HomeMy WebLinkAbout#04 - Regulation of THC EdiblesSTAFF REPORT
DATE: 08/10/2022
TO: City Council
FROM: Julie Johnson, City Clerk AGENDA ITEM: Regulation of THC Edibles REVIEWED BY: Kristina Handt, City Administrator
INTRODUCTION: The Minnesota Legislature recently enacted a new law allowing the sale of certain edible and
beverage products infused with tetrahydrocannabinol (THC). Some cities have enacted a
temporary moratorium banning sale of these products while the city drafts an ordinance regulating these products. ISSUE BEFORE THE CITY COUNCIL: Should the City consider an ordinance amendment regulating the sale of THC products through
zoning and/or licensing? DETAILS/ANALYSIS: 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 restrict where these products can be sold, but state liquor licensing laws would prohibit sale of these products at a liquor store.
A memo from the City Attorney regarding regulation of THC edibles along with ordinances enacted by other Minnesota communities are attached. FISCAL IMPACT: Potential licensing fees for sale of THC products.
ATTACHMENTS:
• July 15, 2022 Memo from Kennedy & Graven
• City of Edina Interim Ordinance
• City of Robbinsdale Interim Ordinance
• City of Stillwater Interim Ordinance
• City of White Bear Lake Interim Ordinance
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Offices in Minneapolis
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Fifth Street Towers 150 South Fifth Street, Suite 700 Minneapolis, MN 55402 (612) 337-9300 telephone (612) 337-9310 fax kennedy-graven.com Affirmative Action, Equal Opportunity Employer
To: Kristina Handt
From: Rachel Tierney, Acting City Attorney
Joseph L. Sathe, Assistant City Attorney Date: July 15, 2022
Re: Regulation of THC Products
This memorandum provides information on ways the city can potentially regulate the newly legalized products that contain up to 5mg of tetrahydrocannabinol (“THC”) derived from certified
hemp. We have addressed local government enforcement of the requirements of the law legalizing these products, Minnesota Statutes, section 151.72 (the “Act”), in a separate memo. I. BACKGROUND
Beginning on July 1, 2022, it became legal to sell certain products containing delta-9 THC (“THC
Products”) in Minnesota. The Act allows THC Products to be sold if certain requirements are met including that there are not more than 5mg of THC per dose and 50mg of THC per container; the purchaser is at least 21 years old; and the products are not marketed towards children. The Minnesota Board of Pharmacy (“Board”) is the state agency with oversight of THC
Products. There is currently no state-level license required in order to sell THC Products and the Board does not test or approve products prior to their sale.1 II. LOCAL REGULATION The Act neither explicitly allows nor explicitly prohibits local regulation of the sale of THC Products. Therefore, to determine whether a municipality can regulate the sale of THC Products, the municipality must have the authority to regulate the sale of THC products and must not be
preempted by state law. A municipality could rely upon its general police and general welfare power to regulate the sale of THC products. The two most applicable avenues through which the municipality can regulate the
sale of THC Products is through its licensing or zoning authority.
A. The Act Does Not Expressly Preempt Local Regulation The Act does not expressly require a city to allow the sale of THC Products, nor does it restrict a
city’s ability to regulate such facilities through additional zoning or licensing requirements.
1 Hemp Derived Products Frequently Asked Questions, page 5
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Nevertheless, a city cannot enact a local regulation if it conflicts with state law or if the state law
fully occupies a particular field of legislation so that there is no room for local regulation.
Any local regulations must not create an irreconcilable conflict with state law, but instead must be merely additional and complementary or in aid and furtherance of the Act. Also, local regulations must not exceed a city’s lawful licensing or zoning powers.
