Discussion and possible action to concur with the Planning and Zoning  Commission's recommendation and adopt ORD. 2023-13, amending various sections of Chapter 11, Licenses, Taxation and Miscellaneous Business Regulations and Chapter 21, Zoning Ordinance, as it pertains to Qualifying Marijuana Dispensary regulations.

Lindsay Schube of Gammage & Burnham, PLC, on behalf of Pitchfork Partners, Inc has filed a Text Amendment seeking changes to Chapter 11 - Licenses, Taxation and Miscellaneous Business Regulations (hereafter the "License Ordinance") and Chapter 21 Zoning Ordinance pertaining to Qualifying Marijuana Dispensary regulations as summarized below:

1. Section 11-75, Marijuana establishments prohibited; dual licensee exception: Remove the section entirely, effectively removing the requirement that marijuana dispensaries must be dual licensed (medicinal and non-medicinal sales) establishments.
   
   
2. Section 21-202, Definitions "Qualifying Marijuana Dispensaries": Expand the definition of a Qualifying Marijuana Dispensary to include those dispensaries holding an Establishment License as a single retail location (hereafter, “Non-Medicinal Establishment”) issued by the Arizona Department of Health Services, and selling marijuana and marijuana products for general non-medicinal use (adult-use).
   
   
3. Section 21-505.M Qualifying Marijuana Dispensaries and Marijuana Manufacturing, Cultivation and Testing Facilities: Remove the prohibition on the delivery of marijuana and marijuana products, and add requirements to the Security Management Plan criteria pertaining to the secure transport and delivery of marijuana and marijuana products, if a Qualifying Marijuana Dispensary provides delivery services.

The applicant's narrative is included as an exhibit to the Planning and Zoning Commission Report (Exhibit 1), and the proposed text amendment to the License and Zoning Ordinances is included as Exhibit 2.

The applicant's request to delete Section 11-75 of the License Ordinance is necessary for the City to issue a business license to a Non-Medicinal Establishment, and to facilitate the proposed modifications to the Zoning Ordinance to allow Non-Medicinal Establishments to exist within Peoria.  The proposed amendment would effectuate the aforementioned allowance by including Non-Medicinal Establishments in the definition of a Qualified Marijuana Dispensary.

Therefore, the existing provisions that apply to Qualified Marijuana Dispensaries, including Medical and Dual License (Medical and Non-Medicinal) establishments, would also apply to Non-Medicinal Establishments. Meaning, the number and locations where dispensaries are allowed, security provisions, and separation requirements remain the same, regardless of the type of establishment (Medical, Dual license, and Non-Medicinal). In addition, the amendment to delete the prohibition of marijuana deliveries would allow any Qualifying Marijuana Dispensaries to deliver marijuana and marijuana products in a manner consistent with the security considerations and procedures established by the State of Arizona and the new or updated security plan approved by the Peoria Police Department. Detailed information pertaining to the Staff's analysis of the Zoning Ordinance modifications is included in the Planning and Zoning Commission Report, Exhibit 1.

Key Items for Consideration

• Currently, the City of Peoria only allows dispensaries that hold a medical marijuana license or a dual license (Medical and Non-Medicinal establishments).
  
  
• The proposed modifications in no way disrupt, alter or change the current zoning restrictions pertaining to the siting of Qualifying Marijuana Dispensaries. Moreover, with the exception of the proposed removal of the prohibition of deliveries, the existing operating limitations in the Zoning Ordinance would remain unchanged.
  
  
• It should be noted that currently, the State of Arizona only allows the transportation and delivery of medicinal marijuana and marijuana products. However, as part of the law, ADHS must promulgate rules for the secure delivery of adult-use marijuana no later than January 1, 2025. At the time of this report, ADHS has not enacted rules for the delivery of non-medicinal marijuana.
  
  
• Other cities and counties within Arizona and in the immediate area currently allow medicinal marijuana delivery, including delivery services to Peoria caregivers and qualifying patients. The applicant has asserted that this has created a competitive disadvantage for Peoria-based dispensaries.

