65A - RPT - REGARDING MEDICAL MARIJUANA INITIATIVE

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CHAPTER 3 PLANNING & LAND USE ISSUES Defining the Means of Marijuana Distribution The City currently regulates medical marijuana dispensaries under Article XIII of Chapter 18 of the Santa Ana Municipal Code (SAMC), "Health and Sanitation". This section was added to the code in 2007 and prohibits the establishment of medical marijuana dispensaries throughout the City. The code does not apply to State-licensed clinics, health care facilities, residential care facilities for persons with chronic life- threatening illnesses, residential care facilities for the elderly or residential hospice or home health agencies. The Santa Ana Medical Cannabis Restriction Limitation Initiative would amend Chapter 18 to remove the current prohibition and allow for the distribution of marijuana in specified zones. Section 18-61 defines a "medical marijuana dispensary" as a "facility or location" where medical marijuana is distributed or made available. The definition specifically includes medical marijuana cooperatives, defined as two or more people who collectively or cooperatively provide medical marijuana, While this does somewhat blur the line between the physical facility and the service provider, it nevertheless clearly identifies a physical establishment as the dispensary. The initiative does not specifically refer to physical establishments where marijuana is distributed, i.e. dispensaries, but rather uses the terms "collectives and cooperatives" without any reference to a physical establishment. For all intents and purposes the collective or cooperative, although referring to a group of people in the definition, is indistinguishable from the physical establishment used to distribute the drug. However, based on further descriptions in the definition, medical cannabis collectives and cooperatives would provide "transfers" of cannabis subject to the City's gross receipts tax, indicating some point of sale. Additionally, the initiative mandates the eligibility for a Certificate of Occupancy (C of O) and sets strict time limits for inspection and issuance. This functionally creates a medical marijuana "dispensary" or "store." Moreover, the initiative's imposition of a special 2% Gross Receipts Cannabis Business License Tax Rate, along with the City's receipt of a portion of the sales tax collected by the California Board of Equalization, characterizes the activity of the medical marijuana dispensaries as retail sales. As such, our understanding of a collective or cooperative is that it would function as a physical establishment, conducting business in a fixed location. This is important for understanding how the use would operate and for evaluating any impacts that such a use would have on its neighboring uses. This will be further discussed in the Land Use Compatibility section. The initiative's definition of collective or cooperative as those operations including five or more patients or their primary caregivers, does not address those operations providing medical marijuana for more than one but less than five patients. With the repeal of the 10 65A-16