Loading...
HomeMy WebLinkAboutMinutes - September 21, 2021 SSLODI CITY COUNCIL SHIRTSLEEVE SESSION CARNEGIE FORUM, 305 WEST PINE STREET TUESDAY, SEPTEMBER 21, 2021 An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held Tuesday, September 21, 2021, commencing at 7:00 a.m. Due to the COVID-19 pandemic and pursuant to Executive Order N-29-20, all Council Members participated in the meeting via teleconference and the meeting was available for viewing by the public via livestream at https://www.facebook.com/CityofLodi/ and https://zoom.us/j/93455719476?pwd=NDdhc1E4OEZyYWV3d2pDY1U5SjVZZz09; the opportunity for public comment was available through councilcomments@lodi.gov and https://zoom.us/j/93455719476?pwd=NDdhc1E4OEZyYWV3d2pDY1U5SjVZZz09. Present: Council Member Hothi, Council Member Khan, Council Member Kuehne, Mayor Pro Tempore Chandler, and Mayor Nakanishi Absent: None Also Present: City Manager Schwabauer, City Attorney Magdich, and City Clerk Cusmir Mayor Pro Tempore Chandler had to leave the meeting early. City Manager Schwabauer introduced this item. Deputy City Manager Keys and City Attorney Magdich explained how recreational cannabis sales are taxed via sales tax and transaction tax and how those taxes are collected, in response to questions asked by Mayor Nakanishi. City Attorney Magdich stated that there are three State agencies that regulate the sale and distribution of cannabis; the Department of Consumer Affairs, which licenses the transportation, storage, distribution, and sales; the Department of Food and Agriculture issues cannabis cultivation licenses; and the Department of Health issues licenses for manufacturing and testing facilities. Council Member Kuehne noted that previously the City Council agreed to allow for the delivery of medical cannabis without knowing that in the future the City might lose tax revenue by not allowing recreational cannabis delivery. Mr. Kuehne said that revisiting this issue is timely, considering how the cannabis industry has been developing in the State. City Attorney Magdich provided some background on previous discussion the Council had regarding cannabis sales in the City. David McPherson, Compliance Director with HdL Companies, provided a PowerPoint presentation. Specific topics of discussion included HdL background; Proposition 64 election results; cannabis licenses; cannabis business categories; California cannabis laws; survey regarding consumers' replacement of prescription and over-the-counter drugs with CBD; California cannabis retail market analysis; California cannabis retail market license shortage; policy decisions; policy development; importance of updating policy; policy decisions based on A.Roll Call by City Clerk B.Topic(s) B-1 Presentation on Cannabis Regulation and Taxation Potential (DCM) 1 activities; path to success; status of other agencies in the region; core values for consideration; development of regulatory ordinance; land use buffer options; non-compliant and compliant retail examples; retailer/dispensary/microbusiness; illegal and legal manufacturing examples; manufacturing; distribution; addressing public concerns through regulations; local control authority; regulatory system advantages; regulatory ordinance; tax and fee revenues; local tax and fee revenue projections; revenue generating strategies; and policy questions - ban or allow commercial cannabis, medical or non-medical, types of cannabis licenses, capping available licenses, competitive licensing options, buffer requirements, buffer distance requirements, zoning districts, and revenue options. Council Member Kuehne asked about the impact on grape growers if cannabis cultivation is also allowed. Mr. McPherson responded that outdoor cultivation could be a concern and indoor cultivation would have fewer, if any, impacts. City Manager Schwabauer asked if the City's transaction use tax would be applicable. Mr. McPherson answered that it would be applicable to sales made at a fixed location, but not deliveries. Council Member Kuehne asked if the City could adopt a higher local sales tax than 6 percent. Mr. McPherson said that the City could implement a high sales tax, however consumers may go elsewhere to make their purchases if the