HomeMy WebLinkAbout09-07-2022 Workshop MeetingCITY OF FALCON HEIGHTS
City Council Workshop
City Hall
2077 West Larpenteur Avenue
AGENDA
September 7, 2022
6:30 P.M.
A. CALL TO ORDER:
B. ROLL CALL: ANDREWS ___ GUSTAFSON____ LEEHY___
MEYER ___ WEHYEE___
STAFF PRESENT: LINEHAN____ SORENSEN____
C. PRESENTATIONS:
D. POLICY ITEMS:
1. Proposed 2023 Levy and Budget*
a. General Fund Updates
b. Preliminary Levy and Revenue
c. Utility Fees
2. 2023 Recycling Contract Renewal
3. Police Consultant RFP Review*
4. Commercial Real Estate Broker RFP Review*
5. Discussion on THC/CBD
E. INFORMATION/ANNOUNCEMENTS:
F. ADJOURNMENT:
DISCLAIMER: City Council Workshops are held monthly as an opportunity for Council Members to discuss policy topics in greater detail prior to a formal meeting where a public hearing may be held and/or
action may be taken. Members of the public that would like to make a comment or ask questions about an
item on the agenda for an upcoming workshop should send them to mail@falconheights.org prior to the
meeting. Alternatively, time is regularly allotted for public comment during Regular City Council Meetings (typically 2nd and 4th Wednesdays) during the Community Forum.
*Materials will be available at the meeting.
BLANK PAGE
REQUEST FOR CITY COUNCIL ACTION
City of Falcon Heights, Minnesota __________________________
Item Budget Workshop #2: General Fund Expenditure Update, Proposed Revenue / Preliminary
Levy, Utility Use Fees
Description
Staff will present the preliminary proposed 2023 budget as part of our second budget
workshop. We will discuss updates to the general fund since our first workshop based on
council feedback, the projected revenues and proposed preliminary levy amount, and a
discussion on utility use fees.
1. General Fund Expenditure Updates
Since the previous workshop, the following changes were made to the proposed 2023
general fund budget:
• Expenditure Account 112 – Administrative Expenses
o 89000 – Miscellaneous
Increased from $5,000 to $15,000 for Sister Cities request
o 97000 – Transfers to Capital / Special Revenue
Reduced from $100,000 to $86,000 to balance increases
• Expenditure Account 116 – Communications
o 83010 – Special Events
Increased from $3,000 to $7,000 for an expanded Ice Cream Social
2. General Fund Revenue / Proposed Levy
Staff will review the projected revenue in the general fund, including the proposed tax
levy for 2023 and seek guidance from the City Council. As these numbers are still being
calculated, the revenue worksheets will be handed out in-person at the workshop.
3. Utility Use Fees
As discussed at the previous workshop, staff will review the proposed user fees for the
following utilities:
• Sanitary Sewer
• Storm Drainage
• Recycling
Budget Impact N/A
Attachment(s) To be distributed at meeting
Action(s)
Requested
No action required at this time.
Meeting Date September 7, 2022
Agenda Item Policy D1
Attachment To be distributed at meeting
Submitted By Jack Linehan, City Administrator
BLANK PAGE
ITEM FOR DISCUSSION
City of Falcon Heights, Minnesota __________________________
Item Extend Recycling Contract with Tennis Sanitation, LLC
Description
As of January 15, 2016, the City and the Contractor executed a three-year City-
Wide residential recycling collection contract. Tennis Sanitation, LLC and the
City agreed to two (2) two (2) year extensions of the existing service ending
December 31, 2022. Tennis Sanitation, LLC would like to provide service to the
City for a two (2) year extension with the option for an additional two (2) year
extension.
If the City of Falcon Heights and Tennis Sanitation, LLC agree to extend
contracted services, it will begin immediately upon the expiration of the
current contract time period which ends on December 31, 2022. The current
contract price is $3.50 per unit per month.
The parties desire to amend the contract to include pricing for 2023 and 2024
with 2025 & 2026 to be negotiated in 2024. The cost of the Contract shall be
$4.25 per unit per month from January 1, 2023 to December 31st, 2023 and $4.75
per unit per month from January 1, 2024 to December 31st, 2024.
This extension binds and benefits both parties and any successors. This
document, including the original contract, is the entire agreement between the
City of Falcon Heights and Tennis Sanitation, LLC.
On May 9th of 2022 the Environment Commission reviewed the proposed
contract and the analysis from Foth. The Commission approved of the contract
and requested staff to ask Tennis to reduce the 2023 increase from $4.50 per
unit per month. Staff requested this of Tennis and they agreed to a reduced
rate in 2023 of $4.25.
As noted in the attached analysis by Foth, a contractor of Ramsey County,
Falcon Heights residents currently enjoy the lowest cost recycling in the
region—even with the proposed contract increase.
Meeting Date September 7, 2022
Agenda Item Policy D2
Attachment Foth Analysis, Draft Agreement,
Original Contract
Submitted By Paul Moretto, Community
Development Coordinator
Budget Impact
Attachment(s) Foth Analysis 5-5-2022, 2023-2024 FH Extension Letter, Original Contract
Action(s)
Requested
Staff is seeking direction on the next steps in the negotiation process. Staff is
also seeking feedback on user fees passed on to residents.
