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HomeMy WebLinkAbout5/6/2025 Item 7a, Tway and Gomez - Staff Agenda CorrespondenceCity of San Luis Obispo, Council Memorandum City of San Luis Obispo Council Agenda Correspondence DATE: May 6, 2025 TO: Mayor and Council FROM: Timothea (Timmi) Tway, Director of Community Development Prepared By: Ivana Gomez, Cannabis Business Coordinator VIA: Whitney McDonald, City Manager SUBJECT: ITEM 7a - ANNUAL CANNABIS BUSINESS PROGRAM UPDATE AND INTRODUCTION OF 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 [CITYWIDE] (CODE-0051-2025). Staff received the following questions, regarding cannabis business relocation. The questions are below with staff’s response shown in italics: 1) If a business loses a planned location and has no choice but to move to another location within the same Overlay Zone area, do the proposed amendments require it to restart the application process from scratch? If yes, what new language could create a shorter application timeline? Under current City regulations, if a cannabis business loses its location before or after activating its Commercial Cannabis Operator Permit (activating means opening the business), it must apply for a new operator permit under Chapter 9.10 of the SLO Municipal Code and would also require a new Use Permit for the newly proposed location. This is because the Operator Permit process is competitive, and applications are evaluated based on Merit Criteria such as land use compatibility, site plans, financial capacity, property control, lighting, odor control, and water efficiency plans, many of which are inherently linked to a particular location. This means that the location of a proposed operator is considered when applications are scored. Applicants generally cannot revise or relocate a selected proposal, as doing so would undermine the fairness of the competitive process. The proposed amendments do not change this requirement. At this time, staff is not recommending language changes that would allow a permit holder to move locations without completing a new competitive application process. Modifying this process would require a comprehensive reevaluation of the Merit Criteria and application procedures—an effort that could take over a year, accounting for the typical public input process. Additionally, allowing relocation prior to permit activation could incentivize applicants to propose one location to secure a higher score, then change sites before opening. ITEM 7a - ANNUAL CANNABIS BUSINESS PROGRAM UPDATE AND INTRODUCTION OF 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 [CITYWIDE] (CODE- 0051-2025). Page 2 As described above, the current municipal code also does not provide the ability for permits that are activated (established businesses) to move without completing a new competitive process that is required of all applicants. However, a streamlined relocation process for an existing business could be considered. Changes to streamline this process should be studied to ensure there are not unintended consequences, and that fairness and equity in the process are preserved. A potential future amendment could mirror the three-year prohibition on majority ownership transfers included in the City’s current regulations (SLOMC Section 9.10.120(C)), which could allow established businesses to relocate after demonstrating three years of compliant operation. The modified regulation could read: Section 9.10.120 – Prohibition on Transfer of Commercial Cannabis Operator Permits A. Location Restriction: A commercial cannabis operator permit is valid only for the location identified on the permit. The permit may not be transferred to a different site, and no business may operate at a location other than the one specified, except as specifically provided herein. Relocation is not permitted until the operator permit has been activated in accordance with Section 9.10.070(D). Following activation, no relocation to a different site is allowed for a period of three years from the date of activation. After this three-year period, the operator may apply to relocate the business to another property within the applicable zoning overlays without undergoing a new competitive application process for a commercial cannabis operator permit. However, such relocation would require approval of a new Use Permit in accordance with Section 17.86.080. This approach preserves the integrity of the competitive application process while offering flexibility to long-standing, compliant operators. If the Council is inclined to direct staff to proceed with an ordinance amendment along the lines outlined above or otherwise, staff would recommend that the Council also direct staff to propose criteria by which to evaluate such a relocation application, as well as a recommendation as to the approval authority (e.g., Council, City Manager or Community Development Director) ITEM 7a - ANNUAL CANNABIS BUSINESS PROGRAM UPDATE AND INTRODUCTION OF 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 [CITYWIDE] (CODE- 0051-2025). Page 3 2) If an applicant loses their proposed location, how long is the process to complete the competitive application process for an alternative location? Under the current regulations, an applicant who has “lost” the location proposed in their original application for a Commercial Cannabis Operator Permit may reapply during the next annual application period or any subsequent application period established by the City Manager. The process to open an application period, create and publish application materials, and evaluate applications submitted to the City can take roughly 6 months to a year, depending on the volume of applications received, and whether there are legal challenges asserted among applicants. This does not include time involved in the submittal and review of a Use Permit following the issuance of a Commercial Cannabis Operator Permit. Additionally, significant staff time is required for preparation of application materials, availability to answer questions from interested parties, as well as for the Cannabis Application Review Team (“CART” - staff from various City departments responsible for convening to review and score commercial cannabis applications) to review and score applications against the adopted Merit Criteria.