HomeMy WebLinkAbout75A - PH CANNABIS MUNI CODE AMENDREQUEST FOR
COUNCIL ACTION
CITY COUNCIL MEETING DATE:
AUGUST 20, 2019
TITLE:
PUBLIC HEARING —APPROVE ORDINANCE
AMENDMENT NO. 2019-01 TO AMEND CERTAIN
SECTIONS OF CHAPTERS 18, 21, AND 40 OF
THE SANTA ANA MUNICIPAL CODE ALLOWING
VERTICAL AND HORIZONTAL INTEGRATION
OF CANNABIS BUSINESSES; UPDATING
OWNERSHIP TRANSFERS, PROCEDURAL
STANDARDS AND REQUIREMENTS, SECURITY
DEPOSITS, AND VARIOUS ADMINISTRATIVE
PROCESSES; UPDATING AND STREAMLINING
REGULATORY COMPONENTS; REDUCING
CANNABIS TESTING TAXES TO TWO PERCENT
OF GROSS RECEIPTS; ADOPTING A CANOPY
MEASUREMENT AND SQUARE FOOTAGE
ALLOCATION SERVICE FEE; AND
AUTHORIZING AMENDMENT OF THE
COMMERCIAL CANNABIS OPERATING
AGREEMENT TEMPLATE
(STRATEGIC PLAN NOS. 3, 2; 3, 3; 3, 5; 4,3)
CLERK OF COUNCIL USE ONLY:
APPROVED
❑ As Recommended
❑ As Amended
❑ Ordinance on 181 Reading
❑ Ordinance on 2n° Reading
❑ Implementing Resolution
❑ Set Public Hearing For
CONTINUED TO
FILE NUMBER
CITY MANAGER
RECOMMENDED ACTION
Adopt an ordinance allowing vertical integration of certain commercial cannabis businesses;
updating operational and procedural standards for implementing the City's medicinal and
commercial cannabis ordinances, decrease security deposit amount requirements, compute
square footage cannabis taxes based on allocation of gross square footage usage; and
reducing the commercial cannabis testing laboratory tax from five (5) to two (2) percent.
2. Adopt an ordinance amending various sections of Chapters 18 and 40 of the Santa Ana
Municipal Code addressing medicinal cannabis purchasing age, employee badges,
manufacturing permit requirements, and ordinance administration and implementation.
3. Adopt a resolution reducing the gross receipts tax on commercial cannabis testing
laboratories from five (5) to two (2) percent.
4. Adopt a resolution implementing a canopy measurement service fee and an allocated square
footage measurement service fee to cover the City's cost in independently verifying the
allocation of square footage usage by commercial cannabis businesses.
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5. Adopt a resolution amending Resolution No. 2017-074 authorizing amendment of the
commercial cannabis operating agreement template to identify social equity goals and
requirements and specify requirements for Community Benefit and Sustainable Business
Practices Plans and authorize the city manager to execute the cannabis operating
agreements.
BACKGROUND
The City of Santa Ana permits a variety of types of cannabis business activity, which include
retail sales of medicinal and adult -use cannabis, and cannabis cultivation, distribution,
manufacturing, and testing. These cannabis business activities were permitted through adoption
of multiple ordinances beginning with Measure BB (Ordinance NS-2684) in November 2014
ending with Ordinance NS-2944 in May 2018. In November 2018, Santa Ana voters approved
Measure Y (Ordinance NS-2962), which established commercial cannabis business license taxes
for adult -use cannabis retail sales, cannabis cultivation, distribution, manufacturing, and testing.
Medicinal cannabis retail sales taxes were not modified by Measure Y and continue to be subject
to taxes pursuant to Measure BB.
Multiple changes to State cannabis laws and changes in market demands prompted the City to
revisit its ordinances and tax collection to ensure that Santa Ana maintain its competitive position
in the region, remain compliant with applicable State laws, and streamline its implementation of
cannabis taxation. When added to Santa Ana's local cannabis taxes, the State's assessments
on cannabis goods, which include sales tax, excise cannabis tax, and cultivation tax, result in
legally -operating and permitted commercial cannabis businesses having to confront a combined
state and local tax rate exceeding 50 percent of the retail sale value of their cannabis goods. This
50-percent rate discourages businesses from seeking the required permits to operate legally and
in tandem with a cumbersome and rapidly -changing regulatory framework can foster a continued
illicit cannabis market, which is to the detriment of Santa Ana's permitted operators.
DESCRIPTION & BACKGROUND
Table 1 (Proposed Amendments to Chapter 21) describes the finance -related ordinance
amendments. Additional details are provided in the subsections that follow.
Table 1: Proposed Financial Amendments
Item
Impact
Vertical and Horizontal
Amendment:
Integration (SAMC
Sections 21-131.2 and 21-
Allow vertical and horizontal integration of business structures for
142)
businesses engaging in multiple types of commercial cannabis business
activity. Includes allowance for vertical and horizontal integration of
commercial cannabis business activities involving both medicinal and
nonmedicinal cannabis retail businesses.
Impacts:
. Incentivizes cannabis businesses to expand operations within the City
and encourages new businesses to enter the Santa Ana marketplace.
9 Allows for the7djeApA43 of intraparty sales and/or transfers of cannabis
Ordinance Amendment
August 20, 2019
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No. 2019-01 — Commercial Cannabis Ordinance Updates
Table 1: Proposed Financial Amendments
Item
Impact
and cannabis products occurring within a single integrated cannabis
business from reportable gross receipts of cannabis businesses.
• Reduces the net negative effect of multi -level taxation.
Security Deposits (SAMC
Amendment:
Section 21-80, 21-80.1, 21-
86, and 21-136)
Amends Ordinance NS-2962 to allow a single security deposit to cover
multiple types of vertically/ horizontally integrated commercial cannabis
business activities conducted by the same ownership regardless of form of
business structure.
Impacts:
• Reduces overall security deposit requirement to a maximum amount of
$10,000.
• Allows two or more vertically/horizontally integrated cannabis
businesses to be covered by a single deposit.
• Implements well-defined processes for handling deposits, their
application, replenishment, and release as well as requirements for
close-out audits and other guards against loss of taxes due to transfer of
ownership or termination of business.
Alternate Square Footage
Amendment:
Tax (SAMC Section 21-133)
Amends Ordinance NS-2962 to allow certain vertically and/or horizontally
integrated commercial cannabis businesses to base their alternate square
footage tax calculations on measured allocated gross square feet rather
than total gross square feet.
Impact:
• Allows distribution and manufacturing cannabis businesses that are
vertically or horizontally integrated to report actual allocated square
footage utilized upon verification by the City in place total square footage
of premises.
Testing Laboratories
Amendment:
Reduce Tax Rate from 5 to
2 Percent
Amends Ordinance NS-2962 to reduce the gross receipts tax rate on
testing laboratories and testing facilities.
Impact:
• Allows the City to maintain its competitive position with regards to
cannabis testing which is the most mobile and easily re -locatable class
of commercial cannabis business.
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Financial Amendments (Chapter 21)
Vertical and Horizontal Cannabis Business Integration
Santa Ana voters approved Measure Y in November 2018, which established various tax rates
for legally -operating and permitted commercial cannabis businesses in the City. In tandem with
preparation of the measure, City officials met with cannabis industry representatives to discuss
vertical and horizontal integration, security deposits and substitution of allocated gross square
footage vs. total square footage for certain types of commercial cannabis businesses.
Subsequently, City staff met with cannabis industry representatives and reviewed proposed
changes to Measure Y in order to address the new tax confronting cannabis businesses and to
incentivize legal operators throughout Santa Ana. The City's current regulatory ordinances
permit co -location of multiple commercial cannabis business activities on the same site along
with medicinal cannabis retail activity; the proposed revisions to Chapter 21 will ensure that these
co -located business activities are vertically and/or horizontally integrated under the business
license code as well. Additionally, concerns related to reducing the amount of security deposits
and accommodating use of allocated gross square footage in the computation of the alternate
gross square footage tax payable by commercial cannabis businesses engaged in distribution
and manufacturing are likewise addressed below.
An understanding was reached with industry representatives that the City would be open, via a
subsequent ordinance as provided under the terms of Measure Y, to the adoption of
vertical/horizontal integration, and reducing and capping the amount of security deposits and
applying in cases of vertically/horizontally integrated cannabis businesses, a single security
deposit.
With regard to the concept of vertical/horizontal integration which relates to the City's recognition
that state law, by requiring separate licensure for certain separate aspects of commercial
cannabis business (cultivation, distribution, manufacturing, and retail sales), consciously adopts a
horizontally integrated regulatory scheme as opposed to a vertically integrated scheme adopted
in other states. Other states that utilize horizontal integration for regulatory purposes and prohibit
vertical integration at the regulatory level include Illinois and Washington. While horizontal
integration carries with it certain benefits in terms of maintaining a more open, participatory, and
business -friendly marketplace at the state level, it also results in a single integrated cannabis
business being subject to multiple state and local tax assessments. The state assessments -
sales tax, excise cannabis tax, and cultivation tax - when added to local taxes, such as Santa
Ana's, mean that a single integrated cannabis business could face a combined state and local tax
rate exceeding 50 percent of the retail sale value of their cannabis goods.
Vertical/horizontal integration of these separately licensed business activities at the local tax level
allows a single integrated business to effectively pay their gross receipts tax assessment once, at
the final point of retail sale (which is still at the highest rate of 8 percent for adult -use and 6
percent for medicinal cannabis). In this model, interparty sales and transfers of goods between
component parts of a vertically/horizontally integrated cannabis business supply chain, sharing
80 percent underlying ownership, without reference to form of business structure, are allowed to
be deducted from each individual integrated cannabis business' gross receipts tax assessment at
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each point in the supply chain. This would leave only their third -party sales and/or their minimum
square footage tax, whichever is greater, to be reported and paid.
Security Deposits
Concerning security deposits, it was determined that nominal security deposit language setting a
minimum security deposit amount of $10,000 or the average of one month's remittable
commercial cannabis tax, whichever was greater, would be included in the final text of Measure
Y. This was done with an understanding that the City would be open via a subsequent
ordinance, as provided under the terms of Measure Y to reducing and capping the amount of
security deposits for commercial cannabis businesses to $10,000 or one month's average
remittable commercial cannabis tax whichever is least. Also, it would permit two or more
vertically/horizontally integrated cannabis businesses to be covered by a single deposit, provided
that: clear detailed procedural language be added surrounding security deposits, their
maintenance, application, replenishment and refunding and that similarly detailed language be
added concerning sales, assignments, transfers and terminations of cannabis businesses to
ensure the City is secure in its continued receipt of cannabis business license tax revenues.
Allocated Gross Square Footage
In the case of integrated distribution and/or manufacturing cannabis businesses, the minimum
gross square footage tax reported would reflect the allocated square footage actually utilized by
the business as verified by the City, rather than the maximum square footage of the premises.
The gross square footage tax on cultivation would continue to be based on canopy size as
reported to the state and as verified by the City. The gross square footage tax for adult -use retail
businesses would continue to be based on the maximum size of the premises.
Gross Receipts Tax Rate Reduction for Cannabis Testing Laboratories
Local jurisdiction tax rates on commercial cannabis testing laboratories vary across the state.
When the City's commercial cannabis testing laboratory ordinance was adopted in March 2018,
testing laboratory tax rates ranged from 2 to 10 percent in various jurisdictions statewide. The
City currently collects a tax of 5 percent of gross receipts or $1.50 per gross square foot,
whichever is the greater of the two calculations. Nearby, the City of Costa Mesa collects 6
percent; Long Beach collects 6 percent, with the option to increase to 8 percent; Bellflower
collects 5 percent, (with multiple 2.5 percent annual increases scheduled beginning July 1, 2020
until a 10 percent cap is reached) and Irvine collects no taxes. It is important to note that
beginning in 2015 the City of Irvine ceased collecting a business license tax for any type of
business in the City.
Cannabis testing laboratories play a crucial role in ensuring product safety for medicinal and
adult -use consumers. Testing laboratories examine products for pesticides, minerals, potency,
and toxicity. These facilities employ highly -skilled and educated individuals and require
purchasing and installation of costly equipment. Although the City's current 5 percent tax rate is
consistent with other local jurisdictions with the exception of Irvine, the City has a continuing
interest in promoting safe medicinal and nonmedicinal cannabis and cannabis products for all
users and to ensure the sustained growth of the regulated medicinal and commercial cannabis
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Ordinance Amendment No. 2019-01 — Commercial Cannabis Ordinance Updates
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business hub in Santa Ana. Reducing the cannabis testing laboratory gross receipts rate from 5
to 2 percent will maintain Santa Ana's overall competitive edge in the medicinal and commercial
cannabis industries by promoting a healthy mix of business types, employment opportunities, and
equipment investment in Santa Ana's industrial areas.
Positive Impacts of Code Amendments
There are multiple commercial cannabis business start-ups pending with the Planning and
Building Agency that would benefit from vertical and horizontal integration. For these businesses
to move forward with their permitting and licensing processes, assurance that the City will provide
local tax treatment based on principles of vertical and horizontal integration, that issues related to
security deposits and gross square footage assessment will be addressed, and that the
ordinance is being routinely examined to identify areas for streamlining and modernization will
provide a stronger foundation for success in the City. The medicinal and commercial cannabis
ordinance updates recommended by staff provide this assurance and will serve to "jump-start"
commercial cannabis business activity in the City, while at the same time accomplishing all other
objectives of the City in securing reliable and continuing receipt of resulting cannabis revenues.
Regulatory Amendments (Chapters 18 and 40)
In addition to the proposed changes listed in Table 1, the City is proposing to update and streamline
certain sections of Chapter 18 (Medicinal Marijuana) and Chapter 40 (Commercial Cannabis
Business Activities Other Than Medicinal Marijuana). Table 2 (Proposed Amendments to Chapters
18 and 40) describes the regulatory -framework ordinance amendments.
Table 2: Proposed Regulatory Amendments
Item
Amendment and Impact
Medicinal Cannabis
Amendment:
Purchasing Age (SAMC
Section 18-613)
Amends Chapter 18 to reduce minimum purchasing age for medicinal
cannabis products from 21 to 18.
Impacts:
• Establishes consistency with State cannabis retail laws.
• Retains adult -use retail sales' minimum purchasing age at 21, which is
also consistent with State cannabis retail laws.
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Table 2: Proposed Regulatory Amendments
Item
Amendment and Impact
Employee Badges (SAMC
Amendment:
Sections 18-613 and 40-8)
Amends Chapters 18 and 40 addressing production of required employee
badges.
Impacts:
• Removes site -specific badge requirement for each employee.
• Allows an employee that has an approved badge to work at multiple
commercial cannabis businesses without the need for multiple badges.
• Streamlines commercial cannabis business requests for new
employees, volunteers, managers, and owners.
Volatile and Non -Volatile
Amendment:
Manufacturing
Requirements (SAMC
Amends Chapter 40 to allow both non-volatile and volatile manufacturing
Section 40-8)
in the Light and Heavy Industrial zoning districts (M-1 and M-2) without a
conditional use permit (CUP) requirements, subject to Building Code and
Fire Code requirements.
