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PC APPROVED Minutes 04-14-16 APPROVED Minutes Spokane Valley Planning Commission Council Chambers—City Hall, April 14,2016 Chair Graham called the meeting to order at 6:00 p.m. Commissioners, staff and audience stood for the pledge of allegiance. Administrative Assistant Deanna Horton took roll and the following members and staff were present: Kevin Anderson Erik Lamb, Deputy City Attorney Heather Graham Lori Barlow, Senior Planner James Johnson Christina Janssen, Planner Tim Kelley Jenny Nickerson, Senior Plans Examiner Mike Phillips Suzanne Stathos Elisha Heath, Office Assistant Joe Stoy Deanna Horton, Secretary of the Commission Commissioner Stoy moved to accept the April 14, 2016 agenda as presented The vote on the motion was seven in favor, zero against and the motion passed Commissioner Johnson moved to approve the March 10, 2016 minutes as they were presented The vote on the motion was seven in favor, zero against, and the motion passed COMMISSION REPORTS: The Commissioners had no reports. ADMINISTRATIVE REPORT: Senior Planner Lori Barlow reported there is a joint study session schedule for May 3, 2016 between the City Council and the Planning Commission to discuss draft goals and polices which could be included in the City's Comprehensive Plan. PUBLIC COMMENT: There were no public comments. COMMISSION BUSINESS: Public Hearing: CTA-2015-0006 proposed amendments to Spokane Valley Municipal Code (SVMC) 19.85 Marijuana Uses, 19.120.050 Permitted Use Matrix and Appendix A,Definitions After reading the rules for a public hearing Chair Graham opened the public hearing at 6:08 p.m. for CTA-2015-0006: proposed amendments to Spokane Valley Municipal Code(SVMC) 19.85 Marijuana Uses, 19.120.050 Permitted Use Matrix and Appendix A, Definitions. Deputy City Attorney Erik Lamb gave the Commission and audience a presentation outlining the process of amending the current marijuana regulations and the current moratoriums which are in place. Recreational marijuana is legal in the state of Washington and uses are licensed by the Washington State Liquor and Cannabis Board(WSLCB), Marijuana use is governed by numerous laws and codes: Federal, State and City. The passage of I-502 did not address how the State would regulate the medical marijuana side of industry. • In 2015 the State Legislature passed bills to reconcile medical and recreational marijuana markets o Maintains the same licensing system through the WSLCB o Adds `medical marijuana endorsement' for licensed retail stores o Eliminates collective gardens effective July 1, 2016 o Establishes cooperatives for up to four patients o Cities may reduce the state buffers to 100 feet, except around schools and playgrounds o Establishes a transportation license o Establishes a research license o Allows qualified patients to grow up to 15 plants per housing unit o WSLCB must increase the number of allocated retail locations to accommodate medical marijuana needs • Emergency Rules in Oct. of 2015 04-14-16 Planning Commission Minutes Page 2 of 8 • Proposed final rules should be complete by mid-2016 • Sets the number of retails stores statewide at 556. Still three for Spokane Valley, but if the moratorium were lifted,would likely go to six. • No limit on number of producers and processors • Sets rules for cooperatives,which must register with the WSLCB Mr.Lamb explained the Dept. of Health has been taxed with developing rules for`medical' marijuana. Since marijuana is still a controlled substance it cannot be tested for medicinal qualities. • Emergency rules in 2015 • Proposed final rules should be complete in mid-2016 • Designates `compliant' marijuana,related to testing levels of CBC/THC • Tax exempt for qualified patients • Anyone over 21, and certain minor patients, may purchase compliant marijuana. • Only qualified patients may purchase: o High THC compliant marijuana o Higher volumes of marijuana o Receive a tax exemption Mr. Lamb covered the current status of the marijuana moratoriums in the City: • A Moratorium on new medical marijuana uses, unlicensed marijuana uses, was established December 9, 2014 • A moratorium on new marijuana uses licensed by the licensed by the WSLCB was established October 6, 2015 • Both moratoriums require the City to develop appropriate local regulations giving effect to 2015 State legislative amendments. • Prior to the moratoriums: • The City had established zoning and buffer restrictions on recreational marijuana which were adopted in July of 2014 • The adopted regulations applied to licensed retailers, producers, and processors • Marijuana production is permitted in the Heavy Industrial and the Light Industrial zones outright and is permitted in a limited manner in the Regional Commercial and Community Commercial zones • Marijuana processing is permitted in the Heavy Industrial and the Light Industrial zones outright and is permitted