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HomeMy WebLinkAboutItem 5a. Amendments to SLOMC Section 17.86.080 (Cannabis) (CODE-0051-2025) PLANNING COMMISSION AGENDA REPORT SUBJECT: REVIEW OF TEXT AMENDMENTS TO SECTION 17.86.080 (“CANNABIS”) OF TITLE 17 (“ZONING REGULATIONS”) OF THE MUNICIPAL CODE TO CLARIFY SPECIFIC LAND USE AND OPERATIONAL REQUIREMENTS FOR COMMERCIAL CANNABIS ACTIVITY [CITYWIDE] (CODE-0051-2025) BY: Ivana Gomez, Cannabis Business Coordinator FROM: Tyler Corey, Deputy Director Phone Number: (805) 781-7147 Phone Number: (805) 781-7169 Email: igomez@slocity.org Email: tcorey@slocity.org APPLICANT: City of San Luis Obispo REPRESENTATIVE: Ivana Gomez RECOMMENDATION Adopt a Resolution recommending the City Council introduce and approve an Ordinance to amend Section 17.86.080 (“Cannabis”) of Title 17 (“Zoning Regulations”) of the Municipal Code to clarify specific land use and operational requirements for commercial cannabis activity. 1.0 COMMISSION'S PURVIEW Pursuant to the City of San Luis Obispo Municipal Code (“SLOMC”) Chapter 17.124 (Amendments – Zoning Regulations and Zoning Map) and California Government Code Section § 65854, the Planning Commission’s role is to review the proposed amendments to the City’s Zoning Regulations for consistency with the City’s General Plan and State Law and provide a recommendation to the City Council. 2.0 SUMMARY On behalf of the City of San Luis Obispo, the Community Development Director has initiated a text amendment in accordance with SLOMC § 17.124.020(B) (Authority to Initiate an Amendment to the Zoning Regulations) to Section 17.86.080 (“Cannabis”) of Title 17 (“Zoning Regulations”) of the City of San Luis Obispo Municipal Code. The proposed amendments clarify specific land use and operational requirements for commercial cannabis activities consistent with the legislative intent of the currently adopted Zoning Ordinance and State Law. Specifically, the proposed amendments will clarify buffer requirements for retail storefronts, clarify hours of operation for microbusinesses that conduct retail storefront activity as party of their operations, and remove repetitive verbiage. 3.0 BACKGROUND Meeting Date: 4/9/2025 Item Number: 5a Time Estimate: 45 minutes Page 23 of 54 Item 5a CODE-0051-2025 Planning Commission Report – April 9, 2025 3.1 City Council Action Cannabis Regulations and Cannabis Zoning Regulations On May 15, 2018, the City Council adopted Ordinance No. 1647 (2018 Series), amending the Municipal Code to establish regulations for commercial cannabis activity, including adoption of SLOMC Chapter 9.10 (Cannabis Regulations) and SLOMC § 17.86.080 (Cannabis Zoning Regulations), f ormerly Chapter 17.99. On March 21, 2023, the City Council adopted Ordinance No. 1725 (2023 Series) modifying specific rules for commercial cannabis retail storefront operations including expansion of hours of operation and allowing access to medicinal cannabis customers 18 to 20 years of age with a valid physician’s recommendation. Cannabis Business Overlay Zones and Zoning Map On September 18, 2018, the City Council adopted Ordinance No. 1653 (2018 Series), amending the City’s Zoning Regulations and Zoning Map to designate seven areas of the City as Cannabis Business Overlay Zones (“CBZ Overlay Zones”) where cannabis businesses may be located. Then, on May 16, 2023, the City Council adopted Ordinance No. 1727 (2023 Series), amending the Zoning Map to expand the CBZ Overlay Zones to include recently annexed areas of the City, including the Fiero Lane -Clarion Court and East Airport Areas1,2. 3.2 Cannabis Business (CBZ) Overlay Zones and Buffers CBZ Overlay Zones are indicated on the City Zoning Map and establish locations in the City where cannabis businesses may operate. Allowed uses are further controlled by zoning and required buffers within those overlay zones. Table 2-1 (Uses Allowed by Zone) within SLOMC § 17.10.020 shows the permitting requirements per land use and zoning district. The CBZ overlay zones were carefully and deliberately proposed and adopted, taking into consideration state law buffer requirements, proximity to certain land uses such as schools and residentially zoned areas beyond and within the boundary lines, existing zoning, adjacency to arterial roads and other barriers within the built environment, and other land use suitability characteristics. Retail storefronts must be located at least one thousand (1,000) feet from any preschools, elementary schools, junior high schools, high schools, and public parks or playgrounds, six hundred (600) feet from licensed daycare centers, whether these uses are located in the CBZ overlay or not. In addition, retail storefronts must be three hundred (300) feet from residentially zoned areas within CBZ Overlay Zones (SLOMC § 17.86.080; see further discussion in Section 4.1 below). Retail storefronts are also required to be located at least one thousand (1,000) feet from other cannabis retail storefronts. 4.0 PROJECT ANALYSIS 4.1 Land Use Requirements for Retail Storefronts 1 City of San Luis Obispo Zoning Map 2 The term “CBZ Overlay” is also referred to as “CAN Overlay” in SLOMC § 17.86.080(E)(5)(b). Both terms are interchangeable and refer to the same zoning designation. Page 24 of 54 Item 5a CODE-0051-2025 Planning Commission Report – April 9, 2025 The first proposed text amendments are to SLOMC §§§ 17.86.080(E)(4)(e), 17.86.080(E)(10)(b)(iii), and 17.86.080(E)(12)(c)(v) within the Cannabis Zoning Regulations, which state the buffer requirements for retail storefronts from sensitive uses, including residentially zoned areas. Residential zones include the following zones: Low- Density Residential (R-1), Medium-Density Residential (R-2), Medium-High Density (R- 3) and High-Density Residential (R-4). Areas with a Mixed-Use (MU) Overlay are not considered to be residentially zoned, as the MU designation is an overlay rather than a base zone that is attached to some commercial zoning districts. The proposed text amendments clarify that the 300-foot buffer requirement for retail storefronts from residentially zoned areas applies only within CBZ Overlay Zones, consistent with the original legislative intent. The 05/01/2018 and 09/04/2018 Council Agenda Reports explicitly state that residential buffers were intended to apply only within CBZ Overlay Zones, which were established based on local conditions such as major roadways and railroads that serve as barriers from sensitive land uses. The 05/01/2018 Council Agenda Report to establish the City’s Cannabis Regulations, including the adoption of specific buffer requirements, clearly states that the buffer from residentially zoned areas was to apply within a CBZ Overlay Zone only. Page 3 of the report states the Planning Commission’s recommendation that: “Within overlay zones, sensitive uses like schools and parks should provide 1,000-foot buffers, and residential zones should provide 300-foot buffers, to retail stores. No other cannabis business activity should be subject to buffers.” This is further confirmed in the 09/04/2018 Council Agenda Report to establish the CBZ Overlay Zones. Page 3 of the report states, “While there is no buffer from residential uses in state law, the City has established a 300 -foot buffer between residentially zoned land and retail stores. However, this buffer only applies from residential zoning that occurs within that same overlay zone. There are two locations where this occurs, one is in the Broad Street Corridor CBZ, and the other is in the Airport Area CBZ.”3 It is important to note that the May 1, 2018, report established the regulatory foundation for cannabis buffers, even though the CBZs were not yet formally designated. The buffers were a key policy decision that directly influenced the later creation of the overlay zones. When the CBZs were adopted in September 2018, their boundaries were drawn in a way that accounted for these pre-established buffers. This clearly demonstrates that the legislative intent was always for the 300-foot buffer from residential zones to apply only within CBZ Overlay Zones. 