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Morgan Hill
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May 11, 2021

Council says ‘no’ to cannabis business

Split body voted 3-2 on commercial ordinance

The Morgan Hill City Council narrowly rejected a proposal to allow cannabis businesses to open up shop within the city limits.

The council’s 3-2 decision at its Nov. 6 meeting followed more than two hours of discussion and a procession of concerned residents voicing their support or opposition to marijuana business in Morgan Hill. These included a chorus of Morgan Hill Unified School District educators who fear the increasing use of illegal marijuana and e-cigarettes in local schools will grow even worse if cannabis becomes more widely available for adults. State law prohibits anyone younger than 21 from possessing or using cannabis recreationally.

At the end of the Nov. 6 discussion, Mayor Rich Constantine and Mayor Pro Tem Rene Spring voted against a motion by Councilmember Yvonne Martinez Beltran to reject an ordinance proposed by the Morgan Hill Planning Commission that would allow licensed, regulated and taxed cannabis businesses in the city limits. Joining Martinez Beltran in rejecting the planning commission’s proposal were Councilmembers Larry Carr and John McKay.

Thus the city’s prohibition of marijuana-related commerce will continue in Morgan Hill for the foreseeable future.

The planning commission’s proposal would have allowed manufacturing, distribution, testing and up to four retail cannabis businesses in Morgan Hill. Such businesses would have required conditional zoning permits approved individually by city planners, and would have to be located at least 600 feet away from schools and other facilities that serve children, according to city staff reports.

The planning commission voted to recommend the commercial cannabis ordinance in August. The ordinance was drafted in consultation with HdL Companies, a consultant for the commercial cannabis industry.

Constantine voted against the Nov. 6 motion to reject the planning commission’s proposal because the city’s voters have voiced their support for marijuana business.

“I am in favor of having cannabis businesses in Morgan Hill, because half our citizens say that’s what they want,” said Constantine. He was referring to a previous survey of likely Morgan Hill voters who were “split right down the middle” in their position on legal cannabis business in the city limits, with 48 percent in favor and 48 percent opposed.

In November 2016, voters in Morgan Hill supported state Proposition 64 with 58 percent in favor. Prop 64 is the state law allowing the adult use of commercial marijuana, and permitting cities and counties to establish local cannabis business ordinances with regulations and taxes.

Furthermore, in November 2018, 79 percent of Morgan Hill voters approved local Measure I, in support of the taxation of cannabis business should the council ever allow it here.

Spring said he supports legal cannabis business because there is a growing demand. “I’m convinced there is a true need in our community for our residents who want to have safe access to cannabis products. … Pursuing what the planning commission proposed is a good start for me,” Spring said.

In response to public concerns about the impact of cannabis on youth, Spring said access to alcohol is far more prevalent and potentially more harmful than regulated cannabis businesses could be. Behind Britton Middle School, for example, is a liquor store, he said.

“When I see the problems of people who drink (alcohol), that is just as bad if not worse than the stories about cannabis,” Spring said.

He added that the potential economic benefit of cannabis businesses—including laboratory and testing facilities with high-paying jobs—is “meaningful and beneficial.”

Problem at the schools

MHUSD school administrators and principals were among those who spoke against cannabis business in Morgan Hill at the Nov. 6 council meeting. Britton Middle School principal Nanette Donohue said nicotine, alcohol and drug use among children are at “epidemic” levels across the nation due to growing access.

The use of e-cigarette or vaping devices—which may contain nicotine or marijuana products—in particular is on the rise among the youth.

“By allowing cannabis business in Morgan Hill within walking distance (of a school) we are increasing access to all residents, and increasing the likelihood (marijuana) will fall into our kids’ hands,” Donohue said.

MHUSD Superintendent Steve Betando noted the district’s school board earlier this year approved a resolution opposing all licensed cannabis business in Morgan Hill due to the potential impact on children.

Glen Webb, the school district’s director of curriculum, instruction and assessment, said the drug and vaping problems in the schools have created a sharp uptick in student suspensions and expulsions which, in turn, result in less revenue and increased costs (related to investigating discipline violations) for MHUSD.

Webb said in the last three years, student expulsions for drug violations on campus have tripled. He predicts that number will “easily” double within the next year.

Webb and other educators added the possible health risks of cannabis on developing young minds are another good reason to keep access to marijuana limited.

Other Morgan Hill residents—including cannabis industry professionals—spoke to the council in support of the planning commission’s proposal. These supporters cited the medical benefits of marijuana for certain patients, economic opportunities and the assurance of safety that legalization with regulation—as opposed to stringent prohibition—could provide.  

Financial windfall?

The promise of a new pile of public revenues from the taxation of licensed cannabis business was not enough to sway the public or the council on the industry’s possible benefit to Morgan Hill.

City staff and HdL consultants estimated that legal cannabis could bring in between $340,000 and $750,000 annually in new tax revenues to the city.

However, Morgan Hill Police Chief David Swing noted that state auditors and other cities that allow cannabis business have not seen the revenues they anticipated. That translates to less funding than expected for grants for cities to offset the impact of the marijuana industry.

Swing added that direct costs associated with a legal cannabis program would include additional police and fire department staffing, drug and substance abuse prevention, youth intervention programs and community outreach.

“I don’t want to have an industry come to town that provides no benefit (and) only challenges and issues to deal with,” McKay said before voting to reject the proposed ordinance. “If this was providing revenue in the millions of dollars, I would feel a little more comfortable; then we could deal with some of the social impacts.”

At the end of the Nov. 6 discussion, Spring made a motion to allow marijuana delivery establishments without retail storefronts in Morgan Hill, but nobody on the council seconded the motion.

City staff noted that state law allows cannabis delivery services in Morgan Hill, and prohibits cities from banning delivery.

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