use and cultivation of
marijuana at a private residence and creating a state licensing and regulatory scheme for
various commercial marijuana activities; and
WHEREAS, On October 10, 2017, City Council adopted Ordinance 687 to amend and
clarify the provisions in the AGMC relating to marijuana (cannabis) in order to continue to
prohibit all commercial cannabis activity within the City of Arroyo Grande, except for
limited delivery as permitted by Chapter 5.95, to ban outdoor cannabis cultivation and
reasonably regulate indoor cannabis cultivation; and
WHEREAS, the State has implemented a new comprehensive licensing and regulatory
system for cannabis based upon emergency regulations adopted in December 2017, and
June 2018, including the adoption of regulations requiring background checks of
licensees, requirements related to premises, testing and quality control of cannabis, a
“track and trace” system for all commercial cannabis activity, and procedures relating to
delivery; and
WHEREAS, the City Council of the City of Arroyo Grande desires to amend the provisions
in the AGMC relating to cannabis in order to delete the City’s Cannabis Delivery Services
local licensing regulations and instead allow deliveries by State licensed cannabis
retailers.
Item 9.f. - Page 5
ORDINANCE NO.
PAGE 2
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE DOES
ORDAIN AS FOLLOWS:
SECTION 1. The above recitals and findings are true and correct and are incorporated
herein by this reference.
SECTION 2. Section 16.62.010 of the Arroyo Grande Municipal Code is hereby amended
to read in its entirety as follows:
16.62.010 - Purpose and findings
A. By adoption of this Chapter, with the exception of deliveries into the City of
Arroyo Grande by State licensed cannabis retailers, it is the City Council’s purpose and
intent to: prohibit commercial cannabis activity, including but not limited to medical
cannabis dispensaries, cooperatives and collectives; outdoor cultivation of cannabis; and
manufacture, distribution, processing, storing, laboratory testing, packaging, labeling,
transportation, or sale of cannabis and cannabis products, and the location of premises
for retail or non-storefront retail cannabis businesses; and to reasonably regulate the
ability of individuals to cultivate not more than six (6) cannabis plants indoors for personal
noncommercial use, as permitted by the Adult Use of Marijuana Act (AUMA, Proposition
64), and Health and Safety Code Sections 11362.1 and 11362.2. These regulations
are adopted pursuant to the AUMA and the City of Arroyo Grande’s authority under Article
XI, Section 7 of the California Constitution, in order to promote the health, safety, and
general welfare of the residents and businesses within the City of Arroyo Grande and
prevent adverse impacts which such activities may have on nearby properties and
residents.
B. Pursuant to the City of Arroyo Grande’s police powers authorized in Article XI,
Section 7 of the California Constitution, the City has the power to regulate permissible
land uses within its boundaries and to enact regulations for the preservation of public
health, safety and general welfare of its residents and community. Further, pursuant to
Government Code Sections 38771 through 38775, the City also has the power through
the City Council to declare actions and activities that constitute a public nuisance.
SECTION 3. Subsection A of Section 16.62.060 is hereby amended to read as follows:
A. Except as provided in Section 16.62.070 related to deliveries into the City of
Arroyo Grande, all commercial cannabis activity, including but not limited to medical
cannabis collectives, cooperatives and dispensaries (including mobile dispensaries),
cultivation, manufacture, distribution, processing, storing, laboratory testing, packaging,
labeling, transportation, or sale of cannabis and cannabis products, and the location of
premises for any retail or non-storefront retail cannabis businesses, are not permitted in
or upon any premises in the City of Arroyo Grande.
Item 9.f. - Page 6
ORDINANCE NO.
PAGE 3
SECTION 4. Section 16.62.070 of the Arroyo Grande Municipal Code is hereby amended
to read as follows:
16.62.070 - Deliveries
It shall be unlawful for any person to deliver cannabis or cannabis products or
engage in activities that constitute delivery of cannabis or cannabis products anywhere
within the boundaries of in the City of Arroyo Grande, except for cannabis retail
businesses with physical premises located outside of the City of Arroyo Grande that are
licensed by the State Bureau of Cannabis Control. Notwithstanding any provision of this
chapter, nothing herein is intended to prohibit the transportation of cannabis or cannabis
products on public roads by a licensee duly licensed and acting in compliance with
Division 10 of the Business and Professions Code (Business and Professions Code
Sections 26000 et seq.).