3 The area that was previously zoned residential in the Airport Area CBZ has since been rezoned such that it is now zoned Service Commercial (C-S). There is now only one location in the City where residential zoning occurs within a CBZ Overlay Zone – the South Broad CBZ Overlay. Page 25 of 54 Item 5a CODE-0051-2025 Planning Commission Report – April 9, 2025 The City’s official Zoning Map further reinforces the legislative intent by clearly indicating that the 300-foot buffer applies to residential zones within the South Broad CBZ (see Figure 1). As stated above, the staff report from 09/04/2018 to establish CBZ Overlay Zones notes only two locations in the City where residential zoning occurs within a CBZ. The need for this clarifying amendment was brought to staff’s attention by an appeal regarding the Planning Commission’s approval of a Conditional Use Permit (CUP) for a cannabis retail storefront at 2400 Broad Street. The appeal questioned the project’s consistency with zoning regulations, including buffer requirements from residentially zoned areas. The proposed text amendment is declaratory of existing City law in effect since 2018, ensuring clarity and regulatory consistency for both pending and future projects. This clarifying text is a statement of what the ordinance has always meant and is intended to reflect the City’s application of the buffer requirements since their adoption. Additionally, staff recommends adding specific language to Section 17.86.080(E)(10)(B)(iii) to clarify that land uses established after the approval of a Use Permit for a retail storefront do not impede the existing use as a cannabis retail storefront. In other words, a new adjacent sensitive use does not affect the continuation of an existing use that was issued a Use Permit under the standards of the Municipal Code. This approach aligns with the principle that legally established land uses, often referred to as "nonconforming uses," are permitted to continue despite subsequent zoning changes or the introduction of new adjacent uses. This principle ensures that property owners can maintain their lawful operations without disruption, even as neighboring properties undergo changes. Page 26 of 54 Item 5a CODE-0051-2025 Planning Commission Report – April 9, 2025 Figure 1: City of SLO Zoning Map and Legend – South Broad CBZ Overlay as Adopted by Ordinance No. 1727 (2023 Series) 4.2 Commercial Cannabis Development Standards The term “CBZ Overlay” is referred to as “CAN Overlay” in SLOMC § 17.86.080(E)(5)(b). Both terms are interchangeable and refer to the same zoning designation. The proposed amendment to SLOMC § 17.86.080(E)(5)(b) is to replace the term “CAN Overlay” with “CBZ Overlay,” consistent with the City Zoning Map and Table 1 -1 “Zones Established” within SLOMC § 17.06.020(D). 4.3 Regulations for Retail Storefronts within a Microbusiness Operation Hours of Operation for Retail Storefronts Within a Microbusiness Operation On March 7th, 2023, the City Council adopted Ordinance No. 1725 (2023 Series) amending Chapter 9.10 (Cannabis Regulations) and Chapter 17.86.080 (Cannabis Zoning Regulations) of the Municipal Code, modifying specific rules for commercial cannabis retail storefront operations. The amendments expanded the allowable hours of operation from 9:00AM and 8:00PM daily to 7:00AM and 9:00PM daily. However, the Ordinance did not consider microbusiness operations, which are operations that engage in at least three (3) of the following commercial cannabis activities under one location: Page 27 of 54 Item 5a CODE-0051-2025 Planning Commission Report – April 9, 2025 cultivation, manufacturing, distribution, and retail sale (SLOMC § 17.156.028; Cal. Code Regs., Title 4, §15500.) As currently adopted, SLOMC § 17.86.080(E)(12)(c)(v)(ix) (Microbusiness Development Standards), states that the hours of retail sales shall be limited to between 9:00AM and 8:00PM. Under state regulations (Cal. Code Regs., Title 4, § 15500), microbusinesses authorized to engage in retail sale are required to comply with all rules and requirements applicable to a retailer license. Similarly, SLOMC § 17.86.080(E)(12)(c)(i) requires microbusinesses authorized to engage in retail sales to comply with the regulations established for retail commercial cannabis activity. Therefore, staff is recommending updating the hours of operation for retail storefronts within a microbusiness operation to be consistent with the hours of operation for a retail storefront only business: between 7:00AM and 9:00PM daily. Required Signage for Retail Storefronts within a Microbusiness Operation Ordinance No. 1725, referenced in the preceding section, also modified age restrictions for retail storefront operations. Specifically, the adopted ordinance allows individuals 18 to 20 years of age who have a valid physician’s recommendation for medicinal cannabis to enter and access retail storefronts that possess a valid state of California cannabis retailer license with M-designation (For Medical Use) (Cal. Code Regs., Title 4, § 15000.2). As with the amendment to the hours of operation for retail storefronts, the Ordinance did not include microbusiness operations that engage in retail storefront sales. Therefore, staff is recommending an amendment to SLOMC § 17.86.080(E)(12)(c)(v)(x), which states the entryway signage requirements for retail storefronts associated with a microbusiness. 4.4 Purpose Statement – Reference to Federal Law As discussed in the Annual Cannabis Business Program Update in 2024, at a federal level, there has been discussion of rescheduling cannabis from Schedule I to Schedule III under the Controlled Substances Act (CSA). However, there is no concrete timeline on when the U.S. Drug Enforcement Administration (DEA) will take action. Staff recommends removing the specific CSA classification of marijuana (cannabis) from the Cannabis Zoning Regulations “Purpose” statement found in SLOMC § 17.86.080(A). Instead, the proposed amendment will revise the purpose statement to state that the provisions of Section § 17.86.080 are not intended to affect or alter federal law, regardless of the classification. This avoids having to update this section whenever the federal government changes the classification of marijuana while still reinforcing that the provisions of the cannabis zoning regulations are not intended to affect or alter federal law. 5.0 ENVIRONMENTAL REVIEW Adoption of the proposed amendments to Section § 17.86.080 of the Municipal Code have been reviewed in accordance with the California Environmental Quality Act (CEQA) Guidelines. It has been determined that the amendments are exempt from environmental review under CEQA Guidelines Section § 15301(b)(3) (General Rule Exemption), which applies to activities that can be clearly seen to have no potential for significant environmental impact. Project-specific environmental review will be required for any new commercial cannabis activity. Page 28 of 54 Item 5a CODE-0051-2025 Planning Commission Report – April 9, 2025 6.0 OTHER DEPARTMENT / DIVISION REVIEW Some of the proposed amendments are declaratory of existing law, ensuring clarity and regulatory consistency for both pending and future projects, and others are intended to conform City regulations to allowances under state law. The Director of Community Development and the City Attorney’s Office have reviewed the proposed amendments to the City’s Cannabis Zoning Regulations and have found them to be consistent with State Law and the legislative intent of the adopted Ordinance. 7.0 ALTERNATIVES 1. Recommend the City Council does not adopt the recommended changes to the Zoning Regulations. The proposed changes to Sections 17.86.080(E)(4)(e), 17.86.080(E)(10)(b)(iii), and 17.86.080(E)(12)(c)(vii) are declaratory of existing law, and without adoption of the recommended changes, unintended ambiguity may persist regarding existing land use and operational requirements for commercial cannabis activity. The proposed changes to Section 17.86.080(E)(12)(c)(ix)-(x) are intended to reflect what is permitted under current state law, and without adoption of the recommended changes, the City’s cannabis regulations will remain inconsistent therewith. 2. Modify the recommendation. The Planning Commission may modify the recommended action prior to adopting the proposed Resolution. 