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City of NovatoCANNABIS WORKSHOP
ABOUT HDL
Serves:‒ 303 cities‒ 48 counties‒ 108 transaction districts
Partnered with over 125 local agencies to develop cannabis policies
Team consists of former policymakers, law enforcement and cannabis regulators with State, County and local level experience
Reviewed and evaluated over 1,400 cannabis business applications for local agencies
HdL staff has experience conducting over 11,000 cannabis compliance reviews in Colorado, California and Nevada
AGENDA
Introductions Update on Federal and State Laws Philosophy of stakeholders
• Council• City Staff• Public Safety• Community• Cannabis Industry
Discuss core values in the implementation process
Pyramid chart review Matrix Chart review
AGENDA (cont’d)
Land Use Ordinance –GIS Assessment CEQA Requirements Regulatory Ordinance Tax Measure Ordinance Public Consumption Personal Cultivation Application Process Cost Recovery Fees Initial Cost Cost Recovery Fees Annual Cost Background Checks
STAKEHOLDER/COMMUNITY WORKSHOP MEETINGS CALENDAR
July 10: City Council Presentation #1
July 20: Cannabis Industry Stakeholders Meeting #1
July 21: Overview of the Cannabis Industry Workshop #1
Aug 8: Launch of Community Survey
Aug 8: Police Chief and Public Safety Agencies Meeting
Aug 8: Public Safety and Enforcement Community Workshop #2
CITY COUNCIL/STAKEHOLDER/COMMUNITY WORKSHOP MEETINGS CALENDAR
Aug 9: Youth, Community, Neighborhood Stakeholder Meeting #2
Aug 17: Business Community Stakeholder Meeting #3
Aug 17: Community Workshop #3 TBA Aug 28: City Council Presentation #2 Sept 17: Planning Commission MeetingSept 25: City Council
Presentation #3
PROPOSITION 64 ELECTION RESULTS
Statewidepassed with 56.1% of the vote;
43.9% opposed
Marin County 59.1% of voters supported;
40.9% opposed
City of Novato 64.8% of voters supported;
35.2% opposed
WHAT’S LEGAL?
January 4, 2018 AG rescinds 2013 Cole
Memo
1
FinCEN Guidelines from 2014
2
Each state AG will be free to
decide how aggressively they wish to
enforce federal marijuana laws
3
Rohrabacher-Blumenauer amendment January 19,
2018
4
Criminal Action vs Civil
Action
5
Medicinal vs Adult-Use
6
ATTORNEY GENERAL FEDERAL ENFORCEMENT POLICY
10
20162015 2017
• Proposition 64• Adult Use of
Marijuana Act (AUMA)
• Trailer Bill SB 94: • Medical & Adult Use
Cannabis • Regulation and
Safety Act; AB 133
• Medical Cannabis• Regulation and
Safety• Act (MCRSA)
CALIFORNIA CANNABIS LAWS
SB 94 LOCAL CONTROL AUTHORITY
State must notify the local jurisdiction when it receives a commercial cannabis application
The law shall not limit local jurisdictions’ ability to ban or limit certain activities in the City
The law does not supersede or limit existing local authority for law enforcement activity, enforcement of local zoning requirements or local ordinances
Businesses can now only own one Type 3 Cultivation license until January of 2023
OTHER KEY CHANGES TO STATE REGULATIONS
As of January 1, 2018, temporary permits began being issued and have now been extended for the remainder of the year.
As of July 1, 2018, all products must be tested that are sold at retail and all other cannabis products must be destroyed
Vertical integration will now be permitted except for testing labs
Local Regulatory Ordinances will not be subject to CEQA until July 1, 2019
Establishes a Non-Store Front License (Delivery service which operates from a commercial location)
Track and Trace is not anticipated to go into effect until January 1, 2019
Health & Safety Code 11362.775 (Medical Marijuana Program) will be repealed as of January 1, 2019
POLICY DECISIONS
CANNABISPOLICY
DEVELOMENT
“Policies designed today will help shape how your industry looks tomorrow.”
-HdL Companies
15
Why Should Your City Care?
