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Item 5.
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| City Council Regular | |
| Date: | 11/08/2021 |
| Title: | Second Reading - Ordinance establishing marijuana business license regulations |
| Presented by: | Karen Tracy |
| Department: | Legal |
| Presentation: | |
RECOMMENDATION
Staff recommends Council approve on Second Reading the attached Ordinance amending Billings, Montana City Code (BMCC) to repeal Article 7-1700 - Medical Marijuana and add Article 7-2000 - Marijuana Regulations with the proposed nonsubstantive amendments.
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
On October 25, 2021, Council approved on first reading the attached Ordinance amending BMCC, repealing Article 7-1700 - Medical Marijuana and adding Article 7-2000 - Marijuana Regulations which establishes regulations for marijuana businesses as well as requires a City license to operate such businesses. The Ordinance provides a comprehensive approach to regulate all types of marijuana businesses within the City, including dispensaries, manufacturers, cultivators, transporters, and testing facilities. The attached ordinance as approved on First Reading comports with prior direction from council to staff at six prior work sessions on the subject of marijuana regulations conducted on July 6, 2021, July 19, 2021, September 7, 2021, September 20, 2021, October 4, 2021 and October 18, 2021.
At the public hearing on First Reading, Council Members discussed possible amendments to the potency provisions of the ordinance but did not amend those provisions, which currently track Chapter 16 of the Montana Code Annotated.
The proposed ordinance attached to this staff memorandum includes nonsubstantive amendments adding defined terms in Section 7-2005. The added terms and definitions track the definitions included in Chapter 16 of the Montana Code Annotated.
During the open comment period of the council work session held on November 1, 2021, 2 members of the public spoke regarding their opinion that marijuana testing laboratories should not be subject of the current moratorium on licensing new marijuana businesses. The moratorium on testing laboratories does not impact consumer safety. It might, however, effect the availability of products for resale at area dispensaries. Even if council were inclined to do so, given the required ordinance amendments and publication requirements, the additional timeframe would only advance laboratories by an estimated 3 weeks.
On November 2, 2021, the unofficial results of the Billings municipal election reflected a decision by the voters to ban recreational adult-use marijuana dispensaries within city limits. Pursuant to Section 16-12-301(7), this vote prohibiting recreational adult-use marijuana dispensaries takes effect on the 90th day after the local election, which is January 31, 2022. The recreational adult-use dispensary provisions in the proposed ordinance should remain as those provisions would be necessary should the election results change, should the election results not be certified, and for the period of time between January 1, 2022 and January 31, 2022. Likewise, future annexations may include land with existing recreational adult-use dispensaries and these provisions would make it clear that, without a local license, retail sales could not continue even if other marijuana business activity (medical sales, cultivation, manufacturing) was ultimately licensed by the City.
Based upon the anticipated certification of the municipal election results, the recommendations of Substance Abuse Connect regarding potency and packaging are substantially moot, as those limitations would not apply to medical marijuana products. Leaving Section 7-2005 of the proposed ordinance intact provides consistency with state law.
Section 7-2009 of the proposed ordinance contemplates that all licenses issued under the ordinance are subject to the rights of the voters to prohibit categories of marijuana businesses by majority vote.
Based upon the results of the election, the City of Billings may not allow recreational adult-use dispensaries to operate within city limits after January 31, 2022, assuming certification of election results. See Section 16-12-301(7). Staff interprets this provision to require enforcement by the City of the prohibition against recreational adult-use dispensaries after January 31, 2022.
Former medical marijuana licensees who anticipated selling recreational retail marijuana within the city limits of Billings may not do so after January 31, 2022, regardless of whether they are in good standing or not.
Section 16-12-201(b) provides:
Beginning January 1, 2022, a former medical marijuana licensee may sell marijuana and marijuana products to registered cardholders at the medical tax rate set forth in 15-64-102 and to consumers at the adult-use marijuana tax rate set forth in 15-64-102 under the licensee's existing license in a jurisdiction that allows for the operation of marijuana businesses pursuant to 16-12-301 until the former medical marijuana licensee's next license renewal date, by which time the former medical licensee must have applied for and obtained the appropriate licensure under this chapter to continue operations, unless an extension of time is granted by the department.
Assuming certification of the election results, the operation of recreational adult-use dispensaries is not permitted under 16-12-301 effective January 31, 2022 by state law.
The above interpretation is supported by the information from the Montana Department of Revenue Cannabis Control Division. Cannabis Control Division Frequently asked questions
At the public hearing on First Reading, Council Members discussed possible amendments to the potency provisions of the ordinance but did not amend those provisions, which currently track Chapter 16 of the Montana Code Annotated.
The proposed ordinance attached to this staff memorandum includes nonsubstantive amendments adding defined terms in Section 7-2005. The added terms and definitions track the definitions included in Chapter 16 of the Montana Code Annotated.
During the open comment period of the council work session held on November 1, 2021, 2 members of the public spoke regarding their opinion that marijuana testing laboratories should not be subject of the current moratorium on licensing new marijuana businesses. The moratorium on testing laboratories does not impact consumer safety. It might, however, effect the availability of products for resale at area dispensaries. Even if council were inclined to do so, given the required ordinance amendments and publication requirements, the additional timeframe would only advance laboratories by an estimated 3 weeks.
On November 2, 2021, the unofficial results of the Billings municipal election reflected a decision by the voters to ban recreational adult-use marijuana dispensaries within city limits. Pursuant to Section 16-12-301(7), this vote prohibiting recreational adult-use marijuana dispensaries takes effect on the 90th day after the local election, which is January 31, 2022. The recreational adult-use dispensary provisions in the proposed ordinance should remain as those provisions would be necessary should the election results change, should the election results not be certified, and for the period of time between January 1, 2022 and January 31, 2022. Likewise, future annexations may include land with existing recreational adult-use dispensaries and these provisions would make it clear that, without a local license, retail sales could not continue even if other marijuana business activity (medical sales, cultivation, manufacturing) was ultimately licensed by the City.
