Report Prepared by: Jonnie Lan, AICP, Principal Planner, Development Services Department
Title
SUBJECT: Public Hearing - Zoning Ordinance Amendment #24-01, Initiated by the City of Merced, 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 Would Clarify the Process to Amend or Provide Supplemental Application Materials, Clarify the Responsibility of the Applicant Relative to Meeting the Requirements of the Selection Criteria, Clarify the Process to Correct Potential Scoring Errors, Clarify the Qualified Commercial Cannabis Business Application List Timelines and Clarify the Process if There is a Failure for a Business to Meet the Clarified Timeline and Various Other Amendments
REPORT IN BRIEF
The City is proposing modifications to the City’s current cannabis ordinance found under Merced Municipal Code Section 20.44.170 - Regulations of Commercial Cannabis Activities - Commercial Cannabis Business Permit Required. This ordinance amendment would clarify the process to amend or provide supplemental application materials, clarify the responsibility of the applicant relative to meeting the requirements of the Selection Criteria, clarify the process to correct potential scoring errors, clarify the Qualified Commercial Cannabis Business Application List timelines and clarify the process if there is a failure for a business to meet the clarified timeline and various other amendments.
RECOMMENDATION
City Council - Adopt a motion:
A. Adopting a Categorical Exemption for Environmental Review #24-21; and,
B. Introducing Ordinance 2571, an Ordinance of the City Council of the City of Merced, California, Amending Section 20.44.170. “Regulation of Commercial Cannabis Activities - Commercial Cannabis Business Permit Required,” of Merced Municipal Code to Allow City Council Consideration of Alternative Sites for Retail Cannabis Business Applications Under Appeal, and Include a Local Ownership Element for Cannabis Retail Permits Issued after November 3, 2021.
Body
ALTERNATIVES
1. Introduce the Ordinance, as recommended by the Planning Commission and staff; or,
2. Introduce the Ordinance, subject to modifications by City Council (identify specific items to be amended in the motion); or,
3. Deny; or,
4. Refer to staff for reconsideration of specific items (to be addressed in the motion; or,
5. Continue to a future City Council meeting (date and time to be specified in motion).
AUTHORITY
Merced Municipal Code Section 20.80, “Zoning Ordinance Amendments,” spells out procedures for amending the Zoning Ordinance.
CITY COUNCIL PRIORITIES
As provided for in the City Council Goals and Priorities for Fiscal Year 2024/25.
DISCUSSION
Project Description
Zoning Ordinance Amendment #24-01 would modify the City’s regulations regarding cannabis sales (MMC 20.44.170) as described below.
The changes are contained in Draft Ordinance 2571 (Attachment 1) and also in Exhibit A of Planning Commission Resolution #4139 (Attachment 2). In general, the modifications can be summarized as follows:
1) Section 20.44.170(L)(1)(e) would add new text in the section allowing the applicant, after notification of a discrepancy, to amend or supplement the Merit-Based Selection Criteria information as well as other information currently outlined in the Ordinance within 10 days of notification.
2) Section 20.44.170(L)(1)(f)(vii) would add a section clarifying the applicant’s responsibility to include and clearly label the Selection Criteria in the application and any information that addresses the most recently adopted Merit-Based Scoring system Selection Criteria.
3) Section 20.44.170(L)(1)(g)(iv) would add text allowing the Director of Development Services, within 10 days of the rankings being released, the option to correct any errors in the calculation of the average score.
4) Section 20.44.170(L)(1)(g)(iv)(a) would add text clarifying that the qualified Commercial Cannabis Business Application List-Dispensaries/Retail established on August 19, 2022, shall be subject to the timelines established in this code.
5) Section 20.44.170(L)(1)(g)(iv)(c) would add text allowing the List mentioned above to be active until the last available Commercial Cannabis Business Retail Permit becomes operational and opens for business.
6) Section 20.44.170(L)(1)(g)(iv)(d) would add a section clarifying the process should a Commercial Cannabis Business Retail Permit fail to become operational and open for business.
Background
The City adopted a cannabis sales land use ordinance in 2017 with a supplemental resolution in 2018, establishing the Merit Selection Criteria for retail/dispensaries. These adoptions established the land use policy and permitting procedures for retail dispensaries and non-dispensary uses, such as cultivation, distribution, manufacturing, 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 (4 at the time). 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.
In August 2022, the City established the most recent list to support the 5th retail permit. During that review and selection process, areas of the process that could be clarified were brought to the attention of City staff. There are a number of amendments that are being considered at this time.
Cannabis permits have been issued since about 2018. Amendments to this ordinance have been made over time as the City has received feedback from the community, business owners, and cannabis business professionals. The City also looks at other communities and compares processes and outcomes.
Planning Commission Action
On August 21, 2024, the Planning Commission reviewed the proposed ordinance amendments. The Commission voted unanimously (7,0) to recommend approval to the City Council (refer to Planning Commission Resolution #4139 at Attachment 2). The Planning Commission Staff Report (SR #24-808) is provided at Attachment 3 along with a memo, which described changes recommended after the Staff Report was issued at Attachment 4.
Environmental Review
Planning staff has conducted an environmental review (Environmental Review #24-21) of the project in accordance with the requirements of the California Environmental Quality Act (CEQA) and recommends the adoption of a Categorical Exemption (Attachment 5).
City Council Action
The City Council should hold a public hearing on this matter. After the public hearing, staff is recommending the City Council adopt a motion approving Environmental Review #24-21 (Categorical Exemption) and introducing the Ordinance at Attachment 1.
IMPACT ON CITY RESOURCES
There is no impact on City resources and no appropriation of funds is needed.
ATTACHMENTS
1. Draft Ordinance 2571
2. Draft Ordinance 2571 Redlined Version
3. Planning Commission Resolution #4139
4. Planning Commission Staff Report #24-808
5. Planning Commission Memo 8.21.24
6. Categorical Exemption (Environmental Review #24-21)
7. Presentation