Two recent Minnesota Supreme Court cases indicate a deference for local ordinances that provide greater protections than state statutes.2 Additional licensing and zoning requirements adopted for the purpose of protecting the general welfare and ensuring the sale of THC Products are being conducted in accordance with the Act, including that THC Products are not being sold to
individuals under the age of 21, for example, would be considered greater protections than those
included in the Act. B. Licensing
A city may license a business or activity, either (1) when expressly allowed to do so by state statute;
or (2) when implied by statute, such as when a license is necessary for a city to perform its general statutory powers (like preventing public nuisance or protecting the general welfare). Since there is no express authority for a city to license a business selling THC Products a city must
look to an implied authority. The authority granted under the “general welfare” clause allows a
city to provide “for the suppression of vice and immorality, the prevention of crime, the protection of public and private property, the benefit of residence, trade, and commerce, and the promotion of health, safety, order, convenience, and the general welfare by such ordinances not inconsistent with the Constitution and laws of the United States or of this state as it shall deem expedient.”3
The Act contains very little regulatory structure, consumer protection, or general control of the sale of THC Products. Cities very clearly have an interest in ensuring the THC Products are being sold in the manner provided for in the Act, and individual cities may each want to study the impact of the sale of THC Products in each community and determine what additional regulation is
warranted to protect the general welfare of the city.
A licensing ordinance must be reasonable in its terms and conditions and cannot place unnecessary, unreasonable, or oppressive restrictions that conflict with the state or federal constitution. A licensing ordinance could include application requirements such as:
• terms;
• qualifications;
• bond and insurance requirements;
• hours of operation;
• reasons for denial, including no criminal conviction or license revocations related to
controlled substances;
2 Minnesota Chamber of Commerce v. City of Minneapolis, 944 N.W.2d 441 (Minn. 2020); and Graco v. City of Minneapolis, 937 N.W.2d. 756 (Minn. 2020). 3 Minn. Stat. 412.221, subd. 32
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• revocation and suspension of license;
• transferability; license fees;
• limiting the number of licenses;
• Requiring licensees to ID purchasers;
• Requiring THC products to be sold from behind a counter; and
• Identify how the city will conduct compliance checks.
C. Zoning
Zoning controls generally relate to uses of property and not the sale of individual products, so using the city’s zoning authority alone may not be an effective way to regulate the sale of THC Products. However, cities may use a combination of zoning and licensing provisions to regulate
the sale of THC Products.
i. Outright Prohibition A city could probably prohibit the sale of THC Product sales if it defines such sale as a “use” in
its zoning ordinance and has legitimate planning and zoning grounds for the ban. There is no
“right” to sell THC Products and cities have broad discretion in establishing zoning requirements. An outright ban would likely need to be combined with other general business regulations (e.g., licensing) since the sale of THC Products is currently not a primary use of land but can be sold at any retail store.
ii. Expressly Authorize THC Product Sales A city could expressly authorize THC Product sales at dedicated locations, establish the sale of THC Products as a dedicated permitted or conditional use, and consider imposing additional
regulations on those operations that it does authorize.
Some examples of zoning-type regulations might include:
• Restricting such uses to certain zoning districts;
• Capping the total number of THC-related land uses within the City or within certain zoning districts;
• Requiring that THC-related facilities not produce noxious odors;
• Requiring a minimum distance from certain land uses in addition to schools, such as child-care facilities; places of worship and other religious institutions; health care practitioners. and chemical dependency, alcohol and drug treatment facilities;
• Requiring a minimum distance between other THC-related uses;
• Requiring a minimum distance from liquor stores and bars; and
• Additional restrictions on signage and advertising. Instead of including these traditional zoning provisions in the zoning code, a city could consider
including similar provisions as part of a licensing regulatory scheme (e.g., only issue a license to
an THC Product business that is located within particular zoning districts). This approach would be more appropriate if a city chooses not to require THC Product sales at dedicated business locations.
