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Home My WebLink AboutItem 8a. Introduce Ordinance (amend Zoning Map, RZ-0118-2023), Introduce Ordinance (amend Chapter 9.10, CODE-0164-2023), adopt Resolution updating Cannabis Operator Permit Ranking Criteria Item 8a Department: Community Development Cost Center: 4001 For Agenda of: 5/2/2023 Placement: Public Hearing Estimated Time: 20 Minutes FROM: Michael Codron, Community Development Director Prepared By: Alex Fuchs, Cannabis Business Coordinator SUBJECT: INTRODUCE TWO (2) ORDINANCES AMENDING THE ZONING MAP AND AMENDING THE MUNICIPAL CODE FOR THE CANNABIS BUSINESS PROGRAM AND ADOPT A RESOLUTION UPDATING THE MERIT CRITERIA FOR COMMERCIAL CANNABIS OPERATOR PERMIT APPLICATIONS RECOMMENDATION 1. As recommended by the Planning Commission, introduce a Draft Ordinance entitled, “An Ordinance of the City Council of the City of San Luis Obispo, California, amending the City’s Zoning Map to expand the Cannabis Business Overlay Zones where cannabis businesses may be located as may be allowed or conditionally allowed by the underlying base zones and the rules and regulations established in the City’s Municipal Code (RZ-0118-2023)”; and 2. Introduce a Draft Ordinance entitled, “An Ordinance of the City Council of the City of San Luis Obispo, California, amending Chapter 9.10 (Cannabis Regulations) of the Municipal Code adding requirements for owners that lease real property to commercial cannabis operators (CODE-0164-2023)”; and 3. Adopt a Draft Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, approving updates to the cannabis operator permit ranking criteria.” REPORT-IN-BRIEF City staff anticipates opening a new period for commercial cannabis operator permit applications in summer 2023. The new period will allow for the submittal of applications for all permit types including the third and final retail storefront permit. Staff has identified several administrative updates, for Council’s consideration, with the intent of improving the quality and quantity of applications received. At the last Cannabis Business Program update on March 7, 2023, staff indicated a return to Council with a proposed expansion of the Cannabis Business Overlay Zones (CBZs) to include two recently annexed areas of the City. Attachment A is a draft Ordinance introducing an amendment to the City’s Zoning Map expanding the CBZs as detailed in this report. Expanding the CBZs to include areas that meet the same conditions consistent with the existing areas increases the number of suitable areas of the City where commercial cannabis businesses may be permitted. Page 215 of 349 Item 8a Staff is also recommending introduction of an Ordinance (Attachment B) amending Chapter 9.10, Cannabis Regulations, of the Municipal Code adding requirements for owners that lease real property to commercial cannabis applicants. The intent is to limit opportunities for persons with cannabis-related criminal convictions from associating with, to the extent possible under the City’s authority, the Cannabis Business Program. The final recommendation of this report is for Council to adopt a Resolution (Attachment C) updating the merit criteria for all application permit types. Some of the proposed updates are based on Council’s discussion at the October 2022 program update in which Council questioned potential points available under the Financial Investment section. Staff is also proposing minor clarifications on the potential points available i n other sections. The intent is to better inform applicants on how points are awarded and to provide more clear direction to evaluators during the application scoring process. POLICY CONTEXT Since the adoption of the Cannabis Business Program, Council an d staff acknowledged periodic updates will be needed as staff garners experience administering the program and the permit holders gain experience operating in the City. At the last annual update in March 2023, staff discussed a return to Council in May with a recommendation to expand the existing Cannabis Business Overlay Zones. The expansion includes two recently annexed areas near the airport. Staff is also taking this return to Council as an opportunity to recommend additional updates to the Cannabis Business Program before opening a new application period in summer 2023. Staff is recommending a minor amendment to the Municipal Code adding requirements for property owners and updates to the merit criteria clarifying potential points awarded during the evaluation of commercial cannabis operator permit applications. DISCUSSION Cannabis Business Overlay Zone Expansion In September 2018, City Council approved the establishment of the Cannabis Business Overlay Zones (CBZs) consisting of seven separate designated areas of the City where commercial cannabis activities may be permitted. The CBZs contain an appropriate mixture of land use types for commercial cannabis activities; are generally free of sensitive land uses like schools, daycare facilities, and public parks; and contain properties fronting an arterial street which is required for retail storefronts. Staff periodically evaluates areas of the City that may be suitable to permit commercial cannabis activities and will develop recommendation(s) based on the evaluation for the Planning Commission’s and City Council’s consideration. Page 216 of 349 Item 8a Fiero Lane – Clarion Court Area In November 2019, City Council approved annexation of the Fiero Lane – Clarion Court Area. The area is made up of 30 parcels totaling 38.97 acres of land and is located on the west side of Broad Street within the Airport Area Specific Plan (AASP). The area includes developed properties along Fiero Lane and Clarion Court with a mix of industrial, manufacturing, commercial, and office uses, with an estimated 500,124 square feet of total building area. East Airport Area In March 2020, City Council approved the annexation of what is referred to in the AASP as the East Airport Area. The East Airport Area is made up of 33 parcels (23 of which are developed), 58.31 acres of land, is within the AASP, and is zoned Service Comme rcial (C-S) throughout. The area is on the east side of Broad Street opposite the airport, bounded by Farmhouse Lane and Kendall Road, including Allene Way, Morabito Place, and Prospect Street. Figure 1 shows the boundaries and relationship of the proposed expansion areas to the San Luis Obispo Regional Airport. Figure 1. Cannabis Business Zone Expansion Boundaries Map Page 217 of 349 Item 8a Compatibility with Allowable Land Use Types When the Cannabis Business Overlay Zones (CBZs) were initially developed, staff considered areas of the City with land use types that are appropriate for cannabis operations, are free of sensitive uses, and have properties that front an arterial street. Fiero Lane – Clarion Court Area and East Airport Area are consistent with the criteria used to develop and establish the initial CBZs, except that the Fiero Lane - Clarion Court Area does not meet the zoning requirements for retail storefront permitting because the Service Commercial parcels in that area do not front an arterial street. The Fiero-Lane Clarion area is appropriate for all other cannabis permit types. Table 1 shows the various cannabis activities permitted by the City, the land use type in which each of the activities are allowed, and the approval level needed for use permit issuance. The East Airport Area is zoned Service Commercial (C -S) throughout which allows for all cannabis activities permitted by the City. The Fiero Lane – Clarion Court Area is a mixture of Service Commercial (C-S), Manufacturing (M), and Business Park (BP) Zones. These three zones allow for all permitted cannabis activities except for retail storefront as noted above. Table 1: Cannabis Activities Allowed by Land Use Type Cannabis Activity Land Use Type O C-R C-S M BP Cultivation D D D Nursery D D D Manufacturing D D D Distribution D D D Microbusiness PC* D/PC* D/PC* D/PC* Testing Lab PC AA AA AA Retail (Delivery) D D D Retail (Storefront) PC PC AA = Administrative Approval D = Director’s Approval PC = Planning Commission Approval *Planning Commission Approval required if activity includes retail storefront Municipal Code Amendments In October 2022, Council adopted amendments to the City’s Cannabis Regulations further clarifying the requirements for applying, obtaining, activating, and renewing commercial cannabis operator permits. However, the amendments did not include requirements for owners that lease real property to commercial cannabis businesses. The proposed amendments recommended by staff make explicit that any property owner listed on a commercial cannabis operator permit application is equally subject to the criteria which may disqualify the applicant from applying for or obtaining a permit. Specifically, the amendment would disqualify an applicant if the property owner of record for the location of the proposed operation has been convicted of the offenses or subject to the punishments stated in section 9.10.070(C)(3). Page 218 of 349 Item 8a Cannabis Operator Permit Merit Criteria Updates City Council has established ranking criteria, also referred to as merit criteria, used by staff to evaluate and, in the case of retail storefront and cultivation, rank applications. The last update occurred in October 2022 with Council approving minor cha nges for retail storefront merit criteria. In preparation for opening a new application period, staff is proposing additional updates to the merit criteria for all permit types . The updates to the Financial Investment Section were discussed by Council at the Cannabis Business Program annual update in October 2022. Council debated the points available for developing raw land versus points for major improvements to existing structures and aligning them with the City’s broader goal of promoting in-fill development. Council also discussed points awarded for meeting generally applicable parking requirements. Staff proposes combining the sections for development of raw land and for major improvements into one section so that potential points apply equally to both investment types. Staff also proposes removing the section for meeting parking requirements completely because this is already required by the City’s development review process. The intent is to improve the quality of the applications and to assist evaluators with uniformly awarding points by further clarifying the language and points available . Details of the proposed updates can be found in Exhibit A of Attachment C with text additions in red and deletions with strikethroughs. Some of proposed changes require updating the Merit Criteria Example Sheet developed by staff as a reference tool to aid applicants during the application submittal process. The Merit Criteria Example Sheet is an administrative document reviewed and approved by the Cannabis Steering Committee. Proposed Merit Criteria Updates 1. Community Benefit Section 1.A.1 - Clarify that 0 points will be awarded for committing to hiring under 60% of employees from within the County. 1.A.2 - Clarify that 0 points will be awarded for committing to sourcing under 50% of supply and equipment expenses from within a 90-mile radius. 1.B.1 - Clarify that 0 points will be awarded for committing to providing less than 10 hours per month of community support. 2. Equity and Labor Section 2.A.1 - Clarify that 0 points will be awarded to applications that include no Primary Principals who have earned at or below the median household income at the time of submittal. 2.A.3 - Clarify that the term “minimum wage” refers to the State of California’s minimum wage requirements. 3. Financial Investment Section 3.A.2 and 3.A.3 – Combine together and award up to 10 points for committing to develop raw land or for committing to major improvements of an underutilized/underdeveloped site. 3.A.4 - Remove potential points awarded for meeting on-site parking requirements. 4. Medical Retail Commitment 7.A.1 - Clarify that potential points are 0 or 10 instead of 0 to 10 points. Page 219 of 349 Item 8a Previous Planning Commission Action On April 12, 2023, the Planning Commission reviewed the proposed Cannabis Business Overlay Zone expansion and adopted a Resolution recommending Council introduce and adopt an Ordinance approving the expansion. Attachment D is the adopted Resolution. The Planning Commission did not review or act on the other recommendations in this report because the proposed changes do not fall under their purview. Public Engagement Property owners and occupants within the 300 feet of the proposed expansion areas we re noticed in advance of the Planning Commission meeting and this City Council meeting. A legal ad was also posted in advance of both meetings in accordance with the City’s noticing requirements. CONCURRENCE The Cannabis Steering Committee, consisting of representatives from City Administration, Police Department, City Attorney’s office, Community Development Department, and Finance Department; have reviewed and support the recommendations in this report. ENVIRONMENTAL REVIEW The recommended actions were reviewed in accordance with the California Environmental Quality Act (CEQA) Guidelines and are determined to be exempt from environmental review pursuant to the General Rule (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 expansion of the Cannabis Business Overlay Zones will not have a significant effect on the environment because the inclusion does not alter the development standards for the land use types within the proposed expansion areas. Amending the Municipal Code and updating the merit criteria are considered administrative activities of a government agency that will not result in an impact on the environment. Commercial cannabis businesses permitted by the City would be required to comply with all applicable state and local law, including a showing of CEQA compliance or exemption. FISCAL IMPACT Budgeted: Yes Budget Year: On-going Funding Identified: Yes Page 220 of 349 Item 8a Fiscal Analysis: Funding Sources Total Budget Available Current Funding Request Remaining Balance Annual Ongoing Cost General Fund $ 0 $ 0 $ 0 $ 0 State Federal Fees Other: Total $ 0 $ 0 $ 0 $ 0 There is no fiscal impact associated with the recommended actions of this report. ALTERNATIVES 1. Council could decide to not introduce the Ordinance expanding the Cannabis Business Overlay Zones. Staff does not recommend this alternative because the Planning Commission reviewed and approved adoption of a Resolution supporting the expansion of the Cannabis Business Overlay Zones. 