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HomeMy WebLinkAboutAgenda Report - May 17, 2017 C-15TM CITY OF LODI COUNCIL COMMUNICATION AGENDA ITEM c- 15 AGENDA TITLE: Receive Report Regarding Communication Pertaining to Trailer Bill Implementing Proposition 64, Adult Use of Marijuana Act MEETING DATE: May 17, 2017 PREPARED BY: City Clerk RECOMMENDED ACTION: Receive report regarding communication pertaining to Trailer Bill Implementing Proposition 64, Adult Use of Marijuana Act. BACKGROUND INFORMATION: The City received a request for communication from the League of California Cities regarding the Trailer Bill Implementing Proposition 64, Adult Use of Marijuana Act. There was a need to send a letter of opposition immediately in light of a pending hearing. The Trailer Bill purports to "reconcile" Proposition 64 with the Medical Cannabis Regulation and Safety Act (MCRSA), which the League of California Cities supported, together with the California Police Chiefs Association; however, the Trailer Bill reconciles nothing because it proposes to delete the MCRSA from the Trailer Bill altogether, including the following: • Provision expressly empowering local governments to a) conduct enforcement of state health & safety and other standards, if they requested and were granted that authority from the relevant state agency; • Provision expressly empowering local governments to inspect the books of cannabis businesses and conduct audits — vital with any all-cash business; and • Provision requiring a business' ability to operate to be suspended upon revocation of a local permit. The attached letter, electronically signed by the Mayor, was sent out on April 27, 2017. A copy of the initial request is also attached. This report is provided for informational purposes only, pursuant to policy. FISCAL IMPACT: Not applicable. FUNDING AVAILABLE: Not applicable. J - n ifer M. F^ raiolo City Clerk APPROVED: N: Administration\CLERK\Council\COUNCOM\LeagueReceiveReportMaster2.doc anager CITY COUNCIL DOUG KUEHNE, Mayor ALAN NAKANISHI, Mayor Pro Tempore MARK CHANDLER BOB JOHNSON JOANNE MOUNCE CITY OF LODI CITY HALL, 221 WEST PINE STREET P.O. BOX 3006 LODI, CALIFORNIA 95241-1910 (209) 333-6702 / FAX (209) 333-6807 www.lodi.gov cityclerk©Iodi.gov April 27, 2017 The Honorable Philip Ting Chair, Assembly Budget Committee State Capitol — Room 6026 Sacramento, CA 95814 STEPHEN SCHWABAUER City Manager JENNIFER M. FERRAIOLO City Clerk JANICE D. MAGDICH City Attorney RE: Trailer Bill Implementing Proposition 64, Adult Use of Marijuana Act Notice of Opposition Dear Assembly Member Ting: On behalf of the City of Lodi, I am writing to express our opposition to the proposed Trailer Bill implementing Proposition 64, the Adult Use of Marijuana Act. The Trailer Bill purports to "reconcile" Proposition 64 with the Medical Cannabis Regulation and Safety Act (MCRSA), which the League of California Cities supported, together with the California Police Chiefs Association; however, the truth is that the Trailer Bill reconciles nothing. It proposes to delete the MCRSA from the Trailer Bill altogether. What does this mean for cities? Here are just a few local control and local enforcement provisions in the MCRSA that are absent from the Trailer Bill, and that arguably present no conflict with Proposition 64: • A provision expressly empowering local governments to a) conduct enforcement of state health & safety and other standards, if they requested and were granted that authority from the relevant state agency; • A provision expressly empowering local governments to inspect the books of cannabis businesses and conduct audits — vital with any all-cash business; and • A provision requiring a business' ability to operate to be suspended upon revocation of a local permit. We will oppose any measure regulating cannabis that does not sufficiently protect local control. The above provisions do not conflict with Proposition 64. In fact, the last one is totally consistent with the initiative, which provides that state licenses cannot be issued if they are in violation of local ordinances, yet this was not included in the Trailer Bill. We have seen in the press the argument that because Proposition 64 was approved by voters by a comfortable margin, it should trump any Act of the Legislature. We believe that such a view disrespects and disregards the institution you serve in, as well as the effort many legislators invested in the MCRSA, along with stakeholders such as the League. We oppose the deletion of anti -concentration language in regard to the siting of cannabis businesses that is designed to protect our most fragile, economically -challenged neighborhoods. That is a carry-over from decades -old law governing alcohol establishments, and there is no sound policy reason to believe that because we are now talking about cannabis businesses, they will magically be immune from such concerns. To replace this provision of law with a study, as the Trailer Bill proposed, is a waste of precious public funds, and an insult to anyone who has ever complained to their city council about the