16
Where is the Cannabis Industry in the Region
Delivery locations Dispensary locations
1 2 3 4
CITY OF NOVATOCore Values - Community Priorities
Public Safety EnvironmentalProtection
Neighborhood and Land Use
Protection
Access by Youth
SUCCESS
EDUCATE
REGULATE
LEGISLATE
COLLABORATE
PATH TO SUCCESS
1 2 3 4
STARTING NOW IS IMPORTANT BECAUSE:
State licenses have begun to be
issued January 2, 2018
01 02 03 04Regulations are
under development
and review
Investors and businesses
are deciding where to locate
It will be legal: either establish
/maintain a ban orregulate it
Total ban
Total ban
Allow one/few activities
Allow one/few activities
Allow some/most
activities
Allow some/most
activities
Total allowance Total allowance
REGULATORY OPTIONS
21
CITY COUNCIL SETS CANNABISREGULATORY POLICIES ON:
• Cultivation• Microbusiness• Manufacturing • Testing Labs• Delivery/Non Store Front
Retailer • Retail-Medicinal/Adult-Use• Distribution Facilities
CATEGORIES OF USE
MEDICINAL ADULT-USECultivation YES / NO YES / NO
Manufacturing YES / NO YES / NO
Testing (Quality Control) YES / NO YES / NO
Retailer/Non-Store Front Retailer(Dispensary/Delivery Services)
YES / NO YES / NO
Distribution Facility YES / NO YES / NO
Microbusiness YES / NO YES / NO
Addressing Public Concerns Through Regulations
POTENTIAL PUBLIC
CONCERNS
PERSONAL USE PUBLIC SAFETY & WELFAREAAAAAAAA
Grants person right to cultivate (indoor) up to six (6) plantsCan be subject to reasonable local regulationsCan prohibit outdoor cultivation The primary use of the property must be for a residence Must comply with building and construction code Use of gas products or generators for cultivation are prohibitedAny structure used must be secure and fully enclosed Must have written consent of the property owner
1 2• Monitor business practices• Conduct background checks • Approve security plans• Offset resource cost for staffs time• Regulate time, place, and manner
requirements
• Reduces police power due to limited search and seizure laws under Prop 64
• Makes it difficult to gather intelligence information
• Encourages black market sales• Creates a reliance on public safety
resources with no mechanism for cost recovery
• No control regarding sales to youth
PUBLIC SAFETY RISK ASSESSMENT
1 2
• Bad actors• Black market diversion/inversion• Illegal cultivation activities• Illegal business activities• Driving while impaired• Increased traffic from Retailers
• Bad odors• Pollutants/Air Quality• Overdose Response Calls• Access by youth in homes/illegal
sales
A REGULATORY SYSTEM CAN:
Give the local agency authority and control over licensing
Require applicants to comply with robust requirements
Enhance accountability for security and product safety
Reduce intervention from the Federal Government by complying with the Cole Memo and other state laws
A REGULATORY ORDINANCE CAN INCLUDE:
Limited number of business licenses Access control requirements Police access Police background checks Record reporting/retention
requirements Investigation and inspection protocols Good neighbor policy mitigation Suspension, fines, and permit
revocation
LAND USE BUFFER
OPTIONS
PLANNING DEPARTMENT
PROCESS
Allows you to be business friendly, nimble and expeditious
Establishes one process Requires compliance with
operational standards Amendments to Zoning
Ordinance needed to accommodate cannabis businesses
Merit or quality insurance based process selection for applicants that includes:
• Applicants meeting specified regulatory standards• Proposed location is properly zoned• Completion of background check• Payment of application fees• Ongoing payment to City to recover cost
APPLICATION PROCESS
33
PROCESS FOR SUCCESSFUL REGULATORY FRAMEWORK DEVELOPMENT
July – Sept Oct - Dec Jan – March 2019
01
Educate the City Council and the community Conduct community survey/stakeholder meeting Draft a regulatory framework Develop a cost recovery plan
34
PROCESS FOR SUCCESSFUL REGULATORY FRAMEWORK DEVELOPMENT
July – Sept Oct - Dec Jan – March 2019
02
Draft a regulatory and zoning ordinance as applicable before the moratorium expires
