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HomeMy WebLinkAboutAGENDA REPORT 2020 0617 CCSA REG JNT DC ITEM 09ECITY OF MOORPARK, 
CALIFORNIA City Council Meeting of June 17, 2020 ACTION The City Council provided direction and policy guidance to staff on developing zoning ordinance policies pertaining to industrial hemp uses.. BY B.Garza. E. Hold a Study Session and Provide General Policy Guidance on Industrial Hemp Uses. Staff Recommendation: 1) Receive the report; and 2) Receive public comment; and 3) Provide feedback and policy guidance on development of zoning ordinance amendments pertaining to industrial hemp uses. (Staff: Karen Vaughn) Item: 9.E. MOORPARK CITY COUNCIL AGENDA REPORT TO: Honorable City Council FROM: Karen Vaughn, Community Development Director BY: Shanna Farley-Judkins, Principal Planner DATE: 06/17/2020 Regular Meeting SUBJECT: Hold a Study Session and Provide General Policy Guidance on Industrial Hemp Uses BACKGROUND Federal and State Regulations On January 1, 2019, the Agricultural Improvement Act of 2018 became effective nationwide. This law removed industrial hemp (hemp) from Schedule I of the Controlled Substances Act. The Act directed the U.S. Agricultural Department to develop a federal regulatory oversight program for the cultivation, production, and marketing of hemp. The law also distinguished hemp from cannabis by defining hemp as having no more than 0.3 percent Tetrahydrocannabinol (THC). THC is the primary psychoactive compound of cannabis. Previously, the State of California limited allowances to grow hemp under an agricultural pilot program, under certain conditions, as California Industrial Hemp Farming Act (SB566). Subsequently, the State of California enacted a regulatory program to allow for the commercial cultivation of hemp in California through the Industrial Hemp Act (SB153). SB 153 requires that growers of hemp for commercial purposes register with the county agricultural commissions and obtain an annual permit. City Council Urgency Ordinance and Ban on Cultivation on Hemp The City received numerous complaints concerning strong odors and quality of life impacts related to hemp cultivation just outside of City limits. In response, the City Council adopted Interim Urgency Ordinance No. 477 on December 18, 2019, which imposed a temporary, 45-day moratorium on the cultivation, manufacturing, testing, and storing of hemp, and related activities such as drying and processing hemp in all areas of the City. The interim ordinance also prohibited the explicit sale of cannabidiol (CBD) if the sale of those products requires approval by the United States Food and Drug Administration (FDA), and the products do not have such approval. Item: 9.E. 18 Honorable City Council 06/17/2020 Regular Meeting Page 2 On January 15, 2020, Interim Urgency Ordinance No. 477 was superseded by Interim Urgency Ordinance No. 479, which extended the term of the moratorium by 10 months and 15 days, to December 16, 2020. The extension of the Interim Urgency Ordinance was necessary to provide city staff with additional time to research and prepare a recommendation regarding how these uses are addressed. On January 15, 2020, City Council also adopted Resolution No. 2020-3870 to initiate the zoning code amendments and direct the Planning Commission to hold a public hearing. Hemp operations involve emerging technologies and require significant research; therefore, staff took a multi-prong approach to the zoning amendments. Staff separated hemp cultivation from other hemp uses and moved forward with a zoning ordinance amendment to ban cultivation citywide. On February 25, 2020, the Planning Commission held a public hearing to consider the prohibition of hemp cultivation within city limits. No public comments were received. The Planning Commission voted 5-0 to adopt Resolution No. 2020-648, recommending that the City Council prohibit the cultivation of hemp citywide. The City Council Consideration of the cultivation ban was delayed due to the COVID-19 pandemic but is tentatively scheduled for the City Council in July 2020. While the hemp cultivation ban moves forward, the purpose of this study session is to evaluate all other hemp uses and provide policy direction to staff for the preparation of a draft zoning ordinance amendment. ANALYSIS Hemp is made into a wide range of products, including paper, textiles, clothing, biodegradable plastics, paint, insulation, biofuel, and food products for both human and animal consumption. The California Department of Food and Agriculture (CDFA) has established an Industrial Hemp Advisory Board that assists in the development and administration of the regulations and laboratory testing requirements for hemp crops. At this time, local agencies retain a significant degree of discretion to regulate the land uses and performance standards for hemp-related uses. Understanding the need to protect the community from potential negative impacts, opportunities may exist to allow certain low-impact hemp uses within the City. These uses may offer an economic boost by filling vacant commercial units, increasing employment opportunities and increasing sales tax revenues. At this time, financial data related to hemp uses is difficult to assess as the use has only recently begun throughout the state. 