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VII.1. Update on Moratorium on the Operation of Cannabis Businesses; Domeier DOCSOPEN\HP145\1\908422.v2-10/11/23 CITY OF HOPKINS Memorandum To: Honorable Mayor and Council Members Mike Mornson, City Manager From: Amy Domeier, City Clerk Date: October 17, 2023 Subject: Update on Moratorium on the Operations of Cannabis Businesses _____________________________________________________________________ PURPOSE On July 18, 2023, the City Council adopted a 120-day (to expire on November 24, 2023) moratorium to allow time for the City Council and staff to consider next steps and potential regulations related to the newly authorized cannabis legislation, including review of the Office of Cannabis Management’s (“OCM”) regulations and model ordinances. Since that time, the OCM management has provided that it does not anticipate having either the administrative rulemaking process or model ordinance complete or will begin issuing licenses until the end of 2024 or the first quarter of 2025. Staff is looking to extend the moratorium to allow the City to develop regulations on a known and stable timeline, and businesses in the community have requested guidance on locations where these businesses might be able to operate. INFORMATION Timeline The Office of Cannabis Management (OCM) is still in the process of developing the regulatory framework for legal adult cannabis and establish processes and timelines to apply for licenses. Most importantly, the administrative rulemaking process should clarify what city regulation of cannabis businesses will entail, as well as other important aspects of the state-licensure and city-registration (as part of receiving a license from the state, a business must register with the city). The OCM’s website provides: “While this [Expedited Rulemaking] process will allow OCM to complete the rulemaking process with some flexibilities that would otherwise not be available, the rules may not be approved and in force until 2025.” Potential City Regulations Information regarding the actions the City Council will be able to take to regulate cannabis businesses in Hopkins remains the same as when the moratorium was enacted. It is anticipated that the City Council will have control in regulating the following: ADMINISTRATION DOCSOPEN\HP145\1\908422.v2-10/11/23 Reasonable restrictions on the time, place and manner of the operation of cannabis businesses. These regulations will likely primarily be adopted through zoning regulations, but things like limits on hours of operation may be adopted elsewhere. The OCM’s model ordinance is required to address these regulations. o There restrictions would be in addition to requiring cannabis businesses to adhere to general zoning and use regulations (e.g., cannabis retail could only exist where general retail is allowed), as well as all applicable building and fire code. Setbacks from Youth Oriented Facilities. The City may adopt regulations prohibiting cannabis businesses within 1,000 feet of a school, or 500 feet of a day care, residential treatment facility, or an attraction within a public park that is regularly used by minors, including a playground or athletic field. o We understand that these buffers would be the maximum. i.e., we could impose a 350 ft buffer from schools, parks, etc. o It is unclear whether the city is able to adopt an additional buffer between two cannabis businesses or whether the listed buffers (distances from youth-oriented uses) are the only kind that will be allowed. Restrict the number of cannabis retailers to one per 12,500 residents. There is some question based on what was negotiated between legislators and interest groups (which should be clarified by the administrative rules or during the next legislative session) whether the intent of the ratio was to provide that a city with a population between 12,501-25,000 may limit the number of retailers to one or two retailers. Regardless, the City would not be able to adopt regulations that further limit the number of retailers established under the ratio. This would not restrict the City Council from considering allowing more than the minimum. Business Registration and Compliance Checks o Businesses receiving a license from the OCM will also be required to register with the City. This is the point at which the City will confirm that the business meets all local cannabis specific and general regulations related to the particular business. o The City will be required to conduct compliance checks at least once per calendar year, but it is it’s uncertain how the license process will actually work and if the Police Department would be responsible for background checks, but it’s clear that it must be addressed in the administrative rulemaking process. Municipal Cannabis o The City is able to operate its own municipal dispensary should it choose to do so. It is unclear at this time if the OCM will prioritize municipal applicants over other applicants. Staff is not planning to pursue this option at this time unless different direction is given by Council. This would require Staff to more deeply