Agenda Date: 05/17/2016
Subject:
Title
An ordinance concerning the regulation and licensing of retail marijuana establishments
Body
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Presented By: |
Kristin Schledorn, City Attorney |
POLICY QUESTION:
Does city council support the regulation and licensing of retail marijuana stores?
BACKGROUND:
On April 6, 2016, city council held a study session to discuss retail marijuana licensing. At that study session, council directed staff to bring forward an ordinance to allow retail marijuana stores in the City of Littleton.
The Colorado Constitution (Article XVIII, Section 16) permits adults over the age of 21 to purchase, use, possess and cultivate limited amounts of marijuana and allows local governments to prohibit retail marijuana establishments, to adopt regulations governing the time, place, manner and number of establishments, and to establish licensing procedures and operating fees.
In July 2014, city council approved Ordinance 13-2014, which prohibits retail marijuana establishments in the city (codified in City Code § 3-21-2).
STAFF ANALYSIS:
There are four types of retail marijuana establishments that may be licensed under Colorado law. This ordinance only allows the licensing of retail marijuana stores, and as proposed, provides that the city's four medical marijuana centers could either: (1) apply for a retail marijuana store license, in addition to its medical marijuana center license; or (2) apply for a retail marijuana store license and surrender its medical marijuana center license.
The number of locations would remain limited to four, and the total combined floor area would remain limited to 2,000 square feet. The regulations concerning security requirements, hours of operation, application process, etc., are the same as, or similar to, those for medical marijuana centers.
There are several areas highlighted for council consideration in the attached ordinance.
1. Dual Licensing. Three alternatives are presented for council consideration:
• Dual operation of a medical marijuana center and a retail marijuana store would only be allowed in the same premises, provided the patrons of both the medical marijuana center and the retail marijuana store are 21 years of age or older (pg. 17, lines 21-33 - yellow highlight);
• Dual operation of a medical marijuana center and retail marijuana store would only be allowed, provided there are separate entrances (council should determine whether a common foyer would be allowed) (pg. 17, lines 35-44 and pg. 18, line 1-5 - green highlight); or
• STAFF RECOMMENDATION: The city would leave the decision of whether to limit the age to 21 years or older, or provide separate entrances, to the licensee (green and yellow highlight combined).
2. Distance Limitations. Two alternatives are presented for council consideration:
• STAFF RECOMMENDATION: New and/or dual licenses must comply with the current distance restrictions (pg. 14, lines 13-15 - blue highlight); or
• Distance requirements are not applicable to the existing locations of any medical marijuana center that elects dual operation or converts to a retail marijuana store license (pg. 14, lines 17-20 - pink highlight).
Staff has posted questions on Open Littleton regarding retail marijuana: one related to location and one related to number of stores. The results, as of May 10, 2016, are attached.
Since first reading, there are three changes to the ordinance that staff would propose based on comments received from the dispensary owners. The first requires policy direction from council; the other two are revisions to comport with current store practices.
1. Assignment (3-21-11): This provision has been revised to mirror the language in the medical marijuana chapter (and may need to be further revised depending on council direction with respect to grandfathering existing locations). Dispensary owners have requested assignment only be conditioned on licensing authority approval.
2. Limitation on quantity sold (3-21-24): This provision has been revised from limiting the amount of marijuana that can be sold per day to per transaction. Retail stores are not required to keep records on customers like medical dispensaries are, so tracking the amount of marijuana sold per person per day would be more difficult for retail stores.
3. Packaging (3-21-24): This provision has been revised to only require compliance with state packaging requirements. This would eliminate the need for stores to have two sets of labels, in order to comply with city requirements that may differ from state requirements.
FISCAL IMPACTS:
Taxes
There is an additional 3% tax on retail marijuana under City Code § 3-22-2. The city will collect its standard 3% retail sales tax, in addition to this voter-approved 3% special retail marijuana tax. The city will also receive a proportionate share of 15% of the 10% special marijuana state sales tax, which is apportioned based on sales taxes collected in the local jurisdiction (e.g., for the month of January 2016, Glendale received $15,414, Northglenn $6,646, and Denver $273,924). Based on data from neighboring cities and the state’s marijuana sales tax distributions, these additional annual sales tax revenues are estimated for the city (amounts include the state shared sales taxes):
1. If two current businesses convert to retail, $231,000
2. If three current businesses convert to retail, $346,500
3. If all current businesses convert to retail, $462,000
Operating fees
Under the Retail Marijuana Code, the city is authorized to collect operating fees. Based on input from the clerk's office, police, planning, and finance, staff recommends an annual operating fee of $2,500 to cover administration, inspection and enforcement costs.
Shared application fees
License applications are submitted to the state licensing authority, and the state then forwards one-half (1/2) of the application fee ($500 for medical marijuana centers converting to retail stores and $5,000 for new retail store applications) to the local jurisdiction.
STAFF RECOMMENDATION:
Staff recommends approval as noted above.
PROPOSED MOTION:
Proposed Motion
I move to approve the ordinance on second reading concerning the regulation and licensing of retail marijuana establishments.