19 Honorable City Council 06/17/2020 Regular Meeting Page 3 In the sections below, staff provides context, research, and recommendations for distinct hemp-related uses that could be allowed in the City. Staff is seeking City Council guidance on the following uses for the preparation of zoning text amendments. Warehousing Uses Hemp warehousing includes the storage of unprocessed hemp plant material (raw hemp) after harvest and the storage of finished hemp based products. Generally, warehousing of raw hemp requires a climate-controlled environment where trucks haul bailed or bagged plant material into a building for temporary storage before shipment elsewhere for processing. This type of warehousing often occurs as an incidental use in association with a larger manufacturing or processing use, but may also occur as a standalone primary use. Whereas, warehousing of finished hemp based products likely occurs only alongside manufacturing or as part of a larger and more general product distribution/fulfillment center and is not expect to occur as a primary use. The City permits warehousing in the Industrial Park (M-1) and Limited Industrial (M-2) Zones and as an accessory use to retail sales in the Commercial Planned Development (CPD) and General Commercial (C-2) Zones. Currently, warehouse uses exist within the City as both primary and accessory uses. Warehousing of hemp is similar to other general warehousing uses in that it would require buildings with open floor area, truck loading docks, and small office areas. Unprocessed hemp storage requires climate controls to preserve the plant materials similar to a produce or food warehouse. Warehousing of finished hemp products would likely occur alongside a manufacturing, distribution, or retail use. Various retail stores in Moorpark carry hemp-based products and maintain small stocks awaiting sale. Staff expects that hemp warehousing could create new jobs in the City. Based on the “May 2019 National Occupational Employment and Wage Estimates United States,”1 wages for warehousing personnel, however, were significantly lower than more skilled manufacturing or technical jobs. In addition, warehouses tend to require minimal staff; therefore, new jobs growth associated with this use would be limited. It is likely that warehousing of raw hemp could generate community impacts associated with odor, similar to cultivation odors. Potential odors may be reduced using techniques including refrigeration, air filtration, building insulation and adequate setbacks from sensitive uses. Warehousing of finished hemp products is not expected to create odor impacts. Warehousing of raw hemp and finished hemp products would likely increase truck traffic through the City for the transport of materials. Accessory warehousing of either raw hemp or finished hemp products within a facility manufacturing or conducting retail sales would share traffic impacts with the primary use and would therefore have fewer traffic impacts than a warehouse that requires additional trips to a future site for processing or sale. 1 U.S. Bureau of Labor Statistics, Occupational Employment Statistics, Last modified March 31, 2020, https://www.bls.gov/oes/current/oes_nat.htm 20 Honorable City Council 06/17/2020 Regular Meeting Page 4  Staff Recommendation: Based on the low jobs growth potential paired with odor and truck traffic impacts, staff recommends that the warehousing of raw hemp and finished hemp products be prohibited as a primary use. Staff recommends that the warehousing of raw hemp and finished hemp products be permitted only when accessory to a permissible manufacturing or retail use. Outdoor storage of raw hemp would not be permitted in any zone. Manufacturing and Processing Uses Harvested raw hemp is made into a variety of products that are used in industrial and commercial applications. These uses are grouped into three primary categories: 1) Paper, textiles, and construction materials, 2) Oil extraction, and 3) Food, nutritional supplements, and personal care products. Code Section 17.20.060(D) (4) identifies a variety of manufacturing and assembly uses that are permitted in the M-1 and M-2 Zones. Each section below includes a breakdown of permissible uses most similar to each category. Paper, Textiles, and Construction Materials Hemp plants can provide strong, sustainably produced