ACTION REQUESTED:
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Communication from the City Manager and the Corporation Counsel with a Request for DIRECTION on the PROHIBITION or IMPLEMENTATION of the Local Government Portions of the CANNABIS REGULATION AND TAX ACT, Effective January 1, 2020.
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BACKGROUND: On June 25, 2019, Governor Pritzker signed Public Act 101-0027, the Cannabis Regulation and Tax Act (the “Act”). In general, the Act legalizes private consumption and possession of cannabis for Illinois residents over 21 years of age. Non-residents may legally possess lower amounts of cannabis. The Act also provides for the state licensure and regulation of a variety of adult-use cannabis business establishments, preserves the legalization of medical cannabis and includes a provision allowing “home grow” of cannabis by medical cannabis program participants. There are five main components of the Act that need evaluation and discussion: business prohibition, business zoning, Retailer’s Occupation Tax, employment matters and expungements. Following a brief summary of each component, detailed below, is a question or questions for Council’s consideration. You will also find background on business regulation, the existing ordinance regulating possession of cannabis and the potential for additional legislation before year-end.
Attached to this communication, for supplementary background and substance, is an IML publication on Adult-Use Cannabis Resources, an ICMA publication on Local Impacts of Commercial Cannabis and a summary of the bill from the Illinois Attorney General’s Office.
I. Business Prohibition: The Act permits, but does not require, the City to allow the sale of recreational cannabis within its corporate limits. Recently, the local communities of Morton and El Paso have both adopted ordinances prohibiting adult-use cannabis establishments. Across the state, Libertyville, Bloomingdale and Grayslake have prohibited the sale of cannabis; Naperville initially voted no and is voting on an ordinance in September. Note that medical cannabis business establishments must still be allowed and are subject only to local zoning provisions.
The first state licenses for adult-use cannabis business establishments will be issued to organizations that operate existing medical dispensaries. There is one existing medical cannabis dispensary, located at 3125 N. University (Trinity Compassionate Care Center). There are currently 55 medical cannabis dispensaries throughout the State. 75 additional licenses will be awarded before May of 2020 and another 110 licenses will be issued after January 1, 2021.
a. Does the Council desire to allow recreational cannabis to be sold within the City?
II. Business Zoning: The Act preserves the City’s ability to limit the location of cannabis businesses by ordinance. The City may enact zoning regulations that designate the time, place, manner and number of cannabis business operations through a special use permit.
In addition to the special use authority for authorized adult-use cannabis businesses, the City can authorize on-site consumption of cannabis and co-location of craft growers, infusers and dispensaries. If authorized, the City could evaluate minimum distance limitations between other cannabis establishments, liquor establishments, schools, daycare centers, nursing home or other uses the City deems sensitive.
Medical cannabis dispensaries are special uses in all commercial districts and permitted uses in industrial district. They are prohibited in all other zoning districts, including form districts. Currently, as there are currently no special uses in form districts, the only relief would be a zoning change or a text amendment.
No unit of local government may prohibit home cultivation or unreasonably prohibit the use of cannabis, as authorized by this Act.
a. Does the Council wish to permit the on-site consumption of cannabis at retail facilities? If so, what zoning designation does the Council want the retail sites to be able to operate within?
b. Does the Council wish a cannabis retail store to require a “special use?”
III. Retailers’ Occupation Tax: The Act allows for imposition of a municipal tax under the Municipal Cannabis Retailer’s Occupation Tax Law. The tax may be up to 3% of the gross receipts of cannabis products, and must be imposed in 0.25% increments.
Currently, the tax will not go into effect sooner than September 1, 2020. However, we believe the City should adopt the ordinance imposing the tax effective January 1, 2020 and certify the ordinance to the Department of Revenue by October 1, 2019 as a legislative amendment will likely authorize the local tax as of January 1, 2020.
The state will use revenues from state taxes and license fees to distribute to local governments to fund crime prevention programs and training programs. These taxes and fees are in addition to the City’s Retailer’s Occupation Tax.
a. Does the Council wish to impose a tax on cannabis sales and if so, in what amount?