local sales tax is too high and the businesses may not be competitive with those outside the city limits. Council Member Khan expressed his concern about how a retail location in Lodi would impact the surrounding neighborhood. Mr. Khan stated that he would support delivery only and maybe a retail location away from any residential neighborhoods. Mr. McPherson stated that the City would be able to dictate the terms for any retail locations, including requiring security guards, cameras and other safety concerns. Sergeant Eric Versteeg reported the Lodi Police Department has done some research regarding DWIs, collisions, increases in teen usage, and overall increases in crime in areas surrounding dispensaries and what they found is that there is no significant increase in crime or teen usage. Sergeant Versteeg stated that there may be an increase in DWIs, however that may be a result of increased detection. Sergeant Versteeg said there are other concerns related to educating the public. Council Member Kuehne stated that he supports exploring the matter further and noted that he is concerned with allowing recreational cannabis while considering regulating tobacco use. Council Member Kuehne had to leave the meeting early. Council Member Hothi stated he supports further exploration of the issue especially considering there are already deliveries occurring in the city limits. Mr. Hothi noted the benefit to businesses and City revenues. Mayor Nakanishi said that he understands why cannabis businesses are supported by jurisdictions, but does not support dispensaries in the City of Lodi and spoke about the health and societal costs related to cannabis use. Mayor Nakanishi stated he does not support dispensaries in Lodi. Council Member Khan said he supports allowing deliveries, but not retail dispensaries. C.Comments by Public on Non-Agenda Items 2 None No action was taken by the City Council. The meeting was adjourned at 8:14 a.m. D.Adjournment ATTEST: Jennifer Cusmir City Clerk 3 City of Lodi CANNABIS POLICY DISCUSSION ABOUT HdL ✓Serves: ‒303 cities ‒48 counties ‒108 transaction districts ✓Partnered with over 175 local agencies to develop cannabis policies ✓Team consists of former policymakers, law enforcement and cannabis regulators with State, County and local level experience ✓Reviewed and evaluated over 4,000 cannabis business applications for local agencies ✓HdL staff has experience conducting over 18,000 cannabis compliance reviews in California, Colorado, and Nevada PROPOSITION 64 ELECTION RESULTS Statewide passed with 56% of the vote; 44% opposed San Joaquin County 51.85% of voters supported 41% opposed CANNABIS LICENSES BY TYPE AS OF 9/8/21 5371 Cultivation 906 Manufacturer 781 Retailers 328 Retailers Non-Storefront 1026 Distributors 145 Distributor Transport Only 297 Microbusinesses 40 Testing Labs 41 Cannabis Event Organizers 8,935 Total CULTIVATOR MANUFACTURER TESTING LAB DISTRIBUTOR RETAIL TESTING LAB CONSUMER CANNABIS BUSINESS CATEGORIES WHAT’S LEGAL CALIFORNIA CANNABIS LAWS 2015-17 2018-19 2020-21 •Medical Cannabis •Regulation and Safety Act (MCRSA) •Prop 64 (AUMA) •Trailer Bill SB 94 •Medicinal & Adult Use Cannabis Regulation and Safety Act •State Regulations finalized Jan 2019 •SB 1459 Established Provisional Licenses •AB 97 and SB 97 provided additional revision to regulations •AB 1356 (Ting) Minimum Local Retail Requirement •Farm Bill Act 2018-Hemp •AB 45-Hemp Law (Aguiar- Curry) •SB 59 CEQA Sunset •AB 141 Consolidation of State Agencies SURVEY: CONSUMERS REPLACE PRESCRIPTION & OTC DRUGS WITH CBD CA CANNABIS RETAIL MARKET ANALYSIS 2855 1842 1061 781 Illicit Market Market Demand Market Shortage Current Retail Licenses CA CANNABIS RETAIL MARKET LICENSE SHORTAGE Lodi Lodi POLICY DECISIONS CANNABIS POLICY DEVELOPMENT “Policies designed today will help shape how your industry looks tomorrow.” -HdL Companies UPDATING CANNABIS POLICIES NOW IS IMPORTANT BECAUSE: 1 2 3 401 Regulations are finalized and have changed local policies 02 03 04 Consumer trends have changed and their perception of cannabis Businesses and investors are looking at places to locate It is now legal: either establish regulations or maintain the ban Policy Decisions Based on Activities ✓Personal