HomeMy WebLinkAboutItem 7b. Annual Cannabis Business Program Update and Introduce an Ordinance amending Chapter 9.10 and Chapter 17.86 modifying specific rules for Cannabis Retail Storefront Operations Item 7b
Department: Community Development
Cost Center: 4003
For Agenda of: 3/7/2023
Placement: Public Hearing
Estimated Time: 60 Minutes
FROM: Michael Codron, Community Development Director
Prepared By: Alex Fuchs, Cannabis Business Coordinator
SUBJECT: INTRODUCTION OF AN ORDINANCE AMENDING CHAPTER 9.10 AND
CHAPTER 17.86 OF THE MUNICIPAL CODE MODIFYING SPECIFIC
RULES FOR CANNABIS RETAIL STOREFRONT OPERATIONS
RECOMMENDATION
1. Receive an update on the City’s Cannabis Business Program; and
2. Introduce an Ordinance entitled, “An Ordinance of the City Council of the City of San
Luis Obispo, California, amending Chapter 17.86 (Regulations for Specific Land Uses
and Activities) and Chapter 9.10 (Cannabis Regulations) of the Municipal Code
modifying specific rules for commercial cannabis business retail storefront
operations.”
POLICY CONTEXT
At the direction of Council, staff returns annually with an update to the Cannabis Business
Program including recommendations for improvements based on operational and
administrative experiences.
At the last annual update in October 2022, Council directed staff to further evaluate and
return with recommendations addressing requests to modify specific cannabis retail
storefront operational rules. The requests include expanding retail storefront hours of
operations, allowing retail storefronts to also engage in cannabis delivery, and allowing
medical cannabis users aged 18-20 to access retail storefronts.
Staff completed an evaluation and developed proposed amendments to Chapter 17.86
and Chapter 9.10 of the Municipal Code addressing Council’s direction as detailed in a
draft Ordinance included with this report as Attachment A.
REPORT-IN-BRIEF
City Council directed staff to return annually with an update on the City’s Cannabis
Business Program. The annual update is an opportunity for staff to recommend policy
and regulatory changes to improve the commercial cannabis application and operational
processes.
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Item 7b
It is also an opportunity for existing cannabis businesses to request changes based on
their operational experiences. This report presents, for Council’s consideration, 1) a
review of operator permit changes; 2) cannabis tax and permit fee revenue forecast
update; 3) recommendations to modify the requirements for retail storefront operations
described above; and 4) a discussion of future program updates.
DISCUSSION
Cannabis Business Program Update
Since the last update in October 2022, several significant changes to the program have
occurred. On February 2, 2023, the Superior Court of San Luis Obispo County held a
hearing for the Natural Healing Center (NHC) SLO, LLC v. City of San Luis Obispo case
regarding the City’s decision to revoke NHC’s operator permit in October 2021 following
felony criminal charges brought against the former owner, Helios Dayspring . The Court
ruled in favor of the City, rejecting NHC’s amended complaint that the City’s revocation
of the permit was unreasonable and baseless.
The Court’s decision was the final ruling on the case and represents the conclusion of a
major chapter for the City and for the Cannabis Business Program. The City Manager has
the authority, under Municipal Code section 9.10.070, to open a new application period
outside of the annual application period that occurs throughout July of each year. With
the conclusion of the NHC case, the City Manager can approve the opening of a new
application period to fill the third retail storefront permit. Cou ncil will be notified in advance
of a new application period. The City Manager intends to open up the application period
to fill the third retail storefront permit this summer.
Cannabis Operator Permit Changes
At the last update, staff presented that Pure SL, LLC (Pure SL), which was issued an
operator permit for non-storefront delivery in May 2021, was awaiting their final building
permit. A final building permit was issued in December and Pure SL has since
commenced operation of their cannabis delive ry service. Pure SL also submitted an
external minority Transfer of Ownership request to the City in October 2022.
Pure SL is requesting a 49% ownership transfer to 7 Points Group, LLC (7 Points) based
out of Woodlake, California. 7 Points incorporated in 2018 and is currently licensed by the
state to operate cannabis cultivation, delivery, and distribution services. The transfer
request is being processed in accordance with the adopted administrative regulations and
a determination is anticipated to occur by the end of March 2023.
In December 2022, Coastal Delivery, an existing non-storefront delivery operator, notified
the City of their intent to close operations by the end of the calendar year. Coastal Delivery
was issued an operator permit in September 2019 and opened for operation in fall 2021.
Table 1 shows the current permitted operators in the City and the status of their respective
business as of February 2023.
