Loading...
Regulation of THC Products; Domeier CITY OF HOPKINS Memorandum To: Honorable Mayor and Council Members Mike Mornson, City Manager From: Amy Domeier, City Clerk Date: August 8, 2022 Subject: Regulation of THC Products _____________________________________________________________________ PURPOSE Staff is soliciting feedback and direction on how to proceed with the new law enacted at the end of the 2022 legislative session that allows for certain edible and beverage infused with tetrahydrocannabinol (THC) to be sold. INFORMATION Include with this memo are three documents that provide information on the regulation of THC products: • A memorandum from Kennedy & Graven that outlines what cities can do to regulate THC products, including licensing and other considerations • Sample ordinances from Golden Valley and St. Cloud Some items to consider when drafting these regulations include: • What areas of the city edible cannabinoids may be sold or manufactured or distributed. • What business should be allowed to sell edible cannabinoids. • Age of person selling the product. • Location of products within retail establishment. • Pop-up sales. • Transient merchants. • Vending machines. • Distance from other uses (schools, parks, residential, etc.). • Distance between retailers. • Delivery services. • Online sales. • Limit number of establishments within the city. • Age verification. • Hours. • Background checks. Administration The League of Minnesota Cities has created some FAQs regarding the new law: https://www.lmc.org/resources/cities-and-regulation-of-edible-cannabinoid-products/ FUTURE ACTION Based upon the discussion, staff will proceed with drafting ordinance(s) for consideration. Options for ordinance(s) include: • Licensing and Zoning Ordinances o If the zoning ordinance would need to be amended, the changes would require zoning amendments, the Planning & Zoning Commission would need to hold a public hearing before City Council consideration. • Moratorium Ordinance o A moratorium that would prohibit the sale, testing, manufacturing and distribution in the City for or up to one year. DOCSOPEN\KG400\1\808498.v2-7/11/22 Offices in Minneapolis Saint Paul St. Cloud Fifth Street Towers 150 South Fifth Street, Suite 700 Minneapolis, MN 55402 (612) 337-9300 telephone (612) 337-9310 fax kennedy-graven.com Affirmative Action, Equal Opportunity Employer To: All From: Scott J. Riggs, City Attorney Joseph L. Sathe, Assistant City Attorney Date: July 11, 2022 Re: Regulation of THC Products This memorandum provides information on ways the city can potentially regulate the newly legalized products that contain up to 5mg of tetrahydrocannabinol (“THC”) derived from certified hemp. We have addressed local government enforcement of the requirements of the law legalizing these products, Minnesota Statutes, section 151.72 (the “Act”), in a separate memo. I. BACKGROUND Beginning on July 1, 2022, it became legal to sell certain products containing delta-9 THC (“THC Products”) in Minnesota. The Act allows THC Products to be sold if certain requirements are met including that there are not more than 5mg of THC per dose and 50mg of THC per container; the purchaser is at least 21 years old; and the products are not marketed towards children. The Minnesota Board of Pharmacy (“Board”) is the state agency with oversight of THC Products. There is currently no state-level license required in order to sell THC Products and the Board does not test or approve products prior to their sale.1 II. LOCAL REGULATION The Act neither explicitly allows nor explicitly prohibits local regulation of the sale of THC Products. Therefore, to determine whether a municipality can regulate the sale of THC Products, the municipality must have the authority to regulate the sale of THC products and must not be preempted by state law. A municipality could rely upon its general police and general welfare power to regulate the sale of THC products. The two most applicable avenues through which the municipality can regulate the sale of THC Products is through its licensing or zoning authority. A. The Act Does Not Expressly Preempt Local Regulation The Act does not expressly require a city to allow the sale of THC Products, nor does it restrict a city’s ability to regulate such facilities through additional zoning or licensing requirements. 1 Hemp Derived Products Frequently Asked Questions, page 5 2 DOCSOPEN\KG400\1\808498.v2-7/11/22 Nevertheless, a city cannot enact a local regulation if it conflicts with state law or if the state law fully occupies a particular field of legislation so that there is no room for local regulation. Any local regulations must not create an irreconcilable conflict with state law, but instead must be merely additional and complementary or in aid and furtherance of the Act. Also, local regulations must not exceed a city’s lawful licensing or zoning powers. Two recent Minnesota Supreme Court cases indicate a deference for local ordinances that provide greater protections than state statutes.2 Additional licensing and zoning requirements adopted for the purpose of protecting the general welfare and ensuring the sale of THC Products are being conducted in accordance with the Act, including that THC Products are not being sold to individuals under the age of 21, for example, would be considered greater protections than those included in the Act. B. Licensing A city may license a business or activity, either (1) when expressly allowed to do so by state statute; or (2) when implied by statute, such as when a license is necessary for a city to perform its general statutory powers (like preventing public nuisance or protecting the general welfare). Since there is no express authority for a city to license a business selling THC Products a city must look to an implied authority. The authority granted under the “general welfare” clause allows a city to provide “for the suppression of vice and immorality, the prevention of crime, the protection of public and private property, the benefit of residence, trade, and commerce, and the promotion of health, safety, order, convenience, and the general welfare by such ordinances not inconsistent with the Constitution and laws of the United States or of this state as it shall deem expedient.”3 The Act contains very little regulatory structure, consumer protection, or general control of the sale of THC Products. Cities very clearly have an interest in ensuring the THC Products are being sold in the manner provided for in the Act, and individual cities may each want to study the impact of the sale of THC Products in each community and determine what additional regulation is warranted to protect the general welfare of the city. A licensing ordinance must be reasonable in its terms and conditions and cannot place unnecessary, unreasonable, or oppressive restrictions that conflict with the state or federal constitution. A licensing ordinance could include application requirements such as: • terms; • qualifications; • bond and insurance requirements; • hours of operation; • reasons for denial, including no criminal conviction or license revocations related to controlled substances; 2 Minnesota Chamber of Commerce v. City of Minneapolis, 944 N.W.2d 441 (Minn. 2020); and Graco v. City of Minneapolis, 937 N.W.2d. 756 (Minn. 2020). 