POTENTIAL REGULATION OF RECREATIONAL MARIJUANA

Below is a summary of a City Council Meeting on February 13, 2018. These are the topics discussed about our beautiful community and progression of Legalizing Cannabis within the city of Corona, CA.

A BRIEF HISTORY LESSON

Corona Has Long Prohibited Medical Marijuana Dispensaries & Related Businesses

  • First prohibition adopted in 2006
  • One of the first published appellate court opinions related to enforcement of medical marijuana prohibitions (Corona v. Naulls in 2008)

WHAT DOES PROP 64 ALLOW?

Medicinal and Adult-Use Cannabis Regulations and Safety Act (MAUCRSA). Essentially Replaced Prop 64 and Consolidated with Medical Marijuana Regulation and Safety Act (MMRSA)

Personal Usage

  • Age – 21 years of age or older
  • Possession – Possess, process, transport, purchase, obtain or give away
  • Use – Smoke or ingest cannabis or cannabis products
  • Cultivation – Possess, plant, cultivate, harvest, dry or process up to 6 plants per residence for personal use, subject to reasonable regulation

State Licensing of Commercial Operations

Since January 1, 2018

  • All commercial cannabis businesses must have a state license to engage in any commercial cannabis activities
  • State licenses cannot be issued to an applicant whose operations would violate the provisions of any local ordinance or regulation
  • State licenses will be valid for one year
  • Separate state licenses are required for each business location

Types of State Licenses

  • Types 1/2/3: Cultivation; specialty outdoor and indoor (small and medium) (January 2018)
  • Type 4: Cultivation; Nursery
  • Type 5: Cultivation; outdoor/indoor (large) (January 2023)
  • Types 6/7: Manufacturing 1 and 2
  • Type 8: Testing
  • Types 9/10: Retailer
  • Types 11/12: Distributor /Transportation

Local Regulatory Options

  • MAUCRSA does not require cities or counties to enact a regulatory scheme by a certain date
    • If not in place before a business applies for a state license, state will contact local agency to ensure that activity would not violate local regulations
  • May completely ban state-licensed cannabis businesses
    • May not prohibit use of public roads for deliveries in other jurisdictions
  • May regulate all or some commercial cannabis activities
    • State standards are minimum standards
    • Possible additional standards: health & safety, environmental protection, testing, security, food safety and worker protections

“OPENING THE DOOR” TO REGULATION

  • Aspects of the Marijuana Business
    • Research
    • Grow/Produce
    • Manufacture
    • Testing
    • Distribute
    • Sell (Retail)
  • Allowing Any Aspect Increases Likelihood of Allowing All
    • Policy pressure and/or initiative measures
  • Perception Alone Likely Drives an Increase in Illegal Businesses
    • 6 in first 6 months following passage of Prop 64

CITY STAFF CONCERNS

  • What Will the City’s “Net” Financial Impact Be?
    • Current budget challenges & the promise of money
    • Regulatory staff & enforcement costs
    • Timing gap between certain expense & uncertain revenue
    • “INVESTING WITH BORROWED MONEY” ~ Risk all on city
  • Fixed Costs & Related Concerns
    • Community Development & Fire Department
  • Concerns for the Building and Fire Departments
    • Compliance with building occupancy classifications
      • Indoor commercial cannabis grow facility
      • Cannabis processing
      • Testing facility
      • Extraction facility
    • Ventilation
      • Control heat and excess CO2 inside bldg.
    • Gas Detection System
      • Increased level of CO2 inside bldg. for commercial grow
    • Odor Control
      • External odor from operation
    • Electrical Demand
      • Indoor Grow Facility
    • Quantity of highly flammable products in control rooms
    • Maintaining Means of Egress from the Building
    • Staffing Concerns
      • Current staffing levels not sufficient
      • Increased inspections by Building and Fire inspectors
      • Ensure compliance with building and fire codes and building occupancy classification
      • Unknown if operations would warrant bi-annual or tri-annual inspections by city staff
    • Time Spent on Enforcement of Illegal Business
  • Police Department Highlights
    • Staffing Concerns
    • Crime Concerns
    • The Colorado Experience
  • Possible Utility Concerns
    • Electricity Thefts
    • Sewer System Impacts
  • Current Enforcement Efforts
    • The City’s Complete and Unequivocal Prohibition Makes Our Enforcement Efforts Quicker and Much More Efficient
  • Major Steps in the Process
    • Discovery
    • Inspection by Code Enforcement
    • Cease & desist letter
    • File complaint/request TRO in court
    • Daily admin cites/fines (owners/operators/landlords)

Recent Case Study (944 W. 6th Street)

  • Weeks from discovery to shut down – 6
  • Admin fines recovered – $30,000

Variable Costs & Related Concerns

  • Enforcement Costs, Outside Legal Fees (6 Figures)
    • Would want to avoid adding attorney
    • Easily double (or more) current city-wide outside legal fees
    • Longer, more difficult path to shut down
    • Approved businesses will demand enforcement against illegal operations
    • We have experience with this – remember billboards & massage establishments
  • Forensic Compliance Audits & Expert Witnesses
  • Defending Constitutional Challenges
    • Equal Protection & First Amendment
  • Secondary Effects Lawsuits
    • Example: Ferranto
  • Workers Comp & Other Costs
    • Including Marijuana & Chemical Exposure

Federal Issues

  • Still Illegal Under Federal Law
  • Banking Concerns
  • Would the City Ever Be At Risk With Federal Grants?

WHY NOW?

There is Time to Learn from Other Cities

  • Regulatory/Inspection Issues
  • Development of State Law/Regs
  • Assess Federal/Banking Issues
  • Assess Net Cost Impacts

Are There Any Benefits to the City Proceeding Now?

  • Chasing the “Risk Premium”
  • Cities Don’t Chase Risk
  • How Long Will the Risk Premium Last?
  • Can We Risk Waiting More Than We Can Risk Failure?
  • Declining Prices & Taxes
  • Shifting Leverage