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Item 7b
Business Business Status
Retail Storefronts
1 Megan’s Organic Market Opened and operating in the City
2 SLOCAL Roots Opened and operating in the City
Non-Storefront Retail (Delivery)
3 Coastal Delivery Closed for operation
4 Pure SL Opened and operating in the City
Table 1. Permitted Operators in the City
Cannabis Tax and Permit Fee Revenue
Cannabis tax and permit fee revenue budgeted amounts for fiscal year 2022 -23 were
adjusted downward as part of the Mid-Year budget review. Cannabis tax revenue was
adjusted down from $1.4 million to $1.1 million. Similarly, permit f ee revenue was adjusted
down from $210,000 to $177,000. The adjustments are based on a delayed opening in
permit issuance for the third retail storefront permit and a subsequent delay in the opening
of new non-retail storefront cannabis businesses. Figure 1 below shows the Cannabis tax
revenue actuals and budgeted amounts for fiscal years 2019-20 through 2022-23. The
actual revenue shown for fiscal year 2022-23 is through the end of December 2022 and
is on track to meet the revised budgeted amount.
Figure 1. Cannabis Tax Revenue FY2020 through FY2023
FY2020 FY2021 FY2022 FY2023
Actual $96,367 $830,265 $997,719 $539,391
Revised Budget $64,000 $400,000 $1,000,000 $1,100,000
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
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Item 7b
Evaluation of Modifications to Retail Storefront Operations
In October 2022, Council provided direction to staff to further evaluate changes to three
specific retail storefront operational rules and return with recommendations for their
consideration. The requested changes include: 1) extending hours of operation; 2)
allowing medical cannabis users aged 18 -20 to access storefronts; 3) and allowing
storefronts to also provide delivery service. As part of the evaluation, staff conducted
outreach to the community, reviewed retail storefront rules from comparative agencies,
and engaged a consulting firm in a financial analysis for the change in operational hours.
Extend Storefront Operating Hours
Existing storefront retailers are requesting an extension of the operating hours from 9:00
am - 8:00 pm to 7:00 am - 9:00 pm. A Comparative Agency Analysis of ten cities
throughout California revealed that the City currently has the most restrictive retail
storefront hours of operations of cities studied, as shown in Table 2 below. The requested
change in operating hours is within the City’s authority since the State of California allows
all permitted cannabis businesses to operate between 6:00 am – 10:00 pm, daily.
Extending the retail storefront operating hours increases access to cannabis and
cannabis products for recreational users and allows operators to better serve the
community. Extending the operating hours may increase tax revenue to the City, but will
primarily serve customer convenience. HdL Companies (HdL), a cannabis consulting firm
contracted by the City, analyzed sales information from the two existing retail storefront
operators and concluded that they could not predict if the change would increase sales.
HdL determined that an increase in sales would only result if the change in hours captures
sales lost to cannabis delivery services, unlicensed cannabis sales, or sales that would
not otherwise occur but for the change in hours of operation.
Allow Medical Cannabis Users Aged 18-20 to Access Storefronts
The City’s regulations allow medical cannabis users aged 18 -20 to access cannabis
products only through delivery services. Storefront retailers have requested the City allow
medical cannabis users aged 18-20 to access storefronts. The requested change is within
the City’s authority since the State of California allows adults aged 21+ and medical
cannabis users aged 18+ with a valid physician’s recommendation to purchase cannabis
in retail storefronts provided the retailer has the appropriate state license. Both Megan’s
Organic Market and SLOCAL Roots possess state retail licenses with an “A” and “M”
designation allowing them to sell cannabis products to both adults 21 and older as well
as medical users 18 and older.
The City is the only agency of those studied in the Comparative Agency Analysis that
does not allow medical users aged 18-20 to access storefronts (see Table 2.) The City’s
current regulations restrict the ability of patients aged 18-20 to obtain medicinal cannabis
from businesses within the City that may be deemed necessary by a licensed physician.
If approved, retailers would need to demonstrate compliance with the Municipal Code
amendments and be issued an amended operator permit before allowing 18–20-year-old
medical cannabis users to access their storefront.
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Item 7b
Allow Storefronts to Also Deliver
The City’s current regulations prohibit storefronts from also operating a delivery service
in the City. Again, the requested change is within the City’s authority, since the State of
California allows a business to conduct both types of operations under the Type 10 license
issued to cannabis retailers. The City is the only agency of those studied in the
Comparative Agency Analysis that does not allow retail storefronts to also deliver (see
Table 2.) If approved by Council, the application materials for the Cannabis Business
Program would be updated to explicitly allow retail storefront operators to engage in
delivery services. Staff will also create a process to allow existing retail storefronts to
apply for and receive approval to deliver from their existing locations. Approval and
issuance of an amended operator permit would be dependent upon meeting the City’s
zoning and regulatory requirements for delivery operations.
