HomeMy WebLinkAboutItem 12 - Cannabis Regulations Update PresentationCannabis Business Program
Regulations Update
December 3, 2019
Recommendation
1.Receive an update on the City’s Cannabis Business Program;
and
2.Adopt a Resolution that updates the one-time application fee;
and
3.Adopt a Resolution that updates the merit criteria to be used in
the evaluation of applications for cannabis business operator
permits and adopts a 70%of total available points minimum
threshold;and
4.Introduce and adopt an ordinance amending Municipal Code
Section 9.10 clarifying unsuccessful applicants’ability to apply
during separate application periods in the same year.
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Background
November 8, 2016:Proposition 64 approved allowing recreational cannabis use in CA
May 1, 2018: City Council adopts an ordinance to create land use regulations
allowing personal cultivation and commercial cannabis businesses to operate in the City
May 15, 2018: City Council considers a proposed ballot measure for the November 2018
election to establish a Cannabis Business Tax if approved by voters
October 16, 2018: City Council met to discuss cannabis business operator application
requirements and evaluation criteria for ranking operators and provided staff with a list of
directional items to incorporate into revised criteria
November 6, 2018: Residents voted to authorize the Cannabis Business Tax Measure
(Measure F-18), putting Ordinance 1647 in effect.
November 27, 2018: City Council adopted the resolution approving the fee schedule and
evaluation criteria for the Cannabis Business Operator Permits
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Program Update
January 1-29, 2019:Initial Commercial Cannabis Business Operator Permit Application period
opened
March 28, 2019: Five Contingent Operator Permits granted
April 2019-Present: Background investigation process underway for applicants that received
Contingent Operator Permits
July 1, 2019: Second application period opened
September 5, 2019: First two Operator Permits granted
October 23, 2019: Third Operator Permit granted; new Contingent Operator Permit granted
November 13, 2019: Conditional Use Permit approval for two storefront retail businesses
December 2, 2019: First cannabis delivery business opened
January 15-February 15, 2020: Next application period for Operator Permits (non-storefront)
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Business Program Implementation
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▪Development of Administration and Operational Guidelines
▪Delivery from businesses outside of the City
-Compliance notifications (2)
-Enforcement by SLOPD
-Licensing of out of area operators continues
Application Fees
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Existing Fee Payment Structure Amount Total
Retail Storefront:
One-time payment $23,262.00 =$23,262.00
Other Business Types:
Initial payment $7,676.00
Final payment $15,584.00 =$23,262.00
Recommended Fee Payment Structure Amount Total
All Business Types:
Initial payment $4,995.00
Final payment $18,307.00 =$23,262.00
Cottage Industry Program
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▪Consideration of a set of lower fees for smaller indoor,
outdoor or mixed lighting cultivation
▪No significant operations in other municipalities to identify
demand or best practices
▪Recommendation to support the existing applicant pool in
opening their businesses and experiencing another year of
operations before studying further
Criteria
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Based on 2018 Council direction:
▪Designed to ensure businesses are sustainable and well run
and to protect community character and quality of life
▪Criteria for retail storefront,non-storefront,distribution,
manufacturing,cultivation and microbusiness operator types
differ from one another
▪Criteria categories include Community Benefit,Equity and
Labor,Financial Investment and others
Criteria
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Minor updates and clarifications to the merit criteria are
recommended for future applications for cannabis business
operator permits
▪Informed through feedback from two application periods from
the Applicant Review Panel
▪Internal multi-department staff teams
▪Consultants recommendations
▪Best practices from other municipalities
Application Changes
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▪Community Benefit
▪Equity and Labor
▪Scoring Threshold
▪Application Submittal
Recommendation
1.Receive an update on the City’s Cannabis Business Program;
and
2.Adopt a Resolution that updates the one-time application fee;
and
3.Adopt a Resolution that updates the merit criteria to be used in
the evaluation of applications for cannabis business operator
permits and adopts a 70%of total available points minimum
threshold;and
4.Introduce and adopt an ordinance amending Municipal Code
Section 9.10 clarifying unsuccessful applicants’ability to apply
during separate application periods in the same year.
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Fiscal Impact
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▪Revenue projections for 2019-2020 will need to be adjusted
as actual tax remittances will not reflect the original
assumptions
▪The initial long-term assumptions of $1,500,000 in tax
revenue through the next several years as businesses
mature is still an accurate forecast of tax revenue
▪Updated projections on Cannabis Business Tax revenue will
be presented to the City Council at the Mid-Year Budget
Update on February 18, 2019