2. Council could decide to not introduce the Ordinance amending the Municipal Code clarifying property owner requirements. Staff does not recommend this alternative because the Municipal Code amendment is necessary to limit opportunities for persons convicted of cannabis business-related crimes from associating with the program. 3. Council could decide to not adopt a Resolution updating the commercial cannabis operator permit merit criteria. Staff does not recommend this alternative because providing clear instructions to potential applicants as to how submittals will be evaluated, and points awarded improves the quality of the applications and increases the chances of obtaining a successful operator. ATTACHMENTS A - Draft Ordinance amending the City’s Zoning Map to expand the Cannabis Business Overlay Zones B - Draft Ordinance amending Chapter 9.10 adding requirements for the property owner C - Draft Resolution updating the merit criteria for commercial cannabis operator permits D - PC Resolution No. PC-1074-2023 recommending the Council introduce an ordinance expanding the Cannabis Business Overlay Zones Page 221 of 349 Page 222 of 349 O ______ ORDINANCE NO. _____ (2023 SERIES) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, AMENDING THE CITY’S ZONING MAP TO EXPAND THE CANNABIS BUSINESS OVERLAY ZONES WHERE CANNABIS BUSINESSES MAY BE LOCATED AS MAY BE ALLOWED OR CONDITIONALLY ALLOWED BY THE UNDERLYING BASE ZONES AND THE RULES AND REGULATIONS ESTABLISHED IN THE CITY’S MUNICIPAL CODE (RZ-0118-2023) WHEREAS, on September 18, 2018, the City Council of San Luis Obispo amended the zoning map and designated areas of the City as Cannabis Business Overlay Zones where commercial cannabis activities may be located and allowed or conditionally allowed by the underlying base Zones; and WHEREAS, on November 19, 2019, the City Council of the City of San Luis Obispo approved the annexation of the properties along Fiero Lane and Clarion Court to the City of San Luis Obispo; and WHEREAS, on March 7, 2020, the City Council of the City of San Luis Obispo approved the annexation of the East Airport Annexation Area Properties (East Airport Commerce Park Association, Senn-Glick) to the City of San Luis Obispo; and WHEREAS, overlay Zones supplement the base Zones and are used to establish special use or development regulations for a particular area in addition to the provisions of the underlying base Zones; and WHEREAS, the expansion of the Cannabis Business Overlay Zones provides more locations that may be appropriate for a variety of commercial cannabis activities t o occur in the City; and WHEREAS, the location of commercial cannabis activities within the Cannabis Business Overlay Zones are subject to issuance of a land use permit, which is a process that provides notification for neighboring property owners, busine sses, and residents; and ensures compatibility of uses through the imposition of conditions of approval; and WHEREAS, at a public hearing of the Planning Commission of the City of San Luis Obispo conducted on April 12, 2023 in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo, California, the Planning Commission considered amending the zoning map to expand the Cannabis Business Overlay Zones and made a recommendation to the City Council in favor of such an amendment. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: Page 223 of 349 Ordinance No. _____ (2023 Series) Page 2 O ______ SECTION 1. Finding. The expansion of the Cannabis Business Overlay Zones intends to provide more locations that may be appropriate for commercial cannabis activities to occur, as detailed in Chapter 9.10 and Chapter 17.86 of the City’s Municipal Code. SECTION 2. Environmental Review. The proposed expansion of the Cannabis Business Overlay Zones to include the Fiero Lane – Clarion Court Area and the East Airport Area was reviewed in accordance with the California Environmental Quality Act (CEQA) Guidelines. The proposed expansion is 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 expansion of the Cannabis Business Overlay Zones will not have a significant effect on the environment because the expansion does not alter the underlying base Zones land use types or development standards for those land use types. Project specific environmental review will be required for any new commercial cannabis operation located within the Fiero Lane – Clarion Court Area and the East Airport Area as part of the City’s existing permitting processes. SECTION 3. Action. The City Council hereby adopts an ordinance amending the City’s Zoning Map designating properties that will be included in the Cannabis Business Overlay Zones in nine separate areas of the City as depicted in Exhibit A which is incorporated herein by reference. SECTION 4. 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 unenforceable. SECTION 5. Ordinance Number 1653 (2018 Series) is hereby amended and superseded to the extent inconsistent herewith. Page 224 of 349 Ordinance No. _____ (2023 Series) Page 3 O ______ SECTION 6. A summary of this ordinance, together with the names of the 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 __________, 2023, 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 225 of 349 Ordinance No. _____ (2023 Series) Page 4 O ______ Page 226 of 349 Ordinance No. _____ (2023 Series) Page 5 O ______ Page 227 of 349 Ordinance No. _____ (2023 Series) Page 6 O ______ Page 228 of 349 Ordinance No. _____ (2023 Series) Page 7 O ______ Page 229 of 349 Ordinance No. _____ (2023 Series) Page 8 O ______ Page 230 of 349 Ordinance No. _____ (2023 Series) Page 9 O ______ Page 231 of 349 Ordinance No. _____ (2023 Series) Page 10 O ______ Page 232 of 349 Ordinance No. _____ (2023 Series) Page 11 O ______ Page 233 of 349 Ordinance No. _____ (2023 Series) Page 12 O ______ Page 234 of 349 O ______ ORDINANCE NO. _____ (2023 SERIES) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, AMENDING CHAPTER 9.10 (CANNABIS REGULATIONS) OF THE MUNICIPAL CODE ADDING REQUIREMENTS FOR OWNERS THAT LEASE REAL PROPERTY TO COMMERCIAL CANNABIS OPERATORS (CODE-0164-2023) WHEREAS, after commencing administration and operation of the commercial cannabis program, staff has identified necessary changes to Chapter 9.10 of the Municipal Code to clarify the requirements for owners that lease real property to commercial cannabis operators; and WHEREAS, the City Council of the City of San Luis Obispo on May 2, 2023 in the City Council Chamber of City Hall, 990 Palm Street, San Luis Obispo, California, considered the recommended changes to Chapter 9.10 of the Municipal Code and held a public meeting to review and discuss the proposed changes. NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo as follows: SECTION 1. Section 9.10.070 – Commercial cannabis operator permit application procedures and requirements of the San Luis Obispo Municipal Code is hereby amended as reflected in Exhibit A to read as follows: A. Application. A person shall apply for a commercial cannabis operator permit by submitting an application to the city during the annual application period. The city council will, by resolution, adopt criteria by which all applications will be reviewed, applicants qualified and in the case of retail and cultivation businesses, also ranked. Those applicants that are selected will have the opportunity to apply for a use permit as outlined in Section 17.86.080. Each application shall designate at least one responsible party. If a person is not selected to receive a commercial cannabis operator permit, the person may reapply during the next annual application period or any subsequent application period established by the city manager except a s otherwise prohibited by this chapter. B. Application Submittal Time Frame. A person may only submit one application per permit type, per application period, for a commercial cannabis operator permit, during the annual application period designated by resolu tion of the city council or any subsequent application period established by the city manager. An applicant who is unsuccessful in any application period may submit another application in any subsequent application period, except as otherwise prohibited by this chapter. The commercial cannabis operator permit will be valid for twelve months. Once a permit is activated, the applicant can apply annually for renewal. There is no guarantee that an applicant will receive a Page 235 of 349 Ordinance No. _____ (2023 Series) Page 2 commercial cannabis operator permit in the first instance. Due to limitations on the number of certain permits, even a highly ranked applicant for a retail or cultivation permit may not receive a commercial cannabis operator permit and even an applicant who receives a commercial cannabis operat or permit is not guaranteed that any subsequent, required land use permit, as outlined in Section 17.86.080, will be approved. C. Grounds for Automatic Disqualification. In addition to any other reason that may be established by the city council as a basis fo r disqualification, an applicant shall be disqualified from applying for, or obtaining, a commercial cannabis operator permit if: 1. The applicant fails to timely file an application during the annual application period. 2. The responsible party refuses to sign the application and agree to be personally responsible for compliance, and personally liable for failure to comply, with the provisions of this chapter. 3. The applicant, or any of its officers, directors or owners, or any person listed in the application, including the property owner of record, has been convicted of a felony or offense referenced in Business and Professions Code Section 26057, or of any other crime related to the application for or operation of a cannabis business; or has been subject to fine s, penalties, or sanctions for cultivation or production of a controlled substance on public or private lands or for unauthorized commercial cannabis activities as specified in Business and Professions Code Section 26057 or for any other criminal misconduc t related to the application for or operation of a cannabis business; or has been disqualified from obtaining, or has had a commercial cannabis license suspended or revoked by the state of California or any city or county in any state for misconduct related to a cannabis business. The foregoing restrictions shall apply within the five years preceding the date the application is filed, and for any additional period of time during which an applicant is ineligible to apply for a state cannabis license. No pers on who has been convicted of such a felony or offense, or subject to such fines, penalties, sanctions, disqualification, suspension or revocation of a cannabis permit or license, may be engaged (actively or passively) in the application for, or operation, management or ownership of any commercial cannabis business or leasing of any real property to commercial cannabis business. A conviction within the meaning of this chapter means a plea or verdict of guilty or a conviction or diversion following a plea of nolo contendere. Page 236 of 349 Ordinance No. _____ (2023 Series) Page 3 4. The applicant made one or more false or misleading statements or omissions in the application process. The foregoing shall result in immediate notice of automatic disqualification of the application, and/or revocation of any permit issued to the applicant as the result of the misleading statements or omissions. 5. Any person listed on the application is a licensed physician making patient recommendations for medical or medicinal cannabis pursuant to state law. 6. Any person listed in the application is less than twenty-one years of age. D. Duration and Activation of Permit. Each commercial cannabis operator permit issued pursuant to this chapter shall expire twelve months after the date of its activation. The permittee may apply for renewal prior t o expiration in accordance with this chapter. Each commercial cannabis operator permit must be activated within twenty-four months of issuance. The permit is activated by the issuance of a use permit for the commercial cannabis activity pursuant to Chapter 17.86, together with all other applicable city permits and state licenses, and the commercial cannabis operator thereafter opening and continuously operating the commercial cannabis activity. Failure to timely activate the permit shall be deemed abandonment of the permit and the permit shall automatically lapse. In the event that a permit holder fails to timely activate the permit and the permit lapses, the cannabis business shall be required to submit a new application, unless otherwise prohibited from doing so under this chapter. (Ord. 1722 § 2, 2022; Ord. 1673 §§ 1, 2 (Exh. A), 2020; Ord. 1647 § 4 (Exh. A (part)), 2018) SECTION 2. Ordinance No. 1722 (2022 Series) is hereby amended and superseded to the extent inconsistent herewith. SECTION 3. Environmental Review. The California Environmental Quality Act CEQA) does not apply to the recommended action in this repot because the action does not constitute a “ Project” under CEQA Guidelines Sec. 15378. The adoption of the cannabis regulatory changes is an administrative activity of a government agency that will not result in direct or indirect physical impact on the environment. SECTION 4. 