City Council
MEETING DATE: 3/23/2016
TITLE:
Title
Second Reading Omnibus Cannabis Ordinance
End
FROM:
Charlie McClendon, City Manager
RECOMMENDATION:
Recommendation
Staff recommends the City Council approve the second reading, by title only, and adopt an Ordinance of the City Council of Cathedral City, California, Amending Title 3, Title 5 and Title 13 of the Cathedral City Municipal Code Relating to Medical Cannabis Businesses.
Body
BACKGROUND:
At the September 23, 2015 City Council Meeting, Council approved an Agreement with Vicente Sederberg, LLC, for Special Counsel for legal services related to medical marijuana cultivation, processing and testing as well as dispensaries. During the study session on November 16, 2015, Shawn Hauser and Jordan Wellington from Vincente Sederberg, LLC provided a list of fundamental structural issues and their recommendations for consideration and received comments from the Council. A draft ordinance prepared by Vicente Sederberg was presented at the December 9, 2015 Council meeting and Council directed staff to bring an ordinance amendment back for first reading on January 13, 2016. That particular ordinance amended Chapter 5 of the municipal code and established the local license provisions related to medical cannabis businesses. The ordinance subsequently received second reading and was adopted on January 27, 2016. A companion ordinance addressing the land use regulations related to medical cannabis businesses and amending Chapter 9 of the code was heard at a public hearing before the Planning Commission on February 3, 2016 and received two public hearings before the City Council on February 10 and February 24, 2016 at which time it received second reading and was adopted.
At every stage of this extensive and very public process of developing and adopting the medical cannabis ordinances it was clear that the final step would involve two final ordinance revisions, referred to as the omnibus ordinances. These omnibus ordinances have been developed by Vicente Sederberg, in cooperation with the City Attorney’s office and City staff to address the remaining regulations necessary for medical cannabis businesses. The amendments to Chapters 3, 5 and 13 received first reading on March 9, 2016 and are scheduled for second reading tonight. The amendments to Chapter 9 will first receive a public hearing before the Planning Commission on April 6, 2016 and will then come to Council later in April.
DISCUSSION:
The proposed amendments to Titles 3, 5, and 9 of the Cathedral City Municipal Code serve to tax, regulate, and license Medical Cannabis Businesses in the City in a manner consistent with state law. Title 3, which imposes a tax on the proceeds of Medical Cannabis Businesses, is amended to further define gross receipts, modify terminology to be consistent with state law, and to establish regulations governing collection and enforcement. Title 5, which governs the licensing of Medical Cannabis Businesses, was amended to add a licensing and regulatory structure for manufacturing businesses, to establish regulations governing testing, packaging, labeling, transportation, and delivery. Title 5 also establishes a Medical Cannabis Task Force. Title 9, governing land use regulations for conditional use permits, establishes zoning and conditional use permits required for manufacturing facilities as well as provisions for waste disposal.
Revenue & Finance (Title 3)
Major Changes
The following provisions were added/amended/removed:
3.48.020 Definitions.
“Medical Cannabis Businesses” was redefined from “cannabis or marijuana collective” to maintain consistency with MMRSA.
“Gross Receipts” was defined to ensure that all receipts normally kept for business purposes are maintained.
3.48.080 Returns and Remittances.
This provision establishes a policy for monthly tax returns to be filed to the City Manager reflecting all tax payments made in the previous month.
3.48.090 Failure to Pay Tax.
This provision enacts penalties against companies who do not comply with the taxation required
pursuant to this Title. It allows the City Manager to impose fines of up to 25% of the outstanding tax plus interest and outlines policies on returned checks after the tax’s due date. This provision also gives the City Manager the right to waive these fines.
3.48.100 Refunds.
This provision addresses policies on returns of overpaid/over collected taxes and grants the City Manager the authority to audit a businesses books and records to verify the refunded amount.
3.48.110 Enforcement.
This provision grants the City Manager authority to promulgate administrative rules and regulations for the purpose of administrative enforcement of the taxes established in this Title. This provision also makes any violations of the established taxes or knowingly misrepresenting tax information a misdemeanor.
4.48.120 Debts; Deficiencies; Assessments.
This provision designates that all taxation debts are owed to the City and can be liable as owed to the City in court. It also grants the City Manager authority to issue deficiency statements and assessments to ensure the proper payment of all taxes to the City.
