HomeMy WebLinkAboutItem 10 - Authorize a contract with HDL Companies for Cannabis Program Services Department Name: Administration
Cost Center: 1001
For Agenda of: May 4, 2021
Placement: Consent
Estimated Time: N/A
FROM: Greg Hermann, Deputy City Manager
Prepared By: Georgina Bailey, Cannabis Program Coordinator/Management Fellow
Victoria Tonikian, Acting Assistant to the City Manager
SUBJECT: AUTHORIZE A CONTRACT WITH HDL COMPANIES FOR CANNABIS
PROGRAM SERVICES
RECOMMENDATION
Authorize the City Manager, or their designee, to execute a contract (Attachment A) with HdL
Companies to provide support services for the operations of the City’s Cannabis Business
Program.
DISCUSSION
Following a year of analysis of operator license fees, on January 19, 2021, the City Council
approved Resolution 11213 (Attachment B), updating the commercial cannabis business operator
permit fee for all types of cannabis businesses within the City. The operator permit fee adopted
by City Council captures the total costs involved to ensure the City is 100% reimbursed for the
staff time, consultant fees, and other expenses, which are essential to managing the Cannabis
Program.
Following the approval of Resolution 11213, City staff is recommending using HdL Companies
(HdL) to assist with continuation of the City’s Cannabis Program. Should Council authorize this
contract, HdL will continue to provide cannabis application services and provide new services
related to cannabis operator permits.
Background
Following the passage of the City’s Cannabis Business Tax ballot measure in November 2018,
the City Council approved the fee structure, application criteria and zoning regulations to allow
for cannabis businesses to operate in the City on November 27, 2018. A year after the initial
regulations were adopted, staff returned to the City Council on December 3, 2019 with a
Cannabis Program update. At this meeting, the City Council adopted recommended changes to
the original cannabis application fees, which allowed all operators to pay an initial application
fee and a secondary fee once the contingent operator permit was granted, thu s lowering the initial
application costs. Additionally, staff committed to come back to Council with an analysis of
operator license fees after one full year of operations to collect information on actual time spent
compared to the assumptions used in developing the original fees. Staff brought that analysis to
City Council on January 19, 2021 in the form of a fee study and fee recommendation , which the
City Council adopted.
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As part of the fee study process, the City researched alternative service delivery approaches for
regulatory compliance inspections, cannabis tax audits, and background check renewals for
owners and employees. Through the research, staff determined that the City can provide the
same level and quality of service for some aspects of the program for a reduced cost by utilizing
a consultant for some components of regulatory compliance inspections, cannabis tax audits, and
background check renewals for owners and employees. This approach is consistent with other
cities that have utilized consultants similarly for some aspects of the cannabis program services
such as Grover Beach, Goleta, Port Hueneme, etc.
City staff has since concluded – through a review of consultant services needed, cost, and the
Cannabis Program requirements – that HdL can provide the services desired in accordance with
the City's Cannabis Program regulations and the fees adopted by City Council. HdL has over 30
years of experience providing consulting services to government agencies throughout California
and other states. HdL’s Cannabis Management Program has been used by many agencies in the
State to assist with application proctoring, compliance monitoring, auditing, background checks,
and other consulting services.
Locally, HdL has worked successfully with other agencies’ Cannabis Programs such as Grover
Beach to provide compliance checks and audits. Likewise, HdL has experience working with the
City’s Cannabis Program as they have assisted with two application rounds in which they
proctored the application scoring and assisted with application completeness checks. Outside of
the Cannabis Program, the City’s Finance Department has utilized HdL for multiple years as a
sales tax consultant and has recently partnered with them for Utility User Tax services. It is
therefore staff’s recommendation to enter into a contract with HdL to assist with the City’s
Cannabis Program to provide Operator Permit and Application services.
Scope of Services (Attachment C)
Should the contract with HdL Companies be authorized, the City will utilize HdL for the
following services:
Operator Permit Services:
• Conduct one annual cannabis tax audit of each licensed cannabis business to ensure
proper reporting and remittance of cannabis taxes to the City.
• Conduct four on-site compliance inspections of each licensed cannabis business annually
to ensure ongoing compliance with all state and local laws in conjunction with the Police
Department,
Application Permit Services:
• Screen all initial cannabis business applications for completeness.
• Proctor the City's application review process.
• Provide initial background checks and renewals for all owners, managers and employees
of the City’s commercial cannabis businesses subject to review and approval of the
Police Department.
Additional Cannabis Program Support:
• Provide technical assistance and support for process improvement and program
modification.
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Previous Council or Advisory Body Action
On November 27, 2018, the City Council approved both application and operating license fees
for the Cannabis Business Program.
On December 3, 2019, the City Council approved a change to the cannabis application fees that
allowed all operators to pay an initial application fee and a secondary fee once the contingent
operator permit was granted, thus lowering the initial application fee.
On January 19, 2021, the City Council approved a change to the operator permit renewal fee,
which reduced the fee for all operators and placed all operators on the same fiscal year renewal
cycle.
Policy Context
The recommendation to execute a contract with HdL Companies to support cannabis services is
consistent with overall goals of the Cannabis Business Program and all applicable sections of the
Municipal Code. The adopted cannabis operator permit renewal fees and application fees not
only provide business support and compliance monitoring for cannabis businesses, but consultant
support will also streamline the process administratively for both businesses and City staff.
Public Engagement
The current application and operator permit fee ordinances and resolutions were considered and
adopted by City Council on May 15, 2018, October 16, 2018, November 27, 2018, December 3,
2019 and January 19, 2021. Since that time, staff have been in regular communication with
applicants, business operators and industry representatives receiving feedback on a wide range of
issues related to the implementation of the Cannabis Business Program.
For this item, no public engagement was conducted as this is considered to be an administrative
item. However, extensive public engagement was done prior to City Council’s adoption of the
operator permit renewal fees adopted January 19, 2021, in which cannabis operator permit
holders supported the recommendation to reduce the cannabis operator permit fees based o n the
results of the fee study.
CONCURRENCE
A Steering Committee and Cannabis Team of City staff members including staff from the
departments of Administration, the City Attorney’s Office, Community Development, Finance
and the Police Department supports the action to execute a contract with HdL Companies to
support cannabis services for cannabis operator permits and cannabis application scoring as it
relates to the City’s Cannabis Program.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action in this
report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15 378.
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FISCAL IMPACT
Budgeted: Yes Budget Years: 2021-2023
Funding Identified: Yes
Fiscal Analysis:
Funding Sources
FY 2021-2022
Cost
FY 2022-2023
Cost
Total Project
Cost
General Fund
State
Federal
Community
Development
$52,095 $57,345
Finance $30,000 $48,000
Other:
Total $82,095 $105,345
As a part of the 2021-2023 Financial Plan which will be brought before the City Council on June
1, 2021, staff has included a request for Cannabis Consultant Services for both fiscal years. The
request is for required consultant support of the Cannabis Business Program and will be funded
through either operator permit or application fees.
Due to the fee-for service model and contract, the total work by HdL Companies for the
Cannabis Program could exceed $100,000 in any given fiscal year dependent on the number of
operator permits and applications received. As is consistent with the City’s purchasing policy,
this contract is being brought to the Council for review as it may exceed $100,000 in any given
year.