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 invalidity or unenforceability shall not affect the validity or enforcement of the remaining portions 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 unenforceable. Page 237 of 349 Ordinance No. _____ (2023 Series) Page 4 SECTION 5. 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 Tribune, 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 _________, 2023, 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 238 of 349 EXHIBIT A Chapter 9.10 CANNABIS REGULATIONS 9.10.010 Purpose and intent. 9.10.020 Definitions. 9.10.030 Personal cultivation limited. 9.10.040 Commercial cannabis/city permit and state license required. 9.10.050 Regulations and fees. 9.10.060 Display and production of permits. 9.10.070 Commercial cannabis operator permit application procedures and requirements. 9.10.080 Renewal of permit. 9.10.090 Suspension or revocation of permit. 9.10.100 Appeal. 9.10.110 Right to occupy and to use property for commercial cannabis activity. 9.10.120 Prohibition on transfer of commercial cannabis operator permits. 9.10.130 Records and reports. 9.10.140 Inspection and enforcement. 9.10.150 Outdoor commercial cannabis cultivation and activities prohibited. 9.10.160 Indemnification, insurance, reimbursement, consent. 9.10.170 Compliance with laws. 9.10.180 Permit violation. 9.10.190 Permit compliance monitoring. 9.10.200 Permit holder responsible for violations by employees or agents. 9.10.210 Consumption or use prohibited on site and in public—Cannabis event prohibited. 9.10.220 Concurrent alcohol or tobacco sales or service prohibited. 9.10.230 Minors. 9.10.240 Sale of cannabis products or cannabis accessories by vending machine prohibited. 9.10.250 Security and public safety measures. 9.10.260 Limitations on city’s liability. 9.10.270 Fees deemed debt to city. 9.10.280 Violation and penalties. 9.10.290 Severability. 9.10.010 Purpose and intent. A. It is the primary purpose and intent of this chapter to protect the health, safety, and welfare of the residents of the city of San Luis Obispo from the negative impacts of illegal commercial and noncommercial cannabis activity, and of state authorized cannabis activity, by enforcing city ordinances, rules and regulations consistent with applicable state law, including, but not limited to, the Compassionate Use Act, the Medical Marijuana Program Act, the Adult Use of Marijuana Act, and the Medicinal and Adult Use of Cannabis Regulatory and Safety Act. Page 239 of 349 EXHIBIT A B. This chapter is not intended to, and shall not be construed to, prohibit or interfere with any right, defense or immunity under Health and Safety Code Section 11362.5 (the Compassionate Use Act), or under Health and Safety Code Section 11362.7 et seq. (the Medical Marijuana Program Act). C. This chapter is not intended to, and shall not be construed to, prohibit or interfere with any right, defense or immunity of any person twenty-one years of age or older relating to the adult personal possession or cultivation of cannabis or marijuana consistent with the provisions of the Control, Regulate and Tax Adult Use of Marijuana Act and the Medicinal and Adult Use of Cannabis Regulatory and Safety Act. D. Nothing in this chapter shall be construed to authorize the cultivation, possession or use of marijuana for any purpose inconsistent with state or local law. E. Any reference to California statutes includes any regulations promulgated thereunder and is deemed to include any successor or amended version of the referenced statute or regulation. (Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.020 Definitions. A. State-Defined Terms. Words or terms used in this chapter that are defined words or terms in Business and Professions Code Section 26001 or Health and Safety Code Section 11362.7 (the “Statutes”) shall have the meanings ascribed to them in the Statutes as they now read, or as they may be amended to read. These state -defined words and terms include, but are not limited to, “cannabis,” “cannabis accessories,” “cannabis concentrate,” “cannabis products,” “commercial cannabis activity,” “cultivation,” “delivery,” “distribution,” “license,” “live plants,” “manufacture,” “operation,” “person,” “premises,” “sell,” “sale,” “to sell.” Some of these terms are also set forth in Chapter 17.156. In the event of conflict in the definitions, the definitions in Chapter 17.156 shall control; provided the terms defined in subsection B of this section shall control over any other definition. B. City-Defined Terms. The following words or terms used in this chapter have the following meanings: 1. “Applicant” means the individual or entity applying for the commercial cannabis business operator permit, including each entity or individual identified as part of the applicant team or who is an owner or principal of an entity applying for a permit. 2. “Commercial cannabis business” means any person or entity engaging in any business, operation or activity which is commercial cannabis activity under state law in the city. 3. “Commercial cannabis operator permit” means a permit required by the city of San Luis Obispo pursuant to this chapter to conduct commercial cannabis activity or a commercial cannabis business in the city. Page 240 of 349 EXHIBIT A 4. “Financial interest holder” means a person or entity (other than a social equity owner) who has less than a ten percent aggregate ownership interest in the commercial cannabis business, has no active or passive direction, control, or management of the commercial cannabis business, and otherwise meets the definitions of financial interest holder as set forth in the Department of Cannabis Control Medicinal and Adult-Use Commercial Cannabis Regulations, California Code of Regulations Title 4 Division 19, Department of Cannabis Control. For purposes of this chapter, the aggregate ownership threshold herein shall supersede any current (twenty percent) or subsequently amended state threshold for a financial interest holder. 5. “Majority” means more than half. An equal number does not constitute a majority. 6. “Operator” means an applicant that has been permitted and conducts or conducted active cannabis operations in the city. 7. “Owner” means any of the following: a. A primary principal; b. A social equity owner; c. Any person or entity engaged actively or passively in the direction, control, or management of any commercial cannabis business; d. If available evidence indicates that an individual qualifies as an owner, the city may notify the applicant or licensee that it must either: (i) disclo se the individual or entity as an owner and submit written acknowledgement that the owner will be subject to the requirements of the application and this chapter; or (ii) produce a written attestation under oath, along with any supporting documentation, demonstrating that the individual does not qualify as an owner. 8. “Principal(s)” means the individual(s), entities, and/or individual members of any entity, identified as part of the applicant team in the commercial cannabis operator permit application. 9. “Primary principal” means an individual or entity that has a ten percent or greater ownership interest, or has an immediately actionable entitlement to such interest, in the applicant business, commercial cannabis business, including, but not limited to, partners, members, officers, directors, and stockholders of every corporation, limited liability company, or general or limited partnership that owns, or has an immediately actionable entitlement to, at least ten percent of the stock, capital, profits, voting rights, or membership interest of the commercial cannabis business or that is one of the partners in the commercial cannabis business. Managers of a commercial cannabis business with the authority to establish, Page 241 of 349 EXHIBIT A modify or control operational and policy directives and/or business operations plans for the business, whether by means of ownership or contractual authority, shall also be considered primary principals. On -site retail managers without such authority shall be considered employees and not primary principals. 10. “Responsible party(ies)” shall be one or more individuals who have an ownership interest in a commercial cannabis activity and are designated to be personally responsible for compliance with all terms and conditions of the commercial cannabis operator permit, all other permits required by the city, and all ordinances and regulations of the city. Any person having an ownership interest of more than fifty percent in a commercial cannabis activity shall be designated a responsible party on the application. If no individual owns more than fifty percent of a commercial cannabis activity, the individual owning the largest share shall be a responsible party, and if multiple individuals have the same percentage interest, each one shall be a responsible party. More than one individual can be designated a responsible party. 11. “Social equity owner” means the principal(s) of a commercial cannabis business with two percent equity or higher who earned at or below the median household income at the time the operator’s commercial cannabis operator permit application was approved by the city. 12. “Cannabis event” means a public or private event where compensation is provided or exchanged, either directly or indirectly or as part of an admission or other fee for service, for the provision, hosting, promotion or conduct of the event where consumption of cannabis is part of the activities. (Ord. 1722 § 1, 2022; Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.030 Personal cultivation limited. A. Maximum Six Plants Outdoors per Parcel. It shall be unlawful for any person to plant, cultivate, harvest, dry, process, maintain, possess or store outdoors, more than six live cannabis plants on any parcel containing one or more private residences. This limitation on outdoor personal cannabis activities applies per parcel, regardless of the number of residents in each private residence, and regardless of the number of residences on the parcel. This limitation applies to cannabis live plants for either adult recreational use or medicinal purposes. Outdoor personal cultivation shall comply with applicable provisions of Section 17.86.080. B. Maximum Six Plants per Private Residence, Indoors and Outdoors. It shall be unlawful for the cumulative total of cannabis plants per private residence, indoors and outdoors, to exceed six cannabis live plants, regardless of number of persons residing in the private residence. This limitation applies to cannabis live plants for either adult recreational use or medicinal purposes. Any live cannabis plants grown indoors shall comply with applicable provisions of Section 17.86.080. Page 242 of 349 EXHIBIT A C. No Outdoor Cultivation on Parcel without Private Residence. It shall be unlawful for any person to plant, cultivate, harvest, dry, process, maintain, possess or s tore any cannabis live plants outdoors on a parcel that does not have a private residence used for residential dwelling purposes by the person cultivating the cannabis live plants. D. Neighborhood Impacts of Personal Cultivation. There shall be no exterio r evidence of cannabis cultivation occurring at the property visible by normal unaided vision from a public place or the public right-of-way and any outdoor cultivation shall comply with provisions of Section 17.86.080(D). Personal cultivation of cannabis, for recreational adult use or for medicinal purposes, shall not create odors, dust, heat, noise, light, glare, smoke or other impacts to people of normal sensitivity living, working or lawfully present in the vicinity of the personal cultivation site. Impacts that cross the nearest property line of any other parcel, beyond that parcel on which the personal cultivation is conducted, or that are visible or noticeable with normal unaided vision, from a public place or the public right - of-way, or from any separately owned, leased or controlled private residence or business on the same parcel as the private residence responsible for the personal cultivation, are unlawful. E. No Hazardous Personal Cultivation. Personal cultivation, harvesting, drying, or processing of cannabis, for recreational adult use or medicinal purposes, that uses or stores hazardous or toxic chemicals or materials, creates hazardous or toxic products or wastes, or uses volatile processes or other methods or substances that pose a significant risk to public health or safety, is prohibited and unlawful. (Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.040 Commercial cannabis/city permit and state license required. A. City