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HomeMy WebLinkAbout06 - PH-1 - Extension of Urgency Ordinance No. 17-04 - 11/21/2017CITY COUNCIL AGENDA REPORT MEETING DATE NOVEMBER 21, 2017 ITEM NUMBER: PH -1 SUBJECT: EXTENSION OF AN URGENCY ORDINANCE NO. 17-04 TO ADOPT CODE AMENDMENT CO -16-06 AMENDING AND RENAMING ARTICLE 20 (MARIJUANA AND/OR MEDICAL MARIJUANA USES AND ACTIVITIES) OF CHAPTER IX (SPECIAL LAND USE REGULATIONS) OF TITLE 13 (PLANNING, ZONING AND DEVELOPMENT), SECTIONS 13-200.84, 13-200.86 AND 13-200.87, RELATING TO CULTIVATION OF MARIJUANA AND CERTAIN MARIJUANA RELATED USES DATE: NOVEMBER 13, 2017 FROM: CITY ATTORNEYS OFFICE AND DEVELOPMENT SERVICES DEPARTMENT PRESENTATION BY: BARRY CURTIS, ECONOMIC AND DEVELOPMENT SERVICES DIRECTOR TARQUIN PREZIOSI, ASSISTANT CITY ATTORNEY FOR FURTHER INFORMATION CONTACT: BARRY CURTIS, AICP (714) 754-5278 Barry.curtis@costamesaca.gov SUMMARY On January 3, 2017, the City Council adopted a 45 -day interim ordinance as an urgency measure (the Urgency Ordinance) pursuant to Government Code section 65858 that prohibited all marijuana uses that are or will be authorized by Proposition 64, except as preempted by state law, or as authorized by Measure X. On February 7, 2017, the City Council adopted a 10 -month and 15 -day extension of the Urgency Ordinance. The approval for the Urgency Ordinance will expire on December 22, 2017. Staff is recommending that the urgency ordinance be extended for a final one-year period, as allowed by Government Code Section 65858, to allow staff the time to further analyze the local impacts of the state marijuana regulations that go into effect on January 1, 2018. RECOMMENDATION City Council introduce and adopt Ordinance No. 17-16, extending Urgency Ordinance 17- 04 to adopt Code Amendment CO -16-06 amending and renaming Article 20 (Marijuana and/or medical marijuana uses and activities) of Chapter IX (Special Land Use Regulations) of Title 13 (Planning, Zoning and Development), Sections 13-200.84, 13- 200.86 and 13-200.87, relating to cultivation of marijuana and certain marijuana related uses, and approve the Report of the City Council regarding the extension thereof. BACKGROUND On November 8, 2016, voters approved two initiatives related to marijuana that effect the City of Costa Mesa: Costa Mesa Measure X and State Proposition 64, the "Control, Regulate and Tax Adult Use of Marijuana Act" ("Prop 64" or "AUMA"). This report focuses on Proposition 64. AUMA allows adults 21 years and over to use, possess, and cultivate limited amounts of marijuana; it will also allow sales and other activities after January 1, 2018. AUMA has two primary components: (1) a right to non- medical/recreational marijuana use, possession, and cultivation, and (2) a state licensing and taxing scheme for non-medical/recreational marijuana businesses similar to those licensed by the state under the Medical Marijuana Regulation and Safety Act ("MMRSA"). AUMA also reduces criminal penalties for specified marijuana crimes, including possession and use of marijuana by minors. State regulations for AUMA were being prepared by three state agencies, the Department of Consumer Affairs' Bureau of Cannabis Control, the Department of Public Health's Manufactured Cannabis Safety Branch and the Department of Food and Agriculture's CalCannabis Cultivation Licensing On January 3, 2017 the Council approved Urgency Ordinance 17-01 to adopt a code amendment prohibiting the cultivation of marijuana and/or medical marijuana for a 45 - day period. On February 7, 2017, the City Council adopted Urgency Ordinance 17-04 to extend the urgency ordinance for 10 months and 15 days, to December 22, 2018. The staff report from the February meeting is attached is Attachment 2. In late June, the state Legislature passed and the Governor signed into law the Medicinal and Adult -Use Cannabis Regulation and Safety Act (MAUCRSA), which creates one regulatory system for both medicinal and adult -use (recreational) cannabis. The three cannabis licensing authorities are in the process of drafting emergency regulations based on the new law for the commercial medicinal and adult -use (recreational) cannabis industries. The licensing authorities will use the emergency rulemaking process to establish the new regulations, followed by the formal rulemaking process. The emergency regulations are expected to be published in November. The implementation date for the issuance of commercial cannabis licenses remains the same: January 1, 2018. In the meantime, the Development Services Department continues to process all applications for medical marijuana business permits and conditional use permits pursuant to Measure X. ANAI YSIS Government Code section 65858 provides the regulations for urgency ordinances. An urgency measure requires a four-fifths vote of the Council for adoption and is in effect for 45 days. The Council may extend the interim ordinance for 10 months and 15 days and subsequently extend the interim ordinance for one year. Any extension also requires a four-fifths vote for approval. Not more than two extensions may be adopted. To date, only one extension of the urgency ordinance was approved by the Council. Prior to the expiration of the interim ordinance, the Council must issue a written report describing the measures taken to alleviate the condition which led to the adoption of the ordinance. A report entitled "Report of the City Council: Extension of Urgency Ordinance 17-04" is attached. A one-year extension of the urgency ordinance will preserve the status quo regulations prohibiting marijuana related uses within the City to the extent allowable under state law. The code amendment is necessary to revise the existing Zoning Code prohibition against all cultivation to be consistent with Proposition 64, and to otherwise expressly prohibit in the Zoning Code various other uses that will be allowed by Proposition 64 on January 1, 2018. The urgency ordinance did not conflict with the provisions of Measure X, and was drafted to harmonize the Zoning Code with the allowable uses and prohibitions in Title 9 as adopted by the voters. At this time, staff recommends a final one-year extension of the urgency ordinance to allow it to remain in effect until December 22, 2018, to ensure adequate time for staff to review and propose amendments, if needed, to ensure Costa Mesa's medical marijuana business permitting process is consistent with the state regulations that will go into effect on January 1, 2018. PUBLIC NOTICE Publication of the public hearing notice once in the Orange Coast Daily Pilot at least ten (10) days prior to the date of hearing as required by law. At the time of publication of this report, no public comments have been received. Any correspondence will be forwarded to the City Council under separate cover. ENVIRONMENTAL DETERMINATION The project has been reviewed for compliance with the California Environmental Quality Act (CEQA), the CEQA guidelines, and the City's environmental procedures, and has been found to be exempt pursuant to Section 15061(b)(3) (general rule) of the CEQA Guidelines, in that it can be seen with certainty that there is no possibility that the proposed amendment to the Zoning Code will have a significant effect on the environment. ALTERNATIVES CONSIDERED: The City Council could forego adoption of the urgency ordinance. This alternative may allow for outdoor marijuana cultivation and potentially other uses authorized under Prop 64 to proceed pending the future adoption of any regulations as determined by the City Council. FISCAL REVIEW: The extension of the urgency ordinance will not have any fiscal impact on the City's budget. LEGAL REVIEW The draft ordinance has been reviewed by the City Attorney's Office and approved as to form. CONCLUSION: If the City Council extends this urgency ordinance, only limited marijuana cultivation, as allowed under state law, and marijuana related businesses allowed under Measure X, will be permitted. These temporary restrictions will provide time for the City to study these issues and for the City Council to enact long-term policies and regulations. BARRY CURTIS, AICP ECONOMIC AND DEVELOPMENT SERVICES DIRECTOR Attachments: 1. Urgency Ordinance No. 17-16 2. City Council report dated February 7, 2017 3. Report of the City Council: Extension of Ordinance No. 17-04 ORDINANCE NO. 17-16 AN EXTENSION OF URGENCY ORDINANCE NO. 17-04 OF THE CITY COUNCIL OF THE CITY OF COSTA MESA AMENDING AND RENAMING ARTICLE 20 (MARIJUANA AND/OR MEDICAL MARIJUANA USES AND ACTIVITIES) OF CHAPTER IX (SPECIAL LAND USE REGULATIONS) OF TITLE 13 (PLANNING, ZONING AND DEVELOPMENT), SECTIONS 13-200.84, 13-200.86 AND 13-200.87, RELATING TO CULTIVATION OF MARIJUANA AND CERTAIN MARIJUANA RELATED USES. WHEREAS, the City of Costa Mesa, pursuant to its police power, may adopt regulations to protect the health, safety and welfare of the public, Cal. Const. art. XI, § 7, Cal. Govt. Code § 37100, and thereby is authorized to declare what use and condition constitutes a public nuisance; and WHEREAS, Government Code Section 38771 authorizes the City through its legislative body to declare actions and activities that constitute a public nuisance; and WHEREAS, in 1970, Congress enacted the Controlled Substances Act (21 U.S.C. Section 801 et seq.) which, among other things, makes it illegal to import, manufacture, distribute, possess, or use marijuana for any purpose in the United States and further provides criminal penalties for marijuana possession, cultivation and distribution; and WHEREAS, the People of the State of California have enacted Proposition 215, the Compassionate Use Act of 1996 (codified at Health and Safety Code Section 11362.5 et seq.) (the "CUA"), which exempts qualified patients and their primary caregivers from criminal prosecution under enumerated Health and Safety Code sections for use of marijuana for medical purposes; and WHEREAS, the California Legislature enacted Senate Bill 420 in 2003, the Medical Marijuana Program Act (codified at Health and Safety Code Section 11362.7 et seq.) (the "MMPA"), as amended, which created a state-wide identification card scheme for qualified patients and primary caregivers; and WHEREAS, on October 11, 2015, the Governor signed into law Senate Bill 643, Assembly Bill 266, and Assembly Bill 243, collectively referred to as the Medical Marijuana Regulation and Safety Act ("MMRSA"), effective January 1, 2016, which established a state licensing system for medical marijuana cultivation, manufacturing, delivery, and dispensing, regulating these activities with licensing requirements and regulations that are only applicable if cities and counties also permit marijuana cultivation, manufacturing, dispensing, and delivery within their jurisdictions. Under the MMRSA, cities and counties may continue to regulate and/or prohibit medical marijuana cultivation, manufacturing, dispensing, and delivery, consistent with their respective police powers, in which case the new law would not allow or permit these activities within the cities and counties where such activities are not otherwise permitted; and WHEREAS, on February 3, 2016, Assembly Bill 21 (Wood) was signed by the Governor, amending provisions of MMRSA pertaining to cultivation licenses by eliminating a March 1, 2016 deadline for local jurisdictions for the promulgation of cultivation regulations or cultivation bans other local jurisdictions would lose the ability to regulate to the State. Assembly Bill 21 also modified language in Health & Safety Code section 11362.777(g), which pertained to exemptions from licensing requirements for qualified patients and caregivers. The prior language, which specifically stated that local governments retained the right to prohibit cultivation without exception, was revised to state: "Exemption from the requirements of this section does not limit or prevent a city, county, or city and county from exercising its police authority under Section 7 of Article XI of the California Constitution."; and WHEREAS, notwithstanding