HomeMy WebLinkAboutX-D-01 1st Reading of Interim Ordinance on Cannabis - Cannabinoids
City Council Memorandum
To: Mayor Fasbender & City Councilmembers
From: City Administrator Dan Wietecha
Date: September 6, 2022
Item: Interim Ordinance on Cannabis and Cannabinoids
Council Action Requested:
First Reading of Interim Ordinance Prohibiting the Establishment of New Uses or the Expansion of
Existing Uses Related to Cannabis and Intoxicating Cannabinoids (CBD) Sales, Testing, Manufacturing
or Distribution
Background Information:
At the end of the 2022 Legislative Session, the state passed new laws surrounding the sale of
cannabis/cannabinoid products, which went into effect July 1. The new law limits the sale of intoxicating
CBD products to individuals age 21 and older and implements regulations regarding the packaging of
edible CDB products. However the new law has resulted in questions about local regulatory authority,
law enforcement, and taxing.
On August 1, the City Council referred the subject to the Public Safety Advisory Commission. PSAC met
August 18 and recommended a twelve-month interim ordinance to allow time for adequate study. The
Public Safety Committee of City Council met September 1. They discussed concerns about public safety,
community impact, and supporting local business; they recommended a six-month interim ordinance,
acknowledging it could be extended if further study were needed.
Financial Impact:
Not applicable
Committee Discussion:
• Public Safety Advisory Commission meeting 8/18/2022
• Public Safety Committee meeting 9/1/2022
Attachments:
• August 2022 Memo re CBD Regulations
• Interim Ordinance Prohibiting the Establishment of New Uses or the Expansion of Existing Uses
Related to Cannabis and Intoxicating Cannabinoids (CBD) Sales, Testing, Manufacturing or
Distribution
X-D-01
TO:
Hastings Public Safety Commission
FROM: Kori Land, City Attorney
DATE: August 18, 2022
RE: CBD Regulations
In order to grasp the new regulations about cannabis and CBD products, it is important to review
the evolution of the State legislature’s actions regarding marijuana and hemp uses.
BACKGROUND:
A. Medical Marijuana - 2014
In 2014, the THC Therapeutic Research Act (“Act”) legalized the use of marijuana-derived
compounds for medical purposes (“medical marijuana”) in Minnesota, and created a legal
framework for the manufacturing, testing, and distribution of medical marijuana.1 Patients with
qualifying conditions will be able to obtain medical marijuana for use in liquid (including oil) or
pill form, but not in forms which require smoking, or the vaporization of dried leaves or other plant
forms.2 Originally, only 9 types of illneses qualified a patient to use medical marijuana.3
The Act required the state Commissioner of Health (the “Commissioner”) to register two in-state
manufacturers to produce medical cannabis.4 The two approved manufacturers are still only
Leafline Labs in Cottage Grove and Green Goods in Otsego. Each manufacturer must carry on all
of its cultivation, harvesting, manufacturing, packaging, and processing at one single location, in
an enclosed, locked facility.5
1 I note that nothing in the Act provides any immunity from prosecution under federal laws, including the federal
Controlled Substances Act, which classifies marijuana as a Schedule-I controlled substance. However, the United
States Department of Justice has issued memoranda stating that it would not prosecute individuals whose actions
comply with state laws on medical marijuana. United States Dep’t of Justice, Memorandum re Guidance Regarding
Marijuana Enforcement, (Aug. 29, 2013) (“Cole II Memo”) (available at
http://www.justice.gov/iso/opa/resources/3052013829132756857467.pdf); United States Dep’t of Justice,
Memorandum for Selected United State Attorneys re Investigations and Prosecutions in States Authorizing the
Medical Use of Marijuana, (Oct. 19, 2009) (“Ogden Memo”) (available at
https://www.justice.gov/archives/opa/blog/memorandum-selected-united-state-attorneys-investigations-and-
prosecutions-states )
2 Minn. Stat. § 152.22, subd. 6
3 Minn. Stat. § 152.22 § subd. 14 (listing nine specific diagnoses, plus “any other medical condition or its treatment
approved by the commissioner [of health]”).
