1. Cannabis Regulations
October 10, 2017
Item 7-A

2. Introduction March 7, 2017 Study Session
Create a Regulatory Permit and Selection Process
Prohibit Non-Medicinal Cannabis Business Activities
Council Defined this as Temporary to Allow for Public Process
Consider Options for Light Manufacturing
Amend SMMC to Address Changes in State Law
June 27, 2017 SB 94 “MAUCRSA” Adopted
Consolidated Medicinal & Non-Medicinal Regulations
Clarified Some Regulations (e.g. Open Container)
Authorized Retail Sales via Deliver Only (no store front)
State Draft Regulations – November 2018 (est.)
State Licenses - January 1, 2018
Medicinal and Adult Use Cannabis Regulation and Safety Act

3. Interim Zoning Ordinance
Align with Comprehensive State Regulations
Repeal sub-sections I, K, and L of Section of the SMMC
I. Staffing and Securing (State Law and Local Operational Regulations)
K. Patron Notification / On Site Posting (State Law)
L. Prohibited Activities / No alcohol or tobacco sales (State Law)
Re-Alignment, not Reduction
Definitions
Replace “Medical Marijuana Dispensary” with “Medicinal Cannabis Retailer”
Update Industry, Limited Classification
Allows for Medicinal Cannabis Light Manufacturing
Prohibits Non-Medicinal Commercial Activities
Provides Time to Initiate Public Process
Medicinal and Adult Use Cannabis Regulation and Safety Act

4. Statewide Regulations – Overview Medicinal and Non-Medicinal
Personal Cultivation and Use
Commercial Activities
Retail Sales
Distribution
Testing
Cultivation
Manufacturing
Commercial On-Site Consumption
Special Event Permits for On-Site Sale & Use at Temporary Events
Local Regulation Authorized
Complete
Local Control
Short Overview
1. Personal Use
2. Established regulatory framework for commercial activties
“Nonvolatile solvent” means any solvent used in the extraction process that is not a volatile solvent, including carbon dioxide. “Volatile solvent” means any solvent that is or produces a flammable gas or vapor that, when present in the air in sufficient quantities, will create explosive or ignitable mixtures. The state’s examples of volatile solvents include, butane, hexane, propane, and ethanol. A Type 6 cannabis manufacturing licensee can only use nonvolatile solvents, but a Type 7 licensee can use both nonvolatile and volatile solvents in its extractions and infusions. 4

5. Medicinal and Non-Medicinal
Tonight’s Discussion
Medicinal and Non-Medicinal
Personal Cultivation and Use
Distribution
Testing
On-Site Consumption
Special Event Permits for On-Site Sale & Use
Retail Sales
Only 2
≤ 2,500 sq ft
Within a Limited Zone
Distancing
Commercial Cultivation
≤ 375 sq ft (15%)
Only by City Authorized Retailer within the Retail Location
Manufacturing
Light Manufacturing, No Volatile Solvents
Assembly Only, No Extractions
Office Campus Zone (with CUP)
Industrial Conservation Zone 5

6. Retail Sales and Cultivation
Medicinal Cannabis
Retail Sales and Cultivation 6

7. Medicinal Cannabis Retail Zones
Prohibited within
600 Feet of a:
Child Care Center
Early Education Center
Day Care Center
Park
School
Library
Social Services Center
Other Medicinal Cannabis Retailer
Challenges
Limited Space Options
“Surge” Lease Costs

8. Medicinal Cannabis Retail Sales Operational Approval Phases
Operational Review
Selection Process
Land Use Process
Compliance Review
Permit Issuance 8

9. Medicinal Cannabis Retail Sales Phase 1: Operational Review
Selection Process
Request for Applications
Defined Application Period
Objective Standards with Ratings
Evaluation Committee Rankings
Selection Decision Made by Director of Planning or Designee
Preliminary Selection Letter Issued
Appeal Period
List Expiration
Land Use Process
Identify Location
Conditional Use Permit Process
Other Entitlement Processes (e.g ARB, Landmarks) 9

10. Medicinal Cannabis Retail Sales
Phase 2: Compliance Review
(Overlap with Entitlement Period)
State Licensing
Bureau of Cannabis Control (BCC)
Retailers (M-Type 10)
Department of Food and Agriculture (DFA)
Specialty Indoor, Small, <500 sq. ft. (M-Type 1A)
Tenant Improvement/Build Out
Standard Development Review Process
B&S
Fire
Water Resources
Santa Monica Business License Application Submittal
Fees
State Permit Verification
Other State or County Permits (e.g. Health Dept., Board of Equalization) 10