Memorandum
pw:\\foth-pw.bentley.com:foth-pw-01\Documents\Clients\Ramsey Co PH MN\0022R003.00\10300 Draft Documents\ Falcon Heights 2022 Recycling Contract\M-Falcon Heights' Recycling Contract Analysis - Final 5-5-2022.docx 1
8550 Hudson Boulevard North
Eagle Point Office Center II, Suite 105
Lake Elmo, MN 55042 (651) 288-8550 foth.com
May 5, 2022
TO: Paul Moretto, Community Development Coordinator / City Planner, City of Falcon Heights Filsan Ibrahim, Jennifer Nguyen Moore, Ramsey County
CC: Cami Van Abel, Foth Infrastructure & Environment, LLC (Foth)
FR: Dan Krivit, Foth
RE: Analysis of the Tennis Recycling Contract Extension Proposal as Submitted to the
City of Falcon Heights
Introduction
Tennis Sanitation, LLC (Tennis) is the current recycling collection services contractor for the City of Falcon Heights (City). The services include weekly, single-stream, curbside collection of traditional recyclables at single unit and multi-unit dwellings, and collections of recyclables and trash at City Hall. The contract is scheduled to end on December 31, 2022. This service does not
include trash collection. The City has an “open hauling” system for trash collection, whereby
residents contract directly with a licensed hauler. The original contract was issued after a competitive request for proposals (RFP) procurement
process conducted in 2015. Tennis began collections effective January 1, 2016. The recycling
contract was extended in 2018 for a four-year period from January 1, 2019 through
December 31, 2022. On November 1, 2021, Tennis submitted a proposal to the City for a second, four-year extension
for the period beginning January 1, 2023 through December 31, 2026.1 The City is considering
options including to negotiate with Tennis based on their proposed extension or initiate a new
RFP process. On April 19, 2022, City staff met with Ramsey County and Foth staff to discuss the Tennis
proposal for a contract extension and the option to go out for RFP. County and City staff
requested Foth conduct an analysis of the Tennis proposal for recycling collection services,
including price comparisons to other comparable Ramsey County cities’ recycling contract prices. Foth’s consultant services are being provided to the City through the Ramsey County Technical Assistance Program (TAP).
1 Tennis Sanitation letter of proposed “Contract Extension Agreement between the City of Falcon Heights
and Tennis Sanitation, LLC” (November 1, 2021).
2
Findings About Recycling Service Standards
City staff report the recycling collection services provided by Tennis during the past six+ years have been satisfactory. In 2018, the City approved a contract extension of recycling collection services by Tennis for an additional four years (2019 through 2022).
Based on information of the local recycling collection industry, Tennis provides a high level of
recycling services including the following standards:
Single-stream collection of all traditional recyclables (such as paper, cans, glass and plastic) collected in commingled format in one curbside recycling cart (equipped with wheels and a lid). Tennis also includes collection of textiles.
Tennis provides weekly curbside recycling service. Some cities elect to contract for
every-other-week recycling collection to help save on recycling prices.
Both trash and recyclables collection occur on Fridays each week. This “same day” collection schedule is generally more convenient for residents and helps them remember their trash/recyclable collection day.
Tennis utilizes fully automated side-loading recycling trucks that pick up and tips the
cart using a robotic arm. This improves collection efficiency and is safer for the
Contractor’s collection crew compared to manual or semi-automated cart lifting systems.
Tennis owns and manages the recycling carts. This approach avoids City ownership of carts which requires some form of City financing. (Note: If the City elects to own the
recycling carts, Ramsey County has a grant program that may fund up to 50% of the
recycling carts to help offset some of these costs.)
Tennis provides recyclables processing at their materials recovery facility (MRF) located in St. Paul Park. The is no “risk/revenue sharing” provision in the contract; Tennis takes on all of the market risk during periods of low recyclables prices, but also does not
provide a financial share back to City during periods of high recyclables prices.
Tennis takes a pro-active approach in implementing most public education services such as the City-specific annual recycling brochure for Falcon Heights.2
Resident inquiries, missed pick-ups, and cart repairs/placement are managed by Tennis.
Residents are instructed to call Tennis directly for these and other customer service
issues.
Tennis provides a comprehensive annual recycling report that summarizes recyclables tonnages, resident participation rates, important program changes, recycling market conditions, environmental impacts, and other information.3
Tennis provides recyclables and trash collection services for City Hall at no additional
charge to the City.
2 Tennis Sanitation “2022 Recycling Brochure” for Falcon Heights
3 Tennis Sanitation “2021 Year End Recycling Report” for Falcon Heights
3
Price Analysis
Below is a detailed analysis of Tennis’ proposed recycling contract extension pricing and how the proposed price compares to the current contract and to selected other comparable Ramsey County cities with recycling contracts.
Tennis’ Proposed Prices
Table 1 lists the historical, current, and proposed recycling prices as charged by Tennis to the City in $ per household (HH) per month for weekly collection. Over the past seven years, the recycling contract included two price changes: +$0.25/HH/month each for 2019 and for 2021. This equates to an eight percent increase from 2018 to 2019 and 2020 to 2021.
