No action is required of council at this time. Staff is providing an update to City Council on regulatory options for consideration as well as an update on efforts and progress made on prior City Council directives.

On August 9, 2021, City Council passed Resolution 21-10981 to place the question regarding whether to permit recreational, adult-use dispensaries within City limits to the voters. Contemporaneously with this matter being presented to the voters, a committee consisting of staff and council members is working toward developing regulations for marijuana businesses that will be allowed by state law, effective January 1, 2022.

STAFF DIRECTION FROM CITY COUNCIL AT THE SEPTEMBER 7, 2021 WORK SESSION

At the September 7, 2021 work session, City Council provided the following staff direction in developing necessary regulations:

Zoning: review provisions providing for separation of marijuana businesses from residential use.
Provide consolidated map reflecting all areas subject to the 1,000 foot buffer zone for purposes of viewing the cumulative effect of such a zoning ordinance.

Dispensary caps: Work on regulations in this area.

Furnish council with data regarding dispensary concentrations in other jurisdictions for purposes of contemplating a potential number of dispensaries to be permitted.

Some members of City Council expressed concern over a merit-based allocation of dispensary licenses, expressing favor for a lottery system.

Licensing structure: work on developing a licensing structure that would permit the City to timely respond to violations that may occur in marijuana businesses.

Cultivation caps: staff acknowledged that additional work was needed in this area in order to provide information to the City Council sufficient for the City Council to make a policy decision regarding whether a cap was necessary or desirable.

Additional education: City Council members expressed a desire for additional education to determine if, and to what extent, the introduction of marijuana businesses in the City may be detrimental to the health, safety, and welfare of City residents so that the City Council could properly balance the policy considerations of protecting the health, safety, and welfare of City residents with promoting businesses. In particular, City Council members expressed concern of local business interests in the newly created marijuana business industry.

Information has been provided to council and the committee by email in the interim and in this staff memorandum as well.

Testing: The need for testing was discussed in terms of necessity and scope. No consensus was reached. Staff will provide clarification of what is intended by the term "testing."

STATUS OF DISPENSARIES OPERATING WITHIN THE CITY AND WITHIN YELLOWSTONE COUNTY

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 of 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. Many state regulatory functions are being transitioned from DPHHS to the Department of Revenue in anticipation of the January 1, 2022 effective dates.

Local governments throughout states with legalized marijuana employ a variety of regulatory structures, including

• Caps on the number of dispensaries;
• Use of zoning to restrict marijuana business to certain areas;
• Regulating distance between marijuana businesses;
• Regulating distance between marijuana business and sensitive areas such as schools;
• Prohibiting marijuana businesses from being operated as home businesses;
• Limiting size of growing operations
• Developing comprehensive licensing requirements.

POLICY DIRECTION OF OTHER MONTANA JURISDICTIONS

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.

POLICY DIRECTION OF OUT-OF-STATE JURISDICTIONS
Staff has surveyed other out-of-state jurisdictions to determine how the above regulatory options have been utilized. It is common to see marked differences among cities within the same state. For example, Anchorage, Alaska does not cap dispensaries, while Fairbanks Alaska does have a cap. In Colorado, Fort Collins does not have a cap, while Pueblo caps recreational marijuana dispensaries at 8 and has developed a comprehensive scheme for the award, renewal, and revocation of those licenses. Microsoft Word - Retail Marijuana Stores Rules and Regs - TDG Amended (pueblo.us) .

Limits on dispensary caps

If the Billings City Council elects to limit the number of dispensaries, several issues need to be considered:

How many dispensaries
How will the licensees be selected

DISPENSARY DATA:

Ohio -- Ohio caps dispensaries. Ohio permits medical marijuana, but not recreational marijuana. Ohio initially utilized a merit based allocation system, but subsequently moved to a lottery system. Ohio utilizes consulting firms as needed in the administration of their marijuana business licensing. Ohio recently expanded the number of licenses from 57 to 130. Ohio's population is 11,690,000. With the increased number of dispensaries, Ohio has one medical marijuana dispensary for every 89,923 residents. Ohio's recent presentation by the Ohio Medical Marijuana Control Program is attached. EX 1.

Illinois - Illinois caps dispensaries. Illinois permits recreational marijuana and initially allocated 58 licensed dispensaries and used a multi-step lottery approach that reserves a certain number of licenses for populations impacted disproportionately by the "war on drugs." Initial errors in administering the lottery resulted in lawsuits against the state. Illinois is currently adding 75 adult dispensaries for a total of 133 adult-use dispensaries. Illinois' population is 12,671,821. Illinois has one adult use marijuana dispensary for every 95,276 residents.

Pennsylvania--Pennsylvania caps dispensaries. Pennsylvania has medical marijuana use and caps the potential number of dispensaries at 150 (50 licensees, but no more than 3 locations per licensee). Pennsylvania's population is 12,801,989. Pennsylvania has one medical marijuana dispensary for every 85,346 residents. Pennsylvania's method of allocating licenses could not be located. However, their 2-year biennial report is attached; EX 2  this report states that medical marijuana dispensaries have a $30,000 permit fee and must have a doctor or pharmacist on staff at all times.

