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HomeMy WebLinkAbout08.01.22 Work Session Packet CITY OF Meeting Location: FARMINGTONFarmington City Hall 430 Third Street Farmington, MN 55024 CITY COUNCIL WORK SESSION MEETING AGENDA August 1, 2022 5:15 PM 1. CALL TO ORDER 2. APPROVE AGENDA 3. DISCUSSION ITEMS (a) 2023 Draft Budget Discussion (30 Minutes) (b) Discuss THC- Edible Legislation (30 minutes) 4. CITY ADMINISTRATOR UPDATE S. ADJOURN CITY OF O 43o Third St., Farmington, MN 55024 FARMINGTON © 651-28o-6800 .I FarmingtonMN.gov IIIIIIIIIIIIIIIIIIIIII TO: Mayor, Councilmembers and City Administrator FROM: Chris Regis, Finance Director SUBJECT: 2023 Draft Budget Discussion (30 Minutes) DATE: August 1, 2022 INTRODUCTION The city council provided direction at the July 11, 2022,work session on the first draft of the 2023 city budget. Staff has updated the 2023 budget based on the city council direction. DISCUSSION The first draft of the 2023 budget included a General Fund budget of$16.7 million, $3.8 million in revenues, a fiscal disparities number with an estimated 1%increase over the 2021 number and a debt service tax levy of$2.35 million dollars. The net tax levy increase was at 6.16%. During the work session several departments presented their budgets and staffing requests. The city council also discussed the first draft in detail.The direction that came out of that discussion was to keep the tax levy at or around 6%and add two police patrol positions to the budget and for staff to consider additional positions. Staff has added the two police patrol positions to the budget, with effective start dates of July 1, 2023. By delaying the start date to midyear this mitigates the impact on the 2023 budget, however, it will impact the 2024 budget as these two positions would be then budgeted for the entire year. I n addition, staff has added a community development position with a start date of January 1, 2023. One of the primary responsibilities of this position would be taking over the code enforcement that is currently outsourced. The effect on the tax levy by adding these three positions was to increase the levy from the initial draft level of 6.16%to 8.08%. 1 n order to add the three positions and maintain the tax levy increase at approximately 6%one option has presented itself for discussion.That option is the planned 2023 debt service tax levy in the amount of $276,750 for the Series 2016A bonds. These bonds will mature as of February 1, 2023. However,there is sufficient cash in the Series 2016A debt service fund to pay the final principal and interest payment. Therefore,the planned 2023 levy would not be necessary. I n addition,the increase to the community development budget as a result of the new position would be offset by removing the budgeted amount for the code enforcement contract which would be$60,000. By removing the Series 2016A levy,the 2023 budget would be able to add the three new positions and reduce the current levy increase from 8.08%to 5.78%. BUDGET IMPACT The work associated with the 2023 budget development will set the direction of the financial health of the city. ACTION REQUESTED Discuss and review the options presented on the draft 2023 city budget and provide staff with appropriate direction. ATTACHMENTS: Type Description ❑ Backup Material Draft 2023 General Fund Budget Summary ❑ Backup Material Draft 2023 General Fund Revenue Summary ❑ Backup Material Draft 2023 General Fund Expenditure Summary City of Farmington Budget and Tax Levy 2022 Budget,2023 Proposed and 2024 Proposed Company 2022 2023 Budget% 2024 Budget Budget Pro osedChane Proposed Change% Non-Property Tax Revenues Licenses and Permits 736,700 915,470 24.27% 916,270 0.09% Intergovernmental Revenue 672,087 725,207 7.90% 735,307 1.39% Charge for Service 602,460 605,919 0.57% 605,994 0.01% Fines and Forfeitures 50,000 55,000 10.00% 60,000 9.09% Investment Income 41,600 51,000 22.60% 52,000 1.96% Miscellaneous 80,878 48,410 (40.14)% 49,300 1.84% Transfers In 1,427,858 1,472,734 3.14% 1,523,459 3.44% Total Revenues 3,611,583 3,873,740 7.26% 3,942,330 1.77% Expenditures Administration 1,099,249 1,159,523 5.48% 1,368,218 18.00% Human Resource 402,112 401,235 (0.22)% 309,914 (22.76)% Dakota Broadband 45,500 45,500 0.00% 45,500 0.00% Finance and Risk Mgmt 818,759 844,707 3.17% 955,410 13.11% Police 5,279,810 5,664,569 7.29% 5,732,679 1.20% Fire 1,592,646 1,742,006 9.38% 1,801,340 3.41% Community Development 1,059,182 1,191,555 12.50% 1,228,955 3.14% Engineering 850,411 862,897 1.47% 925,020 7.20% Municipal Services 1,609,704 1,716,574 6.64% 1,768,964 3.05% Parks and Recreation 1,329,737 1,610,495 21.11% 1,780,594 10.56% Transfers Out 1,642,609 1,662,609 1.22% 1,678,334 0.95% Total Expenditures 15,729,719 16,901,670 7.45% 17,594,928 4.10% Revenues Over(Under)Expenditures (12,118,136) (13,027,930) 7.51% (13,652,598) 4.79% Fiscal Disparities 2,351,400 2,374,914 1.00% 2,398,663 1.00% General Fund Levy 9,766,736 10,653,016 9.07% 11,253,935 5.64% Debt Levy Bonds 2,099,788 2,186,168 4.11% 1,946,855 (10.95)% 2005C Loan Repay-Storm Water Tr Adv 166,000 166,000 0.00% 96,000 (42.17)% Total Debt Levy 2,265,788 