fiber products including paper, textiles, and construction materials. Manufacturing facilities that process these types of materials generally require delivery bays, warehousing areas, machinery used to separate plant materials, and machinery or chemical processes to produce the final products. Due to the variety of products, which are prepared from hemp, specific uses may vary in size and intensity and therefore warrant further study. Code Section 17.20.060 permits manufacturing and assembly uses including the production of cabinets, clothing, furniture, leather products, paper, plastic products, textiles and others uses. Manufacturing hemp paper, textiles, and construction materials is similar to these permitted uses. Production of hemp-based materials would require similar structures as other manufacturing uses, requiring large buildings with open floor area, truck loading docks, mechanical equipment, and storage areas. The City of Moorpark currently has manufacturing businesses that produce products containing, glass, textiles, plastics, metals and wood. Although the manufacturing process and products are similar to the uses above, specific impacts related to hemp-based materials should be studied further. The manufacturing of hemp-based materials could create new jobs. However, similar to warehousing jobs, these manufacturing jobs are expected to be lesser skilled and lower paying versus other more technical or skilled manufacturing jobs such as metalworkers or chemical operators. In general, all facilities utilizing raw hemp and producing these types of materials have a high potential to create odor, dust and noise impacts. Potential odors are reduced by refrigeration, air filtration, building insulation, and adequate setbacks from sensitive uses. Depending on the specific product, chemical and mechanical processes could generate health, safety, and noise impacts. Manufacturing uses could also create truck traffic along the SR 118 and SR 23 corridors, as trucks would be utilized to deliver the 21 Honorable City Council 06/17/2020 Regular Meeting Page 5 raw hemp and distribute the finished product. Due to the complexity and range of production methods, additional study may be necessary.  Staff Recommendation: Based on the high potential for odor, dust, noise and truck traffic impacts, staff recommends that hemp manufacturing and processing of paper, textiles, and construction materials be prohibited. Oil Extraction Hemp oil extraction is a process of obtaining essential oils from raw hemp plant materials. Based on data from the County Agricultural Commissioner, the bulk of hemp cultivated in Ventura County in 2019 was grown to satisfy a demand for hemp oil products, including CBD oil. Hemp oil is added to food and personal care products. Hemp oil facilities are scalable and utilize a variety of methods to extract oil. Extraction techniques include alcohol, hydrocarbons, pressurized gas, and oil methods. Extraction processes that utilize volatile hydrocarbons as a solvent may create a safety risk, but emerging technologies that utilize pressurized carbon dioxide (CO2) or other less hazardous agents may serve to minimize this risk. Other production methods include ethanol and oil extraction, which are safer for human consumption but less efficient. As noted above, manufacturing and assembly uses are permitted within the M-1 and M-2 Zones. These permitted uses include the production of cleaners, cosmetics, detergents, perfumes, pharmaceuticals, photographic and optical goods, plastic products, soap, and other products that may use volatile chemicals or similar mechanical methods as oil extraction. Hemp oil extraction could create new jobs within the City. Jobs related to hemp oil production may include production, skilled technical and administrative staff. CBD oil is a valuable product, currently ranging in price from $30-$250 per ounce. Because of the high value and the more technical production methods, jobs require higher skilled staff and therefore higher paying. Hemp oil extraction could generate community impacts associated with odor and traffic. Staff expects that hemp oil extraction using unprocessed hemp plant materials would have increased odor impacts. Potential odors may be reduced by refrigeration, air filtration, building insulation and adequate setbacks from sensitive uses. In addition, hemp oil extraction would likely increase truck traffic along the SR 118 and SR 23 corridors. Semi-trucks, including both incoming and outgoing traffic trips, would transport shipments of hemp. As with the manufacturing of hemp paper, textiles, and construction materials, staff believes that oil extraction uses could create or exacerbate issues related to odors, increased truck traffic, and compatibility with existing sensitive uses.  