Commercial Cannabis Operator Permit Required. No person shall engage in commercial cannabis activity or have an ownership interest in, operate, or manage a commercial cannabis business without obtaining and continuously maintaining a commercial cannabis operator permit pursuant to this chapter. B. Commercial Cannabis Operator Permit and State License(s) Required. It shall be unlawful for any person to own, conduct, manage, operate, engage or participate in, or work or volunteer at a commercial cannabis activity or commercial cannabis business that does not have a valid commercial cannabis operator permit issued pursuant to this chapter and other city permits or licenses required by this code, in addition to the appropriate license(s) required by state law to conduct the commercial cannabis activity. Any commercial cannabis business or commercial cannabis activity conducted without all required city and state permits and licenses is prohibited and unlawful and is hereby declared to be a public nuisance. (Ord. 1647 § 4 (Exh. A (part)), 2018) Page 243 of 349 EXHIBIT A 9.10.050 Regulations and fees. The city council shall by resolution or ordinance adopt such forms, fees, regulations and procedures as are necessary to implement this chapter with respect to the application and qualification for, and the selection, future selection, investigation, process, issu ance, renewal, revocation, and suspension of, commercial cannabis operator permits. (Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.060 Display and production of permits. A. Dual Permits Posted and Visible. A copy of the commercial cannabis operator permit issued by the city of San Luis Obispo pursuant to this chapter, together with a copy of the appropriate state license(s) for the commercial cannabis activity being conducted, shall be posted and readily visible to the public at all times, at each location where commercial cannabis activity occurs. B. Production of Originals for Inspection. Any owner, operator, employee or person in charge of a commercial cannabis activity shall produce for inspection and copying, upon request of a city inspector, code enforcement officer, or city police officer during normal operating hours, the original of the current and valid city of San Luis Obispo commercial cannabis operator permit and the appropriate, current and valid license(s) of the state of California for the commercial cannabis activity(ies) or commercial cannabis business(es) being conducted. (Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.070 Commercial cannabis operator permit application procedures and requirements. A. Application. A person shall apply for a commercial cannabis operator permit by submitting an application to the city during the annual application period. The city council will, by resolution, adopt criteria by which all applications will be reviewed, applicants qualified and in the case of retail and cultivation businesses, also ranked. Those applicants that are selected will have the opportunity to apply for a use permit as outlined in Section 17.86.080. Each application shall designate at least one responsible party. If a person is not selected to receive a commercial cannabis operator permit, the person may reapply during the next annual application period or any subsequent application period established by the city manager except as otherwise prohibited by this chapter. B. Application Submittal Time Frame. A person may only submit one application per permit type, per application period, for a commercial cannabis operator permit, during the annual application period designated by resolution of the city council or any subsequent application period established by the city manager. An applicant who is unsuccessful in any application period may submit another application in any subsequent application period, except as otherwise prohibited by this chapter. The commercial cannabis operator permit will be valid for twelve months. Once a permit is activated, the applicant can apply annually for renewal. There is no guarantee that an applicant will receive a commercial cannabis operator permit in the first instance. Due to limitations on the number of certain permits, even a highly ranked applicant for a retail or cultivation permit may not receive a Page 244 of 349 EXHIBIT A commercial cannabis operator permit and even an applicant who receives a commercial cannabis operator permit is not guaranteed that any subsequent, required land use permit, as outlined in Section 17.86.080, will be approved. C. Grounds for Automatic Disqualification. In addition to any other reason that may be established by the city council as a basis for disqualification, an applicant shall be disqualified from applying for, or obtaining, a commercial cannabis operator permit if: 1. The applicant fails to timely file an application during the annual application period. 2. The responsible party refuses to sign the application and agree to be personally responsible for compliance, and personally liable for failure to comply, with the provisions of this chapter. 3. The applicant, or any of its officers, directors or owners, or any person listed in the application, including the property owner of record, has been convicted of a felony or offense referenced in Business and Professions Code Section 26057, or of any other crime related to the application for or operation of a cannabis business; or has been subject to fines, penalties, or sanctions for cultivation or production of a controlled substance on public or private lands or for unauthorized commercial cannabis activities as specified in Business and Professions Code Section 26057 or for any other criminal misconduct related to the application for or operation of a cannabis business; or has been disqualified from obtaining, or has had a commercial cannabis license suspended or revoked by the state of California or any city or county in any state for misconduct related to a cannabis business. The foregoing restrictions shall apply within the five years preceding the date the application is filed, and for any additional period of time during which an applicant is ineligible to apply for a state cannabis license. No person who has been convicted of such a felony or offense, or subject to such fines, penalties, sanctions, disqualification, suspension or revocation of a cannabis permit or license, may be engaged (actively or passively) in the application for, or operation, management or ownership of any commercial cannabis business or leasing of any property to commercial cannabis business. A conviction within the meaning of this chapter means a plea or verdict of guilty or a conviction or diversion following a plea of nolo contendere. 4. The applicant made one or more false or misleading statements or omissions in the application process. The foregoing shall result in immediate notice of automatic disqualification of the application, and/or revocation of any permit issued to the applicant as the result of the misleading statements or omissions. 5. Any person listed on the application is a licensed physician making patient recommendations for medical or medicinal cannabis pursuant to state law. 6. Any person listed in the application is less than twenty-one years of age. Page 245 of 349 EXHIBIT A D. Duration and Activation of Permit. Each commercial cannabis operator permit issued pursuant to this chapter shall expire twelve months after the date of its activation. The permittee may apply for renewal prior to expiration in accordance with thi s chapter. Each commercial cannabis operator permit must be activated within twenty -four months of issuance. The permit is activated by the issuance of a use permit for the commercial cannabis activity pursuant to Chapter 17.86, together with all other app licable city permits and state licenses, and the commercial cannabis operator thereafter opening and continuously operating the commercial cannabis activity. Failure to timely activate the permit shall be deemed abandonment of the permit and the permit sha ll automatically lapse. In the event that a permit holder fails to timely activate the permit and the permit lapses, the cannabis business shall be required to submit a new application, unless otherwise prohibited from doing so under this chapter. (Ord. 1722 § 2, 2022; Ord. 1673 §§ 1, 2 (Exh. A), 2020; Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.080 Renewal of permit. A. Renewal Application Filing Deadline. An application for renewal of a commercial cannabis operator permit shall be filed at least sixty calendar days, but not more than one hundred twenty calendar days, prior to the expiration date of the permit with the city manager or his/her designee. All commercial cannabis operator permits shall have an expiration date of June 30th of each year. If the complete application and fees are timely submitted but the city does not act to approve or reject the renewal prior to expiration, the permittee may continue to operate under the expired permit until the city approves or rejects the application for renewal. B. Rejection of Renewal Application. An application for renewal of a commercial cannabis operator permit shall be rejected if any of the following exists: 1. The commercial cannabis operator permit is revoked at the time of the application or renewal. 2. The applicant conducted unpermitted commercial cannabis activities in the city or continued to conduct formerly permitted commercial cannabis activities after expiration of the permit, other than as expressly permitted by this section. 3. Any of the grounds for disqualification for prequalification set forth in Section 9.10.070(C), or as established by the city council, exist at the time of application for renewal, or the date of renewal. 4. The permittee fails to renew any required state of California license(s), or the state revokes or suspends the license. Revocation, termination, nonissuance or suspension of a license issued by the state of California, or any of its departments or divisions, shall immediately, concurrently revoke, terminate, or susp end, respectively, the commercial cannabis operator permit. Such automatic suspension makes it illegal for a commercial cannabis business or activity to operate within the city of San Luis Obispo until the state of California, or its respective department or division, reinstates or issues the state license. Page 246 of 349 EXHIBIT A An application for renewal of a commercial cannabis operator permit may be denied if any of the following exists: 1. The application is filed less than sixty days before its expiration. 2. The applicant has received an administrative citation for violating any provision of this code relating to its commercial cannabis activity(ies) in the city during the last twelve months, and the administrative citation has not been resolved in the applicant’s favor by the date of application for renewal. A pending, unresolved appeal of an administrative citation shall not result in rejection of an otherwise timely and complete application, but resolution of an appeal in a manner that upholds the violation against the applicant during the application review period shall result in the immediate rejection of the application. 3. The commercial cannabis business has not been in regular and continuous operation in the three months immediately prior to the renewal application. 4. The commercial cannabis business fails to conform to the requirements of this chapter, any regulations adopted pursuant to this chapter, or the conditions imposed as part of any use permit or zoning requirements under Section 17.86.080. 