number of liquor stores in their neighborhood. We oppose the proposed deletion from statute of fire safety standards as applied to cannabis businesses, given the many illicit butane extraction operations that have resulted in fires or explosions, many of them in residential areas, and some of which have killed our first responders. We question the absence from the Trailer Bill of the codification of security standards (such as the requirement to destroy cannabis that has failed to meet testing standards) that were included in the MCRSA, but that did not conflict with Proposition 64. In fact, we question the wholesale jettisoning of the MCRSA in favor of what is clearly a regulatory structure that was written by the industry itself. We would hope, after the grueling labor and hard-won consensus that led to the MCRSA, thanks to a group of committed legislators and stakeholders over a period of two years, that our policymakers in Sacramento would eagerly seek to retain any part of the MCRSA not in direct conflict with Proposition 64. In addition, the City of Lodi will not support any proposal that threatens fiscal harm to cities, as does the Trailer Bill's proposed elimination of the state medical marijuana ID card program. All consumers will need to do then, to avoid paying sales tax on recreational, is to get a doctor's recommendation, a very easy thing indeed to get hold of. This will shrink the recreational market, which cities can tax, and expand the medical market, which they cannot. We do not support any proposal that threatens to reduce our tax base. Proposition 64 was sold to the voters in part based on the fact that it built upon the MCRSA. The text of Proposition 64 even references the MCRSA several times, yet the very first line of the Trailer Bill would repeal the MCRSA in what amounts to a "bait -and -switch" tactic that arguably subverts the will of the voters. For these reasons, the City of Lodi respectfully opposes this measure. Sincerely, Douy "uetiue Doug Kuehne Mayor, City of Lodi cc: Senator Cathleen Galgiani, Fax: (916) 651-4905 Assemblymember Jim Cooper, Fax: (916) 319-2109 Stephen Qualls, League of California Cities, squalls©cacities.org Meg Desmond, League of California Cities, mdesmond©cacities.org Jennifer Ferraiolo From: Steve Schwabauer Sent: Tuesday, April 25, 2017 12:00 PM To: Jennifer Ferraiolo Subject: FW: ACTION ALERT: Trailer Bill Implementing Prop. 64 — Adult Use of Marijuana Act Attachments: image003.png; ACTION ALERT Marijuana Trailer Bill.docx; ACTION ALERT Marijuana Trailer Bill.pdf; Talking Points_Marijuana Trailer Bill.pdf; image002.emz Importance: High Lets do this one as well! Original Message From: Stephen R. Qualls [mailto:squalls@cacities.org] Sent: Monday, April 24, 2017 7:13 PM To: JoAnne Mounce - External; Doug Kuehne - External; Bob Johnson; Alan Nakanishi - External; Mark Chandler; Steve Schwabauer Subject: Fw: ACTION ALERT: Trailer Bill Implementing Prop. 64 — Adult Use of Marijuana Act Importance: High Please see below. Regardless of the City of Lodi's position on marijuana, please, every one of you, take a moment to contact Assembly Member Cooper's office and ask him to vote NO when this comes before his committee. This bill will affect all of your fellow cities in the state of California. If you could please relay any feedback to me I'd appreciate it. Thank you, Stephen Qualls Central Valley Regional Public Affairs Manager League of California Cities 209-614-0118 Fax 209-883-0653 squalls@cacities.org<mailto:squalls@cacities.org> [Description: Description: LCC_Logo_SM] [https://mail.cacities.org/owa/attachment.ashx?id=RgAAAACy8fHTR2LKSbH7v1WA%2bKroBwCJ I F8QxE1YR5pVkCgOVZ7 pAAAGc5DHAACi1U1kD4vzS51QTLjAf8aNAAAyvLINAAAJ&attcnt=1&attid0=BAABAAAA&attcid0=image002.png%4001CF9 F55.154BCF00] Strengthening California Cities through Advocacy and Education To expand and protect local control for cities through education and advocacy in order to enhance the quality of life for all Californians. <https://mail.cacities.org/owa/redir.aspx?C=9balcebeda914a8d8b298c0154b06ac0&URL=http%3a%2f%2fwww.cacities .org%2fAC> 1 PLEASE DO NOT distribute political campaign advocacy information from public (city hall) computers, on city time, or using public resources, even if it's from your personal email account. If in doubt, check with your city attorney. ***Disclaimer***Please Note: Please take the following precautions if this email is about a CITIPAC event. Though it is not illegal for you to receive this notice via a city e-mail address, you should not respond to it or forward it using public resources. You may however forward this message to your non-public e-mail account for distribution on non-public time. If you have questions about the event or need additional information, please contact Mike Egan at (916) 658-8271 or egan@cacities.org From: Sara Rounds Sent: Monday, April 24, 2017 5:47 PM To: #Regional Reps Cc: Tim Cromartie; Derek Dolfie; Eva Spiegel Subject: ACTION ALERT: Trailer Bill Implementing Prop. 64 — Adult Use of Marijuana Act ACTION ALERT!! Trailer Bill Implementing Prop. 64—Adult Use