3 Minn. Stat. 412.221, subd. 32 3 DOCSOPEN\KG400\1\808498.v2-7/11/22 • revocation and suspension of license; • transferability; license fees; • limiting the number of licenses; • Requiring licensees to ID purchasers; • Requiring THC products to be sold from behind a counter; and • Identify how the city will conduct compliance checks. C. Zoning Zoning controls generally relate to uses of property and not the sale of individual products, so using the city’s zoning authority alone may not be an effective way to regulate the sale of THC Products. However, cities may use a combination of zoning and licensing provisions to regulate the sale of THC Products. i. Outright Prohibition A city could probably prohibit the sale of THC Product sales if it defines such sale as a “use” in its zoning ordinance and has legitimate planning and zoning grounds for the ban. There is no “right” to sell THC Products and cities have broad discretion in establishing zoning requirements. An outright ban would likely need to be combined with other general business regulations (e.g., licensing) since the sale of THC Products is currently not a primary use of land but can be sold at any retail store. ii. Expressly Authorize THC Product Sales A city could expressly authorize THC Product sales at dedicated locations, establish the sale of THC Products as a dedicated permitted or conditional use, and consider imposing additional regulations on those operations that it does authorize. Some examples of zoning-type regulations might include: • Restricting such uses to certain zoning districts; • Capping the total number of THC-related land uses within the City or within certain zoning districts; • Requiring that THC-related facilities not produce noxious odors; • Requiring a minimum distance from certain land uses in addition to schools, such as child- care facilities; places of worship and other religious institutions; health care practitioners. and chemical dependency, alcohol and drug treatment facilities; • Requiring a minimum distance between other THC-related uses; • Requiring a minimum distance from liquor stores and bars; and • Additional restrictions on signage and advertising. Instead of including these traditional zoning provisions in the zoning code, a city could consider including similar provisions as part of a licensing regulatory scheme (e.g., only issue a license to an THC Product business that is located within particular zoning districts). This approach would be more appropriate if a city chooses not to require THC Product sales at dedicated business locations. 4 DOCSOPEN\KG400\1\808498.v2-7/11/22 III. MORATORIUM/INTERIM ORDINANCE A city may establish a moratorium on the sale of THC Products. Cities have the authority to place moratoria on zoning matters for up to one year under Minnesota Statutes, section 462.355, subd. 4. Cities have also relied on the city’s police power to enact moratoria on activities to be licensed by the city so long as the moratorium is limited in duration and enacted in good faith and without discrimination.4 Before adopting a moratorium, a city will first decide that it does want to regulate the sale of THC Products in some manner. A moratorium would be for the purpose of studying licensing or zoning regulations related to the sale of THC Products and prohibiting such sales in the city until the study is completed. IV. CONCLUSIONS The state law legalizing the sale of THC Products includes minimal regulation and cities are left to establish individual regulations that can be tailored to the local needs of the community. Cities can rely on implied authority granted through its general welfare and police powers to regulate the sale of THC Products even though the Act does not contain express authority for such regulation. A city could choose to use its licensing and/or zoning authority to restrict the sale of THC Products, and/or could issue a moratorium on the sale of THC Products to study the impacts of THC Product sales and develop appropriate restrictions. A comprehensive approach to regulating THC Products could include both licensing and zoning aspects to ensure sales are in compliance with state law and any locally established regulations as well as regulating where within the city products can be sold. It is also important to keep in mind that the Minnesota Legislature may act, either during a special or regular session, to regulate the sale of THC Products which could impact how a city is able to regulate THC products. 4 Almquist v. Town of Marshan, 245 N.W.2d 819 (Minn. 1976). Page 1 of 6 ORDINANCE NO. 741 AN ORDINANCE AMENDING THE CITY CODE AMENDING CHAPTER 16 OF THE CITY CODE ADDING ARTICLE XIX. TETRAHYDROCANNABINOL PRODUCTS The City Council of the City of Golden Valley hereby ordains as follows: Section 1. City Code Chapter 16 is amended to add Article XIX, and shall read as follows: ARTICLE XIX. TETRAHYDROCANNABINOL PRODUCTS Sec. 16-550. Purpose and Intent. The purpose of this Section is to regulate the sale of legalized adult-use of any product that contains tetrahydrocannabinol and that meets the requirements to be sold for human or animal consumption under Minnesota Statutes, section 151.72 (“THC Products”) for the following reasons: (a) The City recognizes that, based on the most reliable and up-to-date scientific evidence, the rapid introduction of newly legalized adult-use THC products, presents a significant potential threat to the public health, safety, and welfare of the residents of Golden Valley, and particularly to youth. (b) The City has the opportunity to be proactive and make decisions that will mitigate this threat and reduce exposure of young people to the products or to the marketing