review what resources would be necessary to consider this option. Staff has created a business license comparison for tobacco, liquor and the proposed cannabis sales. In addition, a map has been created with the proposed zoning setbacks as allowed by law. Both illustrations are attached to this report. DOCSOPEN\HP145\1\908422.v2-10/11/23 FUTURE ACTION Staff will not be able to put an ordinance together before the end of the moratorium based off the currently outstanding items the state needs to determine. Staff plans to come back to Council to extend the moratorium and continue to discuss regulations that are in the City’s control. Tobacco License Vaping Establishment License Off-Sale Liquor Cannabis Number of licenses issued 7/1 19 1 9 License Limit None 1 9 Need to issue at least 2 License Fee(s) $200 $100 $200 (lower than State Statute 340A.408)) Distance requirement(s) Tobacco Sales Establishments prohibited within 500 feet of a public park, public or private school, church, daycare or the Hopkins Center for the Arts (Zoning Code 102-580 i) Tobacco Sales Establishments prohibited within 500 feet of a public park, public or private school, church, daycare or the Hopkins Center for the Arts (Zoning Code 102-580 i) No new off-sale intoxicating liquor license or off-sale 3.2 percent malt liquor license shall be granted for any building within 350 feet of any elementary or secondary school, daycare center or religious institution, existing exclusive off-sale liquor store, pawnshop, currency exchange, or any business licensed by the city as an adult oriented business. The distance shall be a horizontal measurement from the nearest existing property line. (City Coder Sec. 4- 105)* Allowed to prohibit the operation of a cannabis business within 1,000 feet of a school or 500 feet of a day care, residential treatment facility, or an attraction within a public park that is regularly used by minors, including a playground or athletic field. Time of sales Not regulated Not regulated Follow State Statute (340A.504). No sale of intoxicating liquor may be made by an off-sale licensee: (1) on Sundays, except between the hours of 11:00 a.m. and 6:00 p.m.; (2) before 8:00 a.m. or after 10:00 p.m. on Monday through Saturday; (3) on Thanksgiving Day; (4) on Christmas Day, December 25; or (5) after 8:00 p.m. on Christmas Eve, December 24. Prohibited Use It shall be unlawful for any person to light, inhale, or exhale tobacco, tobacco products, or tobacco related devices in any retail establishment, or for any tobacco license holder or licensee, or their employees, to permit the same. The vaping of e-cigarettes at a retail establishment and the sampling of vaping of e- cigarettes at a licensed vaping establishment are exempt from prohibition under this section (City Code Sec. 10-463) No person may use tobacco products on city-owned parkland, park facilities, recreational or open spaces, except within the confine of a vehicle in a designated parking area. (Legislative Policy 5-G) It shall be unlawful for any person to light, inhale, or exhale tobacco, tobacco products, or tobacco related devices in any retail establishment, or for any tobacco license holder or licensee, or their employees, to permit the same. The vaping of e- cigarettes at a retail establishment and the sampling of vaping of e- cigarettes at a licensed vaping establishment are exempt from prohibition under this section (City Code Sec. 10-463) Size/Floor Space requirements **Considered an establishment if over 25% of the gross floor area is devoted to the sales and display of tobacco, tobacco products or tobacco-related devices (Zoning Code 102-540) **Off-sale liquor stores may not exceed 5,000 square feet in gross floor area (Zoning Code 102-580 c)** Compliance Checks All licensed premises (tobacco sales or vaping establishment) shall be open to inspection by the city police or other authorized city official during regular business hours. At least once per calendar year, an unannounced compliance check shall be conducted at each licensed retail establishment. (City Code Sec. 10-466) Same as tobacco. At least once per calendar year, required to conduct compliance checks of every cannabis business and hemp business with a retail registration. Also required to “conduct unannounced age verification compliance checks at least once each calendar year.” Violation language City Code Sec. 10-467 City Code Sec. 10-467 City Code Sec. 4-82 There is limited authority to suspend a registration for up to 30 days. The OCM will review the suspension and may order reinstatement, additional suspension, revocation or other licensed based penalties or enforcement action. We may reinstate the registration if it determines that the violation has been cured. •We can impose civil penalties of up to $2,000 for registration violations. * Includes instructions for measuring the distances **Certain zones restrict Tobacco Sales Establishments and Off-Sale Liquor Stores to no more than 25% of the building footprint (RX-TOD, RX-D, RX-N, IX-TOD) – see zoning map. For liquor, this was put in place to eliminate a “big box” from coming to Hopkins