HomeMy WebLinkAboutCannabis CMR with AttachmentsCity of San Luis Obispo, City Manager Report
Final City Manager Approval Approver Name Date Approved
City Administration Derek Johnson 03/28/19
Reviewer Routing List Reviewer Name Date Reviewed
City Attorney J. Christine Dietrick 3/25/19
Community Development Michael Codron 3/27/2019
March 14, 2019
FROM: Greg Hermann, Deputy City Manager gh
PREPARED BY: Charlene Rosales, Economic Development Manager
Victoria Tonikian, Management Fellow
SUBJECT: ISSUANCE OF CONTINGENT OPERATOR PERMITS FOR FIVE
CANNABIS BUSINESSES
RECOMMENDATION
Approve the recommendation for the issuance of contingent operator permits for five cannabis
businesses: three retail storefronts, one delivery service (non-storefront) and one microbusiness (non-
storefront) in the City of San Luis Obispo, subject to successful background checks and procurement
of an alternative allowable location for one retail operator as described in this report.
DISCUSSION
Background
On November 27, 2018 the City Council adopted Resolution No. 10966 (2018 Series) approving the
cannabis operator permit ranking criteria and the annual application submittal period (CODE-1058-
2017). This Resolution established the ranking criteria for individuals who apply for a Cannabis
Operator Permit and designated January 7, 2019 through the close of business on January 29, 2019
as the first application submittal period.
As adopted in the Resolution, the Cannabis Business License Scoring Guidelines (Attachment 1) set
forth the merit criteria on which the cannabis business license applications would be ranked. The
merit criteria are broken down into several categories. For manufacturing, distribution and retail (non-
storefront): 1) Community Benefit, 2) Equity and Labor, and 3) Financial Investment. For retail
(storefront): 1) Community Benefit, 2) Experience, Equity and Labor, 3) Messaging, 4) Medical
Retail Commitment, 5) Property Control and 6) Financial Investment.
Issuance of Tentative Operator Permits for Five Cannabis Businesses Page 2
Application Period, Process for Review, and Scoring
During this designated application period, the City received nine applications for retail storefronts,
and three applications for manufacturing, distribution and retail (non-storefront).
On February 22, 2019, a panel of application reviewers/scorers comprised of representatives from the
City Departments of Administration, Code Enforcement, Community Development, Fire and Police
assembled to rank the cannabis business license applications received during the application period.
In addition to these panel members, two representatives from MuniServices/Avenu, a third-party
consulting firm that facilitated the review of these applications, were present to proctor the scoring
process to ensure consistent application of review criteria.
Prior to the scoring session, each application had been read by each of the panel members. On the day
of the scoring, each panel member contributed knowledge of the applications as well as insights and
expertise from their specific department. Each panel member was given their own scoring sheet,
which was then submitted to MuniServices/Avenu facilitators at the end of the session for input into
aggregated scoring sheets. Each required submission item and Merit Criteria item was covered
independently as a group before moving onto the next point and once discussion ceased, each panel
member would document their score and the group would move onto the next point of discussion.
Manufacturing, Distribution and Retail (Non-Storefront)
The group first scored the three applications for manufacturing, distribution, and retail (non-
storefront). Out of 85 possible points, their scores are listed below from highest to lowest points.
Coastal Delivery 747 Woodbridge St. 64.4
Element 7 Location TBD 48.6
*Lab Tested 3563 Sueldo St., Ste. R 42
*The final score for Lab Tested disqualified them as they did not meet the 70% threshold required as
set forth by the City Council.
Retail Storefront:
The group then scored the nine applications for retail storefronts. Out of 140 possible points, their
scores are listed below from highest to lowest points.
Natural Healing Center 2600 and 2604 Broad St. 136
Megan's Organic 1 280 Higuera St. 136
*Megan's Organic 2 300 Higuera St. 134.8
**Elemental Wellness 2550 Broad St. 121.6
SLO Cal Roots 3535 Higuera St. 109
805 SLO Beach Breaks 2410 Broad St. 105.4
Issuance of Tentative Operator Permits for Five Cannabis Businesses Page 3
Coastal Retail 2504 Broad St. 104.8
Harvest 309 and 311 Higuera St. 100.8
Hollister 207 Higuera St. 89
*Megan’s Organic Market submitted two applications (one as a “2nd location option”), however,
under adopted Ordinance No. 1647 (2018 Series) “A person may only submit one application for a
Commercial Cannabis Operator Permit during the annual application period designated by the
resolution of the City Council”. The application fee for the second application will be refunded.