in a limited manner in the Regional Commercial and Community Commercial zones • The local buffers for both production and processing are these facilities cannot be located within 1,000 feet of City Hall, CenterPlace, any vacant City property(other than stormwater and public rights-of-way), vacant library property and vacant school property • Marijuana retails sales are permitted in the Mixed Use Center, Corridor Mixed Use, Regional Commercial and Community Commercial zones. • The local buffers for retails sales are these facilities cannot be located within 1,000 feet of City Hall, CenterPlace, any vacant City property(other than stormwater and public rights-of-way), vacant library property and vacant school property, the Appleway Trail and the Centennial Trail Mr. Lamb explained the Planning Commission had been through an extensive process to develop the proposed draft changes to the SVMC regarding the marijuana regulations. There had been meetings on(noted by staff after meeting September 24), October 22,November 12, December 10, 2015, February 25 and March 10,2016. The Planning Commission took a field trip in which they: 04-14-16 Planning Commission Minutes Page 3 of 8 • Did a`windshield tour' of Grow Op Farm located at 2611 N Woodruff,where it was noted this is the highest-producing facility in dollar value in Washington but very nondescript from the exterior • Toured Driftboat production/processing facility located at 18101 E Euclid Avenue. Manager Stan Fong and property owner Paul Bielec discussed the operations located at this facility • Visited Locals Canna House retail facility located at 9616 E Sprague Avenue where staff and Commissioners spoke to shop owner Doug Pederson about his operations Mr. Lamb commented the Planning Commission has also received information from staff, from the public, from the police and fire departments. Based on previous discussions with the Planning Commission staff drafted proposed amendments to the marijuana regulations which in short: • Do not allow for any new marijuana processors • Do not allow for any new marijuana producers • Do not allow for any new marijuana retail stores • Do not allow for any cooperatives Appendix A, the definitions have been amended to be updated with the correct language. A new definition for a marijuana club or lounge has been added and a line in the Permitted Use Matrix has been added showing it is not allowed in any of the City's zones. The Permitted Use Matrix has been amended to show the line items on the matrix have been changed from an `S' which refers to Supplemental regulations, to being struck out meaning that use is not allowed in any zone. Home grows are allowed in all low density residential zones, but the residence must comply with all local building codes, the grow must be indoors in a permanent structure, no smell, no ability to see it from outside.Language has been added regarding rental property and disclosure is required if the owner asks for it. Processing is allowed at home, but no chemical processing is allowed in a residence. The SEPA Determination of Nonsignificance for this amendment will be issued April 15, 2016. Mr.Lamb wanted to address the questions from the last meeting. The first question was regarding how the tax exemption applies to qualified patients. Marijuana sales are charged a state excise tax of 37%, along with applicable state sales and use tax. All of these taxes would be exempt to a qualified patient. Mr. Lamb clarified that "qualified patients" are only patients who had been to a doctor, get an authorization card and register with the state system. The next question was if there were regulations regarding prohibiting the selling of marijuana to impaired purchasers. There is currently no law which prohibits selling marijuana to a marijuana impaired purchaser. Commissioner Anderson clarified only 15 plants are allowed per housing unit,but they are not allowed in a multi-family zone. Commissioner Graham didn't remember eliminating cooperatives from the regulations. Mr. Lamb confirmed it being part of the proposed deleted language based on Commission discussion and was in the draft regulations sent in the most recent packet. Commissioner Anderson asked how the nonconforming regulations would work if the lease of one of the retail shops should not continue to work well for the owner. Mr. Lamb said based on the current nonconforming regulations, a retail store would not be able to move from their current location. The provision for abandonment is 12-months,but at that location,so it doesn't allow for the business to change locations. Only billboards are allowed to be able to change locations. Commissioner Anderson commented however we don't restrict the number of other businesses. Commissioner Stathos asked if another business of the same type could move into the same location. Mr.Lamb responded if it was done within a 12-month period. Commissioner