4 Minn. Stat. § 152.25, subd. 1(a).
5 Minn. Stat. § 152.29, subd. 1(a), 2(b).
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Originally, each manufacturer was required to operate a total of four distribution facilities. The
locations of these distribution facilities must be “based on geographical need throughout the state
to improve patient access.”6
Each manufacturer must also contract with an independent laboratory, also approved by the
Commissioner, to test the medical marijuana produced by the manufacturer and verify that it meets
statutory requirements for content, contamination, consistency, and form.7 There are two
laboratories authorized to conduct independent testing, one is located in St. Paul and the other is
in Maple Grove.
There have been many expansions to the law from the original 2014 version greatly increasing the
qualifying conditions, distribution sites, and methods of delivery. The Act allows the
Commissioner to add additional qualifying medical conditions and delivery mechanisms without
legislative approval.8 These expansions are summarized below:
1. Qualifying Conditions
Although the original list included only 9 qualifying conditions, the list has expanded to 17
qualifying conditions, including chronic pain, intractable pain and obstructive sleep apnea.
2. Distribution sites:
The Act originally provided for each manufacturer to have 4 distribution sites, so there would be
a total of 8. Now, the law allows each manufacturer to have up to 8 distribution sites.9 There are
currently 13 distribution sites in Minnesota: Woodbury, Eagan, Burnsville, Bloomington, Blaine,
St. Paul, Minneapolis, St. Cloud, Rochester, Hibbing, Duluth, Willmar and Moorhead.
3. Methods of Delivery:
The Act provided for delivery in the form of a liquid or pill only, and specifically excluded
smoking or vapor. The law now allows both vaporization of the liquid or oil and new this year,
smoking of dried raw cannabis.10
With the increase in the qualifying conditions, the additional distribution sites and the expansion
of methods of delivery, patient enrollment has increased dramatically. In 2015, there were 837
patients enrolled. Today, there are 37,112.
6 Minn. Stat. § 152.29, subd. 1(a).
7 Minn. Stat. §§ 152.25, subd. 1(e); 152.29, subd. 1(c) (citing Minn. Stat. § 152.22, subd. 6).
8 Minn. Stat. § 152.27, subd. 2(b); see also Minn. Stat. § 152.22, subd. 14 (“‘Qualifying medical condition’ means a
diagnosis of any of the following conditions: … any other medical condition or its treatment approved by the
commissioner”).
9 Minn. Stat. § 152.29 subd. 1.
10 Minn. Stat. § 152.22 subd. 6.
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That same year, the federal government passed the 2014 federal farm bill, allowing the growing
of hemp containing less than .3 percent THC. This resulted in a new industry of manufacturing
and selling hemp products of all kinds, which slowly began to take off in other parts of the country.
B. Nonintoxicating Cannabinoids (CBD) - 2019
In 2019, the Minnesota legislature authorized the sale of products containing nonintoxicating
cannabinoids extracted from hemp.11 This law gave CBD businesses the launching point needed
to open throughout the state, first as part of smoke shops and then as standalone businesses.12 Last
year, the investment bank Cowen estimated that the U.S. CBD industry will be worth $16 billion
by 2025. Without local licensing or zoning, CBD products suddenly appeared as permitted uses in
tobacco stores or general retail establishments on Minnesota’s main streets. Many stores began
selling products that contain CBD with THC as an incidental part of their retail business.
C. Intoxicating CBD
Then, in May of 2022, on the last day of the legislative session, in the middle of the Health and
Human Services omnibus bill, the legislature passed new laws surrounding the sale of CBD
products, which went into effect on July 1, 2022 and which has exploded edible CBD product
sales. The law limits the sale of intoxicating CBD products to those 21 and older and implements
the following regulations regarding the packaging of edible CBD products:
11 Hemp means the plant Cannabis sativa L. and any part of the plant, whether growing or not, including the plant’s
seeds, and all the plant's derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether
growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.
Minn. Stat. §18K.02: Subd. 3 and Minn. Stat. § 151.72 subd. 1(a).
