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Ordinance Amendment No. 2018-01 — Allow Commercial Cannabis Testing Laboratories and <br />Resolution to Modify Commercial Cannabis Application Fees <br />February 20, 2018 <br />Page 2 <br />Amendment 64 permitted testing laboratories at the time, it did not require safety and potency <br />testing for all types of commercial cannabis products. In July 2016, Colorado adopted regulations <br />that required testing of all products, including medicinal products. Because the supply chain had <br />been largely established without an integrated testing stage, the supply chain was disrupted by <br />new and stringent requirements for product testing. <br />California voters approved Proposition 64 in November 2016, legalizing certain types of <br />commercial and adult use cannabis business activities. Proposition 64 requires testing for all <br />cannabis products based in part on lessons learned from supply chain disruptions in Colorado. <br />The State of California began issuing cannabis business licenses on January 1, 2018; since then, <br />numerous commercial cannabis testing laboratories have expressed interest in operating in Santa <br />Ana's industrial zoning districts. Nearby jurisdictions have adopted ordinances or are in the process <br />of allowing cannabis testing laboratories, including Costa Mesa, Irvine, and La Habra. <br />Local impacts <br />Testing laboratories are the least "public" of all the commercial cannabis business activities since <br />they are prohibited from holding any other commercial cannabis license and may not co -locate with <br />any other commercial cannabis business. Similar to other quality -control product testing facilities, <br />they require high-value, high-technology equipment and employ highly -educated and highly - <br />trained personnel. Because cannabis is a lightweight product, facilities may occupy as little as 500 <br />square feet, although typical testing facilities range between 2,000 and 4,000 square feet. All <br />testing laboratories are subject to strict State regulations regarding the quantity of cannabis that <br />may be on the premises, the operation of equipment, and disposal of tested materials. <br />Table 1 — Proposed Amendments to Chapter 18 and Cha ter 40 <br />Item <br />Current Ordinances <br />Proposed Amendment <br />Impact <br />Definitions (chapters <br />Contain definitions for a <br />Amends Chapter 40 and <br />Enables compliance with <br />18 and 40) <br />variety of terms relating to <br />Chapter 18 to add definitions <br />State law and ensures <br />commercial cannabis. <br />for cannabis testing <br />consistency between <br />laboratories <br />chapters 18 and 40. <br />Uses permitted and <br />Contain operational <br />Amends Chapter 40 to allow <br />Ensures safe operations of <br />operational standards <br />standards addressing <br />and establish operational <br />cannabis testing laboratories <br />general operations and retail <br />standards for cannabis <br />in accordance with all <br />operations. <br />testinq laboratories. <br />applicable State laws. <br />Regulatory safety <br />Outline the Registration <br />Requires Phase 1 and Phase <br />Allows cannabis testing <br />permit (RSP) process <br />Application (Phase 1) and <br />2 applications for cannabis <br />laboratories to begin <br />for cannabis testing <br />Regulatory Safety Permit <br />testing laboratories but allows <br />operating in Santa Ana's <br />laboratories (Chapter <br />(Phase 2) processes for <br />testing laboratories to be <br />industrial zoning districts, <br />40) <br />commercial cannabis retail <br />approved without merit <br />subject to compliance with all <br />businesses. <br />criteria consideration. <br />applicable standards and <br />regulations. <br />Chapter 18 edits <br />Chapter 18 contains <br />Amends Chapter 18 to <br />Ensures consistency <br />prohibition against all other <br />ensure consistency with <br />I between various SAMC <br />75B-2 <br />