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VII.2. First Reading: Zoning Code Text Amendment Related to Medical Cannabis Businesses; Lindahl (CR2016-101) September 27, 2016 City Council Report 2016-101 Zoning Code Text Amendment Related Medical Cannabis Businesses Proposed Action: Move to adopt Resolution 2016-069, approving Ordinance 2016-1115 amending the City Code related to medical marijuana facilities. Overview This application was initiated by the City Council after it adopted a one-year moratorium on Medical Cannabis (medical marijuana) manufacturing and distribution facilities and directed staff to study this issue. The Commission reviewed this item and held public hearings during the June 28, August 30 and September 27, 2016, meetings. At the August 30 meeting, the Commission directed staff to prepare a zoning code text amendment consistent with Option 2 as outlined by staff during the August 30, 2016, meeting. The Commission reviewed that text amendment during the September 27 meeting and recommended the City Council approve it. That ordinance amendment is attached for your review and approval. Primary Issues to Consider • Planning & Zoning Commission action • Legal authority • Proposed zoning standards Supporting Documents • Resolution 2016-069 • Ordinance 2016-1115 Related to Medical Marijuana Distribution Facilities • Map of Parcels Eligible to Host Medical Marijuana Distribution Facilities • City Attorney memo dated 8-19-16 _____________________ Jason Lindahl, AICP City Planner Financial Impact: $ N/A Budgeted: Y/N ____ Source: _____________ Related Documents (CIP, ERP, etc.): _________________________________________ Notes: City Council Report 2016-101 Page 2 Planning & Zoning Commission Action The Planning Commission reviewed this item during their regular meetings on June 28, August 30 and September 27, 2016. During each meeting the Commission heard a presentation from staff and held a public hearing that produced no comments. During the September 27 meeting, the Commission recommended the City Council approve a zoning text amendment adding definitions for “Medical Marijuana” and “Medical Marijuana Distribution Facilities” and adding Medical Marijuana Distribution Facilities as a permitted use in all Business districts, subject to all provisions in Minnesota Statutes 152.22 through 152.37 and Minnesota Rules Chapter 4770. Legal Authority Zoning Code amendments are legislative actions in that the City is creating new standards to regulate the development of certain types of uses and/or structures. Under the law, the City has wide flexibility to create standards that will ensure the type of development it desires; however, zoning regulations must be reasonable and supported by a rational basis relating to promoting the public health, safety and welfare of the community. In this case, the regulations must also be consistent with Minnesota Statutes 152.22 through 152.37 and Minnesota Rules Chapter 4770, which regulate medical marijuana. Proposed Zoning Standards There are three land use types associated with the medical marijuana industry, as stipulated by the State of Minnesota legislature in the Therapeutic Research Act, Minn. Stat. §§152.21. Overall, staff recommends no zoning changes for manufacturing and laboratory uses. Specific changes for distribution facilities are summarized below and detailed in the attached ordinance. These recommendations are based on review of the City Code, applicable state law, information from the City Attorney and the zoning regulations in other communities with medical marijuana facilities. • Manufacturing facilities: Where medical marijuana is cultivated, harvested, manufactured and packaged. Staff does not recommend allowing manufacturing activity in Hopkins. Since current state law would not allow additional manufacturing facilities at this time, staff believes the most prudent approach would be to monitor the experiences in both Cottage Grove and Otsego before allowing manufacturing uses. Staff recommends no changes to the City zoning regulations based on the finding medical marijuana manufacturing is already prohibited within Hopkins because it is not expressly allowed under the zoning regulations. • Laboratories: Where medical marijuana samples are tested to ensure compliance with state manufacturing standards. Staff recommends no changes related to Laboratories because the Minnesota Department of Health indicates that they will have only very small amounts of medical marijuana product on site for testing purposes, and therefore do not have the potential to create negative impacts on neighboring properties. Currently, Research Labs are a permitted use in the I-1 Industrial District and a conditional use in the B-3 General Business District. Dental – Med Labs are permitted uses in the B-2 Central Business and B-3 General Business Districts. • Distribution facilities: Establishments engaged in the sale and distribution of medical City Council Report 2016-101 Page 3 marijuana that are validly registered and approved by the State of Minnesota. Distribution facilities do not include manufacturing facilities. Based on feedback from the Commission, staff has prepared the attached zoning ordinance text amendment. It should also be noted that in addition to the recommendation below, distribution facilities will be required to meet all requirements of state law including a 1,000- foot buffer from public or private schools, 24-hour video monitoring, alarm systems, background checks for all employees and controlled access systems to limit access to restricted areas. • Add “Medical Marijuana Distribution Facility” as a permitted use in all Business districts (B-1, B-2, B-3, & B-4) with no conditions of approval. This would allow distribution facilities in the same districts where clinics are currently allowed. This option is similar to how seven of the eight