Agenda Item Title:
Approve Resolution No. 2024-079, a Resolution Initiating a Moratorium on Accepting Applications for New Cannabis Dispensary Licenses
Origination Group:
Legal & Finance Committee
Origination Meeting Date:
10/02/2024
City Council Hearing Date:
10/07/2024
Petitioner:
City Attorney's Office
Staff Contact:
Joel Landeen/Justin Williams
Location:
Council Chambers
Agenda Item Summary:
In response to the voters in 2020 approving the legalization of marijuana for medical use, the City adopted an ordinance regulating medical cannabis establishments in the City. The ordinance authorized one medical cannabis dispensary license for every 5,000 residents. As a result, the City has 15 medical cannabis dispensary licenses, which is a higher number than any other community in the state. These licenses were allocated via a random lottery in March 2022.
Six of the 15 licenses have never been actively used. Of those 6 licenses, one has been reallocated to Puffy’s because it was the next establishment in the alternate list from the original lottery. This license has not expired, and we would not recommend revoking or reallocating this license. The five remaining inactive licenses are all currently allocated to Puffy’s. In 2023, the State did not issue the required state licenses to Puffy’s, and Puffy’s is currently litigating with the State over the denial of these state licenses. The City’s ordinance requires the dispensary licenses be put to use within a year of issuance, or the licensee loses the license. The ordinance also permits the City to grant licensees an additional year to become operational, and the City granted such an extension to all licensees which applied for the extension. The five inactive licenses have not become active within the two years required by the City ordinance, and we have no legal basis to continue to hold these licenses for Puffy’s. The City has been contacted by the next several businesses on the alternate list seeking to have the City reallocate the five inactive licenses. Others have questioned whether, in hindsight, the number of dispensary licenses the City originally authorized is appropriate and whether it is appropriate to maintain the status quo until after the vote on adult use marijuana next month. The City has reached the point where it either needs to distribute these licenses, or decide to hold off on issuance of the five inactive licenses.
If the City wants to maintain the status quo and not allocate the inactive licenses, the time to make that decision is now. The proper mechanism by which to do so is a moratorium. If the Council approves the attached resolution, the City will not reallocate the five inactive licenses and the City will reexamine how to proceed after the election in November. If the attached resolution is rejected, staff will reallocate the five inactive licenses to the alternates based on the list established by the original license lottery.
Six of the 15 licenses have never been actively used. Of those 6 licenses, one has been reallocated to Puffy’s because it was the next establishment in the alternate list from the original lottery. This license has not expired, and we would not recommend revoking or reallocating this license. The five remaining inactive licenses are all currently allocated to Puffy’s. In 2023, the State did not issue the required state licenses to Puffy’s, and Puffy’s is currently litigating with the State over the denial of these state licenses. The City’s ordinance requires the dispensary licenses be put to use within a year of issuance, or the licensee loses the license. The ordinance also permits the City to grant licensees an additional year to become operational, and the City granted such an extension to all licensees which applied for the extension. The five inactive licenses have not become active within the two years required by the City ordinance, and we have no legal basis to continue to hold these licenses for Puffy’s. The City has been contacted by the next several businesses on the alternate list seeking to have the City reallocate the five inactive licenses. Others have questioned whether, in hindsight, the number of dispensary licenses the City originally authorized is appropriate and whether it is appropriate to maintain the status quo until after the vote on adult use marijuana next month. The City has reached the point where it either needs to distribute these licenses, or decide to hold off on issuance of the five inactive licenses.
If the City wants to maintain the status quo and not allocate the inactive licenses, the time to make that decision is now. The proper mechanism by which to do so is a moratorium. If the Council approves the attached resolution, the City will not reallocate the five inactive licenses and the City will reexamine how to proceed after the election in November. If the attached resolution is rejected, staff will reallocate the five inactive licenses to the alternates based on the list established by the original license lottery.
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