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Fresno Cannabis - First Steps to Reform


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Update on medical cannabis regulations in the City of Fresno.

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Fresno Cannabis - First Steps to Reform

  1. 1. Fresno Cannabis – First Steps to ReformFresno Cannabis – First Steps to Reform
  2. 2. Fresno Cannabis – Ban Early, Ban OftenFresno Cannabis – Ban Early, Ban Often March 2014 – Fresno City Council bans medical cannabis cultivation.
  3. 3. Setting the Stage: MMRSA (2015)Setting the Stage: MMRSA (2015) The Medical Marijuana Regulation and Safety Act (MMRSA) was enacted by the California Legislature. Assembly Bill 243 (Wood) Assembly Bill 266 (Bonta, Cooley, etc.) Senate Bill 643 (McGuire) The MMRSA bills took effect Jan. 1, 2016. Target date for state licenses: Jan. 1, 2018.
  4. 4. MMRSA: Key ConceptsMMRSA: Key Concepts Commercial cannabis activity must be licensed. Dual licensing by state/local “licensing authorities.” Criminal and civil penalties for unlicensed activity. “Local control” provisions allow cities and counties to regulate (or ban) commercial cannabis activities. New Bureau of Medical Marijuana Regulation (BMMR) created within Dept. of Consumer Affairs. Several other agencies (DOJ, CDFA, water boards) have regulatory and enforcement roles.
  5. 5. MMRSA: Key ConceptsMMRSA: Key Concepts Commercial cannabis activity can be banned, virtually ensuring it would be banned in Fresno. Fighting a losing battle against the “local control” provisions of the MMRSA.
  6. 6. Lori Ajax, BCC Chief
  7. 7. MMRSA: Key ConceptsMMRSA: Key Concepts Created mandatory “track-and-trace” program to identify cannabis products from seed to sale. Applicants must obtain local “permit, license or other authorization” before applying for state license. “Robust” regulations designed to address major concerns of federal law enforcement (Cole memo). Cannabis declared to be an agricultural product. Did not address all issues, e.g., banking services, state and local taxation, on-site consumption.
  8. 8. State Permits and LicensingState Permits and Licensing Dept. of Consumer Affairs (new Bureau) Dept. of Fish and Wildlife Dept. of Food and Agriculture Dept. of Pesticide Regulation Dept. of Public Health Dept. of Justice State Board of Forestry & Fire Protection State Water Boards
  9. 9. Which State Laws Were Amended?Which State Laws Were Amended? Business and Professions Code Fish and Game Code Food and Agricultural Code Health and Safety Code Labor Code Revenue & Taxation Code Water Code
  10. 10. Refresher: Compassionate Use ActRefresher: Compassionate Use Act What is Proposition 215? Ballot initiative passed by California voters in 1996. Created limited immunity for “qualified patients” who use or cultivate marijuana for medical purposes when such use has been recommended by a California doctor for a serious medical condition. Limited immunity also covers “primary caregivers.” Did not address local zoning laws or retail sales. Codified at Health and Safety Code §11362.5.
  11. 11. Refresher: Senate Bill 420Refresher: Senate Bill 420 What is the Medical Marijuana Program Act? The Legislature's first attempt to regulate medical marijuana took effect in 2004. Created a voluntary state ID card program, run by county health departments, to help identify qualified patients and primary caregivers for law enforcement. Extended limited immunity to include transportation and “collective or cooperative” cultivation projects. Established 6-plant personal cultivation threshold. Codified at Health and Safety Code §11362.7 et seq.
  12. 12. Unlicensed cannabis activity is illegalUnlicensed cannabis activity is illegal Unlicensed commercial cannabis activity can… ... result in hefty fines. … lead to seizure and destruction of cannabis. … be prosecuted by local authorities. AND/OR “Criminal penalties shall continue to apply to an unlicensed person engaging in commercial cannabis activity in violation of this division.” Business & Professions Code §26038
  13. 13. Commercial Cultivation: OutdoorCommercial Cultivation: Outdoor Outdoor cultivation license types: Type 1, “Specialty Outdoor,” up to 5,000 sq.ft. Type 2, “Small Outdoor,” 5,001 - 10,000 sq.ft. Type 3, “Outdoor,” 10,001+ sq.ft., up to one acre.
  14. 14. Commercial Cultivation: IndoorCommercial Cultivation: Indoor Indoor cultivation license types: Type 1A, “Specialty Indoor,” up to 5,000 sq.ft. Type 2A, “Small Indoor,” 5,001 - 10,000 sq.ft. Type 3A, “Indoor,” 10,001 – 22,000 sq.ft.
  15. 15. Commercial Cultivation: Mixed LightCommercial Cultivation: Mixed Light Mixed-light cultivation license types: Type 1B, “Specialty Mixed-Light,” up to 5,000 sq.ft. Type 2B, “Small Mixed-Light,” 5,001 to 10,000 sq.ft. Type 3B, “Mixed-Light,” 10,001 to 22,000 sq.ft.
