City Council Agenda Report TO: CC: FROM: BY: RE: Honorable Mayor and City Council Mark Orme, City Manager Debbie Presson, City Clerk Vincent C. Ewing, City Attorney Norma Copado, Deputy City Attorney City of Chico Local Regulatory Authority Per Proposition 64-Adult Use of Marijuana Act; Regulatory Implications and Options REPORT IN BRIEF On November 8, 2016, California voters passed Proposition 64, the Control, Regulate, and Tax Adult Use of Marijuana Act ( AUMA ). Effective November 9, 2016 1, AUMA legalizes the nonmedical use of marijuana by persons 21 years of age and over, and the personal cultivation of up to six marijuana plants per residence. Generally, AUMA creates a state regulatory licensing system, which becomes effective January 1, 2018, governing the commercial cultivation, testing, and distribution of nonmedical marijuana, and the manufacturing of nonmedical marijuana products. This report specifies the implications on the City of Chico s ( City ) local authority to regulate nonmedical, i.e., recreational commercial and personal marijuana activities, per AUMA. The report also provides for a summary of what the Chico Municipal Code ( CMC or City s Code ) regulates concerning marijuana, and highlights what other cities are doing. The report also illustrates the City s two options: to explicitly prohibit commercial nonmedical/recreational marijuana activities, or to allow and regulate any or all commercial non-medical/recreational marijuana activities. The report includes issues and concerns the City must consider and evaluate before deciding the City s enforcement route, as well raising awareness to potential future federal enforcement of marijuana laws. DISCUSSION A. Chico s Local Authority, and Limits, to Regulate Non-Medical/Recreational Marijuana Per AUMA Per AUMA, below is a synopsis of what the City has authority to regulate and prohibit, and what it cannot, concerning non-medical/recreational marijuana: 1. The City s Prohibitory, Regulatory and Taxing Authority: The City is allowed to adopt ordinances regulating non-medical/recreational marijuana business activities, or to completely prohibit them. 2 For example, under the state s regulatory system, the state will issue marijuana businesses licenses. However, under AUMA, state licenses cannot be issued to an applicant whose operations 1 An initiative statute approved by a majority of votes thereon takes effect the day after the election unless the measure provides otherwise. (Cal Const, Art. II 10(a)). 2 Business and Professions Code 26200 (a).
Page 2 of 5 would violate the provisions of any local ordinance or regulation. 3 As a result, the City s regulatory scheme may consider zoning and land use implications establishing where nonmedical/recreational marijuana business activities may be allowed, permitted, and/or conditionally permitted. Further, the City has authority to tax said commercial non-medical/recreational marijuana activities. Alternatively, the City may prefer to completely prohibit said businesses. For example, the City is authorized to ban recreational retailers, medical dispensaries, and any delivery service originating from or terminating in the City s jurisdiction, outdoor cultivations, and any other state-licensed marijuana business. If the City does not adopt any ordinances concerning nonmedical/recreational marijuana businesses, the state can issue a license for a business in a City without local input, as silence and/or omission in the City s code on this activity will be deemed permissive by the state. 2. The City s Public and Safety Interest in Limiting Exposure to Smoke and Possession of Non- Medical/Recreational Marijuana: The City may prohibit smoking, and possession of, non-medical/recreational marijuana, in specified locations, including, but not limited to: (a) in buildings owned, leased, or occupied by the City; (b) in public places, except where locally authorized; (c) where smoking tobacco is prohibited; (d) within 1,000 feet of a school, day care center, or youth center while children are present at such school, day care center or youth center, except in or upon grounds of a private residence. 4 So, even though a person s private residence is within 1,000 feet of a school, day care center or youth center, the residents may still smoke marijuana in or on the grounds of such residence. Further, employers, including the City, may continue to maintain drug-free workplaces. 5 (See B.2 below for additional discussion). 3. What May the City not Prohibit and/or Regulate? The City cannot (a) prohibit the non-medical/recreational use of marijuana by persons 21 years of age and over; (b) prohibit the personal cultivation of up to six (6) marijuana plants per residence; nor, (c) tax marijuana cultivated for personal use. B. The City s Regulations Concerning Marijuana 1. Cultivation of Medical Marijuana for Personal Use: CMC Chapter 19.77 allows for the cultivation of medical marijuana on residentially zoned property for personal use by a qualified patient or primary giver. 6 Cultivation is allowed outdoors, subject to certain conditions, such as the location of the plants, the maximum allowed outdoor area devoted to the cultivation, and restrictions on the visibility of same from adjacent public or private property. 7 Further, the indoor cultivation of medical marijuana for personal use inside a residence or other building on residentially zoned property is allowed by first securing a City-issued indoor cultivation permit. 3 Business and Professions Code 26055 (e). 4 Cal. Health and Safety Code 11362.3 (a) (3). 5 Proposed Cal. Health and Safety Code 11362.45 (f); see also Ross v. Raging Wire Telecommunications, Inc. (2008) 42 Cal.4th 920 (the California Supreme Court held that an employee does not have a right to smoke marijuana in the workplace). The League of California Cities opined that this law applies if Proposition 64 passes, workplaces may prohibit the use of marijuana by their employees in a similar fashion as prohibiting drinking alcohol, smoking cigarettes, etc. 6 CMC 19.77.040. 7 CMC 19.77.040(A).