Impacts:
• Addresses recent changes to State non-volatile (Type 6) and volatile
(Type 7) manufacturing categories.
• Allows a broader range of cannabis manufacturing activity types in both
of the City's industrial zoning districts.
• Streamlines the review process for Type 7 license applicants by
eliminating the CUP requirement.
• Maintains requirement that facilities be constructed subject to all life
safety Building and Fire code requirements.
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Ordinance Amendment No
August 20, 2019
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2019-01 — Commercial Cannabis Ordinance Updates
Item Amendment and Impact
Administration and Amendment:
Implementation
Amendments (SAMC Amends Chapter 40 to address State cannabis license type changes,
Sections 18-617.5, 40-1, 40- allow microbusiness license for certain commercial cannabis businesses,
2, 40-5, 40-8, 40-9.1, and 40- address audits, and minor grammatical corrections.
10)
Impacts:
• Updates certain sections to be consistent with applicable State laws.
• Creates internal consistency among Measure 1313 (Chapter 18), Chapter
21, and Chapter 40.
• Amends operating agreement language to be consistent with Measure Y
and specifies minimum requirements for community benefit and
sustainable business practices plans, including:
o Local hiring and local sourcing;
o Community engagement and contributions; and
o Sustainable business practices (green buildings, recycling,
employee training, etc.).
• Streamlines audits and application procedures for non -retail commercial
cannabis business applications.
Medicinal Cannabis Purchasing Age
SAMC Section 18-613 (1) restricts access to medicinal cannabis to those aged 21 and older
unless accompanied by a primary caregiver, physician, parent, or documented legal guardian.
Amending this restriction to allow individuals age 18 and older to access medicinal cannabis will
ensure consistency with Proposition 64, which was approved by California voters in November
2016, and will assist with ensuring the long-term viability of medicinal cannabis sales. Adult -use
(recreational) cannabis sales will remain restricted to those aged 21 and older.
Badges
SAMC Sections 18-613 (k) and 40-8 (3) (o) require all agents, private security officers or other
persons acting for or employed by a commercial cannabis business to display a laminated
identification badge. Moreover, the State of California requires that all commercial cannabis
businesses produce badges, subject to inspection by the State. As written, the ordinances
indicate that the badges are issued by the business, but the City has produced the badges for all
commercial cannabis businesses. The amendment would reinforce that the badges are produced
and issued by City of Santa Ana. The amendment would also allow an individual who has
previously had a background check performed through the Live Scan process to work at an
additional commercial cannabis business without having to order a new Live Scan. The
amendment would streamline staff procedures and reduce staff time required to produce badges,
and would create flexibility within the cannabis industry to hire individuals who have already been
background checked.
Non -Volatile and Volatile Manufacturing Requirements
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Ordinance Amendment No. 2019-01 — Commercial Cannabis Ordinance Updates
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Immediately following the passage of Proposition 64, the State created two commercial cannabis
manufacturing categories: non-volatile (Type 6 license) and volatile (Type 7 license). Since the
two categories were established, the list of chemicals considered "volatile" has been reduced as
changes to Fire and Building safety policies have been adopted across local jurisdictions,
including the Orange County Fire Authority (OCFA). Existing Fire and Building safety policies for
other industrial activities of a similar nature that are already allowed in the industrial zoning
districts will be applied to non-volatile and volatile cannabis manufacturing activities.
Eliminating the non-volatile and volatile manufacturing distinctions in Santa Ana's local ordinance
will also help the City retain its competitive edge by aligning the ordinance with State
requirements, and will ensure that all commercial cannabis manufacturing businesses comply
with up-to-date Building Code and OCFA policies, as updated and adopted from time to time.
Administration and Implementation Amendments
Various updates to the City's commercial cannabis ordinances in Chapters 18 and 40 of the
SAMC are required to keep pace with changes to State law, create internal consistency, and
ensure that Santa Ana maintain its competitive position in the statewide commercial cannabis
industry. These amendments will:
• Clarify that a single Operating Agreement is required for co -located businesses, per
location;
• Allow the microbusiness license types for certain businesses, enabling business owners to
consolidate payments on State -issued license fees;
• Streamline the application process for commercial cannabis business applicants and
maintain consistency between Chapters 18 and 40 by requiring background checks (live
scans) to take place during the Phase 2 (Regulatory Safety Permit/RSP) process; and
• Address closeout audits and fix minor grammar and syntactical errors to ensure consistent
interpretation, administration, and implementation of the City's commercial cannabis
ordinances.
Operating Agreement Modifications
The City Council adopted Resolution No. 2017-074 on November 21, 2017, authorizing the City
Manager to execute operating agreements with commercial cannabis businesses in Santa Ana.
Each commercial cannabis operating agreement contains a required Community Benefit and
Sustainable Business Practices Plan ("Community Plan"), which requires commitments to efforts
to secure local sourcing and local hiring, community engagement, and sustainable/green building
practices. Revisions to the operating agreement template are proposed to strengthen and
enhance the commitments with measurable results.
Local hiring is a critical component of a Community Plan; this requirement is proposed to be
revised to require 50 percent of the labor at all commercial cannabis businesses in Santa Ana be
local and annually certified as such during the RSP renewal process. In addition, the Community
Plan will require community reinvestment commitments from commercial cannabis businesses,
identifying social equity goals and requirements in the operating agreements to reflect the City's
commitment to promote equitable owner, pp an� employment opportunities in the cannabis
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Ordinance Amendment No. 2019-01 — Commercial Cannabis Ordinance Updates
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industry in order to decrease disparities in life outcomes for marginalized communities. The
social equity requirement addresses employment and ownership opportunities, training with the
City's Workforce Development program, and employee investment opportunities.
In addition, requirements for expedited processing and renewal assistance for low-income and
resident applicants, potential fee deferrals and staff assistance to such applicants can be
incorporated in the new agreements in the event the City decides to expand the cannabis
licensing program sometime in the future or provides for an associated competitive process for
future licenses.
Internal Review and Public Outreach
The proposed amendments in Tables 1 and 2 have been vetted by the City's interagency
commercial cannabis team, which includes representatives from the Planning and Building
Agency (Planning and Code Enforcement divisions), the Police Department, the Finance and
Management Services Agency, the Community Development Agency (Economic Development),
and the City Attorney's Office.
The City notified interested parties to ensure they are aware of and have access to the latest
efforts to the proposed amendments. Interested parties include all current/operating and pending
commercial cannabis businesses, those who have expressed interest in submitting applications,
and the Santa Ana Cannabis Association (SACA).
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action. In accordance with the California
Environmental Quality Act (CEQA), the subject actions are exempt from further review pursuant
to Section 15061(b)(3) of the CEQA Guidelines.
FISCAL IMPACT
There is no fiscal impact associated with approval of this action as projected revenues are
incorporated within the City's 2019-20 budget. Failure to adopt the above recommended action
items, however, would have a negative impact as a significant portion of the commercial
cannabis applicants awaiting adoption of those recommended items before committing to
entering the approval, permitting, and licensing process will defer or cancel their decision to enter
the Santa Ana market and anticipated revenues will not be realized.
STRATEGIC PLAN ALIGNMENT & PUBLIC OUTREACH
Approval of this item supports the City's efforts to meet Goal #3 - Economic Development,
Objective #2 (create new opportunities for business/job growth and encourage private
development through new General Plan and Zoning Ordinance policies), Objective #3 (promote a
solutions -based customer focus in all efforts to facilitate development and investment in the
community), and Objective #5 (leverage private investment that results in tax base expansion
and job creation citywide). Approval of this item also supports the City's efforts to meet Goal #4 -
City Financial Stability; Objective #3 (achieve a structurally balanced budget with appropriate
reserve levels). 75A_1 3
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Ordinance Amendment No. 2019-01 — Commercial Cannabis Ordinance Updates
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Minh Thai
Executive Director
Planning & Building Agency
Kathryn Downs, CPA
Executive Director
Finance & Management Services Agency
WH/AP:la
SAFCAM-20-19\Commercial Cannabis Ord Updates\RFCA CA No 2019-01 cannabis chs 18 21 and 40 amendments 08202019 modified
Exhibits: 1. Ordinance — Amending certain sections of Chapter 21 (Finance)
2. Ordinance —Amending certain sections of Chapters 18 and 40 (Regulatory)
3. Resolution — Reducing the Commercial Cannabis Gross
Receipts Tax for testing laboratories from 5 percent to 2 percent
4. Resolution — Establishing a Canopy Measurement service fee and an
Allocated Square Footage Measurement service fee
5. Resolution — Authorizing the City Manager to modify the commercial
cannabis operating agreement template to specify requirements for
community benefit and sustainable business practices plans and to execute
cannabis operating agreements
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EXHIBIT 7
EXHIBIT 1
LS 8.20.19
ORDINANCE NO. NS-XXXX
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF SANTA ANA AMENDING AND ADDING CERTAIN
SECTIONS TO ARTICLES XIII, XII, AND VII OF CHAPTER
21 OF THE SANTA ANA MUNICIPAL CODE PERTAINING
TO OWNERSHIP TRANSFERS, CLOSE OUT AUDIT
PROCEDURES (SECTIONS 21-131.1 AND 21-141);
VERTICAL INTEGRATION (SECTIONS 21-131.2 AND 21-
142); REDUCTION IN THE GROSS RECEIPTS TAX RATE
FOR CANNABIS TESTING FACILITIES, DEDUCTIBILITY
OF INTERPARTY SALES AND TRANSFERS OF GOODS,
CLARIFICATION OF SQUARE FOOTAGE TAX
MEASUREMENT REQUIREMENTS (SECTION 21-133);
AND REDUCTION OF SECURITY DEPOSIT AMOUNTS
AND ESTABLISHMENT OF RELATED PROCEDURAL
REQUIREMENTS (SECTIONS 21-80, 21-80.1, 21-86 AND
21-136)
THE CITY COUNCIL OF THE CITY OF SANTAANA HEREBY ORDAINS AS
FOLLOWS:
Section 1. The City Council of the City of Santa Ana hereby finds, determines
and declares as follows:
A. On November 4, 2014, Santa Ana voters approved Santa Ana's Medical
Marijuana Regulatory Program ordinance ("Measure BB") which was codified in
Chapters 18 and 21 of the Santa Ana Municipal Code. Such regulations govern
medicinal marijuana and the retail sale thereof.
B. In 2015, the Governor signed into law Senate Bill 643, Assembly Bill 266,
and Assembly Bill 243, collectively referred to as the Medical Marijuana Regulation
and Safety Act further amended in 2016 as the Medical Cannabis Regulation and
Safety Act which established regulations and a state licensing system for medical
cannabis cultivation, manufacturing, delivery, and dispensing.
1
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C. In November 2016, the voters of the State of California approved
Proposition 64, the California Marijuana Legalization Initiative, also known as the
Adult Use of Marijuana Act.
D. In 2017, the Governor signed into law Senate Bill 94 also known as
Medicinal and Adult -Use Cannabis Regulation and Safety Act.
E. On November 9, 2017, the City Council created Chapter 40 of the Santa
Ana Municipal Code, allowing adult -use commercial cannabis retail businesses in
the city, and amended certain sections of Chapters 18 and 21 of the Santa Ana
Municipal Code to ensure consistency with State law and Chapter 40.
F. Since November 2014, the City of Santa Ana has permitted the retail sale
of cannabis for medicinal purposes and since January 2018 for adult -use purposes.
On March 20, 2018, the City Council adopted Ordinance NS-2941 and NS-2942,
allowing and regulating commercial cannabis testing laboratories.
G. On April 17, 2018, the City Council adopted Ordinance NS-2944 allowing
and regulating commercial cannabis cultivation, distribution, and manufacturing
activities.
H. On November 6, 2018, the voters of the City of Santa Ana approved
Measure Y (Ordinance NS-2962), establishing a tax on commercial cannabis
business activities except medicinal cannabis retail sales, which continue to be
subject to taxes under Measure BB.
I. The State of California continues to update its regulations on commercial
cannabis business licensing, resulting in the need for local jurisdictions to update
and amend local commercial cannabis ordinances from time to time.
J. The City Council of the City of Santa Ana intends that nothing in this
Article shall be deemed to conflict with federal law as contained in the Controlled
Substances Act, nor to otherwise permit any activity that is prohibited under that Act
or other applicable law.
K. The City of Santa Ana has a compelling interest in ensuring that cannabis
is not cultivated, manufactured or distributed in an illicit manner, in protecting the
public health, safety and welfare of its residents and businesses, in preserving the
peace and quiet of the neighborhoods in which these uses may operate, and in
providing access of cannabis to residents.
L. The City Council held a duly noticed public hearing on July 16, 2019 in
connection with consideration and adoption of this ordinance.
6
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Section 2. This ordinance is adopted pursuant to the authority granted by the
California Constitution and State law, including but not limited to: Article IX, Section 7 of
the California Constitution, the Compassionate Use Act of 1996 (California Health and
Safety Code Section 11362.5), the Medical Marijuana Program (California Health and
Safety Code Section 11362.7 et seq.), the Medical Marijuana Regulation and Safety Act
(AB 266, AB 243, and SB 643), the Adult Use of Marijuana Act (Proposition 64), and the
Medical and Adult Use Cannabis Regulation and Safety Act (SB 94).
Section 3. Pursuant to the California Environmental Quality Act ("CEQA") and
the State CEQA Guidelines, the adoption of this ordinance is exempt from CEQA review
pursuant to California Code of Regulations section 15061(b)(3), which is applicable if it
can be seen with certainty that there is no possibility that the project may have a
significant effect on the environment. As a result, a Notice of Exemption will be filed
upon the adoption of this ordinance.
Section 4. All provisions of the Santa Ana Municipal Code which are repeated
herein are repeated solely in order to comply with the provisions of Section 418 of the
City Charter. Any such restatement of existing provisions of the Code is not intended,
nor shall it be interpreted, as constituting a new action or decision of the City Council,
but rather such provisions are repeated for tracking purposes only in conformance with
the Charter.
Section 5. Section 21-131.1, Article XII of Chapter 21 of the Santa Ana
Municipal Code is hereby added to read in full as follows:
Sec. 21-131.1. Sale, assignment, transfer, or termination of business: marijuana
collective/cooperative (medicinal cannabis retail business) owner/operator's duty
to notify; remitting and reporting requirements; closeout audit; successor's duty
to notify: successor's and transferor's ioint and several liability; certificate of
nonliability.
