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City of San Leandro Meeting Date: December 3, 2012 Staff Report File Number: 12-569 Agenda Section: ACTION ITEMS Agenda Number: 10.C. TO: City Council FROM: Chris Zapata City Manager BY: Jayne Williams City Attorney FINANCE REVIEW: Not Applicable TITLE: Staff Report for Presentation of DRAFT Medical Marijuana Dispensary Ordinance SUMMARY AND RECOMMENDATIONS Staff recommends the City Council review the DRAFT medical marijuana dispensary ordinance, take public comment, provide comments to staff, and provide direction to staff on next steps staff should take before it brings the ordinance back to the City Council for review and adoption. BACKGROUND Since the expiration of the moratorium on the issuance of land use entitlements related to uses involving medical marijuana dispensaries on October 1, 2012, the City Council, by and through its City Council Rules and Communications Committee, has reviewed, taken public comment, and provided comments upon a draft ordinance that would allow the operation of aand impose regulations upon two medical marijuana dispensaries in the City. The City Council Rules and Communications Committee, after several versions of the ordinance, recommends the City Council review and provide comments upon the version of the ordinance presented. Staff also requests direction on next steps it should take related to the communitys review of the ordinance. Two public presentations, one before the Board of Zoning Adjustments, and one before the Planning Commission, will be scheduled early next year. Those two presentations will include a review of the proposed ordinance, and staff recommended amendments to the Zoning Code, to bring it in compliance with the provisions of the proposed ordinance. ANALYSIS Since September 2010, the City has had a moratorium on the issuance of land use City of San Leandro Page 1 Printed on 12/3/2012 File Number: 12-569 entitlements, building permits, and business licenses for new medical marijuana dispensary related operations in the City. The moratorium was passed, and subsequently extended pursuant to City Council findings that included, amongst others, uncertainty regarding the legality of dispensaries as legitimate means of complying with State and Federal law under the Compassionate Use Act, and Medical Marijuana Program Act, and various jurisdictions efforts to ban, regulate, and raise revenue from such operations. On July 16, 2012, pursuant to an appellate court decision that prohibit local jurisdictions from banning medical cannabis dispensary operations (County of Los Angeles v. Alternative Medicinal Cannabis Collective (July 2, 2012) 207 Cal.App.4th 601 (2d Distr., Div. 1), the City Council decided that it would allow the moratorium to expire. The City Council also directed the City Council Rules and Communications Committee to develop an ordinance and amendments to the Zoning Coode with staff to allow a limited number of dispensaries to operate in the City. That direction culminated in the draft proposed ordinance before the City Council. Recommended Zoning Code amendments that conform to the proposed ordinance are forthcoming, and would be presented, along with the proposed ordinance, to the Citys Board of Zoning Adjustments for review and comment, and the Planning Commission for review, comment, and recommendation to the City Council. The ordinance itself is modeled after the City of Oaklands 2011 amendments to its medical cannabis dispensary ordinance (see Attachment 2); the proposed ordinance also borrows from the City and County of San Francisco Department of Public Healths regulations related to edible cannabis product handling, labeling, and distribution (see Attachment 3). The ordinance is in strict compliance with the California Attorney Generals August 2008 Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use (see Attachment 4)). Staff also believes that the ordinance complies with the common law related to the establishment and operation of medical marijuana dispensaries. (see Attachment 5) Finally, staff has advised the City Council in past hearings and proceedings that the possession and distribution of marijuana is illegal under the Federal Controlled Substances Act. The United States Attorney for the Northern District of California has raided and shut down several medical cannabis dispensaries in Oakland and San Francisco. If the City passes regulations in strict compliance with the California Attorney Generals Guidelines , and dispensaries operate in conformance with the Citys ordinance, staff is of the opinion that the likelihood of a raid of City approved dispensaries by Federal law enforcement agencies