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
- Compliance with building occupancy classifications

- 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