City Council

LODI CITY COUNCIL AGENDA Carnegie Forum Shirtsleeve Session 305 West Pine Street, Lodi Date: September 21, 2021 Time: 7:00 a.m. Streaming Link: https://www.facebook.com/CityofLodi/ https://zoom.us/j/93455719476?pwd=NDdhc1E4OEZyYWV3d2pD Y1U5SjVZZz09 SPECIAL NOTICE Effective immediately and while social distancing measures are imposed, Council chambers will be closed to the public during meetings of the Lodi City Council. The following alternatives are available to members of the public to watch Council meetings and provide comments on agenda and non-agenda items before and during the meetings. Viewing: Members of the public may view and listen to the open session of the meeting at https://www.facebook.com/CityofLodi/; or Please click the link below to join the meeting: https://zoom.us/j/93455719476?pwd=NDdhc1E4OEZyYWV3d2pDY1U5SjVZZz09 Passcode: 583605 Or iPhone one-tap : US: +16699009128,,97500264844# Or Telephone: Dial: US +1 669 900 9128 Webinar ID: 934 5571 9476 Public Comment: Members of the public can send written comments to the City Council prior to the meeting by emailing councilcomments@lodi.gov. These emails will be provided to the members of the City Council and will become part of the official record of the meeting. Members of the public who wish to verbally address the City Council during the meeting should email those comments to councilcomments@lodi.gov. Comments must be received before the Mayor or Chair announces that the time for public comment is closed. The Assistant City Clerk will read three minutes of each email into the public record. IMPORTANT: Identify the Agenda Item Number or Oral Communications in the subject line of your email. Example: Public Comment for Agenda Item Number C-17. Members of the public may also participate via Zoom at the following link: https://zoom.us/j/93455719476?pwd=NDdhc1E4OEZyYWV3d2pDY1U5SjVZZz09 Pursuant to the Americans with Disabilities Act (ADA) and Executive Order N-29-20, if you need special assistance to provide public comment in this meeting, please contact the Office of the City Clerk at (209) 333-6702 or cityclerk@lodi.gov at least 48 hours prior to the meeting in order for the City to make reasonable alternative arrangements for you to communicate your comments. If you need special assistance in this meeting for purposes other than providing public comment, please contact the Office of the City Clerk at (209) 333-6702 or cityclerk@lodi.gov at least 48 hours prior to the meeting to enable the City to make reasonable arrangements to ensure accessibility to this meeting (28 CFR 35.160 (b) (1)). SPECIAL TELECONFERENCE NOTICE Pursuant to Executive Order N-29-20: The Brown Act, Government Code Section 54953, contains special requirements that apply when members of a legislative body participate in a public meeting by telephone. Certain of these requirements have been suspended by Paragraph 3 of Executive Order N-29-20, executed by the Governor of California on March 17, 2020, to mitigate the spread of Coronavirus (COVID-19). In particular, the Executive Order suspends that provision of the Brown Act that requires noticing, posting of agendas, and public access to each location where a member will be participating telephonically, as well as provisions that require physical presence of members of the legislative body or the public for purposes of a quorum or to hold a meeting. Executive Order N-29-20 allows an agency to conduct a teleconference meeting that provides members of the public telephonic or other electronic participation in place of making a physical location for the public to observe the meeting and provide public comment, consistent with other provisions of the Brown Act. \\cvcfilv01\administration$\Administration\CLERK\Agenda\COUNCIL\2021\09-21-21agnSS.docx 9/16/2021 5:33 PM  CITY COUNCIL SHIRTSLEEVE AGENDA SEPTEMBER 21, 2021 PAGE TWO For information regarding this Agenda please contact: Jennifer Cusmir