Discussion and possible action to concur with the Planning and Zoning Commission's recommendation and adopt ORD. 2023-13, amending  Chapter 21 of the City Code (Zoning), as it pertains to the delivery of marijuana products from Qualifying Marijuana Dispensaries.

Background

Lindsay Schube of Gammage & Burnham, PLC, on behalf of Pitchfork Partners, Inc, has filed a Code Amendment seeking changes to Chapter 21 of the City Code (Zoning Ordinance) pertaining to delivery services for Qualifying Marijuana Dispensaries.

The Council may recall that the most recent version of the Code Amendment had two distinct parts: (1) a request to remove the prohibition on delivery services for qualifying marijuana dispensaries; and (2) a request to expand the definition of a Qualifying Marijuana Dispensary to include those dispensaries holding an Establishment License as a single non-medicinal or adult use retail location.  On June 6, 2023, the City Council voted 7-0 to continue that amendment indefinitely. Subsequently, at the applicant's request, the Code Amendment has been split into two separate cases so that the City Council may consider them separately. 

The first part (Case TA22-02) only pertains to the prohibition on delivery services, and is the subject for consideration tonight.  The other amendment (Case TA22-02A.1) will proceed on a separate track and be considered at the appropriate time.

Therefore, at this time, the applicant is requesting approval of Case TA22-02 to amend the Zoning Ordinance by removing the prohibition on delivery services for Qualifying Marijuana Dispensaries as outlined below:

Section 21-505.M Qualifying Marijuana Dispensaries:

• Remove the prohibition on the delivery of marijuana and marijuana products; and
• Require the approval of an updated Security Management Plan by the Police Department, to ensure the secure transport and delivery of marijuana products, for those dispensaries choosing to offer delivery services.

The proposed amendment would allow any Qualifying Marijuana Dispensary in the City of Peoria 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 3).

Key Items for Consideration

• The proposed modifications in no way disrupts, alters or changes 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. However, as part of the law, the Arizona Department of Health Services (ADHS) must promulgate rules for the secure delivery of adult-use marijuana no later than January 1, 2025. At this time, ADHS has not enacted rules for the delivery of non-medicinal marijuana.
  
  
• Other jurisdictions within Arizona, and more specifically within the immediate area surrounding Peoria, 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 requested code amendment. 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 which help mitigate risk for employees and patrons. Therefore, the Police 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 a legal ad in the Arizona Republic 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.

• The amendment to remove 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 this version of the amendment since the applicant reconsidered and amended the application to include the expansion of the definition for Qualifying Marijuana Dispensaries to include single retail location establishments that only sell non-medicinal use (adult-use) marijuana and marijuana products. 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 a 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 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's response to Mayor and City Council's questions is provided in a separate letter dated May 17, 2023, which is included as Exhibit 4.
  
  
• 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.

• On June 6, 2023, the City Council continued the combined application to a indefinite future date.  The City Council did not discuss the application.