Section 27-306 of the Unified Zoning Regulations regulates where types of commercial and industrial uses may be located within the city limits by zoning district type. Medical Marijuana Businesses (MMB) are currently classified in the same category as other retail businesses and were generally allowed throughout all commercial or industrial zoning districts. In October 2009, the U.S. Attorney General issued a memorandum to all federal prosecutors stating that enforcement of the Federal Controlled Substances Act (CSA) should not be focused on persons lawfully engaged in the growing, manufacturing, distributing, or use of marijuana for medical purposes in states where such activity has been allowed by state law (Attachment A – DOJ memorandum). Since October 2009, the growth in the number of registered patients and their medical marijuana providers has ballooned within Billings and throughout the state.

In response to this industry growth, the City Council requested the Planning Division prepare an interim zoning ordinance in November 2009. The City Council considered the interim ordinance but chose not to adopt the ordinance and instead appointed an ad hoc committee to study the issue and bring forward options for local regulation. In January 2010, the ad hoc committee was appointed and began its work. On May 11, 2010, the City Council enacted a 6-month moratorium on any new MMB within the city limits. The ad hoc committee met once-a-week to consider regulatory options and presented its recommendation to the Council at a work session on July 19, 2010. On August 9, 2010, the Council initiated a proposed amendment to the Unified Zoning Regulations. The proposed amendment will apply only within the city limits. The County 4-1/2 mile jurisdictional zoning area will not be affected by this city text amendment. The City Zoning Commission conducted a public hearing on September 7, 2010, and is forwarding a recommendation of denial of the text amendment and prohibition of any new MMB within the city and amortize out all existing MMB in the city within 2 years on a 5-0 vote.

The City Council initiated the amendment to the City Zoning Regulations and the City Council may:
1. Approve the zone change request
2. Deny the zone change request
3. Allow withdrawal of the application
4. Delay action for up to thirty (30) days

Denial of the zoning text amendment and adoption of the recommended prohibition of any new MMB and 2-year amortization of existing MMB may have a financial impact on the city as a result of revenue loss from business license applications or potential litigation arising from affected parties.

Marijuana is listed as a Schedule I, Controlled Substance within the federal controlled substances act (CSA). The possession, growing or distribution of marijuana continues to be a federal crime. In 2004, Montana voters acted on a statewide ballot initiative to legalize the use of marijuana for medical purposes, specifically for the treatment of chronic conditions that are not easily treated by other methods. In 2005, the Montana legislature adopted the approved ballot measure into law (Attachment B – State Law Title 50, Chapter 46). The registration of patients and their caregivers happened at a very low level until October 2009, when federal law enforcement officials announced that registering as a patient or caregiver in any state that legalized medical marijuana provided protection from federal prosecution. With the threat of federal prosecution virtually removed, the numbers of patients and caregivers has been rapidly increasing throughout Montana.

On May 11, 2010, the City Council adopted an interim ordinance banning the location of any new MMB within the city limits. State law only allows a first interim ordinance to be in effect for 6 months. Montana state law allows cities to adopt interim zoning as a matter of urgency without the review of the City Zoning Commission or the publication of several legal ads in advance of the City Council public hearing. The interim ordinance is set to expire on November 11, 2010. The City Council can extend this interim ordinance for an additional year.

Cities throughout the state are allowed to regulate MMB within their jurisdictions through zoning to protect the health, safety and general welfare of local citizens. In addition to the purposes of zoning as enumerated in MCA 76-2-301 et seq. (Attachment C), any zoning regulation must provide for substantive due process and be reasonably related to a legitimate governmental purpose. Substantive due process in this instance includes the determination that the local regulations has a substantial bearing on the public health, safety, morals or general welfare of the community. A city may, through zoning, provide for adequate separation from areas that are incompatible with different types of commercial or industrial uses. Certain businesses have negative secondary or ancillary effects on the surrounding area. MMB have been shown, locally and in other jurisdictions, to attract certain types of crimes more so than a local pharmacy, grocery store or other retail business. Burglaries, vandalism, and other security breaches by individuals interested in obtaining marijuana for use or sale on the black market are a concern. (Attachment D – Law Enforcement Concerns) Residential neighborhoods, parks, libraries, churches and schools in close proximity to MMB's may be impacted by these negative secondary effects. Growing operations have generated numerous odor complaints to the Planning Division and Building Division particularly where these operations are in a multi-tenant commercial building or where building setbacks and separations are small. The required ventilation creates smells that may permeate throughout a building or city block.

