Oakland’s New Medical Cannabis Regulations

On May 17, 2016, the Oakland City Council approved new detailed regulations intended to mainstream medical cannabis retail and commercial operations and pave the way for the City to accept cannabis business permit applications within the next few months. Oakland’s comprehensive new rules cover storefront and delivery-only dispensaries, and cultivation, manufacturing, distribution, testing and transportation facilities.

The legislation enables Oakland to maintain some local control over its medical marijuana laws, which mirror state regulations approved in January 2016, but that are not scheduled to kick in until 2018. The Oakland regulations also respond to increasing demand from start-up business owners eager to capture expected large profits as the medical cannabis industry continues to be legitimized.

Oakland’s updated medical cannabis laws build on existing local ordinances that were never fully implemented due to questions about federal law enforcement. Marijuana remains illegal under federal law, but the U.S. Department of Justice has pledged deference to states with robust regulatory systems that comply with new federal guidelines.

The City Council is expected to give final approval to the new Oakland regulations within the next few weeks. Substantive legislative changes added at the first Council reading delayed approval. The changes related to 50% local hire, with an emphasis on high-unemployment neighborhoods, and “equity” provisions, which include the following: Half of all cannabis permits are reserved for Oakland residents who have lived for at least two years in an East Oakland police beat with a high number of marijuana arrests in 2013, or for individuals who were incarcerated in Oakland for marijuana-related crimes within the last decade.

The local hire and equity requirements have caused concern among existing and prospective medical cannabis business owners who believe the rules may discriminate against residents in other parts of the City and may create difficulties in structuring viable businesses.

Once the legislation is finalized, the City expects to complete administrative regulations to clarify issues raised by the legislation and to start accepting applications within 90 days. Below are the highlights.

Dispensary Regulations

• Allow for storefront and delivery-only dispensaries
• No more than 8 new permits issued per year for storefronts; delivery-only are unlimited
• Generally, dispensaries are prohibited within 600 feet of a K-12 school
• Must be located in commercial or industrial zone, or equivalent
• Proximity to other dispensaries is discretionary
• Public hearing required for storefronts; no public hearing for delivery-only
• Non-smoking, on-site consumption allowed at storefronts with an additional permit
• Local hire and “equity” rules apply to ownership and employment practices
• Proposed Fees: $3,644 for application; $2,813 for on-site consumption; $500 renewal

Cultivation, Manufacturing, Distribution, Transportation and Testing Facility Regulations

• Unlimited number of permits issued each year
• Permits must be renewed annually
• Facilities not open to the public

• Generally, facilities are prohibited within 600 feet of a K-12 school
• Facilities must implement a “track-and-trace” program that records the movement of medical cannabis in their custody
• More than one use and/or operator may situate on a single parcel, but each use and/or operator must obtain a permit for each use category

• Local hire and “equity” rules apply to ownership and employment practices
• Zoning: Cultivation, Distribution, Transportation and Testing Facilities
• Allowed only in areas where the Oakland Planning Code permits by right “light manufacturing industrial,” “research and development,” or their equivalent use
• Zoning: Manufacturing

• Nonvolatile solvents:  Locations limited to areas where “custom manufacturing industrial,” or its equivalent use, is permitted by right
• Volatile solvents: Locations limited to areas where “general manufacturing industrial,” or its equivalent use is permitted by right