Measure Z Commercial Cannabis Businesses

City of Marina Measure Z Commercial Cannabis Businesses

Shall the ordinance revising the City of Marina's regulations and permit process for commercial cannabis businesses and land uses, while restricting the proximity of such businesses to public parks and recreation centers and retaining the existing 5% gross receipts tax on cannabis businesses, the existing cap on retail businesses at 3 adult-use retailers and 3 medical dispensaries, and the existing prohibition against recreational sales to persons under 21 years old be adopted?

On August 5, 2020, the City Council adopted Resolution 2020-101, submitting to the Voters at the November 3, 2020 General Municipal Election a Measure Amending provisions of the Municipal Code relating to the Regulation, Permitting and Taxation of Commercial Cannabis Businesses, Activities and Land Uses; and requesting Monterey County Elections to conduct the Election and requesting Consolidation of the Election.

BACKGROUND AND INFORMATION

At the November 6, 2018, General Municipal Election a majority of the voters in the election adopted a voter-proposed initiative ordinance entitled “An Ordinance of the People of the City of Marina allowing Cannabis Business Activity and Establish Taxes and Fees for such Businesses within the City Of Marina, Amending Title and Chapter establishing Cannabis Business Activities as a Use allowed subject to a Use Permit in Specified Zones and Establishing Uses to Protect Public Health, Safety & Welfare.” The final vote was 4,351 votes in favor of the Ordinance and 2,130 votes against the passage of the Ordinance.  

The voter-approved commercial cannabis ordinance is cumbersome to administer.  The ordinance limited the number of retail cannabis permits that could be issued by the City but allowed an unlimited number of applicants for such permits to work their way through the full process of applications and reviews, even though not all would receive permits even if they met all basic qualifications.  The scoring criteria written into the ordinance resulted in many applicants having essentially identical scores, and the ordinance required that issues be decided multiple times for each applicant by staff, consultants, the Planning Commission, and the City Council.  The ordinance mixed land use issues (“Should ____be built and operate at this location?”) with licensing issues (“Should this person be permitted to operate a commercial cannabis business?”).  The ordinance duplicated state rules regarding issues like operating hours, and in some cases state regulations were subsequently amended to be more restrictive that the City ordinance.  Because the ordinance was adopted by the voters and could not be amended by the City Council, these problems could not be fully addressed without a new ballot measure.

The proposed draft Commercial Cannabis Business Ordinance of 2020 takes a regulatory approach instead of a competitive process.  This entails first holding a lottery drawing to select the potential cannabis business permittees that will be allowed to proceed to the full application process.  The competitive process works in the opposite and has been demonstrated with the first group of applicants over the last year and a half.   In the existing competitive permitting system, twelve applicants spent considerable time and resources and three where ultimately selected to receive a conditional use permit, which is prerequisite to receiving a cannabis business license

The Commercial Cannabis Business Ordinance of 2020 repeals Title 19 (Commercial Cannabis Activities) and Chapter 5.76 (Cannabis Retailer) as they were established in the 2018 voter initiative.  These code sections are replaced by Chapter 5.80 (Commercial Cannabis Business Regulations) and Chapter 17.47 (Commercial Cannabis Uses).  

The new regulatory process contained in the Commercial Cannabis Business Ordinance of 2020 focuses on licensing through an administrative process and zoning.

New Chapter 5.80 (Commercial Cannabis Business Regulations)

The licensing process is included in the new Chapter 5.80 (Commercial Cannabis Business).  This proposed Chapter requires that:

• A permit is necessary to operate a cannabis business.
• Where there are a limited number of permits, a pre-application lottery determines who can apply for a permit.
• A permit can only be issued after:
  • All owners and managers have obtained background clearance from the police.
  • The business has obtained a state cannabis license.
  • The business has an approved safety & security plan and has passed an inspection under that plan.
  • The site has complied with all zoning requirements.
• Permits have a one-year term but are renewable upon obtaining new background clearance and safety & security plan approval/inspection.
• Owners and Managers can be added/changed upon obtaining background clearance.
• Permit is tied to a location.  A business can be moved if it obtains a new permit at the new location.  The permit “slot” transfers to the new permit.
• A single license can authorize more than one type of commercial cannabis activity at the same location.  But adding an activity to a license requires new application process.
• Maintains the cannabis business tax rate of 5% of gross receipts, which was established through the 2018 Cannabis Business Activities ordinance and Council Action taken in April 2019.  