Table 1
Falcon Heights Recycling Contract Prices – Weekly Service
(Prices are in $ per household per month)
Contract Period: Original Contract Period First Extension Proposed Second Extension
Year Number: 1 2 3 4 5 6 7 8 9 10 11
Year: 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Price
($/HH/Month) $3.00 $3.00 $3.00 $3.25 $3.25 $3.25 $3.50 $4.50 $4.75 $5.25 __
Percent Increase 0% 0% 8% 0% 8% 0% 29% 6% 11% __
Note: --- = Data not provided in proposed extension. Sources: Tennis Sanitation original contract (2016 – 2018), first Extension (2019 – 2022), and
Tennis-proposed 2023 – 2026 Contract Extension (as submitted on November 1, 2021)
Prepared by: DFK Checked by: CAV The Tennis-proposed, second Contract Extension shows an annual average increase of 15% from the current 2022 price $3.50 per household per month for the three years (years 8 to 10).
There is no price difference in the Tennis recycling contract for single family vs. multi-unit
dwellings. The Saint Paul Regional Water Services administers utility and recycling billing for the City.
Comparison of Prices to Other Ramsey County Cities
Comparing recycling prices between cities is challenged by many variables that affect both cost
of operations and competitive pricing in the marketplace. The goal of any such price analysis
should be to attempt to portray a fair, transparent, and repeatable “apples to apples” comparison to the extent possible.
The following four variables should be kept in mind when reviewing rate comparisons:
Weekly vs. every-other-week recyclables collection frequency.
Contractor owned vs. city owned recycling carts.
“Bundled” trash + recycling contract vs. recycling only contract. Generally, bundled trash + recycling contracts have higher recycling prices due to a common industry practice adjusting rates for recycling prices to save on the state and county taxes.
4
Is there a “risk/revenue sharing” provision for recyclables in the contract? Or, does the contractor take on all of the risk and not share any revenue from sale of recyclables depending on the state of the recycling market?
Comparison to Other Cities
The City of Maplewood also has a 5.5-year recycling contract with Tennis for weekly service.
Tennis owns the carts. Recycling is a separate contract from the city’s trash contract with another company. Table 2 displays the City of Maplewood’s curbside recycling contract prices. Table 2 prices were proposed by Tennis in response to the City of Maplewood’s RFP released in 2019. Residential pickup includes single unit dwellings and multi-unit dwellings. There is no
risk/revenue sharing provision in the contract. The average annual increase in price over the six-
year period is 5.6 percent.
Table 2 Maplewood’s Recycling Contract Price – Weekly Service
(Prices are in $ per household per month)
Year Number: 1 2 3 4 5 6
Year: 2020 2021 2022 2023 2024 2025 (1st half)
Price ($/HH/Month) $4.00 $4.25 $4.50 $4.75 $5.00 $5.25
Percent Increase 6.3% 5.9% 5.6% 5.3% 5.0%
Source: Foth Price Analysis for the City of Maplewood (June 18, 2019, unpublished) Prepared by: DFK Checked by: CAV
The City of Roseville has a 3.5-year recycling contract with Eureka Recycling for every-other-
week service. Eureka owns the carts. The City has an open trash hauling system. Table 3 displays the City of Roseville’s current recycling contract prices. Residential pickup includes single unit dwellings and multi-unit dwellings. There is no risk/revenue sharing provision in the
contract. The average annual increase in price over the six-year period is 3.5 percent. It is
important to note that Roseville elected to purchase every other week service. In response to
the City’s 2021 RFP, Eureka proposed comparable weekly prices that were 31% higher than their every other week price shown in Table 3.
Table 3
Roseville’s Recycling Contract Price – Every Other Week Service
(Prices are in $ per household per month)
Year Number: 1 2 3 4
Year: 2022 2023 2024 2025
(1st half)
Price ($/HH/Month) $3.98 $4.12 $4.26 $4.41
Percent Increase 3.5% 3.4% 3.5%
Source: City of Roseville’s recycling contract with Eureka (Executed July 26, 2021)
Prepared by: DFK
Checked by: CAV
5
The City of Lauderdale has a 5-year recycling contract with Eureka Recycling for weekly service. The City owns the carts. The City has an open trash hauling system. Table 4 displays the City of Lauderdale’s recycling contract prices. Residential pickup includes single unit dwellings and
multi-unit dwellings. There is no risk/revenue sharing provision in the contract. The average
annual increase in price over the six-year period is 1.9 percent.
Table 4 Lauderdale’s Recycling Contract Price – Weekly Service
(Prices are in $ per household per month)
Year Number: 1 2 3 4 5 Year: 2019 2020 2021 2022 2023
Price ($/HH/Month) $5.65 $5.76 $5.87 5.98 6.09
Percent Increase 1.9% 1.9 1.9 1.8
Source: City of Lauderdale’s recycling contract with Eureka (Executed December 2018) Prepared by: DFK
Checked by: CAV
Conclusions and Observations
Several conclusions and observations can be drawn from this analysis.
1. The original Falcon Heights recycling contract with Tennis became effective January 1,
2016.
