County Zone Change 721 – Text Amendment to adopt permanent regulations for Marijuana Businesses – In November 2021, the Board of County Commissioners (BOCC) adopted Interim Zoning Regulations pertaining to the operation of marijuana businesses within the jurisdictional zoning area of the County (4.5-mile jurisdiction surrounding the City of Billings). The BOCC extended the interim regulations for one additional year in November 2022. The interim regulations will expire on November 23, 2023. No further extension of the regulations is allowed by state law. Permanent regulations must be adopted. The Planning staff has prepared a report on its study of the impact of the land use in the County and has devised permanent regulations for marijuana businesses based on this study. The text amendment will modify Sections 27-803.C, 27-1000, 270-1005, 27-1006, 27-1009, 27-1010, 27-1400, 27-1504 and 27-1800 of the Yellowstone County Zoning Regulations (December 2020)
 

Planning staff recommends approval of the draft regulations and adoption of the findings of the ten review criteria.

Not Applicable

Not Applicable

Not Applicable

Not applicable

Most of the existing interim zoning regulations are proposed to become part of the permanent zoning regulations. There are several specific changes staff is recommending based on findings from the report on Marijuana Businesses in Yellowstone County. First, staff is recommending to remove the required separation distance from a residential zone and a marijuana dispensary, cultivation location or processing facility. There have been few reported calls for public safety services at any of the marijuana business locations in the County, and few, if any, reported complaints to the Planning Division or Code Enforcement Division. The anticipated impacts from these businesses did not materialize, so staff believes the separation to residential zones is unnecessary especially when considering other allowed uses in the zoning code that do not require separation distances. Second, Planning staff and County legal staff are recommending the County Commissioners act on a resolution to provide a definitive sunset date for locations and marijuana uses that are in non-commercial zone districts, or in zone districts where the specific marijuana business type is not allowed. In March 2023, the County Commissioners adopted a resolution putting these business owners on notice that their ability to operate may not extend beyond the expiration of the interim zoning regulations (Attached Resolution 23-25). Staff is also recommended that locations that do not meet the required 600-foot separation to churches, schools, public parks with playgrounds and other named protected uses, could continue as legally nonconforming uses with the ability to re-establish if necessary through a special review process. The re-establishment might be required if the location were to burn down or need a major renovation. Staff is not recommending this legal nonconforming status be applied to businesses located in residential zones or in neighborhood zone districts. These businesses are prohibited and commercial enterprise of any kind beyond a home occupation is not allowable in residential and neighborhood districts. Lastly, and related to the sunset resolution, is a proposal to allow cultivation-only in the Agriculture zone district. This may allow some businesses to keep the cultivation portion of the current business going, while moving the retail sales or manufacturing to another location.

The state now issues licenses for each type of marijuana related activity - cultivation, dispensary, manufacturing, transporting or testing laboratories. For example, a dispensary is no longer required to grow all its own product. The dispensary could purchase from a grower or could purchase from a processor who manufactures consumer products from marijuana. Yellowstone County has a handful of cultivation-only operations that sell marijuana to in-state dispensaries and processors. An analysis of available information on marijuana businesses in Yellowstone County indicates a high level of compliance with zoning and land use regulations. Some locations outside zoning are not in what would be considered commercial areas or on arterial roads where some level of commercial activity is expected. The County Commissioners and County Code Enforcement received some complaints early-on about these locations, but the complaints have not persisted over the last two years. Planning staff has gathered information on existing business from a variety of sources. The Department of Revenue Cannabis Control Division does not publish all information on license holders. The division publishes the "location" which could be a city, town, county or general place name, the name of the licensed business and the phone number on the license application. The state does not provide the street address of the business, the name of the license holder or other information. The state law restricts the information that can be made public by the agency. Planning staff has been providing licensees with letters of zoning compliance for nearly two years. Our zoning conformance applications require a business name, an owner name, the exact location of the business and the nature of the business at each location. Staff can match this information with the state-provided information to get a more complete picture of the marijuana business activity in the county. 