the CUA, the MMPA, and the MMRSA as amended, marijuana remains a schedule I substance pursuant to California Health & Safety Code § 11054 (d) (13); and WHEREAS, marijuana also remains a schedule I substance pursuant to federal law, 21 U.S.C. § 812, Schedule 1 (c) (10), and federal law does not provide for any medical use defense or exception (Gonzales v. Raich, 545 U.S. 1 (2005); United States v. Oakland Cannabis Buyers' Coop., 532 U.S. 483 (2001)); and WHEREAS, the California Supreme Court has established that neither the CUA nor the MMPA preempt local regulation in the case of City of Riverside v. Inland Empire Patients Health and Wellness Center, Inc., 56 CalAth 729 (2013); and WHEREAS, the MMRSA expressly allows cities and counties to ban marijuana cultivation consistent with current state law including Maral v. City of Live Oak, 242 Cal.AppAth 940 (2013); and WHEREAS, on November 8, 2016, the electorate of the State of California voted on Proposition 64 ("Prop 64"), and approved the Adult Use of Marijuana Act ("AUMA"), to be codified in California Health and Safety Code at various sections and in California Business and Professions Code at various sections. The AUMA allows adults 21 and over to use, possess, and cultivate limited amounts of marijuana, establishes a state licensing and regulatory scheme for marijuana businesses serving the recreational market; and will expressly allow local jurisdictions to prohibit outdoor cultivation of marijuana for personal use, to regulate indoor cultivation of marijuana for personal use, and to prohibit all non-medical and recreational marijuana businesses from locating and operating within their jurisdictions; and WHEREAS, on November 8, 2016 the electorate of the City of Costa Mesa voted on Measure X, and approved the Costa Mesa Medical Marijuana Measure ("CMMMM"). The CMMMM sets forth the specific area in the City within which medical marijuana distributors, manufacturers, processors, research and development laboratories, testing laboratories and transporters can be located; provides for City regulation of these medical marijuana businesses in a manner consistent with the statewide regulations to be adopted by the California Department of Consumer Affairs - Bureau of Medical Marijuana Regulations ("BMMR") and other state agencies, including the departments of Food and Agriculture and Public Health, pursuant to MMRSA; reaffirms the existing ban on dispensaries and cultivation within the City; and imposes a gross receipts tax on all medical marijuana distributors, manufacturers, processors, testing laboratories, transporters, and research and development laboratories, as well as any other marijuana or cannabis business at a rate of 6% of gross receipts; WHEREAS, on June 27, 2017 the state Legislature passed and the Governor signed into law the Medicinal and Adult -Use Cannabis Regulation and Safety Act (MAUCRSA), which creates one regulatory system for both medicinal and adult -use (recreational) cannabis. The cannabis licensing authorities shall draft emergency regulations based on the new law for the commercial medicinal and adult -use (recreational) cannabis industries. WHEREAS, the renamed State of California Bureau of Cannabis Control has not yet issued comprehensive regulations for the implementation of Prop 64 and MAUCRSA and is not expected to do so until January 1, 2018. WHEREAS, the City Council of the City of Costa Mesa finds that it is in the interest of the health, safety and welfare of the City to make explicit that, to the extent allowable under state law, all marijuana related use and activity of any kind as set forth herein, whether medical, recreational, or otherwise, unless specifically allowed by the CMMMM, is prohibited everywhere in the City and is a public nuisance per se, consistent with State law, and WHEREAS, the City Council of the City of Costa Mesa finds and clarifies this prohibition does not apply to those uses that are authorized by the CMMMM, as set forth in Title 9, Chapter VI "Medical Marijuana Business Permits"; and Title 13, Chapter IX, Article 21 "medical marijuana distributing, manufacturing, research and development and testing" and Chapter IV, "Citywide Land Use Matrix", Table 13-30, of the Costa Mesa Municipal Code; and WHEREAS, the City Council of the City of Costa Mesa finds and clarifies this prohibition does not prohibit qualified patients and persons with identification cards to cultivate indoors, possess, and use marijuana for their own personal medical purposes only, as permitted by state law; but that nothing herein shall be construed to authorize qualified patients to engage in the collective cultivation of marijuana as described by Health and Safety Code section 11362.775, nor are they permitted to cultivate marijuana above limits established by State law and guidelines for their own personal use; and WHEREAS, the City of Costa Mesa, pursuant to the provisions of the California Environmental Quality Act ("CEQA") (California Public Resources Code Sections 21000 et seq.) and State CEQA guidelines (Sections 15000 et seq.) has determined that the Ordinance is exempt pursuant to Section 15061(b)(3) of Title 14 the California Code of Regulations; and WHEREAS, the City Council finds that the provisions of this Ordinance are consistent with the City of Costa Mesa's General Plan; and WHEREAS, the City Council recognizes that there is a need to enact the restrictions contained in this ordinance immediately to protect the public health and safety; WHEREAS, the City Council finds that there is a current and immediate threat to public health, safety, and welfare, and that the approval of additional use permits, variances, building permits, and/or any other applicable entitlement for use which is required in order to comply with the provisions of the Zoning Code would result in that threat to public health, safety, or welfare; and WHEREAS, on January 3, 2017, the City Council held a public hearing and considered the staff report, recommendations by staff and the City Attorney and public testimony regarding amendments to Title 13, Chapter IX, Article 20, Sections 13-20084, 13- 200.86 and 13-200.87 and adopted Urgency Ordinance No. 17-01; and WHEREAS, on February 7, 2017, the City Council held a public hearing to consider an extension of and thereafter did adopt Urgency Ordinance 17-04 to extend the Urgency Ordinance for a period of 10 months and 15 days; and WHEREAS, on November 21, 2017, the City Council held a public hearing to consider an extension of Urgency Ordinance 17-04 for a period of one-year; WHEREAS, 10 days prior to the expiration of the extension of this interim ordinance the City Council did consider and approve the Report of the City Council regarding Extension of Ordinance No. 17-04 WHEREAS, all legal prerequisites prior to the adoption of this ordinance have occurred. THE COSTA MESA CITY COUNCIL DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. The City Council finds that this Ordinance 17-04 remains necessary as an emergency measure for preserving the public peace, health and safety. SECTION 2. The City Council finds that all the facts, findings, and conclusions set forth above in this Ordinance are true and correct. SECTION 3. The City Council issues the "Report of the City Council: Extension of Ordinance No. 17-04." SECTION 4. Except as provided herein, the remaining provisions of Title 13, Chapter IX, Article 20 of the Costa Mesa Municipal Code shall remain in full force and effect. SECTION 5. Title 13, Chapter IX, Article 20, Sections 13-20084, 13-200.86 and 13- 200.87 of the Costa Mesa Municipal Code shall continue to read as follows: ARTICLE 20. - MARIJUANA AND/OR MEDICAL MARIJUANA USES AND ACTIVITIES Sec. 13-200.84. - Purpose. The purpose of this article is to prohibit marijuana -related uses and activities in order to promote the health, safety, morals and general welfare of the residents and the businesses within the city by maintaining local control over the ability to authorize and regulate marijuana -related businesses, including cultivation. Except as preempted by state law, or as specifically authorized by Chapter VI of Title 9, Chapter IX and Articles 20 and 21 of this Title, this prohibition includes all marijuana related uses and activities, including but not limited to dispensing, cultivating, transporting, distributing, processing, delivering, manufacturing, labeling, testing, and/or selling, whether for recreational, medical, or any other use. Sec. 13-200.85. -Applicability. (a) Nothing in this article is intended, nor shall it be construed, to burden any defense to criminal prosecution under the Compassionate Use Act of 1996. (b) All the provisions of this article shall apply to all property, public and private, within the city. (c) All the provisions of this article shall apply indoors and outdoors. Sec. 13-200.86. - Definitions. The following definitions apply to this article: Person shall mean any person, firm, corporation, association, club, society, or other organization. The term person shall include any owner, manager, proprietor, employee, volunteer and/or salesperson. Private residence shall mean a house, an apartment unit, a mobile home, or other similar lawfully existing dwelling unit as set forth in Health & Safety Code section 11362.2(b)(5). Unless otherwise defined herein, the terms used in this article shall have the meaning ascribed to them in Title 9, Chapter VI of this code. Sec. 13-200.87. - Cultivation of marijuana prohibited. (a) Marijuana and/or medical marijuana cultivation by any person, including primary caregivers, qualified patients and dispensaries, is prohibited in all zone districts within the City of Costa Mesa except as provided in subsection b. (b) The prohibition set forth in subsection a. shall not apply to indoor cultivation of up to six plants, as authorized by state law solely for personal recreational use or personal medical marijuana use that occurs within a private residence occupied exclusively by natural persons age 21 or older or inside a fully enclosed and secure lawfully existing accessory structure to a private residence located upon the grounds of a private residence and that is conducted in full compliance with Health and Safety Code section 11362.2. Sec. 13-200.88. - Declaration of public nuisance. Any use, structure, or property that is altered, enlarged, erected, established, maintained, moved, or operated contrary to the provisions of this article, is hereby declared to be unlawful and a public nuisance and may be abated by the city through civil and/or administrative proceedings by means of a restraining order, preliminary or permanent injunction, or in any other manner provided by law for the abatement of such nuisances. Sec. 13-200.89. - Violations. Violations of this article shall be punishable pursuant to the provisions of section 13-16. SECTION 6. Severability. If any provision of this ordinance or the application thereof to any person or circumstance is held invalid, the remainder of the ordinance and the application of such provision to other persons or circumstances shall not be affected thereby. SECTION 7. Effective Date. This Ordinance shall become effective December 22, 2017. SECTION 7. The City Clerk shall certify the adoption of this Ordinance and shall cause the same to be posted or published in the manner as required by law. APPROVED AND ADOPTED on this day of November, 2017. Sandra L. Genis, Mayor ATTEST: Brenda Green City Clerk I, BRENDA GREEN, CITY CLERK of the City of Costa Mesa, California, do hereby certify that the foregoing urgency ordinance was regularly introduced and adopted by the City Council of the City of Costa Mesa, California, at a regular meeting thereof held on the day of November, 2017, by the following vote of the City Council: AYES: NOES: ABSENT: ABSTAIN: APPROVED AS TO FORM: Tom Duarte City Attorney Report of the City Council: Extension of Urgency Ordinance 17-04 Executive Summary On November 8, 2016, voters approved two initiatives related to