File #: 24-056-O    Name:
Type: Ordinance Status: Second Reading
File created: 11/4/2024 In control: Public Safety
On agenda: 11/12/2024 Final action:
Title: ORDINANCE ADDING A NEW CHAPTER 8A TO THE DULUTH CITY CODE REGULATING CANNABIS BUSINESSES AND AMENDING SECTION 12-2(k) OF CHAPTER12 ADDING VIOLATIONS OF CHAPTER 8A.

Title

ORDINANCE ADDING A NEW CHAPTER 8A TO THE DULUTH CITY CODE REGULATING CANNABIS BUSINESSES AND AMENDING SECTION 12-2(k) OF CHAPTER12 ADDING VIOLATIONS OF CHAPTER 8A.

 

Body

CITY PROPOSAL:

The city of Duluth does ordain:

                     Section 1.                     That Chapter 8A be added to the Duluth City Code as follows:

 

CHAPTER 8A

 

CANNABIS.

 

Article 1. Cannabis

 

Sec. 8A-1.                      Findings and Purpose.

                     The purpose of this ordinance is to implement the provisions of Minnesota Statutes, Chapter 342, which authorizes the city of Duluth to protect the public health, safety, welfare of the city’s residents by regulating cannabis businesses within the city.

Sec. 8A-2.                     Authority & Jurisdiction.

                     (a)                     Minn. Stat. 342.13(c), regarding the authority of a local unit of government to adopt reasonable restrictions of the time, place, and manner of the operation of a cannabis business provided that such restrictions do not prohibit the establishment or operation of cannabis businesses.

                     (b)                     Minn. Stat. 342.22, regarding the local registration and enforcement requirements of state-licensed cannabis retail businesses and lower-potency hemp edible retail businesses.

                     (c)                     Minn. Stat. 152.0263, Subd. 5, regarding the use of cannabis in public places.

                     (d)                     Minn. Stat. 462.357, regarding the authority of a local authority to adopt zoning ordinances.

Sec. 8A-3.                     Definitions.

                     Unless otherwise noted in this Section, words and phrases contained in Minn. Stat. § 342.01 and the rules promulgated pursuant to any of these acts, shall have the same meanings in this Section:

                     (a)                     Cannabis Cultivation.  A cannabis business licensed to grow cannabis plants within the approved amount of space from seed or immature plant to mature plant, harvest cannabis flower from mature plant, package and label immature plants and seedlings and cannabis flower for sale to other cannabis businesses, transport cannabis flower to a cannabis manufacturer located on the same premises, and perform other actions approved by the OCM.

                     (b)                     Cannabis retail businesses. A cannabis retail location and the retail location(s) of a mezzobusinesses with a retail operations endorsement, microbusinesses with a retail operations endorsement, medical combination businesses operating a retail location, and excluding lower-potency hemp edible retailers.

                     (c)                     Cannabis retailer.  Any person, partnership, firm, corporation, or association, foreign or domestic, selling cannabis product to a consumer and not for the purpose of resale in any form.

                     (d)                     Compliance checks. The system the city uses to investigate and ensure that those authorized to sell licensed products are following and complying with the requirements of this article. Compliance checks may also be conducted by the city or other units of government for educational, research, and training purposes, or for investigating or enforcing federal, state, or local laws and regulations relating to licensed products.

                     (e)                     Office of Cannabis Management.  Minnesota Office of Cannabis Management, referred to as “OCM” in this section.

                     (f)                     Movable place of business.  A business which has no permanent physical location or is capable of being moved or changed, including, but not limited to, any business that is operated from a kiosk, other transportable structure of shelter, or a motorized or nonmotorized vehicle.

                     (g)                     Place of public accommodation.  A business, accommodation, refreshment, entertainment, recreation, or transportation facility of any kind, whether licensed or not, whose goods, services, facilities, privileges, advantages or accommodations are extended, offered, sold, or otherwise made available to the public.

                     (h)                     Preliminary license approval.  OCM pre-approval for a cannabis business license for applicants who qualify under Minn. Stat. § 342.17.

