HomeMy WebLinkAboutED San Rafael Cannabis Policy Update____________________________________________________________________________________
FOR CITY CLERK ONLY
Council Meeting: 03/04/2019
Disposition: Passed Ordinance 1968 to print & Resolution 14644
Agenda Item No: 6.a
Meeting Date: March 4, 2019
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: Economic Development
Prepared by: Danielle O’Leary,
Econ. Development Director
City Manager Approval: ______________
TOPIC: SAN RAFAEL CANNABIS POLICY UPDATE
SUBJECT: FIRST READING OF AN ORDINANCE AMENDING SAN RAFAEL MUNICIPAL
CODE CHAPTER 10.96 REGULATING CANNABIS BUSINESSES WITHIN
CITY LIMITS, AND ADOPTION OF A RESOLUTION AMENDING, RENAMING, AND
RESTATING THE POLICIES AND PROCEDURES REGULATING COMMERCIAL
CANNABIS ACTIVITY IN SAN RAFAEL
RECOMMENDATION:
1.Hold a public hearing to introduce the Ordinance amending Chapter 10.96 of the San Rafael
Municipal Code and pass the Ordinance to print.
2.Adopt the Resolution amending the policies and procedures regulating commercial cannabis
activity.
BACKGROUND:
On November 8, 2016, California voters enacted Proposition 64, the “Adult Use of Marijuana Act” or
“AUMA”, to legalize, regulate and tax recreational adult-use cannabis. The regulatory framework in
AUMA established a comprehensive system to control the cultivation, processing, manufacture,
distribution, testing and sale of recreational adult-use cannabis.
In response to the election results, San Rafael City Council hosted a study session in January 2017 to
review the emerging commercial recreational adult-use framework and discuss San Rafael’s cannabis
prohibition. At this meeting, the City Council directed staff to form an ad-hoc cannabis subcommittee to
develop a set of recommendations focused on medical cannabis businesses, as the State worked
through creating the regulatory structure for recreational adult-use businesses.
The City Council Ad-Hoc Medical Cannabis Subcommittee (MC Subcommittee) included Councilmember
Kate Colin and Councilmember John Gamblin, the City Manager, the Police Chief, the Fire Chief, the
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
Community Development Director, the Assistant City Attorney, and the Economic Development Director.
The team reviewed all license types available under the State’s medical cannabis framework and
developed a set of recommendations that included starting a limited pilot medical cannabis business
licensing program focused on the following consensus objectives:
• Maintain a discreet, low impact and minimal public interface
• Provide safe consumer access
• Improve transparency and reduce public safety risks
• Add new revenue to support city infrastructure and services
• Create new jobs, produce artisan products
• Promote a diversified economy
The City Council subsequently enacted San Rafael Municipal Code Chapter 10.96, the “Medical
Cannabis Business” ordinance, which authorized four types of medical cannabis business licensing
types:
• Medical Cannabis Delivery (State License Type 9)
• Medical Cannabis Infused Product Manufacturing (State License Type N)
• Cannabis Testing Labs (State License Type 8)
• Medical Cannabis Distribution (State License Type 11)
In adopting the Medical Cannabis Business ordinance, the City Council prohibited the following
commercial activities:
• Cultivation and some manufacturing activities
• Dispensaries
The City Council also prohibited all commercial recreational adult-use cannabis activities until the
permanent State regulations were to be finalized and staff were to have had additional time to analyze
them.
Contemporaneously with the adoption of the Medical Cannabis Business ordinance, the City Council
adopted Resolution No. 14455, subsequently amended and restated by Resolution No. 14508, which
established the “Medical Cannabis Business Operator License Pilot Program”, setting the number of each
type of business license the City would issue and detailing specific policies and procedures for the
licensing process. In June of 2018, San Rafael opened the pilot program licensing process for intake,
application review and merit ranking, with final license determinations made by the ad-hoc MC
Subcommittee reviewing committee. Staff was also directed to come back to the City Council with a future
program update that included recommended changes and refinements to the pilot licensing program.
ANALYSIS:
On January 16, 2019, the State of California released the final permanent regulations for the commercial
cannabis industry across the supply chain, and they became effective immediately. The ad-hoc MC
Subcommittee met to discuss the final State regulations, review current licensee progress, discuss
necessary pilot program refinements, and make recommendations for the authorization of recreational
adult-use businesses to honor the will of the voters.
Recommended changes to the ordinance include:
• Making minor (housekeeping) changes to align the Municipal Code’s references to applicable State
Codes with changes made in the State’s final regulations.
• Progressing from a medical cannabis business policy to an all-inclusive cannabis business policy that
authorizes commercial recreational adult-use activity for existing licensees under our existing policy
framework.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
Recommended refinements to the pilot cannabis program include:
• Create a renewal process for existing licensees, now that a cannabis business tax has been
established.
• Adjust application and appeal fees to reflect staff time associated with processing.
• Add additional licenses to some categories, not all, as illustrated in the table below:
License Category Current License Allotment New Proposed License Allotment
Infused Product MFG 8 10
Distribution 3 4
Delivery 5 no change
Testing Laboratories 4 no change
All other existing elements of the Medical Cannabis Business ordinance will remain the same.
FISCAL IMPACT:
Cannabis industry tax revenue will increase overtime as local licensees will have the ability to gain
market share in both the medicinal and recreational cannabis markets.
OPTIONS:
The City Council has the following options to consider on this matter:
1. Pass to print the Ordinance amending San Rafael Municipal Code Chapter 10.96, and adopt the
Resolution amending, renaming and restating the cannabis business license pilot program
policies and procedures.
2. Make modifications to the Ordinance and/or the Resolution.
3. Direct staff to return with more information.
RECOMMENDED ACTION:
1. Hold a public hearing to introduce the Ordinance amending Chapter 10.96 of the San Rafael
Municipal Code and pass the Ordinance to print.