ALTERNATIVES
1. Do not move forward with the contract with HdL Companies and instead have staff
complete the proposed Scope of Services. This is not advised as the cost for staff to provide
the same Scope of Services would be significantly higher than HdL Companies and the
overall operator permit fee adopted in Resolution 11213. For staff to provide the same Scope
of Services, staff would need to readjust the fees and come back to City Council with a new
fee recommendation as staff cannot provide the full scope of services within the current fee
adopted by City Council January 19, 2021.
2. Do not move forward with the contract with HdL and instead select a different
consultant to complete this work. This is not advised as HdL Companies provides expert
services with experience working within the City of San Luis Obispo’s Cannabis Program at
a rate within the fees adopted by City Council. Likewise, staff is not aware of any vendor,
aside from HdL, that provides the full suite of services needed at the quality of HdL's work
and cost that fits within the fees adopted by the City Council.
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3.Authorize staff to move forward with modified recommendation. Given the nature of the
contract, the City Council could authorize the contract with HdL Companies under the fee-
for-service model but require staff to return to the City Council should contract exceed
$200,000 or any amount deemed appropriate by the City Council in any given fiscal year.
Attachments:
a - Contract with HdL Companies for Cannabis Program Services
b - Resolution No. 11213 (2021 Series) - Master Fee Schedule
c - COUNCIL READING FILE - HdL Scope of Services
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HdL Companies Contract Agreement with City Page 1
AGREEMENT
THIS AGREEMENT is made and entered into in the City of San Luis Obispo on [ ] by and between the
CITY OF SAN LUIS OBISPO, a municipal corporation, hereinafter referred to as City, and Hinderliter, de
Llamas and Associates, hereinafter referred to as Consultant.
W I T N E S S E T H:
WHEREAS, the City desires to utilize Consultant to assist the City with cannabis management services,
specifically in the oversight of cannabis operator permits and with ongoing cannabis permit applications; and
WHEREAS, the Consultant will provide the following services: conduct one annual cannabis tax audit of
each licensed cannabis business, conduct four on-site inspections of each licensed business annually, screen all
cannabis business applications to ensure they are complete, proctor the City ’s Application Review process, conduct
background checks and renewals for all owners, managers and employees of the City ’s commercial cannabis
businesses, and provide additional hours of technical assistance and subject matter expertise as needed; and
WHEREAS, the aforementioned services of Consultant are necessary for the continued operation of the
City’s Cannabis Program; and
WHEREAS, the operator permit fees and application fees adopted by the City Council have captured the
total costs involved to ensure the City is 100% reimbursed for the staff time, consultants fees, and other expenses;
and
WHEREAS, Consultant can conduct the full Scope of Services necessary to implement the City's Cannabis
Program, regulations, and the fees adopted by City Council; and
WHEREAS, Consultant is qualified to perform these type of services and has submitted a proposal to do so
which has been accepted by City.
NOW THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter
contained, the parties hereto agree as follows:
1.TERM. The term of this Agreement shall be from the date this Agreement is made and entered,
as first written above, until the parties terminate this Agreement pursuant to mutual written agreement and
acceptance or completion of said services.
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HdL Companies Contract Agreement with City Page 2
INCORPORATION BY REFERENCE The Consultant’s fees and scope of work are
incorporated in and made a part of this Agreement attached as Exhibit A. The City’s terms and conditions are
hereby incorporated in and made a part of this Agreement as Exhibit B. The City’s insurance requirements
and Consultant’s proof of insurance are hereby incorporated in and made part of this Agreement attached as
Exhibit C. To the extent that there are any conflicts between the Consultant’s fees and scope of work and the City’s
terms and conditions, the City’s terms and conditions shall prevail, unless specifically agreed otherwise in writing
signed by both parties.
2.CITY'S OBLIGATIONS. For providing services as specified in this Agreement, City will pay,
and Consultant shall receive therefore compensation for completion of each service for the quoted price per service
as set forth in Exhibit A.
4.CONSULTANT’S OBLIGATIONS. For and in consideration of the payments and Agreements
herein before mentioned to be made and performed by City, Consultant agrees with City to provide services as set
forth in Exhibit A.
5.AMENDMENTS. Any amendment, modification or variation from the terms of this Agreement
shall be in writing and shall be effective only upon approval by the Department Head or City Manager of the City.
6.COMPLETE AGREEMENT. This written Agreement, including all writings specifically
incorporated herein by reference, shall constitute the complete Agreement between the parties hereto. No oral
Agreement, understanding, or representation not reduced to writing and specifically incorporated herein shall be of
any force or effect, nor shall any such oral Agreement, understanding, or representation be binding upon the parties
hereto.
7.NOTICE. All written notices to the parties hereto shall be sent by United States mail, postage
prepaid by registered or certified mail addressed as follows:
City
Consultant
Community Development Department
City of San Luis Obispo
919 Palm St.
San Luis Obispo, CA 93401
Hinderliter, de Llamas & Associates
120 S. State College Blvd., Ste 200
Brea, CA 92821
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HdL Companies Contract Agreement with City Page 3
8.AUTHORITY TO EXECUTE AGREEMENT. Both City and Consultant do covenant that
each individual executing this Agreement on behalf of each party is a person duly authorized and empowered to
execute Agreements for such party.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year
first above written.
CITY OF SAN LUIS OBISPO, A Municipal Corporation
By:_____________________________________
Michael Codron, Community Development Director
APPROVED AS TO FORM: CONSULTANT
________________________________
City Attorney
By:
_____________________________________ ,
Gary Lott, Chief Operating Officer
Hinderliter de Llamas & Associates
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City of
San Luis Obispo
Cannabis Compliance and Audit Services
March 25, 2021
SUBMITTED BY
HdL Companies
120 S. State College Blvd., Ste 200
Brea, CA 92821
hdlcompanies.com
CONTACT
David McPherson
T: 714.879.5000
E: dmcpherson@hdlcompanies.com
EXHIBIT A
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Proposal for Cannabis Compliance and Audit Services
for the City of San Luis Obispo March 25, 2021
1
TABLE OF CONTENTS
I. LETTER OF TRANSMITTAL ............................................................................. 2
II. PROPOSED SCOPE OF SERVICES ................................................................. 3
III. COST .................................................................................................................. 7
IV. OPTIONAL SERVICES....................................................................................... 8
V. EXPERIENCE AND RESOURCES ....................................................................9
VI. REFERENCES ................................................................................................15
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Proposal for Cannabis Compliance and Audit Services
for the City of San Luis Obispo March 25, 2021
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I. LETTER OF TRANSMITTAL
March 25, 2021
Greg Herman
Deputy City Manager
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Re: Proposal for Cannabis Compliance and Audit Services
Dear Mr. Herman,
Thank you for the opportunity to submit this proposal for cannabis management services for the
City of San Luis Obispo. The enclosed scope of services is designed to provide annual cannabis
tax audits of each licensed cannabis business, quarterly compliance inspections, screening of
cannabis business applications and proctoring meetings of the City’s review panel, along with
background check renewals and additional hours of technical assistance or subject matter
expertise to be used as needed at the City’s request. All services are offered at a straight per-
unit cost and would be billed on a monthly basis depending on the number of each service
requested and provided.