2. Falcon Heights negotiated one, four-year extension to its original recycling contract with Tennis. The current term of the Falcon Heights - Tennis contract is scheduled to expire
on December 31, 2022.
3. The City and its residents have received a high level of recycling service from Tennis when compared to current industry standards in the Twin Cities Metropolitan Area and Ramsey County in particular.
4. Tennis submitted a written proposal for a four-year contract extension on November 1,
2021. The City may wish to ask Tennis additional questions to clarify their proposal (e.g., proposed prices for 2025 and 2026).
5. Comparisons to three other cities’ residential solid waste and recycling prices were
conducted in this memorandum. The Tennis proposed prices for 2023 to 2026 appear to
be very competitive.
July 6th, 2022
City of Falcon Heights
2077 Larpenteur Ave W
Falcon Heights, MN 55113
Contract Extension Agreement between City of Falcon Heights and Tennis Sanitation L.L.C.
Dear Falcon Heights,
Tennis Sanitation L.L.C. is requesting that the term of the Original Contract agreement be extended for
the period of January 1st, 2023 through December 31, 2024. With an option for an additional 2 year
extension upon mutual agreement for the years of 2025 and 2026. If Falcon Heights and Tennis
Sanitation agree to extend the Original Contract, it will begin immediately upon the expiration of the 1st
extension period which ends on December 31st, 2022.
This extension binds and benefits both parties and any successors, this document, including the Original
Contract, is the entire agreement between Falcon Heights and Tennis Sanitation L.L.C.
Rates increases
2023 $4.25
2024 $4.75
Tennis Sanitation, LLC City of Falcon Heights
BY_______________________________ By: _______________________________
Date: ____________________________ Date: _____________________________
BLANK PAGE
REQUEST FOR COUNCIL ACTION
City of Falcon Heights, Minnesota __________________________
The City That Soars!
Item Police Contract Analysis and Consulting Services RFP Responses
Description
Staff released an RFP for Police Contract Analysis and Consulting Services on July 15,
2022. The RFP closed on August 15, 2022. The RFP was marketed widely online and
staff reached out to local and national firms that specialize in this service.
The city received interest from three qualified bidders. One bidder declined to
submit, citing workload / staffing constraints as they were starting up their firm. In
total, the city received two proposals from consultants: one from a local retired law
enforcement executive, and one from a national police consulting firm.
The City Council will review the proposals from the two firms and determine the
next steps for moving forward.
Budget
Impact
Funds have been included in the 2023 proposed budget to assist in paying for the
consulting services. There are funds available in the 2022 budget, including General
Fund 112 – Administrative Expenditures – Consultant, and Special Revenue Fund 210
– Community Inclusion – Personnel/Contract Svcs that can be utilized for the initial
payments.
Attachment(s) To be distributed at meeting
Action(s)
Requested
Provide staff direction on the preferred response for a police consultant and provide
direction for the next steps in engagement.
Meeting Date September 7, 2022
Agenda Item Policy D3
Attachment(s) To be distributed at meeting
Submitted By Jack Linehan, City Administrator
BLANK PAGE
REQUEST FOR COUNCIL ACTION
City of Falcon Heights, Minnesota __________________________
The City That Soars!
Item Commercial Real Estate Broker RFP
Description
The City of Falcon Heights leases the Community Park land from the University of
Minnesota and the current lease agreement is set to expire at the end of 2024. Both
parties have expressed interest in the City purchasing the land from the University,
and both have completed a commercial appraisal of the property. Due to the scale of
this land acquisition, the Council have determined it’s within the City’s best interest
to obtain commercial real estate brokerage services.
Staff issued a Request for Proposal (RFP) on August 17th for a commercial real estate
broker. It was advertised widely online and directly sent to over a dozen firms in the
Twin Cities area. The bid closes at noon on September 2nd—the short time frame
reflecting the basic submittal requirements for the RFP. As of September 1st, the City
has received one response from a qualified broker.
Staff will review the received proposals with the City Council and discuss the next
steps in the process.
Budget
Impact
Attachment(s) To be distributed at meeting
Action(s)
Requested
Provide staff direction on the preferred proposal from commercial brokers and
provide guidance on the next steps in the process.
Meeting Date September 7, 2022
Agenda Item Policy D4
Attachments To be distributed at meeting
Submitted By Jack Linehan, City Administrator
BLANK PAGE
REQUEST FOR CITY COUNCIL ACTION
City of Falcon Heights, Minnesota __________________________
Item Discussion on CBD and THC products
Description
A new law was enacted at the end of the 2022 legislative session that allows certain edible
and beverage products infused with tetrahydrocannabinol (THC) to be sold. The changes
took effect on July 1.
The new law amends the scope of sale of any product that contains cannabinoids extracted from hemp and that is an edible cannabinoid product or is intended for human or animal consumption.
Previous law authorized a product containing nonintoxicating cannabinoids to be sold, but
the authority to sell edible CBD products was unclear. The new law expands the authority to include nonintoxicating cannabinoids, including edible cannabinoid products, provided they do not contain more than 0.3% of any THC. An edible cannabinoid product also cannot exceed more than five milligrams of any THC in a single serving, or more than a total of 50
milligrams of any THC per package.
