In 2008, the Garden Grove City Council adopted Ordinance No. 2734 prohibiting medical marijuana dispensaries throughout the city.  This city-wide marijuana dispensary ban is currently codified in Section 9.16.020.100 of the Garden Grove Municipal Code.  The City considers marijuana delivery services to be “dispensaries” that are prohibited by Section 9.16.020.100; however, delivery of marijuana is not expressly called out separately as a prohibited activity. 

Ordinance No. 2734 does not directly address cultivation of marijuana.  Marijuana cultivation is not an expressly permitted use authorized under the City’s Land Use Code, however, and the City has historically interpreted its Land Use Code to prohibit any use that is not permitted expressly or through an interpretation of use.

On October 9, 2015, Governor Brown signed new legislation (AB 266, AB 243, and SB 643) collectively referred to as the Medical Marijuana Regulatory and Safety Act (“Act”), which establishes a state-wide regulatory and licensing framework for the cultivation and distribution of medical marijuana.  The Act takes effect on January 1, 2016; however, many new state regulations must be developed, and the law will not be fully implemented until at least 2018.

The Act generally does not preempt the authority of cities to regulate or prohibit medical marijuana dispensaries or the delivery or cultivation of medical marijuana.  However, pursuant to the Act, if a city wishes to preserve its right to prohibit the delivery and/or cultivation of medical marijuana, it must have an ordinance expressly doing so.  With respect to the cultivation of medical marijuana, a city must have a land use ordinance in place that clearly regulates or prohibits such cultivation by March 1, 2016, or the State will automatically become the sole licensing authority for individuals or entities seeking to cultivate marijuana in the city, and the city may lose its ability to regulate or prohibit this activity (but, legislation was recently introduced to eliminate this preemptive aspect of the Act). In sum, the proposed ordinance would preserve the status quo and prevent State preemption regarding the cultivation and delivery of marijuana in Garden Grove.

SUMMARY OF MEDICAL MARIJUANA REGULATION & SAFETY ACT

The Act is comprised of three discreet pieces of legislation, each signed by the Governor on October 9, 2015.  Assembly Bill (AB) 266 establishes a dual licensing structure requiring state licenses and a local license or permit for commercial marijuana businesses, with the State Department of Consumer Affairs heading an overall regulatory structure establishing minimum health and safety and testing standards.  Assembly Bill (AB) 243 establishes a regulatory and licensing structure for cultivation sites under the Department of Food and Agriculture.  Senate Bill (SB) 643 establishes criteria for licensing medical marijuana businesses, regulates physicians, and recognizes local authority to levy taxes and fees.  Each of these three bills is summarized below.

AB 243

• Places the Department of Food and Agriculture (DFA) in charge of licensing and regulation of indoor and outdoor cultivation sites. Creates a Medical Cannabis Cultivation Program within the department.

• Mandates the Department of Pesticide Regulation (DPR) to develop standards for pesticides in marijuana cultivation, and maximum tolerances for pesticides and other foreign object residue.

• Mandates the Department of Public Health (DPH) to develop standards for production and labelling of all edible medical marijuana products. 

• Assigns joint responsibility to DFA, Department of Fish and Wildlife (DFW), and the State Water Resources Control Board (SWRCB) to prevent illegal water diversion associated with marijuana cultivation from adversely affecting California fish population.

• Specifies that DPR, in consultation with SWRCB, is to develop regulations for application of pesticides in all cultivation.

• Specifies various types of cultivation licenses.

• Directs the multi-agency task force headed by DFW and SWRCB to expand its existing enforcement efforts to a statewide level to reduce adverse impacts of marijuana cultivation, including environmental impacts such as illegal discharge into waterways and poisoning of marine life and habitats.

• Prohibits cultivation of medical marijuana without first obtaining both a local license/permit and a state license.  A person may not apply for a state license without first receiving a local license/permit or if the proposed cultivation will violate provisions of a local ordinance or regulation or if medical marijuana is prohibited by the local jurisdiction.  However, if a local jurisdiction does not have land use regulations or ordinances regulating or prohibiting the cultivation of marijuana, either expressly or under the principles of permissive zoning, or chooses not to administer a conditional permit program, then commencing March 1, 2016, the state is the sole licensing authority for medical marijuana cultivation applicants (again, cleanup legislation has been introduced to eliminate this preemptive provision of the Act).

AB 266

• Establishes a statewide regulatory scheme, headed by the Bureau of Medical Marijuana Regulation (BMMR) within the Department of Consumer Affairs (DCA).

