Consideration and Adoption of Resolution No. 2022-37 and Ordinance No. 2022-19:  A Resolution of the Flagstaff City Council declaring as a public record that certain document filed with the City Clerk and entitled "PZ-22-00089 Marijuana Operations and Retail Establishments" and an Ordinance of the Flagstaff City Council amending the Flagstaff City Code, Title 10, Flagstaff Zoning Code, to allow recreational marijuana retail sales by establishments that may not be dual licensees and clarify definitions and terms in relation to Marijuana Operations.

The primary purpose of this proposed Zoning Code Text Amendment is to allow for recreational only marijuana retail sales, clarify existing definitions and extend the separation distances between retail establishments.  The Planning & Zoning Commission recommends the City Council approve the amendment as proposed (4-0).

There are no anticipated financial impacts affiliated with the proposed Zoning Code Text Amendment.

There are no anticipated policy impacts affiliated with the proposed Zoning Code Text Amendment.

Priority Based Budget Key Community Priorities and Objectives
Carbon Neutrality Plan
Regional Plan

There have been no previous Council decisions on this specific Zoning Code Text Amendment.

The City Council may adopt, modify, or deny the proposed amendment.

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 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.  Pursuant to the licensing rules in the Act, the vast majority of the marijuana establishment licenses were given to entities that were already operating medical marijuana dispensaries. However, the Act also directed the Arizona Department of Health Services to issue twenty-six additional marijuana establishment licenses across the State of Arizona for the purpose of encouraging social equity in marijuana establishment ownership.  Social equity licenses were issued to applicants who qualified under the Social Equity Ownership Program at a random drawing on April 8, 2022.

On March 16, 2021, the Flagstaff City Council adopted Ordinance 2021-03, which enacted certain regulations regarding the use and sale of recreational marijuana in Flagstaff.  One of the regulations adopted by Council prohibits the operation of recreational marijuana establishments in Flagstaff, except where authorized by a dual licensee that is permitted by the State of Arizona to operate both a nonprofit medical marijuana dispensary and a marijuana establishment at a shared location.  Under the current rules, social equity licenses are not dual licenses—they are recreation only. 

To allow recreational-only retail establishments, the Marijuana Dispensary definition would need to be amended as follows: 

A. Definitions
Current Text
Marijuana Dispensary:  A medical or dual licensee (as defined in A.R.S. 36-2850, as amended) Marijuana Dispensary certified by the State of Arizona to sell Marijuana and Marijuana products to consumers, which may include the cultivation, manufacturing, processing, packaging, or storage of Marijuana products as an accessory use to the dispensary.

Proposed Text
Marijuana Retail Establishment:  A Non-Profit Medical Marijuana Dispensary, a Dual-Licensed establishment (as defined in A.R.S. 36-2850, as amended), or a single recreational retail establishment certified by the State of Arizona to sell Marijuana and Marijuana products to consumers, which may include the cultivation, manufacturing, processing, packaging, or storage of Marijuana products as an accessory use to the dispensary.

Staff recommends the revision of a few other terms in the code to align the Zoning Code with Arizona Revised Statutes.  This includes the following changes:

Marijuana Off-Site Cultivation Location → Marijuana Off-Site Cultivation Establishment    
Marijuana Off-Site Manufacturing Location → Marijuana Off-Site Manufacturing Establishment
Marijuana Establishment → Marijuana Operation

B. Separation Requirements
Marijuana Establishments (to be renamed Marijuana Operations), which include retail establishments, cultivation establishments, manufacturing establishments, and testing facilities, are regulated by Section 10-40.60.220 of the Zoning Code to protect the public health, safety, and welfare. Marijuana Dispensaries (as currently defined – proposed to be called Marijuana Retail Establishments) are only permitted in the Highway Commercial (HC) zone. Section 10-40.60.220.F includes minimum separation requirements for a Marijuana Establishment, measured in a straight line from the boundary of the lot or parcel containing any of the existing uses listed below:

1. Two thousand feet from another Marijuana Establishment;
2. Five hundred feet from a residential substance abuse treatment facility or other residential drug or alcohol rehabilitation facility licensed by the State of Arizona;
3. Five hundred feet from a community college, university, or from any public, private, parochial, charter, dramatic, dancing, music learning center, or other similar school or education facility that caters to children;
4. Five hundred feet from a daycare home or daycare center;
5. Five hundred feet from a public library or public park; and
6. Five hundred feet from a facility devoted to family recreation or entertainment.

The Planning and Zoning Commission recommends that the existing two thousand (2,000) foot separation required between establishments be increased to two thousand five hundred (2,500) feet.  Attached to this report are maps of the existing sales locations with the existing 2,000-foot separation delineated, 2,500 foot separation delineated, and one-mile separation delineated to provide reference for this decision.

A Zoning Code Text Amendment shall be evaluated based on the following findings:

A.  Finding #1:The proposed amendment is consistent with and conforms to the objectives and policies of the General Plan and any applicable specific plan;
The amendment's primary purpose is to implement the City Council’s direction to update the Zoning Code to conform with the issuance of social equity licenses and to maintain consistency and conformance with the Regional Plan's (General Plan) goals and policies.Therefore, the modifications would allow for recreational-only retail establishments in addition to Medical Marijuana Dispensaries and Dual-Licensed establishments (both medical and recreational). The proposed provisions address multiple goals and policies of the Regional Plan including:

• Providing submittal and locational requirements that are transparent and minimize duplication with the State of Arizona’s requirements to be a certified Marijuana Establishment that is allowed to cultivate, manufacture, sell, and store marijuana products (Regional Plan Goal ED.1.);
• Allowing the Marijuana Establishment land uses (Marijuana Dispensary, Marijuana Off-Site Cultivation Location, Marijuana Off-site Manufacturing Location, and Marijuana Testing Facility) in several commercial and industrial zones that will permit new and existing marijuana-based businesses to be retained, expanded, and located in Flagstaff, as well as providing for scientific testing of marijuana products (Regional Plan Goal ED.3., and Policies CC.5.1., CC.5.5., ED.3.1., ED.3.5., and ED.4.2.); and,

B.   Finding #2 The proposed amendment will not be detrimental to the public interest, health, safety, convenience, or welfare of the City;
The provisions of the amendment are not anticipated to be detrimental to the public interest, health, safety, convenience, or welfare of the city.  To assist in ensuring that the proposed Marijuana Establishment land uses are not detrimental, minimum separation requirements are established from facilities and locations that contain any of the following uses: daycares, educational, family recreation and entertainment, public libraries and parks, drug or alcohol rehabilitation, and other Marijuana Establishments.  In addition, provisions are already incorporated pertaining to the security, disposal of marijuana remnants and by-products, and prohibition of onsite consumption of marijuana products and emissions of dust, fumes, vapors, smoke, or odors into the environment from a Marijuana Establishment.

C.   Finding #3 The proposed amendment is internally consistent with other applicable provisions of this Zoning Code.
The amendment is internally consistent, utilizes the existing format, and does not conflict with other Zoning Code provisions. It maintains the Zoning Code’s purpose as a comprehensive contemporary set of land uses and requirements that are straightforward, usable, and easily understood.

Inform.  A formal work session was held with the Planning & Zoning Commission on May 25, 2022, and the City Council on May 31, 2022.  Both work sessions were advertised in the Arizona Daily Sun.  A public hearing was held with the Planning & Zoning Commission on June 22, 2022.  All public hearings were advertised in the Arizona Daily Sun.