marijuana that effect the City of Costa Mesa: 1. Measure X: The City of Costa Mesa Medical Marijuana Measure, and 2. State Proposition 64: Control, Regulate and Tax Adult Use of Marijuana Act (Prop 64). On January 3, 2017, the City Council adopted a 45 -day interim ordinance as an urgency measure (the Urgency Ordinance) pursuant to Government Code section 65858 that prohibited all marijuana uses that are or will be authorized by Proposition 64, except as preempted by state law, or as authorized by Measure X. On February 7, 2017, the City Council adopted a 10 -month and 15 -day extension of the Urgency Ordinance. The approval for the Urgency Ordinance will expire on December 22, 2017 unless a third and final one-year extension is approved by the Council. Government Code section 65858(d) states, "Ten days prior to the expiration of that interim ordinance or any extension, the legislative body shall issue a written report describing the measures taken to alleviate the condition which led to the adoption of the ordinance." This report is intended to meet the requirement of Section 65858(d) and thus allow the Council to consider adoption of a 12 -month extension of the Urgency Ordinance. Background On November 8, 2016, voters approved two initiatives related to marijuana that affect the City of Costa Mesa: Costa Mesa Measure X and State Prop 64. Measure X amended the Cost Mesa Municipal Code (CMMC) to allow medical marijuana distributing, manufacturing, processing and transportation businesses, as well as research and development and testing laboratories to be located in one specific area of the City, provided such businesses obtained a Medical Marijuana Business Permit (MMBP), a conditional use permit and a business license. The measure also imposes a six percent annual gross receipts tax on all marijuana businesses. Prop 64 allows adults 21 years and over to use, possess, and cultivate limited amounts of marijuana; it will also allow sales and other activities after January 1, 2018. Prop 64 has two primary components: 1. A right to non-medical/recreational marijuana use, possession, and cultivation, and 2. A state licensing and taxing scheme for non-medical/recreational marijuana businesses similar to those licensed by the state under the Medical Marijuana Regulation and Safety Act (MMRSA). Report of the City Council: Extension of Urgency Ordinance 17-04 Prop 64 also reduces criminal penalties for specified marijuana crimes, including possession and use of marijuana by minors. State regulations for Prop 64 were being jointly prepared by three state agencies: 1. The Department of Consumer Affairs' Bureau of Cannabis Control 2. The Department of Public Health's Manufactured Cannabis Safety Branch, and 3. The Department of Food and Agriculture's CalCannabis Cultivation Licensing In late June, the State Legislature passed and the Governor signed into law the Medicinal and Adult -Use Cannabis Regulation and Safety Act (MAUCRSA), which creates one regulatory system for both medicinal and adult -use (recreational) cannabis. The same three cannabis licensing authorities are now in the process of drafting emergency regulations based on the new law for the commercial medicinal and adult - use (recreational) cannabis industries. The licensing authorities will use the emergency rulemaking process to establish the new regulations, followed by the formal rulemaking process. The emergency regulations are expected to be published in November. The implementation date for the issuance of commercial cannabis licenses remains the same: January 1, 2018. In the meantime, the Development Services Department continues to process all applications for MMBP and conditional use permits pursuant to Measure X. Urgency Ordinances An urgency ordinance requires a four-fifths vote of the Council for adoption and is in effect for 45 days. The Council may extend the interim ordinance for 10 months and 15 days and subsequently, extend the interim ordinance for one year. An extension also requires a four-fifths vote for approval. Not more than two extensions may be adopted. To date, only one extension of the urgency ordinance was approved by the Council. On January 3, 2017, the Council approved Urgency Ordinance 17-01 to adopt Code Amendment CO -16-06 to prohibit the cultivation of marijuana and/or medical marijuana for a 45 -day period. The urgency ordinance amended the CMMC to revise and re -name Title 13 Chapter IX Article 20, Marijuana and/or Medical Uses and Activities. The code amendment was necessary to revise the existing Zoning Code prohibition against all cultivation to be consistent with Proposition 64, and to otherwise expressly prohibit in the Zoning Code various other uses that will be allowed by Proposition 64 on January 1, 2018. The urgency ordinance did not conflict with the provisions of Measure X, and was drafted to harmonize the Zoning Code with the allowable uses and prohibitions in Title 9 as adopted by the voters. On February 7, the Council adopted Urgency Ordinance 17-04 to extend the Urgency Ordinance for a period of 10 months and 15 days. The extension expires on December 22, 2017. Report of the City Council: Extension of Urgency Ordinance 17-04 The Council has the option to approve a third and final extension for 12 months, which is recommended at this time. A one-year extension of the Urgency Ordinance will preserve the status quo by prohibiting marijuana related uses within the City to the extent allowable under state law. It also resolves any potential conflict between the new provisions of the Health & Safety Code and the CMMC regarding cultivation. Measures Taken to Alleviate the Conditions That Led to the Adoption of the Urgency Ordinance After the passage of Measure X in November 2016, a Task Force of staff from the City Manager's office, City Attorney's office, Development Services (Planning and Code Enforcement), Police Department, Fire Department and the Finance Department was convened and charged with establishing regulations to implement Measure X. The Measure X ballot measure required approval of a medical marijuana business permit, conditional use permit and City business license as necessary to operate a medical marijuana business. However, procedures did not exist that addressed the City's internal review process to ensure that each business applying for a MMBP was required to meet the same standards to operate in the City. Consultant resources were retained to provide an expertise on how other states and jurisdictions have implemented medical marijuana regulations. Each member had specific tasks assigned to ensure development of a comprehensive set of regulations to implement Measure X consistently for each application. Concurrently, the Task Force was awaiting the release of the State regulations to implement Prop 64. Once available, the Task Force would ensure that local Measure X regulations were consistent with the state regulations. In January, a draft set of City Administrative Regulations were presented to the Task Force to begin reviewing. At the same time, the Assistant City Attorney and the Development Services Director presented to the Council the first Urgency Ordinance to amend the CMMC to prohibit sale and cultivation of marijuana which was legalized with the approval of Prop 64 beginning in January 2018. The Ordinance was adopted almost a year prior to the implementation of Prop 64 to make clear the intentions of the City regarding the sale and cultivation of marijuana and to expressly prohibit marijuana businesses in conflict with Measure X. For the first six months of the year, the Task Force continued to meet on a bi-weekly basis to review and revise the administrative regulations, hold stakeholder meetings, implement a Measure X and Prop 64 FAQ page on the City's website, and establish a medical marijuana business permit and development review process. On May 23, 2017, the City Manager approved the Administrative Regulations for the Implementation of Measure X. The Regulations identify the following four permits/licenses as being required to be submitted and approved in the sequence listed below prior to operation of a distribution, manufacturing, processing, research and development and/or testing Report of the City Council: Extension of Urgency Ordinance 17-04 facility. Within each permit/license, there are additional regulations, procedures and requirements an applicant must comply with prior to moving to the next step in the process to ensure the business is operated in a safe and secure manner and with minimal impact on adjacent businesses. Additionally, financial reporting requirement are included to ensure the City's ability to collect the annual sales tax required of each business. Finally, regulations are included that address how to deal with changes to a business ownership and/or renewal of the MMBP licenses after two years of operation. 1. Medical Marijuana Business Permit Application A Medical Marijuana Business Permit application shall be submitted to and approved by the Community Improvement Division, subject to the terms of Chapter VI of Title 9 of the CMMC. a. The applicant must complete the process to obtain the Medical Marijuana Business Permit from the Community Improvement Division, subject to the terms of Chapter VI of Title 9 of the CMMC, pursuant to II.A., below. Upon a completed submission and a successful background check for the applicant, the City will issue a notification that the application is complete for purposes of processing the CUP application. b. The Medical Marijuana Business Permit cannot be issued until the Conditional Use Permit (CUP), as addressed below, has been approved by the Planning Commission (or City Council on appeal), all conditions of approval have been satisfied, and all other requirements of the CMMC have been met. c. Following approval of the CUP, the City may then complete the processing of and issue the Medical Marijuana Business Permit to the operator for that location. 2. Conditional Use Permit Prior to filing a Planning Application for a conditional use permit (CUP), the applicant must have received notification that their Medical Marijuana Business Permit application is complete. Submittal and approval of a CUP is the second step in the four -step approval process to own and/or operate a medical marijuana business in Costa Mesa. A CUP application and a Supplemental Application: CUP for Medical Marijuana Business shall be submitted to the Planning Division and approved by the Planning Commission at a public hearing, subject to the provisions of Title 13, Chapter IX, Article 21 of the CMMC. Table 13-30 of Chapter IV (Citywide Land Use Matrix) of Title 13 (Planning, Zoning and Development) establishes the Report of the City Council: Extension of Urgency Ordinance 17-04 zoning districts within the City where a medical marijuana business is conditionally permitted. 3. Medical Mariivana Business Permit Issuance Following approval of the CUP, the City will make a final determination regarding the Medical Marijuana Business Permit. The permit issuance is the third step in the four-part approval process. A Medical Marijuana Business Permit must be issued prior to the submittal of the business license application addressed below. a. A Medical Marijuana Business Permit shall be valid for two (2) years from the date of issue, unless otherwise suspended or revoked, and shall be renewed bi-annually thereafter, provided the permittee is in compliance with the provisions of this chapter. 