for violation of the Controlled Substances Act is low. The ordinances main provisions are as follows: v 2 valid permits are allowed; v The City Manager may impose separate conditions of approval, including aallowing later hours of operation; v A public hearing on approval of a Dispensary permit must be held by the Board of Zoning Adjustments pursuant to the approval of a conditional use permit; v Operating, security, recordkeeping, facilities, and signage regulations are set in the ordinance; v Dispensaries may only be located in the Citys industrial and commercial zoning districts , and cannot be within 1,000 feet of a school, library, youth center, park and recreation facility, and another dispensary, and cannot be within 500 feet of a residential zone; City of San Leandro Page 2 Printed on 12/3/2012 File Number: 12-569 v On-site cooking and distribution of edible cannabis products is allowed and regulated to prevent the transmission of foodborne illnesses; and v Payment of a non-refundable permit application fee, an annual permit renewal fee, and annual business license fee will be required and the amounts set by the City Council. Previous Actions October 4, 2010: The City Council passed An Interim Urgency Ordinance Prohibiting Consideration and Approval of Use Permits, Variances, Building Permits, Start of New Construction, or Other Entitlements for Any Establishment or Operation of Medical Marijuana Dispensaries, Marijuana Cultivation Facilities, or Other Land Uses that Could Be Proposed Should Prop 19 Be Approved by Voters for a Forty-Five Day Period November 15, 2010: The City Council extended the Interim Urgency Ordinance to October 1, 2011. May 16, 2011: The City Council heard and did not pass an ordinance that would prohibit the establishment of medical marijuana dispensaries in thee City. The moratorium continued in effect. September 6, 2011: The City Council extended the Interim Urgency Ordinance an additional 12 months, to September 30, 2012 June 15, 2012: Approved at First Reading an ordinance prohibiting the establishment and operation of medical marijuana dispensaries with a sunset date. July 2, 2012: The City Council tabled discussion and action at Second Reading of an ordinance prohibiting the establishment and operation of medical marijuana dispensaries with a sunset date. July 16, 2012: The City Council directed the City Council Rules and Communications Committee to work with staff on an ordinance that would permit the establishment and operation of medical marijuana dispensaries within the City. November7, 2012: The City Council Rules and Communications Committee approved the proposed ordinance, and forwarded it to City Council for review and comment. ATTACHMENTS 1. DRAFT Medical Marijuana Dispensary Ordinance 2. City of Oakland Medical Cannabis Dispensary Ordinance and Administrative Regulations 3. City and County of San Francisco edible cannabis regulations 4. 2008 Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use 5. Update on Case law provided to City Council Rules and Communications Committee Related to Medical Marijuana Dispensary Regulations. PREPARED BY: Richard D. Pio Roda, Assistant City Attorney City of San Leandro Page 3 Printed on 12/3/2012 File Number: 12-569 2008963.1 City of San Leandro Page 4 Printed on 12/3/2012 DRAFT Medical Marijuana Dispensary Ordinance (12/3/2012 City Council meeting) 1 CITY OF SAN LEANDRO CITY COUNCIL AN ORDINANCE ADDING CHAPTER 4-33 TO TITLE 4 OF THE SAN LEANDRO MUNICIPAL CODE PERTAINING TO MEDICAL CANNABIS DISPENSARY PERMITS NOW THEREFORE, the City of San Leandro City Council does hereby ordain: Section I. Amendment to Title 4, PUBLIC WELFARE San Leandro Municipal Code Title 4 is hereby amended to add the following Chapter, 4-33, as follows: 4-33-100 -Definitions. The following words or phrases, whenever used in this Chapter, shall be given the following definitions: (a). “Attorney General Guidelines” shall mean the California Attorney General Guidelines for the Security and Non-diversion of Marijuana Grown for Medical Use,” issued by the Attorney General’s Office in August 2008, as amended from time to time, which sets regulations intended to ensure the security and nondiversion of marijuana grown for medical use by qualified patients or primary caregivers. (b). "Cannabis" or "Marijuana" shall have the same definition as Health and Safety Code § 11018, as amended from time to time, which defines "cannabis" as all parts of the plant Cannabis sativa L., whether growing or not; the seeds thereof; the resin extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds or resin. It does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seeds of the plant incapable