HomeMy WebLinkAbout11/27/2018 Item 10, Codron
City of San Luis Obispo, Council Memorandum
DATE:November 26, 2018
TO:City Council
FROM: Michael Codron,Community Development Director
VIA:Derek Johnson, City Manager DJJ
SUBJECT:AGENDA ITEM #10: REVIEW OF A FEE SCHEDULE AND EVALUATION
CRITERIA FOR CANNABIS BUSINESS OPERATOR PERMITS
Staff received questionsregarding the staff report on the proposed Fee Schedule and Evaluation
Criteria for Cannabis Business Operator Permits. Below isa discussion of the topics raised.
Packet Page 238, Cannabis,fees.
Question: Please provide detail on projected police costs specifically, and generally on one-time
program-start-up costs vs.ongoing.Also, I am reading the staff report as saying each and every
business application will be $22k.How can that be appropriate? E.g. how does a $22k fee relate
to a one-person delivery business application, whether on its face or as compared to processing
another much bigger or more complex operation?
Answer:See Attachment 1to this memorandumfor more detail on projected polices costs.The
fee for all cannabis business types is $22,519, which is based on the amount of staff time expected
to be expended during the review of a “typical” application.This fee is proposed to be levied in
the same way asother Planning Applications. For example, the current fee for a minoruse permit
is $3,202. Based on the cost of services analysis prepared by City staff in 2016, it was determined
that if this fee was chargedto all applications, the City would accomplish 100% cost recovery even
though some applications will be relatively straight-forwardand take less time to administer.The
same method was used to develop the proposed cannabis fee schedule.If the Council finds that
the proposed fee schedule resultsin fees that are too high, staff could be directed torevise the fee
schedule to include lower application and annual fees for certain business types, based on further
analysis of the amount of time that is expected for staff to process that application type.
Packet Page 240, Fiscal Impact, second paragraph.
Question:The report states "However it is expected to take some time for the City to establish its
permitting and regulatory protocols..." I thought we were going to be ready to roll when January 1
came around...
Answer: As long as a fee schedule has been adoptedby the City Council, Staff will take in
applications from January 7, 2019 to January 29, 2019. Final evaluation of the applications will
begin once all applications have been submitted, although preliminary review of applications will
Agenda Item #10: Feeschedule and evaluation criteria for cannabis business operator permitsPage 2
begin immediately.During the initial applicationperiod,the Citywill also be finalizing staffroles
in order to implement appropriate business oversight prior tothe first business openingits doors.
Staff has been communicating with those involved in the cannabis industrythat there would be a
window of time in which applications would be accepted and review would commence once the
application window closed.It is important to remember that applicants also have to go through the
land use entitlement process for their sitesonce they become certified operators.
Packet Page 248, Cannabis Scoring Guidelines, #1.
Question: Why can't this be part of our "new ways of doing business more efficiently?", i.e.no
copies, all electronic...?
Answer:The requirement for the applicant to provide hard-copies ensures that hard-copies are
produced and presented exactly as prepared by the applicant. If the Council would rather not have
any hard-copies required, then staff can implement that direction.
Packet Page 262, #3.
Question: Why can't applications from all business types other than retail storefronts and
cultivators be ongoing starting at some date certainafter the initial application period?
Answer:The evaluation of cannabis business applications is new, and staff is looking forward to
working with applicants to make the process transparentand effective.Inparticular, staff will be
taking the time necessary to develop relationships with these new business operators to provide
education and ensure that City standards are clearly communicated and able to be adhered to.
These first-roundapplicationswill hopefully set a high standard and this requires that there be a
finite number of applications submitted within a specified timeframe. Another round of applicants
will be able to apply starting July 1, 2019. It is expected that for all business types other than retail
and cultivation theJuly application period will simply remain open. The City Manager has the
authority to open up additional application periods as needed to effectively implement the program
and will do so after the kinks in the first round of applications have been reviewed.
Police Department Cost Breakdown
As you know, this is our best guest at a brand-newindustry with unlimited variables. We discussed
at some point if there would be different fees for different businesses, and this can be answered
better by CDD in comparison withother license fees for the city.Based on discussions with police
departmentsnationally that are regulating cannabis well, the SLO Police Department tried to
allocate time todifferent types of businesses which could be broken up to represent differing
fees.Allthe businesses should share the cost of education, equipment, or training as we cannot
say which business would draw the most from these areas.
Application Evaluation@ 20 Applicants(#s reflect the time of two Detectives)
Initial application review–40Hours(2per business)
Follow up and clarification–20 Hours(1)
Backgroundon All Cannabis Employees(1680 hours) –It is well known that even with
legalization, there is a high frequency of organized crime and diversion. Californiaand Colorado
havealsoseen an increase in human trafficking/labor traffickingwithin the marijuana industry.In
order to protect these victims,we need to conduct thorough backgrounds to ensure the owners,
employees, and associated members of these businesses are who they claim to be, or who the
company claims they are.Additionally, this is the industry standard, and this is a highly regulated
industry, with very little oversight from the state(12 people regulating).