Staff Recommendation: Based on the high potential for odor, safety, and truck traffic impacts, staff recommends that hemp oil extraction be prohibited as a use. 22 Honorable City Council 06/17/2020 Regular Meeting Page 6 Food, Nutritional Supplements, and Personal Care Products Finished hemp products are frequently used as ingredients in food, nutritional supplements, and personal care products for human and animal consumption. Examples of these products include cereal, joint health supplements, and personal care products such as lotions and shampoos. This use would not involve the primary manufacturing or processing of raw industrial hemp, but instead the addition of hemp- based ingredients into another product. Code Section 17.20.060 permits manufacturing and assembly uses including cleaners, cosmetics, detergents, perfumes, pharmaceuticals, soap, and other uses. The City of Moorpark is home to several businesses that produce food, nutritional supplements, or personal care products. Staff has not identified any nuisance concerns with these existing uses that operate in the industrial zones. The permitting of the integration of hemp-based ingredients in the manufacturing of food, nutritional supplements, and personal care products may provide opportunities for new business as well as potential new ventures for businesses already operating within the City. Food, nutritional supplements, and personal care products that capitalize on natural ingredients are an ever-expanding market share. Jobs related to this use would likely be lower to mid-range paying, based on skill. Use of hemp-based ingredients added to products like food, nutritional supplements, and personal care products is not expected to generate new impacts beyond those associated with existing uses permitted in industrial zones.  Staff Recommendation: Based on the potential for expanded business opportunities with minimal community impacts, staff recommends that the use of hemp in the production of food, nutritional supplements, and personal care products be allowed as a manufacturing use within industrial zones. Outdoor storage of raw hemp would not be permitted in any zone. Laboratory, Testing and Research Uses As required by state law, hemp is tested during the cultivation process to verify that THC levels do not exceed the legally mandated limit of 0.3%. Testing also monitors for the presence of pesticides and other contaminants. Laboratory, testing, and research uses would include chemistry laboratories where testing or research may be conducted in association with hemp. Code Section 17.20.060 allows research and scientific laboratory uses in the Commercial Office (C-O), M-1 and M-2 Zones. Research and testing facilities associated with hemp would be similar to other chemistry and R&D laboratory uses currently in operation in Moorpark and surrounding communities. The testing of hemp is usually one component of a wide range of tests that a laboratory performs. State Assembly Bill 228 (AB 228) is currently pending and would address food, beverage, and cosmetics that include hemp as ingredients. If passed, AB 228 would 23 Honorable City Council 06/17/2020 Regular Meeting Page 7 amend state law to require third party testing of hemp and derived products. AB 228 would also establish new labelling standards for those products that identify hemp ingredients. This may in-turn lead to an increased call for testing and laboratory uses throughout the State. At present, staff is aware of only one state-licensed testing lab in Ventura County, located in the City of Santa Paula. Laboratories that perform hemp research and testing may provide new high-paying technical jobs, reduce building vacancies, and allow expansion of existing business services. Employment opportunities created by such uses could include a broad cross section of the workforce including skilled clinical laboratory positions as well as managerial, clerical, and operational jobs. Laboratory, testing, and research uses are unlikely to present adverse community impacts. Such uses may be ancillary to existing laboratory uses or may be stand-alone establishments that may lend themselves to fill vacancies in the C-O zone.  