5. The commercial cannabis operator permit is suspended at the time of application or renewal. C. Effect of Rejection of Application for Renewal—Operations to Cease Pending Appeals. If a renewal application is rejected, the commercial cannabis operator per mit expires on the expiration date set forth in the permit, even if an appeal has been filed. All commercial cannabis activities in the city under the expired permit must stop until all appeals have been exhausted. A person or entity whose renewal applicat ion is rejected, and who loses his/her/its appeal, must go through the annual commercial cannabis business operator permit application process. (Ord. 1691 § 1, 2021; Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.090 Suspension or revocation of permit. In addition to any other penalty authorized by law, a commercial cannabis operator permit may be suspended or revoked if the city finds, after notice to the permittee and opportunity to be heard, that the permittee or his or her agents or employees have violated any condition of the permit imposed pursuant to, or any provision of, this chapter. A. Upon a finding by the city of a first permit violation within any five -year period, the permit shall be suspended for thirty days. B. Upon a finding by the city of a second permit violation within any five-year period, the permit shall be suspended for ninety days. Page 247 of 349 EXHIBIT A C. Upon a finding by the city of a third permit violation within any five -year period, the permit shall be revoked. D. Notwithstanding the foregoing, upon finding, at any time following activation of a permit and operation of a cannabis business, of any violation of criminal or regulatory misconduct that would have precluded the issuance of a cannabis permit or state license, or upon a finding that the applicant or owner provided false or misleading information in the commercial cannabis operator permit application that resulted in the issuance of any operator permit, the permit and right to operate a cannabis business shall be revoked immediately, subject to appeal as set forth in Section 9.10.100(B). E. Notwithstanding the foregoing, upon finding, at any time prior to activation of a permit, of any violation of criminal or regulatory misconduct that would have precluded the issuance of a cannabis permit or state license, or upon a finding that the applicant or owner provided false or misleading information in the commercial cannabis operator permit application that resulted in the issuance of any operator permit, the permit shall be revoked immediately, subject to notice and informal appeal as set forth in Section 9.10.100(E). (Ord. 1722 § 3, 2022; Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.100 Appeal. A. Qualification—Ranking of Retailers and Cultivators. A decision of the city to not qualify an applicant for a commercial cannabis operator permit, or to rank applicants for retail or cultivation licenses, or to allow qualified applicants with the highest rankings the first opportunity to apply for a commercial cannabis operator permit, shall be the final act ion of the city and not appealable. B. Nonrenewal, Revocation or Suspension. A decision of the city to reject an application for renewal, or to revoke or suspend a commercial cannabis operator permit, is appealable to the city manager. An appeal must be filed with the city manager within ten working days after the renewal has been denied, suspended or revoked. A decision of the city manager or his or her designee is appealable to the city council in accordance with Chapter 1.20. C. Effect of Suspension. During a period of license suspension, the commercial cannabis business shall remove from public view all cannabis and cannabis products, and shall not conduct any commercial cannabis activity. Page 248 of 349 EXHIBIT A D. Revocation—Notice to State. Pursuant to Business and Prof essions Code Section 26200(c), the city manager or his or her designee shall promptly notify the Bureau of Cannabis Control within the Department of Consumer Affairs upon the city’s revocation of any local license, permit, or authorization for a state licensee to engage in commercial cannabis activity within the city. E. Revocation—Prior to Operator Permit Activation. A decision of the city to void, nullify or terminate an operator permit before the operator permit has been activated in accordance with Section 9.10.090(E) shall be the final action of the city and not appealable, except as set forth in this section. If the date of discovery is prior to activation of the operator permit, the applicant shall be provided notice of automatic disqualification and voidance/nullification/termination of the operator permit and given an opportunity to respond to the determinations in writing and/or in an informal hearing before the city manager, upon written request within ten days following notification. The determin ation of the city manager shall be final with no further right of appeal. (Ord. 1722 § 4, 2022; Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.110 Right to occupy and to use property for commercial cannabis activity. As a condition precedent to the city’s issuance of a commercial cannabis operator permit pursuant to this chapter, any person intending to open and operate a commercial cannabis business shall provide evidence satisfactory to the city of the applicant’s legal right to occupy and use the proposed location for the proposed use, together with the approval of a use permit from the city for cannabis activity at the location. In the event the proposed location is owned by or to be leased from another person, the applicant for a permit under this chapter shall provide a signed and notarized statement from the property owner agreeing to the operation of a commercial cannabis business on the property. (Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.120 Prohibition on transfer of commercial cannabis operator permits. A. Business Restriction to Location on Permit. It shall be unlawful for any person to transfer a commercial cannabis operator permit to a location not specified on the permit, or to operate a commercial cannabis business at any place or location othe r than that identified on the commercial cannabis operator permit issued pursuant to this chapter. B. Transfer or Assignment Prohibited. It shall be unlawful and a violation of this chapter to encumber, mortgage, lien, hypothecate, give, bequeath, sell, a ssign or transfer, by operation of law or otherwise, any portion of the ownership, financial interest, or control of a commercial cannabis business or a commercial cannabis operator permit to any person who does not have a commercial cannabis operator perm it from the city. Prior to the effective date of any transfer or other action described in this section, the commercial cannabis operator permittee proposing such an action shall: Page 249 of 349 EXHIBIT A 1. Notify the city in writing of the proposed action, comply with applicab le regulations and provide such information as the city reasonably requests regarding the identity and qualifications of persons involved, and pay all applicable fees and charges; and 2. Provide proof that the proposed lender, lienholder, recipient, heir, buyer, assignee, transferee, or other potential recipient of any portion of the ownership or control, at the time of the notice and effective date of the proposed action, is qualified by the city to apply for a commercial cannabis operator permit and the proposed action is conditioned on the city issuing to the person a new or amended commercial cannabis operator permit. 3. Notify the city in writing within ten calendar days of the action becoming final with the names and contact information of the new persons involved, together with a request that the city issue either a new or amended commercial cannabis operator permit, as applicable. C. Three-Year Moratorium on Majority Transfer of Ownership. Notwithstanding any other provision of this section, for three years following the date on which the commercial cannabis business activates its commercial cannabis operator permit in accordance with Section 9.10.070(D), no transfer of an aggregate ownership interest of fifty percent or more in a commercial cannabis operator permit will be permitted to any person or combination of persons who were not applicants, owners or financial interest holders of the permit at the time that a commercial cannabis operator permit was awarded. This restriction shall be cumulative, as to each commercial cannabis operator permit. No transfer of any interest is permitted in a commercial cannabis business prior to activating the commercial cannabis operator permit. D. Prohibition Against Obtaining Ownership in More Than One Storefront Cannabis Dispensary. Notwithstanding any other provision of this section, it shall be unlawful and a violation of this chapter for an owner, permit holder, or financial interest holder of a commercial cannabis retail storefront in the city to be a owner, permit holder, or financial interest holder in any other commercial cannabis retail storefront in the city. E. Prohibition Against Social Equity Owner Reductions. Notwithstanding any other provision of this section, any transfer of ownership within three years of permit activation that will result in the reduction or elimination of the total number of social equity owners or percentage interest of social equity ownership in a commercial cannabis business from the number or ownership percentage proposed in the original commercial cannabis operator permit applications is prohibited. This prohibition shall include the internal transfer of ownership from one currently permitted operator to another, and transfers of social equity owner interests of any kind require both prior notice and approval of the city to verify compliance with this section. Thereafter, any transfer, at any time, that would result in reduction of the total number of social equity owners proposed in the original application, or that would result in the total social equity ownership percentage in a commercial cannabis business to be reduced below a minimum of two percent, shall be prohibited. Page 250 of 349 EXHIBIT A F. Owner and Financial Interest Disclosure. Notwithstanding any other provision of this section, all owners and financial interest holders in any commercial cannabis business shall be disclosed to the city in the application for the operator permit. Any changes to commercial cannabis business owners or financial interest holders shall be disclosed to the city when notification is given to the state. G. Assignment Null and Void. Any attempt to transfer, sell, assign, give, or lien, or any transfer, by operation of law or otherwise, or any failure to disclose information as required by this chapter, is prohibited and a violation of this chapter, subject to such penalties provided under this chapter or as otherwise provided for violation of the municipal code. Any completed transfer, sale, assignment, gift, or lien, of a commercial cannabis operator permit issued pursuant to the chapter, is prohibited. Any such action immediately shall void, nullify and/or terminate the commercial cannabis operator permit, which shall be of no further force or effect as of the date of any prohibited transfer, sale, ass ignment, gift or lien. (Ord. 1722 § 5, 2022; Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.130 Records and reports. A. City Access to Records. Subject to the Health Insurance Portability and Accountability Act (HIPAA) regulations, each commercial cannabis business shall allow city of San Luis Obispo officials to have access to the commercial cannabis business’s books, records, accounts, and any and all data relevant to its permitted activities for the purpose of conducting an audit, examination or inspection. Books, records, accounts, and any and all relevant data will be produced no later than twenty-four hours after receipt of the city’s request or within a reasonable time as authorized in writing by the city. B. Annual Audit. Each commercial cannabis business shall file with the city manager or his/her designee an audit of its financial operations for the previous fiscal year, complete and certified by an independent certified public accountant in accordance with generally accepted auditing and accounting principles. The audit shall include but not be limited to a discussion, analysis, and verification of each of the records required to be maintained pursuant to this chapter. The information contained in the audit shall be made available in standard electronic format which shall be compatible with programs and software used by the city, and which can easily be imported into either Excel, Access or any other contemporary software designated by the city manager. C. Inventory Control System. All commercial cannabis businesses shall maintain an inventory control and reporting system that accurately documents the present location, amounts, and descriptions of all cannabis and cannabis products for all stages of the growing and production or manufacturing, laborato ry testing and distribution processes until sold or distributed. All commercial cannabis businesses shall maintain records of all sales or transfers of cannabis and cannabis products. D. Employee Registry. Each owner and/or operator of a commercial cannab is business shall maintain a current register of the names and the contact information (including the name, address, and telephone number) of all employees currently employed by the commercial cannabis business and shall disclose such register to any city of San Luis Obispo official upon request. Page 251 of 349 EXHIBIT A E. Reporting and Tracking of Product and of Gross Sales. Each commercial cannabis business shall have in place a point-of-sale tracking system to track and to report on all aspects of the commercial cannabis business including, but not limited to, such matters as cannabis tracking, inventory data, and gross sales (by weight and by sale) and shall ensure that such information is compatible with the city’s recordkeeping systems. The system must have the capability to produce historical transactional data for review by the city of San Luis Obispo. All information provided to the city pursuant to this subsection shall be confidential and shall not be disclosed, except as may otherwise be required under law. F. Maintenance of Records. All records required by this chapter shall be maintained by the commercial cannabis business for a period of not less than seven years and shall otherwise keep accurate records of all commercial cannabis business activity and provide such records for inspection consistent with this code or any rules the city council may adopt by resolution or ordinance. (Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.140 Inspection and enforcement. A. Unscheduled Inspection during Business Hours. The city manager or his/her designee and any other city of San Luis Obispo official or inspector charged with enforcing any provisions of this code may enter a commercial cannabis business at any time during the hours of operation without notice for the purpose of inspec ting the commercial cannabis business for compliance with the provisions of this code, the terms and conditions of the commercial cannabis operator permit or any other city permit or state license, including inspection of the recordings and records maintained pursuant