HomeMy WebLinkAboutItem 5c - 2nd Reading of Ordinance No 1746 amending Section 17.86.080 - Cannabis Item 5c
Department: Community Development
Cost Center: 4001
For Agenda of: 6/3/2025
Placement: Consent
Estimated Time: N/A
FROM: Timmi Tway, Community Development Director
Prepared By: Ivana Gomez, Cannabis Business Coordinator
SUBJECT: SECOND READING AND ADOPTION OF ORDINANCE NO. 1746 (2025
SERIES) AMENDING SECTION 17.86.080 (“CANNABIS”) OF TITLE 17
(“ZONING”) OF THE MUNICIPAL CODE TO CLARIFY SPECIFIC LAND
USE AND OPERATIONAL REQUIREMENTS FOR COMMERCIAL
CANNABIS ACTIVITY [CITYWIDE] (COD
RECOMMENDATION
Adopt Ordinance No. 1746 (2025 Series) entitled, “An Ordinance of the City Council of
the City of San Luis Obispo, California, approving an amendment to Section 17.86.080
(“Cannabis”) of Title 17 (“Zoning”) of the Municipal Code to clarify specific land use and
operational requirements for commercial cannabis activity.” The project is exempt from
environmental review under CEQA Guidelines Section 15301. (Attachment A)
POLICY CONTEXT
On May 6, 2025, staff presented the Annual Cannabis Business Program Update,
including proposed text amendments to the Cit y’s cannabis zoning regulations to clarify
specific land use and operational requirements for commercial cannabis activity. Per
Chapter 17.124 (Amendments - Zoning Regulations and Zoning Map), the City Council
may review the proposed text amendments, including the Planning Commission’s
recommendation, and take action based on consistency with the General Plan and State
Law.
DISCUSSION
Previous Council or Advisory Body Action
Staff presented the proposed text amendments to the Planning Commission at a public
hearing on April 9, 2025. The Planning Commission reviewed the proposed text
amendments to the City’s Zoning Regulations and voted 7-0 to adopt Resolution No. PC-
1100-25 recommending the City Council introduce and adopt an ordinance to amend
Section 17.86.080 (“Cannabis”) of Title 17 (“Zoning”) of the Municipal Code1.
1 04-09-2025 PC Action Update
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Item 5c
During a public hearing held on May 6, 2025 to receive an update on the Cannabis
Business Program, the City Council voted 5-0 to introduce a draft ordinance entitled, “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 2.” If the
Council adopts Ordinance No. 1746 (2025 Series) (Attachment A), it shall be effective
30 days after its final passage.
Proposed Text Amendments
1. Land Use Requirements for Retail Storefronts
Amendments to SLOMC Sections 17.86.080(E)(4)(e), (E)(10)(b)(iii), and (E)(12)(c)(vii)
clarify that the 300-foot buffer from residentially zoned areas applies only within Cannabis
Business (CBZ) Overlay Zones. This reflects the original legislative intent, as outlined in
the May 1 and September 4, 2018 staff reports from the original adoption of the City’s
buffer and zoning requirements for commercial cannabis and ensures consistency with
the City's historical interpretation and application3. The buffer was always intended to
apply only where residential zoning exists within a CBZ, such as in the South Broad and
Airport Area CBZs. The need for this clarifying amendment was brought to staff’s attention
after a recent appeal of a Conditional Use Permit approval for a retail storefront at 2400
Broad Street and aims to eliminate confusion for current and future projects. Additional
language is proposed to clarify that new adjacent sensitive uses established after a retail
storefront receives a Conditional Use Permit do not affect the continuation of that use.
This change reinforces the principle that legally established land uses may continue
despite subsequent changes in neighboring land use.
2. Commercial Cannabis Development Standards
The term “CAN Overlay” in SLOMC Section 17.86.080(E)(5)(b) will be updated to “CBZ
Overlay” for consistency with the City’s Zoning Map and Municipal Code.
3. Regulations for Retail Storefronts within a Microbusiness Operation
State regulations (Cal. Code Regs., Title 4, § 15500) and City regulations (SLOMC
Section 17.86.080(E)(12)(c)(i)) require that microbusinesses authorized to engage in
retail sale comply with all rules and requirements applicable to a retailer license. Two
amendments are proposed to align microbusiness regulations with current standards for
retail storefront operations. First, the allowable hours of operation for retail storefront
components of a microbusiness would be extended to match standalone retail storefronts
(7:00 a.m. to 9:00 p.m. daily), consistent with the City’s regulations. Second, signage
requirements would be updated to reflect the current entry restrictions, which allow
2 05-06-2025 Action Update
3 05-01-2018 Item 15 Cannabis Regulations Ordinance (1st Reading); 09-04-2018 Item 1
Establish Cannabis Business Locations
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Item 5c
individuals 18 and older with a valid physician’s recommendation to enter a retail
storefront, aligning with other retail storefront standards.