2. Adopt the Resolution amending, renaming, and restating the Cannabis Business Operator
License Pilot Program.
ATTACHMENTS
1. Ordinance Amending Chapter 10.96 of the San Rafael Municipal Code Regulating Cannabis
Businesses Within City Limits, Specifically Authorizing by License Cannabis Delivery, Infused
Product Manufacturing, Laboratory Testing, And Cannabis Distribution
2. Resolution Amending and Renaming the “Medical Cannabis Business Operator License Pilot
Program” Establishing Policies and Procedures Regulating Commercial Cannabis Activity in
San Rafael, as the “Cannabis Business Operator License Pilot Program”, and Restating it in its
Entirety
ORDINANCE NO. 1968
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL AMENDING
CHAPTER 10.96 OF THE SAN RAFAEL MUNICIPAL CODE REGULATING CANNABIS
BUSINESSES WITHIN CITY LIMITS, SPECIFICALLY AUTHORIZING BY LICENSE
CANNABIS DELIVERY, INFUSED PRODUCT MANUFACTURING, LABORATORY TESTING,
AND CANNABIS DISTRIBUTION
THE CITY COUNCIL OF THE CITY OF SAN RAFAEL DOES ORDAIN AS FOLLOWS:
DIVISION 1. FINDINGS
WHEREAS, in 2015, the State Legislature adopted the “Medical Marijuana [now
“Cannabis”] Regulation and Safety Act” (MCRSA) establishing a state licensing process for
“commercial cannabis activity,” defined as including “cultivation, possession, manufacture,
processing, storing, laboratory testing, labeling, transporting, distribution, or sale of medical
cannabis or a medical cannabis product, except as permitted for qualifying patients and primary
caregivers;” and
WHEREAS, on November 8, 2016, the voters of the State of California enacted
Proposition 64, the “Control, Regulate and Tax Adult Use of Marijuana Act” (AUMA), to allow for
nonmedical adult use of cannabis, and implementing regulations were subsequently developed
by the state agencies for this act as well; and
WHEREAS, in July 2017, the Governor signed Senate Bill 94, entitled the “Medical and
Adult-Use Cannabis Regulation and Safety Act” (MAUCRSA), which took effect immediately.
The MAUCRSA directed that the MCRSA’s medical cannabis regulations be coordinated with
AUMA’s nonmedical cannabis regulations; and
WHEREAS, the State of California adopted emergency regulations that became
effective on January 1, 2018; and
WHEREAS, on December 4, 2017, the City Council enacted Ordinance No. 1949, an
urgency ordinance adding new Chapter 10.96 to the San Rafael Municipal Code to limit the
commercial cannabis activities that will be allowed in the City of San Rafael starting on January
2, 2018 to those medical cannabis businesses determined by the City Council to be beneficial
rather than detrimental to the residents, workers and visitors in the City, namely medical
cannabis testing, manufacturing, and delivery businesses; and
WHEREAS, San Rafael Municipal Code Section 10.96.050 was amended by Ordinance
No. 1960 adopted on June 4, 2018, to additionally authorize medical cannabis distribution
businesses; and
WHEREAS, San Rafael Municipal Code Section 10.96.050, as amended, provides that
the City Council shall, by resolution, adopt reasonable regulations for the license process for the
medical commercial cannabis activities permitted within the City, and for the number of each
license type to be issued; and
WHEREAS, Measure G, a proposition to adopt a “cannabis industry tax” to regulate and
tax cannabis businesses within San Rafael city limits was approved by San Rafael voters on
June 5, 2018 and is now codified as Chapter 3.40 of the San Rafael Municipal Code; and
WHEREAS, on January 16, 2019, the State of California moved from emergency
regulations and officially approved state regulations for cannabis businesses across the supply
chain, effective immediately, meaning the emergency regulations are no longer in effect; and
WHEREAS, to fulfill the will of the voters and streamline state regulations the City’s
regulations will change from allowing only medical to allowing medical and adult
use/recreational cannabis businesses.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN RAFAEL DOES
HEREBY ORDAIN AS FOLLOWS:
DIVISION 2. MUNICIPAL CODE AMENDMENT.
Chapter 10.96 of the San Rafael Municipal Code, entitled “Medical Cannabis Business”,
is hereby amended to be retitled as “Cannabis Business” and to read in its entirety as follows:
10.96.010 – Purpose and Intent
It is the purpose and intent of this chapter to provide for the orderly regulation of
the commercial cannabis industry within the City of San Rafael with the intent of
encouraging economic growth and job creation while protecting the public health,
safety and welfare of the residents of the city. The City Council may adopt by
resolution any regulations or policies that will further the purpose of this chapter,
and that do not conflict with the provisions herein.
It is also the purpose and intent of this chapter to prohibit all commercial
cannabis activity not authorized under this chapter within the City.
All definitions, authority, scope, responsibilities, requirements, standards,
conditions, exemptions, procedures and penalties described within state law are
adopted and incorporated.
10.96.020 – In General
The Economic Development Director or their designee shall administer and
enforce the provisions of this Chapter, applicable state law, and the rules and
regulations promulgated by the State Department of Public Health’s
Manufactured Cannabis Safety Branch and the Department of Consumer Affairs
Bureau of Cannabis Control, or other state designated regulatory authority. This
Chapter and the regulations contained herein apply to the entire City.
