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Item 3.
 
City Council Work Session
Date: 10/18/2021
Title: Marijuana Regulations Update
Presented by: Gina Dahl
Department: Legal
Presentation: Yes

RECOMMENDATION

Staff is providing an update following the direction Council has provided in previous work sessions and is seeking direction from Council regarding the following:
  1. Dispensary Caps;
  2. Canopy Caps; and
  3. THC Potency regulations.

BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)

On October 25, 2021, Council will consider a proposed ordinance containing regulations for marijuana and marijuana businesses.  At previous work sessions, Council provided direction to staff to consider including caps on the number of dispensaries and canopies. On October 4, 2021, Council asked staff to look into the possibility of regulating THC potency.  Staff has located studies which provide the following information:

Potency:
 
While there is accumulating evidence suggesting that the potency of cannabis being used may be a critical factor when it comes to psychiatric risk for disorders like schizophrenia, this potentially important dimension has not been as well studied with regard to cognition.  Di Forti M, Quattrone D, Freeman TP, et al. The contribution of cannabis use to variation in the incidence of psychotic disorder across europe (eu-gei): a multicentre case-control study. Lancet Psychiatry. 2019;6(5):427–36.

In London, a study of 780 people between the ages of 18 and 65 years with 410 experiencing a first episode of psychosis and 370 healthy controls demonstrated that high potency cannabis use was associated with a triple risk for psychosis.  Di Forti M, et al. Proportion of patients in south London with first-episode psychosis attributable to use of high potency cannabis: a case-control study. Lancet Psychiatry. 2015;2:233–8.

In the past decade, more than two-thirds of US states and the District of Columbia have legalized medical marijuana, and more than one-third of these have also legalized cannabis for recreational use. This has significantly expanded availability and public access to an increasingly wide array of cannabis products that have significantly higher potency than the cannabis available pre-legalization [1-5]. A number of research studies have reported an association between cannabis use and psychotic disorders as well as mood and anxiety disorders [6]. In most of these studies, the associations were based on the use of much lower potency cannabis products available prior to legalization.
1. Murray RM, Englund A, Abi-Dargham A, Lewis DA, Di Forti M, Davies C, et al. Cannabis-associated psychosis: neural substrate and clinical impact. Neuropharmacology. 2017;124:89–104.
2. ElSohly MA, Mehmedic Z, Foster S, Gon C, Chandra S, Church JC. Changes in Cannabis potency over the last 2 decades (1995–2014): analysis of current data in the United States. Biol Psychiatry. 2016;79(7):613–9.
3. Smart R, Caulkins JP, Kilmer B, Davenport S, Midgette G. Variation in cannabis potency and prices in a newly legal market: evidence from 30 million cannabis sales in Washington state. Addiction. 2017;112(12):2167–77.
4. Leafly Staff. A Guide to Cannabis Concentrates: Part 4, Cannabis Concentrates for Experts [Internet]. [updated 2019 June 14; cited 2019 Sept 6]. Available from:
 https://www.leafly.com/news/strains-products/marijuana-extracts-dabs-for-experts.
5. Bennett P. THCA and CBD Crystalline: Cannabinoids at Their Purest 2018 [Internet]. [updated 2018 Mar 22; cited 2019 Sept 6]. Available from: https://www.leafly.com/news/strains-products/what-are-thca-cbda-crystalline-cannabinoids.
6. Sideli L, Quigley H, La Cascia C, Murray RM. Cannabis use and the risk of psychosis and affective disorders. J Dual Diagn. 2019;16:22–42.


In the 1960s, both cannabis plant material (marijuana) and resin (hashish) contained 3% THC or less [7], with a very modest increase in potency through the mid-1990s. In 1995, the average THC content in samples confiscated by the DEA was 4%, and only 0.6% of the samples were high potency, containing more than 12% THC. In 2014, shortly after Colorado and Washington became the first two states to legalize recreational cannabis, the average THC content of DEA-confiscated samples was 11.8%, and 41.2% of the samples contained more than 12% THC [8]. 
7. Murray RM, Englund A, Abi-Dargham A, Lewis DA, Di Forti M, Davies C, et al. Cannabis-associated psychosis: neural substrate and clinical impact. Neuropharmacology. 2017;124:89–104. 
8. ElSohly MA, Mehmedic Z, Foster S, Gon C, Chandra S, Church JC. Changes in Cannabis potency over the last 2 decades (1995–2014): analysis of current data in the United States. Biol Psychiatry. 2016;79(7):613–9.

