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Santa Barbara City Council Wades into Evolving Web of State Marijuana Regulations

The Santa Barbara City Council was confronted with the full tangle of present and potentially future local and state marijuana regulations on Tuesday.

City staff reviewed Santa Barbara’s municipal ordinances, pertinent state laws, other tri-county regulations, and a likely ballot initiative that could seriously shake up the current marijuana-regulatory landscape.

The state recently passed a trio of laws that form the Medical Marijuana Regulation and Safety Act (MMRSA), which imposed a March 1 deadline for cities to enact local cultivation laws.

In a hasty response, the council in January approved rules limiting marijuana cultivation in the city to 100 square feet for qualified patients at their own residences.

Santa Barbara also has a dispensary ordinance covering medical marijuana storefronts, permitting up to three to operate in the city, each of which has to be located in a different pre-determined zone.

One dispensary, which has yet to begin operating, has been approved for 3617 State St. On May 10, the council denied two appeals protesting another proposed dispensary at 118 N. Milpas St.

The city has also received an application, which is under review, for a dispensary at 2609 De La Vina St.

Dispensaries are prohibited from cultivating their pot within the city. Both the State Street and Milpas Street dispensaries have identified cultivation spots within the county, which allows limited cultivation.

Dispensaries are further required to operate as cooperatives or collectives, and cannot make a profit off the medical marijuana sold to their members.

The Community Development Department and the Santa Barbara Police Department are empowered to conduct annual inspections of the dispensaries to ensure compliance and can charge them an inspection fee.

The fees, according to city staff, will be added to their recommended fee resolution for fiscal year 2017. The city could also tax these marijuana sales, though that would be subject to voter approval.

Potential discrepancies between state and city regulations arise, city staff said, in the case of medical marijuana deliveries.

Under the MMRSA, dispensaries may deliver to patients or their caregivers, and while the city can ban its own dispensaries’ deliveries, those operating outside its jurisdiction could still deliver to qualified Santa Barbarans unless the city settles on a ban on all possible deliveries.

Several council members summarily dismissed the notion of watching outside deliveries proceed in the city as city-regulated ones get banned.

“We should be in line to grab that tax revenue,” said Councilwoman Cathy Murillo, who expressed support for as wide a range of marijuana taxes as possible.

Mayor Helene Schneider floated the idea of putting a marijuana tax on the November ballot, a move she said shouldn’t be thought of only in terms of whether a legalization initiative passes.

City Attorney Ariel Calonne told the council that it could only put such a tax on the ballot in an election year in which none of the council members was up for reelection if they unanimously declared it an emergency measure.

What kind of emergency it would have to be, he said, is not specified in the California Constitution.

City Manager Paul Casey added that now was a “prudent time” to set up a tax scheme while none of the city’s proposed dispensaries ia up and running.

The MMRSA also requires anyone who sells, cultivates, transports, manufactures, distributes, or tests medical marijuana to obtain a state license. Simply put, entities may hold up to two of these different licenses, with the first license determining an entity’s options for its second.

Even as the city is coming to grips with its own and the state’s medical marijuana regulations, the very real prospect of full legalization threatens to once again shake things up.

The Adult Use of Marijuana Act (AUMA), a ballot initiative with the backing of Lt. Gov. Gavin Newsom and the California Medical Association, has racked up over 600,000 signatures — close to double the requisite number to make the November ballot.

If passed, the initiative would legalize marijuana and hemp, establish state agencies to oversee the substance, and impose cultivation taxes and a 15-percent sales tax on it.

“There are really two sets of problems that the council might want to address: modifying our existing, pre-2015 collective/cooperative-model ordinance to match the 2015 state law, and then anticipating, to the extent that we can, what a 2016 legalization initiative might look like and how you might want to approach those policy issues,” said Calonne, noting that the emerging state regulatory landscape is becoming more of a commercial model than the city’s collective model.

“This is hard,” he said.

The AUMA, he explained, would significantly narrow the range of city regulatory power, and leaves zoning regulations as a municipality’s primary method of regulation.

Santa Barbara would also be unable to ban outside marijuana deliveries that use routes that pass through the city, though they could ban those deliveries if the destination is within the city’s boundaries.

Additionally, Santa Barbara’s inability to ban indoor personal cultivation under AUMA would conflict with current city rules allowing only qualified patients to grow pot indoors.

State taxes on medical marijuana under the initiative would end, Calonne said, adding that it was unclear whether local taxes could still be levied on it.

The AUMA “was drafted by a very well-known political law firm, and I think you have to assume that everything that doesn’t go our way in that initiative was designed not to go municipalities’ way,” he said.

The council ultimately voted unanimously to return next month to examine a variety of options for a tax measure for November, which would require another unanimous council vote. It also unanimously voted to direct its Ordinance Committee to begin examining revisions to city regulations.

“I do think there’s a time element; I do not want to anticipate what may or may not happen on the state level,” said Councilman Randy Rowse, who chairs the Ordinance Committee. “I think we should grasp as much local control as we can at this moment.”

Noozhawk staff writer Sam Goldman can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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