Cultivation ✓Out of Town Deliveries ✓Non-Store Front Retailer In Town ✓Retailer (Dispensaries) In Town ✓Consumption Lounges Consumer Demand ✓Cultivation Facilities ✓Manufacturing Facilities ✓Distribution Facilities ✓Testing Labs ✓Generates Jobs ✓Generates Revenue Economic Development PATH TO SUCCESS EDUCATE LEGISLATE COLLABORATE REGULATE STATUS OF OTHER AGENCIES IN THE REGION: •Manteca •Modesto •Sacramento •San Joaquin County •Stanislaus County •Stockton •Tracy •Rio Vista CITY OF LODI Core Values for Consideration 1 2 3 4 Public Safety Environmental Protection Neighborhood and Land Use Protection Access by Youth DEVELOPMENT OF REGULATORY ORDINANCE Time Place Manner Local jurisdictions should develop ordinances which address: LAND USE BUFFER OPTIONS RETAIL NON-COMPLIANT COMPLIANT RETAILER/DISPENSARY/MICROBUSINESS MANUFACTURING ILLEGAL LEGAL MANUFACTURING DISTRIBUTION Addressing Public Concerns through Regulations LOCAL CONTROL AUTHORITY ✓The law does not supersede or limit existing local authority for law enforcement activity, enforcement of local zoning requirements or local ordinances ✓Local Regulatory Ordinances will not be subject to CEQA until July 1, 2021 B&P Section 26055 (h) ✓County of Santa Cruz, etal court decision on deliveries ✓Farmer vs BCC billboard court decision A REGULATORY SYSTEM CAN: ✓Give the local agency authority and control over licensing ✓Require applicants to comply with robust requirements ✓Enhance accountability for security and product safety ✓Reduce intervention from the Federal Government by complying with the Cole Memo and other state laws A REGULATORY ORDINANCE CAN INCLUDE: ✓Limited number of business licenses ✓Access control requirements ✓Police access ✓Police background checks ✓Record reporting/retention requirements ✓Investigation and inspection protocols ✓Good neighbor policy mitigation ✓Suspension, fines, and permit revocation Tax & Fee Revenues LOCAL TAX or FEE REVENUE PROJECTIONS Annual Revenue Estimates*: Very Conservative (4%): $480,000-Plus $120,000 in local sales tax. Total $600,000 Moderate (5%): $600,000-Plus $120,000 in local sales tax. Total $720,000 Aggressive (6%): $720,000-Plus $120,000 in local sales tax. Total $840,000. *Assumes 3 storefront retailers with an average of $4M in gross receipts. However, City can accommodate up to six based on market analysis. REVENUE GENERATING STRATEGIES Standard fee to recover City costs General tax to be considered by the voters in November 2022; 50% +1 tax to general fund or by establishing Operational/Community Benefit Agreements POLICY QUESTION #1 Ban or allow commercial cannabis? BAN REGULATE •Maintain ban on commercial cannabis activity in Lodi •Direct staff to draft a regulatory and land use ordinance to bring back to City Council for consideration POLICY QUESTION #2 Medical or non-medical? MEDICAL NON-MEDICAL •18+ with MMID or doctor’s recommendation •Medical-only restriction applicable to retail licensees •21+ with identification •Distinction between M and A no longer relevant for non- retail businesses POLICY QUESTION #3 Cannabis license types? RETAIL NON-RETAIL •Storefront retail •Non-Storefront retail- delivery •Microbusiness (Includes retail and wholesale activity) •Cultivation •Manufacturing •Distribution •Laboratory Testing •Microbusiness POLICY QUESTION #4 Cap on available licenses? CAP NO CAP •Limit number of businesses through licensing process •Most appropriate for retail license types (e.g. storefront retail) •Requires competitive application process •Total number of licenses determined by other factors (e.g. consumer demand, zoning, buffers, etc.) •Most appropriate for non- retail license types (e.g. distribution, manufacturers, cultivation, and testing labs) POLICY QUESTION #5 Competitive licensing options: MERIT FIRST IN LINE LOTTERY HYBRID •Application/ interview ranking •Discretionary approval •First-come, first serve •Online or in- person •Lottery machine •Raffle drum •Computer program •E.g. combination of merit + lottery process POLICY QUESTION #6 Buffer requirements: STATE LOCAL B2B •Schools •Commercial daycare •Youth Centers •Parks •Playgrounds •Cities may also increase/decrease state buffer distances •Specific Areas to create overlays •Minimum distance