of germination. (c). "Cannabis Dispensary" or “Dispensary” shall mean a collective or cooperative that distributes, dispenses, stores, exchanges, processes, delivers, makes available, transmits and/or gives away marijuana in the City for medicinal purposes to four (4) or more qualified patients and/or primary caregivers pursuant to California Health and Safety Code Sections 11362.5, 11362.7 et seq. (d) “City” means the City of San Leandro, and any legislative body granted regulatory authority over Dispensary operations by this ordinance. (e). “City Manager” means the City Manager of the City of San Leandro or his/her designee. DRAFT Medical Marijuana Dispensary Ordinance (12/3/2012 City Council meeting) 2 (f). “Collective” means any association, affiliation, or establishment jointly owned and operated by its members that facilitates the collaborative efforts of qualified patients and primary caregivers, as described in the Attorney General Guidelines. (g). “Cooperative” means a business organization recognized by the state of California through properly registered articles of incorporation under the Corporations or Food and Agricultural Code that conducts its business for the mutual benefit of its members, as described in the Attorney General Guidelines. (h). “Medical Marijuana” means marijuana authorized in strict compliance with Health & Safety Code §§ 11362.5, 11362.7 et seq., as such sections may be amended from time to time. (i). “Parcel of Land” means one piece of real property as identified by the county assessor’s parcel number (APN) that is one contiguous parcel of real property, which is used to identify real property, its boundaries, and all the rights contained therein. (j). "Primary caregiver" shall have the same definition as California Health and Safety Code Section 11362.7, and as may be amended from time to time, and which defines "Primary Caregiver" as an individual designated by a qualified patient or by a person with an identification card who has consistently assumed responsibility for the housing, health, or safety of that patient or person, and may include any of the following: 1. In any case in which a qualified patient or person with an identification card receives medical care or supportive services, or both, from a clinic licensed pursuant to Chapter 1 (commencing with Section 1200) of Division 2 of the California Health and Safety Code; a health care facility licensed pursuant to Chapter 2 (commencing with Section 1250) of Division 2 of the California Health and Safety Code; a residential care facility for persons with chronic life-threatening illnesses licensed pursuant to Chapter 3.01 (commencing with Section 1568.01) of Division 2 of the California Health and Safety Code; a residential care facility for the elderly licensed pursuant to Chapter 3.2 (commencing with Section 1569) of Division 2 of the California Health and Safety Code; a hospice, or a home health agency licensed pursuant to Chapter 8 (commencing with Section 1725) of Division 2 of the California Health and Safety Code; the owner or operator, or no more than three employees who are designated by the owner or operator, of the clinic, facility, hospice, or home health agency, if designated as a primary caregiver by that qualified patient or person with an identification card. 2. An individual who has been designated as a primary caregiver by more than one qualified patient or person with an identification card, if every qualified patient or person with an identification card who has designated that individual as a primary caregiver resides in the same city or county as the primary caregiver. 3. An individual who has been designated as a primary primary caregiver by a qualified patient or person with an identification card who resides in a city or county other than that of the primary caregiver, if the individual has not been designated as a primary caregiver by any other qualified patient or person with an identification card. (k). "Qualified patient" shall have the same definition as California Health and Safety Code Section 11362.7 et seq., and as may be amended, and which means a person who is entitled to the protections of DRAFT Medical Marijuana Dispensary Ordinance (12/3/2012 City Council meeting) 3 California Health & Safety Code Section 11362.5. For purposes of this ordinance, qualified patient shall include a person with an identification card, as that term is defined by California Health and Safety Code Section 11362.7 et seq. (l). "Serious medical condition" shall have the same definition as California Health and Safety Code Section 11362.7 et seq., and as may be amended, and which means all of the following medical conditions: 