4. City of Costa Mesa Business License Prior to filing an application for a business license, the applicant must have received approval of the CUP and the Medical Marijuana Business Permit. A Business License shall be submitted to and approved by the Finance Department Treasury Management pursuant to Chapter I of Title 9 of the CMMC. This is the last step in the four -step approval process to own and/or operate a medical marijuana business in Costa Mesa. On June 1, the City began accepting applications for Medical Marijuana Business Permits. Application are available online and can be submitted to the Community Improvement Division by appointment. To date, ten applications have been submitted and four of those submittals have received a "notices to proceed" which is required prior to filing a conditional use permit application. Two applications for conditional use permits. have been filed as of November 1. On June 28, 2017, Governor Brown signed California Senate Bill 94, which effectively merged two existing bills—the Medical Cannabis Regulation and Safety Act and the Adult Use of Marijuana Act —into one streamlined bill titled the Medicinal and Adult -Use Cannabis Regulation and Safety Act (MAUCRSA). It is expected that one comprehensive state law will provide for a more unified regulatory process governing both medicinal and adult -use cannabis. This bill creates one regulatory system for both medicinal and adult -use (recreational) cannabis. The three cannabis licensing authorities are now in the process of drafting emergency regulations based on the new law for the commercial medicinal and adult -use (recreational) cannabis industries. The licensing authorities will use the emergency rulemaking process to establish the new regulations, followed by the formal rulemaking process. The State's expects the emergency regulations to be published in November 2017. No regulations have been released by the state as of the preparation of this report. However, the implementation date for the issuance of commercial cannabis licenses still remains January 1, 2018. In the meantime, the Development Services Report of the City Council: Extension of Urgency Ordinance 17-04 Department continues to process all applications for medical marijuana business permits and conditional use permits pursuant to Measure X. Once the state regulations are released, staff will begin a review process to assess what, if any, inconsistencies exist between the state regulations and our local MMBP process and/or what, if any, additions or deletions are needed to our local requirements. Until the state regulations are released, the recommendation is to extend the Urgency Ordinance for 12 months to provide time for the City to study these issues and to allow adequate time for Planning Commission review and City Council approval of long-term policies and regulations. If the City Council should forego extension of the Urgency Ordinance, Article 20 of Chapter IX of Title 13 (the Zoning Code) would become inconsistent with Proposition 64 regarding personal marijuana cultivation, and potentially, other uses authorized thereunder. Staff will return to the Council prior to the end date of the extension, December 22, 2018, with final recommendation for a code amendment to address amendments related to Prop 64 and Measure X. CITY COUNCIL AGENDA REPORT MEETING DATE FEBRUARY 7, 2017 ITEM NUMBER: SUBJECT: EXTENSION OF AN URGENCY ORDINANCE NO. 17-01 TO ADOPT CODE AMENDMENT CO -XX -XX: AN AMENDMENT TO TITLE 13 OF THE COSTA MESA MUNICIPAL CODE RELATED TO CULTIVATION OF MARIJUANA AND/OR MEDICAL MARIJUANA DATE: JANUARY 26, 2017 FROM: CITY ATTORNEYS OFFICE AND DEVELOPMENT SERVICES DEPARTMENT PRESENTATION BY: JAY TREVINO, DEVELOPMENT SERVICES DEPARTMENT TARQUIN PREZIOSI, ASSISTANT CITY ATTORNEY FOR FURTHER INFORMATION CONTACT: JAY TREVINO, (714) 754-5278 jay.trevi n o(ftostamesaca.gov RIIMMARY On January 3, 2017, the City Council adopted a 45 -day urgency ordinance prohibiting all marijuana uses that are or will be authorized by Proposition 64, except as preempted by state law, or as authorized by Measure X. The initial time frame for the urgency ordinance is 45 days, which will end on February 17, 2017. Urgency ordinances may be extended subject to a public hearing by the City Council. Staff is recommending that the urgency ordinance be extended for a period of 10 months and 15 days, as allowed by Government Code section 65858, while the administrative regulations to address medical marijuana are completed. RECOMMENDATION Introduce and adopt an extension of Urgency Ordinance No. 17-01 to adopt Code Amendment CO -XX amending Costa Mesa Municipal Code Title 13, Article 20 of Chapter IX, Special Land Use Regulations. BACKGROUND On November 8, 2016, voters approved two initiatives related to marijuana that effect the City of Costa Mesa: Costa Mesa Measure X and State Proposition 64, the "Control, Regulate and Tax Adult Use of Marijuana Act" ("Prop 64" or "AUMA"). This report focuses on Proposition 64. AUMA allows adults 21 years and over to use, possess, and cultivate limited amounts of marijuana; it will also allow sales and other activities by January 1, 2018. AUMA has two primary components: (1) a right to non- medical/recreational marijuana use, possession, and cultivation, and (2) a state licensing and taxing scheme for non-medical/recreational marijuana businesses similar to those licensed by the state under the Medical Marijuana Regulation and Safety Act ("MMRSA"). AUMA also reduces criminal penalties for specified marijuana crimes, including possession and use of marijuana by minors. The staff report from the January meeting is attached is Attachment 2. ANALYSIS The proposed amendment to the Zoning Code is intended to preserve the status quo and prohibit all marijuana related uses within the City to the extent allowable under state law. The proposed amendment also resolves any potential conflict between the new provisions of the Health and Safety Code and the CMMC regarding cultivation. The proposed amendment does not conflict with the provisions of Measure X. Government Code §65858 provides that urgency ordinances be adopted for a period of 45 days. An urgency ordinance can later be extended should the City Council determine an extension is warranted. At this time, staff recommends an extension of the ordinance to allow the internal review process for medical marijuana business to be completed. PUBLIC NOTICE Publication of the public hearing notice once in the Orange Coast Daily Pilot at least ten (10) days prior to the date of hearing as required by law. At the time of publication of this report, no public comments have been received. Any correspondence will be forwarded to the City Council under separate cover. ENVIRONMENTAL DETERMINATION The project has been reviewed for compliance with the California Environmental Quality Act (CEQA), the CEQA guidelines, and the City's environmental procedures, and has been found to be exempt pursuant to Section 15061(b)(3) (general rule) of the CEQA Guidelines, in that it can be seen with certainty that there is no possibility that the proposed amendment to the Zoning Code will have a significant effect on the environment. ALTERNATIVES CONSIDERED: The City Council could forego adoption of the urgency ordinance. This alternative would allow marijuana cultivation and marijuana businesses to proceed pending the future adoption of any regulations as determined by the City Council. FISCAL REVIEW: The extension of the urgency ordinance will not have any fiscal impact on the City's budget. Z — LEGAL REVIEW The draft ordinance has been reviewed by the City Attorney's Office and approved as to form. CONCLUSION: If the City Council extends this urgency ordinance only limited marijuana cultivation, as allowed under state law, and marijuana related businesses allowed under Measure X, will be permitted. These temporary restrictions will provide time for the City to study these issues and for the City Council to enact long-term policies and regulations. JAY,V. TREVINO, AICP DEVELOPMENT SERVICES DEPARTMENT / CONSULTANT Attachments: 1. Urgency Ordinance No. 17-01 2. City Council report dated January 3, 2017 ATTACHMENT 1 ORDINANCE NO. 17-01 AN EXTENSION OF URGENCY ORDINANCE NO. 17-01 OF THE CITY COUNCIL OF THE CITY OF COST MESA AMENDING AND RENAMING ARTICLE 20 (MARIJUANA AND/OR MEDICAL MARIJUANA USES AND ACTIVITIES) OF CHAPTER IX (SPECIAL LAND USE REGULATIONS) OF TITLE 13 (PLANNING ZONING AND DEVELOPMENT), SECTIONS 13-20084,13-200.86 AND 13-200.87, RELATING TO CULTIVATION OF MARIJUANA AND CERTAIN MARIJUANA RELATED USES. WHEREAS, the City of Costa Mesa, pursuant to its police power, may adopt regulations to protect the health, safety and welfare of the public, Cal. Const. art. XI, § 7, Cal. Govt. Code § 37100, and thereby is authorized to declare what use and condition constitutes a public nuisance; and WHEREAS, Government Code Section 38771 authorizes the City through its legislative body to declare actions and activities that constitute a public nuisance; and WHEREAS, in 1970, Congress enacted the Controlled Substances Act (21 U.S.C. Section 801 et seq.) which, among other things, makes it illegal to import, manufacture, distribute, possess, or use marijuana for any purpose in the United States and further provides criminal penalties for marijuana possession, cultivation and distribution; and WHEREAS, the People of the State of California have enacted Proposition 215, the Compassionate Use Act of 1996 (codified at Health and Safety Code Section 11362.5 et seq.) (the "CUA"), which exempts qualified patients and their primary caregivers from criminal prosecution under enumerated Health and Safety Code sections for use of marijuana for medical purposes; and WHEREAS, the California Legislature enacted Senate Bill 420 in 2003, the Medical Marijuana Program Act (codified at Health and Safety Code Section 11362.7 et seq.) (the "MMPA"), as amended, which created a state-wide identification card scheme for qualified patients and primary caregivers; and WHEREAS, on October 11, 2015, the Governor signed into law Senate Bill 643, Assembly Bill 266, and Assembly Bill 243, collectively referred to as the Medical Marijuana Regulation and Safety Act ("MMRSA"), effective January 1, 2016, which established a state licensing system for medical marijuana cultivation, manufacturing, delivery, and dispensing, regulating these activities with licensing requirements and regulations that are only applicable if cities and counties also permit marijuana cultivation, manufacturing, dispensing, and delivery within their jurisdictions. Under the MMRSA, cities and counties may continue to regulate and/or prohibit medical marijuana cultivation, manufacturing, dispensing, and delivery, consistent with their respective police powers, in which case the new law would not allow or permit these activities within the cities and counties where such activities are not otherwise permitted; and — zi_ WHEREAS, on February 3, 2016, Assembly Bill 21 (Wood) was signed by the Governor, amending provisions of MMRSA pertaining to cultivation licenses by eliminating a March 1, 2016 deadline for local jurisdictions for the promulgation of cultivation regulations or cultivation bans other local jurisdictions would lose the ability to regulate to the State. Assembly Bill 21 also modified language in Health & Safety Code section 11362.777(g), which pertained to exemptions from licensing requirements for qualified patients and caregivers. The prior language, which specifically stated that local governments retained the right to prohibit cultivation without exception, was revised to state: "Exemption from the requirements of this section does not limit or prevent a city, county, or city and county from exercising its police authority under Section 7 of Article XI of the California Constitution."; and WHEREAS, notwithstanding the CUA, the MMPA, and the MMRSA as amended, marijuana remains a schedule I substance pursuant to California Health & Safety Code § 11054 (d) (13); and WHEREAS, marijuana also remains a schedule I substance pursuant to federal law, 21 U.S.C. § 812, Schedule 1 (c) (10), and federal law does not provide for any medical use defense or exception (Gonzales v. Raich, 545 U.S. 1 (2005); United States v. Oakland Cannabis Buyers' Coop., 532 U.S. 483 (2001)); and WHEREAS, the California Supreme Court has established that neither the CUA nor the MMPA preempt local regulation in the case of City of Riverside v. Inland Empire Patients Health and Wellness Center, Inc., 56 