Due to the various treatment of each general category of permits in MMRSA, the following discussion of land use concerns cannot cover all the anticipated issues that could be raised for the different license types and uses permitted under the MMRSA. However, we provide an overview that can facilitate further discussion and allow the Council to provide direction to staff on moving forward.

Defining Terms and Definitions

Staff found that other local jurisdictions considering regulation of the Medical Marijuana Industry in their jurisdiction intend to adopt the terms and definitions established in the MMRSA. Doing so will help minimize confusion as to the applicability of local regulations to a particular category of user. For example, the MMRSA differentiates between a “Transporter” and a “Distributor” and using the MMRSA definitions in local regulations will clarify what is required of each at the local level.

Background Checks

In regards to vetting operators to be permitted in the City, staff recommends that a background check be required all owners, operators, employees, and volunteers. Given that the City wants law abiding businesses and operators, it would be appropriate to not only prohibit criminals from participating in a Medical Marijuana regulated activity, but businesses who break the City’s rules and operate illegally, and those persons associated with the illegally operating businesses, should not have a chance to be permitted to operate in the City.

Require Conditional Use Permits

In regards to assessing other jurisdictions and considering the City of Garden Grove's approach to ensuring proper and enforceable regulations on businesses that may create negative impacts establishing and operating at a specific location or in the community as a whole, Staff would recommend placing all Medical Marijuana uses in a land use category subject to a Conditional Use Permit (CUP), which requires a public hearing and conditions of approval to mitigate any identified negative impacts. The CUP process can be tailored to the type of use. For example, conditions unique and applicable to dispensaries may not necessarily be applicable to a cultivation operation, or vise-versa.

Zoning Locations

In regards to zoning, many jurisdictions allow these types of businesses in industrial-manufacturing zones and commercial zones. Although many cities have limited the number of permitted dispensaries to four to eight, many are now eliminating specific limits on the number of facilities, but utilize zoning standards to limit the overall number of facilities by applying distance separations between the facilities, distance separation to residential zones, and to other sensitive uses such as churches, schools (private and public), libraries, preschools and daycares. The distances applied between Medical Marijuana businesses range from 200 feet to 1000 feet, and separation from residential zones and sensitive uses range from the State’s minimum of 600 feet to upwards of 1000 feet. In regards to Garden Grove, should the City allow the different types of Medical Marijuana businesses in addition to dispensaries, such as laboratory research and manufacturing facilities, staff will need more time to analyze what would be an appropriate distance between businesses and from sensitive uses. It should be noted that the City is mostly a residential community and if longer distance requirements from sensitive uses are applied, the number of available parcels in the industrial, manufacturing and commercial zones will be substantially limited. Also, most, if not all, jurisdictions prohibit Medical Marijuana facilities in the residential zones, which if applied to Garden Grove will prohibit the establishment of these facilities in the mixed use zones in the City.

Security Measures

Staff noted that most other jurisdictions regulating Medical Marijuana facilities require an extensive set of security measures to be employed, including security lighting and security cameras inside and outside the facility to be operated at all times. The camera recording systems should cover the outside of the facility well into the parking lot areas.

Hours of operation should be limited to daytime hours only, which could extend into early evening, no later than 8:00 o'clock p.m.

Visibility into the business should be readily provided, including clear glass windows. State licensed uniform security guards should be employed on at the facilities during business hours.

Businesses should be required to post “no loitering” signs inside and outside the facility, and consuming Medical Marijuana products should be prohibited at the facility. Operators should be responsible for enforcing these measures to within 200 feet outside of their facility.

Ventilation and air filtering systems should also be required to prevent obnoxious odors from negatively affecting adjacent businesses and properties.

Taxation and Revenue

MMRSA authorizes the City to tax Medical Marijuana activities if allowed in the City. Many jurisdictions apply taxes ranging from 5% to up to 15% percent. However, staff was not able to obtain a clear answer pertaining to the amount of revenues generated by dispensaries in the cities permitting them.