8.0 ATTACHMENTS A - Draft PC Resolution recommending the City Council introduce and approve an Ordinance to amend Section 17.86.080 (“Cannabis”) of Title 17 of the Municipal Code to clarify specific land use and operational requirements for commercial cannabis activity (CODE-0051-2025). Page 29 of 54 Page 30 of 54 RESOLUTION NO. PC-XXXX-25 A RESOLUTION OF THE CITY OF SAN LUIS OBISPO PLANNING COMMISSION RECOMMENDING THE CITY COUNCIL INTRODUCE AND ADOPT AN ORDINANCE AMENDING SECTION 17.86.080 (“CANNABIS”) OF TITLE 17 (“ZONING REGULATIONS”) OF THE MUNICIPAL CODE TO CLARIFY SPECIFIC LAND USE AND OPERATIONAL REQUIREMENTS FOR COMMERCIAL CANNABIS ACTIVITY. THE PROJECT IS EXEMPT FROM ENVIRONMENTAL REVIEW (CEQA) AS REPRESENTED IN THE PLANNING COMMISSION AGENDA REPORT AND ATTACHMENTS DATED APRIL 9, 2025 (CITYWIDE; CODE-0051-2025) WHEREAS, on May 15, 2018, the City Council adopted Ordinance No. 1647 (2018 Series), amending the Municipal Code (“SLOMC”) to establish regulations for commercial cannabis activity, including adoption of SLOMC Chapter 9.10 (Cannabis Regulations) and SLOMC § 17.86.080 (Cannabis Zoning Regulations), formerly Chapter 17.99 ; and WHEREAS, on March 21, 2023, the City Council adopted Ordinance No. 1725 (2023 Series) modifying specific rules for commercial cannabis retail storefront operations including expansion of allowable hours of operation from between 9:00AM and 8:00PM daily to between 7:00AM and 9:00PM daily and allowing individuals 18 to 20 years of age who have a valid physician’s recommendation for medicinal cannabis to enter and access retail storefronts that possess a valid state of California cannabis retailer license with M - designation (For Medical Use); and WHEREAS, on September 18, 2018, the City Council adopted Ordinance No. 1653 (2018 Series), amending the City’s Zoning Regulations and Zoning Map to designate seven areas of the City as Cannabis Business Overlay Zones (“CBZ Ove rlay Zones”) where cannabis businesses may be located. Then, on May 16, 2023, the City Council adopted Ordinance No. 1727 (2023 Series), amending the Zoning Map to expand the CBZ Overlay Zones to include recently annexed areas of the City, including the Fiero Lane-Clarion Court and East Airport Areas; and WHEREAS, upon adoption of the initial cannabis regulations on November 17, 2018, the City Council of the City of San Luis Obispo directed staff to return annually with an update to the City’s Cannabis Business Program, including recommendations for improvements based on operational and administrative experiences; and WHEREAS, the Planning Commission of the City of San Luis Obispo conducted a public hearing in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo, California on April 9, 2025, for the purpose of recommending an amendment to Section 17.86.080 (“Cannabis”) of Title 17 (“Zoning Regulations”) of the Municipal Code pursuant to a proceeding under CODE-0051-2025; City of San Luis Obispo, applicant; and Page 31 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 2 WHEREAS, notices of said public hearing were made at the time and in the manner required by the law; and WHEREAS, the Planning Commission has duly considered all evidence, including the testimony of interested parties and the evaluation and recommendations provided by staff, presented at said hearing. NOW, THEREFORE, BE IT RESOLVED, by the Planning Commission of the City of San Luis Obispo as follows: SECTION 1. Findings. Based upon all evidence, the Planning Commission makes the following findings: 1. The proposed amendments to Municipal Code §§§ 17.86.080(E)(4)(e), 17.86.080(E)(10)(b)(iii), and 17.86.080(E)(12)(c)(v) are consistent with State Law and are declaratory of existing City law, ensuring clarity and regulatory consistency for both pending and future projects. These amendments clarify specific land use requirements for commercial cannabis activities consistent with the legislative intent of the currently adopted Zoning Ordinance. These amendments are intended to reflect the City’s application of the buffer requirements since their adoption. 2. In adopting Municipal Code §17.86.080 (formerly Chapter 17.99) on May 15, 2018, the City Council found that the regulations balance the City’s competing interests in allowing certain commercial and research -related cannabis activities desired by the majority of voters, with the public health, welfare, and safety concerns of the City. The proposed amendments to §§§ 17.86.080(E)(4)(e), 17.86.080(E)(10)(b)(iii), and 17.86.080(E)(12)(c)(v), as declaratory of existing law, accomplish the same. 3. The Council Agenda Report dated May 1, 2018, to establish the City’s Cannabis Regulations, including the adoption of specific buffer requirements, clearly indicates that the City Council intended the buffer from residentially zoned areas to apply to areas within the CBZ Overlay Zones only. 4. The Council Agenda Report dated September 4, 2018, to formally establish the CBZ Overlay Zones states that the three-hundred-foot buffer requirement between residentially zoned land and retail storefronts applies from residential zoning that occurs within a CBZ Overlay Zone. Additionally, the CBZ Overlay Zones were designed to incorporate natural physical barriers—such as railroads and major roads—that inherently serve as buffers from sensitive sites, thereby minimizing potential impacts on public health and safety. Applying the 300-foot buffer requirement outside these overlay zones would unnecessarily restrict allowable commercial cannabis sites beyond what is necessary to ensure health and safety, as contemplated by the adoption of the overlay zones. Page 32 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 3 5. The terms “CAN Overlay” and “CBZ Overlay” have been used interchangeably. The proposed amendment to Municipal Code § 17.86.080(E)(5)(b) replaces “CAN Overlay” with “CBZ Overlay” to align with the adopted Zoning Map and Table 1‑1 (“Zones Established”) in SLOMC § 17.06.020(D). 6. The proposed amendments to Municipal Code §§ 17.86.080(E)(12)(c)(v)(ix) and 17.86.080(E)(12)(c)(v)(x) are consistent with State Law and the California Department of Cannabis Control (“DCC”) Regulations, specifically with DCC Regulations §§§ 15400, 15403, and 15500, which define regulations for commercial cannabis retail and microbusiness license holders. 7. The proposed amendments to Municipal Code §§ 17.86.080(E)(12)(c)(v)(ix) and 17.86.080(E)(12)(c)(v)(x) are consistent with Municipal Code § 17.86.080(E)(12)(c)(i) which requires microbusinesses authorized to engage in retail sales to comply with the regulations established for retail commercial cannabis activity. 8. The proposed amendment to Municipal Code § 17.86.080(A) does not alter or affect federal law, and it revises the purpose statement to remove the specific CSA classification of cannabis. This change ensures that the regulation remains effective regardless of any future federal scheduling changes. SECTION 2. Environmental Determination. 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 CEQA Guidelines Section § 15301(b)(3) (General Rule Exemption), which exempts activities that can be seen with certainty to have no possibility for causing a significant effect on the environment. Project-specific environmental review will be required for any new commercial cannabis activity. Page 33 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 4 SECTION 3. Action. The Planning Commission hereby recommends to the City Council the introduction and adoption of an ordinance to amend § 17.86.080 (“Cannabis”) of Title 17 (“Zoning Regulations”) of the Municipal Code to clarify specific land use and operational requirements for commercial cannabis activity as set forth in Exhibit A and incorporated herein. Upon motion of ______________________, seconded by __________________ and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was passed and adopted this 9th day of April 2025. ___________________ Tyler Corey, Secretary Planning Commission Page 34 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 5 EXHIBIT A DRAFT ORDINANCE NO. ____ (2025 SERIES) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, AMENDING SECTION 17.86.080 (“CANNABIS”) OF TITLE 17 (“ZONING REGULATIONS”) OF THE MUNICIPAL CODE TO CLARIFY SPECIFIC LAND USE AND OPERATIONAL REQUIREMENTS FOR COMMERCIAL CANNABIS ACTIVITY. THE PROJECT IS EXEMPT FROM ENVIRONMENTAL REVIEW (CEQA) WHEREAS, on May 15, 2018, the City Council adopted Ordinance No. 1647 (2018 Series), amending the Municipal Code (“SLOMC”) to establish regulations for commercial cannabis activity, including adoption of SLOMC Chapter 9.10 (Cannabis Regulations) and SLOMC § 17.86.080 (Cannabis Zoning Regulations), formerly Chapter 17.99 ; and WHEREAS, on March 21, 2023, the