REPORT TO SHASTA COUNTY BOARD OF SUPERVISORS

BOARD MEETING DATE:  November  14, 2017
CATEGORY:  Scheduled Hearings - Resource Management-8.

SUBJECT:

An Ordinance of the Board of Supervisors of the County of Shasta Regulating Commercial Cannabis Activity.

Supervisorial District No. :  ALL

DEPARTMENT CONTACT:  Richard W. Simon, Director of Resource Management 225-5789

STAFF REPORT APPROVED BY:  Richard W. Simon, Director of Resource Management

RECOMMENDATION

Take the following actions: (1) Conduct a public hearing to consider Zone Amendment No. Z17-005, an ordinance amending the Shasta County Code to prohibit commercial cannabis activity and cannabis delivery (Ordinance); (2) close the public hearing; (3) find the Ordinance is categorically exempt from the California Environmental Quality Act (CEQA) for the reasons stated in Planning Commission Resolution No. 2017-040; (4) find the Ordinance is consistent with the County General Plan; and (5) introduce, waive the reading of, and enact the Ordinance of the Board of Supervisors of the County of Shasta Regulating Commercial Cannabis Activity, Amending Shasta County Code Title 17, “Zoning Plan,” By Repealing Section 17.88.315, “Medical Cannabis Delivery,” And Adding Section 17.88.325, “Commercial Cannabis Activity.”

SUMMARY

On January 24, 2017, the Board of Supervisors adopted Resolution 17-010 directing staff to review the “Adult Use of Marijuana Act” (“AUMA”) and propose amendments to the Shasta County Zoning Plan for consideration by the Planning Commission and recommended action. The proposed ordinance would amend Chapter 17.88, “Special Uses” of the Shasta County Zoning Plan, by repealing Section 17.88.315, “Medical Cannabis Deliveries,” and adding Section 17.88.325, “Commercial Cannabis Activity.”

The proposed ordinance prohibits the following conduct within the unincorporated area of Shasta County, whether for medical or non-medical purposes: (1) commercial cannabis activity, (2) delivery of cannabis to customers, and (3) temporary events involving onsite sale or consumption of cannabis. The proposed ordinance does not prohibit transfer of medicinal cannabis or medicinal cannabis products by primary caregivers to their qualified patients subject to certain requirements.

On October 19, 2017, the Planning Commission considered a draft of this ordinance at a duly noticed special meeting and public hearing, at which time public testimony was received as well as a report from staff. Following the hearing, on a 5-0 vote, the Planning Commission recommended that the Board of Supervisors approve the ordinance as proposed based on the findings set forth in the attached Planning Commission Resolution 2017-040.

DISCUSSION

On January 1, 2016, the “Medical Marijuana Regulation & Safety Act” (MMRSA) became effective, to establish a state regulatory structure concerning, among other things, the issuance of state licenses for commercial cannabis activity, as defined in Business & Professions Code section 19300.5, for medical purposes. On June 27, 2016, the “Medical Marijuana Regulation & Safety Act” was renamed as the “Medical Cannabis Regulation & Safety Act. (MCRSA).

On November 8, 2016, the California electorate approved Proposition 64, known as the “Adult Use of Marijuana Act” or “AUMA.” The AUMA’s purpose is to establish a comprehensive system to legalize, control, and regulate the cultivation, processing, manufacture, distribution, testing, and sale of nonmedical marijuana, including marijuana products, for use by adults 21 years and older, and to tax the commercial growth and retail sale of marijuana. On June 27, 2017, the California Legislature adopted the “Medicinal and Adult Use Cannabis Regulation and Safety Act (MAUCRSA).” The MAUCRSA repealed the MCRSA and included certain provisions of the MCRSA in the licensing provisions of the AUMA. The MAUCRSA also revised references to “marijuana” or “medical cannabis” in existing law to instead refer to “cannabis” or “medicinal cannabis.”

The proposed ordinance would amend the Shasta County Zoning Plan by adding Section 17.88.325 “Commercial Cannabis Activity.” The proposed ordinance includes legislative findings regarding state law, reported adverse impacts to health, safety and community welfare associated with commercial cannabis activity, the need for regulation, and the County’s authority to enact the proposed ordinance. The proposed ordinance defines certain relevant terms including, but not limited to, “Commercial Cannabis Activity” and those uses associated with commercial cannabis activity as set forth in Business and Professions Code section 26001, and “Cannabis” as set forth in Health and Safety Code section 11018 and Business and Professions Code section 26001.

The proposed ordinance prohibits the following conduct within the unincorporated area of Shasta County, whether for medical or non-medical purposes: (1) commercial cannabis activity, (2) delivery of cannabis to customers, and (3) temporary events involving onsite sale or consumption of cannabis. The AUMA would otherwise allow for the issuance by the state of temporary event licenses if a local jurisdiction were to authorize such events.