The new law does not limit where edible cannabinoids products may be sold. However, certain businesses by their nature maybe be limited on their ability to sell the products, including establishments that primarily sell liquor. Nothing in the new law limits a city’s zoning authority related to CBD and THC products. Falcon Heights’ city code does not
address THC or CBD sales. As such, the majority of retail establishments could sell
THC/CBD products within the state threshold. The most common locations for THC/CBD sales are gas stations, tobacco stores, and specialty CBD retailers. The city does not have any tobacco stores, but does have two gas stations that currently sell tobacco products.
City staff have been approached by a CBD establishment interested in potentially opening a
CBD/THC store in Falcon Heights. This establishment has existing stores in White Bear
Lake, St. Paul, Forest Lake and other locations in the Twin Cities and Florida.
The city has two primary options relating to CBD/THC sales: 1) allow State law to be the prevailing guidance for sales, which would allow sales in Falcon Heights or, 2) approve a moratorium on sales for up to one year to study the issue further and consider zoning
regulations.
A moratorium is a tool cities use to pause specific uses in order that the city may study the issue in anticipation of future regulations. A moratorium is limited to a period of one year. For example, a few cities such as Roseville, Arden Hills, Shoreview and Lauderdale have
Meeting Date September 7, 2022
Agenda Item Policy D5
Attachment LMC CBD-THC FAQ
Submitted By Jack Linehan, City Administrator
recently enacted a moratorium on CBD and THC products.
Budget Impact N/A
Attachment(s) LMC CBD-THC FAQ
Action(s)
Requested Provide staff direction on the sale of CBD and THC products in the City of Falcon
Heights.
League of Minnesota Cities
FAQ on Cities and Regulation of Edible Cannabinoid
Products
General information
Q1. What does the new law do?
A1. It is now legal to sell certain edibles and beverages infused with tetrahydrocannabinol (THC), the cannabis ingredient extracted from hemp.
The new law was passed by the Legislature as part of Chapter 98. Article 13 makes several changes to Minnesota Statutes, section 151.72 regarding the sale of certain cannabinoid (CBD)
products. The changes took effect on July 1.
The new law amends the scope of sale of any product that contains cannabinoids extracted from hemp and that is an edible cannabinoid product or is intended for human or animal consumption.
Previous law authorized a product containing nonintoxicating cannabinoids to be sold, but the authority to sell edible CBD products was unclear. The new law expands the authority to include
nonintoxicating cannabinoids, including edible cannabinoid products, provided they do not
contain more than 0.3% of any THC. An edible cannabinoid product also cannot exceed more than five milligrams of any THC in a single serving, or more than a total of 50 milligrams of any THC per package.
Q2. Under the law, where are edible cannabinoids allowed to be sold?
A2. The new law does not limit where edible cannabinoids products may be sold. However, certain businesses by their nature maybe be limited on their ability to sell the products. Liquor stores, for example, are limited to selling specific items set by Minnesota Statute, section 340A.412, subd. 14. The Alcohol and Gambling Enforcement Division (AGE) of the Minnesota
Department of Public Safety has advised the League of Minnesota Cities that products containing CBD, hemp, or THC are not allowed for sale at an exclusive liquor store. In addition, AGE has informed LMC that a liquor store’s ability to sell food pursuant to Minnesota Statute, section 340A.412, subd. 14 (b), does not include edible cannabinoid products.
Q3. Could my city’s municipal liquor store sell the edible cannabinoid products?
A3. Liquor stores are limited to selling specific items set by Minnesota Statute, section
340A.412, subd. 14. The Alcohol and Gambling Enforcement Division (AGE) of the Minnesota Department of Public Safety has advised the League of Minnesota Cities that products containing CBD, hemp, or THC are not allowed for sale at an exclusive liquor store. AGE has
advised LMC that CBD, hemp, or THC infused beverages are not intended to be mixed with alcoholic beverages and are not considered soft drinks. In addition, AGE has informed LMC that
a liquor store’s ability to sell food pursuant to Minnesota Statute, section 340A.412, subd. 14 (b),
does not include edible cannabinoid products. Due to this guidance, LMC recommends cities refrain from selling such products at their municipal liquor stores.
Q4. What regulations are in place for packaging for edible cannabinoids?
A4. Along with testing and labeling requirements, an edible cannabinoid must meet several
requirements, including that it:
• Not bear the likeness or contain cartoon-like characteristics.
• Not be modeled after a brand of products primarily consumed or marketed to children.
• Not be made by applying an extracted or concentrated hemp-derived cannabinoid to a
commercially available candy or snack food item.
• May not contain an ingredient, other than a hemp-derived cannabinoid, that is not approved by the federal Food and Drug Administration.
• May not be packaged in a way that resembles any commercially available food product.
• Must not be packaged in a container that could reasonably mislead any person to believe
that it contains anything other than an edible cannabinoid product.
Q5. Are these products legal under federal regulations?
A5. The 2018 Farm Bill made several changes to federal law related to hemp. Under the law,
hemp was removed from the controlled substance act, including derivates, extracts, and
cannabinoids, provided those substances contained less than 0.3% THC concentration. If a product contains more than 0.3% THC it is considered marijuana and not hemp. Pursuant to the Farm Bill, Minnesota has legalized the production of hemp through its industrial hemp program.
