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SR 11-14-2023 5L City Council Report City Council Meeting: November 14, 2023 Agenda Item: 5.L 1 of 2 To: Mayor and City Council From: Douglas Sloan, City Attorney, City Attorney's Office, Administration Subject: Second Reading and Adoption of an Ordinance amending Section 6.203.010 of the Santa Monica Municipal Code to allow medicinal cannabis retailers with medicinal cannabis permits issued before October 10, 2023, to deliver, cultivate, and sell adult-use cannabis and adult-use cannabis products to persons 21 years of age and over, subject to Santa Monica Municipal Code Section 9.31.185 Recommended Action Staff recommends that the City Council adopt the attached Ordinance. Executive Summary At its meeting on October 24, 2023, the City Council introduced for first reading an Ordinance amending Section 6.203.010 of the Santa Monica Municipal Code to allow medicinal cannabis retailers with medicinal cannabis permits issued before October 10, 2023, to deliver, cultivate, and sell adult-use cannabis and adult-use cannabis products to persons 21 years of age and over, subject to Santa Monica Municipal Code Section 9.31.185. The ordinance is now presented to the City Council for adoption. 5.L Packet Pg. 126 2 of 2 Prepared By: Bradley Michaud, Principal Legal Analyst Approved Forwarded to Council Attachments: A. ORD-Cannabis Amending Section 6.203.010 2d B. Written Comments 5.L Packet Pg. 127 1 City Council Meeting: November 14, 2023 Santa Monica, California ORDINANCE NUMBER _____ (CCS) (City Council Series) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA AMENDING SECTION 6.203.010 OF THE SANTA MONICA MUNICIPAL CODE TO ALLOW MEDICINAL CANNABIS RETAILERS WITH MEDICINAL CANNABIS PERMITS ISSUED BEFORE OCTOBER 10, 2023 TO DELIVER, CULTIVATE, AND SELL ADULT-USE CANNABIS OR ADULT-USE CANNABIS PRODUCTS TO PERSONS 21 YEARS OF AGE AND OVER, SUBJECT TO SANTA MONICA MUNICIPAL CODE SECTION 9.31.185 WHEREAS, the State of California has a long history of regulating cannabis uses within the State; and WHEREAS, in 1996, California voters approved Proposition 215 (codified at Health and Safety Code section 11362.5 and titled the “Compassionate Use Act of 1996”), which provides criminal immunity for patients and primary caregivers for the cultivation and possession of cannabis if a doctor has recommended the cannabis for medical purposes; and WHEREAS, in 2004, Senate Bill 420 was enacted (codified at Health and Safety Code section 11362.7 et seq. and titled the “Medical Marijuana Program Act”) to clarify the scope of the Compassionate Use Act of 1996; and WHEREAS, the Medical Marijuana Program Act allows cities and other governing bodies to adopt and enforce laws consistent with its provisions; and WHEREAS, in 2015, Assembly Bills 243 and 266 and Senate Bill 643 were enacted (codified at Business and Professions Code section 19300 et seq. and titled the “Medical Marijuana Regulation and Safety Act”) and provided for enhanced statewide marijuana regulations; and 5.L.a Packet Pg. 128 Attachment: ORD-Cannabis Amending Section 6.203.010 2d (6124 : Cannabis Section 6.203.010 - Second Reading) 2 WHEREAS, In November 2016, voters approved Proposition 64, the Adult Use of Marijuana Act (“AUMA”), which allows adults 21 years of age or older to legally grow, possess, and use cannabis for nonmedicinal purposes, with certain restrictions; and WHEREAS, beginning on January 1, 2018, AUMA authorizes the sale and distribution of cannabis for nonmedicinal purposes through a licensed business; and WHEREAS, in 2017, the State legislature enacted Senate Bill 94 which created the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”) which establishes a robust set of regulations for the medicinal and adult use cannabis markets, aligns all permit types, and authorizes certain state agencies to establish rules governing cannabis operations and to implement the law; and WHEREAS, MAUCRSA continues to preserve local control over cannabis-related uses by: (1) requiring medicinal cannabis businesses to obtain both a state license and a local license or permit, if required, to operate legally in California, (2) terminating the ability of a medicinal cannabis business to operate if its local license or permit is terminated, (3) continuing to authorize local governments to enforce local cannabis-related laws, (4) providing for penalties for unlicensed activities, and (5) expressly protecting local licensing practices, zoning and business regulation laws, and local actions taken under the constitutional police power; and WHEREAS, consistent with State actions, the City Council, when adopting its comprehensive update to its Zoning Ordinance in 2015, contemplated authorizing two medicinal cannabis