• Provides for dual licensing: state will issue licenses, and local governments will issue permits or licenses to operate marijuana businesses, according to local ordinances. State licenses will be issued beginning in January 2018.

• Revocation of a local license or permit will unilaterally terminate the ability of the business to operate in that jurisdiction.

• Expressly protects local licensing practices, zoning ordinances, and local constitutional police power.

• Caps total cultivation for a single licensee at four acres statewide, subject to local ordinances.
  Requires local jurisdictions that wish to prevent delivery services from operating within their borders to enact an ordinance affirmatively banning this activity. 

• Specifies that DCA will issue the following licenses: Dispensary, Distributor, Transport, and Special Dispensary Status for licensees who have a maximum of three dispensaries. Specifies various sub-categories of licensees (indoor cultivation, outdoor cultivation, etc.)

• Limits cross-licensing to holding a single state license in up to two separate license categories, as specified. Prohibits medical marijuana licensees from also holding licenses to sell alcohol.

• Grandfathers in vertically integrated businesses (i.e. businesses that operate and control their own cultivation, manufacturing, and dispensing operations) if a local ordinance allowed or required such a business model and was enacted on or before July 1, 2015. Also requires such businesses to have operated in compliance with local ordinances, and to have been engaged in all the covered activities on July 1, 2015.

• Requires establishment of uniform health and safety standards, testing standards, and security requirements at dispensaries and during transport of the product.

• Specifies a standard for certification of testing labs, and specified minimum testing requirements. Prohibits testing lab operators from being licensees in any other category, and from holding a financial or ownership interest in any other category of licensed business.

• Includes a labor peace agreement under which unions agree not to engage in strikes, work stoppages, etc. and employers agree to provide unions reasonable access to employees for the purpose of organizing them. Specifies that such an agreement does not mandate a particular method of election.

•  Provides for civil penalties for unlicensed activity, and specifies that applicable criminal penalties under existing law will continue to apply.

•  Specifies that patients and primary caregivers are exempt from the state licensing requirement, and provides that their information is not to be disclosed and is confidential under the California Public Records Act.

•  Phases out the existing model of marijuana cooperatives and collectives one year after DCA announces that state licensing has begun.

SB 643

• Directs the California Medical Board to prioritize investigation of excessive recommendations by physicians.

• Imposes fines ($5000.00) against physicians for violating prohibition against having a financial interest in a marijuana business.

• Recommendation for marijuana without a prior examination constitutes unprofessional conduct.

• Imposes restrictions on advertising for physician recommendations.

•  Places DFA in charge of cultivation regulations and licensing, and requires a track and trace program.

•  Codifies dual licensing (state license and local license or permit), and itemizes disqualifying felonies for state licensure.

• Places DPR in charge of pesticide regulation; DPH in charge of production and labelling of edibles.

•  Upholds local power to levy fees and taxes (subject to applicable State constitutional and statutory requirements-such as the requirement of Proposition 218 for voter approval of general or special taxes).

Marijuana dispensaries, delivery and cultivation are each currently prohibited land use activities throughout the City. However, in light of new requirements in the Act, the provisions of the City’s Land Use Code pertaining to these activities need to be updated immediately, or the City may lose its ability to prohibit the cultivation or delivery of marijuana in the City.

The proposed Code Amendment would update existing provisions in Title 9 of the Garden Grove Municipal Code that pertain to medical marijuana to make them consistent with the recently enacted Act and to preserve the City’s ability to prohibit or regulate the delivery and cultivation of marijuana in the City. In addition, the proposed Code Amendment would add language to Title 9 expressly stating that any use not specifically identified as a permitted use, conditionally permitted use, or incidental use in any zoning district, planned unit development, or specific plan area is a prohibited use in that zone or planned unit development area. 

It is recommended that the City Council consider the adoption of the ordinance amending Title 9 of the Garden Grove Municipal Code to update the City's land use regulations pertaining to cannabis dispensaries, delivery, and cultivation pursuant to new State laws, and to confirm that uses not specifically identified in a zoning district are prohibited in that district. If the City Council determines that adoption of the ordinance is appropriate, it is recommended that the City Council:

• Read the ordinance by title only, waive further reading, and introduce the attached ordinance amending Title 9 of the Garden Grove Municipal Code to update the City's land use regulations pertaining to cannabis dispensaries, delivery, and cultivation pursuant to new State laws, and to confirm that uses not specifically identified in a zoning district are prohibited in that district.