Page 3 of 5 2. Restricting Exposure to Marijuana Smoke: AUMA restricts the places where marijuana may be smoked. A significant restriction bans smoking marijuana for personal use where smoking tobacco is prohibited. 8 The City s restriction on places, locations, and areas where smoking marijuana is prohibited is greater than AUMA restrictions. For example, Chapter 8.28 of the Chico Municipal Code ( CMC ) expressly designates locations where smoking is prohibited, subject to certain exceptions. Furthermore, the City s definition of smoke 9 includes both tobacco and marijuana smoke. Moreover, the CMC prohibits smoking in enclosed areas of all public places within the City. 10 This furthers the City s authority to continue to maintain a drug-free workplace. 11 While said smoking restrictions may be inferred to be applicable to marijuana smoking, the City Attorney recommends that the City adopt an explicit provision making restrictions on smoking and possession of marijuana, including in City-owned buildings. This includes amending the City s drug use policy for City employees to expressly include the prohibition of smoking marijuana. C. City of Chico s Options and Considerations: 1. Prohibit All Commercial Marijuana Activities: The City may continue to prohibit and ban any type of commercial marijuana activities, including medical marijuana dispensaries, non-medical/recreational marijuana retailers, and/or commercial cultivators, delivery, distributors, and/or transporting of, manufacturers, and testing laboratories. If the City opts to ban all commercial marijuana activity, the City Attorney recommends that amendments to the City s Municipal Code be made by adopting an ordinance to make an explicit prohibition. Otherwise, if the City s Municipal Code is silent on nonmedical/recreational marijuana, the state can issue a license for a business in the City. As noted above, the City, however, cannot ban the personal non-medical/recreational use and indoor cultivation. 2. Allow Commercial Marijuana Uses: The City may instead choose to allow some or all commercial marijuana uses and activities, which would include the retail sale of medical and nonmedical/recreational marijuana, such as store fronts open to the public, commercial cultivation for sale to retailers, wholesale, warehouse and distribution centers not open to the public, and/or delivery services originating or terminating in the City. The City would need to adopt corresponding land use and business regulations, and impose corresponding fees. The City may also impose taxes on nonmedical/recreational businesses to cover costs incurred with licensing, regulation, tax collection, enforcement, auditing, etc. Any tax imposed would require voter approval. 3. Smoking and Possession Regulations, and Indoor Personal Marijuana Cultivation The City may (1) regulate the locations where marijuana may be smoked, or possessed, with restrictions, and (2) 8 Business and Professions Code 26201. 9 Business and Professions Code 26201. 10 Chico, California, Municipal Code 8.28.030. 11 Proposed Cal. Health and Safety Code 11362.45 (f); see also Ross v. Raging Wire Telecommunications, Inc. (2008) 42 Cal.4th 920 (the California Supreme Court held that an employee does not have a right to smoke marijuana in the workplace). The League of California Cities opined that this law applies if Proposition 64 passes, workplaces may prohibit the use of marijuana by their employees in a similar fashion as prohibiting drinking alcohol, smoking a cigarette, etc.