1. Acquired immune deficiency syndrome (AIDS); 2. Anorexia; 3. Arthritis; 4. Cachexia; 5. Cancer; 6. Chronic pain; 7. Glaucoma; 8. Migraine; 9. Persistent muscle spasms, including, but not limited to, spasms associated with multiple sclerosis; 10. Seizures, including, but not limited to, seizures associated with epilepsy; 11. Severe nausea; 12. Any other chronic or persistent medical symptom that either: a. Substantially limits the ability of the person to conduct one or more major life activities as defined in the Americans with Disabilities Act of 1990 (Public Law 101-336). b. If not alleviated, may cause serious harm to the patient's safety or physical or mental health. (m). "Written documentation" shall have the same definition as California Health and Safety Code Section 11362.7 et seq., and as may be amended, and which defines "written documentation" as accurate reproductions of those portions of a patient's medical records that have been created by the attending physician, that contain the information required by paragraph (2) of subdivision (a) of California Health and Safety Code Section 11362.715, and that the patient may submit to a county health department or the county's designee as part of an application for an identification card. 4-33-200 – Dispensary Permit required and Application for Permit. (a) Except for hospitals, it is unlawful for any owner, operator, collective, cooperative, or association to own, conduct, operate or maintain, or to participate therein, or to cause or to allow to be conducted, operated, or maintained, any Dispensary in the City of San Leandro unless there exists a valid Dispensary permit in compliance with the provisions of this Chapter. (b) This Chapter does not apply to the individual possession or cultivation of medical marijuana for personal use, nor does this Chapter apply to the usage, distribution, cultivation or processing of medical marijuana by qualified patients or primary caregivers when such group is of three (3) or less individuals, and distributing, cultivating or processing the marijuana from a residential unit or a single non-residential parcel of land. Associations of three (3) or less qualified patients or primary caregivers shall not be required to obtain a Dispensary permit under this Chapter, but must comply with all applicable State Laws and the Attorney General Guidelines. DRAFT Medical Marijuana Dispensary Ordinance (12/3/2012 City Council meeting) 4 (c) The City shall issue no more than two (2) valid permits for the operation of dispensaries in the City. (d) In addition to the requirements specified in Chapter 2-2 related to Business Licenses, the permit application for a Dispensary shall set forth the following information: (1) Unless it is determined by the City that the location will not impact the peace, order and welfare of the public, evidence that the proposed location of such Dispensary is not within one thousand (1000’) feet of a public or private school, public library, youth center (serving youth ages eighteen (18) and under), parks and recreation facilities, and another Dispensary and five hundred (500’) feet from a residential zone. The proposed Dispensaries must be located in a commercial or industrial zone, or its equivalent as may be amended, of the City. (2) A complete description of the type, nature and extent of the enterprise to be conducted, with evidence satisfactory to the City that the enterprise is either a collective or cooperative, as described in the Attorney General Guidelines. (3) A plan of operations that will describe how the Dispensary will operate consistent with the intent of State law, the provisions of this Chapter, the Attorney General Guidelines, the City’s Municipal and Zoning Codes, and conditions of approval including but not limited to: (i) Controls to verify membership in collectives and cooperatives to ensure medical marijuana will be dispensed only to qualified patients and primary caregivers; and (ii) Controls to acquire, possess, transport and distribute marijuana to and from members, and plans to ensure marijuana is acquired as part of a closed-circuit of marijuana cultivation and consumption. (iii) A security plan, as a separate document, outlining the proposed security arrangements for ensuring the safety of persons and to protect the premises from theft and burglary, and patrons and customers from robbery. The security plan shall be reviewed by the Police Department and shall be exempt from disclosure as a public record pursuant to Government Code Section 6255(a). (iv) Such other information deemed necessary to conduct any investigation or background check of the applicant, and for the City to determine