2,352,168 3.81% 2,042,855 (13.15)% Use of Fund Balance to Lower Debt Levy 0 Net Debt Levy 2,265,788 2,352,168 3.81% 2,042,855 (13.15)% Farmington Net Tax Levy 12,032,524 13,005,184 8.08% 13,296,790 2.24% General Fund Detailed Non-Property Tax Revenue Summary 2021 Budget,2022 Budget, 2023 Proposed and 2024 Proposed Object 2021 2022 2023 2024 Account Budget Budget Prosed Proposed LIQUOR LICENSES 40,000 40,000 37,000 37,000 BEER&WINE LICENSES 1,100 800 800 800 CLUB LICENSES 500 500 500 500 MASSAGE LICENSE 300 50 50 50 GAMBLING LICENSE/PERMIT 250 150 300 300 OTHER LICENSE&PERMIT 1,700 1,400 1,800 1,800 ANIMAL LICENSES 2,500 2,000 2,900 2,000 Licenses 46,350 44,900 43,350 42,450 BUILDING PERMITS 380,876 590,000 762,770 762,770 REINSPECTION FEES 1,500 1,200 5,000 5,000 CODE ENFORCEMENT FEES 1,500 900 900 900 PLUMBING&HEATING PERMITS 50,000 60,000 60,000 60,000 ELECTRIC PERMITS 16,000 20,000 23,000 23,000 ISTS PERMITS 300 250 250 250 UTILITY PERMITS 10,500 10,500 11,000 12,000 SIGN PERMITS 800 700 900 700 BURNING PERMITS 1,250 1,250 1,300 1,200 OTHER PERMITS 8,000 7,000 7,000 8,000 Permits 470,726 691,800 872,120 873,820 Licenses and Penults 517,076 736,700 915,470 916,270 FEDERAL GRANT 5,000 5,000 3,100 3,200 LOCAL GOVERNMENT AID 105,587 105,587 105,587 105,587 MSA MAINTENANCE 184,000 184,000 185,400 185,400 POLICE AID 198,000 205,000 225,000 230,000 POST TRAINING 15,160 15,000 25,000 25,000 FIRE AID 142,490 150,000 175,000 180,000 STATE GRANT 4,325 0 0 0 COUNTY MISCELLANEOUS 13,350 7,500 6,120 6,120 Intergovernmental 667,912 672,087 725,207 735,307 CUSTOMER SERVICES NONTAXABI. 210 135 150 150 ZONING&SUBDIVISION FEES 2,600 3,000 4,000 4,000 ADMINISTRATION FEES-PROJECT 4,000 4,000 7,500 8,000 FIRE CHARGES 239,227 258,940 264,177 272,513 POLICE SERVICE CHARGES 78,810 80,385 81,992 83,631 EROSION&SEDIMENT CONTROL 8,100 9,500 14,000 15,000 RECREATION FEES-GENERAL 75,000 75,000 62,000 65,000 RECREATION FEES-SENIOR CTR 15,000 17,000 17,500 18,000 MEMBERSHIP FEES-SENIOR CTR 6,000 7,500 7,600 7,700 ADVERTISING 750 500 500 500 ADVERTISING 1,500 1,500 1,500 1,500 FRANCHISE FEE 145,000 145,000 145,000 130,000 Charges For Services 576,197 602,460 605,919 605,994 COURT FINES 49,000 50,000 55,000 60,000 Fines&Forfeitures 49,000 50,000 55,000 60,000 INTEREST ON INVESTMENTS 29,100 41,600 51,000 52,000 Investment Income 29,100 41,600 51,000 52,000 RENTAL INCOME-RRC 18,000 18,000 7,710 8,000 RENTAL INCOME 29,670 28,678 29,000 29,500 MISCELLANEOUS REVENUE 31,700 34,200 4,200 4,300 DONATIONS 0 0 2,500 2,500 REFUNDS&REIMBURSEMENTS 0 0 5,000 5,000 Misc Revenue 79,370 80,878 48,410 49,300 OPERATING TRANSFERS 1,379,689 1,427,858 1,472,734 1,523,459 Trensfers In 1,379,689 1,427,858 1,472,734 1,523,459 Total Revenues $3,298,3441 $3,611,5831 $3,873,740 $3,942,330 General Fund Expenditure Detail Summary 2021 Budget,2022 Budget 2023 Proposed and 2024 Proposed Company 2021 2022 2023 2024 Budget Budget Pro osed Pro osed Expenditures Administration Legislative(1005) 87,392 87,259 110,262 113,832 Administration(1010) 321,712 469,641 528,826 550,964 Elections(1013) 9,351 47,948 10,000 93,298 Communications(1014) 114,900 132,916 134,785 220,835 City Hall(1015) 369,560 361,485 375,650 389,289 Administration 902,915 1,099;249 1,159,523 1,368,218 Human Resources 361,658 402,112 401,235 309,914 Human Resource(1011) 361,658 402,112 401,235 309,914 Human Resources r 361,658 402;112 401,235 309,914 Dakota Broadband 37,500 45,500 45,500 45,500 Dakota Broadband 37,500 45,500 45,500 45,500 Dakota Broadband -37,500 45,500 45,500 45,500 Finance and Risk Management Finance(1021) 603,097 648,309 655,157 760,170 Risk Management(1022) 173,190 170,450 189,550 195,240 Finance and:Risk Management 776,287 818,759 844,707 955,410 Police Police Administration(1050) 1,263,014 1,356,642 1,382,034 1,462,046 Patrol Services(1051) 2,639,752 2,929,249 3,228,428 3,205,906 Investigations(1052) 926,430 974,019 1,032,707 1,041,827 Emergency Management(1054) 16,600 19,900 21,400 22,900 Police 4,845,796 5,279,810 5,664,569 5,732,679 Fin: Fire(1060) 1,435,685 1,592,646 1,742,006 1,801,340 Fire 1,435,685 1,592,646 1,742,006 1,801,340 Community Development 1,007,849 1,059,182 1,191,555 1,228,955 Planning(1030) 567,681 624,475 617,627 632,884 Building Inspection(1031) 440,168 434,707 573,928 596,071 Community Development 1,007;849 1,059,182 1,191,555 - 1,228,955 Engineering Engineering(1070) 694,134 725,816 720,613 777,362 Natural Resources(1076) 119,761 124,595 142,284 147,658 Engineering' 813,895 850,411 862,897 925,020 Municipal Services Streets(1072) 1,268,832 1,358,489 1,436,409 1,495,729 Snow Removal(1073) 242,355 251,215 280,165 273,235 Municipal Services 1,5111187 1,609,704 1,716,574 1,768,964 Parks and Recreation Park Maintenance(1090) 733,607 677,974 979,476 1,135,550 Rambling River Center(1093) 185,054 227,731 204,199 204,483 Park&Rec Admin(1094) 304,383 324,745 315,130 328,661 Recreation Programs(1095) 94,297 99,287 111,690 111,900 Parks and Recreation 1,317,341 1,329,737 1,610,495 1,780,594 Transfers Out 822,351.00 1,642,609.00 1,662,609.00 1,678,334.00 Transfers Out 822,351.00 1,642,609.00 1,662,609.00 1,678,334.00 Total Expenditures 13,832,4641 