10.96.030 – Findings
The San Rafael City Council finds:
1.Since, 1996, cannabis for personal medicinal purposes, when recommended
by a physician, has been legal in the State of California under the
Compassionate Use Act (Proposition 215); and
2.In 2016, California voters enacted Proposition 64, intended to create a
comprehensive system to legalize, control, and regulate the cultivation,
processing, manufacture, distribution, testing and sale of nonmedicinal
cannabis, including cannabis products, for use by adults 21 years and older,
and to tax the cultivation and retail sale of cannabis for nonmedicinal use;
and
3.In 2017, the Governor signed a bill to combine the regulation of medical and
nonmedical cannabis under one umbrella licensing and regulatory system,
entitled the “Medical and Adult-use Cannabis Regulation and Safety Act”
(MAUCRSA); and
4.MAUCRSA does not limit the authority of a local governing body to adopt and
enforce local ordinances regulating businesses licensed under MAUCRSA or
to completely prohibit such businesses with the local jurisdiction to the full
extent authorized to a local agency by MAUCRSA; and
5.The use, cultivation, distribution, production, possession and transportation of
cannabis remains illegal under Federal Law, and cannabis remains classified
as a “controlled substance” by both California and Federal law; and
6.The City Council intends to limit commercial cannabis activity within the City
limits; and
7.The City Council intends to regulate the use, acquisition, cultivation,
production, and distribution of commercial cannabis activity in a manner that
is consistent with the California Constitution and MAUCRSA. The regulations
are intended to apply to all cannabis operations in the city by any cannabis
business licensed under state law. Commercial cannabis activity can have an
impact on health, safety, and community resources, and this Chapter is
intended to license cannabis businesses where it will have minimal impact;
and
8.To the extent that cannabis businesses are registered and authorized by the
State of California to operate in the corporate limits of the city, the City
Council desires to provide for their licensing and regulation to protect the
public health, safety and general welfare of the citizens of the city; and
9.This chapter is to be construed to protect the public over cannabis business
interests. Operation of a cannabis business is a revocable privilege and not a
right in the city. There is no property right for an individual or business to
have a cannabis business in the city; and
10.Cannabis is a heavily regulated industry in the city, and the city has a zero-
tolerance policy of violations to this chapter.
10.96.040 – Definitions
For the purpose of this chapter, unless the context clearly requires different
meaning, the words, terms, and phrases set forth in this section shall have the
meanings given to them in this section:
A.“Act” means the Medicinal and Adult-use Cannabis Regulation and Safety Act
(MAUCRSA).
B.“Applicant” means the owner of the applicant entity applying for a City and
State license.
C.“Cannabis” means all parts of the plant cannabis sativa Linnaeus, Cannabis
indica, or Cannabis ruderalis, whether crude or purified, extracted from any
part of the plant; and every compound, manufacture, salt, derivative, mixture,
or preparation of the plant, its seeds, or resin. “Cannabis” does not include
the mature stalks of the plant, fiber produced from stalks, oil or cake made
from the seeds of the plant, any other compound, manufacture, salt,
derivative, mixture or preparation of the mature stalks (except the resin
extracted therefrom), fiber, oil or cake, or the sterilized seed of the plant
which is incapable of germination. For the purposes of this division,
“cannabis” does not mean “industrial hemp” as defined by Section 11018.5 of
the Health and Safety Code.
D.“Cannabis Business” means any business that engages in commercial
cannabis activities.
E.“Cannabis Distribution” means the procurement, sale, and transport of
cannabis and cannabis products between entities licensed pursuant to state
regulations.
F.“Cannabis Processing” means any method used to prepare cannabis or its
byproducts for commercial sale, including but not limited to: drying, cleaning,
curing, packaging, and extraction of active ingredients to create cannabis
related products and concentrates.
G.“Cannabis Products” means cannabis including dried flower, and product
containing cannabis.
H.“Cannabis accessories” has the same meaning as in Health and Safety Code
section 11018.1.
I.“Commercial cannabis activity” includes cultivation, possession, manufacture,
distribution, processing, storing, laboratory testing, packaging, labeling,
transportation, delivery or sale of cannabis and cannabis products as
provided for in Business and Professions Code section 26000 et. seq
J.“Cultivation” means any activity involving the planting, growing, harvesting,
drying, curing, grading, or trimming of cannabis.
K.“Edible cannabis product” means cannabis product that is intended to be
used, in whole or in part, for human consumption. Edible cannabis product
includes cannabis products that dissolve or disintegrate in the mouth but
does not include cannabis concentrate.
L.“Delivery” means the commercial transfer of cannabis or cannabis products to
a customer. “Delivery” also includes the use by a retailer of any technology
platform.
M.“Dispensary” means a facility open to the public where cannabis, cannabis
products, or devices for the use of cannabis or cannabis products are offered,
either individually or in any combination, for retail sale.
N.“License” refers to any one (1) of the licenses described by section 10.96.050
that specifically authorizes a person to conduct commercial cannabis
operations in the City.
O.“Licensee” means a person issued a state license under the Act to engage in
commercial cannabis activity or a person issued a cannabis business license
under Section 10.96.050 of this Chapter.
P.“Licensing Authority” means the state agency responsible for the issuance,
renewal, or reinstatement of the state license, or the state agency authorized
to take disciplinary action against the licensee.
Q.“Manufacturer” means a licensee that conducts the production, preparation,
propagation, or compounding of cannabis or cannabis products either directly
or indirectly or by extraction methods, or independently by means of chemical
synthesis, or by a combination of extraction and chemical synthesis at a fixed
location that packages or repackages cannabis or cannabis products, or
labels or relabels its containers.
R.“Medical cannabis” or “medicinal cannabis” means cannabis or cannabis
product, respectively, intended to be sold for use pursuant to the
Compassionate Use Act of 1996 (Proposition 215), found at Section 11362.5
of the Health and Safety Code, by a medicinal patient in California who
possesses a physician’s recommendation.
S.“M-License” means a state license issued pursuant to Division 10 of the
Business and Professions Code for commercial cannabis activity involving
medicinal cannabis
T.“A-License” means a state license issued pursuant to Division 10 of the
Business and Professions Code for cannabis or cannabis products that are
intended for adults who are 21 years of age and older and who do not
possess a physician’s recommendation.
U.“Premises” means the designated structure(s) and land specified in the
application that is owned, leased, or otherwise held under the control of the
applicant or licensee where the commercial cannabis activity will be or is
conducted.