retailers within the City to serve local needs; and WHEREAS, the City has commenced a prolonged medicinal cannabis retailer selection process and issued two permits for the operation of a medicinal cannabis 5.L.a Packet Pg. 129 Attachment: ORD-Cannabis Amending Section 6.203.010 2d (6124 : Cannabis Section 6.203.010 - Second Reading) 3 retailers in the City; and WHEREAS, the City has an important governmental interest in maintaining a thriving business community and protecting the health, safety, and economic welfare of its citizens and businesses; and WHEREAS, on May 10, 2022, City Council requested that the City Manager schedule a study session as soon as practicable regarding whether to allow for the sale of nonmedicinal cannabis in the City of Santa Monica; and WHEREAS, on July 26, 2022, in line with potential economic recovery efforts, the City Council voted to place a cannabis business license tax measure (Measure HMP) on the November 2022 ballot, imposing a tax on all commercial cannabis activities; and WHEREAS, in the November 2022 election, the voters approved Measure HMP; and WHEREAS, on June 13, 2023, City Council held a discussion session where it: (1) considered key policy considerations for allowing adult-use cannabis businesses and other non-retail cannabis business types within the City of Santa Moncia; (2) discussed options for allowing adult-use cannabis sales and associated regulatory restrictions as may be appropriate; and (3) provided direction to staff on bringing back changes to the Municipal Code to allow for adult-use cannabis retail businesses and non-retail cannabis business types within the City; and WHEREAS, at the June 13, 2023, study session, City Council approved allowing the previously approved medicinal cannabis retailers to also sell, cultivate, and deliver adult-use cannabis while the permanent adult-use cannabis updates are pending; and WHEREAS, Section 6.203.010 of the Santa Monica Municipal Code currently 5.L.a Packet Pg. 130 Attachment: ORD-Cannabis Amending Section 6.203.010 2d (6124 : Cannabis Section 6.203.010 - Second Reading) 4 prohibits commercial cannabis sales in the City; and WHEREAS, the City desires to amend Section 6.203.010 of the Santa Monica Municipal Code to allow medicinal cannabis retailers with medicinal cannabis permits issued before October 10, 2023 to deliver, cultivate, and sell adult-use cannabis or adult- use cannabis products to persons 21 years of age and over subject to the Santa Monica Municipal Code Section 9.31.185. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. Commercial Nonmedicinal Cannabis Uses. Santa Monica Municipal Code Section 6.203.010 is amended as follows: 6.203.01 Commercial Nonmedicinal Cannabis Uses a. Except as provided in subsection b, below, it shall be unlawful to undertake, establish, operate, maintain, or permit any commercial nonmedicinal cannabis use in the City. Except as provided in this subsection b, below, no use permit, business license, variance, building permit, or any other entitlement, license, or permit, whether administrative or discretionary, shall be approved or issued. The possession of a State license for commercial nonmedicinal cannabis use shall not be sufficient to authorize the operation of such a use within the City. b. Notwithstanding the prohibitions set forth in subsection a, above, a medicinal cannabis retailer that has been issued a medicinal cannabis permit pursuant to Chapter 6.203 of the Santa Monica Municipal Code prior to October 10, 2023, and subject to Santa Monica Municipal Code Section 9.31.185, shall be permitted to deliver, cultivate, or sell adult-use cannabis or adult-use cannabis products, as licensed and regulated by 5.L.a Packet Pg. 131 Attachment: ORD-Cannabis Amending Section 6.203.010 2d (6124 : Cannabis Section 6.203.010 - Second Reading) 5 Business and Professions Code Section 26000 et seq. and as amended from time to time, to persons 21 years of age and over. The authority to operate under this subsection will be limited to each annual business license term or renewal and will be subject to any additional requirements the City may adopt by ordinance, or administrative regulations or conditions in accordance with Santa Monica Municipal Code Section 6.200.040, including, but not limited to, any requirements related to social equity or community benefits. SECTION 2. Any provision of the Santa Monica Municipal Code or any appendix thereto inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further, is hereby repealed or modified to that extent necessary to effect the provisions of this Ordinance. SECTION 3. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional. 