Article XXVI — CANNABIS REGULATION

Sec. 2A.420. Office of Cannabis.

Sec. 2A.421. Application and Annual License Fees.

Sec. 2A.422. Exclusions.

Sec. 2A.423. Undertaking for the General Welfare.

(a) Establishment. The Mayor shall establish an Office of Cannabis under the direction of the City Administrator to oversee the implementation of laws and regulations governing cannabis in San Francisco. The City Administrator shall appoint a Director of the Office of Cannabis. The Office of Cannabis shall include such officers and employees as are authorized pursuant to the budgetary and fiscal provisions of the Charter.

(b) Duties and functions.

(1) The Director of the Office of Cannabis and/or his or her designee (“Director”) shall issue, deny, condition, suspend, or revoke such permits in accordance with applicable laws and regulations. The final decision of the Director regarding a permit may be appealed to the Board of Appeals in the manner prescribed in Article 1 of the San Francisco Business and Tax Regulations Code.

(2) The Director may impose reasonable conditions upon the issuance or renewal of cannabis business permits, consistent with applicable law and regulations, for the location and activities for which a permit is sought.

(3) The Director shall further coordinate with all relevant City departments, boards, and commissions for the conduct of any inspection or investigation necessary or appropriate for the full and fair consideration of applications for the issuance or renewal of permits under this Article XXVI. City departments, boards and commissions shall cooperate with the Office of Cannabis.

(4) The Office shall ensure that the perspectives of communities that historically have been disproportionately impacted by federal drug enforcement policies are included and considered in all policy decisions.

(5) By no later than November 1, 2017, the Director, in consultation with the Human Rights Commission and Controller, shall prepare and submit to the Board of Supervisors and the Mayor a report analyzing disparities in the cannabis industry based on race, income, economic status, gender, disability, sexual orientation, gender identity, and HIV/AIDS status. The report shall make recommendations regarding policy options that could (A) foster equitable access to participation in the industry, including promotion of ownership and stable employment opportunities in the industry (B) invest City tax revenues in economic infrastructure for communities that have historically been disenfranchised, (C) mitigate the adverse effects of drug enforcement policies that have disproportionately impacted those communities, and (D) prioritize individuals who have been previously arrested or convicted for marijuana-related offenses.

(6) By no later than November 1, 2017, the Director, in consultation with the Department of Public Health and the Controller, shall prepare and submit to the Board of Supervisors and the Mayor a report analyzing the unique needs of individuals who use cannabis for medicinal purposes. The report shall make recommendations on (A) preserving affordable and/or free access to medical cannabis patients, (B) ensuring medical cannabis patients continue to receive high-quality, appropriate care and (C) providing uninterrupted access to medical cannabis patients.

oard of Supervisors and the Mayor a report analyzing the unique needs of individuals who use cannabis for medicinal purposes. The report shall make recommendations on (A) preserving affordable and/or free access to medical cannabis patients, (B) ensuring medical cannabis patients continue to receive high-quality, appropriate care and (C) providing uninterrupted access to medical cannabis patients.

(7) By no later than January 1, 2020, and annually thereafter, the Director shall produce and submit to the Cannabis Oversight Committee a report evaluating the growth of the City’s cannabis industry. This report shall include, but need not be limited to, the following information, provided that the gathering or the disclosure of such information is not required where it would violate Federal or State law, and further provided that any reports derived from the data do not identify specific individuals:

(A) The total number of permits the Office of Cannabis granted in the prior 12 months in each permit category listed in Police Code Section 1607.

(B) The total revenue, including tax revenue, permitted Cannabis Businesses generated in the prior 12 months.

(C) The total costs the City incurred in processing Cannabis Business Permit applications in the prior 12 months.

(D) The total costs Cannabis Business Permit applicants incurred in the prior 12 months, associated with preparation, submission, and processing of Cannabis Business Permit applications.

(E) The average time for Cannabis Business Permit processing in the prior 12 months, measured from the date the Office of Cannabis receives an application for a Cannabis Business Permit through the date the Office of Cannabis grants or denies a permit.

(F) The total number and length of time in operation of permitted Cannabis Businesses that operated for 30 days or more in the prior 12 months, categorized by each permit category listed in Police Code Section 1607.

