Commercial Cannabis Industry Overview March 28 630900 PM Sonoma Community Center Andrews Hall Consultants MuniServices Fran Mancia Vice President Government Relations Jeff Kolin Senior Advisor ID: 734121
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Sonoma
Community Workshop #1:
Commercial Cannabis Industry OverviewMarch 28 6:30-9:00 PMSonoma Community Center, Andrews Hall
Consultants, MuniServices
Fran Mancia, Vice President Government Relations Jeff Kolin, Senior AdvisorSlide2
Sonoma
Agenda
Program and goals for Workshop
Welcome -- Mayor Madolyn Agrimonti
Background and existing City Council Direction -- City Manager Cathy Capriola
MuniServices
presentation -- Fran Mancia and Jeff Kolin
Federal / State and Local regulations and options
Types of cannabis licenses
City Council direction to date
Local regulation options
Mapping and local issues -- City Planning Director David Goodison
Questions / Answers
Exercises / Feedback
Public Comment
Next StepsSlide3
Sonoma
Cannabis - dried flowers and leaves of
cannabis sativa. Delta-9-tetrahydrocannabinol (THC) - main psychoactive ingredient from female unpollinated plants, sticky resin. Cannabis stronger in last 20 years: from 5% THC to average 17% today. “Influence” determined by: drug, experience level and setting
Cannabidiol (CBD) - non-psychoactive. Anti-anxiety, pain relief indicationsExtractions: Hash oil, wax, shatter
Infusions: candy, drinks, chocolate bars, cooking saucesTypical medicinal uses for cannabisNeuropathic pain, epilepsy, treatment of spasticity associated with multiple sclerosis, AIDS wasting, and cancer and chemotherapy-induced nausea.
*Note: FDA has not found any such product to be safe or effective for the treatment of any disease or condition.
Cannabis 101Slide4
Sonoma
Cannabis still illegal by Federal law and U.S.A.G is not a supporter of cannabis legalization. Causes friction with states, businesses, banking and research
Controlled Substances Act of 1970 (CSA) - cannabis listed as Schedule 1 drug with heroin, LSD, MDMA (ecstasy), mushroomsCSA point: Cannabis has
“high potential for abuse”Counterpoint: The abuse rate among those who continue use is moderate with low/moderate damage compared to alcohol that has a slightly higher abuse rate and higher levels of damage, and compared to cigarettes with a very high abuse rate and very high damage from use.
CSA point: Cannabis has “no currently accepted medical treatment use”Counterpoint: Successful cannabis treatment for chronic pain and epilepsy are well documented.
Additional notes: There have been no recorded death by overdose, though high dosage can cause panic attacks
Federal Schedule 1Slide5
Sonoma
The Proposition 64
Statewide Vote: Yes: 57.1% No: 42.9%
County of Sonoma: Yes: 59.1% No: 40.9%City of Sonoma:
Yes: 62.4% No: 37.6%What did it Do?: Legalizes adult nonmedical use of cannabis
What About Locals?: Does not change local governments’ ability to regulate and/or tax medicinal or non-medicinal cannabis. When did Recreational Cannabis Businesses Activities Begin?
: January 1, 2018
SB 94: Reconciled Medicinal Cannabis Regulations and Safety Act with Adult Use of Marijuana Act of 2016 (AUMA) Prop. 64
Restrictions
Smoking cannabis
Processing cannabis for personal use
Growing and giving away cannabis
Medicinal & Adult-Use Cannabis Regulation and Safety Act
(MAUCRSA)Slide6
Administrative Structure of MAUCRSA
Sonoma
Excise Taxes
Sales and Use Taxes
Ban or authorize any or all segments of the commercial cannabis industry.
Regulate commercial cannabis businesses and personal cultivation. Slide7
Cultivation License Categories and Fees
Sonoma
Category
(Annual Fee)
Outdoor
Indoor
Mixed-Light
Specialty Cottage
Up to 25 plants
($1,205)
Up to 500 sq ft
($1,830)
Up to 2,5400 sq ft
($3,035 - $5,200)
Specialty
Up to 5,000 sq ft or 50 plants
($2,410)
Up to 5,000 sq ft
($19,540)
Up to 5,000 sq ft
($5,900 - $10,120)
Small
5,001 – 10,000 sq ft
($4,820)
5,001 – 10,000 sq ft
($35,410)
5,001 – 10,000 sq ft
($11,800 - $20,235)
Medium
10,001 sq ft to 1 acre
($13,990)
10,001 – 22,000 sq ft
($77,905)
10,001 – 22,000 sq ft
($25,970 - $44,517)
Large
(Not issued until 2023)
Greater than 1 acre
(Not Established)
Greater than 22,000 sq ft
(Not Established)
Greater than 22,000 sq ft
(Not Established)
Nursery
No size limit defined in statute (no canopy)
($4,685)
Processor
Conducts only trimming, drying, curing, grading, or packaging of cannabis and nonmanufactured cannabis products
($9,370)Slide8
Licensing categories and fees
Sonoma
License Type
Operations maximum per license (range)
Annual Fee per license (range)
Manufacturer
$100,000 to $10 million
$2,000 to $75,000
Testing Laboratory
0 to $500 million
$20,000 to $90,000
Distributor
0 to $80 million
$1,200 to $125,000
Distributor – Transport only
0 to $8 million
$500 to $2,500
Retailer
0 to $4.5 million and up
$4,000 to $75,000
Microbusiness
0 to $4.5 million and up
$5,000 to $120,000Slide9
Key State Regulations
Sonoma
Cultivation
: Metrc tags and tracking, RFID, immature to flowering plants.
