HomeMy WebLinkAbout05-01-2018 Item 15 Cannabis Regulations Ordinance (1st Reading)
Meeting Date: 5/1/2018
FROM: Michael Codron, Community Development Director
Prepared By: Michael Codron, Community Development Director
Anne Russell, Assistant City Attorney
Rachel Cohen, Associate Planner
SUBJECT: CANNABIS OPERATORS’ PERMIT AND LAND USE REGULATION
ORDINANCE
RECOMMENDATION
The following actions are recommended to establish new Municipal Code provisions that would
become effective if a cannabis revenue measure is placed on the November 2018 General
Election ballot and approved by the voters:
1. Introduce an Ordinance entitled “An Ordinance of the City Council of the City of San Luis
Obispo, California, amending the Municipal Code to establish Zoning (Chapter 17) and
Public Peace, Morals and Welfare (Chapter 9) regulations for commercial cannabis
businesses and personal cultivation, and determining that the amendments are statutorily
exempt from environmental review pursuant to business and professions code section
26055 (H) (CODE-1058-2017).”
a. Creating “Chapter 9.10 - Cannabis Regulations” of the City’s Municipal Code, repealing
the current ban on commercial cannabis business activity and establishing standards to
protect public health and safety regulating personal cannabis cultivation, cannabis
business operators, and permitted cannabis business activities in the City (Attachment A,
Exhibit A); and
b. As recommended by the Planning Commission, with modifications to personal
cultivation limits, creating “Chapter 17.99 – Cannabis” of the City’s Municipal Code
creating land use regulations for cannabis business activities, personal cultivation, and
providing for the creation of overlay zones where the proposed land use regulations
would apply (Attachment A, Exhibit B).
2. Direct staff to return to the City Council with additional implementing measures, including
zoning map amendments for the proposed cannabis overlay zones, criteria for the ranking
of cannabis business operator applications, a fee schedule for applications and annual
licenses, and more information about a cannabis revenue measure.
REPORT-IN-BRIEF
On March 14, 2017, the City Council adopted Ordinance No. 1633 (Attachment B), reaffirming
that all commercial cannabis activity is currently illegal in the City of San Luis Obispo.
Proposition 64 (approved in November 2016) was strongly supported by City voters (15,447
total yes votes or 67.52% of the ballots cast), however, the Council chose to maintain a
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prohibition on all commercial cannabis business activity until a comprehensive program to
regulate commercial cannabis uses and activities could be developed. Council directed staff to
engage with the community and return with recommendations regarding the regulation of
cannabis business activity within the City.
On February 20, 2018, the City Council held a study session and provided direction to staff on
key policy matters relating to proposed ordinances. Subsequently, the Planning Commission
reviewed and recommended approval of proposed land use standards for cannabis uses and
activities to be adopted into the City’s Zoning Code. Staff is forwarding the recommendations of
the Planning Commission with some recommended modifications related to personal cultivation.
The most important recommendations made by the Commission include restricting cannabis
business activity to specific overlay zones, allowing retail storefronts in the Service-Commercial
(CS) zones within those overlay zone areas, restricting retail storefronts to arterial streets within
overlay zones, and only requiring buffers from cannabis businesses that have public access (e.g.
buffers for retail stores, but not for testing labs, manufacturers, cultivators, etc.).
In addition to the recommended land use standards contained in Chapter 17 of the Municipal
Code, the City Council is being asked to consider health and safety standards that would be
located in Chapter 9. Chapter 9.10 of the Municipal Code would be repealed and replaced with
the new regulations. Generally, the rules included in Chapter 17.99 will govern the issuance of
permits for cannabis businesses with conditions of approval that would be enforced through the
Community Development Department’s Code Enforcement Division. Chapter 9.10 includes
public health and safety standards to be enforced primarily by the Police Department and apply
to business operators and to business activities that have been permitted under the processes
established by Chapter 17.99.
Prior to commercial cannabis activities commencing in the City, the Council will also need to
adopt comprehensive regulations by resolution, including a fee schedule to ensure that 100% of
City costs associated with regulating cannabis business activity is recovered through one-time
application fees and annual licensing and renewal fees. On March 20, 2018, the City Council
authorized the issuance of an RFP for a consultant to assist the City with the development of
these regulations, including the application requirements (e.g. the components of a security plan,
cash management plan, etc.), and the criteria by which potential business operators would be
ranked. Finally, it is also recommended that these proposed regulations go into effect only if
voters approve a cannabis revenue measure planned for the November 2018 General Election
ballot. The approval of a revenue measure for placement on the ballot is not part of this report or
recommendation and will be presented to the City Council on a future agenda.
DISCUSSION
Overview of Draft Ordinances
City staff has drafted cannabis ordinances to be codified in two Municipal Code Chapters. The
first would be adopted in San Luis Obispo Municipal Code (SLOMC) Chapter 9 and is focused
on public health and safety standards related to the personal cultivation and use of cannabis and
the conduct of cannabis business operations in the City, which are contemplated to be enforced
primarily by the Police Department. The second would be adopted in SLOMC Chapter 17
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(Zoning Regulations), which would define land use regulations for sites within the City where
cannabis business activity would be allowed. Thus, components of business activities would be
regulated both through Cannabis Business Activity Permits, and land use regulations, which
would be enforced with more detailed regulations to be adopted by Council Resolution, and/or
through a conditional use permit linked to a Cannabis Business Activity Permit. Legal operation
of a cannabis business would require alignment of a permitted business operator and a physical
location zoned for such uses.
Overall, the draft ordinances are intended to protect public health, safety, and welfare – and
support the local cannabis economy – by permitting and regulating a wide range of cannabis
uses, summarized as follows:
1. Allows for access to medical and recreational marijuana in the City, with
storefront and delivery options (at least one storefront to be reserved for a holder
of a medicinal retailer license)
2. Prohibits events and onsite consumption
3. Establishes a two-step process requiring prospective business operators to be
certified and ranked prior to applying for a land use permit
4. Includes requirements for energy and water efficiency, and limits total amount of
cultivation, to ensure consistency with City climate action goals
5. Limits manufacturing uses to non-volatile processes only
6. Limits cultivation to indoors only, and total City-wide amount of cultivation
allowed to 70,000 square feet of total canopy coverage within indoor areas,
cumulatively (includes total canopy of either horizontal or vertical growing
situations)
7. Provides for the creation of overlay zones where cannabis business activity may
be permitted, and buffers within those overlay zones for cannabis retail stores of
300 feet from residential zones, and 1,000 feet from schools, and parks.
8. Requires retail storefronts to be located at least 1,000 ft. apart
Planning Commission Review and Recommendations
On March 25 and 26, 2018, the Planning Commission reviewed the land use related components
of the draft cannabis ordinances. The Commission voted 4-2 (Stevenson and Fowler voting no)
to forward a recommendation to the City Council for approval. The Planning Commission’s
recommendation includes seven key differences from the initial staff recommendation, as
follows.
1. Overlay zones are recommended to be established to define the locations in the City
where cannabis business activities may be allowed. Allowed uses should be controlled by
the zoning and required buffers within those overlay zones.
2. 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.
3. Within the overlay zones, retail stores should be allowed in the Service Commercial (CS)
zone, but not in the Community Commercial (CC) or Tourist Commercial (CT) zones.
4. Retail stores should only be approved if they are located on arterial streets.
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5. At least one of the three retail storefronts should be operated by a medicinal license
holder (retailers are allowed to hold both medicinal and adult use licenses).
6. Access to retail stores by any adult under 21 years of age should be prohibited.
7. Personal cultivation should be prohibited outdoors.
Staff has incorporated all of the Planning Commission’s recommendations into the staff
recommendation with the exception of the prohibition on personal outdoor cultivation. However,
staff is proposing some additional limits on personal outdoor cultivation for Council’s
consideration. The Council could accept the Planning Commission’s recommendation on this
component of the regulations, however, Council has previously expressed support for allowing
personal outdoor cultivation and individuals can currently grow up to six plants per residence in
the City, even under the current prohibition regulations in effect since February 2017.
1. Overlay Zones
Overlay zones were drafted and presented to the Planning Commission to reflect areas that are
suitable for cannabis business activities. The overlay zones were chosen based on the zoning of
land within the overlay, distance from sensitive land uses such as schools, residential
neighborhoods, and parks, and the presence of barriers from these sensitive land uses including
major roadways, the railroad tracks, and topographical features. The Planning Commission is
recommending approval of six overlay zone areas (Exhibit C). Cannabis business activities
would only be allowed within the boundaries of an overlay zone area, and the underlying zoning
would determine what types of cannabis activity permits could be approved for a given property.
Approval of the recommended ordinances would establish the requirement for cannabis business
activities to be located within one of the six overlay zone areas, however, a separate action is
needed to rezone the properties shown in Exhibit C. Staff will return in Summer 2018 with
zoning map amendments to implement to proposed overlay zones.
2. Buffers
The Planning Commission recommendation is to only establish buffers from cannabis businesses
with customer access, which is limited to retail storefronts. The Planning Commission is
recommending buffers of 1,000 feet from schools, parks, and playgrounds and 300 feet from
residentially zoned land to retail stores with customer access.
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
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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 re sidential
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.
The overlay zones have been selected to avoid the need to measure buffers as a regular part of
implementing the new ordinances, however, there are two relatively small areas where
residential land exists within an overlay zone boundary (in the Moylan Terrace area of the Broad
Street Corridor and in the Airport Area at the Hidden Hills Mobile Lodge property). There are no
schools located within the proposed overlay zones.
3. Retail Store Locations
Originally staff recommended that retail stores be located within three zones: Community
Commercial (C-C), Tourist Commercial (C-T), and Retail Commercial (C-R) zones. The
Planning Commission recommended that retail storefronts only be allowed within the C-R and
Service Commercial (C-S) zones. This recommendation is consistent with the zoning that is
included within each of the Overlay Zones described above. Additionally, the Planning
Commission recommends that retail storefronts only be located on arterial roads such as Higuera,
S. Higuera and Broad Street. Overall, this recommendation is supported by the Police
Department because locating retail stores on arterial streets will facilitate patrol and enforcement
of the City’s ordinances and regulations.
4. Medicinal (M) Retail Licenses and Adult Access
During the February 20, 2018 City Council study session, Council discussed whether one of the
retail storefronts should be a medicinal only storefront. The Planning Commission had a similar
discussion and recommended that at least one of the three retail storefronts have a medicinal
license. The business would not necessarily have to be medicinal only and could also hold an
adult use license.
Health and Safety Regulations
Part of the action recommended is to repeal the current prohibition on commercial cannabis
activity contained in SLOMC Chapter 9.10 Marijuana Regulation and replace this section in its
entirety with proposed health and safety regulations to govern commercial cannabis business
activity. Some of the features of the proposed health and safety regulations, which would be
enforced primarily by the Police Department, include personal cultivation regulations, operator
permit application procedures and requirements, permit renewal requirements, suspension or
revocation of permits, inspections and enforcement, transfer of operator permits, and on-site
consumption.
1. Personal Cultivation
Chapter 9.10 contains limitations on personal cultivation. The Planning Commission is
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recommending no outdoor cultivation be allowed in Chapter 17.99. If the Council agrees with
that recommendation, then section 9.10.030 which allows up to 6 plants should be deleted and
replaced with a prohibition of all outdoor cultivation. As drafted, 9.10.030 clarifies that for
outdoor cultivation, there is a six-plant limit per parcel with a private residence, regardless of the
number of residences per parcel, and regardless of the number of residents per private residence.
Chapter 17.99 is not as explicit as to limits on outdoor cultivation where there are multiple
residences on a parcel, such as apartment buildings, accessory dwelling units, duplexes, etc. By
limiting outdoor cultivation to six plants per parcel, it will be easier for the police to enforce the
limit and it will reduce the likelihood that odors associated with outdoor cultivation will
adversely impact adjacent properties or residents. Outdoor cultivation would require continued
compliance with odor nuisance regulations.
The draft proposes a limit of six plants total per parcel with a private residence, (indoors and
outdoors together) except for medicinal patients. For medicinal patients, any plants more than six
must be grown indoors. Commercial outdoor cultivation is prohibited, as is any outdoor
cultivation on a parcel that does not contain a private residence.
2. Two-Step Process – Operator Permit Application Procedures
Staff is proposing a two-step process where qualification and ranking of business operators is
required to occur prior to approval of an application for a land use permit for that business.
The Council recently approved a RFP for consultant services to assist the city in evaluating and
ranking potential cannabis businesses and to assist in drafting regulations. Staff expects that the
criteria for ranking of business operators, and the specific regulations and performance standards
that will apply to cannabis business activities will be ready for review by the Council during Fall
2018.
3. Permit Renewal Requirements
An application for renewal of a Commercial Cannabis Operator Permit will need to be filed at
least sixty (60) calendar days prior to the expiration date of the permit. If the complete
application and fees are timely submitted, but the City does not act to approve or reject the
renewal prior to expiration, the permittee will be able continue to operate under the expired
permit until the City approves or rejects the application for renewal. An application for renewal
of a Commercial Cannabis Operator Permit can be rejected for a number of reasons, such as:
• The application is filed less than sixty (60) days before its expiration.
• The Commercial Cannabis Operator Permit, is revoked at the time of the application or
renewal.
• The applicant conducted unpermitted commercial cannabis activities in the city or
continued to conduct formerly permitted commercial cannabis activities after expiration
of the permit.
• The applicant has received an administrative citation for violating any provision of this
Code relating to its Commercial Cannabis Activity(ies) in the city during the last twelve
months, and the administrative citation has not been resolved in the applicant’s favor by
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date of application for renewal. A pending, unresolved appeal of an administrative
citation shall not result in rejection of an otherwise proper application, but resolution of
an appeal in a manner that upholds the violation against the applicant during the
application review period shall result in the immediate rejection of the application.
• The Commercial Cannabis Business fails to conform to the requirements / conditions of
the Use Permit, Chapter 9.10 or Chapter 17.99 of the Municipal Code.