(G) The total number of employees directly employed by permitted Cannabis Businesses that operated for 30 days or more in the prior 12 months, categorized by job type or classification.

(H) The rate of pay and benefits of employees directly employed by permitted Cannabis Businesses that operated for 30 days or more in the prior 12 months, categorized by job type or classification.

(I) The total number of individuals in the City whose Cannabis convictions have been expunged in the prior 12 months.

(J) If available, the total number of permitted Cannabis Business owners, operators, and employees categorized by race and sex. The Director may request but not require Cannabis Business owners and operators to disclose such information. The Director may not consider such information in making any permit determination.

(Added by Ord. 168-17, File No. 170275, App. 7/27/2017, Eff. 8/26/2017; amended by Ord. 187-17, File No. 170859, App. 9/15/2017, Eff. 10/15/2017; Ord. 260-18, File No. 180800, App. 11/2/2018, Eff. 12/3/2018)

(a) Beginning January 1, 2018, the Office of Cannabis shall charge every applicant for a cannabis-related permit a non-refundable permit application fee. The Office of Cannabis shall also charge every business that receives a cannabis-related permit an annual license fee.

(b) The Office of Cannabis shall not collect any application or license fees under this Section 2A.421 until the Board of Supervisors enacts an ordinance establishing the amounts of those fees. No later than November 1, 2017, the Director, in consultation with the Controller, shall submit to the Board of Supervisors a proposed ordinance setting a schedule of permit application and annual license fees. The proposed fee schedule shall be calculated to recover but not exceed the City’s estimated costs of application-related and licensing-related activities, including but not limited to: administration, public outreach and education, development and maintenance of an online portal and application system, review and processing of applications and permit renewals, complaint resolution, inspections, enforcement activities, adjudication of appeals, and coordination with state agencies and other city departments. In developing this fee schedule, the Director shall estimate the number of permits and licenses to be issued per year, and consider any other information he or she determines appropriate in making the cost estimates referenced above.

(c) Beginning with fiscal year 2018-2019, the permit application and annual license fees set pursuant to subsection (b) of this Section 2A.421 may be adjusted each year on July 1, without further action by the Board of Supervisors. Not later than April 1 of each year, the Controller shall determine whether the current fees have produced or are projected to produce revenues sufficient to support the costs of application- related and licensing-related activities, and that the fees will not produce revenue that is significantly more than the costs of providing such services. The Controller shall, if necessary, adjust the fees upward or downward for the upcoming fiscal year as appropriate to ensure that the program recovers the costs of operation without producing revenue that is significantly more than such costs. The adjusted rates shall become operative on July 1.

(Added by Ord. 168-17, File No. 170275, App. 7/27/2017, Eff. 8/26/2017; amended by Ord. 187-17, File No. 170859, App. 9/15/2017, Eff. 10/15/2017)

Nothing in this Article XXVI is intended to limit or abridge the permitting, licensing, or inspection authority of any other City department over commercial businesses or real property.

(Added by Ord. 168-17, File No. 170275, App. 7/27/2017, Eff. 8/26/2017; amended by Ord. 187-17, File No. 170859, App. 9/15/2017, Eff. 10/15/2017)

Editor’s Note:

Ord. 168-17 inadvertently enacted two sections numbered as Section 2A.421, and Ord. 187-17 continued that duplicate numbering. To avoid conflicting use of that section number, Sections 2A.422 and 2A.423 have been redesignated by the Editor from their original designations of Sections 2A.421 and 2A.422, respectively.

In enacting and implementing this Article XXVI, the City is assuming an undertaking only to promote the general welfare. It is not assuming, nor is it imposing on its officers and employees, an obligation for breach of which it is liable in money damages to any person who claims that such breach proximately caused injury.

(Added by Ord. 168-17, File No. 170275, App. 7/27/2017, Eff. 8/26/2017; amended by Ord. 187-17, File No. 170859, App. 9/15/2017, Eff. 10/15/2017)

Editor’s Note:

Ord. 168-17 inadvertently enacted two sections numbered as Section 2A.421, and Ord. 187-17 continued that duplicate numbering. To avoid conflicting use of that section number, Sections 2A.422 and 2A.423 have been redesignated by the Editor from their original designations of Sections 2A.421 and 2A.422, respectively.