New Chapter 17.47 Commercial Cannabis Uses

The Commercial Cannabis Business Ordinance of 2020 includes typical zoning parameters and involves restrictions on what activities are allowed in what zones.   The zoning process in the draft ordinance works like the zoning process for any proposed new use of a parcel.  It is about what can be done at the location and how the location can be improved, not about who can do it.  In the draft ordinance, all cannabis businesses are made a conditional use.  As a conditional use, all cannabis uses require approval of the Planning Commission in a public hearing.  

Other zoning related items included in the Commercial Cannabis Business Ordinance of 2020 include:

• Removing the cannabis use provisions contained in Chapter 17.06.020 that concern alcohol establishments. This will revert this section to read as it did prior the voter approved Commercial Cannabis Business Activities ordinance.
• Chapter 17.47 (Commercial Cannabis Uses) is added to the zoning code to 
  • required that a conditional use permit be acquired for cannabis uses consistent with the standards for all conditional use permits in the City (same findings and hearing process);
  • specify that buffer zones between cannabis uses and child day care center and public recreation center or park are 600 feet;
  • require that a condition be imposed that cannabis business will not generate offensive noise or odors;
  • require a 1,000-foot buffer between retail cannabis business uses

Moratorium

The Commercial Cannabis Business Ordinance of 2020 also includes a moratorium.  This moratorium language states: No application for a Permit for Cultivation, Manufacturing, Testing Laboratory, Nursery or Distribution shall be accepted prior to July 1, 2021.  The purpose of this paragraph is to permit the City Council to adopt additional regulations, beyond those existing under state law, on such businesses (Chapter 5.80.090 (h)).

Treatment of Applications submitted prior November 3, 2020

Prior Commercial Cannabis Businesses applicants that were reviewed by the City Council on June 10, 2020 will be subject to Section 8 of the Commercial Cannabis Business Ordinance of 2020.  This section provides that:

1. Any commercial cannabis permit issued pursuant to Title 19 of the Municipal Code prior to the repeal of that Title by this Ordinance shall be treated as a valid permit issued pursuant to this ordinance and may be renewed pursuant to this ordinance.
2. Any application for a permit that was submitted prior to the effective date of this ordinance will be processed under the laws existing laws at the time of application.
3. Notwithstanding subdivision (b), an applicant for a non-retail commercial cannabis permit may request that such permit be processed pursuant to this law instead of pursuant to the prior law.

Creation of Legal Non-Conforming Uses

Of the three commercial cannabis businesses that was approved by the City Council on June 17, 2020 to receive a Cannabis Conditional Use Permit was Stiiizy, located at 3170 Del Monte.  This site is within 600-feet of both Vince DiMaggio Park and Locke Paddon Park.   To address this issue, Section 17.47.050  Existing Retail Site is included to exempt the commercial cannabis business approved at 3170 Del Monte from having a legal non-conforming status.

Sign Regulations 

Commercial signs are governed by MMC Chapter 17.59.  Current commercial sign regulations allow for one and one-half square feet of sign area for every linear foot of primary business frontage to a maximum of two hundred square feet per business. One-half square foot of sign area is permitted for every foot of secondary business frontage to a maximum of twenty-five square feet for each secondary business frontage. No more than four signs may be permitted per business.  Commercial cannabis business signage will be subject to both MMC Chapter 17.59 and Section 17.47.030 of the new Ordinance, which requires additional sign restrictions for cannabis businesses.