HdL was incorporated in 1983 and has over 30 years of experience providing revenue
enhancement and consulting services to local governments in California. HdL is a consortium
of three companies established to maximize local government revenues by providing audit,
compliance, economic development, consulting services and software products. Its audit and
consulting services include sales, use and transaction taxes, property taxes, transient occupancy
taxes, and a Cannabis Management Program. HdL’s systematic approach to revenue
management and economic analysis is currently being utilized by over 500 agencies in six states.
The firm currently serves 49 counties, 311 cities and 132 transactions tax districts in California.
Our knowledgeable team of professionals have more than 52 years’ combined experience in the
establishment and implementation of cannabis regulatory programs including establishing land-
use regulations, registration processes, operation regulations for cannabis facilities, staffing
plans, cost recovery, structuring cannabis business taxes and conducting compliance and
financial audits.
We look forward to the opportunity to partner with the City of San Luis Obispo in developing a
strategy which meets your program needs. If you have any questions or require additional
information, please feel free to contact me by email at anickerson@hdlcompanies.com or David
McPherson at dmcpherson@hdlcompanies.com or by phone at 714.879.5000.
Sincerely,
Andy Nickerson
President, HdL Companies
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Proposal for Cannabis Compliance and Audit Services
for the City of San Luis Obispo March 25, 2021
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II. PROPOSED SCOPE OF SERVICES
In May of 2018, the San Luis Obispo City Council approved an ordinance allowing
commercial cannabis businesses to operate in the City. That ordinance was followed in late
2018 by the development of a cannabis business operator permit process. The first permit
application period opened in January 2019, followed by a second application period in July
of 2019, and two other application periods in January 2020 and June 2020. There are
currently 7 cannabis businesses who have been granted operator permits by the City.
Currently 2 cannabis businesses are operating within the City and the remaining 5 cannabis
business are at various stages in the permitting process.
In May of 2020, the City engaged the services of HdL Companies to review the City’s existing
fee structure to determine the total costs involved in the administration of the Cannabis
Business Program. In addition, HdL was asked to review the application process and merit
criteria to determine how the application process could be streamlined and be more efficient.
As the City’s cannabis program has grown and expanded, so has the need for rigorous
monitoring and oversight of the local industry to verify compliance with all state and local laws
and to ensure that all applicable cannabis taxes are being properly reported and remitted to
the City. To assist with these needs, the City of San Luis Obispo has requested that HdL
develop a proposal to provide the following services:
Conduct one annual cannabis tax audit of each licensed cannabis business to ensure
proper reporting and remittance of cannabis taxes to the City.
Conduct four on-site compliance inspections of each licensed cannabis business
annually to ensure ongoing compliance with all state and local laws.
Screen all cannabis business applications to ensure they are complete.
Proctor the City's Application Review Process
Provide background check renewals of all owners, managers and employees of the
City’s commercial cannabis businesses.
Provide additional hours of technical assistance and subject matter expertise
This proposal provides a fixed unit cost for each of these services, which are described below.
Objective 1: Cannabis Tax Audits
HdL will conduct an annual financial audit to verify the accuracy of revenues reported to the City
during the review period and will recommend a tax assessment should the audit reveal any
unreported revenue. As part of the process, HdL will conduct a risk based analytical review of
the business using the proprietary Cannabis Analytical Tracking Solution (CATS™) program to
ensure there is no diversion of product or cash. Our unique audit approach allows us to identify
if an operator is under-reporting its taxes or diverting product from its facility. HdL audit staff will
also use information gathered as part of the onsite inspection to assist with the financial audit.
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Proposal for Cannabis Compliance and Audit Services
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HdL will help the City prepare a notification letter to send to the business to start the audit. The
letter will contain pertinent information about the audit, including a list of the records requested
and a request for access to the business’ point of sale system. HdL recommends the notification
letter be sent by the City to encourage cooperation from the business and communicate HdL’s
authority to conduct the audit. The audit shall include:
Gross receipts verification
Risk based CATS™ Analytic Review
Inventory review (subject to access to the track and trace system)
POS data entry requirements review
Preparation and issuance of report
Exit conference with the City
HdL will provide a draft audit report to the commercial cannabis business. The business will be
given the appropriate time to respond or appeal the report in accordance with the City ordinance.
HdL will review any documentation provided by the business to dispute the findings and will
adjust the tax assessment as necessary prior to issuing the final report to the City.
The City will inform HdL when a cannabis business receives permission to operate (i.e., through
the issuance of a development agreement, conditional use permit, certificate of occupancy or
other indication the business has opened). HdL will then work with the City to schedule financial
audits and will coordinate with the City as the time for each audit approaches.
Depending upon the corporate structure of each cannabis business and any subdivisions or
subsidiaries, it is possible that some businesses may be subject to multiple audits. For purposes
of this proposal, a business that holds multiple state cannabis licenses shall be considered a
single business provided that all licenses are held and operated under the same name,
ownership and a single tax ID number. Any variation may indicate separate business entities
requiring separate audits. Any such determination would be made on a case-by-case basis in
consultation with the City.
Objective 2: Regulatory Compliance Inspections
HdL will conduct four on-site compliance inspections annually for each licensed cannabis
business to determine compliance with State and/or local laws. If HdL identifies any non-
compliant activities, we will provide the City with a recommended appropriate action to
address the deficiency and to ensure future compliance by the permittee. The cost for these
services includes all of the following:
Notifying permittee of pending inspection
On-site inspection to ensure that each business complies with all State and local
laws and regulatory protocols for all of the following:
o Inventory management
o Cash handling procedures
o Access control
o Video surveillance
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Proposal for Cannabis Compliance and Audit Services
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o Alarm system maintenance and safety
o Lock standards
o Packaging and labeling
o Waste management
o Transportation documentation
o Surveillance equipment maintenance
o Occupational badges
o Business records
o Other items as necessary to ensure compliance with laws
Preparation of a draft report detailing the findings of the inspection and providing
recommendations for improvement where needed. If the inspection identifies any
violations of law or other non-compliance issues, then HdL will prepare a notice to
comply as an included part of the report.
All travel costs associated with the inspection
All phone, email and other communications involved in preparing for, scheduling
and coordinating the inspections and providing the report.
As with cannabis tax audits, the number of compliance inspections necessary for each business
will be determined in consultation with the City, based upon the number and type of state
licenses held and operated under the same name, ownership and tax ID number. In addition,
operations at separate locations, addresses, building numbers or premises may be subject to
separate inspections at additional cost, even if under a single ownership.
The cost for this service does not include any follow-up re-inspection or review of any
supplemental documents provided to address or contest any findings of non-compliance, nor
does it include any assistance with the appeal of any enforcement action by the City. Any costs
associated with such additional services would be billed at HdL’s hourly rate.
Objective 3: Initial Screening of Applications for Completeness
HdL staff will conduct an initial screening of all applications for completeness based upon an
objective checklist of required documentation. This initial screening shall allow for some limited
discretion in determining whether submitted documents are substantively complete but shall not
otherwise consider the quality of the submissions.