V.“State” means the State of California.
W.“State license” means a state license issued pursuant to Division 10 of the
California Business and Professions Code (Sections 26000, et seq).
X.“Type N” means a state license issued for manufacturers that produce edible
or topical products using the infusion process, or other types of cannabis
products other than extracts and concentrates, but who do not conduct
extractions. Type N licensees may also package and label cannabis products
on a licensed premise.
Y.“Testing Laboratory” means a laboratory, facility, or entity in the state that
offers or performs tests of cannabis and cannabis products and that is both of
the following:
i.Accredited by an accrediting body that is independent from all other
persons involved in the cannabis industry in the state.
ii.Licensed by the Department of Consumer Affairs Bureau of Cannabis
Control.
10.96.050 – Commercial Cannabis Businesses Authorized
Notwithstanding section 10.96.080, the City shall allow commercial cannabis
activity and testing laboratories by license only, as described below:
A.Each cannabis business seeking to operate within the City must first apply
and be issued the appropriate license to operate within the City. The license
is specific to the location where the commercial cannabis business will be
operating. Multiple operating locations for the same cannabis business will
require separate licenses. Each license is non-transferable.
B.A cannabis business may apply for any of the following:
1.Testing Laboratory License. State License Type 8. A testing laboratory
license is required for all activities for which MAUCRSA requires a Type 8
state license.
2.Manufacturing License – Infusions. State License Type N. A
manufacturing license is required for all activities for which MAUCRSA
requires a Type N state license.
3.Cannabis Delivery – Non-storefront. State License Type 9. A non-
storefront retailer license is required for all activities for which MAUCRSA
requires a Type-9, non-storefront retailer state license to conduct retail
cannabis sales exclusively by delivery as defined in Business and
Professions Code section 26001(p).
4. Cannabis Distribution. State License Type 11. A distribution license is
required for all activities for which MAUCRSA requires a Type 11 state
license.
5. No license shall be issued if the cannabis activity is not a permitted land-use
in the City.
C. The City Council shall adopt by resolution reasonable regulations pertaining
to the license process for the above identified commercial cannabis
businesses allowed within the City.
D. The City Council shall adopt by resolution a limit on the number of each
license type to be issued.
E. Unless expressly permitted and outlined in this chapter all other types of
cannabis businesses (medical or non-medical) are prohibited within City
limits.
10.96.060 – Cannabis Gross Receipts Business Tax Required
The requirements of this chapter shall be in addition to any Cannabis Industry
Tax requirements imposed pursuant to Chapter 3.40 of this Code.
10.96.070 – State License Required
In addition to a license identified in Section 10.96.050 any cannabis business
operating within City boundaries must posses the appropriate state license
issued by the appropriate licensing authority required by state law. If a state
license has not yet been issued at the time of the license application, the
cannabis business shall describe how it will meet the state licensing
requirements, and provide supporting documentation required by the local
licensing authority.
10.96.080 – Cannabis Business Prohibitions
A. Except as provided in Section 10.96.050, cannabis cultivation and cannabis
dispensaries shall be prohibited activities in the City, and no person or entity
shall conduct or engage in said activities, except where the City is preempted
by federal or state law from enacting a prohibition on any such activity or
prohibiting a person or entity from conducting or engaging in such activity.
B. All cannabis businesses operating in violation of this chapter are expressly
prohibited. No entity that distributed cannabis prior to the enactment of this
chapter shall be deemed to have been a legally established use under the
provisions of this chapter, and such use shall not be entitled to claim legal
nonconforming status for the purposes of licensing.
10.96.090 – Violations a public nuisance, penalties, nuisance abatement,
and other remedies
Any cannabis business operated, conducted, or maintained contrary to the
provisions of this chapter shall be, and the same is hereby declared to be,
unlawful and a public nuisance, and the city attorney may, in addition to or in lieu
of prosecuting a criminal action hereunder, commence an action or actions,
proceeding or proceedings, for the abatement, removal and enjoinment thereof,
in the manner provided by law. Such remedies shall be in addition to any other
judicial and administrative penalties and remedies available to the city under this
chapter, or chapters 1.40, 1.42, 1.44, or 1.46 of this code, or under state law.
10.96.100 – Fees
The City Council may establish by resolution the fees that shall be charged for
administration and implementation of this chapter. The adoption of such fees
shall not prevent the City from recovering enforcement costs not specified in
such resolution.
10.96.110 – Severability
If any provision of this chapter of the application of any such provision to any
person or circumstance, shall be held invalid, the remainder of this chapter, to
the extent it can be given effect, or the application of those provisions to persons
or circumstances other than those to which it is held invalid, shall not be affected
thereby, and to this end, the provisions of this chapter are severable.
DIVISION 3. CALIFORNIA ENVIRONMENTAL QUALITY ACT
This Ordinance is exempt from review under the California Environmental Quality Act
(“CEQA”) pursuant to the State CEQA Guidelines, since it can be seen with certainty that there
is no possibility that this Ordinance or its implementation would have a significant effect on the
environment (14 Cal. Code Regs. Section 15061(b)(3)).
DIVISION 4. PUBLICATION; EFFECTIVE DATE
A summary of this Ordinance shall be published and a certified copy of the full text of this
Ordinance shall be posted in the office of the City Clerk at least five (5) days prior to the Council
meeting at which it is adopted.
This Ordinance shall be in full force and effect thirty (30) days after its final passage, and
the summary of this Ordinance shall be published within fifteen (15) days after the adoption,
together with the names of those Councilmembers voting for or against same, in the Marin
Independent Journal, a newspaper of general circulation published and circulated in the City of
San Rafael, Marin County, State of California.
Within fifteen (15) days after adoption, the City Clerk shall also post in the office of the
City Clerk a certified copy of the full text of this Ordinance, along with the names of those
Councilmembers voting for or against the Ordinance.