SECTION 5. Chapter 5.95 of Title 5 of the Arroyo Grande Municipal Code is hereby
repealed.
SECTION 6. Notwithstanding anything in this Ordinance or in the Arroyo Grande
Municipal Code to the contrary, any cannabis delivery service that has been licensed by
the City in accordance with the provisions of Chapter 5.95 as they previously existed prior
to the repeal provided in Section 5 herein, may continue to deliver medical cannabis or
medical cannabis products in the City of Arroyo Grande in accordance with the laws
governing medical cannabis collectives and cooperatives (reference Health and Safety
Code Section 11362.775), until the expiration of the term of the license as provided in
AGMC Section 5.95.040(D). Such licensees shall continue to comply with the provisions
of Chapter 5.95 as they existed at the time the license was granted and any applicable
provisions of Title 16 California Code of Regulations, Sections 5000 et. Seq. relating to
delivery.
SECTION 7. In accordance with the requirements of Business and Professions Code
Section 26055(f), a copy of this Ordinance shall be provided to the Bureau of Cannabis
Control within the California Department of Consumer Affairs.
SECTION 8. This Ordinance is exempt from CEQA pursuant to CEQA Guidelines
Section15061(b)(3) which is the general rule that CEQA applies only to projects which
have the potential for causing a significant effect on the environment and CEQA does not
apply where it can be seen with certainty that there is no possibility that the activity may
have a significant effect on the environment.
SECTION 9. A summary of this Ordinance shall be published in a newspaper published
and circulated in the City of Arroyo Grande at least five (5) days prior to the City Council
meeting at which the proposed Ordinance is to be adopted. A certified copy of the full text
of the proposed Ordinance shall be posted in the office of the City Clerk. Within fifteen
(15) days after adoption of the Ordinance, the summary with the names of those City
Council members voting for and against the Ordinance shall be published again, and the
Item 9.f. - Page 7
ORDINANCE NO.
PAGE 4
City Clerk shall post a certified copy of the full text of such adopted Ordinance. This
Ordinance shall take effect and be in full force and effect thirty (30) days after its passage.
SECTION 10. This Ordinance shall take effect and be in full force and effect thirty (30)
days after its passage.
SECTION 11. If any section, subsection, sentence, clause, or phrase of this Ordinance is
for any reason held to be invalid or unconstitutional by a decision of any court of
competent jurisdiction, such decision shall not affect the validity of the remaining portions
of this Ordinance. The City Council hereby declares that it would have passed this
Ordinance and each and every section, subsection, sentence, clause, or phrase not
declared invalid or unconstitutional without regard to whether any portion of the ordinance
would be subsequently declared invalid or unconstitutional.
On motion by Council Member ______, seconded by Council Member _______, and by
the following roll call vote to wit:
AYES:
NOES:
ABSENT:
the foregoing Ordinance was adopted this ____ day of _______, 2018.
Item 9.f. - Page 8
ORDINANCE NO.
PAGE 5
___________________________________
JIM HILL, MAYOR
ATTEST:
___________________________________
KELLY WETMORE, CITY CLERK
APPROVED AS TO CONTENT:
________________________________
JAMES A. BERGMAN, CITY MANAGER
APPROVED AS TO FORM:
___________________________________
HEATHER K. WHITHAM, CITY ATTORNEY
Item 9.f. - Page 9
August 15,2018
Lori Ajax, Chief
Bureau of Cannabis Control
P.O. Box 419106
Rancho Cordova, CA 9p7 41
CITY OF ARROYO GRAN E
CALIFORNIA
Submitted via Email: bcc.comments@dca.ca.gov
RE: Bureau of Cannabis Control Proposed Regulations -July 2018
Dear Chief Ajax:
The City of Arroyo Grande appreciates the opportunity to comment on the proposed
regulations released in July 2018, which seek to codify the emergency regulations
implemented in December 2017. On August 14, 2018, the City Council directed me to
submit this letter.