of these products and improve compliance among THC product retailers with laws prohibiting the sale or marketing of THC products to minors. (c) A local regulatory system for THC product retailers is appropriate to ensure that retailers comply with THC product laws and business standards of the City of Golden Valley to protect the health, safety, and welfare of our youth and most vulnerable residents. (d) State law requires THC product retailers to check the identification of purchasers to verify that they are at least 21 years of age (Minn. Stat. § 151.72, subd. 3(c)), comply with certain packaging and labeling requirements to protect children and youth (Id., subd. 5), and meet certain potency and serving size requirements (Id., subd. 5a). (e) State law authorizes the Board of Pharmacy to adopt product and testing standards in part to curb the illegal sale and distribution of THC products and ensure the safety and compliance of commercially available THC products in the state of Minnesota. (f) State law does not preempt the authority of a local jurisdiction to adopt and enforce local ordinances to regulate THC product businesses including, but not limited to, local zoning and land use requirements and business license requirements. (g) A requirement for a THC product retailer license will not unduly burden legitimate business activities of retailers who sell or distribute THC products to adults but will allow the City of Golden Valley to regulate the operation of lawful businesses to discourage violations of state and local THC Product-related laws. In making these findings and enacting this ordinance, it is the intent of the Golden Valley City Council to ensure responsible THC product retailing, allowing legal sale and access without promoting increases in use, and to discourage violations of THC Product-related laws, especially those which prohibit or discourage the marketing, sale or distribution of THC products to youth under 21 years of age. Page 2 of 6 Sec. 16-551. Definitions. Except as may otherwise be provided or clearly implied by context, all terms shall be given their commonly accepted definitions. The following words, terms, and phrases, when used in this article, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning: Compliance Checks. The system the City uses to investigate and ensure that those authorized to sell licensed products are following and complying with the requirements of this article. Compliance checks may also be conducted by the City or other units of government for educational, research, and training purposes, or for investigating or enforcing Federal, State, or local laws and regulations relating to licensed products. Exclusive Liquor Store. An establishment that meets the definition of exclusive liquor store in Minnesota Statutes, section 340A.101, subdivision 10. Licensed Product or TCH Product. Any product that contains tetrahydrocannabinol and that meets the requirements to be sold for human or animal consumption under Minnesota Statutes, section 151.72. Moveable Place of Business. Any form of business operated out of a kiosk, truck, van, automobile, or other type of vehicle or transportable shelter and not a fixed address storefront or other permanent type of structure authorized for sales transactions. Retail Establishment. Any place of business where licensed products are available for sale to the general public, including, but not be limited to, grocery stores, tobacco products shops, convenience stores, gasoline service stations, bars, and restaurants. Sale. Any transfer of goods for money, trade, barter, or other consideration. Self-Service Merchandising. Open displays of licensed products in any manner where any person has access to the licensed products without the assistance or intervention of the licensee or the licensee's employee. Assistance or intervention means the actual physical exchange of the licensed product between the customer and the licensee or employee. Vending Machine. Any mechanical, electric, or electronic, or other type of device that dispenses licensed products upon the insertion of money, tokens, or other form of payment directly into the machine by the person seeking to purchase the licensed product. Sec. 16-552. License. (a) License Required. No person shall sell or offer to sell any licensed product without first having obtained a license to do so from the City. (b) Application. An application for a license to sell licensed products shall be made on a form provided by the City. The application shall contain the full name of the applicant, the applicant's residential and business addresses and telephone numbers, the name of the business for which the license is sought, and any additional information the City deems necessary. Upon receipt of a completed application, the City Clerk shall forward the application to the City Council for action at its next regularly scheduled City Council meeting. If the City Clerk determines that an application is incomplete, they shall return the application to the applicant with notice of the information necessary to make the application complete. A business applicant, at the time of application, shall furnish the City with a list of all persons that have an interest of five percent or more in the business. The list shall name all owners and show the interest held by each, either individually or beneficially for others. It is the duty of each business licensee to notify the City Clerk in writing of any change in ownership in the business. Any change in the ownership or control of the business shall be deemed equivalent to a transfer of the license, and any such license shall be revoked 30 days after any such change in ownership or control unless the licensee has notified the Council of the change in ownership by submitting a new license application for the new owners, and the Council has approved the transfer of the license by appropriate action. Any time an additional investigation is required because of a Page 3 of 6 change in ownership or control of a business, the licensee shall pay an additional investigation fee to be determined by the City. The City may at any reasonable time examine the transfer records and minute books of any business licensee to verify and identify the owners, and the City may examine the business records of any other licensee to the extent necessary to disclose the interest which persons other than the licensee have in the licensed business. The Council may revoke any license issued upon its