to this chapter or the applicable provisions of state law. The right to inspect under this section includes the right to copy recordings and records. B. Interference with Inspection. It is unlawful for any person who owns, operates, manages or is employed by, or has any responsibility over the operation of, a commercial cannabis business to refuse to allow, or to impede, obstruct, or interfere with, an inspection by the city, or the city’s review or copying of recordings (including audio and video recordings) and records, or to conceal, destroy, alter or falsify any recordings or records. C. Obtaining Samples. The city manager or his/her designee or any other person charged with enforcing the provisions of this chapter may enter the location of a commercial cannabis business at any time during the hours of operation and without notice to obtain samples of cannabis and cannabis products to test for law enforcement and/or public safety purposes. Any samples obtained by the city of San Luis Obispo shall be logged, recorded, and maintained in accordance with city of San Luis Obispo police department standards for evidence. At all other times, the city manager or his/her designee may enter the location of a commercial cannabis business to obtain samp les of cannabis upon reasonable notice, as otherwise authorized by law or pursuant to a warrant. Page 252 of 349 EXHIBIT A D. Violation and Enforcement Any Time During Application and Permitting Process. Notwithstanding any initial verification of compliance of the commercial cannabis operator permit application and commercial cannabis activity with the provisions of this chapter, any commercial cannabis business later found to be in violation of any of the requirements of this chapter at any time during, throughout and after t he application and permitting process is subject to the enforcement provisions provided in this chapter. (Ord. 1722 § 6, 2022; Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.150 Outdoor commercial cannabis cultivation and activities prohibited. A. Outdoor Commercial Cultivation Prohibited. Outdoor commercial cannabis cultivation, including, but not limited to, cultivation in greenhouses, hoop structures, and by mixed light (part daylight/part artificial light), is prohibited and unlawful. This section prohibits all outdoor commercial cannabis cultivation, including cultivation for profit or not -for-profit cultivation, and including commercial cultivation for adult recreational use or medicinal purposes. For purposes of this section, outdoor cultivation of cannabis by cooperatives is prohibited. All commercial cannabis cultivation shall be conducted only inside a fully enclosed structure by a person or entity with a commercial cannabis operator permit, a city use permit, and appropriate state license(s). See also Section 17.86.080(E)(7)(c). B. Outdoor Commercial Cannabis Activities Prohibited. Outdoor storage, harvesting, drying, processing, or manufacturing of commercial cannabis or cannabis products is prohibited and unlawful. (Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.160 Indemnification, insurance, reimbursement, consent. As a condition of approval of any commercial cannabis operator permit issued pursuant to this chapter, the permittee shall, at a minimum: A. Execute an agreement to protect, indemnify, defend (at its sole cost and expense with counsel approved by city), and hold the city of San Luis Obispo and its officers, employees, attorneys, representatives, and agents harmless from and against any and all claims, demands, losses, damages, injuries, costs, expenses (including attorneys’ fees), fines, penalties, or liabilities arising from, related to or associated with: the issuance of a commercial cannabis operator permit or use permit; the permitting or approving the operation of a commercial cannabis activity; the collection of any fees, taxes, or charges from a commercial cannabis business; the commercial cannabis business’s or any of its owners’, operators’, managers’, employees’, or agents’ violation of any federal, state or local laws; the city’s suspension, revocation or refusal to renew the commercial cannabis operator permit. B. Maintain insurance with standard city coverages and limits, but with additional conditions thereon as deemed necessary by the city attorney. Page 253 of 349 EXHIBIT A C. Reimburse the city of San Luis Obispo for any and all costs, expenses, attorney fees, fines, penalties and court costs that the city of San Luis Obispo may be required to pay as a result of any legal challenge related to the city’s approval of a commercial cannabis operator permit pursuant to this chapter or any other city permit or the city of San Luis Obispo’s approval of the operation of a commercial cannabis activity. The city of San Luis Obispo may, at its sole discretion, participate at its own expense in the defense of an y such action, but such participation shall not relieve the obligations imposed under this chapter. D. Consent to unscheduled inspections, production of records and recordings, and obtaining of samples of cannabis and cannabis products by authorized city officials during normal operating hours as provided in this chapter. (Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.170 Compliance with laws. The commercial cannabis business shall operate all times in compliance with all applicable state and local laws, regulations, and any specific, additional operating procedures or requirements which may be imposed as conditions of approval of the commercial cannabis operator permit or use permit or state license(s). Nothing in this chapter shall be construed as authorizing any action which violates state law or local law with respect to the operation of a commercial cannabis activity. (Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.180 Permit violation. Compliance with all local and state cannabis-related laws shall be a condition of a city commercial cannabis operator permit and it shall be a violation of a commercial cannabis operator permit for a permittee or his or her agents or employees to violate any local or state cannabis-related law. (Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.190 Permit compliance monitoring. Compliance with this chapter shall be monitored by the San Luis Obispo police department, code enforcement staff and/or any other duly authorized agent of the city. Any compliance checks pursuant to this chapter shall be in addition to any under any other ordinances, regulations or permits. At least four compliance checks of each cannabis retailer shall be conducted during each twelve-month period. At least two compliance checks of each commercial cannabis business other than a retailer shall be conducted during each twelve-month period. The cost of compliance monitoring shall be incorporated into the annual renewal fee. (Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.200 Permit holder responsible for violations by employees or agents. The responsible person and any entity to whom a commercial cannabis operator permit is issued pursuant to this chapter shall be responsible for all violations of the regulations and ordinances of the city of San Luis Obispo committed by the permittee or any employee or agent of the permittee, which violations occur in or about the premises of the Page 254 of 349 EXHIBIT A commercial cannabis business, even if the responsible person is not present. Violations by an employee or agent may result in the termination or nonrenewal of the permit by the city. (Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.210 Consumption or use prohibited on site and in public—Cannabis event prohibited. A. It is unlawful for any person or entity: 1. To sell, give, exchange, dispense or distribute cannabis or cannabis products for on-site consumption, use or sampling on any business premises; or 2. To consume or use cannabis or cannabis products, whether by smoking, vaping, inhaling, eating, drinking or any other means: a. In, on or about the premises of any commercial cannabis business; b. In, on or about any publicly owned or operated property; any place open to or accessible by the public; any place smoking is prohibited; or any place visible from any public place with normal unaided vision; c. In on or about any other business, club, cooperative or commercial event, regardless if open to the public or only to members, ticket holders or event invitees; d. Any location where an entry or other fee is charged to attendees or to the host or where a thing of value or consideration is received or exchanged, directly or indirectly, for or related to the provision of cannabis. B. It is unlawful for any person to conduct a cannabis event in the city. (Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.220 Concurrent alcohol or tobacco sales or service prohibited. A. No person shall dispense, serve, store, give away or consume, or cause or permit the sale, dispensing, serving, giving away or consumption of alcoholic beverages or tobacco in or on the premises of a commercial cannabis business. B. No person shall conduct any commercial cannabis activity at any location where alcohol is sold or served. (Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.230 Minors. 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. Page 255 of 349 EXHIBIT A 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 or both. C. 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. D. 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 no t at least twenty-one years of age. (Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.240 Sale of cannabis products or cannabis accessories by vending machine prohibited. A. No person shall locate, install, keep, maintain or use, or permit the location, installation, keeping, maintenance or use on his, her or its premises of, any cannabis vending machine used or intended to be used for the purpose of selling any cannabis products or cannabis accessories therefrom. B. No person, business, or other entity shall sell, offer for sale, or display for sale any cannabis product by means of a self -service display or vending machine. All cannabis products shall be offered for sale exclusively by means of vendor/employee assistance. C. “Vending machine” means any electronic or mechanical device or appliance the operation of which depends upon the insertion of money, whether in coin or paper bill, or debit or credit card, or other thing representative of value, which device or appliance dispenses or releases cannabis, cannabis product(s) and/or cannabis accessories. (Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.250 Security and public safety measures. A. The city manager or his/her designee(s) is authorized to promulgate all regulations necessary to implement the requirements and fulfill the purposes and policies of this chapter, including but not limited to enforcement, background checks for applicants, approval and enforcement of a commercial cannabis activity security plan, including audio and video recordings of operations, and verification of compliance. B. Every commercial cannabis activity shall have a security plan approved by the chief of police or designee prior to issuance of a city commercial cannabis operator permit. C. Hours of Operation. 1. Retail Storefront. Retail storefront commercial cannabis business shall not operate between the hours of eight p.m. and nine a.m. Page 256 of 349 EXHIBIT A 2. Retail Non-Storefront (Delivery Services). Retail non-storefront (delivery services) commercial cannabis business shall not operate 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) 9.10.260 Limitations on city’s liability. The city shall not be liable for issuing, or failing or refusing to issue, suspending, revoking or failing to renew a commercial cannabis operator permit pursuant to this chapter or otherwise approving or disapproving the operation of any commercial c annabis business pursuant to this chapter. (Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.270 Fees deemed debt to city. The amount of any fee, cost or charge imposed pursuant to this chapter shall be deemed a debt to the city of San Luis Obispo that is recoverable in any court of competent jurisdiction. (Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.280 Violation and penalties. A. Misdemeanor. Each violation of the provisions of this chapter shall be a misdemeanor and is punishable as provided in Section 1.12.030; provided, that where the city attorney determines that such action would be in the interest of justice, he/she may specify in the accusatory pleading that the offense shall be an infraction. Any violation of the provisions of this chapter by any person is also subject to administrative fines as provided in Chapter 1.24. B. Infraction Violation. Where the city attorney determines that, in the interest of justice, a violation of this chapter is an infraction, such infraction is punishable by a fine not exceeding one hundred dollars for a first violation, a fine not exceeding two hundred dollars for a second violation of the same provision within one year, and a fine not exceeding five hundred dollars for each additional infraction violation of the same provision within one year. C. The fine amounts set forth above may be modified, from time to time, by city council resolution. In no event shall such fine amounts exceed the amounts authorized by state law. D. If the city of San Luis Obispo finds, based on substantial record evidence, that any person has engaged in