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9.f1 City Attorney Memo - Cannabis Hemp and THC Interim Ordinances - Scandia (July 12 2023)ECKBERG LAMMERS MEMORANDUM To: Scandia City Council From: Eric D. Larson, City Attorney Date: July 14, 2023 Re: Cannabis Business Regulation This Memorandum provides a summary background of the adult-use cannabis legislation followed by a series of proposals for the City of Scandia to consider: 1. Recommendation that the City adopt a code prohibiting anyone from using cannabis flower, cannabis products, lower-potency hemp edibles, or hemp-derived consumer products in a public place. Exhibit C – Ordinance Prohibiting Cannabis Consumer Product Use in Public Spaces (Draft Ordinance 2023-06). The bases for this recommendation is to ensure that use of cannabis is prohibited in public spaces, similarly to the prohibition of tobacco and liquor in public buildings or public spaces. 2. Recommendation that on July 18, 2023, the City adopt Interim Moratorium Ordinance regarding Hemp and Cannabis businesses to provide time to undertake a zoning study and receive information and guidance from the newly created Office of Cannabis Management. Exhibit D – Interim Ordinance Prohibiting the Establishment of New Uses Related to the Operation of Cannabis Businesses and Hemp Businesses (Draft Ordinance No. 2023-07). The Cannabis Legislation authorizing a municipal moratorium does not take effect until August 1, 2023, and there is an argument that the moratorium power under the new law applies to cannabis only and does not extend to hemp. This moratorium would be enacted under existing law, specifically, Minnesota statutes section 462.355, apply to both hemp and cannabis and provide the City of Scandia to undertake a zoning study and receive information and guidance from the newly created Office of Cannabis Management. 3. Recommendation that on August 15, 2023, the City hold a public hearing and thereafter adopt an Interim Moratorium Ordinance regarding Hemp and Cannabis businesses to provide time to undertake a zoning study and receive information and guidance from the newly created Office of Cannabis Management. This interim moratorium ordinance would be enacted as authorized by the Cannabis legislation, specifically Minnesota Statutes section 342.13, subd. 3, which takes effect on August 1, 2023. Exhibit E – Interim Ordinance Prohibiting the Establishment of New Uses Related to the Operation of Cannabis Businesses. 2 CANNABIS LAW GENERALLY This legislative session Minnesota adopted a new law legalizing adult-use cannabis. Along with legalizing adult use cannabis, the Legislature adopted a series of laws creating various licensing schemes for cannabis businesses and hemp businesses, creating the Office of Cannabis Management to regulate the cannabis and hemp industry, and, importantly for Minnesota cities, setting forth options for local control by cities. On August 1, 2023, the use of recreational cannabis by adults is legal, but the sale of cannabis, cannabis products, and lower-potency hemp edibles is not legal until the Office of Cannabis Management begins issuing cannabis business and hemp business licenses. The Legislature did not identify a date when the Office of Cannabis Management will begin accepting, processing, and granting applications for cannabis businesses and hemp businesses. Theoretically, the Office of Cannabis Management has the authority to begin issuing licenses as soon as August 1, 2023. It seems generally understood that it will be a year or more before the Office of Cannabis Management begins issuing licenses. Presently, however, when cannabis businesses and hemp businesses may begin lawful operation in Minnesota cannot be exactly predicted. The Office of Cannabis Management must consult with a city prior to issuing a license for a cannabis business or hemp business operation to ensure the business complies with the City’s zoning code. Once the Office of Cannabis Management issues a license for a cannabis business or hemp business, a city must issue a registration to the licensee for operation in their city unless the city has provided consent for the county to issue registrations for their jurisdiction. All that being said, edible cannabinoid products, which were made legal in the 2022 Legislative Session, continue to be legal to sell through March 1, 2025. However, once the Office of Cannabis Management begins issuing lower-potency hemp edible licenses, cities would no longer have licensing power over edible cannabinoid products and must begin registering retailers through the city’s cannabis retailer registration process. There is a