(a) Owner/Operator's duty to notify.
termination of business.
ii. Sale assignment or transfer of business. A medicinal cannabis retail
business owner/operator who is selling, assigning, or otherwise transferring
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their business (hereinafter collectively referred to as transferor) shall notify the
collector in writing of such sale assignment or transfer at least ninety (90)
days in advance of the date of the sale assignment or transfer and shall
notify the collector in writing of the name and address of the purchaser,
assignee, transferee, or other successor in interest (hereinafter collectively
successor was notified of the requirements of this Article regarding their
responsibility for unpaid business license tax liabilities
(b) Remitting and reporting requirements. Each medicinal cannabis retail business
owner/operator upon the sale assignment or other transfer, or termination of
(c)
to gross receipts, the amount of business license tax collected for the reporting
account available for a closeout audit by the collector, his or her revenue officers
terminating their business is found to have satisfied all business license tax
liabilities, the collector shall issue to such business owner/operator a certificate of
nonliability.
transferring, or terminating their business is deficient in either their return or
liabilities owing, the collector shall issue a certificate of nonliability.
(d) Successor's duty to notify. If a medicinal cannabis retail business owner/operator
decides to sell, assign, or otherwise transfer their business their successor shall
75A-20
the transferor does not have or is not liable for any outstanding business license
taxes liabilities. After the successor seeks written verification from the collector's
office if the collector notifies the successor that the transferor has or is liable for
If the decision to sell, assign, or otherwise transfer was made within less than a
ninety (90) day period prior to the date of the sale, assignment, or other transfer,
the collector pending settlement of the account of the transferor.
(e) Joint and several liability. If the successor fails to withhold the applicable amount
required under subsection (d) they shall become jointly and severally liable along
with the transferor for future penalties and/or interest charges as may be applicable
as set forth in sections 21-83, 21-84, and 21-85 until all business license tax
liabilities are satisfied.
(f) Certificate of nonliability. Upon application of a medicinal cannabis retail business
operator/owner who is terminating their business, or a transferor, or a successor,
transferor's, or successor's business license tax liabilities have been satisfied. If
liabilities have been partially or wholly paid by their successor to the collector
pursuant to subsection (e) or partially or wholly satisfied by their successor's action
of withholding and depositing amounts with the collector pursuant to subsection
75A-21
Section 6. Section 21-131.2 of Article XII of Chapter 21 of the Santa Ana
Municipal Code is hereby added to read in full as follows:
Sec. 21-131.2 Vertical and horizontal integration of marijuana
collective/cooperative licensees (medicinal cannabis retail businesses) —Defined
The terms vertical integration and horizontal integration as used in this Article shall have
the following meanings: Vertical integration shall refer to cannabis businesses operating
at different points in the same supply chain from cultivation to retail sales as long as
they share at least 80% underlying common ownership regardless of form of business
structure and are engaged in interparty sales and/or transfers of goods Horizontal
integration shall refer to cannabis businesses operating at the same point in the same
supply chain, as long as they share at least 80% underlying common ownership
regardless of form of business structure and are engaged in interparty sales and/or
transfers of goods. For purposes of this Article the term "cannabis businesses" shall
include marijuana collectives/cooperatives as defined in section 18-611 and commercial
cannabis businesses as defined in section 40-2 but shall not include commercial
cannabis businesses engaged in testing facilities or testing laboratory businesses
Section 7. Section 21-133 of Article XIII of Chapter 21 of the Santa Ana
Municipal Code is hereby amended to read in full as follows:
Sec. 21-133. Commercial cannabis businesses —Annual business license tax
assessment.
Every person engaged in a "commercial cannabis business" or "commercial
cannabis activity" shall pay an annual business license tax as outlined below. This
Article shall not apply, except with respect to medical marijuana cooperatives/collectives
(also referred to as medicinal cannabis retail businesses)_ Wh'Gh aFe s. b°9^t
to a-
loneRst;tax und9F"'` ' v" @f !"jg "` which are vertically and/or
horizontally integrated with commercial cannabis businesses to medical marijuana
cooperatives/collectives which are governed by Article XII of this Chapter, or to personal
cultivation as defined in section 18-611(n) of this Code.
(a) For each branch establishment or separate property location of a commercial
cannabis business transacted and carried on in the city, and for each separate
type of commercial cannabis business conducted at the same location, the higher
of the two (2) following tax rates shall be due to the City for each monthly reporting
period:
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(1) Up to ten percent (10%) of each dollar of gross receipts received or
generated for each monthly reporting period.
(2) Up to $35.00 per square foot (annual tax rate) prorated monthly to one -
twelfth (1/12th) of the annual tax rate amount.
(b) These tax rates shall not be adjusted for inflation pursuant to section 21-121 of this
Chapter.
(c) Notwithstanding the tax rates imposed herein under subsection (a), the City
Council may, in its discretion, at any time by resolution, implement any lower tax
rate it deems appropriate, and may by resolution increase such tax rate from time
to time, not to exceed the maximum rates established by subsection (a).
(d) As of the operative date of this Article, the business license gross receipts tax
rates and square footage tax rates application to specific commercial cannabis
business activities shall be established as follows:
Commercial Cannabis Business
Gross Receipts
Gross Square
Activity
Tax Rate
Footage Tax Rate
Adult -use Cannabis Retail
8%
$ 25.00
Business (including Delivery)
Cultivation
6%
$ 10.00
Distribution
.6%
$ 4.00
Manufacturing
6%
$ 10.00
Testing Facility or Testing
Laboratory (effective December
5%
$ 1.50
21, 2018 through June 30, 2019)
Testing Facility or Testing
Laboratory (effective beginning
2%
$ 1.50
July 1, 2019)
Commercial cannabis businesses not having a fixed place of business within the
city but conducting regular, non -incidental commercial cannabis business activities
within the city shall be subject to the gross receipts tax rate(s) as set out in the
table above based on the category/categories of commercial cannabis activity
conducted. However, such out-of-town commercial cannabis businesses shall not
be subject to any gross square footage tax rate(s).
(e) As part of the annual gross receipts/square footage tax(es) imposed by this Article,
each commercial cannabis business located within the city shall pay a minimum
75A-23
basic rate of two thousand dollars ($2,000.00) annually for each branch
establishment or separate property location of the commercial cannabis business
transacted and carried on in the city, and for each separate type of commercial
cannabis business conducted at the same location. Commercial cannabis
businesses having no fixed place of business within the city shall be exempted
from this requirement.
(f) In the event the City should in the future permit additional categories of commercial
cannabis business activity, as may from time to time be licensed by the State of
California, such categories of commercial cannabis activates shall be subject to the
same maximum tax rates as imposed herein. The City may by ordinance of the
City Council initially set the required gross receipts/gross square footage tax rates
based on category of cannabis business activity at lesser rates as may be deemed
appropriate by the City Council.
(g) For purposes of this Article, a commercial cannabis business is not considered to
be a business or person having a "specified exemption" or "specified exclusion"
from business license taxation as set forth in sections 21-48 and 21-49 of this
Chapter.
(h) For purposes of this Article any person claiming an exemption from the gross
receipts tax rate component of the combined gross receipts/square footage tax
imposed under this Article on the basis of a claim of being a qualified "nonprofit
organization" shall have the burden of substantiating their claim to the same extent
and in the same manner as a marijuana collective/cooperative in accordance with
section 21-127(a)(6) of this Chapter.
(1) Cannabis businesses shall not pass the taxes imposed by this Article through to an
adult -use cannabis retail business customer or commercial cannabis business
customer in any fashion except as part of the basic product sales and/or service
price.
Q) Definitions. For purposes of this Article, the following terms have the following
meanings:
(1) "Adult -Use cannabis retail business" as defined in section 40-2(4) of this
Code.
(2) "Commercial Cannabis Activity" as defined in section 40-2(9) of this
Code.
(3) "Commercial cannabis business" as defined in section 40-2(10) of this
Code excluding medical marijuana collectives/cooperatives also referred
to as medicinal cannabis retail sales.
(4) "Cultivation" as defined in section 40-2(11) of this Code.
(5) 'Delivery" as defined in section 40-2(13) of this Code.
75A-24
(6) "Distribution" as defined in section 40-2(16) of this Code.
(7) "Gross receipts" — section 21-3 of this Chapter notwithstanding, "gross
receipts" for the purposes of this Article shall mean:
(A) Transfer of title or possession, exchange or barter, conditional or
otherwise, in any manner or by any means whatsoever, of tangible
personal property for a consideration including any monetary
consideration for cannabis, including, but not limited to,
membership dues, reimbursements provided by members,
regardless of form, or the total amount of cash or in -kind
contributions, including all operating costs related to the growth,
cultivation, manufacturing, distribution, testing, or provision of
cannabis or any transaction related thereto.
(B) Anything else of value obtained by an a cannabis business;
(C) The total amount of the sale price of all sales and services;
(D) The total amount charged or received for the performance of any
act, service or employment of whatever nature it may be, whether
or not such service, act or employment is done as a part of or in
connection with the sale of goods, wares, or merchandise (whether
at wholesale or retail), for which a charge is made or credit allowed,
including all refunds, cash credits and properties of any amount or
nature;
(E) Any amount for which credit is allowed by the seller to the
purchaser without any deduction therefrom, on account of the cost
of the property sold, the cost of materials used, the labor or service
cost, interest paid or payable, losses, or any other expense
whatsoever; provided that cash discounts allowed or payment on
sales shall not be included;
(F) The amount of any federal manufacturer's or importer's excise tax
included in the price of property sold, even though the manufacturer
or importer is also the retailer thereof and whether OF ROt the
,n1 ei s, rh tax is stated a Fete charge;
(G) The amount of any California state cannabis excise tax or state
cannabis cultivation tax
such exGffise tax AF ^-,"^•^'i^^ tax 4s included in the price of the
productOF stated to GustemeFs as a sepaFate GhaFge;
(H) "Gross receipts" shall not include the following:
i. The amount of any federal tax imposed on or with respect to
retail or wholesale sales or the sale of services whether
0
75A-25
imposed upon the cannabis business or the consumer
whenever the amount of federal tax is authorized by law to be
stated and passed through to customers as a separate charge.
ii. Any California state, county, or city sales or use tax, including
any add -on, district, or transaction and use tax, required by law
to be included in or added to the purchase price and collected
from the consumer or purchaser, or such part of the sales price
of any property previously sold and returned by the purchaser to
the seller which is refunded by the seller by way of cash or
credit allowances given or taken as part payment on any
property so accepted for resale; or
iii. The amount of the sale price of business personal property (all
property owned or leased by a cannabis business operator used
in the operation cannabis business activities, including but not
limited to: furniture, fixtures, and business equipment); real
property, including land, buildings and other improvements.
iv. The amount of equity contributions, investments, and/or loan
proceeds to cannabis business' operation, and/or proceeds from
the sale or transfer of cannabis business' retail or commercial
cannabis business.
v. The amount of interparty sales and/or transfers of goods within
a single vertically and/or horizontally integrated cannabis
business, where the sales or transfers goods are between two
or more commercial cannabis business licensees (excluding
testing facilities or testing laboratories), or one or more said
commercial cannabis business licensee(s) and one or more
medicinal cannabis retail business licensee(s) as set forth in
accordance with section 21-131.2 and/or section 21-142.
(1) "Gross receipts" shall be calculated without any deduction on
account of any of the following:
i. The cost of tangible or intangible property sold or bartered;
ii. The cost of materials or products used, labor or service cost,
interest paid, losses, or other expense;
iii. The cost of transportation of cannabis, or other property or
product;
iv. The amount of any federal or state income or franchise taxes;
and
io
75A-26
v. Any other business costs or expenses, unless otherwise
specifically exempted.
—"Reta•i businesses" as defined ; eGtien 40Yi40of this w^de."Gross
Square foot" or "gross square footage" for the purposes of this Article
shall mean:
(A) In the case of commercial cannabis businesses licensed by the
state to engage in an adult -use cannabis retail business, Tthe gross
number of square feet comprising the adult -use cannabis retail
property location as confirmed by the corresponding "approved
building set" or "approved certificate of occupancy' on file with the
City of Santa Ana Planning and Building Agency, whichever is the
greater of any square footage indicated, whether such adult -use
cannabis retail business is part of an on -site vertically or
horizontally integrated cannabis business or not.
(B) In the case of commercial cannabis businesses licensed by the
state to engage in cultivation, the aggregate number of square feet
comprising all areas of the premises under "canopy', whether such
sum is greater or lesser than the gross square footage as stated in
the "approved building set" or "approved certificate of occupancy",
and whether such commercial cannabis cultivation business is part
of an on -site vertically integrated cannabis business or not.
"Canopy' shall mean the designated area(s) of a premise that will
contain mature plants at any point in time. 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 of the space(s) within the boundaries. Canopy
may be noncontiguous, but each unique area included in the total
canopy calculation shall be separated by an identifiable boundary
which includes interior walls, shelves, greenhouse walls, hoop
house walls, garden benches, hedgerows, fencing, garden beds, or
garden plots; and if mature plants are being cultivated using a
shelving system, the surface area of each level shall be included in
the total canopy calculation.
Canopy shall be subject to independent measurement and
calculation by duly authorized employees or agents of the City at
the time of application for a Santa Ana Business License and
annually thereafter at the time of the renewal of such license, or
more often as may be deemed necessary in the discretion of the
collector. Whenever an independent canopy measurement and
11
75A-27
calculation is required under the terms of this Article or whenever
the collector in his or her discretion determines that the
independent measurement and calculation of a licensee's canopy is
desirable to effectuate the proper assessment or collection of the
business license taxes required to be paid under the terms of this
Chapter, or for any other purposes related to the express aims of
this Article then a canopy measurement shall be performed and a
corresponding service fee shall be applicable in the amount as
specified by resolution of the City Council.
(C) In the case of commercial cannabis businesses licensed by the
state to engage in distribution or manufacturing and that are not
vertically or horizontally integrated with another cannabis business
occupying the same premises the gross number of square feet as
confirmed by the corresponding "approved building set" or
"approved certificate of occupancy' on file with the City of Santa
Ana Planning and Building Agency whichever is the greater of anv
square footage indicated.
(G)—(D) In the case of commercial cannabis businesses licensed by the
state to engage in distribution or manufacturing and occupying the
same premises with another cannabis business with which they are
vertically or horizontally integrated, the gross number of square feet
allocated by the commercial cannabis business owner/operator
respectively for either distribution use or for manufacturing use
whether the combined sum of all Vertically or horizontally integrated
uses is less than equal to or greater than the gross square footage
as stated in the "approved building set" or "approved certificate of
occupancy".
The number of square feet allocated ("Allocated Square Footage")
shall be subject to independent measurement and calculation by
duly authorized employees or agents of the City at the time of
application for a Santa Ana Business License and annually
thereafter at the time of the renewal of such license or more often
as may be deemed necessary in the discretion of the collector.
Whenever an independent allocated square footage measurement
and calculation is required under the terms of this Article or
whenever the collector in his or her discretion determines that the
independent measurement and calculation of a licensee's allocated
square footage is desirable to effectuate the proper assessment or
collection of the business license taxes required to be paid under
the terms of this Chapter, or for any other purposes related to the
express aims of this Article then an Allocated Square Footage
12
75A-28
measurement shall be performed and a corresponding service fee
shall be applicable in the amount as specified by resolution of the
City Council.