**Elemental Wellness is currently inside the 1000-foot buffer zone as they are 400 feet from Natural
Healing Center. An issuance of a contingent operator permit will be subject to their ability to submit
additional information to support their application with an eligible location within 60 days, as well as
successful completion of the same background check required of other successful applicants.
For a detailed breakdown of where each application lost points, please review the Cannabis License
Application Scoring Process Review - After Report, which includes a recap on the evaluation process.
This After Report was prepared by MuniServices (Attachment 2).
RECOMMENDATION
Manufacturing, Distribution and Retail (Non-Storefront):
As highlighted above, three applications were received for non-storefront cannabis businesses. Of
the three applications, one was disqualified due to their overall points not meeting the 70%
threshold that was established by the City Council. The following recommendation s are being
proposed for manufacturing, distribution, and retail (non-storefront) cannabis businesses:
1. Issue a contingent operator permit to the top ranked applicant (Coastal Delivery).
2. Issue a contingent operator permit to the second highest ranked applicant (Element 7).
Official Cannabis Business Operator Permits will be issued in place of tentative operator permits
provided the above applicants pass the necessary background checks which will begin
immediately following their receiving notification of the results of the application review.
Retail Storefront:
On May 15, 2018 Council adopted Ordinance 1647 (2018 Series) which allows for three retail
storefronts to be established in the City, no less than 1,000 feet apart from one another, and located
along arterial streets on property with the appropriate zoning. The top three retail storefront
businesses that have the highest number of points will be awarded a Cannabis Business Operator
Permit. If the businesses ranked #2 and #3 are located within 1,000 feet of business #1, they will
no longer be able to include any points for having a business location. This may mean that their
businesses are no longer ranked #2 or #3. If there is a tie between retail storefront applications
with the most points, then those applicants will be required to submit to in-person interviews for
final ranking.
Issuance of Tentative Operator Permits for Five Cannabis Businesses Page 4
With this stipulation, coupled with the scoring of the applications, the following recommendations
are being proposed for retail (storefront) cannabis businesses:
1. Issue a contingent operator permit to the top ranked applicant (Natural Healing Center).
2. Issue a contingent operator permit to the second highest ranked applicant (Megan’s
Organic Market 1).
3. Issue a refund of the application fee (Megan’s Organic Market 2).
4. Issue a “letter of intent” to issue a contingent operator permit to the fourth highest ranked
applicant (Elemental Wellness) provided that they submit an alternative eligible location
within 60 days that does affect scoring for any other criteria.
Official Cannabis Business Operator Permits will be issued in place of contingent operator permits
provided the above applicants pass the necessary background checks which will begin
immediately following their receiving notification of the results of the application review.
If any of the tentative permit holders fail their background investigation, then the next highest
ranked applicant (scoring at least 70% of the highest score), will be provided with a contingent
operator permit and an opportunity to identify an alternative location should they be within 1,000
feet of another permit holder. Once we have issued three Official Cannabis Business Operator
Permits, this round of applications will conclude, and new Cannabis Business Operator Permits
will only be awarded following the review and ranking of complete applications submitted during
the next official application period.
CONCURRENCES
The process for ranking the twelve applicants was consistent with the Cannabis Business License
Scoring Guidelines established by the City Council. Additionally, these rankings were derived
with the help of representatives from the City Departments of Administration, Code Enforcement,
Community Development, Fire and Police.
ALTERNATIVES
The City Manager could decide not to issue contingent operator permits to the top three ranked
cannabis businesses. This is not recommended as the ranking of these businesses were consistent with
the Cannabis Business License Scoring Guidelines as established by the City Council.
ATTACHMENTS
1. Cannabis Business License Scoring Guidelines
2. MuniServices Scoring Process After Report
\\chstore7\team\city manager reports\administration\2018-19\cannabis\cannabis cmr.docx
CITY OF SAN LUIS OBISPO
Cannabis Business License Scoring Guidelines
Applicant:
Reviewer:
1. Applicant will make three copies of each proposal. 2. City will compile any additional information related to the applicant for consideration.
3. Discussion between the reviewers during the evaluation will be limited to clarification to ensure an equal
understanding of the application.
4. Questions can also be directed to the consultant. 5. Each reviewer will complete a score sheet for each proposal. 6. Points may be awarded in an amount up to the possible points in each scoring criteria.
7. Each completed score sheet will be given to the consultant. 8. The consultant will review all three score sheets for each proposal.