minor difference between lower-potency hemp edibles, which cannot be sold until a license is obtained from the Office of Cannabis Management, and edible cannabinoid products, which can be sold now (see Exhibit A – Difference between Lower-Potency Hemp Edible Products & Edible Cannabinoid Products). An edible cannabinoid product contains a cannabinoid but a lower-potency hemp edible can contain hemp concentrate or cannabinoids. Also, lower-potency hemp edibles can contain a higher amount of cannabidiol, cannabigerol, or any combination of those with THC. Importantly, a city continues to possess zoning and land use controls through which the city may regulate a cannabis business’ location and the number of cannabis businesses in the city (see Exhibit B – Statutory Regulations for Sales of Edible Cannabinoid Products, Hemp Businesses, & Cannabis Businesses). A city must allow at least one cannabis business registration for every 12,500 residents; if a county has one active registration for every 12,500 residents, then a city is not obligated to register a cannabis business. And a city may also permit more than the 3 minimum permitted by state law. Cities may prohibit the operations of a cannabis business within 1,000 feet of a school, 500 feet of a daycare, residential treatment facility, or an attraction within a public park that is regularly used by minors, including a playground or athletic field. In short, cities have the option to prohibit use of cannabis products in public places, restrict the hours of cannabis businesses, limit the number of cannabis businesses, place reasonable time, place, and manner restrictions for cannabis businesses, and finally prohibit cannabis businesses with an interim ordinance through January 1, 2025. Cities also have the option to regulate and restrict hemp businesses with their traditional regulatory authority. Cities do not have the option to prohibit cannabis use in their city; and they do not have the option to prohibit cannabis businesses in the city beyond January 1, 2025. And cities may themselves operate a municipal cannabis store. In summary, the use and possession of cannabis is lawful as of August 1, 2023, but currently, no business is authorized to sell cannabis. And regulation, licensing, and local zoning controls for both hemp and cannabis remain to be developed. How regulation of hemp and cannabis will impact edible cannabis remains to be determined. As a result, here are the following options and recommendations for the Scandia City Council to consider. RECOMMENDATIONS – CANNABIS AND HEMP Many unknowns remain as to the methods towns, cities, counties, and the State will use to regulate this new cannabis and hemp industry for the State of Minnesota. Interim moratorium ordinances provide cities the best option to study, learn, and make informed decisions as to how best manage this new industry in a manner that best fits their city and maintain a city’s legal rights to regulate accordingly. Therefore, the Scandia City Attorney makes the following recommendations: 1. Public Use Prohibition. City of Scandia adopt an ordinance prohibiting the use of cannabis flower, cannabis products, lower-potency hemp edibles, and hemp-derived consumer products in public places. Scandia’s current code prohibiting public use of liquor or tobacco products may apply to cannabis products. But to ensure that such a prohibition is clear, law enforcement in many cities has requested such an ordinance be adopted. This ordinance would permit law enforcement in the City of Scandia to charge individuals using such products in public places with a petty misdemeanor. While the City of Scandia cannot prohibit the use of such products at a private residence, private property where the owner permits the use, or the premises of an establishment or event licensed to permit on -site consumption, the City can prohibit it just about everywhere else with this ordinance. 2. Hemp and Cannabis Moratorium. On July 18, 2023, the City of Scandia adopt an interim ordinance prohibiting the operation of hemp businesses for a period of one year and would include a moratorium on Cannabis, which remain in effect until the Cannabis and Hemp Moratorium recommended below is enacted. The legislature did not allow cities to prohibit the operation of hemp businesses with an interim ordinance through 2025. This means cities may only adopt an interim ordinance for one year. Adopting interim ordinances will give the City time to adopt or amend official controls for cannabis businesses and hemp businesses prior to the Office of Cannabis Management approving licenses in the City. 4 3. Cannabis and Hemp