                     (i)                     Public place.  A public park or trail, public street or sidewalk; any enclosed, indoor area used by the general public, including, but not limited to, restaurants; bars, any other food or liquor establishment; hospitals; nursing homes; auditoriums; arenas; gyms; meeting rooms; common areas of rental apartment building, and other places of public accommodation.

                     (j)                     Residential treatment facility.  As defined under Minn. Stat. § 245.462, Subd. 23.

                     (k)                     Retail establishment. Any place of business where licensed products are available for sale to the general public, including, but not limited to, grocery stores, tobacco products shops, convenience stores, gasoline service stations, bars, and restaurants.

                     (l)                     Retail registration.  An approved registration issued by the city to a state-licensed cannabis retail business.

                     (m)                     School.  A public school as defined under Minn. Stat. § 120A.05 or a nonpublic school that must meet the reporting requirements under Minn. Stat. § 120A.24.

                     (n)                     Self-service merchandising. Open displays of licensed products in any manner where any person has access to the licensed products without the assistance or intervention of the licensee or the licensee's employee. Assistance or intervention means the actual physical exchange of the licensed product between the customer and the licensee or employee.

                     (o)                     State license.  An approved license issued by the OCM to a cannabis retail business.

                     (p)                     THC.  Tetrahydrocannabinol.

                     (q)                     Tobacco products shop.  The meaning given in Section 8-7(a)(17) of this Code.

                     (r)                     Vending machine.  Any mechanical, electric, or electronic, or other type of device that dispenses licensed products upon the insertion of money, tokens, or other form of payment directly into the machine by the person seeking to purchase the licensed product.

Sec. 8A-4.                     Retail Registration of Cannabis Businesses.

                     (a)                     Retail registration required.  No individual or entity may operate an OCM state-licensed cannabis retail business within the city without first registering with the city.

                     (b)                     Application.

                                          (1)                     An application for registration of a cannabis retail business shall be made on a form provided by the city and in accordance with Chapter 31 of this Code. The application must contain the following:

                                                               (A)                     The full name of the applicant;

                                                               (B)                     The applicant's residential and business addresses;

                                                               (C)                     Tax property identification number for the property which the retail registration is sought;

                                                               (D)                     Telephone numbers, e-mail address, and the name of the business for which the registration is sought;

                                                               (E)                     A copy of OCM license preapproval; and

                                                               (F)                     Any additional information the city deems necessary.

                                          (2)                     If the city clerk determines that an application is incomplete, they shall return the application to the applicant with notice of the information necessary to make the application complete.

                                          (3)                     A business applicant, at the time of application, shall furnish the city with a list of all persons that have an interest of five (5) percent or more in the business. The list shall name all owners and show the interest held by each, either individually or beneficially for others.                                           (4)                     It is the duty of each business registration holder to notify the city clerk in writing of any change in ownership in the business. Any change in the ownership or control of the business shall be deemed equivalent to a transfer of the registration, and any such registration shall be revoked thirty (30) days after any such change in ownership or control unless the registration holder has notified the city clerk of the change in ownership by submitting a new registration application for the new owners, and the city clerk has approved the transfer of the registration by appropriate action.

                                          (5)                     Any time an additional investigation is required because of a change in ownership or control of a business, the business registration holder shall pay an additional investigation fee to be determined by the city.

                                          (6)                     The city may at any reasonable time examine the transfer records and minute books of any business registration holder to verify and identify the owners, and the city may examine the business records of any other business registration holder to the extent necessary to disclose the interest which persons other than the business registration holder have in the registered business.

                                          (7)                     The city may revoke any registration issued upon its determination that a change of ownership of a business registration holder has actually resulted in the change of control of the registered business so as materially to affect the integrity and character of its management and its operation, but no such action shall be taken until after a hearing by the Alcohol-Gambling and Tobacco Commission on notice to the business registration holder.

                     (c)                     Zoning pre-approval and preliminary compliance checks.

