Staff Report - Marijuana Ordinance Final
PREPARED BY: ROBERT SCHULTZ
Town Attorney
Reviewed by: Town Manager, Assistant Town Manager, and Community Development Director
110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 10/17/2017
ITEM NO: 7
DATE: October 10, 2017
TO: MAYOR AND TOWN COUNCIL
FROM: ROBERT SCHULTZ, TOWN ATTORNEY
SUBJECT: AN ORDINANCE OF THE TOWN OF LOS GATOS AMENDING LOS GATOS
MUNICIPAL CODE CHAPTER 14, ARTICLE XII, SECTION 14.120.010 –
14.120.030 PROHIBITING THE ESTABLISHMENT OF ANY FORM OF
MARIJUANA COMMERCE, TRADE OR INDUSTRY, AND PROHIBITING
COMMERCIAL CULTIVATION, PROCESSING, AND DELIVERY OF MARIJUANA
RECOMMENDATION:
Staff recommends that Town Council accept public comment and then move for the
introduction and first reading of an Ordinance, by title only, amending Section 14.120.010 –
14.120.030 of the Town Code to prohibit the establishment of any form of marijuana
commerce, trade or industry, and prohibiting commercial cultivation, processing, and delivery
of marijuana (Attachment 1).
BACKGROUND:
The Federal Controlled Substances Act, 21 U.S.C. § 801, et seq., classifies marijuana as a
Schedule 1 Drug, which is defined as a drug or other substance that has a high potential for
abuse, that has no currently accepted medical use in treatment in the United States, and that
has not been accepted as safe for use under medical supervision. The Federal Controlled
Substances Act makes it unlawful under federal law for any person to cultivate, manufacture,
distribute or dispense, or possess with intent to manufacture marijuana.
The Town Council has consistently taken the position that medical marijuana operations are
detrimental to the public health, safety, and welfare and has adopted regulations prohibiting
such operations in the Town (Attachment 2). In 2016, the Town expanded the prohibition on
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SUBJECT: PROPOSED ORDINANCE PROHIBITING THE ESTABLISHMENT OF ANY FORM OF
MARIJUANA COMMERCE, TRADE OR INDUSTRY, AND PROHIBITING
COMMERCIAL CULTIVATION, PROCESSING, AND DELVERY OF MARIJUANA
OCTOBER 10, 2017
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BACKGROUND (cont’d):
medical marijuana dispensaries to include the cultivation, processing, and delivery of medical
marijuana (Attachment 3).
DISCUSSION:
Last November, California voters approved Proposition 64, which is known as The Control,
Regulate, and Tax Adult Use Marijuana Act (the “AUMA”). With the passage of the AUMA,
personal and commercial (non-medical) use of marijuana is now decriminalized under California
law, subject to certain restrictions. For example, individuals 21 years of age or older may now
possess, transport, purchase, use, and transfer recreational marijuana. Under AUMA, adults
may possess up to 28.5 grams of marijuana, up to 8 grams of marijuana in the form of
concentrated cannabis (which may be present in marijuana products such as edibles), up to six
living marijuana plants, and any marijuana produced by those plants, at their private
residences. AUMA also decriminalized the cultivation of recreational marijuana, commercial
marijuana delivery services, and commercial (non-medical) marijuana retail services. AUMA did
little to change existing law that governs medical marijuana; consequently, these laws remain
substantively intact.
The AUMA permits a Town to adopt and enforce local ordinances to regulate non -medical
marijuana businesses, including, but not limited to, local zoning and land use requirements,
business license requirements, and requirements related to reducing exposure to secondhand
smoke. The AUMA also authorizes local governments to completely prohibit the establishment
or operation of non-medical marijuana businesses within its jurisdiction.
Under the AUMA, the growth and sale of marijuana is taxed. Effective January 1, 2018, (1) a
marijuana excise tax of 15 percent of the gross receipts of any retail sale and (2) a cultivation
tax on all harvested marijuana are imposed. The cultivation tax is initially set at $9.25 per ounce
for marijuana flowers, $2.75 per ounce for marijuana leaves, and may be adjusted annually by
the State Board of Equalization. A portion of the proceeds of the excise and cultivation taxes
adopted by the AUMA is to be allocated as grants to local governments to assist with law
enforcement, fire protection, or other local programs addressing public health and safety
associated with implementation of the AUMA. Local governments are prohibited from receiving
these grants if they ban (1) commercial marijuana cultivation, (2) the outdoor growth of
marijuana, including on private residences, or (3) the retail sale of marijuana or marijuana
products. Since the Town prohibits marijuana dispensaries and marijuana cultivation, it would
not be eligible for any of these grants.