12 Mitch. McConnell included a hemp pilot program in the 2014 federal farm bill — for “research.” In the legislation,
hemp was defined as cannabis containing less than 0.3 percent THC — an arbitrary threshold, not a scientific
distinction: Nothing in the Farm Bill, in case law, or in the Controlled Substances Act seemed to say anything about
CBD. Entrepreneurs interpreted this research-oriented pilot program as the de facto legalization of cannabidiol.
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Additional requirements for edible cannabinoid products.
(a) In addition to the testing and labeling requirements under subdivisions 4 and 5, an edible
cannabinoid must meet the requirements of this subdivision.
(b) An edible cannabinoid product must not:
(1) bear the likeness or contain cartoon-like characteristics of a real or fictional person, animal,
or fruit that appeals to children;
(2) be modeled after a brand of products primarily consumed by or marketed to children;
(3) be made by applying an extracted or concentrated hemp-derived cannabinoid to a
commercially available candy or snack food item;
(4) contain an ingredient, other than a hemp-derived cannabinoid, that is not approved by the
United States Food and Drug Administration for use in food;
(5) be packaged in a way that resembles the trademarked, characteristic, or product-specialized
packaging of any commercially available food product; or
(6) be packaged in a container that includes a statement, artwork, or design that could
reasonably mislead any person to believe that the package contains anything other than an edible
cannabinoid product.
(c) An edible cannabinoid product must be prepackaged in packaging or a container that is
child-resistant, tamper-evident, and opaque or placed in packaging or a container that is child-resistant,
tamper-evident, and opaque at the final point of sale to a customer. The requirement that packaging be
child-resistant does not apply to an edible cannabinoid product that is intended to be consumed as a
beverage and which contains no more than a trace amount of any tetrahydrocannabinol.
(d) If an edible cannabinoid product is intended for more than a single use or contains multiple
servings, each serving must be indicated by scoring, wrapping, or other indicators designating the
individual serving size.
(e) A label containing at least the following information must be affixed to the packaging or
container of all edible cannabinoid products sold to consumers:
(1) the serving size;
(2) the cannabinoid profile per serving and in total;
(3) a list of ingredients, including identification of any major food allergens declared by name;
and
(4) the following statement: "Keep this product out of reach of children."
(f) An edible cannabinoid product must not contain more than five milligrams of any
tetrahydrocannabinol in a single serving, or more than a total of 50 milligrams of any
tetrahydrocannabinol per package.13
However, some issues that have arisen since the new law went into effect. Without going into
every business in the city (retail, massage, chiropractor), there is no way to know who is selling
these products. There is also no reliable mechanism for testing edible CBD products for the levels
of THC, therefore local law enforcement is forced to trust the packaging labels provided by the
manufacturers.
13 2022 Minnesota Session Laws, Chapter 98, Article 13, Section 3, amending Minn. Stat. §151.72, subd. 1.
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FORECASTING THE FUTURE
Many observers believe that authorization for medical marijuana (and now intoxicating CBD) will
precede authorization for recreational use, noting that California, Colorado, Washington and many
other states followed that sequence.14 If this occurs, medical marijuana distribution sites and stores
that sell CBD products could be converted into recreational marijuana stores immediately. Without
any regulations at all, recreational sales of marijuana could be considered general retail uses and
move into any storefront in any business district.
There are concerns that such uses are incompatible or inharmonious in certain zoning districts and
with other land uses.15 For example, growing and processing operations have characteristics of
other agricultural and industrial land uses, including the potential to emit strong odors.16
According to Charles McGinley, a registered Environmental Professional Engineer who
specializes in odor issues and air toxicity, the process of drying marijuana leaves emits a strong
skunk-like odor, suggesting that certain measures such as odor mitigation and air purification
systems should be required. In addition, there are potential security concerns surrounding sales of
marijuana and TCH CBD products. Federal banking regulations do not clearly authorize banks to
provide services to marijuana-related businesses. As a result, most medical distribution sites and
sales of such products operate on a cash-only basis, creating security risks.
In the absence of any municipal regulations, there is a concern that manufacturing, testing
laboratory, and sales for marijuana or CBD will fall under existing land use categories, and qualify
as permitted or conditional uses under existing Zoning Code regulations as medical clinics, retail,
pharmacies, farming, and greenhouses.