Cal.4th 729 (2013); and WHEREAS, the MMRSA expressly allows cities and counties to ban marijuana cultivation consistent with current state law including Maral v. City of Live Oak, 242 Cal.App.4th 940 (2013); and WHEREAS, on November 8, 2016, the electorate of the State of California voted on Proposition 64 ("Prop 64"), and approved the Adult Use of Marijuana Act ("AUMA"), to be codified in California Health and Safety Code at various sections and in California Business and Professions Code at various sections. The AUMA allows adults 21 and over to use, possess, and cultivate limited amounts of marijuana, establishes a state licensing and regulatory scheme for marijuana businesses serving the recreational market; and will expressly allow local jurisdictions to prohibit outdoor cultivation of marijuana for personal use, to regulate indoor cultivation of marijuana for personal use, and to prohibit all non-medical and recreational marijuana businesses from locating and operating within their jurisdictions; and WHEREAS, on November 8, 2016 the electorate of the City of Costa Mesa voted on Measure X, and approved the Costa Mesa Medical Marijuana Measure ("CMMMM"). The CMMMM sets forth the specific area in the City within which medical marijuana distributors, manufacturers, processors, research and development laboratories, testing laboratories and transporters can be located; provides for City regulation of these medical marijuana businesses in a manner consistent with the statewide regulations to be adopted by the California Department of Consumer Affairs - Bureau of Medical Marijuana Regulations ("BMMR") and other state agencies, including the departments of Food and Agriculture and Public Health, pursuant to MMRSA; reaffirms the existing ban on dispensaries and cultivation within the City; and imposes a gross receipts tax on all medical marijuana distributors, manufacturers, processors, testing laboratories, transporters, and research and development laboratories, as well as any other marijuana or cannabis business at a rate of 6% of gross receipts; WHEREAS, the City Council of the City of Costa Mesa finds that it is in the interest of the health, safety and welfare of the City to make explicit that, to the extent allowable under state law, all marijuana related use and activity of any kind as set forth herein, whether medical, recreational, or otherwise, unless specifically allowed by the CMMMM, is prohibited everywhere in the City and is a public nuisance per se, consistent with State law, and WHEREAS, the City Council of the City of Costa Mesa finds and clarifies this prohibition does not apply to those uses that are authorized by the CMMMM, as set forth in Title 9, Chapter VI "Medical Marijuana Business Permits"; and Title 13, Chapter IX, Article 21 ,'medical marijuana distributing, manufacturing, research and development and testing" and Chapter IV, "Citywide Land Use Matrix", Table 13-30, of the Costa Mesa Municipal Code; and WHEREAS, the City Council of the City of Costa Mesa finds and clarifies this prohibition does not prohibit qualified patients and persons with identification cards to cultivate indoors, possess, and use marijuana for their own personal medical purposes only, as permitted by state law; but that nothing herein shall be construed to authorize qualified patients to engage in the collective cultivation of marijuana as described by Health and Safety Code section 11362.775, nor are they permitted to cultivate marijuana above limits established by State law and guidelines for their own personal use; and WHEREAS, the City of Costa Mesa, pursuant to the provisions of the California Environmental Quality Act ("CEQA") (California Public Resources Code Sections 21000 et seq.) and State CEQA guidelines (Sections 15000 et seq.) has determined that the Ordinance is exempt pursuant to Section 15061(b)(3) of Title 14 the California Code of Regulations; and WHEREAS, the City Council finds that the provisions of this Ordinance are consistent with the City of Costa Mesa's General Plan; and WHEREAS, the City Council recognizes that there is a need to enact the restrictions contained in this ordinance immediately to protect the public health and safety; and WHEREAS, on January 3, 2017, the City Council held a public hearing and considered the staff report, recommendations by staff and the City Attorney and public testimony regarding amendments to Title 9, Chapter VI and Title 13, Chapter IX, Article 21 and Chapter IV, "Medical Marijuana Business Permits"; and Title 13, Chapter IX, Article 21 "medical marijuana distributing, manufacturing, research and development and testing" and Chapter IV, "Citywide Land Use Matrix", Table 13-30, of the Costa Mesa Municipal Code and adopted Urgency Ordiance No. 17-01 ; and WHEREAS, On February 7, 2017, the City Council held a public hearing to consider the extension of the Urgency Ordinance for a period of 10 months and 15 days; and _, ( — WHEREAS, all legal prerequisites prior to the adoption of this ordinance have occurred. THE COSTA MESA CITY COUNCIL DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. The City Council finds that this Ordinance is necessary as an emergency measure for preserving the public peace, health and safety. SECTION 2. The City Council finds that all the facts, findings, and conclusions set forth above in this Ordinance are true and correct. SECTION 4. Except as provided herein, the remaining provisions of Title 13, Chapter IX, Article 20 of the Costa Mesa Municipal Code shall remain in full force and effect. SECTION 5. Title 13, Chapter IX, Article 20, Sections 13-20084, 13-200.86 and 13- 200.87 of the Costa Mesa Municipal Code are hereby amended to read as follows: ARTICLE 20. - MARIJUANA AND/OR MEDICAL MARIJUANA USES AND ACTIVITIES Sec. 13-200.84. - Purpose. The purpose of this article is to prohibit marijuana -related uses and activities in order to promote the health, safety, morals and general welfare of the residents and the businesses within the city by maintaining local control over the ability to authorize and regulate marijuana -related businesses, including cultivation. Except as preempted by state law, or as specifically authorized by Chapter VI of Title 9, Chapter IX and Articles 20 and 21 of this Title, this prohibition includes all marijuana related uses and activities, including but not limited to dispensing, cultivating, transporting, distributing, processing, delivering, manufacturing, labeling, testing, and/or selling, whether for recreational, medical, or any other use. Sec. 13-200.85. - Applicability. (a) Nothing in this article is intended, nor shall it be construed, to burden any defense to criminal prosecution under the Compassionate Use Act of 1996. (b) All the provisions of this article shall apply to all property, public and private, within the city. (c) All the provisions of this article shall apply indoors and outdoors. Sec. 13-200.86. - Definitions. The following definitions apply to this article: Person shall mean any person, firm, corporation, association, club, society, or other organization. The term person shall include any owner, manager, proprietor, employee, volunteer and/or salesperson. Private residence shall mean a house, an apartment unit, a mobile home, or other similar lawfully existing dwelling unit as set forth in Health & Safety Code section 11362.2(b)(5). Unless otherwise defined herein, the terms used in this article shall have the meaning 9 ascribed to them in Title 9, Chapter VI of this code. Sec. 13-200.87. - Cultivation of marijuana prohibited. (a) Marijuana and/or medical marijuana cultivation by any person, including primary caregivers, qualified patients and dispensaries, is prohibited in all zone districts within the City of Costa Mesa except as provided in subsection b. (b) The prohibition set forth in subsection a. shall not apply to indoor cultivation of up to six plants, as authorized by state law solely for personal recreational use or personal medical marijuana use that occurs within a private residence occupied exclusively by natural persons age 21 or older or inside a fully enclosed and secure lawfully existing accessory structure to a private residence located upon the grounds of a private residence and that is conducted in full compliance with Health and Safety Code section 11382.2. Sec. 13-200.88. - Declaration of public nuisance. Any use, structure, or property that is altered, enlarged, erected, established, maintained, moved, or operated contrary to the provisions of this article, is hereby declared to be unlawful and a public nuisance and may be abated by the city through civil and/or administrative proceedings by means of a restraining order, preliminary or permanent injunction, or in any other manner provided by law for the abatement of such nuisances. Sec. 13-200.89. - Violations. Violations of this article shall be punishable pursuant to the provisions of section 13-16. SECTION 6. Severability. If any provision of this ordinance or the application thereof to any person or circumstance is held invalid, the remainder of the ordinance and the application of such provision to other persons or circumstances shall not be affected thereby. SECTION 7. Effective Date. This Ordinance shall become effective XX. SECTION 8. The City Clerk shall certify the adoption of this Ordinance and shall cause the same to be posted or published in the manner as required by law. APPROVED AND ADOPTED on this day of January, 2017. Katrina Foley, Mayor —s— ATTEST: Brenda Green City Clerk I, BRENDA GREEN, CITY CLERK of the City of Costa Mesa, California, do hereby certify that the foregoing urgency ordinance was regularly introduced and adopted by the City Council of the City of Costa Mesa, California, at a regular meeting thereof held on the day of , 2017, by the following vote of the City Council: AYES: NOES: ABSENT: ABSTAIN: APPROVED AS TO FORM: Tom Duarte City Attorney ATTACHMENT 2 CITY COUNCIL AGENDA REPORT MEETING DATE: JANUARY 3, 2017 ITEM NUMBER: SUBJECT: AN URGENCY ORDINANCE TO ADOPT CODE AMENDMENT CO -XX -XX: AN AMENDMENT TO TITLE 13 OF THE COSTA MESA MUNICIPAL CODE RELATED TO CULTIVATION OF MARIJUANA AND/OR MEDICAL MARIJUANA DATE: DECEMBER 16, 2016 FROM: CITY ATTORNEYS OFFICE AND DEVELOPMENT SERVICES DEPARTMENT PRESENTATION BY: JAY TREVINO, DEVELOPMENT SERVICES DEPARTMENT TARQUIN PREZIOSI, ASSISTANT CITY ATTORNEY FOR FURTHER INFORMATION CONTACT: JAY TREVINO, (714) 754-5278 jay.trevi no(akostamesaca.gov SUMMARY On November 8, 2016, voters approved two initiatives related to marijuana that effect the City of Costa Mesa: Costa Mesa Measure X and State Proposition 64, the "Control, Regulate and Tax Adult Use of Marijuana Act" ("Prop 64" or "AUMA"). This report focuses on Proposition 64. AUMA allows adults 21 years and over to use, possess, and cultivate limited amounts of marijuana; it will also allow sales and other activities by January 1, 2018. Staff recommends adoption of an urgency ordinance prohibiting all marijuana uses that are or will be authorized by Proposition 64, except as preempted by state law, or as authorized by Measure X. RECOMMENDATION Introduce and adopt Urgency Ordinance XX to adopt Code Amendment CO -XX amending Costa Mesa Municipal Code Title 13, Article 20 of Chapter IX, Special Land Use Regulations. BACKGROUND AUMA has two primary components: (1) a right to non-medical/recreational marijuana use, possession, and cultivation, and (2) a state licensing and taxing scheme for non- medical/recreational marijuana businesses similar to those licensed by the state under the Medical Marijuana Regulation and Safety Act ("MMRSA"). AUMA also reduces criminal penalties for specified marijuana crimes, including possession and use of marijuana by minors. Non-medical/Recreational Use and Cultivation of Marijuana AUMA decriminalizes the possession, processing, transporting, purchasing, obtaining or giving away of not more than 28.5 grams of marijuana or 8 grams of marijuana in the form of concentrated by persons 21 years of age or older.' It also