9. If there is a scoring deviation between reviewers on any scoring criteria of more than 30% , the consultant
will discuss this specific score with the reviewers. 10. An adjusted score may be agreed upon by the reviewer and the consultant. 11. Once all criteria scores are reviewed and agreed upon, the total aggregate score for all three reviewers will
be totaled then divided by three to obtain the final score.
Automatic Fail Criteria:
· Application received after the final filing date.
· Application incomplete.
· Facility does not meet City business licensing standards.
· Only one license applicant allowed per location. Applicants must ask potential landlords if they have
existing, competing cannabis business applicants.
Definitions:
An "applicant" is the entity petitioning for the license and "principals" are the individual members of the applicant
team.
A "primary principal" is defined as an individual who has a 10% or greater ownership stake of the applicant
business.
An "operator" is an applicant that has been licensed and conducts or conducted active operations.
A "majority" is defined as a greater number; more than half. An equal number does not constitute a majority.
Adult-Use Retail Cannabis Merit-Based Criteria and Possible Points All applications for a license will be evaluated using the merit criteria outlined below. Applicants must submit
supplemental documentation or references with the application that support the statements below for review
by the City.
Manufacturing, Distribution and Non-Storefront Retail Evaluation Criteria
Merit Criteria 1.0 - Community Benefit
Community Benefit (A): Applicant demonstrates a commitment to City through
local hiring and community support. Select all that apply within each category
and total score. (Up to 20 Points – Deviation Threshold 6 Points)
Possible
points
Applicant
score
1.1A
Over 90% of employees will be San Luis Obispo County residents. (10 points)
10
or 60% - 90% of employees will be San Luis Obispo County residents. (5 points)
1.2A
Over 80% of supply and equipment expense (non-labor, non-rent expense) will be
sourced from businesses within 90 miles. (10 points)
10
or 50% - 80% of supply and equipment expense (non-labor, non-rent expense)
will be sourced from local businesses within 90 miles. (5 points)
Total Community Benefit (A) 20
Community Benefit (B): Continued support of community programs in San Luis
Obispo (i.e. park cleanups, facility improvements, donating supplies/equipment to
youth programs). (Up to 10 Points - Deviation Threshold 3 points)
Possible
points
Applicant
score
1.1B
Providing over 20 hours per month of community support. (5 points)
5
or Providing over 10-20 hours per month of community support. (2 points)
1.2B
Provide over $1,000 per month for community support. (5 points)
5
or Provide up to $1,000 per month for community support. (2 points)
1.3B Applicant can demonstrate a history of supporting local community programs. (5
points) 5
Total Community Benefit (B) 15
Total Merit Criteria 1.0 35
Merit Criteria 2.0 - Equity and Labor
Applicant commits to equity ownership and competitive compensation in
comparison to other mainstream commercial businesses. Applicants commitment
will be confirmed during annual permit renewal process. Select all that apply and
total score. (Up to 20 Points – Deviation Threshold 9 Points)
Possible
points
Applicant
score
2.1
Applicant includes 3 or more principals with 2% equity or higher who have earned
at or below the median household income at the time of application. (8 points)
8
or Applicant includes 1 or 2 primary principals who have earned at or below the
median household income at the time of application. (4 points)
2.2
Business will have an average pay rate for entry and mid-level positions of at least
40% more than the median local income for similar positions in other mainstream
businesses. (8 points)
8
or Business will have an average pay rate for entry and mid-level positions of at
least 20% more than the median local income for similar positions in other
mainstream businesses. (4 points)
2.3 Base wages of employees exceed the minimum wage by at least $3.00/hr. 2
2.4 Business will allow "labor peace agreement" at 20 or more non-management
employees. 2
Total Merit Criteria 2.0 20
Merit Criteria 3.0 - Financial Investment
Financial Investment: Applicant has plans and capital to support a vibrant
business within the City. (Up to 25 Points – Deviation Threshold 3 Points)
Possible
points
Applicant
score
3.1 Applicant demonstrates financial capacity to capitalize, start up, and sustain
business operations. 1-10
3.2 Applicant commits to develop raw land that has been zoned for commercial use
for a commercial cannabis facility. 1-10
3.3
Applicant commits to major improvements, including façade rehabilitation,
building expansion, site improvements and/or other investments in an
underutilized/underdeveloped site that has been zoned for commercial use for a
commercial cannabis facility.