                                          (1)                     Prior to issuance of a cannabis retail business registration, the city may conduct a preliminary compliance check to ensure compliance with local ordinances established pursuant to Minn. Stat. §342.13.

                                          (2)                     Pursuant to Minn. Stat. §342, within 30 days of receiving a copy of a state license application from OCM, the city shall certify on a form provided by OCM whether a proposed cannabis retail business complies with local zoning ordinances and, if applicable, whether the proposed business complies with the state fire code and building code.

                     (d)                     Action. The city may either approve or deny the registration application, or it may delay action for a reasonable time to complete any investigation of the application or the applicant it deems necessary. A state-licensed cannabis retail business application shall not be approved or renewed if the applicant is unable to meet the requirements of this chapter.  If the city approves the registration, the city clerk shall issue the registration to the applicant. If the city denies the application, notice of the denial shall be given to the applicant along with notice of the applicant's right to appeal the city's decision. If a registration application is denied, the earliest an applicant may reapply is 12 months from the date the registration is denied.

                     (e)                     Term. All registrations issued under this article shall be valid for one calendar year from the date of issue.

                     (f)                     Revocation or suspension. Any registration issued under this Article may be revoked or suspended as provided in this Section.

                     (g)                     Transfers prohibited. All registrations issued under this article shall be valid only on the premises for which the registration was issued and only for the person or business to whom the registration was issued. The transfer of any registration to another location, business, or person is prohibited.

                     (h)                     Display. All registrations shall be posted and displayed in plain view of the general public on the registered premises.

                     (i)                     Renewals. The renewal of a registration issued under this Article shall be handled in the same manner as the original application. The request for a renewal shall be made at least 30 days but no more than 60 days before the expiration of the current registration. The issuance of a registration issued under this Section is a privilege and does not entitle the registration holder to automatic renewal of the registration.

                     (j)                     Maximum number of registrations. The maximum number of retail cannabis registrations issued by the city at any time is limited to one (1) per twelve-thousand five hundred (12,500) residents. A state-licensed cannabis retail business application shall not be approved if the cannabis retail business would exceed the maximum number of registered cannabis retail businesses permitted under this chapter.  When the maximum number of registrations has been issued, the city may place persons seeking registration on a waiting list and allow them to apply on a first-come, first-served basis, as registrations are not renewed or are revoked.  A new applicant who has purchased a business location holding a valid city registration will be entitled to first priority, provided the new applicant meets all application requirements in this chapter.

                     (k)                     Registration Fees. No registration shall be issued under this Section until the appropriate registration fee is paid in full. The fee for a registration under this Section shall be established by the city and adopted in the city fee schedule, and may be amended from time to time.

                     (l)                     Background and Financial Investigations. The city may conduct a background and financial investigation on all new applications. The city may conduct a background and financial investigation on an application for a renewal of a registration if the city determines it is in the public interest to do so.

                     (m)                     Minimum Buffer Requirements. The city shall not issue a registration authorizing retail cannabis sales to any business located in a prohibited alcohol license and sales area under Sec. 8-68 of this Code. 

                     (n)                     Ineligibility and Basis for Denial, Suspension, or Revocation of Registration.

                                          (1)                     Ineligibility

                                                               (A)                     Movable place of business. No registration shall be issued to a movable place of business. Only fixed location businesses shall be eligible for retail registration under this Chapter.

                                                               (B)                     City location required. A person who does not have, or at the time of the issuance of the registration does not plan to have, at least one permanent physical premises in the city at which the registered business will be located shall ineligible for registration under this Chapter.

                                          (2)                     Grounds for Denial, Suspension, or Revocation. Grounds for suspending, revoking, or denying the issuance or renewal of a registration under this Chapter include, but are not limited to, the following:

                                                               (A)                     The applicant is under the age of 21 years.

                                                               (B)                     The applicant is prohibited by federal, state, or other local law, ordinance, or other regulation from holding a valid license issued through OCM.