City Clerk Telephone: (209) 333-6702 Informal Informational Meeting A. Roll Call by City Clerk B. Topic(s) B-1 Presentation on Cannabis Regulation and Taxation Potential (DCM) C. Comments by Public on Non-Agenda Items D. Adjournment Pursuant to Section 54954.2(a) of the Government Code of the State of California, this agenda was posted at least 72 hours in advance of the scheduled meeting at a public place freely accessible to the public 24 hours a day. ______________________________ Jennifer Cusmir City Clerk All staff reports or other written documentation relating to each item of business referred to on the agenda are on file in the Office of the City Clerk, located at 221 W. Pine Street, Lodi, and are available for public inspection. If requested, the agenda shall be made available in appropriate alternative formats to persons with a disability, as required by Section 202 of the Americans with Disabilities Act of 1990 (42 U.S.C. Sec. 12132), and the federal rules and regulations adopted in implementation thereof. To make a request for disability-related modification or accommodation contact the City Clerk’s Office as soon as possible and at least 72 hours prior to the meeting date. Language interpreter requests must be received at least 72 hours in advance of the meeting to help ensure availability. Contact Jennifer Cusmir at (209) 333-6702. Solicitudes de interpretación de idiomas deben ser recibidas por lo menos con 72 horas de anticipación a la reunión para ayudar a asegurar la disponibilidad. Llame a Jennifer Cusmir (209) 333-6702.  AGENDA ITEM B-01 CITY OF LODI COUNCIL COMMUNICATION TM AGENDA TITLE: Presentation on Cannabis Regulation and Taxation Potential MEETING DATE: September 21, 2021 PREPARED BY: Deputy City Manager RECOMMENDED ACTION: Presentation on Cannabis Regulation and Taxation Potential BACKGROUND INFORMATION: The City of Lodi currently prohibits cannabis business operations within City limits to the maximum extent permitted under state law. Staff consistently reviews potential revenue opportunities for the City to provide the Council with the best available information and best position the City to take advantage of available opportunities the Council would like to explore further. New revenue from cannabis would provide the City with flexibility to maintain and enhance services in the future. In addition, the City has recently seen an uptick in interest from cannabis businesses looking to expand. Some businesses make claims of significant revenue benefit to the City, provided proof of taxes paid to other communities and have records of success in those communities. Staff sought independent analysis of the claims these businesses have made. The City’s revenue consultant, HdL Companies, provides staff with expert advice on revenue trends, economic activity, potential revenue opportunities, in addition to their contracted services of sales, use and transaction tax administration and auditing, business license tax administration and auditing and transient occupancy tax administration and auditing. HdL is also a leader in cannabis tax regulation and administration throughout the state, having drafted a large majority of the local ordinances regulating and taxing cannabis in the state. HdL’s analysis confirmed there is significant revenue opportunities within the cannabis industry in Lodi. Dave McPherson from HdL has a background in both law enforcement and municipal finance, in addition to his recent experience in municipal cannabis administration in Colorado and California. Dave will provide a presentation on the opportunities in Lodi for cannabis regulation and taxation and address initial concerns regarding legal cannabis and its potential impacts on the community. Staff has also conducted preliminary research, including legal, public safety and finance and are available for specific questions or to confirm HdL’s findings. FISCAL IMPACT: There is no fiscal impact