The proposed ordinance does not prohibit transfer of medicinal cannabis or medicinal cannabis products by primary caregivers to their qualified patients subject to certain requirements.

The proposed ordinance also would amend the Shasta County Zoning Plan by repealing Section 17.88.315, “Medical Cannabis Deliveries.” Section 17.88.315 was adopted in response to the MMRSA, which has since been repealed. Specific language relating to the issue of “delivery” of cannabis products to customers in the unincorporated area has been incorporated into Section 17.88.325.

The proposed ordinance is not subject to the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15061(b)(3) (there is no possibility the activity in question may have a significant effect on the environment). In addition to the foregoing general exemptions, the following categorical exemptions apply: sections 15308 (actions taken as authorized by local ordinance to assure protection of the environment), 15321 (action by agency for enforcement of a law, general rule, standard or objective administered or adopted by the agency, including, but not limited to, by direct referral to the County Counsel as appropriate for judicial enforcement), and 15303 (new construction or conversion of small structures, e.g., a residential accessory building). There are no unusual circumstances under CEQA Guildline15300.2(c). Each exemption stands as a separate and independent basis for determining that this ordinance is not subject to CEQA.

The proposed ordinance is consistent with the County General Plan on the basis that the ordinance discourages excess grading and safeguards against disturbance and development on unstable slopes (General Plan Sections 5.1, 6.1), protects against degradation and misappropriation of water resources (General Plan Sections 5.1, 6.6), reduces exposure of the general public to hazardous materials (General Plan Section 5.6), protects agricultural, timber, recreation and other resource lands for their intended lawful purposes including habitat and production of food and fiber, guards against encroachment of large scale or illegal outdoor cultivation onto these lands (General Plan Sections 6.1 through 6.10), and is in furtherance of the public necessity, health, safety, convenience, and general welfare.

Based on the intent of the Board of Supervisors as expressed in Resolution 17-010 and in consideration of the provisions of the AUMA, the MAUCRSA, and related state regulations, staff is of the opinion that proper analysis has been undertaken and that the proposed ordinance is consistent with the County General Plan and further supports the public necessity, health, safety, convenience, and general welfare of the citizens of Shasta County.

Proposed regulations related to personal cultivation in response to the AUMA, as amended by the MAUCRSA, will be addressed in a forthcoming separate ordinance.

ALTERNATIVES

The Board may choose not to adopt the proposed ordinance or may modify the ordinance and direct staff as appropriate. Starting January 1, 2018, the State Bureau of Cannabis Control will begin to issue licenses for commercial cannabis activity. However, the State shall not approve an application for a license if approval of the license would violate the provisions of a local ordinance. Business & Professions Code section 26055. In order to prohibit commercial licenses being issued in the unincorporated area of Shasta County, a local ordinance prohibiting commercial cannabis activity must be adopted and enacted prior to January 1, 2018, and the licensing authority must be notified of the enacted ordinance.

OTHER AGENCY INVOLVEMENT

County Counsel has approved the ordinance as to form. The County Administrative Office has reviewed this recommendation.

FINANCING

While the AUMA allows the County to prohibit commercial cultivation and the retail sale of cannabis and cannabis products, it also imposes monetary consequences should a County do so.

The AUMA imposes, effective January 1, 2018, a state cannabis excise tax on purchasers of cannabis and cannabis products at the rate of 15% of the gross receipts of any retail sale by a person or entity required to be licensed to sell cannabis and cannabis products directly to a purchaser. Revenue & Taxation Code section 34011(a).

The AUMA also impose a cultivation tax on all harvested cannabis that enters the commercial market upon all persons required to be licensed to cultivate cannabis. The tax for cannabis flowers shall be $9.25 per dry-weight ounce. The tax for cannabis leaves shall be $2.75 per dry-weight ounce. Revenue & Taxation Code section 34012(a).

A certain portion of the proceeds from these state taxes shall be deposited into the “State and Local Government Law Enforcement Account.” Revenue & Taxation Code section 34019(f)(3). A certain amount of funds in that account will be made available to the Board of State & Community Corrections for making grants to local governments to “assist with law enforcement, fire protection, or other local programs addressing public health and safety associated with the implementation of the [AUMA].” Revenue & Taxation Code section 34019(f)(3)(C).

However, the Board of State & Community Corrections shall not make any grants to local governments that have banned cultivation or the retail sale of cannabis or cannabis products. Revenue & Taxation Code section 34019(f)(3)(C).

Cannabis-related code enforcement is supported in part with General Fund dollars. If approved, the regulations promulgated by the proposed ordinance will be administered and enforced within the existing code enforcement structure. No additional general fund impact is anticipated as a result of this action.