determination that a change of ownership of a licensee has actually resulted in the change of control of the licensed business so as materially to affect the integrity and character of its management and its operation, but no such action shall be taken until after a hearing by the Council on notice to the licensee. (c) Action. The City Council may either approve or deny the application for a license, or it may delay action for a reasonable period of time as necessary to complete any investigation of the application or the applicant it deems necessary. If the City Council approves the license, the City Clerk shall issue the license to the applicant. If the City Council denies the license, notice of the denial shall be given to the applicant along with notice of the applicant's right to appeal the City Council's decision. If a license application is denied, the earliest an applicant may reapply is 12 months from the date the license is denied. (d) Term. All licenses issued under this article shall be valid for one calendar year from the date of issue. (e) Revocation or Suspension. Any license issued under this article may be revoked or suspended as provided in Section 16-560. (f) Transfers. All licenses issued under this article shall be valid only on the premises for which the license was issued and only for the person or business to whom the license was issued. The transfer of any license to another location, business, or person is prohibited. (g) Display. All licenses shall be posted and displayed in plain view of the general public on the licensed premises. (h) Renewals. The renewal of a license issued under this article shall be handled in the same manner as the original application. The request for a renewal shall be made at least 30 days but no more than 60 days before the expiration of the current license. (i) Issuance as Privilege and Not a Right. The issuance of a license issued under this article is a privilege and does not entitle the license holder to automatic renewal of the license. Sec. 16-554. Fees. No license shall be issued under this article until the appropriate license fee shall be paid in full. The fee for a license under this article shall be established by the City Council and adopted in the City fee schedule, and may be amended from time to time. Sec. 16-555. Ineligibility and Basis for Denial of License. (a) Ineligibility. (1) Moveable Place of Business. No license shall be issued to a moveable place of business. Only fixed location businesses shall be eligible to be licensed under this article. (2) Exclusive Liquor Store. No license shall be issued to an exclusive liquor store as defined in Minnesota Statutes, section 340A.101, subdivision 10. (b) Grounds for Denial. Grounds for denying the issuance or renewal of a license under this article include, but are not limited to, the following: (1) The applicant is under the age of 21 years. (2) The applicant is prohibited by Federal, State, or other local law, ordinance, or other regulation from holding a license. Page 4 of 6 (3) The applicant has been convicted within the past five years for any violation of a Federal, State, or local law, other ordinance, provision, or other regulation relating to the licensed products, but not including possession or sale of licensed products. (4) The applicant has had a license to sell licensed products suspended or revoked during the 12 months preceding the date of application, or the applicant has or had an interest in another premises authorized to sell licensed products, whether in the City or in another jurisdiction, that has had a license to sell licensed products suspended or revoked during the same time period, provided the applicant had an interest in the premises at the time of the revocation or suspension, or at the time of the violation that led to the revocation or suspension. (5) The applicant is a business that does not have an operating officer or manager who is eligible pursuant to the provisions of this article. (6) The applicant is the spouse of a person ineligible for a license pursuant to the provision of Subsections (b)(2) and (3) of this section or who, in the judgement of the Council, is not the real party in interest or beneficial owner of the business to be operated, under the license. (7) The applicant fails to provide any information required on the application, or provides false or misleading information. Any false statement on an application, or any willful omission of any information called for on such application form, shall cause an automatic refusal of license, or if already issued, shall render any license issued pursuant thereto void and of no effect to protect the applicant from prosecution for violation of this chapter, or any part thereof. (c) The City shall conduct a background investigation on all new applications and applications to transfer a license. The City may conduct a background and financial check on an application for a renewal of a license if it is in the public interest to do so. If a license is mistakenly issued or renewed to a person, it shall be revoked upon the discovery that the person was ineligible for the license under this article and the City shall provide the person with a notice of revocation, along with information on the right to appeal. (d) No license shall be granted or renewed for operation on any premises on which real estate taxes, assessments, or other financial claims of the City or of the State are due, delinquent, or unpaid. If an action has been commenced pursuant to the provisions of Minn. Stats. Ch. 278, questioning the amount or validity of taxes, the Council may, on application by the licensee, waive strict compliance with this provision; no waiver may be granted, however, for taxes, or any portion thereof, which remain unpaid for a period exceeding one year after becoming due unless such one-year period is extended through no fault of the licensee. Sec. 16-556. Prohibited Acts. (a) In general. No person shall sell or offer to sell any licensed product: (1) By means of any type of vending machine. (2) By means of self-service merchandising. (3) By any other means, to any other person, on in any other manner or form prohibited by state or other local law, ordinance provision, or other regulation. (b) Legal Age. No person shall sell any licensed product to any person under the age of 21. (1) Age verification. Licensees shall verify by means of government issued photographic identification that the purchaser is at least 21 years of