Johnson asked if the license was in a joint name and the partnership dissolved, could one of the partners then move the business. Mr. Lamb said the nonconforming regulations go with the use and are not tied to an owner. Commissioner Stathos asked how a smell would be enforced. Mr. Lamb said it currently is difficult to enforce, and explained the process. Under the new provisions, enforcement would be easier. Current nuisance ordinance states a smell to a reasonable person. The proposed changes would make any smell a code enforcement issue. Commissioner Phillips asked how the nonconforming rules could be changed to allow the retail shops to move. Mr. Lamb said the 04-14-16 Planning Commission Minutes Page 4 of 8 Planning Commission could make that request, but he would need to confer with staff to determine if the change was substantial enough to require an additional public hearing. Chair Graham confirmed the Commissioners had no other questions for staff and turned to accept public testimony. Paul Bielec,911 S Valley View,Post Falls: Mr.Bielec is the President of Bielec Properties Inc.which owns the northwest corner of Euclid and Eden, the place which the Commissioners toured. After getting a blessing from the City for I-502 production and processing in 2014, Mr. Bielec said he was able to lease a good amount of his property to a few licensees with the idea they would add infrastructure in the future to obtain more tenants. Since then he and his tenants have added hundreds of thousands of dollars for tenant improvements. Mr. Bielec said the Commissioners saw what was inside the building but there is more that is not seen. Due to the moratoriums, he is no longer able to obtain any new tenants for his vacant space. He said this may seem trivial to the Commission, however to him it is devastating. He said they are now restricted from leasing any additional space to any processors/growers, and more important we are not able to replace any of the tenants. If a tenant goes out of business,if they change business plans he cannot replace these tenants. In recent months he has turned away several potential tenants who wanted to lease from him,which could have resulted in 20- 100 jobs for the City. He asks the Commission to please consider separating the growing/processors from the retail. He said he realized this had not been brought up before and he feels they are two different animals. He said he has attended many of the planning meetings and most of the discussion has been about retailers. Growers in the Spokane Valley sell their product either to existing retailers in the City or to any other retailer across the state. The product will be grown regardless of the location through any licensed I-502 grower any place in the state. Prohibiting additional growers in the City does not accomplish anything other than moving jobs out of the Spokane Valley to another taxing jurisdiction. Mr. Bielec offered that licensed growers have a huge amount invested in their businesses. The product is tracked from seed to sale. The product is tested for quality, mold, fungus, bugs and hopefully soon pesticides. If mold,fungus or pesticides are found it will not pass testing and cannot be sold as is. It built out facilities such as his site, it is a controlled environment which helps to eliminate the mold, bugs and fungus. Many growers are even starting to utilize organic methods of controlling the bugs. He believes this will continue into the future because of the pesticides. He offered the Black Market does not care if they sell to minors, if they use pesticides, fungicides,they do not pay L&I, or payroll taxes for employees. They do not track their product from seed to sale, they do not test their product for mold, fungus or quality. They do not pay sales or excise tax to educate the public. He said this goes for the home grows as well, saying there are some home grows that don't know what they are doing. He reiterated his request to separate the grower/processor from the retailers when making the recommendation to the City Council. They are completely different with different concerns. He said he could understand the concerns with additional retailers in the City. However growers ship product outside the area as well as selling it in the area. He asked what harm is there to support employees who work hard to support their families in a legitimate business in the City of Spokane Valley in a first class secure environment. Commissioner Stoy asked if there were limits on producers and processors. Mr. Lamb said there was a total canopy limit statewide. There is a limit on how big each production facility can be in terms of how much canopy they are allowed. There are three different levels with a max of 30,000 square feet of canopy. The state max is 8,000,000 square feet of canopy space, he thought. There could come a time when they start to limit the production but the state is