Zoning Regulations:
There are many zoning regulations that can be adopted to appropriately place these types of uses
in the right zoning district with public health, safety and welfare performance standards. Some
options are as follows:
• Defining CBD exclusive retail stores as those that derive more than 50% of their gross
revenue sales from CBD products, similar to a liquor store.
• Defining CBD products into 2 types: intoxicating and non-intoxicating
o Intoxicating products means the products that produce intoxicating effects and may
include but are not limited to products made with Delta 8, 9 and 10.
14 David Bailey, “Minnesota governor signs medical marijuana bill into law,” Reuters, (May 29, 2014) (available at
https://www.reuters.com/article/us-usa-minnesota-marijuana/minnesota-governor-signs-medical-marijuana-bill-into-
law-idUSKBN0E91TN20140529).
15 See, e.g.,, Samantha Pak, “Redmond Ridge residents lit up about marijuana ordinance,” Redmond News-Reporter,
(available at http://www.redmond-reporter.com/news/234676601.html).
16 Tom Perkins, “Ypsilanti Township wins ‘seminal’ case against couple pumping intense marijuana fumes into
neighborhood,” Ann Arbor News (Jul. 1, 2014) (available at http://www.mlive.com/news/ann-
arbor/index.ssf/2014/07/ypsilanti_township_wins_semina.html); Jeremy P. Meyer, “When Pot Smells in Denver, the
Nasal Ranger goes in to investigate,” Denver Post, (Nov. 11, 2013) (available at
http://www.denverpost.com/politics/ci_24496810/when-pot-smells-denver-nasal-ranger-goes-investigate).
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o Non-intoxicating products means products that do not produce intoxicating effects.
• Defining incidental CBD sales as those CBD sales that are not typically part of the primary
business or do not make up a majority of sales for the business. (i.e. massage therapy
businesses, drug stores, or gift shops who may have a kiosk with a few CBD products)
• Allowing only CBD exclusive stores to sell intoxicating CBD products. If you allow sales
at any retail store, then we would have to add limitations on accessibility of the products.
• Limit CBD exclusive stores to appropriate zoning districts. The sale of non-intoxicating
CBD products could be permitted anywhere, but intoxicating CBD products would require
a CUP.
• Implementing distance requirements from other CBD exclusive stores and from schools
(most cities have discussed 1,000 feet)
• Requiring security plans for intoxicating CBD stores,
• Prohibiting the sale at drive-throughs windows.
• Allowing medical distribution facilities in certain zoning districts, with a security plan and
distance requirements from schools and residential property, as already required in state
law.
• Allowing medical labs in the industrial park
• Allowing Hemp Growing Operations in the Ag District as a permitted use, as long as they
have 200 contiguous acres, and they cannot sell on site.
• Prohibiting marijuana manufacturing and hemp manufacturing due to nuisance-related
odor problems.
• Prohibiting any sales of CBD products that contain more than .3% THC. While this
prohibition on intoxicating CBD products is state law today,17 in the event the Minnesota
legislature legalizes recreational marijuana, the City’s specific identification of the
prohibition on selling anything over .3% would not allow any business to immediately sell
recreational marijuana upon adoption of state law (unless the state law pre-empted local
zoning). This prohibition would allow the City time to study if and where recreational
marijuana should be allowed.
Licensing regulations
While the licensing regulations will be similar to other licenses of its type (tobacco, liquor),
requiring an application, fee, background check, a process for approval, suspension or revocation,
it could also include the following:
• License only the stores that sell intoxicating CBD products
• Limit the sales to exclusive CBD shops
• Prohibiting anyone under 21 from entering
• Requirement to check IDs (including signs that clearly display no one under 21 can
purchase)
