02. Staff Report - Hemp Interim Ordinance Staff Report
Date of Meeting: July 24, 2024
For: Honorable Mayor and Council
From: Kyle Morell, City Administrator
Subject: Public Hearing: Hemp Interim Ordinance
Background:
In August of 2023, the City of Scandia adopted interim ordinances temporarily prohibiting cannabis
businesses until January 1, 2025, under Minn. Stat. §342.13 and temporarily prohibiting hemp
businesses for one year under Minn. Stat. §462.355. Cities hoped that if the legislature added “hemp
business” to the subdivision cited above, it would also add “hemp business” to the subdivision,
allowing cities to adopt an interim ordinance extending until January 1, 2025. However, this did not
occur. This means the temporary prohibition on hemp businesses will expire on August 22, 2024,
before the city can begin adopting zoning ordinances.
The City of Scandia may extend the interim ordinance temporarily prohibiting hemp businesses for
an additional 120 days because we are still awaiting OCM to complete the development of certain
items and the adoption of initial rules. This process requires a public hearing to be held 15-30
days before the interim ordinance expires. In the City of Scandia, that is between July 23, 2024, and
August 7, 2024. For this purpose, a special meeting was scheduled for July 24, 2024.
Ordinance 2024-05 is included in the packet. If approved, it will extend the interim ordinance on
hemp businesses in the City of Scandia for 120 days, or until November 21, 2024. Between now and
then, the City would work to adopt a cannabis ordinance and amend its zoning code to regulate the
location of cannabis businesses.
Issue:
Should the City extend the hemp business moratorium for an additional 120 days?
Request:
Staff recommends approving Ordinance 2024-05, extending the interim hemp business moratorium.
This will prohibit the possibility of creating legal nonconformities by allowing businesses to open
and operate in an area of the city we do not wish to allow them to.
Options:
1) Approve Ordinance 2024-05 – Extending Interim Hemp Business Moratorium
2) Allow Moratorium to Expire
3) Table for Future Discussion
Recommendation:
Option 1
Attachments:
Eckberg and Lammers staff report on the ordinance extension
Ordinance 2024 – 05 Extending Interim Hemp Ordinance
ECKBERG LAMMERS
MEMO
To: City of Scandia City Council
From: Christina Benson, Assistant City Attorney
Date: July 17, 2024
Re: Conversion to Hemp Business License – Effective Upon Final Enactment
During the 2024 legislative session, a new statute allows businesses selling edible cannabinoid products
to receive automatic licensure, without involvement of local governments, as hemp businesses.
Minnesota Statute §342.18 states the Office of Cannabis Management (OCM) may permit a person
selling edible cannabinoid products who has registered with the MDH, or now the OCM, to convert the
registration to a comparable hemp business license. OCM may permit this conversion to a hemp
business license once OCM adopts initial rules. The process for OCM to adopt initial rules is a matter of
30 days. OCM will publish notice of their rules in the State Register, 30 days after publication, the OCM
will have adopted initial rules. This means, cities will have potentially only 30 days’ notice of the
commencement of hemp business operations. This publication could happen at any time.
This session, the legislature also amended Minnesota Statute §342.13 to state “a local unit of
government may not prohibit the establishment or operation of a cannabis business or hemp business
licensed under this chapter.” The change is noted in red text.
At this point in time, cities only have one method to regulate hemp businesses, their zoning ordinances.
Cities maintain the ability to adopt time, place, and manner regulations for the operation of both hemp
businesses and cannabis businesses.
In August of 2023, the City of Scandia adopted interim ordinances temporarily prohibiting cannabis
businesses until January 1, 2025, under Minn. Stat. §342.13, and temporarily prohibiting hemp
businesses for one year, under Minn. Stat. §462.355. Cities hoped if the legislature added “hemp
business” to the subdivision cited above that the legislature would also add “hemp business” to the
subdivision allowing cities to adopt an interim ordinance extending until January 1, 2025. However, this
did not occur. This means the temporary prohibition on hemp businesses will expire on August 22,
2024, before the city has had the ability to begin adopting zoning ordinances.
The City of Scandia may extend the interim ordinance temporarily prohibiting hemp businesses for an
additional 120 days because we are still awaiting OCM to complete development of certain items and
adoption of initial rules. This process requires a public hearing be held 15-30 days before the interim
ordinance expires. In the City of Scandia that is between July 23, 2024 and August 7, 2024. A special
meeting has been scheduled on July 24, 2024 for this purpose.
It is important to take action because the only authority to regulate hemp sales in cities is through zoning
ordinances and if no regulation exists, legal nonconformities will be created.
A zoning assessment has been completed to reflect the types of cannabis businesses and hemp
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businesses, the types of operations at each of these businesses, and where the business have to potential
for operating should the City Council choose not to amend the zoning code to include cannabis
businesses and hemp businesses. During the remainder of the year, further discussion will take place
seeking feedback from the City Council on zoning decisions regarding the time, place, and manner of
cannabis business and hemp business operations.
