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Meeting Date: DECEMBER 06, 2016
AGENDA ITEM: Overview of Prop 64 and its Impacts on the City.
MEETING DATE: December 6, 2016
PREPARED BY: Jose M. Sanchez, City Attorney
Receive information from the City Attorney’s Office on the passage of Prop 64 regarding the legalization of recreational marijuana in California and its impacts on the City.
On November 8, 2016, Californians approved Prop 64 -the Control, Regulate, and Tax Adult Use of Marijuana Act (“AUMA” or “the Act”), legalizing recreational marijuana use for adults 21 and older and establishing a commercial licensing structure.
Overview of AUMA:
Effective November 9, 2016, AUMA makes it legal for anyone 21 and older to:
– Smoke or ingest marijuana and marijuana products (subject to certain limitations outlined below);
– Possess, obtain, give away, purchase, and process up to one ounce of marijuana and up to 8 grams of concentrated marijuana;
– Possess, plant, harvest, dry, or process up to six living plants within a single private residence or an enclosed and secure accessory structure to a private residence (“private residence” includes a house, an apartment, a mobile home, or other similar dwelling); and
– Possess, plant, harvest, dry, or process up to six living plants upon the grounds of a private residence, unless outdoor cultivation is prohibited by local regulations.
The new law establishes that marijuana may not be smoked in public places, anywhere tobacco smoking is prohibited, or within 1,000 feet of a school, day care center, or youth center where children are present. There are two exceptions to this last prohibition: AUMA allows for marijuana to be smoked within 1,000 feet of a school, day care center or youth center where children are present if it occurs at a private residence or a business licensed to allow for on-site marijuana smoking and such smoking is not detectable by others at the nearby school, day care center, or youth center.
Marijuana may not be smoked while driving or riding in a moving vehicle or boat. It is also illegal under AUMA to possess or smoke marijuana on school grounds, or at day care or youth centers when children are present.
The law does allow for private property owners to prohibit any of AUMA’s permitted personal use and possession activities. Government agencies may prohibit such activities within buildings owned, leased, or occupied by the government agency. Private employers may maintain or adopt a drug-free workplace policy that prohibits the use of marijuana by employees.
AUMA also creates a licensing and regulatory system for nonmedical commercial marijuana activities, including sales, distribution, cultivation, manufacturing, and testing. The regulatory structure is similar to the one created under the Medical Cannabis Regulatory and Safety Act passed in 2015.
It contains 19 different types of commercial licenses. AUMA expands the duties of the California Bureau of Medical Cannabis Regulation (renamed the Bureau of Marijuana Control), Department of Consumer Affairs, Department of Food and Agriculture, and Department of Public Health. It is anticipated that the regulations and state licensing will be developed by January 1, 2018.
It is illegal for a commercial nonmedical marijuana business to operate without a state license.
The Act also imposes taxes on commercial sales and cultivation of nonmedical marijuana. Starting January 1, 2018, AUMA implements an excise tax on purchases of marijuana, and a tax on cultivation of marijuana.
The tax on purchases is 15% of the gross receipts of any retail sale of medical or nonmedical marijuana.
The cultivation tax will be imposed on harvested marijuana. The tax is nine dollars and twenty-five cents ($9.25) per dry weight ounce.
The tax for marijuana leaves is two dollars and seventy five cents ($2.75) per dry weight ounce. The excise tax and the cultivation tax shall be “in addition to any other tax imposed by a city, county or city and county,” but medical marijuana purchases by qualified patients and caregivers will be exempt from all sales and use taxes. (Rev. & Tax. §§ 34021;34011.)
The City’s Cannabis Business Tax, approved by voters in 2010, would therefore apply to all medical and nonmedical marijuana sales, should such uses ever be allowed in the City.
Chapter 20 of the AUMA sets out regulations related to local control. Specifically, section 26200 of the Business and Professions Code states:
(a) Nothing in this division shall be interpreted to supersede or limit the authority of a local jurisdiction to adopt and enforce local ordinances to regulate businesses licensed under this division, including, but not limited to, local zoning and land use requirements, business license requirements, and requirements related to reducing exposure to second hand smoke, or to completely prohibit the establishment or operation of one or more types of businesses licensed under this division within the local jurisdiction.
State licensing authorities shall not approve an application for a state license under AUMA if it would violate a local ordinance or regulation adopted pursuant to proposed Business and Professions Code section 26200. (Bus. & Prof Code § 26055(e).)
But unlike the MCRSA, the Act does not require applicants seeking a state license to provide documentation that they have permission from local authorities to operate their cannabis business.
Medical Cannabis Regulation and Safety Act
Passed by the Legislature in 2015, Medical Cannabis Regulation and Safety Act (“MCRSA”) establishes a regulatory and licensing structure for medical marijuana businesses in California. Until the enactment of MCRSA, all marijuana “businesses,” with the exception of cooperatives and collectives (dispensaries and their associated growers), were illegal.
MCRSA changed that by creating licensing categories for every aspect of the industry, including cultivation, testing, distribution, and sales. It is anticipated that the regulations and state licensing will be developed by January 1, 2018. The new regulatory framework allows medical marijuana businesses -beyond only nonprofit dispensaries- to operate legitimately.
The passage of Prop 64 did not affect the regulatory structure established for commercial medical marijuana activities.
Current Livingston Marijuana Cultivation Regulations
•• Cultivation of Marijuana and Medical Marijuana both indoor and outdoor is prohibited (LMC 5-5- 14(B))
Except for LMC 5-5-14(C)
•• Personal Medical Cultivation is allowed (LMC 5-5-14(C)): Total of 2 plants can be cultivated outdoors
Detached, single-family home
R-E (estate residential), R-1 (low density residential), R-2 (medium density residential), R-3 (high density residential), and DTC (downtown commercial)
Not allowed in duplexes and apartment buildings
Prohibited within 1,000 feet of a school, childcare center or public park Property owner consent
Impact of AUMA on the City’s Regulations
AUMA makes it legal for individuals 21 and older to cultivate up to six plants within a single private residence or within an accessory structure to a private residence. “Private residence” includes a home, an apartment, or a mobile home or similar dwelling. Cities and counties may enact “reasonable regulations” for indoor cultivation, but may not completely prohibit it. However, cities and counties may completely prohibit outdoor cultivation allowed under AUMA.
The City therefore may retain its ban on all outdoor cultivation of marijuana under AUMA. Minor amendments to the City’s ordinance regarding indoor cultivation regulations will, however, be required to ensure compliance with AUMA.
The City may adopt reasonable regulations related to health, safety, and public welfare, but will need to allow for the personal cultivation of up to six plants indoors on all residential parcels for nonmedical purposes.
AUMA does allow for private property owners, such as landlords, to ban indoor and/or outdoor cultivation on their property. (Health & Safety Code § 11362.45(h).)
1. PowerPoint Presentation