nowhere near that at this time. Commissioner Anderson asked if Mr. Bielec's current tenants could expand under the moratorium, if their license allowed more canopy space. There was discussion with Mr. Bielec regarding his unrented space, how he can only expand the tenants he already has if they have a license which allows for more canopy space, how the moratorium is for the growers/processors as well, he is a property owner not a license holder. Having no one else who wished to testify Chair Graham closed the public hearing at 6:51 p.m. Commissioner Graham confirmed the taxes are only collected at the point of sale. Mr.Lamb reminded the Commission because the producing and processing are wholesale businesses, no taxes are gained from the producers/processors. Commissioner Graham confirmed there would be income collected on 04-14-16 Planning Commission Minutes Page 5 of 8 the property used by the growers/processors but secondary income would be from the employees working in the facilities. Commissioner Johnson discussed some information he shared with the Commission. He said page 1 of his handout states that in 2009 the American Medical Association (AMA) requested that cannabis be removed from the Schedule I controlled substances, in order for it to be studied properly. Without this requested being honored, which it hasn't, there will be no studies and therefore no support. So every time someone says there is no AMA support, it is because they can't study it. Without it being removed from the list of Schedule I drugs, the AMA won't study it. He said while AMA as a body doesn't support medical cannabis as a valid treatment, numerous independent surveys are indicating medical professionals around the globe are coming out in support. Even the Food and Drug Administration is wanting to 'get going' on the approval of cannabis. Commissioner Johnson said that another misconception of cannabis is that it is a gateway drug. He quoted from the oldest report he could find in his research,which was from 1999,but other reports he found were similar. He said that the report said that while most people who use harder drugs usually used cannabis first,there is nothing which links cannabis to moving on to stronger drugs. It is more of a middle step,in a progression which commonly starts with tobacco,then alcohol,then cannabis and then whatever the harder drugs are that someone would experiment with. Cannabis when not available, is more often replaced with prescription drugs found in an adolescent's home. Commissioner Johnson said so cannabis being labeled a gateway drug is often inaccurate. He said another argument everyone has heard is that legalizing cannabis sends the wrong message to youth. He said page 3 of his handout shows an excerpt from a study which says that legalizing cannabis does not increase use in adolescents. He said his impression was that the age group we are talking about does not listen to adults. They listen to their peers. They don't care what message the City Council might be sending, or any government body for that matter. He said anyone who has parented a teenager understands that commonly a parent's message is considered an anti-message by the teenager. There was a study that showed in states which legalized cannabis use by adolescents,that it was higher before and after passage. There are other factors at play and those factors need to be discovered and addressed and blaming cannabis is actually a red herring. Mr. Johnson discussed the tax revenues which would be gained by the City from the sale of cannabis. He offered the $75,000, which had been mentioned in a previous meeting, did not seem like a lot, however there are news reports about the growth of the industry. Mr. Johnson said he felt that last year's$75,000 would be$150,000 next year,and$300,000 the next. He said you can look at the graph which was on the WSLCB's website and see it has increased 70% in 10 months, most likely to double in a year. By the time the state fiscal year ends it will have doubled. Also on the WSLCB website there was research on how the legal sales are impending on the illegal sales. He last referenced an article from Time magazine, from April 2015, which states there has been a 25% drop of cannabis confiscated by US Border Patrols and a 32% drop by Mexican authorities, relating this to the legalization in some US states. Commissioner Johnson said he did not think the Commissioners would drop the moratorium on retail, but he hoped the other Commissioners would consider dropping it for the producers and processors. He said the City is looking at the loss of jobs, wages, and millions of dollars a year. He said there is one property owner who is here,and another property owner,which the Commission drove by that business,which had 200 full time jobs, which is a lot of wages. He said he hoped the Commission would take a serious look at the proposed amendment as it was