1-5
3.4 The proposed cannabis business site can accommodate the required number of
parking spaces with safe and convenient access for customers/employees. 1-5
Total Merit Criteria 3.0 30
Totals
Total GENERAL Merit Criteria Points Available 85
Total GENERAL Merit Criteria Points Awarded
Total %
Cultivation Evaluation Criteria
Merit Criteria 1.0 - Community Benefit
Community Benefit (A): Applicant demonstrates a commitment to City through
local hiring and community support. Select all that apply within each category
and total score. (Up to 20 Points – Deviation Threshold 6 Points)
Possible
points
Applicant
score
1.1A
Over 90% of employees will be San Luis Obispo County residents. (10 points)
10
or 60% - 90% of employees will be San Luis Obispo County residents. (5 points)
1.2A
Over 80% of supply and equipment expense (non-labor, non-rent expense) will be
sourced from businesses within 90 miles. (10 points)
10
or 50% - 80% of supply and equipment expense (non-labor, non-rent expense)
will be sourced from local businesses within 90 miles. (5 points)
Total Community Benefit (A) 20
Community Benefit (B): Continued support of community programs in San Luis
Obispo (i.e. park cleanups, facility improvements, donating supplies/equipment to
youth programs). (Up to 10 Points - Deviation Threshold 3 points)
Possible
points
Applicant
score
1.1B
Providing over 20 hours per month of community support. (5 points)
5
or Providing over 10-20 hours per month of community support. (2 points)
1.2B
Provide over $1,000 per month for community support. (5 points)
5
or Provide up to $1,000 per month for community support. (2 points)
1.3B Applicant can demonstrate a history of supporting local community programs.
(5 points) 5
Total Community Benefit (B) 15
Total Merit Criteria 1.0 35
Merit Criteria 2.0 - Equity and Labor
Applicant commits to equity ownership and competitive compensation in
comparison to other mainstream commercial businesses. Applicants commitment
will be confirmed during annual permit renewal process. Select all that apply and
total score. (Up to 20 Points – Deviation Threshold 9 Points)
Possible
points
Applicant
score
2.1
Applicant includes 3 or more principals with 2% equity or higher who have earned
at or below the median household income at the time of application. (8 points)
8
or Applicant includes 1 or 2 primary principals who have earned at or below the
median household income at the time of application. (4 points)
2.2
Business will have an average pay rate for entry and mid-level positions of at least
40% more than the median local income for similar positions in other mainstream
businesses. (8 points)
8
or Business will have an average pay rate for entry and mid-level positions of at
least 20% more than the median local income for similar positions in other
mainstream businesses. (4 points)
2.3 Base wages of employees exceed the minimum wage by at least $3.00/hr. 2
2.4 Business will allow "labor peace agreement" at 20 or more non-management
employees. 2
Total Merit Criteria 2.0 20
Merit Criteria 3.0 - Medical Retail Commitment
Medical Retail Commitment (up to 10 points) Possible
points
Applicant
score
3.1 Applicant commits to retain a California state medicinal cannabis cultivation
license. 10
Total Merit Criteria 3.0 10
Merit Criteria 4.0 - Sustainability
Applicant demonstrates past experience in and/or commits to sustainable and
environmental business or building practices utilizing recognized industry
standards. Applicants actions will be confirmed during annual permit renewal
process. Select all that apply and total score. (Up to 20 Points – Deviation
Threshold 6 Points)
Possible
points
Applicant
score
4.1 Applicant will recycle waste water (utilize purple pipe when available). 5
4.2 Applicant will utilize certified organic practices. 3
4.3 Applicant will utilize carbon free power sources for majority of power. 5
4.4 Applicant will utilize energy efficient lighting. 4
4.5 Applicant has plan to reduce water waste. 3
Total Merit Criteria 4.0 20
Merit Criteria 5.0 - Financial Investment
Financial Investment: Applicant has plans and capital to support a vibrant
business within the City. (Up to 25 Points – Deviation Threshold 3 Points)
Possible
points
Applicant
score
5.1 Applicant demonstrates financial capacity to capitalize, start up, and sustain
business operations. 1-10
5.2 Applicant commits to develop raw land that has been zoned for commercial use
for a commercial cannabis facility. 1-10
5.3
Applicant commits to major improvements, including façade rehabilitation,
building expansion, site improvements, removing visual blight, and/or other
investments in an underutilized/underdeveloped site that has been zoned for
commercial use for a commercial cannabis facility.
