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8.A. - Page 7 The four recommended phases for regulating cannabis in the City are detailed below: 1. Phase 1— Ordinance Adoption — Effective January 2, 2018 The City's only regulation addressing cannabis -related activity is Zoning Ordinance Article 59, which prohibits medical cannabis distribution facilities in all zoning districts. Staff recommends that the City adopt the proposed Zoning Code amendment, which would amend Article 59 by repealing it in its entirety and adding express provisions limiting indoor cultivation to six cannabis plants, banning personal outdoor cultivation and banning all commercial cultivation, manufacturing, testing, retail and distribution, except for deliveries. The proposed Zoning Code amendment implements the City Council's direction on local cannabis regulations and is intended to protect the public health, safety, and welfare. Also, as part of Phase I, City staff brought an ordinance to the Council on October 2, 2017 to ban smoking in multifamily units. The Council introduced the ordinance after adding duplex units to the list of eligible buildings. This ban, as with all smoking ordinances, will apply to both tobacco and cannabis. 2. Phase 11 — Delivery Registration — January -November 2018 In the next phase, the City intends to enforce its existing business license obligations on cannabis businesses providing delivery services in Redwood City, thereby moving from unregistered to registered deliveries. Currently, delivery of medicinal cannabis is not explicitly prohibited; therefore, it is allowed. Under the proposed Zoning Code amendment, delivery of cannabis would continue to be allowed. All companies who operate in Redwood City, including cannabis businesses delivering to Redwood City, are subject to the City's business license obligations. To date, cannabis businesses delivering to Redwood City have not complied with the City's business license obligations. During this phase, staff plans to notify cannabis retailers that may be making deliveries in Redwood City that they need to obtain an annual business license and pay the required business license tax that all other businesses operating in the City are required to pay. All cannabis businesses will need this business license if they want to compete for a permit/license to operate in Redwood City in any future phases. This phase will give staff the opportunity to assess the scope of delivery activity currently underway before making a recommendation on how best to regulate that activity. Throughout this phase, cannabis retailers delivering to Redwood City would be subject to State regulations and the licensee requirements from the local jurisdiction in which they are based. 7