City Council
Report
City Council Meeting: December 17, 2024
Agenda Item: 10.A
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To: Mayor and City Council
From: David Martin, Director, Administration
Subject: Introduction and First Reading of an Interim Zoning Ordinance Amending Interim Zoning Regulations Established by Interim Zoning Ordinance 2764 (CCS) and Extended by Interim Zoning Ordinance 2770 (CCS) to Extend the Operating Hours for the City’s Existing Cannabis Retailers Consistent with State Law
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines.
2. Introduce for first reading an Interim Zoning Ordinance amending interim zoning regulations established by Interim Zoning Ordinance 2764 (CCS) and extended by Interim Zoning Ordinance 2770 (CCS) to extend the operating hours for the City’s existing cannabis retailers consistent with State law.
Summary
On November 14, 2023, Council adopted Interim Ordinance Number 2764 (CCS) (IZO 2764) which adopted interim zoning regulations to permit the City’s two existing Medicinal Cannabis Retailers to sell adult-use cannabis or adult-use cannabis products to persons 21 years of age and over with operating hours of 10:00 a.m. to 8:00 p.m.
Monday through Saturday and 12:00 p.m. to 7:00 p.m. on Sundays. On December 19, 2023, Council adopted Interim Ordinance Number 2770 (CCS) (IZO 2770) which extended the interim zoning regulations until February 12, 2026, while staff continues to develop an ordinance allowing for adult-use cannabis retail business and non-retail business types within the City and conduct an equity study to create a cannabis social equity program. On November 11, 2024, Council directed staff to amend IZO 2770 to 2 of 6
extend the operating hours for the City’s existing cannabis retailers consistent with State law. The proposed amendment to IZO 2770 would allow the existing cannabis retailers to operate between 8:00 a.m. to 10:00 p.m. daily which is within current State cannabis regulations that allow cannabis retailers to operate between 6:00 a.m. to 10:00 p.m.
Discussion
The City of Santa Monica first adopted regulations for medical marijuana (medicinal cannabis) in June of 2015 as a part of the City’s comprehensive Zoning Ordinance update (Article 9 of the Santa Monica Municipal Code) which enabled up to two medicinal cannabis retailers within the City subject to a regulatory permit and selection process. All other cannabis-related uses were prohibited. The retailers were allowed only along limited sections of Wilshire Boulevard and Santa Monica Boulevard within the Mixed-Use Boulevard Low (MUBL), Mixed-Use Boulevard (MUB) or General Commercial (GC) zones subject to a Conditional Use Permit with hours of operation limited to between the hours of 10:00 a.m. and 8:00 p.m. Monday through Saturday and 12:00 p.m. to 7:00 p.m. on Sundays.
After a prolonged selection process, two medicinal cannabis retailers were selected.
Both retailers were granted Conditional Use Permits and regulatory licenses and began operations recently at 925 Wilshire Boulevard in 2023 and 1418 Wilshire Boulevard in 2024.
On October 24, 2017, the City Council adopted an Interim Zoning Ordinance (IZO) making changes as needed including replacing the term “Medical Marijuana Dispensary” with “Medicinal Cannabis Retailer” and removing certain requirements for Medicinal Cannabis Retailers in SMMC Section 9.31.185 for consistency with State law.
The ordinance prohibited all adult-use commercial cannabis activities including retail, cultivation, testing, distribution, and manufacturing. That IZO subsequently expired.
On July 26, 2022, the City Council voted to place a cannabis business license tax measure (Measure HMP) on the November 2022 ballot, imposing a tax on all commercial cannabis activities at initial rates of 3% of gross receipts for adult-use 3 of 6
cannabis retailers, 2% for medicinal cannabis retailers, and 1% on other cannabis business types. Measure HMP was approved by over 66% of voters in November 2022.
The voter-approved rates are included in Santa Monica Municipal Code (SMMC) Chapter 6.204.
At its June 13, 2023, study session, Council considered various policy considerations for allowing adult-use cannabis businesses and other non-retail cannabis business types within the City and directed staff to return to Council with an Ordinance permitting the two previously approved Medicinal Cannabis Retailers to sell adult-use cannabis.
Expanding the operating hours for the existing adult-use cannabis retailers in the City will help with economic recovery efforts. As a result of the COVID-19 Declaration of Emergency, the City of Santa Monica, County of Los Angeles, and State of California maintained public health measures that included, at differing times, strict limitations on public gatherings, required closures of certain businesses, and strict limitations and protocols for the operations of businesses permitted to remain open. The local, state, and federal emergency declarations have since concluded, but the economic impacts of the COVID19 closures of, and limitations on, businesses and resulting behavior changes continue to affect the local Santa Monica economy. As the commercial and economic landscape evolves, the City’s economic recovery and competitive advantage will depend on its ability to deliver on a diverse range of unique dining, retail, commercial, and entertainment uses and other revenue streams. The City has an important governmental interest in maintaining a thriving business community and protecting the health, safety, and economic welfare of its citizens and businesses.
On November 14, 2023, Council adopted IZO 2764 which, among other items, permitted the two existing Medicinal Cannabis Retailers to sell adult-use cannabis or adult-use cannabis products to persons 21 years of age and over. The existing permitted hours of operation of 10:00 a.m. and 8:00 p.m. Monday through Saturday and 12:00 p.m. to 7:00 p.m. on Sundays were maintained. On December 19, 2023, Council adopted IZO 2770 which extended the interim zoning regulations until February 12, 2026.
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On November 11, 2024, Council directed staff to amend IZO 2770 to extend the operating hours for the City’s existing cannabis retailers consistent with State law.
