1. Municipal Code Amendments: Marijuana Regulations
City Council
November 6, 2017

2. Overview
City staff has been evaluating existing local and state laws regarding commercial and medicinal marijuana related businesses with commissions, committees, and the public for over a year
Regular bi-weekly meetings – Under City Manager’s direction, an inter-departmental task force represented by:
City Manager’s Office, City Attorney’s Office, City Clerk’s Office, Police, Health, Finance, and Planning
Staff has been developing a potential framework for a comprehensive regulatory scheme to permit, regulate, and tax marijuana related businesses

3. Overview
Since the State is expected to begin issuing licenses for marijuana related businesses in January 2018, as outlined in the staff report, the unanimous recommendation from the task force, the Planning Commission, and Ed Tech is to clarify and strengthen the City’s current prohibition on all marijuana related activities
At some time in the future, after we are able to evaluate best practices from other jurisdictions regarding the implementation of the new state laws, the City could comprehensively regulate and tax marijuana businesses

4. Background
Pasadena currently prohibits all commercial marijuana activity under PMC Title 8 and Title 17
State Proposition 64 – Adult Use of Marijuana Act (“AUMA”)
Legalizes the nonmedical or recreational use of marijuana by adults aged 21+ and the personal cultivation of up to 6 plants
Creates a state regulatory and licensing system for the commercial cultivation, manufacturing, testing, and distribution of nonmedical marijuana
Allows local governments to prohibit or regulate and license commercial nonmedical marijuana activities
Took effect November 9, 2016

5. Timeline Ed Tech – October 19, 2016 Public Outreach – April 2017
Introduction to the regulation of recreational marijuana in the context of Prop. 64
Public Outreach – April 2017
Three community workshops on AUMA and possible regulations
Planning Commission – May 24, 2017
Study session to seek guidance and feedback

6. Timeline Ed Tech – August 23, 2017
Considered options and regulations and provided policy direction
Planning Commission – September 27, 2017
Presented with recommendation to:
Prohibit personal outdoor cultivation and commercial marijuana activities
Allow the delivery of marijuana and marijuana products into the City

7. Action Required
State agencies will start to issue licenses for retail sale, commercial cultivation, etc. of nonmedical marijuana beginning January 1, 2018
Unless Pasadena adopts a local land use ordinance that expressly clarifies and re-states its position, the State may be obliged to issue licenses within the city limits
If city regulations are in place before a business applies for a state license, the state license will either not be issued or will be subject to local regulations

8. Action Required Important issues for the City to consider:
Personal outdoor cultivation of marijuana
Commercial marijuana uses
Taxation of commercial sales and cultivation
Status of current illegal marijuana operators

9. History of Marijuana Regulations
1996 – Prop. 215, Compassionate Use Act, exempted patients and primary caregivers from criminal liability under state law for possession and cultivation of marijuana for medical purposes
2003 – SB 420, Medical Marijuana Program Act, clarified Prop. 215 and extended legal protections to “collectives” cultivating marijuana for medical purposes
2005 – City banned marijuana dispensaries under Ordinance No. 7018
2013 – California Supreme Court confirmed a local jurisdiction’s ability to prohibit medical marijuana dispensaries
2015 – Medical Cannabis Regulation and Safety Act (“MCRSA”) further clarified and established statewide regulations re: the use and cultivation of medical marijuana (effective Jan. 1, 2016)
2016 – City Council adopted Ordinance No confirming that marijuana cultivation is a prohibited use in the City and that delivery services cannot originate from within Pasadena

10. History of Marijuana Regulations
2016 – Prop. 64, Control, Regulate and Tax Adult Use of Marijuana Act (“AUMA”), legalized the recreational use of nonmedical marijuana for adults aged 21+
June 2017 – SB 94, Medicinal and Adult-Use Cannabis Regulation and Safety Act, merged medical and nonmedical marijuana/cannabis regulations into a single regulatory scheme

11. Key Differences: MCRSA & AUMA/SB 94
Medical Cannabis Regulation & Safety Act (MCRSA)
Adult Use of Marijuana Act (AUMA) / SB 94
Focus
Regulates medical marijuana
Regulates nonmedical/recreational marijuana
Taxation
Authorizes counties to impose excise taxes
Exempts medical marijuana from state/local sales tax
Imposes state taxes on purchase and cultivation of marijuana
Local taxation is not preempted, except for sales tax (medical cannabis)
Local Regulations
Local governments may allow, regulate, or prohibit commercial marijuana businesses within their jurisdictions
This should be reflected in an ordinance that contains express language
Personal Cultivation
Does not alter local authority to prohibit all personal cultivation
Local government can “reasonably” regulate, but cannot ban indoor cultivation for personal use (6 plants)
Local government may still regulate or prohibit commercial cultivation