permits persons 21 year and older to cultivate up to 6 plants indoors or outdoors on the grounds of a private residence. Health and Safety Code section 11362.2 limits the total number of plants grown at any one single private residence (which is defined to include a house, apartment unit, mobile home, or other similar dwelling) to no more than six (6) plants. AUMA specifically prohibits cities and counties from completely prohibiting indoor cultivation for non-medical use, but allows cities and counties to completely ban cultivation outdoors upon the grounds of a private residence.2 AUMA allows cities and counties to enact and enforce reasonable regulations to regulate the indoor cultivation of marijuana for non-medical use.3 However, the parameters of what type of regulation is allowed by local entities is not set forth in AUMA. AUMA prohibits smoking or ingesting marijuana or marijuana products in the following places: • In any public place (unless in inside a business that is authorized by state and local law to allow use of marijuana on its premises); • In places where smoking tobacco is prohibited; • Within 1,000 feet of a school, day care center, or youth center while children are present, except in or upon the grounds of a private residence or inside a business that is authorized by state and local law to allow the use of marijuana on its premises; and • While driving in, operating, or riding in a motor vehicle, boat, vessel, aircraft or other vehicle.' AUMA also allows cities, counties and public employers to maintain a drug and alcohol free workplace and to have policies prohibiting the use of marijuana by employees and prospective employees.5 Non -Medical Marijuana Businesses The second primary component of AUMA is a newly established state licensing and regulation scheme for commercial non-medical marijuana businesses, similar to the categories of businesses permitted under MMRSA.6 AUMA renames the Bureau of Medical Marijuana Regulation the Bureau of Marijuana Control and charges them with 1 Health and Safety Code § 11362.1. 2 Health & Safety Code § 11362.2(b)(2) and (3). 3 Health & Safety Code § 11362.2(b)(1). 4 Health & Safety Code § 11362.3. 5 Health & Safety Code § 11362.45. 6 Business & Professions Code § 26000 et seq. issuing licenses to marijuana -related retail, manufacturing, distribution, transport, dispensary and delivery businesses catering to recreational users in addition to licensing medical marijuana businesses.' The Department of Food and Agriculture is tasked with issuing licenses to non-medical marijuana cultivation businesses. AUMA requires all state licensing authorities to issue licenses by January 1, 2018.$ AUMA permits local jurisdictions to adopt and enforce local ordinances to regulate recreational marijuana businesses, including local zoning and land use requirements, business license requirements, and requirements related to reducing exposure to second hand smoke. AUMA also expressly authorizes cities and counties to completely prohibit the establishment or operation of businesses within their jurisdictions.9 AUMA imposes a 15% state tax on the retail sales of non-medical marijuana. Funds from the tax will be used in part to fund research on the health effects of marijuana. AUMA does not prohibit local taxes of non-medical marijuana.10 Costa Mesa Municipal Code The Costa Mesa Municipal Code ("CMMC") currently prohibits medical and recreational marijuana cultivation, both indoors or outdoors, in all areas in the City." The CMMC prohibits the operation of medical marijuana dispensaries.12 With the adoption of Measure X, the City established a specific area within which medical marijuana distributors, manufacturers, processors, research and development laboratories, testing laboratories and transporters may be located. The area within which these businesses may be located include the Manufacturing Park (MP) and Planned Development Industrial (PDI) zones located north of South Coast Drive and west of Harbor Boulevard, excluding any portion of the South Coast Collection. While marijuana possession, use and limited cultivation is now allowed under state law, staff recommends that the City temporarily prohibit indoor cultivation under the CMMC except as allowed by state law, and all outdoor cultivation, pending further analysis of regulatory options and approaches. Further, while certain marijuana related businesses are allowed under Measure X, staff believes that it is in the City's best interest to prohibit all other marijuana related businesses pending further analysis of regulatory options, approaches and tax implications. ANALYSIS The proposed amendment to the Zoning Code is intended to preserve the status quo and prohibit all marijuana related uses within the City to the extent allowable under state law. The proposed amendment also resolves any potential conflict between the new provisions of the Health and Safety Code and the CMMC regarding cultivation. The 7 Business & Professions Code § 26010. 8 Business & Professions Code § 26012(c). 9 Business & Professions Code § 26200. 10 Proposed Revenue & Taxation Code § 34021 and 34021.5. 11 CMMC 13.200.87. 12 CMMC 13-30 table 31 (a). —121— proposed amendment does not conflict with the provisions of Measure X. Government Code §65858 provides that urgency ordinances be adopted for a period of 45 days. An urgency ordinance can later be extended should the City Council determine an extension is warranted. Staff will begin the study of marijuana cultivation and marijuana related businesses right away and will report to the City Council at the February 7, 2016 meeting as to whether an extension of the urgency ordinance may be necessary. PUBLIC NOTICE Code requires publication of a display Ad in the local newspaper (Daily Pilot) for Title 13 Code Amendments. At the time of publication of this report, no public comments have been received. Any correspondence will be forwarded to the City Council under separate cover. ENVIRONMENTAL DETERMINATION The project has been reviewed for compliance with the California Environmental Quality Act (CEQA), the CEQA guidelines, and the City's environmental procedures, and has been found to be exempt pursuant to Section 15061(b)(3) (general rule) of the CEQA Guidelines, in that it can be seen with certainty that there is no possibility that the proposed amendment to the Zoning Code will have a significant effect on the environment. ALTERNATIVES CONSIDERED: The City Council could forego adoption of the urgency ordinance, and direct staff to study the issues and return with appropriate recommendations. This alternative would allow marijuana cultivation and marijuana businesses to proceed pending the future adoption of any regulations as determined by the City Council. FISCAL REVIEW: The adoption of this urgency ordinance will not have any fiscal impact on the City's budget. LEGAL REVIEW The draft ordinance has been reviewed by the City Attorney's Office and approved as to form. CONCLUSION: If the City Council adopts this urgency ordinance only limited marijuana cultivation, as allowed under state law, and marijuana related businesses allowed under Measure X, will be permitted. These temporary restrictions will provide time for the City to study these issues and for the City Council to enact long-term policies and regulations. will be permitted. These temporary restrictions will provide time for the City to study these issues and for the City Council to enact long-term policies and regulations. JAYJA. TREVINO, AICP DEVELOPMENT SERVICES DIRECTOR / CONSULTANT Attachments: 1. Urgency Ordinance �� ATTACHMENT 1 ORDINANCE NO. AN URGENCY ORDINANCE OF THE CITY COUNCIL OF THE CITY OF COST MESA AMENDING AND RENAMING ARTICLE 20 (MARIJUANA AND/OR MEDICAL MARIJUANA USES AND ACTIVITIES) OF CHAPTER IX (SPECIAL LAND USE REGULATIONS) OF TITLE 13 (PLANNING ZONING AND DEVELOPMENT), SECTIONS 13-20084, 13-200.86 AND 13-200.87, RELATING TO CULTIVATION OF MARIJUANA AND CERTAIN MARIJUANA RELATED USES. WHEREAS, the City of Costa Mesa, pursuant to its police power, may adopt regulations to protect the health, safety and welfare of the public, Cal. Const. art. XI, § 7, Cal. Govt. Code § 37100, and thereby is authorized to declare what use and condition constitutes a public nuisance; and WHEREAS, Government Code Section 38771 authorizes the City through its legislative body to declare actions and activities that constitute a public nuisance; and WHEREAS, in 1970, Congress enacted the Controlled Substances Act (21 U.S.C. Section 801 et seq.) which, among other things, makes it illegal to import, manufacture, distribute, possess, or use marijuana for any purpose in the United States and further provides criminal penalties for marijuana possession, cultivation and distribution; and WHEREAS, the People of the State of California have enacted Proposition 215, the Compassionate Use Act of 1996 (codified at Health and Safety Code Section 11362.5 et seq.) (the "CUA"), which exempts qualified patients and their primary caregivers from criminal prosecution under enumerated Health and Safety Code sections for use of marijuana for medical purposes; and WHEREAS, the California Legislature enacted Senate Bill 420 in 2003, the Medical Marijuana Program Act (codified at Health and Safety Code Section 11362.7 et seq.) (the "MMPA"), as amended, which created a state-wide identification card scheme for qualified patients and primary caregivers; and WHEREAS, on October 11, 2015, the Governor signed into law Senate Bill 643, Assembly Bill 266, and Assembly Bill 243, collectively referred to as the Medical Marijuana Regulation and Safety Act ("MMRSA"), effective January 1, 2016, which established a state licensing system for medical marijuana cultivation, manufacturing, delivery, and dispensing, regulating these activities with licensing requirements and regulations that are only applicable if cities and counties also permit marijuana cultivation, manufacturing, dispensing, and delivery within their jurisdictions. Under the MMRSA, cities and counties may continue to regulate and/or prohibit medical marijuana cultivation, manufacturing, dispensing, and delivery, consistent with their respective police powers, in which case the new law would not allow or permit these activities within the cities and counties where such activities are not otherwise permitted; and —15— WHEREAS, on February 3, 2016, Assembly Bill 21 (Wood) was signed by the Governor, amending provisions of MMRSA pertaining to cultivation licenses by eliminating a March 1, 2016 deadline for local jurisdictions for the promulgation of cultivation regulations or cultivation bans other local jurisdictions would lose the ability to regulate to the State. Assembly Bill 21 also modified language in Health & Safety Code section 11362.777(g), which pertained to exemptions from licensing requirements for qualified patients and caregivers. The prior language, which specifically stated that local governments retained the right to prohibit cultivation without exception, was revised to state: "Exemption from the requirements of this section does not limit or prevent a city, county, or city and county from exercising its police authority under Section 7 of Article XI of the California Constitution."; and WHEREAS, notwithstanding the CUA, the MMPA, and the MMRSA as amended, marijuana remains a schedule I substance pursuant to California Health & Safety Code § 11054 (d) (13); and WHEREAS, marijuana also remains a schedule I substance pursuant to federal law, 21 U.S.C. § 812, Schedule 1 (c) (10), and federal law does not provide for any medical use defense or exception (Gonzales v. Raich, 545 U.S. 1 (2005); United States v. Oakland Cannabis Buyers' Coop., 532 U.S. 483 (2001)); and WHEREAS, the California Supreme Court has established that neither the CUA nor the MMPA preempt local regulation in the case of City of Riverside v. Inland Empire Patients Health and Wellness Center, Inc., 56 Cal.4th 729 (2013); and WHEREAS, the MMRSA expressly allows cities and counties to ban marijuana