Applications for competitive licenses that are deemed incomplete will be disqualified and those
applicants will not be allowed to submit any supplemental information. Applications for non-
competitive licenses that are deemed incomplete will be provided an opportunity to submit
supplemental information to complete the application. All applications which have been deemed
complete will move forward for a full review by the City’s review panel.
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Proposal for Cannabis Compliance and Audit Services
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Objective 4: Proctor the City’s Application Review Process
HdL shall provide a subject matter expert who will be available to attend and facilitate the City’s
application review process. The City’s application process includes a review panel that that will
review all of the applications and then meet to score and rank them. HdL’s subject matter expert
shall attend the review panel meeting (or meetings) to proctor or facilitate the process and to
serve as a resource to the review team. HdL staff will not separately review the applications,
nor will HdL recommend scores or ranking for any applications. This service shall be billed at
HdL’s hourly rate, plus travel costs
Objective 5: Supplemental Background Checks
HdL shall provide background checks of all owners, principals, managers and employees of
cannabis businesses as a part of their annual license renewal process. Our supplemental
background process expands upon the State-required Live Scan information by checking the
subject’s social security number and up to 5 variations of their name or aliases against over
200 million databases nationwide.
Our supplemental background checks can identify other factors that local governments may
wish to consider before granting discretionary business licenses or permits, including other
felony offenses, misdemeanor convictions, arrest records, civil judgements, restraining
orders, the terrorist screening database, the national sex offender registry, delinquent child
support payments, bankruptcies, employment and credit records, and more.
HdL offers a reduced rate for annual renewals after the initial background check has been
completed. Our rates include an HdL-designed employee identification badge with the city
logo which meets all State requirements. HdL provides an online portal for applicants to
submit their application, authorization and all necessary documentation.
Prices valid as of the date of this proposal and subject to change without notice.
Objective 6: Provide Subject Matter Expertise & Technical Support
HdL shall provide additional hours of general consulting in the form of subject matter
expertise or technical assistance, to be utilized on an as-needed basis at the City’s request.
Such assistance may include monitoring of changes to State laws and regulations,
community outreach, participation in conference calls, responding to staff inquires via phone
and email, reviewing staff reports to the City Council, assisting with responses to inquiries
from the public, or other issues yet to be determined as requested by the City.
Background Checks Owner, principal
or manager
Employee or line
staff
Initial background check $300 $100
Annual renewal $100 $100
Reissue lost or stolen badge $10 $10
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Proposal for Cannabis Compliance and Audit Services
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III. COST
The proposed services are broken down into specific line items in the cost table below. All of
these services are to be provided on an as-needed basis to be billed to the City via invoice.
HdL’s fees are based on time, materials and travel-related expenses associated with the
execution of the services. The hours and costs in the table below do not include any
additional items that are not specifically contemplated by this scope of services.
Prices offered here are valid for 90 days from the date of this proposal to allow time for
consideration and negotiating a service agreement. Once under contract, prices shall be
honored for the initial term of that contract, up to a maximum of 3 years.
Scope of Service Objectives Estimated Cost
Objective 1: Cannabis Tax Audits
Conduct one annual audit of each cannabis business.
$6,000
per audit
Objective 2: Regulatory Compliance Inspections
Assumes 4 inspections per business/per year for an
annual cost of $5,000 per business. Includes travel.
costs.
$1,250
per inspection
Objective 3: Initial Screening of Applications for Completeness $195
per application
Objective 4: Proctor the City’s Application Review Process
To be billed on an hourly basis.
$250
per hour
Objective 5: Supplemental Background Checks
See below
Objective 6: Subject Matter Expertise and Technical Assistance
To be billed on an hourly basis as needed.
$250
per hour
Travel Cost
If and as needed for any overnight travel.
$600
per site visit
Estimate of Total Costs N/A
Background Checks Owner, principal
or manager
Employee or
line staff
Initial background check $300 $100
Annual renewal $100 $100
Reissue lost or stolen badge $10 $10
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Proposal for Cannabis Compliance and Audit Services
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IV. OPTIONAL SERVICES
Hourly Rates for HdL Staff
The prices in this proposal are based on the hourly rates for HdL staff as shown in the chart
below. Any additional services requested by the client that are not specifically described in this
proposal would be billed at the standard rate for the assigned staff person.
HdL Staff Title Hourly Rate
David McPherson Compliance Director $250
Matt Eaton Deputy Compliance Director $250
Ajay Kolluri Deputy Audit Director $250
Mark Lovelace Senior Policy Advisor $250
Kami Miller Senior Compliance Inspector $195
Michelle Shaw Compliance Inspector $195
Elizabeth Eumurian Senior Auditor $195
Alfredo Marquez Senior Auditor $195
Odette Mikhail Auditor $195
Mark Brogan Auditor $195
Tao Lu Auditor $195
All rates current as of the date of this proposal
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Proposal for Cannabis Compliance and Audit Services
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V. EXPERIENCE AND RESOURCES
Company Profile
Founded in 1983, HdL is a consortium of three companies established to maximize local
government revenues by providing audit, compliance, economic development, consulting
services and software products. Its audit and consulting services include sales, use and
transaction taxes, property taxes, transient occupancy taxes, and a Cannabis Management
Program. The firm also provides a variety of enterprise software processing tools for
business licensing, code enforcement, animal control, building permits and tracking/billing of
false alarms. HdL’s systematic and coordinated approach to revenue management and
economic data analysis is currently being utilized by over 500 agencies in six states. The
firm currently serves 49 counties, 311 cities and 132 transactions tax districts in California.
HdL’s key staff has extensive experience serving local government and many have previously
held positions in city management, finance, planning, economic development or revenue
collection. HdL is a Corporate Partner of the League of California Cities and California State
Association of Counties and works extensively with the County Auditor’s Association of
California, California Society of Municipal Finance Officers (CSMFO) and California
Municipal Revenue and Tax Association (CMRTA) on anticipation and planning of programs
to strengthen local government revenues.
This close understanding of local government needs coupled with extensive databases
and advanced methodology provides for the most relevant, productive and responsive
revenue recovery; forecasting; and economic services available.
Our team of professionals has over 52 years of direct experience establishing and
implementing cannabis regulatory and taxation programs, including establishing land-use
regulations, permit processes, staffing plans, and cost recovery fees; structuring
cannabis business tax fees; regulatory compliance; financial audits; and law enforcement
training. Our team has conducted over 18,000 cannabis compliance inspections and
investigations in California, Colorado and Nevada.
Key Personnel
David McPherson, Compliance Director
David McPherson works with local agencies to prepare them to mitigate regulatory issues
surrounding Proposition 64 and SB 94. Prior to joining HdL, David served 28 years in local
government for the County of Orange and the cities of Newport Beach, San Jose and
Oakland. David’s experience as a law enforcement officer, compliance auditor, and tax
administrator has provided him a wealth of experience that makes him uniquely qualified to
manage HdL’s Cannabis Management Program. While working for the City of Oakland, he
became the first Tax Administrator in the country to successfully tax, regulate and audit
medical marijuana businesses. David has over 10 years of experience working with cannabis
regulatory programs.
