COMMUNITY DEVELOPMENT DEPARTMENT

100 Parkers Mill • Oswego, IL 60543 (630) 554-3622 • Fax: (630) 551-3975 www.oswegoil.org

STAFF REPORT

DATE: September 18, 2019

TO: Chairman and Planning and Zoning Commission

FROM: Rod Zenner, Community Development Director Natalie Zine, Planner

SUBJECT: Staff Report for the October 10, 2019 Planning and Zoning Commission Meeting Text Amendment Adult Use Cannabis Project #1043.19

Purpose To provide the Planning and Zoning Commission with background and proposals regarding regulations for the uses associated with Adult Use Cannabis

Background The State of Illinois approved the “Cannabis Regulation and Tax Act” which allows for the recreational use of cannabis within the State of Illinois beginning in January 1, 2020. Though this act allows for cannabis use and specific cannabis related businesses, it does allow communities to regulate and/or prohibit the cannabis businesses within their individual jurisdiction. It does not allow a community to prohibit the possession or consumption of cannabis as long at it is consistent with the guidelines within the State act.

The Village Board is currently weighing the options of allowing cannabis related businesses, restricting certain businesses, or prohibiting the businesses altogether within the Village limits. The Board has requested that the Planning and Zoning Commission review the various businesses associated with cannabis outlined in the act and provide a proposed text amendment regarding those uses assuming that the Village Board determines to allow them within the Village corporate limits.

Staff is providing a copy of the Illinois Municipal League’s FAQ regarding the new State regulations for your information. Text Amendment - Cannabis Project #1043.19 September 18, 2019 Page 2 Discussion The Act outlines several types of uses related to adult use cannabis. A definition of those types of uses from the Illinois Municipal League’s FAQ is as follows:

Craft Grower: A facility operated by an organization or business that is licensed by the Illinois Department of Agriculture to cultivate, dry, cure, and package cannabis that is available for sale at a dispensing organization or for use at a processing organization. A craft grower may contain up to 5,000 square feet of canopy space on its premises for plants in the flowering stage. The Department of Agriculture may authorize an increase or decrease of flowering stage cultivation space in increments of 3,000 square feet by rule based on market need, craft grower capacity and the licensee's history of compliance or noncompliance, with a maximum space of 14,000 square feet for cultivating plants in the flowering stage, which must be cultivated in all stages of growth in an enclosed and secure area. Craft crowers can distribute to a cultivation center, a craft grower, an infuser, or dispensing organization. By State law, a craft grower cannot be located in a residentially zoned property or within 1,500 feet of another craft grower or cultivation center.

Cultivation Center: means a facility operated by an organization or business that is licensed by the Department of Agriculture to cultivate, process, transport (unless otherwise limited by the Act) and perform other necessary activities to provide cannabis and cannabis-infused products to cannabis business establishments. Cultivation centers are limited to 210,000 square feet of canopy space for flowering plants. Cultivation centers may sell or distribute to dispensing organizations, craft growers, infusing organizations, and transporters.

Dispensing Organization: means a facility operated by an organization or business that is licensed by the Illinois Department of Financial and Professional Regulation to acquire cannabis from a cultivation center, craft grower, processing organization or another dispensary for the purpose of selling or dispensing cannabis, cannabis-infused products, cannabis seeds, paraphernalia or related supplies under the Act to purchasers or to qualified registered medical cannabis patients and caregivers. As used in the Act, a “dispensing organization” shall include a registered medical cannabis organization as defined in the Compassionate Use of Medical Cannabis Program Act or its successor Act that has obtained an Early Approval Adult Use Dispensing Organization License. Dispensing organizations cannot sell through a drive-thru window, vending machines, or transport to residents or other locations for sale. Per the Act, they are limited to the hours of 6:00am to 10:00 pm and cannot operate unless two people are working at the same time. A dispensary cannot be located within 1,500 feet of another dispensary. They also cannot advertise within 1,000 feet of a school, playground, hospital and health care facilities, recreation centers, child care centers, public parks, libraries, or arcade.

Infuser Organization: or "infuser" means a facility operated by an organization or business that is licensed by the Illinois Department of Agriculture to directly incorporate cannabis or cannabis concentrate into a product formulation to produce a cannabis-infused product. They may only dell or distribute through a dispensary. They cannot be located within a residential zone.

Processing Organization: A facility operated by an organization or business that is licensed by the Illinois Department of Agriculture to either extract constituent chemicals or compounds to Text Amendment - Cannabis Project #1043.19 September 18, 2019 Page 3 produce cannabis concentrate or incorporate cannabis or cannabis concentrate into a product formulation to produce a cannabis product, per the Cannabis Regulation and Tax Act, (P.A. 101- 0027), as it may be amended from time-to-time, and regulations promulgated thereunder.