cultivation consistent with current state law including Mara[ v. City of Live Oak, 242 Cal.App.4th 940 (2013); and WHEREAS, on November 8, 2016, the electorate of the State of California voted on Proposition 64 ("Prop 64"), and approved the Adult Use of Marijuana Act ("AUMA"), to be codified in California Health and Safety Code at various sections and in California Business and Professions Code at various sections. The AUMA allows adults 21 and over to use, possess, and cultivate limited amounts of marijuana, establishes a state licensing and regulatory scheme for marijuana businesses serving the recreational market; and will expressly allow local jurisdictions to prohibit outdoor cultivation of marijuana for personal use, to regulate indoor cultivation of marijuana for personal use, and to prohibit all non-medical and recreational marijuana businesses from locating and operating within their jurisdictions; and WHEREAS, on November 8, 2016 the electorate of the City of Costa Mesa voted on Measure X, and approved the Costa Mesa Medical Marijuana Measure ("CMMMM"). The CMMMM sets forth the specific area in the City within which medical marijuana distributors, manufacturers, processors, research and development laboratories, testing laboratories and transporters can be located; provides for City regulation of these medical marijuana businesses in a manner consistent with the statewide regulations to be adopted by the California Department of Consumer Affairs - Bureau of Medical Marijuana Regulations ("BMMR") and other state agencies, including the departments of Food and Agriculture and Public Health, pursuant to MMRSA; reaffirms the existing ban on dispensaries and cultivation within the City; and imposes a gross -1�- receipts tax on all medical marijuana distributors, manufacturers, processors, testing laboratories, transporters, and research and development laboratories, as well as any other marijuana or cannabis business at a rate of 6% of gross receipts; WHEREAS, the City Council of the City of Costa Mesa finds that it is in the interest of the health, safety and welfare of the City to make explicit that, to the extent allowable under state law, all marijuana related use and activity of any kind as set forth herein, whether medical, recreational, or otherwise, unless specifically allowed by the CMMMM, is prohibited everywhere in the City and is a public nuisance per se, consistent with State law, and WHEREAS, the City Council of the City of Costa Mesa finds and clarifies this prohibition does not apply to those uses that are authorized by the CMMMM, as set forth in Title 9, Chapter VI "Medical Marijuana Business Permits"; and Title 13, Chapter IX, Article 21 ,'medical marijuana distributing, manufacturing, research and development and testing" and Chapter IV, "Citywide Land Use Matrix", Table 13-30, of the Costa Mesa Municipal Code; and WHEREAS, the City Council of the City of Costa Mesa finds and clarifies this prohibition does not prohibit qualified patients and persons with identification cards to cultivate indoors, possess, and use marijuana for their own personal medical purposes only, as permitted by state law; but that nothing herein shall be construed to authorize qualified patients to engage in the collective cultivation of marijuana as described by Health and Safety Code section 11362.775, nor are they permitted to cultivate marijuana above limits established by State law and guidelines for their own personal use; and WHEREAS, the City of Costa Mesa, pursuant to the provisions of the California Environmental Quality Act ("CEQA") (California Public Resources Code Sections 21000 et seq.) and State CEQA guidelines (Sections 15000 et seq.) has determined that the Ordinance is exempt pursuant to Section 15061(b)(3) of Title 14 the California Code of Regulations; and WHEREAS, the City Council finds that the provisions of this Ordinance are consistent with the City of Costa Mesa's General Plan; and WHEREAS, the City Council recognizes that there is a need to enact the restrictions contained in this ordinance immediately to protect the public health and safety; and WHEREAS, all legal prerequisites prior to the adoption of this ordinance have occurred. THE COSTA MESA CITY COUNCIL DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. The City Council finds that this Ordinance is necessary as an emergency measure for preserving the public peace, health and safety. SECTION 2. The City Council finds that all the facts, findings, and conclusions set forth above in this Ordinance are true and correct. SECTION 4. Except as provided herein, the remaining provisions of Title 13, Chapter IX, Article 20 of the Costa Mesa Municipal Code shall remain in full force and effect. SECTION 5. Title 13, Chapter IX, Article 20, Sections 13-20084, 13-200.86 and 13- 200.87 of the Costa Mesa Municipal Code are hereby amended to read as follows: ARTICLE 20. - MARIJUANA AND/OR MEDICAL MARIJUANA USES AND ACTIVITIES Sec. 13-200.84. - Purpose. The purpose of this article is to prohibit marijuana -related uses and activities in order to promote the health, safety, morals and general welfare of the residents and the businesses within the city by maintaining local control over the ability to authorize and regulate marijuana -related businesses, including cultivation. Except as preempted by state law, or as specifically authorized by Chapter VI of Title 9, Chapter IX and Articles 20 and 21 of this Title, this prohibition includes all marijuana related uses and activities, including but not limited to dispensing, cultivating, transporting, distributing, processing, delivering, manufacturing, labeling, testing, and/or selling, whether for recreational, medical, or any other use. Sec. 13-200.85. - Applicability. (a) Nothing in this article is intended, nor shall it be construed, to burden any defense to criminal prosecution under the Compassionate Use Act of 1996. (b) All the provisions of this article shall apply to all property, public and private, within the city. (c) All the provisions of this article shall apply indoors and outdoors. Sec. 13-200.86. - Definitions. The following definitions apply to this article: Person shall mean any person, firm, corporation, association, club, society, or other organization. The term person shall include any owner, manager, proprietor, employee, volunteer and/or salesperson. Private residence shall mean a house, an apartment unit, a mobile home, or other similar lawfully existing dwelling unit as set forth in Health & Safety Code section 11362.2(b)(5). Unless otherwise defined herein, the terms used in this article shall have the meaning ascribed to them in Title 9, Chapter VI of this code. Sec. 13-200.87. - Cultivation of marijuana prohibited. (a) Marijuana and/or medical marijuana cultivation by any person, including primary caregivers, qualified patients and dispensaries, is prohibited in all zone districts within the City of Costa Mesa except as provided in subsection b. (b) The prohibition set forth in subsection a. shall not apply to indoor cultivation of up to six plants, as authorized by state law solely for personal recreational use or personal medical marijuana use that occurs within a private residence occupied exclusively by natural persons age 21 or older or inside a fully enclosed and secure lawfully existing accessory structure to a private residence located upon the grounds of a private residence and that is conducted in full compliance with Health and Safety Code section 11382.2. Sec. 13-200.88. - Declaration of public nuisance. Any use, structure, or property that is altered, enlarged, erected, established, maintained, moved, or operated contrary to the provisions of this article, is hereby declared to be unlawful and a public nuisance and may be abated by the city through civil and/or administrative proceedings by means of a restraining order, preliminary or permanent injunction, or in any other manner provided by law for the abatement of such nuisances. Sec. 13-200.89. - Violations. Violations of this article shall be punishable pursuant to the provisions of section 13-16. SECTION 6. Severability. If any provision of this ordinance or the application thereof to any person or circumstance is held invalid, the remainder of the ordinance and the application of such provision to other persons or circumstances shall not be affected thereby. SECTION 7. Effective Date. This Ordinance shall become effective XX. SECTION 8. The City Clerk shall certify the adoption of this Ordinance and shall cause the same to be posted or published in the manner as required by law. APPROVED AND ADOPTED on this day of January, 2017. ATTEST: Brenda Green City Clerk Katrina Foley, Mayor I, BRENDA GREEN, CITY CLERK of the City of Costa Mesa, California, do hereby certify that the foregoing urgency ordinance was regularly introduced and adopted by the City Council of the City of Costa Mesa, California, at a regular meeting thereof held on the day of , 2017, by the following vote of the City Council: AYES: NOES: ABSENT: ABSTAIN: APPROVED AS TO FORM: Tom Duarte City Attorney 20- Report of the City Council: Extension of Urgency Ordinance 17-04 Executive Summary On November 8, 2016, voters approved two initiatives related to marijuana that effect the City of Costa Mesa: 1. Measure X: The City of Costa Mesa Medical Marijuana Measure, and 2. State Proposition 64: Control, Regulate and Tax Adult Use of Marijuana Act (Prop 64). On January 3, 2017, the City Council adopted a 45 -day interim ordinance as an urgency measure (the Urgency Ordinance) pursuant to Government Code section 65858 that prohibited all marijuana uses that are or will be authorized by Proposition 64, except as preempted by state law, or as authorized by Measure X. On February 7, 2017, the City Council adopted a 10 -month and 15 -day extension of the Urgency Ordinance. The approval for the Urgency Ordinance will expire on December 22, 2017 unless a third and final one-year extension is approved by the Council. Government Code section 65858(d) states, "Ten days prior to the expiration of that interim ordinance or any extension, the legislative body shall issue a written report describing the measures taken to alleviate the condition which led to the adoption of the ordinance." This report is intended to meet the requirement of Section 65858(d) and thus allow the Council to consider adoption of a 12 -month extension of the Urgency Ordinance. Background On November 8, 2016, voters approved two initiatives related to marijuana that affect the City of Costa Mesa: Costa Mesa Measure X and State Prop 64. Measure X amended the Cost Mesa Municipal Code (CMMC) to allow medical marijuana distributing, manufacturing, processing and transportation businesses, as well as research and development and testing laboratories to be located in one specific area of the City, provided such businesses obtained a Medical Marijuana Business Permit (MMBP), a conditional use permit and a business license. The measure also imposes a six percent annual gross receipts tax on all marijuana businesses. Prop 64 allows adults 21 years and over to use, possess, and cultivate limited amounts of marijuana; it will also allow sales and other activities after January 1, 2018. Prop 64 has two primary components: 1. A right to non-medical/recreational marijuana use, possession, and cultivation, and 2. A state licensing and taxing scheme for non-medical/recreational marijuana businesses similar to those licensed by the state under the Medical Marijuana Regulation and Safety Act (MMRSA). Report of the City Council: Extension of Urgency Ordinance 17-04 Prop 64 also reduces criminal penalties for specified marijuana crimes, including possession and use of marijuana by minors. State regulations for Prop 64 were being jointly prepared by three state agencies: 1. The Department of Consumer Affairs' Bureau of Cannabis Control 2. The Department of Public Health's Manufactured Cannabis Safety Branch, and 3. The Department of Food and Agriculture's CalCannabis Cultivation