written. Commissioner Anderson stated he never considered the moratorium on the producers/processors since most of the conversations had centered on the retail. He said the best outcome would probably be produce it here and sell it someplace else and he would consider that over selling to locals. Commissioner Anderson said the producing/processing was not a problem in his mind over the three retail outlets. He said he did not remember having a conversation about how many acres should be allowed, he thought it was State controlled. He would allow the production/processing. Commissioner Kelley said the discussion is about how fast the City moves forward. Commissioner Kelley said there are a lot of businesses in the State of Washington which have trouble with regulations. He said there are a lot of associations which spend a lot of time fighting on capital hill to get rid of regulations, welcome to the small business world in the State of Washington. He continued saying there are associations like the Home Builders Association,the Association of General Contractors,the Associated Builders and Contractors Association that are getting regulated every day. Every one of 04-14-16 Planning Commission Minutes Page 6 of 8 them has invested a great deal of money, maybe not the millions you have, but a great deal of money to them. They are getting regulated out of business and they are moving out of state all the time. This is a challenge, this is something that needs to be addressed, but he did not see where the marijuana industry should get special privilege just because they are a drug operation. Join the other associations that are fighting the regulations. Find people who are on your side,that have common causes and get involved in them and stop asking for the king to anoint your industry. Commissioner Phillips said he felt that the nonconforming regulations should be changed to allow the retailers to move. He said he did not like placing anyone at the mercy of a landlord. He said the landlord should not have the right to hold over the leasee the fact they can't move and they would be able to raise the rent. He feels we should craft the regulations to allow for the movement of the three retail shops. Commissioner Phillips said he was not opposed to allowing more production/processors. Commissioner Graham said she felt that some of the information was from a time when marijuana still held a stigma and that the gateway argument was because it wasn't as readily available as it currently is. Commissioner Graham said she thought about the producers/processors,where they are located and what little impact they had on the surrounding areas. Her thoughts are more in line with lifting the moratorium on the producers/processors. She thinks it could bring as many jobs as Commissioner Johnson hopes,which is always good. She has some concerns about the Department of Health and how they are going to enforce pesticides. She also agrees with allowing the current licensed retailers to move under nonconforming rules. Commissioners Stoy agreed that the retailers should be allowed to move. He also agreed with allowing the moratorium producers and processors to be lifted. Commissioner Stathos said in all the discussions she did not realize the moratorium was affecting the producer/processors. She commented on the visit, said the site was secure, there was no smell on the outside,it was clean and jobs are being created. She spoke to Commissioner Kelley's statements about fighting to create less regulations and she said we are creating another layer of it because of our moratorium. She said his options now are so narrow there is no room for growth, even for someone who has already created a facility. She said she felt that the regulations needed to be reviewed. Commissioner Kelley said he agreed a retailer should be allowed to move and not be bound to a location if they could not work out a good lease with a property owner. He also felt the City should not allow for more than the three which had already been established. Commissioner Kelley said regarding the production facilities,he said he felt the City should move cautiously. There was no data on what would happen to the employees working in the facilities now,there is no data on what kinds of challenges the industry would face, he is more in favor of putting the brakes on a little bit, letting people operate as they are, but he is not in favor of opening the flood gates. Chair Graham stated she felt the Commission had a consensus on the following items: • Lifting the moratorium on the producers/processors • Draft regulations which would allow the three currently conforming retail shops to change locations Commissioner Kelley requested an informal vote on the two items. Commissioner Stoy asked if there was consensus to limit the number of producer/processors in order to allow Commissioner Kelley to be more comfortable. Mr. Lamb