(E) In the case of commercial cannabis businesses licensed by the
state to engage in testing facilities or testing laboratory businesses,
the gross number of square feet comprising such commercial
cannabis business' property location as confirmed by the
corresponding "approved building set" or "approved certificate of
occupancy" on file with the City of Santa Ana Planning and Building
Agency, whichever is the greater.
(B)L) "Manufacturing" as defined in section 40-2(22) of this Code.
R 10 "Retail businesses" as defined in section 40-2(40) of this Code.
(11) "Testing Facility" or "Testing Laboratory" as defined in section 40-2(44)
of this Code.
(12) "Wholesale" as defined in section 40-(46) of this Code
(k) Modification, repeal or amendment. The City Council may repeal the ordinance
codified in this Article, or amend it in a manner which does not result in an increase
in the tax or taxes imposed herein, without further voter approval. The City Council
may likewise by ordinance adopt and add additional provisions to any other Article
of this Chapter and relate them to this Article, or amend any existing provisions of
any Article of this Chapter as they may already relate to this Article in any manner
which does not result in an increase in the tax or taxes imposed herein, without
further voter approval. If the City Council repeals said ordinance or any provision of
this Article, it may subsequently reenact it without voter approval, as long as the
reenacted ordinance or section does not result in an increase in the tax or taxes
imposed herein.
(1) Administration —Rules, regulations and guidelines. In order to aid in the city's
collection of taxes due under this Article and to ensure that all commercial
cannabis businesses are taxed consistently to the best of the city's ability, the
collector, with the concurrence of the city attorney, may promulgate rules,
regulations, and guidelines, to implement and administer this Article including, but
not limited to rules, regulations, and guidelines harmonizing other provisions of this
Chapter with the provisions of this Article in any manner not inconsistent with the
intent of this Article and which does not result in an increase in the tax or taxes
imposed herein. The collector may also, with the concurrence of the city attorney,
interpret or clarify the methodology of the tax, or any definition applicable to the
tax, so long as such interpretation or clarification (even if contrary to some prior
interpretation or clarification) is not inconsistent with the language of this Article.
13
75A-29
(m) Occasional transactions —Exemptions.
(1) The provisions of this Article shall not apply to persons having no fixed
place of business within the city who come into the city for the purpose
of transacting a specific item of commercial cannabis business at the
request of a specific client or customer, incidental to a commercial
cannabis business principally established elsewhere, provided that
such person does not come into the city for the purpose of transacting
such business on more than three (3) days during any calendar year.
(2) For any person not having a fixed place of business within the city who
comes into the city for the purpose of transacting commercial cannabis
business activities, the business license tax(es) payable by such
person may be apportioned by the collector in accordance with this
Chapter.
(n) Reporting and remittance.
(1) Beginning as set forth in subsection (r) below, and monthly thereafter,
each commercial cannabis business required to pay a tax or taxes
based on gross receipts under this Article (except qualified nonprofit
organizations exempt from taxes measured by income or gross
receipts), shall report to the city any gross receipts received during the
preceding monthly reporting period. In addition, each cannabis business
(including qualified nonprofit organizations) required to pay a tax or taxes
based on square footage shall report to the city the gross square footage
of the cannabis business' property location. Every cannabis business
shall then compute the business license taxes at both the gross receipts
rate and the gross square footage rate - prorated monthly to one -twelfth
(1/12th) of the annual tax rate amount - and shall then remit to the city
the amount of the higher of the two tax calculations due and owing
during said period in accordance with section 21-133, subsection (d). In
the case of a qualified nonprofit organization only the gross square
footage computation shall be made and the amount of such calculation
shall represent the amount due and owing during said period. All
reporting and remitting made shall be done in accordance with
instructions from the collector and shall be made using forms provided or
approved by the collector.
(2) For purposes of this section, month shall mean calendar month and shall
include any fraction of a month. Taxes shall begin to accrue on the date
that a person or entity first receives a business license or other city
permit to operate as a commercial cannabis business or upon the
operative date of this Article should a person or entity already possess a
14
75A-30
commercial cannabis business license or other city permit to operate as
a commercial cannabis business.
(3) The payment of the two thousand dollars ($2,000.00) minimum basic
rate gross receipts tax required annually for each separate branch
location or separate property location of the business in accordance with
this section, shall be made annually prior to the beginning of the fiscal
year beginning April first of the current year and expiring on the 31st day
of March of the following year. In the case of a new commercial cannabis
business the minimum basic rate gross receipts tax shall be paid in
advance prior to any new business activity being undertaken. Every new
licensee shall pay in advance an amount equal to one -quarter (Y<) of the
annual minimum basic rate gross receipts tax, for each quarter and
fraction of a quarter remaining during the period for which the new
license is issued.
(o) Delinquent date —Penalty. Any individual or entity who fails to pay the taxes
required by this Article when due shall be subject to penalties and interest as set
forth in accordance with this Chapter. The collector is not required to send a
delinquency or other notice or bill to any person subject to the provisions of this
Article and failure to send such notice or bill shall not affect the validity of any tax
or penalty due under the provisions of this Article.
(p) Business license tax certificate —Required. There are imposed upon all persons
engaged in transacting and carrying on any commercial cannabis business activity
in the city taxes in the amounts prescribed in this Article. It shall be unlawful for any
person, either for him or herself or for any other person, to commence, transact or
carry on any business in the city without first having procured a business license
from the city under this Chapter and having paid the taxes set forth in this Article,
and without complying with any and all applicable provisions contained in this
Chapter. The carrying on of any commercial cannabis business activity without
complying with all the provisions of this Article shall constitute a separate violation
of this Chapter for each and every day that such commercial cannabis activity is so
carried on.
(q) Classification of business license assessment type —Term and renewal. The
business license issued to commercial cannabis businesses shall be classed as a
gross receipts assessment type, issued for the same term of license as set forth in
subsection 21-71(c) of this Chapter and shall be subject to renewal in accordance
with sections 21-72(c), 21-73(c), and 21-77.
(r) Operative date. Upon the approval by the majority of the voters of the city at the
November 6, 2018 general election, the taxes imposed by this Article shall become
operative and shall be applied by the collector upon all commercial cannabis
businesses.
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75A-31
(� Operative date of decreased gross receipts tax rate The -gross receipts tax set
initially at a rate of five (5%) percent for testing facilities or testing laboratories
pursuant to subsection (d) above shall be decreased to a rate of two (2%) percent
by resolution of the City Council rSanta Ana City Council Resolution No XX-XXXI
as hereinabove provided for in accordance with subsection (c) which reduced rate
under the terms of said City Council resolution shall become retroactively effective
July 1, 2019.
Section 8. Section 21-136 of Article XIII of Chapter 21 of the Santa Ana
Municipal Code is hereby amended to read in full as follows:
Sec. 21-136. Security for collection of commercial cannabis business' business
license tax; requirement; extension of time: application; failure to post or
restore —effect: ieopardv determination; refund or release; deposit adiustment—
effect.
(a) Requirement for Security Deposit. To ensure compliance with business license tax
payment requirements established pursuant to this Article, the collector shall
require, beginning on the operative date of this Article, that each commercial
cannabis business owner/operator, (including but not limited to each purchaser,
assignee, transferee, or other successor in interest (hereinafter collectively referred
to as successor) of a commercial cannabis business subject to the business
licensing requirements of this ArticleJ deposit within
IRdiyidual busine^^'' ` one hundred and twenty (120) days following the last
day of the month in which business was first commenced such security (per
individual business license) in a form acceptable to the collector in an amount not
larger than the commercial cannabis business owner's/operator's estimated
average monthly business license tax liability as determined by the collector or the
sum of ten thousand dollars ($10,000.00), whichever is thegFeat^ef least. Provided,
however, in the event that two or more commercial cannabis business licensees
sharing at least 80% underlying common ownership regardless of form of
business structure, are engaged in an integrated cannabis business (whether
vertically or horizontally integrated) as defined in section 21-142 then a single
consolidated deposit shall be made equal to the deposit amount owing for the
integrated commercial cannabis activity having the highest individual business
license tax liability. Each new city commercial cannabis business licensee shall
upon obtaining their City business license(s) deposit a similar security as
applicable per business license within thirty (30) days after commencing business.
(b) Extension of Time If, upon request and in the iud-gment of the collector, a
determination of any commercial cannabis business' estimated average monthly
tax liability for purposes of setting the amount of their required security deposit
requires an extension of time bevond one hundred and twenty (120) days following
16
75A-32
the last day of the month in which business was first commenced, then the
collector may issue a written notification to such commercial cannabis business
granting such extension.
(c) Application of Security Deposit. To recover past -due business license taxes,
including penalties interest charges fees or costs (hereinafter collectively
referred to as business license tax liabilities) remittable by the depositor, the
collector may apply the security deposited with the collector. At least fifteen (15)
days prior to the application of a security deposit the collector shall serve upon the
depositing commercial cannabis business owner/operator notice of intent to apply
the security deposit. Service of notice may be made by placing the notice in the
United States mail postage prepaid addressed to the depositing commercial
cannabis business owner/operator at their place of business or other mailing
address of record. Any portion of the security remaining after satisfaction of
outstanding business license tax liabilities and any expenses related to third -party
administrative charges or fees relating to the liquidation and application of non -
cash deposits may be retained by the collector for security or in the case of a
closeout audit may be paid over by the collector to the depositing owner/operator.
Except in the case of a closeout audit pursuant to section 21-141 in the event the
collector applies the security deposit, or any portion of said deposit, as an offset
against remittable business license tax liabilities and any expenses related to third -
party administrative charges or fees relating to the liquidation and application of
non -cash deposits, the commercial cannabis business owner/operator shall be
required within thirty (30) days of the collectors written demand therefor, to re
deposit the full amount of the required security. In such event the amount of the
required security shall be adjusted by the collector based on the average of the
commercial cannabis business' actual monthly gross receipts tax returns and/or
remittances as measured over the last three (3) valid monthly retums and/or
remittances received by the collector or the sum of ten thousand dollars ($10,000).
whichever is least, less any amount remaining on deposit with the collector.
Service of demand shall be in the same manner as stated hereinabove for service
of notice.
(d) Failure to Post or Restore Security Deposit —effect. Failure by a commercial
cannabis business licensee to initially post or restore a security deposit when
required by the collector pursuant to this section shall be cause for suspension
and/or revocation of such commercial cannabis business' existing Santa An
Business License as set out in section 21-86 of this Chapter. Similarly, in the case
of a vertically and/or horizontally integrated cannabis business, the business
license(s) of the integrated commercial cannabis business(es) shall be likewise
sublect to suspension and/or revocation.
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(e) Jeopardy Determination. If the collector believes that the collection of any
business license tax imposed by this Article will be ieopardized in whole or in part
by delay in the commercial cannabis business owner's/operator's timely remittance
of the business license tax. the collector shall serve notice upon the person
determined to be liable therefor of their determination of ieopardv and of the
business license tax required to be paid to the City, and demand immediate
Payment thereof, together with any interest and penalty determined to be due The
collector may consider all facts and circumstances relevant to determining whether
the collection of any business license tax will be ieopardized by delay, including but
not limited to indications that the person liable for the business license tax intends
to take or is taking action to discontinue business activities in the City, dissipate or
otherwise remove assets from the City, or sell exchange transfer, assign or
otherwise dispose of such Person's business personal or business income or
business property. The collector also may consider whether the person liable for
the business license tax is or has been uncooperative or unresponsive in
connection with any investigation examination audit deficiency determination
assessment, or collection action or procedure undertaken by the collector. A
ieopardv determination of business license tax, penalty, or interest is immediately
due and payable upon the service of the notice of ieopardv determination on the
Person determined to be liable therefor. Service of notice of a ieopardv
determination shall be made by: (1) sending the notice initially by electronic mail to
the depositing commercial cannabis business owner's/operator's electronic mail
address of record as set out in the depositing commercial cannabis business
owners/operator's application for business license or most recent business license
renewal affidavit or business license amendment statement (2) placing the notice
for delivery with an express carrier for next business day delivery, all delivery and
tracking charges prepaid addressed to the depositing commercial cannabis
business owner/operator at their place of business; and/or (3) conspicuously
posting said notice upon the premises of the commercial cannabis business
Service of notice of a ieopardv determination shall be deemed completed upon
tracking confirmation of the delivery of said notice to the commercial cannabis
business owner's/operator's place of business or on the date of the actual posting
of said notice on the premises of the depositing commercial cannabis business
owner/operator. Upon the business day next following the completion of service of
notice of a ieopardv determination upon a depositing commercial cannabis
business, the collector in his or her discretion may proceed with the application of
the security deposit upon actual or estimated business license taxes due including
penalties, interest, charges, or service fees.
(f) Refund or release of securitv deposit In the case of the sale assignment or other
transfer or termination of business by the depositor pursuant to section 21-141 the
collector shall refund or release the security deposit amount required pursuant to
this section, or in the event of prior application of the security deposit pursuant to
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subsection (c) any unapplied amount of such security deposit, upon depositor's
presentation to the collector of a certificate of nonliability stating the nonliability of
the depositor for payment of business license taxes as hereunder provided in
section 21-141(f).
(q) Deposit adjustment —effect In the case of a determination by the collector that the
amount of a previously posted commercial cannabis business owner's/operator's
security deposit exceeds the requirements of this section then the collector shall
adjust the amount of the required security deposit. If the prior securitv deposit was
posted on a cash basis then the collector shall refund the excess amount. If the
Prior security deposit was posted on a non -cash basis then an adjusted cash basis
security deposit or adjusted non -cash basis security deposit in a form acceptable
to the collector may be posted in exchange for the release of the prior security
deposit.
Section 9. Section 21-141 of Article XIII of Chapter 21 of the Santa Ana
Municipal Code is hereby added to read as follows:
Sec. 21-141. Sale, assignment, transfer, or termination of business commercial
cannabis business owner's/operator's duty to notify; remitting and reporting
requirements; closeout audit; successor's duty to notify; successor's and
transferor's joint and several liability; certificate of nonliability.
(a) OwnerVverator's duty to notify.
i. Termination of business. A commercial cannabis business owner/operator
who is terminating their business shall notify the collector in writing of such
termination at least ninety (90) days in advance of the date of termination of
shall then immediately notify the collector of said decision and the date of
termination of business.
collector in writing of such sale, assignment, or transfer at least ninety (90)
referred to as successor) unless the decision to sell assign, or otherwise
then immediately notify the successor of the successor's responsibility for
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the period prior to the sale, assignment or transfer as set forth in subsections
(d) and (e) below, and shall further certify in writing to the collector that the
successor was notified of the requirements of this Article regarding their
responsibility for unpaid business license tax liabilities
(b) Remitting and reporting requirements Each commercial cannabis business
owner/operator upon the sale assignment or other transfer, or termination of
business for any reason shall on or before the last day of the month following the
Period, remittances made if any, and the balance of the business license tax due
if any, shall be remitted to the collector.