1-5
5.4 The proposed cannabis business site can accommodate the required number of
parking spaces with safe and convenient access for customers/employees. 1-5
Total Merit Criteria 5.0 30
Totals
Total Merit Criteria Points Available 115
Total Merit Criteria Points Awarded
Total %
Retail Evaluation Criteria
Merit Criteria 1.0 - Community Benefit
Community Benefit (A): Applicant demonstrates a commitment to City through
local hiring and community support. Select all that apply within each category
and total score. (Up to 20 Points – Deviation Threshold 6 Points)
Possible
points
Applicant
score
1.1A
Over 90% of employees will be San Luis Obispo County residents. (10 points)
10
or 60% - 90% of employees will be San Luis Obispo County residents. (5 points)
1.2A
Over 80% of supply and equipment expense (non-labor, non-rent expense) will be
sourced from businesses within 90 miles. (10 points)
10
or 50% - 80% of supply and equipment expense (non-labor, non-rent expense)
will be sourced from local businesses within 90 miles. (5 points)
Total Community Benefit (A) 20
Community Benefit (B): Continued support of community programs in San Luis
Obispo (i.e. park cleanups, facility improvements, donating supplies/equipment to
youth programs). (Up to 10 Points - Deviation Threshold 3 points)
Possible
points
Applicant
score
1.1B
Providing over 20 hours per month of community support. (5 points)
5
or Providing over 10-20 hours per month of community support. (2 points)
1.2B
Provide over $1,000 per month for community support. (5 points)
5
or Provide up to $1,000 per month for community support. (2 points)
1.3B Applicant can demonstrate a history of supporting local community programs. (5
points) 5
Total Community Benefit (B) 15
Total Merit Criteria 1.0 35
Merit Criteria 2.0 - Experience
Record of compliant current or previous business operations: Applicant has
previous record of operating a compliant cannabis operation (including medical).
A compliant operation is defined as having a substantially compliant record (may
have some minor resolved/corrected violations) without a documented history of
unresolved local or state level violations relating, but not limited to: business code,
public safety, environmental impacts, employment, and financial payments. (Up
to 30 Points – Deviation Threshold 9 Points)
Possible
points
Applicant
score
2.1
91% to 100% of the primary principals have operated a local compliant cannabis
operation for 5 or more years. 35
or 81% to 90% of the primary principals have operated a local compliant
cannabis operation for 5 or more years. 30
or 71% to 80% of the primary principals have operated a local compliant
cannabis operation for 5 or more years. 25
or 61% to 70% of the primary principals have operated a local compliant
cannabis operation for 5 or more years. 20
or 51% to 60% of the primary principals have operated a local compliant
commercial cannabis operation for 5 or more years. 15
2.2
10-50% of the primary principals operated a compliant cannabis operation outside
of SLO County for 5 or more years. 10
or 10-50% of the primary principals operated a compliant cannabis operation
outside of SLO County for less than 5 years. 5
Total Merit Criteria 2.0 35
Merit Criteria 3.0 - Equity and Labor
Applicant commits to equity ownership and competitive compensation in
comparison to other mainstream commercial businesses. Applicants commitment
will be confirmed during annual permit renewal process. Select all that apply and
total score. (Up to 20 Points – Deviation Threshold 9 Points)
Possible
points
Applicant
score
3.1
Applicant includes 3 or more principals with 2% equity or higher who have earned
at or below the median household income at the time of application. (8 points)
8
or Applicant includes 1 or 2 primary principals who have earned at or below the
median household income at the time of application. (4 points)
3.2
Business will have an average pay rate for entry and mid-level positions of at least
40% more than the median local income for similar positions in other mainstream
businesses. (8 points)
8
or Business will have an average pay rate for entry and mid-level positions of at
least 20% more than the median local income for similar positions in other
mainstream businesses. (4 points)
3.3 Base wages of employees exceed the minimum wage by at least $3.00/hr. 2
3.4 Business will allow "labor peace agreement" at 20 or more non-management
employees. 2
Total Merit Criteria 3.0 20
Merit Criteria 4.0 - Messaging
4.1 Applicant commits to responsible use messaging practices. Select all that apply
and total score. (Up to 10 Points – Deviation Threshold 3 Points)
Possible
points
Applicant
score
4.2 Business articulates strategy to keep cannabis from being diverted to minors
including advertising that is appropriately targeted to adult audiences. 1-5
4.3
Business promotes responsible use including messaging on packaging, offering
lower dose THC product options, offering to track use via "user determined
quotas", posting information on cannabis use disorder and cautions re:
development of the adolescent brain.