responded the State controls how those licenses are distributed and they are not given out based on a number of outlets, but on amount of canopy space. Commissioner Anderson discussed how the State is controlling the canopy space and it is a statewide number,and this could be a floodgate in Spokane Valley, however this is occurring all over the state. He felt the restrictions and challenges to starting this type of business would not allow for just anyone to be able to do it. Commissioner Kelley commented that just because everyone else in the State is doing it is ridiculous. In response to Commissioner Stathos' comment about the requirements for licensing a producer/processor, Mr. Lamb explained the State requires they have a property in mind, however he was unsure to the extent they must demonstrate they have a lease; then the applicant must have an operating plan for that location,which must include all the necessary security features,the quarantine 04-14-16 Planning Commission Minutes Page 7 of 8 area,cameras,how many employees. Until the applicant has a site pinned down,which includes zoning at the local level,any tenant improvements which might be necessary,they must conform to all building code requirements. All of this must occur before they are allowed to have a WSLCB license. Sr. Plans Examiner Jenny Nickerson discussed she had been working with some applicants for possibly a year and a half or more as they work through identifying a location, securing a lease, identifying what type of modifications would be necessary, applying for the permits, complying with the permits, following the inspection process, applying for a business license and moving forward with WSLCB. She said some applicants have no problems with the process when they find property which is zoned properly, the building doesn't need many modifications to meet fire/safety requirements. The City will not approve a business license without them having applied for a building permit completed. The WSLCB would look to make sure that the building and fire codes have been met before issuing a processing license. She noted she has had applicants who have done work, invested money only to learn they will not be approved. The Commissioners had a consensus vote to modify the proposed draft language to allow: • Marijuana Production — Permitted in heavy and light industrial zones outright(indoor and outdoor); permitted in limited manner(indoor growing only) in Regional Commercial and Community Commercial zones. • Marijuana Processing — Permitted in heavy and light industrial zones outright(packaging and extraction); permitted in limited manner(packaging and labeling of useable marijuana only) in Regional Commercial and Community Commercial zones. • Local buffers for both marijuana production and processing — Cannot be located within 1,000 feet of City Hall, CenterPlace, vacant City property(other than stormwater and public rights-of-way),vacant library property, and vacant school property. Commissioner Kelley noted once this was done,there would be no limit on the number of production facilities which could open in the City. Vote on this proposal, was six in favor, one against, Commissioner Kelley dissenting. The Commissioners has a consensus vote to modify the proposed draft language to : • Allow only the three retail marijuana stores, but to modify the nonconforming rules to allow the three stores to change locations as long as they maintain all the previous requirements. • Permitted in the Mixed Use Center, Corridor Mixed Use, Regional Commercial, and Community Commercial zones. • Local buffers for retail sales: Cannot be located within 1,000 feet of City Hall, CenterPlace, vacant City property(other than stormwater and public rights-of-way), vacant library property, vacant school property,the Appleway Trail, and the Centennial Trail. Commissioner Kelley asked if the language could be crafted to only allow the stores to move, if they were experiencing lease negotiation issues. There was discussion about how the City would not be able to accomplish this. Commissioner Johnson wanted it noted his vote on this would reflect his desire to not restrict the retail stores to only three in the City. The vote on this proposal was six in favor, one against, with Commissioner Johnson dissenting. Mr. Lamb noted staff would draft up a new proposal and notice a new public hearing. This would not be happening at the next meeting based on statutory requirements. 04-14-16 Planning Commission Minutes Page 8 of 8 GOOD OF THE ORDER: Ms. Barlow explained how the new goals and polices for the new/updated Comprehensive Plan had been developed and there was a possibility that there would not be a direct comparison to the old Comprehensive Plan. ADJOURNMENT: There being no other business the meeting was adjourned at 7:02 p.m. t'V0?�4 1-\/✓Vl/ 5r3 2a Chair Heather Graham Date si ed Ago Ali ; 0D Secre ary Deanna Horton