commercial cannabis activity in violation of this chapter, the city shall fine that person as follows: Each day that person without a commercial cannabis operator permit offers cannabis or cannabis products for sale or exchange shall constitute a separate violation and assessed a fine in accordance with Sections 1.12.080 and 1.24.070(A). Page 257 of 349 EXHIBIT A E. Each person committing, causing, or maintaining a violation of this chapter or failing to comply with the requirements set forth herein shall be deemed guilty of a separate offense for each and every day during any portion of which any violation of any provision of this chapter is committed, continued, maintained, or permitted by such person and shall be punishable accordingly. F. The violation of any provision of this chapter shall be and is hereby declared to be a public nuisance and contrary to the public interest. Any public nuisance under this chapter may, at the city’s discretion, be abated by the city by civil process by means of a restraining order, preliminary or permanent injunction, or in any manner provided by law for the abatement of such nuisance. The city shall also be entitled to recover its full reasonable costs of abatement. The prevailing party in any proceeding associated with the abatement of a public nuisance shall be entitled to recovery of attorneys’ fees incurred in any such proceeding if the city has elected at the initiation of that individual action or proceeding to seek recovery of its own attorneys’ fees. G. In lieu of issuing a criminal citation, the city may issue an administrative citation to any person responsible for committing, causing or maintaining a violation of this chapter. Nothing in this section shall preclude the city from also issuing a citation upon the occurrence of the same offense on a separate day. H. The remedies set forth in this chapter are cumulative and in addition to any and all other remedies available at law or equity, whether set forth elsewhere in the San Luis Obispo Municipal Code, or in state or federal laws, regulations, or case law. In addition to other remedies provided by this chapter or by other law, any violation of this chapter may be remedied by a civil action brought by the city attorney, includ ing but not limited to administrative or judicial nuisance abatement proceedings, civil or criminal code enforcement proceedings, and suits for injunctive relief. (Ord. 1647 § 4 (Exh. A (part)), 2018) 9.10.290 Severability. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this chapter is for any reason held to be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of the remaining sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases of this chapter or the rules adopted hereby. The city council of the city of San Luis Obispo hereby declares that it would have adopted each section, subsection, subdivision, paragraph, sentence, clause or phrase hereof, irrespective of the fact that any one or more other sections, subdivisions, paragraphs, sentences, clauses or phrases hereof be declared invalid or unenforceable. (Ord. 1647 § 4 (Exh. A (part)), 2018) Page 258 of 349 R _____ RESOLUTION NO. ______ (2023 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, APPROVING AN UPDATE TO THE CANNABIS OPERATOR PERMIT RANKING CRITERIA WHEREAS, On November 27, 2018, the City Council of the City of San Luis Obispo adopted Resolution No. 10966 (2018 Series) establishing the Cannabis Operator Permit Ranking Criteria and annual application submittal period; and WHEREAS, On December 3, 2019, the City Council of the City of San Luis Obispo adopted Resolution No. 11067 (2019 Series) amending the Cannabis Operator Permit Ranking Criteria based on administrative experience reviewing and ranking applications; and WHEREAS, On October 18, 2022, the City Council of the City of San Luis Obispo adopted Resolution No. 11370 (2022 Series) amending the ranking criteria for retail storefront applications clarifying points awarded for specific criterium; and WHEREAS, the City intends to open a new application period in summer 2023 for the third and final retail storefront permit, and specific ranking criteria need updating to clarify submittal requirements and points awarded to ensure fair evaluation and ranking of commercial cannabis operator permit applications. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. Findings. 1. The proposed Cannabis Operator Permit Ranking Criteria (Exhibit A) establishes the ranking criteria to review and, in the case of retail and cultivation businesses, rank applications consistent with Municipal Code Section 9.10.070. SECTION 2. Environmental Review. The California Environmental Quality Act (CEQA) does not apply to the recommended action in this report because the action does not constitute a “Project” under CEQA Guidelines Section 15378. The adoption of the updated Cannabis Operator Permit Ranking Criteria is an administrative activity of a government agency that will not result in direct or indirect physical impac t on the environment. The City’s cannabis business regulations require discretionary review and approval of permits, licenses, or other authorizations to engage in commercial cannabis activity. Future applications for commercial cannabis business activities in the City will be subject to the CEQA review, per the normal environmental review process. Page 259 of 349 Resolution No. ______ (2023 Series) Page 2 R _____ SECTION 3. Action. The City Council hereby approves the amended Cannabis Operator Permit Ranking Criteria as outlined in Exhibit A subject to the following conditions: 1. This resolution supersedes Resolution No. 11370 (2022 Series) to the extent inconsistent herewith. Upon motion of Council Member ____________, seconded by Council Member _____________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this ______ day of ___________, 2023. ___________________________ 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 260 of 349 Resolution No. ______ (2023 Series) Page 3 R _____ EXHIBIT A Page 261 of 349 Resolution No. ______ (2023 Series) Page 4 R _____ Page 262 of 349 Resolution No. ______ (2023 Series) Page 5 R _____ Page 263 of 349 Resolution No. ______ (2023 Series) Page 6 R _____ Page 264 of 349 RESOLUTION NO. PC-1074-2023 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, RECOMMENDING THE CITY COUNCIL INTRODUCE AND ADOPT AN ORDINANCE EXPANDING THE CANNABIS BUSINESS OVERLAY ZONES (RZ-0118-2023) WHEREAS, the Planning Commission of the City of San Luis Obispo conducted a public hearing in the Council Chambers of City Hall, 990 Palm Street, San Luis Obispo, California on April 12, 2023, for the purpose of reviewing and making a recommendation to the City Council of San Luis Obispo to amend the Zoning Map for the Cannabis Business Overlay Zones; and WHEREAS, notices of said public hearing were made at the time and in the manner as required by law; and WHEREAS, the Planning Commission has duly considered all evidence presented by City staff and public commentors at said hearing. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. Findings. Based upon all the evidence presented, the Planning Commission makes the following findings: a) The amendment to the City’s Zoning Map expanding the Cannabis Business Overlay Zones to include the Fiero Lane – Clarion Court Area and the East Airport Area intends to provide more locations that may be appropriate for commercial cannabis activities to occur, as detailed in Chapter 17.86 and Chapter 9.10 of the Municipal Code. SECTION 2. Environmental Review. The recommended actions were reviewed in accordance with the California Environmental Quality Act (CEQA) Guidelines. The recommended actions are determined to be exempt from environmental review pursuant to CEQA Guidelines Section 15061(b)(3), the “Common Sense” exemption which exempts activities that can be seen with certainty to have no possibility for causing a significant effect on the environment. The expansion of the Cannabis Business Overlay Zones will not have a significant effect on the environment because the expansion does not alter the underlying base Zones land use types or development standards for those land use types. Project specific environmental review will be required for any new commercial cannabis operation located within the East Airport Area and Fiero Lane – Clarion Court Area as part of the City’s existing permitting processes. SECTION 3. Recommended actions. The Planning Commission does hereby recommend the City Council: Page 265 of 349 Resolution No. PC-1074-2023 Citywide Page 2 1) Introduce and adopt an Ordinance amending the Zoning Map to expand the Cannabis Business Overlay Zones to include the East Airport Area and Fiero Lane – Clarion Court Areas shown in Exhibit A. On motion by Commissioner Kahn, seconded by Commissioner Ringer, and on the following roll call vote: AYES: Commissioners Houghton, Jorgensen, Kahn, Ringer, Tolle, Vice Chair Cooley, and Chair Munoz-Morris NOES: None REFRAIN: None ABSENT: None The foregoing resolution was adopted this 12th day of April, 2023. ___________________________ Tyler Corey, Secretary Planning Commission Page 266 of 349 Resolution No. PC-1074-2023 Citywide Page 3 EXHIBIT A ORDINANCE NO. _____ (2023 SERIES) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, AMENDING THE CITY’S ZONING MAP TO EXPAND THE CANNABIS BUSINESS OVERLAY ZONES WHERE CANNABIS BUSINESSES MAY BE LOCATED AS MAY BE ALLOWED OR CONDITIONALLY ALLOWED BY THE UNDERLYING BASE ZONES AND THE RULES AND REGULATIONS ESTABNLISHED IN THE CITY’S MUNICIPAL CODE (RZ-0118-2023) WHEREAS, on September 18, 2018, the City Council of San Luis Obispo amended the zoning map and designated areas of the City as Cannabis Business Overlay Zones where commercial cannabis activities may be located and allowed or conditionally allowed by the underlying base Zones; and WHEREAS, on November 19, 2019, the City Council of the City of San Luis Obispo approved the annexation of the properties along Fiero Lane and Clarion Court to the City of San Luis Obispo; and WHEREAS, on March 7, 2020, the City Council of the City of San Luis Obispo approved the annexation of the East Airport Area Properties (East Airport Commerce Park Association, Senn-Glick) to the City of San Luis Obispo; and WHEREAS, overlay Zones supplement the base Zones and are used to establish special use or development regulations for a particular area in addition to the provisions of the underlying base Zones; and WHEREAS, the expansion of the Cannabis Business Overlay Zones provides more locations that may be appropriate for a variety of commercial cannabis activities to occur in the City; and WHEREAS, the location of commercial cannabis activities within the Cannabis Business Overlay Zones are subject to issuance of a land use permit, which is a process that provides notification for neighboring property owners, businesses, and residents; and ensures compatibility of uses through the imposition of conditions of approval; and WHEREAS, the Planning Commission of the City of San Luis Obispo conducted a public hearing on April 12, 2023 in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo, California, for the purpose of considering amending the zoning map to expand the Cannabis Business Overlay Zones and making a recommendation to the City Council regarding such an amendment. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: Page 267 of 349 Resolution No. PC-1074-2023 Citywide Page 4 SECTION 1. Finding. The expansion of the Cannabis Business Overlay Zones intends to provide more locations that may be appropriate for commercial cannabis activities to occur, as detailed in Chapter 9.10 and Chapter 17.86 of the City’s Municipal Code. SECTION 2. Environmental Review. The proposed expansion of the Cannabis Business Overlay Zones to include the Fiero Lane – Clarion Court Area and the East Airport Area was reviewed in accordance with the California Environmental Quality Act (CEQA) Guidelines. The proposed expansion is determined to be exempt from environmental review pursuant to CEQA Guidelines Section 15061(b)(3), the “Common Sense” exemption which exempts activities that can be seen with certainty to have no possibility for causing a significant effect on the environment. The expansion of the Cannabis Business Overlay Zones will not have a significant effect on the environment because the expansion does not alter the underlying base Zones land use types or development standards for those land use types. Project specific environmental review will be required for any new commercial cannabis operation located within the Fiero Lane – Clarion Court Area and the East Airport Area as part of the City’s existing permitting processes. SECTION 3. Action. The City Council hereby adopts an ordinance amending the City’s Zoning Map designating properties that will be included in the Cannabis Business Overlay Zones in nine separate areas of the City as depicted in Exhibit A which is incorporated herein by reference. SECTION 3. 