of Marijuana Act OPPOSE Background: Since 2014 the League of California Cities and the California Police Chiefs Association have worked to establish a balance between California cities' ability to preserve their land use authority over medical marijuana businesses within their borders and the right of California's citizens to access medical marijuana pursuant to Proposition 215 (1996). In 2015, three bills, AB 266 (Bonta, et. al.), AB 243 (Wood) and SB 643 (McGuire), or the Medical Marijuana Regulation and Safety Act (MMRSA) was signed into law. The MMRSA established three fundamental tenets: 1) advancing local control; 2) protecting public safety; and 3) creating uniform health and safety standards that ensure the lawful distribution of medical marijuana in those cities and counties in which it is authorized. The Administration's proposed trailer bill includes language which would invalidate the MMRSA in its entirety, including the local government protections which it put in place. It proposes to do the following: • Trigger a sales tax hit to cities by repealing the state Medical Marijuana ID card program and drop the ID card requirement from the criteria to qualify for the sales tax exemption for medical marijuana retail sales. As a practical matter, this means consumers will migrate to medical marijuana, the market where cities can no longer impose sales tax. Cities yielded $23.7 million from marijuana sales in 2016. That revenue will dry up, because we can expect the recreational market to shrink if the ID card goes away. • Return cities to an Alcoholic Beverage Control enforcement model by only empowering the state to inspect businesses, and is silent on such authority for local governments. • Repeals the provision imposing a 10 -day time limit on state licensing entities to begin an investigation once notified by local governments that they have revoked a business' local permit — undermining local enforcement. • Scrap a provision of law invalidating a business' ability to operate legally once a local permit has been revoked. 2 [ACTION: The Marijuana Trailer Bill will be heard tomorrow, April 25, 2017 in the Assembly Budget Subcommittee No. 4 at 1:30 p.m. If you have an Assembly Member on this committee, please CALL and urge their NO VOTE as soon as possible. ASSEMBLY BUDGET SUBCOMMITTEE NO. 4 ON STATE ADMINISTRATION Member District Party Room Phone Fax Allen, Travis 72 R 4208 916 319 2072 916 319 2172 Caballero, Anna 30 D 5158 916 319 2030 916 319 2130 Chiu, David 17 D 4112 916 319 2017 916 319 2117 Choi, Steven 68 R 2016 916 319 2068 916 319 2168 Cooper, Jim (Chair) 9 D 6025 916 319 2009 916 319 2109 Ting, Philip (alternate) 19 D 6026 916 319 2019 916 319 2119 Obernolte, Jay (alternate) 33 R 4116 916 319 2033 916 319 2133] <https://ad72.asmrc.org/> Talking Points • Unless MMRSA provisions are actually in conflict with Prop. 64, there is no reason to repeal them. MMRSA resulted from a 2 -year stakeholder process balancing interests of local government, industry, labor, and law enforcement. • Prop. 64 passed largely because it built on the MMRSA framework. • Prop. 64 did not itself repeal MMRSA. To do so now arguably is a question that would require returning to the voters, notwithstanding the Governor's directive to create a single regulatory system for both medical and recreational marijuana. • Repealing the medical marijuana ID card program is premature. • Repealing the state ID card program will have the effect of encouraging all consumers, regardless of why they use it, to migrate to medical marijuana, on which local governments cannot impose sales tax. [Note: The League has confirmed that cities collected at least $23.7 million in sales tax revenue in 2016.] 3 • The cannabis industry's biggest ask is that they be allowed to control their own distribution. This is something the League and Police Chiefs have already agreed to. Local governments are simply asking for reasonable oversight: Either an independent auditor/inspector or the delegation of those functions to local government. We maintain that the Bureau, acting alone, cannot effectively perform this role. • There should be a reasonable time limit for the state to act, once notified of the revocation of a local business permit. We understand that the current language, i.e. 10 days, may not be reasonable and we are willing to discuss a longer time frame, but there should be defined deadline. • Do not dismantle existing protections in law in the areas of public safety, public health, and the environment: • Do not repeal the volatile solvents definition and fire safety requirements; authorize locals to enforce. • Restore Section 26051 (anti -concentration language for businesses, protecting minors, fragile neighborhoods, etc.) • Do not repeal the environmental protection language in regards cultivation operations. • Do not repeal the potency/maximum concentration standards. The repeal endangers the public. • In product testing, retain the MMRSA requirement that all products must be tested in the final form in which they will reach the consumer. 