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Home My WebLink About2023-05-04; Medicinal Cannabis Delivery Service Businesses (Districts - All); Barberio, GaryMay 4, 2023 To: From: Via: Council Memorandum Honorable Mayor Blackburn and Members of the City Council Gary Barberio, Deputy City Manager, Community Services Jeff Murphy, Community Development Director Geoff Patnoe, Assistant City Manager {§?_ {cityof Carlsbad Memo ID# 2023039 Re: Medicinal Cannabis Delivery Service Businesses (Districts -All) This memorandum provides an overview of a new law imposed by Senate Bill (SB) 1186, which forbids local laws prohibiting medicinal cannabis delivery-only retailers and will allow medicinal cannabis delivery-only retailers to operate in local jurisdictions where they are currently prohibited, like the City of Carlsbad. The new law, effective January 1, 2024, will require the city to amend its cannabis ordinance, Carlsbad Municipal Code Chapter 8.90, to accommodate delivery- only medicinal cannabis delivery service businesses, also known as "non-storefront retail" medicinal cannabis businesses, in the City of Carlsbad. Companion amendments to the city's Municipal Code may also be warranted, as described more fully in the "Next Steps" section of this memo. Background Medicinal use of cannabis1 in the State of California has been legal since Proposition 215, the Compassionate Use Act of 1996, Health and Safety Code Section 11362.5. In 2015, the state legislature passed the Medical Cannabis Regulation and Safety Act (MCRSA). For the first time, MCRSA established a comprehensive, statewide licensing and regulatory framework for the cultivation, manufacture, transportation, testing, distribution, and sale of medicinal cannabis. Shortly following the passage of MCRSA, California voters passed Proposition 64, the Control, Regulate and Tax Adult Use of Marijuana Act, which legalized adult-use cannabis2• Less than a year later in June 2017, the state legislature passed a budget trailer bill, SB 94, that integrated MCRSA with Proposition 64 to create the Medicinal and Adult Use Cannabis Regulation and Safety Act (MAUCRSA), which is the current regulatory structure for both medicinal and adult-use cannabis. MAUCRSA sets up a basic framework for licensing, oversight and enforcement related to cannabis businesses. The MAUCRSA also allows cities and counties to make independent regulatory decisions for both medicinal and adult-use cannabis activity. The City of Carlsbad, like roughly half the jurisdictions in the state, adopted Ordinance No. CS-323, 2017 adding Chapter 8.90 to the Municipal Code to prevent all commercial cannabis activity within 1 Medicinal cannabis is used for medicinal purposes and can be legally obtained in California by individuals 18 years or older with a valid medical cannabis card. 2 Adult use cannabis is used primarily for leisure and recreation by adults and can be legally obtained in California by individuals 21 years or older. Community Services Branch Community Development Department 1635 Faraday Avenue I Carlsbad, CA 92008 I 442-339-5088 t Council Memo -Medicinal Cannabis Delivery Service Businesses (Districts -All) May 4, 2023 Page 2 the city. This includes the cultivation, delivery, distribution and sale of cannabis or cannabis products in the city. On January 24, 2019, the Bureau of Cannabis Control passed a regulation that authorized the delivery of all cannabis products to any location in the state, regardless of conflicting local regulations. During the public comment period, former Mayor Matt Hall submitted a letter of opposition to the Bureau on behalf of the City of Carlsbad, consistent with the City Council's legislative platform (Attachment A). In September of last year, Governor Newsom signed several bills that further expanded the reach of the cannabis market in the state. By far the most consequential measure for cities and counties is SB 1186, which has the following implications: • Eliminates a local jurisdiction's ability to ban medicinal cannabis delivery service businesses, non-retail storefronts only, from operating in the jurisdiction. • Local jurisdictions must also ensure that any proposed or existing regulations do not have the effect of prohibiting medicinal cannabis retail sale by delivery in a timely and readily accessible manner and in types and quantities that are sufficient to meet local demand. • Depending on a city's zoning code, the new law may require zoning code amendments to allow non-storefront retail medicinal cannabis delivery service businesses, i.e., cannabis delivery centers, to operate in certain zones of a city and/or permits or licenses for such businesses. The non-storefront retail location will operate essentially as a delivery center where delivery trucks and cannabis related goods and products are stored until they are delivered to locations within or outside the city limits. Discussion SB 1186 is intended to maximize medicinal cannabis patients' rights to access the medicinal cannabis products that they need. As such, SB 1186 prohibits cities and counties from adopting new regulations or enforcing existing regulations that prohibit or effectively prohibit non- storefront medicinal cannabis delivery service businesses from operating within their jurisdiction. To comply with this new law, most cities and counties will need to identify appropriate zones within their jurisdictions to accommodate medicinal cannabis delivery service businesses, if they are not already permitted, by right or otherwise, citywide. SB 1186 does allow jurisdictions to adopt and enforce reasonable regulations on retail delivery of medicinal cannabis such as reasonable zoning amendments, security or public health and safety requirements, licensing requirements, the imposition and collection of applicable state or local taxes on retail sales occurring within the local jurisdiction, and