age. Verification is not required for a person over the age of 30. That the person appeared to be 30 years of age or older does not constitute a defense to a violation of this subsection. (2) Signage. Notice of the legal sales age and age verification requirement must be posted prominently and in plain view at all times at each location where licensed products are offered for sale. The Page 5 of 6 required signage, which will be provided to the licensee by the City, must be posted in a manner that is clearly visible to anyone who is or is considering making a purchase. (c) Samples Prohibited. No person shall distribute samples of any licensed product free of charge or at a nominal cost. Sec. 16-557. Additional Requirements. (a) Storage. All licensed products shall either be stored behind a counter or other area not freely accessible to customers, or in a case or other storage unit not left open and accessible to the general public. Sec. 16-558. Responsibility. All licensees are responsible for the actions of their employees in regard to the sale, offer to sell, and furnishing of licensed products on the licensed premises. The sale, offer to sell, or furnishing of any licensed product by an employee shall be considered an act of the licensee. Nothing in this section shall be construed as prohibiting the City from also subjecting the employee to any civil penalties that the City deems to be appropriate under this ordinance, state or federal law, or other applicable law or regulation. Sec. 16-559. Compliance Checks and Inspections. All premises licensed under this subdivision shall be open to inspection by the City during regular business hours. From time to time, but at least once per year, the City shall conduct compliance checks. No person used in compliance checks shall attempt to use a false identification misrepresenting their age. All persons lawfully engaged in a compliance check shall answer all questions about their age asked by the licensee or their employee, and produce any identification, if any exists, for which they are asked. Persons used for the purpose of compliance checks shall be supervised by law enforcement or other designated personnel. Nothing in this article shall prohibit compliance checks authorized by state or federal laws for educational, research, or training purposes, or required for the enforcement of a particular State or Federal law. Additionally, from time to time, the City will conduct inspections to determine compliance with any or all other aspects of this ordinance. Sec. 16-560. Violations and Penalty. (a) Administrative Civil Penalties—Individuals. If a person who is not a licensee is found to have violated this article, the person shall be charged an administrative penalty as follows: (1) First Violation. The Council shall impose a civil fine not to exceed $50.00. (2) Second Violation Within 12 months. The Council shall impose a civil fine not to exceed $100.00. (3) Third Violation Within 12 months. The Council shall impose a civil fine not to exceed $150.00. (b) Same—Licensee. If a licensee or an employee of a licensee is found to have violated this article, the licensee shall be charged an administrative penalty as follows: (1) First Violation. The Council shall impose a civil fine of $500.00 and suspend the license for not less than 1 day. (2) Second Violation Within 36 Months. The Council shall impose a civil fine of $1,000.00 and suspend the license for not less than 3 consecutive days. Page 6 of 6 (3) Third Violation Within 36 Months. The Council shall impose a civil fine of $2,000.00 and suspend the license for not less than 10 consecutive days. (4) Fourth Violation Within 36 Months. The Council shall revoke the license for at least one year. (c) Administrative Penalty Procedures. Notwithstanding anything to the contrary in this section: (1) Any of the administrative civil penalties set forth in this section that may be imposed by the Council, may in the alternative be imposed by an administrative citation under Section 1-9. (2) If one of the foregoing penalties is imposed by an action of the Council, no penalty shall take effect until the licensee or person has received notice (served personally or by mail) of the alleged violation and of the opportunity for a hearing before the Council, and such notice must be in writing and must provide that a right to a hearing before the Council must be requested within 10 business days of receipt of the notice or such right shall terminate. (d) Misdemeanor Prosecution. Nothing in this section shall prohibit the City from seeking prosecution as a misdemeanor for any alleged violation of this article. Sec. 16-561. Severability. If any section or provision of this ordinance is held invalid, such invalidity will not affect other sections or provisions that can be given force and effect without the invalidated section or provision. Sec. 16-562. Effective Date. This ordinance becomes effective upon passage and publication. Secs. 16-563—16-599. Reserved. Section 2. City Code Chapter 1 entitled “General Provisions” and Sec. 1-8 entitled “General Penalty; Continuing Violations” are hereby adopted in their entirety, by reference, as though repeated verbatim herein. Section 3. This ordinance shall take effect form and after its passage and publication as required by law. Adopted by the City Council this 3rd day of August 2022. _________________________ Shepard M. Harris, Mayor ATTEST: _________________________ Theresa J. Schyma, City Clerk Section 430 Cannabinoid Products Section 430:00. Purpose. The purpose of this ordinance is to establish licensing regulations for the sale of cannabinoid products derived from hemp as provided in Minn. Stat. § 151.72. Section 430:05. Findings of City Council. The City Council makes the following findings regarding the need to regulate, license, and inspect establishments that sell certain cannabinoid products: (1)By enacting 2022 Session Law Chapter 98, Article 13, the Minnesota Legislature amended Minn. Stat. § 151.72 to allow for the sale of certain cannabinoid products. (2)This new law does not prohibit municipalities from licensing the sale of cannabinoid products derived from hemp locally. (3)The National Academies of Science, Engineering, and Medicine note that the growing acceptance, accessibility, and use of cannabis and its derivatives have raised important public health concerns, while the lack of aggregated knowledge of cannabis-related health effects has led to uncertainly about the impact of its use. (4)The