Transportation Organization: An organization or business that is licensed by the Illinois Department of Agriculture to transport cannabis on behalf of a cannabis establishment or a community college licensed under the Community College Cannabis Vocational Training Pilot Program, per the Cannabis Regulation and Tax Act, (P.A. 101-0027), as it may be amended from time-to-time, and regulations promulgated thereunder.

Marijuana Smoking Lounge/Marijuana Social Club: A location where you are allowed to consume or purchase and consume cannabis-based products

Proposed Zoning Requirements: Staff has prepared a decision matrix table at the end of this memorandum to assist in the conversation regarding the proposed uses and potential zoning requirements

Zoning Designation Assuming the Village Board determines that cannabis-based businesses would be allowed within the Village, it will need to determine what zoning designations would be required for the specific uses.

Craft Grower, Cultivation Organization, Processing Organization, Transportation Organization – These uses are specific to the creation and processing of the cannabis product. Based on the Village’s Zoning Ordinance, it is staff’s opinion that these uses are most appropriate for the M-1 Limited Manufacturing and M-2 General Manufacturing Districts. Currently, the M-1 and M-2 allows the production and processing of drugs as a permitted use.

Other manufacturing is allowed in the B-3 District, breweries for example, but the nature of these type of producers invites customers to observe and partake in the products at that B-3 location. Cannabis users are specifically different as they prohibit interaction with the general public, do not allow the intake of their product on site, and have security measures that are counter to the intended use and intensity of a B-3 District. Therefore, staff is of the opinion that these uses should be limited to the M-1 and M-2 Districts.

Dispensing Organization – This use is limited to the sale of the cannabis product to the general public. It is staff’s opinion that the intensity of this type of use is similar to uses found in the B-2 Community Shopping District and B-3 Community Service and Wholesale District. The use is similar to the intensity of a tobacco store, liquor store, or drug store. The tobacco store and liquor store are uses that have a similar restriction of the sale of their product to customers of a certain age. Drug stores are also similar to the dispensing model as they sell prescriptions based on the records of an individual. Dispensaries must register the sale of product with every transaction.

Staff also considered limiting the dispensaries to M-1 and M-2 Districts, but it is staff’s opinion that the manufacturing district is not intended for a retail type of use. The roads in industrial park Text Amendment - Cannabis Project #1043.19 September 18, 2019 Page 4 are designed for large trucks vs. many passenger vehicles as experienced in commercial retail areas. The parking lots are established based on industrial uses which have a lower parking requirement than retail organizations. Manufacturing districts are not designed to provide visibility of the units for the general public. Staff would recommend dispensaries be located in highly visible areas which can provide more security than an industrial location hidden from view from the public road.

Smoking Lounge and Social Clubs/on premises consumption – It is staff’s opinion that these uses should not be allowed within the Village. These uses would encourage patrons to visit their location, consume product, and then leave the site in their vehicle. As there is not a reliable way to determine if a user is under the influence, it will be difficult for the police to identify if a driver was impaired. The Village Board has also indicated that they are not in favor of this type of use within the Village.

Special Use The Village has the ability to allow the proposed uses as permitted by right or to require a Special Use Permit. The Special Use Permit would require a petitioner to come before the Planning and Zoning Commission for a public hearing and recommendation. That would then be forwarded to the Village Board for final decision. Under a Special Use permit, the Village could require specific conditions that would mitigate any impacts of a proposed use. Currently, the Zoning Ordinance requires a Special Use Permit for liquor stores and tobacco stores. Staff would recommend a special use requirement for a dispensary to be consistent with the other similarly intense uses. The Village Board has indicated that they would like cannabis-based businesses to be under a Special Use permit.

Distance Separation The State Act currently has a distance restriction between similar uses (1,500 feet) and advertising of dispensaries from certain uses (1,000 feet). The Village has the ability to provide additional distance requirements.

The Village Code currently requires a distance of 100 feet between a liquor license use and a school or park. Staff would recommend a similar distance regulation of 100 feet from a school or park to create consistency within the Code. The Village does have the ability to increase that distance and to include other sensitive uses if it desires.

Special Districts If dispensaries are allowed in B-2 or B-3 Districts, they would be allowed in the Downtown area under those districts. The Village could prohibit their location in the Downtown through the Zoning Ordinance. The intent would be to preserve downtown retail spaces for more pedestrian scale retail and service uses instead the proposed intensity of the dispensary use. If the Commission is of the opinion that dispensaries should be prohibited from the Downtown area, staff would recommend language indicating that the use is not allowed within the Village’s TIF District (which covers the downtown area). The Village recently received a grant from the Chicago Metropolitan Agency for Planning (CMAP) to create a Unified Development Ordinance, which is an overhaul of the Village’s Zoning Ordinance. During this process, which will take up to two Text Amendment - Cannabis Project #1043.19 September 18, 2019 Page 5 years, staff will establish new zoning districts in the downtown in place of the current B-2 and B- 3 Districts. The Village could then prohibit dispensaries in these new downtown districts as part of the new development code prior to the expiration of the TIF District.

