Report Prepared by: Francisco Mendoza-Gonzalez, Associate Planner, Development Services Department
Title
SUBJECT: Introducing Zoning Ordinance Amendment #23-01, Initiated by the City of Merced this Application Involves Changes to the Merced Zoning Ordinance (Title 20 of the Merced Municipal Code) Which Amends Merced Municipal Code Section 20.44.170 (Regulation of Commercial Cannabis Activities - Commercial Cannabis Business Permit Required); This Amendment Increases the Maximum Number of Retail Cannabis Dispensaries Allowed Within the City from Five to Up to Ten, Add a New Section Allowing Council Consideration of Alternative Sites for Retail Cannabis Business Applications Under Appeal, Include Local Ownership Requirements for Cannabis Retail Permits Issued After November 3, 2021, and Various Other Amendments
REPORT IN BRIEF
Considers introducing an Ordinance amending Section 20.44.170 of the Merced Municipal Code Regarding Regulation of Commercial Cannabis Activities - Commercial Cannabis Business Permit Required, which would increasing the number of cannabis retail permits (from 5 to up to 10), allow alternative sites for retail cannabis business applications under appeal, and including local ownership requirements for commercial cannabis retail permits issues after November 3, 2021.
RECOMMENDATION
City Council - Adopt a motion:
A. Adopting a Categorical Exemption (Environmental Review #23-12); and,
B. Introducing Ordinance 2550, an Ordinance of the City Council of the City of Merced, CA, amending section 20.44.170 “Regulation of Commercial Cannabis Activities - Commercial Cannabis Business Permit Required” of the Merced Municipal Code.
Body
ALTERNATIVES
1. Approve the Zoning Ordinance Amendment as recommended by the Planning Commission and Staff; or,
2. Modify the Zoning Ordinance Amendment with specific modifications as spelled out in the Council motion; or,
3. Deny the Zoning Ordinance Amendment; or,
4. Request additional information (as specified in the Council motion); or,
5. Continue the item to a future City Council meeting (date and time to be specified in Council motion).
AUTHORITY
Chapter 20.80 of the Merced Municipal Code spells out procedures for amending the Zoning Ordinance.
CITY COUNCIL PRIORITIES
None.
DISCUSSION
Project Description
Zoning Ordinance Amendment #23-01 would modify the City’s regulations regarding cannabis sales (MMC 20.44.170), as directed by the City Council during the City Council Meeting of March 20, 2023. This ordinance amendment would increase the number of retail cannabis permits from 5 to up to 10, allow Council to consider alternative sites for retail cannabis business permit applications under appeal, include local ownership requirements for cannabis retail permits issued after November 3, 2021, and other minor procedural clarifications and modifications.
Background
The City adopted a cannabis sales land use ordinance in 2017 with a supplemental resolution in 2018. These adoptions established the land use policy and permitting procedures for retail dispensaries and non-dispensary uses such a cultivation, distribution, and laboratory testing. All cannabis uses are required to obtain a commercial cannabis business permit reviewed and approved by the Planning Commission. Cannabis dispensaries are the only cannabis use that has a merit-based approval system with a limited number of City-wide permits (originally 4 permits City-wide). Non-dispensary cannabis uses are processed on an individual basis and do not have a maximum number of permits that can be issued.
In August 2021, the City amended this ordinance to increase the number of retail permits from 4 to 5 and to also clarify various parts of the permitting process. The proposed zoning ordinance amendment is another amendment to the cannabis ordinance, and it is being provided at the direction of the City Council from their meeting of March 20, 2023. This ordinance amendment would increase the number of retail cannabis permits from 5 to up to 10 (final amount determined by Council), allow Council to consider alternative sites for retail cannabis business permit applications under appeal, include local ownership requirements for cannabis retail permits issued after November 3, 2021, and other minor procedural clarifications and modifications.
Cannabis permits are generally new to the City being issued for approximately 4 years. Amendments to this relatively new ordinance are expected with adjustment coming through feedback from the community, input from cannabis business professionals, and by comparing our process and outcomes with other communities.
Proposed Changes to the Chapter 20.44.170
The following changes to Chapter 20.44.170 (Regulations of Commercial Cannabis Activities - Commercial Cannabis Business Permit Required) are proposed in the Draft Ordinance at Attachment 4, and the red-lined Ordinance at Attachment 3:
1). Land Use Table 20.44-1(Footnote 1) and Section 20.44.170 (F)(1) would increase the maximum number of retail cannabis dispensaries allowed within the City from 5 to up to 10 (City Council to final discretion on maximum number or permits).
2). Section 20.44.170(L)(4)(g) would add a new section allowing Council consideration of alternative sites for retail cannabis business applications under appeal.
3). Section 20.44.170(L)(7)(b)(iii) would include local ownership requirements for cannabis retail permits issued after November 3, 2021.
Environmental Clearance
The Planning staff has conducted an environmental review of the project in accordance with the requirements of the California Environmental Quality Act (CEQA), and a Categorical Exemption is being recommended (see Attachment 2).
Planning Commission Recommendation
On June 7, 2023, the Planning Commission held a public hearing on the proposed Zoning Ordinance Amendment. Jiva Life submitted a letter and left two voicemails supporting the increase in number of commercial cannabis retail permits up to 6 or 7, but noted that additional cannabis retail permits beyond that would saturate the market. There were no speakers in person at the meeting. After the hearing, the Planning Commission voted to recommend approval to the City Council by a 4-0 (4 ayes, 2 absent, and 1 vacancy) vote. See Planning Commission Resolution #4113 at Attachment 1.
City Council Action
After the public hearing, the City Council should consider adopting a motion to adopt the Categorical Exemption and to introduce the Draft Ordinance at Attachment 4. If the Ordinance is introduced on July 17, 2023, a 2nd reading and adoption would follow on August 7, 2023, with the Ordinance being effective 30 days later or on or about September 7, 2023.
IMPACT ON CITY RESOURCES
There are no impacts on City resources with this request.
ATTACHMENTS
1. Planning Commission Resolution #4113
2. Categorical Exemption (Environmental Review #23-12)
3. Proposed Amendments to MMC 20.44.170 (Red-Lined)
4. Draft Ordinance 2550
5. Presentation