12. Personal Use and Cultivation
AUMA/SB 94 allows personal cultivation of up to 6 marijuana plants per residence
Local governments may “reasonably” regulate but not prohibit personal indoor cultivation
Local governments may regulate or prohibit personal outdoor cultivation
Given the accessibility of marijuana grown outdoors, there may be risks to public safety, health, and welfare associated with outdoor cultivation, including the potential for theft, increased youth exposure to marijuana, and odor

13. Personal Use and Cultivation
Recommendation:
It is recommended that personal outdoor cultivation be prohibited to minimize the potential negative impacts from marijuana cultivation in residential areas, including the potential for crime, youth exposure, and odor.
It is also recommended that reasonable regulations be applied to indoor cultivation such as prohibiting in locations designated for vehicle parking.

14. Personal Use and Cultivation
Indoor cultivation regulations:
Up to 6 living plants per single private residence
Permitted only within fully enclosed and secure structures inaccessible to minors and shall not be visible from a public right-of-way
Must comply with Building Code; lighting not to exceed 1,000 watts per light; use of gas products prohibited; must have proper ventilation and shall not create a humidity or mold problem
Cultivation shall not be conducted in a manner that constitutes a public nuisance (e.g., light, glare, heat, noise, odor, or vibration that interferes with the reasonable enjoyment of life or property)
Shall not displace required off street parking
Accessory structures must comply with setback requirements

15. Personal Use and Cultivation

16. Commercial Uses
Pasadena has historically prohibited medical marijuana dispensaries and commercial cultivation
Whether the City continues to prohibit or regulate commercial activities it must amend the Municipal Code to clarify and re-state its current ban so as to not rely on the current “permissive zoning” language
It is illegal for a commercial marijuana business to operate without a state license

17. Commercial Uses Types of marijuana-related commercial activities:
Cultivation – Producing and selling marijuana at wholesale to marijuana processors and other marijuana producers.
Lab Testing – A facility or analytical laboratory that measures the potency and safety of all cannabinoid infused products and medicines.
Manufacturing – Processing of marijuana into marijuana concentrates, useable marijuana, and marijuana-infused products, and selling of such products at wholesale to marijuana retailers.
Retail Sale (Distribution) – Selling of marijuana concentrates, useable marijuana, and marijuana-infused products in a retail outlet.
Delivery (Distribution) – Delivery of marijuana concentrates, useable marijuana, and marijuana-infused products from a retail outlet.

18. Commercial Uses
Main issues related to AUMA/SB 94 and local regulations include:
Impacts to the public health and safety of residents
Neighborhood crime and security
Odor control and neighborhood livability
Environmental impacts, including increased water consumption
Electricity consumption in the case of greenhouses and indoor grow operations
Inconsistencies between state legislation and federal drug regulations

19. Health Impacts
2017 report from the National Academy of Sciences found conclusive, substantial, or moderate scientific evidence for therapeutic effects of cannabis:
Treatment of chronic pain
Treatment of chemotherapy-induced nausea
Improving muscle spasms related to MS
Improving short-term sleep outcomes

20. Health Impacts
2017 report from the National Academy of Sciences presented substantial or moderate evidence for risks related to cannabis use:
Respiratory symptoms (bronchitis)
Increased risk of motor vehicle crashes
Lower birth weight for newborns of mothers who used cannabis while pregnant
Increased risk for progression to problem cannabis use
Increased risk of overdoes injuries among children
Impaired learning, memory, and attention
Increased mania in individuals with bipolar disorder
Small increased risk for depression
Increased risk of suicide
Increased risk of social anxiety disorder

21. Taxation AUMA/SB 94 and Taxation of Marijuana
Adds state excise tax of 15% on the purchase of marijuana at retail
Cultivation tax is $9.25 per dry weight ounce
Does not affect local governments’ authority to impose taxes
Local tax would be in addition to state tax
Medical marijuana is exempt from state/local sales tax
Marijuana cultivated for personal use is exempt from cultivation tax

22. Taxation
Should commercial uses be reconsidered and allowed, the City should consider a local excise tax on these products as commercial activity would be anticipated to have impacts on the community and without the collection of taxes on the use(s) the City would not have the resources to address those impacts.