15,729,719 1 16,901,6701 17,594;928 ITV'OF O 430 Third St., Farmington, MN 55024 FARMINGTON © 651-28o-6800 FarmingtonMN.gov �IIII TO: Mayor, Councilmembers and City Administrator FROM: Lynn Gorski, City Administrator SUBJECT: Discuss THC- Edible Legislation (30 minutes) DATE: August 1, 2022 INTRODUCTION The state legislature passed a new law that allows for the sale of certain edible and beverage products infused with THC. The new law went into effect on July 1, 2022 and took many by surprise. DISCUSSION There have been many discussions amongst cities with the League of Minnesota Cities. LMC has been researching and collecting information from state agencies and stakeholders to answer questions pertaining to regulation,taxing,employment and others concerns. Attached you will find a FAQ document created by the League of Minnesota Cities.This document provides many answers, but also leaves many unanswered questions. It is unknown when we will have all the answers. It has been suggested that the next legislative session will include additional rules and regulation for the new THC law. Many items need clarifying and may be changed while they sort things out. BUDGET IMPACT N/A ACTION REQUESTED Staff is seeking direction from City Council on how and if they would like to move forward with handling THC-edibles within Farmington City limits. ATTACHMENTS: Type Description D Backup Material Cities and Regulation of Edible Cannabinoid Products 7/27/22,11:43 AM Cities and Regulation of Edible Cannabinoid Products-League of Minnesota Cities LMCLEAGUE of MINNESOTA CITIES Cities and Regulation of Edible Cannabinoid Products Published:July 15, 2022 A new law was enacted at the end of the 2022 legislative session that allows certain edible and beverage products infused with tetrahydrocannabinol(THC)to be sold. Since the enactment of the law,the League of Minnesota Cities has been researching and collecting information from state agencies and stakeholders to answer questions pertaining to local regulatory authority, law enforcement,taxing,and employment.The following frequently asked questions(FAQ) aim to provide information to cities on the new law to assist local governments in making decisions related to the law.The League will continually update the information below as necessary. (Updated July 22, 2022) Get answers to FAQs regarding the new law allowing certain edible and beverage products containing THC extracted from hemp to be sold. General information Q1.What does the new law do? 02.Under the new law,where are edible cannabinoids allowed to be sold? (Updated July 20, 2022) Q3.Could my ci 's municipal liquor store sell the edible cannabinoid products? (Updated July 20, 2022) Q4.What regulations are in place for packagLng for edible cannabinoids? Q5.Are these products legal under federal regulations? (Updated July 22, 2022) Q6.Where do the edible cannabinoid products come from? Q7.How are the new products taxed? Enforcement and public safety 08.How is the new law enforced? (Updated July 22, 2022) �9.What are penalties for someone who violates? Q10.How do our officers determine if a driver is under the influence of these new products? Q11. Could citiesprohibit the sale of edible cannabinoids entirely? (Updated July 19, 2022) Q12. Is our citvreouired to adopt regulations under the new law? City Licensing hftps://www.Imc.org/resources/cities-and-regulation-of-edible-cannabinoid-products/ 1/11 7/27122, 11:43 AM Cities and Regulation of Edible Cannabinoid Products-League of Minnesota Cities 013.What authority do cities have regarding licensing the sale of edible cannabinoids? .L--What types of restrictions should we consider in regulating cannabinoids? (Updated July 19, 2022) Q15. Can a city add edible cannabinoid products to its existing tobacco licensing-program? Q16.If our city licenses edible cannabinoid products,how much can we charge as a license fee? Zoning Q17.What authority do cities have regarding zoning for where theproducts could be sold? (Updated July 19, 2022) Q18. Could cities adopt a moratorium prohibitingiLe sae,manufacturingQr-,distribution of cannabinoids so it can study the issue? City employment and personnel issues Q19.Does the new Minnesota legal cannabinoid law cha gLanny thing about how we do drug testing for CDL holders? (Updated July 22, 2022) Q20.Does the new law change anything related to employees who carry a firearm? (Updated July 22, 2022) Q21.Are there now"acceptable"limits of cannabinoids for non-CDL em p ees for purposes of drug testing at work(i.e.,those we test understate drug and alcohol testing Lw)? Q22.Can we still prohibit empovees from being under the influence of cannabinoids while at work?Does the League have a modelop licy with updated language? Q23. Can employ s be in possession of edibles or other cannabinoid products while at work? Q24.Do we need to changLAnything in our collective bargaining1greement with regard to discipline of em-loyees who use cannabinoid products? Q25. Can empoyees use cannabinoid products off-duty? Q26. How does this impact the requirements of the Drug-Free Workplace Act? Q27.Should city still continue to include marijuana