Conduct study session & public hearings on any regulatory and zoning ordinance revisions
Adopt a resolution approving a cost recovery plan and application procedures or continue banning cannabis use
35
PROCESS FOR SUCCESSFUL REGULATORY FRAMEWORK DEVELOPMENT
July – Sept Oct – Dec Jan – March 2019
03
Develop a tax policy and an annual regulatory fee Establish a Community Benefit Program until a tax
measure can be place on the November 2020 ballot
Tax & Fee Revenues
37
CANNABIS ECONOMIC TRENDS
Cannabis industry set to generate $7.6 billion in California by 2020
Hemp products are now a new commodity
Local communities are looking to benefit financially from commercial companies
Creates jobs in the community directly and indirectly
Misconceptions of sales/use tax exemption H&S 11362.71
1 2
Standard fee to recover City costs
General tax to be considered by voters in
November 2020; 50% +1; Tax to general fund
REVENUE GENERATING STRATEGIES
CUMULATIVE CANNABIS TAXES
HdL Analysis
DEVELOPMENT AGREEMENTS
What is the purpose of Development Agreements (CGC 65864)
• Lack of certainty in the approval of a development project can result in a waste of resources, escalate the cost of housing and other developments to the consumer
• The lack of public facilities such as streets, sewage, transportation, drinking water, schools and utility facilities
Who has right to the property for DA’s (CGC 6586.5)• The property owner or other persons having a legal or equitable interest
in the property
What limitations does the City have on the agreement? (Government Code 65865.2)
• The development agreement may include conditions, terms, restrictions, and requirements for subsequent discretionary actions, provided that such actions shall not prevent development of the land for the uses and to the density or intensity of the development set forth in the agreement.
Can development agreements be challenged? (Government Code 65867.5 (a)
• A development agreement is a legislative act that shall be approved by ordinance and is subject to referendum.
DEVELOPMENT AGREEMENTS (cont.)
LOCAL TAX REVENUE
PROJECTIONS
Annual Revenue Estimates*:
Very Conservative (2.5%): $675,000
Moderate (4%): $1,080,000
Aggressive (6%): $1,620,000• Assumes 2 cultivation facilities with 10K sq. feet each of
canopy space generating $4M in gross receipts annually.• Assumes 2 manufacturers with an average of $3M in
gross receipts.• Assumes 2 retailers with an average of $2.5M in gross
receipts.• Assumes 2 testing labs with an average of $2M in gross
receipts.• Assumes 2 distribution facilities with an average of $2M
in gross receipts
*Emerging market makes it difficult to assess with total accuracy
The Size of The California Cannabis Industry
44
CANNABIS LICENSES BY TYPEas of 7/3/18
2315 Cultivation 609 Manufacturer414 Retailers118 Retailer Non-Storefront383 Distributors51 Distributor Transport Only95 Microbusinesses31 Testing Labs45 Cannabis Event Organizers4,061 Total
CALIFORNIA’S CANNABIS MARKET
A
A
Aa
A
a
Total Statewide Cannabis Production: 13.5 million pounds (CDFA Estimate)
Total Statewide Cannabis Consumption: 2.5 million pounds (CDFA Estimate)
Total Statewide Cannabis Consumption: 1.6 million pounds
Current Number of Cultivation Licenses Statewide: 2,315*
Potential Cannabis Production 5.5 to 6.9 million pounds*
(California Cannabis Opportunity Report)
*California Department of Food and Agriculture Database – July 3, 2018
REGIONAL CANNABIS
PRODUCTION
47
POLICY STRATEGY OPTIONS
OPTION 1 OPTION 2• Continue banning
commercial cannabis; or • Allow for delivery services
and testing labs;• Minimal modifications to
Muni Code to address Prop 64 changes except for indoor personal use
• Allow for conditional or discretionary permit;
• Establish a licensing process for limited commercial cannabis uses
City Council can choose:
THE DECISION IS YOURS
Thank you!David McPherson Cannabis Compliance Director
Matt EatonCannabis Compliance Manager
Tim CromartieCannabis Senior Advisor
909-861-4335
909-861-4335
909-861-4335
NAME EMAIL PHONE