GARY O. PHILLIPS, Mayor
ATTEST:
LINDSAY LARA, City Clerk
The foregoing Ordinance No. 1968 was read and introduced at a regular meeting of the City
Council of the City of San Rafael on Monday, March 4, 2019 and was ordered passed to print
by the following vote, to wit:
AYES:
NOES:
ABSENT:
Councilmembers: Bushey, Colin, Gamblin & Mayor Pro Tem McCullough
Councilmembers: None
Councilmembers: Mayor Phillips
And will come up for adoption as an Ordinance of the City of San Rafael at a Regular Meeting
of the Council to be held on the 18 day of March 2019.
LINDSAY LARA, City Clerk
CITY OF SAN RAFAEL
NOTICE OF PUBLIC HEARING
CONSIDERATION OF AN ORDINANCE AMENDING SAN RAFAEL
MUNICIPAL CODE CHAPTER 10.96 REGULATING CANNABIS BUSINESSES
WITHIN CITY LIMITS AND SPECIFICALLY AUTHORIZING CANNABIS
DELIVERY, CANNABIS INFUSED PRODUCT MANUFACTURING, CANNABIS
DISTRIBUTION AND CANNABIS TESTING
DATE/TIME: Monday, March 4, 2019
LOCATION: City Council Chambers, 1400 Fifth Street, San Rafael, CA
PURPOSE: To receive public comments and consider the adoption of an
ordinance amending Chapter 10.96 of the San Rafael Municipal
Code entitled “Medical Cannabis Business” to retitle it “Cannabis
Business,” and to include commercial recreational adult-use
cannabis activities within the City’s existing commercial cannabis
regulatory structure for the purposes of encouraging economic
growth, and job creation, while protecting public health, safety and
the welfare of residents in the city. The proposed ordinance
amendment would authorize existing San Rafael Cannabis
Delivery, Cannabis Infused Product Manufacturing, Cannabis
Distribution Licensees to also service the recreational adult-use
market consistent with the will of the voters after the passing of
California Proposition 64. The ordinance requires cannabis
businesses to obtain a valid State license in addition to a City
license and to comply with the City’s Cannabis Industry Tax
requirements.
IF YOU CANNOT You may send a letter to Lindsay Lara, City Clerk of San Rafael
ATTEND: PO Box 151560 San Rafael, CA 94915-1560. You may also hand
deliver prior to the meeting.
FOR MORE Contact Danielle O’Leary, Director of Economic Development and
INFORMATION: Innovation at 415-485-3460, Monday through Friday 8 AM – 5 PM
SAN RAFAEL CITY COUNCIL
___________________________
LINDSAY LARA
CITY CLERK, CITY OF SAN RAFAEL
DRAFT Cannabis Business Operator License Resolution 1 | P a g e
RESOLUTION NO. 14644
RESOLUTION OF THE SAN RAFAEL CITY COUNCIL AMENDING AND RENAMING
THE “MEDICAL CANNABIS BUSINESS OPERATOR LICENSE PILOT PROGRAM”
ESTABLISHING POLICIES AND PROCEDURES REGULATING COMMERCIAL
CANNABIS ACTIVITY IN SAN RAFAEL, AS THE “CANNABIS BUSINESS OPERATOR
LICENSE PILOT PROGRAM”, AND RESTATING IT IN ITS ENTIRETY
WHEREAS, in 2015, the State Legislature adopted the “Medical Marijuana [now
“Cannabis”] Regulation and Safety Act” (MCRSA) establishing a state licensing process for
“commercial cannabis activity,” defined as including “cultivation, possession, manufacture,
processing, storing, laboratory testing, labeling, transporting, distribution, or sale of medical
cannabis or a medical cannabis product, except as permitted for qualifying patients and primary
caregivers;” and
WHEREAS, on November 8, 2016, the voters of the State of California enacted
Proposition 64, the “Control, Regulate and Tax Adult Use of Marijuana Act” (AUMA), to allow for
nonmedical adult use of cannabis, and implementing regulations were subsequently developed
by the state agencies for this act as well; and
WHEREAS, in July 2017, the Governor signed Senate Bill 94, entitled the “Medical and
Adult-Use Cannabis Regulation and Safety Act” (MAUCRSA), which took effect immediately.
The MAUCRSA directed that the MCRSA’s medical cannabis regulations be coordinated with
AUMA’s nonmedical cannabis regulations; and
WHEREAS, on December 4, 2017, the City Council enacted Ordinance No. 1949, an
urgency ordinance adding new Chapter 10.96 to the San Rafael Municipal Code to limit the
commercial cannabis activities that will be allowed in the City of San Rafael starting on January
1, 2018 to those determined by the City Council to be beneficial rather than detrimental to the
residents, workers and visitors in the City; and
WHEREAS, San Rafael Municipal Code section 10.96.050 provides that the City Council
shall, by resolution, adopt reasonable regulations for the license process for the commercial
medical cannabis activities permitted within the City, and for the number of each license type to
be issued; and
WHEREAS, on January 16, 2018, the City Council adopted Resolution No. 14455
approving a Medical Cannabis Business Operator License Pilot Program and policies, practices
and procedures for administering and enforcing the program, including the number of each
license type to be issued; and
WHEREAS, on May 21, 2018, the City Council adopted Resolution No. 14508 amending
and restating the Medical Cannabis Business Operator License Pilot Program policies,
practices, and procedures; and
DRAFT Cannabis Business Operator License Resolution 2 | P a g e
WHEREAS, on March 4, 2019, the City Council approved introduction of Ordinance No.