City Council adopted Ordinance No. 1725 (2023 Series) modifying specific rules for commercial cannabis retail storefront operations including expansion of allowable hours of operation from 9:00AM and 8:00PM daily to 7:00AM and 9:00PM daily and allowing individuals 18 to 20 years of age who have a valid physician’s recommendation for medicinal cannabis to enter and access retail storefronts who possess a valid state of California cannabis retailer license with M -designation (For Medical Use); and WHEREAS, on September 18, 2018, the City Council adopted Ordinance No. 1653 (2018 Series), amending the City’s Zoning Regulations and Zoning Map to designate seven areas of the City as Cannabis Business Overlay Zones (“CBZ Overlay Zones”) where cannabis businesses may be located. Then, on May 16, 2023, the City Council adopted Ordinance No. 1727 (2023 Series), amending the Zoning Map to expand the CBZ Overlay Zones to include recently annexed areas of the City, including the Fiero Lane-Clarion Court and East Airport Areas; and WHEREAS, upon adoption of the initial cannabis regulations on November 17, 2018, the City Council of the City of San Luis Obispo directed staff to return annually with an update to the City’s Cannabis Business Program, including recommendations for improvements based on operational and administrative experiences; and WHEREAS, the Planning Commission of the City of San Luis Obispo conducted a public hearing in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo, California on April 9, 2025, for the purpose of recommending an amendment to Section 17.86.080 (“Cannabis”) of Title 17 (“Zoning Regulations”) of the Municipal Code pursuant to a proceeding under CODE-0051-2025; City of San Luis Obispo, applicant; and Page 35 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 6 WHEREAS, notices of said public hearing were made at the time and in the manner required by the law; and WHEREAS, the Planning Commission has duly considered all evidence, including the testimony of interested parties and the evaluation and recommendations provided by staff, presented at said hearing. NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of San Luis Obispo as follows: SECTION 1. Findings. Based upon all evidence, the City Council makes the following findings: 1. The proposed amendments to Municipal Code §§§ 17.86.080(E)(4)(e), 17.86.080(E)(10)(b)(iii), and 17.86.080(E)(12)(c)(v) are consistent with State Law and are declaratory of existing City law, ensuring clarity and regulatory consistency for both pending and future projects. These amendments clarify specific land use requirements for commercial cannabis activities consistent with the legislative intent of the currently adopted Zoning Ordinance. These amendments are intended to reflect the City’s application of the buffer requirements since their adoption. 2. In adopting Municipal Code § 17.86.080 (formerly Chapter 17.99) on May 15, 2018, this Council found that the regulations balance the City’s competing interests in allowing certain commercial and research-related cannabis activities desired by the majority of voters, with the public health, welfare, and safety concerns of the City. The proposed amendments to Municipal Code §§§ 17.86.080(E)(4)(e), 17.86.080(E)(10)(b)(iii), and 17.86.080(E)(12)(c)(v), as declaratory of existing law, accomplish the same. 3. The Council Agenda Report dated May 1, 2018, to establish the City’s Cannabis Regulations, including the adoption of specific buffer requirements, clearly indicates that the City Council intended the buffer from residentially zoned areas to apply within the CBZ Overlay Zones only. 4. The Council Agenda Report dated September 4, 2018, to formally establish the CBZ Overlay Zones states that the three-hundred-foot buffer requirement between residentially zoned land and retail storefronts applies from reside ntial zoning that occurs within a CBZ Overlay Zone. Additionally, the CBZ Overlay Zones were designed to incorporate natural physical barriers—such as railroads and major roads—that inherently serve as buffers from sensitive sites, thereby minimizing poten tial impacts on public health and safety. Applying the 300-foot buffer requirement outside these overlay zones would unnecessarily restrict allowable commercial cannabis sites beyond what is necessary to ensure health and safety, as contemplated by the ado ption of the overlay zones. Page 36 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 7 5. The terms “CAN Overlay” and “CBZ Overlay” have been used interchangeably. The proposed amendment to Municipal Code Section § 17.86.080(E)(5)(b) replaces “CAN Overlay” with “CBZ Overlay” to align with the adopted Zoning Map and Table 1‑1 (“Zones Established”) in SLOMC § 17.06.020(D). 6. The proposed amendments to Municipal Code §§ 17.86.080(E)(12)(c)(v)(ix) and 17.86.080(E)(12)(c)(v)(x) are consistent with State Law and the California Department of Cannabis Control (“DCC”) Regulations, specifically with DCC Regulations §§§ 15400, 15403, and 15500, which define regulations for commercial cannabis retail and microbusiness license holders. 7. The proposed amendments to Municipal Code §§ 17.86.080(E)(12)(c)(v)(ix) and 17.86.080(E)(12)(c)(v)(x) are consistent with Municipal Code § 17.86.080(E)(1 2)(c)(i) which requires microbusinesses authorized to engage in retail sales to comply with the regulations established for retail commercial cannabis activity. 8. The proposed amendment to Municipal Code § 17.86.080(A) does not alter or affect federal law, and it revises the purpose statement to remove the specific CSA classification of cannabis. This change ensures that the regulation remains effective regardless of any future federal scheduling changes. SECTION 2. Environmental Determination. 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 CEQA Guidelines § 15301(b)(3) (General Rule Exemption), which exempts activities that can be seen with certainty to have no possibility for causing a significant effect on the environment. Project-specific environmental review will be required for any new commercial cannabis activity. SECTION 3. Action. The City Council hereby adopts an ordinance amending Section 17.86.080 (“Cannabis”) of Title 17 (“Zoning Regulations”) of the Municipal Code to clarify specific land use and operational requirements for commercial cannabis activity. Section 17.86.080 (“Cannabis”) of Title 17 (“Zoning Regulations”) of the City of San Luis Obispo Municipal Code is hereby amended as follows: 17.86.080 Cannabis. A. Purpose. The purpose of this section is to protect the public health, safety, and welfare, enact strong and effective regulatory and enforcement controls in compliance with state of California law, protect neighborhood character, and minimize potential for negative impacts on people, communities, and the environment within the city of San Luis Page 37 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 8 Obispo by establishing land use requirements and development standards for cannabis activities. Cannabis activity, as defined in Section 17.156.008 (C Definitions), includes the cultivation, possession, manufacturing, processing, storing, laboratory testing, labeling, transporting, distribution, delivery, or sale of cannabis or a cannabis product for either personal or commercial use. Therefore, this section recognizes that cannabis activities require land use controls due to state legal constraints on cannabis activity, and the potential environmental and social impacts associated with cannabis activity. Not hing in this section is intended to affect or alter federal law., which identifies marijuana (cannabis) as a Schedule I controlled substance. B. Applicability. Nothing in this section shall be construed to allow any conduct or activity relating to the cultivation, distribution, dispensing, sale, or consumption of cannabis that is otherwise illegal under local or state law, statute, rule or regulation. It is neither the intent nor the effect of this chapter to condone or legitimize the illegal use, consumpt ion or cultivation of cannabis under state or local law and nothing herein is intended to interpret, alter, interfere with or in any way affect otherwise applicable federal law. C. Definitions. See Chapter 17.156, Land Use Definitions (Table 2-1: Uses Allowed by Zone). Terms used in this section that are defined terms under state cannabis statutes or regulations shall have the same meaning as the respective state definition, as now defined or as the definition may be amended by the state in the future, except as otherwise specifically provided in Chapter 17.156, Land Use Definitions (Table 2-1: Uses Allowed by Zone), or Chapter 9.10, Cannabis Regulations. D. Personal Cultivation. 