compliance with this Chapter, the City’s Municipal Code and Zoning Code. (e) The City Manager shall designate the investigating official to whom an application shall be referred. In recommending the granting or denying of such permit and in granting or denying the same, such designee shall give particular consideration to the capacity, capitalization, and history of the applicant and any other factors that in the City’s discretion it deems necessary to maintain the peace, order and welfare of the public. The City Manager on his or her own power and in addition to any other conditions of approval imposed by any other City departments, boards, commissions or legislative bodies, may impose any conditions on a Dispensary permit he or or she deems necessary to maintain the peace, order, and welfare of the public. DRAFT Medical Marijuana Dispensary Ordinance (12/3/2012 City Council meeting) 5 (f) At the time of submission of a Dispensary permit application, the applicant shall pay a nonrefundable Dispensary permit application fee. The fee amount shall be set by the City Council. (g) The issuance of a Dispensary permit shall not be effective until the permit applicant has received all other permits and approvals required by the City’s ordinances, rules and regulations, including but not limited to any conditional use permit and building permit, and paid all fees. 4-33-300 – Compliance with State Law and Municipal Code. (a) A Dispensary must comply with all applicable state and local laws, policies, rules and regulations, including but not limited to the California Health and Safety Code, the City adopted Building Code, Plumbing Code, Electrical Code, Mechanical Code, Fire Code, the San Leandro Municipal Code, the San Leandro Zoning Code, and the San Leandro Administrative Code including any and all rules and regulations related to the land use entitlement process, Dispensary operations, annual Dispensary permit fee, annual business license fee, and the Americans with Disabilities Act to be in compliance with the Dispensary permit. The Dispensary must comply with any and all Conditions of Approval imposed upon it pursuant to any land use permit or entitlement granted. Failure to comply with the Conditions of Approval or any conditions imposed upon a Dispensary permit by the City Manager, and all applicable local and state laws or regulations, and failure to pay when due all fees may result in the imposition of fines, and suspension or revocation of the Dispensary permit after an administrative hearing. The Dispensary may also be subject to enforcement through the City’s nuisance abatement process and other administrative enforcement mechanisms, civil action, and criminal prosecution as defined in San Leandro Municipal Code Chapter 1-12. 4-33-400 – Renewal of Permits (a) Dispensary Permits must be renewed annually. Permit Holders shall contact the City’s Community Development Director in writing no later than forty-five (45) days before the expiration of the current permit to begin the renewal process. At that time, the Dispensary shall submit verification of a current Business License, audited financial statements for the previous permit term, and any other requested financial documents or information as required by the San Leandro Municipal Code or the Dispensary’s Permit. As part of the annual renewal process the Dispensary shall be inspected by the Building Inspector and Fire Marshall or their designees. Violations of the San Leandro Municipal Code shall be corrected within a reasonable time, as determined by the Building Inspector, Fire Marshal or his/her designee. The Dispensary shall provide proof to the City that there are no outstanding violations of the San Leandro Municipal Code. (b) A Dispensary Permit will not be renewed without payment of the annual renewal fee, or any other fees on such operations established by the City Council. 4-33-500 -Performance standards. DRAFT Medical Marijuana Dispensary Ordinance (12/3/2012 City Council meeting) 6 (a) Operations A Dispensary shall operate in conformance with the following minimum standards, and such standards shall be deemed to be part of the conditions of approval on the Dispensary’s Permit to ensure that its operation is in compliance with California law, the Attorney General Guidelines, and this Municipal Code, and to mitigate any potential adverse impacts of the Dispensary on the public health, safety, and welfare. (1) A Dispensary shall provide the City, the Chief of Police, and all neighbors located within fifty (50) feet of the premises with the name, phone number, facsimile number and email address of an onsite community relations staff person that can be contacted related to