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CC SR 20171003 03 - Marijuana Prohibition Code Amendment InitiationRANCHO PALOS VERDES CITY COUNCIL MEETING DATE: 10/03/2017 AGENDA REPORT AGENDA HEADING: Regular Business AGENDA DESCRIPTION: Consideration and possible action to initiate code amendment proceedings in order to prohibit commercial marijuana activities in the City. RECOMMENDED COUNCIL ACTION: (1) Initiate code amendment proceedings to amend Title 17 (Zoning) of the Rancho Palos Verdes Municipal Code in order to prohibit commercial marijuana activities in the City that will be licensed by the State beginning in January 2018 (Case No. ZON2017-00430). FISCAL IMPACT: N/A Amount Budgeted: N/A Additional Appropriation: N/A Account Number(s): N/A ORIGINATED BY: So Kim, Deputy Director/Planning Managed -"" 2I REVIEWED BY: Ara Mihranian, AICP, Director of Community Developments APPROVED BY: Doug Willmore, City Manager''` -1`1 BACKGROUND AND DISCUSSION: In October 2015, the State legislature adopted the Medical Cannabis Regulation and Safety Act ("MCRSA") to establish a statewide regulatory system for the licensing and operation of commercial medical marijuana businesses. However, the MCRSA explicitly allowed cities to prohibit each of the permitted types of commercial medical marijuana businesses. At the November 8, 2016, election, California voters approved Proposition 64, also known as the Control, Regulate, and Tax Adult Use of Marijuana Act ("AUMA"). AUMA legalized the limited personal use and possession of marijuana, and preempted cities from prohibiting the cultivation of up to 6 marijuana plants for personal use indoors at a private residence. On November 1, 2016, the City Council adopted Ordinance No. 590U. Ordinance No. 590U prohibited the outdoor personal cultivation of marijuana, and established reasonable regulations for the indoor personal cultivation of marijuana, pursuant to AUMA. 01203.0005/410009.4 1 AUMA also established a statewide regulatory system for the licensing and operation of commercial marijuana businesses for recreational use, which was similar to the medical marijuana regulatory scheme enacted by the MCRSA. AUMA also explicitly allows cities to prohibit each of the permitted types of commercial marijuana businesses. Recently, the State legislature adopted SB 94, also known as the Medicinal and Adult - Use Cannabis Regulation and Safety Act ("MAUCRSA"). The purpose of SB 94 is to reconcile the differences between the MCRSA and AUMA, and to bring medical and recreational marijuana businesses into the same regulatory scheme. Under the MAUCRSA, on or about January 1, 2018, the State of California will begin issuing state licenses for commercial marijuana operations (both medical and recreational). Local governments maintain regulatory and land use authority over all of these new commercial marijuana operations which the State will be licensing. Cities may completely prohibit these businesses, allow some but not others, or allow all of them. Cities may also impose stricter regulations than the state (if a certain business type is allowed). However, to maintain local control over these businesses, local governments are advised to expressly determine through local ordinance whether each different type of business operation will be allowed in a city. For example, a failure to affirmatively address these operations through local ordinance may reasonably allow commercial marijuana operations to conduct business in a city pursuant to a valid state license, if that city does not expressly prohibit that license type. The City's Municipal Code currently has no regulations regarding the commercial marijuana activities that will be permitted by the State pursuant to SB 94. SB 94 provides for twenty different types of licenses for various commercial marijuana activities. The State marijuana licenses will be for retail sales, cultivation, manufacturing, testing, distribution and microbusinesses. A State license will be required to engage in any of these commercial marijuana operations. There will be the same twenty different license types available for medical and recreational commercial operations, to be distinguished by either an "A" for adult -use (i.e., recreational) or an "M" for medical use. (Business & Professions Code § 26050.) Generally speaking, manufacturing involves the preparation of marijuana products such as oils and edible products, and distribution involves the transportation of marijuana and marijuana products between licensed commercial facilities (e.g. transporting marijuana between the cultivation site and the testing facility). Deliveries of marijuana are covered by the "retailer" category of licenses. The specific license types are as follows, with the majority being for various types of marijuana cultivation: Type 1 Cultivation; Specialty outdoor; Small. Type 4 Cultivation; Nursery. Type 1A Cultivation; Specialty indoor; Small. Type 5 Cultivation; Outdoor; Large. Type 113 Cultivation; Specialty mixed -light; Small. Type SA Cultivation; Indoor; Large. 01203.0005/410009.4 2 Type 1C Cultivation; Specialty cottage; Small. Type 5B Cultivation; Mixed -light; Large. Type 2 Cultivation; Outdoor; Small. Type 6 Manufacturer 1. Type 2A Cultivation; Indoor; Small. Type 7 Manufacturer 2. Type 2B Cultivation; Mixed -light; Small. Type 8 Testing laboratory. Type 3 Cultivation; Outdoor; Medium. Type 10 Retailer Type 3A Cultivation; Indoor; Medium. Type 11 Distributer Type 3B Cultivation; Mixed -light; Medium. Type 12 Microbusiness SB 94 establishes a dual -licensing scheme by which a business must have both a valid State license and local government authorization to lawfully operate a marijuana business. Cities may completely prohibit each of the activities permitted under the various state license types. Cities may also choose to allow and regulate any of the individual license types. The City of Los Angeles are considering regulations for current and future medical marijuana operators. The regulations may allow for various new commercial cannabis activity (e.g. dispensary and retailer, microbusiness, indoor commercial, manufacture, testing, distributer, and cultivation) and grandfathering of limited existing medical marijuana businesses. Allowance for these types of businesses may be issued by the newly formed City of Los Angeles' Department of Cannabis Regulation. Should this ordinance pass, there may be new commercial cannabis along Western Avenue in the City of Los Angeles. If the City does not specifically prohibit all commercial marijuana activities prior to January 1, 2018, then businesses that obtain State licenses for commercial marijuana activities not expressly prohibited by local law reasonably may be able to begin those commercial operations in the City. Therefore, Staff recommends that the City Council initiate code amendment proceedings to amend Title 17 to expressly prohibit all commercial marijuana activities in the City prior to the January 1, 2018, effective date. ALTERNATIVES: In addition to the Staff recommendations, the following alternatives are available for the City Council's consideration: 1. Prohibit all commercial marijuana activities now to maintain local control, and direct Staff to revisit the issue at a later date to determine whether certain marijuana business types should be permitted. 2. Identify certain commercial marijuana activities that should be permitted in the City, and direct Staff to prepare an ordinance to that effect. 3. Direct Staff to take no action at this time. 01203.0005/410009.4 3