  16. 16. Commercial Cultivation: Other LicensesCommercial Cultivation: Other Licenses Other cultivation license types: Type 4 “Nursery” license is for cultivation of immature plants and seeds as nursery stock only. A nursery licensee may transport live plants. “Specialty cottage” license type for small growers adopted by Legislature in 2016 (AB 2516 – Wood).
  17. 17. Post-cultivation License Types*Post-cultivation License Types* Type 6: Manufacturer 1 (non-volatile solvents). Type 7: Manufacturer 2 (volatile solvents). Type 8: Testing. Type 10: Retailer (aka dispensary). “Storefront,” “non-storefront” subtypes proposed for delivery-only retail businesses. Type 11: Distributor Type 12: Microbusiness *(License types shown as they currently exist in state law, not as enacted.)
  18. 18. Who's eligible for state licensing?Who's eligible for state licensing? You do not have to be a qualified patient. However... You should have some money saved up. License application and renewal fees will be expensive. DOJ fingerprint checks required (LiveScan). Convictions for violent felonies, fraud/embezzlement and other specified offenses are disqualifying. License may be denied on other “suitability” factors. The level of security and background checks applied to owners, employees and licensed sites are comparable to alcohol and cardroom regulations.
  19. 19. Criminal and Civil PenaltiesCriminal and Civil Penalties
  20. 20. Criminal and Civil PenaltiesCriminal and Civil Penalties Limited immunity for collectives is going away. H&S Code §11362.775 is repealed one year after the state commences commercial licensing. The official sunset date is Jan. 9, 2019. Operators of unlicensed “collective or cooperative” businesses and cultivation sites will no longer have an affirmative MMJ defense if charged criminally. 005_repeal_hscode.pdf
  21. 21. Who's in Charge of Enforcement?Who's in Charge of Enforcement? State and local agencies share enforcement duties. City: Police | code enforcement | city attorney | DA. County: Sheriff | county counsel | district attorney. Dept. of Food & Agriculture | ag commissioners. Dept. of Consumer Affairs (Bureau). Dept. of Public Health | county health officers. State/local water and environmental agencies. CDTFA (state/local taxes).
  22. 22. Where does medical cannabis come from?Where does medical cannabis come from?
  23. 23. Dispensaries: Lawful Access is LimitedDispensaries: Lawful Access is Limited Dispensary bans are in place in Fresno County and most other cities and counties in the Central Valley. Among the closest lawful dispensaries to Fresno: Tulare: 46 miles Coalinga: 62 miles (pending city approval) Goshen: 37 miles Bakersfield: 109 miles (unregulated, recent sweep) Sacramento: 171 miles Los Angeles: 219 miles
  24. 24. Whack-A-Mole: Unlicensed StorefrontsWhack-A-Mole: Unlicensed Storefronts Fresno-area storefronts open, close, open again.
  25. 25. Deliveries: Supply and DemandDeliveries: Supply and Demand The number of delivery services (50+) grew rapidly after local bans on dispensaries were enacted.
  26. 26. Personal CultivationPersonal Cultivation Cultivation is vital in “dry” cities and counties. Personal cultivation does not require a state license. Nuisance/crime potential is limited by small size of license-exempt gardens. Trend: Ordinances that limit greenhouse/indoor growing to “fully enclosed and secure structures.” Natural sunlight is safest, cheapest growing method. Reduces carbon footprint and potential fire risks. Did I mention greenhouses? They’re important.
  27. 27. What About Federal Law?What About Federal Law? Although federal law prohibits all cannabis activities, state/local MMJ laws are not pre-empted by default. The Compassionate Use Act does not obstruct the enforcement of federal law. Police agencies may not enforce federal law where federal authorities do not enforce it themselves. (City of Garden Grove v. Superior Court; 2007) State ID card program does not violate federal law. (County of San Diego v. San Diego NORML; 2008) U.S. Controlled Substances Act (CSA) explicitly grants states right to regulate drugs and medicine.
  28. 28. Legalization 2016: Enter Prop. 64Legalization 2016: Enter Prop. 64 Adult-use legalization in other states was the main reason that the state Legislature passed the MMRSA. Voters were expected to approve a ballot initiative in November to legalize non-medical use – and they did. The Adult Use of Marijuana Act (AUMA) was drafted with the MMRSA framework as a model. Adults 21 and up can grow, possess and use small amounts. Commercial and retail activities are state-licensed. Adult-use cannabis is now legal in Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, Washington state, District of Columbia.
  29. 29. AUMA: Key ConceptsAUMA: Key Concepts The Adult Use of Marijuana Act (AUMA) builds upon MMRSA framework with added layers of regulation. Bureau of Marijuana Control tasked with overseeing both medical and nonmedical marijuana. Revision of state criminal statutes reduces some cannabis penalties but is not full “legalization.” Establishment and funding of new drug-diversion programs aimed at youth, with local grant options. MMRSA-style commercial licensing and oversight. Adult-use sales can be regulated or banned locally.
