City of Sacramento
Law and Legislation Committee Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-01339 9/17/2024 Discussion Item 5.
Policy Direction Relating to Cannabis Consumption Lounges File ID: 2024-01339
Location: Citywide
Recommendation: 1) Review and consider a pilot-permit program for the social consumption of cannabis in designated areas at storefront cannabis dispensaries; and 2) provide direction to staff.
Contact: Leyne Milstein, Assistant City Manager, (916) 808-8491, [email protected]; Peter Coletto, Director of Finance, (916) 808-5416, [email protected]; Office of the City Manager; Fiona Mattson, Program Specialist, (916) 808-8925, [email protected], Office of Cannabis Management
Presenter: Fiona Mattson, Program Specialist, (916) 808-8925, [email protected]; Office of Cannabis Management
Attachments:
1-Description/Analysis
Description/Analysis
Issue Detail:
‘Social consumption’ is an activity by which cannabis is smoked or ingested by multiple individuals in a designated commercial consumption area, whether within a licensed consumption space operated by a storefront cannabis dispensary (storefront dispensary) or at a licensed cannabis special event. A designated, permitted social consumption location, whether in lounges or at special events, can provide a legal space for multiple individuals to gather and consume cannabis in a way that doesn't impact the non-cannabis consuming public, and which is away from those who are under 21.
Current Status
Currently, social consumption in the city of Sacramento is only allowed at State-licensed cannabis special events at Cal Expo. On September 19, 2023, the Law and Legislation Committee (Committee) directed the Office of Cannabis Management (OCM) to develop a pilot framework for cannabis social consumption lounges. This will allow staff to collect and evaluate data; respond to questions and concerns as they arise; take enforcement action, if needed; and inform progressive development and implementation of the program. On May 21, 2024, staff presented to the Committee
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a social consumption permitting framework which would create two permit add-on types, Type 1 (Ingestible Products Only) and Type 2 (Inhalable and Ingestible Products), for all storefront dispensaries to allow consumption lounges.
By Committee direction, Type 2 permitted facilities would need to have negative pressure smoking rooms designed to limit to the extent possible leakage of smoke and particulate matter into the non- smoking room(s) and have HVAC systems separated from the rest of the facility that do not recirculate and have a high rate of air exchange.
Overview of Pilot Add-On Business Operating Permit Requirements and Process Further details for the business operating permit (BOP) add-ons for social consumption include:
· Type 1 would allow for cannabis-infused drinks, such as mocktails, canned/bottled drinks and cannabis infused-edibles, such as cookies, popcorn, chips, chocolate, and gummies. · Type 2 would allow for all Type 1 activities and the ability to smoke cannabis products such as flower, pre-rolls, and concentrates.
Type 2 permit add-ons will require the premises to have negative pressure smoking rooms designed to limit to the extent possible leakage of smoke and particulate matter into the non-smoking room(s) and have HVAC systems separated from the rest of the facility that doesn’t recirculate and has a high rate of air exchange. The Type 1 (Ingestible Products Only) would not require negative pressure smoking rooms and specialized HVAC systems. Both permit add-ons would be allowed to sell prepackaged, non-cannabis-infused, non-alcoholic food and beverages.
Currently, OCM offers the option for a storefront dispensary to add a delivery permit. A similar process will be used to add on a social consumption permit. Submitted documentation would need to be updated to reflect this addition, which includes, but is not limited to:
· Property owner’s statement of consent to modify the building · Modified conditional use permit, or required land use entitlement · Security and lighting plan
· Floor plan
· Certificate of liability insurance
· Odor Control Plan
· Certificate of Occupancy
· Current State license issued by DCC for a storefront dispensary Additionally, the following documentation, which includes, but is not limited to, would also be required as part of the BOP process:
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· Consumption Lounge Operation Plan - This document would describe in detail, including but not limited to, patron and product flow, employee training, emergency plans, patron time limitations, and hours of operation.
· Impaired Driving Prevention Plan - This document would describe in detail how the business would ensure patrons leave the consumption lounge and have access to safe transportation (i.e. over consumption educational components, access to regional transit, ridesharing options, establishing “no-tow” zones).
· Ventilation Plan (Type 2 only) - This document would describe in detail the HVAC/ventilation system that is implemented, maintained and complies with the California Mechanical Code.