Signage Along with the Village’s current signage regulations, the State Act prohibits advertisement that is within 1,000 feet of a school, playground, hospital, health care facility, recreation centers, child care centers, public parks, libraries, or game arcades that admit patrons under the age of 21. Signage cannot provide false advertising, promote consumption, display cannabis (including leaves) make any health claims, or show use by anyone under 21 or appeal to minors.

Hours of Operation The Act currently limits the hours of operation for a dispensary from 6:00am to 10:00pm. The Village has the ability to reduce the hours of operation if it deems it appropriate to do so. At this time, staff has not determined a need to reduce the hours as provided by the Act and recommend the 6:00am to 10:00pm restriction.

Maximum Number if Businesses The Village will consider a license requirement for the Cannabis based businesses. The Village currently has licenses for liquor and video gaming establishments. In this way, the Village can limit the total number of businesses. This process will be independent of the zoning approval process and will be determined by the Village Board through the licensing process.

Recommendation

Staff has provided the Planning and Zoning Commission with a decision matrix spreadsheet to assist in discussing the proposed text amendment. The spreadsheet breaks the issues out into individual discussion items to assist the Commission in reviewing the proposed amendments.

Staff is also providing draft language to the Zoning Ordinance consistent with staff’s suggestions and the proposed language that is being considered by neighboring communities.

Staff recommends that if the Village determines to allow cannabis-based businesses to be allowed within the Village, that the Village of Oswego Zoning Ordinance be amended as follows:

 Adding definitions for Craft Grower, Cultivation Center, Dispensing Organization and Infusing Organization.

 Including Dispensing Organizations as a Special Use in the B-2 and B-3 Zoning Districts with a 100-foot separation between the dispensary and a public school or park

 Allowing Craft Grower, Cultivation Organization, Processing Organization, and or Transportation Organization as a Special Use in the M-1 Limited Manufacturing and M-2 General manufacturing Districts Text Amendment - Cannabis Project #1043.19 September 18, 2019 Page 6

The Planning and Zoning Commission’s recommendation will be forwarded to the Village Board for consideration. Text Amendment - Cannabis Project #1043.19 September 18, 2019 Page 7 Proposed Text Amendment

New language in highlighted text

Section 3.02 Definitions

CRAFT GROWER: A facility operated by an organization or business that is licensed by the Illinois Department of Agriculture to cultivate, dry, cure, and package cannabis that is available for sale at a dispensing organization or for use at a processing organization. A craft grower may contain up to 5,000 square feet of canopy space on its premises for plants in the flowering stage. The Department of Agriculture may authorize an increase or decrease of flowering stage cultivation space in increments of 3,000 square feet by rule based on market need, craft grower capacity and the licensee's history of compliance or noncompliance, with a maximum space of 14,000 square feet for cultivating plants in the flowering stage, which must be cultivated in all stages of growth in an enclosed and secure area. Craft crowers can distribute to a cultivation center, a craft grower, an infuser, or dispensing organization. By State law, a craft grower cannot be located in a residentially zoned property or within 1,500 feet of another craft grower or cultivation center.

CULTIVATION CENTER: A facility operated by an organization or business that is licensed by the Department of Agriculture to cultivate, process, transport (unless otherwise limited by the Act) and perform other necessary activities to provide cannabis and cannabis-infused products to cannabis business establishments. Cultivation centers are limited to 210,000 square feet of canopy space for flowering plants. Cultivation centers may sell or distribute to dispensing organizations, craft growers, infusing organizations, and transporters.

DISPENSING ORGANIZATION: A facility operated by an organization or business that is licensed by the Illinois Department of Financial and Professional Regulation to acquire cannabis from a cultivation center, craft grower, processing organization or another dispensary for the purpose of selling or dispensing cannabis, cannabis-infused products, cannabis seeds, paraphernalia or related supplies under the Act to purchasers or to qualified registered medical cannabis patients and caregivers. As used in the Act, a “dispensing organization” shall include a registered medical cannabis organization as defined in the Compassionate Use of Medical Cannabis Program Act or its successor Act that has obtained an Early Approval Adult Use Dispensing Organization License. Dispensing organizations cannot sell through a drive-thru window, vending machines, or transport to residents or other locations for sale. Per the Act, they are limited to the hours of 6:00am to 10:00 pm and cannot operate unless two people are working at the same time. A dispensary cannot be located within 1,500 feet of another dispensary. They also cannot advertise within 1,000 feet of a school, playground, hospital and health care facilities, recreation centers, child care centers, public parks, libraries, or arcade.