communities with distribution facilities chose to regulate these uses. Only Bloomington has decided to amend their code to create specific zoning and licensing standards for these uses. • Add the following definition of “Medical Marijuana” to the Definition section of the zoning ordinance: Any species of the genus cannabis plant, or any mixture or preparation of them, including whole plant extracts and resins and is delivered in the form of (1) liquid, but not limited to oil; (2) pill; (3) vaporized delivery method with use of liquid or oil but which does not require the use of dried leaves or plant form that has been approved by the Commissioner of the Minnesota Department of Health under Minnesota Statute 152.25. • Add the following definition of “Medical Marijuana Distribution Facility” to the Definition section of the zoning ordinance: An establishment engaged in the sale and distribution of medical marijuana that is validly registered and approved by the State of Minnesota. Distribution facilities do not include manufacturing facilities. Alternatives 1. Approve the proposed zoning code text amendment related to medical marijuana distribution facilities. Approving this text amendment will allow medical marijuana distribution facilities in the B-1, B-2, B-3 and B-4 districts as a permitted use subject to all provisions in Minn. Stat. 152.22 through 152.37 and Minn. Rules Chapter 4770 as each may be amended from time to time 2. Deny the proposed zoning code text amendment related to medical marijuana distribution facilities. By denying the proposed text amendment, medical marijuana distribution facilities will remain prohibited. If the City Council considers this alternative, findings will have to be identified that support this alternative. 3. Continue for further information. If the City Council indicates that further information is needed, the item should be continued. CITY OF HOPKINS Hennepin County, Minnesota RESOLUTION NO: 2016-069 A RESOLUTION APPROVING ORDINANCE 2016-1115 AMENDING SECTIONS 515.07 AND 535 OF THE CITY CODE RELATED TO ZONING STANDARDS FOR MEICAL MARIJUANA DISTRIBUTION FACILITIES WHEREAS, the City of Hopkins initiated an application to amend Sections 515.07 and 535 of the City Code related to zoning standards for Medical Marijuana Distribution Facilities; and, WHEREAS, the procedural history of the application is as follows: 1. That an application to amend Sections 515.07 and 535 of the City Code related to zoning standards for medical marijuana distribution facilities was initiated by the City of Hopkins on May 26, 2016; 2. That the Hopkins Zoning and Planning Commission, pursuant to published notice, held public hearings on the application and reviewed such application on June 28, August 30 and September 27, 2016: all persons present were given an opportunity to be heard; and, 3. That the written comments and analysis of City staff were considered. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Hopkins hereby approves Ordinance 2016-1115 amending Sections 515.07 and 535 of the City Code related to zoning standards for medical marijuana distribution facilities based on the following Findings of Fact: 1. The zoning ordinance text amendment is consistent with the goals and implementation strategies of the Comprehensive Plan and will promote the public health, safety and welfare of the City of Hopkins. Adopted this 4th day of October 2016. _______________________ Molly Cummings, Mayor ATTEST: ______________________ Amy Domeier, City Clerk CITY OF HOPKINS Hennepin County, Minnesota ORDINANCE NO. 2016-1115 AN ORDINANCE AMENDING SECTIONS 515.07 AND 535 OF THE CITY CODE RELATED TO MEDICAL MARIJUANA DISTRIBUTION FACILITIES THE COUNCIL OF THE CITY OF HOPKINS DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. Section 515.7, Definitions, is hereby amended to add the following: Medical Marijuana: Any species of the genus cannabis plant, or any mixture or preparation of them, including whole plant extracts and resins and is delivered in the form of (1) liquid, but not limited to oil; (2) pill; (3) vaporized delivery method with use of liquid or oil but which does not require the use of dried leaves or plant form that has been approved by the Commissioner of the Minnesota Department of Health under Minnesota Statute 152.25. Medical Marijuana Distribution Facility: An establishment engaged in the sale and distribution of medical marijuana that is validly registered and approved by the State of Minnesota. SECTION 2. 535 Subdivision 3, Permitted Uses, is hereby amended to add the following: Permitted Uses B-1 B-2 B-3 B-4 Medical Marijuana Distribution Facilities, subject to all provisions in Minn. Stat. 152.22 through 152.37 and Minn. Rules Chapter 4770 as each may be amended from time to time X X X X SECTION 3. This ordinance shall take effect and be in force upon its publication, in accordance with Section 3.07 of the City Charter. First Reading: October 4, 2016 Second Reading: October 18, 2016 Date of Publication: October 27, 2016 Date Ordinance Takes Effect: October 27, 2016 ______________________ Molly Cummings, Mayor ATTEST: _______________________ Amy Domeier, City Clerk Parcels Eligible to Host MedicalMarijuana Distribution Facilities °Legend City Boundary Eligible to Host Distribution Facilities Schools H i g h w a y 7 H i g h w a y 1 6 9 Excelsior Boulevard 1 1 t h A v e n u e B l a k e R o a d Mainstreet 1 484957v3 AMB HP145-9 Kennedy 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis MN 55402-1458 (612) 337-9300 telephone (612) 337-9310 fax sriggs@kennedy-graven.com http://www.kennedy-graven.com Affirmative Action, Equal Opportunity Employer & Graven C H A R T E R E D MEMORANDUM DATE: August 19, 2016 TO: Jason Lindahl, City Planner FROM: Scott J. Riggs, City Attorney Andrew M. Biggerstaff, Assistant City Attorney RE: Medical Cannabis This memorandum addresses various issues