Dispensary issues, twenty-four hours a day, seven days a week. (2) Medical marijuana shall only be distributed by a Dispensary at the property identified and approved as the location for the Dispensary on the Dispensary permit application. (3) A Dispensary shall only provide, distribute, dispense, or give medical marijuana to qualified patients or primary caregiver members. It is within the City’s discretion to limit the number of members allowed per Dispensary. (4) Only qualified patients, caregivers, and their guests shall be allowed inside of a Dispensary. The Dispensary shall comply with all occupancy rules imposed by State law or the Fire Marshal. (5) A Dispensary shall not profit from the sale or distribution of marijuana. Any monetary reimbursement that members provide to the Dispensary should only be an amount necessary to cover overhead costs and operating expenses. Retail sales of medical marijuana that violate California law or this ordinance are expressly prohibited. (6) A Dispensary may only dispense, store, or transport marijuana in aggregate amounts tied to its membership numbers. A Dispensary may possess no more than eight (8) ounces of dried marijuana per qualified patient or caregiver, and maintain no more than six (6) mature and twelve (12) immature marijuana plants per qualified patient. However, if a qualified patient or primary caregiver has a doctor’s recommendation that the above quantity does not meet the qualified patient’s needs, the qualified patient or primary caregiver may possess an amount of marijuana consistent with the patient’s needs. For purposes of determining the quantity of marijuana, only the dried mature processed flowers of female cannabis plants or the plants conversion shall be considered. (7) A Dispensary may operate no later than 7pm daily unless it is determined by the City that a later hour will not affect public health, safety, or welfare. A Dispensary is prohibited from operating between the hours that the City determines the Dispensary should close and 9 a.m. the next ensuing day unless further restricted by the City. (8) Dispensaries shall disclose the percentage level of delta-9 (trans) tetrahydracannabinol, cannabidiol, and cannabinol in medical cannabis to qualified patients before providing medical cannabis. (9) Dispensaries shall follow the directions of the City Manager or his/her designee regarding any medical cannabis found to be non-compliant with testing standards. These instructions extend to any DRAFT Medical Marijuana Dispensary Ordinance (12/3/2012 City Council meeting) 7 medical cannabis found to be unsafe on the basis of such testing results, or to the Dispensary’s operations and practices generally. (10) Representative samples of medical marijuana distributed by a collective or cooperative shall be analyzed by an independent laboratory to ensure it is free of harmful pesticides and other contaminants regulated by local, state or federal regulatory statutory standards. Any medical marijuana from which the representative sample tested positive for a harmful pesticide or other contaminant at a level that exceeds the local, state or federal regulatory or statutory standards shall be destroyed forthwith. (11) Any medical marijuana provided to collective members shall be properly labeled in strict compliance with state and local laws, regulations and policies. (12) Dispensaries shall not allow cannabis to be smoked, ingested or otherwise consumed on the premises. The term premises includes the actual building, as well as any accessory structures, parking areas, or other immediately surrounding areas. (13) Dispensaries shall not hold or maintain a license from the State Department of Alcoholic Beverage Control to sell alcoholic beverages, or operate a business that sells alcoholic beverages. Dispensaries shall not operate as a restaurant, cafe or lounge serving food or drinks for consumption onsite. There shall be no seating area, tables, couches, or chairs for the gathering or congregating of patients or primary caregivers. (14) A Dispensary shall post a copy of the Business License Certificate issued by the City’s Finance Department and a copy of the Cannabis Dispensary Permit issued by the City in a conspicuous place on the premises. (15) The regulation of edible cannabis products shall be as follows: (a) No edible cannabis products requiring refrigeration or hot-holding shall be manufactured for sale or distribution at a Dispensary, due to the potential for food-borne illness. Exemptions may be granted by the City, in consultation with the Alameda County Department of Public Health (DPH) on a case-by-case basis. For such exempted edible cannabis products, DPH may