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David is one of the state’s most recognized experts in cannabis regulatory policies,
compliance implementation and tax policies. His unique knowledge in horticulture,
processing and dispensary operations while working for the City of Oakland has made him
one of the pioneers in creating a Cannabis Management Program. He uses his experience
to assist local and state agencies in developing cannabis policies for regulation, compliance,
auditing and economic development. He worked closely with the League of Cities on the
development of the Medical Cannabis Regulation and Safety Act (MCRSA) and helped
shape SB 94, the Medicinal Adult-Use Cannabis Regulation and Safety Act (MAUCRSA).
David provides technical support on cannabis-related matters to the League of Cities, the
Police Chief’s Association, Rural County Representatives of California and the California
State Association of Counties. In addition, David is working collaboratively with the
Department of Consumers Affairs, Department of Food & Agriculture, Department of Health
Services and the State Board of Equalization on the implementation of best practices for
regulating the cannabis industry for local agencies.
David received his Bachelor’s Degree in History from California State University, Fullerton
and his Master’s Degree in Public Administration from California State University, Long
Beach. While at Long Beach, he was named “Future Urban Administrator of the Year”.
Matt Eaton, Deputy Compliance Director
Matt Eaton is the Deputy Compliance Director at HdL and plays a critical role in implementing
the Cannabis Compliance Program for local agencies. Prior to joining the firm, he was a
progressive law enforcement professional with 30 years’ experience conducting
criminal/regulatory investigations, and corporate/individual background investigations.
While working as a Supervisory Investigator at the Colorado Department of Revenue in the
Marijuana Enforcement Division (MED), Matt managed criminal investigators and civilian
staff in the Denver Metro and Longmont field offices. During his six-year tenure at the MED,
he conducted approximately 10,000 criminal investigations and compliance reviews,
including regulatory and financial investigations. He is a subject matter expert on track and
trace systems and understands the complexity of reviewing data to ensure businesses are
in compliance with state and local regulations. Matt was responsible for planning, developing
and implementing report and field inspection protocols for the agency. He also played an
instrumental role in recommending changes to current regulations and identifying essential
language for new legislation in Colorado. Matt is well known for his ability to maintain working
relationships with cannabis industry leaders and external stakeholders in resolving issues.
Matt received his Bachelor of Science Degree from Biola University and maintained Police
Officer Service Training (POST) certification for over 30 years in California and Colorado. He
has also served as an adjunct instructor teaching law enforcement principle related to
criminology, correctional processes, procedural law, interviews, interrogations and criminal
evidence at AIMS Community College in Greeley, Colorado.
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Ajay Kolluri, Deputy Director of Policy and Audits
Ajay Kolluri is the Deputy Director of Audits and Operations for HdL’s Cannabis Division. Ajay
is responsible for overseeing the cannabis audit team and the daily operations of the division,
which includes special projects such as community outreach, surveys, grant solicitation,
revenue analysis, cost recovery fee studies, contracts, budgeting, and marketing. Ajay
previously served as Program Manager for the Office of Cannabis Oversight (OCO) at City
of Long Beach. Working within the City Manager’s Office, Ajay was responsible for the
licensing, regulation and enforcement of all commercial cannabis activity in the City, with one
of the largest legal cannabis markets in the state. During his tenure with the OCO, Ajay
oversaw the issuance over 200 cannabis business licenses, generating over $10 million in
annual revenue for the City. Ajay has experience in all aspects of cannabis oversight,
including public health and education, planning and zoning, building inspections,
enforcement, social equity, fee development, economic analysis and revenue projections.
Prior to overseeing the OCO, Ajay worked in public finance, serving as Budget Analyst for
the Department of Financial Management in the City of Long Beach. Ajay holds a Bachelor’s
degree in business economics from the University of California, Santa Barbara, and a
Master’s degree in public policy from the University of Michigan.
Mark Lovelace, Senior Policy Advisor
Mark Lovelace has 16 years of broad experience in public policy, community engagement
and advocacy and is recognized as a leader in advancing the statewide discussion of medical
and recreational cannabis as a policy issue in California.
Mark served on the Humboldt County Board of Supervisors from 2009 through 2016 where
he was instrumental in developing a comprehensive approach to regulating cannabis,
including a voter-approved tax on commercial cultivation and an innovative track and trace
pilot program. Mark established and co-chaired the Medical Marijuana Working Group for
the California State Association of Counties (CSAC) and helped draft CSAC’s legislative
platform for cannabis issues. Mark pioneered the first regional summit on cannabis issues
in 2015 which helped guide the development of SB 643 and AB 243, two components of the
Medical Cannabis Regulation and Safety Act (MCRSA).
Mark has worked extensively with public agencies and statewide associations on cannabis
issues, including CSAC, Rural County Representatives of California, the Association of
California Water Agencies, the North Coast Resource Partnership, California Department of
Fish and Wildlife, the State Water Board, the North Coast Regional Water Board, the Bureau
of Cannabis Control, State legislators, and others. He has led numerous presentations,
workshops and panel discussions on cannabis issues and has been a sought-after speaker
on the topic for government agencies, community organizations and industry groups.
Mark received his Bachelor of Science degree in Industrial Design from San Jose State
University. Prior to his time on the Board, he worked for many years as a respected advocate
on land use, planning, development and environmental issues.
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Kami Miller, Senior Compliance Inspector
Kami Miller is a Senior Compliance Inspector at HdL whose primary role is to ensure
cannabis compliance and identify the risk assessment in the supply chain process of each
permitted business. Prior to joining the firm, she served three years as a Marijuana
Compliance Manager for the Department of Public Behavior and Health (DPBH) for the State
of Nevada. During this time Kami played a key role in Nevada’s implementation of its Medical
Marijuana Program in which she was responsible for statewide monitoring of medical
marijuana facilities that included cultivation, production, testing labs and retail stores.
During her tenure at the DPBH, Kami managed compliance auditors and support staff in the
Las Vegas office. She conducted approximately 1,000 compliance and financial inspections
for which she developed the inspection protocols documentation to create comprehensive
reports. In addition, her experience with various cannabis track and trace systems allowed
her to develop industry supply chain practices for the Department of Taxation.
Kami received her Bachelor of Business Administration in E-Commerce and Supply Chain
Management from Tennessee State University.
Michelle Shaw, Compliance Inspector
Michelle is a Cannabis Compliance Inspector at HdL and is tasked with conducting onsite
inspections, examinations and other actions to monitor compliance with established
standards for local licensed cannabis businesses. Prior to joining HdL, she was a
Compliance Specialist Officer at a large, multinational bank where she managed, validated
and oversaw the effectiveness and accuracy of numerous compliance issues within the
consumer retail space. Throughout her eight years of experience at the bank, she performed
onsite assessments of affiliate businesses to determine compliance/non-compliance of their
processes and procedures pursuant to bank standards and state regulations.
A graduate of Cypress College, Michelle holds a Foundations of Banking Risk certificate from
the Global Association of Risk Professionals and a paralegal certificate from the Southern
California College of Business and Law.
Alfredo Marquez, Senior Auditor
Alfredo Marquez is a Senior Auditor at HdL. His primary role is to conduct cannabis tax audits.