                                                               (C)                     The applicant has had a city registration or OCM-issued license to sell cannabis products suspended or revoked during the 12 months preceding the date of application, or the applicant has or had an interest in another premises authorized to sell licensed products, whether in the city or in another jurisdiction, that has had a city registration or OCM-issued license to sell cannabis products suspended or revoked during the same time period, provided the applicant had an interest in the premises at the time of the revocation or suspension, or at the time of the violation that led to the revocation or suspension.

                                                               (D)                     The applicant is a business that does not have an operating officer or manager who is eligible pursuant to the provisions of this chapter.

                                                               (E)                     The applicant is the spouse of a person ineligible for registration pursuant to this chapter or who, in the judgement of the city, is not the real party in interest or beneficial owner of the business to be operated, under the registration.

                                                               (F)                     The applicant or registrant fails to provide required information to the city; denies city officials responsible for verifying compliance with this chapter access to the registered premises or necessary business records; or provides false or misleading information to the city.

                                                               (G)                     No registration shall be granted or renewed for operation on any premises on which real estate taxes, assessments, or other financial claims of the city or of the state are due, delinquent, or unpaid. If an action has been commenced pursuant to the provisions of Minn. Stats. Ch. 278, questioning the amount or validity of taxes, the city may, on application by the business registration holder, waive strict compliance with this provision; no waiver may be granted, however, for taxes, or any portion thereof, which remain unpaid for a period exceeding one year after becoming due unless such one-year period is extended through no fault of the business registration holder.

8A-5.                     Operating Standards of Registered Retail Establishments.

                     (a)                     Violation of City Code.  If a registration holder violates this section or any other provision of the City Code or poses an immediate threat to the health or safety of the public, the registration may be immediately suspended.  The city shall notify the cannabis retail business in writing the grounds for the suspension.

                     (b)                     Minimum Employment Age.  A registered retail establishment may not employ or contract with any individual under 21 years of age if the individual’s scope of work involves the handling of cannabis plants, cannabis flower, artificially derived cannabinoids, or cannabinoid products.

                     (c)                     Any OCM state-licensed cannabis retail business without a valid retail registration that sells cannabis or cannabis products, except lower-potency hemp edible products, within the city shall incur a civil penalty of up to $2,000 for each violation.

                     (d)                     No person shall sell or offer to sell any cannabis product:

                                          (1)                     By means of any type of vending machine or by means of delivery.

                                          (2)                     By means of self-service merchandising.

                                          (3)                     By any other means, to any other person, or in any other manner or form prohibited by state or other local law, ordinance provision, or other regulation.

                     (e)                     Legal Age. No person shall sell any cannabis or lower-potency hemp edible product to any person under the age of 21.

                                          (1)                     Age verification. Registered businesses shall verify by means of government issued photographic identification that the purchaser is at least 21 years of age. Verification is not required for a person over the age of 30, but an unlawful sale to a person who appeared to be 30 years of age or older does not constitute a defense to a violation of this subsection.

                                          (2)                     Signage. Notice of the legal sales age and age verification requirement must be posted prominently and in plain view at all times at each location where licensed products are offered for sale. The required signage, which will be provided to the registration holder by the city, must be posted in a manner that is clearly visible to anyone who is or is considering making a purchase.

                     (f)                     Samples Prohibited. No person shall distribute samples of any cannabis product free of charge or at a nominal cost.

                     (g)                     Storage. All cannabis products shall either be stored behind a counter or other area not freely accessible to customers, or in a case or other storage unit not left open and accessible to the general public.

                     (h)                     Responsibility. All registered businesses are responsible for the actions of their employees regarding the sale, offered sale, handling, and furnishing of cannabis products on the registered premises. Nothing in this section shall be construed as prohibiting the city from also subjecting the employee to any civil penalties authorized under this ordinance, state or federal law, or other applicable law or regulation.

                     (i)                     Compliance checks and inspections. All premises registered under this Chapter shall be open to inspection by the city during regular business hours. From time to time, but at least once per year, the city shall conduct compliance checks to assess if the business meets age verification requirements, as required under Minn. Stat. §342.22, subd. 4(b) and Minn. Stat.§342.24 and this Section. The city shall conduct at minimum one unannounced age verification compliance check at least once per calendar year. Additionally, from time to time, the city may conduct inspections to determine compliance with any or all other aspects of this Chapter.