Staff Recommendation: Based on the opportunity for expanded high-paying technical jobs with minimal community impacts, staff recommends that laboratory, testing, and research uses of hemp be allowed in certain industrial and commercial with no outside storage of raw hemp being permissible. Retail Sale Uses Retail sale of hemp-based products includes the sale of various finished goods that include hemp as an ingredient. Staff has identified three types of commercial retail sales, which occur in the marketplace. These include accessory, stand-alone and home-based sales, each of which are described below. Accessory Sales at Existing Retailers Hemp-based products are sold in retail department stores where their sale occurs alongside the sale of other goods. Such stores include grocers, pharmacies, salons, pet stores, health stores, and other retailers that sell a range of goods. For the purposes of this report, accessory sales are discussed separately from stand-alone retail stores. Ordinance No. 479 created a moratorium on hemp activity in the City of Moorpark but allowed for the retail sale of hemp products that are FDA approved and where those sales account for 5% or less of the business’ floor area. Generally, FDA approval is required for food ingredients, health claims, or are labeled as a nutritional supplement2. Review, approval, and licensing of these products fall exclusively within the scope of authority of the FDA. Research and field investigations conducted by staff determined that multiple retail businesses in Moorpark currently sell products with ingredients derived from hemp. In all cases, businesses offering hemp-derived products were well 2 U.S. Food and Drug Administration, What You Need to Know (And What We’re Working to Find Out) About Products Containing Cannabis or Cannabis-derived Compounds, Including CBD, 2020, https://www.fda.gov/consumers/consumer-updates/what-you-need-know-and-what-were-working-find-out- about-products-containing-cannabis-or-cannabis 24 Honorable City Council 06/17/2020 Regular Meeting Page 8 within the 5% limit placed on floor area. Products offered included snacks, personal care items, pet care items, and pet nutritional products. Retailers include big box stores, pet stores, grocery stores, and pharmacies. Accessory retail sale of hemp products is commonplace and an expanding market. Customer demand has brought these products into general retail establishments. Accessory retail sales provide local retailers and service providers with the opportunity to sell or use products that have high customer demand and provide additional sales tax revenue. Sales of these products on a limited, accessory basis by existing retailers has not generated any impacts to police or code enforcement resources. To date, no negative community impacts have been reported.  Staff Recommendation: Based on the opportunity to expand sales tax revenue with minimal community impacts, staff recommends that sale of products derived from or containing hemp be allowed as an accessory use to an otherwise permissible retail use throughout the City. Stand-Alone Retail Stores Hemp based products are also sold in stand-alone hemp retail stores that specialize in hemp. Most stand-alone hemp retailers sell CBD oil and a range of personal care products, although food or clothing may also be available. Stand-alone retailers are those that primarily sell one type of product. The type of product or service they provide or sell (i.e. liquor, tobacco, building products, hay and feed stores, etc.) often defines such uses. The Code regulates certain stand-alone commercial uses, limiting where and how they operate. Several stand-alone hemp retailers exist throughout Ventura County. Stand-alone retail sales could create new jobs and help fill vacant commercial tenant spaces. Stand-alone retail stores are expected to generate lower paying jobs, which would include customer service and operational staff. Most stand-alone retail stores sell CBD based products that have a high retail value and could provide additional sales tax revenue. The introduction of new commercial use types may increase demand for space and provide relief to properties that might otherwise remain vacant. Concerns associated with stand-alone hemp retail sales and community compatibility may be addressed similar to other stand-alone uses like liquor or tobacco stores. As such, stand-alone hemp retail stores could be restricted to particular zones or require an administrative or discretionary permit with conditions to mitigate potential incompatibility.  Staff Recommendation: Based on the opportunity to reduce commercial real estate vacancy and the potential to increase sales tax revenue with minimal community impacts, staff recommends that stand-alone hemp retail sales be allowed as a primary use in certain commercial zones. 25 Honorable City Council 06/17/2020 Regular Meeting Page 9 Home Businesses Home businesses are those business operated as a “Home Occupation” pursuant to Code Section 17.28.020(B). A hemp home business is one that sells hemp-derived products as a primary or accessory use. Such products may include oils, personal care products, foods, clothing, etc. The hemp home-based business may sell products that are manufactured offsite and either sold through the mail, online store or as part of customer services. Due to the small scale of such businesses, staff does not anticipate a major economic impact associated with home based businesses, but acknowledges that allowing these uses may create value for residents who are trying to start their own businesses or expanding products or services they offer. Home Occupations are subject to stringent operating requirements intended to minimize impacts to adjacent residents and maintain the character of residential neighborhoods. Staff believes that the Code sufficiently addresses potential impacts related to a hemp home business.  