5.L.a Packet Pg. 132 Attachment: ORD-Cannabis Amending Section 6.203.010 2d (6124 : Cannabis Section 6.203.010 - Second Reading) 6 SECTION 4. The Mayor shall sign and the City Clerk shall attest to the passage of this Ordinance. The City Clerk shall cause the same to be published once in the official newspaper within 15 days after its adoption. This Ordinance shall become effective thirty days after its adoption. APPROVED AS TO FORM: _________________________ Douglas Sloan, City Attorney 5.L.a Packet Pg. 133 Attachment: ORD-Cannabis Amending Section 6.203.010 2d (6124 : Cannabis Section 6.203.010 - Second Reading) From:Taylor Megdal To:councilmtgitems Cc:Lauren Niehaus; Brian Manning Subject:Recreational Canabis Ownership Letter of Support Date:Monday, October 23, 2023 10:30:06 AM Attachments:City of Santa Monica_Support for Adult-Use Sales_10.19.23 TM Signed.pdf EXTERNAL I respectfully submit the attached in favor of allowing the two medical licenses currently in Santa Monica to be allowed to be adult use. Let me know if you have any questions... Thank you Taylor Taylor Megdal, Esq.PresidentThe Megdal Companies252 S. Beverly Drive, Suite #CBeverly Hills, CA 90212 Office: (310) 277-0416Fax: (310) 277-0519Cell: (310) 601-6600 ITEM 5.L. November 14, 2023 ITEM 5.L. November 14, 2023 5.L.b Packet Pg. 134 Attachment: Written Comments (6124 : Cannabis Section 6.203.010 - Second Reading) October 23, 2023 RE: Support for adult-use sales in the city of Santa Monica Santa Monica City Council 1685 Main St. Santa Monica, CA 90401 Dear Members of the Santa Monica City Council, We are writing to express our strong support for the sale of adult-use cannabis within the city of Santa Monica. As an established cannabis operator in the state, we have witnessed the positive effects of responsible cannabis regulation, and believe Santa Monica has the opportunity to benefit greatly from such a policy change. Adult use marijuana legalization has been implemented successfully, and responsibly, in various states across the nation. In November 2016, California citizens supported adult-use legalization, via Prop 64. Santa Monica is poised to adopt the same. The city has already secured two strong operators and has rules in place that will ensure that the cannabis businesses in the city operate to the benefit of the community. We believe that Santa Monica, with its vibrant and diverse community, is well-positioned to launch into adult-use sales while continuing to prioritize public safety and community well- being. By allowing adult-use sales, the city can benefit from an economic boost and ensure that consumers have access to safe and regulated products. Transparency and open dialogue are crucial to shaping policies that reflect the needs and values of the residents, while ensuring a strong business environment. We appreciate the opportunity to expand upon our originally planned business and provide both medical and adult use access to Santa Monica citizens. As the city has already promulgated rules for medical sales, it is imperative that those standards remain in place. Transitioning those rules to be inclusive of adult use sales, will prime the approved operators for success. We strongly encourage the Council to follow the existing state regulations governing the sale of adult use cannabis, and after there has been time for operators to implement those sales, should a change need to be made, we are committed to bringing additional best-practice suggestions to planning and Council for consideration. Our company is in the midst of construction and poised to open in the coming months. While this process has been a long time coming, we are looking forward to serving the Santa Monica community in the coming months. We will have recently paid for our building permits and are finalizing re-designs of our floor plan layout. As soon as we have approval to proceed, we plan ITEM 5.L. November 14, 2023 ITEM 5.L. November 14, 2023 5.L.b Packet Pg. 135 Attachment: Written Comments (6124 : Cannabis Section 6.203.010 - Second Reading) to move quickly to become operational. Our team on the ground in the city will be focusing all efforts on opening this store before the end Q1, 2024. To conclude, we ask the Santa Monica City Council to consider the potential benefits of legalizing and regulating adult-use cannabis sales within the city, with the current rules in place. This is an opportunity to boost the local economy, promote consumer safety, and reduce the influence and use of the illicit market. Thank you for your time and consideration. We look forward to our continued partnership with the city of Santa Monica. Sincerely, Taylor Megdal Co-Owner, Harvest License/Location ITEM 5.L. November 14, 2023 ITEM 5.L. November 14, 2023 5.L.b Packet Pg. 136 Attachment: Written Comments (6124 : Cannabis Section 6.203.010 - Second Reading)