between businesses •Typically applies to retail only •Requires process to determine who has rights to an area POLICY QUESTION #7 Buffer Distance requirements: SCHOOLS DAYCARES YOUTH FACILITIES •Less than 600 feet •State buffer 600 feet •Greater than 600 feet •Less than 600 feet •State buffer 600 feet •Greater than 600 feet •Less than 600 feet •State buffer 600 feet •Greater than 600 feet POLICY QUESTION #8 LODI ZONING DISTRICTS GC General Commercial DMU Downtown Mixed-Use District MCO Mixed Use Corridor MCE Mixed Use Center BP Business Park M Industrial POLICY QUESTION #9 Revenue options: TAXES FEES OTHER BENEFITS •Percentage of gross receipts •Price per square foot •Requires voter approval •Application fees •Regulatory fees •Limited to cost recovery, unless negotiated through development agreement •Development or Operational agreements may be used to negotiate community benefits THE DECISION IS YOURS THANK YOU! David McPherson Compliance Director dmcpherson@hdlcompanies.com (714) 879-5000 City of Lodi CANNABIS POLICY DISCUSSION ABOUT HdL ✓Serves: ‒303 cities ‒48 counties ‒108 transaction districts ✓Partnered with over 175 local agencies to develop cannabis policies ✓Team consists of former policymakers, law enforcement and cannabis regulators with State, County and local level experience ✓Reviewed and evaluated over 4,000 cannabis business applications for local agencies ✓HdL staff has experience conducting over 18,000 cannabis compliance reviews in California, Colorado, and Nevada PROPOSITION 64 ELECTION RESULTS Statewide passed with 56% of the vote; 44% opposed San Joaquin County 51.85% of voters supported 41% opposed CANNABIS LICENSES BY TYPE AS OF 9/8/21 5371 Cultivation 906 Manufacturer 781 Retailers 328 Retailers Non-Storefront 1026 Distributors 145 Distributor Transport Only 297 Microbusinesses 40 Testing Labs 41 Cannabis Event Organizers 8,935 Total CULTIVATOR MANUFACTURER TESTING LAB DISTRIBUTOR RETAIL TESTING LAB CONSUMER CANNABIS BUSINESS CATEGORIES WHAT’S LEGAL CALIFORNIA CANNABIS LAWS 2015-17 2018-19 2020-21 •Medical Cannabis •Regulation and Safety Act (MCRSA) •Prop 64 (AUMA) •Trailer Bill SB 94 •Medicinal & Adult Use Cannabis Regulation and Safety Act •State Regulations finalized Jan 2019 •SB 1459 Established Provisional Licenses •AB 97 and SB 97 provided additional revision to regulations •AB 1356 (Ting) Minimum Local Retail Requirement •Farm Bill Act 2018-Hemp •AB 45-Hemp Law (Aguiar- Curry) •SB 59 CEQA Sunset •AB 141 Consolidation of State Agencies SURVEY: CONSUMERS REPLACE PRESCRIPTION & OTC DRUGS WITH CBD CA CANNABIS RETAIL MARKET ANALYSIS 2855 1842 1061 781 Illicit Market Market Demand Market Shortage Current Retail Licenses CA CANNABIS RETAIL MARKET LICENSE SHORTAGE Lodi Lodi POLICY DECISIONS CANNABIS POLICY DEVELOPMENT “Policies designed today will help shape how your industry looks tomorrow.” -HdL Companies UPDATING CANNABIS POLICIES NOW IS IMPORTANT BECAUSE: 1 2 3 401 Regulations are finalized and have changed local policies 02 03 04 Consumer trends have changed and their perception of cannabis Businesses and investors are looking at places to locate It is now legal: either establish regulations or maintain the ban Policy Decisions Based on Activities ✓Personal Cultivation ✓Out of Town Deliveries ✓Non-Store Front Retailer In Town ✓Retailer (Dispensaries) In Town ✓Consumption Lounges Consumer Demand ✓Cultivation Facilities ✓Manufacturing Facilities ✓Distribution Facilities ✓Testing Labs ✓Generates Jobs ✓Generates Revenue Economic Development PATH TO SUCCESS EDUCATE LEGISLATE COLLABORATE REGULATE STATUS OF OTHER AGENCIES IN THE REGION: •Manteca •Modesto •Sacramento •San Joaquin County •Stanislaus County •Stockton •Tracy •Rio Vista CITY OF LODI Core Values for Consideration 1 2 3 4 Public Safety Environmental Protection Neighborhood and Land Use Protection Access by Youth DEVELOPMENT OF REGULATORY ORDINANCE Time Place Manner Local jurisdictions should develop ordinances which address: LAND USE BUFFER OPTIONS RETAIL NON-COMPLIANT COMPLIANT RETAILER/DISPENSARY/MICROBUSINESS MANUFACTURING ILLEGAL LEGAL MANUFACTURING DISTRIBUTION Addressing Public Concerns through Regulations LOCAL CONTROL AUTHORITY ✓The law does not supersede or limit existing local