from this presentation. Legal cannabis operations in the City have the ability to provide a new revenue stream to the City’s general fund. __________________________________ Andrew Keys, Deputy City Manager APPROVED: ________________________________________ Stephen Schwabauer, City Manager  City of Lodi CANNABIS POLICY DISCUSSION  ✓ Serves: ‒ 303 cities ‒ 48 counties ‒ 108 transaction districts ✓ Partnered with over 175 local agencies to ABOUT develop cannabis policies HdL enforcement and cannabis regulators with ✓ Team consists of former policymakers, law State, County and local level experience ✓ Reviewed and evaluated over 4,000 cannabis business applications for local agencies ✓ HdL staff has experience conducting over 18,000 cannabis compliance reviews in California, Colorado, and Nevada  PROPOSITION 64 ELECTION RESULTS Statewide passed with 56% of the vote; 44% opposed San Joaquin County 51.85% of voters supported 41% opposed  CANNABIS LICENSES BY TYPE AS OF 9/8/21 5371 Cultivation 906 Manufacturer 781 Retailers 328 Retailers Non-Storefront 1026 Distributors 145 Distributor Transport Only 297 Microbusinesses 40 Testing Labs 41 Cannabis Event Organizers 8,935 Total CANNABIS BUSINESS CATEGORIES TESTING LAB TESTING LAB CULTIVATOR MANUFACTURER DISTRIBUTOR RETAIL CONSUMER WHAT’S LEGAL CALIFORNIA CANNABIS LAWS 2015-17 2018-19 2020-21 • Medical Cannabis • State Regulations • AB 1356 (Ting) Minimum • Regulation and finalized Jan 2019 Local Retail Requirement Safety Act (MCRSA) • SB 1459 • Farm Bill Act 2018-Hemp • Prop 64 (AUMA) Established • AB 45-Hemp Law (Aguiar- Provisional Licenses Curry) • Trailer Bill SB 94 • AB 97 and SB 97 • SB 59 CEQA Sunset • Medicinal & Adult provided additional Use Cannabis • AB 141 Consolidation of revision to Regulation and State Agencies regulations Safety Act SURVEY: CONSUMERS REPLACE PRESCRIPTION & OTC DRUGS WITH CBD CA CANNABIS RETAIL MARKET ANALYSIS 2855 1842 1061 781 Illicit Market Market Demand Market Shortage Current Retail Licenses CA CANNABIS RETAIL MARKET LICENSE SHORTAGE Lodi Lodi  POLICY DECISIONS  CANNABIS “Policies designed today will help shape POLICY how your industry looks tomorrow.” DEVELOPMENT -HdL Companies UPDATING CANNABIS POLICIES NOW IS IMPORTANT BECAUSE: 01 1 02 2 03 3 04 4 Regulations are Consumer trends Businesses and It is now legal: finalized and have have changed and investors are either establish changed local their perception of looking at places regulations or policies cannabis to locate maintain the ban Policy Decisions Based on Activities Consumer Demand Economic Development ✓ Personal Cultivation ✓ Cultivation Facilities ✓ Out of Town Deliveries ✓ Manufacturing Facilities ✓ Non-Store Front Retailer In Town ✓ Distribution Facilities ✓ Retailer (Dispensaries) In Town ✓ Testing Labs ✓ Consumption Lounges ✓ Generates Jobs ✓ Generates Revenue PATH TO SUCCESS EDUCATE COLLABORATE REGULATE LEGISLATE STATUS OF OTHER AGENCIES IN THE REGION: • Manteca • Modesto • Sacramento • San Joaquin County • Stanislaus County • Stockton • Tracy • Rio Vista  CITY OF LODI Core Values for Consideration 1 2 3 4 Public Safety Environmental Neighborhood Access by Protection and Land Use Youth Protection  DEVELOPMENT OF REGULATORY ORDINANCE Local jurisdictions should develop ordinances which address: Time Place Manner  LAND USE BUFFER OPTIONS RETAIL NON-COMPLIANT COMPLIANT RETAILER/DISPENSARY/MICROBUSINESS MANUFACTURING ILLEGAL LEGAL MANUFACTURING DISTRIBUTION Addressing Public Concerns through Regulations  LOCAL CONTROL AUTHORITY ✓ The law does not supersede or limit existing local authority for law enforcement activity, enforcement of local zoning requirements or local ordinances ✓ Local Regulatory Ordinances will not be subject to CEQA until July 1, 2021 B&P Section 26055 (h) ✓ County of Santa Cruz, etal court decision on deliveries ✓ Farmer vs BCC billboard court decision A REGULATORY SYSTEM CAN: ✓ Give the local agency authority and control