Alfredo previously worked for a publicly traded corporation as a Senior Internal Auditor where
he performed risk assessments of new business acquisitions, financial and Sarbanes & Oxley
audits. He also conducted compliance audits in the areas of commercial and government
contracts, export and import activities, and general information technology controls. In these
roles he worked with employees at various levels within the organization across North
America, Latin America, Europe, and Asia in order to meet organizational objectives. Alfredo
has recently done work for the Cities of Cotati, Cloverdale, Desert Hot Springs, Perris, Port
Hueneme, and Vallejo. He earned his Bachelor’s degree in Accounting from the University
of La Verne.
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Elizabeth Eumurian, Senior Auditor
Elizabeth Eumurian is a Senior Auditor at HdL. Her primary role is to conduct financial audits,
evaluate cannabis applications and conduct background checks. As part of the audit program,
she will be conducting and preparing analytical information through the CATS™ program to
prepare Tax Analytical Remittance Reports (TARR) summaries to evaluate under reporting or
anomalies in the remittance of tax payments to local jurisdictions.
Elizabeth previously worked as a senior auditor in the entertainment industry. In this role, she
executed testing procedures for targeted audit programs, analyzed findings and prepared
audit and compliance reports. She also has experience working for a large financial institution
analyzing data for reporting anomalies and performing internal audits. Elizabeth has recently
done work for Blythe, California City, Coachella, Cotati, Desert Hot Springs, Long Beach,
Mammoth Lakes, Moreno Valley, Perris, San Bernardino, and Vallejo.
Elizabeth earned her Bachelor of Arts degree in History from California State University and
holds a certificate in CannaBusiness from Oaksterdam University.
Odette Mikhail, Auditor
Odette Mikhail is an Auditor at HdL. Her primary role is to conduct financial audits. Odette
previously worked as a senior auditor at public accounting firms. In this role, she executed
testing procedures for audit and review engagements, identified accounting issues, reviewed
internal controls, and prepared financial reports and statements. Odette earned her Bachelor
of Science degree in Accounting and Business Administration from Ain Shams University in
Cairo, Egypt.
Tao Lu, Auditor
Tao Lu works as an Auditor for HdL’s Cannabis Management Team. Tao has two and a half
years’ experience as an accountant with an emphasis in information technology and food
manufacturing industries. He also has public audit work experience at RSM China.
Tao was born and raised in China. He earned a Bachelor’s Degree in Accounting and
Finance from Syracuse University in New York before relocating to Southern California with
his family.
Mark Brogan, Auditor
Mark Brogan works as an Auditor for HdL’s Cannabis Management Team. Mark previously
worked for the City of San Jose as a Financial Analyst and later as a Supervisor in the
Revenue Management Division of the City’s Department of Finance. Mark also worked in
the City’s Housing Department prior to his time with the Department of Finance.
Mark holds a Bachelor’s Degree in Business Administration from San Jose State University,
with a minor in Economics. Mark is also an accomplished triathlete and has successfully
completed numerous marathons and Iron Man competitions.
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VI. REFERENCES
City of Port Hueneme
Tony Stewart
Director of Community Development
Phone: 805.986.6520
Email: tstewart@cityofporthueneme.org
City of Maywood
Jennifer Vasquez
City Manager
Phone: 323.562.5721
Email: jennifer.vasquez@cityofmaywood.org
City of King City
Steve Adams
City Manager
Phone: 831.386.5917
Email: sadams@kingcity.com
City of Goleta
Luke Rioux
Finance Director
Phone: 805.562.5508
Email: lrioux@cityofgoleta.org
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EXHIBIT B
GENERAL TERMS AND CONDITIONS
1.Insurance Requirements. The Contractor shall provide proof of insurance in the form,
coverages and amounts specified in Section E of the City’s Request for Proposal referenced in
paragraph 2 of the Agreement, unless changes are otherwise approved and agreed to in writing
between the parties. If the Agreement is entered into outside of a Request for Proposal,
Contractor shall provide proof of insurance in the form of coverages and amounts specified in
Exhibit C.
2.Business License & Tax. The Contractor must have a valid City of San Luis Obispo
business license & tax certificate before execution of the contract. Additional information
regarding the City’s business tax program may be obtained by calling (805) 781-7134.
3.Ability to Perform. The Contractor warrants that it possesses, or has arranged through
subcontracts, all capital and other equipment, labor, materials, and licenses necessary to carry out
and complete the work hereunder in compliance with all federal, state, county, city, and special
district laws, ordinances, and regulations.
4.Laws to be Observed. The Contractor shall keep itself fully informed of and shall
observe and comply with all applicable state and federal laws and county and City of San Luis
Obispo ordinances, regulations and adopted codes during its performance of the work.
5.Payment of Taxes. The contract prices shall include full compensation for all taxes that
the Contractor is required to pay.
6.Permits and Licenses. The Contractor shall procure all permits and licenses, pay all
charges and fees, and give all notices necessary.
7.Safety Provisions. The Contractor shall conform to the rules and regulations pertaining
to safety established by OSHA and the California Division of Industrial Safety.
8.Public and Employee Safety. Whenever the Contractor’s operations create a condition
hazardous to the public or City employees, it shall, at its expense and without cost to the City,
furnish, erect and maintain such fences, temporary railings, barricades, lights, signs and other
devices and take such other protective measures as are necessary to prevent accidents or damage
or injury to the public and employees.
9.Preservation of City Property. The Contractor shall provide and install suitable
safeguards, approved by the City, to protect City property from injury or damage. If City
property is injured or damaged resulting from the Contractor’s operations, it shall be replaced or
restored at the Contractor’s expense. The facilities shall be replaced or restored to a condition as
good as when the Contractor began work.
10.Immigration Act of 1986. The Contractor warrants on behalf of itself and all
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subcontractors engaged for the performance of this work that only persons authorized to work in
the United State pursuant to the Immigration Reform and Control Act of 1986 and other
applicable laws shall be employed in the performance of the work hereunder.
11. Contractor Non-Discrimination. In the performance of this work, the Contractor
agrees that it will not engage in, nor permit such subcontractors as it may employ, to engage in
discrimination in employment of persons because of age, race, color, sex, national origin or
ancestry, sexual orientation, or religion of such persons.
12. Work Delays. Should the Contractor be obstructed or delayed in the work required to be
done hereunder by changes in the work or by any default, act, or omission of the City, or by
strikes, fire, earthquake, or any other Act of God, or by the inability to obtain materials,
equipment, or labor due to federal government restrictions arising out of defense or war
programs, then the time of completion may, at the City’s sole option, be extended for such
periods as may be agreed upon by the City and the Contractor. In the event that there is
insufficient time to grant such extensions prior to the completion date of the contract, the City
may, at the time of acceptance of the work, waive liquidated damages that may have accrued for
failure to complete on time, due to any of the above, after hearing evidence as to the reasons for
such delay, and making a finding as to the causes of same.
13. Payment Terms. The City’s payment terms are 30 days from the receipt of an original
invoice and acceptance by the City of the materials, supplies, equipment, or services provided by
the Contractor (Net 30).
14. Inspection. The Contractor shall furnish City with every reasonable opportunity for City
to ascertain that the services of the Contractor are being performed in accordance with the
requirements and intentions of this contract. All work done, and all materials furnished, if any,
shall be subject to the City’s inspection and approval. The inspection of such work shall not
relieve Contractor of any of its obligations to fulfill its contract requirements.
