10.1 SR 09-062022
Request for Action
To Item Number
Mayor and City Council 10.1
Agenda Section Meeting Date Prepared by
Work Session September 6, 2022 Cal Portner, City Administrator
Item Description Reviewed by
Discuss Hemp THC Licensure Ordinance
Reviewed by
Action Requested
Received information, discuss, and provide staff direction for licensing of Hemp THC.
Background/Discussion
Following the legalization of intoxicating hemp product sales, the city should establish an ordinance to enforce
the legal sale.
The city attorney will provide information to consider for a draft ordinance.
Financial Impact
N/A
Mission/Policy/Goal
Elk River City Mission
Attachments
N/A
The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional
service, and community engagement that encourages and inspires prosperity.
Updated: August 2020
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.
Return to top—QLp-age,
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.
ARTICLE . - SALE OF THC; LICENSING
DIVISION 1. - GENERALLY
Sec. . — Purpose.
The City Council finds that current state law of clarifying the sale of edible and non -edible
tetrahydrocannabinol ("THC") products has created a rapid introduction of new products into our
community. The U.S. Surgeon General has offered guidance that THC products present a
significant potential threat to public health, safety, and welfare, and particularly to youth and
adolescents and their brain development.
While the sale of some edible and nonedible THC products is legal in Minnesota, marijuana
remains a prohibited substance under federal law and therefore the partial legalization of THC
products on a state level presents special challenges.
The Council finds that there is a public health necessity for regulation related to sales and
distribution of THC Products within the City. To balance the interests of effectively regulating
THC Products while not placing an undue burden upon businesses, the City Council finds that a
licensing model is most appropriate to ensure compliance with the laws and business standards
of City and state.
The City Council desires to prevent young people from consuming THC illegally and to ensure
that retailers sell legal THC products in a safe manner to persons of who are of legal age to
consume them.
This section does not apply to any product dispensed by a registered medical cannabis
manufacturer pursuant to Minn. Stat. § 152.22 to 152.37.
Sec. . - Definitions.
The following words, terms and phrases, when used in this article, shall have the meanings
ascribed to them in this section, except where the context clearly indicates a different meaning:
Minor means any natural person who has not yet reached the age of 21 years.
Movable place of business means any form of business operated out of a truck, van, automobile
or other type of vehicle or transportable shelter and not a fixed address storefront or other
permanent type of structure authorized for sales transactions.
Place of Worship means church, synagogue, temple, mosque, or other facility used for religious
services.
Retail sale means any transfer of goods for money, trade, barter or other consideration.
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School means a building used for the purpose of elementary or secondary education, which
meets all the requirements of compulsory education laws of the State of Minnesota, and not
providing residential accommodations.
THC is the chemical compound tetrahydrocannabinol whether derived naturally or synthetically
from the cannabis plant.
THC-related product or THC-related device means any products containing THC that is intended
for human consumption or to enable human consumption, whether chewed, smoked, absorbed,
dissolved, inhaled, snorted, sniffed, or ingested by any other means, or any component, part, or
accessory of a THC product, including, but not limited to, joints, blunts, edibles, flowers, buds,
tinctures, and other kinds and forms of THC. This includes electronic delivery devices.
Vending machine means any mechanical, electric or electronic, or other type of device which
dispenses THC or THC-related products or THC-related devices upon the insertion of money,
tokens or other form of payment directly into the machine by the person seeking to purchase the
THC, THC-related product or THC-related devices.
DIVISION 2. - LICENSE
Sec. . - Required.
No person shall keep THC, THC-related products or THC-related devices for retail sale or sell
THC, THC-related products or THC-related devices at retail in the city without first obtaining a
license from the city. No license shall be issued for the sale of THC, THC-related products or
THC-related devices:
(1) at a movable place of business
(2) from a vending machine or
(3) to a person under the age of 21.
(4) unless the THC, THC-related product or THC-related devices are permitted under
Minnesota law, including but not limited to Minn. Stat. § 151.72.
Sec. . - License procedure.
The provisions of Sections 38-31 to 38-60 of this City Code shall apply to all licenses required
by this article and to the holders of such licenses.
Sec. . - Term of license.
Each license issued pursuant to this article shall expire on December 31 of the year issued.
DIVISION 3. - RULES AND REGULATIONS
Sec. . — Licensee Violations.
It shall be a violation of this article for any person to sell or offer to sell any THC, THC-related
products or THC-related devices:
(1) To any person under the age of 21 years.
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(2) By means of any type of vending machine.
(3) From a movable place of business
(4) By means of self-service merchandising whereby the customer does not need to make
a verbal or written request to an employee of the licensed premises in order to receive
the THC, THC-related products or THC-related devices. All such products shall be
stored behind a counter or other area not freely accessible to customers.