1-5
Total Merit Criteria 4.0 10
Merit Criteria 5.0 - Medical Retail Commitment
Medical Retail Commitment (up to 10 points) Possible
points
Applicant
score
5.1 Applicant commits to provide retail medical cannabis products to consumers. 10
Total Merit Criteria 5.0 10
Merit Criteria 6.0 - Property Control
Control of business location: Applicant demonstrates control of a site to ensure a
successful and timely transition from being awarded a license to opening the
business. Incomplete purchase or lease agreements do not constitute site control.
(Up to 10 Points – Deviation Threshold 3 Points)
Possible
points
Applicant
score
Choose one:
6.1 Majority ownership in site property. 10
6.2 Minority ownership in site property. 8
6.3 10+ years future lease of site property. 8
6.4 5-10 years future lease of site property. 5
6.5 2-5 years future lease of site property. 3
6.6 Less than 2 years future lease of site property. 1
Total Merit Criteria 6.0 10
Merit Criteria 7.0 - Financial Investment
Financial Investment: Applicant has plans and capital to support a vibrant
business within the City. (Up to 25 Points – Deviation Threshold 3 Points)
Possible
points
Applicant
score
7.1 Applicant demonstrates financial capacity to capitalize, start up, and sustain
business operations. 1-10
7.2
Applicant commits to major improvements, including façade rehabilitation,
building expansion, site improvements, removing visual blight, and/or other
investments in an underutilized/underdeveloped site that has been zoned for
commercial use for a commercial cannabis facility.
1-5
7.3 The proposed cannabis business site can accommodate the required number of
parking spaces and safe and convenient access for customers/employees. 1-5
Total Merit Criteria 7.0 20
Totals
Total Merit Criteria Points Available 140
Total Merit Criteria Points Awarded
Total %
1
City of San Luis Obispo
Cannabis license application scoring process review (after report)
February 26, 2019
The following report is a recap on the process followed by the City of San Luis Obispo to score
the cannabis business license applications received for 1) Retail (storefront) and 2)
Manufacturing, Distribution and Retail (non-storefront). The report is prepared by
MuniServices/Avenu Cannabis Support Services.
On Friday, February 22, 2019 from 8:30am to 5:30pm a panel of application reviewers/scorers
assembled at the Community Development building, Conference Room #1. The panel was
comprised of representatives from the following City of San Luis Departments: Administration,
Code Enforcement, Fire, Planning and Police.
MuniServices/Avenu is a third-party consulting firm that was engaged to facilitate the review
and scoring process. Two representatives were present throughout the scoring process. This
memo summarizes MuniServices/Avenu’s observations of the process during this review day.
At 8:30am, the panel arrived, had some light breakfast and the welcomes and introductions began.
The representatives from MuniServices walked the group through the process, ground rules and
expectations, distributed scoring sheets and allowed for initial panel member Q&A. For the session,
the panel agreed that only information that had been provided on the applications by the January 29
submission deadline would be used for consideration of point awards. Outside sources were not used
in consideration of point awards; that statements made on the applications wo uld be taken at face
value and that any verification or background checks could happen at some point in the future. In
addition, City staff and panelists did not take any in-person meetings with applicants nor did they
consider any materials, phone or email correspondence submitted after the submission deadline,
either from applicants or their advocates.
All applications had been read before the scoring session; such things as important pages that
contained supporting documentation were noted. On the day of the scoring each panel member
contributed knowledge of the applications as well as insights and expertise from their specific
departments.
There were a few points of clarification, and minor corrections of order numbering on the scoring
forms:
• The Retail Evaluation Criteria: In “Merit Criteria 2.0 – Experience”, the possible points awarded
was corrected from 30 and moved up to 35.
2
• In Retail Evaluation Criteria: “Merit Criteria 4.0 – Messaging”, the numbering for 4.1 was
scratched out as this was an overview row not a specific criteria. The numbers 4.2 (re:
“Business articulates strategy to keep cannabis from being diverted to minors…”) and 4.3 (re:
“Business promotes responsible use including messaging on packaging, offering lower dose
THC product options…”) remained numbered as they were originally posted.
• In Retail Evaluation Criteria: For “Merit Criteria 6.0 – Property Control”, the numbering for 6.4
became 5-9 years (rather than 5-10 years) future lease of site property and 6.5 became 2 to 4
years future lease of site property.
• In Retail Evaluation Criteria: For “Merit Criteria 7.0 Financial Investment”, the possible points
awarded was corrected from 25 and moved down to 20.
These were addressed before the actual review and scoring process began.