  30. 30. AUMA: More Key ConceptsAUMA: More Key Concepts 15% state excise tax on cannabis cultivation. Express authority for counties to tax cannabis sales; authority for city cannabis taxes is implied. Game-changer for Fresno: Cities and counties may not completely prohibit indoor cultivation of six living plants by adults 21 and up at their private residence, nor the possession and use of designated amounts of cannabis. Qualified patients and primary caregivers with valid state-issued ID card exempt from paying sales tax.
  31. 31. Local Options: Regulate, Tax or BanLocal Options: Regulate, Tax or Ban Prop. 64 requires local implementation to work. Personal cultivation: Consider Prop. 215 update; “indoor” options can include secure greenhouses. Medical/non-medical needs/laws are not identical. Commercial cultivation: Outdoor unlikely in urban landscapes; may be some indoor/mixed-light options in industrial zones. Most outdoor cultivation will occur in rural/ag lands outside incorporated cities. Dispensaries/retail sales: Storefronts, deliveries. Other license types: Heavy commercial/industrial.
  32. 32. Land-Use Options: Zoning is KeyLand-Use Options: Zoning is Key Existing zoning can frame land uses for cannabis activities. ● Personal cultivation. ● Commercial cultivation. ● Dispensary or delivery-only. ● Other licenses.
  33. 33. More Local Options: Cannabis TaxesMore Local Options: Cannabis Taxes Prop. 64 authorizes cities to tax commercial cannabis activities, subject to local voter approval. Oakland: Voters approved a 5% tax on medical, 10% tax on nonmedical commercial activities. Desert Hot Springs: Voters approved 10% tax on dispensary sales and area-based cultivation tax. Sacramento: Business operations tax, up to 10%. Lake County: Cultivation tax ($1/2/3 sq.ft.) Palm Springs: Voters approved 15% dispensary tax.
  34. 34. Senate Bill 94 = Medical + Adult UseSenate Bill 94 = Medical + Adult Use The MMRSA, approved by the Legislature, and voter-approved Prop. 64 did not line up word for word. The two laws were merged and renamed in 2017. The law was renamed the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA). Most MAUCRSA statutes appear at Business and Professions Code Sec. 26000 et seq. Emergency regulations issued in November 2017 by Bureau of Cannabis Control (DCA), CalCannabis Cultivation Licensing (CDFA) and Manufactured Cannabis Safety Branch (CDPH).
  35. 35. The City of Fresno respondsThe City of Fresno responds Adult use or “recreational” cannabis banned. The Fresno City Council voted June 22, 2017, to ban all recreational cannabis activities. Personal cultivation in limbo. Proposition 64 effectively ended the ban on personal cultivation in Fresno for qualified patients and adults 21 and older. A new ordinance will be introduced in 2018. Historic council vote. In December 2017, the City Council voted 7-0 to initiate MMJ-only regulations. City hires “dope consultant.” The city has hired HdL to help develop cannabis fees and regulations.
  36. 36. Keeping It LocalKeeping It Local The cannabis industry is expanding rapidly. Many large companies are setting up shop in the Emerald Triangle, Southern California, the Bay Area and the Central Coast. Fresno is losing ground. Big boxes in small cities. Coalinga was the first city to regulate cannabis in 2016. Parlier, Hanford, Merced, Firebaugh and other cities have followed. Social equity is lacking. Oakland, Los Angeles, Sacramento and other large cities are exploring ways to help minorities enter the marketplace. Barriers to entry hit people of color hardest.
  37. 37. Keeping It LocalKeeping It Local “If the overall goal of the [cannabis regulation] program was to favor a corporate, big dollar, new money industry then we have succeeded. If the goal was to create a workable pathway for existing operators, then I think we have failed.” – Sonoma County ag commissioner
  38. 38. Cities Need Role Models TooCities Need Role Models Too Sacramento. Registered existing dispensaries and allowed some to relocate away from sensitive uses. Registered existing industrial cultivation sites. Cracked down on hundreds of illegal “grow houses.” Oakland. Created social equity program to set aside permits for minority applicants impacted by drug war. Coalinga. Despite intense opposition, the Coalinga City Council passed a regulatory ordinance and crafted two successful ballot measures in 2016. Lake County. Passed “self-certification” program for existing medical cannabis collective growers.
  39. 39. Moving ForwardMoving Forward Serve patients. Medical cannabis is a health-care delivery challenge. Safe access = retail sales + more flexible personal cultivation regulations. Do not criminalize patients. (Kirby v. Fresno Co.) Address contentious issues in phases, by topic. Consider ballot placement of a cannabis tax measure, covering medical and nonmedical options. Develop regulatory ordinances on separate tracks. Don't forget CEQA and planning laws. Good zoning ordinances take time to draft and review. Conduct initial study to identify potential impacts.
  40. 40. Fresno Cannabis – First Steps to ReformFresno Cannabis – First Steps to Reform Prepared for the Central Valley NORML Cannabis Town Hall March 5, 2018