The City strongly objects to two proposed changes that we view are in fundamental
conflict with both the language and intent of Ptoposition 64 and will undermine our city's
ability to effectively regulate cannabis at the local level:
•Section 5416(d), would drastically preempt local control and regulatory authority
by authorizing cannabis delivery anywhere in the state regardless of conflicting
local regulations or bans, and
•Sections 5001 (c) (11) and 5002(c) (28) would undermine the ability of local
agencies to ensure community standards are met by reducing from 60 to 10 days
the period to verify if a licensee has obtained necessary local approvals.
The City believes the two proposed regulations go beyond the BCC's regulatory authority
and instead create a new cannabis policy outside of the legislative process. California's
voters were assured that "Proposition 64 preserves local control"1 and these regulations
chip away at the very foundation of local control by allowing cannabis deliveries to every
jurisdiction in California.
The City has enacted an ordinance that prohibits all commercial cannabis activity except
for deliveries. However, the City previously strictly regulated deliveries and only
yesterday approved modifications to the ordinance to allow the State to regulate deliveries
after much public input and consideration and firmly advocates the right to reconsider
anytime in the future. Additionally, the City has already experienced difficulties with the
10-day local review period in reviewing deliveries, it is much too short particularly for
smaller cities with limited staff resources. The City strongly recommends a local review
period of 60 days.
CITY MANAGER'S OFFICE • 300 E. Branch Street • Arroyo Grande, California 93420
Phone: (805) 473-5400 • FAX: (805) 473-0386 • E-mail: agcitv@arrovoerande.ore • Website: www.arrovoerande.om:
DRAFT
Item 9.f. - Page 10
D
Item 9.f. - Page 11
Bureau of Cannabis Control
Lori Ajax, Chief
August 15, 2018
Page2
For these reasons, the City of Arroyo Grande respectfully opposes these regulations until
such time as they are amended to address the concerns listed above. We look forward
to continued opportunities to comment on specific regulatory proposals.
Sincerely,
James A. Bergman
City Manager
cc: David Mullinax, League of California Cities, dmullinax@cacities.org
Meg Desmond, League of California Cities, cityletters@cacities.org
July 26, 2018
Lori Ajax, Chief
Bureau of Cannabis Control
P.O. Box 419106
Rancho Cordova, CA 95741
Submitted via Email: bcc.comments@dca.ca.gov
RE: Bureau of Cannabis Control Proposed Regulations – July 2018
Dear Chief Ajax,
The League of California Cities® appreciates the opportunity to comment on the proposed regulations
released in July 2018, which seek to codify the emergency regulations implemented in December 2017.
The League is committed to ensuring that California has a reliable, safe, and smart regulatory system for
cannabis that upholds the ability of local jurisdictions to control and regulate business entities participating
in their local area, which was central to the passage of both the Medicinal and Adult-Use Cannabis
Regulation and Safety Act (MAUCRSA) and the Control, Regulate and Tax adult Use of Marijuana Act
(Proposition 64).
We understand the challenge that the Bureau of Cannabis Control (BCC) faces in developing a
comprehensive regulatory structure for the now largest legal cannabis market in the country. However,
cities remain concerned about critical aspects of these regulations that would undermine their ability to
decide if and how cannabis is right for their communities. Our key concerns are as follows:
§5416(d). Cannabis Deliveries to a Physical Address. Section 5416(d) subverts the intent of the voters
who passed Proposition 64 by removing a local government’s ability to prohibit cannabis deliveries
within its jurisdiction.
Recognizing the value of local control in regulating commercial cannabis activity, Proposition 64’s
purpose and intent provisions expressly provided that “[i]t is the intent of the People in enacting this Act
to…[a]llow local governments to ban nonmedical marijuana businesses….” Thus, under existing law—as
articulated in Proposition 64 and, now, MAUCRSA—local governments can adopt and enforce local
ordinances to ban or regulate all commercial cannabis activity, including deliveries, within their borders.
Section 5416(d), as proposed, fundamentally alters this pillar of Proposition 64 by forcing local
governments to allow cannabis deliveries.