1968 to amend San Rafael Municipal Code Chapter 10.96 to expand its provisions to authorize,
by license, both medical and recreational adult-use commercial cannabis activities in San
Rafael, and the Council expects to adopt this ordinance on March 18, 2019; and
WHEREAS, the City Council desires to expand and amend the Medical Cannabis
Business Operator License Pilot Program to also apply to the commercial recreational adult-use
licenses authorized by Ordinance No. 1968 and to rename it as the “Cannabis Business
Operator License Pilot Program”; and
WHEREAS, for ease of reference, the City Council wishes to restate herein the entirety
of the Cannabis Business Operator License Pilot Program and its policies, practices and
procedures as amended by this Resolution;
NOW, THEREFORE, BE IT RESOLVED, that the City Council hereby amends, renames
and restates the Cannabis Pilot Operator Licensing Program in its entirety as follows:
SECTION 1. PURPOSE AND INTENT
It is the purpose and intent of this resolution to regulate commercial cannabis activity within San
Rafael city limits, to promote the health, safety, and general welfare of residents and businesses
within the City. This resolution governs the establishment and operation of cannabis testing
laboratories, cannabis infused product manufacturers, cannabis delivery, and cannabis
distribution.
SECTION 2. DEFINITIONS
For the purposes of this Program, the definitions below shall apply:
(a)“Applicant” means an owner applying for a City Cannabis Business Operator License
(CBOL).
(b)“Bureau” means the Bureau of Cannabis Control within the California Department of
Consumer Affairs.
(c)“City” means City of San Rafael.
(d)“Cannabis” means all parts of the plant Cannabis sativa Linnaeus, Cannabis indica, or
Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude
or purified, extracted from any part of the plant; and every compound, manufacture, salt,
derivative, mixture, or preparation of the plant, its seeds, or resin. “Cannabis” also
means the separated resin, whether crude or purified, obtained from cannabis.
“Cannabis” does not include the mature stalks of the plant, fiber produced from the
stalks, oil or cake made from the seeds of the plant, any other compound, manufacture,
salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted
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therefrom), fiber, oil, or cake, or the sterilized seed of the plant which is incapable of
germination. For the purpose of this division, “cannabis” does not mean “industrial hemp”
as defined by Section 11018.5 of the Health and Safety Code.
(e)“Cannabis Testing Laboratory” means “testing laboratory” as defined by Business and
Professions Code 26000, and as further defined in SRMC 10.96.040. This sort of use is
regulated by the State of California as a Type 8 Cannabis license.
(f)“Cannabis Delivery” means the commercial transfer of cannabis or cannabis products to
a customer. “Delivery” also includes the use by a retailer of any technology platform.
This sort of use is regulated by the State of California as a Type 9 Cannabis license. A
non-storefront retailer licensee shall be authorized to conduct retail sales exclusively by
delivery as defined by Business and Professions Code section 26001(p). The licensed
premises of a non-storefront retailer licensee shall be closed to the public.
(g)“Cannabis Distribution” means the procurement, sale, and transport of cannabis and
cannabis products between entities licensed pursuant to state regulations.
(h)“Cannabis Infused Manufacturing” means producing edible or topical products
that include pre-extracted cannabis oils, to create edibles, beverages, capsules,
vape cartridges tinctures or topical. This sort of use is regulated by the State of
California Department of Public Health Cannabis Manufacturing Division as a
Class N (Infusions) Cannabis license. Cannabis manufacturing may also include
shared use of a manufacturing facility by multiple businesses that perform
manufacturing, (i.e. commercial kitchen). Shared manufacturing is regulated by
the State of California as Type S Cannabis license. Infusion” means a process by
which cannabis, cannabinoids, or cannabis concentrates are directly
incorporated into a product formulation to produce a cannabis product.
(i)“Medicinal Cannabis Patient” includes both a qualified patient as defined in the Health and
Safety Code section 11362.7 and a person in possession of a valid identification card
issued under Health and Safety Code section 11362.71“Licensee” means any person
holding a City Cannabis Business Operator License (CBOL).
(j)“Operator License” means a City of San Rafael Cannabis Business Operator License.
(k)“Owner” means any of the following, as defined in Section 26001 of the Business and
Professions Code:
1)A person with an aggregate ownership interest of 20 percent or more in
the person applying for a license or a licensee, unless the interest is solely
a security, lien, or encumbrance.
2)The chief executive officer of a nonprofit or other entity
3)A member of the board of directors of a nonprofit
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4)An individual who will be participating in the direction, control, or
management of the person applying for a license.
(l)“Person” includes any individual, firm, partnership, joint venture, association,
corporation, Limited Liability Company, estate, trust, business trust, receiver,
syndicate, or any other group or combination acting as a unit, and the plural as
well as the singular.
(m) “Purchaser” means the customer who is engaged in a transaction with a licensee for
purposes of obtaining cannabis or cannabis products.
(n)“Sell”, “sale,” and “to sell” include any transaction whereby, for any consideration, title to
cannabis or cannabis products is transferred from one person to another and includes
the delivery of cannabis or cannabis products pursuant to an order placed for the
purchase of the same and soliciting or receiving an order for the same.
SECTION 3. LICENSING PROCESS
(a)Any person seeking to sell and or distribute, deliver, manufacture, or providing laboratory
testing services located in San Rafael city limits must first obtain a Cannabis Business
Operator license (CBOL) prior to operating.
(b)The Pilot CBOL Program will make the following limited licenses available:
•Cannabis Testing Laboratories (State License Type 8): 4 licenses
•Cannabis Infused Manufacturing (State License Type N): 10 licenses
•Cannabis Delivery (State License Type 9): 5 licenses
•Cannabis Distribution (State License Type 11): 4 licenses
SECTION 4. REVIEW AND ACTION ON APPLICATIONS; APPEAL
(a)The CBOL Application Review Committee includes the Police Chief, Fire Chief,
Community Development Director and Economic Development Director, and/or their
designees, to review and rank applications.
