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Item 5.2 Cannabis Interim Ordinance Request for City Council Action DEPARTMENT INFORMATION ORIGINATING DEPARTMENT REQUESTOR: MEETING DATE: Planning City Planner Licht 24 June 2024 PRESENTER(s) REVIEWED BY: ITEM #: City Planner Licht City Administrator/Finance Director Flaherty City Attorney Kendall 5.2 – Cannabis Interim Ordinance STRATEGIC VISION MEETS: THE CITY OF OTSEGO: X Is a strong organization that is committed to leading the community through innovative communication. Has proactively expanded infrastructure to responsibly provide core services. Is committed to delivery of quality emergency service responsive to community needs and expectations in a cost-effective manner. X Is a social community with diverse housing, service options, and employment opportunities. Is a distinctive, connected community known for its beauty and natural surroundings. AGENDA ITEM DETAILS RECOMMENDATION: City staff recommends the City Council adopt an interim ordinance temporarily prohibiting operation of cannabis businesses. ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED? No Yes, to be held by City Council 24 June 2024. BACKGROUND/JUSTIFICATION: The State of Minnesota has established Minnesota Statutes 342 legalizing the cultivation, manufacturing, testing, distributing, and selling of cannabis flower and cannabis products, and the operation of cannabis businesses. The Statute defines 14 specific types of cannabis businesses that will be allowed within the State. Allowance of these businesses requires issuance of a license by the State that includes a requirement for confirmation of compliance from the local government unit. The Statute establishes that cities cannot prohibit cannabis businesses from operating within their jurisdictions and limits the scope of regulations that a city can adopt to control public use, as well as time, place, and manner operations of a cannabis business. The Statute also does allow that counties and cities may impose limits on the number of cannabis business licenses issued within their jurisdictions based on population. Wright County has already adopted an ordinance prohibiting the public use of cannabis, which includes areas of Otsego. Time, place, and manner regulations would be incorporated within the Zoning Ordinance and can include specific provisions of the law regarding setbacks from certain sensitive uses and limits on hours of operation. There are also administrative functions that counties and/or cities will be responsible for in terms of certification of license applications, site inspections, and confirmation of compliance with zoning requirements. City staff updated the Administrative Subcommittee regularly at their meetings that City will need to develop regulations as provided for by Statute to be incorporated as part of the Zoning Ordinance. City staff has not to date initiated development of regulations related to cannabis businesses allowing for the State Office of Cannabis Management to develop rules, procedures, and guidance for cities on the extent and format of regulations. City staff has also been meeting with Wright County and other cities within Wright County regarding of cannabis regulations including the option for Wright County to administer portions of the regulations such as compliance inspections. By Statute, retail sale of cannabis products cannot occur before 1 January 2025. The State did approve an amendment to the Statute in 2024 allowing certain applicants to obtain a cultivation license to operate in 2024. The purpose of the amendment is to provide for production of cannabis products to be offered for sale once retail sales are allowed. The allowance of the early cultivation licenses will require the City to move up adoption of local controls. The local controls will be drafted by City staff, reviewed by the Planning Commission (including consideration at a public hearing), and are subject to approval of the City Council. City staff expects this process to take 60 to 90 days. Minnesota Statute 342.13 allows the City to adopt an interim ordinance (moratorium) to provide time to establish local controls prior to receipt of applications for zoning confirmation. Based on the time frame required to develop, review, and adopt local controls, and the ability for applicants to request approval of a license, City staff recommends adoption of an interim ordinance that will temporarily prohibit operation of a cannabis business within the City. The proposed interim ordinance will not affect existing licensed medical cannabis or businesses currently selling THC products within the City. The interim ordinance can only be in effect until 31 December 2024 and may be repealed prior to that date concurrent with adoption of the local controls. The City is required to hold a public hearing to consider the interim ordinance in accordance with Statute. This requirement is different from an interim land use ordinance (moratorium) allowed by Minnesota Statutes 462.355, Subd. 4, where the City is not required to hold a public hearing. SUPPORTING DOCUMENTS ATTACHED: • Ordinance 2024-08 • Summary of Ordinance 2024-08 POSSIBLE MOTION PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES: Motion to adopt Ordinance 2024-08 temporarily prohibiting operation of cannabis businesses and approve publication in summary form. BUDGET INFORMATION FUNDING: BUDGETED: N/A N/A 1 CITY OF OTSEGO COUNTY OF WRIGHT STATE OF MINNESOTA ORDINANCE NO.: 2024-08 INTERIM ORDINANCE TEMPORARILY PROHIBITING OPERATION OF CANNABIS BUSINESSES The Otsego City Council does ordain: Section 1. FINDINGS AND PURPOSE. A. By enacting 2023 Session Laws Chapter 63, the Minnesota Legislature enacted Minn. Stat. chapter 