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 unenforceable. SECTION 4. Ordinance Number 1653 (2018 Series) is hereby repealed and replaced. SECTION 5. A summary of this ordinance, together with the names of the 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 2nd day of May, 2023, AND FINALLY ADOPTED by the Council of the City of San Luis Obispo on the ____ day of ______, 2023, on the following vote: Page 268 of 349 Resolution No. PC-1074-2023 Citywide Page 5 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 269 of 349 Resolution No. PC-1074-2023 Citywide Page 6 EXHIBIT A Page 270 of 349 Resolution No. PC-1074-2023 Citywide Page 7 Page 271 of 349 Resolution No. PC-1074-2023 Citywide Page 8 Page 272 of 349 Resolution No. PC-1074-2023 Citywide Page 9 Page 273 of 349 Resolution No. PC-1074-2023 Citywide Page 10 Page 274 of 349 Resolution No. PC-1074-2023 Citywide Page 11 Page 275 of 349 Resolution No. PC-1074-2023 Citywide Page 12 Page 276 of 349 Resolution No. PC-1074-2023 Citywide Page 13 Page 277 of 349 Resolution No. PC-1074-2023 Citywide Page 14 Page 278 of 349 Resolution No. PC-1074-2023 Citywide Page 15 Page 279 of 349 Page 280 of 349 Introduction of Two Ordinances and Adoption of a Resolution for the Cannabis Business Program City Council Meeting May 2, 2023 Recommendations 1.As recommended by the Planning Commission,introduce a Draft Ordinance entitled,“An Ordinance of the City Council of the City of San Luis Obispo, California,amending the City’s Zoning Map to expand the Cannabis Business Overlay Zones where cannabis businesses may be located as may be allowed or conditionally allowed by the underlying base zones and the rules and regulations established in the City’s Municipal Code (RZ-0118-2023)”;and 2.Introduce a Draft Ordinance entitled,“An Ordinance of the City Council of the City of San Luis Obispo,California,amending Chapter 9.10 (Cannabis Regulations)of the Municipal Code adding requirements for owners that lease real property to commercial cannabis operators (CODE-0164-2023)”;and 3.Adopt a Draft Resolution entitled,“A Resolution of the City Council of the City of San Luis Obispo,California,approving updates to the cannabis operator permit ranking criteria.” 2 3Presentation Overview 1.Cannabis Business Overlay Zone Expansion •Existing Cannabis Business Overlay Zones •Expansion Areas ➢Fiero Lane –Clarion Court Area ➢East Airport Area •Cannabis Activities by Allowable Land Use Types 2.Municipal Code Amendments •9.10.070 –Commercial Cannabis Operator Permit Application Procedures and Requirements 3.Cannabis Operator Permit Merit Criteria Updates •Proposed Merit Criteria Section Updates Existing Cannabis Business Overlay Zones In September 2018,Council designated seven 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) 4 5Location of Proposed Expansion Areas Fiero Lane –Clarion Court Area 6 In November 2019,Council annexed properties along Fiero Lane -Clarion Court north of the airport on the west side of Broad Street. The Area is comprised of: 1.About 39 acres made up of 30 parcels 2.Zoned Service Commercial (C-S-SP), Manufacturing (M-SP), and Business Park (BP- SP) 3.500,000 square feet of total building area 4.Located within the Airport Area Specific Plan East Airport Area 7 In March 2020,Council annexed an area along Broad Street opposite of the airport referred to as the East Airport Area. The Area is comprised of: 1.The East Airport Commerce Park Association and the Senn/Glick Development 2.About 58 acres made up of 33 parcels 3.Zoned Service Commercial (C-S-SP) 4.Located within the Airport Area Specific Plan 8Cannabis Activities by Allowable Land Use Types Cannabis Activity Land Use Type O C-R C-S M BP Cultivation D D D Nursery D D D Manufacturing D D D Distribution D D D Microbusiness PC*D/PC*D/PC*D/PC* Testing Lab PC AA AA AA Retail (Delivery)D D D Retail (Storefront)PC PC AA = Administrative Approval D = Director’s Approval PC = Planning Commission Approval *Planning Commission Approval required if activity includes retail storefront 9Municipal Code Amendments In October 2022,Council adopted amendments to the City’s Cannabis Regulations further clarifying the requirements for applying,obtaining, activating,and renewing commercial cannabis operator permits.The amendments did not include requirements for owners that lease real property to commercial cannabis businesses. 9.10.070(C)(3) –Commercial Cannabis Operator Permit Application Procedures and Requirements The proposed amendments recommended by staff make explicit that any property owner or record that leases to a commercial cannabis operator is also subject to the criteria which may disqualify the applicant from applying for or obtaining a permit. 10Cannabis Operator Permit Merit Criteria Updates City Council has established Merit Criteria used to evaluate and,in the case of retail storefront and cultivation,rank applications.The Merit Criteria are updated based on experience administering the review and scoring process in prior application periods. The last update occurred in October 2022 with Council approving minor changes for retail storefront merit criteria. Staff is proposing additional updates to the merit criteria for all permit types in preparation for opening a new application period. 11 Total Potential Points Available 138 83 73 113 103 83 73 Merit Criteria 1: Community Benefit (Potential Points)35 35 35 35 1.A Applicant demonstrates a commitment to the City through local hiring and community support. Retail Storefront Retail Non- Storefront (Delivery) Cultivation Distribution, Manufacturing 1.A.1 Over 90% of employees will be San Luis Obispo County residents. (10 points); OR 60% -90% of employees will be San Luis Obispo County residents. (5 points); OR Under 60% of employees will be San Luis Obispo County residents. (0 points) 0, 5, or 10 0,5, or 10 0,5, or 10 0,5, or 10 1.A.2 Over 80% of supply and equipment expense (non-labor, non-rent expense) will be sourced from businesses within 90 miles. (10 points); OR 50% -80% of supply and equipment expense (non-labor, non-rent expense) will be sourced from local businesses within 90 miles. (5 points);OR Under 50% of supply and equipment expense (non-labor, non-rent expense) will be sourced from local businesses within 90 miles. (0 points) 0,5, or 10 0,5, or 10 0,5, or 10 0, 5, or 10 1.B Continued support of community programs in San Luis Obispo (i.e. park cleanups, facility improvements, donating supplies / equipment to youth programs). Retail Storefront Retail Non- Storefront (Delivery) Cultivation Distribution, Manufacturing 1.B.1 Providing over 20 hours per month of community support. (5 points); OR Providing 10-20 hours per month of community support. (2 points);OR Providing less than 10 hours per month of community support. (0 points). 0, 2, or 5 0, 2, or 5 0,2, or 5 0, 2, or 5 1.B.2 Provide over $1,000 per month for community support. (5 points); OR Provide up to $1,000 per month for community support. (2 points)2 or 5 2 or 5 2 or 5 2 or 5 1.B.3 Applicant can demonstrate a history of supporting local community programs for the past one years. (5 points)5 5 5 5 Proposed Merit Criteria Section Updates 12 Merit Criteria 2: Equity and Labor (Potential Points)18 18 18 18 2.A Applicant commits to equity ownership and competitive compensation in comparison to other mainstream commercial businesses. Applicants commitment will be confirmed during annual permit renewal process. Retail Storefront Retail Non- Storefront (Delivery) Cultivation Distribution, Manufacturing 2.A.1 Applicant includes 3 or more principals with 2% equity or higher who have earned at or below the median household income at the time of application. (8 points); OR Applicant includes 1 or 2 primary principals who have earned at or below the median household income at the time of application. (4 points); OR Application includes 0 Primary Principals who have earned at or below the median household income at the time of submittal. (0 points). 0, 4, or 8 0, 4, or 8 0, 4, or 8 0, 4, or 8 2.A.2 Business will have an average pay rate for entry and mid-level positions of at least 40% more than the median local income for similar positions in other mainstream businesses. (8 points); OR Business will have an average pay rate for entry and mid-level positions of at least 20% more than the median local income for similar positions in other mainstream businesses. (4 points) 4 or 8 4 or 8 4 or 8 4 or 8 2.A.3 Base wages of employees exceed the State of California's minimum wage by at least $3.00/hr.0 to 2 0 to 2 0 to 2 0 to 2 Proposed Merit Criteria Section Updates 13Proposed Merit Criteria Section Updates Merit Criteria 3: Financial Investment (Potential Points)20 30 20 30 20 30 20 3.A Applicant has plans and capital to support a vibrant business within the City.Retail Storefront Retail Non- Storefront (Delivery) Cultivation Distribution, Manufacturing 3.A.1 Applicant demonstrates financial capacity to capitalize, start up, and sustain business operations 1 to 10 1 to 10 1 to 10 1 to 10 3.A.2 Applicant commits to develop raw land or major improvements, including façade rehabilitation, building expansion, site improvements and/or other investments in an underutilized/underdeveloped site that has been zoned for commercial use for a commercial cannabis facility. 1 to 10 1 to 10 1 to 10 1 to 10 3.A.3 Applicant commits to major improvements, including façade rehabilitation, building expansion, site improvements and/or other investments in an underutilized/underdeveloped site that has been zoned for commercial use for a commercial cannabis facility. 1 to 5 1 to 5 1 to 5 1 to 5 3.A.4 The proposed cannabis business site can accommodate the required number of parking spaces with safe and convenient access for customers/employees.1 to 5 1 to 5 1 to 5 1 to 5 Merit Criteria 7: Medical Retail Commitment (Potential Points)10 0 10 0 7.A Medical Retail Commitment Retail Storefront Retail Non- Storefront (Delivery) Cultivation Distribution, Manufacturing 7.A.1 Applicant commits to retain a California state medicinal cannabis cultivation license.0 to or 10 0 0 to or 10 0 Recommendations 1.As recommended by the Planning Commission,introduce a Draft Ordinance entitled,“An Ordinance of the City Council of the City of San Luis Obispo, California,amending the City’s Zoning Map to expand the Cannabis Business Overlay Zones where cannabis businesses may be located as may be allowed or conditionally allowed by the underlying base zones and the rules and regulations established in the City’s Municipal Code (RZ-0118-2023)”;and 2.Introduce a Draft Ordinance entitled,“An Ordinance of the City Council of the City of San Luis Obispo,California,amending Chapter 9.10 (Cannabis Regulations)of the Municipal Code adding requirements for owners that lease real property to commercial cannabis operators (CODE-0164-2023)”;and 3.Adopt a Draft Resolution entitled,“A Resolution of the City Council of the City of San Luis Obispo,California,approving updates to the cannabis operator permit ranking criteria.” 14 1010 Marsh St., San Luis Obispo, CA 93401 (805) 546-8208 . FAX (805) 546-8641 PROOF OF PUBLICATION (2015.5 C.C.P.) 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: 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, C rnia, this day --of Aptit k 2023. Patricia Horton, New Times Legals Proof of Publication of 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. May 2, 2023 a45:30 p.m. 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 4amthoutubg.slo.city. Public comment prior to the xtart 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 eemp ilcouncQzlocity.om. PUBLIC HEARING ITEMS: As recommended by the Cultural Heritage Committee, adopt a Resolution approving a Historic Property Preservation Agreement between the City and the owner of The Call Hotel' at 1703 Santa Barbara Street under the terms described in the draft agreement Consideration of eligibility for historic listing is exempt from the provisions of the California Environmental Quality Act ICEQAI under the general rule described in CEQA Guidelines §15061(bHU as it is does not have the potential for causing a significant effect on the environment (1703 Santo Barbara St, HIST-11601-20221 For more information, you are invited to contact Walter Oeteell of the Ws Community Development Department at (805) 781-7593or woetzell®slocity.org • The City Council will hold a Public Hearing to consider the following actions related to the Cannabis Business Program: o Introduce an Ordinance amending the Zoning Map expanding the Cannabis Business Overlay Zones to include recently annexed services, manufacturing, and business park areas along Broad Street in the Airport Area Specific Plan (RZ-0118-2023); and o Introduce an Ordinance amending Chapter 9.10 (Cannabis Regulations) of the Municipal Code adding requirements for owners that lease property to cannabis businesses (CODE-0164- 2023); and o Adopt a Resolution updating cannabis operator permit ranking criteria to clarify potential points awarded during the evaluation of commercial cannabis operator permit applications. For mare information, you are invited to contact Alex Fuchs of the City's Community Development Department at (805) 703-7877 or afuchs@slocitvara The City Council may also discuss other hearings or uusiness items before or after the hems listed above. If you challenge the proposed project in court, you may be limited to raising only those issues you or someone else raised atthe public hearing described in this notice, or m written correspondence delivered to the City Council at, or priorto, the public hearing. Council Agenda Reports for this meeting will be available for review one week in advance of the meeting date on the City's welente, under the Public Meeting Agendasweb page: httsA/wwwslocitva o/ , nmenUmavor-end-city-council/agendas-and- inl nutes. Please call the City Clerk's Office at 1805) 781-7114 for more information. The City Council meeting will be televised live on Charter Cable Channel 20 and live streaming on the City's YouTube channel htto,// outube slo c'N. April 20, 2023