1. Indoor Personal Cultivation. Indoor personal cultivation of cannabis does not require a permit and is allowed in all private residences subject to all the following minimum performance standards: a. All indoor personal cultivation shall occur only inside a private residence or fully enclosed and secure accessory building or structure to a private residence. Accessory building or structure for indoor personal cultivation of cannabis does not include a greenhouse or hoop structure. Page 38 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 9 b. Structures and equipment used for indoor cultivation, such as indoor grow lights, shall comply with all applicable building, electrical and fire code regulations as adopted by the city. c. All accessory buildings and structures used for indoor cultivation shall comply with the city’s zoning regulations and building codes. d. Indoor personal cultivation of cannabis may occur inside a dwelling and/or an accessory building or structure, subject to the following restrictions: i. The cumulative cultivation for cannabis shall not exceed six cannabis plants per private residence. ii. All personal cultivation shall be conducted by persons twenty-one years of age or older, and the cumulative total of cannabis plants per private residence, indoor and outdoor, shall not exceed six cannabis plants, regardless of the number of persons residing on the property. e. Personal cultivation of cannabis shall not interfere with the primary occupancy of the building or structure, including regular use of kitchen(s) or bathroom(s). f. Cannabis cultivation must be concealed from public view at all stages of growth and there shall be no exterior evidence of cannabis cultivation occurring at the property visible with normal unaided vision from any pu blic place, or the public right-of-way. Personal cultivation of cannabis shall be shielded to confine light and glare to the interior of the structure. g. Nothing in this section is intended, nor shall it be construed, to preclude any landlord from limiting or prohibiting personal cultivation of cannabis by tenants. h. Nothing in this section is intended, nor shall it be construed, to authorize commercial cultivation of cannabis at a private residence. i. Personal cultivation of cannabis shall not create : offensive odors or excessive dust, heat, noise, light, glare, smoke, traffic, or hazards due to the use or storage of materials, processes, products or wastes, or other unreasonable impacts to persons of normal sensitivity who are living, working or lawf ully present in the vicinity of the personal cultivation. Page 39 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 10 j. Cannabis cultivation areas in a private residence shall be locked at all times when the cultivator is not present. 2. Outdoor Personal Cultivation. Outdoor personal cultivation of cannabis does not require a permit and is allowable at all private residences, subject to all of the following minimum performance standards: a. Outdoor personal cultivation of cannabis is not permitted in the front yard between the public right-of-way and the private residence. Outdoor personal cultivation is only permitted in a rear or side yard that is entirely enclosed by a solid, opaque fence that is associated with a private residence used for residential purposes. b. The cannabis plants shall be placed at a minimum setback of five feet from the edge of canopy to the property line. c. Cannabis cultivation must be concealed from public view at all stages of growth and there shall be no exterior evidence of cannabis cultivation occurring at the property visible by normal unaided vision from a public place or the public right-of-way. Cultivation may occur within a greenhouse or hoop structure (as long as it complies with the performance standards), but mixed light cultivation is prohibited. d. All outdoor personal cultivation shall be conducted by persons twenty-one years of age or older. e. The cumulative total of cannabis plants cultivated outdoor shall not exceed six cannabis plants per parcel containing a private residence, regardless of the number of persons residing on the property, and regardless of the number of private residences on the parcel. f. Nothing in this section is intended, nor shall it be construed, to preclude any landlord from limiting or prohibiting cannabis cultivation by tenants. g. Nothing in this section is intended, nor shall it be construed, to authorize commercial cultivation of cannabis at a private residence outdoors. h. Outdoor personal cultivation of cannabis shall not create: offensive odors or excessive dust, heat, noise, light, glare, smoke, traffic, or hazards due to the use Page 40 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 11 or storage of materials, processes, products or wastes, or other unreasonable impacts to people of normal sensitivity living, working or lawfully present in the vicinity of the personal cultivation. E. Commercial Cannabis Businesses. 1. Commercial Cannabis Operator Permit. a. No person or entity shall operate or conduct a commercial cannabis activity or commercial cannabis business without first obtaining both a commercial cannabis operator permit from the city pursuant to Chapter 9.10, Cannabis Regulations, and a use permit from the city pursuant to this chapter to conduct the commercial cannabis activity at a specific location. Any permit authorizing commercial cannabis activity pursuant to this chapter shall be conditioned upon the holder obtaining and maintaining a city commercial cannabis operator permit and the appropriate state license for the activity. b. A commercial cannabis activity pursuant to this chapter may be transferred, assigned, or bequeathed, by operation of law or otherwise as described in Section 9.10.120. c. The commercial cannabis operator permit must be renewed each year. d. Expiration of the use permit shall be consistent with Section 17.104.070. 2. No Vested Right to Operate. No person shall have any entitlement or vested right to operate a cannabis business solely by virtue of licensing under these regulations. Operation of cannabis activity(ies) requires both the approval of a conditional use permit and a commercial cannabis operator permit under Chapter 9.10, which is a revocable privilege and not a right in the city. The applicant bears the burden of proving that all qualifications for licensure have been satisfied and continuously maintained prior to conducting a cannabis business at an otherwise allowed location within the city. 3. State Application Required. Filing a local application for cannabis activity(ies) with the city does not constitute an application with the state of California. A separate state application and license process must be followed through with the state. Page 41 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 12 4. Application Requirements. All commercial cannabis activities require qualification through the commercial cannabis operator selection appro val process in Chapter 9.10, Cannabis Regulations, a state license and a use permit for a specific location pursuant to this chapter. The application for a use permit shall include the followi ng information: a. Site plan, floor plans, and a general description of the nature, square-footage, parking and type of cannabis activity(ies) being requested. b. An operations plan including: i. A security plan to the approval of the chief of police, pursuant to criteria approved by resolution of the city council, including but not limited to on -site security measures both physical and operational and, if applicable, security measures for the delivery of cannabis associated with the commercial cannabis business and payment of taxes and fees; ii. Plan for restriction of access by minors; iii. Employee safety and training plan; iv. Odor, noise and light management plan; v. Estimated energy usage and energy efficiency plan; vi. Estimated water usage and water efficiency plans; vii. Waste management plan; and viii. For retail sales, provide an