Amendments Proposed by Ad Hoc Committee and City Council:

The proposed zoning text amendments include a provision that all MMB be in a conforming location. If an existing MMB is nonconforming, the owner has 4 years to secure a conforming location or close the business (Attachment E - Ordinance – Section 6). The ad hoc committee worked with the Billings GIS Coordinator, Tom Tully, to produce a series of maps to determine whether amendments to the Unified Zoning Regulations as proposed will allow sufficient area within the city for existing MMB to re-locate to a conforming area (Attachment F - Possible Conforming Locations). The map includes all possible re-location areas but does not separate the types of MMB into growing, manufacturing and retail as detailed in the proposed ordinance. The Controlled Industrial (CI) zoning district is the only zoning district where the 3 MMB types would be allowed by right or by special review approval. The proposed ordinance eliminates MMB as an allowed use in all residential zoning districts, planned developments, entryway zoning districts and all the lower-intensity commercial districts. MMB involved only in growing operations would be allowed in CI and Heavy Industrial (HI). MMB involved only in manufacturing – preparing the harvested product for sale and consumption – would be allowed in CI, HI and Highway Commercial (HC) zoning districts. MMB involved in retail sales to patients would be allowed only by special review approval in the Central Business District (CBD), CI or HC zoning districts. Consequently, it is likely the re-location of a nonconforming MMB will require a special review approval of the City Council. The areas shown in red on the map shows possible conforming locations for MMB within the city limits. All MMB currently operated as home occupations (25) would be required to re-locate or close operations within 4 years. All but 1 of the 29 MMB within commercial or industrial zones would be required to re-locate or close operations within 4 years based on the required separation distances and allowable zoning districts proposed.

Other proposed rules in the ordinance includes a 1,000-foot separation to any residential zone, schools including private schools, the Entryway Mixed-Use (EMU) zone, recreational facilities including trails, cemeteries, any Planned Development that includes residential use, Agriculture Open-Space and Agriculture-Suburban zones, and any Community Residential Facility including group homes, and day cares. The ordinance also proposes to prohibit signage that references the name or symbol of any Schedule I controlled substance.

Amendment Considerations from Planning Staff:

All MMB within the state of Montana are currently required to grow, manufacture and sell medical marijuana as a caregiver. Caregivers may have one (1) or more locations for each part of the business but they are not allowed to purchase medical marijuana from another caregiver or on the black market. Separation of the different aspects of the business is not currently allowed or intended by current state law. For example, a caregiver would not be allowed to simply grow any amount of medical marijuana - a caregiver is limited by the number of patients the business has acquired. Enacting the proposed amendment may give MMB owners the impression that becoming a grower or preparer of medical marijuana is an allowed activity. Some caregivers do have multiple locations for each part of their operation, however each cargiver is required to be a grower, a manufacturer, and a retailer for their patients. The 2011 Montana legislature may consider changes to state law that will further regulate “grow” operations that are separate and distinct from manufacturing and dispensing medical marijuana. It is not predictable what the results may be of the proposed changes to the Montana Medical Marijuana act (Attachment G - Proposed draft changes to MCA Title 50, Chapter 46).

Planning staff recommended to the Zoning Commission consolidation of the growing, manufacturing and selling of medical marijuana into one business operation type to better align with current state requirements and to make administration of the amended code clearer for staff and the community. Staff further suggested that the Zoning Commission consider making the consolidated business type locations all allowed by special review only in the CBD, HC & CI zones. Staff recommended the use be allowed in the Heavy Industrial (HI) zone without special review. Staff proposals would make it clear that the City Council has the approval authority for any medical marijuana business in the City through the special review process with the exception of businesses locating in Heavy Industrial zoning.

The Zoning Commission did not concur with the Planning Staff recommendation, or the Ad Hoc Committee's and City Council's recommended amendments to the Zoning Regulations, and voted 5-0 to recommend denial of the text amendment and adoption of a prohibition on any new MMB within the city and amortization of all existing MMB within 2 years.

The Zoning Commission conducted a public hearing on September 7, 2010 and received the staff report and recommendation. Several persons provided testimony to the commission including Denis Pitman, Chair of the Medical Marijuana ad hoc committee and Ward II Council representative, Mark Higgins of 814 Ahoy Avenue and medical marijuana caregiver, Cary Smith of 5522 Billy Casper Drive and Representative of Montana House District #55, Susan Smith of 5522 Billy Casper Drive and Chair of the Safe Communities, Safe Kids initiative, and Tom Zurbuchen of 1747 Wicks Lane and Chair of Heights Community Development Task Force.

Mr. Pitman introduced the members of the ad hoc committee that were in attendance and let the Zoning Commission know that any specific questions on the recommended zoning text amendments could be directed to these members. Commission member Ed Workman asked Mr. Pitman if the committee considered any of the draft proposals to amend the state law such as limiting caregivers to a maximum of 5 patients. Mr. Pitman stated the ad hoc committee focused on land use issues and zoning and not on business operational issues. Mr. Pitman stated the legislature should decide how to better regulate the business operations. Commission member Barbara Hawkins asked if the ad hoc committee considered how other cities in Montana were regulating medical marijuana such as Helena where the city prohibited any business that was in violation of federal, state or local regulation. Mr. Pitman stated Helena and other Montana cities were well ahead of the surge of new medical marijuana businesses opening in their communities. Mr. Pitman stated there were no MMB in Helena when the city adopted the prohibition. Billings had issued 81 City Business Licenses to MMB when the moratorium was adopted in May 2010.