as a pre-em p o ment panel screen for My Non-DOT employees? (Updated July 19, 2022) General information Q1. What does the new law do? Al.It is now legal to sell certain edibles and beverages infused with tetrahydrocannabinol (THC),the cannabis ingredient extracted from hemp. The new law was passed by the Legislature as part of Chapter 98.Article 13 makes several changes to Minnesota Statutes, section 151.72 regarding the sale of certain cannabinoid(CBD) products.The changes took effect on July 1. The new law amends the scope of sale of any product that contains cannabinoids extracted from hemp and that is an edible cannabinoid product or is intended for human or animal https://www.Imc.org/resources/cities-and-regulation-of-edible-cannabinoid-products/ 2/11 7/27/22, 11:43 AM Cities and Regulation of Edible Cannabinoid Products-League of Minnesota Cities consumption. Previous law authorized a product containing nonintoxicating cannabinoids to be sold,but the authority to sell edible CBD products was unclear.The new law expands the authority to include nonintoxicating cannabinoids,including edible cannabinoid products, provided they do not contain more than 0.3% of any THC.An edible cannabinoid product also cannot exceed more than five milligrams of any THC in a single serving, or more than a total of 50 milligrams of any THC per package. Q2. Under the law, where are edible cannabinoids allowed to be sold? A2.The new law does not limit where edible cannabinoids products may be sold. However, certain businesses by their nature maybe be limited on their ability to sell the products.Liquor stores,for example, are limited to selling specific items set by Minnesota Statute, section 340A.412, subd. 14.The Alcohol and Gambling Enforcement Division(AGE) of the Minnesota Department of Public Safety has advised the League of Minnesota Cities that products containing CBD,hemp, or THC are not allowed for sale at an exclusive liquor store.In addition, AGE has informed LMC that a liquor store's ability to sell food pursuant to Minnesota Statute,. section 340A.412, subd. 14(b)., does not include edible cannabinoid products. Q3. Could my city's municipal liquor store sell the edible cannabinoid products? A3.Liquor stores are limited to selling specific items set by Minnesota Statute, section 340A.412, subd. 14.The Alcohol and Gambling Enforcement Division(AGE) of the Minnesota Department of Public Safety has advised the League of Minnesota Cities that products containing CBD,hemp, or THC are not allowed for sale at an exclusive liquor store.AGE has advised LMC that CBD,hemp, or THC infused beverages are not intended to be mixed with alcoholic beverages and are not considered soft drinks.In addition,AGE has informed LMC that a liquor store's ability to sell food pursuant to Minnesota Statute, section 340A.412, subd. 14 .(b)., does not include edible cannabinoid products. Due to this guidance, LMC recommends cities refrain from selling such products at their municipal liquor stores. Q4. What regulations are in place for packaging for edible cannabinoids? A4.Along with testing and labeling requirements,an edible cannabinoid must meet several requirements,including that it: • Not bear the likeness or contain cartoon-like characteristics. • Not be modeled after a brand of products primarily consumed or marketed to children. • Not be made by applying an extracted or concentrated hemp-derived cannabinoid to a commercially available candy or snack food item. • May not contain an ingredient, other than a hemp-derived cannabinoid,that is not approved by the federal Food and Drug Administration. • May not be packaged in a way that resembles any commercially available food product. • Must not be packaged in a container that could reasonably mislead any person to believe that it contains anything other than an edible cannabinoid product. hftps://www.Imc.org/resources/cities-and-regulation-of-edible-cannabinoid-products/ 3/11 7/27/22, 11:43 AM Cities and Regulation of Edible Cannabinoid Products-League of Minnesota Cities Q5. Are these products legal under federal regulations? A5.The 2018 Farm Bill made several changes to federal law related to hemp. Under the law, hemp was removed from the controlled substance act,including derivates,extracts, and cannabinoids, provided those substances contained less than 0.3%THC concentration.If a product contains more than 0.3%THC it is considered marijuana and not hemp.Pursuant to the Farm Bill,Minnesota has legalized the production of hemp through its industrial hemp program. Although hemp extracts that meet the mandated THC level are no longer controlled substances,the Farm Bill did not alter the authority of other federal agencies,including the Food and Drug Administration(FDA)from regulating hemp and hemp byproducts.Under current FDA regulations, CBD or THC products cannot be sold as a dietary supplement and cannot be added to food for humans or animals. Q6. Where do the edible cannabinoid products come f rom? A6.Under current law,these products can be manufactured in Minnesota but also imported from other states. Growing hemp in Minnesota is governed by the Department of