To start the meeting for our PISFIS.

So I'm gonna before we begin.

I want to remind the public safety, finance, and strategic support committee members and members of the public to follow our code of conduct at meetings.

This includes commenting on the specific agenda item only and addressing the full body.

Public speakers will not engage in a conversation with the chair, council member, or staff.

All members of the public safety, finance, and strategic support committee, staff and the public are expected to refrain from abusive language.

Repeated failure to comply with the code of conduct, which will disturb, disrupt or impede the orderly conduct of this meeting, may result in removal from the meeting.

This meeting of the public safety finance and strategic support committee will now come to order.

Clerk, can you call roll, please?

Sallas?

Here.

Casey.

Okay.

Here.

Vice Chair Kameh.

Here.

Chair Duan.

Here.

Yeah, but on consent calendar.

We we got one item on consent calendar, which is bi-monthly financial report for January.

Um, is there any public comment?

We have no public comment.

Can I have a motion?

Move approval.

Second.

That motion passes unanimously.

Thank you.

Okay, on item number one.

We have uh hemp regulation status report.

And that would be the staff given the PowerPoint would be Wendy Sulausee and Rachel Roberts.

Yeah, Rachel's out here.

Good afternoon, Chair, committee members and members of the public.

My name is Wendy Salazzi, and I'm the division manager in the police department's division of cannabis regulation.

And joining me shortly will be Rachel Roberts, uh, Deputy Director of Code Enforcement.

On June 11th, City Council directed the police department's division of cannabis regulation to bring the following items to a future public safety finance and strategic support committee meeting banning the sale of chemically synthesized hemp in the city of San Jose and requiring registration of industrial hemp retailers.

However, in September 2024, after the city council's direction was given, Governor Newsom issued emergency regulations aimed at protecting youth from the adverse health effects of dangerous hemp products.

The emergency state regulations require industrial hemp food beverage and dietary products intended for human consumption to have no detectable THC or other intoxicating cannabinoids per serving.

It sets a minimum age to purchase hemp products at 21 and limits the number of hemp products to five per package.

The emergency regulations were readopted and approved in March and will be in effect until September.

Staff are monitoring this emergency regulation to understand the state's plans and actions following September of this year.

As a result of the emergency regulations and rules already existing at the state level, staff believes the city's role and focus should be on collaborating with the state on enforcement efforts of their ban rather than creating an additional and separate ban on the sale of chemically synthesized hemp and requiring a registration process of industrial hemp retailers in San Jose.

Implementing a successful strategy to address chemically synthesized hemp being sold in retail locations in San Jose requires careful consideration of the scope of the problem, regulations and enforcement tools already in place, as well as constraints, additional enforcement tools, and additional resources that may be required.

Unregulated products containing intoxicating cannabinoids are being sold in locations such as vape shops, smoke shops, and convenience stores due to loopholes in existing state and federal regulations.

Staff has received reports from various stakeholders regarding concerns about chemically synthesized hemp being sold at businesses throughout the city.

And code enforcement staff have observed hemp products being offered for sale in some tobacco retail licensed businesses and have received complaints recording illegal hemp products for sale.

Per the emergency state regulations, hemp products with THC will no longer be available in the retail marketplace, and legal cannabis products must be sold in licensed cannabis businesses.

With all sales of products containing THC being required to be sold in licensed cannabis businesses, the city and state should benefit from increased cannabis tax revenue.

State regulators, including the Department of Public Health, the Department of Cannabis Control, Department of Alcoholic Beverage Control, and Department of Tax and Fee Administration will work together to ensure industrial hemp is enforced from manufacture to sale.

Local enforcements also have the authority to ensure licensed retail establishments comply with the law.

The Department of Public Health staff are currently working with industry and regulatory partners to ensure compliance with these emergency regulations and existing law.

Businesses that violate these laws are subject to enforcement actions, including licensure actions and civil administrative or criminal andor criminal penalties.

City ordinances related to cannabis and tobacco are designed to encourage the responsible sale of cannabis and tobacco products and discourage violation of cannabis and tobacco related laws.

The administrative citation schedule fines for violations of the municipal code establishes an escalation scale with the first violation being the lowest fine, followed by increases for the second and third and any subsequent violations within a 12-month period from the date of the first violation.

The fine schedule related to cannabis violations is tiered with the lowest offenses starting at 250 dollars and escalating to $5,000, and more significant offenses start at 10,000 and escalate to 50,000.

Selling hemp products containing THC is a cannabis sale.

No businesses shall operate in the City of San Jose until it's first filed a cannabis business registration application, paid all required fees, and has received a notice of completed registration from the city manager to operate.

If a business is found to be non-compliant with this requirement, a more egregious violation would be assessed at the highest level, beginning at 10,000 and escalating to 50,000.

Staff reviewed hemp regulations in various city California cities and counties for the purpose of peer analysis and understanding the landscape of current practices.

As you can see, the results varied from nothing currently in place to notification of enforcement actions for noncompliance, which is what San Jose did last summer as well, to plans of creating policies to temporary moratoriums to banning hemp.

Even though there are no city resources allocated to hemp regulation, in July 2024, the police department and planning building code enforcement department sent all current tobacco retail licensees a letter with their annual renewal notices regarding selling intoxicating hemp, reminding them to discontinue selling these products and to destroy the products or bring them to the police department for destruction.