COUNTY ADMINISTRATION OFFICE - R. ESPINOSA

Discuss the draft Cannabis Ordinance. HDL companies consultant, David McPherson to report adjustments, suggestions, recommendations, and request direction form the Board of Supervisors.  

SBC FILE NUMBER: 119

Background:

In 2015, the California Legislature enacted the Medical Cannabis Regulation and Safety Act (MCRSA). Then, in 2016 California voters passed Proposition 64, enacting the Adult Use of Marijuana Act (AUMA). MCRSA and AUMA provide local control of medical and non-medical marijuana businesses and certain related activities through licensing and land use regulations. The laws allow local jurisdictions to regulate marijuana businesses and activities or to impose reasonable regulations.

The Board of Supervisors previously adopted a limited Cannabis Businesses Ordinance (Ordinance No. 964) on December 12, 2017, set forth in Chapter 7.02 of the San Benito County Code, pending the results of an initiative measure regarding taxing cannabis businesses. On June 6, 2018, San Benito County voters approved Measure C to create a tax for cannabis businesses located in unincorporated San Benito County.

Hdl Companies consultant, David McPherson, and County Staff have collaborated and consulted with key stakeholders to discuss logistics and address the County’s needs. Chapter 7.02 currently prohibits most cannabis business activities within the unincorporated area of the County, with some limited exemptions, such as for personal cultivation in compliance with Chapter 11.15 of the County Code. Hdl Companies has been drafting a revised Cannabis Ordinance to regulate cannabis businesses in San Benito County, rather than prohibiting them outright, to address issues of public health and safety. As revised by the proposed ordinance, Chapter 7.02 will address regulation of cannabis businesses and will include the following sections, as listed and summarized below:

7.02.010 - Findings, Purpose, Effect, Authority, and Policy.  

7.02.020 - Definitions.

7.02.030 - Prohibited Activities.

7.02.040 - Cannabis Permit Required – Compliance.

      7.02.050 - Cannabis Business Regulatory Program.

      7.02.060 - Cannabis Permit Types.

      7.02.070 - Cannabis Permit Application.

7.02.080 - Restrictions.

7.02.090 - Denial, Non-Renewal, Suspension, or Revocation of Permit.

7.02.100 - Procedure for Suspension or Revocation.

7.02.110 - Cannabis Business Facilities.

7.02.120 - Records.

7.02.130 - Promulgation of Regulations, Standards and Other Legal Duties

7.02.140 - Nuisance Declared.

7.02.150 - Enforcement.

7.02.160 - Other Nuisance.

7.02.170 - Remedies Cumulative.

7.02.010 -      Findings, Purpose, Effect, Authority, and Policy

 These provisions are mostly unchanged from the provisions set forth in Chapter 7.02 of the County Code. There are some minor revisions to reflect that the revised Cannabis Ordinance will regulate, rather than prohibit outright, certain cannabis business activities, in compliance with MAUCRSA and AUMA.

7.02.020 -      Definitions 

Chapter 7.02 provides definitions in section 7.02.020. Certain definitions would be added or revised to address the regulation and permitting process, as well as updates to state law and/or evolving business practices in the industry.

7.02.030 -      Prohibited Activities 

As revised, Section 7.02.030 would prohibit cannabis business activities from operating in the unincorporated County without permits issued by the County, in compliance with County regulatory requirements and in compliance with MAUCRSA’s licensing requirements. All cannabis retail (dispensary), non-storefront retail (delivery) or microbusiness which conducts retail or retail delivery services of cannabis products are to remain expressly prohibited in the unincorporated area of the County of San Benito, other than delivering from a location that is licensed by a state and local jurisdiction located outside the unincorporated area of the County.

7.02.040 -      Cannabis Permit Required – Compliance 

The current version of Section 7.02.040 (Exemptions) provides limited exemptions to the outright prohibition of cannabis business activities.  The revised version of Section 7.02.040 would require any person or organization who intends to engage in cannabis business activity shall obtain a cannabis permit for the location of cannabis business. Section 7.02.040 would specify certain permit conditions, including a clear statement that permits issued do not provide any protection or immunity for any person from State or Federal laws, or from prosecution pursuant to any applicable State or Federal laws.

7.02.050 - Cannabis Business Regulatory Program.

The Cannabis Business Regulatory Program shall be operated by the County Administrative Office. This includes, but is not limited to, accomplishing the following tasks:

1. Creating application forms for cannabis permits;

2. Conducting pre-permit inspections;

3. Approving and denying cannabis permit applications;

4. Issuing, renewing, suspending, and revoking cannabis permits;

5. Creating a system on the County’s website to communicate the number of cannabis permits issued and notifying the public as to whether applications for cannabis permits are being accepted; and

6. Creating and/or adopting any policies, procedures, rules, regulations, or fees necessary to implement the Cannabis Business Regulatory Program.

7.02.060 – Cannabis Permit Types.