Minnesota Legislature recognized the danger of cannabis use among youth by prohibiting the sale of any product containing cannabinoid or tetrahydrocannabinol (THC) extracted or otherwise derived from hemp to those under the age of 21 and requiring that edible cannabinoid products be packaged without appeal to children and in child-resistant packaging or containers. (5)Due to the passage of this new law by the Minnesota Legislature, the City Council believes the following rules, regulations, and standards for licensing the sale of cannabinoid products are necessary to promote and protect the public health, safety, and general welfare of the residents of St. Cloud. Section 430:10. Definitions. Subd. 1. “Cannabinoid product” means any product containing nonintoxicating cannabinoids extracted from hemp, including an edible cannabinoid product, that is sold for human or animal consumption. Subd. 2. “Certified hemp” means the definition for the same provided in Minn. Stat. § 151.72, Subd. 1(b), as may be amended. Subd. 3. “Compliance checks” means the system the City uses to investigate and ensure that those authorized to sell cannabinoid products are following and complying with the requirements of state laws and this ordinance. Compliance checks involve the use of persons under the age of 21 who purchase or attempt to purchase cannabinoid products. Compliance checks may also be conducted by the City or other units of government for St. Cloud educational, research, and training purposes or for investigating or enforcing federal, state, or local laws and regulations relating to cannabinoid products. Subd. 4. “Delivery sale” means the sale of any cannabinoid products to any person for personal consumption and not for resale when the sale is conducted by any means other than an in-person, over-the-counter sales transaction in a licensed retail establishment. Delivery sale includes, but is not limited to, the sale of any cannabinoid products when the sale is conducted by telephone, other voice transmission, mail, the internet, or app- based service. Delivery sale includes delivery by licensees or third parties by any means, including curbside pick-up. Subd. 5. “Edible cannabinoid product” means any product that is intended to be eaten or consumed as a beverage by humans, contains a cannabinoid in connection with food ingredients, and is not a drug. Subd. 6. “Hemp” or “Industrial Hemp” means the definition for the same provided in Minn. Stat. § 18K.02, Subd. 3, as may be amended. Subd. 7. “Label” means the definition for the same provided in Minn. Stat. § 151.01, Subd. 18, as may be amended. Subd. 8. “Labeling” means the definition for the same provided in Minn. Stat. § 151.72, Subd. 1(f), as may be amended. Subd. 9. “Matrix barcode” means the definition for the same provided in Minn. Stat. § 151.72, Subd. 1(g), as may be amended. Subd. 10. “Moveable place of business” means any form of business that is operated out of a kiosk, truck, van, automobile or other type of vehicle or transportable shelter and that is not a fixed address or other permanent type of structure licensed for over-the-counter sales transactions. Subd. 11. “Nonintoxicating cannabinoid” means substances extracted from certified hemp plants that do not produce intoxicating effects when consumed by any route of administration. Subd. 12. "Operator" means the person in legal possession and control of a location by reason of ownership, lease, contract or agreement, for the sale of cannabinoid products at retail. Subd. 13. “Retail establishment” means any fixed place of business where cannabinoid products are available for sale to the general public. Retail establishment for purposes of this ordinance does not include exclusive liquor stores or residences. Subd. 14. “Sale” means any transfer of goods for money, trade, barter or other consideration. Subd. 15. “Self-service vending” means the display for sale of cannabinoid products that are accessible to the public without the need of assistance of an employee. Subd. 16. “Vending machine” means any mechanical, electrical or electronic, or other type of device that dispenses cannabinoid products upon the insertion of money, tokens, or other form of payment into or onto the device by the person seeking to purchase cannabinoid products. Section 430:15. License Required. It will be unlawful for any person to sell at retail any cannabinoid products within the City unless the person holds a retail cannabinoid products license, in full force and effect. Section 430:20. Procurement of License. Subd. 1. Any person desiring a retail cannabinoid products license will make and file with the City Clerk an application, in writing, executed in duplicate. Such application will give the name and residence address of the applicant, if an individual, will identify the location at which it is proposed to sell the cannabinoid products at retail, and will provide such other information as the City Council may require from time to time. The application will be accompanied by the required fee. Subd. 2. The City Clerk will immediately transmit a copy of the application to the Chief of Police, who will investigate all facts and information which he/she can reasonably find, bearing upon the question of the applicant's fitness to receive the license and to perform the duties imposed by this ordinance. Upon completing the investigation, the Chief of Police will report, in writing, her/his findings to the Mayor or designee, together with her/his recommendation as to the issuance of a license to the applicant. The Mayor or designee will submit to the City Council the report of the Chief of Police, together with the recommendation as to the issuance of the license to the applicant. Subd. 3. The City Council will consider the facts and recommendation of the Chief of Police and of the Mayor, together with any material facts which it may have or obtain, and then, by motion, will approve or deny the application to the City Clerk together with a copy of the motion. If the City Council has approved the application, it is the duty of the City Clerk to execute and deliver a license to the applicant on a form approved by the City Attorney. Such license will be for October 1st of the year of the issuance to September 30th of the following year or other such time frame as specified. Section 430:25. Basis for Denial of License. Subd. 1. Grounds for denying the issuance or renewal of a license include, but are not limited to, the following: (1) The applicant is under 