Gov. Brown Signs Into Law Bills Creating Statewide Regulation of Medical Cannabis

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Last month, Council majority (6-3, Price, Mungo, Austin dissenting) brushed aside cautions by Police Chief and City Mgr and directed City Att'y to begin drafting LB ordinance text that would let up to nine LB medpot outlets operate legally

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(Oct. 9, 2015) -- As widely expected (and anticipated by the Long Beach City Council, see below), Governor Jerry Brown has signed into a law a trio of bills that together create a comprehensive statewide regulatory framework for cultivating, testing and distributing medical cannabis and its related products.

The three bills -- AB 243, AB 266 and SB 643 -- will still require people using medical marijuana legally to obtain a doctor's recommendation, but the new laws effectively try to eliminate former "collectives" and "co-ops" and instead create licensed, background checked, commercial growers, distributors and sellers. The legislation creates about a dozen types of licenses and allows local licensing.

"This new structure will make sure patients have access to medical marijuana, while ensuring a robust tracking system," Gov. Brown wrote in a signing statement.

The new laws let cities and counties say "no" to medpot businesses in their jurisdictions...and a LB City Council majority has already given a tentative "yes" in directing the City Attorney to draft a measure consistent with state regulatory framework.

One of the bills (AB 266) directs an academic study to determine to what extent marijuana impairs driving (a measure supported by Assemblyman Tom Lackey (R, Palmdale), a veteran CHP officer.

The bills moved forward with input from the Governor's office, anticipating that at least one petition-intiated measure (several are pending) will qualify for the 2016 ballot that would let CA voters decide whether to legalize marijuana for non-medical, recreational purposes (as in Colorado.)

Some of the new regulations won't go into effect until 2018, but in a signing statement, the Governor said "state agencies will begin working immediately with experts and stakeholders on crafting clear guidelines, so local government, law enforcement, businesses, patients and health providers can prepare and adapt to the new regulated system."

The new laws prohibit individuals convicted of certain felonies from obtaining licensies to operate medical cannabis dispensaries.

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On Sept. 22, in anticipation of the bills being signed, a LB City Council majority approved a motion by Vice Mayor Suja Lowenthal (6-3 vote, Price, Mungo, Austin dissening) to have the City Attorney draft a new LB medpot ordinance with the following salient points:

(1) Up to nine dispensaries Citywide (can be one per district or nine Citywide;
(2) All zones, except those that are exclusively residential, subject to "buffers;"
(3) "Buffers" should be schools, schools in surrounding cities, parks, libraries, licensed child care facilities located in or adjacent to commercial corridors, and high crime areas specifically relating to human trafficking (with LBPD determining locations of human trafficking high crime corridor areas. Buffers are as follows: elementary/middle schools 1,000 feet, high schools 1,500 feet, schools in surrounding cities 1,000 feet, parks 1,000 feet, licensed child care facilities in and adjacent to commercial corridors 1,000 feet, libraries 1,000 feet;
(4) Cultivation allowed in the City, but not a requirement;
(5) Medical marijuana deliveries allowed by approved and permitted medical marijuana operations, only by dispensaries licensed in the City
(6) Ordinance timed to go into effect as soon as possible, and ultimately supplemented by the State regulations now being drafted;
(7) All LB dispensaries and cultivation sites must have a "labor peace agreement:;
(8) The City Council is to receive a report on a possible process to allocate medical marijuana tax revenues of 5% to 10% to support parks, and after school programs.

The Council majority action came despite strong cautions voiced by Police Chief Robert Luna who said based on his experience, letting medpot outlets operate in LB again would have a negative impact on public safety and stretch LBPD's current resources. City Mgr Pat West said in a March 2015 memo that the City didn't have the resources at that time to successfully implement and manage a medical marijuana ordinance. "If an ordinance were adopted without additional resources, the City would experience the same type of problems encountered with the prior ordinance, perhaps to an even greater degree," the City Manager wrote. Those words came prior to enactment of the new statewide regulatory framework...but to our knowledge neither the Police Chief nor City Manager have rescinded their words.

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Marijuana remains a federally designated [by Congress] Class 1 controlled drug...although the Obama administration's Justice Dept. has said it won't enforce some federal laws as long as they're consistent with state medical marijuana provisions and meet other DOJ requirements. That may or may not change under a different administration (especially if a Repub is elected president) which might put state laws on skakey ground unless Congress acts.

A previous LB City Council voted years ago to add a section to the City's federal legislative agenda [policies the City is supposed to be supporting/advocating] to "Support legislation to classify medical marijuana as a recognized pharmaceutical medication dispensed through pharmacies." Such action would involve legislative action in Congress.

Congressman Alan Lowenthal (D, Long Beach-West OC) has supported some legislation supportive of medical marijuana dispensaries, but to date we are unaware of any House legislation authored or supported by him (or by Cong. Janice Hahn (D, LA Harbor/southbay) that would do what the City's legislative agenda seeks. However a bill introduced in March 2015 in the U.S. Senate by Senator Cory Booker (D, NJ), joined by co-sponsors Sen. Rand Paul (R, KY) and Sen. Kirsten Gillibrand (D, NY) -- S 683 -- would downgrade marijuana from Schedule 1 to Schedule 2 of the Controlled Substances Act. Since then, 12 co-sponsors have been added to the three originating Senators including Sen. Barbara Boxer (D, CA.)

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This marks LB's second attempt to enact a medical marijuana regulatory ordinance. The City's first attempt spawned multiple lawsuits, administrative and enforcement issues, neighborhood residents' complaints and taxpayer costs before an CA appellate Court struck LB's ordinance down (as an attempt to regulate what federal law didn't allow.).