There are seven locations within the zoning jurisdiction of the county that are not in the correct zoning to operate a marijuana business. Three are located in the Agriculture (A) zone, three are in Rural Residential (RR) zones and one is in the Neighborhood Mixed Use (NMU) zone. These are not considered legal nonconforming uses of land. If any or all of these locations were to be abandoned or damaged through fire, they could not be re-established at those locations in those zone districts. Six of the locations never inquired with the Planning office prior to establishing their business in an incorrect zone district. One was established prior to the County's adoption of the interim zoning regulations and did receive a written notice of compliance with the zoning at the time. This is the location in the Neighborhood Mixed Use (NMU) zone at the intersection of Shiloh Road and Central Avenue. Since the County did not have zoning regulations related to marijuana businesses at the time (early in 2021), and the zone district allowed retail businesses, Planning approved this location. These locations have several options available to bring the location into conformance. First, the owner could apply for a zone change to a district that allows the existing use. Zone changes need to meet the county's 11 review criteria to be approved. Not all of these locations are appropriate for commercial zoning. Secondly, the businesses in the Agriculture zone (A) could modify the type of license at the facility to a cultivation license and move the retail and processing license to a conforming location. Third, the businesses could obtain by purchase or lease a new location in a conforming zone district or outside the county's zoning jurisdiction. Twenty-eight percent of the existing 57 locations in Yellowstone County are outside the zoning jurisdiction. Finally, the businesses can propose an amendment to the pending permanent regulations to allow continuation of the businesses in these zone districts.

There are several locations in the zoning jurisdiction located in a correct zone district that may not meet the required 600-foot separation distance to a church, public school, public park with a playground, a day care center, a youth center or a behavioral health clinic. The listed uses are considered protected uses in the interim zoning and in the proposed permanent code. Marijuana businesses located within the 600-foot protected area around these uses would be considered legally nonconforming uses. The proposed permanent code would allow these locations to continue and to have the ability to re-build or re-establish the use in the future if for some reason the building or structure was damaged. This re-build would only be available through a special review application to the Board of County Commissioners. In this way, the initial investment to establish a business in a commercial zone district is preserved. The locations that are not within the correct zone districts are not afforded the same protection. The Rural Residential and Agriculture zone districts generally do not allow retail businesses of any kind. 

Planning staff will present to the Board of County Commissioners an updated study to support the proposed permanent regulations for marijuana businesses in the County's jurisdictional zoning area on October 3rd. Seven of the existing 57 locations in Yellowstone County will need to take positive action to remain at their current locations, or seek new locations for their businesses. Sixteen locations are outside the County's zoning jurisdiction. The remaining 24 locations are within the correct zoning districts for the business activity. There are 424 licensed dispensaries state-wide in counties where the 2020 ballot initiative was approved. Planning staff recommends approval of the proposed zoning text amendments related to marijuana businesses in the county. The study has informed the proposed final regulations and findings have been prepared to support the proposed regulations.
 

The Yellowstone County Zoning Commission, prior to making a recommendation to the County Commissioners, shall consider the following:

1. Is the new zoning designed in accordance with the Growth Policy?
The County Growth Policy supports:

• Predictable land use decisions that are consistent with neighborhood character and preferred land use patterns identified in neighborhood plans
• New developments that are sensitive to and compatible with the character of adjacent neighborhoods and County townsites

• Coordinated economic development efforts that target business recruitment, retention, and expansion
• Attractive and accessible communities
• Preserve and sustain the rural community centers
• Provide citizens with greater financial stability

• Protection of groundwater, surface water, riparian areas, air quality, and productive agricultural land

• Protect public lives and property
• Predictable and timely development review procedures

The proposed final regulations will help make the proposed uses more predictable and will remove the uncertainty on where these businesses may locate. The state rules (2022) requiring positive approval for compliance with local zoning regulations has helped prevent the improper location of some marijuana businesses. Locations outside the county's zoning boundary may locate anywhere provided there are no private covenants or restrictions on the proposed use. The current state law has only allowed existing licensed locations to expand. The limitation was extended by the 2023 legislature until July 1, 2025. 

2. Is the new zoning designed to secure from fire and other danger?
The proposed final regulations will help secure property from fire and other danger by requiring that any new marijuana business that sells, transports or processes marijuana be located in a commercial zone district. Some manufacturing processes use chemicals that may be hazardous. Ensuring these businesses are in commercial or industrial zones will help public safety services respond to an incident with the appropriate equipment and staff. Locations outside of commercial zone district may delay response times and responders may not have the right equipment when they do arrive.