21 years of age. (2) The applicant has been convicted within the past five years of any violation of federal, state, or local law, ordinance provision, or other regulation relating to cannabinoid products. (3) The applicant has had a license to sell cannabinoid products suspended or revoked within the preceding 12 months of the date of application. (4) The applicant fails to provide any of the information required on the licensing application, or provides false or misleading information. (5) The applicant is prohibited by federal, state, or other local law, ordinance, or other regulation from holding a license. (6) The business for which the license is requested is a moveable place of business. Only fixed-location retail establishments that are not excluded under the definition for retail establishments in this ordinance are eligible to be licensed. Subd. 2. Location Ineligible. No license will be approved unless the premises proposed to be licensed complies with all applicable zoning requirements. Subd. 3. Issued Mistakenly. If a license is mistakenly issued or renewed to a person, the City will revoke the license upon the discovery that the person was ineligible for the license under this ordinance. The City will provide the license holder with notice of the revocation, along with information on the right to appeal. Section 430:30. Sales of Cannabinoids Derived from Hemp. In accordance with Minn. Stat. § 151.72, Subd.3, as may be amended: Subd. 1. A product containing nonintoxicating cannabinoids, including an edible cannabinoid product, may be sold for human or animal consumption only if all of the requirements of this section are met, provided that a product sold for human or animal consumption does not contain more than 0.3 percent of any tetrahydrocannabinol and an edible cannabinoid product does not contain more than five milligrams of any tetrahydrocannabinol in a single serving, or more than a total of 50 milligrams of any tetrahydrocannabinol per package. Subd. 2. No other substance extracted or otherwise derived from hemp may be sold for human consumption if the substance is intended: (1) For external or internal use in the diagnosis, cure, mitigation, treatment, or prevention of disease in humans or animals; or (2) To affect the structure or any function of the bodies of humans or other animals. Subd. 3. No product containing any cannabinoid or tetrahydrocannabinol extracted or otherwise derived from hemp may be sold to any individual who is under the age of 21. Subd. 4. Products that meet the requirements of this section are not controlled substances under Minn. Stat.§ 152.02. Section 430:35. Testing Requirements. All testing must comply with the requirements set forth in Minn. Stat. § 151.72, Subd. 4, as may be amended. Section 430:40. Labeling Requirements. All labeling must comply with the requirements set forth in Minn. Stat. § 151.72, Subd. 5, as may be amended. Section 430:45. Additional Requirements for Edible Cannabinoid Products. In accordance with Minn. Stat. § 151.72, Subd. 5a, as may be amended: Subd. 1. An edible cannabinoid product must not: (1) Bear the likeness or contain cartoon-like characteristics of a real or fictional person, animal, or fruit that appeals to children; (2) Be modeled after a brand of products primarily consumed by or marketed to children; (3) Be made by applying an extracted or concentrated hemp-derived cannabinoid to a commercially available candy or snack food item; (4) Contain an ingredient, other than a hemp-derived cannabinoid, that is not approved by the United States Food and Drug Administration for use in food; (5) Be packaged in a way that resembles the trademarked, characteristic, or product-specialized packaging of any commercially available food product; or (6) Be packaged in a container that includes a statement, artwork, or design that could reasonably mislead any person to believe that the package contains anything other than an edible cannabinoid product. Subd. 2. An edible cannabinoid product must be prepackaged in packaging or a container that is child-resistant, tamper-evident, and opaque or placed in packaging or a container that is child-resistant, tamper-evident, and opaque at the final point of sale to a customer. The requirement that packaging be child-resistant does not apply to an edible cannabinoid product that is intended to be consumed as a beverage and which contains no more than a trace amount of any tetrahydrocannabinol. Subd. 3. If an edible cannabinoid product is intended for more than a single use or contains multiple servings, each serving must be indicated by scoring, wrapping, or other indicators designating the individual serving size. Subd. 4. A label containing at least the following information must be affixed to the packaging or container of all edible cannabinoid products sold to consumers: (1) The serving size; (2) The cannabinoid profile per serving and in total; (3) A list of ingredients, including identification of any major food allergens declared by name; and (4) The following statement: “Keep this product out of reach of children.” Subd. 5. An edible cannabinoid product must not contain more than five milligrams of any tetrahydrocannabinol in a single serving, or more than a total of 50 milligrams of any tetrahydrocannabinol per package. Section 430:50. Prohibited Sales. Subd. 1. Samples Prohibited. Sampling of cannabinoid products within any retail establishment licensed under this ordinance is prohibited. No person shall distribute samples of any cannabinoid products free of charge or at a nominal cost. The distribution of cannabinoid products as a free donation is prohibited. Subd. 2. Coupon and Price Promotion. No person shall accept or redeem any coupon, price promotion, or other instrument or mechanism, whether in paper, digital, electronic, mobile, or any other form, that provides any cannabinoid products to a consumer at no cost or at a price that is less than the non-discounted, standard price listed by a retailer on the item or on any related shelving, posting, advertising, or display at the location where the item is sold or offered for sale, including all applicable taxes. Subd. 3. Self-service Displays. All cannabinoid products must be stored behind the sales counter, in a locked case, in a storage unit, or in another area not freely accessible to the general public. No person shall allow the sale of cannabinoid products in open displays that are accessible to the public without the intervention of a store