IV. Employment Matters: The Act provides that employers may maintain “reasonable” Drug Free Workplace Policies, but the act includes amendments to the Right to Privacy in the Workplace Act (820 ILCS 554) which prohibits discrimination against employees for using products that are lawful under state law.
Employers may prohibit employees from use or possession in the workplace and while-on-call, but must have a good faith basis for disciplining employees who appear to be under the influence of cannabis while at work.
The majority of the City’s employees are covered under collective bargaining agreements with detailed provisions regarding a drug and alcohol free workplace. Human Resources is currently reviewing all collective bargaining agreements, as well as its personnel policies, to identify any areas that may need addressed.
V. Expungement of Local Law Enforcement Records: The Act includes a schedule of expungement provisions that require the City to automatically expunge all criminal history records of an arrest, charge not initiated by arrest, order of supervision or order of probation if (1) one year has elapsed since the date of arrest or action and (2) no criminal charges were filed relating to the action. This requires records created after 1/1/3 to be expunged by 1/1/21 and records created between 1/1/00 and 1/1/13 to be expunged by 1/1/23. Records prior to 1/1/00 shall be expunged prior to 1/1/25.
VI. Existing Ordinance. The City’s existing ordinance makes it unlawful for a person to possess less than 10 grams of cannabis. (Section 20-112). It does not apply to a person or entity who is authorized to possess, keep for sale, offer for sale, sell, or deliver for any commercial consideration cannabis, a controlled substance, a look-alike substance, synthetic alternative drug, or drug paraphernalia pursuant to the "Illinois Controlled Substances Act" (720 ILCS 570/101 et seq.), the "Compassionate Use of Medical Cannabis Pilot Program Act" (410 ILCS 130/1 et seq.), or another provision of Illinois Statute.
As of January 1, 2020, the Act allows adults over 21 to purchase and possess up to 30 grams of cannabis. Possession is limited to 15 grams for non-Illinois residents.
a. Does the Council wish to continue the existing ordinance for those under 21?
VII. Business Regulation: The City requires various forms of business licenses for liquor sales, video gaming, tobacco sales and other adult vendors. For liquor regulation, in particular, there is a detailed licensing and inspection procedure established in the ordinance. The Act anticipates local inspection of cannabis-related business and gives the City the authority to implement civil penalties for violations of local ordinances and regulations.
a. Does the Council wish to license retail cannabis stores?
b. Does the Council wish to license businesses that offer on-site consumption?
c. Does the Council wish to establish a Cannabis Commission or authorize the Liquor Commission to regulate?
VIII. Trailer Bill: On August 10, 2019 the IML asked the General Assembly to consider a trailer bill to clarify four issues of concern to municipalities. The areas identified as needing clarification are:
a. The new law allows those to have a medical marijuana card to grow no more than give plans in their home without needing to be a licensed cultivation center or craft grower. The City has no information from the State, however, on which residences can legally grow cannabis plants.
b. The new law also states that “no unit of local government…may prohibit home cultivation or unreasonably prohibit use of cannabis authorized by this Act.” The term “unreasonably” is not defined, so municipalities could be exposed to unknown litigation as they attempt to adopt regulations protecting the health, safety and well-being of their citizens.
c. The legislature is also asked to clarify two regulations on how funds are distributed and may be spent by local governments. For example, restricted funds are being put into an unrestricted disbursement fund, causing uncertainty on how the money can be spent.
FINANCIAL IMPACT: Potential funding increase from sales tax revenues.
NEIGHBORHOOD CONCERNS: Not applicable.
IMPACT IF APPROVED: Potential funding increase from sales tax revenues.
IMPACT IF DENIED: Status Quo.
ALTERNATIVES: Not applicable.
EEO CERTIFICATION NUMBER: Not applicable.
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL’S 2014 - 2029 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Grow Peoria: Businesses, Jobs, and Population
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Grow employers and jobs.
DEPARTMENT: Legal