Alternatively, existing operators may opt to open delivery-specific locations in the City
under a separate operating permit which would increase one -time application fee revenue
and on-going permit renewal fees. Application fees are $26,699 and permit renewal fees
are $44,310 for the 2022-23 fiscal year. Fees are listed in the City’s Comprehensive Fee
Schedule and subject to annual adjustments based on the Consumer Price Index (CPI).
Comparative Agency Analysis
Staff reviewed the cannabis regulations for nine other cities used in the past to compare
and recommend changes to the City’s Cannabis Business Program. Of the nine other
agencies, the City has the most restrictive hours of operation, is the only city that does
not allow 18-20 medical cannabis users to access storefronts, and is the only city that
does not allow storefronts to also deliver.
Table 2. Comparison of Retail Storefront Operational Policies
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Item 7b
Previous Council and Planning Commission Actions
In October 2022, Council received an update on the City’s Cannabis Business Program
and took the following actions:
1. Introduced an Ordinance amending the City’s Cannabis Regulations clarifying
requirements for applying, obtaining, activating, and renewing commercial
cannabis operator permits,
2. Adopted a Resolution updating the merit criteria used to evaluate retail storefront
permit applications, and
3. Provided direction to staff to further evaluate and return at the next annual
cannabis program update with recommendations addressing requests to modify
specific cannabis retail storefront rules.
Staff evaluated the proposed changes based on Council’s direction and developed
recommendations addressing specific rules for retail storefront operations. On February
8, 2023, staff presented to the Planning Commission the proposed amendments to
Chapter 17.86 and Chapter 9.10 of the Municipal Code to modify certain rules for
commercial cannabis retail storefront operations.
The proposed changes to the City’s Zoning Regulations fall under the purview of the
Planning Commission. The Planning Commission reviewed1 and approved staff’s
recommendation to adopt a Resolution recommending Council introduce and approve an
Ordinance amending the Municipal Code to modify the retail storefront operational rules.
Attachment B is a link to the Planning Commission report and Attachment C is the draft
minutes from the February 8th meeting.
Staff also presented a proposed expansion to the Cannabis Business Overlay Zones to
include a recently annexed area east of the airport along Broad Street. However, staff
has identified a second annexation area that is appropriate for inclusion in the Cannabis
Business Overlay Zones and will bring both areas to Council at the same time for
consideration. The second annexation area will be brought before the Planning
Commission for review and approval prior to Council’s review.
Future Program Updates
Expansion of the Cannabis Business Overlay Zones
In September 2018, City Council approved the establishment of the Cannabis Business
Overlay Zones (CBZ) consisting of seven separate designated areas where commercial
cannabis activities may be permitted. The CBZ contains an appropriate mixture of zoning
types for commercial cannabis activities; separation from sensitive land uses like schools,
daycare facilities, and public parks; and properties fronting an arterial street required for
retail storefront operations. Staff periodically evaluates areas of the City that may be
suitable to permit commercial cannabis activities.
1 February 8, 2023 Planning Commission Meeting – Staff Report and Approved Minutes
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In March 2020, City Council approved the annexation of what is referred to in the Airport
Area Specific Plan (AASP) as the East Airport Area. The East A irport Area is consistent
with the criteria used to develop and establish the initial Cannabis Business Zones and
represents an opportunity to provide more locations where cannabis activities may occur.
Staff presented the proposed CBZ expansion to the Planning Commission for their
consideration at the February 8th meeting. However, staff identified a second area
annexed by the City around the same time that is also appropriate for cannabis activities.
In November 2019, City Council approved the annexation of properties along Fiero Lane
and Clarion Court west of Broad Street which is also located in the AASP. The Fiero Lane
and Clarion Court annexation area meet the same criteria used in the establishment of
the original CBZ areas and used to evaluate the East Airport Area but has not been
reviewed by the Planning Commission. Staff intends to present the second annexation
area to the Planning Commission then return to Council in fall 2023 with a
recommendation to expand the CBZ to include both annexed areas.
New Application Period for the 3rd Retail Storefront Permit
As mentioned in the Cannabis Business Program Update section of this report, the City
Manager has the authority as provided by Municipal Code section 9.10.070 to establish
a new application period. The final ruling on the NHC case represents an opportunity for
the City Manager to open a new period to receive applications for the 3 rd retail storefront
permit. The issuance of the 3rd permit has been on hold since the revocation of NHC’s
permit in 2021. The Cannabis Steering Committee will convene after this Council meeting
and make a recommendation to the City Manager for an appropriate time to open for retail
storefront applications. Council will be notified prior to the opening of a new application
period which is expected to be this Summer.
