Item 25 - Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax Updates

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Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax Updates September 20, 2022 Page 10 2 5 0 8 Number of Permitted Retail Locations, Retail Relocation, and Termination of the Measure BB Waitlist Existing ordinance regulations permit up to 20 medicinal and 30 adult-use cannabis retail locations; however, such facilities may be co-located in a single facility. The proposed amendments would allow an additional five (5) retail locations, for a total of 35 storefronts in the City. If approved, the amendments would allow all 35 retail licenses to sell both medicinal and adult-use cannabis. There are currently 27 operating storefront retailers in the City. Of these, 19 sell medicinal and adult-use cannabis, and 8 sell adult-use only cannabis. In addition, there are 1 pending/selected medicinal-only and 3 pending/selected adult-use retailers. The amendment would incentivize the pending/unopened retailers to open sooner and provide the retailers greater revenue-generating potential through both medicinal and adult-use retail cannabis sales. The amendments would also allow existing retailers to relocate subject to full compliance with all zoning, buffer, and separation requirements from other existing or pending/selected locations. This amendment also addresses the SR-55 widening project, which will result in physical impacts to at least one retailer, as well as evolving market conditions as the industry matures in Santa Ana. Currently, relocation is prohibited, and those businesses that have relocated have done so pursuant to various agreements with the City. The amendments would standardize the process for all entities and further incentivize the pending/selected businesses that have not yet opened to properly locate and open. Lastly, the amendments would terminate the Measure BB Waitlist, which has consistently shrunk since 2015 from 575 entities to its current five (5). Pursuant to Measure BB, each year waitlisted entities must notify the City of their desire to remain on the Waitlist, and the City updates the Waitlist annually between April and May. The amendments would set forth a process by which the City notifies the waitlisted entities of the intended termination and allow them to apply for the five new retail locations by March 30, 2023. Should all five not open, the priority for remaining storefront positions would then be given to those entities scored as part of the adult-use retail selection process in 2018; those entities would need to apply by July 31, 2023. Should remaining storefront positions be available thereafter, the City would accept applications from brand-new entities beginning July 31, 2023, subject to the same merit-based evaluation process employed in 2018 that included criteria such as site control, previous experience, commitment to community benefits, having remained on the Waitlist, residing in Santa Ana, and being in good standing. This staggered method will ensure consistency with prior processes and create a fair opportunity for those waitlisted entities to submit competitive applications to operate new retail locations in the City. Any remaining positions available after this staggered