Council Work Session


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     4.       
Meeting Date: 09/07/2021  
TITLE:    Marijuana business regulation, licensing, and zoning
PRESENTED BY: Karen Tracy
Department: Legal  

RECOMMENDATION
No action is required of council at this time. Staff is providing an update to City Council on regulatory options for consideration. 
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
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 of marijuana businesses that will be allowed by state law, effective January 1, 2022.

The Montana Department of Revenue Cannabis Control Division indicates that there are 39 medical marijuana licensed businesses in “Billings.” Internet available information and the city-county map confirms that 2 are within the city limits, 27 are outside the city limits but within the county, and addresses could not be located for the remaining licensed businesses. Repeated but unsuccessful attempts to obtain this information from the state have been made. It appears that many state functions are being transitioned in anticipation of the January 1, 2022, effective dates. Of the 2 businesses located in city limits, only one has a valid city business license to operate a medical marijuana business.

At the working group meeting on August 18, staff provided an overview of the proposed core elements of zoning regulation amendments to address marijuana businesses in Billings. Below are the main elements the working group reviewed and was generally supportive of so that staff could move forward with drafting zoning text amendments:
  • Allow Marijuana Dispensary – Medical, Adult and Combined Use in Heavy Commercial (CX), Light Industrial (I1), and Heavy Industrial (I2) districts (Map of location of these three zoning districts to be shared by staff at this meeting).
  • Require 1,000-foot separation between all Marijuana Dispensaries allowed in CX, I1 and I2 from public or private schools, daycare centers, public recreation centers or public parks, churches, synagogues, or other place of worship, and youth centers (Draft Maps to be shared by staff at this meeting).
  • Allow Cultivator, Processor/Manufacturer and Transporter in Heavy Commercial (CX), Light Industrial (I1), and Heavy Industrial (I2) districts
  • Allow Testing Laboratory in Downtown Support (DX), Heavy Commercial (CX), Light Industrial (I1, and Heavy Industrial (I2) districts
  • Add Marijuana Dispensary, Testing Laboratory, Cultivator, Processor/Manufacturer and Transporter to the Primary Use Table in the Zoning Code (Table 27-1000/.1)
  • Clarify that marijuana cultivation, processing, manufacturing, sales, transportation or testing laboratories are not “Home Occupations” (Sec. 27-1008) and cannot be “Accessory” uses to a Primary Use unless the accessory use is located in one of the districts where the use is allowed as a Primary Use. 
  • Clarify that outdoor cultivation is not allowed within the city limits for any licensed Marijuana Cultivation operation.
  • Require sign permit applicants to provide state sign approval at the time of application. (Sec. 27-1400 -or- Sec. 27-1622 (permitting). Consider whether to adopt state sign permit requirements more carefully once the rules are finalized by DOR, but require applicants to show state approval prior to city sign permit review.
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.
Staff has surveyed other local 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. www.pueblo.us/DocumentCenter/View/14773/Retail-Marijuana-Rules-and-Regs?bidId=.

The following publications were located which may assist the City Council in formulating marijuana business policy:

Zoning and dispensary caps:

EM Everson et al., Post-Legalization Opening of Retail Cannabis Stores and Adult Cannabis Use in Washington State, 2009-2016, American Journal of 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: ajph.aphapublications.org/doi/10.2105/AJPH.2019.305191

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 edible products tested in three major cities were significantly mislabeled: 23% were underlabeled (stronger than indicated), 60% were overlabeled 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: jamanetwork.com/journals/jama/fullarticle/2661569?resultClick=1


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.  ajph.aphapublications.org/doi/10.2105/AJPH.2017.303848

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

Considerations for limits on dispensary caps:

If 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)
 
ALTERNATIVES
No formal action is required at this time, therefore no alternatives were analyzed.
FISCAL EFFECTS
The issue of local excise tax is also before the voters on November 2, 2021, so any revenue impact is uncertain at this time.

City business licensing fees to defray licensing expenses will need to be established and are expected to vary according to the types of regulations implemented.
SUMMARY
This is presented to update and inform Council of some issues that may need to be addressed with any city regulations.  The studies cited above provide additional information for Council to review in order to make informed policy decisions.  No action is required, but staff welcomes any specific direction Council will provide regarding zoning, buffer zones, caps on dispensaries, or any other areas Council wishes to see regulated.


    

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