City Council
MEETING DATE: 11/23/2016
TITLE:
Title
Interim Urgency Ordinance Temporarily Halting Approvals of New Dispensary Applications
End
FROM:
Erica L. Vega, Assistant City Attorney
RECOMMENDATION:
Recommendation
Staff recommends the City Council adopt an ordinance imposing a temporary moratorium on the approval of new applications for dispensaries.
Body
BACKGROUND:
In early 2016, the City Council adopted Ordinances 772 and 774, comprehensively overhauling its regulations of medical cannabis businesses, including dispensaries. These ordinances made significant changes to the permitting and approval process for dispensaries, including eliminating the cap on the number of dispensaries that were allowed to operate in the City. The City's prior regulations provided that no more than three dispensaries could operate in the City, with the possibility of a fourth as the population of the City increased. Two dispensaries were approved under the prior regulations.
On April 1, 2016, the City began accepting applications for dispensaries under the City's new regulatory program. Under the new regulations, dispensaries may locate in the I-1, CBP-2 and PCC zones, and must be setback certain distances from residential zones, East Palm Canyon Drive, and schools, day-care centers and youth centers. To date, the City has received eighteen applications for dispensaries under the new regulations. Eleven of these applications have already received their medical cannabis license and conditional use permit to operate. There are five applications that are currently pending, and two have been denied conditional use permits by the Planning Commission. The two denials have been appealed to the City Council as well as one of the approvals.
DISCUSSION:
Concerns have been raised by members of the public and the Planning Commission regarding the number of dispensaries that are seeking to locate in the City. Due to the limited locations where dispensaries may operate in the City and the large number of applications for dispensaries that have been received, many dispensaries are seeking to operate within very close proximity of other dispensaries. Residents and business owners have expressed concerns regarding the unintended negative impacts that may arise from allowing a large number of dispensaries to locate within close proximity, including but not limited to property crimes, loitering, public consumption of cannabis, drugged driving, and business displacement. Business owners in these areas have informed the City that the opening up of the market for dispensaries in the City has had the unintended consequence of creating a “bubble” in the real estate market in the areas where dispensaries are allowed, which has caused or will cause existing businesses to relocate outside of the City, either voluntarily or involuntarily, because dispensary operators are willing to pay a premium for real estate in these areas. Furthermore, it is unknown if the market for medical cannabis in Cathedral City will support the continued operation of the large number of the dispensaries that are seeking to operate in the City, which will result in vacancies.
The City takes the concerns raised by the public and Planning Commission seriously. The City is particularly concerned with the possibility that existing, long-standing, desirable, tax-generating businesses may relocate outside of the City to make way for dispensaries that may go out of business in a relatively short amount of time due to the intense competition in the medical cannabis market, creating an imbalance in economic and social opportunities within the City. The City is also concerned that there may be unintended negative secondary effects associated with dispensaries, and due to the rapid pace at which proposed dispensaries are seeking conditional use permits many dispensaries may be approved before a significant number of the dispensaries are open for business, meaning that the City does not have the opportunity to study and observe whether any negative secondary effects are occurring.
Government Code section 65858 allows the City Council to adopt an interim urgency moratorium prohibiting any uses that may be in conflict with a contemplated general plan, specific plan, or zoning proposal that the City is considering or studying or intends to study within a reasonable time to protect the public health, safety and general welfare. A four-fifths vote of the City Council is required to approve such an ordinance, and it lasts for only 45 days, but may be extended for an additional 10 months and 15 days, and then for an additional year if necessary.
Based on the concerns raised by the public and Planning Commission regarding dispensaries, the City desires to study and analyze the possible negative secondary effect that may arise from the operation of dispensaries and the negative secondary impacts that may occur from having a large concentration of dispensaries in certain areas of the City. The City also desires to study and analyze possible changes to its medical cannabis ordinances in order to address proper locations for dispensaries, to adopt reasonable regulations and appropriate development standards so as to ensure a proper balance of land uses in areas where dispensaries are allowed, ensure there is a balance of economic and social opportunities within the City, and to avoid blight. The need to study and analyze these issues is further exacerbated by the recent passage of Proposition 64 legalizing recreational marijuana use and changes to the regulation of dispensaries in nearby cities, and the impacts these changes will have on the market for marijuana in the City.
The proposed interim urgency ordinance temporarily prohibits the approval of any medical cannabis license under Chapter 5.88 of the Code or a conditional use permit under Chapter 9.108 of the Code for a dispensary except for those applications that were submitted prior to the effective date of this interim urgency ordinance. For a dispensary application to be eligible for approval after the effective date of this ordinance, the application form must have been completed in full, all required supporting documentation submitted, and the application deposit fee paid.
FISCAL IMPACT:
The fiscal impact of this interim urgency ordinance is unknown and speculative. The City taxes dispensaries based on gross receipts. It is unknown how many more dispensaries will or would have submitted applications to the City during the pendency of this moratorium.
ATTACHMENTS:
Ordinance No. ____