(5) Containing any chemical compound or drug that is otherwise a controlled substance
under Minnesota law, including Minn. Stat. § 152.02 subd. 2.
(6) By any other means or to any other person prohibited by state or other local laws,
ordinances or other regulations.
(7) That fails to meet the labelling requirements as established in Minn. Stat. § 151.72
subds. 5 and 5a.
(8) That fails to meet the testing requirements as established in Minn. Stat. § 151.72 subd.
4.
Sec. . Responsibility for sales.
The license holder is responsible for all actions occurring on the licensed premises. Actions of
employees at the licensed establishment regarding the sale of any THC, THC-related products or
THC-related devices shall be considered a sale by the licensed owner.
Sec. . - Sampling.
Sampling or consumption of THC, THC-related products or THC-related devices within an
establishment selling any THC, THC-related products or THC-related devices is prohibited. All
products must remain sealed while on the licensed premises.
Sec. . - Use of false identification.
No person under the age of 21 shall attempt to disguise his or her true age by the use of a false
form of identification, whether the identification is that of another person or one on which the
age of the person has been modified or tampered with to represent an age older than the actual
age of the person.
Sec. . - Compliance checks and inspections.
(a)All licensed premises shall be open to inspection by the city and other authorized officials
during regular business hours.
(b)From time to time, but at least once per year, the city shall conduct compliance checks by
engaging, with persons over 15 years but less than 21 years, to enter the licensed premises to
attempt to purchase THC, THC-related products or THC-related devices.
(1)Prior written parental consent is required for any minor who participates in a
compliance check.
(2)Persons used for the purpose of compliance checks shall be supervised by designated
law enforcement officers or other designated city personnel.
(3)Persons used for compliance checks shall not be guilty of the unlawful purchase or
attempted purchase, nor unlawful possession of THC, THC-related products or THC-
related devices when such items are obtained or attempted to be obtained as part of the
compliance check.
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(4)No person used in the compliance checks shall attempt to use a false identification
misrepresenting the person's age, and all persons lawfully engaged in a compliance check
shall answer all questions about the person's age for which he or she is asked.
(c)Nothing in this article 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.
DIVISION 4. - ENFORCEMENT; PENALTIES
Sec. . - Violations.
The notification and hearing process set forth in Chapter 38, Article II, Section 3 8-3 5 of the City
Code will apply to violations of this article.
Sec. -5. - Notice.
No administrative penalty or license suspension or revocation may take effect until the licensee
or other individual has received notice, served personally by mail, of the alleged violation and of
the opportunity for a hearing pursuant to Chapter 38, Article II.
Sec. -6. - Hearings.
If a person accused of violating this division so requests, a hearing shall be scheduled before the
City Council, the time and place of which shall be published and provided to the accused
violator.
Sec. -7. - Decision.
If the city council determines that a violation of this article did occur, that decision along with
the reasons for finding a violation and the penalty to be imposed under section -12, shall
be recorded in writing, a copy of which shall be provided to the accused violator. Likewise, if the
hearing finds that no violation occurred or finds grounds for not imposing any penalty, such
findings shall be recorded and a copy provided to the acquitted accused violator.
Sec. -8. - Appeals.
Appeals of any decision made by the city council shall be filed in Sherburne County district
court.
Sec. -9. - Misdemeanor prosecution.
Nothing in the article shall prohibit the city from seeking prosecution as a misdemeanor for any
alleged violation of this article, or seeking injunctive or equitable relief as provided in City Code
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§ 1-8(e). If the city elects to seek misdemeanor prosecution, an administrative penalty may also
be imposed.
Sec. -10. - Continued violation.
Each violation, and every day in which a violation occurs or continues, shall constitute a separate
offense.
Sec. -11. - Penalties.
The following administrative penalties will be applied as set forth in this section:
(1)Licensees. Any licensee found to have violated this article, or whose employee shall have
violated this article, shall be charged an administrative fine of
a.$200.00 for the first violation of this article;
b.$600.00 for the second offense at the same licensed premises within a 24-month period;
c.$$1,000.00 for a third offense at the same location within a 24-month period and the
license shall be suspended for not less than seven days and may be revoked; and
d.$1500.00 for a fourth offense at the same location within a 24-month period. In
addition, after the fourth offense, the license shall be revoked.
(2)Other individuals. Other individuals, other than minors regulated by subsection (3) of this
section, found to be in violation of this article shall be charged an administrative fee of $50.00.
(3)Underage persons. Persons under 21 years of age who use false identification to purchase or
attempt to purchase, THC, THC-related products or THC-related devices shall be guilty of a
misdemeanor.
(4)Misdemeanor. Nothing in this article shall prohibit the city from seeking prosecution as a
misdemeanor for any violation of this article.
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