Business Regulations (Title 5)
Several provisions were removed from Title 5 that were more appropriately classified as zoning and planning than business licensing, while standard business licensing procedures and operational requirements were retained. Changes to Title 5 also allow for licensing of marijuana businesses through an application and public hearing processes instead of through the lottery process and license cap that previously existed. Title 5 also includes regulations governing testing, packaging, labeling, transportation, and delivery. Overall changes were made to ensure responsible regulation and best business practices.
Major Changes
The following provisions were added/amended/removed:
5.88.025 R.
From
“Identification Card” or “ID Card” means a valid identification card issued pursuant to Section 113672.7 et. seq. of the California Health and Safety Code.
To
“Identification Card” or “ID Card” means a valid identification card issued pursuant to Section 113672.7 et. seq. of the California Health and Safety Code.
5.88.040 I(1)(b) Local License Application Process.
This provision adds requirements for applicants to submit complete operational plans for approval including floor plan dimensions, layouts, and access areas as a requirement to local licensing and removes this from the purview conditional use permitting.
5.88.040 (h)(f) Local License Application Process.
This provision is removed entirely and security plans, security camera coverage diagrams, secure facility information, and alarm systems have been relocated to Title 9.
5.88.065 (A)(4) Medical Cannabis Business Operational Requirements.
This provision moves background checks from land use to business licensing and gives the city the authority for 3rd party background checks.
5.88.065 (B)(7) Medical Cannabis Business Operational Requirements.
This provision amended medical cannabis business operations requirements by removed the “Forms of Payment” clause, which only allowed approved payments from Qualified Patients to the City Manager, and did not include cash transactions. This provision was amended at the Council’s request.
5.88.095(B-E) Confidentiality of Information.
These provisions address and protect patient confidentiality and private medical information consistent with the Confidentiality of Medical Information Act.
5.88.025(Q) (2) General Definitions.
This provision was added in lieu of Chapter 5.88.025(4) to provide guidance that any controlled substance felony is not sole grounds for revocation of licensure or denial of renewal unless the charge involves minors or drug trafficking.
5.88.065(C) Medical Cannabis Business Operational Requirements.
This provision was added to amend the Medical Cannabis Business Operational Requirements outline in Chapter 5. It establishes standards for the distribution of manufactured cannabis including limitations on manufactured cannabis, limiting sales to pre-packaged products only, requiring products to advertise expiration dates, and outlining food-handling requirements.
5.88.070 Packaging and Labeling.
This provision adds packaging and labeling standards to ensure that children cannot reasonably access the products and to ensure that products are not marketed towards children. Packaging and labeling standards promote public health and safety and ensure responsible regulation.
5.88.075 Testing Requirements.
This provision establishes potency and contaminant testing requirements, designates testing centers, addresses testing enforcement, and grants exemptions if testing services are unavailable. Testing regulations include the ability for businesses to conduct on-site testing until such time as the state registers at least 3 testing facilities.
5.88.080 Transportation and Delivery.
This provision provides a summary of authorized transportation and delivery, motor vehicle requirements, preparation standards, manifest requirements, and processes on sending and receiving medical cannabis between medical cannabis businesses and between medical cannabis businesses and patients receiving deliveries. This was added to ensure minimum standards for lawful transfers and to expand patient.
5.88.085 Visitor Requirements.
This provision summarizes visitor access to restricted areas and governs standards and expectations for visitor conduct.
5.88.090 Maintenance of Records Required.
This provision ensures record maintenance is consistent with MMRSA.
5.88.140 Task Force.
This provision establishes a Medical Cannabis Task Force that meets bi-annually to protect the welfare of qualified patients and to increase the efficacy of the regulatory system associated with the operations of a Medical Cannabis Business.
5.88.09570 B.
From
The City shall treat all financial information provided pursuant to this Chapter as confidential information financial data in accordance with the California Open Records Act (§§ 6254(n).
To
The City shall treat all financial information provided pursuant to this Chapter as confidential information financial data in accordance with the California Public Records Act (California Government Code § 6254(n).
FISCAL IMPACT:
Costs associated with issuing licenses and permits will be recovered through fees paid by the applicants. Medical Cannabis businesses will pay taxes to the City as authorized by the City’s voters. Until there is more history on the businesses and the taxes paid it is not possible to determine what the tax revenue will be.
ATTACHMENTS:
Ordinance
Memo regarding waste disposal