Manufacturing:
THC limits, must deal with cannabis waste.
Testing:
Any cannabis product sold must meet testing requirements. Collect samples and test for cannabinoids, foreign materials, pesticides, homogeneity. Prohibited from licensure for other activity.
Transportation:
mandatory alarm system, shipping manifest, only employees in vehicle
Distributor:
transporting, arrange lab testing, quality assurance
Retailer:
Sells and may deliver goods. Hours 6:00am to 10:00pm, opaque packaging, deliveries to physical address, no more than $3,000 of goods, cannot package or label goods. Slide10
State License Requirements
Sonoma
The landowner must provide approval for the cannabis activity to be conducted
Licensee must have a $5,000 surety bond to cover destruction of cannabis goods
All licensees must enter supply chain events into track and trace systemSlide11
Sonoma
Medicinal vs. Adult Use
Medicinal ”M” or Adult-Use “A” licenses in closed systems:
Beginning July 1, 2018, A-licensees only conduct business with A-licensees and M-licensees shall only conduct business with M-licensees, except for testing laboratories.
Medicinal: Sold to purchasers 18 year or older that possess a valid doctor’s recommendation or California Medicinal Identification Card.
Adult-Use: Ultimately sold to purchasers 21 years or older. Slide12
Sonoma
Restriction: Other than the personal consumption, the city has authority to
Prohibit medicinal and/or recreational adult use cannabis business
Determine location of businesses and any kind of zoning requirements
Determine type of license/permit
Use permit
Special cannabis annual license
Taxation:
Sales and use tax
Retail and cultivation tax
Gross receipts tax
Administration fees. (modify or change)
Authority of Local GovernmentSlide13
Cultivation License Categories
Sonoma
Number
License Type
Description
Size
1
Cultivation
Outdoor, no artificial light
Up to 5000 sq. ft. canopy or 50 plants
1A
Cultivation
Indoor, all artificial light
Up to 5000 sq. ft canopy
1B
Cultivation
Natural and artificial light
Up to 5000 sq. ft canopy
2
Cultivation
Outdoor, no artificial light
Between 5000 and 10000 sq. ft. of canopy
2A
Cultivation
Indoor, all artificial light
Between 5000 and 10000 sq. ft. of canopy
2B
Cultivation
Natural and artificial light
Between 5000 and 10000 sq. ft. of canopy
3
Cultivation
Outdoor, no artificial light
Between 10000 sq. ft. and 1 acre
3A
Cultivation
Indoor, all artificial light
Between 10000 sq. ft. and 22000 sq. ft.
3B
Cultivation
Cultivation; Indoor; Medium
Between 10000 sq. ft. and 22000 sq. ft.
4
Cultivation
Cultivation; Nursery
No limit
5
Cultivation
Cultivation; Nursery
Outdoor, greater than 1 acre (2023)
5A
Cultivation
Cultivation; Indoor; Large
Indoor, greater than 22,000 sq. ft. (2023)
5B
Cultivation
Cultivation; Mixed-light; Large
Mixed indoor-outdoor, size TBD (2023)
8Slide14
Manufacturing, Testing, Retail, Distribution and Microbusiness License Categories
Sonoma
Number
License Type
Description
Size
6
Manufacturer
Manufacturer, no solvents or non-volatile solvents
7
Manufacturer
Manufacturer, volatile solvents
8
Testing
Testing - laboratory analyzing small samples for contaminants and potency
10
Retailer
Retail -
Medicinal
and/or
Adult Use
11
Distributor
Distributors (Medicinal Dispensary or Adult Use)
12
Microbusiness
(Non-med. only)
Cultivation, distributor, manufacturer (no solvents or non-volatile solvents), retailer
Up to 10,000 square feet of cultivation
Yellow highlighted
– City Council direction to exploreSlide15
Sonoma –
What is allowed now?
SonomaMoratorium on all cannabis licenses other than personal use and licensed delivery at this time.
Where Can Consumption Take Place: Smoking cannabis in a private residence
or at a business licensed for on-site cannabis consumption.How Much Can be Possessed:
Up to 28.5 grams (about one ounce) of cannabis and up to 8 grams of
concentrated cannabis (such as hash).
Where Can the Plants be Grown for Personal Use and How Much:
Growing up to six living cannabis plants and keeping the cannabis produced within a private residence or outside greenhouse.