Although hemp extracts that meet the mandated THC level are no longer controlled substances, the Farm Bill did not alter the authority of other federal agencies, including the Food and Drug
Administration (FDA) from regulating hemp and hemp byproducts. Under current FDA regulations, CBD or THC products cannot be sold as a dietary supplement and cannot be added to food for humans or animals.
Q6. Where do the edible cannabinoid products come from?
A6. Under current law, these products can be manufactured in Minnesota but also imported from other states. Growing hemp in Minnesota is governed by the Department of Agriculture, though the MDA Hemp Program does not regulate cannabis extracts, development and manufacturing of cannabis extracts, or the retail and marketing of cannabinoid products. Cities may want to
consider zoning implications for manufacturing and production of cannabinoid products.
Q7. How are the new products taxed?
A7. It is the understanding of LMC that edible cannabinoid products legalized under the new law are subject to Minnesota sales tax. LMC is waiting for more guidance from the Minnesota
Department of Revenue to determine if any exemptions apply. The new law does not authorize
cities to tax the products in their communities, however LMC is waiting on more information as to whether the products would be subject to a local food and beverage tax.
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Enforcement and public safety
Q8. How is the new law enforced?
A8. The Minnesota Board of Pharmacy has regulatory authority over drug products that are implicitly or explicitly intended for human or animal consumption. This includes products
regulated in the new law. If a product does not meet all the requirements of the new law, the
product may be considered misbranded or adulterated. The sale of a misbranded or adulterated product is a misdemeanor-level crime which is to be prosecuted by the county attorney where the offense took place. Questions regarding whether a specific product deviates from the requirements of the new law should be forwarded to the Minnesota Board of Pharmacy. The
Board of Pharmacy has provided a form to file complaints against licensed or unlicensed
cannabis businesses (pdf) and an inspection checklist to assist law enforcement (pdf).
In addition, the new law limits the sale of CBD and THC products to persons over the age of 21. The sale of CBD and THC products to a person under the age of 21 is a misdemeanor-level crime which is to be prosecuted by the county attorney where the offense took place. Cities will
need to work with local law enforcement and the county attorney to determine how to enforce
this requirement.
If cities desire to further regulate CBD and THC products within their jurisdiction, they will need to work with their city attorney to adopt local regulations.
The League is working with the Minnesota Chiefs of Police Association and Minnesota Sheriff’s
Association to understand potential implications for law enforcement and identify additional
questions pertaining to the enforcement of these new products along with employment related questions for law enforcement.
Q9. What are penalties for someone who violates?
A9. A violation of the new law is a misdemeanor. In most cases, the county attorney is charged with prosecuting these violations.
Q10. How do our officers determine if a driver is under the influence of these
new products?
A10. The new law does not change the current rules relating to driving under the influence of a cannabinoid. Officers should use the same process to determine sobriety as they have used if
they suspected a driver was under the influence of marijuana.
Q11. Could cities prohibit the sale of edible cannabinoids entirely?
A11. In most states that have adopted adult use cannabis legislation, local governments are given the option to either opt-in or opt-out of cannabis in their communities. This framework helps to
maintain local control of the cannabis issue. The new Minnesota law does not provide such an
option. Therefore, the new law makes the new cannabinoid products legal in every city throughout the state.
Without a clear opt-out option, the question as to whether a city could completely prohibit the sale of edible cannabinoids is an open question. One potential approach would be to follow the
Minnesota House Research’s suggestion to LMC that it may be possible for a city to classify cannabis edibles containing THC as an intoxicating cannabinoid and therefore would not be allowed under the new law.
Arguments have also been made that a city may be able to prohibit the sale of edible cannabinoids products under its authority to provide for the health safety and welfare of its
community. If a city were to attempt to prohibit edible cannabinoids under this authority, it
would need to work with its city attorney to develop findings that clearly show the dangers of edible cannabinoids products and the need to prohibit the products. Cities may want to look at communities that have banned the sale of flavored tobacco products as a model for such prohibitions.
Q12. Is our city required to adopt regulations under the new law?
A12. The new law does not require cities to take action in regulating the new products. If a city chooses not to adopt additional regulations, the sale and production of these new products will be governed by the city’s existing zoning and other regulations. In addition, the new law gives local
law enforcement power to enforce violations as a misdemeanor.
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City licensing
Q13. What authority do cities have regarding licensing the sale of edible cannabinoids?
A13. A city’s authority to license comes from either a specific grant of authority from the
Legislature or from its authority to provide for its general health, safety, and welfare. When a
city official proposes local licensing of any activity or occupation, a city first must determine whether the state already licenses that activity and, if so, whether the law forbids or allows a local license.
Q14. What types of restrictions should we consider in regulating
cannabinoids?
A14. If a city decides to regulate edible cannabinoids or other cannabinoid products, the types of regulations can vary from city to city. Some items a city may consider when drafting these
regulations include:
• What areas of the city edible cannabinoids may be sold or manufactured or distributed.
• What business should be allowed to sell edible cannabinoids.
• Age of person selling the product.
• Location of products within retail establishment.
• Pop-up sales.