(C) Closeout audit. After filing the final return and remittina the balance due the
the owner/operator selling assigning or otherwise transferring or terminating their
If, upon closeout audit, or by means of other information available to them the
collector determines that the owner/operator selling assigning or otherwise
the amount of the net deficiency, plus applicable penalties interest charges fees
(d) Successor's duty to notify. If a commercial cannabis business owner/operator
any outstanding amount of business license tax liabilities the successor shall
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present a certificate of nonliability within ninety (90) days after such sale,
assignment or other transfer, the successor shall deposit the withheld amount with
the collector pending settlement of the account of the transferor.
If the decision to sell assign or otherwise transfer was made within less than a
ninety (90) day period prior to the date of the sale assignment or other transfer,
the successor shall notify the collector of the sale, assignment, or transfer
immediately and shall withhold an amount equal to the sum of the transferor's last
three (3) months' of reported and remitted business license taxes until the
transferor produces a certificate of nonliability stating the nonliability of the
assignment or other transfer, the successor shall deposit the withheld amount with
the collector pending settlement of the account of the transferor.
(e) Joint and several liability. If the successor fails to withhold the applicable amount
required under subsection (d) they shall become iointly and severally liable along
with the transferor for the payment of the full amount of the transferor's business
license tax liabilities and shall likewise become iointly and severally liable along
with the transferor for future penalties and/or interest charges as may be applicable
as set forth in sections 21-83, 21-84 and 21-85 until all business license tax
liabilities are satisfied.
(f) Certificate of nonliability. Upon application of a commercial cannabis business
owner/operator who is terminating their business, or a transferor, or a successor,
additional business license tax liabilities have accrued subsequent to the date of
issuing their respective certificate of nonliability. Where a transferor's business
license tax liabilities have been partially or wholly paid by their successor to the
pursuant to subsection (d) no certificate of nonliability shall be issued to the
transferor without the prior written consent of their successor.
Section 10. Section 21-142 of Article XIII of Chapter 21 of the Santa Ana
Municipal Code, is hereby added to read as follows:
Sec. 21-142. Vertical and horizontal integration of commercial cannabis business
licensees —Defined.
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The terms vertical integration and horizontal integration as used in this Article shall have
the following meanings: Vertical integration shall refer to cannabis businesses operating
at different points in the same supply chain from cultivation to retail sales as long as
they share at least 80% underlying common ownership regardless of form of business
structure, and are engaged in interparty sales and/or transfers of goods Horizontal
integration shall refer to cannabis businesses operating at the same point in the same
supply chain, as long as they share at least 80% underlying common ownership
regardless of form of business structure and are engaged in interparty sales and/or
transfers of goods. For purposes of this Article the term "cannabis businesses" shall
include medicinal marijuana collectives/cooperatives as defined in section 18-611 and
commercial cannabis businesses as defined in section 40-2 but shall not include
commercial cannabis businesses engaged in testing facilities or testing laboratory
businesses.
Section 11. Section 21-80 of Article VII of Chapter 21 of the Santa Ana
Municipal Code is hereby amended to read in full as follows:
Sec. 21-80. - Same —Not conclusive; audit of books.
No statement shall be conclusive as to the matters set forth therein, nor shall the filing
of the same preclude the city from collecting by appropriate action such sum as is
actually due and payable hereunder. Such statement and each of the several items
therein contained shall be subject to audit and verification by the collector, his or her
revenue officers, or duly authorized employees or agents of the City, who are hereby
authorized to examine, audit, and inspect such books and records of any licensee or
applicant for license, as may be necessary in their judgment to verify or ascertain the
amount of license fee due.
All persons subject to the provisions of this Chapter shall keep complete and detailed
records of business transactions, including, but not limited to the following: rent
collected, daily sales, sales taxes collected and paid to the state, any and all city, state
and federal taxes collected and remitted from cannabis sales point of sales (POS)
system detailed daily sales data base and summary monthly sales reports receipts,
purchases, and other expenditures, detailed general ledger, income statements, cash
flow statements, balance sheets, sales iournals cash disbursement iournals and
ledgers including payroll iournals, third -party staffing agency statements lease
agreements, and other reports regarding the number and types of persons employed
and/or otherwise engaged in the business, and shall retain all such records for
examination by the collector, his or her revenue officers, or duly authorized employees
or agents of the City. Such records shall be maintained for the period of the current
calendar year, and fora 2kLperiod of at least three (3) complete calendar years or
from the commencement of business within the city, whichever period is least. In the
event such records of any business are not maintained within the city and are not
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reasonably made available for examination within the city, then such business shall be
responsible for the actual travel and lodging cost in connection with the performance
of said examination.
No person required to keep records under this section shall refuse to allow the collector,
his or her revenue officers, or duly authorized employees or agents of the City to
examine said records at reasonable times and places. Any person who willfully refuses
to allow said examination on demand and at a reasonable time and place as herein
provided shall be deemed guilty of a misdemeanor. In addition, such willful refusal shall
be cause for suspension and/or revocation of such business' existing Santa Ana
Business License as set out in section 21-86 of this Chapter.
Section 12. Section 21-80.1 of Article VII of Chapter 21 of the Santa Ana
Municipal Code is hereby amended to read in full as follows:
Sec. 21-80.1. - Same —Audit deficiency; application of penalty and interest;
voluntary compliance;—effectl7-Abatement of penalty and interest;;
application;_ Exception for business license taxes assessed on a monthly basis;
audit service fees.
In the event that the collector or his or her designated agents, whether through an
audit or otherwise, determine that any person has misstated their gross receipts
amount, square footage amount, or other criteria upon which their current or prior
years' business license tax has been calculated resulting in an underpayment of the
tax amount owed, the collector shall separately calculate the deficiency for each
distinct license period affected and issue a statement of tax deficiency and add
delinquency penalties as applicable to the amount of the tax deficiency in accordance
with Section 21-25, subsection (a) and Section 21-83, subsection (a), together with
interest as provided under Sections 21-84 and 21-85, as applicable, until such time as
the tax deficiency together with the accrued penalties and interest, are satisfied.
In the case of business license taxes which are assessed and payable on a monthly
basis, an identical procedure shall be applied by the collector. Provided, however, that
the provisions of Section 21-25 shall not apply.
Provided, however -'mot Except business license taxes which are assessed and
payable on a monthly basis, where any person voluntarily reports a tax deficiency on
business license taxes which are assessed and payable on an annual basis such
person's penalty and interest assessment on said deficiency shall be abated until the
combined amount of tax, penalty and interest due is equalized to an amount
equivalent to the amount of current and prior years' taxes owing as computed or
determined based upon the business license tax rates and charges in effect for the
most current tax year. In computing the abatement of accrued penalties and interest to
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arrive at a combined amount of tax, penalty and interest equivalent to the amount of
the current or prior years' taxes owing as computed or determined based upon the
business license tax rates in effect for the most current tax year the collector in his or
her discretion may retain a sufficient amount of accrued penalty alone, or a sufficient
amount of accrued interest alone, or any sufficient combination of accrued penalty
amount and accrued interest amount necessary.
Whenever the result of any audit performed pursuant to this Chapter, excluding
audits performed in connection with any medicinal cannabis business or commercial
cannabis business, determines that any licensee has, exclusive of penalties and
interest, underpaid the amount of their business license tax by five (5) per cent or
more of the total amount due, but not less than two hundred fifty dollars ($250.00),
then an audit service fee in an amount as specified by resolution of the City Council
shall be applied.
In the case of audits performed pursuant to this Chapter in connection with anv
medicinal cannabis business or commercial cannabis business that has exclusive of
penalties and interest, underpaid the amount of their business license tax by five (5)
per cent or more of the total amount due, but not less than five thousand dollars
($5,000.00), then such cannabis business shall be responsible for the City's actual
cost of performing said audit.
Section 13. Section 21-86 of Article VII of Chapter 21 of the Santa Ana
Municipal Code is hereby amended to read in full as follows:
Sec. 21-86. - Same —Suspension and revocation of business license.
The collector shall suspend and/or revoke any business license issued or
granted pursuant to this Chapter only upon those grounds set forth in Sections 2145,
21-50, 21-55, 21-58, 21-59, 21-60, 21-80, 21-136 or upon conditions set forth in any
written agreement executed pursuant to Section 21-83.
Provided further, that unless revocation is made upon conditions set forth in a
written agreement executed pursuant to Section 21-83 or upon licensee's failure to
comply with the requirements of Section 21-136, no licensee's business license shall be
suspended and/or revoked for failure to pay the anv annual business license tax as set
forth in this Chapter, or any monthly business license tax as set forth in Article XII or
Article XIII of this Chapter, or any other amount due pursuant to this Chapter until the
penalties accruing for such failure to pay, exclusive of interest, equal GRe hundred (100
peF t of the businessIiGeRse tax due fGF GUGh liGense have attained the maximum
applicable amount permissible under the terms of this Chapter. Whereupon, the
collector shall give a notice of suspension, which notice shall specify the grounds for
suspension, and which notice shall be given by personal service or by depositing it in
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the United States post office in the city, postage prepaid, addressed to the licensee at
the address listed on the application of the licensee where he or she consented to
receive mail concerning his or her license, to obtain a license or to pay any license tax
due or the address listed on the most recent business license renewal affidavit or
business license amendment statement and/or conspicuously posting said notice upon
the premises of the business. Service of notice shall be deemed completed upon the
date of personal service of said notice or the date of mailing of said notice, or the date
of actual posting of said notice on the premises of the licensee whichever occurs first.
In the event said licensee fails, within a period of thirty (30) days -days' notice, to
pay the business license tax due or any other amount due pursuant to this Chapter, or
to request a hearing the procedure for which shall be as provided in Section 21-41, then
and in that event the collector shall give a notice of revocation. The licensee shall be
given at least ten (10) days -days' notice, which notice shall specify the grounds for
revocation, and which notice shall be given pursuant to the hereinabove set forth
procedure for giving notice.
In the event said licensee fails within the allotted ten (10) day period to request a
hearing to show cause why his or her business license should not be revoked, then and
in that event the collector shall revoke said person's license and give notice thereof to
said person pursuant to the hereinabove set forth procedure for giving notice.
In the event said licensee fails to file within ten (10) days thereafter, an appeal
pursuant to Chapter 3 of this Code, then the collector's action in revoking said person's
business license shall be conclusive as to all matters involved, and the transacting and
carrying on by any person of any business pursuant to said license shall thereafter be
deemed a misdemeanor.
Section 14. Severability. If any section, subsection, sentence, clause, phrase or
portion of this ordinance is for any reason held to be invalid or unconstitutional by the
decision of any court of competent jurisdiction, such decision shall not affect the validity
of the remaining portions of this ordinance. The City Council of the City of Santa Ana
hereby declares that it would have adopted this ordinance and each section,
subsection, sentence, clause, phrase or portion thereof irrespective of the fact that any
one or more sections, subsections, sentences, clauses, phrases, or portions be
declared invalid or unconstitutional.
Section 15. Effective Date. This Ordinance shall be effective thirty days after its
adoption by the City Council of the City of Santa Ana.
//
//
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ADOPTED this day of 2019.
Miguel A. Pulido
Mayor
APPROVED AS TO FORM
Sonia R. Carvalho, City Attorney
By:,
Lisa Storck
Assistant City Attorney
AYES: Councilmembers:
NOES: Councilmembers:
ABSTAIN: Councilmembers:
NOT PRESENT: Councilmembers:
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, DAISY GOMEZ, Clerk of the Council, do hereby attest to and certify that the
attached Ordinance No. NS- to be the original ordinance adopted by the
City Council of the City of Santa Ana on 2019, and that
said ordinance was published in accordance with the Charter of the City of Santa
Ana.
Date:
Clerk of the Council
City of Santa Ana
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75A-42
EXHIBIT 2
LS 8.20.19
ORDINANCE NO. NS-XXXX
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA AMENDING CERTAIN SECTIONS OF ARTICLE XIII
OF CHAPTER 18 OF THE SANTA ANA MUNICIPAL CODE
PERTAINING TO MEDICINAL MARIJUANA AND CHAPTER 40
OF THE MUNICIPAL CODE PERTAING TO COMMERCIAL
CANNABIS TO UPDATE AND STREAMLINE IMPLEMENTATION
OF COMMERCIAL CANNABIS, INCLUDING MEDICINAL
CANNABIS PURCHASING AGE (SECTION 18-613), EMPLOYEE
BADGES (SECTIONS 18-613 AND 40-8), MANUFACTURING
PERMIT REQUIREMENTS (SECTION 40-8), AND
ADMINISTRATION AND IMPLEMENTATION AMENDMENTS
(SECTIONS 18-617.5, 40-1, 40-2, 40-5. 40-8, 40-9.1. AND 40-10)
THE CITY COUNCIL OF THE CITY OF SANTA ANA HEREBY ORDAINS AS
FOLLOWS:
Section 1. The City Council of the City of Santa Ana hereby finds, determines
and declares as follows:
A. On November 4, 2014, Santa Ana voters approved Santa Ana's Medical
Marijuana Regulatory Program ordinance ("Measure BB") which was codified in Chapters 18
and 21 of the Santa Ana Municipal Code. Such regulations govern medicinal marijuana and
the retail sale thereof.
B. In 2015, the Governor signed into law Senate Bill 643, Assembly Bill 266, and
Assembly Bill 243, collectively referred to as the Medical Marijuana Regulation and Safety
Act further amended in 2016 as the Medical Cannabis Regulation and Safety Act which
established regulations and a state licensing system for medical cannabis cultivation,
manufacturing, delivery, and dispensing.
C. In November 2016, the voters of the State of California approved Proposition 64,
the California Marijuana Legalization Initiative, also known as the Adult Use of Marijuana
Act.
D. In 2017, the Governor signed into law Senate Bill 94 also known as Medicinal
and Adult -Use Cannabis Regulation and Safety Act.
E. On November 9, 2017, the City Council created Chapter 40 of the Santa Ana
Municipal Code, allowing adult -use commercial cannabis retail businesses in the city, and
amended certain sections of Chapters 18 and 21 of the Santa Ana Municipal Code to ensure
consistency with State law and Chapter 40.
F. Since November 2014, the City of Santa Ana has permitted the retail sale of
cannabis for medicinal purposes and since January 2018 for adult -use purposes. On March
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20, 2018, the City Council adopted Ordinance NS-2941 and NS-2942, allowing and
regulating commercial cannabis testing laboratories.
G. On April 17, 2018, the City Council adopted Ordinance NS-2944 allowing and
regulating commercial cannabis cultivation, distribution, and manufacturing activities.
H. On November 6, 2018, the voters of the City of Santa Ana approved Measure Y
(Ordinance NS-2962), establishing a tax on commercial cannabis business activities except
medicinal cannabis retail sales, which continue to be subject to taxes under Measure BB.
I. The State of California continues to update its regulations on commercial cannabis
business licensing, resulting in the need for local jurisdictions to update and amend local
commercial cannabis ordinances from time to time.
J. The City Council of the City of Santa Ana intends that nothing in this article shall
be deemed to conflict with federal law as contained in the Controlled Substances Act, nor to
otherwise permit any activity that is prohibited under that Act or other applicable law.