5Slide16
Sonoma
City Council Direction
Types of potential cannabis activities under exploration
Medicinal dispensary
Manufacturer
Testing labDelivery – Medicinal only (allowed)Slide17
Sonoma
DispensariesSlide18
Sonoma
Delivery
“Delivery” means the commercial transfer of cannabis or cannabis products to a customer. “Delivery” also includes the use by a retailer of any technology platform owned and controlled by the retailer.
Only licensed operations can deliver cannabis. Delivery must be to a physical address
No drone deliverySlide19
Sonoma
ManufacturingSlide20
Sonoma
Testing
Slide21
Sonoma
Regulatory Options (further discussion at next Town Hall)
Which cannabis licenses, if any, to allowSiting location – zoning / distance requirementsState Law -- 600 feet from school (K-12), day care center or youth center.
Youth center – public or private facility primarily used to host recreational or social activities for minors, including, private youth membership organizations or clubs, social service teenage club facilities, video arcades, or similar amusement park facilities
City Council determines what a ‘youth center” is. Can do greater distance and define “day care center or youth center”
Taxing / feesTaxes require a vote of the people – November electionConsider option to reduce buffer zones by local action. CA emergency regulations seem to indicate that the local jurisdiction can designate both a more restrictive buffer zone or a less restrictive buffer zone
City Regulatory OptionsSlide22
Permitted DispensaryPermitted Dispensary + Other Cannabis Businesses
Dispensary Prohibited
CotatiSanta RosaSebastopolCloverdalePetaluma
Rohnert ParkWindsor
Healdsburg (but Med grow)Napa County (but Med grow/deliver)City of Napa (but Med retail, grow, manuf.)
Yountville (but Med deliver)St. Helena (but med grow, deliver)Calistoga
American Canyon (but Med/Rec grows)
Sonoma
Dispensaries: what are other North Bay communities doingSlide23
City Distance RequirementsCotatiOnly located in commercial zoning districts. Cannot be in the downtown commercial CD zoning district Cannot be within 500 feet (straight line from boundary) of: youth oriented facility, school, or smoke shop - cannot be in a residential area.
Highly visible entrance from East Cotati Ave, Gravenstein Hwy, or Redwood Dr.Napa
Not located on a property that is within 1,000 feet of any youth oriented property. - City Council has requested Napa ease this buffer, or adjusting measure not as ”the crow flies” but shortest possible path over streets.May not be located on a property that directly abuts, or is directly across the street from, a residential zoning district; with the exception that a medicinal cannabis retailer may be located on a property directly abutting the back yard of a residential zoning district.Santa Rosa
Shall not be established within 600 feet of any other Cannabis Retail use established within and permitted by the City of Santa Rosa.Cannot be within 600 ft. from any K-12 “school” as defined by the Health and Safety Code Section 11362.768.
SebastopolOnly in commercial or industrial area. Not in residential or mobile home land use – unless intervening nonresidential use appropriately separated from residence.Visible location with good views of dispensary entrance.
Not within 500 feet of a youth oriented facility, a school, a park (except for Laguna Wetlands Preserve) and the town plaza.
Sonoma
Dispensary Distance Requirements in Other North Bay CommunitiesSlide24
Sonoma
DRAFT MAP - 600 Foot Radius From Sensitive Sites
(not including day care centers)Slide25
Sonoma
Sonoma possesses valuable tasting and tours boutique brand
Sonoma Cannabis Tasting Festival or cannabis tours?Cannabis events can be licensed for a maximum of four days
Impact on tourismPotential to enhance wine/food tourism if done properlyPotential to detract reputation if sub-standard
Sonoma Cannabis Events?Slide26
Sonoma
Future federal enforcement is unclear
Lobbying effort to minimize cannabis specific taxes (as with alcohol or tobacco)
Traditional banking access still limited – asset seizure potential limits lending
Emerging cashless sales options are not fully testedContinued impact of the black market
Economic stability of the commercial marketPublic health and safety issues – DUI, Cannabis Use Disorder, development of adolescent brain
Available internal and/or external resources
Risk FactorsSlide27
Sonoma
Cannabis Business
Profitability
Protected from black market
Low taxes
Low crimeFair and transparent scoring
Simple, streamlined licensing
Dependable, trained workforce
Security for employees and property
Harmony with neighborhood
Legal standing
Ability to bank
Community
Public health and safety
Access to medicinal cannabis
Educational /prevention programs
Limit youth use
Community character
Increase equity licensing
Personal liberty
Freedom from arrest
Minimal nuisance and smell
Limitations on advertising
Input on retail presence
Why do business and community groups say yes/no?Slide28
What’s next
Sonoma
Rest of the Meeting
Questions / Answers
Input Exercise – Describe (15 minute break to complete)Feedback on license types
Feedback on “youth center” and distance requirementsComment Cards and Public Comment – 3 minutes eachNext Meeting
Community Town Hall #2:
April 11th 6:30-9:00 PM
Sonoma Community Center, Andrews HallSlide29
Sonoma
Thank You