any other regulations consistent with the state's cannabis regulations. Jurisdictions may not, however, impose any of the following regulations that have the effect of prohibiting the retail sale by delivery of medicinal cannabis: • Capping the number of medicinal cannabis businesses authorized to deliver medicinal cannabis in the local jurisdiction; 2 Council Memo -Medicinal Cannabis Delivery Service Businesses (Districts -All) May 4, 2023 Page 3 • Limiting the operating hours of medicinal cannabis businesses; • Limiting the number or frequency of sales by delivery of medicinal cannabis; • Limiting the types or quantities of medicinal cannabis authorized to be sold by delivery; or, • Otherwise preventing the establishment of physical premises of a licensed non-storefront medicinal cannabis delivery service business. SB 1186 is relatively narrow in scope and does not supersede or limit the authority of cities and counties to adopt and enforce local ordinances regulating any other commercial cannabis activity, such as storefront commercial cannabis-related activities (medicinal or adult use cannabis). Outside of the establishment of medicinal cannabis delivery service businesses and deliveries of cannabis into a city from another jurisdiction, cities and counties retain local control over cannabis businesses. Regulation through local ordinance continues to be appropriate, such as local zoning and land use requirements, business license requirements and requirements related to reducing exposure to secondhand smoke, among other allowable local cannabis regulations. Next Steps The City Attorney's Office, working with Community Development and the Police Department, is preparing Municipal Code amendments to respond to and implement new SB 1186 requirements. Proposed amendments to Chapter 8.90 and Title 21 -Zoning Ordinance, as well as a new Chapter 8.95, will be forthcoming to allow non-storefront medicinal cannabis delivery service businesses to operate in the city, to establish appropriate zones for these business locations and to establish a permitting process that screens for qualified businesses and regulates business operations. Because of their warehousing nature, non-storefront retail medicinal cannabis businesses are likely to locate in the industrially zoned areas of the city. It is anticipated that the Municipal Code changes would be presented to the Planning Commission in August/September 2023 followed by City Council in October/November 2023. Based on recent City Council direction, it is anticipated that the Municipal Code amendments would not be used as a pathway to discuss potential new revenues streams or options related to the regulation or taxation of adult-use cannabis. Staff will continue to monitor any additional guidance provided from other regulatory agencies, cities, and counties and update as appropriate. Attachments: A. Former Mayor Hall's letter of opposition to 2019 delivery regulations cc: Scott Chadwick, City Manager Cindie McMahon, City Attorney Mickey Williams, Policy Chief Gary Barberio, Deputy City Manager, Community Services Jason Haber, Intergovernmental Relations Director Ron Kemp, Senior Assistant City Attorney 3 Council Memo -Medicinal Cannabis Delivery Service Businesses (Districts -All) May 4, 2023 Page 4 Marissa Kawecki, Assistant City Attorney Mike Strong, Assistant Community Development Director Eric Lardy, City Planner 4 ... -Cicyof Carlsbad Office of the Mayor August 8, 2018 Sent Via First Class Mail and Email Lori Ajax, Chief Bureau of Cannabis Control P.O. Box 419106 Rancho Cordova, CA 95741 RE: Bureau of Cannabis Control Proposed Regulations-July 2018 • Dear Chief Ajax: ATTACHMENT A The City of Carlsbad 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 City of Carlsbad strongly objects to proposed changes that we view are in direct conflict with Carlsbad Municipal Code ("CMC") section 8.90 "Cannabis" and Proposition 64. Specifically, section 5416(d) would authorize cannabis delivery anywhere in the state regardless of conflicting local regulations, which would drastically preempt local control and regulatory authority. Our city council recently enacted CMC section 8.90 to squarely address and prohibit the very cannabis activity that would be permitted under the BCC's proposed regulations. CMC section 8.90.030(A) prohibits all commercial cannabis activity within the City of Carlsbad, including cultivation, possession, manufacture, distribution, processing, storing, laboratory testing, packaging, labeling, transportation, distribution, delivery, or sale of cannabis requiring a ·license from the State. CMC section 8.90.030(8) specifically prohibits the conducting or participating in the delivery of cannabis. Additionally, the City of Carlsbad believes that this proposed regulation goes beyond the BCC's regulatory authority and instead creates a new cannabis policy outside of the legislative process. California's voters were assured that "64 preserves local control." Yet, this regulation chips away at the very foundation of local control by allowing cannabis deliveries to every jutisdiction in California. Office of the Mayor City Hall 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2830 t I www.carlsbadca.gov BCC Regulations August 8, 2018 Page 2 For these reasons, the City of Carlsbad respectfully opposes this regulation until it is amended to address the concerns listed above. We look forward to continued opportunities to comment on specific regulatory proposals. cc: Carlsbad City Council Scott Chadwick, Carlsbad City Manager Jason Haber, Carlsbad Assistant to City Manager State Assemblyman Rocky Chavez State Senator Patricia Bates Sincerv;u ~attHall City of Carlsbad Scott Meritt, Narcotics Sergeant, Carlsbad Police Department Catherine Hill, League of CA Cities Regional Public Affairs Manager (chill@cacities.org) Meg Desmond, League of CA Cities (cityletters@cacities.org)