If a renewal application is rejected, the Commercial Cannabis Operator Permit expires on the
expiration date set forth in the permit, even if an appeal has been filed.
4. Suspension or Revocation of Permits
Staff is recommending that, in addition to any other penalty authorized by law, a Commercial
Cannabis Operator Permit may be suspended or revoked if the City finds, after notice to the
permitee and opportunity to be heard, that the permitee or his or her agents or employees has
violated any condition of the permit imposed pursuant to, or any provision of, this chapter. This
provision is found in Section 9.10.090 and would be enforced by the Police Department.
1. Upon a finding by the city of a first permit violation within any five-year period,
the permit shall be suspended for thirty days.
2. Upon a finding by the city of a second permit violation within any five-year
period, the permit shall be suspended for ninety days.
3. Upon a finding by the city of a third permit violation within any five-year period,
the permit shall be revoked.
These penalties mirror the penalties included in the City’s Tobacco Retailer License ordinance
(SLOMC 8.14.100). These penalties have been proven effective and enforcement is handled by
the Police Department through a variety of methods, including focused operations that
specifically target retailers selling tobacco products to minors. More minor violations of the
standards in Chapter 17 would be handled through the normal administrative citation process by
City code enforcement officers.
5. Inspections and Enforcement
Chapter 9.10 outlines various inspections that a cannabis business would expect to receive from
code enforcement, the police or any other City official or inspector charged with enforcing any
provisions of this Code. These inspections include: unscheduled inspections during business
hours and the ability to obtain samples for any testing necessary to audit compliance with any
standard pursuant to Chapter 9.10.
6. Transfer of Operator Permits
Another issue is whether to prohibit any sale, assignment or transfer of the commercial cannabis
operator permit. The recommendation provided to the City Council and reflected in Municipal
Code Chapter 9.10.120 requires Council approval of the transfer of operator permits to eligible
cannabis business operators, as follows:
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9.10.120. B. The Commercial Cannabis Operator Permit shall terminate
immediately and automatically upon such assignment or transfer unless and until the
City prequalifies the transferee or assignee during the annual prequalification period;
the transferee or assignee submits all required information, pays all applicable fees
and charges, and obtains the prior consent of the City Council.
The biggest issue is ensuring that only qualified commercial cannabis operators can conduct
business in the city. Since staff is recommending, and the Council may adopt, a limit on the
number of cannabis retail storefront permits, these retail permits, in particular, may become very
valuable. The proposed ordinance provision cited above prohibits the assignment or transfer of
cannabis operator permits outright and allows transfer only to a person or entity qualified by the
City to apply for a commercial cannabis operator permit, with prior approval by the City
Council.
City Council approval in this case is recommended because the transfer of a permit is a business
transaction and while the entity acquiring the operator permit will have to be pre-qualified, it
would be problematic for the City to allow these transfers administratively. In these cases, the
City Council would review assignment as part of a public hearing and determine if it is
acceptable because it is possible that there would be pre-qualified operators that are ranked
higher than the entity acquiring the permit. Even though there may be operators that are ranked
higher, and that are waiting for a license to become available, it may not be feasible for the
highly ranked operator to obtain the transfer of the permit for a variety of reasons includ ing
different business models, the cost of the permit, etc. As a result, City Council discretion should
be applied to determine if the transfer is acceptable, or if prohibiting the transfer is in the best
interest of the community because it would potentially allow a more highly ranked operator to
obtain an operator permit and start a new business.
7. On Site Consumption
Chapter 9.10.210 prohibits any person from selling (or giving away) cannabis for on -site
consumption, at any business premises (not just licensed cannabis businesses) and prohibits any
person from consuming or using cannabis on the premises of any commercial cannabis business,
or in any place accessible to the public, visible from a public place, or any place smoking is
prohibited.
State law prohibits a cannabis licensee from selling alcoholic beverages or tobacco products on a
licensed cannabis business premises. Proposed Chapter 9.10 goes a step further and additionally
prohibits the giving away or permitting the consumption of alcohol or tobacco in or on the
premises of a commercial cannabis activity and would prohibit any commercial cannabis activity
at any location where alcohol is sold or served.
Next Steps
The ordinances recommended for approval will establish firm ground with respect to the City’s
rules for commercial cannabis activities. However, before any new business can be established,
additional work will have to be accomplished. The areas of additional work include the
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establishment of criteria for ranking potential cannabis business operators, zoning map
amendments to create the overlay zones, the creation of a fee schedule to ensure cost recovery,
and the placement of a tax measure on the 2018 General Election ballot.
1. Consultant Support RFP (Status Report)
The City issued an RFP for Cannabis Business Regulation and Education Support Services on
March 26, 2018. The proposals are due on April 26th and a contract is expected to be executed in
early June with the successful consultant. One of the critical work efforts that the consultant will
be tasked with accomplishing is the development of criteria against which future cannabis
business operators will be evaluated and ranked. In order to apply for a land use permit, cannabis
business operators must first be evaluated according to criteria adopted by the City Council. The
criteria will be developed by staff and the consultant team and presented to the City Council for
approval. In addition to criteria around the experience and qualifications of a potential cannabis
business operator, the ranking system will be designed to provide extra points for local
businesses, cultivators that use organic growing practices, energy efficiency in business
operations and other criteria to the approval of the City Council.
2. Rezoning Overlay Zone Areas
As previously noted, in order to affect the proposed overlay zones, staff will need to notify
property owners within these areas and perform the appropriate notification prior to additional
public hearing. Postcard notification of properties within 300 feet of any area to be rezoned is
required, unless over 1,000 postcards would be generated, then a display ad in the Tribune can be
used in lieu of postcard notification. It is possible that some fine tuning of the overlay zones
could occur as part of this process. Staff will begin work on the formal rezoning process
immediately and will be able to return to the Council with a recommendation from the Planning
Commission in late summer.
3. Cost Recovery Evaluations and Fee Schedule
A feature of the proposed program to regulate cannabis business activity in the City is 100% cost
recovery. Once the City Council adopts the ordinances necessary to enact a regulatory program,
staff will complete its efforts to determine the scope of resources needed to support the program.
For example, it is expected that one or more police officers, a code enforcement officer, and
additional resources in the Finance Department and City Attorney’s Office would be utilized to
administer and enforce the new rules. The costs associated with these efforts, which include
public information and education efforts, would be recovered from future business operators via
one-time application fees, and annual permit and inspection fees. Staff will return to the City
Council with an assessment of these costs, and a proposed fee schedule to ensure 100% cost
recovery.
4. Enactment Pending Voter Approval of Tax Measure
In addition to the important steps above that are necessary to accomplish prior to the first
cannabis business opening within the City, staff is recommending that the proposed Municipal
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Code changes not go into effect unless and until there is a tax measure approved by the resid ents
of the City. On April 17, 2018, the City Council approved the concept of moving forward with a
cannabis revenue measure on the November 2018 general election ballot. Staff plans to bring an
item to the Council on May 15 for consideration of various tax rates and other questions relating
to the ballot measure.
CONCURRENCES
A steering committee of City staff members including the Community Development Director,
City Attorney, Police Chief, Fire Chief, and Finance Director was convened to guide the process
of developing regulations for consideration by the City Council.
ENVIRONMENTAL REVIEW
SB 94 amends the Business and Professions Code to exempt from CEQA review the adoption of
an ordinance, rule, or regulation by a local jurisdiction requiring discretionary review and
approval of permits and licenses for commercial cannabis activity (until July 1, 2019).
Depending on the nature of the activity for which an application is received, individual project
level environmental review may be required.
FISCAL IMPACT
Ultimately, if the City moves forward with regulations, it should establish fees and licenses that
allow it to recover 100% of the allowable costs associated with regulation. These are the costs
that can be quantified based on the amount of staff time in various departments to administer and
license the cannabis industry. Community Development, Attorney’s Office, Administration,
Police, Fire, Utilities, and Finance will experience costs associated with regulation and staff will
be developing a fee structure based on approved regulations to recover the allowable costs.
The Council may give staff policy direction to pursue additional revenues associated with a tax
on cannabis business activity, but that question will be considered separately from the
regulations. In addition, cities that choose to regulate cannabis business activity rather than
prohibit such activities are eligible for grant funding from the state. There may be additional
indirect costs due to cannabis activities such as public safet y activities or secondary effects not
covered by the fees. These indirect costs may be present regardless of the Council action on
regulations due to passage of Proposition 64 and the actions of neighboring jurisdictions to
approve cannabis business activities.
The issues around taxation and the ability of cannabis business activity to drive the collection of
new General Fund revenues are important considerations for the City’s fiscal health and are part
of its Fiscal Health Response Strategy. Once the City Council has decided how it wants to
proceed with respect to regulations, the City’s Finance Department will take the lead in
evaluating fiscal impacts and recommending a cost recovery and taxation approach.
ALTERNATIVES
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1. Modify the Proposed Ordinances. The City Council is free to make modifications to the
recommendations presented. The Council can make minor modifications “on the fly” during
the meeting. More significant changes should return to the Council following additional staff
analysis.
2. Continue Consideration of Ordinances to a Future Date. The City Council could direct
staff to conduct additional research or outreach on more or more components of the
recommended ordinances. If this alternative is taken, the Council should provide direction to
staff regarding additional information needed to move forward.
3. Direct Staff Not to Move Forward with Changes to Ordinance No. 1633. The City Council
could decide to direct staff to focus on other priorities and not pursue changes to the current
ordinance that prohibits all commercial cannabis business activity at this time. This
alternative is not recommended based on the direction provided by the City Council on
February 20, 2018, that it did want to move forward and regulate the commercial cannabis
industry in San Luis Obispo.
Attachments:
a - Draft Ordinance with Exhibits
b - Ordinance 1633 (2017 Series)
c - Proposed Cannabis Activities Overlay Area Maps
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O ______
ORDINANCE NO. _____ (2018 SERIES)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AMENDING THE MUNICIPAL CODE TO
ESTABLISH ZONING (CHAPTER 17) AND PUBLIC PEACE, MORALS
AND WELFARE (CHAPTER 9) REGULATIONS FOR COMMERCIAL
CANNABIS BUSINESSES AND PERSONAL CULTIVATION, AND
DETERMINING THAT THE AMENDMENTS ARE STATUTORILY
EXEMPT FROM ENVIRONMENTAL REVIEW PURSUANT TO
BUSINESS AND PROFESSIONS CODE SECTION 26055 (h) (CODE-1058-
2017)
WHEREAS, the voters of the State of California approved the Compassionate Use Act in
1996 to provide a defense to criminal prosecution for the cultivation, possession and use of
marijuana for medical purposes. Subsequently, the Medical Marijuana Program Act (MMPA)
established a voluntary participation, State-authorized medical marijuana identification card and
registry database for verification of qualified patients and their primary caregivers; and
WHEREAS, in 2015, the State enacted the Medical Cannabis Regulation and Safety Act;
and
WHEREAS, on November 8, 2016, California voters approved Proposition 64, the Adult
Use of Marijuana Act, a voter initiative, which legalized, under state law, adult personal
recreational use, possession and cultivation of cannabis in California, and created a comprehensive
regulatory and dual licensing system for commercial cannabis activity in the State effective
January 2018; and
WHEREAS, Proposition 64 was approved by sixty-seven percent (67%) of the voters in
the City of San Luis Obispo; and
WHEREAS, prior to the passage of Proposition 64, the City took the position that
commercial cannabis activity was prohibited in the city under principles of permissive zoning,
which holds that uses that are not expressly allowed or conditionally allowed under zoning
regulations are prohibited within the City; and
WHEREAS, after the passage of Proposition 64, in 2017 the City Council adopted
Ordinance 1633, amending Chapter 9.10 of the Municipal Code to maintain and make explicit the
existing commercial prohibitions on commercial and industrial recreational and medical
marijuana/cannabis-related uses, activities, businesses, or operations within the city and to limit
outdoor cultivation, while the city conducted public outreach; and
WHEREAS, City staff has conducted extensive public outreach; and
WHEREAS, after review of the information gathered by staff during public outreach, the
City Council directed staff to recommend and draft amendments to the Municipal Code to permit
commercial cannabis activities within the City; and
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Ordinance No. _____ (2018 Series) Page 2
O ______
WHEREAS, in 2017, the California legislature passed, and Governor Brown signed
Senate Bill 94, which enacted the Medicinal and Adult-Use Cannabis Regulation and Safety Act
(“MAUCRSA”), and repealed the Medical Cannabis Regulation and Safety Act (“MCRSA”), but
incorporated certain provisions of MCRSA into the licensing provisions established by Proposition
64; and
WHEREAS, before any commercial cannabis activities in the City can begin, revision of
Title 17, Zoning, and repeal and replacement of Title 9, Public Peace, Morals and Welfare (Chapter
9.10,) is required; and
WHEREAS, as part of the process to permit commercial cannabis activity in the City, the
City desires to update Title 9 and Title 17 to establish regulations for the operation of cannabis
businesses, consistent with current state law and City permitting and land use requirements; 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
March 28, 2018 and March 29, 2018, for the purpose of considering amendments to Title 17
(Zoning Regulations) of the Municipal Code to establish land use regulations for the operation of
commercial cannabis businesses, and making recommendations to the City Council regarding such
amendments.
WHEREAS, the proposed amendments were considered at regular, duly noticed meeting
of the City Council on May 1, 2018;
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo
as follows/or that (whatever action is needed):
SECTION 1. Findings. Based upon all the evidence, the Council makes the following
additional findings.
a) The proposed amendments to Title 17 are consistent the City’s General Plan.
b) The proposed amendments to Title 17 are consistent with existing zoning practices
in the City, so that commercial cannabis activities will be permitted only in zones
which already allow for similar uses, such as retail, manufacturing and laboratories,
consistent with existing performance standards and levels of planning review
applicable to similar uses.
c) The amendments to Title 9 and Title 17 enacted by this ordinance promote the
public health, safety, convenience, and welfare of the city by creating clear and
complementary land use, business operations, and personal conduct standards and
requirements to ensure the safe and orderly implementation of Proposition 64 and
Senate Bill 94 in the City, taking into consideration the unique local circumstances
and needs of City residents, as well as law enforcement and regulatory enforcement
staff.
