City Council Meeting - FINAL

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12.B.

Meeting Date:	11/15/2022
From:	Tiffany Antol, Senior Planner

Information

TITLE

Discussion regarding adult use marijuana retail sales.

STAFF RECOMMENDED ACTION:

Receive direction from Council regarding whether to allow adult use only marijuana retail sales to operate in Flagstaff.

EXECUTIVE SUMMARY:

The “Smart and Safe Arizona Act” (the “Act”), certified as Proposition 207, was passed by Arizona voters at the November 3, 2020, general election and became effective on December 1, 2020. The Act declared that “the responsible adult use of marijuana should be legal for persons twenty-one years of age or older, subject to state regulation, taxation, and local ordinance.”

The Act decriminalizes the use and possession of up to one ounce of recreational marijuana by a person who is at least twenty-one years of age. Individuals who are at least twenty-one years of age can also legally grow and possess up to six marijuana plants, but no more than twelve plants can be grown at a single residence and cultivation must take place in an enclosed, secure area not visible from public view.

In June 2021, the Flagstaff City Council adopted Ordinance 2021-13, which enacted certain regulations regarding the use and sale of recreational marijuana in Flagstaff. The Ordinance included:

Marijuana-related land use application requirements to remove redundancy with the provisions that are regulated and verified by the State of Arizona
Marijuana-related definitions and incorporated new definitions that are consistent with the Arizona Revised Statutes;
Medical marijuana dispensary definition to be inclusive of the medical and a dual (medical and recreational) state certified location that is authorized to sell marijuana and marijuana products to consumers and have accessory uses (cultivation, manufacturing, processing, packaging, or storage of marijuana products); and,
Commercial and industrial land use tables with revised names and added the new land use of Marijuana Testing Facility.

INFORMATION:

Staff attended the Arizona Planning Association Conference in late August where a session was provided on adult use marijuana operations in Arizona. The following information was obtained from that session which included a representative from the Arizona Department of Health, and planning staff from Tucson and Gilbert.

There was a total of 130 existing medical marijuana dispensaries in Arizona when the Smart and Safe Act (Proposition 207) passed in November 2020 legalizing marijuana for adult personal use. After the adoption of this proposition, the existing 130 medical marijuana dispensaries were allowed to become dual licensed facilities by adding adult use retail sales. The total number of dual use marijuana establishments is adjusted dependent upon the number of pharmacies in the State. It has been several years since the license numbers have been adjusted based on the number of pharmacies, so there is the potential for there to be additional dual use licenses when those numbers are recalculated in the future.

The Smart & Safe Act included provisions for 13 adult use licenses (recreational only) in rural Counties in Arizona. These licenses were awarded in April 2021. Of these 13 licenses approximately 6 retail facilities have opened. There are still 7 licenses that have not yet opened a location. These licensees have until October 2022 to open a location. The Arizona Department of Health was unsure at the time if they will consider extensions for those licenses. This information is relevant to the discussion in Flagstaff due to the possible location of marijuana retail establishments just outside city limits if Coconino County permits. Coconino County did not update their zoning code after the adoption of the Smart and Safe Act.

The Smart & Safe Act also included provisions for 26 adult use licenses (recreational only) for social equity applicants. These licenses were awarded in April 2022 and the licensees have until October 2023 to open locations. To date none of these license holders have opened an establishment in Arizona. The Smart & Safe Act allows municipalities to prohibit adult use retail establishments. If a municipality chooses to allow adult use retail establishments (recreational only), a municipality must treat all retail establishments the same including dual licensed and medical only dispensaries. Several municipalities in Arizona also did not update their zoning codes after the adoption of the Smart and Safe Act.

Gilbert has one existing dispensary which is a dual licensed establishment and chose not to allow recreational only retail sales. The planner from Gilbert commented that several Marijuana Establishments have already located at the city limits of Gilbert and Mesa (within Mesa), and they do not anticipate additional sales establishments pursuing Gilbert. The only complaints that have been received on their one existing establishment is the lack of parking.

Tucson is working on text amendments to their Uniform Development Code currently to allow adult use recreational sales establishments. The Tucson City Council directed early this year in a work session to require a Mayor & Council Special Exception land use procedure, which requires a neighborhood meeting, Zoning Examiner Public Hearing, and Mayor & Council review. Pima County has already adopted similar provisions. This process is similar to the City of Flagstaff Conditional Use Permit process which requires a neighborhood meeting, a public hearing before the Planning & Zoning Commission, and City Council review if elected. Staff from Tucson mentioned that the city has already reduced separation distances for marijuana establishments as the separations required had unintended consequences.

Staff recently participated in a tour of the Noble Herb marijuana establishment in Flagstaff which allowed staff to view the back of house practices of the retail business as well as manufacturing and production of products. Not all retail establishments include the same level of manufacturing and production of products such as Noble Herb. This introduces a new level of complexity into the conversation about retail facilities and their potential ancillary uses.

Staff is requesting direction on the following:

Should the proposed zoning code text amendment to allow adult use only marijuana retail establishments be delayed until such time that more cities have adopted similar provisions?
Should staff include provisions to require a conditional use permit for all marijuana retail establishments?

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