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  Time Set   #   24.    
Board of Supervisors   
Meeting Date: 02/25/2020  
Brief Title:    Industrial Hemp Processing, Manufacturing, & Sales Ordinance
From: Mindi Nunes, Assistant County Administrator, County Administrator's Office
Staff Contact: Eric Will, Associate Management Analyst, County Administrator's Office, x8157

Subject
Hold a public hearing and consider adoption of an ordinance entitled "An Ordinance Restricting Manufacturing, Processing, Storage, and Sales of Industrial Hemp." (No general fund impact) (Nunes/Will)
Recommended Action
  1. Introduce the ordinance (Attachment A) by title only and waive first reading;
     
  2. Receive a staff presentation and hold a public hearing on the proposed ordinance;
     
  3. Adopt the proposed ordinance; and
     
  4. Direct staff to (1) include consideration of processing and storage activities into the ongoing work of the working group on industrial hemp cultivation, and (2) concurrent with the end of the cultivation moratorium, advise the Board on further evaluation of hemp manufacturing and retail sales restrictions.
Strategic Plan Goal(s)
Flourishing Agriculture
Reason for Recommended Action/Background
The County currently has a moratorium on the cultivation of industrial hemp, which is set to expire on January 14, 2021. This moratorium includes limited exemptions for the cultivation of nursery stock, transplants, research or seed breeding, provided such activities are conducted indoors (including greenhouses) and meet other requirements (e.g., security, pollen control). The Agricultural Commissioner has general oversight of exempt cultivation activities. The current moratorium ordinance (as modified by the Board on November 19, 2019) is included as Attachment B. The ordinance does not regulate the non-cultivation activities (i.e., processing, manufacturing, storage and sales) that are the subject of recommendations for Board consideration.

In connection with the cultivation moratorium, the Board has directed County staff to consider and recommend a regulatory approach to industrial hemp cultivation that balances several factors, including potential economic opportunities for local growers, cross-pollination risks (with both cannabis and hemp), demands upon law enforcement, concerns about ineffective crop THC-level sampling, and nuisance odors. A working group that includes local growers, hemp experts from UC Davis, law enforcement, the Agricultural Commissioner and other stakeholders, is currently reviewing these issues with staff to assist in formulating a regulatory approach for Board consideration prior to expiration of the cultivation moratorium in early 2021.

The Proposed Ordinance
The existing moratorium ordinance applies only to hemp cultivation. As discussed during the December 17, 2019, Board meeting, County staff regularly receive inquiries concerning non-cultivation activities involving industrial hemp.  The inquiries range from questions about storing hemp prior to its distribution, processing harvested hemp (cutting, trimming, drying, and related activities), and manufacturing hemp-related products such as cigarettes with hemp cultivated outside of California. State and federal regulation of these activities is not fully developed, though legislation regulating some aspects of hemp product manufacturing and sales is currently pending in the Legislature (Attachment C). As a review of Assembly Bill 228 illustrates, the marketing and sale of hemp products presents an array of consumer safety issues that would be challenging to address without significant work (and outside expertise) and would generally benefit from a uniform statewide approach.

On December 17, 2019, the Board directed staff to develop an ordinance banning all such activities. The Board also included hemp storage within the range of activities to be included in the ordinance, though it recognized the potential need to evaluate storage further (including but not limited to including a "grandfather" clause for existing hemp storage occurring in Yolo County). In providing this direction, the Board acknowledged the possibility of revisiting the ban upon the adoption of a state regulatory framework covering such activities.

The attached ordinance responds to the Board’s direction.  The ordinance includes a straightforward ban on processing and manufacturing activities, as well as a ban on the commercial sale of industrial hemp products to consumers.  The ordinance takes a more nuanced approach to storage, banning storage at facilities not currently used for the hemp storage as of the effective date of the ordinance.  In order to take advantage of the limited exemption for continued storage at facilities already in such use, the facility owner or lessee has to register with the Agricultural Commissioner prior to the effective date of the ordinance and provide certified laboratory results demonstrating the commodity is industrial hemp rather than cannabis.  Finally, the ordinance also contains enforcement provisions that (like the cultivation moratorium ordinance) incorporate the abatement process set forth in the County’s cannabis licensing ordinance.  Restrictions in the ordinance are not applicable to currently exempt cultivation activities, but only to the extent they can demonstrate that manufacturing, processing, sales and storage are incidental to their authorized cultivation activities.

Planning Commission Recommendation

As required by state law, the Planning Commission considered the proposed ordinance at a public hearing on February 13, 2020.  The Commission recommended adoption of the ordinance, but its motion also included the following recommendations:
  • To include a sunset clause on the processing and storage restrictions that corresponds to the January 14, 2021 expiration of the cultivation moratorium; and
  • To ensure staff consider industrial hemp manufacturing and retail sales activities going forward.
     
The recommended actions reflect the substance of the Planning Commission recommendations, but the proposed ordinance has not been revised to include a sunset clause.  Staff believe the sunset clause recommendation is reasonable but believe the same outcome can be achieved through Board direction to add those activities to the charge of the existing industrial hemp working group.  If the Board concurs, the working group would consider the need for processing and storage of industrial hemp in conjunction with its evaluation of hemp cultivation.  All three activities could be addressed, if appropriate, in an ordinance presented for consideration prior to the conclusion of the moratorium.
Collaborations (including Board advisory groups and external partner agencies)
County Counsel, County Administrator's Office, Department of Agriculture, Community Services Department.
Attachments
Att. A. Proposed Ordinance
Att. B. Cultivation Moratorium Ordinance (as amended 11-19-2019)
Att. C. Assembly Bill 228
Att. D. Presentation

Form Review
Inbox Reviewed By Date
Eric Will (Originator) Eric Will 02/13/2020 03:46 PM
Phil Pogledich Phil Pogledich 02/14/2020 09:56 AM
Eric Will (Originator) Eric Will 02/14/2020 10:14 AM
Leslie Lindbo Leslie Lindbo 02/16/2020 08:36 AM
Casey Liebler Casey Liebler 02/16/2020 03:33 PM
Mindi Nunes Mindi Nunes 02/17/2020 05:47 AM
Patrick Blacklock Patrick Blacklock 02/18/2020 09:53 AM
Elisa Sabatini Elisa Sabatini 02/19/2020 09:38 AM
Form Started By: Eric Will Started On: 12/17/2019 02:24 PM
Final Approval Date: 02/19/2020
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