(b)The CBOL application ranking process shall consist of the following areas of evaluation:
•Business Plan (25 POINTS -MAXIMUM)
•Safety & Security Plan (25 POINTS - MAXIMUM)
•Gross Receipts Activity (25 POINTS - MAXIMUM)
•Qualifications of Principals (25 POINTS - MAXIMUM)
An application is required to receive a total of 70 points to move forward. The Committee
shall rank all the applications and shall issue a written decision setting forth the ranking
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for each application, the ranking of each application in each of the ranking categories,
and an explanation of the facts and reasoning supporting the rankings. The Committee
shall serve a copy of its written decision on each applicant by email.
(c)Appeal. An applicant who has received a ranking of less than 70 points may appeal that
decision to the City Manager or his or her designee, by filing a written appeal with the City
Manager’s office within five (5) business days after the date of service of the written
ranking decision on the applicant. The appeal shall not be accepted for filing unless
accompanied by an appeal fee in an amount determined by resolution of the City Council.
In determining the appeal, the City Manager/designee will review the Committee’s written
decision on the appellant’s application and the application itself. In addition, within five
(5) business days after the filing of the appeal, the City Manager/designee shall set a time
for a hearing, not to exceed two hours in length, at which the appellant may appear to
review the Committee’s decision and to present evidence or argument why the
Committee’s ranking should be modified. The hearing shall occur no later than thirty (30)
days following the filing of the appeal unless another time is agreed to by the appellant.
The hearing may be recorded by audiotape or written minutes.
Within ten (10) business days after completion of the hearing on the appeal, the City
Manager/designee shall issue a written decision on the appeal shall either confirming or
modifying the ranking given by the Committee. The decision shall be in served upon the
appellant by email, or regular mail through the United States Post Office. The City
Manager’s decision will be final, with no appeal to the City Council, and shall be subject
to judicial review according to the provisions and time limits set forth in Code of Civil
Procedure Section 1094.6; however, the filing of any such action shall not stay any
lottery or subsequent award of operator licenses as provided herein.
After the appeal period has run without the filing of any appeals, or after the final
decision by the City Manager on any and all appeals, if the Committee determines that
the number of pre-screened and ranked applicants exceeds 100% of the maximum
number of licenses available, then a lottery will be conducted after the ranking round.
(d)Operator Selection. W ithin 120 days of written and e-mail notification, operators will
have the ability to look for sites within permitted zoning districts and return with an
identified site to apply for zoning clearance, Cannabis Industry Tax registration, and
operator license issuance. Failure to secure a San Rafael location within 120 days shall
be grounds for the City to revoke the award of a San Rafael cannabis business operating
license.
(e)Zoning Clearance, Cannabis Industry Tax Registration, and Operator permit
issued. Once the operator has found a business location, and has an executed lease
agreement, or signed application by the property owner, planning staff will confirm zoning
clearance. The applicant can then proceed with registering for the Cannabis Industry Tax
pursuant to San Rafael Municipal Code Chapter 3.40, and the operator license will be
issued.
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SECTION 5. FEES
The Cannabis Business Operator License application and renewal fees are based on a cost-
recovery model for application intake, processing, and compliance monitoring. All fees are non-
refundable. Cannabis Operator License Application Fee shall be as follows, or as modified from
time to time by resolution of the City Council:
Process Steps Staff Coordination Per Applicant Cost
Application Intake Econ. Dev Coordinator Review Time: 1-2
hours
$200
Criminal Background
Check
Police Review Time: 1
hour
$100
Application Review and
Ranking
Econ. Development
Director, Police Chief, Fire
Chief, Community
Development Director
Review Time: 3-4
hours
$2000
Operator Notification Econ. Development
Coordinator/Director
Review Time: 1
hour
$100
Zoning Clearance,
Business Tax
Certificate, Operator
License Issuance
Senior Planner, Economic
Development Coordinator,
Economic Development
Director
Review Time: 2-3
hours
$300
Compliance Inspections Senior Code Enforcement
Officer
Review Time: 3-4
hours
$500
Annual Gross Receipts
Audits
Contract with Outside
Agency
Review Time 3-4
hours
$900
Total License Fee $4100
Cannabis Business Operator License Renewal Fee:
Process Steps Staff Coordination Per Applicant Cost
Application Intake &
Review
Econ. Dev Coordinator,
Economic Development
Director
Review Time: 1-2
hours
$500
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Cannabis Business Operator License Appeal Fee:
Process Steps Staff Coordination Per Applicant Cost
Appeal Intake & Review,
Staff Preparation
Review City Manager Review Time: 4
hours
$836
Appeal Hearing &
Written Decision
Review City Manager Review Time: 4
hours
$836
Total Appeal Fee $1,672
SECTION 6. OPERATING REQUIREMENTS
All cannabis business operator licensees shall comply with all the following operating
requirements:
(a)The licensee shall meet all operating requirements of the Medicinal and Adult-use
Cannabis Regulation and Safety Act (MAUCRSA), and requirements set forth by the
Bureau and the California Department of Public Health’s Manufactured Cannabis Safety
Branch.
(b)The licensee shall obtain and maintain the State of California license for the equivalent
State cannabis license type and maintain all other required State and local licensees,
permits, or approvals.
(c)Odor Control. No cannabis odors shall be detectable outside the commercial facility.
(d)Advertising and Marketing Restrictions. All signage shall meet the sign requirements of
Title 14 of the San Rafael Municipal Code and shall not advertise any activity related to
cannabis.
(e)Operating Hours. A licensee may operate between the hours of:
1)Cannabis Delivery: 9AM to 9PM up to seven days a week, unless modified
as condition of license to address site specific conditions.
2)Cannabis Testing Labs: 7AM – 7PM up to seven days a week, unless
modified as condition of license to address site specific conditions.
3)Cannabis Infused Product Manufacturing: 7 AM – 7PM, evenings
available as a condition of the license; up to seven days a week, unless
modified as condition of license to address site specific conditions.
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4)Cannabis Distribution: 7 AM – 7PM, up to seven days a week, unless
modified as condition of license to address site specific conditions.