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CITY OF SCANDIA
WASHINGTON COUNTY, MINNESOTA
ORDINANCE NO. 2024-05
AN INTERIM ORDINANCE OF THE CITY OF SCANDIA, WASHINGTON
COUNTY MINNESOTA EXTENDING THE INTERIM ORDINANCE 2023-07
PROHIBITION ON HEMP BUSINESSES IN THE CITY UNDER MINNESOTA
STATUTE SECTION 462.355 SUBDIVISION 4 FOR AN ADDITIONAL 120 DAYS
THE CITY COUNCIL OF THE CITY OF SCANDIA, WASHINGTON COUNTY,
MINNESOTA DOES ORDAIN:
Section 1. The purpose of this interim ordinance is to authorize studies to be conducted,
protect the planning process, and protect the health, safety, and welfare of the City of Scandia for
the following reasons:
(1) The State of Minnesota passed the new Regulation of Adult Use
Cannabis Law, Chapter 63 of Minnesota Session Law - 2023, Regular
Session (Statutes Chapter 342), much of which became effective as of
August 1, 2023.
(2) The State of Minnesota's new cannabis law established the Office of
Cannabis Management tasked with issuing licenses for and regulating
the operation of various types of Cannabis Businesses and Hemp
Businesses.
(3) Statutes Chapter 342 does not include a specific date for the Office of
Cannabis Management to begin issuing licenses to Cannabis
Businesses and Hemp Businesses.
(4) Edible Cannabinoid Products are legal for sale under Minnesota Statutes §151.72
through March 1, 2025, after which sales of Edible Cannabinoid Products will require
a Hemp Business license from the Office of Cannabis Management. Sales of Edible
Cannabinoid Products are not subject to this Interim Ordinance as sales of Edible
Cannabinoid Products are not Hemp Businesses under Minnesota Statute until 2025.
(5) Minnesota Statute §342.13 requires the Office of Cannabis Management to engage in
the process of developing model ordinances for reasonable restrictions on the time,
place, and manner of the operation of a cannabis business; developing standardized
forms and procedures for the issuance of a retail registration; and developing model
policies and procedures for the performance of compliance checks; but the Office of
Cannabis Management has not yet completed development of standardized forms for
the issuance of a retail registration or development of model policies and procedures
for the performance of compliance checks and the prohibition on Hemp Businesses in
Interim Ordinance 2023-07 expires in less than 30 days.
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(6) Minnesota Statute §342.02 requires the Office of Cannabis Management to engage in
the process of rulemaking to implement Minnesota Statute Chapter 342; but the Office
of Cannabis Management has not yet completed this process and the prohibition on
Hemp Businesses in Interim Ordinance 2023-07 expires in less than 30 days.
(7) Minnesota Statute §342.18 provides after the Office of Cannabis Management adopts
initial rules the office may permit a person selling edible cannabinoid products to
convert their state registration to a lower-potency hemp retail license excluding local
control in the process.
(8) Minnesota Statute §342.02 permits the Office of Cannabis Management to use the
expedited rulemaking process under Minnesota Statute §14.389. Under the expedited
process, the rules become effective after 30 days publication in the State Register
which does not provide cities time to react to the new rules before a business could
become a lower-potency hemp retailer.
Section 2. The Regulation of Adult-Use Cannabis Legislation took effect on August 1, 2023
and empowers municipalities to adopt an interim ordinance prohibiting the operation of a
Cannabis Business within its jurisdiction. This ordinance is adopted 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 and Hemp Business within the City.
Section 3. Pursuant to Minnesota Statutes, §462.355 Subd. 4 (d), on July 24, 2024, a public
hearing was held, after notice duly published as required by law, within the 15-30 day timeline
of the expiration of Interim Ordinance 2023-07’s prohibition on Hemp Businesses and the
views of all interested persons with respect therefor presented at the hearing having been
considered.
Section 4. Pursuant to Minnesota Statutes, §462.355 Subd. 4 (d) (2), and for the reasons set
forth in Section 2 above, an interim ordinance is hereby adopted extending Interim Ordinance 2023-
07’s prohibition on the operation of Hemp Businesses in the City for an additional 120 days. This
interim ordinance extension authorizes the City to continue conducting studies regarding the
impacts of Hemp Businesses to determine whether and what revisions to the Scandia City Code of
Ordinances or other regulations on the time, place, and manner of Hemp Business operations are
warranted for the purpose of protecting the planning process and the health, safety, and welfare of
the citizens of Scandia. Interim Ordinance 2023-07 was set to expire on August 22, 2024 and is
now extended 120 days thereafter to December 20, 2024.
Section 7. 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.
Section 8. This interim ordinance shall be in full force and effect from and after its passage
and publication according to law.
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Passed and adopted by the City Council of the City of Scandia, Washington County, Minnesota this
24th day of July, 2024.
__________________________
Christine Maefsky
Mayor
Attest:
(Seal)
_________________________
Kyle Morell
City Administrator