Licensing In late June, the State Legislature passed and the Governor signed into law the Medicinal and Adult -Use Cannabis Regulation and Safety Act (MAUCRSA), which creates one regulatory system for both medicinal and adult -use (recreational) cannabis. The same three cannabis licensing authorities are now in the process of drafting emergency regulations based on the new law for the commercial medicinal and adult - use (recreational) cannabis industries. The licensing authorities will use the emergency rulemaking process to establish the new regulations, followed by the formal rulemaking process. The emergency regulations are expected to be published in November. The implementation date for the issuance of commercial cannabis licenses remains the same: January 1, 2018. In the meantime, the Development Services Department continues to process all applications for MMBP and conditional use permits pursuant to Measure X. Urgency Ordinances An urgency ordinance requires a four-fifths vote of the Council for adoption and is in effect for 45 days. The Council may extend the interim ordinance for 10 months and 15 days and subsequently, extend the interim ordinance for one year. An extension also requires a four-fifths vote for approval. Not more than two extensions may be adopted. To date, only one extension of the urgency ordinance was approved by the Council. On January 3, 2017, the Council approved Urgency Ordinance 17-01 to adopt Code Amendment CO -16-06 to prohibit the cultivation of marijuana and/or medical marijuana for a 45 -day period. The urgency ordinance amended the CMMC to revise and re -name Title 13 Chapter IX Article 20, Marijuana and/or Medical Uses and Activities. The code amendment was necessary to revise the existing Zoning Code prohibition against all cultivation to be consistent with Proposition 64, and to otherwise expressly prohibit in the Zoning Code various other uses that will be allowed by Proposition 64 on January 1, 2018. The urgency ordinance did not conflict with the provisions of Measure X, and was drafted to harmonize the Zoning Code with the allowable uses and prohibitions in Title 9 as adopted by the voters. On February 7, the Council adopted Urgency Ordinance 17-04 to extend the Urgency Ordinance for a period of 10 months and 15 days. The extension expires on December 22, 2017. Report of the City Council: Extension of Urgency Ordinance 17-04 The Council has the option to approve a third and final extension for 12 months, which is recommended at this time. A one-year extension of the Urgency Ordinance will preserve the status quo by prohibiting marijuana related uses within the City to the extent allowable under state law. It also resolves any potential conflict between the new provisions of the Health & Safety Code and the CMMC regarding cultivation. Measures Taken to Alleviate the Conditions That Led to the Adoption of the Urgency Ordinance After the passage of Measure X in November 2016, a Task Force of staff from the City Manager's office, City Attorney's office, Development Services (Planning and Code Enforcement), Police Department, Fire Department and the Finance Department was convened and charged with establishing regulations to implement Measure X. The Measure X ballot measure required approval of a medical marijuana business permit, conditional use permit and City business license as necessary to operate a medical marijuana business. However, procedures did not exist that addressed the City's internal review process to ensure that each business applying for a MMBP was required to meet the same standards to operate in the City. Consultant resources were retained to provide an expertise on how other states and jurisdictions have implemented medical marijuana regulations. Each member had specific tasks assigned to ensure development of a comprehensive set of regulations to implement Measure X consistently for each application. Concurrently, the Task Force was awaiting the release of the State regulations to implement Prop 64. Once available, the Task Force would ensure that local Measure X regulations were consistent with the state regulations. In January, a draft set of City Administrative Regulations were presented to the Task Force to begin reviewing. At the same time, the Assistant City Attorney and the Development Services Director presented to the Council the first Urgency Ordinance to amend the CMMC to prohibit sale and cultivation of marijuana which was legalized with the approval of Prop 64 beginning in January 2018. The Ordinance was adopted almost a year prior to the implementation of Prop 64 to make clear the intentions of the City regarding the sale and cultivation of marijuana and to expressly prohibit marijuana businesses in conflict with Measure X. For the first six months of the year, the Task Force continued to meet on a bi-weekly basis to review and revise the administrative regulations, hold stakeholder meetings, implement a Measure X and Prop 64 FAQ page on the City's website, and establish a medical marijuana business permit and development review process. On May 23, 2017, the City Manager approved the Administrative Regulations for the Implementation of Measure X. The Regulations identify the following four permits/licenses as being required to be submitted and approved in the sequence listed below prior to operation of a distribution, manufacturing, processing, research and development and/or testing Report of the City Council: Extension of Urgency Ordinance 17-04 facility. Within each permit/license, there are additional regulations, procedures and requirements an applicant must comply with prior to moving to the next step in the process to ensure the business is operated in a safe and secure manner and with minimal impact on adjacent businesses. Additionally, financial reporting requirement are included to ensure the City's ability to collect the annual sales tax required of each business. Finally, regulations are included that address how to deal with changes to a business ownership and/or renewal of the MMBP licenses after two years of operation. 1. Medical Marijuana Business Permit Application A Medical Marijuana Business Permit application shall be submitted to and approved by the Community Improvement Division, subject to the terms of Chapter VI of Title 9 of the CMMC. a. The applicant must complete the process to obtain the Medical Marijuana Business Permit from the Community Improvement Division, subject to the terms of Chapter VI of Title 9 of the CMMC, pursuant to II.A., below. Upon a completed submission and a successful background check for the applicant, the City will issue a notification that the application is complete for purposes of processing the CUP application. b. The Medical Marijuana Business Permit cannot be issued until the Conditional Use Permit (CUP), as addressed below, has been approved by the Planning Commission (or City Council on appeal), all conditions of approval have been satisfied, and all other requirements of the CMMC have been met. c. Following approval of the CUP, the City may then complete the processing of and issue the Medical Marijuana Business Permit to the operator for that location. 2. Conditional Use Permit Prior to filing a Planning Application for a conditional use permit (CUP), the applicant must have received notification that their Medical Marijuana Business Permit application is complete. Submittal and approval of a CUP is the second step in the four -step approval process to own and/or operate a medical marijuana business in Costa Mesa. A CUP application and a Supplemental Application: CUP for Medical Marijuana Business shall be submitted to the Planning Division and approved by the Planning Commission at a public hearing, subject to the provisions of Title 13, Chapter IX, Article 21 of the CMMC. Table 13-30 of Chapter IV (Citywide Land Use Matrix) of Title 13 (Planning, Zoning and Development) establishes the Report of the City Council: Extension of Urgency Ordinance 17-04 zoning districts within the City where a medical marijuana business is conditionally permitted. 3. Medical Mariivana Business Permit Issuance Following approval of the CUP, the City will make a final determination regarding the Medical Marijuana Business Permit. The permit issuance is the third step in the four-part approval process. A Medical Marijuana Business Permit must be issued prior to the submittal of the business license application addressed below. a. A Medical Marijuana Business Permit shall be valid for two (2) years from the date of issue, unless otherwise suspended or revoked, and shall be renewed bi-annually thereafter, provided the permittee is in compliance with the provisions of this chapter. 4. City of Costa Mesa Business License Prior to filing an application for a business license, the applicant must have received approval of the CUP and the Medical Marijuana Business Permit. A Business License shall be submitted to and approved by the Finance Department Treasury Management pursuant to Chapter I of Title 9 of the CMMC. This is the last step in the four -step approval process to own and/or operate a medical marijuana business in Costa Mesa. On June 1, the City began accepting applications for Medical Marijuana Business Permits. Application are available online and can be submitted to the Community Improvement Division by appointment. To date, ten applications have been submitted and four of those submittals have received a "notices to proceed" which is required prior to filing a conditional use permit application. Two applications for conditional use permits. have been filed as of November 1. On June 28, 2017, Governor Brown signed California Senate Bill 94, which effectively merged two existing bills—the Medical Cannabis Regulation and Safety Act and the Adult Use of Marijuana Act —into one streamlined bill titled the Medicinal and Adult -Use Cannabis Regulation and Safety Act (MAUCRSA). It is expected that one comprehensive state law will provide for a more unified regulatory process governing both medicinal and adult -use cannabis. This bill creates one regulatory system for both medicinal and adult -use (recreational) cannabis. The three cannabis licensing authorities are now in the process of drafting emergency regulations based on the new law for the commercial medicinal and adult -use (recreational) cannabis industries. The licensing authorities will use the emergency rulemaking process to establish the new regulations, followed by the formal rulemaking process. The State's expects the emergency regulations to be published in November 2017. No regulations have been released by the state as of the preparation of this report. However, the implementation date for the issuance of commercial cannabis licenses still remains January 1, 2018. In the meantime, the Development Services Report of the City Council: Extension of Urgency Ordinance 17-04 Department continues to process all applications for medical marijuana business permits and conditional use permits pursuant to Measure X. Once the state regulations are released, staff will begin a review process to assess what, if any, inconsistencies exist between the state regulations and our local MMBP process and/or what, if any, additions or deletions are needed to our local requirements. Until the state regulations are released, the recommendation is to extend the Urgency Ordinance for 12 months to provide time for the City to study these issues and to allow adequate time for Planning Commission review and City Council approval of long-term policies and regulations. If the City Council should forego extension of the Urgency Ordinance, Article 20 of Chapter IX of Title 13 (the Zoning Code) would become inconsistent with Proposition 64 regarding personal marijuana cultivation, and potentially, other uses authorized thereunder. Staff will return to the Council prior to the end date of the extension, December 22, 2018, with final recommendation for a code amendment to address amendments related to Prop 64 and Measure X.