Public Engagement
Consistent with the City’s Public Engagement and Noticing Manual, s taff conducted
outreach to Cal Poly, Cal Poly’s Associated Students, Inc. (ASI), Cuesta College, and
existing cannabis operators. As a public institution, Cal Poly will not be taking a position
on the proposed changes. Similarly, ASI also stated they will not take an official position.
Staff did not receive a response back from Cuesta College. The existing retail storefront
operators are supportive of the requested changes and are interested in continuing their
operations within the City.
Postcard notifications were sent out to all property owners and tenants within 300 feet of
the existing retail storefront businesses in advance of the Planning Commission meeting
on February 8, 2023, and in advance of tonight’s meeting in accordance with public
noticing requirements. Public comment on the item was also received during the Planning
Commission meeting.
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CONCURRENCE
The Cannabis Steering Committee comprised of representatives from the City Attorney’s
office, Police Department, Finance Department, Community Development Department,
and City Administration met to review and deliberate the proposed changes . The
Cannabis Steering Committee support the recommended changes to the Cannabis
Business Program discussed in this report.
ENVIRONMENTAL REVIEW
The recommended actions were reviewed in accordance with the California
Environmental Quality Act (CEQA) Guidelines. The recomme nded actions are
determined to be exempt from environmental review pursuant to the General Rule under
CEQA Guidelines Section 15061(b)(3), which exempts activities that can be seen with
certainty to have no possibility for causing a significant effect on the environment.
The proposed amendments to Chapter 17.86 and Chapter 9.10 of the Municipal Code
constitute minor modifications to the rules governing commercial cannabis business retail
storefront operations and do not have a significant effect on the environment. Project
specific environmental review will be required for any new commercial cannabis
operation. Any new or existing retailer applying for a delivery permit would be required to
comply with all applicable state and local law, including a showing of CEQA compliance
or exemption.
FISCAL IMPACT
Budgeted: N/A Budget Year: 2022-23
Funding Identified: Yes
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current Funding
Request
Remaining
Balance
Annual
Ongoing Cost
General Fund $ N/A $ $ $
State
Federal
Fees
Other:
Total $ N/A $ $ $
HdL Companies (HdL), a cannabis consulting firm contracted by the City, analyzed sales
information from the two existing retail storefront operators and compared it against other
storefront operations with similar hours to those proposed. HdL concluded that the
changes may increase sales and revenue to the City, but the increase depends on a
number of factors and cannot be quantified at this time . Staff is not recommending an
adjustment to the cannabis tax revenue budget at this time because it is not known if or
when the operators will request or be approved for the change in operational hours. Once
the changes go into effect, staff will continue to monitor and evaluate and will recommend
budget adjustments, including staff resources, that may be warranted.
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Item 7b
ALTERNATIVES
Council could decide not to introduce the Ordinance. This is not recommended
because the proposed retail storefront operational changes are within the City’s authority
to implement and are consistent with policies established by comparative agencies.
ATTACHMENTS
A - Draft Ordinance amending Chapter 17.86 and Chapter 9.10 for Cannabis Retail
Storefront Operations
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O ______
ORDINANCE NO. _____ (2023 SERIES)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AMENDING CHAPTER 17.86 (REGULATIONS
FOR SPECIFIC LAND USES AND ACTIVITIES) AND CHAPTER 9.10
(CANNABIS REGULATIONS) OF THE MUNICIPAL CODE MODIFYING
SPECIFIC RULES FOR COMMERCIAL CANNABIS BUSINESS RETAIL
STOREFRONT OPERATIONS
WHEREAS, on May 1, 2018, the City Council of the City of San Luis Obispo
adopted regulations allowing for the operation of commercial cannabis businesses and
personal cultivation in the City; and
WHEREAS, Municipal Code Chapter 17.86 and Chapter 9.10 establishes the
hours of operations and the age restrictions for access to commercial cannabis retail
storefronts operating in the City; and
WHEREAS, the City currently has two permitted commercial cannabis retail
storefronts operating in the City; and
WHEREAS, the permitted commercial cannabis retail storefronts requested the
City expand the hours of operations from 9:00 a.m. and 8:00 p.m., daily to 7:00 a.m. and
9:00 p.m., daily; and to allow individuals 18 to 20 years of age who have a valid
physician’s recommendation for medicinal cannabis to access retail storefronts; and
WHEREAS, on October 18, 2022, City Council directed staff to further evaluate
and return with recommendations addressing requests to modify the regulations for hours
of operations and access restrictions for medicinal cannabis customers 18 to 20 years of
age; and
WHEREAS, the State of California’s Department of Cannabis Control’s Code of
Regulations allows licensed cannabis retailers and delivery businesses to operate
between the hours of 6:00 a.m. and 10:00 p.m. and allows licensed cannabis retailers
who possess either an M-designation license or and A- and M-designation license to sell
medicinal cannabis goods to individuals who are at least 18 years of age and who
possess a valid physician’s recommendation; and
WHEREAS, City staff conducted extensive public outreach for the requested
changes submitted by the permitted commercial cannabis retail storefronts; and
WHEREAS, consistent with State of California regulations and the feedback
collected during the public outreach component of the requested changes evaluation, the
City desires to continue to support existing and future commercial cannabis retail
storefront operations by amending Chapter 17.86 and Chapter 9.10 of the Municipal
Code; and
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Ordinance No. _____ (2023 Series) Page 2
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WHEREAS, the Planning Commission of the City of San Luis Obispo conducted a
public hearing in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo,
California, on February 8, 2023, for the purpose of considering updates to the City’s
commercial cannabis program including amending Chapter 17.86 and Chapter 9.10 of
the Municipal Code for retail storefront operations and making recommendations to the
City Council regarding such amendments.