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Ordinance No. _____ (2018 Series) Page 3
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d) The proposed amendments establish reasonable regulations regarding the
establishment of commercial cannabis businesses in the City, are consistent with
State law, maintain local control over land use and 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.
e) The City requires discretionary review and approval of permits, licenses and other
authorizations necessary to engage in commercial cannabis activity. Such review
and approval include applicable environmental review.
SECTION 2. Environmental Review. Until July 1, 2019, Business and Professions Code
section 26055, subdivision (h), as amended by SB 94, provides that the California Environmental
Quality Act (“CEQA”) does not apply to the adoption of an ordinance, rule, or regulation by a
local jurisdiction that requires discretionary review and approval of permits, licenses, or other
authorizations to engage in commercial cannabis activity, so long as the discretionary review
includes any applicable environmental review pursuant to CEQA. The proposed ordinance is
subject to a statutory exemption from CEQA because the City requires discretionary review and
approval, including applicable environmental review pursuant to CEQA, of permits, licenses or
other authorizations to engage in commercial cannabis activity.
SECTION 3. This Ordinance shall be known as the “Cannabis Land Use and Business
Regulation Implementation Ordinance.”
SECTION 4. Chapter 9.10 of the City of San Luis Obispo’s Municipal Code is hereby
repealed and replaced in its entirety as set forth in Exhibit A.
SECTION 5. Chapter 17.99 of the City of San Luis Obispo’s Municipal Code is hereby
added as set forth in Exhibit B.
SECTION 6. Chapter 17.22, Table 9 of the City of San Luis Obispo’s Municipal Code is
hereby amended as set forth in Exhibit C.
SECTION 7. Chapter 17.100 of the City of San Luis Obispo’s Municipal Code is hereby
amended as set forth in Exhibit D.
SECTION 8. No land use or operator permits under the terms of the provisions adopted
and/or amended herein shall be issued and no commercial cannabis business operations shall be
allowed in the City after the effective date of this ordinance unless and until the voters of the City
approve a cannabis revenue measure.
SECTION 9. Severability. If any subdivision, paragraph, sentence, clause, or phrase of
this Ordinance is, for any reason, held to be invalid or unenforceable by a court of competent
jurisdiction, such invalidity or unenforceability shall not affect the validity or enforcement of
the remaining portions of this Ordinance, or any other provisions of the City’s rules and
regulations. It is the City’s express intent that each remaining portion would have been adopted
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irrespective of the fact that any one or more subdivisions , paragraphs, sentences, clauses, or
phrases be declared invalid or unenforceable
SECTION 10. A summary of this ordinance, together with the names of Council members
voting for and against, shall be published at least five (5) days prior to its final passage, in The
Tribune, a newspaper published and circulated in this City. This ordinance shall go into effect at
the expiration of thirty (30) days after its final passage.
INTRODUCED on the ___ day of ___, 2018, AND FINALLY ADOPTED by the
Council of the City of San Luis Obispo on the ___ day of ___, 2018, on the following vote:
AYES:
NOES:
ABSENT:
____________________________________
Mayor Heidi Harmon
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, this ______ day of ______________, _________.
______________________________
Teresa Purrington
City Clerk
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Chapter 9.10 Cannabis Regulations
9.10.010 Purpose and Intent.
9.10.020 Definitions
9.10.030 Personal Cultivation Limited
9.10.040 Commercial Cannabis/City Permit and State License Required
9.10.050 Regulations and Fees
9.10.060 Display and Production of Permits
9.10.070 Commercial Cannabis Operator Permit Application Procedures and Requirements.
9.10.080 Renewal of Permit
9.10.090 Suspension or Revocation of Permit
9.10.100 Appeal
9.10.110 Right to Occupy and Use Property for Commercial Cannabis Activity
9.10.120 Prohibition on Transfer of Commercial Cannabis Operator Permits.
9.10.130 Records and Reporting.
9.10.140 Inspection and Enforcement.
9.10.150 Outdoor Commercial Cannabis Cultivation and Activities Prohibited
9.10.160 Indemnification, Insurance, Reimbursement, Consent
9.10.170 Compliance with Laws
9.10.180 Permit Violation
9.10.190 Permit Compliance Monitoring
9.10.200 Permit Holder Responsible for Violations by Employees or Agents
9.10.210 Consumption or Use Prohibited On-site and In Public
9.10.220 Concurrent Alcohol Sales or Service Prohibited
9.10.230 Minors
9.10.240 Sale of Cannabis, Cannabis Products or Cannabis Accessories by Vending Machine
prohibited
9.10.250 Security Measures
9.10.260 Limitations on City’s Liability.
9.10.270 Fees Deemed Debt to City
9.10.280 Violation and Penalties
9.10.290 Severability
9.10.010 Purpose and Intent.
A. It is the primary purpose and intent of this Chapter to protect the health, safety, and welfare of
the residents of the City of San Luis Obispo from the negative impacts of illegal commercial
and non-commercial cannabis activity, and of state authorized cannabis activity, by enforcing
city ordinances, rules and regulations consistent with applicable State law, including, but not
limited to, the Compassionate Use Act, the Medical Marijuana Program Act, the Adult Use of
Marijuana Act, and the Medicinal and Adult Use of Cannabis Regulatory and Safety Act.
B. This Chapter is not intended to, and shall not be construed to, prohibit or interfere with any
right, defense or immunity afforded to a patient or a patient’s primary caregiver, under Health
and Safety Code Section 11362.5 (the Compassionate Use Act), or a qualified patient or a
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qualified patient’s primary caregiver, under Health and Safety Code Section 11362.7 et. seq.
(the Medical Marijuana Program Act).
C. This Chapter is not intended to, and shall not be construed to, prohibit or interfere with any
right, defense or immunity of any person 21 years of age or older relating to the adult personal
possession or cultivation of cannabis or marijuana consistent with the provisions of the
Control, Regulate and Tax Adult Use of Marijuana Act, and the Medicinal and Adult Use of
Cannabis Regulatory and Safety Act.
D. Nothing in this Chapter shall be construed to authorize the cultivation, possession or use of
marijuana for any purpose inconsistent with state or local law.
E. Any reference to California statutes includes any regulations promulgated thereunder and is
deemed to include any successor or amended version of the referenced statute or regulation.
9.10.020 Definitions
A. State defined terms. Words or terms used in this chapter that are defined words or terms in
Business and Professions Code Section 26001, or Health and Safety Code Section 11362.7 (the
Statutes”) shall have the meanings ascribed to them in the Statutes as they now read, or as they
may be amended to read. These state defined words and terms include, but are not limited to,
“cannabis”, “cannabis accessories”, “cannabis concentrate”, ”cannabis products”,
“commercial cannabis activity”, ”cultivation”, “delivery”, “distribution”, ”identification card”,
“license”, “live plants” “manufacture”, ”operation”, “person”, “person with an identification
card”,” physician’s recommendation”, ‘premises”, “primary caregiver”, “qualified patient”
“sell”, “sale”, “to sell”. Some of these terms are also set forth in Chapter 17.100 of this code.
In the event of conflict in the definitions, the Statutes’ definitions shall control. Terms used in
this chapter that are not defined by the Statutes or chapter 17.100, shall have the meanings set
forth in subsection B below.
B. City defined terms. The following words or terms used in this chapter have the following
meanings:
1. “Commercial Cannabis Business” means any person or entity engaging in any business,
operation or activity which is Commercial Cannabis Activity under state law in the
city.
2. “Commercial Cannabis Operator Permit” means a permit required by the City of San
Luis Obispo pursuant to this chapter to conduct Commercial Cannabis Activity or a
Commercial Cannabis Business in the city.
3. “Responsible Party(ies)” shall be one or more individuals who have an ownership
interest in a Commercial Cannabis Activity and are designated to be personally
responsible for compliance with all terms and conditions of the Commercial Cannabis
Operator Permit, all other permits required by the city, and all ordinances and
regulations of the city. Any person having an ownership interest of more than fifty
percent in a Commercial Cannabis Activity shall be designated a Responsible Party on
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the application. If no individual owns more than fifty percent of a Commercial
Cannabis Activity, the individual owning the largest share shall be a Responsible Party,
and if multiple individuals have the same percentage interest, each one shall be a
Responsible Party. More than one individual can be designated a Responsible Party.
9.10.030 Personal Cultivation Limited
A. Maximum Six Plants Outdoors Per Parcel. It shall be unlawful for any person to plant,
cultivate, harvest, dry, process, maintain, possess or store outdoors, more than six (6) live
cannabis plants on any parcel containing one or more private residences. This limitation on
outdoor personal cannabis activities applies per parcel, regardless of the number of residents
in each private residence, and regardless of the number of residences on the parcel. This
limitation applies to cannabis live plants for either adult recreational use or medicinal purposes.
Outdoor personal cultivation shall comply with standards and requirements in chapter 17.99
of this Code.
B. Maximum Six Plants Per Private Residence, Indoors and Outdoors/Medicinal Exception.
Except for qualified patients with a Medical Marijuana Identification Card and the primary
caregivers of such persons, as provided in Subsection C below, it shall be unlawful for the
cumulative total of cannabis plants per private residence, indoors and outdoors, to exceed six
(6) cannabis live plants, regardless of number of persons residing in the private residence. Any
live cannabis plants grown indoors shall comply with applicable provisions of Chapter 17.99
of this Code.
C. Medicinal Cannabis Indoors if Exceed Six Plants. For qualified patients with a Medical
Marijuana Identification Card, or the primary caregivers of such persons, any cannabis live
plants in excess of six per private residence, shall be cultivated indoors and shall comply with
applicable provisions of Chapter 17. 99 of this Code.
D. No Outdoor Cultivation on Parcel without Private Residence. It shall be unlawful for any
person to plant, cultivate, harvest, dry, process, maintain, possess or store any cannabis live
plants outdoors on a parcel that does not have a private residence used for residential dwelling
purposes by the person cultivating the cannabis live plants.
E. Neighborhood Impacts of Personal Cultivation. 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 and any outdoor cultivation shall comply with provisions of Chapter
17.99.040 of this code. Personal cultivation of cannabis, for recreational adult use or for
medicinal purposes, shall not create odors, dust, heat, noise, light, glare smoke or other impacts
to people of normal sensitivity living, working or lawfully present in the vicinity of the personal
cultivation site. Impacts that cross the nearest property line of any other parcel, beyond that
parcel on which the personal cultivation is conducted, or that are visible or noticeable with
normal unaided vision, from a public place or the public right of way, or from any separately
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owned, leased or controlled private residence or business on the same parcel as the private
residence responsible for the personal cultivation, are unlawful.
F. No Hazardous Personal Cultivation. Personal cultivation, harvesting, drying, or processing of
cannabis, for recreational adult use or medicinal purposes, that uses or stores hazardous or
toxic chemicals or materials, creates hazardous or toxic products or wastes, or uses volatile
processes or other methods or substances that pose a significant risk to public health or safety,
is prohibited and unlawful.
9.10.040 Commercial Cannabis/City Permit and State License Required
A. City Commercial Cannabis Operator Permit Required. No person shall engage in Commercial
Cannabis Activity or have an ownership interest in, operate, or manage, a Commercial
Cannabis Business without obtaining and continuously maintaining a Commercial Cannabis
Operator permit pursuant to this chapter.
B. Commercial Cannabis Operator Permit and State License(s) Required. It shall be unlawful for
any person to own, conduct, manage, operate, engage or participate in, work or volunteer at a
Commercial Cannabis Activity or Commercial Cannabis Business that does not have a valid
Commercial Cannabis Operator’s Permit issued pursuant to this chapter and other city permits
or licenses required by this Code, in addition to the appropriate license(s) required by state law
to conduct the Commercial Cannabis Activity. Any Commercial Cannabis Business or
Commercial Cannabis Activity conducted without all required city and state permits and
licenses is prohibited and unlawful and is hereby declared to be a public nuisance.
9.10.050 Regulations and Fees.
The City Council shall by resolution or ordinance adopt such forms, fees, regulations and
procedures as are necessary to implement this Chapter with respect to the application and
qualification for, and the selection, future selection, investigation, process, issuance, renewal,
revocation, and suspension of, Commercial Cannabis Operator Permits.
9.10.060 Display and Production of Permits
A. Dual Permits Posted and Visible. A copy of the Commercial Cannabis Operator permit issued
by the City of San Luis Obispo pursuant to this Chapter, together with a copy of the appropriate
state license(s) for the Commercial Cannabis Activity being conducted, shall be posted and
readily visible to the public at all times, at each location where Commercial Cannabis Activity
occurs.
B. Production of Originals for Inspection. Any owner, operator , employee or person in charge of
a Commercial Cannabis Activity shall produce for inspection and copying, upon request of a
City inspector, code enforcement officer, or City police officer during normal operating hours,
the original of the current and valid City of San Luis Obispo Commercial Cannabis Operator
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Permit and the appropriate, current and valid license(s) of the State of California for the
Commercial Cannabis Activity(ies) or Commercial Cannabis Business(es) being conducted.
9.10.070 Commercial Cannabis Operator Permit Application Procedures and
Requirements
A. Application. A person shall apply for a Commercial Cannabis Operator permit by submitting
an application to the City during the annual application period. The City Council will, by
resolution, adopt criteria by which all applications will be reviewed, applicants qualified and
ranked. Those applicants that are selected will have the opportunity to apply for a use permit
as outlined in Chapter 17.99. Each application shall designate at least one Responsible Party.
If a person is not selected to receive a Commercial Cannabis Operator Permit, the person may
reapply during the next annual application period.
B. Application Submittal Timeframe. A person may only submit one application for a commercial
cannabis operator permit during the annual application period designated by resolution of the
City Council. In no event will the Commercial Cannabis Operator permit be valid for for more
than a twelve (12) month period. There is no guarantee that an applicant will receive a
commercial cannabis operator permit. Due to limitations on the number of certain permits,
even a highly ranked applicant may not receive a commercial cannabis operator permit and
even an applicant who receives a commercial cannabis operator’s permit is not guaranteed that
any subsequent, required land use permit, as outlined in Chapter 17.99, will be approved.