3. Will the new zoning facilitate the provision of transportation, water, sewerage, schools, parks and other public requirements?
Transportation - The proposed final rules should not have any effect on the transportation system in the County. 
Water and Sewer - The proposed regulations should not have an effect on the provision of water and sewer services in the County. Many retail locations in the county are located in Lockwood where a public water and sewer district already exists. There are limited locations where access to consistent water supply for cultivation is available. Cultivation in Agriculture zone districts can have more access to non-potable water for grow operations.
Schools and Parks - Adoption of the proposed final regulations will help protect public parks and public schools from the intrusion of these uses close to areas primarily used by children.
Public Safety Services - Adoption of the final regulations will provide predictability for first responders within the zoning jurisdiction around the Billings city limits. 

4. Will the new zoning promote health and general welfare?
The proposed final regulations limit the effect of locating these businesses within the county zoning jurisdiction by providing separation distances from sensitive uses and limiting the businesses to compatible zone districts such as C3, CX, I1 and I2. The businesses may also be allowed within the CMU1 and CMU2 zone districts so long as the separation distances can be met. This will promote the health and general welfare.

5. Will the new zoning provide adequate light and air?
Although the regulations are not site specific, the general setbacks and building siting standards in each of the districts where the use may be located allow for adequate light and air around each structure. The additional building separation to a protected use may also provide a benefit.

6. Will the new zoning effect motorized and non-motorized transportation?
The proposed text will not have any effect on the transportation network in the county. Most of the zones where the use is allowed are developed commercial areas with streets that can handle this type of traffic.

7. Will the new zoning be compatible with urban growth in the vicinity?
Urban growth is typically related to the City of Billings. The city has different regulations that apply to marijuana businesses. The City does not allow dispensaries of marijuana within the city limits. It has been observed that several adult use sales marijuana businesses have located next to the city limits to provide better access to city residents and be located on streets with more average daily traffic. These businesses do not have access to other city services such as water and sewer or police response. Most are located with the urban fire service area and the Billings Fire Department would be the responding agency. Lockwood, which has municipal services and opportunity for urban growth also has several marijuana businesses and those businesses are served by the Lockwood Fire District.

8. Does the new zoning consider the character of the district and the suitability of the property for particular uses?
The proposed final regulations limit the retail and processing marijuana businesses to zone districts that are either commercial or industrial. The regulations propose to allow cultivation in the Agriculture zone district in addition to the commercial and industrial zones. The character of these districts and uses makes marijuana businesses suitable for these areas provided the separation distances can be met. 

9. Will the new zoning conserve the value of buildings?
The proposed regulations recognize the existence of legally nonconforming businesses and illegal business locations. A legally nonconforming use has to be 1) established prior to the adoption of the interim zoning regulations and 2) legal in the zone district where it was located at the time. Retail marijuana (dispensaries) located in non-commercial or non-industrial zone district do not qualify as legally nonconforming locations since no retail business is allowed in the residential zones of the County and only limited retail businesses are allowed in the Agriculture zone. Most of these businesses are directly related to agricultural pursuits such animal services and crop production. Seven of the 57 existing locations in Yellowstone County are not located in a zone that is conforming to the final regulations. Only one location, 4028 Central Avenue, is in a zone district (NMU) that allows some retail businesses. 

10. Will the new zoning encourage the most appropriate use of land in Yellowstone County?
The final regulations will encourage the most appropriate locations for marijuana businesses in the county. The proposed regulations do not include all commercial zone districts such as Neighborhood Office (NO) or Neighborhood Mixed Use (NMU). These two zones are intended to be in proximity to or within residential neighborhoods.

11. Will the new zoning be as compatible as possible with adjacent zoning in the City of Billings?
The proposed final regulations are as compatible as possible with the city's zoning for marijuana businesses. The County cannot enforce the city's adopted 1,000-foot separation requirement for dispensaries and protected uses including residential zone districts. Conversely, the City cannot enforce the County's regulations on separation distances.

RECOMMENDATION
Planning staff recommends the approval of the draft regulation and adoption of the ten review criteria.