INFUSER ORGANIZATION: or "infuser" means a facility operated by an organization or business that is licensed by the Illinois Department of Agriculture to directly incorporate cannabis or cannabis concentrate into a product formulation to produce a cannabis-infused Text Amendment - Cannabis Project #1043.19 September 18, 2019 Page 8 product. They may only dell or distribute through a dispensary. They cannot be located within a residential zone.

Section 8.02 B-2 Community Shopping District

B. Special Uses

8. Dispensing Organization where the proposed facility complies with the following: 8.01 Facility may not be located within 100 feet of the property line of a pre-existing public school or park 8.02 Facility may not be located in a dwelling unit 8.03 At least 75% of the floor area of any tenant space occupied by a dispensing organization shall be devoted to the activities of the dispensing organization as authorized by the State Act, and no dispensing organization shall also sell food for consumption on the premises 8.04 Facility may conduct any sales or distribution of cannabis other than as authorized by the State Act. 8.05 Consumption on site or establishment of lounges shall not be permitted.

Section 8.03 B-3 Community Service and Wholesale District

B. Special Uses

8. Dispensing Organization whereas they are located no closer than 100 feet from a public school or park. Consumption on site or establishment of lounges shall not be permitted. 8.01 Facility may not be located within 100 feet of the property line of a pre-existing public school or park 8.02 Facility may not be located in a dwelling unit 8.03 At least 75% of the floor area of any tenant space occupied by a dispensing organization shall be devoted to the activities of the dispensing organization as authorized by the State Act, and no dispensing organization shall also sell food for consumption on the premises 8.04 Facility may conduct any sales or distribution of cannabis other than as authorized by the State Act. 8.05 Consumption on site or establishment of lounges shall not be permitted.

Section 9.01 Limited Manufacturing District

C. Permitted Uses

6. Craft Grower, Cultivation Organization, Processing Organization, and or Transportation Organization Text Amendment - Cannabis Project #1043.19 September 18, 2019 Page 9

Table 1: Zoning and Use Category Matrix

Zoning District Land Use Category A-1 B-1 B-2 B-3 O-R T-U M-1 M-2 Craft Grower S S Cultivation Center S S Dispensing Organization S S S S

Infuser Organization or Infuser S S

Processing Organization or S S Processor

Transporting Organization or S S Transporter S = Special Use Permit Blank = Prohibited

Table 2: Marijuana-Related Uses Proposed Special Standards

Item Subject Staff Recommendation P&Z Commission Recommendation A. Regulated Use Types Craft Grower Cultivation Center Dispensing Organization (Dispensary) Infuser Organization (Infuser) Processing Organization (Processor) Transporting Organization (Transporter)

B. Prohibited Uses Cannabis Smoking Lounge Cannabis Social Club C. Special Use Permit Cannabis dispensing organizations shall require a Special Use Permit.

D. Distance from 100 feet child/community related uses E. Distance from other A craft grower shall not be located within marijuana-related 1,500 feet of another craft grower or a uses cultivation center. A dispensing organization may not be located within 1,500 feet of the property line of a preexisting dispensing organization. Text Amendment - Cannabis Project #1043.19 September 18, 2019 Page 10 F. Maximum square No regulation recommended. However, a footage cultivation center may not contain more than 210,000 square feet of canopy space for plants in the flowering stage for cultivation of adult-use cannabis as provided in the Cannabis Act.

G. Maximum number of Village Board decision. licenses

H. Home Occupation Marijuana-related uses are prohibited as home occupations. I. Dispensing Methods Prohibited methods of dispensing include: Drive-through windows, vending machines, and transport of cannabis to residences or other locations where purchasers may be for delivery. J. On-site sales vs. All sales of retail marijuana shall be made electronic in person, directly to the purchaser, within the restricted area of the retail marijuana establishment. No sales shall be made via telephone, internet or other means of remote purchase. Deliveries shall occur only in person to the purchaser at the time of purchase within the restricted area of the retail marijuana establishment. K. Hours of Operation 6:00am - 10:00pm as provided by the Cannabis Act.

L. Public Visibility of Any and all possession, storage, display, Activities sales, testing, production, or cultivation of marijuana shall occur only within the restricted area of the marijuana establishment and shall not be visible from the exterior of the business. Text Amendment - Cannabis Project #1043.19 September 18, 2019 Page 11 M. Odor All marijuana establishments shall utilize control/Ventilation a ventilation and odor system that prohibits the detection of noxious odors from outside the licensed premises. N. Permanent location All marijuana-related uses shall be operated from a permanent location. No marijuana-related use shall be permitted to operate from a moveable, mobile or transitory location.

O. Co-located Uses An infuser may share premises with a craft grower or a dispensing organization, or both, provided each licensee stores currency and cannabis or cannabis- infused products in a separate secured vault to which the other licensee does not have access or all licensees sharing a vault share more than 50% of the same ownership.