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. Findings. Based upon all the evidence presented, the Council makes
the following findings.
1. The proposed amendments to Chapter 17.86 and Chapter 9.10 are
consistent with State of California’s Department of Cannabis Control
regulations.
2. The proposed amendments establish reasonable regulations for the
operation of commercial cannabis retail storefront businesses in the City.
3. The proposed amendments continue to promote the public health, safety,
and welfare of the City as they relate to commercial cannabis business
operations.
4. The City requires discretionary review and approval of permits, licenses,
and other authorizations to engage in commercial cannabis activity. Such
review and approval include applicable environmental review.
SECTION 2. Section 17.86.080 (E)(5)(f), Commercial Cannabis Development
Standards, of the San Luis Obispo Municipal Code is hereby amended as follows:
f. The use permit to be issued under this chapter shall include, but is not limited to,
the following conditions:
i. The obtaining and maintaining of the commercial cannabis operator
permit and appropriate state license.
ii. Payment of all applicable current and future state and local taxes and all
applicable commercial cannabis fees and related penalties established by
the city council, including but not limited to application, administrative
review, inspection, etc.
iii. The commercial cannabis operator permit or a controlling interest in the
permit may not be assigned, transferred or bequeathed, by operation of law
or otherwise, unless permitted as described in Chapter 9.10, and the permit
shall terminate automatically on such event.
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iv. Any commercial cannabis operator permit issued pursuant to this
chapter and Chapter 9.10 expires after one year, unless renewed.
v. Prohibition of on-site consumption of cannabis at: (A) at a commercial
cannabis business or commercial cannabis activity location; (B) any other
business, club or cooperative or event, regardless if open to the public or
only to members; and (C) anywhere an entry or other fee is charged to
attendees or the host or thing of value or consideration is received or
exchanged.
vi. Prohibition of the possession, storage, sale, distribution or consumption
of alcoholic beverages on the premises, or the holding of license from the
State Division of Alcoholic Beverage Control for the sale of alcoholic
beverages, or operating a business that sells alcoholic beverages on or
adjacent to the commercial cannabis activity site.
vii. No cannabis products or cannabis accessories may be displayed in
windows or visible from the public right-of-way or from places accessible to
the general public.
viii. Prohibition of minors and persons under the age of twenty-one on the
premises, even if accompanied by a parent or guardian, unless the person
is at least eighteen years of age and is also in possession of a valid
physician’s recommendation for medical cannabis.
ix. Outdoor storage of cannabis or cannabis products is prohibited.
SECTION 3. Section 17.86.080 (E)(10), Retail—Storefront, of the San Luis
Obispo Municipal Code is hereby amended as follows:
10. Retail - Storefront.
a. Commercial cannabis storefront retail may be conditionally permitted, subject
to the requirements of this section and the obtaining and maintaining of a
commercial cannabis operator permit, and the appropriate state license, in the
following zones:
i. Retail commercial (C-R);
ii. Service commercial (C-S);
b. Development Standards.
i. Compliance with subsection (E)(5) of this section, Commercial Cannabis
Development Standards.