C. Grounds for Automatic Disqualification.
In addition to any other reason that may be established by the City Council as a basis for
disqualification, an applicant shall be disqualified from applying for, or obtaining, a
Commercial Cannabis Operator Permit if:
1. The applicant fails to timely file an application during the annual application period.
2. The Responsible Party refuses to sign the application and agree to be personally
responsible for compliance, and personally liable for failure to comply, with the
provisions of this chapter.
3. Any person listed in the application has been convicted of a felony. No person who has
been convicted of a felony may be engaged (actively or passively) in the operation ,
management or ownership of any Commercial Cannabis Business. A conviction within
the meaning of this Chapter means a plea or verdict of guilty or a conviction or
diversion following a plea of nolo contendere. However, a person with a felony
conviction solely related to personal marijuana use or marijuana activity that would
otherwise be permitted under current state law shall not be prohibited from applying or
being approved for a Commercial Cannabis Operator Permit solely on the basis of such
a conviction or plea of nolo contendere.
4. The applicant made one or more false or misleading statements or omissions in the
application process.
5. Any person listed on the application is a licensed physician making patient
recommendations for medical or medicinal cannabis pursuant to State law.
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6. Any person listed in the application is less than twenty-one (21) years of age.
D. Duration and Activation of Permit. Each Commercial Cannabis Operator permit issued
pursuant to this Chapter shall expire twelve (12) months after the date of its activation. The
permittee may apply for renewal prior to expiration in accordance with this chapter. Each
Commercial Cannabis Operator Permit must be activated within 12 months of issuance. The
permit is activated by the issuance of a use permit for the Commercial Cannabi s Activity
pursuant to Chapter 17.99, together with all other applicable city permits and state licenses,
and the Commercial Cannabis Operator thereafter opening and continuously operating the
Commercial Cannabis Activity. Failure to timely activate the pe rmit shall be deemed
abandonment of the permit and the permit shall automatically lapse.
9.10.080 Renewal of Permit
A. Renewal Application Filing Deadline. An application for renewal of a Commercial Cannabis
Operator Permit shall be filed at least sixty (60) calendar days, but not more than one hundred
twenty (120) calendar days, prior to the expiration date of the permit with the City Manager or
his/her designee. If the complete application and fees are timely submitted but the City does
not act to approve or reject the renewal prior to expiration, the permittee may continue to
operate under the expired permit until the City approves or rejects the application for renewal.
B. Rejection of Renewal Application. An application for renewal of a Commercial Cannabis
Operator Permit shall be rejected if any of the following exists.
1. The application is filed less than sixty (60) days before its expiration.
2. The Commercial Cannabis Operator Permit, is revoked at the time of the application or
renewal.
3. The applicant conducted unpermitted commercial cannabis activities in the city or
continued to conduct formerly permitted commercial cannabis activities after
expiration of the permit, other than as expressly permitted by this section.
4. The applicant has received an administrative citation for violating any provision of this
Code relating to its Commercial Cannabis Activity(ies) in the city during the last twelve
months, and the administrative citation has not been resolved in the applicant’s favor
by date of application for renewal. A pending, unresolved appeal of an administrative
citation shall not result in rejection of an otherwise timely and complete application,
but resolution of an appeal in a manner that upholds the violation against the applicant
during the application review period shall result in the immediate rejection of the
application.
5. The Commercial Cannabis Business has not been in regular and continuous operation
in the three (3) months immediately prior to the renewal application.
6. The Commercial Cannabis Business fails to conform to the requirements of this
Chapter, any regulations adopted pursuant to this Chapter or the conditions imposed as
part of any Use Permit or zoning requirements under Chapter 17.99 of this Code.
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7. Any of the grounds for disqualification for prequalification set forth in Section
9.10.070(C) above, or as established by the City Council, exist at the time of application
for renewal, or date of renewal.
8. The permittee fails to renew any required State of California license(s), or the State
revokes or suspends the license. Revocation, termination, non-issuance or suspension
of a license issued by the State of California, or any of its departments or divisions,
shall immediately, concurrently revoke, terminate, or suspend, respectively, the
Commercial Cannabis Operator Permit. Such automatic suspension makes it illegal for
a Commercial Cannabis Business or Activity to operate within the City of San Luis
Obispo until the State of California, or its respective department or division, reinstates
or issues the State license.
C. Effect of Rejection of Application for Renewal. Operations to Cease Pending Appeals . If a
renewal application is rejected, the Commercial Cannabis Operator Permit expires on the
expiration date set forth in the permit, even if an appeal has been filed. All commercial cannabis
activities in the City under the expired permit must stop until all appeals have been exhausted.
A person or entity whose renewal application is rejected, and loses his/her/its appeal, must go
through the annual Commercial Cannabis Business Operator Permit application process.
9.10.090 Suspension or Revocation of Permit.
In addition to any other penalty authorized by law, a Commercial Cannabis Operator Permit may
be suspended or revoked if the city finds, after notice to the permitee and opportunity to be heard,
that the permitee or his or her agents or employees has violated any condition of the permit
imposed pursuant to, or any provision of, this chapter.
1. Upon a finding by the city of a first permit violation within any five-year period, the permit
shall be suspended for thirty days.
2. Upon a finding by the city of a second permit violation within any five-year period, the
permit shall be suspended for ninety days.
3. Upon a finding by the city of a third permit violation within any five-year period, the permit
shall be revoked.
9.10.100 Appeal.
A. Qualification. Ranking. A decision of the city to not qualify an applicant for a Commercial
Cannabis Operator Permit, or to rank applicants, or to allow qualified applicants with the
highest rankings the first opportunity to apply for a Commercial Cannabis Operator Permit,
shall be the final action of the City and not appealable.
B. Non-renewal, Revocation or Suspension. A decision of the City to reject an application for
renewal, or to revoke or suspend a Commercial Cannabis Operator Permit, is appealable to the
City Manager. An appeal must be filed with the City Manager within ten working days after
the renewal has been denied, suspended or revoked. A decision of the City Manager or his or
her designee is appealable to the City Council in accordance with Chapter 1.20 of this Code.
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C. Effect of Suspension. During a period of license suspension, the Commercial Cannabis
Business shall remove from public view, all cannabis and cannabis products, and shall not
conduct any Commercial Cannabis Activity.
D. Revocation. Notice to State. Pursuant to Business and Profession Code Section 26200 (c), the
City Manager or his or her designee shall promptly notify the Bureau of Cannabis Control
within the Department of Consumer Affairs, upon city’s revocation of any local license,
permit, or authorization for a state licensee to engage in commercial cannabis activity within
the city.
9.10.110 Right to Occupy and to Use Property for Commercial Cannabis Activity.
As a condition precedent to the City’s issuance of a Commercial Cannabis Operator Permit
pursuant to this Chapter, any person intending to open and operate a Commercial Cannabis
Business shall provide evidence satisfactory to the City of the applicant’s legal right to occupy and
to use the proposed location for the proposed use, together with the approval of a use permit from
the city for cannabis activity at the location. In the event the proposed location is owned by or to
be leased from another person, the applicant for a permit under this Chapter shall provide a signed
and notarized statement from the property owner agreeing to the operation of a Commercial
Cannabis Business on the property.
9.10.120 Prohibition on Transfer of Commercial Cannabis Operator Permits.
A. Business Restriction to Location on Permit. It shall be unlawful for any person to transfer a
Commercial Cannabis Operator Permit to a location not specified on the permit, or to operate
a Commercial Cannabis Business at any place or location other than that identified on the
Commercial Cannabis Operator Permit issued pursuant to this Chapter.
B. Transfer or Assignment Prohibited. No person or entity shall encumber, mortgage, lien,
hypothecate, give, bequeath, sell, assign or transfer, by operation of law or otherwise, any
portion of the ownership or control of a Commercial Cannabis Business or a Commercial
Cannabis Operator Permit. The Commercial Cannabis Operator Permit shall terminate
immediately and automatically upon such assignment or transfer unless and until the City
prequalifies the transferee or assignee during the annual prequalification period; the transferee
or assignee submits all required information, pays all applicable fees and charges, , and obtains
the prior consent of the City Council.
C. Assignment Null and Void. Any attempt to transfer, sell, assign, give, or lien, or any transfer,
sale, assignment, gift or lien, of a Commercial Cannabis Operator Permit issued pursuant to
this Chapter, by operation of law or otherwise, in violation of this chapter, is prohibited. Any
such action immediately voids, nullifies and terminates the Commercial Cannabis Operator
Permit, which shall be of no further force or effect.
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9.10.130 Records and Reports.
A. City Access to Records. Subject to the Health Insurance Portability and Accountability Act
(HIPAA) regulations, each Commercial Cannabis Business shall allow City of San Luis
Obispo officials to have access to the Commercial Cannabis Business’s books, records,
accounts, and any and all data relevant to its permitted activities for the purpose of conducting
an audit, examination or inspection. Books, records, accounts, and any and all relevant data
will be produced no later than twenty-four (24) hours after receipt of the City’s request or
within a reasonable time as authorized in writing by the City.
B. Annual Audit. Each Commercial Cannabis Business shall file with the City Manager or his/her
designee an audit of its financial operations for the previous fiscal year, complete and certified
by an independent certified public accountant in accordance with generally accepted auditing
and accounting principles. The audit shall include but not be limited to a discussion, analysis,
and verification of each of the records required to be maintained pursuant to this Chapter. The
information contained in the audit shall be made available in standard electronic format which
shall be compatible with programs and software used by the City, and which can easily be
imported into either Excel, Access or any other contemporary software designated by the City
Manager.
C. Inventory Control system. All Commercial Cannabis Businesses shall maintain an inventory
control and reporting system that accurately documents the present location, amounts, and
descriptions of all cannabis and cannabis products for all stages of the growing and production
or manufacturing, laboratory testing and distribution processes until sold or distributed.
D. Employee Registry. Each owner and/or operator of a Commercial Cannabis Business shall
maintain a current register of the names and the contact information (including the name,
address, and telephone number) of all employees currently employed by the Commercial
Cannabis Business and shall disclose such register to any City of San Luis Obispo official upon
request.
E. Reporting and Tracking of Product and of Gross Sales. Each Commercial Cannabis Business
shall have in place a point-of-sale tracking system to track and to report on all aspects of the
Commercial Cannabis Business including, but not limited to, such matters as cannabis
tracking, inventory data, and gross sales (by weight and by sale) and shall ensure that such
information is compatible with the City’s record-keeping systems. The system must have the
capability to produce historical transactional data for review by the City of San Luis Obispo.
All information provided to the City pursuant to this sub-Chapter shall be confidential and
shall not be disclosed, except as may otherwise be required under law.
F. Maintenance of Records. All records required by this Chapter shall be maintained by the
Commercial Cannabis Business for a period of not less than seven (7) years and shall otherwise
keep accurate records of all Commercial Cannabis Business activity and provide such records
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for inspection consistent with this Code or any rules the City Council by resolution or
ordinance.
9.10.140 Inspection and Enforcement.
A. Unscheduled Inspection during Business Hours. The City Manager or his/her designee and any
other City of San Luis Obispo official or inspector charged with enforcing any provisions of
this Code, may enter a Commercial Cannabis Business at any time during the hours of
operation without notice for the purpose of inspecting the Commercial Cannabis Business for
compliance with the provisions of this Code, the terms and conditions of the Commercial
Cannabis Operator Permit or any other city permit or state license, including inspection of the
recordings and records maintained pursuant to this Chapter or the applicable provisions of
State law. The right to inspect under this inspection includes the right to copy recordings and
records.
B. Interference with Inspection. It is unlawful for any person who owns, operates, manages or is
employed by, or has any responsibility over the operation of, a Commercial Cannabis Business,
to refuse to allow, or to impede, obstruct, or interfere with, an inspection by the city, or the
city’s review or copying of recordings (including audio and video recordings) and records , or
to conceal, destroy, alter or falsify any recordings or records.
C. Obtaining Samples. The City Manager or his/her designee or any other person charged with
enforcing the provisions of this Chapter may enter the location of a Commercial Cannabis
Business at any time during the hours of operation and without notice to obtain samples of
cannabis and cannabis products to test for law enforcement and/or public safety purposes. Any
samples obtained by the City of San Luis Obispo shall be logged, recorded, and maintained in
accordance with City of San Luis Obispo Police Department standards for evidence. At all
other times, the City Manager or his/her designee may enter the location of a Commercial
Cannabis Business to obtain samples of cannabis upon reasonable notice, as otherwise
authorized by law or pursuant to a warrant.
9.10.150 Outdoor Commercial Cannabis Cultivation and Activities Prohibited.
A. Outdoor Commercial Cultivation prohibited. Outdoor commercial cannabis cultivation,
including, but not limited to, cultivation in greenhouses, hoop structures, and by mixed light
(part daylight/part artificial light), is prohibited and unlawful. This section prohibits all outdoor
commercial cannabis cultivation, including cultivation for profit or not for profit cultivation,
and including commercial cultivation for adult recreational use or medicinal purposes. For
purposes of this section, outdoor cultivation of cannabis by cooperatives is prohibited. All
commercial cannabis cultivation shall be conducted only inside a fully enclosed structure by a
person or entity with a Commercial Cannabis Operator Permit, a city use permit, and
appropriate State license(s). See also Section 17.99.050 G 3 of this Code.
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B. Outdoor Commercial Cannabis Activities Prohibited. Outdoor storage, harvesting, drying,
processing, or manufacturing of commercial cannabis or cannabis products is prohibited and
unlawful.