A prospective study of first episode psychosis patients in South London found former regular cannabis users who quit had the lowest relapse rate (24%), while people who continued to use high-potency cannabis had the highest rate (58%) [9]. There were also significant effects of cannabis use on number of relapses and time to relapse [9], as well as length of relapse [10]. Some of these effects were mediated by negative effects of cannabis use on medication adherence [10]. Clearly, much more research is needed to understand the relationship between risk of psychosis and cannabis potency, especially with regard to the extremely high THC concentrations found in cannabis concentrates (e.g., BHO, shatter, wax, etc.) increasingly available post-legalization, about which little is known. Some studies suggest that CBD may have a protective effect against elevated risk of psychosis driven by THC [11–14]. Post-legalization trends in commercially marketed cannabis have seen dramatic increases in THC concentration, while CBD content has been removed or significantly reduced in most commercial cannabis products [15].
9. Schoeler T, Petros N, Di Forti M, Klamerus E, Foglia E, Ajnakina O, et al. Effects of continuation, frequency, and type of cannabis use on relapse in the first 2 years after onset of psychosis: an observational study. Lancet Psychiatry. 2016;3(10):947–53. 
10. Schoeler T, Petros N, Di Forti M, Klamerus E, Foglia E, Murray R, et al. Poor medication adherence and risk of relapse associated with continued cannabis use in patients with first-episode psychosis: a prospective analysis. Lancet Psychiatry. 2017;4(8):627–33.
11. Morgan CJ, Curran HV. Effects of cannabidiol on schizophrenia-like symptoms in people who use cannabis. Br J Psychiatry. 2008;192(4):306–7.
12. Schubart CD, Sommer IE, van Gastel WA, Goetgebuer RL, Kahn RS, Boks MP. Cannabis with high cannabidiol content is associated with fewer psychotic experiences. Schizophr Res. 2011;130(1–3):216–21.
13. Leweke FM, Piomelli D, Pahlisch F, Muhl D, Gerth CW, Hoyer C, et al. Cannabidiol enhances anandamide signaling and alleviates psychotic symptoms of schizophrenia. Transl Psychiatry. 2012;2:e94. 
14. McGuire P, Robson P, Cubala WJ, Vasile D, Morrison PD, Barron R, et al. Cannabidiol (CBD) as an adjunctive therapy in schizophrenia: a multicenter randomized controlled trial. Am J Psychiatry. 2018;175(3):225–31.
15. Sideli L, Quigley H, La Cascia C, Murray RM. Cannabis use and the risk of psychosis and affective disorders. J Dual Diagn. 2019;16:22–42. 


While there is a lack of solid research at this early stage, those in the field of Substance Use Disorder treatment and professionals who work with the cannabis-dependent patient will often cite the increased potency and presence of THC (Tetrahydrocannabinol) in the marketplace as a major contributor to their patient’s psychosis. To illustrate the radical shift, one must remember that the majority of our valid research relies on cannabis that contains under 10% THC and often some level of CBD (Cannabidiol) which is thought to mute the effects of THC on mental health. Products being produced, such as “distillates” have been tested to be as pure as 99% THC with no trace of CBD. The majority of evidence pointed to for “high-potency” marijuana comes from an ongoing study taking place in England and published regularly in The Lancet journal, this study, and most other countries, consider “high-potency” marijuana to be anything above 10% THC [16]. As the body of research grows, it does suggest that higher concentrations of THC are associated and or lead to higher instances of psychosis [16].
16. Di Forti M, Quattrone D, Freeman TP, et al. The contribution of cannabis use to variation in the incidence of psychotic disorder across Europe (EU-GEI): a multicentre case-control study. Lancet Psychiatry. 2019;6:427–36.