Moratorium. On August 15, 2023, the City of Scandia conduct a public hearing and adopt an interim ordinance prohibiting the operation of cannabis and hemp businesses thru January 1, 2025. This interim moratorium ordinance would be enacted as authorized by the Cannabis legislation. To the extent the Cannabis legislation permits the moratorium to extend to hemp, this moratorium would apply to hemp as well. The interim moratorium ordinance will give the City time to adopt or amend official controls for cannabis businesses and hemp businesses prior to the Office of Cannabis Management approving licenses in the City. 5 EXHIBIT A DIFFERENCE BETWEEN LOWER-POTENCY HEMP EDIBLE PRODUCTS & EDIBLE CANNABINOID PRODUCTS 6 EXHIBIT B STATUTORY REGULATIONS FOR: SALES OF EDIBLE CANNABINOID PRODUCTS, HEMP BUSINESSES, & CANNABIS BUSINESSES Types Edible Cannabinoid Products Lower-Potency Hemp Edibles Cannabis Products Display/ Storage Every person selling edible cannabinoid products to consumers, other than products that are intended to be consumed as a beverage, must ensure that all edible cannabinoid products are displayed behind a checkout counter where the public is not permitted or in a locked case. A lower-potency hemp edible retailer shall ensure that all lower-potency hemp edibles, other than lower-potency hemp edibles that are intended to be consumed as a beverage, are displayed behind a checkout counter where the public is not permitted or in a locked case. All lower-potency hemp edibles that are not displayed must be stored in a secure area. Retail area may have samples and cannabis products available for sale displayed (one of each type). The products must be stored in the secure storage area. Age Verification Prior to sale employee must verify Prior to sale employee must verify Prior to sale employee must verify Liquor License Permissions On-site consumption permitted for establishments with on- sale licenses. Exclusive Liquor Stores may sell. Exclusive liquor stores may sell. Prohibit Silent Silent No – 342.13(b) Zoning Silent Silent Reasonable time, place, manner restrictions. Option to prohibit 1,000 feet from a school; 500 feet of day care, residential treatment facility, attraction w/in a public park regularly used by minors Interim Ordinance Silent Silent Regulate, restrict, or prohibit until Jan. 1, 2025 Number of Businesses Silent Silent 1/12,500 residents Employee Age Silent Silent Must be 21+ Age to enter Silent Silent 21+ Hours Silent Silent Closed from 2AM – 8AM Mon-Sat. 2AM-10AM Sunday. City may further restrict to sales from 9PM -2AM or 8AM-10AM. 7 EXHIBIT C DRAFT CITY OF SCANDIA WASHINGTON COUNTY, MINNESOTA ORDINANCE NO. 2023-06 AN ORDINANCE OF THE CITY OF SCANDIA, WASHINGTON COUNTY, MINNESOTA, ADDING TITLE XII, USE OF CANNABIS FLOWER, CANNABIS PRODUCTS, LOWER-POTENCY HEMP EDIBLES OR HEMP-DERIVED CONSUMER PRODUCTS IN PUBLIC PLACES. THE CITY COUNCIL OF THE CITY OF SCANDIA, WASHINGTON COUNTY, MINNESOTA DOES ORDAIN: That TITLE XII, Use of Cannabis Flower, Cannabis Products, Lower-Potency Hemp Edibles or Hemp-Derived Consumer Products in Public Places, is hereby added to the City of Scandia, Minnesota Code of Ordinances. Title XII, Use of Cannabis Flower, Cannabis Products, Lower-Potency Hemp Edibles or Hemp- Derived Consumer Products in Public Places Sec. 120.01. Purpose. The purpose of this ordinance provides for the good order of the City, the suppression of vice and immorality, the prevention of crime, the protection of public property, and to promote the health, safety, order, convenience, and general welfare of the residents of the City of Scandia. Sec. 120.02. Definitions. Public Place. Any place excluding the following: (1) A private residence, including a person’s curtilage or yard; (2) Private property not generally accessible by the public unless the person is explicitly prohibited from consuming cannabis flower, cannabis products, lower-potency hemp edibles, or hemp-derived consumer products on the property by the owner of the property; or (3) The premises of an establishment or event licensed to permit on-site consumption. Sec. 120.03. Prohibited Activity. No person shall use cannabis flower, cannabis products, lower-potency hemp edibles, or hemp- derived consumer products in a public place. Sec. 120.04. Violation. 