4. Purpose Statement – Reference to Federal Law
To avoid the need for future updates, the proposed amendment removes reference to the
specific federal classification of cannabis in the purpose statement of SLOMC Section
17.86.080(A). Instead, the revised language affirms that the section does not alter or
affect federal law, regardless of federal scheduling.
Public Engagement
The proposed text amendments were noticed in accordance with San Luis Obispo
Municipal Code (SLOMC) Chapter 17.122 (Public Notices and Hearing) and California
Government Code Sections 65854, 65090, and 65091. Notice of the proposed text
amendments was published in the local newspaper on March 20, 2025, in advance of the
Planning Commission hearing held on April 9, 2025. Additional public notices were
published on April 10, 2025, prior to the City Council hearing on May 6, 2025, and again
on May 29, 2025, in advance of the June 3, 2025, meeting to consider final adoption of
the ordinance.
CONCURRENCE
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.
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.
FISCAL IMPACT
Budgeted: N/A Budget Year: 2025-26
Funding Identified: N/A
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Item 5c
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
This item has no fiscal impact, as it does not propose any changes to the adopted budget
or result in new expenditures or revenues. The update is informational in nature and
reflects existing operations and fee structures previously approved by the City Co uncil as
part of the 2023–2025 Financial Plan. The proposed amendments to the Municipal Code
are intended to clarify existing regulations and do not establish any new requirements.
ALTERNATIVES
1. The City Council may decide not to adopt the proposed Ordinance with
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 chan ges,
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. The City Council may modify the proposed Ordinance. Substantive changes will
require reintroduction at a subsequent public hearing.
3. The City Council may continue the item. The City Council may continue the item to
a date uncertain if additional information is needed to address the proposed text
amendments.
ATTACHMENTS
A – Ordinance No. 1746 (2025 Series) adopting 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 (CODE -0051-
2025).
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ORDINANCE NO. 1746 (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, and voted to recommend the proposed amendments to
Section 17.86.080 (“Cannabis”) of Title 17 (“Zoning Regulations”) of the Municipal Code;
and
WHEREAS, the City Council 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
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on May 6, 2025, and voted to introduce an Ordinance to amend Section 17.86.080
(“Cannabis”) of Title 17 (“Zoning Regulations”) of the Municipal Code; and
WHEREAS, notices of said public hearing were made at the time and in the
manner required by the law; and
WHEREAS, the City Council 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 ORDAINED, 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)(vii) are consistent with State Law and
are declaratory of existing City code, ensuring clarity and regulatory consistency for both
pending and future projects. These amendments are declaratory of existing land use
requirements for commercial cannabis activities and are consistent with the legislative
intent of the currently adopted Zoning Ordinance. These amendments are intended to
reflect the City’s interpretation and 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)(vii), as declaratory of existing code,
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 residentia l 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
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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 adoptio n of the overlay
zones.
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)(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 § 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
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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 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. Nothing in this section is intended to affect or alter federal law.
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,
consumption 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.
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.
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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 public 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
lawfully present in the vicinity of the personal cultivation.
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.
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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 cannabi s 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 cu ltivation
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 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.
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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.
4. Application Requirements. All commercial cannabis activities require
qualification through the commercial cannabis operator select ion approval 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 following 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;
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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.
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
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cannabis activity(ies) to be conducted on the premises) or ot her 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 commercia l
cannabis business within the zones specified for each type of commercial
activity listed below.
b. Commercial cannabis facilities shall be allowed in areas demarcated with
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 distributed 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.
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ii. Payment of all applicable current and future state and local taxes and all
applicable commercial cannabis fees and related penalties established by
the city council, including but not limited to application, administrative
review, inspection, etc.
iii. The commercial cannabis operator permit or a controlling interest in the
permit may not be assigned, transferred or bequeathed, by operation of law
or otherwise, unless permitted as described in Chapter 9.10, and the permit
shall terminate automatically on such event.
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:
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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 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.
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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.
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);
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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 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);
iv. Office (O).
b. Development Standards.
i. Compliance with subsection (E)(5) of this section, Commercial Cannabis
Development Standards.
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.
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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.
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
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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.
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);
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).
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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.
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.
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viii. Retail storefronts must be separated from each other by at least one
thousand feet.
ix. Hours of retail shall be limited to between seven a.m. to 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 subdivisions,
paragraphs, sentences, clauses, or phrases be declared invalid or unenforceable.
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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 6th day of May 2025, AND FINALLY ADOPTED by the
Council of the City of San Luis Obispo on the 3rd day of June, 2025, 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
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