Michigan-Michigan does not appear to cap its dispensaries. The best information available is that there are 364 medical dispensaries and a population of approximately 9,987,000. Michigan has one medical marijuana dispensary for every 27,436 residents. Michigan's adult-use industry is in its early stages and good data is unavailable.

Oregon-Oregon does not appear to cap its dispensaries and has the greatest density of dispensaries: approximately 1 for every 5600 residents. Once Oregon began licensing recreational marijuana retail dispensaries, demand for medical marijuana licenses dropped from 425 dispensaries in October 2016 to 2 medical marijuana dispensaries in October 2020. The Oregon  2021 Recreational Marijuana Supply and Demand Legislative Report published by the Oregon Liquor Control Commission (OLCC) is an attachment to this staff memo. EX 3.

Washington State- Washington State caps its dispensaries. The State of Washington took a similar approach and eventually merged its categories of licenses and capped its licenses at 556 (roughly one dispensary per 24,000 residents). The cap covers the total number of dispensaries, both medical and recreational.

City of Pueblo, CO-The City of Pueblo caps only the number of adult use dispensaries and has capped that at 8 for a population of approximately 165,982 (roughly one dispensary per every 21,000 residents). The City of Pueblo DOES NOT cap medical marijuana dispensaries.

The following publications were located which may assist the City Council in formulating marijuana business policy related to the zoning of marijuana businesses and capping the number of dispensaries.

Everson, EM, Dilley JA, Maher JE, Mack CE., Post-Legalization Opening of Cannabis Stores and Adult Cannabis Use in Washington State, 2009-2016. Am. J. 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. Adult current use significantly increased in areas located within 18.4 miles of a cannabis retailer, with a larger increase occurring in areas located within 0.8 miles of a retailer. Frequent past-month use, likely the more serious public health concern, increased significantly in areas located within 0.8 miles of a retailer.
     
                This publication is copyrighted, but is available for purchase through the following link: Post-Legalization Opening of Retail Cannabis Stores and Adult Cannabis Use in Washington State, 2009–2016 | AJPH | Vol. 109 Issue 9 (aphapublications.org)

Testing of products sold through dispensaries

Although the State of Montana has provided for testing at the state level in House Bill 701, there is no statutory provision for disclosure of this data to local governmental entities. Because the retail program has not commenced in Montana, no Montana testing data for retail marijuana is available.

The Montana Medical Marijuana Act provided for testing pursuant to 50-46-304, and also required testing labs to report that information through the seed-to-sale tracking system. However, this information was not made available to local governmental entities. As such, there is no way to verify whether representation made to the public regarding marijuana and marijuana products is applicable until local governmental entities are statutorily granted access to this information effective January 1, 2022.

The two forgoing issues, and the study referenced below, lend uncertainty regarding the accuracy of representations made to consumers regarding the content of their purchased products. Council may wish to provide for the ability to test products as advisable for the protection of public health and safety. This need not be a formal or comprehensive program at this time, but merely one that reserves such a testing power to the City as determined by future data gleaned from the seed-to-sale tracking system or other future events.

There is no federal regulation of marijuana. By comparison, food, alcohol, tobacco, drugs, and firearms are all subject to federal regulations and enforcement.

One peer reviewed publication found that edible products  tested in three major cities (San Francisco, Los Angels, Seattle)  were significantly mislabeled: 23% were under-labeled (stronger than indicated), 60% were over-labeled with respect to THC content (less potent than indicated), and 17% were accurately labeled. Vandrey R, Raber JC, Raber ME, Douglass B, Miller C, Bonn-Miller MO. Cannabinoid dose and label accuracy in edible medical cannabis products. Research Letter. JAMA. 2015;313:2491-3. The article may be accessed through the following link.  Labeling Accuracy of Cannabidiol Extracts Sold Online | Addiction Medicine | JAMA | JAMA Network

Public safety impact of legalization of marijuana

The research in this area is a mixed bag. One study found no increase in fatal motor vehicle accidents but noted that data was unavailable to determine any change in the number of non-fatal motor vehicle accidents. Jayson D. Aydelotte et al. “Crash Fatality Rates After Recreational Marijuana Legalization in Washington and Colorado” American Journal of Public Health 107, no. 8 (August 1, 2017): pp. 1329-1331.   Crash Fatality Rates After Recreational Marijuana Legalization in Washington and Colorado | AJPH | Vol. 107 Issue 8 (aphapublications.org)

However, more recently, the Rocky Mountain High Intensity Drug Trafficking Area released its study entitled “The Legalization of Marijuana in Colorado: The Impact,” Vol. 8, September 8. The full study is available at www.RMHIDTA.org. The executive summary of the study is attached to this staff memo. EX 4.