23. Commercial Uses
Recommendation: With potential negative externalities in mind, it is recommended that the City expressly prohibit commercial marijuana activities until such time when it can better understand the impacts of such uses. This approach would allow staff and City policymakers an opportunity to observe the rollout of the state licensing and regulatory mechanism and learn from the best practices of other jurisdictions. As well, it would allow the electorate an opportunity to vote on a tax on the sale and cultivation of marijuana that could be collected to offset any negative impacts from commercial marijuana activities in the City.

24. Marijuana Deliveries
City currently prohibits deliveries to or from locations in Pasadena but cannot prohibit transportation through Pasadena
Delivery itself is not an activity readily regulated under the Zoning Code; it is typically an ancillary activity of a land use
Should the City involve itself in the ability of citizens to have the option to have marijuana delivered from legitimate retailers/dispensaries?
Recommendation: It is recommended that marijuana deliveries be permitted through and to locations within the City from commercial marijuana operations in other jurisdictions.

25. Consistency Items
Recommendation: It is recommended that the ban in Title 17 is to be clarified and strengthened to apply to every zone in the City, and to amend the tobacco prevention provisions in Title 8 as necessary to clearly apply to marijuana.
Recommendation: It is recommended that staff be given authority to amend any other provision of the PMC that may be necessary to effectuate the ban.

26. Resolution of Intent
City may in the future wish to allow and regulate commercial marijuana activity
If so, the City will want to impose criteria for eligibility for approval to engage in such business, including possibly disqualifying current illegal marijuana operators from any future city permitting
City may wish to put illegal operators on notice of its intent to disqualify illegal marijuana operators from any future City permitting process
Recommendation: It is recommended that the Resolution of Intent to Legislate Regarding Disqualifying Current Illegal Marijuana Operators be adopted.

27. Recommendation
Find that the action proposed herein is not a project subject to the California Environmental Quality Act (CEQA) in accordance with Section of CEQA and State CEQA Guidelines Sections (c)(2), (c)(3), and 15378, and that the proposed action is exempt from CEQA pursuant to State CEQA Guidelines Section 15061(b)(3), the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment;
Adopt the Findings of Consistency with the General Plan in Attachment A;

28. Recommendation
Approve the proposed Municipal Code Amendments as contained in this report, which are to: 1) amend Title 17 (Zoning Code) to prohibit citywide personal outdoor cultivation of marijuana and apply reasonable regulations on personal indoor cultivation, prohibit citywide commercial marijuana activities, including retail sales and cultivation for commercial purposes, and allow the delivery of marijuana and marijuana products into the City from commercial marijuana businesses in other jurisdictions; 2) amend Title 8 (Health and Safety) to amend the tobacco prevention provisions to include marijuana; and 3) any other portion of the Municipal Code as may be necessary to implement the recommendations set forth herein;

29. Recommendation
Adopt a resolution of intent to legislate regarding disqualifying current illegal marijuana operators from any future city permitting; and
Direct the City Attorney to prepare an ordinance within 60 days amending the Pasadena Municipal Code as presented in this report.

30. Next Steps Timeline for having regulations ready by January 1, 2018:
November 6th – City Council public hearing
November 6th – First Reading of ordinance
November – Second Reading of ordinance
November – Publication by City Clerk
December – Effective date

31. End of Presentation
City Council
November 6, 2017

32. Survey of Other Cities
Culver City – In the process of considering regulations; all commercial marijuana activity is currently prohibited
El Monte – Recently approved (1st reading) cultivation, manufacturing, and testing, but prohibited retailers and delivery services
Long Beach – Currently allows up to 32 medical marijuana dispensaries, as well as cultivation and manufacturing facilities
Los Angeles – In the process of considering regulations; dispensaries currently prohibited except grandfathered businesses
Sacramento – Allows cultivation, manufacturing, and testing, but prohibits dispensaries
Santa Ana – Currently allows up to 20 medical marijuana dispensaries, but prohibits recreational sales and commercial cultivation
Santa Monica – Allows 2 medical marijuana dispensaries and is considering regulations for other commercial marijuana businesses

33. Taxation
City “general” tax measures where revenues are used for unrestricted purposes can be held as part of either a regularly scheduled election or a special election
For a general tax, a simple majority approval (50% + 1) is required
However, if the proposed tax is not part of a regularly scheduled election, then a unanimous declaration of an “emergency” by the City Council is required for simple majority approval at a special election
Next special election that would coordinate with the County is in June 2018
Projected cost for a ballot measure on a regular or special election is estimated to range between $150,000 to $250,000