Next Steps
If the Committee moves the pilot program forward, OCM staff will present the pilot program to Council for consideration of approval. If Council approves it, the City will need to do the following:
· Adopt an Ordinance to amend Title 5 - Cannabis Permitting, Title 8 - Smoking Restrictions, Title 9 - Public Consumption of Cannabis, and Title 17 - Land Use and Zoning of the City Code, and any other section of the City Code that the City Attorney’s Office determines should be amended to implement the policy direction.
· Complete a fee study, which can be included in the comprehensive cannabis fee study. · Engage with partners on an education and outreach campaign to promote safe consumption with mandates for storefront dispensaries to provide information to patrons regarding the effects of cannabis.
Staff Recommendation
Staff is recommending that the Committee move the proposed pilot program forward and provide direction for the length of time for program. This would give storefront dispensary permits the opportunity to decide whether to invest funds and explore strategies for a potentially temporary business opportunity.
Policy Considerations: State law allows for the City to permit social consumption at storefront dispensaries. Social consumption would allow people to consume cannabis in the same location in a way that doesn't impact the non-cannabis consuming public and is away from those who are under
21. A pilot program will enable the City to evaluate the impacts of social consumption; including impacts on the local cannabis industry and surrounding businesses, public safety, and transportation; and provide for an informed progressive development and implementation of the program.
Economic Impacts: The addition of cannabis consumption lounges may increase economic activity
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in the cannabis marketplace, as well as drive cannabis tourism and enhance surrounding businesses.
Environmental Considerations: This action is not a ‘project’ under the California Environmental Quality Act (CEQA) Guidelines as it is continuing administrative activities such as general policy and procedure making (CEQA Guidelines section 15378(b)(2)).
Sustainability: Not applicable.
Commission/Committee Action: On September 19, 2023, the Committee directed OCM to develop a pilot framework for cannabis social consumption lounges. On May 21, 2024, OCM provided an informational update to the Committee regarding a framework for consumption permits. The Committee provided direction to staff to come back to the Committee in September with a framework to allow consumption permits for all storefront dispensaries.
Rationale for Recommendation: Staff is fulfilling Committee direction to return with a pilot social consumption permitting framework that would be available to all storefront dispensary permittees.
Financial Considerations: The addition of social consumption options may increase cannabis sales which would increase revenues into the General/Measure U Fund and the Measure L Children’s Fund.
Local Business Enterprise (LBE): Not applicable.
Background OCM has conducted extensive outreach regarding cannabis consumption. A meeting was held on consumption lounges in December 2021, where OCM presented information on licensing limitations under state law, sought to clarify misconceptions of what consumption lounges could include, and received input on how careholders envisioned onsite consumption in Sacramento.
On August 30, 2022, the Committee hosted a workshop with a panel of regulators from the Cities of West Hollywood, Palm Springs, and the City and County of San Francsico to discuss the consumption lounges in their jurisdictions and to answer questions around community concerns and how they were addressed, revenues and the cost of regulatory oversight, enforcement challenges, and lessons learned.
OCM hosted two community engagement meetings on cannabis consumption - a virtual meeting on April 12, 2023, and an in-person meeting on April 25, 2023. OCM also made a presentation on consumption lounges and events at the quarterly meeting of the City’s Property and Improvement Districts (PBIDs) on April 19, 2023.
After these meetings, an online survey with the same questions and options presented at the April
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25, 2023, in-person meeting was sent out to cannabis careholders, which included permitted businesses, current and potential applicants, PBIDS, neighborhood associations, and any individual who had previously attended a careholder meeting or signed up for alerts for cannabis news. The list contained approximately 3,000 names and 481 responses were received. While responses varied on details, respondents were virtually unanimous in their support of expanding public cannabis consumption to either dedicated consumption lounges and/or to temporary events outside of Cal Expo.
Between October 2022 and July 2023, OCM engaged in fact-finding by meeting with regulators and visited consumption lounges in San Francisco, Oakland, Palm Springs, West Hollywood, and Coachella. OCM also spoke with the facilities’ owners or managers to find out about the challenges and benefits in operating a consumption lounge from the businesses’ perspective.
On September 19, 2023, OCM presented the information from the community and PBID meetings, the survey results, and fact-finding to the Committee. After public comment and a robust Committee discussion, the Committee directed staff to first bring back a framework for a consumption lounge pilot, and secondarily to bring forward a framework for cannabis events outside of Cal Expo.