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III. MORATORIUM/INTERIM ORDINANCE
A city may establish a moratorium on the sale of THC Products. Cities have the authority to place moratoria on zoning matters for up to one year under Minnesota
Statutes, section 462.355, subd. 4. Cities have also relied on the city’s police power to enact
moratoria on activities to be licensed by the city so long as the moratorium is limited in duration and enacted in good faith and without discrimination.4 Before adopting a moratorium, a city will first decide that it does want to regulate the sale of THC
Products in some manner. A moratorium would be for the purpose of studying licensing or zoning
regulations related to the sale of THC Products and prohibiting such sales in the city until the study is completed. IV. CONCLUSIONS
The state law legalizing the sale of THC Products includes minimal regulation and cities are left to establish individual regulations that can be tailored to the local needs of the community. Cities can rely on implied authority granted through its general welfare and police powers to regulate the sale of THC Products even though the Act does not contain express authority for such regulation.
A city could choose to use its licensing and/or zoning authority to restrict the sale of THC Products, and/or could issue a moratorium on the sale of THC Products to study the impacts of THC Product sales and develop appropriate restrictions. A comprehensive approach to regulating THC Products could include both licensing and zoning
aspects to ensure sales are in compliance with state law and any locally established regulations as well as regulating where within the city products can be sold. It is also important to keep in mind that the Minnesota Legislature may act, either during a special or regular session, to regulate the sale of THC Products which could impact how a city is able to
regulate THC products.
4 Almquist v. Town of Marshan, 245 N.W.2d 819 (Minn. 1976).
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ORDINANCE NO. 2022-06
AN INTERIM ORDINANCE PROHIBITING THE SALE, TESTING, MANUFACTUR ING, AND
DISTRIBUTION OF THC PRODUCTS
NOW, THEREFORE , the City Council of the City of Edina does ordain:
SECTION 1.BACKGROUND.
1.By enacting 2022 Session Law Chapter 98,Article 13,the Minnesota Legislature
amended Minn.Stat.§151.72 and permitted the sale of edible and nonedible
cannabinoid products that contain no more than 0.3 %of Tetrahydrocannabinol,
commonly known as THC (“THC Products”).
2.The new law does enact some requirements for labeling and testing,but the law
provides no parameters regulating production,compliance checks,or sales of THC
Products. The new law does not prohibit local regulation.
3.Pursuant to Minn.Stat.§462.355,subd.4,the City is authorized to enact by
ordinance a moratorium to regulate,restrict or prohibit any use within the jurisdiction
to protect the public health,safety,and welfare.Specifically,the City is authorized to
enact a moratorium ordinance to allow it to undertake a study to determine whether
to adopt any regulations or restrictions,including siting and location of uses,related
to the sales, testing, manufacturing, and distribution of THC Products.
4.Pursuant to its general police powers,including but not limited to,Minn.
Stat. § 421.221,subd.32,the City may enact and enforce regulations or restrictions
on THC Products within the City to protect the public safety,health,and welfare,
including restrictions and a moratorium on the use of sales,testing,manufacturing,
and distribution,during the pendency of a study to determine the need for police
power regulations, including but not necessarily limited to licensing and permitting.
SECTION 2.FINDINGS.
1.The City Council finds there is a need to study THC Products and uses and
businesses related thereto,in order to assess the necessity for and efficacy of
regulation and restrictions relating to the sales,testing,manufacturing,and
distribution of THC Products,including through licensing or zoning ordinances,in
order to protect the public health, safety, and welfares of its residents.
2.The study will allow the City Council to determine the appropriate changes,if any,
that that it should make to City ordinances.
3.The City Council,therefore,finds that there is a need to adopt a City-wide
moratorium of the sale,testing,manufacturing,and distribution of THC Products
within the City while City staff studies the issue.
SECTION 3. MORATORIUM .
1.No individual,establishment,organization,or business may sell,test,manufacture,
or distribute THC Products for twelve (12)months from the effective date of this
ordinance.