8 Any person who engages in the use of cannabis flower, cannabis products, lower-potency hemp edibles, or hemp-derived consumer products in a public place is guilty of a petty misdemeanor. Effective Date. This ordinance shall take effect from and after its passage and publication as required by law. Passed and adopted by the City Council of the City of Scandia, Washington County, Minnesota, this __ day of ___, 2023. Christine Maefsky, Mayor Attest: (SEAL) Kyle Morell, City Administrator 9 EXHIBIT D DRAFT CITY OF SCANDIA WASHINGTON COUNTY, MINNESOTA ORDINANCE NO. 2023-07 AN INTERIM ORDINANCE OF THE CITY OF SCANDIA, WASHINGTON COUNTY, MINNESOTA, PROHIBITING THE ESTABLISHMENT OF NEW USES RELATED TO THE OPERATION OF CANNABIS BUSINESSES AND HEMP BUSINESSES FOR ONE YEAR UNDER MINNESOTA STATUTE 462.355 SUBDIVISION 4. THE CITY COUNCIL OF THE CITY OF SCANDIA, WASHINGTON COUNTY, MINNESOTA DOES ORDAIN: Section 1. The purpose of this interim ordinance is to protect the planning process and the health, safety, and welfare of the City of Scandia for the following reasons: (1) The State of Minnesota established the Office of Cannabis Management, tasked with issuing licenses for the operation of cannabis businesses and hemp businesses in Chapter 63 of Minnesota Session Law – 2023, Regular Session. (2) Chapter 63 of Minnesota Session Law – 2023, Regular Session does not include a date for the Office of Cannabis Management to begin issuing licenses to cannabis businesses and hemp businesses. (3) The City of Scandia does not currently permit or regulate the uses of Cannabis Business or Hemp Business. Section 2. Pursuant to Minnesota Statutes, Section 462.355, subdivision 4, City Staff is directed to conduct a study to gather information and make a recommendation to the Council to determine if the City of Scandia official controls as defined in Minn. Stat. §462.352, subd. 15. need to be amended regarding the uses related to the operation of cannabis businesses and hemp businesses, and if so, what regulations are appropriate. Section 3. Pursuant to Minnesota Statutes, Section 462.355, subdivision 4, no business, person, or entity may establish a cannabis business or hemp business for a period of up to twelve (12) months from the effective date of this ordinance or until the ordinance regulating such uses become effective or until the Council rescinds this Interim Ordinance, whichever occurs first. Section 4. This interim ordinance shall be in full force and effect from and after its passage and publication according to law. 10 Passed and adopted by the City Council of the City of Scandia, Washington County, Minnesota, this __ day of ___, 2023. __________________________ Christine Maefsky Mayor Attest: (Seal) _________________________ Kyle Morell City Administrator 11 EXHIBIT E DRAFT CITY OF SCANDIA WASHINGTON COUNTY, MINNESOTA ORDINANCE NO. TO BE DETERMINED AN INTERIM ORDINANCE OF THE CITY OF SCANDIA, WASHINGTON COUNTY MINNESOTA, PROHIBITING THE OPERATION OF CANNABIS BUSINESSES IN THE CITY UNDER MINNESOTA STATUTE 342.13 (e) THE CITY COUNCIL OF THE CITY OF SCANDIA, WASHINGTON COUNTY, MINNESOTA DOES ORDAIN: Section 1. The purpose of this interim ordinance is to protect the planning process and the health, safety, and welfare of its citizens by prohibiting the operation of a cannabis business within the jurisdiction of the City of Scandia until January 1, 2025, and to provide for adequate time for study, analysis, and finalization of City Code amendments regarding time, place, and manner of the operation of a cannabis business within the City. Section 2. Pursuant to Minnesota Statutes, Section 342.13(e), an interim ordinance is hereby adopted authorizing the City to conduct a study regarding the impacts of cannabis businesses and uses to determine whether and what revisions to the Scandia City Code of Ordinances or other regulations on the time, place, and manner of cannabis business operations are warranted for the purpose of protecting the planning process and the health, safety, and welfare of the citizens of Scandia. Section 3. Pursuant to Minnesota Statutes, Section 342.13(e), subdivision 4, the operation of cannabis businesses in the City of Scandia is prohibited. Section 4. This interim ordinance shall be in full force and effect from and after its passage and publication according to law until January 1, 2025. Section 5. Violation of any portion of this ordinance shall be a misdemeanor punishable by imprisonment for up to 90 days and a fine of $1,000.00 or both, plus the costs of prosecution. Each day that a violation occurs shall be considered a separate offense. The City may enforce any provision of this ordinance by mandamus, injunction, or any other appropriate civil remedy in any court of competent jurisdiction. Passed and adopted by the City Council of the City of Scandia, Washington County, Minnesota, this __ day of ___, 2023. __________________________ Christine Maefsky Mayor 12 Attest: (Seal) _________________________ Kyle Morell City Administrator