Council postpones decision on ordinance to bar new cannabis production and processing in M‑1 zone

The Estacada City Council opened a public hearing on Ordinance 2025‑004, a proposed amendment to Title 16 of the Estacada Municipal Code that would prohibit new cannabis production and processing businesses in the M‑1 (industrial) zone and impose revised operational and licensing requirements on existing businesses.

The change was introduced by Grace, a planner with Winterbrook Planning, who told the council the proposal responded to repeated complaints about nuisance odor and was recommended by the Planning Commission in June. Grace said the amendment would "prohibit new cannabis production and processing businesses within city limits. Existing businesses would still be able to operate and would become nonconforming under the code," and that the ordinance also "would revise the operational and licensing requirements for existing cannabis production and require things like odor control plans." Grace noted a narrow change made after the Planning Commission to clarify inspection authority to comply with Fourth Amendment protections.

In public testimony, Amy Margolis, an attorney who said she has represented clients in the cannabis industry for more than 20 years, told council the draft ordinance would have serious consequences for processors. Margolis argued that because the Oregon Liquor and Cannabis Commission (OLCC) requires a new license for a change of ownership, the ban on issuing new licenses for processors would make it effectively impossible for owners to sell their businesses: "this would almost entirely prohibit them from selling their license," she said, adding that courts have treated similar deprivations of economic value as takings. Margolis also criticized an inspection provision she described as ‘‘extremely broad’’ and warned of potential federal and state legal complications.

Local business owner John Sampson, identifying himself as a processor who has operated in Estacada for eight years and now employs over 75 people, said the ordinance came as a shock and would have "absolute financial impact" and risk staff jobs. He urged the council to "seek alternative solutions and probably not hinder our business" and offered the businesses' willingness to work with the city.

Council members and staff discussed constraints created by state regulation. Interim city attorney Missy and staff explained that existing producers (growers) have statutory nonconforming use protection under ORS 475C.063, but processors lack equivalent protection; moreover, OLCC rules require new licenses for ownership changes and typically deny renewals if a local ban is adopted and referred to the voters. A staff attorney advised the council that, under state law, a local ban on a marijuana business can require referral of a local ordinance to the voters at the next general election; staff said that, if adopted, the ordinance would be referred to voters in 2026 and that the OLCC would be prohibited from renewing licenses during the interim.

After extended discussion about timing, legal risk, license renewal schedules, and whether the city's actions would unintentionally strand businesses or their investments, Councilor Metcalfe moved to postpone further action until the council's September 8 meeting so staff could gather firm information on license renewal dates, the number of processors vs. producers, and clarifying guidance from the OLCC. The motion passed on a roll call vote: Councilors Blevins, Dozle, McElroy, Metcalfe and Tenbush and Mayor Drinkwine voted yes.

The public hearing was closed; the item was continued to the September 8 council meeting for additional staff information and potential revisions.

Why it matters: the draft ordinance aims to address nuisance complaints and protect other industrial uses but touches complex state licensing rules. Council postponed to avoid inadvertent economic harm to locally established businesses and to give voters the final say if the council proceeds to adopt a local ban for referral in 2026.

Ending: The council instructed staff to seek clarifying guidance from the OLCC, to compile renewal dates for existing licenses, and to return with options that could preserve existing businesses' operations during any transition and to clarify the inspection language in the ordinance.