Mark Higgins testified that he was one of the first caregivers in Billings and first suggested a moratorium in May of 2009. Mr. Higgins stated he was concerned with the direction many new caregivers were bringing to the business. He stated he was not surprised that none of the other MMB owners were at the Zoning Commission public hearing. He urged the commission to recommend approval of the zoning text amendment since it would prevent and eliminate the MMB from being too close to schools, parks and trails. Mr. Higgins stated he chose his current location in a CI zone away from these sensitive land uses because Planning staff thought it would likely meet any new regulations. Mr. Higgins stated his location is the only conforming location under the proposed zoning text amendment. The proposed special review requirement for retail sales would not effect his current operation unless he moved to another location.

Cary Smith, Representative of House District #55, stated he was opposed to the proposed zoning amendment. He state he served on the ad hoc committee and the group was skewed in favor of medical marijuana and was not made up of a broad range of community concerns or interests. As a member of the ad hoc ommittee, he said he had voted against the recommendation to the City Council. Mr. Smith stated the original intent of the 2004 ballot initiative was to be compassionate to those people in unrelieved pain from serious illnesses. When the measure passed, the state approached its regulations from that point of view - not to regulate medical marijuana as a business venture. Mr. Smith stated the existing Medicial Marijuana Act is a failure because opportunists have taken advantage of the law and the regulations to create this mess. He will be working in the 2011 Legislature to review bills that will make changes to the state law. He urged the commission to recommend prohibiting all MMB within Billings.

Susan Smith testified in opposition to the proposed amendments. She stated she worked on the Safe Communities, Safe Kids campaign to gather petition signatures to put medical marijuana back on the ballot in November 2010. She stated the group gather over 8,000 signatures in the Billings area in less than a week. She stated the measure did not achieve enough signatures in enough districts statewide to put the measure on the ballot. Mrs. Smith stated she talked with thousands of people since June and most are mad or angry about how the state law has been abused. She stated the current law and regulations were written to tie the hands of law enforcement and this is why we have such a big mess now. She stated the information on medical marijuana is confusing and the proposed ordinance will not be good for the community. She urged the commission to not accept the foregone conclusion that medical marijuana is permanent in Montana. She stated the problem is out of control in Colorado and California.

Tom Zurbuchen stated the amendment was arbitrary and capricious and not related to a legitimate government purpose such as protection of the helath and safety of its residents. He stated the separation distance for bars and casinos from schools is only 600 feet but the proposed ordinance requires 1,000 feet from school for a MMB. Medical marijuana is used for health reasons and is not entertainment or recreation. He stated the 2004 vote was 2-1 in favor of medical marijuana and no new ballot initiative would change the vote. Mr. Zurbuchen stated American Pharmaceuticals operates within 70 feet of residential zone and no one has an issue with that - and the company will not even tell you what it is making or storing on site. It makes no sense to treat MMB differently, according to Zurbuchen. He stated it is likely all the current MMB will sue the city if the ordinance is approved. He stated the city would lose its case and a judge would decide where MMB could be located in Billings. He urged the commission not to let a judge decide for the city. Mr. Zurbuchen stated he doubted there were any complaints about smells from growing operations in the city. He stated there were plenty of greenhouses in the city and no one was complaining about smells from these places. He state MMB are no different in growing than other greenhouse operators. 

There was no other testimony. The Zoning Commission closed the public hearing and Chairman Dailey asked the commission for a motion. Commission member Ed Workman made a motion to recommend denial of the proposed text amendment and to prohibit any new MMB within the city and amortize out all existing MMB in the city in 2 years. The motion was seconded by Commission member Dan Wagner. Commission member Barbara Hawkins stated she has a friend in federal law enforcement who recently moved back to the area who was appalled at what was happening here. She state he was in other western states that had "legalized" marijuana for medical purposes and it was impossible to regulate or control. Mrs. Hawkins stated medical marijuana is still a violation of federal law so why should we continue to allow this activity in Billings. Chairman Dailey stated he appreciated all the work of the Council and the ad hoc committee but he thought this effort was ahead of its time. He stated the 2011 Legislature will be considering a number of amendments that could be contrary to this regulations or would require another effort in less than a year to amend this regulation. The Zoning Commission voted 5-0 in favor of the motion.  

Cities throughout the state are allowed to regulate land use within their jurisdictions through zoning to protect the health, safety and general welfare of local citizens. The City has adopted the 2008 Growth Policy and numerous neighborhood and special area plans to better guide land use decisions. The 2008 Growth Policy suggests that regulations should be adopted with consideration for the separation of incompatible uses, protection of the fabric and integrity of existing residential neighborhoods while still providing economic development for new and growing businesses. Consideration of these policies provided the basis for the Planning Staff recommendation of approval of the draft ordinance.