Agriculture, though the MDA Hemp Program does not regulate cannabis extracts, development and manufacturing of cannabis extracts, or the retail and marketing of cannabinoid products. Cities may want to consider zoning implications for manufacturing and production of cannabinoid products. Q7. How are the new products taxed? A7.It is the understanding of LMC that edible cannabinoid products legalized under the new law are subject to Minnesota sales tax.LMC is waiting for more guidance from the Minnesota Department of Revenue to determine if any exemptions apply. The new law does not authorize cities to tax the products in their communities,however LMC is waiting on more information as to whether the products would be subject to a local food and beverage tax. Return to to of page Enforcement and public safety Q8. How is the new law enforced? A8.The Minnesota Board of Pharmacy has regulatory authority over drug products that are implicitly or explicitly intended for human or animal consumption.This includes products regulated in the new law.If a product does not meet all the requirements of the new law,the product may be considered misbranded or adulterated.The sale of a misbranded or adulterated product is a misdemeanor-level crime which is to be prosecuted by the c un _ attorney where the offense took place. Questions regarding whether a specific product deviates from the requirements of the new law should be forwarded to the Minnesota Board of Pharmacy.The Board of Pharmacy has provided a form to file complaints against licensed or unlicensed cannabis businesses. In addition,the new law limits the sale of CBD and THC products to persons over the age of 21. The sale of CBD and THC products to a person under the age of 21 is a misdemeanor-level https:ltwww.Imc.org/resources/cities-and-regulation-of-edible-cannabinoid-products/ 4/11 7/27/22, 11:43 AM Cities and Regulation of Edible Cannabinoid Products-League of Minnesota Cities crime which is to be prosecuted by the coun attorney where the offense took place.Cities will need to work with local law enforcement and the county attorney to determine how to enforce this requirement. If cities desire to further regulate CBD and THC products within their jurisdiction,they will need to work with their city attorney to adopt local regulations. The League is working with the Minnesota Chiefs of Police Association and Minnesota Sheriff's Association to understand potential implications for law enforcement and identify additional questions pertaining to the enforcement of these new products along with employment related questions for law enforcement. Q9. What are penalties for someone who violates? A9.A violation of the new law is a misdemeanor.In most cases,the coun attorney is charged with prosecuting these violations. Q10. How do our officers determine if a driver is under the influence of these new products? A10.The new law does not change the current rules relating to driving under the influence of a cannabinoid. Officers should use the same process to determine sobriety as they have used if they suspected a driver was under the influence of marijuana. Q11. Could cities prohibit the sale of edible cannabinoids entirely? All.In most states that have adopted adult use cannabis legislation,local governments are given the option to either opt-in or opt-out of cannabis in their communities.This framework helps to maintain local control of the cannabis issue.The new Minnesota law does not provide such an option.Therefore,the new law makes the new cannabinoid products legal in every city throughout the state. Without a clear opt-out option,the question as to whether a city could completely prohibit the sale of edible cannabinoids is an open question.One potential approach would be to follow the Minnesota House Research's suggestion to LMC that it may be possible for a city to classify cannabis edibles containing THC as an intoxicating cannabinoid and therefore would not be allowed under the new law. Arguments have also been made that a city may be able to prohibit the sale of edible cannabinoids products under its authority to provide for the health safety and welfare of its community. If a city were to attempt to prohibit edible cannabinoids under this authority,it would need to work with its city attorney to develop findings that clearly show the dangers of edible cannabinoids products and the need to prohibit the products. Cities may want to look at communities that have banned the sale of flavored tobacco products as a model for such prohibitions. Q12. Is our city required to adopt regulations under the new law? Al2.The new law does not require cities to take action in regulating the new products. If a city chooses not to adopt additional regulations,the sale and production of these new products will hftps://www.Imc.org/resources/cities-and-regulation-of-edible-cannabinoid-products/ 5/11 7/27/22, 11:43 AM Cities and Regulation of Edible Cannabinoid Products-League of Minnesota Cities be governed by the city's existing zoning and other regulations.In addition,the new law gives local law enforcement power to enforce violations as a misdemeanor. Return