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ii. Only three retail storefronts, which must front arterial streets, will be
allowed within the city. Selection of the retail commercial cannabis operator
will be selected from qualified commercial cannabis operators as set forth
in Chapter 9.10, Cannabis Regulations. One of the retail storefronts shall
have a medicinal license and may also have an adult use license.
iii. Retail storefronts shall be located at least one thousand feet from any
preschool, elementary school, junior high school, high school, public park
or playground, six hundred feet from any licensed day care center, and
three hundred feet from any residentially zoned area. Youth centers do not
require a buffer. Distance shall be measured from the nearest point of the
property line to the nearest point of the property line of the enumerated use
using a direct straight-line measurement.
iv. Retail storefronts must be separated from each other by at least one
thousand feet.
v. Hours of operation shall be limited between nine seven a.m. to eight nine
p.m.
vi. Retail storefronts that possess a valid State of California cannabis
retailer license with an A-designation mMust include a sign at each entrance
of a retail storefront that prohibits persons under twenty-one years of age
from entering. Retail storefronts that possess a valid State of California
cannabis retailer license with an M-designation or both an A-designation
and an M-designation must include a sign at each entrance of the retail
storefront that prohibits persons under twenty-one years of age from
entering unless the person is at least eighteen years of age and is also in
possession of a valid physician’s recommendation for medical cannabis.
SECTION 4. Section 9.10.230, Minors, of the San Luis Obispo Municipal Code is
hereby amended as follows:
A. Minors shall not be allowed on the premises of a commercial cannabis business
having either an “A” or “M” license, or both, even if accompanied by a parent or
guardian.
B. No person under twenty-one years of age shall be allowed on the premises of
a commercial cannabis business having either an “A” or “M” license only or both.
C. No person under twenty-one years of age shall be allowed on the premises of
a commercial cannabis business having either an “M” license or both an “A” and
“M” license unless the person is at least eighteen years of age and possesses a
valid physician’s recommendation for medical cannabis.
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C. D. Every entrance to an “A” or “M” licensed commercial cannabis business shall
be clearly and legibly posted with the following notice: “ENTRY ONTO THESE
PREMISES BY PERSONS UNDER 21 YEARS OF AGE IS PROHIBITED BY
LAW. VALID PHOTO ID REQUIRED.” Each letter of the notice must be at least
two inches high and clearly visible.
E. Every entrance to an “M” licensed or both an “A” and “M” licensed commercial
cannabis business shall be clearly and legibly posted with the fo llowing notice:
“ENTRY ONTO THESE PREMISES BY PERSONS UNDER 21 YEARS OF AGE
IS PROBIHITED BY LAW UNLESS THE PERSON IS EIGHTEEN YEARS OF
AGE OR OLDER AND POSSESSES A VALID PHYSICIAN’S
RECOMMENDAITON FOR MEDICAL CANNABIS. VALID PHOTO ID
REQUIRED.” Each letter of the notice must be at least two inches high and clearly
visible.
D. F. No person, business, or other entity conducting a commercial cannabis
activity with either an “A” or “M” state license shall employ any person who is not
at least twenty-one years of age. (Ord. 1647 § 4 (Exh. A (part)), 2018)
SECTION 5. Section 9.10.250 (C), Security and public safety measures, of the
San Luis Obispo Municipal Code is hereby amended as follows:
C. Hours of Operation.
1. Retail Storefront. Retail storefront commercial cannabis business shall not
operate between the hours of eight nine p.m. and nine seven a.m.
2. Retail Non-Storefront (Delivery Services). Retail non-storefront (delivery
services) commercial cannabis business shall not opera te between the hours
of ten p.m. and six a.m.
3. Commercial Other than Retail. All commercial cannabis activity other than
retail is prohibited between the hours of ten p.m. and seven a.m. (Ord. 1647
§ 4 (Exh. A (part)), 2018)
SECTION 6. Environmental Review. The proposed amendments to Chapter 17.86
and Chapter 9.10 of the Municipal Code was reviewed in accordance with the California
Environmental Quality Act (CEQA) Guidelines. The proposed amendments are
determined to be exempt from environmental review pursuant to CEQA Guidelines
Section 15061(b)(3), the General Rule exemption which exempts activities that can be
seen with certainty to have no possibility for causing a significant effect on the
environment. The proposed amendments constitute minor modifications to the rules
governing commercial cannabis business retail storefront operations and do not have a
significant effect on the environment. Any new retailer-applicant would be required to
comply with all applicable state and local law, including a showing of CEQA compliance
or exemption.
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SECTION 7. Action. The City Council hereby adopts an ordinance amending
Chapter 17.86 and Chapter 9.10 of the Municipal Code modifying the hours of operations
and access requirements for commercial cannabis retail storefronts.
SECTION 8. Ordinance Number 1647 (2018 Series) is hereby amended and
superseded to the extent inconsistent herewith.