9.10.160 Indemnification, Insurance, Reimbursement, Consent.
As a condition of approval of any Commercial Cannabis Operator Permit issued pursuant to this
Chapter, the permitee shall, at a minimum:
A. Execute an agreement to protect, indemnify, defend (at its sole cost and expense with counsel
approved by City), and hold the City of San Luis Obispo and its officers, employees, attorneys,
representatives, and agents harmless from and against any and all claims, demands, losses,
damages, injuries, costs, expenses (including attorneys’ fees) fines, penalties, or liabilities
arising from, related to or associated with: the issuance of a Commercial Cannabis Operator
Permit or use permit; the permitting or approving the operation of a Commercial Cannabis
Activity; the collection of any fees, taxes, or charges from a Commercial Cannabis Business;
the Commercial Cannabis Business’s or any of its owners’, operators’, managers’, employees,
or agents’ violation of any federal, state or local laws; the City’s suspension, revocation or
refusal to renew the Commercial Cannabis Operator Permit.
B. Maintain insurance with standard city coverages and limits, but with additional conditions
thereon deemed necessary by the City Attorney.
C. Reimburse the City of San Luis Obispo for any and all costs, expenses, attorney fees , fines,
penalties and court costs that the City of San Luis Obispo may be required to pay as a result of
any legal challenge related to the City’s approval of a Commercial Cannabis Operator Permit
pursuant to this Chapter or any other city permit or the City of San Luis Obispo’s approval of
the operation of a Commercial Cannabis Activity. The City of San Luis Obispo may, at its
sole discretion, participate at its own expense in the defense of any such action, but such
participation shall not relieve the obligations imposed under this Chapter.
D. Consent to unscheduled inspections, production of records and recordings, and obtaining of
samples of cannabis and cannabis products by authorized City officials during normal
operating hours as provided in this chapter.
9.10.170 Compliance with Laws.
The Commercial Cannabis Business shall operate all times in compliance with all applicable state
and local laws, regulations, and any specific, additional operating procedures or requirements
which may be imposed as conditions of approval of the Commercial Cannabis Operator Permit or
use permit or state license(s). Nothing in this Chapter shall be construed as authorizing any action
which violates state law or local law with respect to the operation of a Commercial Cannabis
Activity
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9.10.180 Permit Violation.
Compliance with all local and state cannabis-related laws shall be a condition of a city Commercial
Cannabis Operator Permit and it shall be a violation of a license for a licensee or his or her agents
or employees to violate any local, state or federal tobacco-related law.
9.10.190 Permit Compliance Monitoring.
Compliance with this chapter shall be monitored by the San Luis Obispo police department, Code
Enforcement staff and/or any other duly authorized agent of the City. Any compliance checks
pursuant to this chapter shall be in addition to any under any other ordinances, regulations or
permits. At least four compliance checks of each cannabis retailer shall be conducted during each
twelve-month period. At least two compliance checks of each commercial cannabis business other
than a retailer shall be conducted during each twelve-month period. The cost of compliance
monitoring shall be incorporated into the annual renewal fee.
9.10.200 Permit Holder Responsible for Violations By Employees or Agents.
The responsible person and any entity to whom a Commercial Cannabis Operator permit is issued
pursuant to this Chapter shall be responsible for all violations of the regulations and ordinances of
the City of San Luis Obispo, committed by the permittee, any employee or agent of the permittee,
which violations occur in or about the premises of the Commercial Cannabis Business, even if the
responsible person is not present. Violations by an employee or agent may result in the termination
or non-renewal of the permit by City.
9.10.210 Consumption or Use Prohibited On-site and in Public
It is unlawful for any person or entity:
a. To sell, give, exchange, dispense or distribute cannabis or cannabis products for on-site
consumption, use or sampling on any business premises; or
b. To consume or use cannabis or cannabis products, whether by smoking, vaping, inhaling,
eating, drinking or any other means:
1. in, on or about the premises of any Commercial Cannabis Business;
2. in, on or about any publicly owned or operated property; any place open to, or
accessible by the public; any place smoking is prohibited; or any place visible
from any public place with normal unaided vision.
9.10.220 Concurrent Alcohol or Tobacco Sales or Service Prohibited.
A. No person shall dispense, serve, store, give away or consume, or cause or permit the sale,
dispensing, serving, giving away or consumption of alcoholic beverages or tobacco in or on
the premises of a Commercial Cannabis Business.
B. No person shall conduct any Commercial Cannabis Activity at any location where alcohol is
sold or served.
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9.10.230 Minors
A. Minors shall not be allowed on the premises of a commercial Cannabis Business having either
an “A” or “M” license, or both, even if accompanied by a parent or guardian.
B. Every entrance to an “A” or “M” licensed Commercial Cannabis Business shall be clearly and
legibly posted with the following notice: “ENTRY ONTO THESE PREMISES BY PERSONS
UNDER 21 YEARS OF AGE IS PROHIBITED BY LAW. VALID PHOTO ID REQUIRED.”
Each letter of the notice must be at least two inches high and clearly visible.
C. No person, business, or other entity conducting a Commercial Cannabis Activity with either
an “A” or “M’ state license shall employ any person who is not at least twenty-one (21) years
of age.
9.10.240 Sale of Cannabis Products or Cannabis Accessories by Vending Machine
prohibited
A. No person shall locate, install, keep, maintain or use, or permit the location, installation,
keeping, maintenance or use on his, her or its premises of any cannabis vending machine used
or intended to be used for the purpose of selling any cannabis products or cannabis accessories
therefrom.
B. No person, business, or other entity shall sell, offer for sale, or display for sale any cannabis
product by means of a self-service display or vending machine. All cannabis products shall be
offered for sale exclusively by means of vendor/employee assistance.
C. “Vending machine” means any electronic or mechanical device or appliance the operation of
which depends upon the insertion of money, whether in coin or paper bill, or debit or credit
card, or other thing representative of value, which device or appliance dispenses or releases
cannabis, cannabis product(s) and/or cannabis accessories.
9.10.250 Security and Public Safety Measures.
A. The City Manager or his/her designee(s) is authorized to promulgate all regulations necessary
to implement the requirements and fulfill the purposes and policies of this Chapter, including
but not limited to enforcement, background checks for applicants, approval and enforcement
of a Commercial Cannabis Activity security plan, including audio and video recordings of
operations, and verification of compliance.
B. Every Commercial Cannabis Activity and every Commercial Cannabis Activity shall have a
security plan approved by the Chief of Police or designee prior to issuance of a City
Commercial Cannabis Operator Permit.
C. Hours of Operation.
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a. Retail -Storefront. Retail-Storefront Commercial Cannabis Business shall not
operate between the hours of 8 PM and 9 AM.
9.10.260 Limitations on City’s Liability.
The City shall not be liable for issuing, or failing or refusing to issue, suspending, revoking or
failing to renew a Commercial Cannabis Operator Permit pursuant to this Chapter or otherwise
approving or disapproving the operation of any Commercial Cannabis Business pursuant to this
Chapter.
9.10.270 Fees Deemed Debt to City.
The amount of any fee, cost or charge imposed pursuant to this Chapter shall be deemed a debt to
the City of San Luis Obispo that is recoverable in any court of competent jurisdiction.
9.10.280 Violation and Penalties.
A. Misdemeanor. Each violation of the provisions of this chapter shall be a misdemeanor and is
punishable as provided in Section 1.12.030 of this code.; provided, that where the city attorney
determines that such action would be in the interest of justice, he/she may specify in the
accusatory pleading that the offense shall be an infraction. Any violation of the provisions of
this chapter by any person is also subject to administrative fines as provided in Chapter 1.24
of this code.
B. Infraction Violation. Where the city attorney determines that, in the interest of justic e, a
violation of this chapter is an infraction, such infraction is punishable by a fine not exceeding
one hundred dollars for a first violation, a fine not exceeding two hundred dollars for a second
violation of the same provision within one year, and a fine not exceeding five hundred dollars
for each additional infraction violation of the same provision within one year.
C. The fine amounts set forth above may be modified, from time to time, by city council
resolution. In no event shall such fine amounts exceed the amounts authorized by state law.
D. If the city of San Luis Obispo finds, based on substantial record evidence, that any person has
engaged in Commercial Cannabis Activity in violation of Chapter 9.10, the city shall fine that
person as follows. Each day that person without a Commercial Cannabis Operator Permit
offers cannabis or cannabis products for sale or exchange shall constitute a separate violation
and assessed a fine in accordance with Sections 1.12.080 and 1.24.070(A) of this code.
E. Each person committing, causing, or maintaining a violation of this chapter or failing to
comply with the requirements set forth herein shall be deemed guilty of a separate offense for
each and every day during any portion of which any violation of any provision of this chapter
is committed, continued, maintained, or permitted by such person and shall be punishable
accordingly.
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F. The violation of any provision of this chapter shall be and is hereby declared to be a public
nuisance and contrary to the public interest. Any public nuisance under this chapter may, at
the city’s discretion, be abated by the city by civil process by means of a restraining order,
preliminary or permanent injunction or in any manner provided by law for the abatement of
such nuisance. The city shall also be entitled to recover its full reasonable costs of abatement.
The prevailing party in any proceeding associated with the abatement of a public nuisance shall
be entitled to recovery of attorneys’ fees incurred in any such proceeding if the city has elected
at the initiation of that individual action or proceeding to seek recovery of its own attorneys’
fees.
G. In lieu of issuing a criminal citation, the city may issue an administrative citation to any person
responsible for committing, causing or maintaining a violation of this chapter. Nothing in this
section shall preclude the city from also issuing a citation upon the occurrence of the same
offense on a separate day.
H. The remedies set forth in this chapter are cumulative and in addition to any and all other l
remedies available at law or equity, whether set forth elsewhere in the San Luis Obispo
Municipal Code, or in state or federal laws, regulations, or case law. In addition to other
remedies provided by this chapter or by other law, any violation of this chapter may be
remedied by a civil action brought by the city attorney, including but not limited to
administrative or judicial nuisance abatement proceedings, civil or criminal code enforcement
proceedings, and suits for injunctive relief. The remedies provided by this chapter are
cumulative and in addition to any other remedies available at law or in equity.
9.10.290 Severability.
If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this chapter is for
any reason held to be invalid or unenforceable, such invalidity or unenforceability shall not affect
the validity or enforceability of the remaining sections, subsections, subdivisions, paragraphs,
sentences, clauses or phrases of this chapter or the rules adopted hereby. The city council of the
city of San Luis Obispo hereby declares that it would have adopted each section, subsection,
subdivision, paragraph, sentence, clause or phrase hereof, irrespective of the fact that any one or
more other sections, subdivisions, paragraphs, sentences, clauses or phrases hereof be declared
invalid or unenforceable.
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Chapter 17.99: Cannabis
17.99.010 - Purpose
17.99.020 - Applicability
17.99.030 - Definitions
17.99.040 - Personal Cultivation
17.99.050 - Commercial Cannabis Businesses
17.99.010 Purpose.
The purpose of this Chapter 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 if San Luis Obispo by establishing land use requirements and
development standards for cannabis activities. Cannabis Activity, as defined in Chapter
17.100.030 (“Definitions” “C”), 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 Chapter 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
Article is intended to affect or alter federal law, which identifies marijuana (cannabis) as a
Schedule I Controlled Substance.
17.99.020 Applicability.
Nothing in this Article 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.
17.99.030 Definitions.
See Section 17.100 Definitions of this code. Terms used in this ordinance 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 Section 17.100 Definitions of this code or Chapter 9.10,
Cannabis Regulations, of this code.
17.99.040 Personal Cultivation.
A. 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:
1. All indoor personal cultivation, including by a qualified patient or primary caregiver, 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.
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2. Medical or medicinal cannabis shall be cultivated inside a private residence only by:
a. A qualified patient or person with an identification card, as each is defined by
Health and Safety code section 11362.7 exclusively for his or her own personal
medical use but who does not provide, donate, sell, or distribute medical cannabis
to any other person; or
b. A primary caregiver, as defined by Health and Safety Code section 11362.7, who
cultivates, possesses, stores, manufactures, transports, donates, or provides medical
cannabis exclusively for the personal medical purposes of no more than five
specified qualified patients for whom he or she is the primary caregiver, but who
does not receive remuneration for these activities except for compensation in full
compliance with Health and Safety Code Section 11362.765(c).
3. 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.
4. All accessory buildings and structures used for indoor cultivation shall comply with the
City’s Zoning Regulations and Building Codes.
5. Indoor personal cultivation of cannabis may occur inside a dwelling and/or an accessory
building or structure, subject to the following restrictions:
a. The cumulative cultivation for medical or medicinal cannabis shall not exceed six
(6) cannabis plants per qualified patient per private residence. Either a qualified
patient or a primary caregiver shall reside full-time on the premises where the
medical cannabis cultivation occurs.
b. For persons other than qualified patients or primary caregivers, all personal
cultivation shall be conducted by persons 21 years of age or older, and the
cumulative total of cannabis plants on the property, indoor and outdoor, shall not
exceed six (6) cannabis plants, regardless of the number of persons residing on the
property.
6. 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).
7. 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.
8. 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.
9. Nothing in this section is intended, nor shall it be construed, to authorize commercial
cultivation of cannabis by qualified patients, persons with an identification card or primary
caregivers.
10. 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.
11. Cannabis cultivation areas in a private residence shall be locked at all times when the
cultivator is not present.
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17.99.050 Commercial Cannabis Businesses
A. Commercial Cannabis Operator Permit.
1. 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, of the code 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.
2. No permit issued for commercial cannabis activity pursuant to this chapter may be
transferred, assigned, or bequeathed, by operation of law or otherwise.
3. The Commercial Cannabis Operator Permit must be renewed each year.
4. Expiration of the use permit shall be consistent with Chapter 17.58, Section 17.58.030(C).
B. 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 Cannabis Business
Operator’s Permit, 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.
C. 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.
D. Application Requirements. All commercial cannabis activities require qualification through
the commercial cannabis operator selection approval process in Chapter 9.10, Cannabis
Regulations, of this code, 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:
1. Site plan, floor plans, and a general description of the nature, square-footage, parking and
type of cannabis activity(ies) being requested.
2. An operations plan including:
a. 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 o n-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;
b. Plan for restriction of access by minors;
c. Employee safety and training plan;
d. Odor, noise and light management plan;
e. Estimated energy usage and energy efficiency plan;
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f. Estimated water usage and water efficiency plans; and
g. Waste management plan.