• Transient merchants.
• Vending machines.
• Distance from other uses (schools, parks, residential, etc.).
• Distance between retailers.
• Delivery services.
• Online sales.
• Limit number of establishments within the city.
• Age verification.
• Hours.
• Background checks.
Q15. Can a city add edible cannabinoid products to its existing tobacco licensing program?
A15. The requirements and legal authority for tobacco products are unique to those products. While some aspects of tobacco regulations may be used when regulating edible cannabinoid products, the products and the authority to regulate them are quite different. If a city chooses to license edible cannabinoid sellers, it would be best to do so separately from tobacco regulations or be sure to carefully draft new language in an existing ordinance that follows the unique
requirements of the new law.
Q16. If our city licenses edible cannabinoid products, how much can we
charge as a license fee?
A16. When setting fees, cities should consider a number of things. First, cities should not view municipal licensing as a significant source of revenue. License fees must approximate the direct and indirect costs associated with issuing the license and policing the licensed activities. License fees that significantly exceed these costs are considered unauthorized taxes.
This means a license fee may not be so high as to be prohibitive or produce any substantial
revenue beyond the actual cost to issue the license and to supervise, inspect, and regulate the licensed business.
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Zoning
Q17.What authority do cities have regarding zoning for where the products could be sold?
A17. Nothing in the new law limits a city’s zoning authority related to CBD and THC products.
No Minnesota court has interpreted the limits on zoning authority in this context, but at least one
court in another state has ruled that a state law related to cannabis did “not nullify a municipality’s inherent authority to regulate land use under [state] law so long as the municipality does not prohibit or penalize all medical marijuana cultivation … and so long as the municipality does not impose regulations that are unreasonable and inconsistent with regulations
established by state law.” DeRuiter v. Township of Byron, 505 Mich. 130, 949 N.W.2d 91 (2020). It is unknown if a Minnesota court would come to the same conclusion.
Cities should be thoughtful and intentional about how zoning regulations related to cannabinoid products affect their communities and work with their city attorney to determine what, if any, zoning restrictions should be adopted. Cities will need to consider not only zoning regulations
related to retail sales of CBD and THC products but also the manufacturing and production of
the products within the city. Unless specifically differentiated in a zoning ordinance, a city’s general manufacturing and production zoning provisions will likely apply to CBD and THC production as well.
Q18. Could cities adopt a moratorium prohibiting the sale, manufacturing or, distribution of cannabinoids so it can study the issue?
A18. A moratorium is a tool cities use to pause specific uses in order that the city may study the
issue in anticipation of future regulations. A moratorium is limited to a period of one year. To
adopt a moratorium, a city must follow the procedures in Minnesota Statute, section 462.355, subd. 4. The statute specifies the specific instances where a city may adopt a moratorium. If a city were to adopt a moratorium prohibiting the sale or manufacturing of edible cannabinoid products, it should work with its city attorney to clearly state the legal justification for the
moratorium.
If a city does adopt a moratorium, it must actually review and study the issue or meet one of the other requirements of the statute. More information on moratoriums can be found in the LMC Zoning Guide for Cities.
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City employment and personnel issues
Q19. Does the new Minnesota legal cannabinoid law change anything about
how we do drug testing for CDL holders?
A19. No, cities with positions requiring an employee to hold a commercial driver’s license (CDL) will recall these positions are regulated by federal law, and those regulations are
supervised by the Federal Department of Transportation (DOT). Federal law preempts state law
related to cannabinoid use; in fact the DOT states in its DOT Recreational Marijuana Notice it does not authorize the use of Schedule I drugs, including marijuana, for any reason. As a result, cities should continue to follow their drug-testing procedures related to CDL holders and may enforce prohibitions against any use of cannabinoids for CDL holders, regardless of state law
protections.
Although there is a legal difference between marijuana and hemp, DOT warns CDL drivers the hemp products could lead to a positive marijuana test; therefore CDL holders are ultimately responsible if those products lead to a positive marijuana test.
Cities can find more information on the effects of the new law on drug testing in the LMC Drug
and Alcohol Testing Toolkit, starting on page 22.
Q20. Does the new law change anything related to employees who carry a
firearm?
A20. No. Public safety employees who carry a firearm cannot lawfully use marijuana under federal law. Federal law prohibits cities from providing firearms or ammunition to an employee it knows or has reason to think is using marijuana. Although there is a legal difference between marijuana products and hemp products, it is the understanding of LMC that it may not be
possible to differentiate the products in a drug test. Officers should be mindful of any substance
they ingest because they are ultimately responsible if those products lead to a positive marijuana test.
Q21. Are there now “acceptable” limits of cannabinoids for non-CDL
employees for purposes of drug testing at work (i.e., those we test under state drug and alcohol testing law)?
A21. There isn’t a clear answer, since THC can remain in the body for several weeks after usage
(and long after any intoxicating or impairing effects have since disappeared), so positive test results may not indicate any wrongdoing on the employee’s part and may just be evidence of an employee’s lawful actions done outside of work. The League of Minnesota Cities recommends that employers thoroughly document any suspicions of an employee being under the influence
and to work closely with their city attorney(s) before taking any action against the employee.