• The group clarified that the definition of “local” throughout the document would be “San Luis
Obispo County”; consistent with how it was utilized on the City website “Cannabis Business
License Scoring Guidelines” for both community benefit and experience.
• The panel reviewed the standard set in merit criteria 3.4 (on Retail Storefront application) on
Labor Peace Agreements and agreed the criteria should be dropped for everyone. The wording,
“Business will allow "labor peace agreement" at 20 or more non-management employees” would
be less restrictive than the State of California, Bureau of Cannabis Control regulations code which
requires labor peace agreement at 20 or more employees of any kind.
• The panel used the Housing and Urban Development huduser.gov “Median Household Income”
for the City of San Luis Obispo of $83,200.
• Merit Criteria 1.3B (on Manufacturing, Distribution, Non-Storefront retail application) that the
applicant had to demonstrate history of supporting local programs.
• For Merit Criteria 3.1 (on Retail Storefront application); the group decided to not disqualify
principals that were students and to accept their stated income when considering qualification for
earning, “at or below the median household income at the time of the application”.
• For all claims made in the applications, the panel decided to favor those with stronger evidence
provided.
• For Merit Criteria 6.0 (on Retail Storefront), the group decided to use a range rather than an “all or
nothing” for variations in the level of site control. The vertical header had been listed on the public
website as “possible points”. For example, 10 possible points for “majority ownership in site
property”, became 1-10 where different levels of commitment and ownership or control by the
principals could be taken into account.
Each panel member kept their own scoring sheet; which was submitted to the MuniServices
facilitators at the end of the session for input into aggregated scoring sheets.
3
Each Required Submission item and Merit Criteria item was covered independently as a group before
moving on to the next point. Points of discussion were addressed by the grou p as they moved through
the sections. Once discussion ceased, each panel member would document their score and the group
would move on to the next point of discussion.
This was the review order and some brief notes on the findings of the panel. Most of the notes below
relate to Merit Criteria where the applicant lost points:
MANUFACTURING, DISTRIBUTION, AND RETAIL (NON-STOREFRONT)
Applicant #1 Element 7 San Luis Obispo, LLC (Manufacture (non-volatile), Distributor, Retail (non-
storefront); originally filed as “microbusiness”)
TOTAL SCORE: 48.6 (of 85 possible)
• Applicant lost points on Merit Criteria 1.3B “demonstrate a history of supporting local
community programs”. The applicant stated the intent of working with local groups but did
not demonstrate a history of activity.
• Applicant lost points on Merit Criteria 2.2 regarding “business will have an average pay
rate for entry and mid-level positions of at least 40% (or 20%) more than the median local
income. However, the applicant responded on p. 17 that their lowest pay rate would be
50% above minimum wage. No points were awarded for this response.
• Applicant lost points for Merit Criteria 3.2, 3.3, and 3.4 as they did not make commitments
to develop raw land, commit to major improvements, or demonstrate that the site can
accommodate parking needs.
Applicant #2 Coastal Delivery SLO, LLC (Delivery)
TOTAL SCORE: 64.4 (of 85 possible)
• Applicant lost points on Merit Criteria 3.2 on account they did not state intent to develop
raw land.
• Applicant lost points on Merit Criteria 3.4 following discussion that the site does not
actually have adequate parking to support operations.
Applicant #3 Lab Tested SLO, LLC (Delivery)
TOTAL SCORE: 42.0 (of 85 possible)
• Applicant lost points on Merit Criteria 1.3B. There was no statement of history of
supporting local community programs
• Applicant lost points on Merit Criteria 2.1. There was no evidence of earnings for principals
to support equity ownership.
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• Applicant lost points on Merit Criteria 2.3. There was no statement made regarding base
wages of employees exceeding minimum wage.
• Applicant lost points on Merit Criteria 3.1, 3.2, and 3.3 providing no evidence of financial
capacity, no commitment to develop raw land and no commitment to major
improvements.
• Applicant did not provide information on financial investment, security plan or lighting
plan.
• Their final score did not qualify them as it did not meet the 70% threshold of the highest
score.*
• Application incomplete. Automatic fail.
RETAIL STOREFRONT APPLICATIONS
Applicant #4 Harvest of San Luis Obispo, LLC (Retail)
TOTAL SCORE 100.8 (of 140 possible)
• Applicant lost points on Merit Criteria 2.1 unable to prove operation of a local compliant
cannabis operation for 5 or more years but did earn points for operation of compliant
cannabis operation outside of SLO county for 5 or more years.