                                          (1)                     Age verification compliance checks shall involve persons at least 17 years of age but under the age of 21 who, with the prior written consent of a parent or guardian if the person is under the age of 18, attempt to purchase adult-use cannabis flower, adult-use cannabis products, lower-potency hemp edibles, or hemp-derived consumer products under the direct supervision of a city employee or law enforcement officer.

                                          (2)                     No person involved in a compliance check shall attempt to use a false identification misrepresenting their age. All persons lawfully engaged in a compliance check shall answer all questions about their age asked by the registered business or their employee, and produce any identification in their possession, if any, upon the request of the registered business or their employee. Nothing in this section shall prohibit compliance checks authorized by state or federal laws for educational, research, or training purposes, or required for the enforcement of a particular State or Federal law.

                                          (3)                     Any failures under this section must be reported to the OCM.

                     (j)                     Hours of Operation - Registered cannabis retail businesses are limited to retail sale of cannabis, cannabis flower, or cannabis products between the hours of 10:00 a.m. and 9:00 p.m., Monday through Sunday.

8A-6.                     Denial, Suspension, and Revocation of Registrations; Civil Penalties.

                     (a)                     Denial, Suspension, and Revocation. A person or registered cannabis retail business violating this Chapter may be denied a registration or have their registration suspended or revoked.

                     (b)                     Civil Penalties. Subject to Minn. Stat. §342.22, subd. 5(e) the city may impose a civil penalty, as specified in the city’s fee schedule, for registration violations, not to exceed $2,000 for each violation of this Chapter.

                     (c)                     Notice of Violations. Any person or registered cannabis retail business that is denied a registration, has their registration suspended or revoked, or is assessed a civil penalty must be provided written notice of the basis for the sanction and an explanation of the person’s or registered cannabis retail business’ right to request a hearing. 

                     (d)                     Hearings. Within 30 days of receiving notice of a violation from the city, any person or registered cannabis retail business that is assessed a civil penalty, denied a registration, or that has their registration suspended or revoked for a violation of this Chapter may request a hearing pursuant to Section 8-9, paragraph (a) of this Code before the Alcohol, Gambling and Tobacco Commission. The Alcohol, Gambling and Tobacco Commission may stay proceedings on any violation of this Chapter when all or part of the factual basis for the violation is under review or appeal before OCM.  

                     (e)                     Notification to OCM.  The city shall immediately notify the OCM in writing the grounds for any revocation or suspension.  OCM will provide the city and cannabis business retailer a response to the complaint within seven calendar days and perform any necessary inspections within 30 calendar days.

                     (f)                     Length of Suspension.  The suspension of a cannabis retail business registration must be for up to 30 calendar days, unless OCM suspends the license for a longer period.  The business may not make sales to customers if their registration is suspended.

                     (g)                     The city may reinstate a registration if it determines that the violations have been resolved.

                     (h)                     The city shall reinstate a registration if OCM determines that the violations have been resolved.

8A-7.                     Use in Public Place.

                     No person shall use cannabis flower, cannabis products, lower-potency hemp edibles, or hemp-derived consumer products in a public place or a place of public accommodation unless the premises is an establishment or an event licensed to permit on-site consumption.

8A-8.                     Severability.

                     If any part, section or provision of this Chapter is held invalid, such invalidity will not affect other sections or provisions that can be given force and effect without the invalidated section or provision.

8A-9.                     Temporary Cannabis Events.

                     (a)                     Permit required for Temporary Cannabis Event. A permit issued by the city clerk is required prior to holding a Temporary Cannabis Event.

                     (b)                     Application Procedure. Application for a Temporary Cannabis Event Permit shall be made on a form provided by the city and in accordance with Chapter 31 of this Code. Said form shall include, but is not limited to:

                                          (1)                     Full name of the property owner and applicant;

                                          (2)                     Address, email address, and telephone number of the applicant;

                     (c)                     The applicant shall include with the form:

                                          (1)                     The application fee as required in the city’s fee schedule.