(f)Contact Person. A licensee shall provide the City with the name and phone
number of an on-site community relations staff person or designee to whom one
can provide notice if there are operating concerns. The licensee shall make a
good faith effort to encourage residents to call this person to try to solve
operating concerns before any calls or complaints are made to the City.
SECTION 7. TERMS OF LICENSE
(a)Licenses issued under this resolution shall be valid for 12 months from the date of
issuance.
(b)Licensees may submit a license renewal form no sooner than 60 and no later than 30
calendar days before the license expires.
SECTION 8. WITHDRAWAL OF APPLICATION
(a)An applicant may withdraw an application at any time prior to the City’s issuance of a
license or denial of a license.
(b)Requests to withdraw an application must be submitted to the City in writing, dated and
signed by the applicant.
(c)The City will not refund application fees for a withdrawn application after application intake
window closes.
SECTION 9. GROUNDS FOR LICENSE DENIAL OR RENEWAL
(a)The City may deny an application for license or for renewal of a license for any reason
specified in Business and Professions Code section 26057, as amended from time to
time
(b)Written Notice Required. Upon denial of a license or denial of renewal of a license
pursuant to subsection (a) of this section, the Economic Development Director, or
designee, shall notify the applicant of the reasons for denial in the manner provided
Section 10(b) of this Resolution.
(c)Appeal. Upon denial of a license of denial of renewal of a license, the applicant may file
a written appeal of that decision with the Economic Development Director within ten (10)
business days after the date of service of the written decision. The appeal shall not be
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accepted for filing unless accompanied by an appeal fee in an amount determined by
resolution of the City Council.
(d)Hearing. The Economic Development Director, or designee, shall appoint a hearing
officer and set an appeal hearing, to be held no less than ten (10) days and no more
than sixty (60) days after the service of the written notice required in subsection (b). The
hearing and notice of decision shall be as provided in Sections 10(c) and (d) of this
Resolution.
SECTION 10. LICENSE SUPENSION, MODIFICATION AND REVOCATION
(a)Any license issued under the terms of this resolution may be suspended, modified, or
revoked by the Economic Development Director, or his or her designee, for cause
including but not limited to violation of any the requirements or provisions of this
resolution, or conflicts with State law.
(b)Written Notice Required. The Economic Development Director, or designee, before
revoking or suspending any Cannabis Business operator license shall serve the
licensee with written notice of revocation or suspension, provided in the manner set
forth in Section 1.08.060 of the San Rafael Municipal Code, of the alleged grounds for
revocation or suspension and the date for a hearing, to be held no less than ten (10)
days and no more than sixty (60) days after the service of the written notice , to
consider whether the Cannabis Business operator license shall be revoked or
suspended.
(c)Hearing. The Economic Development Director, or designee, shall appoint a hearing
officer to hear and consider all evidence at the hearing. The hearing may, after being
commenced within the time specified pursuant to subsection (b) of this section, be
continued for good cause by the hearing officer from time -to-time. The hearing officer
may require such legal briefi ng as may be required to address any issues raised at the
hearing.
(d)Notice of Decision; Judicial Review. Within a reasonable time, but not more than thirty
(30) days following the conclusion of the hearing, the hearing officer shall issue a
written decision as to whether the Cannabis Business operator license shall be
revoked or suspended, supported by factual findings and determinations referenced by
supporting evidence. The written decision shall be served on the operator licensee as
provided in Code of Civil Procedure Section 1094.6, with a copy submitted to the city
clerk and the city attorney. The written decision of the hearing officer shall be final and
shall be subject to judicial review according to the provisions and time limits set forth in
Code of Civil Procedure Section 1094.6.
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SECTION 11. TRANSFER OF LICENSE
(a)A licensee shall not operate under the authority of a Cannabis Business operator license
at any location other than the address stated in the application for the license.
(b)The Cannabis Business operator licenses are not transferrable or assignable to another
person or owner. In the event of the sale or other transfer of the business or operations
covered by the licensee, changes in ownership shall be made in accordance with the
following:
1)If one or more of the owners of a license change, but if at least one existing
owner is not transferring his or her ownership interest and will remain as an
owner under the new ownership structure, then the new owners shall submit
a new application to the City for review of qualifications, background checks
and to determine whether the change would constitute grounds for denial of
the license.
2)If all owners will be transferring ownership interest, the business shall not
operate under the new ownership structure until a new license application
has been submitted and approved by the City, and all application and
licensing fees have been paid.
SECTION 12. ENFORCEMENT
(a)It is unlawful for any person to violate any provision or fail to comply with any of the
requirements of this resolution, and any such violation shall be enforceable in
accordance with the provisions of Chapters 1.40, 1.42, 1.44, and 1.46 of the San Rafael
Municipal Code.
(b)In accordance with Section 26013, Business and Professions Code. The City, and its
authorized representative, shall have full and immediate access to inspect and:
1)Enter onto any premises license by the City.
2)Any inspection, investigation or review, or audit of a licensed premises shall
be conducted anytime the licensee is exercising privileges under the license,
or as otherwise agreed to by the City and licensee or its agents, employees,
or representatives.
3)Prior notice of an inspection, investigation, review or audit is not required.
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BE IT FURTHER RESOLVED that any amendments to the Cannabis Pilot Operator
Licensing Program Policies, Practices and Procedures as deemed necessary from time-to-time
shall require an amendment to this resolution by City Council action.
BE IT FURTHER RESOLVED that this Resolution shall take effect upon the effective
date of Ordinance No. 1968.
I, LINDSAY LARA, City Clerk of the City of San Rafael, hereby certify that the foregoing
resolution was adopted at a regular meeting of the City Council on the 4th day of March 2019.
AYES:
NOES:
ABSENT:
Councilmembers: Bushey, Colin, Gamblin & Mayor Pro Tem McCullough
Councilmembers: None
Councilmembers: Mayor Phillips
____________________________
Lindsay Lara, City Clerk