K. The City of Santa Ana has a compelling interest in ensuring that cannabis is not
cultivated, manufactured or distributed in an illicit manner, in protecting the public health,
safety and welfare of its residents and businesses, in preserving the peace and quiet of the
neighborhoods in which these uses may operate, and in providing access of cannabis to
residents.
L. The City Council has held a duly noticed public hearing on August 20, 2019 in
connection with consideration and adoption of this ordinance.
Section 2. This Ordinance is adopted pursuant to the authority granted by the
California Constitution and State law, including but not limited to: Article IX, Section 7 of the
California Constitution, the Compassionate Use Act of 1996 (California Health and Safety Code
Section 11362.5), the Medical Marijuana Program (California Health and Safety Code Section
11362.7 et seq.), the Medical Marijuana Regulation and Safety Act (AB 266, AB 243, and SB
643; hereafter "MMRSA"), the Adult Use of Marijuana Act (Proposition 64), and the Medical and
Adult Use Cannabis Regulation and Safety Act (SB 94; hereafter "MAUCRSA").
Section 3. Pursuant to the California Environmental Quality Act ("CEQA") and the
State CEQA Guidelines, the adoption of this ordinance is exempt from CEQA review pursuant to
California Code of Regulations section 15061(b)(3), which is applicable if it can be seen with
certainty that there is no possibility that the project may have a significant effect on the
environment. As a result, a Notice of Exemption will be filed upon the adoption of this
ordinance.
Section 4. All provisions of the Santa Ana Municipal Code which are repeated
herein are repeated solely in order to comply with the provisions of Section 418 of the
City Charter. Any such restatement of existing provisions of the Code is not intended,
nor shall it be interpreted, as constituting a new action or decision of the City Council,
but rather such provisions are repeated for tracking purposes only in conformance with
the Charter.
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Section 5. Section 18-613 of Article XIII of Chapter 18 of the Santa Ana
Municipal Code is hereby amended to read in full as follows:
Sec. 18-613. - Operating Standards.
(a) At all times the collective is open, a collective shall provide at least one (1) security
guard who is licensed, possesses a valid department of consumer affairs "security
guard card", and has a valid Santa Ana Business License. In the event that the
security guard is employed by an outside security guard company; such security
guard company shall maintain a valid Santa Ana Business License.
(b) The security guard and collective personnel shall monitor the site and the
immediate vicinity of the site to assure that patrons immediately leave the site and
not consume medical marijuana in the vicinity of the collective or on the property or
in the parking lot.
(c) Exterior signage shall comply with Article XI of Chapter 41. Interior signage or
advertising may not be visible from the exterior. Collectives and dispensaries must
comply with the advertising and marketing provisions of Business and Professions
Code §§ 26150-26155.
(d) No recommendations from a doctor for medical marijuana shall be issued on -site.
(e) There shall be no on -site sales of alcohol or tobacco products, and no on -site
consumption of food, alcohol, tobacco or marijuana by patrons.
(f) Hours of operation shall be limited to: 7:00 a.m. to 11:00 p.m. daily. No licensed
dispensary/collective shall be open to the public between the hours of 11:01 p.m.
and 6:59 a.m. of any day.
(g) The property shall provide an air treatment system with sufficient odor absorbing
ventilation and exhaust systems so that odor generated inside the location is not
detected outside the building, anywhere on adjacent property or public rights -of -
way, or within any other unit located within the same building as the collective if the
use only occupies a portion of a building.
(h) A collective shall only dispense medical marijuana to qualified patients and their
caregivers as defined by California Health and Safety Code § 11362.5 (Proposition
215). This shall include possession of an original valid doctor's recommendation,
not more than one (1) year old, for medical marijuana use by the patient.
(i) A collective shall notify patrons of the following both verbally and through posting
of a sign in a conspicuous location:
(1) Use of medical marijuana shall be limited to the patient identified on the
doctor's recommendation. Secondary sale, barter or distribution of medical
marijuana is a crime and can lead to arrest.
(2) That loitering on and around the collective site is prohibited by California
Penal Code § 647(e) and that patrons must immediately leave the site and not
consume medical marijuana in the vicinity of the collective or on the property or in
the parking lot.
(3) Forgery of medical documents is a felony crime.
(4) A warning that patrons may be subject to prosecution under federal
marijuana laws.
(5) That the use of medical marijuana may impair a person's ability to drive a
motor vehicle or operate machinery.
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Q) A collective shall not provide marijuana to any individual in an amount not
consistent with personal medical use.
(k) All agents, private security officers or other persons acting for or employed by a
collective shall display a laminated identification badge at least two (2) inches by
two (2) inches in size, issued by the sellective Cifty. The badge, at a minimum, shall
include the GelleGtiye's "doing businessnamed liGense numbeF,the
employee's first and last name, date of most recent Live Scan, expiration date of
Live Scan results after the one-vear period and a color photo of the employee that
shows the full front of the employee's face.
(1) No one under twe^ty Gne (21 eighteen t18) years of age shall be permitted to
enter establishment, unless such person is a qualified patient and is accompanied
by his or her primary caregiver, licensed attending physician, parent(s) or
documented legal guardian.
(m) A collective shall provide the name and phone number of an on -site staff person to
the police department and the code enforcement division of the planning and
building agency for notification if there are operational problems with the
establishment.
(n) Each collective owner, operator(s) and employees shall complete a criminal
background check and wear a visible photo ID at all times during operating hours.
Owners, operator(s), employees, managers or volunteers may not have been
convicted of, or pleaded guilty/no-contest to a felony or misdemeanor drug charge
within the past four (4) years; nor shall they be a person required to register as a
controlled substance offender pursuant to Health and Safety Code section 11590.
(o) Marijuana shall not be grown or cultivated at collective sites, except that cuttings of
the marijuana plant may be kept or maintained on -site for distribution to qualified
patients and primary caregivers as follows:
(1) The cuttings shall not be utilized by a collective as a source for the provision
of marijuana for consumption on -site, however, upon provision to a qualified
patient or primary caregiver, that person may use the cuttings to cultivate
marijuana plants off -site for their own use and they may also return marijuana from
the resulting mature plant for distribution by the collective.
(2) For the purposes of this paragraph, the term "cutting" shall mean a rootless
piece cut from a marijuana plant, which is no more than six (6) inches in length,
and which can be used to grow another plant in a different location.
(p) A collective shall comply with applicable provisions of the California Health and
Safety Code §§ 11362.5 through 11362.83, inclusive.
(q) If food is distributed, the collective shall comply with all relevant state laws and city
and/or county ordinances pertaining to the preparation, distribution and sale of
food.
(r) The location, interior and exterior, shall be monitored at all times by web -based
closed-circuit television for security purposes. The camera and recording system
must be of adequate quality, color rendition and resolution to allow the ready
identification of any individual committing a crime anywhere on or adjacent to the
location. The recordings shall be maintained for a period of not less than ninety
(90) days. The police department may request the recordings in connection with an
75A-46
investigation. If the recordings are not voluntarily provided, the police department
may seek a warrant or court order for the recordings.
(s) The location shall have a centrally -monitored fire and burglar alarm system which
shall include all perimeter entry points and perimeter windows and the building or
the portion of the building where the collective is located shall contain a fire -proof
safe or fire -proof filing cabinet and include a safety and security plan.
(t) Reserved.
(u) Reserved.
(v) If the collective operator is not the owner of the property where the collective is to
operate, the operator shall provide evidence that the property owner(s) consent to
the operation of a collective on the property.
(w) Collectives must obtain and maintain a valid city business license at all times as a
condition for receiving, renewing, and maintaining their regulatory safety permit.
(x) Occupancy shall not exceed that required under the Uniform Building Code and
Uniform Fire Code, and the maximum occupancy load shall be posted at the main
entrance.
Section 6. Section 18-617.5 of Article XIII of Chapter 18 of the Santa Ana
Municipal Code is hereby amended to read in full as follows:
Sec. 18-617.5. - Audits.
Annual audits. No later than lane 30 September 301' of every year, each collective shall
file with the city an audit or financial review of its operations of the previous calendar
year. The form and contents of the document shall be specified by the executive
director of finance and management services, or his/her designeeu.
Section 7. Section 40-1 of Article I of Chapter 40 of the Santa Ana Municipal
Code is hereby amended to read in full as follows:
Sec. 40-1. — Purpose and intent.
A. The purpose and intent of this article is to regulate commercial cannabis business
activities, as defined in this article, in order to ensure the health, safety and welfare of
the residents of the City of Santa Ana by establishing regulations necessary for
commercial cannabis business operating in the City of Santa Ana to obtain and maintain
a Regulatory Safety Permit ("RSP"). Any commercial cannabis businesses operating in
the City of Santa Ana shall at all times be in compliance with current State Law and this
article. All commercial cannabis facilities shall operate in accordance with the
regulations in this article and with the conditions of approval associated with the
applicable zone for the parcel of real property upon which the commercial cannabis
activities are conducted. Any commercial cannabis business shall qualify for and
receive a Regulatory Safety Permit from the City of Santa Ana as provided by this
article and operate only in a zone in compliance with Santa Ana Municipal Code before
commencing with any commercial cannabis business activity. Any commercial cannabis
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business without a Regulatory Safety Permit is in violation of this article. The regulations
in this article, in compliance with the Compassionate Use Act, the Medicinal Marijuana
Program Act, SB 94, AB 133, Proposition 64, and the California Health and Safety Code
(collectively referred to as "State Law") do not interfere with the right to use adult -use
cannabis or medicinal cannabis as authorized under State Law, nor do they criminalize
the possession of cannabis as authorized under State Law.
B. Any person operating a medicinal marijuana collective/cooperative (as defined in
Chapter 18 of this Code) as of December 14, 2017, or who has a RSP application
pending to operate a medicinal collective/cooperative, and has met all of the
requirements of Chapter 18, shall be allowed to apply for a Regulatory Safety Permit for
the sale of Adult -Use cannabis provided that they enter into the Adult Use Commercial
Cannabis Retailef Operating Agreement with the City.
C. The Commercial Cannabis Operating Agreement shall be a legally binding written
agreement between each commercial cannabis business operator and the City,
executed by the City Manager, or his or her designee, and in a form and substance
satisfactory to the Executive Director of Planning and Building and the City Attorney,
and containing those provisions necessary to ensure that the requirements of this article
are satisfied. A distinct Commercial Cannabis Operating Agreement shall be required
for each location and type of commercial cannabis business activity taking place at an
approved Commercial Cannabis Business.
Section 8. Section 40-2 of Article I of Chapter 40 of the Santa Ana Municipal
Code is hereby amended to read in full as follows:
Sec. 40-2. - Definitions.
The definitions are incorporated herein as fully set forth and are applicable to this
article. All definitions are intended to comply with those set forth by the State of
California for all commercial cannabis business activities.
1. "Applicant' means a person who is required to file an application for a permit under
this article, including an individual owner, managing partner, officer of a corporation, or
any other operator, manager, employee, or agent of a commercial cannabis business.
2. "Adult -Use" means cannabis or cannabis products that are intended to be used for
non -medicinal purposes by a person twenty-one (21) years of age or older.
3. "Adult -Use Cannabis Retailer Operating Agreement' or "Operating Agreement'
means the agreement entered into by and between the City and the commercial
cannabis business operator which will specify terms for local hiring and sourcing,
community benefit plans, and fees to compensate for authorized impacts on City
services.
0
75A-48
4. "Adult -Use cannabis retail business" means an Adult -Use retail business that
obtains a Regulatory Safety Permit and engages in the delivery or sale of Adult -Use
cannabis, or an Adult -Use cannabis product, except as related Business and
Professions Code Section 19319, or Health and Safety Code Sections 11362.1 through
11362.45, as amended from time to time, excepting medicinal cannabis retail.
5. "Authorized City of Santa Ana representative" means any police officer, city
employee, contractor or agent of the city designated by the director of any city
department which has the authority and responsibility to enforce provisions as set forth
in this article.
6. 'Business owner" means any of the following:
a. A person with an aggregate ownership interest of twenty (20) percent or more in
the person applying for a license or a licensee, unless the interest is solely a security,
lien, or encumbrance.
b. The chief executive officer of a nonprofit or other entity
c. A member of the board of directors of a nonprofit.
d. An individual who will be participating in the direction, control, or management of
the person applying for a license.
7. "Cannabis" or "cannabis product' means all parts of the 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 marijuana. "Cannabis" also means marijuana as defined by Section
11018 of the California Health and Safety Code as enacted by Chapter 14017 of the
Statutes of 1972. "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 chapter, 'cannabis"
does not mean industrial hemp as that term is defined by Section 81000 of the
California Food and Agricultural Code or Section 11018.5 of the California Health and
Safety Code.
8. "City" means the City of Santa Ana, a charter city and municipal coPporation.
9. "Commercial cannabis activity" means the cultivation, possession, manufacture,
distribution, processing, storing, laboratory testing, packaging, labeling, transportation,
delivery or sale of cannabis and cannabis products as provided for this Chapter.
Permitted commercial cannabis activities are listed in Land Use Table 40-5 of this
Chapter.
7
75A-49
10. "Commercial cannabis business" means a business that obtains a Regulatory
Safety Permit and engages in the cultivation, possession, manufacture, processing,
storing, laboratory testing, labeling, distribution, delivery, or sale of adult -use cannabis,
medicinal cannabis or an adult -use cannabis or medicinal cannabis product, except as
related Business and Professions Code Section 19319, or Health and Safety Code
Sections 11362.1 through 11362.45, as amended from time to time.
11. "Cultivation" means to plant, grow, harvest, dry, cure, grade or trim cannabis, as
defined by California Business and Professional Code Section 26001, as amended from
time to time.
12. "Customer" means a natural person twenty-one (21) years of age or over.
13. "Delivery" means the commercial transfer of cannabis or cannabis products from
a retail cannabis business to a customer up to an amount determined to be authorized
by the State of California, or any of its departments or divisions. "Delivery" also includes
the use by a retail cannabis business of any technology platform owned, controlled,
and/ or licensed by the retail cannabis business, or independently licensed by the State
of California under the State law (as amended from time to time), that enables anyone
to arrange for or facilitate the commercial transfer by a licensed retail cannabis business
of cannabis or cannabis products. For the purposes of this article, "delivery" does not
include distribution or purchase of cannabis from a licensed cultivator, and cannabis
products from a licensed manufacturer, for sale to a licensed cannabis retail business.
14. "Delivery employee" means an individual employed by a licensed retail cannabis
business who delivers cannabis goods from the permitted retail premises to a customer
at a physical address.
15. "Display" means cannabis goods that are stored in the licensed retail business
during the hours of operation.
16. "Distribution" means the procurement, sale, and transport of cannabis or cannabis
products between Licensees.
17. "Edible cannabis product' means manufactured cannabis that is intended to be
used, in whole or in part, for consumption. An edible cannabis product is not considered
food as defined by Section 109935 of the California Health and Safety Code or a drug
as defined by Section 109925 of the California Health and Safety Code.