Public Safety Review
The Police Department has been consulted in the review of this request. Accordingly, in their response, the Police Department noted that although dispensaries are cash-based businesses, current marijuana dispensaries in the City have experienced few issues due to the requirement for approved Security Plans to help mitigate risk for employees and patrons. Therefore, the Department has recommended that language be included requiring those dispensaries offering delivery services to submit, and obtain approval of a new or updated Security Plan before initiating services. This recommendation has been incorporated into the proposed amendment.

Public Noticing
The application was properly noticed pursuant to Section 21-315 of the Peoria Zoning Ordinance, which includes placing an ad in the Peoria Times at least 15 days prior to the public hearing. Opportunities for public comment were provided on April 20, 2023, and May 18, 2023, at the Planning and Zoning Commission meetings, and on April 25, 2023, at the City Council Study Session.

Support / Opposition
The City has not received any correspondence supporting or opposing the proposed Zoning Ordinance Text Amendment.

• A limited version of this amendment (removal of the prohibition on delivery) was initially discussed at the October 6, 2022, Planning and Zoning Commission meeting. Subsequently, on October 20, 2022, the Commission voted (4-1) supporting the request to allow Qualifying Marijuana Dispensaries to transport and deliver marijuana and marijuana products to customers. Ultimately, the City Council did not hear the previous version of the amendment since the applicant reconsidered and amended the application to include the proposed expansion of the definition for Qualifying Marijuana Dispensaries. Since the modification was a material change to the application, a new recommendation from the Planning and Zoning Commission on the expanded amendment was necessary.
  
  
• On April 20, 2023, the Planning and Zoning Commission held a Study Session to discuss the proposed changes. Several Commissioners acknowledged that the same standards for Medical and Dual Licensed Establishments would apply to Non-Medicinal Establishments. In addition, there was discussion centered around the applicant’s assertion that the delivery request was essentially a sales tax question. Currently, qualified patients and caregivers in Peoria are already receiving deliveries from dispensaries in neighboring cities that permit delivery. Therefore, the point-of-sale and sales tax is essentially generated in those neighboring jurisdictions.
  
  
• On April 25, 2023, the City Council held a Study Session to discuss the proposed changes. The City Council had several questions that were answered by staff and the applicant. These questions included the state's regulatory methodology for the delivery of marijuana products, differences between and the necessity for a medical and non-medical establishment licenses, and the potency provisions for medical and non-medical marijuana products. In addition, the Council asked staff to return to the City Council with the answers to several questions related to: the tax revenue of all Peoria dispensaries, the number and type of dispensaries in adjacent jurisdictions and associated tax revenues, and the percentage of deliveries made to Peoria residents from adjacent jurisdictions (if available).  The applicant response to Mayor and City Council's questions is provided in a separate letter dated May 17, 2023, which is included as Exhibit 3.
  
  
• On May 18, 2023, the Planning and Zoning Commission held a public hearing and, after deliberation, the Commission voted (4-1) to recommend approval of the proposed changes to the Zoning Ordinance as outlined in the attached Ordinance. There were no speakers present in support or opposition.

A: Approve as recommended by the Planning & Zoning Commission; or
B: Approve with modifications; or
C: Deny; or
D: Continue action to a date certain or indefinitely; or
E: Remand to the Planning & Zoning Commission for further consideration

Adopt ORD. 2023-13, as recommended by the Planning and Zoning Commission, pursuant to the attached Ordinance thereto.

This code amendment request is expected to generate a positive financial  impact to the City with the collection of additional sales tax revenues related to the allowance of delivery services for Peoria-based dispensaries.  If approved, delivery services would initially be limited to medicinal sales to qualified patients and caregivers; however, once ADHS promulgates rules for the delivery of adult use marijuana (no later than January 1, 2025), this would open the door for the collection of additional sales tax revenues beyond the stream with medicinal sales.