Page 4 of 5 enact a permitting scheme for indoor personal marijuana cultivation. The City may decide to adopt an ordinance to address these regulatory provisions to be consistent with state law, while invoking local control and authority in these regulatory areas. This is also an opportunity to review the provisions of CMC Chapter 19.77, and the existing permitting scheme for medical marijuana cultivation for personal use, to ascertain whether the provisions remain consistent with the City s legislative and regulatory goals, as well as if they remain consistent with state law. D. What Are Neighboring Cities Doing? 1. Roseville: Roseville has a City-wide ban of medical marijuana dispensaries, processing facilities, testing laboratories, and delivery services. Roseville prohibits outdoor cultivation of marijuana, except that it allows cultivation of medical marijuana by authorized growers indoors in residential zones, subject to specific conditions. No recent actions have been taken in response to the passage of AUMA. 2. Oroville: Oroville has a City-wide ban of outdoor cultivation of marijuana, marijuana dispensaries, and delivery and commercial processing of medical cannabis. Cultivation of medical marijuana inside a residential structure is allowed with a permit. No recent actions have been taken in response to the passage of AUMA. 3. Butte County: The Butte County Board of Supervisors has voted to move forward with an ordinance regulating the cultivation of six nonmedical/recreational marijuana plants, which is nearly identical to its rules for cultivating medical marijuana. However, the new ordinance restricts plants to indoors on properties smaller than 5 acres, while residents with properties of 5 acres or larger can choose to grow up to six adjacent plants either indoors or outdoors. This will only apply to residents of the county s unincorporated areas. The vote was 3-2. 4. Sacramento: The Sacramento City Council will discuss the remaining components of its marijuana cultivation regulations at its March 7 meeting. These items include the proposed cultivation permit fees, permit term, distance from parks, and criminal history background check for potential cultivators. It will also vote on an ordinance lifting the temporary moratorium currently in place for all cultivation activities in the city. If the ordinances pass and the proposed fees are adopted, the City expects to begin accepting cultivation applications on April 3. 5. Redding: The Redding City Council held a public session on Monday, February 13, to discuss the impacts AUMA could have on the City. City Council gave direction for City staff to conduct further content/subject matter workshops to gather information and secure public comment on the various categories of related marijuana land uses, such as dispensaries, cultivation, etc. Redding has a ban on dispensaries and collectives. However, Redding allows qualified patients and designated primary caregivers to cultivate up to six marijuana plants at their private residences. The plants may be grown indoors or outdoors. E. Federal Preemption and Enforcement Marijuana remains an illegal Schedule 1 drug. While past administrations have not made the federal criminal enforcement of marijuana a policy priority, the current Trump administration and Attorney General Jeff Sessions have expressed intent to enforce. As recent as February 23, 2017, the White House said it expects law enforcement agents to enforce federal marijuana laws when they come into conflict with states where recreational use of the drug is permitted. "I do believe you will see greater enforcement of it," White House press secretary Sean Spicer said
Page 5 of 5 regarding federal drug laws. 12 Attorney General Jeff Sessions further has said he is "not a fan" of the expanded use of marijuana, and vows that there will be greater enforcement of federal marijuana laws. 13 CONCLUSION The City of Chico has not lost its local regulatory authority to enact regulations concerning nonmedical/recreational marijuana, despite the use of nonmedical/recreational marijuana by adults 21 or older now being legal in California. The City may continue to enact ordinances and policies, and consistent with state law, to further the City s interest in protecting and furthering public, safety, health and economic considerations, while balancing a person s right to use nonmedical/recreational marijuana, under AUMA. The City Attorney is prepared to provide additional information on any topic raised herein, and/or to draft ordinances and policies on behalf of the City, after the City has had the opportunity to consider and evaluate any issues and concerns before deciding its policy route. The City Attorney will continue to monitor all significant developments arising from the adoption of AUMA, and related state and federal regulations, laws, and policies. 12 White House: Feds Will Step Up Marijuana Law Enforcement, (http://www.cnn.com/2017/02/23/politics/white-house-marijuanadonald-trump-pot) [February 24, 2017]. 13 Jeff Sessions: 'We're not going to a better nation if we have marijuana sold at every corner grocery store,' (http://www.businessinsider.com/jeff-sessions-against-weed-trump-administration-wants-to-crack-down-2017-2) [February 28, 2017].