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REQUEST FOR <br />COUNCIL ACTION <br />CITY COUNCIL MEETING DATE: <br />JUNE 4, 2019 <br />CLERK OF COUNCIL USE ONLY: <br />TITLE: <br />APPROVED <br />❑ As Recommended <br />PUBLIC HEARING — APPROVE ORDINANCE <br />❑ As Amended <br />AMENDMENT NO. 2019-01 TO ADD TO AND <br />❑ Ordinance on 151 Reading <br />El Ordinance Reading <br />El <br />on <br />AMEND CERTAIN SECTIONS OF CHAPTER 21 <br />El Implementing Resolution <br />OF THE SANTA ANA MUNICIPAL CODE TO <br />❑ Set Public Hearing For <br />/_1 q 11116PJAT/ 4 [i 9 [If-1 IF_1 i! 191: P] V r401 ,11 r_1 • <br />INTEGRATION OF CANNABIS BUSINESSES; <br />UPDATING PROCEDURAL STANDARDS AND <br />REQUIREMENTS RELATING TO OWNERSHIP <br />TRANSFERS, SECURITY DEPOSITS, AND <br />VARIOUS ADMINISTRATIVE PROCESSES; AND <br />REDUCING CANNABIS TESTING TAXES TO <br />TWO PERCENT OF GROSS RECEIPTS <br />{STRATEGIC PLAN NOS. 3, 2; 3, 3; 3, 5; 4,31 <br />CONTINUED TO <br />FILE NUMBER <br />— CITY MANAGER <br />RECOMMENDED ACTION <br />Approve Ordinance Amendment No. 2019-01 allowing vertical integration of certain commercial <br />cannabis businesses; updating operational and procedural standards for implementing the <br />City's medicinal and commercial cannabis ordinances, decrease security deposit amount <br />requirements, compute square footage cannabis taxes based on allocation of gross square <br />footage usage; and reducing the commercial cannabis testing laboratory tax from five (5) to two <br />(2) percent. <br />2. Adopt a resolution reducing the gross receipts tax on commercial cannabis testing laboratories <br />from five (5) to two (2) percent. <br />3. Adopt a resolution implementing a canopy measurement service fee and an allocated square <br />footage measurement service fee to cover the City's cost in independently verifying the <br />allocation of square footage usage by commercial cannabis businesses. <br />BACKGROUND <br />The City of Santa Ana permits a variety of types of cannabis business activity, which include retail <br />sales of medicinal and adult -use cannabis, and cannabis cultivation, distribution, manufacturing, <br />and testing. These cannabis business activities were permitted through adoption of multiple <br />ordinances beginning with Measure BB (Ordinance NS-2684) in November 2014 through <br />Ordinance NS-2944 in May 2018. In November 2018, Santa Ana voters approved Measure Y <br />(Ordinance NS-2962), which established commercial cannabis business license taxes for adult- <br />75F-1 <br />