The change in potency and methods of delivery during the time period of cannabis legalization has altered patient presentations seen with acute marijuana toxicity. Cannabis potency has dramatically increased [17]. Current commercialized cannabis is now over 20% tetrahydrocannabinol (THC), up from a concentration that was around 2% before 1990. This tenfold increase in potency does not take in to account other ways of using marijuana such as oils, edibles, waxes, and dabs, which can reach levels of 80–95% THC. These formulations are obtained when THC is extracted with a hydrocarbon solvent to create concentrated oils which can then be used in cooking to create edibles, further concentrated into waxes, and those waxes again heated and the vapor inhaled in the form of dabs. Vaping is able to generate higher drug potency and symptoms than smoking [18]. Edibles have been made to mimic products that people regularly consume such as chocolates or gummy bears. This gives a sense of safety that can lead to inadvertent overdose. First-pass metabolism often gives unpredictable onset of action. As a result, there has been a significant increase in the accidental exposure/overdoses, especially in children [19]. Young children and the elderly are more susceptible and frequently display more dramatic and life-threatening symptoms [20, 21].
17. The health and social effects of non-medical cannabis use. 2016. http://apps.who.int/iris/bitstream/10665/251056/1/9789241510240-eng.pdf?ua=1.
18. Spindle TR, Cone EJ, Schlienz NJ. Acute effects of smoked and vaporized cannabis in healthy adults who infrequently use cannabis. A crossover trial. JAMA Netw Open. 2018;1(7):e184841.
19. Wang GS, et al. Unintentional pediatric exposures to marijuana in Colorado, 2009-2015. JAMA Pediatr. 2016;170(9):e160971.
20. Macnab A, Anderson E, Susak L. Ingestion of cannabis, a cause of coma in children. Pediatr Emerg Care. 1989;5:238–9.
21. Cao D, Srisuma S, Bronstein AC, Hoyate CO. Characterization of edible marijuana product exposures reported to United States poison centers. Clin Toxicol (Phila). 2016;54(9):840–6. Epub 15 Jul 2016.


There are two well-known methods to get THC quickly into the user’s bloodstream, namely, by either vaping or dabbing. A “dab” is the product resulting from the solvent extraction of the THC from the marijuana plant. The extracted product is highly concentrated and therefore has a much greater potency (80%+ THC). Vaping and dabbing both require the use of heat in the form of an electrically energized coil (for vaping) or a manually heated “nail” composed of either ceramic, titanium, quartz, or glass (for dabbing) [22]. 
22. Nails D. SmokeCartel.com, https://www.smokecartel.com/collections/titanium-ceramicquartz-nails-and-dabber-tools.
 
Relying on the sources that have previously been provided, staff would like to have discussion and additional direction from Council regarding whether Council would like to impose a cap on dispensaries and if so, what that number should be. Some of the information previously provided is cited below.

Dispensary Caps:

EM Everson et al., Post-Legalization Opening of Retail Cannabis Stores and Adult Cannabis Use in Washington State, 2009-2016, American Journal of Public Health. 2019;109(9):1294-1301.

The above peer reviewed publication published results of a study that found that increasing cannabis retail access was associated with increased current and frequent use and noted “regardless of how cannabis is consumed, frequent use—such as daily or near-daily use—is likely of more concern than occasional use and has recently been identified as a risk. The study found that local retail access, but not state legalization of possession itself, was associated with increased cannabis use and that local jurisdictions may be able to limit increased use through enacting policies such as retail bans, moratoriums, caps on retail license numbers, or density or zoning restrictions. This was the case even for jurisdictions that bordered communities with less stringent policies given that use significantly increased in areas located within 0.8 miles of a retailer.  This publication is copyrighted, but is available for purchase through the following link: ajph.aphapublications.org/doi/10.2105/AJPH.2019.305191

The Montana Department of Revenue Cannabis Control Division indicates that there are 39 medical marijuana licensed businesses in “Billings.” Internet available information and a few of the city-county maps confirmed that 2 dispensaries are within the city limits, 27 are outside the city limits but within the county, and addresses could not be located for the remaining licensed businesses. The regional inspector for the state confirmed that there are only two dispensaries within City limits, as did an attorney from the Department of Revenue. 

Staff has conferred with attorneys in Kalispell, Bozeman, and Great Falls regarding their approaches towards new marijuana businesses authorized by state law:

Great Falls: Great Falls will continue to prohibit marijuana businesses based upon the illegality of such businesses under federal law. We do not believe that this is a viable option because the Montana Medical Marijuana Act is being repealed and House Bill 701 does not allow for local prohibitions without the vote of electors.

Bozeman: Bozeman voters approved recreational marijuana by over 70%. Bozeman currently caps their medical marijuana dispensaries at 20, issued on a first-come, first-served basis. This process worked well for the first several years and licenses were still available, notwithstanding the 20 dispensary cap. However, in the last two years, all licenses were "snapped up" in anticipation of the roll-out of recreational marijuana. Well funded businesses would buy out the owners of existing licenses and then would come in together with the current licensee surrendering their license, immediately followed by someone buying that license. This was the work-around the prohibition against transferring licenses.  The situation became frustrating, and Bozeman will likely eliminate all caps and amend their ordinances to treat all marijuana sales equally. The businesses are restricted to only certain zones and prohibited in the downtown area. Bozeman has ordinances requiring certain retail aesthetics, which are by definition incompatible with state laws for marijuana retail businesses (clear windows into businesses versus no public view of marijuana products and plants). These limitations combined with high real estate prices will likely push dispensaries out of city limits and into the county.