18. "Free sample" means any amount of commercial cannabis goods provided to a
purchaser of cannabis without cost or payment or exchange of any other thing of value.
19. "Labor Peace Agreement' means a legally binding agreement between an
employer and a labor organization in which the employer agrees to remain neutral in the
event its employees wish to unionize, as described more fully in Business and
Professions Code 26001(x), as amended from time to time.
N
75A-50
20. "License/Licensee" means a license issued by the State and includes both an A -
license (Adult -Use) and an M-license (Medicinal), and the holder of such license.
21. "Manufacturer" means a Licensee that conducts 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 at a fixed location that packages
or repackages cannabis or cannabis products or labels or relabels its container.
22. "Manufacturing" means all aspects of the extraction and/or infusion processes,
including processing, preparing, holding, storing, packaging, or labeling of cannabis
products. Manufacturing also includes any processing, preparing, propagating, holding,
or storing of components and ingredients.
23. "Medicinal cannabis patient' is a person whose physician has recommended the
use of cannabis to treat a serious illness, including cancer, anorexia, AIDS, chronic
pain, spasticity, glaucoma, arthritis, migraine, or any other illness for which cannabis
provides relief.
24. "Micro -Business" means a commercial cannabis business that cultivates cannabis
on an area less than ten thousand (10,000) square feet and acts as a licensed
distributor, Level 1 manufacturer, and retailer.
25"Non volatile solvent" means any solvent used in the extrond'nn nr0GA-8G that es Ra
1 amended by the State
, Tax .. .�.-.....
256. "Nursery" means a commercial cannabis Licensee that produces only clones,
immature plants, seeds, and other agricultural products used specifically for the
planting, propagation, and cultivation of cannabis.
267. "Medicinal/medical cannabis" or "Medicinal cannabis product', means cannabis
or a product containing cannabis, including, but not limited to, concentrates, and
extractions, intended to be sold for use by medicinal cannabis patients in California
pursuant to the Compassionate Use Act of 1996, found at Section 11362.5 of the
California Health and Safety Code. Medicinal cannabis retail is regulated by Chapter 18
and Chapter 21 of the Santa Ana Municipal Code.
278. "Outdoor cultivation" means the cultivation of cannabis outside a permanent
enclosed building. Outdoor cultivation is prohibited within the City of Santa Ana.
280. "Ownership interest' means an interest held by a person who is an owner as
defined by State of California commercial cannabis regulations or who has a financial
interest in the commercial cannabis business of twenty (20) percent or more.
29.30. 'Package" and "Packaging" means any container or wrapper that may be used
for enclosing or containing any cannabis goods for final retail sale. 'Package" and
E]
75A-51
"packaging" does not include a shipping container or outer wrapping used solely for the
transport of cannabis goods in bulk quantity to a Licensee.
304. "Person" includes any individual, firm, partnership, joint venture, association,
corporation, limited liability company, estate, trust, business trust, receiver, syndicate, or
any other group or combination acting as a unit, and the plural as well as the singular.
312. "Premises" means the designated structure(s) and land specified in the
application that are in possession of and used by the applicant or Licensee to conduct
the commercial cannabis activity.
323. "Primary Caregiver" has the same meaning as that term is defined in Section
11362.7 of the Health and Safety Code, as amended from time to time.
334. "Private Residence" shall have the same definition as that contained in Health
and Safety Code section 11362.2(5) and also means a lawfully established structure,
suitable for human occupancy as required by section 17922 and 17958 of the California
Health and Safety Code. A recreational vehicle does not constitute a lawfully
established structure for the purposes of this article.
345. "Private security officer" has the same meaning as that term as defined in the
State of California Business and Professions Code section 7574.01.
356. "Purchase" means obtaining cannabis goods in exchange for consideration.
367. "Purchaser" means a person who is engaged in a transaction with a Licensee for
purposes of obtaining cannabis goods.
373. "Qualified patient" has the same meaning as such term is defined in California
Health and Safety Code section 11362.5, as amended from time to time, and means a
person whose physician has recommended the use of cannabis to treat a serious
illness, including cancer, anorexia, AIDS, chronic pain, spasticity, glaucoma, arthritis,
migraine, or any other illness for which cannabis provides relief.
389. "Responsible person" means any of the following:
a) A person who causes a Code violation to occur.
b) A person who maintains or allows a Code violation to continue by way of his or her
action or failure to act.
c) A person whose agent, employee, or independent contractor causes a Code
violation by its failure to act.
d) A person who is the owner of, and/or a person who is a lessee or sub lessee with
the current right of possession of, real property where property -related Code violation
occurs.
e) A person who is the on -site manager of a business who normally works daily at the
site when the business is open and is responsible for the activities of such premises.
10
75A-52
3949. "Retail business" means a premises where cannabis, cannabis products, or
devices for the use of cannabis or cannabis products are offered, either individually or in
any combination for retail sale, including an establishment that delivers cannabis or
cannabis products as part of a retail sale.
404. "Regulatory Safety Permit (RSP)" means a permit issued by the City pursuant to
this article to a commercial cannabis business.
413. "Sell," "sale," and "to sell" include any transaction whereby, for any
consideration, title to cannabis is transferred from one (1) person to another, and
includes the delivery of cannabis goods 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 goods by a Licensee to the Licensee from whom such cannabis
goods were purchased.
423. "State" means the State of California.
434. "Testing Facility" or "Testing Laboratory" defined in the Business and
Professions Code section 26001, as amended from time to time, means a laboratory,
facility, or entity in the State that offers or performs tests of cannabis or cannabis
products and that is both of the following:
a) Accredited by an accrediting body that is independent from all other persons
involved in commercial cannabis activity in the State; and,
b) Licensed by the Bureau of Cannabis Control.
45. "Volatile solvent" means aRy solvent that is er pFedwees a flarnmable gas E)F vaper
that, when pFesent In the a1F iR sufflGient quantities, will create explosive oF ignitable
rno)duFes. Examples F volatile solvents inn' -de but aFG .. t limited to butane, hexaRe
gB4 propane, and ethanol, OF as it may be defiRed and amended by the State.
446. "Wholesale" means the sale of cannabis goods to a distributor for resale to one
(1) or more retail cannabis businesses.
Section 9. Section 40-5 of Article I of Chapter 40 of the Santa Ana Municipal
Code is hereby amended to read in full as follows:
Sec. 40-5. - Zoning compliance and regulatory safety permit requirements.
Commercial cannabis activities are expressly prohibited in all zones in the City of Santa
Ana; however, specific commercial cannabis businesses are allowed as a speslal use in
the Industrial zone zoning districts (M-1, M-2). The allowed current permit types are
described in Table 40-5 and the City of Santa Ana's zoning ordinance as a requisite for
obtaining a Regulatory Safety Permit. No commercial cannabis business may operate in
the City of Santa Ana without a Regulatory Safety Permit.
11
75A-53
r
This Land Use Table 40-5 shall be used to determine whether a commercial cannabis
business is permitted — "P", or not permitted — "X". Any commercial cannabis business
in the City of Santa Ana shall also operate in compliance with the City's zoning
ordinance. If a Zoning District is not listed in the Land Use Table in this section then the
use is expressly not permitted.
City of Santa Ana Municipal Code Table 40.5
Commercial
—
I
Cannabis
Regulatory
Business
Land Use
M-1
M-2
Safetv
Activities Use
Classification
Zone
Zone
Permit
Type
j
Required
(Yes
Cultivator/Nursery
(ndooronly
;P
'
Cultivator/Nurse
Outdoor or mixed-
flight
I"'
�NA f
!!Indoor/Outdoor
—
—�
(Type B 5 Lar ej
Cultivator/Nursery
(Grows. as defined
IX
iX
NA
I and amended by
j
1the State
Manufacturing
iMaMa faun cturing
P
P
Yes
Medicinal Retail
—
Retail 1(SAMC
ChapterlP
�P
Yes
18) I
Retail ;Adult
-Use Retail �P
P IYes
Adult -Use and/or
i
Testing Laboratory {Medicinal
iP
jP
Yes
i
Industrial
Distribution !Freight/Transport
TP
P ;Yes
12
75A-54
----- -----
-----_I---
----------
X P —only as
'X P — only as part
part of a
of a vertically-
vertically-
integrated/co-
integrated/co -
Cultivation/Retail/
located business
located
Micro -Business
Manufaetare/Manu
in full
business in full PIA Yes
fistribuution
conformance with
conformance
(DDistri
(the requirements
with thel
of this article and
requirements of
Chapter 18.
this article and'
Chapter 18. 1
��•
Section 10. Section 40-8 of Article I of Chapter 40 of the Santa Ana Municipal
Code is hereby amended to read in full as follows:
Sec. 40-8. - General provisions for commercial cannabis activities in the City of Santa
Ana.
1. Regulatory Safety Permit Required.
a. Each commercial cannabis business shall obtain a Regulatory Safety Permit
(RSP) specific to the business activity or activities defined by the State pertaining
to that activity. The only allowed current permit activity types pursuant to this
article are for commercial cannabis retail sales and cultivation, distribution,
manufacturing, and testing laboratories/facilities. Co -location is permitted
pursuant to Section 40-9.3.1.
b. It shall be unlawful for any person, as defined by this ordinance, to engage
in, conduct or carry on, in or upon any premises within the City of Santa Ana any
commercial cannabis business without a RSP. A commercial cannabis business
shall register and obtain a RSP from the City of Santa Ana prior to operation. The
RSP applicant shall pay an annual non-refundable application fee in an amount
established by the City Council.
13
75A-55
c. A copy of the RSP shall be displayed at all times in a place visible to the
public.
d. A RSP shall be valid for a period of one (1) year from the date of issuance,
unless sooner revoked. No permit granted herein shall confer any vested right to
any person or business for more than the above -referenced period.
2. Maintenance of Records and Reporting. All records shall be maintained by the
commercial cannabis business for a period of five (5) years and shall be made available
by the commercial cannabis business to an authorized City of Santa Ana representative
upon request. If they are not produced as requested, the City may seek a search
warrant, subpoena, or court order. In addition to all other formats that the commercial
cannabis business may maintain, these records shall be stored by the business at the
location in a printed format in a fire -proof safe or filing cabinet. Any loss, damage or
destruction of the records shall be reported to the Police Department within twenty-four
(24) hours of the loss, destruction or damage.
a. The business shall obtain and maintain a valid Seller's Permit from the State
Board of Equalization.
b. Financial records include, but are not limited to: bank statements, sales
invoices, receipts, tax records, and all records required by the California State
Board of Equalization under Title 18 California Code of Regulations section 1968.
c. Personnel records, including each employee's full name, address, phone
number, social security, or individual tax payer identification number, date of
beginning employment, and date of termination of employment if applicable.
d. Training records, including, but not limited to, the content of the training
provided and the names of the employees that received the training.
e. Contracts with other businesses regarding commercial cannabis business
activity.
f. Permits, licenses, and other local authorizations to conduct the commercial
cannabis business activity.
g. Security records, as outlined in the Operational Standards for All
Commercial Cannabis Business Activities.
h. Proof of building ownership or landlord letter acknowledging business type.
I. Proof of insurance.
3. Operational Standards for All Commercial Cannabis Business Activities.
a. The location, interior and exterior, shall be monitored at all times by web -
based closed circuit television for security purposes. The camera and recording
system must be of adequate quality, color rendition and resolution to allow the
14
75A-56
ready identification of any individual committing a crime anywhere on or adjacent
to the location. The recordings shall be maintained unaltered in a secure location
for a period of not less than ninety (90) days. The Police Department may
request the recordings in connection with an investigation.
b. All controlled access areas, security rooms and all points of ingress/egress
to limited access areas and all point of sale (POS) areas shall have fixed camera
coverage capable of identifying activity occurring within a minimum of twenty (20)
feet.
c. The surveillance system storage device or cameras shall be transmission
control protocol/TCP capable of being accessed through the internet by the
police department or their designee on request.
d. If applicable, the applicant shall conduct and pay for any required CEQA
reviews and analyses, and pay for all costs, including those of the City,
associated with project review under CEQA.
e. Commercial cannabis businesses shall create and maintain an active
account within the State's track and trace system prior to commencing any
commercial cannabis retail activity. In the event of system failure, the business
shall keep a hard copy record and transfer the information to the track and trace
system within twenty-four (24) hours of the system being available.
f. No physical modification of the licensed premises is allowed without written
prior permission by the City of Santa Ana and payment of any additional fees
required by the City.
g. Commercial cannabis business businesses shall provide adequate off-street
parking and comply with the City of Santa Ana Municipal Code parking
requirements in order to service customers without causing negative impact.
h. The commercial cannabis business shall provide adequate disabled access
parking per the requirements in the California Building Code.
i. The commercial cannabis business shall minimize nuisances such as trash,
litter, and graffiti.
j. Any and all signage, packaging, and facilities shall not be "attractive", as it is
defined by the State, to minors.
k. Commercial cannabis business facilities shall be required to provide an air
treatment system that ensures off -site odors shall not result from its operations.
This requirement at a minimum means that the facility shall be designed to
provide sufficient odor absorbing ventilation and exhaust systems so that any
odor generated inside the location is not detected outside the building, in any
adjacent tenant suites, on adjacent properties or public rights -of -way, or within
15
75A-57
any other unit located within the same building as the facility if the use occupies
only a portion of a building.
I. The commercial cannabis business shall comply with all State regulations
regarding:
i. Testing, labeling and storage of all cannabis products.
ii. Use of appropriate weighing devices.
iii. Electrical and plumbing regulations subject to periodic and
unannounced inspections to ensure compliance.
iv. State deadlines for applying for a State license and receiving a State
license within six (6) months after the date the State begins issuing
licenses. This may be waived if the State has longer delays in issuing
licenses of the type the commercial cannabis business seeks.
m. The commercial cannabis business shall maintain a comprehensive general
liability combined single occurrence insurance policy issued by an "A" rated
insurance carrier in an amount no less than two million dollars ($2,000,000.00),
with primary coverage, naming the City of Santa Ana as additional insured.
n. No free samples of any cannabis or cannabis product may be distributed at
any time.
o. All agents, private security officers or other persons acting for or employed
by a collective shall display a laminated identification badge at least two (2)
inches by two (2) inches in size, issued by the seNestiae Cam. The badge, at a
minimum, shall include the ^^0eGtive'^ udeiR^ b U^ and I'^^^s^
numbeF, the employee's first and last name, date of most recent Live Scan,
expiration date of Live Scan results after the one-year period and a color photo
of the employee that shows the full front of the employee's face.
p. All private security officers acting for or employed by a commercial cannabis
business shall be licensed by the State and issued a business license from the
City of Santa Ana.
q. The commercial cannabis business shall have a centrally -monitored fire and
burglar alarm system which shall include all perimeter entry points and perimeter
windows and the building or portion of the building where the business is located
shall contain a fire -proof safe or fire proof filing cabinet and include a safety and
security plan.
r. The commercial cannabis business shall ensure a licensed alarm company
operator or one (1) or more of its registered alarm agents installs, maintains,
monitors and responds to the alarm system. The alarm company shall obtain a
City of Santa Ana business license.
