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Staff believes these estimates may be conservative, but are an appropriate starting <br />point for assessing the potential market. If the City allowed a licensed retail storefront or <br />a warehouse retail without a storefront, the City's market would most likely recapture <br />some of the 30% of Redwood City residents lost. In addition, either retail option would <br />open the market to non-residents, such as daytime workers and visitors to the City, <br />depending on the structure of regulations. <br />The data is based on medicinal cannabis use patterns, but MuniServices believes the <br />data is reflective of adult use cannabis use as well since many consumers, interested in <br />cannabis use, are already consuming. This perspective is supported by research <br />conducted by the Colorado Department of Public Health and Environment, where the <br />Department found that adult cannabis use did not increase overall following the <br />legalization of adult use cannabis in that State. <br />Recommended Phased Approach to Requlatinq Cannabis <br />Following research, analysis, and an assessment of best practices, staff believes that <br />the benefits of regulating medicinal and adult use cannabis at the local level outweigh <br />the costs. By regulating cannabis sales, the City can provide an incentive for <br />responsible business operators to locate in Redwood City and reduce black market <br />activity. To best achieve the benefits for the City, staff recommends a four-phase <br />approach to implementing cannabis regulation. <br />First, the City needs to put initial provisions into place to have some control over <br />cannabis activity since the State will start issuing licenses to sell adult use cannabis on <br />January 1, 2018. Once the City's regulations are in place, City staff has time to more <br />fully develop the local response to cannabis. By phasing in changes, staff can analyze <br />the final State regulations, assess tax policy, assess the evolving cannabis market, and <br />collaborate with public health, education and other partners serving youth. Staff has <br />strong working relationships with such community stakeholders and will continue to <br />work in collaboration on these efforts. <br />M <br />0 <br />11 <br />