to top of page City licensing Q13. What authority do cities have regarding licensing the sale of edible cannabinoids? A13.A city's authority to license comes from either a specific grant of authority from the Legislature or from its authority to provide for its general health, safety,and welfare.When a city official proposes local licensing of any activity or occupation, a city first must determine whether the state already licenses that activity and,if so,whether the law forbids or allows a local license. Q14. What types of restrictions should we consider in regulating cannabinoids? A14.If a city decides to regulate edible cannabinoids or other cannabinoid products,the types of regulations can vary from city to city.Some items a city may consider when drafting these regulations include: • What areas of the city edible cannabinoids may be sold or manufactured or distributed. • What business should be allowed to sell edible cannabinoids. • Age of person selling the product. • Location of products within retail establishment. • Pop-up sales. • Transient merchants. • Vending machines. • Distance from other uses (schools,parks,residential, etc.). • Distance between retailers. • Delivery services. • Online sales. • Limit number of establishments within the city. • Age verification. • Hours. • Background checks. Q15. Can a city add edible cannabinoid products to its existing tobacco licensing program? A15.The requirements and legal authority for tobacco products are unique to those products. While some aspects of tobacco regulations may be used when regulating edible cannabinoid hftps://www.Imc.org/resources/cities-and-regulation-of-edible-cannabinoid-products/ 6/11 7/27/22, 11:43 AM Cities and Regulation of Edible Cannabinoid Products-League of Minnesota Cities products,the products and the authority to regulate them are quite different. If a city chooses to license edible cannabinoid sellers,it would be best to do so separately from tobacco regulations or be sure to carefully draft new language in an existing ordinance that follows the unique requirements of the new law. Q16. If our city licenses edible cannabinoid products, how much can we charge as a license fee? A16.When setting fees, cities should consider a number of things.First, cities should not view municipal licensing as a significant source of revenue.License fees must approximate the direct and indirect costs associated with issuing the license and policing the licensed activities. License fees that significantly exceed these costs are considered unauthorized taxes. This means a license fee may not be so high as to be prohibitive or produce any substantial revenue beyond the actual cost to issue the license and to supervise,inspect, and regulate the licensed business. Return to top-.Q—fp-age Zoning Q17.What authority do cities have regarding zoning for where the products could be sold? A17.Nothing in the new law limits a city's zoning authority related to CBD and THC products. No Minnesota court has interpreted the limits on zoning authority in this context,but at least one court in another state has ruled that a state law related to cannabis did"not nullify a municipality's inherent authority to regulate land use under[state]law so long as the municipality does not prohibit or penalize all medical marijuana cultivation... and so long as the municipality does not impose regulations that are unreasonable and inconsistent with regulations established by state law."DeRuiter v. Township of Byron, 505 Mich. 130,949 N.W.2d 91 (2020).It is unknown if a Minnesota court would come to the same conclusion. Cities should be thoughtful and intentional about how zoning regulations related to cannabinoid products affect their communities and work with their city attorney to determine what,if any, zoning restrictions should be adopted.Cities will need to consider not only zoning regulations related to retail sales of CBD and THC products but also the manufacturing and production of the products within the city.Unless specifically differentiated in a zoning ordinance, a city's general manufacturing and production zoning provisions will likely apply to CBD and THC production as well. Q18. Could cities adopt a moratorium prohibiting the sale, manufacturing or, distribution of cannabinoids so it can study the issue? A18.A moratorium is a tool cities use to pause specific uses in order that the city may study the issue in anticipation of future regulations.A moratorium is limited to a period of one year.To adopt a moratorium, a city must follow the procedures in Minnesota Statute, section 462.355,. subd.4.The statute specifies the specific instances where a city may adopt a moratorium.If a city were to adopt a moratorium prohibiting the sale or manufacturing of edible cannabinoid https://www.Imc.org/resources/cities-and-regulation-of-edible-cannabinoid-products/ 7/11 7/27/22, 11:43 AM Cities and Regulation of Edible Cannabinoid Products-League of Minnesota Cities products, it should work with its city attorney to clearly state the legal justification for the moratorium. If a city does adopt a moratorium,it must actually review and study