related to medical cannabis and land-use regulation within the city of Hopkins (the “City”). I. Security Measures Required for Manufacturing or Dispensing Sites State law regulates the requirements which apply to any medical cannabis manufacturing site in this state.1 Among those requirements, all manufacturing sites must develop “operating documents” which contain a certain number of items. One of those items is “procedures for the implementation of appropriate security measures to deter and prevent the theft of medical cannabis and unauthorized entrance into areas containing medial cannabis.”2 In furtherance of this mandate, the Commissioner of the Department of Health, who has oversight responsibility with respect to medical cannabis, has promulgated rules which further define the responsibilities of regulated entities. In particular, Minnesota Administrative Rules require manufacturers to comply with specific 24-hour video monitoring requirements.3 Additionally, manufacturers are required to comply with specific alarm system requirements.4 1 Minn. Stat. § 152.29. 2 Id. 3 Minn. R. 4770.0900. 4 Minn. R. 4770.1000. & 2 484957v3 AMB HP145-9 Some question has arisen regarding whether the City should (a) impose stricter security requirements on these facilities or (b) impose these security measures on distribution facilities as well. With respect to the first question, it is unclear whether the City possesses the authority to require additional security measures. Certainly, the City is entitled to pass laws which are within its general police powers, or as expressly provided by the state legislature. However, one concern may be whether the legislature has preempted local regulation by “occupying the field” in terms of creating a framework for regulation of these entities. Unlike other areas of state law, where the legislature has expressly provided that local ordinance may be as strict or stricter, the state statutes regarding medical cannabis are silent as to local government authority. Any imposition of additional restrictions or requirements may be met by a challenge from the regulated entities that such local action is not allowed. Secondly, it appears that there is no need for City action to require these same security measures at distribution sites. Under the relevant Minnesota Rules, a “medical cannabis manufacturer or manufacturer” is defined as “an entity registered by the commissioner to cultivate, acquire, manufacture, possess, prepare, transfer, transport, supply, or dispense medical cannabis, delivery devices, or related supplies and educational materials.”5 Because the security requirements in the relevant rules apply to “a medical cannabis manufacturer” which by statute includes an entity registered to “dispense medical cannabis” it seems clear that the security measures already apply to licensed dispensing facilities. As to a question of whether stricter or additional requirements may be imposed on those facilities, the answer would be identical to the analysis above. II. Application of Pharmacy Controls to Distribution Sites Questions have also been raised about whether medical cannabis distribution sites should be treated as pharmacies for the purpose of the City’s zoning code. Under state law, medical cannabis manufacturers (and distributors)6 are required to ensure that “employees licensed as pharmacists” be the only employees to distribute the medical cannabis to a patient.7 In comparison, state law also dictates that “a medical cannabis manufacturer is not subject to the Board of Pharmacy licensure or regulatory requirements” under state law.8 This appears to be clear for both actual manufacturing facilities, as well as distribution facilities run by manufacturers. This provision arguably limits the City’s authority to require a potential future distribution site from complying with any standards applicable to pharmacies as determined by state law. However, this does not appear to limit the City’s ability to treat these uses as “pharmacies” for purposes of the zoning code. For instance, the City allows, as a permitted use, a pharmacy or 5 Minn. R. 4770.0200, subp. 27 (citing Minn. Stat. § 152.22, subd. 7). 6 Under state law, each of the manufacturers of medical cannabis must operate four distribution facilities, one of which may be their main manufacturing location. Minn. Stat. § 152.29, subd. 1. 7 Minn. Stat. 152.29, subd. 3. 8 Minn. Stat. 152.29, subd. 1(h). 3 484957v3 AMB HP145-9 drug store in both the Business-1 and Business-2 zoning districts. If medical cannabis dispensaries were defined as pharmacies for the purposes of the City’s zoning code, they would also be allowed in those zoning districts. Of course, whatever limitation that is placed on medical cannabis distribution facilities may impact the likelihood that such a facility would seek to locate itself in the City, especially insofar as those regulations limit or restrict where such facilities may locate.9 III. Conclusion Because medical cannabis facilities are regulated by state law, the City may face some limitations in terms of the regulation that may be imposed. However, the City does retain the authority to impose some reasonable restrictions on these enterprises, as discussed herein. As the Minnesota Medical Cannabis Therapeutic Research Act is further amended by the state legislature, the City should ensure that any future action on this issue is in conformance with the applicable laws and rules that may be in effect at that time. 9 Under current law, only eight distribution facilities are allowed. Additionally, state law required that all eight facilities be up and running by July 1, 2016, and those facilities be located across the state. Currently, there are four locations in the Twin Cities Metropolitan area. It is unclear if, or when, additional locations might be authorized for this area. Minn. Stat. § 152.29, subd. 1.