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SUBJECT: PROPOSED ORDINANCE PROHIBITING THE ESTABLISHMENT OF ANY FORM OF
MARIJUANA COMMERCE, TRADE OR INDUSTRY, AND PROHIBITING
COMMERCIAL CULTIVATION, PROCESSING, AND DELVERY OF MARIJUANA
OCTOBER 10, 2017
S:\COUNCIL REPORTS\2017\10-17-17\Marijuana Ordinance\Staff Report - Marijuana Ordinance Final.docx 10/12/2017 12:04 PM SLL
DISCUSSION (cont’d):
In 2018, State agencies will start to issue licenses for the cultivation, manufacture, distribution,
transportation, and retail sales of recreational marijuana. Unless otherwise prohibited by the
Town (which is allowed in the AUMA), this would create the potential for the proliferation of
various commercial marijuana-related activities, including retail storefronts.
Cities and Towns in California and across the nation have reported a multitude of negative
effects associated with marijuana-related activities. For example as marijuana plants begin to
flower, and for a period of two months or more, the plants produce a strong, unique odo r,
offensive to many people and detectable far beyond property boundaries if grown outdoors.
This odor can have the effect of encouraging theft by alerting persons to the location of the
valuable plants, and creating a risk of burglary, robbery, or armed robbery of the plants as well
as the potential for violent acts related to such criminal activity. Following legalization in
Colorado, the Denver Police Department reported that the most common marijuana industry -
related crime is burglary, accounting for 63 percent of marijuana related crimes. The City of
Sacramento has also seen an increase in marijuana related violent crimes, which has led the
Sacramento County Sheriff’s Department to describe marijuana cultivation sites as “crime
magnets.”
In addition, unregulated cultivation enterprises often utilize substandard electrical wiring to
avoid detection by illegally and dangerously diverting electricity. Some cities that allow
marijuana cultivation operations have reported that the electrical use at these locations often
surpasses what the electrical grid can withstand. Indoor marijuana cultivation also requires
extensive amounts of water, aggravating California’s water supply challenges. According to the
California Department of Fish and Wildlife, marijuana plants use six to eight gallons of water per
plant per day. Indoor marijuana cultivation can also produce dangerous levels of mold because
of the combination of warm temperatures and high humidity found in many indoor cultivation
operations.
Given the adverse impacts associated with marijuana dispensaries and cultivation sites, the
potential proliferation of commercial marijuana establishments would be contrary to the
Town’s previous efforts to maintain local control and offer all available protections afforded by
State law. To this end, the Town Attorney’s Office prepared the attached ordinance
(“Ordinance”). The proposed Ordinance (Attachment 1) would prohibit all commercial
marijuana activities in the Town, which includes the cultivation, possession, manufacture,
distribution, processing, storing, laboratory testing, labeling, transportation, distribution,
delivery, trade or sale of marijuana and marijuana products by any person, entity, commercial
PAGE 4 OF 4
SUBJECT: PROPOSED ORDINANCE PROHIBITING THE ESTABLISHMENT OF ANY FORM OF
MARIJUANA COMMERCE, TRADE OR INDUSTRY, AND PROHIBITING
COMMERCIAL CULTIVATION, PROCESSING, AND DELVERY OF MARIJUANA
OCTOBER 10, 2017
S:\COUNCIL REPORTS\2017\10-17-17\Marijuana Ordinance\Staff Report - Marijuana Ordinance Final.docx 10/12/2017 12:04 PM SLL
DISCUSSION (cont’d):
or business enterprise, whether for-profit or nonprofit. Additionally, the Ordinance would
prohibit the outdoor cultivation of marijuana, which would include any activity involving the
planting, growing, harvesting, drying, curing, grading, or trimming of marijuana that is not
within a fully enclosed and secure structure. Consistent with the requirements of the AUMA,
the Ordinance would not prohibit the cultivation of up to six marijuana plants inside a person’s
private residence or inside a fully enclosed accessory structure to a person’s private residence.
The Ordinance would not alter the protections afforded by the previous ordinances adopted by
the Town Council concerning medical marijuana dispensaries, mobile medical marijuana
dispensaries, and the cultivation and processing of medical marijuana.
CONCLUSION:
The Town Attorney’s Office recommends Council review and move for first reading the
introduction and adoption of the attached Ordinance by title only.
ENVIRONMENTAL ASSESSMENT:
It has been determined that there is no possibility that this project will have a significant impact
on the environment; therefore, the project is not subject to the California Environmental
Quality Act (Section 15061 (b)(3)).
FISCAL IMPACT:
The adoption of the Ordinance results in no fiscal impact.
Attachments:
1. Draft Ordinance prohibiting the establishment of any form of marijuana
commerce, trade or industry, and prohibit commercial cultivation, processing
and delivery of marijuana
2. Adopted Ordinance 2198 prohibiting medical marijuana dispensaries
3. Adopted Ordinance 2251 prohibiting marijuana cultivation and delivery of
marijuana