the issue or meet one of the other requirements of the statute.More information on moratoriums can be found in the LMC Zoning Guide for Cities. Return to top of page City employment and personnel issues Q19. Does the new Minnesota legal cannabinoid law change anything about how we do drug testing for CDL holders? A19.No,cities with positions requiring an employee to hold a commercial driver's license (CDL)will recall these positions are regulated by federal law, and those regulations are supervised by the Federal Department of Transportation(DOT).Federal law preempts state law related to cannabinoid use;in fact the DOT states in its DOT Recreational Marijuana Notice it does not authorize the use of Schedule I drugs,including marijuana, for any reason.As a result, cities should continue to follow their drug-testing procedures related to CDL holders and may enforce prohibitions against any use of cannabinoids for CDL holders, regardless of state law protections. Although there is a legal difference between marijuana and hemp, DOT warns CDL drivers the hemp products could lead to a positive marijuana test;therefore CDL holders are ultimately responsible if those products lead to a positive marijuana test. Cities can find more information on the effects of the new law on drug testing in the LMC Drug and Alcohol Testing Toolkit, starting on page 22. Q20. Does the new law change anything related to employees who carry a firearm? A20.No.Public safety employees who carry a firearm cannot lawfully use marijuana under federal law. Federal law prohibits cities from providing firearms or ammunition to an employee it knows or has reason to think is using marijuana.Although there is a legal difference between marijuana products and hemp products,it is the understanding of LMC that it may not be possible to differentiate the products in a drug test. Officers should be mindful of any substance they ingest because they are ultimately responsible if those products lead to a positive marijuana test. Q21. Are there now "acceptable" limits of cannabinoids for non-CDL employees for purposes of drug testing at work (i.e., those we test under state drug and alcohol testing law)? A21.There isn't a clear answer, since THC can remain in the body for several weeks after usage (and long after any intoxicating or impairing effects have since disappeared), so positive test results may not indicate any wrongdoing on the employee's part and may just be evidence of an employee's lawful actions done outside of work.The League of Minnesota Cities recommends hftps://www.Imc.org/resources/cities-and-regulation-of-edible-cannabinoid-products/ 8111 7/27/22, 11:43 AM Cities and Regulation of Edible Cannabinoid Products-League of Minnesota Cities that employers thoroughly document any suspicions of an employee being under the influence and to work closely with their city attorney(s)before taking any action against the employee. With this new area of law, a city may want to avoid relying on the results of traditional tests that detect metabolites remaining in a person's body(for many days or weeks after using marijuana) and instead focus on implementing reasonable-suspicion drug-testing protocols to detect marijuana intoxication based on behavioral observations.Keep in mind, employers may prohibit all employees from being under the influence while the employee is working.That would include employees who operate vehicles. Employers may want to revise their policies to clarify that employees still may not be under the influence of cannabis,legal or otherwise, while at work. The National Drug-Free Workplace Alliance offers a toolkit to help employers work through the complex and confusing issue of marijuana and the workplace. Q22. Can we still prohibit employees from being under the influence of cannabinoids while at work? Does the League have a model policy with updated language? A22.Yes, employers can continue to prohibit employees from being under the influence of cannabinoid products,including edibles,while at work.Although employers'obligations and restrictions related to marijuana use vary widely across the states,there is no law we are aware of that requires employers to allow cannabinoid use during work hours or to allow an employee to report to work impaired.Thus, employers may continue to maintain drug-free policies at the workplace and discipline employees who use cannabinoids during working hours or who report to work impaired. In fact, one could argue that under the Occupational Safety and Health Administration's (OSHA)General Duty Clause of the Occupational Safety and Health Act, employers are required to furnish a workplace free from recognized hazards that are likely to cause serious physical harm.This provision of the Act is typically used in accident cases where toxicology screens are positive. OSHA's new electronic recordkeeping rule, clarified on 10/11/2018, states"If the employer chooses to use drug testing to investigate the incident,the employer should test all employees whose conduct could have contributed to the incident, not just employees who reported injuries,"with respect to using drug testing to