educational material dissemination plan. c. Proposed signage: i. Must comply with city’s sign regulations for size, area and type of sign, no exceptions allowed. ii. Internal illumination of signs is prohibited. iii. No portion of the cannabis plant may be used in any sign visible from the public right-of-way. Page 42 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 13 iv. Provide sign size, height, colors, and design of any proposed signage at the site. v. Must include a sign inside the premises that states: “Smoking, ingesting, vaping, eating or consuming cannabis or cannabis products on this site or in a public place is prohibited.” vi. Must include a sign at each entrance of a retail storefront that prohibits persons under twenty-one years of age from entering. d. An analysis that demonstrates neighborhood compatibility and a plan for addressing potential compatibility issues. e. Applications for retail storefronts shall include a vicinity map showing at least one thousand feet of surrounding area and the distances to the following uses: 1) one thousand feet from any preschool, elementary school, junior high school, high school, public park or playground, whether located within or outside a CBZ Overlay Zone; 2) six hundred feet from any licensed daycare center, whether located within or outside a CBZ Overlay Zone ; and 3) three hundred feet from a residentially zoned areas located within a CBZ Overlay Zone. Youth centers do not require a buffer. Distance shall be measured from the nearest point of the property line of the site that contains the commercial cannabis activity to the nearest point of the property line of the enumerated use using a direct straight- line measurement. f. Proof of ownership, option to purchase, (or lease agreement or option to lease with landowner’s express written consent to the proposed commercial cannabis activity(ies) to be conducted on the premises) or othe r proof of right to apply for the permit at the location. g. A list of all other uses on the property. 5. Commercial Cannabis Development Standards. Each cannabis business is required to meet the following standards: a. Qualification through the Chapter 9.10, Cannabis Regulations, commercial cannabis operator selection process to apply for a commercial cannabis operator permit. Submittal of a use permit application to conduct the commercial cannabis Page 43 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 14 business within the zones specified for each type of commercial activity listed below. b. Commercial cannabis facilities shall be allowed in areas demarcated with CAN CBZ overlay zoning and as allowed in the underlying zone for each type of commercial cannabis activity. c. All commercial cannabis facilities shall be sited and/or operated in a manner that prevents cannabis odors from being detected off site. Commercial cannabis activities shall not create offensive or excessive odors, dust, heat, noise, light, glare, smoke, traffic, or hazards due to the use or storage of materials, processes, products or wastes, or other unreasonable impacts to people of normal sensitivity living, working or lawfully present in the vicinity of the commercial facility. d. All commercial cannabis operations must be concealed from public view at all times and there shall be no exterior evidence of cannabis or cannabis products occurring at the property visible with normal unaided vision from any public place, or the public right-of-way. Commercial manufacturing of cannabis or cannabis products shall be shielded to confine light and glare to the interior of the structure. e. All commercial cannabis facilities shall include adequate measures that address enforcement priorities for commercial cannabis activities, including restricting access to the public and to minors and ensuring that cannabis and cannabis products are only obtained from and supplied to other permitted licensed sources within the state and not distribu ted out of state. f. The use permit to be issued under this chapter shall include, but is not limited to, the following conditions: i. The obtaining and maintaining of the commercial cannabis operator permit and appropriate state license. ii. Payment of all applicable current and future state and local taxes and all applicable commercial cannabis fees and related penalties established by the city council, including but not limited to application, administrative review, inspection, etc. Page 44 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 15 iii. The commercial cannabis operator permit or a controlling interest in the permit may not be assigned, transferred or bequeathed, by operation of law or otherwise, unless permitted as described in Chapter 9.10, and the permit shall terminate automatically on such event. iv. Any commercial cannabis operator permit issued pursuant to this chapter and Chapter 9.10 expires after one year, unless renewed. v. Prohibition of on-site consumption of cannabis at: (A) a commercial cannabis business or commercial cannabis activity location; (B) any other business, club or cooperative or event, regardless if open to the public or only to members; and (C) anywhere an entry or other fee is charged to attendees or the host or thing of value or consideration is received or exchanged. vi. Prohibition of the possession, storage, sale, distribution or consumption of alcoholic beverages on the premises, or the holding of license from the State Division of Alcoholic Beverage Control for the sale of alcoholic beverages, or operating a business that sells alcoholic beverages on or adjacent to the commercial cannabis activity site. vii. No cannabis products or cannabis accessories may be displayed in windows or visible from the public right-of-way or from places accessible to the general public. viii. Prohibition of minors and persons under the age of twenty-one on the premises, even if accompanied by a parent or guardian, unless the person is at least eighteen years of age and is also in possession of a valid physician’s recommendation for medical cannabis. ix. Outdoor storage of cannabis or cannabis products is prohibited. 6. Commercial Cultivation. a. Commercial Cannabis Cultivation. Commercial cannabis cultivation may be conditionally permitted indoors only, subject to the requirements of this section and the obtaining and maintaining of a commercial cannabis operator permit pursuant to Chapter 9.10, Cannabis Regulations, and appropriate state license, in the following zones: Page 45 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 16 i. Service commercial (C-S); ii. Manufacturing (M); iii. Business park (BP). b. A maximum of seventy thousand square feet of cumulative canopy area (includes total canopy of either horizontal or vertical growing situations) for cultivation and nurseries shall be allowed for indoor commercial cannabis cultivation in the city within the zones identified above, including microbusinesses under subsection (E)(12) of this section. c. 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. All commercial cannabis cultivation shall be conducted only inside a fully enclosed, legally permitted structure that meets all applicable building and other codes. d. Commercial cannabis cultivation conditional permits include the following: i. Specialty Cultivator. A maximum of no more than five thousand square feet of canopy of indoor cultivation (either in horizontal or vertical growing situations) and includes processing. ii. Small Cultivator. A maximum of no more than ten thousand square feet of canopy of indoor cultivation (either in horizontal or vertical growing situations) and includes processing. iii. Nursery, Cannabis. A maximum of no more than ten thousand square feet of indoor propagation area (either in horizontal or vertical growing situations). e. Development Standards. i. Compliance with subsection (E)(5) of this section, Commercial Cannabis Development Standards. ii. Canopy areas shall be easily identifiable for inspection and measurement. Each unique area included in the total canopy calculation shall be separated Page 46 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 17 by an identifiable boundary such as an interior wall or by at least ten feet of open space (see “Canopy” definition in Chapter 17.156). iii. All indoor cannabis cultivation shall be designed to accomplish zero net energy use from the start of the operation. iv. Pesticides and fertilizers shall be properly labeled, stored, and applied to avoid and prevent contamination through erosion, leakage, or inadvertent damage from rodents, pests, or wildlife. 