SECTION 9. Severability. If any subdivision, paragraph, sentence, clause, or
phrase of this Ordinance is, for any reason, held to be invalid or unenforceable by a court
of competent jurisdiction, such invalid or unenforceability shall not affect the validity or
enforcement of the remaining provisions of this Ordinance, or any other provisions of the
City’s rules and regulations. It is the City’s express intent that each remaining portion
would have been adopted irrespective of the fact that any one or more subdivisions,
paragraphs, sentences, clauses, or phrases be declared invalid or unenforceabl e.
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SECTION 10. A summary of this ordinance, together with the names of Council
members voting for and against, shall be published at least five (5) days prior to its final
passage, in The New Times, a newspaper published and circulated in this City. This
ordinance shall go into effect at the expiration of thirty (30) days after its final passage.
INTRODUCED on the ___ day of ______ 2023, AND FINALLY ADOPTED by the
Council of the City of San Luis Obispo on the ____ day of ____, 20 23, on the following
vote:
AYES:
NOES:
ABSENT:
___________________________
Mayor Erica A. Stewart
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
Page 375 of 375
Cannabis Business Program Update
City Council
March 7, 2023
Recommendations
1.Receive an update on the City’s Cannabis Business Program;
and
2.Introduce an Ordinance entitled,“An Ordinance of the City
Council of the City of San Luis Obispo,California,amending
Chapter 17.86 (Regulations for Specific Land Uses and Activities)
and Chapter 9.10 (Cannabis Regulations)of the Municipal Code
modifying specific rules for commercial cannabis business retail
storefront operations.”
3Natural Healing Center Update
Permitted Cannabis Operators
Retail Storefronts Retail Delivery
4
5Pure SL Transfer Request –External Minority Transfer
Anacapa CA, LLC
Pure SL, LLC
Current Structure
100%
Anacapa CA, LLC 7 Points Group, LLC
Pure SL, LLC
(dba 7 Points SLO)
Proposed Structure
51%49%
Note: Pure SL’s ownership structure does not include Social Equity Owners
6Cannabis Tax Revenue FY2020 –FY2023
FY2020 FY2021 FY2022 FY2023
Actual $96,367 $830,265 $997,719 $539,391
Revised Budget $64,000 $400,000 $1,000,000 $1,100,000
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
*
* Through December 2022
Evaluation of Retail Storefront Operational Changes
1.Extend Storefront Operating Hours
Request to open 2 hours earlier and stay open 1 hour later than currently allowed
2.Allow 18+ Medical Cannabis User Access to Storefronts
18+ medical users are prohibited from accessing retail storefronts but can obtain
cannabis products from delivery services
3.Allow Storefronts to Also Deliver
Storefronts are prohibited from providing delivering services within City limits
In October 2022,Council directed staff to further and return with recommendations
addressing three (3)operational changes for retail storefronts
7
Comparative Agency Analysis
Agency Hours of Operations Allow 18-20 Medical
Users Access (Y / N)
Allow Storefront
Delivery (Y / N)
City of San Luis Obispo (Current)9am to 8pm N N
City of San Luis Obispo (Proposed)7am to 9pm Y Y
City of Morro Bay 7am to 9pm Y N
City of Grover Beach 7am to 9pm Y Y
City of Santa Ana 7am to 11pm Y Y
City of Santa Cruz 7am to 10pm Y Y
City of Santa Barbara Varies*Y Y
City of Davis 9am to 9pm Y Y
City of Sacramento 7am to 9pm**Y Y
City of Oakland 7am to 10pm***Y Y
City of San Francisco 8am to 10pm Y Y
California State Regulations 6am to 10pm Y Y
*Hours of operation approved on a case-by-case basis
**Unless restricted further by City Manager
***Maximum hours allowed. May be restricted further
8
Proposed Municipal Code Amendments
Zoning Regulations
1.Section 17.86.080 (E)(5)(F) –Commercial Cannabis Development Standards
▪Allow persons aged 18-20 to access retail storefronts
2.Section 17.86.080 (E)(10) –Retail-Storefront
▪Allow persons aged 18-20 to access retail storefronts
▪Allow retail storefronts to operate between 7am and 9pm
Cannabis Regulations
3.Section 9.10.230 -Minors
▪Allow persons aged 18-20 to access retail storefronts
4.Section 9.10.250 (C)–Security and Public Safety Measures
▪Allow retail storefronts to operate between 7am and 9pm
9
Future Program Updates
In September 2018,Council designated seven
(7)areas (shown in green)appropriate for
commercial cannabis activities.Areas were
determined based on the following criteria:
1.Contained land use types appropriate for
various commercial cannabis permit types
2.Free of state and locally identified sensitive
uses (schools,daycare facilities,residential
uses,etc.)
3.Properties fronting an arterial street (required
for retail storefront permitting)
10
Cannabis Business Zone Expansion
In March 2020,Council annexed an area
adjacent to the airport along Broad Street
referred to as the East Airport Area.