Kalispell:  Kalispell plans to regulate through zoning, with marijuana businesses being limited to a relatively small geographic area in retail, industrial, and warehouse districts, and excluded from the downtown area.  In addition, marijuana businesses will require an administrative conditional use permit. The contemplated zoning includes a residential buffer, a buffer from sensitive areas, and a buffer between businesses, but the specific distances for each have not been finalized. Just outside of Kalispell city limits is what can be characterized as a medical marijuana corridor. Kalispell anticipates that medical marijuana licensees throughout the state will seek to open retail dispensaries in Flathead County beginning 1/1/2022. Kalispell staff have also experienced difficulty in reaching staff in the Department of Revenue.

Canopy size:

The state has provided for the licensing of indoor marijuana cultivation by size (also referred to as "tiers"). The state's allowed tiers exceed 50,000 square feet. The state also grandfathered current outdoor cultivation. It is difficult to obtain information on the size of any cultivation that may be occurring in the City of Billings as information from the state has proven difficult to obtain.

Montana is unique in that indoor cultivation has been mandated to protect the state's hemp crop from destruction through cross-pollination with cannabis. However, some studies are available that discuss the impact of outdoor cultivation on the environment and indoor cultivation on human health. These two studies are attached for your consideration.   Potential regional air quality impacts of cannabis cultivation facilities in Denver, Colorado ;  Health Effects Associated with Indoor Marijuana Grow Operations

Because marijuana remains prohibited at the federal level, the City cannot rely on federal agencies such as OSHA for the protection of marijuana cultivation workers; nor may the City rely upon the Environmental Protection Agency to regulate emissions from marijuana cultivation operations. Although the City may regulate to provide containment of noxious cultivation smells, and has provided for such in the staff-recommended ordinances, the adequacy of this protection, especially for marijuana cultivation workers, remains questionable. Further, given the paucity of information staff has been able to obtain from state government, staff cannot recommend that the City take a hands-off approach to regulating these issues in deference to state regulation as local residents working in marijuana cultivation would bear the risk of scarce scientific research and even more scarce safety regulation. Staff recommends that the City cap the size of marijuana cultivation tiers somewhere between Tier 5 and Tier 7, but absolutely no more than Tier 9. Tier measurements are below:
(1) a micro tier canopy license allows for a canopy of up to 250 square feet at one indoor cultivation facility.     
(2) a tier 1 canopy license allows for a canopy of up to 1,000 square feet at one indoor cultivation facility.     
(3) a tier 2 canopy license allows for a canopy of up to 2,500 square feet at up to two indoor cultivation facilities.     
(4) a tier 3 canopy license allows for a canopy of up to 5,000 square feet at up to three indoor cultivation facilities.     
(5) a tier 4 canopy license allows for a canopy of up to 7,500 square feet at up to four indoor cultivation facilities.     
(6) a tier 5 canopy license allows for a canopy of up to 10,000 square feet at up to five indoor cultivation facilities.     
(7) a tier 6 canopy license allows for a canopy of up to 13,000 square feet at up to five indoor cultivation facilities.     
(8) a tier 7 canopy license allows for a canopy of up to 15,000 square feet at up to five indoor cultivation facilities.     
(9) a tier 8 canopy license allows for a canopy of up to 17,500 square feet at up to five indoor cultivation facilities.    
(10) a tier 9 canopy license allows for a canopy of up to 20,000 square feet at up to six indoor cultivation facilities.

Tier 10 raises the permitted cultivation to 30,000 square feet, a 50% increase from Tier 9. Larger canopies also increase the volume of pesticides that must be regulated by our city departments, increase water usage which is a scare regional resource, and require increased energy use.
 

ALTERNATIVES

This is an informational update and no formal action is required at this time.

FISCAL EFFECTS

The issue of local excise tax is also before the voters on November 2, 2021, so any revenue impact is uncertain at this time.

City business licensing fees to defray licensing expenses will need to be established by separate resolution and are expected to vary according to the types of regulations implemented.
 

SUMMARY

This is presented to update Council on the progress of staff in developing regulations. The studies provided during previous work sessions provide additional information for Council to review in order to make informed policy decisions.  No formal action is required, but staff desires specific input on the whether Council wants to impose a cap on dispensaries, canopies, or THC content.