Because the State Constitution requires a majority voter approval for general taxes, many jurisdictions are placing taxation ordinances on the ballot to obtain voter approval prior to allowing Medical Marijuana businesses in their jurisdiction. The ordinances being presented to the voters stipulate that the taxation measures do not permit the operation of Medical Marijuana businesses unless their city councils separately adopt regulations permitting them. These jurisdictions are moving to take advantage of the upcoming general elections for submitting the measure to their voters in the event they decide in the future to permit Medical Marijuana businesses to operate in their jurisdictions. Many of these jurisdictions are obtaining voter approval to tax at the rate of up to 15% with the option for their city councils to implement a tax at or below the amount approved by the voters. Many jurisdictions currently permitting Medical Marijuana businesses have implemented taxes that range from 5% to 10% of gross receipts, and a per square-feet tax or per-plant tax on cultivation activities.

The deadline to place a ballot measure for the voters to approve an ordinance implementing a tax on Medical Marijuana businesses is August 12, 2016 (88 days prior to the November 8, 2016 elections). Staff recommends that the City Council consider placing a tax measure on the ballot for the upcoming election to prepare in the event it decides to permit Medical Marijuana activities in the City in the future.

Public Safety

The goal of the City’s Police Department is to build a safe community for residents, businesses, visitors, children and others that come into our community. Since Marijuana Dispensaries have opened illegally within the City limits, there has been a series of community complaints and other criminal activities in and around these illegal businesses. There has also been an increase in the amount of marijuana use in the junior high and high schools that have raised the concern of school administrators, parents, and law enforcement. Cases at the schools range from possession, use and overdose of edible marijuana products. There is a fear within the community that marijuana will soon find its way into elementary schools.

Enforcement against illegal dispensaries has been a challenge because of limited Police Department resources.

The City of Garden Grove has a ban in place prohibiting medical marijuana dispensaries and cultivating operations within the City limits. The ban alone has not been effective in eliminating the problem of illicit marijuana-related businesses, but it has helped in deterring some operators from reopening after they have been cited and their products confiscated, although some operators reopen the illicit business soon after the police leave.

Access to Youth

Administrators from the Garden Grove Unified School District have expressed concerns over the increase in marijuana possession and use by students within the schools. Dispensaries provide easy access to marijuana for kids. Only money and a claim of chronic pain is needed to get a medical marijuana card. Dispensary products are being sold to students within the junior high schools as well as the high schools. Kids are using marijuana in class in the presence of teachers and administrators, which sometimes is hard to detect because marijuana now comes in the form of snack foods, edibles, candies, and sports drinks. Marijuana overdoses are also on the rise with the most recent in early May at Rancho Alamitos High School. According to Garden Grove Unified School District Trustee Teri Rocco, marijuana represents ninety percent of all drug-related possession incidents at Garden Grove schools.

According to Dan Gleason of the Garden Grove Drug Free Coalition, legalization would only exacerbate existing drug and alcohol use, which has negative impacts on the developing brains of adolescents. According to reports published in 2012 and 2014 in the "Proceedings of the National Academy of Sciences," long-term cannabis use was associated with abnormalities in brain function to include a decline in mental functions such as language, memory, and emotion. A recent study published by JAMA Pediatrics reported a spike in the number of young children treated at Children's Hospital Colorado for accidentally eating marijuana edible treats after marijuana laws were liberalized in the State of Colorado.

Community Concerns

The Police Department prioritizes illegal dispensary enforcement based on community concerns and complaints. A large number of complaints come from owners and operators of businesses located near dispensaries. Complaints include marijuana odors leaking through ceiling tiles and ventilation systems, increase in graffiti and vandalism, and dispensary patrons hanging around the establishments consuming the marijuana products. Many complaints claim that these activities are driving businesses away and will deter good business operators from opening legitimate businesses.

Cultivation operations have been investigated in residential areas as well. Cultivators have been known to convert an entire house in an unassuming neighborhood into a marijuana grow facility and possibly steal electricity from neighboring houses to avoid detection. Often times, the building on the property is heavily damaged or destroyed from building modifications or mold from the moisture associated with an indoor growing operation. The same is true for commercial and industrial buildings. Cultivators make unpermitted modifications to buildings, making it only appealing to another cultivator to occupy the property without costly repairs by the property owner.