15. Audit. The City shall have the option of inspecting and/or auditing all records and other
written materials used by Contractor in preparing its invoices to City as a condition precedent to
any payment to Contractor.
16. Interests of Contractor. The Contractor covenants that it presently has no interest, and
shall not acquire any interest—direct, indirect or otherwise—that would conflict in any manner
or degree with the performance of the work hereunder. The Contractor further covenants that, in
the performance of this work, no subcontractor or person having such an interest shall be
employed. The Contractor certifies that no one who has or will have any financial interest in
performing this work is an officer or employee of the City. It is hereby expressly agreed that, in
the performance of the work hereunder, the Contractor shall at all times be deemed an
independent contractor and not an agent or employee of the City.
17. Hold Harmless and Indemnification.
(a) Non-design, non-construction Professional Services: To the fullest extent permitted by
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law (including, but not limited to California Civil Code Sections 2782 and 2782.8), Consultant
shall indemnify, defend, and hold harmless the City, and its elected officials, officers,
employees, volunteers, and agents (“City Indemnitees”), from and against any and all causes of
action, claims, liabilities, obligations, judgments, or damages, including reasonable legal
counsels’ fees and costs of litigation (“claims”), arising out of the Consultant’s performance or
Consultant’s failure to perform its obligations under this Agreement or out of the operations
conducted by Consultant, including the City’s active or passive negligence, except for such loss
or damage arising from the sole negligence or willful misconduct of the City. In the event the
City Indemnitees are made a party to any action, lawsuit, or other adversarial proceeding arising
from Consultant’s performance of this Agreement, the Consultant shall provide a defense to the
City Indemnitees or at the City’s option, reimburse the City Indemnitees their costs of defense,
including reasonable legal fees, incurred in defense of such claims.
(b) Non-design, construction Professional Services: To the extent the Scope of Services
involve a “construction contract” as that phrase is used in Civil Code Section 2783, this
paragraph shall apply in place of paragraph A. To the fullest extent permitted by law (including,
but not limited to California Civil Code Sections 2782 and 2782.8), Consultant shall indemnify,
defend, and hold harmless the City, and its elected officials, officers, employees, volunteers, and
agents (“City Indemnitees”), from and against any and all causes of action, claims, liabilities,
obligations, judgments, or damages, including reasonable legal counsels’ fees and costs of
litigation (“claims”), arising out of the Consultant’s performance or Consultant’s failure to
perform its obligations under this Agreement or out of the operations conducted by Consultant,
except for such loss or damage arising from the active negligence, sole negligence or willful
misconduct of the City. In the event the City Indemnitees are made a party to any action, lawsuit,
or other adversarial proceeding arising from Consultant’s performance of this Agreement, the
Consultant shall provide a defense to the City Indemnitees or at the City’s option, reimburse the
City Indemnitees their costs of defense, including reasonable legal fees, incurred in defense of
such claims.
(c) Design Professional Services: In the event Consultant is a “design professional”, and the
Scope of Services require Consultant to provide “design professional services” as those phrases
are used in Civil Code Section 2782.8, this paragraph shall apply in place of paragraphs A or B.
To the fullest extent permitted by law (including, but not limited to California Civil Code
Sections 2782 and 2782.8) Consultant shall indemnify, defend and hold harmless the City and its
elected officials, officers, employees, volunteers and agents (“City Indemnitees”), from and
against all claims, damages, injuries, losses, and expenses including costs, attorney fees, expert
consultant and expert witness fees arising out of, pertaining to or relating to, the negligence,
recklessness or willful misconduct of Consultant, except to the extent caused by the sole
negligence, active negligence or willful misconduct of the City. Negligence, recklessness or
willful misconduct of any subcontractor employed by Consultant shall be conclusively deemed
to be the negligence, recklessness or willful misconduct of Consultant unless adequately
corrected by Consultant. In the event the City Indemnitees are made a party to any action,
lawsuit, or other adversarial proceeding arising from Consultant’s performance of this
Agreement, the Consultant shall provide a defense to the City Indemnitees or at the City’s
option, reimburse the City Indemnitees their costs of defense, including reasonable legal fees,
incurred in defense of such claims. In no event shall the cost to defend charged to Consultant
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under this paragraph exceed Consultant’s proportionate percentage of fault. However,
notwithstanding the previous sentence, in the event one or more defendants is unable to pay its
share of defense costs due to bankruptcy or dissolution of the business, Consultant shall meet and
confer with other parties regarding unpaid defense costs.
(d) The review, acceptance or approval of the Consultant’s work or work product by any
indemnified party shall not affect, relieve or reduce the Consultant’s indemnification or defense
obligations. This Section survives completion of the services or the termination of this contract.
The provisions of this Section are not limited by and do not affect the provisions of this contract
relating to insurance.
18.Contract Assignment. The Contractor shall not assign, transfer, convey or otherwise
dispose of the contract, or its right, title or interest, or its power to execute such a contract to any
individual or business entity of any kind without the previous written consent of the City.
19.Termination for Convenience. The City may terminate all or part of this Agreement for
any or no reason at any time by giving 30 days written notice to Contractor. Should the City
terminate this Agreement for convenience, the City shall be liable as follows: (a) for standard or
off-the-shelf products, a reasonable restocking charge not to exceed ten (10) percent of the total
purchase price; (b) for custom products, the less of a reasonable price for the raw materials,
components work in progress and any finished units on hand or the price per unit reflected on
this Agreement. For termination of any services pursuant to this Agreement, the City’s liability
will be the lesser of a reasonable price for the services rendered prior to termination, or the price
for the services reflected on this Agreement. Upon termination notice from the City, Contractor
must, unless otherwise directed, cease work and follow the City’s directions as to work in
progress and finished goods.
20.Termination. If, during the term of the contract, the City determines that the Contractor
is not faithfully abiding by any term or condition contained herein, the City may notify the
Contractor in writing of such defect or failure to perform. This notice must give the Contractor a
10 (ten) calendar day notice of time thereafter in which to perform said work or cure the
deficiency.
If the Contractor has not performed the work or cured the deficiency within the ten days
specified in the notice, such shall constitute a breach of the contract and the City may terminate
the contract immediately by written notice to the Contractor to said effect. Thereafter, neither
party shall have any further duties, obligations, responsibilities, or rights under the contract
except, however, any and all obligations of the Contractor’s surety shall remain in full force and
effect, and shall not be extinguished, reduced, or in any manner waived by the terminations
thereof.
In said event, the Contractor shall be entitled to the reasonable value of its services performed
from the beginning date in which the breach occurs up to the day it received the City’s Notice of
Termination, minus any offset from such payment representing the City’s damages from such
breach. “Reasonable value” includes fees or charges for goods or services as of the last
milestone or task satisfactorily delivered or completed by the Contractor as may be set forth in
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the Agreement payment schedule; compensation for any other work, services or goods
performed or provided by the Contractor shall be based solely on the City’s assessment of the
value of the work-in-progress in completing the overall work scope.
The City reserves the right to delay any such payment until completion or confirmed
abandonment of the project, as may be determined in the City’s sole discretion, so as to permit a
full and complete accounting of costs. In no event, however, shall the Contractor be entitled to
receive in excess of the compensation quoted in its proposal.