• Prohibiting anyone under 21 to sell the products
• Prohibiting firearms on the premises
• Restricting hours of operation
• Not allow sampling
17 Technically, it is also prohibited under Federal law as anything over .3% is a Schedule 1 illegal drug.
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• Not allow on-site entertainment
• Prohibit internet sales or delivery service
• Prohibit transient merchant sales or sales at special events (no mobile sales)
• Prohibit flavors for inhaled cannabis
• Prohibit powders, gels or other forms that are mixed with beverages
• Must comply with the statutory regulations regarding packaging
• Limit the number of CBD licenses
• Authorize compliance checks, similar to tobacco and liquor
CONCLUSION
Given the potential for unintended consequences without any regulations in place, an interim
ordinance (commonly called a “moratorium”)18 is a tool used by cities in order to study the impacts
of certain uses and determine whether regulations are appropriate for the purpose of protecting the
public health, safety and welfare of their citizens. In order to be proactive and thoughtful in
considering the potential impact of these uses within the City, as well as the uncertainty
surrounding any upcoming legislation, it is recommended that the City adopt an interim ordinance
and undertake a study to consider where these types of uses should be located, how many of them
should be allowed and whether or not licensing restrictions are appropriate. The interim ordinance
may be in place for up to one year, however, it can be terminated at any time by the Council and
would automatically terminate with the adoption of any ordinances surrounding the regulations of
these uses.
RECOMMENDATION
Discuss and made recommendations to the Public Safety Committee of the Council.
18 Minn. Stat., § 462.355 subd. 4.
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ORD. NO.
CITY OF HASTINGS
DAKOTA COUNTY, MINNESOTA
AN INTERIM ORDINANCE PROHIBITING THE ESTABLISHMENT OF NEW USES
OR THE EXPANSION OF EXISTING USES RELATED TO CANNABIS AND
INTOXICATING CANNABINOIDS (CBD) SALES, TESTING, MANUFACTURING OR
DISTRIBUTION
WHEREAS, pursuant to Minnesota Statutes, Section 462.355 subdivision 4, many cities
have adopted interim ordinances in order to study the impacts of certain uses and determine
whether regulations are appropriate for the purpose of protecting the public health, safety and
welfare of their citizens; and
WHEREAS, the City is undertaking a study to consider possible changes to the Zoning
Ordinance and City Code that would address the types of uses that involve the sales, testing,
manufacturing and distribution of cannabis and products that contain intoxicating cannabinoids
(CBD) whether for medical, recreational or for other human or animal consumption purposes and
may implement many of the suggestions from the study.
The City Council of the City of Hastings, Dakota County, Minnesota, does hereby ordain
as follows:
SECTION 1. No business, person or entity may establish a new use or expand an existing use
that includes or involves the sales, testing, manufacturing, or distribution of cannabis in any way,
whether medical or recreational, or any products that contain intoxicating cannabinoids extracted
from hemp (CBD) in any form, for a period of up to six (6) months from the effective date of this
ordinance or until ordinances regulating such uses become effective or until the Council rescinds
this Interim Ordinance, whichever occurs first.
SECTION 2. City Staff is directed to conduct a study to gather information and make a
recommendation to the Council to determine if the Zoning Ordinance and City Code need to be
amended regarding these types of uses to better protect the citizens of Hastings, and if so, what
regulations are appropriate.
SECTION 3. SUMMARY PUBLICATION. Pursuant to Minnesota Statutes Section 412.191,
in the case of a lengthy ordinance, a summary may be published. While a copy of the entire
ordinance is available without cost at the office of the City Clerk, the following summary is
approved by the City Council and shall be published in lieu of publishing the entire ordinance:
The City will be undergoing a study regarding CBD and cannabis uses to determine if
regulations surrounding zoning and licensing are appropriate. No new use may be
established, and no existing use may be expanded until the City adopts regulations
regarding these uses, or determines no regulations are necessary and rescinds the interim
ordinance or for a period of six months, whichever occurs first.
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SECTION 4. EFFECTIVE DATE AND EXPIRATION DATE. This ordinance shall be in full
force and effect from and after its passage and publication according to law and shall expire upon
adoption of ordinances regulating such uses, until the Council rescinds or terminates the Interim
Ordinance or six (6) months from its effective date, whichever occurs first.
Adopted by the Hastings City Council on_____, 2022, by the following vote:
Ayes:
Nays:
Absent:
Mary Fasbender, Mayor
ATTEST:
Kelly Murtaugh, City Clerk (City Seal)
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