Storefront and Delivery-Only as Cannabis Retailers
The City may allow smoking, vaporizing, and ingestion of cannabis and cannabis products on the premises of a permitted retailer or microbusiness (California Business and Professions Code (BPC) section 26200(g)). As a result, stand-alone cannabis consumption lounges are not permitted.
Additionally, the consumption area must be restricted to individuals who are 21 years of age or older, must be outside of the view of the general public, and not be used for the sale of alcohol or tobacco.
Lastly, prepackaged, non-cannabis-infused, non-alcoholic food and beverages may be sold in the consumption area and non-cannabis-infused, non-alcoholic food and beverages from a restaurant may be brought into or delivered to the consumption area (Title 4 California Code of Regulations (CCR) §15407(b) and (c)).
Although delivery-only cannabis dispensaries are considered a “cannabis retailer,” delivery-only dispensaries must be closed to the public, which is also why they tend to be in areas with access to major roads and highways and minimal foot traffic (4 CCR §15414(d)). Storefront cannabis dispensaries, on the other hand, are open to the public and typically are in areas with good parking and foot traffic, and more access to public transit options. This is a critical distinction between a storefront cannabis dispensary (purchases made on the premises) and a delivery-only dispensary (purchases are not allowed on the premises because the public are not allowed on the premises), such that allowing the consumption lounge add-on permit for delivery-only dispensaries would result in difficulties in enforcement.
Pending State Legislation
There is pending legislation, Assembly Bill 1775, that would allow for the preparation of and sales of
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non-infused food and beverages products in the consumption area in compliance with all applicable provisions of the California Retail Food Code and the sale of tickets for live entertainment in area where cannabis is consumed. This bill authorizes a local jurisdiction to allow a licensed cannabis retailer or microbusiness to prepare or sell non-cannabis food or beverage products, in compliance with retail food code, where the consumption of cannabis is currently allowed in accordance with local requirements. The bill also permits live music or other performances on the premises of a licensed cannabis retailer or microbusiness where cannabis consumption is permitted, as specified.
Planning Workplan
Planning’s work on Title 17 cannabis updates stems from the May 31, 2022, City Council meeting, where they directed the Planning and Design Commission to consider the following:
1. Review current cannabis business zoning and sensitive uses to determine if they continue to serve the purposes for which they were adopted.
2. Consider additional zones for storefront and delivery-only dispensaries and non-volatile manufacturing (including infusion and packaging).
3. Consider storefront dispensaries as an allowed use in Residential Mixed Use (RMX) or C-3 zones.
4. Consider limiting cannabis sensitive uses to schools, youth centers, drug and alcohol treatment centers, neighborhood and community parks, and faith-based institutions.
5. Consider reviewing suitability of mixed light cannabis uses in industrial/manufacturing zones and whether new mixed light facilities should be constructed with the ability to be re-purposed.
6. Consider a zoning and permit type for cannabis research and development (R&D) facilities.
7. Consider removing distribution from the current uses subject to a district-based square footage cap."
Planning staff scheduled the Planning and Design Commission’s first hearing to discuss the Council’s requests on August 25, 2022. With the direction provided by the Committee, Planning has been looking at incorporating how consumption lounges could fit into the zoning and land use requirements of Title 17 and has begun the process of engaging with careholders through outreach and workshops.
On May 21, 2024, Planning staff presented an update on the Cannabis Study Direction or Title 17 Cannabis Amendments project. The Committee directed Planning staff to bring back a package of policy recommendations for consideration and these recommendations were presented to the Committee on August 20, 2024, for storefront dispensaries.
Ventilation Systems
The Building Division will be responsible for inspecting and certifying ventilation systems to adhere to the California Mechanical Code (CMC). State law appears to be consistent with the California Clean Indoor Air Laws for private smoking lounges. Furthermore, the requirement for separate heating, ventilation, and air conditioning systems is also consistent with CMC 403.9.2 (Class 2 air shall not be
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recirculated or transferred to Class 1 spaces). The use of odor control units and pollution control units is consistent with CMC 505 and the City of Sacramento’s Cannabis Related Occupancies Submittal Requirements (Form CDD-0420). The negative pressure and differential requirement is consistent with CMC 403.9.2.