By authorizing cannabis delivery employees to deliver cannabis to any jurisdiction within California,
section 5416(d) removes a critical component of the local enforcement model established by Proposition
64.The influx of cannabis deliveries that will result from such a regulation will increase public safety
costs for local law enforcement agencies. These increased costs cannot be easily absorbed by local
governments. Therefore, if section 5416(d) is adopted, local governments will be forced to make difficult
decisions about how best to allocate their limited resources to ensure the safety of the public—decisions
that they are not required to make under Proposition 64 or MAUCRSA.
That section 5416(d) contradicts existing law is further illustrated by the failure of SB 1302 by Senator
Lara, which would have similarly preempted a local government from adopting or enforcing an ordinance
that would ban cannabis deliveries within its jurisdiction. Not only did SB 1302 fail to attain the required
2/3 majority vote required by Proposition 64 for the enactment of amendments that contradict Proposition
64’s express terms, it failed to pass out of its house of origin.
1400 K Street, Suite 400 Sacramento, California 95814
Phone: 916.658.8200 Fax: 916.658.8240
www.cacities.org
Item 9.f. - Page 12
LEAGUE ®
OF CALIFORN I A
CITIES
Because section 5416(d) goes beyond the statutory provisions of Proposition 64 and MAUCRSA,
adoption of 5416(d) would exceed the BCC’s regulatory authority. California Business and Professions
Code section 26013 limits the regulatory authority of the BCC to enacting rules and regulations that are
“consistent with the purposes and intent of [Proposition 64].” By allowing deliveries in every jurisdiction
in California, the BCC is fundamentally changing Proposition 64, not simply clarifying existing law. For
these reasons, the League strongly urges that section 5416(d) be removed from the regulations.
§5001(c)(11). Temporary License Application Requirements and §5002(c)(28). Annual License
Application Requirements. Both sections 5001(c)(11) and 5002(c)(28) create a 10-day “shot clock” for
cities to respond to the BCC’s inquiry of the validity of a license before that license is deemed valid. This
10 day “shot clock” does not afford cities sufficient time to review license applications and respond to the
BCC. The League advocated in 2017 in SB 94 for a 90-day “shot clock” that was ultimately reduced to 60
days. This proposed 10-day “shot clock” effectively makes cities obsolete in approving or verifying the
authenticity of licenses. This will undermine a fundamental pillar of Proposition 64 that ensures local
jurisdictions can regulate cannabis in their communities.
Current law, Business and Professions Code Section 26055(g)(2)(D), states that cities have 60 days to
provide notification of compliance or noncompliance with local ordinances or regulations before a license
application is deemed in compliance. The League strongly believes that the 60-day standard set in
existing law should also be applied to these regulations, because it will allow cities the time they need to
verify that a license submitted to the BCC is, in fact, valid.
If this 10-day shot clock were to be adopted, cities would be susceptible to a cannabis company sending
multiple purported local licenses to the BCC claiming that they are all valid, knowing that a city may not
have the time and resources to check each license’s validity before the 10-day verification period ends.
Ensuring that a local jurisdiction has approved either a temporary or annual license is key to promoting
public safety and should not be reduced to an over-the-counter approval process. For these reasons, the
League strongly urges that these regulations be amended from a 10-day to a 60-day period in both
sections 5001(c)(11) and 5002(c)(28), in order to both reflect current law and ensure cities an appropriate
amount of time to verify whether local licenses are indeed valid.
Furthermore, some patience with this newly-minted law is essential. As California’s experiment in
decriminalizing commercial cannabis activity unfolds, many jurisdictions that opted not to allow sales and
distribution within their jurisdiction are observing the experience in other jurisdictions. In time, as
successful examples of local implementation emerge, more jurisdictions can be expected to alter their
policies and permit the sale and delivery of cannabis.
For these reasons, the League strongly requests the outlined amendments to these proposed regulations.
The League appreciates the stakeholder engagement process the BCC is undertaking. We look forward to
continued opportunities to comment on specific regulatory proposals. If you have any questions, please
feel free to contact me at (916) 658-8252.
Sincerely,
Charles W.R. Harvey
Legislative Representative
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