Based upon the anticipated certification of the municipal election results, the recommendations of Substance Abuse Connect regarding potency and packaging are substantially moot, as those limitations would not apply to medical marijuana products. Leaving Section 7-2005 of the proposed ordinance intact provides consistency with state law.
Section 7-2009 of the proposed ordinance contemplates that all licenses issued under the ordinance are subject to the rights of the voters to prohibit categories of marijuana businesses by majority vote.
Based upon the results of the election, the City of Billings may not allow recreational adult-use dispensaries to operate within city limits after January 31, 2022, assuming certification of election results. See Section 16-12-301(7). Staff interprets this provision to require enforcement by the City of the prohibition against recreational adult-use dispensaries after January 31, 2022.
Former medical marijuana licensees who anticipated selling recreational retail marijuana within the city limits of Billings may not do so after January 31, 2022, regardless of whether they are in good standing or not.
Section 16-12-201(b) provides:
Beginning January 1, 2022, a former medical marijuana licensee may sell marijuana and marijuana products to registered cardholders at the medical tax rate set forth in 15-64-102 and to consumers at the adult-use marijuana tax rate set forth in 15-64-102 under the licensee's existing license in a jurisdiction that allows for the operation of marijuana businesses pursuant to 16-12-301 until the former medical marijuana licensee's next license renewal date, by which time the former medical licensee must have applied for and obtained the appropriate licensure under this chapter to continue operations, unless an extension of time is granted by the department.
Assuming certification of the election results, the operation of recreational adult-use dispensaries is not permitted under 16-12-301 effective January 31, 2022 by state law.
The above interpretation is supported by the information from the Montana Department of Revenue Cannabis Control Division. Cannabis Control Division Frequently asked questions
STAKEHOLDERS
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 dispensary cap and lottery system to allocate available licenses within the initial 18-month period for the sale of recreational marijuana. However, those business owners expressed concern regarding any cap on THC potency given the current industry and market standards. Potential retail dispensary owners expressed concern with the adequacy of the zoning areas contemplated and recommended by the zoning commission.
Following the October 18, 2021, work session, council members received questions and concerns from business owners regarding the proposed ordinance to be presented at First Reading. Staff provided responses to council regarding those questions and concerns.
On October 19, 2021, Substance Abuse Connect hosted a meeting for local public officials which was attended by CM Ewalt, CM Purinton, and Mayor Cole and at which Ben Cort spoke. The meeting was also attended by City Administrator Chris Kukulski, City Attorney Gina Dahl, and Assistant City Attorney Karen Tracy.
At the October 25, 2021 public hearing, participants in the substance abuse recovery community spoke regarding concerns with the proposed ordinance and, at the request of certain council members, agreed to provide additional input to council and staff regarding their concerns.
At the October 25, 2021 public hearing, marijuana business owners and others interested in marijuana businesses offered public comment on a variety of issues addressed in the ordinance.
Information and proposals were received from Substance Abuse Connect and taken into consideration.
During the open comment period of the council work session held on November 1, 2021, two members of the public spoke regarding their opinion that marijuana testing laboratories should not be subject of the current moratorium on licensing new marijuana businesses. The moratorium on testing laboratories does not impact consumer safety. It might, however, effect the availability of products for resale at area dispensaries.
Following the October 18, 2021, work session, council members received questions and concerns from business owners regarding the proposed ordinance to be presented at First Reading. Staff provided responses to council regarding those questions and concerns.
On October 19, 2021, Substance Abuse Connect hosted a meeting for local public officials which was attended by CM Ewalt, CM Purinton, and Mayor Cole and at which Ben Cort spoke. The meeting was also attended by City Administrator Chris Kukulski, City Attorney Gina Dahl, and Assistant City Attorney Karen Tracy.
At the October 25, 2021 public hearing, participants in the substance abuse recovery community spoke regarding concerns with the proposed ordinance and, at the request of certain council members, agreed to provide additional input to council and staff regarding their concerns.
At the October 25, 2021 public hearing, marijuana business owners and others interested in marijuana businesses offered public comment on a variety of issues addressed in the ordinance.
Information and proposals were received from Substance Abuse Connect and taken into consideration.
During the open comment period of the council work session held on November 1, 2021, two members of the public spoke regarding their opinion that marijuana testing laboratories should not be subject of the current moratorium on licensing new marijuana businesses. The moratorium on testing laboratories does not impact consumer safety. It might, however, effect the availability of products for resale at area dispensaries.
ALTERNATIVES
City Council may:
- Approve;
- Approve with amendments; or,
- Not Approve
FISCAL EFFECTS
On November 2, 2021, Yellowstone County voters approved a county-wide excise tax of 3% on medical and recreational marijuana. Staff estimates that the City of Billings will receive 92 cents for each $100 of marijuana and marijuana products sold county-wide and, within a few years, generate annual revenue of approximately $200,000.
On November 2, 2021, City of Billings voters voted to prohibit recreational adult-use dispensaries within City limits. Although there should not be ongoing costs associated with the licensing of recreational, adult-use marijuana, 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. Should council elect to deviate from the potency levels set by the state, the cost of enforcement for those ordinances should be passed through to the licensed marijuana businesses to the extent possible.
On November 2, 2021, City of Billings voters voted to prohibit recreational adult-use dispensaries within City limits. Although there should not be ongoing costs associated with the licensing of recreational, adult-use marijuana, 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. Should council elect to deviate from the potency levels set by the state, the cost of enforcement for those ordinances should be passed through to the licensed marijuana businesses to the extent possible.