1500 HoursTotal (dependent on total employees–some may have 2 some may have 50)
o Live Scan
o Interview –Owner’s only–not general employees
o Open source check (out of state crimes, liens, bankruptcy, suspended business due to
tax evasions)
o Law Enforcement contact (Owner (life), employee (last three years)
o Follow up interview to clarify any results found
o Written documentation of background findings
o Award letter (serves as proof of complete background to employer)
Onsite security guidance inspection, until award of license -80+ Hours(4)
In-depth Review and Scoring –40 Hours
Business License Award(160 hours)
Final Selection Justification –40 Hours
Approve business plans –40 Hours(2)
Creation, issuance and instructionsof Keyholder/employee Identification Card–80 Hours
(Unknown number of employees)
o BP(Business and Professions Code)5043 Employee Badge Required
o Onsite inspection of employee badges for compliance
o Badge uniformity (assure one style of badge being awarded)
o Assures all badged employees have been through the background process
First YearOperations
Administration and Enforcement Oversight
City Staff (Officersand other personnel)training and education–560 Hours(Total)
o 2 Det’s at 80 hours each = 160of Formal Training
o Reading case law, studyingCannabis legislation,consulting with other
municipalities on emerging Cannabis issues,New Cannabis processes and
equipment of this rapidly changing and innovative industry,Instruction law
enforcement on State Cannabis Law and Municipal Code.
o 59 Sworn Officersat 2 hours each per year (briefing trainings) =118
o Briefing training for local jurisdictions other than SLOPD(CAPSLO, THMA, DTA
etc)
o Development, preparation, and regular update of training lesson plans
o Development of training guides, handouts, pamphlets
o Security Services, Training and Education for City Finance Depart. –100 Hours
Community Out Reach and public training–160Hours
o Youtheducation and prevention
o Community education on Cannabis State Law and Municipal Code
o Ongoing outreach via social media and technology updates
o Development, preparation,and regular update of training lesson plans
o Development of training guides, handouts, pamphlets
Cannabis Business Employee Training(quarterlyon compliance) –48Hours
o Industry compliance training from Cannabis Team
o Exemplar of innovative ways the industry hasmet the regulations (encouraging
compliance).
o Development, preparation, and regular update of training lesson plans
o Development of training guides, handouts, pamphlets
o Ongoing Cannabis Employee Training (I.e. ID checks) -24 Hours
(768total hours)
Variable Administration Action (1920 hours)
o Retail Inspection –200 Hours(66 hours per)
o Retail Decoy Operations –160 Hours (Requires 4 Det’s minimum for safety
plus decoy)
o Mobile Dispensary Inspections –200 Hours
o Mobile Dispensary Decoy Operations –160 Hours (Requires 4 Det’s minimum
for safety plus decoy, Surveillance)
o Manufacture inspection –500 Hours
Based on 5 businesses=1 weekly inspection at 1 hour each
o Cultivation Inspection –500Hours(same as above with 5 businesses)
o Other Cannabis Business Inspections –200 Hours
**Inspection hours include, yearly inspection, follow up inspection for violations corrected,
inspectionsbased on community reported violation, spot inspections, documentation (includes
“Notice to Amend” for violations and “Municipal Code Violation” reports for prosecution), cross
reporting to City and Cannabis Team partners** Decoyoperations accounts for the arrest/citation
of potential violators and documentation.
Total hours: 4528(Hours from Muni-Services co. are different. They added approximately 10
percent for unexpected services.
Required Equipment:
Dedicated Patrol Vehicle/Truck-$70,000
o Code 3/patrol equipped as required by policy/law
o Capable of transporting large payloads including seizures of equipment, marijuana
plants, etc (full size truck)
o Capable of transporting 4-5 adults plus equipment
Two laptop computers-$5,000
o Large screen laptops capable of viewing the Cannabis Facility surveillance systems
remotely
o Capable of running all city required programs (Office Suite) including remote
access to SLOPD records/report writing systems, MDC/CAD systems
o Compatibility with police surveillance equipment
Surveillance Equipment-$10,000
o SLR Style camera with lens capable of distance photographs
o Two hi powered binoculars
o Portable Surveillance camera systems
o Body-wire audio recording devices
o Vehicle tracking devices
o Package tracking devices
Office Equipment-$5000
o Large screen monitors capable of viewing Cannabis Facility surveillance systems
o Two desktop computers capable of running all required city programs including
MDC/CAD systems
o Two office work stations
Inspection Equipment-$4,000
o Disposable Tyvek suits, booties, masks
o Safety Glasses
o Emergency respirators/Filters
o Multi-gas detectors
o Flashlights