342, legalizing adult-use cannabis and permitting the operation of cannabis businesses and the sale of cannabis flower and cannabis products for human consumption. This law creates a new agency, the Office of Cannabis Management, to regulate the sales of cannabis products. B. The new law does enact some requirements for production, labeling and testing, and sale of cannabis products at the state government level. However, the new law creates uncertainty that will need to be resolved by the passage of further regulations by the Office. C. The new law establishes that the sale of cannabis products are still subject to local planning and zoning restrictions, and must comply with local zoning code. The new law provides no guidance on how cities are to zone the new businesses, leaving it to local control. D. Pursuant to Minn. Stat. § 342.13, the City is authorized to adopt an interim ordinance protecting the planning process and the health, safety, and welfare of its citizens. Under Minn. Stat. § 342.13, such ordinance may remain in effect until January 1, 2025 E. Pursuant to its general police powers, including but not limited to, Minn. Stat. § 421.221, subd. 32, the City may enact regulations regarding to promote the health, safety, order, convenience, and the general welfare of the City. This power permits the City to implement a moratorium to study the sales, testing, manufacturing, and distribution of cannabis products to determine if regulations are necessary for the sake of good order of the City. F. The City Council finds that it is necessary to study the application of 2023 Session Laws Chapter 63, and the products, uses, and businesses related thereto, in order to assess the necessity for and efficacy of regulation and restrictions relating to the sales, testing, manufacturing, and distribution of cannabis flower, cannabis products, and lower-potency products including through zoning ordinances, in order to protect the public health, safety, and welfare of its residents. Section 2. DEFINITIONS: The following terms when used in this ordinance shall mean: Official controls. “Official controls” or “controls” means ordinances and regulations which control the physical development of the city or any part thereof or any detail thereof and implement the general objectives of the comprehensive plan. Official controls include ordinances establishing zoning, subdivision controls, site plan regulations, sanitary codes, building codes and official maps. 2 Cannabis Business. “Cannabis Business” has the meaning given in Minn. Stat. § 342.01, subd. 14. Cannabis Flower. “Cannabis Flower” means the harvested flower, bud, leaves, and stems of a cannabis plant. Cannabis Product. “Cannabis Product” means a product infused with cannabinoids, including but not limited to tetrahydrocannabinol (THC), including hemp-derived cannabinoids. Section 3. INTENT AND AUTHORIZATION: A. It is the intent of this ordinance to allow the City of Otsego time to complete an in-depth study concerning adoption of revisions of the City’s official controls for the manufacturing, testing, distributing, and selling of Cannabis Flower and Cannabis Products, and the operation of Cannabis Businesses. B. City staff is directed and authorized to conduct a study of the City’s official controls that may need to be adopted or amended to protect the public health, safety, and welfare as they relate to the manufacturing, testing, distributing, and selling of Cannabis Flower and Cannabis Products, and the operation of Cannabis Businesses. Section 4. TEMPORARY PROHIBITION: Pending the completion of the above referenced study and the adoption of appropriate official controls the manufacturing, distributing, and selling of Cannabis Flower and Cannabis Products, and the operation of any Cannabis Business not lawfully established prior to the effective date of this moratorium is prohibited within the City. Section 5. ENFORCEMENT. The City may enforce this Ordinance by mandamus, injunctive relief, or other appropriate civil remedy in any court of competent jurisdiction. The City Council hereby authorizes the City Administrator, in consultation with the City Attorney, to initiate any legal action deemed necessary to secure compliance with this Ordinance. A violation of this Ordinance is also subject to the City’s general penalty in City Code Sec. 1-18 et seq. Section 6. EFFECTIVE DATE: This ordinance shall take effect immediately upon its passage and shall remain in effect until January 1, 2025, or until the adoption of the official controls being studied, whichever occurs first. (The remainder of this page inentionally blank) 3 ADOPTED by the Otsego City Council this 24th day of June, 2024. MOTION BY: SECONDED BY: IN FAVOR: OPPOSED: CITY OF OTSEGO __________________________________ Jessica L. Stockamp, Mayor ATTEST: __________________________________ Audra Etzel, City Clerk 1 CITY OF OTSEGO COUNTY OF WRIGHT STATE OF MINNESOTA SUMMARY OF ORDINANCE NO.: 2024-08 INTERIM ORDINANCE TEMPORARILY PROHIBITNIG OPERATION OF CANNABIS BUSINESSES NOTICE IS HEREBY GIVEN that on June 24, 2024, Ordinance 2024-08 was adopted by the City Council of the City of Otsego, Minnesota. NOTICE IS FURTHER GIVEN that the ordinance adopted by the City Council temporarily prohibits operation of cannabis businesses until January 1, 2025. ADOPTED by the Otsego City Council this 24th day of June, 2024. CITY OF OTSEGO Jessica L. Stockamp, Mayor ATTEST: Audra Etzel, City Clerk Pursuant to Minnesota Statutes 412.191, Subd. 4 and 331A.01, Subd.10, this Ordinance is published in summary form. Complete copies of the ordinance are available for inspection by contacting the City Clerk, Otsego City Hall, 13400 90th Street NE, Otsego, Minnesota 55330 during regular office hours.