3. Proposed signage:
a. Must comply with City’s Sign Regulations for size, area and type of sign, no
exceptions allowed.
b. Internal illumination of signs is prohibited.
c. No portion of the cannabis plant may be used in any sign visible from the public
right-of-way.
d. Provide sign size, height, colors, and design of any proposed signage at the site.
e. 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.”
f. Must include a sign at each entrance of a retail storefront that prohibits persons
under 21 years of age from entering.
4. An analysis that demonstrates neighborhood compatibility and a plan for addressing
potential compatibility issues.
5. Applications for retail storefronts shall include a vicinity map showing at least one
thousand (1000) feet of surrounding area and the distances to the following uses: any pre-
school, elementary school, junior high school, high school, public park or playground and
three hundred (300) feet from a residentially zoned area. 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.
6. 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 other proof of right to apply for the permit at the location;
7. A list of all other uses on the property.
E. Commercial Cannabis Development Standards
Each Cannabis business is required to meet the following standards:
1. 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 business within the zones
specified for each type of commercial activity listed below.
2. Commercial cannabis facilities shall be allowed in areas demarcated with CAN overlay
zoning and as allowed in the underlying zone for each type of commercial cannabis
activity.
3. All commercial cannabis facilities shall be sited and/or operated in a manner that prevents
cannabis odors from being detected offsite. 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.
4. 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-
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way. Commercial manufacturing of cannabis or cannabis products shall be shielded to
confine light and glare to the interior of the structure.
5. 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.
6. The use permit to be issued under this chapter shall include, but is not limited to, the
following conditions:
a. The obtaining and maintaining of the Commercial Cannabis Operator Permit and
appropriate state license.
b. 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.
c. 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.
d. Any Commercial Cannabis Operator permit issued pursuant to this chapter and
Chapter 9.10 expires after one year, unless renewed.
e. Prohibition of on-site consumption of cannabis at: 1) at a commercial cannabis
business or commercial cannabis activity location; 2) any other business, club or
cooperative or event, regardless if open to the public or only to members; and 3 )
anywhere an entry or other fee is charged to attendees or the host or thing of value
or consideration is received or exchanged.
f. 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.
g. 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
h. Prohibition of minors on the premises, even if accompanied by a parent or guardian.
i. Outdoor storage of cannabis or cannabis products is prohibited.
F. Commercial Cultivation
1. 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’s Permit pursuant to Chapter 9.10,
Cannabis Regulations, of this code and appropriate state license, in the following zones:
a. Service Commercial (C-S)
b. Manufacturing (M)
c. Business Park (BP)
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2. A maximum of 70,000 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 L below.
3. 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.
4. Commercial cannabis cultivation conditional permits include the following:
a. Specialty Cultivator – A maximum of no more than 5,000 square feet of canopy
of indoor cultivation (either in horizontal or vertical growing situations) and
includes processing.
b. Small Cultivator – A maximum of no more than 10,000 square feet of canopy of
indoor cultivation (either in horizontal or vertical growing situations) and includes
processing.
c. Nursery-Cannabis – A maximum of no more than 10,000 square feet of indoor
propagation area (either in horizontal or vertical growing situations).
5. Development Standards:
1. Compliance with Subsection E. Commercial Cannabis Development Standards.
2. 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 10 feet of open space
(see “Canopy” definition in Chapter 17.100).
3. All indoor cannabis cultivation shall be designed to accomplish zero net energy use
from the start of the operation.
4. 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.
G. Manufacturing
1. Manufacturing (non-volatile) Permissible. Non-volatile 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:
a. Service Commercial (C-S)
b. Manufacturing (M)
c. Business Park (BP)
2. Manufacturing (volatile) Prohibited. Cannabis or cannabis products manufacturing
involving volatile solvents, processes, compounds or substances is prohibited
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3. Development Standards:
1. Compliance with Subsection E. Commercial Cannabis Development Standards.
2. Outdoor manufacturing of cannabis or cannabis products is prohibited.
3. A complete description of all products used in the manufacturing process including
the cannabis supply chain, liquids, solvents, agents, and processes.
4. Storage protocol and hazard response plan.
5. Employee safety and training equipment plan, plus Materials Safety Data Sheet
requirements, if any.
H. Distribution
1. 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:
a. Service Commercial (C-S)
b. Manufacturing (M)
c. Business Park (BP)
2. Development Standards:
1. Compliance with Subsection E. Commercial Cannabis Development Standards.
I. Testing Laboratory
1. 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:
a. Service Commercial (C-S)
b. Manufacturing (M)
c. Business Park (BP)
d. Office (O)
2. Development Standards:
1. Compliance with Subsection E. Commercial Cannabis Development Standards.
2. 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.
3. 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.
4. 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.
5. 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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J. Retail - Storefront
1. 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:
a. Retail Commercial (C-R)
b. Service Commercial (C-S)
2. Development Standards:
1. Compliance with Subsection E. Commercial Cannabis Development Standards.
2. Only 3 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.
3. Retail storefronts shall be located at least one thousand (1000) feet from any pre-
school, elementary school, junior high school, high school, public park or
playground and three hundred (300) feet from any residentially zoned area.
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.
4. Retail storefronts must be separated from each other by at least 1,000 feet.
5. Hours of operation shall be limited between 9:00 am to 8:00 pm.
6. Must include a sign at each entrance of a retail storefront that prohibits persons
under 21 years of age from entering.
K. Retail - Non-Storefront (Delivery Services)
1. 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:
a. Service Commercial (C-S)
b. Manufacturing (M)
c. Business Park (BP)
2. Development Standards:
1. Compliance with Subsection E. Commercial Cannabis Development Standards.
2. Hours of delivery shall be limited between 6:00 am to 10:00 pm.
L. Microbusiness
1. 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.
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a. Microbusinesses with no more than 50% of the gross receipts being from
cultivation, distribution and manufacturing are allowed in the following zones:
1. Retail Commercial (C-R)
b. Microbusinesses with no more than 50% of the gross receipts being from storefront
retail sales are allowed in the following zones:
1. Manufacturing (M)
2. Business Park (BP)
c. Microbusinesses located in the Service Commercial (C-S) zone are not limited by
gross sales receipts from cultivation, distribution, manufacturing or retail sales.
2. Microbusinesses are subject to the 70,000 square feet of canopy cultivation city-wide
limitation (either in horizontal or vertical growing situations) and the limit of 3 retail
storefronts fronting arterial streets city-wide set forth in Subsection J above.
3. Development Standards:
1. Compliance with Subsection E. Commercial Cannabis Development Standards.
2. A maximum of 70,000 square feet of cumulative canopy for cultivation and
nurseries shall be allowed for indoor cultivation in the City within the allowed land
use zones.
3. All indoor cannabis cultivation shall be designed to accomplish zero net energy use
from the start of the operation.
4. 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.
5. Only 3 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.
6. Any Microbusiness with a retail storefront shall require a Planning Commission
Use Permit.
7. Retail storefronts shall be located at least one thousand (1000) feet from any pre-
school, elementary school, junior high school, high school, public park or
playground and three hundred (300) feet from any residentially zoned area.
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.
8. Retail storefronts must be separated from each other by at least 1,000 feet.
9. Hours of retail shall be limited to between 9:00 am to 8:00 pm and delivery shall
be limited to between 6:00 am to 10:00 pm.
10. Must include a sign at each entrance of a retail storefront that prohibits persons
under 21 years of age from entering.
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EXHIBIT C
Table 9: Uses Allowed by Zone
Land Use
Permit Required by Zoning District
AG C/OS R-1 R-2 R-3 R-4 PF O C-N C-C C-D C-R C-T C-S M BP
Cannabis Activity
Specialty Cultivator D D D
Small Cultivator D D D
Nursery D D D
Manufacturing I D D D
Distributor D D D
Microbusiness PC* D/PC* D/PC* D/PC*
Testing PC AA AA AA
Retailer (delivery) D D D
Retailer (storefront) PC PC
Key: A = Allowed AA = Administrative Approval D = Director's Use Permit
PC = Planning Commission Use Permit Approval Required
* See section 17.99.050 (L) of the Zoning Regulations for specific requirements per zone. A Planning Commission
use permit is only required if the Microbusiness includes a retail storefront as part of the business.
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EXHIBIT D
Chapter 17.100: Definitions
Cannabis. “Cannabis” or “cannabis product” means all parts of the plant Cannabis sativa
Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing or not; the seeds thereof, the
resin, whether crude or purified, extracted from any part of the plant; and every compound,
manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. “Cannabis”
also means the separated resin, whether crude or purified, obtained from cannabis plants.
“Cannabis” does not include the mature stalks of the plant, fiber produced from the stalks, oil or
cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture,
or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the
sterilized seed of the plant which is incapable of germination. For the purpose of this division,
“cannabis” does not mean “industrial hemp” as defined by Section 11018.5 of the Health and
Safety Code.
Cannabis accessories. Any equipment, products or materials of any kind which are used, intended
for use, or designed for use in planting, propagating, cultivating, growing, harvesting,
manufacturing, compounding, converting, producing, processing, preparing, testing, analyzing,
packaging, repackaging, storing, smoking, vaporizing, or containing marijuana, or for ingesting,
inhaling, or otherwise introducing cannabis or cannabis products into the human body.
Cannabis Activity. Any activity involving cannabis or cannabis products, except for possession
or use, which are regulated under state law. Includes commercial cannabis activity as well as
personal non-commercial cultivation, processing, storing, labeling, or delivery for personal adult
recreational or medicinal use.
Canopy. “Canopy” means all of the following:
1. The totality of an individual plant's aboveground parts, including branches, stems, leaves,
and flowering structures;
2. The designated area(s) at a licensed premise that will contain mature plants at any point in
time;
3. Canopy shall be calculated in square feet and measured using clearly identifiable
boundaries of all area(s) that will contain mature plants at any point in time, including all
the space(s) within the boundaries;
4. Canopy may be noncontiguous, but 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 10 feet of open space; and
5. If mature plants are being cultivated using a shelving or stacking system, the surface area
of each level shall be included in the total canopy calculation.
Commercial Cannabis Activity. The cultivation, possession, manufacture, distribution,
processing, storing, laboratory testing, packaging, labeling, transportation, delivery or sale of
cannabis and cannabis products as provided for in this division.
Concentrated Cannabis. The separated resin, whether crude or purified, obtained from cannabis.
Cultivation. Any activity involving the planting, growing, harvesting, drying, curing, grading, or
trimming of cannabis.
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EXHIBIT D
Cultivation, Indoor. Any activity involving the planting, growing, harvesting, drying, curing,
grading, or trimming of cannabis enclos ed within a structure using artificial lighting. These
structures do not have any part open to the outside.
Cultivation, Outdoor. Any activity involving the planting, growing, harvesting, drying, curing,
grading, or trimming of cannabis not within an enclosed structure such as open fields, greenhouses,
hoop structures, etc.
Cultivation, Personal. Cultivation of cannabis conducted by an individual strictly for that
individual’s personal use, possession, processing, transporting, or giving away without any
compensation whatsoever in accordance with this Code and State law, including but not limited to
Health and Safety Code sections 11362.1 and 11362.2, as may be amended. Personal cultivation
also means and includes cultivation of medical cannabis conducted by a qualified patient
exclusively for his or her personal medical use, and cultivation conducted by a primary caregiver
for the personal medical purposes of no more than five specified qualified patients for whom he or
she is the primary caregiver, in accordance with State law, including Health and Safety Code
sections 11362.7 and 11362.765, as may be amended. Except as herein defined, personal
cultivation does not include, and shall not authorize, any cultivation conducted as part of a business
or commercial activity, including cultivation for compensation or retail or wholesale sales of
cannabis.
Delivery. The commercial transfer of cannabis or cannabis products to a customer. “Delivery”
also includes the use by a retailer of any technology platform owned and controlled by the retailer.
Distribution. The procurement, sale, and transport of cannabis and cannabis products between
licensees.
Edible Product. Cannabis product that is intended to be used, in whole or in part, for human
consumption, including, but not limited to, chewing gum, but excluding products set forth in
Division 15 (commencing with Section 32501) of the Food and Agricultural Code. An edible
cannabis product is not considered food, as defined by Section 109935 of the Health and Safety
Code, or a drug, as defined by Section 109925 of the Health and Safety Code
Greenhouse. A fully enclosed permanent or temporary structure that is clad in transparent material
that may contain climate control, such as heating and/or ventilation capabilities, and/or
supplemental artificial lighting, and/or use of both natural and artificial lighting (mixed light) for
cultivation. Cannabis cultivation within a greenhouse is considered outdoor cultivation.
Hoop Structure. A readily removable plastic or fabric covered hoop structure without in-ground
footings or foundations. Cannabis cultivation within hoop structures is considered outdoor
cultivation.
Live Plants. Living cannabis flowers and plants, including seeds, immature plants, and vegetative
stage plants
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EXHIBIT D
Manufacturing (Volatile). The production, preparation, propagation, or compounding of
cannabis or cannabis products either directly or indirectly or by extraction methods, or
independently by means of chemical synthesis or by a combination of extraction and chemical
synthesis, using volatile organic compounds, at a fixed location, that packages or repackages
cannabis or cannabis products, or labels or relabels its containers.
Manufacturing (Non-volatile). The production, preparation, propagation, or compounding of
cannabis or cannabis products either directly or indirectly or by extraction methods, or
independently by means of chemical synthesis or by a combination of extraction and chemical
synthesis, using non-volatile organic or inorganic compounds (see Cannabis Manufacturing
(Volatile)), at a fixed location, that packages or repackages cannabis or cannabis products, or labels
or relabels its containers.
Medicinal Cannabis or Medicinal Cannabis Product. Cannabis or a cannabis product,
respectively, intended to be sold for use pursuant to the Compassionate Use Act of 1996
(Proposition 215), found at Section 11362.5 of the Health and Safety Code, by a medicinal
cannabis patient in California who possesses a physician’s recommendation.
Microbusiness. Allows a single business to integrate cultivation, manufacturing, distribution and
retail sales.