employee. This section does not apply to a retail establishment, as defined in this ordinance, that is continuously staffed by an employee from which persons under 21 years of age are prohibited from entering the store. Subd. 4. Prohibition Against Retail Sales of Cannabinoid Products by Vending Machines. No person will sell or dispense cannabinoid products through use of a vending machine. Subd. 5. Delivery Sales. All sales of cannabinoid products must be conducted in person, in a licensed retail establishment under this ordinance, in over-the-counter sales transactions. Section 430:55. Adulterated or Misbranded Products. A cannabinoid product shall be considered adulterated or misbranded under the provisions set forth in Minn. Stat. §151.72, Subd. 6, as may be amended. Section 430:60. Signage. At each location where cannabinoid products are sold, the licensee shall display a sign in plain view to provide public notice that selling any of these products to any person under the age of 21 is illegal and subject to penalties. The notice shall be placed in a conspicuous location in the licensed establishment and shall be readily visible to any person who is purchasing or attempting to purchase these products. The sign shall provide notice that all persons responsible for selling these products must verify, by means of photographic identification containing the bearer’s date of birth, the age of any person under 30 years of age. Section 430:65. Age Verification. At each location where edible cannabinoid products are sold, the licensee shall verify, by means of government-issued photographic identification containing the bearer’s date of birth, that the purchaser or person attempting to make the purchase is at least 21 years of age. Verification is not required if the purchaser or person attempting to make the purchase is 30 years of age or older. It shall not constitute a defense to a violation of this Section that the person appeared to be 30 years of age or older. Section 430:70. Responsibility. All licensees are responsible for the actions of their employees regarding the sale, offer to sell, and furnishing of cannabinoid products on the licensed premises. The sale, offer to sell, or furnishing of any cannabinoid product by an employee shall be considered an act of the licensee. Section 430:75. Hours of Sales. No sales of cannabinoid products will be allowed at the licensed premises after 10:00 p.m. and before 8:00 a.m. daily. Section 430:80. Compliance Checks and Inspections. All licensed premises must be open to inspections by law enforcement or other authorized city officials during regular business hours. From time to time, but at least once per year, the City will conduct compliance checks. The City will conduct a compliance check that involves the participation of a person at least 17 years of age, but under the age of 21 to enter the licensed premises to attempt to purchase cannabinoid products. Prior written consent from a parent or guardian is required for any person under the age of 18 to participate in a compliance check. Persons used for the purpose of compliance checks will be supervised by law enforcement or other designated personnel. Section 430:85. Civil Penalty, Suspension or Revocation of Licenses. Subd. 1. The City Council will follow the provisions of this section of the ordinance on the suspension, revocation or imposition of a civil penalty against any license granted under this ordinance. Subd. 2. Notice of Violation. The Chief of Police will provide, in writing, to the licensee either personally or by mail, notice of any alleged violation of the provisions of this ordinance or Minnesota Statutes Chapter 151, committed in the operation of the licensee's business, and provide notice to the City Attorney’s Office. If the City Attorney's Office determines from the facts and circumstances reported, together with any other facts and circumstances known to it, that the violation may warrant a civil penalty, suspension or revocation of the license held by the licensee, it will notify the licensee, and set a time and place for a hearing sufficiently in advance to provide ten days written notice of the time, place and purpose of such hearing to the licensee. Subd. 3. Hearing on Alleged Violations. The hearing will be held before an independent hearing officer, in accordance with Section 1100 of the 2007 Code of Ordinances of the City of St. Cloud. At the time of the hearing, the licensee may appear and present any evidence which is material to the investigation. The hearing officer will make findings of fact as to whether a violation of the provisions of this ordinance or Minnesota Statutes Chapter 151 have been committed in the operation of the licensee's business and whether the violation was willful in nature. The hearing officer will also make a recommendation as to what penalty, if any, will be applied. The City Council will adopt the hearing officer's findings of fact that the licensee has violated any of the provisions of this ordinance or State law, and may impose a civil fine, suspend or revoke the license in accordance with the schedule in Section 430:90 of this ordinance. Subd. 4. Mandatory Revocation. The Council will revoke the license of any licensee under this ordinance if the licensee willfully violates any provisions of this ordinance or Minnesota Statutes Chapter 151. Section 430:90. Penalties for Violations. Upon a violation by a licensee holding a cannabinoid products license of any provision of this ordinance or any provision of state law regulating the sale of cannabinoid products, or failing to comply with any other requirements of Minn. Stat. § 151.72, the City Council may impose a civil fine, suspend or revoke the license in accordance with the following schedule: First violation……………………………………………………………... ...fine up to $300.00 Second violation within 36 months………...fine up to $600.00 and a 30-day license suspension Third violation within 36 months………………. fine up to $1,000.00 and a license revocation Violation during period of suspension………………………………………license revocation Subd. 1. Any civil fine assessed against a licensee pursuant to this section must be paid in full within 30 days from receipt of written notification of the City Council’s imposition of the civil fine. Failure to pay the fine within that time period will result in a ten-day license suspension. Licensees whose licenses have been revoked may not be issued a new license within six months from the effective date of such revocation.