evaluate the root cause of a workplace incident that harmed or could have harmed employees.Thus, if a city has a non-DOT drug-testing policy in place, a protocol following this guidance is important. The League has a Non-DOT Drug and Alcohol Testing and Drug-Free Workplace Act model op licy that has been updated initially, and will be continually updated as the League learns more. Q23. Can employees be in possession of edibles or other cannabinoid products while at work? A23.Cities may enact policies prohibiting employees from bringing cannabinoid products, including edibles,to work. https:/Iwv.w.imc.org/resources/cities-and-regulation-of-edible-cannabinoid-products/ 9/11 7/27/22, 11:43 AM Cities and Regulation of Edible Cannabinoid Products-League of Minnesota Cities Q24. Do we need to change anything in our collective bargaining agreement with regard to discipline of employees who use cannabinoid products? A24.No, but ensure your city's drug-testing policy has been updated and your supervisors are trained on the behavioral signs and symptoms associated with impairment. Of course,if the collective bargaining agreement includes language that policy changes need to be negotiated, then there would need to be a meeting with the union if the city's policy changes. Q25. Can employees use cannabinoid products off- duty? A25.It depends. Certain types of employees, such as law enforcement officers and other employees issued firearms and ammunition as part of their jobs, are subject to regulations from the federal Bureau of Alcohol,Tobacco and Firearms,which prohibits firearms and ammunitions to be given to individuals who do or are believed to use illegal drugs.As noted above, city positions required to hold a commercial driver's license are subject to Department of Transportation regulations and are not authorized for the use of Schedule I drugs,including marijuana,for any reason.Thus,these types of employees could be prevented from using cannabinoid products both on and off duty.Other employees who are not subject to that or other federal regulations would likely be able to use cannabinoid products while they are off duty, as there is nothing under Minnesota law which prohibits certain classes of employees from using cannabinoid products off duty, as long as they are not impaired at work. If there are any questions regarding whether an employee could be prevented from using cannabinoid products while off-duty due to federal regulations, please consult your city attorney before any action is taken. Q26. How does this impact the requirements of the Drug-Free Workplace Act? A26.It does not.The Drug-Free Workplace Act of 1988 (DFWA)requires federal grantees and contractors to implement a drug-free workplace policy and establish a drug-free awareness program as a precondition for receiving a federal grant or a contract. However,the DFWA does not require covered employers to test employees for drugs or terminate them for drug-related violations,so the new Minnesota state law does not impact the DFWA directly.Minnesota law allows employers to prohibit employees from bringing legal cannabinoid products to work and permits employers to prohibit employees from being under the influence while at work.It would be best practice for cities with drug-free work policies to keep those in effect.If a city wishes to do so, it can update its policy to include lawful cannabinoid products within its scope. Q27. Should my city still continue to include marijuana as a pre-employment panel screen for my Non-DOT employees? A27.That is for each city to decide for itself. Because currently there are no devices or blood tests available that measure marijuana impairment, and because a best practice approach for Non-DOT marijuana drug testing is to base testing on behavioral observations, some employers are excluding marijuana from their pre-employment Non-DOT drug screens.Some states even prohibit an employer from refusing to hire an applicant simply because of a positive drug test, haps://www.Imc.org/resources/cities-and-regulation-of-edible-cannabinoid-products/ 10/11 7/27/22,11:43 AM Cities and Regulation of Edible Cannabinoid Products-League of Minnesota Cities but Minnesota is currently not one of these states at this time.Any city that chooses to continue to test for THC for Non-DOT positions must be aware of the fact that these substances may remain in an individual's system for weeks after the impairing effect of the drug has worn off. Thus, it will be difficult, if not impossible,to determine whether the positive test indicates usage in violation of the city's drug-free workplace policy or indicates lawful usage during an employee's time-off from work.Cities should consult with their city attorneys prior to taking any action based upon a positive drug test for THC. Return to top of page Your LMC Resource Research&Information Service staff members are ready to help you apply their broad knowledge to the issues you're dealing with today. Access online form to submit a question, or call us: (651) 281-1200 or(800)925-1122 https://www.imc.org/resources/cities-and-regulation-of-edible-cannabinoid-products/ 11/11