Other studies have attempted to reach a definitive conclusion, but have been unsuccessful. See Wu Guangzhen et al. “Impact of recreational marijuana legalization on crime: Evidence from Oregon” Journal of Criminal Justice 72 (2020) 101742 https://doi.org/10.1016/j.jcrimjus.2020.101742

PUBLIC HEALTH IMPACT OF MARIJUANA USE

In addition to the information provided to City Council through the publication “Cannabis in Medicine: An Evidence-Based Approach,” Finn, Kenneth ed. 2020, attached is a report from the State of Oregon’s Retail Marijuana Scientific Advisory Committee which sought to summarize recently published scientific evidence on the health effects of marijuana. EX. 5

The National Academy of Sciences found conclusive or substantial evidence on the association between cannabis use and health:
1.  A therapeutic effect of cannabis for the treatment of chronic pain in adults
2. A therapeutic effect as antiemetics in the treatment of chemotherapy-induced nausea and vomiting (oral cannabinoids)
3.  A therapeutic effect for improving patient-reported multiple sclerosis spasticity symptoms (oral cannabinoids)
4.  Worse respiratory symptoms and more frequent chronic bronchitis episodes (long-term cannabis smoking)
5.  Increased risk of motor vehicle crashes
6.  Lower birth weight of offspring (cannabis smoking)
7.  The development of schizophrenia or other psychoses, with the highest risk amount the most frequent users (cannabis)
8.  Stimulant treatment of ADHD during adolescence is not a risk factor for the development of problem cannabis use
9.  Being male and smoking cigarettes are risk factors for the progression of cannabis use to problem cannabis use.
10.  Initiating cannabis use at an earlier age is a risk factor for the development of problem cannabis use.
11. There is a statistical association between increases in cannabis use frequency and the progression to developing problem cannabis use.

Additional information may be found utilizing the link below.

National Academies of Sciences, Engineering, and Medicine 2017. The Health Effects of Cannabis and Cannabinoids: The Current State of Evidence and Recommendations for Research. Washington, DC: The National Academies Press.
https://doi.org/10.17226/24625  http://nap.edu/24625

Cannabis in Medicine: An Evidence-Based Approach, sets out the following conclusions:

1.  There is substantial evidence that cannabis use causally increases risk of psychosis in a dose-response fashion, especially in adolescents and individuals with pre-existing psychotic symptoms or risk factors including family history of schizophrenia. p. 89.
2.  Among individuals diagnosed with major depression, bipolar disorder or schizophrenia, there is robust evidence that regular cannabis use is associated with a more severe and chronic course of illness, less robust response to treatment and lower rates of remission. p. 89.
3.  The potential for suicidal behaviors is clearly the most severe mental health risk from marijuana use. p. 104
4.  State legalization of marijuana in the USA has made a significant impact on many aspects of pediatric health. Unintentional pediatric exposures continue to rise, and there continues to be many unknowns regarding the impact of breastfeeding and passive smoke exposures. p. 129.
5.  The results of exposing the vulnerable CNS [central nervous system] of children and adolescents to THC over time can lead to variable levels of cognitive dysfunction, cannabis dependence, and neuropsychiatric disorders such as psychosis. p. 147.
6.  As marijuana potency has increased and use is becoming more acceptable, the emergency department presentations are increasing in frequency and severity. p. 165.
7.  Cannabis smoke inhalation by any means puts its users at undue repiratory risk due to mitigation of respiratory immune defense, increase in respiratory secretions, and development of pulmonary syndromes such as bronchitis, COPD, emphysema, necrotizing bronchiolitis, pneumothorax, pneumomediastinum, fungal pneumonia, tuberculosis, and lung cancer. p. 195.
8.  Vaping is causing lung illnesses and lung damage to such a degree that hospital treatment is usually required, and in several notable cases, death occurs. p. 202.
9.  THC and CBD can also deompose when heated excessively and form chemical compounds that can also cause serious health issues, including lung ailments. p. 202.
10.  Marijuana use has been associated with adverse cardiovascular outcomes which include acute coronary syndromes, coronary artery dissection, coronary vasospasm, coronary thrombosis, arrhythmias, stroke, vasculitis, myocarditis, and cardiomyopathies. p. 211.

The above are a small fraction of the information available in this medical textbook which is available through the following link:

Cannabis in Medicine - An Evidence-Based Approach | Kenneth Finn | Springer

The Centers for Disease Control and Prevention (CDC) have issued a number of findings concerning the effect of marijuana use on people. A sample of those findings are attached. EX. 6.

Staff seeks council direction regarding dispensary caps (medical and/or recreational), if any, and direction on method of allocation, if so. Staff seeks input on caps to be applied to cultivation licensees, if any.

Fiscal effects have not been quantified at this time. Council will have the opportunity to set licensing fees at a level to offset identified costs of licensing.