Consideration and Adoption of Ordinance No. 2021-03:  An ordinance of the City Council of the City of Flagstaff, Arizona, amending the Flagstaff City Code, Title 6, Police Regulations, by adopting a new Chapter 6-10, Regulation of Recreational Marijuana.

Attached is the amended ordinance as approved on March 2, 2021 for the first read.

The “Smart and Safe Arizona Act” (the “Act”), certified as Proposition 207, was passed by Arizona voters at the November 3, 2020 general election and became effective on December 1, 2020. The Act declared that “the responsible adult use of marijuana should be legal for persons twenty-one years of age or older, subject to state regulation, taxation, and local ordinance.”
 
The Act decriminalizes the use and possession of up to one ounce of recreational marijuana by a person who is at least twenty-one years of age. Individuals who are at least twenty-one years of age can also legally grow and possess up to six marijuana plants, but no more than twelve plants can be grown at a single residence and cultivation must take place in an enclosed, secure area not visible from public view.

The Act also allows for Marijuana Establishments, which are entities licensed by the Arizona Department of Health Services to operate a retail location for the sale of recreational marijuana, an off-site marijuana cultivation facility, and an off-site manufacturing facility.    
 
It remains illegal to drive while impaired by marijuana, and the Act does not allow the smoking of marijuana in a public or open space. In addition, cities are authorized to prohibit marijuana possession, sale, and other uses (vaping, ingesting, etc.) on city property and adopt the following regulations: 

1. Enact reasonable zoning regulations that limit the use of land for marijuana establishments and marijuana testing facilities to specified areas (zoning regulations for recreational marijuana cannot be more restrictive than zoning regulations for medical marijuana dispensaries).
2. Limit the number of marijuana establishments or marijuana testing facilities, or both.
3. Prohibit marijuana establishments or marijuana testing facilities, or both.
4. Regulate the time, place and manner of marijuana establishment and marijuana testing facility operations.
5. Establish reasonable restrictions on public signage regarding marijuana, marijuana establishments and marijuana testing facilities.
6. Prohibit or restrict delivery within its jurisdiction.

Although the Act allows cities to prohibit marijuana establishments and marijuana testing facilities, it prohibits cities from adopting a regulation that “restricts or interferes with the ability of a dual licensee or an entity eligible to become a dual licensee to operate a nonprofit medical marijuana dispensary and a marijuana establishment cooperatively at shared locations.”

Cities are authorized to tax the sale of recreational marijuana through a transaction privilege tax or use tax.

The Arizona Department of Health Services will eventually issue twenty-six marijuana establishment licenses under the Act across the State of Arizona for the purpose of encouraging social equity in marijuana establishment ownership. These licenses will be issued to applicants who qualify under the Social Equity Ownership Program.

The Arizona Department of Health Services must first adopt rules to create and implement a Social Equity Ownership Program to promote the ownership and operation of marijuana establishments by individuals disproportionately impacted by the enforcement of previous marijuana laws. During the rulemaking the Arizona Department of Health Services will post drafts and accept public comments.
 

The Department will begin accepting applications for these twenty-six licenses within six months of adopting the final rules for the Social Equity Ownership Program. The Department does not currently have a timeline for this rulemaking. As a result, this current ordinance may come back to City Council to allow for updates in light of the Social Equity Ownership Program and the potential for licensure under that Program.

The sale of recreational marijuana will be taxed by the City, thereby creating an additional revenue stream to fund City programs.

The adopted regulations will codify the City's policies related to recreational marijuana use and sales in Flagstaff. 

None.

Council gave direction at prior work session.