Currently, State cannabis regulations allow cannabis retailers to sell cannabis goods between 6:00 a.m. and 10:00 p.m. with local jurisdictions allowed to set more restrictive hours. The City’s current allowable hours of operation of 10:00 a.m. to 8:00 p.m.
Monday through Saturday and 12:00 p.m. to 7:00 p.m. on Sundays are more restrictive than what State regulations allow. The proposed amendment to IZO 2770 would allow the existing cannabis retailers to operate between 8:00 a.m. to 10:00 p.m. daily which would be within what current State cannabis regulations allow but also slightly more restrictive in the morning. Communication with the two existing retailers indicates that the 8:00 a.m. opening time is agreeable to them.
The proposed amended IZO would continue to remain effective until February 12, 2026.
The proposed amendment would not preclude Council from revisiting the IZO prior to its expiration to potentially amend the provisions or duration of the IZO.
Environmental Review
The proposed interim ordinance is categorically exempt from the provisions of California Environmental Quality Act (CEQA) pursuant to Section 15061(b)(3) of the State Implementation Guidelines (common sense exemption). Based on the evidence in the record, it can be seen with certainty that there is no possibility that the proposed interim ordinance may have a significant effect on the environment. The extension of operating hours for the City’s two existing cannabis retailers from 8:00 a.m. to 10:00 p.m. daily are consistent with existing State law. The change in allowable operating hours at the existing cannabis retailers with active licenses and permits are consistent with existing land uses and will not change the approved commercial land use for these locations. [See e.g., Lucas v. City of Pomona (2023) 92 Cal.App.5th 508 (holding that substantial evidence supported city’s determination that proposed commercial cannabis activities were exempt from CEQA as consistent with existing retail land uses and density covered by previous EIR)]. Therefore, it can be seen with certainty that the interim 5 of 6
ordinance would not result in adverse physical impacts on the environment, and as such, is exempt from CEQA.
Past Council Actions
Meeting Date Description
10/24/17 (attachment A) Adoption of Interim Ordinance Replacing the Term "Medical Marijuana Dispensary" with "Medicinal Cannabis Retailer" Throughout the City's Zoning Ordinance, Chapter 9.01 Through Chapter 9.52 of Article 9 of the Santa Monica Municipal Code; Creating a Definition for "Medicinal Cannabis Retailer" to Replace the Definition for "Medical Marijuana Dispensary" to Conform With State Law; Removing Certain Requirements for Medicinal
Cannabis Retailers for Consistency with State Law and to Allow for Separate Regulation and Rulemaking; and Modifying the Definition of "Industry, Limited" to Allow for Medicinal Cannabis Light Manufacturing
02/25/20 (attachment B) Adoption of Interim Zoning Ordinance Extending Interim Zoning Ordinances Number 2557 (CCS) and 2566 (CCS), Which
Replaced the Term "Medical Marijuana Dispensary" with
"Medicinal Cannabis Retailer" Throughout the City's Zoning Ordinance, Chapter 9.01 Through Chapter 9.52 of Article 9 of the Santa Monica Municipal Code; Created a Definition for "Medicinal Cannabis Retailer" to Replace the Definition for "Medical Marijuana Dispensary" to Conform with State Law; Removed Certain Requirements for Medicinal Cannabis Retailers for Consistency with State Law and to Allow for Separate Regulation and Rulemaking; and Modified the Definition of "Industry, Limited" to Allow for Medicinal Cannabis Light Manufacturing
06/13/23 (attachment C) Adult-Use Cannabis Study Session 11/14/23 (attachment D) Adoption of an Interim Zoning Ordinance amending the text of the Zoning Ordinance to replace the term “Medical Marijuana Dispensary” with “Medicinal Cannabis Retailer”, to remove certain requirements for Medicinal Cannabis Retailers for consistency with State law, and to permit Medicinal Cannabis Retailers to deliver, cultivate, and sell adult-use cannabis or adult-use cannabis products to persons 21 Years of Age and Over
12/19/23 (attachment E) Adoption of an Interim Zoning Ordinance Extending Interim Zoning Regulations Adopted by Interim Zoning Ordinance 2764 (CCS) Amending the Text of the Zoning Ordinance to Replace the Term “Medical Marijuana Dispensary” with “Medicinal Cannabis Retailer”, to Remove Certain Requirements for Medicinal Cannabis Retailers for Consistency with State law, and to Permit Medicinal Cannabis Retailers to Sell Adult-Use Cannabis or AdultUse Cannabis Products to Persons 21 Years of Age and Over Financial Impacts and Budget Actions
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There is no budget action necessary as a result of the recommended action. Staff has not included tax revenue projections associated with adult-use cannabis sales in the FY 2024-25 budget; however, the potential revenue anticipated from the currently authorized businesses is nominal. Future year revenues based on the upcoming ordinance will be included in future year budgets.
Prepared By: Tony Kim, Principal Planner
Approved Forwarded to Council
Attachments:
A. October 24, 2017 Council Meeting Cannabis Interim Zoning Ordinance (Web Link)
B. February 25, 2020 Council Meeting Cannabis Interim Zoning Ordinance (Web Link)
C. June 13, 2023 Council Meeting Adult Use Cannabis Study Session (Web Link) D. November 14, 2023 Council Meeting Cannabis Interim Zoning Ordinance (Web Link)
E. December 19, 2023 Council Meeting Cannabis Interim Zoning Ordinance Extension (Web Link)
F. Cannabis Retailers Operating Hours Extension IZO
G. PowerPoint Presentation