With this new area of law, a city may want to avoid relying on the results of traditional tests that detect metabolites remaining in a person’s body (for many days or weeks after using marijuana) and instead focus on implementing reasonable-suspicion drug-testing protocols to detect marijuana intoxication based on behavioral observations. Keep in mind, employers may prohibit
all employees from being under the influence while the employee is working. That would
include employees who operate vehicles. Employers may want to revise their policies to clarify that employees still may not be under the influence of cannabis, legal or otherwise, while at work.
The National Drug-Free Workplace Alliance offers a toolkit to help employers work through the complex and confusing issue of marijuana and the workplace.
Q22. Can we still prohibit employees from being under the influence of cannabinoids while at work? Does the League have a model policy with
updated language?
A22. Yes, employers can continue to prohibit employees from being under the influence of cannabinoid products, including edibles, while at work. Although employers’ obligations and restrictions related to marijuana use vary widely across the states, there is no law we are aware of
that requires employers to allow cannabinoid use during work hours or to allow an employee to report to work impaired. Thus, employers may continue to maintain drug-free policies at the workplace and discipline employees who use cannabinoids during working hours or who report to work impaired. In fact, one could argue that under the Occupational Safety and Health Administration’s (OSHA) General Duty Clause of the Occupational Safety and Health Act,
employers are required to furnish a workplace free from recognized hazards that are likely to
cause serious physical harm. This provision of the Act is typically used in accident cases where toxicology screens are positive.
OSHA’s new electronic recordkeeping rule, clarified on 10/11/2018, states “If the employer chooses to use drug testing to investigate the incident, the employer should test all employees
whose conduct could have contributed to the incident, not just employees who reported injuries,”
with respect to using drug testing to evaluate the root cause of a workplace incident that harmed or could have harmed employees. Thus, if a city has a non-DOT drug-testing policy in place, a protocol following this guidance is important.
The League has a Non-DOT Drug and Alcohol Testing and Drug-Free Workplace Act model
policy that has been updated initially, and will be continually updated as the League learns more.
Q23. Can employees be in possession of edibles or other cannabinoid
products while at work?
A23. Cities may enact policies prohibiting employees from bringing cannabinoid products, including edibles, to work.
Q24. Do we need to change anything in our collective bargaining agreement
with regard to discipline of employees who use cannabinoid products?
A24. No, but ensure your city’s drug-testing policy has been updated and your supervisors are trained on the behavioral signs and symptoms associated with impairment. Of course, if the collective bargaining agreement includes language that policy changes need to be negotiated,
then there would need to be a meeting with the union if the city’s policy changes.
Q25. Can employees use cannabinoid products off-duty?
A25. It depends. Certain types of employees, such as law enforcement officers and other employees issued firearms and ammunition as part of their jobs, are subject to regulations from
the federal Bureau of Alcohol, Tobacco and Firearms, which prohibits firearms and ammunitions
to be given to individuals who do or are believed to use illegal drugs. As noted above, city positions required to hold a commercial driver’s license are subject to Department of Transportation regulations and are not authorized for the use of Schedule I drugs, including marijuana, for any reason. Thus, these types of employees could be prevented from using
cannabinoid products both on and off duty. Other employees who are not subject to that or other
federal regulations would likely be able to use cannabinoid products while they are off duty, as there is nothing under Minnesota law which prohibits certain classes of employees from using cannabinoid products off duty, as long as they are not impaired at work.
If there are any questions regarding whether an employee could be prevented from using
cannabinoid products while off-duty due to federal regulations, please consult your city attorney
before any action is taken.
Q26. How does this impact the requirements of the Drug-Free Workplace Act?
A26. It does not. The Drug-Free Workplace Act of 1988 (DFWA) requires federal grantees and
contractors to implement a drug-free workplace policy and establish a drug-free awareness program as a precondition for receiving a federal grant or a contract. However, the DFWA does not require covered employers to test employees for drugs or terminate them for drug-related violations, so the new Minnesota state law does not impact the DFWA directly. Minnesota law allows employers to prohibit employees from bringing legal cannabinoid products to work and
permits employers to prohibit employees from being under the influence while at work. It would be best practice for cities with drug-free work policies to keep those in effect. If a city wishes to do so, it can update its policy to include lawful cannabinoid products within its scope.
Q27. Should my city still continue to include marijuana as a pre-employment
panel screen for my Non-DOT employees?
A27. That is for each city to decide for itself. Because currently there are no devices or blood tests available that measure marijuana impairment, and because a best practice approach for
Non-DOT marijuana drug testing is to base testing on behavioral observations, some employers are excluding marijuana from their pre-employment Non-DOT drug screens. Some states even prohibit an employer from refusing to hire an applicant simply because of a positive drug test, but Minnesota is currently not one of these states at this time. Any city that chooses to continue to test for THC for Non-DOT positions must be aware of the fact that these substances may
remain in an individual’s system for weeks after the impairing effect of the drug has worn off. Thus, it will be difficult, if not impossible, to determine whether the positive test indicates usage in violation of the city’s drug-free workplace policy or indicates lawful usage during an employee’s time-off from work. Cities should consult with their city attorneys prior to taking any action based upon a positive drug test for THC.
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