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2.The City shall not issue any license or permit related to THC Products or twelve (12)
months from the effective date of this ordinance.No license or permit application,of
any kind,by any individual,establishment,organization,or businesses involved in
the proposed sale,testing,manufacturing,or distribution of THC Products within the
City of Edina shall be accepted or considered for twelve (12)months from the
effective date of this ordinance.
3.Planning or zoning applications related to THC Products or applications from
individuals,establishments,organizations,or businesses involved in the proposed
sale,testing,manufacturing,or distribution of THC Products within the City of Edina
shall not be accepted or considered for twelve (12)months from the effective date of
this ordinance.
SECTION 4.STUDY.The City Council directs City staff to study the need for local regulation
regarding the sale,testing,manufacturing,or distribution of THC Products within the City of
Edina.Staff must also study the need for creating or amending zoning ordinances,licensing
ordinances,or any other ordinances to protect the citizens of Edina from any potential negative
impacts of THC Products.Upon completion of the study,the City Council,together with such
commission as the City Council deems appropriate,or as may be required by law,will consider
the advisability of adopting new ordinances or amending its current ordinances.
SECTION 5.ENFORCEMENT.The City may enforce this Ordinance by mandamus,
injunctive relief,or other appropriate civil remedy in any court of competent jurisdiction.The City
Council hereby authorizes the City Manager,in consultation with the City Attorney,to initiate any
legal action deemed necessary to secure compliance with this Ordinance.A violation of this
Ordinance is also subject to the City’s general penalty in City Code § Sec. 1-18 subd. (b).
SECTION 6.TERM.Unless earlier rescinded by the City Council,the moratorium established
under this Ordinance shall remain in effect until twelve (12)months from its effective date,at
which point, it will automatically expire.
SECTION 7.EFFECTIVE DATE.This Ordinance shall be in full force and effect from and
after its passage by the City Council.
This ordinance is effective upon adoption.
First reading: July 19, 2022
Second reading: August 3, 2022
ATTEST:
_______________________________________________________________
Sharon Allison, City Clerk James B. Hovland, Mayor
Please publish in the Edina Sun Current on:
Send two affidavits of publication
Bill to Edina City Clerk
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ORDINANCE NO. _______
CITY OF STILLWATER
WASHINGTON COUNTY, MINNESOTA
AN INTERIM ORDINANCE PROHIBITING ACCEPTANCE OR
CONSIDERATION OF APPLICATIONS FOR NEW CANNABIS AND CANNABIDIOL
SALES, TESTING, MANUFACTURING AND DISTRIBUTION FOR ONE YEAR
WHEREAS, many cities have adopted interim ordinances or regulations on aspects of
planning and zoning regulations to study their impacts and determine whether the regulations are
appropriate in order to protect the public health, safety and welfare of their citizens; and
WHEREAS, the City is undertaking a study to effectuate changes to the Zoning Ordinance
and City Code that would regulate the sales, testing, manufacturing and distribution of cannabis
and cannabidiol (CBD) for medical, recreational and other purposes and may implement many of
the suggestions from the study.
NOW, THEREFORE, pursuant to Minnesota Statutes, Section 462.355 subdivision 4,
the City Council of Stillwater does ordain:
SECTION 1. No applications related to the license, use, development, variances,
conditional use permits or any other planning or licensing applications that involves the sales,
testing, manufacturing or distribution of cannabis, medical or recreational, in any way, and
cannabidiol products shall be accepted or considered for twelve (12) months from the effective
date of this ordinance or until ordinances regulating such uses become effective, whichever
occurs first.
SECTION 2. City Staff is directed to conduct a study to gather information and make a
recommendation to determine how the Zoning Ordinance and City Code need to be amended
regarding this use to better protect the citizens of Stillwater.
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. No zoning or
licensing applications will be accepted until the City adopts regulations regarding these
uses, or for a period of one year, whichever occurs first.
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 or 12 months from its effective date,
whichever comes first.
Approved this ____________day of __________________, 2021.
Ted Kozlowski, Mayor
ATTEST:
Beth Wolf, City Clerk