over licensing ✓ Require applicants to comply with robust requirements ✓ Enhance accountability for security and product safety ✓ Reduce intervention from the Federal Government by complying with the Cole Memo and other state laws A REGULATORY ORDINANCE CAN INCLUDE: ✓ Limited number of business licenses ✓ Access control requirements ✓ Police access ✓ Police background checks ✓ Record reporting/retention requirements ✓ Investigation and inspection protocols ✓ Good neighbor policy mitigation ✓ Suspension, fines, and permit revocation Tax & Fee Revenues  Annual Revenue Estimates*:  Very Conservative (4%): $480,000- Plus $120,000 in local sales tax. Total $600,000 LOCAL TAX or  Moderate (5%): $600,000-Plus $120,000 in FEE REVENUE local sales tax. Total $720,000 PROJECTIONS  Aggressive (6%): $720,000-Plus $120,000 in local sales tax. Total $840,000. *Assumes 3 storefront retailers with an average of $4M in gross receipts. However, City can accommodate up to six based on market analysis.  REVENUE GENERATING STRATEGIES General tax to be considered Standard fee to recover City by the voters in November costs 2022; 50% +1 tax to general fund or by establishing Operational/Community Benefit Agreements POLICY QUESTION #1 Ban or allow commercial cannabis? BAN REGULATE • Maintain ban on commercial • Direct staff to draft a cannabis activity in Lodi regulatory and land use ordinance to bring back to City Council for consideration POLICY QUESTION #2 Medical or non-medical? MEDICAL NON-MEDICAL • 18+ with MMID or doctor’s • 21+ with identification recommendation • Distinction between M and A • Medical-only restriction no longer relevant for non- applicable to retail licensees retail businesses POLICY QUESTION #3 Cannabis license types? RETAIL NON-RETAIL • Storefront retail • Cultivation • Non-Storefront retail- • Manufacturing delivery • Distribution • Microbusiness (Includes retail • Laboratory Testing and wholesale activity) • Microbusiness POLICY QUESTION #4 Cap on available licenses? CAP NO CAP • Limit number of businesses • Total number of licenses through licensing process determined by other factors • Most appropriate for retail (e.g. consumer demand, zoning, license types (e.g. storefront buffers, etc.) retail) • Most appropriate for non- • Requires competitive retail license types (e.g. application process distribution, manufacturers, cultivation, and testing labs)  POLICY QUESTION #5 Competitive licensing options: MERIT FIRST IN LINE LOTTERY HYBRID • Application/ • First-come, first • Lottery machine • E.g. combination interview serve • Raffle drum of merit + lottery ranking • Online or in- process • Computer • Discretionary person program approval  POLICY QUESTION #6 Buffer requirements: STATE LOCAL B2B • Schools • Parks • Minimum distance • Commercial daycare • Playgrounds between businesses • Youth Centers • Cities may also • Typically applies to increase/decrease retail only state buffer distances • Requires process to • Specific Areas to determine who has create overlays rights to an area  POLICY QUESTION #7 Buffer Distance requirements: YOUTH SCHOOLS DAYCARES FACILITIES • Less than 600 feet • Less than 600 feet • Less than 600 feet • State buffer 600 feet • State buffer 600 feet • State buffer 600 feet • Greater than 600 • Greater than 600 • Greater than 600 feet feet feet  GC General Commercial POLICY QUESTION #8 DMU Downtown Mixed-Use District MCO Mixed Use Corridor LODI ZONING DISTRICTS MCE Mixed Use Center BP Business Park M Industrial  POLICY QUESTION #9 Revenue options: TAXES FEES OTHER BENEFITS • Percentage of gross • Application fees • Development or receipts • Regulatory fees Operational agreements • Price per square foot may be used to • Limited to cost negotiate community • Requires voter approval recovery, unless benefits negotiated through development agreement THE DECISION IS YOURS  David McPherson THANK Compliance Director YOU! dmcpherson@hdlcompanies.com (714) 879-5000