11. Medicinal Cannabis Retail Sales
Phase 3: Permit Issuance
Pre-Permit Issuance Compliance Inspection
Permit and Business License Issuance 11

12. Medicinal Cannabis Light Manufacturing12

13. Medicinal Cannabis Light Manufacturing
Proposed IZO
Light Manufacturing
No Volatile Solvents / Extractions
Volatile Solvents (e.g. Butane)
Concentrates (e.g. Oils, Shatter, Budder/Wax)
Assembly Only 13

14. Medicinal Cannabis Light Manufacturing
Updated Definition to Existing Classification
Industry, Limited
Light industrial activities producing minimal impacts on adjacent properties. Includes light manufacturing, such as packaging of foods for off-site consumption (e.g. wholesale bakery, frozen foods)
Added: “medicinal cannabis, and medicinal cannabis products for off-site use or consumption using nonvolatile solvents, or no solvents” 14

15. Medicinal Cannabis Light Manufacturing Utilizing Existing Zones
Office Campus
Provides for office and advanced technology uses, scientific research, and administration, and limited manufacturing of related products which require large expanses of floor area.
CUP Required
Uses must be conducted within an enclosed building or an open enclosure screened from public view. In order to approve a CUP, a finding that proposed uses are compatible with abutting residential neighborhoods is required.
Industrial Conservation
Intended to preserve space for small-scale industrial and manufacturing businesses
At this time….. 15

16. Medicinal Light Manufacturing16
Proposed:
Office Campus (OC)
Industrial Cons. (IC)
At this time….. 16

17. Medicinal Light Manufacturing
Permit Issuance
Regulatory Permit and Business License
Zoning Conformance Review
State Licensing
Department of Public Health
Manufacture 1 - Non Volatile or No Solvents (M-Type 6)
Tenant Improvement/Build Out
Standard Development Review Process
B&S
Fire
Water Resources
Discretionary review for land use is not contemplated (except ARB / Landmarks associated w/ exterior work). 17

18. Operating Permit Fees New Medicinal Cannabis Retailer Permits-Prorated
Cost recovery Fee
$99.58 Administrative Processing
$ Two Hour Compliance Inspection
Proposed Annual Permit Fees
Annual Medicinal Cannabis Retailer Permit $1,822.10
Annual Medicinal Cannabis Light Manufacturing Permit $
New Medicinal Cannabis Retailer Permits-Prorated
July – September (4 Inspections) $1,822.10
October – December (3 Inspections) $1,391.47
January – March (2 Inspections) $
April – June (1 Inspection) $
Sales tax exempt 18

19. Business License Taxes
Current
Retailers and Manufactures
Tax Group I
$75 on the first $60,000
$1.25 per $1,000 (.125%)
Evaluate
Community Impacts
Increased Demands on Law Enforcement
Public Health Education – Youth, Tourism
Needed Funding, Resources, Programs
Consider
Ballot Initiative
New Cannabis Classification(s) and Rates
Sales tax exempt 19

20. Next Steps Extend IZO Within 60 Days of IZO’s Effective Date
Draft Administrative Regulations
Initiate Request for Application and Establish a Review Committee
Provide State with Copy City’s Cannabis Ordinance Regulations and Contact Person
Train Staff
Evaluate Track and Trace Technologies with State, Identify Implementation Needs
Initiate Public Process
Consider Commercial Cannabis Adult Non-Medicinal Use Activities
Consider Other Medicinal Commercial Use Activities
Consider Commercial On-Site Consumption
Evaluate Necessity for Additional Fees or Taxes to Fund Enforcement, Compliance, and Education Programs (e.g. Tourism and Youth)
Return to Planning Commission and Council with Recommended Changes to the Zoning Ordinance
Come back in 60 days
Determine if we want to consider issuing licenses to non-profit cannabis businesses in accordance with 20

21. Cannabis Regulations
October 10, 2017
Item 7-A
Questions?

22. -Public Health
-Education
-Tourism

23. Forms of Butane Hash Oils (BHO)
Shatter
Oil
Budder/Wax 23