1. A commercial cannabis business is limited to Indoor or Mixed-Light Commercial Cultivation, Distribution, Manufacturing, Microbusinesses (Non-Retail Activity) and Testing Labs for cannabis and cannabis products, and must obtain a valid commercial cannabis business permit from the County, a valid State of California Seller’s Permit, and be in compliance with all state and local regulatory requirements

2. No permit will be issued for any retail or non-storefront cannabis business located in the unincorporated area of San Benito County.

7.02.070 – Cannabis Permit Application.

An application to obtain a cannabis permit will be required for each type of business activity. The Applicant shall pay all applicable fees and bond or other security when filing the application, and the County shall respond within 30 days. The collection of an annual fee will be applicable to qualifying applicants. The cannabis permit application will have specific requirements, including but not limited to submittal of a written Cannabis Business Operations Plan, and other specific information regarding the proposed business activity, description of the property and proposed business operations such as the size, hours of operation, identities and background checks of the owners, operators, employees, etc., which are set forth in the ordinance and which all applicants will need to provide with their application. The County will implement an application acceptance, review, and adjudication process. Depending on the type of business activity, other specific permit application requirements may apply.  For example, a cultivation-type permit application will require the submittal of several management plans, including but not limited to a pest management plan, waste management plan, landscape plan, landscape management plan for the preservation of agricultural lands, water management plan, energy management plan, air quality management plan, and security plan, and a distributor-type permit will require certain information, including but not limited to a quality control inspection and requirements plan, storage and handling plans, and certain information regarding vehicles used to transport cannabis.  Section 7.02.070 addresses applicable fees, and the process for accepting and processing applications. A cannabis permit must be renewed after one year, does not run with the land, is not transferable, and will automatically terminate upon transfer of ownership.

7.02.080 -      Restrictions.

No cannabis business facility shall be located:

1. Less than three hundred (300) feet from any boundary line of the premises (“Boundary Line Setback”).

2. Less than one thousand (1,000) feet from any school, school bus stop, school evacuation site, church, park, child care center, or youth-oriented facility (“Sensitive Use Setback”);

3. Less than four hundred (400) feet from any off-parcel residence, if the cannabis business facility is located on a parcel that is ten (10) acres or less (“Residence Setback”).  Any cannabis businesses proposed to be located on a parcel of land that is less than ten (10) acres will require a hearing process.

A written request can be made to the County Administrative Officer or his/her designee may waive the application of any provision based upon a finding of unusual hardship or other good cause, which may be granted, granted with reasonable conditions, or denied, in writing. If the waiver request is denied or conditioned, the applicant may submit a written appeal to the Clerk of the Board of Supervisors within ten (10) calendar days, which will be heard by the Board of Supervisors or other designated hearing officer. The Board of Supervisors or hearing office will hear the appeal de novo and may affirm, reverse, or modify the determination of the County Administrative Officer or designee; the decision following the appeal will be final and conclusive. If the waiver request is granted (with or without conditions of approval) by the County Administrative Officer or on appeal before the Board of Supervisor or other designated hearing officer, the waiver shall remain valid until expiration of the annual permit, at which time the waiver will also expire. Renewal of the waiver can be requested and processed along with a renewal permit application.

Cannabis business facilities, or premises, must be located in a zoning district that allows for cannabis business activities (Agricultural Productive, Agricultural Productive/Light Industrial, Agricultural Rangeland, Agricultural Rangeland/Mineral Resource, Light Industrial, Heavy Industrial, Rural, or Rural Transitional). Only indoor cultivation within a fully enclosed building will be permitted.

Cannabis business activities shall operate in a reasonable manner to minimize the effects on the health or safety of nearby properties through creation of mold, mildew, dust, glare, heat, noise, noxious gasses, odor, smoke, traffic, vibration, or other impacts of cannabis business activities.

7.02.090 – Denial, Non-Renewal, Suspension, or Revocation of Permit.

Certain findings will allow the County Administrative Officer or his/her designee to reject an application, including but not limited to the application being untimely, non-payment of application fees, revocation or suspension of any required MAUCRSA license, making of false or misleading statements or omissions on the application or during the application process, non-compliance with applicable regulatory requirements, violation of building, zoning, health, safety, or other provisions of state or local law that substantially affect the public health, welfare, safety, or morals, failure to meet age requirements, failure to submit to or complete background checks, conviction of certain offenses, applicant status related to medicinal cannabis, prior sanctions or permit revocations within the three (3) years preceding the date the application is filed, or failure to obtain and maintain a valid Seller’s Permit. Specific grounds for denial, non-renewal, suspension, or revocation of a permit will be set forth in this section.

7.02.100 – Procedure for Suspension or Revocation.