A recent staff report being presented to the Oakland City Council mentions that Marijuana businesses are driving non-Marijuana industrial and manufacturing businesses out of town due to increased rents. Medical Marijuana businesses are able to pay up to three times the regular rental rates, and make it unaffordable for other industries to stay or establish within the areas in the particular zone where the city permits them.

Crime Concerns

Marijuana dispensaries in Garden Grove have been associated with an assortment of crimes in and around the dispensary locations. These crimes include theft, burglaries, armed robberies, and violent assaults. The most recent armed robbery at a dispensary involved the use of an automatic weapon. The crime nearly went unreported as only one of the many dispensary employees decided to report the crime.

Driving while under the influence of marijuana is a growing concern, especially with young people. The increase in marijuana DUI is alarming. It is difficult for a police officer to detect because there is no presumptive marijuana field screening test other than the standard field sobriety test used in most DUI traffic stops. According to the National Roadside Survey in 2009, marijuana accounted for 25 percent of all positive drug tests for fatally injured drivers for whom drug tests were performed. The percentage increases significantly to 43 percent of fatalities involving drivers 24 years of age and younger with known drug test results.

Investigations on Garden Grove dispensaries revealed that many are operated by individuals associated with gangs and organized crime. Marijuana is a schedule One Drug in the United States Uniform Controlled Substances Act, indicating that it has high abuse potential and has no medical use. Although some states have legalized medical marijuana, dispensary operators are unable to utilize the federal banking system, making dispensaries a cash only business. This cash and carry business model has made it attractive to organized crime and have made them robbery and violent crime targets.

In regards to increase in crime and other related matters, information on such data was not available at the time of this report. A few criminal type incidents have occurred in or around dispensary uses, while the Oakland report indicates that regulation has diminished the criminal activity associated with illegally-operated dispensaries.

Enforcement Concerns

The Garden Grove Police Department is one of the lowest officer staffed police agencies in the nation. A team of officers are currently dedicating more than thirty hours per week on illegal marijuana dispensary enforcement. More than $900,000 dollars and a total of 7,000 pounds of marijuana has been seized. Since January 2015, 51 administrative citations have been issued to illegal dispensary operators and property owners. Each violation has a fine amount of $1,000. Fine collections total more than $32,000, while the balance are still subject to unexpired due dates plus accounts that have been sent to collections. The Police Department has been successful in the permanent shut down of more than ten dispensaries since January 2015.

Without strong regulations in place, combined with a lack of additional police staffing, there is a concern that lifting the ban will increase the amount of illegal dispensaries and increase access to our youth. The Police Department would need additional resources to police dispensaries, banned or regulated. Lifting the ban prior to the Police Department acquiring these resources will only exacerbate enforcement challenges and could not only endanger the health and well-being of the community, but contribute to an increase in violent crimes.

California Environmental Quality Act (CEQA)

Should the Council decide to consider regulations to permit Medical Marijuana businesses, environmental review under CEQA will need to be performed. This review must take place in the context of the Zoning Code revisions that will be necessary to permit Medical Marijuana businesses to operate in the City.

Regulations in Other Jurisdictions

Attached to this report are copies of the regulations currently in place in the Cities of Palm Springs and Santa Ana. Regulation amendments to the Oakland Municipal Code are also attached. It should be noted that the Palm Springs and Santa Ana regulations were enacted prior to the MMRSA, while the Oakland regulation amendments are intended to align Oakland’s regulations with the MMRSA.

For City Council to consider the following:

• Authorize the City Attorney to prepare an ordinance and measure to be placed on the November 2016 ballot seeking voter approval of a tax of up to 15% on Medical Marijuana activities, which shall not take effect until the City Council adopts regulations and revisions to the Municipal Code to permit Medical Marijuana activities in the City.

• Direct staff to commence the process to enact regulations and revise the Municipal Code to establish land use standards, and other business regulations under which Medical Marijuana businesses could operate.

• Maintain the ban against Medical Marijuana businesses and activities until the time that regulations are in place to permit them to operate in the City.