authority for law enforcement activity, enforcement of local zoning requirements or local ordinances ✓Local Regulatory Ordinances will not be subject to CEQA until July 1, 2021 B&P Section 26055 (h) ✓County of Santa Cruz, etal court decision on deliveries ✓Farmer vs BCC billboard court decision A REGULATORY SYSTEM CAN: ✓Give the local agency authority and control over licensing ✓Require applicants to comply with robust requirements ✓Enhance accountability for security and product safety ✓Reduce intervention from the Federal Government by complying with the Cole Memo and other state laws A REGULATORY ORDINANCE CAN INCLUDE: ✓Limited number of business licenses ✓Access control requirements ✓Police access ✓Police background checks ✓Record reporting/retention requirements ✓Investigation and inspection protocols ✓Good neighbor policy mitigation ✓Suspension, fines, and permit revocation Tax & Fee Revenues LOCAL TAX or FEE REVENUE PROJECTIONS Annual Revenue Estimates*: Very Conservative (4%): $480,000-Plus $120,000 in local sales tax. Total $600,000 Moderate (5%): $600,000-Plus $120,000 in local sales tax. Total $720,000 Aggressive (6%): $720,000-Plus $120,000 in local sales tax. Total $840,000. *Assumes 3 storefront retailers with an average of $4M in gross receipts. However, City can accommodate up to six based on market analysis. REVENUE GENERATING STRATEGIES Standard fee to recover City costs General tax to be considered by the voters in November 2022; 50% +1 tax to general fund or by establishing Operational/Community Benefit Agreements POLICY QUESTION #1 Ban or allow commercial cannabis? BAN REGULATE •Maintain ban on commercial cannabis activity in Lodi •Direct staff to draft a regulatory and land use ordinance to bring back to City Council for consideration POLICY QUESTION #2 Medical or non-medical? MEDICAL NON-MEDICAL •18+ with MMID or doctor’s recommendation •Medical-only restriction applicable to retail licensees •21+ with identification •Distinction between M and A no longer relevant for non- retail businesses POLICY QUESTION #3 Cannabis license types? RETAIL NON-RETAIL •Storefront retail •Non-Storefront retail- delivery •Microbusiness (Includes retail and wholesale activity) •Cultivation •Manufacturing •Distribution •Laboratory Testing •Microbusiness POLICY QUESTION #4 Cap on available licenses? CAP NO CAP •Limit number of businesses through licensing process •Most appropriate for retail license types (e.g. storefront retail) •Requires competitive application process •Total number of licenses determined by other factors (e.g. consumer demand, zoning, buffers, etc.) •Most appropriate for non- retail license types (e.g. distribution, manufacturers, cultivation, and testing labs) POLICY QUESTION #5 Competitive licensing options: MERIT FIRST IN LINE LOTTERY HYBRID •Application/ interview ranking •Discretionary approval •First-come, first serve •Online or in- person •Lottery machine •Raffle drum •Computer program •E.g. combination of merit + lottery process POLICY QUESTION #6 Buffer requirements: STATE LOCAL B2B •Schools •Commercial daycare •Youth Centers •Parks •Playgrounds •Cities may also increase/decrease state buffer distances •Specific Areas to create overlays •Minimum distance between businesses •Typically applies to retail only •Requires process to determine who has rights to an area POLICY QUESTION #7 Buffer Distance requirements: SCHOOLS DAYCARES YOUTH FACILITIES •Less than 600 feet •State buffer 600 feet •Greater than 600 feet •Less than 600 feet •State buffer 600 feet •Greater than 600 feet •Less than 600 feet •State buffer 600 feet •Greater than 600 feet POLICY QUESTION #8 LODI ZONING DISTRICTS GC General Commercial DMU Downtown Mixed-Use District MCO Mixed Use Corridor MCE Mixed Use Center BP Business Park M Industrial POLICY QUESTION #9 Revenue options: TAXES FEES OTHER BENEFITS •Percentage of gross receipts •Price per square foot •Requires voter approval •Application fees •Regulatory fees •Limited to cost recovery, unless negotiated through development agreement •Development or Operational agreements may be used to negotiate community benefits THE DECISION IS YOURS THANK YOU! David McPherson Compliance Director dmcpherson@hdlcompanies.com (714) 879-5000