The County Administrative Officer or his/her designee shall issue a written notice of intention to suspend or revoke the permit, describing the premises, the intention to revoke or suspend the permit, the grounds for suspension or revocation, the action necessary to abate the violation, the time limit for compliance, and the right to a hearing held before the County Hearing Officer appointed in accordance with Chapter 1.07 of the County Code to determine whether to suspend or revoke the permit. The permittee will have the opportunity to request an administrative hearing within 10 days. Failure to submit a timely written request for a hearing will be deemed a waiver and a failure to exhaust administrative remedies.  The specific procedures pertaining to administrative hearings and determinations are described in this section.  The hearing officer shall conduct the hearing de novo, and may affirm, reverse, or modify the determinations contained in the notice and order.  The determination will be in writing, supported by findings, and shall be conclusive and final.

7.02.110 – Cannabis Business Facilities

Section 7.02.110 specifies the requirements applicable to each classification of permit.  Cultivation-type cannabis permits shall not include residential buildings, shall require that propagation areas shall contain immature plants and that mother plants shall remain in the designated propagation area, shall require compliance with track and trace program requirements, and shall require proper labeling in tamper-evident packaging.

Distribution Cannabis Permits shall require permittees to be bonded and insured at the minimum level required by the Bureau of Cannabis Control, adhere to specific requirements regarding commercial vehicles and trailer use for transportation of cannabis, adhere to specific requirements when transporting cannabis, comply with track and trace program requirements, complete an electronic shipping manifest, maintain a physical copy of the shipping manifest during transportation, maintain security measures, and provide the county required vehicle information.

Cannabis Manufacturing Permits include edibles and other Cannabis products, and sale or distribution of edible and other Cannabis products.

Testing Labs shall be required to conduct all testing in a manner pursuant to Business and Professions Code Section 26100 and shall be subject to state and local law. Each Testing Lab shall be subject to additional regulations as determined from time to time as more regulations are developed under this Chapter and any subsequent State of California legislation regarding the same.

7.02.120 – Records.

Cannabis business facilities shall maintain an electronic point of sales, and an inventory control and reporting system that accurately documents all cannabis products throughout the distribution chain until the product is sold, and will maintain records on the premises at all times. The inventory control and reporting system shall comply with the track and trace program required by section 26067 et seq. of the California Business and Professions Code and regulations issued pursuant thereto.

7.02.130 – Promulgation of Regulations, Standards and Other Legal Duties

The County Administrative Officer or his/her designee is authorized to establish additional rules, regulations and standards governing the issuance, denial or renewal of commercial cannabis business permits, the ongoing operation of commercial cannabis businesses and the County’s oversight. Regulations shall be published on the County website, effective on publication date, and may be subject to change, due to changes in state law or regulations.

7.02.140 - Nuisance Declared.

These provisions are mostly unchanged from the provisions set forth in Chapter 7.02 of the County Code. Violations of any provisions of cannabis regulation is declared to be unlawful and a public nuisance, violation shall be subject to injunctive relief, disgorgement of any payment to the County of any and all monies unlawfully obtained, costs of abatement, costs of restoration, costs of investigation, attorneys’ fees, and any other relief or remedy available at law or in equity. Any person engaging in cannabis business activities without a cannabis permit shall be subject to criminal penalties.

7.02.150 - Enforcement

This Section would replace the current Section 7.02.150 (Nuisance Abatement Authority) set forth in Chapter 7.02 of the County Code. The County Administrative Officer or his/her designee or other enforcing officer shall have the right to enter all cannabis business facilities from time to time unannounced during the cannabis business facility’s hours of operation for the purpose of making reasonable inspections to observe and enforce compliance. Disclosure of private medical records or confidential information contained in such records shall not be required. The County Administrative Officer, his/her designee, and other enforcing officers are authorized to pursue appropriate abatement actions, including those set forth in Chapters 1.03, 1.04 and/or 1.06 of the County Code. It shall be a separate offense for each and every day during any portion of which any violation of, or failure to comply with the regulations set forth in the ordinance, and violators shall be provided with six (6) calendar days, from issuance of the notice, to abate the nuisance before the imposition of any civil administrative penalty. The ordinance does not impose a duty on the County Administrative Officer or designee or other enforcing officer to take specific action regarding notification or abatement of nuisances and neither the County, the County Administrative Officer, his/her designee, or other enforcing officer shall be held liable for failure to issue any notice, nor for failure to abate nuisances, nor for failure to take any other action with regard to any cannabis business activity.

7.02.160 – Other Nuisance

No changes to this section, as set forth in Chapter 7.02 of the County Code, are being proposed.

7.02.170 – Enforcement

This section, as set forth in Chapter 7.02 of the County Code, will be replaced by Section 7.02.150, as summarized above.

7.02.180 – Duty of Owners and Occupants; No Unlawful Activity Permitted

This section, as set forth in Chapter 7.02 of the County Code, will be replaced by other provisions of this ordinance.  

7.02.190 – Remedies Cumulative

No changes to this section, as set forth in Chapter 7.02 of the County Code, are being proposed. However, it will be renumbered to be Section 7.02.170.

Staff Recommendation:

1)     Receive HDL companies' presentation regarding a cannabis regulation ordinance; and

2)     Provide direction to staff regarding a draft ordinance.