7. Manufacturing. a. Manufacturing (Nonvolatile) Permissible. Nonvolatile cannabis or cannabis products manufacturing may be conditionally permitted indoors only, subject to the requirements of this section and the obtaining and maintaining of a commercial cannabis operator permit pursuant to Chapter 9.10, Cannabis Regulations, and appropriate state license, in the following zones: i. Service commercial (C-S); ii. Manufacturing (M); iii. Business park (BP). b. Manufacturing (Volatile) Prohibited. Cannabis or cannabis products manufacturing involving volatile solvents, processes, compounds or substances is prohibited. c. Development Standards. i. Compliance with subsection (E)(5) of this section, Commercial Cannabis Development Standards. ii. Outdoor manufacturing of cannabis or cannabis products is prohibited. iii. A complete description of all products used in the manufacturing process including the cannabis supply chain, liquids, solvents, agents, and processes. iv. Storage protocol and hazard response plan. Page 47 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 18 v. Employee safety and training equipment plan, plus materials safety data sheet requirements, if any. 8. Distribution. a. Commercial cannabis distribution may be conditionally permitted, subject to the requirements of this section and the obtaining and maintaining of a commercial cannabis operator permit pursuant to Chapter 9.10, Cannabis Regulations, and appropriate state license, in the following zones: i. Service commercial (C-S); ii. Manufacturing (M); iii. Business park (BP); b. Development Standards. i. Compliance with subsection (E)(5) of this section, Commercial Cannabis Development Standards. 9. Testing Laboratory. a. Commercial cannabis testing may be conditionally permitted, subject to the requirements of this section and the obtaining and maintaining of a com mercial cannabis operator permit pursuant to Chapter 9.10, Cannabis Regulations, and appropriate state license, in the following zones: i. Service commercial (C-S); ii. Manufacturing (M); iii. Business park (BP); iv. Office (O). b. Development Standards. i. Compliance with subsection (E)(5) of this section, Commercial Cannabis Development Standards. Page 48 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 19 ii. The cannabis testing laboratory, as proposed, will comply with all the requirements of the state for the testing of cannabis, including dual licensure and participation in an authorized track-and-trace program. iii. The owners, investors, permittees, operators, and employees of the cannabis testing laboratory will not be associated with, nor have any financial interest in, any other form of commercial cannabis activity. iv. The cannabis testing laboratory is accredited by an appropriate accrediting agency as approved by the state and further described in Health and Safety Code Section 5238 and as it may be amended. v. The cannabis testing laboratory operating plan demonstrates proper protocols and procedures for statistically valid sampling methods and accurate certification of cannabis and cannabis products for potency, purity, pesticide residual levels, mold, and other contaminants according to adopted industry standards. 10. Retail—Storefront. a. Commercial cannabis storefront retail may be conditionally permitted, subject to the requirements of this section and the obtaining and maintaining of a commercial cannabis operator permit, and the appropriate state license, in the following zones: i. Retail commercial (C-R); ii. Service commercial (C-S). b. Development Standards. i. Compliance with subsection (E)(5) of this section, Commercial Cannabis Development Standards. ii. Only three retail storefronts, which must front arterial streets, will be allowed within the city. Selection of the retail commercial cannabis operator will be selected from qualified commercial cannabis operators as set forth in Chapter 9.10, Cannabis Regulations. One of the retail storefronts shall have a medicinal license and may also have an adult use license. Page 49 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 20 iii. Retail storefronts shall be located at least: 1) one thousand feet from any preschool, elementary school, junior high school, high school, public park or playground, whether located within or outside a CBZ Overlay Zone ; 2) six hundred feet from any licensed day care center, whether located within or outside a CBZ Overlay Zone; and 3) three hundred feet from any residentially zoned area located within a CBZ Overlay Zone. Youth centers do not require a buffer. Distance shall be measured from the nearest point of the property line to the nearest point of the property line of the enumerated use using a direct straight-line measurement. A subsequently established use described herein shall not affect the continuation of a retail storefront in possession of a Use Permit issued under the standards of this Section and Chapter 9.10. iv. Retail storefronts must be separated from each other by at least one thousand feet. v. Hours of operation shall be limited between seven a.m. and nine p.m. vi. Retail storefronts that possess a valid state of California cannabis retailer license with an A-designation must include a sign at each entrance of a retail storefront that prohibits persons under twenty-one years of age from entering. Retail storefronts that possess a valid state of California cannabis retailer license with an M-designation or both an A-designation and an M-designation must include a sign at each entrance of the retail storefront that prohibits persons under twenty-one years of age from entering unless the person is at least eighteen years of age and is also in possession of a val id physician’s recommendation for medical cannabis. 11. Retail—Non-Storefront (Delivery Services). a. Commercial cannabis non-storefront retail may be conditionally permitted, subject to the requirements of this section and the obtaining and maintaining of a commercial cannabis operator permit pursuant to Chapter 9.10, Cannabis Regulations, and the appropriate state license, in the following zones: i. Service commercial (C-S); ii. Manufacturing (M); Page 50 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 21 iii. Business park (BP). b. Development Standards. i. Compliance with subsection (E)(5) of this section, Commercial Cannabis Development Standards. ii. Hours of delivery shall be limited between six a.m. to ten p.m. 12. Microbusiness. a. Microbusinesses fall into two groups as described below and may be conditionally permitted, subject to the requirements of this section and the obtaining and maintaining of a commercial cannabis operator permit pursuant to Chapter 9.10, Cannabis Regulations, and the appropriate state license, in the following zones: i. Microbusinesses with no more than fifty percent of the gross receipts being from cultivation, distribution and manufacturing are allowed in the following zones: (a) Retail commercial (C-R). ii. Microbusinesses with no more than fifty percent of the gross receipts being from storefront retail sales are allowed in the following zones: (a) Manufacturing (M); (b) Business park (BP). iii. Microbusinesses located in the service commercial (C-S) zone are not limited by gross sales receipts from cultivation, distribution, manufacturing or retail sales. b. Microbusinesses are subject to the seventy thousand square feet of canopy cultivation citywide limitation (either in horizontal or vertical growing situations) and the limit of three retail storefronts fronting arterial streets citywide set forth in subsection (E)(10) of this section. c. Development Standards. Page 51 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 22 i. Compliance with subsection (E)(5) of this section, Commercial Cannabis Development Standards. ii. A maximum of seventy thousand square feet of cumulative canopy for cultivation and nurseries shall be allowed for indoor cultivation in the city within the allowed land use zones. iii. All indoor cannabis cultivation shall be designed to accomplish zero net energy use from the start of the operation. iv. Pesticides and fertilizers shall be properly labeled, stored, and applied to avoid