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Exhibit C – Insurance
The Consultant shall procure and maintain for the duration of the contract insurance against claims for
injuries to persons or damages to property which may arise from or in connection with the performance
of the work hereunder by the Consultant, its agents, representatives, employees or subcontractors.
Minimum Scope of Insurance. Coverage shall be at least as broad as:
1. Insurance Services Office Commercial General Liability coverage (occurrence form CG 0001).
2. Insurance Services Office form number CA 0001 (Ed. 1/87) covering Automobile Liability, code
1 (any auto).
3. Workers' Compensation insurance as required by the State of California and Employer's Liability
Insurance.
4. Errors and Omissions Liability insurance as appropriate to the consultant's profession.
Minimum Limits of Insurance. Consultant shall maintain limits no less than:
1. General Liability: $1,000,000 per occurrence for bodily injury, personal injury and property
damage. If Commercial General Liability or other form with a general aggregate limit is used,
either the general aggregate limit shall apply separately to this project/location or the general
aggregate limit shall be twice the required occurrence limit.
2. Automobile Liability: $1,000,000 per accident for bodily injury and property damage.
3. Employer's Liability: $1,000,000 per accident for bodily injury or disease.
4. Errors and Omissions Liability: $1,000,000 per occurrence.
Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must be declared
to and approved by the City. At the option of the City, either: the insurer shall reduce or eliminate such
deductibles or self-insured retentions as respects the City, its officers, officials, employees and
volunteers; or the Consultant shall procure a bond guaranteeing payment of losses and related
investigations, claim administration and defense expenses.
Other Insurance Provisions. The general liability and automobile liability policies are to contain, or be
endorsed to contain, the following provisions:
1. The City, its officers, officials, employees, agents and volunteers are to be covered as insureds as
respects: liability arising out of activities performed by or on behalf of the Consultant; products
and completed operations of the Consultant; premises owned, occupied or used by the
Consultant; or automobiles owned, leased, hired or borrowed by the Consultant. The coverage
shall contain no special limitations on the scope of protection afforded to the City, its officers,
official, employees, agents or volunteers.
2. For any claims related to this project, the Consultant's insurance coverage shall be primary
insurance as respects the City, its officers, officials, employees, agents and volunteers. Any
insurance or self-insurance maintained by the City, its officers, officials, employees, agents or
volunteers shall be excess of the Consultant's insurance and shall not contribute with it.
3. The Consultant's insurance shall apply separately to each insured against whom claim is made or
suit is brought, except with respect to the limits of the insurer's liability.
4. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be
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suspended, voided, canceled by either party, reduced in coverage or in limits except after thirty
(30)days' prior written notice by certified mail, return receipt requested, has been given to the
City.
Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best's rating of
no less than A:VII.
Verification of Coverage. Consultant shall furnish the City with a certificate of insurance showing
maintenance of the required insurance coverage. Original endorsements effecting general liability and
automobile liability coverage required by this clause must also be provided. The endorsements are to be
signed by a person authorized by that insurer to bind coverage on its behalf. All endorsements are to be
received and approved by the City before work commences.
DocuSign Envelope ID: FC757967-7834-4B4D-B3B1-DF20BC7FE54F
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RESOLUTION NO. 11213 (2021 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AMENDING THE CITY’S MASTER FEE
SCHEDULE WITH UPDATED USER AND REGULATORY FEES FOR
VARIOUS COMMERCIAL CANNABIS BUSINESS ACTIVITIES
WHEREAS, it is the City’s policy (User Fee Recovery Goals - Financial Plan Section H)
to assess service charges based on specific policies for cost recovery of services provided; and
WHEREAS, on May 15, 2018, the City Council adopted Ordinance No. 1647 ( 2018
Series) establishing a comprehensive regulatory program for the evaluation and permitting of
commercial cannabis business operations within the City; and
WHEREAS, on November 27, 2018, the City Council adopted Resolution 10965 (2018
Series) which updated the City’s Master Fee Schedule to include the one-time application fees and
yearly license renewal fees; and
WHEREAS, on December 2, 2019, the City Council adopted Resolution 11066 (2019
Series) which updated the City’s Master Fee Schedule that updated the one-time cannabis
application fee for all types of cannabis businesses permitted within the City; and
WHEREAS, Section 9.10.050 of the Municipal Code says that the City Council shall
adopt fees necessary to implement the regulations in relation to Commercial Cannabis Operator
Permits; and
WHEREAS, the City has contracted with a consultant, HdL, to prepare a fee study for the
purpose of identifying appropriate fees to assess for various activities associated with
implementing and overseeing the City’s cannabis regulations for each business in the City of San
Luis Obispo; and
WHEREAS, the City has completed one full year of operations to collect information on
actual time spent compared to the initial cannabis yearly license renewal fees City Council adopted
through Resolution 10965 (2018 Series), upon which staff has concluded it necessary to adjust the
yearly license renewal fees for all types of cannabis businesses permitted within the City; and
WHEREAS, public outreach was conducted through outreach by staff members to
cannabis businesses impacted by the newly proposed fees and through publication of the proposed
fee schedule on the City’s website in advance of the City Council’s consideration of the newly
proposed fees; and
WHEREAS, on November 27, 2018, the City Council adopted a fee schedule; and
WHEREAS, on December 3, 2019 City Council adopted an updated fee schedule; and
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WHEREAS, on January 19, 2021 the City Council held a public hearing to review and
discuss the updated proposed fee schedule, receive public input, and consider the
recommendations of its staff.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. Findings. The City Council makes the following findings:
1. That the above recitals are true and correct.
2. That the proposed user and regulatory fees are consistent with the City’s cost recovery
goals (Financial Plan Section H), and that the established fees do not exceed the
estimated reasonable cost of providing the service or performing the activity for which
the fee is imposed.
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SECTION 2. Action. The City Council takes the following actions:
1. The City’ s Master Fee Schedule is hereby amended to include updated user and
regulatory fees for cannabis business operator applications and annual operator permit
licenses as provided in Exhibit A attached hereto.
2. The City will reimburse operators through the Finance Department who have already
paid their 2020-2021 yearly license renewal fees the difference of what the operators
paid based on the City’s 2020-2021 Master Fees and the newly proposed fees in Exhibit
A attached hereto.
3. This resolution supersedes Resolution 11066 (2019 Series) to the extent inconsistent
herewith.
Upon motion of Council Member Christianson, seconded by Council Member Pease, and
on the following roll call vote:
AYES: Council Member Christianson, Marx, Pease, Vice Mayor Stewart, and
Mayor Harmon
NOES: None
ABSENT: None
The foregoing resolution was adopted this 19th day of January 2021.
Mayor Heidi Harmon
ATTEST:
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, on ___________________________.
Teresa Purrington, City Clerk
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EXHIBIT A
CITY OF SAN LUIS OBISPO
Cannabis Fee Schedule
One Time Application Fees
All Commercial Cannabis Business Applicants:
Initial Application Fee $5,087.79
Final Application Fee when permit issues $18,797.63
Total One Time Application Fees $23,885.55
Yearly License Renewal Fees
All types of Cannabis Businesses permitted within the City $39,638.38
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