                                          (2)                     A copy of the OCM cannabis event license application, submitted pursuant to Minn. Stat. §342.39, subd. 2.

                     (d)                     The application shall be submitted to the city clerk for review.  If the city clerk determines that a submitted application is incomplete, they shall return the application to the applicant with the notice of deficiencies.

                     (e)                     Once an application is considered complete, the city clerk shall inform the applicant as such, process the application fees, and forward the application to the Alcohol-Gambling and Tobacco Commission for approval or denial.

                     (f)                     The application fee shall be non-refundable once processed.

                     (g)                     A request for a Temporary Cannabis Event that does not meet the requirements of this section shall be denied.  The city shall notify the applicant of the standards not met and basis for denial.

                     (h)                     Temporary Cannabis Events shall only be held at Bayfront Festival Park.

                     (i)                     Temporary Cannabis Events shall only be held between the hours of 10:00am and 9:00pm.

                     (j)                     The city may deny a Temporary Cannabis Event permit application, suspend or revoke a Temporary Cannabis Event permit, or impose a civil penalty on permit holders or other individuals violating this chapter pursuant to procedures and requirements of section 8A-6, above.

                     Section 2.                     That Section 12-2(k) of Chapter 12 of the Duluth City Code be amended as follows:

                     (k)                     Violation.  Any violation of the Code, including but not limited to the following provisions of the Code:

                                          (1)                     Chapter 4.                     Airports;

                                          (2)                     Chapter 5.                     Amusements;

                                          (3)                     Chapter 6.                     Animals and Fowl;

                                          (4)                     Chapter 8.                     Beverages;

                                          (5)                     Chapter 8A.                     Cannabis

                                          (56)                     Chapter 9.                     Bicycles;

                                          (67)                     Chapter 10.                     Buildings;

                                          (78)                     Chapter 11.                     Cigarettes;

                                          (89)                     Chapter 15.                     Dances and Dance Halls;

                                          (910)                     Chapter 21.                     Fire Protection;

                                          (1011)                     Chapter 24.                     Garbage and Other Solid Waste;

                                          (1112)                     Chapter 25.                     Gasoline Filling Stations;

                                          (1213)                     Chapter 26.                     Harbors, Docks and Bridges;

                                          (1314)                     Chapter 27.                     Hawkers, Peddlers and Transient Businesses;

                                          (1415)                     Chapter 28.                     Health and Sanitation;

                                          (1516)                     Chapter 29.                     Hotels, Motels and Motor Courts;

                                          (1617)                     Chapter 29A.                     Housing Code;

                                          (1718)                     Chapter 30.                     Abandoned Property and Abandoned or Inoperative Vehicles;

                                          (1819)                     Chapter 33.                     Motor Vehicles and Traffic;

                                          (1920)                     Chapter 34.                     Offenses--Miscellaneous;

                                          (2021)                     Chapter 35.                     Parks and Recreation;

                                          (2122)                     Chapter 36.                     Pawnbrokers and Metal Dealers;

                                          (2223)                     Chapter 43.                     Sewers and Sewage Disposal;

                                          (2324)                     Chapter 43A.                     Illicit Discharges to the City Storm Sewer System

                                          (2425)                     Chapter 44A.                     Skywalk System;

                                          (2526)                     Chapter 45.                     Streets, Sidewalks and Public Grounds;

                                          (2627)                     Chapter 47.                     Vehicles for Hire;

                                          (2728)                     Chapter 48.                     Water and Gas;

                                          (2829)                     Chapter 49.                     Weapons;

                                          (2930)                     Chapter 50.                     Unified Development;

                     Section 3.                     That this ordinance shall take effect 30 days after its passage and publication.                     

 

Statement of Purpose

STATEMENT OF PURPOSE: This ordinance adds a new Chapter 8A to the Duluth City Code regulating cannabis businesses and amends Section 12-2(k) of Chapter 12 to provide for administrative enforcement of the new Chapter 8A.