Staff recommends Council conduct a public hearing and approval of first reading of an ordinance to license permitted marijuana businesses and to delineate the personal rights of individuals to cultivate and use marijuana and marijuana products as provided by state law which are exceptions to the commercial regulation of marijuana if cultivated and used in compliance with state law.

Staff recommends that council implement a cap on the retail marijuana dispensaries in city limits and allocate those licenses by a lottery system for qualified applicants.

Staff recommends that council implement a cap on the medical marijuana dispensaries and allocate those licenses by a lottery system for qualified applicants.

Staff recommends that council implement a cap on the cultivation of marijuana in city limits not to exceed the state-defined Tier 7.

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 work to develop regulations for marijuana businesses that will be allowed by state law, effective January 1, 2022.

STAFF DIRECTION FROM OCTOBER 4, 2021 WORK SESSION
At the October 4, 2021 work session, City Council provided the following staff direction:
Provide information regarding the regulation of marijuana potency at the local level.

STAFF DIRECTION FROM SEPTEMBER 20, 2021 WORKSESSION
At the September 20, 2021 worksession, City Council provided the following staff direction:
Prepare an updated zoning map congregating the various contemplated zoning
Include a residential setback from marijuana dispensaries
Prepare a staff recommendation regarding caps of dispensaries, medical and retail.

STAFF DIRECTION FROM 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.
Method of allocating limited number of caps: 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: Some 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 prompting businesses, particularly local businesses, in the newly created marijuana business industry. That 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.

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 map confirms that 2 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, but the regional inspector for the state confirmed that these are not within City limits. 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 spacing between marijuana businesses;
· Regulating spacing 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 and screening.
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 their illegality under federal law.
Bozeman:
Kalispell:  Kalispell will regulate through zoning with marijuana businesses being limited to a relatively small geographic area. The contemplated zoning includes a residential buffer, a buffer from sensitive areas, and a buffer between businesses. Just outside of Kalispell city limits is what can be characterized as a medical marijuana corridor. Kalispell is anticipating that medical marijuana licensees throughout the state will seek to open retail dispensaries in Flathead County beginning 1/1/2022.
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) .
The following publications were located which may assist the Billings City Council in formulating marijuana business policy:
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.             
              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, because there is no federal regulation of marijuana, additional testing could be implemented by the City of Billings, either in this initial set of ordinances or in the future if the state’s testing protocol is inadequate to address public health and safety concerns.  One study found that at edible products  tested in three major cities were significantly mislabeled: 23% were underlabeled (stronger than indicated), 60% were overlabled 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.
Other studies have attempted to reach of 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.
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
How will renewals and revocations be handled
With House Bill 701, the State of Montana effectively merged its regulatory structure for medical marijuana with recreational marijuana. 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). By contrast, the City of Pueblo caps only the number of adult dispensaries and has capped that at 8 for a population of approximately 165,982 (roughly one dispensary per every 21,000 residents)
 

On October 13, 2021, representatives of the City and individuals from the community met to discuss business owners' concerns with contemplated marijuana regulations. Those medical marijuana business owners present expressed a general agreement with a cap and lottery system to allocate available licenses within the initial 18-month period for the sale of recreational marijuana. Potential retail dispensary owners expressed concern with the adequacy of the zoning areas contemplated and recommended by the zoning commission.

The zoning commission issued its recommendations regarding the zoning of marijuana businesses and those recommendations are before council for consideration.

City Council may:

• Approve; or,
• Not Approve; or
• Approve with amendments approved by council vote.

The fiscal effects are uncertain at this time based upon the following:

On November 2, 2021, Yellowstone County voters will vote on whether to approve a county-wide excise tax of 3% on medical and/or recreational marijuana. If voters so approve one or both categories of excise tax, staff estimates that the City of Billings will receive 92 cents for each $100 or marijuana and marijuana products sold county-wide.

On November 2, 2021, City of Billings voters will vote on whether to permit recreational marijuana dispensaries within City limits. Should City voters ban recreational marijuana dispensaries, cost to the City to regulate dispensaries will dramatically decrease. However, other marijuana businesses would still require City regulation.

Staff recommends that council, by future resolution, set fees for the issuance and renewal of marijuana business licenses at such a level as to offset direct and documented expenses of implementing and maintaining the licensing provisions set out in the proposed ordinance.