4 ACTION ALERT!! Trailer Bill Implementing Prop. 64 — Adult Use of Marijuana Act OPPOSE Background: Since 2014 the League of California Cities and the California Police Chiefs Association have worked to establish a balance between California cities' ability to preserve their land use authority over medical marijuana businesses within their borders and the right of California's citizens to access medical marijuana pursuant to Proposition 215 (1996). In 2015, three bills, AB 266 (Bonta, et. al.), AB 243 (Wood) and SB 643 (McGuire), or the Medical Marijuana Regulation and Safety Act (MMRSA) was signed into law. The MMRSA established three fundamental tenets: 1) advancing local control; 2) protecting public safety; and 3) creating uniform health and safety standards that ensure the lawful distribution of medical marijuana in those cities and counties in which it is authorized. The Administration's proposed trailer bill includes language which would invalidate the MMRSA in its entirety, including the local government protections which it put in place. It proposes to do the following: • Triggers a sales tax hit to cities by repealing the state Medical Marijuana ID card program and drop the ID card requirement from the criteria to qualify for the sales tax exemption for medical marijuana retail sales. As a practical matter, this means consumers will migrate to medical marijuana, the market where cities can no longer impose sales tax. Cities yielded $23.7 million from marijuana sales in 2016. That revenue will dry up, because we can expect the recreational market to shrink if the ID card goes away. • Returns cities to an Alcoholic Beverage Control enforcement model by only empowering the state to inspect businesses, and is silent on such authority for local governments. • Repeals the provision imposing a 10 -day time limit on state licensing entities to begin an investigation once notified by local governments that they have revoked a business' local permit — undermining local enforcement. • Scraps a provision of law invalidating a business' ability to operate legally once a local permit has been revoked. ACTION: The Marijuana Trailer Bill will be heard tomorrow, April 25, 2017 in the Assembly Budget Subcommittee No. 4 at 1:30 p.m. If you have an Assembly Member on this committee, please CALL and urge their NO VOTE as soon as possible. 1 ASSEMBLY BUDGET SUBCOMMITTEE NO. 4 ON STATE ADMINISTRATION Member District Party Room Phone Fax — Allen, Travis 72 R 4208 916 319 2072 916 319 2172 Caballero, Anna 30 D 5158 916 319 2030 916 319 2130 Chiu, David 17 D 4112 916 319 2017 916 319 2117 Choi, Steven 68 R 2016 916 319 2068 916 319 2168 Cooper, Jim (Chair) 9 D 6025 916 319 2009 916 319 2109 Ting, Philip (alternate) 19 D 6026 916 319 2019 916 319 2119 Obernolte, Jay (alternate) 1 33 1 R 4116 916 319 2033 1 916 319 2133 Talking Points • Unless MMRSA provisions are actually in conflict with Prop. 64, there is no reason to repeal them. MMRSA resulted from a 2 -year stakeholder process balancing interests of local government, industry, labor, and law enforcement. • Prop. 64 passed largely because it built on the MMRSA framework. • Prop. 64 did not itself repeal MMRSA. To do so now arguably is a question that would require returning to the voters, notwithstanding the Governor's directive to create a single regulatory system for both medical and recreational marijuana. • Repealing the medical marijuana ID card program is premature. • Repealing the state ID card program will have the effect of encouraging all consumers, regardless of why they use it, to migrate to medical marijuana, on which local governments cannot impose sales tax. [Note: The League has confirmed that cities collected at least $23.7 million in sales tax revenue in 2016.] • The cannabis industry's biggest ask is that they be allowed to control their own distribution. This is something the League and Police Chiefs have already agreed to. Local governments are simply asking for reasonable oversight: Either an independent auditor/inspector or the delegation of those functions to local government. We maintain that the Bureau, acting alone, cannot effectively perform this role. • There should be a reasonable time limit for the state to act, once notified of the revocation of a local business permit. We understand that the current language, i.e. 10 days, may not be reasonable and we are willing to discuss a longer time frame, but there should be defined deadline. • Do not dismantle existing protections in law in the areas of public safety, public health, and the environment: • Do not repeal the volatile solvents definition and fire safety requirements; authorize locals to enforce. • Restore Section 26051 (anti -concentration language for businesses, protecting minors, fragile neighborhoods, etc.) • Do not repeal the environmental protection language in regards cultivation operations. • Do not repeal the potency/maximum concentration standards. The repeal endangers the public. • In product testing, retain the MMRSA requirement that all products must be tested in the final form in which they will reach the consumer.