Staff Recommendation: Based on the opportunity to allow expanded entrepreneurial opportunities and sales tax revenue with minimal community impacts, staff recommends that Home Occupations involving the accessory sale of hemp-based products, sales through mail or online or as part of services provided, be permitted. ENVIRONMENTAL DETERMINATION This study session is intended to provide policy guidance to help develop future regulations. As such, it would not result in any physical change to the environment and would not be considered a “Project” as defined by California Environmental Quality Act (“CEQA”) Guidelines. Any resulting regulatory changes to modify the City Code will be reviewed pursuant to CEQA to determine if potential environmental impacts are expected. Such CEQA analysis will be prepared alongside future regulations. NOTICING Because this is a study session where no formal action will be taken, no public noticing is required. However, based on previous community input regarding hemp, a public meeting notice was published in the Ventura County Star paper on June 11, 2020. FISCAL IMPACT Aside from staff time preparing the analysis and amendments to the zoning code, no fiscal impacts are proposed with this request for policy guidance. 26 Honorable City Council 06/17/2020 Regular Meeting Page 10 COUNCIL GOAL COMPLIANCE This action does not support a current strategic directive. STAFF RECOMMENDATION 1. Receive the report; and 2. Receive public comment; and 3. Provide feedback and policy guidance on development of zoning ordinance amendments pertaining to industrial hemp uses. Attachment 1: Summary Table of the Staff Recommendations 27 Summary Table Study Session: Industrial Hemp Uses / Staff Recommendations Use Analysis Staff Recommendation Warehousing Raw Hemp and Finished Hemp Products: Primary Based on the low jobs growth potential paired with odor and truck traffic impacts, staff recommends that the warehousing of raw hemp and finished hemp products be prohibited as a primary use. Prohibit Warehousing: Accessory to manufacturing or retail Based on limited impacts associated with related manufacturing or retail uses, staff recommends that the warehousing of raw hemp and finished hemp based products be permitted when accessory to a permissible manufacturing or retail use. Outdoor storage of raw hemp would not be permitted in any zone. Allow Manufacturing: Paper/Textile/Construction Materials Based on the high potential for odor, dust, noise and truck traffic impacts, staff recommends that hemp manufacturing and processing of paper, textiles, and construction materials be prohibited. Prohibit Manufacturing: Oil Extraction Based on the high potential for odor, safety, and truck traffic impacts, staff recommends that hemp oil extraction be prohibited as a use. Prohibit Manufacturing: Food/Supplement/Personal Care Based on the potential for expanded business opportunities with minimal community impacts, staff recommends that the use of hemp in the production of food, nutritional supplements, and personal care products be allowed as a manufacturing use within industrial zones. Outdoor storage of raw hemp would not be permitted in any zone. Allow Laboratory, Testing, and Research Based on the opportunity for expanded high-paying technical jobs with minimal community impacts, staff recommends that laboratory, testing, and research uses of hemp be allowed in certain industrial and commercial with no outside storage of raw hemp being permissible. Allow Retail Sales: Accessory Use Based on the opportunity to expand sales tax revenue with minimal community impacts, staff recommends that sale of products derived from or containing hemp be allowed as an accessory use to an otherwise permissible retail use throughout the City. Allow Retail Sales: Primary Based on the opportunity to reduce commercial real estate vacancy and the potential to increase sales tax revenue with minimal community impacts, staff recommends that stand-alone hemp retail sales be allowed as a primary use in certain commercial zones. Allow Retail Sales: Home Occupation Based on the opportunity to allow expanded entrepreneurial opportunities and sales tax revenue with minimal community impacts, staff recommends that Home Occupations involving the accessory sale of hemp-based products, sales through mail or online or as part of services provided, be permitted. Allow 28