11
In November 2019,Council annexed properties
along Fiero Lane and Clarion Court west of
Broad Street.
Recommendations
1.Receive an update on the City’s Cannabis Business Program;
and
2.Introduce an Ordinance entitled,“An Ordinance of the City
Council of the City of San Luis Obispo,California,amending
Chapter 17.86 (Regulations for Specific Land Uses and Activities)
and Chapter 9.10 (Cannabis Regulations)of the Municipal Code
modifying specific rules for commercial cannabis business retail
storefront operations.”
1010 Marsh St., San Luis Obispo, CA 9:
(805) 546-8208 . FAX (805) 546-864.
PROOF OF PUBLICATION
(2015.5 C.C.P.) Proof of Publicatio
STATE OF CALIFORNIA,
County of San Luis Obispo,
I am a citizen of the United States and a resident
of the county aforesaid; I am over the age of
eighteen years, and not a party interested in the
above entitled matter. I am the principal clerk
of the printer of the New Times, a newspaper
of general circulation, printed and published
weekly in the City of San Luis Obispo, County
of San Luis Obispo, and which has been
adjudged a newspaper of general circulation by
the Superior Court of the County of San Luis
Obispo, State of California, under the date of
February 5, 1993, Case number CV72789: that
notice of which the annexed is a printed copy
(set in type not smaller than nonpareil), has been
published in each regular and entire issue of said
newspaper and not in any supplement thereof on
the following
dates, to -wit.
Z
l -Q J. �J
in the year 2023.
I certify (or declare) under the the penalty of
perjury that the foregoing is true and correct.
Dated at San Luis Obispo, California, this day
Z3 of KcXJb 2023.
Michael Gould, New Times Legals
M - kV —Y-MMGA .IWMG OKWBUSINFSSIP l:oiw/Nmfd Pob
SAN LUIS OBISPO CITY COUNCIL
NOTICE OF PUBLIC HEARING
The San Luis Obispo City Council invites all
interested persons to attend a public hearing on
Tuesday, March 7, 2M at 5:30 p.m. held in the
Council Chambers at City Hall, 990 Palm Street, San
Luis Obispo. Meetings can be viewed remotely on
Government Access Channel 20 or streamed live
from the City's YouTube channel at htto//voutube
slo.ciN. Public comment, prior to the start of the
meeting, may be submitted in writing via U.S. Mail
delivered to the City Clerk's office at 990 Palm
Street, San Luis Obispo, CA 93401 or by email to
ema i Icou nc it*slocitv.orc.
PUBLIC HEARING ITEMS
• The City Council will receive the annual Cannabis
Business Program update and introduce an
Ordinance amending Municipal Code Chapter
17.86 and Chapter 9.10 modifying specific retail
storefront operational rules.(CODE-OW-2023)
For more information, you are invited to contact
Alas Fuchs of the Cdy's Community Development
Department at1805) 783-7877or afuchsftloctry.
• The City Council will introduce an Ordinance
amending the following sections of the Municipal
Code to explicitly authorize designated
civilian employees to enforce infractions and
misdemeanor violations of the San Luis Obispo
Municipal Code through the issuance of citations:
o Title 1 "General Provisions", Chapter 16
"Citation Procedure", Section 1.16.060 "Code
Enforcement Officer Designation Authority"
o Title 10 "Vehicles and Traffic", Chapter 10.08
"Administration", Section 10.08.070, and
Chapter 10.68 "Inoperative Vehicles", Section
10.68.020
o Tide 9 "Public Pease, Morals and Welfare" to
add Chapter 9.60 "Enforcement"
For more information, you are invited to contact
Brian Amoroso of the City'; Police Department at
(805) 781-7317 or bamorosn®slociN ora
The City Council may also discuss other hearings
or business items before or after the items listed
above. If you challenge the proposed project in
court, you may be limited to raising only those
issues you or someone else raised at the public
hearing described in this notice, or in written
correspondence delivered to the City Council at, or
prior to, the public hearing.
Council Agenda Reports for this meeting will be
available for review one week in advance of the
meeting,dateonthe Col(swebsite, under the. Public
_ Mewing Agendas web page: httpsl/www pr I i�t
org/oovernment(maygr-and-city-council/auendas-
and-minute . Please call the City Clerk's Office
at (8091 781-7114 for more information. The City
Council meeting will he telBViisitd five on Charter
Cable Channel 20 and live streaming on the City's
YouTube channel htto:f/voutubeslo.citv.
February 23, 2023
bruary 23 - March 2, 2023 • Ne it TGrMm • 49