With no enforceable ordinance in place, then-City Attorney Bob Shannon urged the Council ban medical marijuana dispensaries to halt the uncontrolled proliferation of outlets until the CA Supreme Court ruled on several legally murky matters. The Council enacted a ban; the CA Supreme Court ruled and clarified some matters...and a LB Council majority sought (again) to try to enact second LB medical marijuana regulatory ordinance and (again) the process was contentious and polarizing.

The Council opted to appoint an advisory Task Force which presented its findings on September 1...at which time Mayor Garcia told the Council that the state legislature was then-considering three marijuana setting up a statewide regulatory framework and recommended that the Council wait a few days to see if the legislature enacted the measures. The Council waited; the state legislature approved the bills...and the Governor has now signed them into law.

The action comes nearly twenty years after CA voters authorized the use of marijuana for medical purposes, but without statewide guidance or consistency. Under federal law, marijuana remains a prohibited drug, although the Obama administration's Justice Department has indicated it won't prosecute cases that operate within state medical marijuana laws and include other provisions consistent with federal policies.

"This new structure will make sure patients have access to medical marijuana, while ensuring a robust tracking system...This sends a clear and certain signal to our federal counterparts that California is implementing robust controls not only on paper, but in practice," the Governor said in a signing message.

Prior to enactment of the state legislation, LB City Manager Pat West and LBPD Police Chief Robert Luna publicly advised/cautioned/warned the Council of what they say will be fiscal costs and public safety resource issues if the Council were to lift LB's current ban and enact a new LB medpot ordinance.

City Manager West told the Council in a March 24, 2015 memo:

[City Mgr. Mar. 24, 2015 memo] The City does not currently have the resources to successfully implement and manage a medical marijuana ordinance. If an ordinance were adopted without additional resources, the City would experience the same type of problems encountered with the prior ordinance, perhaps to an even greater degree. Further, even if additional resources were found, there would need to be a minimum of a one year preparation period as staff would need to be hired through Civic Service. Additionally, the Police Department would need to decide which current enforcement operations would be reduced to provide a marijuana enforcement detail. Also, consultants would need to be interviewed and hired and appropriate policies and procedures would need to be developed to be fully prepared for the ordinance implementation.

The City Manager followed-up with a detailed, itemized June 3, 2015 memo (text below) indicating that LB's previous medpot ordinance cost LB taxpayers nearly $4 million from FY10 through FY15:

[City Manager June 3, 2015 memo] Since 2010, it is estimated that the City has expended more than $5 million in enforcing the prior regulatory ordinance and ban on medical marijuana. This has ranged from $360,000 to more than $1.5 million on an annual basis. The largest expenses were incurred in FY 113 and FY 14, following the enactment of the ban and increased enforcement efforts. The table below provide a breakdown by department.
Total costs incurred FY10-FY15

Department Total costs

Fire $15,000

Police $425,000

City Att'y $3,000,000

City Prosecutor $550,000

Financial Mgm't $1,200,000

Development Services $70,000

Total $5,260,000

During this same time period, the City collected $1,275,000 in fines from administrative citations, out of a total of $3,320,000 issued.

The bottom line FY10-FY15: city management estimated a net cost to LB taxpayers of $3,985,000.

To view the full June 3, 2015 and March 24, 2015 memos (single document), see below.

June 201 Long Beach City Mgr. re Proposed Medical Marijuana Ordinance

The City Manager's June memo (after itemizing costs by several Departments) estimated annual costs for all Departments to implement a proposed new ordinance as then drafted would be $3,905,000 plus one-time costs of $445,000...for total costs of $4.395,000.

Regarding anticipated revenue from a new ordinance, the City Manager's June memo indicates that the Financial Management Department hired a consultant who roughly projected estimated tax revenues as follows:

[City Manager June 3 memo text] The consultant estimated that 4% of the City's adult population would be medical m marijuana patients, based on rates ranging from 11.7% to 5% in other California cities. In addition, the consultant estimated the demand and usage rates within the City based on ordinance features, such as the local grow requirement and the inability for collectives to establish discounted loyalty programs. The projectIons below include three different scenarios based on low, medium, and high patient demand and retention. The consultant further estimated how altering requirements of the ordinance, including tine local grow and residency requirements, would affect revenues. Finally, the consultant assumed cultivation sites would be of various sizes, and the projections below assume that there will be twelve small facilities, four medium size facilities, and two large facilities.
Although these projections have been developed based on the best available evidence, the nature of the medical marijuana industry makes accurate revenue forecasting difficult. The projections below should be interpreted as rough estimates. If the City Council decides to pass a regulatory ordinance, actual revenue may vary significantly from this estimate. The revenues below assume a level of 6% on gross receipts from dispensaries and a $15 per square foot business tax applied to cultivation facilities and also include the City's 1% share of sales tax on all sales from dispensaries. Transfer from cultivation facilities to dispensary facilities would not be taxable under the current ordinance, as both facilities would be owned by the same company.

Projected Medical Marijuana Taxes and Sales Tax Revenue (Patient demand and retention ranges of low, medium and high)
Current ordinance	$850,000	$1,000,000	$1,250,000
Ordinance w/out local grow	$1,050,000	$1,300,000	$1,500,000
Ordinance w/out residency	$1,350,000	$1,800,000	$2,500,000
Ordinance w/out local grow and residency	$2,700,000	$3,150,000	$3,600,000

Immediate past LBPD Chief (now County Sheriff) Jim McDonnell, and his LB successor, current LBPD Chief Robert Luna both recommended that the Council not lift LB's ban. They cited costs, negative neighborhood impacts and drains on current LBPD resources. Chief Luna told the Council that he will need need for additional LBPD resources if a Council majority really intends to proceed. Chief Luna said that based on his experience, he expects letting medical marijuana outlets to reopen would bring negative impacts to neighborhoods and further stretch LBPD's resources.