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Home My WebLink AboutCM Cannabis Regulation Special Study Session PPT,Vk R AFq WITH A City Council Study Session Cannabis Regulations January 17, 2017 Study Session Overview • Proposition 64 — Review of permitted and restricted activities — Local control options • Medical Cannabis and Safety Regulation Act — Governing and licensing structure — State agency roles — Taxation allocation • Voting Results • City operational considerations • Economics • Next steps What does proposition 64 allow? Proposition 64 • Legalizes adult (Adults 21 +) non-medical use; changes state law to legalize use for non-medical purposes; legalizes non-medical activities with restrictions. • Became Effective: November 9, 2016 • Commercial activities begin: January 1, 2018 • Personal Use: Effective immediately — Growing up to six plants for personal use in a private residence. yP� RAp Proposition 64: Restrictions Restrictions Examples of what is NOT allowed • Consumption: Smoking while driving a Smoking car, in any public place (other than a business licensed for onsite consumption), Possession or anywhere where tobacco is prohibited. Growing 0 Possession: May not be possessed on GivingAway the grounds of a school, day care center, Y or youth center while children are present. • Growing: Not allowed in an area that is unlocked or visible from a public place. • Minors: Providing cannabis to minors under the age of 21 for non-medical use is not allowed. Proposition 64: Permitted Consumption Possession Growing Examples of what IS allowed • Consuming in a private home or at a business licensed for on-site consumption. • Possession of up to 28.5 grams (about ounce) of cannabis and up to 8 grams concentrate. • Growing up to 6 plants. Proposition 64: Local Control Options • Cities can ban outdoor cultivation • Cities may prohibit or regulate a variety of land uses. • Cities may prohibit or regulate activities licensed by the State. • City may prohibit or regulate delivery, but cannot prohibit use of city streets. What does medical cannabis regulation safety act (MCRSA) cover? State Agency Roles • Department of Consumer Affairs (DCA): lead agency and houses the Bureau of Medical Cannabis Regulation (BMCR). • Bureau of Medical Cannabis Regulation: oversees the whole system and ensures smooth transition to the legal market. Oversees retailers, distributors and micro businesses. • Department of Food and Agriculture: oversees cultivation, environmental compliance and track and trace program. • Department of Public Health: oversees manufacturinq and testing, ensuring consumers receive a safe product. • Board of Equalization: collects the special tax. • Controller: allocates the revenue. IN Cultivation Transportation Distribution Testing Manufacturing Retail 11 License 1 License 1 License 1 License 2 License 2 License Categories Category Category Category Categories Categories DEPT. of Bureau of Bureau of DEPT. of DEPT. of Public Bureau of Food & Medical Medical Public Health Medical Agriculture _ Cannabis Cannabis Health Cannabis How will the taxation work? State: Taxation Prop 64 • State and local sales and use tax: applies to recreational cannabis not medicinal. • Existing local tax: does not impact existing local taxes imposed on medical cannabis products and activities. • Future local tax: Allows for the imposition of a new local tax on medical and recreational cannabis products and activities. • New state excise tax: 15% of retail price on recreational and medical cannabis. • New state excise tax on cultivation: $9.25 per ounce of dried flower and $2.75 per ounce of dried leaves. • State tax on medical cannabis: BOE issues special notice stating medical cannabis is exempt from state and local sales tax. How does the excise tax allocation work? State Excise Tax Revenue Allocation • State agency costs are paid first to cover regulatory costs not covered by license fees. • Annual allocation : Evaluations, Studies and Community Services: ■ Evaluation of Proposition 64: $10 million (2018-19 through 2028-29) ■ Create and adopt driving while impaired detection methods: $3 million (2018-19 through 2022-23) ■ Grants to provide community services: mental health and substance abuse use treatment and job placement, $10 million (2018-2019); increasing by $10 million until 2022-23 and $50 million each year thereafter. ■ Study on the risks and benefits of using cannabis for medicinal purposes: $2 million (beginning 2017-18) • Remaining annual allocations: ■ Youth programs: including substance use disorder education, prevention and treatment : 60%, Environmental Damage: clean up and prevention of illegal cannabis cultivation 20%, Programs to reduce DUI and Negative Public Safety Impacts on public health and safety resulting from Prop. 64: 20% yP� RAp How did our community vote? Voter Sentiment Proposition 64 — Marin County % Votes % 69.9% 7,4461960 56.9% 30.4% 5,6491024 43.1% Top 3 Supporting Counties • San Francisco County: • Santa Cruz County: • Marin County: Yes 74.3% No 25.7% Yes 69.9% No 30.1 % Yes 69.6% No 30.4% San Rafael Precincts Results: 68% approval rating ypa RA,,4 o cls w�rN n••`"e What are some city's operational considerations? Land Use • Definitions for uses, activities, etc. • Permissive zoning vs. explicit bans • Permitted zones • Public hearing and noticing requirements • Special findings • Separation requirements from sensitive uses such as parks, schools, and day care facilities • Hours of operations, parking requirements • Signage and on-site advertisements Public Safety Considerations • Outline and identify permit requirements • Exterior and interior security needs • Potential for robbery when shipping and receiving products • Hazmat response to fire from chemical and electrical dangers related to growers operations • Modified electrical equipment and contaminated water • Inspection and compliance 0 0 0 0 0 0 0 Cannabis Business Operational Considerations Background check for all operators and employees Track and Trace software to monitor all products and cash Security requirements for locations Odor control systems Proper labeling of all products Establishment of compliance reviews and financial audits for oversight Local inspections What kind of revenues could we anticipate? Economics Retail Dispensary: $2 M - $18 M Annual Sales (per dispensary) • Possible Sales Tax Revenue to City $20,000 - $180,000 (per dispensary) General Cannabis Business Tax • Could collect tax revenues from any or all of the six licensure categories: • Cultivation • Distribution • Transportation • Testing • Manufacturing • Retail • Possible Gross Receipt Tax Options: 5%, 10%, 15% yq�RAF4� �o rr .F H ✓!T H P Jobs and increased economic activity can come from a legal cannabis economy. Cannabis businesses need everything from architects and lawyers to builders and marketers. Increased commercial property valuations and lease rates also rise. Attorneys Building, HVAC, Architects Accountants plumbing, electrical, roofing, and paving contractors Cleaning supplies Agricultural Packaging Security services products related to production of edibles Real Estate brokers Transportation and Shelving and display Marketing services, trucking companies case manufacturers web design and and installers social media specialists Financial services Oils and chemicals Commercial kitchen Research facilities used in the produc- equipment tion of non -edible products Tech support Communication Testing laboratories Machinery and services equipment providers equipment Possible next steps? Options for Council Consideration • Personal use provisions: — Adopt reasonable regulations for indoor cultivation — Ban or adopt reasonable regulations for outdoor cultivation • Medical cannabis businesses: — Explicitly prohibit or allow some or all medical cannabis businesses, in accordance with MCRSA; or • Non-medical cannabis businesses: — Explicitly prohibit, or allow and regulate some or all non-medical cannabis businesses, in accordance with Prop 64 • Explore tax strategies for permitted medical and/or non- medical activities. yA-0 RAP4" rr .F H �✓!T H P � What we need feedback on tonight... Is Council interested in pursing any, or all parts of the cannabis industry? or Is Council interested in prohibiting this industry from operating within City limits?