Mixed-light Cultivation. Cultivation of cannabis using a combination of natural and supplemental
artificial lighting (e.g. a greenhouse using natural light during the day and artificial light during
the night). Mixed-light cultivation is not allowed.
Nursery (Cannabis). A site that produces only clones, immature plants, seeds, or other
agricultural products used specifically for the planting, propagation, and cultivation of cannabis.
Cultivation as a cannabis nursery shall be indoor only (see Cultivation, Indoor).
Product. See “Cannabis” and “Edible Product” and “Topical Product”.
Private residence. A house, an apartment unit, a mobile home, or other similar dwelling.
Sale/Sell/To Sell Any transaction whereby, for any consideration, title to cannabis is transferred
from one person to another, and includes the delivery of cannabis or cannabis products pursuant
to an order placed for the purchase of the same and soliciting or receiving an order for the same,
but does not include the return of cannabis or cannabis products by a licensee to the licensee from
whom such cannabis or cannabis product was purchased.
Retail (Cannabis). Includes storefront and non-storefront (delivery) sale of cannabis and cannabis
products.
Testing Laboratory. A facility, entity, or site in the State of California that offers or performs
tests of cannabis or cannabis products and that is both of the following: 1) Accredited by an
accrediting body that is independent from all other persons involved in the cannabis industry in
the State, and 2) Licensed by the bureau.
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EXHIBIT D
Topical Product. Cannabis product that is intended to be used for external use. A topical cannabis
product is not considered a drug as defined by Chapter 109925 of the California Health and Safety
Code.
Marijuana. See “Cannabis.”
Medical Marijuana. See “Medicinal Cannabis.”
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ORDINANCE NO. 1633 (2017 SERIES)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, CODIFYING AND REAFFIRMING CURRENT
CITY LAW, POLICY AND PRACTICE BY EXPRESSLY PROHIBITING
ALL COMMERCIAL AND INDUSTRIAL RECREATIONAL AND
MEDICAL MARIJUANA USES, ACTIVITIES AND OPERATIONS AND
LIMITING OUTDOOR CULTIVATION OF MEDICAL AND
RECREATIONAL MARIJUANA WITHIN THE CITY
WHEREAS, in 1996, California voters approved Proposition 215, entitled "The
Compassionate Use Act of 1996", providing a defense to state criminal prosecution for specified
medical marijuana use, and the Medical Marijuana Program Act established a voluntary
participation, State -authorized medical marijuana identification card and registry database for
verification of qualified patients and their primary caregivers; and
WHEREAS, in 2015, the State Legislature approved the Medical Marijuana Regulation
and Safety Act ("MMRSA"), which created an extensive statewide regulatory and licensing system
for the cultivation, manufacture, testing, dispensing, distribution and transport of medical
marijuana. MMRSA exempted from its regulatory and licensing system, certain medical marijuana
cultivation by individual qualified patients and primary caregivers with no more than five qualified
patients. In 2016, the State Legislature updated MMRSA by approving AB 21 and SB 837 to
address issues not previously addressed in prior legislation and changed the name of MMRSA to
the Medical Cannabis Regulation and Safety Act (MCRSA); and
WHEREAS, under MCRSA, the State will not issue licenses to operators in jurisdictions
that prohibit medical marijuana uses and activities, either expressly or under principles of
permissive zoning; and
WHEREAS, the City historically has relied on permissive zoning principles to decline
permitting of marijuana businesses and uses within the City, and reaffirmed that position by
adoption of Resolution 10683 on January 14, 2016; and
WHEREAS, on November 8, 2016, California voters passed Proposition 64, entitled "The
Control, Regulate, and Tax Adult Use of Marijuana Act" ("AUMA"). AUMA legalized under
California law non-medicinal/recreational marijuana use for those 21 years of age and over, and
created a comprehensive regulatory, licensing and tax system for the non-medical marijuana
industry, including 19 different types of licenses for cultivation, manufacturing, testing, retailer,
distributor and microbusiness; and
WHEREAS, AUMA allows local governments to ban recreational marijuana businesses
entirely, or regulate such businesses, and to reasonably regulate cultivation through zoning and
other public health and safety laws, including prohibiting outdoor cultivation outright, but AUMA
does require local governments to allow limited indoor cultivation in private residences; and
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Ordinance No. 1633 (2017 Series) Page 2
WHEREAS, despite the changes in California law, the Federal Controlled Substances Act
still makes it illegal under federal law for any person to cultivate, manufacture, distribute or
dispense, or possess with intent to manufacture, distribute or dispense, marijuana, and the future
of federal government enforcement actions under a new Presidential administration is uncertain
in states that have legalized the recreational use of marijuana; and
WHEREAS, it will take a substantial amount of time: to conduct public outreach regarding
the direction the City should take regarding both medical and recreational marijuana businesses;
to draft comprehensive zoning and other regulations relating to commercial recreational and/or
medical marijuana activities within the City; to determine whether to pursue certain taxes related
to commercial recreational marijuana; and to analyze the potential impacts and health and safety
issues relating to such businesses, including, but not limited to, environmental, water, indoor
electrical fire hazards, mold, odors and criminal activity; and
WHEREAS, AUMA does not contain the protective language relating to permissive
zoning that MCRSA does, and, in the absence of an express ordinance either prohibiting or
regulating non-medical marijuana business or activities, the City could become subject to State
licensing of marijuana businesses and activities within its jurisdiction and/or may not be able
preclude the State from issuing licenses to marijuana businesses anywhere in the City; and
WHEREAS, it is unclear to the full extent to which AUMA and MCRSA may conflict,
how state regulatory provisions ultimately may reconcile the two licensing structures, and whether
the provisions of AUMA will control over MCRSA; and
WHEREAS, the City has had odor complaints relating to outdoor cultivation of marijuana,
resulting in the addition of Chapter 8.22 to the Municipal Code, prohibiting persistent offensive
odors from emanating across property or parcel lines; and
WHEREAS, the City currently prohibits smoking and controls secondhand smoke,
including marijuana smoke and vapors, in public and other places under Chapter 8.16, of its
Municipal Code; and
WHEREAS, the City Council wishes to preserve its ability to continue its current
licensing, permitting, regulation and enforcement practices regarding marijuana uses within its
boundaries in order to receive and consider council direction and public outreach to define the
appropriate nature and scope of regulations.
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The foregoing recitals are adopted by the City Council as findings in support
of the Ordinance.
SECTION 2. This Ordinance constitutes an exercise of the City's police powers under the
California Constitution and codifies existing law, policy and practice in the City of San Luis
Obispo prohibiting marijuana uses and activities.
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Ordinance No. 1633 (2017 Series) Page 3
SECTION 3.
Chapter 9.10 is added to the San Luis Obispo Municipal Code, to read as follows:
Chapter 9.10 MARIJUANA REGULATION
9.07.010 Purpose and Intent
A. The purpose and intent of this chapter is to maintain the status quo while the city
conducts public outreach by limiting the outdoor cultivation, and prohibiting
manufacturing, processing, laboratory testing, labeling, storing and wholesale and
retail distribution and sale of recreational and medical marijuana to protect the health,
safety and welfare of the city consistent with state law.
B. This chapter is not intended to, nor shall it be construed as, prohibiting or interfering
with any right, defense or immunity afforded to qualified patients or their caregivers
relating to medical marijuana under the Compassionate Use Act of 1996, the Medical
Marijuana Program Act, the Medical Cannabis Regulatory and Safety Act and other
applicable California law.
C. This chapter is not intended to, and shall not be construed as, prohibiting or interfering
with any right, defense or immunity of any individual relating to the recreational use
or possession or indoor cultivation of marijuana as permitted by the Control,
Regulation and Tax Adult Use of Marijuana Act; provided, nothing in this subsection
is to be construed to permit actions violating or not permitted by other provisions of
the Municipal Code, including, but not limited to, Chapter 5.01 Business License
Program, Chapter 8.16 Smoking Prohibited and Secondhand Smoke Control, Chapter
8.22 Offensive Odors and Chapter 17.22 Use Regulations.
9.10.020 Limitation of Outdoor Cultivation of Marijuana
No person shall cultivate, plant, grow, maintain or store more than six marijuana plants
outdoors in any location within the City, whether or not located in a greenhouse or other
structure designed or used for such activities.
9.10.030 Prohibition of Marijuana -Related Businesses
A. Except as otherwise specifically required by California law, any and all commercial or
industrial recreational and medical marijuana/cannabis-related uses, activities,
businesses, or operations, are prohibited and unlawful within the City of San Luis
Obispo.
B. This prohibition applies to both for profit and nonprofit commercial and industrial uses,
activities, businesses, operations, even if a State license under the Control, Regulate
and Tax Adult Use of Marijuana Act or the Medical Cannabis Regulation and Safety
Act is not required.
C. This prohibition includes, but is not limited to, commercial and/or industrial:
cultivation (both indoor and outdoor); manufacturing; processing; laboratory testing;
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Ordinance No. 1633 (2017 Series) Page 4
wholesale or retail distribution, delivery and sale; labeling; storage; or permitting of
smoking/vaporizing/ingesting on any business premises, of marijuana/cannabis,
marijuana/cannabis products and all marijuana/cannabis derivatives for any purpose.
9.10.40 Violation and Penalties
A. Misdemeanor. Any violation of the provisions of this chapter shall be a misdemeanor;
provided, that where the city attorney determines that such action would be in the interest
of justice, he/she may specify in the accusatory pleading that the offense shall be an
infraction.
B. Infraction Violation. Where the city attorney determines that, in the interest of justice,
a violation of this chapter is an infraction, such infraction is punishable by a fine not
exceeding one hundred dollars for a first violation, a fine not exceeding two hundred dollars
for a second violation of the same provision within one year, and a fine not exceeding five
hundred dollars for each additional infraction violation of the same provision within one
year.
C. The fine amounts set forth above may be modified, from time to time, by city council
resolution. In no event shall such fine amounts exceed the amounts authorized by state law.
D. Each person committing, causing, or maintaining a violation of this chapter or failing to
comply with the requirements set forth herein shall be deemed guilty of a separate offense
for each and every day during any portion of which any violation of any provision of this
chapter is committed, continued, maintained, or permitted by such person and shall be
punishable accordingly.
E. The violation of any provision of this chapter shall be and is hereby declared to be a
public nuisance and contrary to the public interest. Any public nuisance under this chapter
may, at the city's discretion, be abated by the city by civil process by means of a restraining
order, preliminary or permanent injunction or in any manner provided by law for the
abatement of such nuisance. The city shall also be entitled to recover its full reasonable
costs of abatement. The prevailing party in any proceeding associated with the abatement
of a public nuisance shall be entitled to recovery of attorneys' fees incurred in any such
proceeding if the city has elected at the initiation of that individual action or proceeding to
seek recovery of its own attorneys' fees.
F. In lieu of issuing a criminal citation, the city may issue an administrative citation to any
person responsible for committing, causing or maintaining a violation of this chapter.
Nothing in this section shall preclude the city from also issuing a citation upon the
occurrence of the same offense on a separate day.
G. The remedies set forth in this chapter are cumulative and additional to any and all other
legal remedies available whether set forth elsewhere in the San Luis Obispo Municipal
Code, or in state or federal laws, regulations, or case law
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SECTION 4 The adoption of this Ordinance maintains the status quo and does not make
any change in the current or historic law, policy or practice of the City, and the whole of such
action is not an activity which may cause direct or reasonably foreseeable indirect physical change
in the environment under Public Resources Code Section 21065 or California Environmental
Quality Act ("CEQA") Guidelines Section 15378 (a) and, therefore, is exempt from, and not a
project subject to, environmental review. Even if the adoption of this Ordinance codifying existing
law is determined to constitute approval of a project under CEQA, and even if the project is not
subject to any statutory or categorical exceptions, as a matter of common sense, it can be seen with
certainty that there is no possibility that the activity in question, the adoption of the Ordinance
codifying existing law, may have a significant effect on the environment under CEQA guidelines
section 15061 (b) (3).
SECTION 5. This Ordinance shall not be interpreted in any manner to conflict with
controlling provisions of state or federal law, including, without limitation, the Constitution of the
State of California. If any section, subsection or clause of this ordinance shall be deemed to be
unconstitutional or otherwise invalid, the validity of the remaining sections, subsections and
clauses shall not be affected thereby.
SECTION 6. A summary of this ordinance, together with the names of Council members
voting for and against, shall be published at least five (5) days prior to its final passage, in The
Tribune, a newspaper published and circulated in this City. This ordinance shall go into effect at
the expiration of thirty (30) days after its final passage.
INTRODUCED on the 14th day of March 2017, AND FINALLY ADOPTED by the
Council of the City of San Luis Obispo on the 4th day of April 2017, on the following roll call vote:
AYES: Council Members Christianson, Gomez and Pease,
Vice Mayor Rivoire and Mayor Harmon
NOES: None
ABSENT: None
ATTEST:
Zez4a Z Y
Carrie Gallagher
City Clerk
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Ordinance No. 1633 (2017 Series) Page 6
APPROVED AS TO FORM:
f,
j
J. Christine Dietrick
4 City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, this day ofA.tL , 2017.
Carrie Gallagher
City Clerk
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Item 15
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Item 15
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Item 15
TIm Newspaper of the Central Coast
nIBUNE
RECEIVED
APR 2 5 2018
5L -CLERK
3825 South Higuera • Post Office Box 112 • San Luis Obispo, California 93406-0112 - (805) 781-7800
In The Superior Court of The State of California
In and for the County of San Luis Obispo
AD #3624693
CITY OF SAN LUIS OBISPO
OFF ICE vF THE CITY CLERK
STATE OF CALIFORNIA
ss.
County of San Luis Obispo
I am a citizen of the United States and a resident of the
County aforesaid; I am over the age of eighteen and not
interested in the above entitled matter; I am now, and at
all times embraced in the publication herein mentioned
was, the principal clerk of the printers and publishers of
THE TRMUNE, a newspaper of general Circulation,
printed and published daily at the City of San Luis
Obispo in the above named county and state; that notice
at which the annexed clippings is a true copy, was
published in the above-named newspaper and not in any
supplement thereof — on the following dates to wit;;
APRIL 21, 2018 that said newspaper was duly and
regularly ascertained and established a newspaper of
general circulation by Decree entered in the Superior
Court of San Luis Obispo County, State of California, on
June 9, 1952, Case 419139 under the Government Code
of the State of California.
