COUNTY ADMINISTRATION OFFICE - R. ESPINOSA

Consider adoption of an Ordinance amending Chapter 7.02 of the San Benito County Code (originally enacted by Ordinance No. 964) related to cannabis businesses within the unincorporated area of San Benito County:

1) Read title of ordinance; 

2) Make a motion to accept the introduction;

3) Waive the reading of the ordinance; and

4) Continue to December 11, 2018 for adoption.

SBC FILE NUMBER: 119

Overview of State Cannabis Laws:

Over the past few years, there have been substantial changes in state law relating to cannabis cultivation and distribution, including the enactment of detailed state regulatory schemes for medicinal cannabis (the Medical Cannabis Regulation and Safety Act) and non-medicinal cannabis (sometimes referred to as "recreational marijuana" or “recreational cannabis”) (Prop. 64, the Adult Use of Marijuana Act). These new state laws preserve strong local control over both personal cannabis cultivation and cannabis business activities, specifically, with regard to cannabis business activities (both medicinal and non-medicinal) which may be regulated or completely banned. On June 27, 2017, Senate Bill 94 was approved by Governor Brown which repealed MCRSA and includes certain provisions of MCRSA in the licensing provisions of AUMA. Under SB 94, these consolidated provisions are known as the Medicinal and Adult-Use Cannabis Regulation and Safety Act ("MAUCRSA").

As relevant here, the  MAUCRSA phases out the collective and cooperative model of cannabis cultivation and distribution, and replaces it with a state licensing system that treats the medicinal cannabis industry like other commercial industries in the state. Under the MAUCRSA, a state license (and any applicable local authorization) is required before a person may engage in commercial cannabis activities.

Overview of Local Commercial Cannabis Laws:

On December 12, 2018, the Board of Supervisors adopted Ordinance No. 964, thereby adding Chapter 7.02 to the San Benito County Code which expressly banned any and all commercial cannabis activity within the unincorporated area of San Benito County. Thereafter, the Board directed staff to submit a cannabis tax measure (Measure C) to the people of San Benito County at the June 2018 election.

On June 6, 2018 voters approved Measure C creating a tax on cannabis businesses and Board of Supervisors directed staff to establish the necessary ordinances to allow certain commercial cannabis activity within the unincorporated area of San Benito County.

In July, HdL Companies was contracted to assist the County's development and implementation of a cannabis business regulatory program, to provide input and direction to draft an ordinance establishing the regulatory structure for cannabis business operations and the permitting thereof.

HdL has been recognized as the leader in helping California government agencies, they have developed a Cannabis Management Program with former professional government marijuana policy experts with extensive knowledge in this area. HdL has a specialized division of Cannabis expert staff that have been working closely with the Department of Consumer Affairs, Department of Food and Agriculture, Department of Public Health and the California Department of Tax and Fee Administration in the implementation of the Medical Cannabis Regulatory and Safety Act (MCRSA). Their experts work closely with the League of California Cities, California State Association of Counties (CSAC), and the Police Chiefs Association to develop policy and regulatory strategies to manage the Cannabis Industry in California, offering the resources and expertise to assist with the design and implementation of Cannabis regulatory and taxation policies and programs.

As directed by the Board of Supervisors, County staff and cannabis consultant HDL Companies submitted a package of three ordinances related to cannabis business regulations, zoning, and land use regulations to the Planning Commission for consideration on November 14, 2018. The Planning Commission adopted resolutions recommending the Board of Supervisors adopt each ordinance. Below is a summary of the recommended ordinances which would allow certain commercial cannabis activity within the unincorporated area:

Title 25 (Sections 25.07.005, 25.17.023, 25.17.044, and 25.17.063)

Amendments to the Zoning Code allow cannabis businesses to engage in certain commercial cannabis activity in certain zoning districts, as follows:

A copy of the ordinance as amended by the Planning Commission on November 14, 2018 has been included in the background information to add background information and context for the ordinance amending Chapter 7.02 which is before the Board for consideration and first reading at the Board of Supervisors meeting on November 20, 2018. The ordinance amending Title 25 as recommended by the Planning Commission is anticipated to be before this Board for consideration and adoption on December 11, 2018.

Chapter 19.43

Add Chapter 19.43 to the San Benito County Code which sets forth land use regulations, including, but not limited to, the development and operational standards for cannabis businesses.

A copy of the ordinance as amended by the Planning Commission on November 14, 2018 has been included in the background information to add background information and context for the ordinance amending Chapter 7.02 which is before the Board for consideration and first reading at the Board of Supervisors meeting on November 20, 2018. The ordinance adding Chapter 19.43 as recommended by the Planning Commission is anticipated to be before this Board for consideration and adoption on December 11, 2018.

Chapter 7.02

Amendment to Chapter 7.02 allows certain commercial cannabis activity within the unincorporated area of the County subject to a valid State License and valid County-issued Cannabis Business Permit. Amended Chapter 7.02 sets forth the application, evaluation, issuance, and denial/non-renewal/suspension/revocation processes for Cannabis Business Permits. In addition, amended Chapter 7.02 sets forth the application, evaluation, issuance, and denial/non-renewal/suspension/revocation processes for Cannabis Employee Work Permits. Finally, amended Chapter 7.02 sets for an appeal procedure for decisions regarding the issuance and/or conditions of the permit.

Amended Chapter 7.02 would categorize commercial cannabis activities into six permit types  and requires each person or entity to obtain a separate Cannabis Business Permit for each fixed location in which the commercial cannabis activity is to occur and for each type of commercial cannabis activity noted below prior to commencing operations. The six Cannabis Business Permit types are as follows: Cultivation (including Nursery), Manufacturing (Volatile and Non-Volatile), Testing, Distribution, Microbusiness (Non-Retail), and Retail (Out-of-County delivery only). In addition, the ordinance would prohibit all of the following: any outdoor cultivation of cannabis, microbusinesses with a retail component, and retail. However, out-of-county delivery services licensed by the State and holding a valid authorization from the jurisdiction of origin  would be allowed to deliver cannabis within the unincorporated area of the County so long as they obtain a valid Cannabis Business Permit from the County.

Under amended Chapter 7.02, Cannabis Business Permit application availability may vary depending on whether the commercial cannabis activity is prohibited or limited, e.g., cultivation is limited to fifty (50). All Cannabis Business Permits shall be valid for twelve months from the date of issuance by the CAO, unless suspended or revoked by the County.

Finally, amended Chapter 7.02 makes it unlawful for any person to conduct, engage in, or allows be conducting or engaging in a commercial cannabis activity in the unincorporated area of the County, unless the County has issued such person a Cannabis Business Permit under this Chapter 7.02 of the County Code and the Cannabis Business Permit is valid. 

Together, these ordinances require prospective cannabis businesses engaging in permitted commercial cannabis activity to obtain a County-issued Cannabis Business Permit, State License, and a Conditional Use Permit (as applicable).

Consider adoption of an Ordinance amending Chapter 7.02 of the San Benito County Code (originally enacted by Ordinance No. 964) related to cannabis businesses within the unincorporated area of San Benito County:

1) Read title of ordinance; 

2) Make a motion to accept the introduction;

3) Waive the reading of the ordinance; and

4) Continue to December 11, 2018 for adoption.