and prevent contamination through erosion, leakage, or inadvertent damage from rodents, pests, or wildlife. v. Only three retail storefronts, which must front arterial streets, will be allowed within the city. Selection of the retail commercial cannabis operator will be selected from qualified commercial cannabis operators as set forth in Chapter 9.10, Cannabis Regulations. One of the retail storefronts shall have a medicinal license and may also have an adult use license. vi. Any microbusiness with a retail storefront shall require a planning commission use permit. vii. Retail storefronts shall be located at least: 1) one thousand feet from any preschool, elementary school, junior high school, high school, public park or playground, whether located within or outside a CBZ Overlay Zone ; 2) six hundred feet from any licensed day care center, whether located within or outside a CBZ Overlay Zone; and 3) three hundred feet from any residentially zoned area located within a CBZ Overlay Zone. Youth centers do not require a buffer. Distance shall be measured from the nearest point of the property line to the nearest point of the property line of the enumerated use using a direct straight-line measurement. A subsequently established use described herein shall not affect the continuation of a retail storefront in possession of a Use Permit issued under the standards of this Section and Chapter 9.10. viii. Retail storefronts must be separated from each other by at least one thousand feet. Page 52 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 23 ix. Hours of retail shall be limited to between nine seven a.m. to eight nine p.m. and delivery shall be limited to between six a.m. to ten p.m. x. Retail storefronts that possess a valid state of California cannabis retailer license with an A-designation must include a sign at each entrance of a retail storefront that prohibits persons under twenty-one years of age from entering. Retail storefronts that possess a valid state of California cannabis retailer license with an M-designation or both an A-designation and an M-designation must include a sign at each entrance of the retail storefront that prohibits persons under twenty-one years of age from entering unless the person is at least eighteen years of age and is also in possession of a valid physician’s recommendation for medical cannabis. SECTION 4. 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 subdivision s, paragraphs, sentences, clauses, or phrases be declared invalid or unenforceable. Page 53 of 54 Planning Commission Resolution No. PC-XXXX-2025 CODE-0051-2025 (Citywide) Page 24 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 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 _____ 2025, AND FINALLY ADOPTED by the Council of the City of San Luis Obispo on the ____ day of ____, 202 5, 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 END OF DOCUMENT Page 54 of 54 Review of Text Amendments to Section 17.86.080 (“Cannabis”) of Title 17 (“Zoning Regulations”) of the Municipal Code CODE-0051-2025 Planning Commission Hearing – April 9th, 2025 Recommendation Adopt a Resolution recommending the City Council introduce and approve an Ordinance to amend Section 17.86.080 (“Cannabis”) of Title 17 (“Zoning Regulations”) of the Municipal Code to clarify specific land use and operational requirements for commercial cannabis activity. Summary of Proposed Amendments •Clarify land use requirements for retail storefront operations. •Remove repetitive language (“CAN” vs “CBZ”; SLOMC § 17.86.080 Purpose Statement). •Clarify operational requirements for microbusiness operations. Cannabis Business Overlay Zones & Buffer Requirements Buffers: •Adopted May 15, 2018. •Apply to retail storefronts. o 1,000 ft from schools and public parks/public playgrounds. o 600 ft from licensed daycare centers. o 300 ft from residentially zoned areas within CBZ Overlay Zones. Cannabis Business Overlay Zones (CBZ): •Adopted September 18, 2018. •9 designated areas where cannabis businesses may operate, subject to zoning. •Shown on the City’s Zoning Map. •Account for buffers and local conditions (e.g., roads, railroads). Land Use Requirements – Retail Storefronts SLOMC §§§ 17.86.080(E)(4)(e), 17.86.080(E)(10)(b)(iii), 17.86.080(E)(12)(c)(v) •Retail Storefront Buffer Requirements: o 1,000 ft from schools and public parks/playgrounds, whether located within or outside a CBZ Overlay Zone. o 600 ft from licensed daycare centers, whether located within or outside a CBZ Overlay Zone. o 300 ft from residentially zoned areas within a CBZ Overlay Zone. •Land uses established after approval of a Use Permit do not affect continuation of existing use. Remove Repetitive Verbiage – “CAN vs CBZ” SLOMC §17.86.080(E)(5)(b) •The term “CBZ Overlay” is referred to as “CAN Overlay” in SLOMC § 17.86.080(E)(5)(b). Both terms are interchangeable and refer to the same zoning designation. •Replace “CAN Overlay” with “CBZ Overlay,” consistent with the City Zoning Map and Table 1-1 “Zones Established” within SLOMC § 17.06.020(D). Remove Repetitive Verbiage – Purpose Statement SLOMC §17.86.080(A) •Remove specific Controlled Substances Act (CSA) classification of marijuana (cannabis). •Avoids having to update section whenever federal government changes classification of cannabis. •Still reinforces that provisions of the cannabis zoning regulations are not intended to affect or alter federal law. Operational Requirements - Microbusinesses 8 SLOMC §17.86.080(E)(12)(c)(v)(ix) -SLOMC §17.86.080(E)(12)(c)(v)(x) •Microbusinesses engage in at least three of the following: cultivation, manufacturing, distribution, and retail sale. •Ord. 1725 (2023 Series) expanded retail storefront hours (7AM-9PM) and updated age restrictions (18+ with valid ID) but did not apply these to microbusinesses engaged in retail. •Microbusinesses with retail sale must follow retailer rules (SLOMC § 17.86.080(E)(12)(c)(i); DCC § 15500. •Amendment proposed to align microbusiness regulations with retail storefronts for hours and age restriction requirements. Recommendation Adopt a Resolution recommending the City Council introduce and approve an Ordinance to amend Section 17.86.080 (“Cannabis”) of Title 17 (“Zoning Regulations”) of the Municipal Code to clarify specific land use and operational requirements for commercial cannabis activity. 10 11 12 Cannabis Business Overlay Zones (CBZ) 13 The City’s Zoning Map identifies areas where cannabis businesses may operate, including: •South Broad •Mid-Higuera •Duncan McMillan •Sacramento Industrial •Higuera Commerce Park •Margarita •Airport •East Airport Area •Fiero Lane – Clarion Court 14 South Broad Cannabis Business Zone as shown in the City Zoning Map and Legend 05-01-2018 Staff Report adopting Cannabis Regs & Buffers Requirements for Retail Storefronts (Excerpt) 2. Buffers The relationship between buffers and overlay zones is important to understand. The purpose of overlay zones, which were carefully selected for compatibility with surrounding uses, is to provide clarity for residents, property owners, and business owners regarding where a cannabis business can be established. In selecting the overlay zones, staff closely evaluated the buffer maps and identified areas that were mostly outside of any buffers. Where buffers extend into an overlay zone area, there is typically another barrier such as a major roadway, the railroad tracks, topographical changes, or other features that provide the same effect as a buffer. As a result, buffers are only intended to be evaluated as part of a land use application when there is an activity within an overlay zone that requires a buffer. For example, the Moylan Terrace property in the Broad Street Corridor area is zoned R-3 and any retail store with public access would need to be located 300 feet away from the closest residence within that zone. However, a retail store could be located along Broad Street even though it is within 300 feet of residential land on the west side of Broad Street because buffers would not be calculated from residential land located outside of overlay zones (in this case across Broad Street). The reason for this is that Broad Street itself acts as a significant physical barrier and provides the functional equivalent of a buffer based on distance. 09-04-2018 Staff Report establishing Cannabis Overlay Zones (Excerpt) 17 Table 2-1 (Uses Allowed by Zone) 18 19