I certify (or declare) under the penalty of perjury that the
foregoing istrue and correct.
o
i.0
(SignYe of Principal Clerk)
DATE: APRIL 21, 2018
AD COST: $199.52
2018 Affidavits of Publication
� I
crff OF
SAN LUIS OBISPO CITY COUNCIL
NOTICE OF PUBLIC HEARING
The San Luis Obispo City Council invites
all interested persons to attend - public
hearing on Tuesday, May 1, 2018, at 6:00
p.m in the City Hall Council Chamber,
990 Palm Street, San Luis Obispo, Cali-
rornW relative to the following:
REGULATIONS
A public hearing to consider recommenda-
tions for the establishment of new Munici-
pal Cede provisions for Cannabis Activitias
that would became effective it a cannabis
revenue measure is placed on the Novem-
ber 2018 General Election ballot and ap-
proved by the voters:
1) As recommended by the Planning Com-
mission, with modifications to personal cul-
tivation limits, introduce an ordinance creat-
ing "Chapter 17.99 — Cannabis" of the Citi
y's Municipal Code governing cannabis
business activities, personal cultivation,
and establishing overlay zones where the'
proposed land use regulations would ap-
2) Introduce an ordinance creating "Chap-
ter 9.10 - Cannabis Regulations" of the Cit-
y's Municipal Code, repealing the current
ban on commercial cannabis business ac-
Wity and establishing standards to protect
public health and safety applying to person-
al cannabis cultivation, cannabis business
operators and permitted cannabis busi-
ness activities in the City.
For more information, you are invited to
contact Rachel Cohen of the City's Com-
munity Development Department at (805)
781-75.74 or by email at reohenbsfod .
The City Council may also discuss other
hearings or business items before or after
the items listed above. If you challenge the
proposed project in court, you may be limit-
ed to raising only those issues you or
someone else raised at the public hearing
described in this notice, or in written corre-
spondence delivered to the City Council at,
or prior to, the public hearing.
Reports for this meeting will be available
for review in the City, Clerk's Office and on-
line at www.slocity.org on Wednesday,
April 25, 2018. Please call the City Clerk's
Office at (805) 781-7100 for more informa-
Ifion. The City Council meeting will be tele-
vised live on Charter Cable Channel 20
and live streaming on www.slocitv.orq.
'Teresa Purrington, City Clerk
City of San Luis Obispo
Api�l21.2018 3624693
Legislative 101-07 Legislativf
5/1/2018
1
Cannabis Regulations
City of San Luis Obispo
Recommendations
1.Introduce an Ordinance entitled “An Ordinance of the City Council
of the City of San Luis Obispo, California, amending the Municipal
Code to establish Zoning (Chapter 17) and Public Peace, Morals
and Welfare (Chapter 9) regulations for commercial cannabis
businesses and personal cultivation, and determining that the
amendments are statutorily exempt from environmental review
pursuant to business and professions code section 26055 (H)
(CODE-1058-2017).”
Creating “Chapter 9.10 - Cannabis Regulations” of the City’s Municipal
Code, repealing the current ban on commercial cannabis business activity
and establishing standards to protect public health and safety regulating
personal cannabis cultivation, cannabis business operators, and permitted
cannabis business activities in the City; and
As recommended by the Planning Commission, with modifications to
personal cultivation limits, creating “Chapter 17.99 – Cannabis” of the
City’s Municipal Code creating land use regulations for cannabis business
activities, personal cultivation, and providing for the creation of overlay
zones where the proposed land use regulations would apply.
Staff Presentation - Item #15
5/1/2018
2
Recommendations
2.Direct staff to return to the City Council with additional
implementing measures, including zoning map
amendments for the proposed cannabis overlay zones,
criteria for the ranking of cannabis business operator
applications, a fee schedule for applications and annual
licenses, and more information about a cannabis
revenue measure.
Overview
Previous SLO City Council Direction
Status of Overall Program
Public Health and Safety Standards
Land Use Regulations
Next Steps/Implementation Measures
Staff Presentation - Item #15
5/1/2018
3
Proposition 64 Legalizes Adult Use
of Cannabis
In November 2016, Proposition 64 was approved by
California voters
City of San Luis Obispo voters approved the measure
by a significant margin - 67.52% voted in favor
Since the approval of Prop 64, State legislators have
been at work consolidating various laws and writing the
regulations
Council Direction (March 2017)
The City Council took up the issue in March 2017,
passing Ordinance 1633, which expressly prohibits all
commercial and industrial cannabis business activity
within the City.
At the same time, Council directed staff to:
Monitor developments in other jurisdictions;
Monitor development at the Federal level;
Engage the community regarding various land use and
taxation alternatives that may be appropriate; and
Return to the City Council with a recommendation.
Staff Presentation - Item #15
5/1/2018
4
Public Outreach
Zoning Regulations Public Workshop – June 2017
POSAFY Consultation – June 2017
Chamber of Commerce, Legislative Action Committee –
September 2017
Downtown SLO Board, Issues Committee – September 2017
Open City Hall – October 13, 2107
Public Open House – October 23, 2017
Overview of Draft Regulations Published – January 11, 2018
City Council Policy Level Discussion – February 20, 2018
Planning Commission Hearings – March 28 and 29, 2018
Scope of Ordinances
Allows for access to medical and recreational
marijuana in the City, with storefront and delivery
options (at least one storefront to be reserved for a
holder of a medicinal retailer license).
Prohibits events and onsite consumption.
Establishes a two-step process requiring prospective
business operators to be certified and ranked prior to
applying for a land use permit.
Includes requirements for energy and water efficiency,
and limits total amount of cultivation, to ensure
consistency with City climate action goals.
Staff Presentation - Item #15
5/1/2018
5
Scope of Ordinances
Limits manufacturing uses to non-volatile processes only.
Limits cultivation to indoors only, and total City-wide
amount of cultivation allowed to 70,000 square feet of
total canopy coverage within indoor areas, cumulatively
(includes total canopy of either horizontal or vertical
growing situations).
Provides for the creation of overlay zones where
cannabis business activity may be permitted, and buffers
within those overlay zones for cannabis retail stores of
300 feet from residential zones, and 1,000 feet from
schools, and parks.
Requires retail storefronts to be located at least 1,000 ft.
apart.
Tonight - Foundational Ordinances
Public Health and Safety
Land Use Standards
Next Steps…
Staff Presentation - Item #15
5/1/2018
6
Next Steps: Program Development
and Implementation
Staff roles:
Select Consultant;
Three RFP’s
submitted for
review and
evaluation
Develop criteria for
cannabis business
operator
certification; Refine
and bring forward
overlay zone map
amendments
Develop cost
estimates for
administration of
the program and
enforcement of
requirements
Hire and/or train
staff in best
practices and proper
administration and
enforcement
procedures
Support Council
decision-making
regarding taxation
of cannabis
business activity
Next Steps: Program Development
and Implementation
Council roles:
Adopt criteria for
certification and ranking
of future cannabis
business operator;
Formally approve overlay
zone boundaries
Adopt a fee program to
ensure 100% cost
recovery for City
expenditures to
administer and enforce
the program
Take actions necessary to
place a revenue measure
on the 2018 General
Election ballot to
establish a tax on
cannabis business activity
Direct staff to return to
the City Council as
needed to further refine
and develop the City’s
standards, rules and
regulations related to
cannabis business activity
Staff Presentation - Item #15
5/1/2018
7
Permit Process
Two-Step Process for Businesses:
1.Annual vendor eligibility/ranking process by 3
rd party
consultant to City
2.Cannabis Activity Permit application process
Administration and Oversight:
Annual licensing and regular inspections
Regulatory Fees
Full cost recovery for law enforcement, code
enforcement, finance and administration activities
Taxation levels and revenue estimates will be
developed separately from the regulations.
Health and Safety Standards
Personal Cultivation Limits
Suspension or Revocation
Prohibition of Transfer
Records and Reports
Inspection and Enforcement
Violation and Penalties
Concurrent Alcohol or Tobacco Sales Prohibited
Consumption/Use On-Site or In Public Prohibited
Staff Presentation - Item #15
5/1/2018
8
Vendor Selection Process
• Open application
period for vendors
• Annually on July 1
Submit Application
• City Council to
establish criteria via
resolution
• Applications vetted and
background checks
performed
3rd Party Review • Eligibility list
established
• Priority order rankings
published
Apply for Cannabis
Activity Permit
Cannabis Activity Permits
(Guide)Specialty Cultivator • 5,000 s.f.
max.
• Indoor
only
•C-S, M,
BP zones
Definitions:
Specialty cultivator – indoor only grows under
5,000 s.f., includes processing.
Small cultivator – indoor only grows under
10,000 s.f., includes processing
Nursery – indoor only propagation under
10,000 s.f.
Manufacturer I – non-volatile processing of
cannabis into any other product
Testing – lab testing is required by the State
prior to distribution to a retailer
Retailer – includes storefront and delivery
Distributor – retailers must purchase from
distributors
Microbusiness – allows a single business to
integrate cultivation (10,000 s.f. max.),
manufacturing, distribution and retail sales Type of permit
Allowed locations
Staff Presentation - Item #15
5/1/2018
9
Cannabis Activity Permits
(Guide)Specialty Cultivator • 5,000 s.f.
max.
• Indoor
only
•C-S, M,
BP zones
Zones and Permit Types:
CS – Service Commercial
M – Manufacturing
BP – Business Park
Specialty Cultivator, Small Cultivator,
Nursery, Manufacturing I, Testing,
Distributer, Retailer, Microbusiness
CR – Retail Commercial
Retailer, Microbusiness
O – Office zone
Testing
Type of permit
Allowed locations
Cannabis Activity Permits
Specialty Cultivator • 5,000 s.f.
max.
• Indoor
only
•C-S, M,
BP zones Small Cultivator• 10,000
s.f. max.
• Indoor
only
•C-S, M,
BP zones Nursery• 10,000
s.f. max.
• Indoor
only
•C-S, M,
BP zones
only
Maximum of 70,000 s.f. of canopy for
cultivation and nurseries, cumulatively
Staff Presentation - Item #15
5/1/2018
10
Cannabis Activity Permits
Manufacturing I•Non-
volatile
only
•C-S, M, BP
zones Testing•C-S, M, BP,
O zones
only Retailer•Up to 3 retail
storefronts
Citywide
•Storefront
retail on
arterial roads
in C-R, C-S
zones
•Non-
storefront
retailers
(delivery
only) in C-S,
M, BP zones
Cannabis Activity Permits
Distributor•C-S, M, BP
zones
Microbusiness•Indoor cultivation only
(subject to limit of 70,000 s.f.
city-wide).
•In C-R zones, max 50% of
gross receipts from
cultivating, manufacturing.
•In M, BP zones max 50% of
gross receipts from storefront
retail sales (subject to limit of
3 retail storefronts city-wide).
•In C-S zone, no limitation of
gross sales receipts from
cultivation, distribution,
manufacturing or retail sales.
Staff Presentation - Item #15
5/1/2018
11
Overlay Zones
Staff Presentation - Item #15
5/1/2018
12
Staff Presentation - Item #15
5/1/2018
13
Staff Presentation - Item #15
5/1/2018
14
Tank Farm Road
Higuera / S. Higuera Street
Broad Street
Orcutt Road
Prado Road
Staff Presentation - Item #15
5/1/2018
15
Additional Requirements for
Cannabis Activity Permits
Cultivators must submit energy and water efficiency
plans with permit applications.
Standard: Achieve Zero-Net Energy compliance
Security Plans: All cannabis permit applications shall
include site specific security plans for review and approval
by the Police Department to include video surveillance and
other required features.
Additional Requirements for
Cannabis Activity Permits
Signage
Must comply with City’s Sign Regulations for size, area
and type of sign, no exceptions allowed.
Internal illumination of signs is prohibited.
No portion of the cannabis plant may be used in any sign
visible from the public right-of-way.
No cannabis products may be displayed in store windows
and visible from the public right-of-way.
On-site consumption, whether at a place of business
or event, is prohibited.
Staff Presentation - Item #15
5/1/2018
16
Next Steps
Consideration of revenue measure details –
May 15 and June 5
Review of zoning map amendments for
overlay zones – September 4
Review of criteria for business eligibility and
ranking – October 2
Review fee ordinance – November 13
Recommendations
The following actions are recommended to establish new Municipal Code
provisions that would become effective if a cannabis revenue measure is placed
on the November 2018 General Election ballot and approved by the voters:
Introduce an Ordinance entitled “An Ordinance of the City Council of the Cityof San Luis Obispo, California, amending the Municipal Code to establishZoning (Chapter 17) and Public Peace, Morals and Welfare (Chapter 9)regulations for commercial cannabis businesses and personal cultivation, anddetermining that the amendments are statutorily exempt from environmentalreview pursuant to business and professions code section 26055 (H) (CODE-1058-2017).”
Creating “Chapter 9.10 - Cannabis Regulations” of the City’s Municipal Code, repealing
the current ban on commercial cannabis business activity and establishing standards
to protect public health and safety regulating personal cannabis cultivation, cannabis
business operators, and permitted cannabis business activities in the City; and
As recommended by the Planning Commission, with modifications to personalcultivation limits, creating “Chapter 17.99 – Cannabis” of the City’s Municipal Codecreating land use regulations for cannabis business activities, personal cultivation, andproviding for the creation of overlay zones where the proposed land use regulationswould apply.
Direct staff to return to the City Council with additional implementing
measures, including zoning map amendments for the proposed cannabis
overlay zones, criteria for the ranking of cannabis business operator
applications, a fee schedule for applications and annual licenses, and more
information about a cannabis revenue measure.
Staff Presentation - Item #15
5/1/2018
17
Staff Presentation - Item #15