• Applicant lost points on Merit Criteria 7.2 as they did not make a commitment for major
improvements.
Applicant #5 Natural Healing Center SLO (Retail)
TOTAL SCORE 136 (of 140 possible)
• Applicant scored well in all categories.
Applicant #6 Megan’s Organic Market (Retail) 280 Higuera
TOTAL SCORE 136 (of 140 possible)
• Applicant scored well in all categories.
• Applicant applied for two locations; 280 Higuera is the highest scoring site.
Applicant #7 Megan’s Organic Market (Retail) 300 Higuera
TOTAL SCORE 134.8 (of 140 possible)
• Applicant scored well in all categories.
• NOTE: applicant submitted applications for two separate locations and secured site control
for two sites. Given the Council resolution limiting applicants to one submission; the City
will only issue one contingent operator permit.
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Applicant #8 SLO CAL Roots (Retail)
TOTAL SCORE 109 (of 140 possible)
• Applicant lost points on Merit Criteria 5.0 as they did not make a commitment to provide
retail medical cannabis products to consumers. The applicant has a long history of
providing medical cannabis. Not declaring medical may have been an oversight.
• Applicant lost points on Merit Criteria 7.1 as they were unable to prove financial capacity.
The panel discussed the bank statement that did not have the name of an institution nor
the name of a principal associated with the application; and reviewed a list of real estate
holdings in the name of relatives or associated trusts but no indication of a promise these
assets could or would be used to support the applicant.
Applicant #9 805 SLO Beach Breaks, Inc. (Retail)
TOTAL SCORE 105.4 (of 140 possible)
• Applicant lost points on Merit Criteria 2.1 as they were unable to prove the principals have
operated a local compliant cannabis operation for 5 or more years. The applicant claimed
operations in SLO until 2018 but did not provide documentation to support the claim. They
were awarded points for operating a compliant cannabis operation outside of SLO county for 5
or more years. This issue of clarification required the panel to revisit the application.
Applicant #10 Coastal Retail SLO, LLC (Retail)
TOTAL SCORE 104.8 (of 140 possible)
• Applicant lost points on Merit Criteria 2.1 unable to prove operation of a local compliant
cannabis operation for 5 or more years but did earn points for operation of compliant cannabis
operation outside of SLO county for 5 or more years. This issue of clarification required the
panel to revisit the application.
Applicant #11 Elemental Wellness (Retail)
TOTAL SCORE 121.6 (of 140 possible)
• Applicant lost points on Merit Criteria 6.1 regarding Majority ownership in site property.
The panel was unable to substantiate either ownership or future lease of site property. The
seller of the property is “Matthew Quaglino” who is a principal; and the buyer is “Tommy
Le” but the panel could not find Mr. Le connected to the applicant organization in any way.
• The group accepted 2.1 sellers permit in Nipomo in 2014 as grounds for local operation.
• While the applicant was the third highest scorer in this category, their site is inside the
buffer of the highest scorer’s identified site.**
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Applicant #12 Hollister SLO, LLC (Retail)
TOTAL SCORE 89 (of 140 Possible)
• Applicant lost points on Merit Criteria 2.1 unable to prove operation of a local compliant
cannabis operation for 5 or more years but did earn points for operation of compliant
cannabis operation outside of SLO county. Applicant mentioned activity starting in 2013
but there was no other evidence provided for the operation.
• Applicant lost points on Merit Criteria 3.0 regarding principals with 2% equity who have
earned at or below the median household income: there was some mention of social
equity, but the group could not ascertain who the referred to individuals were or how they
fit in to the applicant group.
Final tallies are to be submitted by the Panel to the City’s Cannabis Steering Committee which will
make a recommendation to the City Manager’s office for final consideration.
Manufacturing, Distribution and Retail (Non-Storefront)
Coastal Delivery 2600 and 2604 Broad St. 64.4
Element 7 280 Higuera St. 48.6
*Lab Tested 300 Higuera St. 42
Retail Storefront:
Natural Healing Center 2600 and 2604 Broad St. 136
Megan's Organic 280 Higuera St. 136
Megan's Organic 300 Higuera St. 134.8
**Elemental Wellness 2550 Broad St. 121.6
SLO Cal Roots 3535 Higuera St. 109
805 SLO Beach Breaks 2410 Broad St. 105.4
Coastal Retail 2504 Broad St. 104.8
Harvest 309 and 311 Higuera St. 100.8
Hollister 207 Higuera St. 89
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