16
75A-58
S. The commercial cannabis business shall provide the name and phone
number of an on -site staff person to the police department and the Code
Enforcement Division of the Planning and Building Agency for notification if there
are operational problems with the establishment.
t. The commercial cannabis business must obtain and maintain a valid City
business license at all times as a condition for receiving, renewing, and
maintaining its regulatory safety permit.
u. Occupancy shall not exceed that required under the Uniform Building Code
and Uniform Fire Code, and the maximum occupancy load shall be posted at the
main entrance.
v. For any commercial cannabis business with two (2) or more employees, the
business owner shall attest that he/she has entered into a labor peace
agreement and provide a copy of the agreement to the City.
w. Each commercial cannabis business owner, operator(s) and employee(s)
shall complete a criminal background check and wear a visible photo ID at all
times during working hours. Owners, operators, employees, managers or
volunteers may not have been convicted of, or pled guilty/no-contest to a felony
or misdemeanor drug charge within the past four (4) years; nor shall they be a
person required to register as a controlled substance offender pursuant to Health
and Safety Code section 11590.
x. All signage for the commercial cannabis business must comply with Article
XI of Chapter 41 of the Santa Ana Municipal Code.
y. Inspections by an authorized City of Santa Ana representative may be
conducted anytime during the business's regular business hours.
4. Additional Operational Standards for Adult -Use Cannabis Retail Business.
a. At all times the Adult -Use cannabis retail business is open, it shall provide at
least one (1) private security guard who is licensed, possesses a valid
Department of Consumer Affairs "security guard card", and has a valid business
license from the City of Santa Ana.
b. The private security guard and adult -use retail cannabis business personnel
shall monitor the site and the immediate vicinity of the site to ensure that patrons
immediately leave the site and do not consume cannabis in the vicinity of the
retail business or on the property or in the parking lot.
c. Exterior signage shall comply with Article XI of Chapter 41 of the Santa Ana
Municipal Code. Interior signage or advertising may not be visible from the
exterior. Retail cannabis businesses must comply with the advertising and
marketing provisions of Business and Professions Code §§ 26150-26155.
17
75A-59
d. There shall be no on -site sales of alcohol or tobacco products, (excluding
rolling papers and lighters) and no on -site consumption of food, alcohol or
tobacco by patrons.
e. Hours of operation shall be limited to: 7:00 a.m. to 10:00 p.m. daily. No
licensed retail business shall be open to the public between the hours of 10:01
p.m. and 6:59 a.m. of any day.
f. The Adult -Use cannabis retail business shall notify patrons of the following
both verbally and through posting of a sign in a conspicuous location:
I. Secondary sale, barter or distribution of adult -use cannabis is a crime
and can lead to arrest.
ii. That loitering on and around the retail site is prohibited by California
Penal Code § 647(e) and that patrons must immediately leave the site and
not consume cannabis in the vicinity of the retail site or on the property or
in the parking lot.
iii. A warning that patrons and/or employees may be subject to
prosecution under federal cannabis laws.
iv. That the use of cannabis may impair a person's ability to drive a
motor vehicle or operate machinery.
g. No one under the age of twenty-one (21) shall be allowed to enter an Adult -
Use cannabis facility unless the licensed Adult -Use cannabis facility holds a
medicinal use cannabis RSP issued by the City and retail license issued by the
State, and the licensed premises for the adult -use cannabis license and
medicinal cannabis license are the same in accordance with Business and
Professions Code section 26140.
h. If non -cannabis food is distributed, the retail business shall comply with all
relevant State laws, County and City ordinances pertaining to the preparation,
distribution and sale of food.
I. All Adult -Use cannabis retail businesses shall establish and implement a
program to incentivize the recycling of used containers. Failure to establish and
implement a program to incentivize the recycling of used containers will result in
a violation of the terms of the required commercial cannabis Operating
Agreement requiring sustainable building or business practices.
j. Adult -Use cannabis retail businesses shall also record on the video
surveillance system point -of -sale areas and areas where cannabis goods are
displayed for sale.
18
75A-60
k. Adequate signage shall clearly state who has inspected any cannabis
product for pesticides, or other regulated contaminants, distributed at this
location.
I. Shipments of cannabis goods may only be accepted during regular business
hours.
m. Inventory shall be secured using a lockable storage system during non -
business hours.
n. No cannabis product shall be visible from the exterior of the business.
o. All required labelling shall be maintained on all product, as required by State
law, at all times.
p. Educational tours of adult -use retail cannabis businesses shall be allowed.
q. A permitted commercial cannabis retail business shall have one hundred
eighty (180) days after permit issuance by the City of Santa Ana to operate. A
permitted commercial cannabis retail business that ceases to operate for more
than ninety (90) calendar days shall be deemed "abandoned" and the permit
shall be forfeited. A permitted commercial cannabis business may temporarily
suspend operations for a period of time as may be reasonably required to affect
upgrades, modifications, repairs, or other property issue mitigations as approved
by the Director of Planning and Building or his or her designee. For the purposes
of this section, "operate" shall mean that the gross receipts fees charged for the
business exceed the fee per square foot calculations by the end of the one
hundred eighty (180) day period.
5. Additional Operational Standards for Commercial Cannabis Retail Delivery
Services.
a. Commercial cannabis retail deliveries may be made only from a commercial
cannabis retail business permitted by the City in compliance with this article, and
in compliance with all State regulations.
b. All employees who deliver cannabis shall have valid identification and a
copy of the commercial cannabis retail business' Regulatory Safety Permit and
State license at all times while making deliveries.
c. All commercial cannabis retail businesses shall maintain proof of vehicle
insurance for any and all vehicles being used to transport cannabis goods as
required by State law.
d. Deliveries may only take place during normal business hours of the
commercial cannabis retail business.
e. During delivery, the delivery employee shall maintain a physical or electronic
copy of the delivery request and shall make it available upon request by the
19
75A-61
licensing authority and law enforcement officers. The delivery request
documentation shall comply with State law.
f. A licensed delivery employee shall not leave the State of California while
possessing cannabis products.
g. A commercial cannabis retail business shall maintain a list of all deliveries,
including the address delivered to, the amount and type of product delivered, and
any other information required by the State.
h. A manifest with all information required in this section shall accompany any
delivery person at all times during the delivery process and delivery hours.
I. Any delivery method shall be made in compliance with State law, as
amended, including use of a vehicle that has a dedicated GPS device for
identifying the location of the vehicle (cell phones and tablets are not sufficient).
j. Each delivery request shall have a receipt prepared by the commercial
cannabis retail business with the following information:
I. Name and address of the commercial cannabis retail business.
ii. The name of the employee who delivered the order.
iii. The date and time the delivery request was made.
iv. The complete delivery addresses.
v. A detailed description of the cannabis goods requested for delivery
including the weight or volume, or any accurate measure of the amount of
cannabis goods requested.
vi. The total amount paid for the delivery including any fees or taxes.
k. At the time of the delivery, the date and time delivery was made, and the
signature of the person who received the delivery.
I. No cannabis delivery vehicle shall display signs, decals or any other form of
advertisement with the exception of a maximum four -inch by four -inch decal.
M. Inspections by an authorized City of Santa Ana representative may be
conducted anytime during regular business hours.
6. Additional Operational Standards for Commercial Cannabis Testing Facilities or
Laboratories.
a. A licensed cannabis testing facility or laboratory business, its owners and
employees may not hold an interest in any other cannabis business except
another testing laboratory business.
75A-62
b. Inspections by an authorized City of Santa Ana representative may be
conducted anytime during the business's regular business hours.
c. Educational tours of cannabis testing facility/laboratory businesses shall be
allowed.
7. Additional Operational Standards for Commercial Cannabis Manufacturing
Facilities.
volatile solvents in the maRLifaGtUFiR9 PFOGess as d-e-fined- in the G lifernia Health
Safety Cede § 11362.775(b)(1)(A) and as amended from tiMP to tiMe, LIRIess
ba. A licensed commercial cannabis nen velatile manufacturing facility may
conduct all activities permitted by the State. This includes, but is not limited to:
non-velatile extractions, repackaging and relabeling, infusions and extractions.
eb. Any manufacturing that will be conducted by the commercial cannabis
business shall be included on the application. No additional manufacturing
activity can be conducted without notifying the Executive Director of the Planning
and Building Agency or his or her designee, after which a determination will be
made if the new activity may commence with or without modification to the RSP
or if a new RSP is required.
dc. At all times, the commercial cannabis manufacturing facility will be
compliant with all State regulations for cannabis manufacturing including Health
and Safety Code § 11362.775, as amended from time to time. Signage shall be
posted regarding the type(s) of chemicals being used at the manufacturing
facility.
ed. Cannabis manufacturing facilities shall not contain an exhibition or product
sales area or allow for retail distribution of products at that location unless the
facility is co -located with an approved commercial cannabis retail business with a
RSP.
fe. Extraction equipment and extraction process utilizing hydrocarbon solvents
shall be located in a room or area dedicated to extraction.
gf. All commercial cannabis manufacturing/processing facilities shall comply
with any and all applicable safety guidelines adopted by the Orange County Fire
Authority, the State of California, and/or the City of Santa Ana for cannabis plant
processing and extraction.
8. Additional Operational Standards for Indoor Commercial Cannabis Cultivation
Facilities.
21
75A-63
a. There shall be no exterior evidence of cannabis cultivation from a public
right-of-way.
b. The Building Official may require additional specific standards to meet the
California Building Code and Fire Code, including but not limited to installation of
fire suppression sprinklers.
c. Compliance with Section 13149 of Water Code as enforced by the State
Water Resources Control Board Is required.
d. All commercial cannabis cultivation facilities shall comply with any and all
applicable safety guidelines adopted by the Orange County Fire Authority, the
State of California, and/or the City of Santa Ana for cannabis carbon dioxide
enrichment systems.
e. Cannabis cultivation facilities shall not contain an exhibition or product sales
area or allow for retail distribution of products at that location unless the facility is
co -located with an approved commercial cannabis retail business with a RSP.
9. Additional Operational Standards for Commercial Cannabis Distribution Facilities.
a. Inspections by an authorized City of Santa Ana representative may be
conducted anytime during the business's regular business hours.
b. A distributor shall ensure that all cannabis goods stored in compliance with
all applicable State regulations to ensure conformance to any and all applicable
Track and Trace systems required by the State.
c. Employee breakrooms, eating areas, changing facilities, locker rooms and
bathrooms shall be completely separated from the storage areas.
Section 10. Sections 40-9 and 40-9.1 of Article I of Chapter 40 of the Santa Ana
Municipal Code are hereby amended to read in full as follows:
Sec. 40-9. - Commercial cannabis selection process.
1. Commercial Cannabis — Registration Application and Regulatory Safety Permit
Required.
a. Existing medicinal cannabis business operators, or those with pending
applications for a medicinal RSP, who desire to operate an adult cannabis retail
business shall apply for the cannabis Regulatory Safety Permit ("RSP") on or
before December 14, 2017. The Director of Planning and Building shall review
such application and issue the RSP, without consideration of the merit based
point system, so long as they satisfy all other requirements of this article and
Chapter 18.
b. The Regulatory Safety Permit ("RSP") selection process will be conducted in
two (2) phases, Phase 1 (Registration Application) and Phase 2 (Regulatory
22
75A-64
Safety Permit Application). Registration Applications will be reviewed by the
Director of Planning and Building or designees(s) for completeness and
compliance, and if eligible, will be placed on the "Regulatory Safety Permit
("RSP") Eligibility List" and entered into the Phase 2 Regulatory Safety Permit
Application process. In Phase 2, the City of Santa Ana has established a merit
based point system for commercial cannabis retail businesses to objectively
award permits as described in the Regulatory Safety Permit Application.
2. Phase 1— Registration Application.
a. Following the adoption of this article, the Director of Planning and Building shall
prepare commercial cannabis business registration application forms and a
related administrative policy. Each commercial cannabis business interested in
operating pursuant to this article may submit an application together with a non-
refundable processing fee in an amount established by the City Council.
b. The Registration Application period shall be thirty (30) calendar days from the
date the applications are released. Following the application period, the Director
of Planning and Building or designee(s) shall stop accepting applications and
review all applications received in Phase 1. Each application that is complete
and in compliance with the application requirements in Phase 1 shall be placed
on the "RSP Eligibility List" and shall be notified in writing whether they are a
"RSP Eligible Applicant" or not. Each applicant on the RSP Eligibility List may
then choose to file an application for a RSP in Phase 2.
c. The requirements for Phase 1 include, but are not limited to:
I. All application documents required in the City's Phase 1 Registration
Application package.
ii. Application was submitted during the application period.
iii. Application forms are filled out completely.
the apptisatien.
ivy. Phase 1 application fee is paid.
vv_i. A signed statement that the proposed location of the commercial
cannabis business on the application meets the zoning criteria established
in this article including, but not limited to, any and all sensitive use
separation criteria required by this article.
vivii. Proof of site control for commercial cannabis retail businesses
submitting Phase 1 applications on or after July 1, 2018.
d. The Director of Planning and Building or his or her designee(s) shall determine
whether each application demonstrates compliance with the minimum
requirements (above) and be placed on the RSP Eligibility List and entered into
the Phase 2 application and review process.
23
75A-65
e. The Director of Planning and Building or his or her designee(s) shall review
each application upon submission and ensure that the application is complete.
Incomplete applications will be promptly rejected and the applicant shall be
notified in writing of the deficiencies. The applicant shall be given an opportunity
to cure any incomplete or deficient application prior to the conclusion of the
application processing term, if such time period Is applicable.
Phase 2 — Regulatory Safety Permit Application.
a. Each applicant identified on the RSP Eligibility List may choose to complete
and file a RSP application to the Director of Planning and Building. The
application shall be filed together with a nonrefundable fee as established by
resolution of the City Council, to defray the cost of investigation required by this
article.
b. The RSP application period shall be open for thirty (30) calendar days and may
run concurrently with the Phase 1 review period. Following the RSP application
period, the Director of Planning and Building or designee(s) shall stop accepting
applications and review all applications received in Phase 2.
c. The Director of Planning and Building or designee(s) will review all application
documents required in the City's Phase 2 application package plus the
additional requirements in subsection (d) below. The Director of Planning and
Building or his or her designee(s) will use a merit based point system to review
and rank each of applications from the most to the least points and objectively
award the top applicants a RSP. A complete description of the merit based
point system and all merit based point considerations shall be included with the
application forms.
d. Phase 2 requirements include, but are not limited to:
I. All application documents required in the City's Phase 2 RSP application
package.
ii. Phase 2 application fee is paid and a comprehensive ewneF background
check is completed on all owners, employees, volunteers, managers
security guards, and/or agents.
iii. The Building Official or designee has inspected all structures in which the
use is located to determine that all applicable standards and requirements
are met. If a building permit is required for site improvements, Permit
issuance will be deferred until a certificate of occupancy or other building
permit approval is issued. Additionally, the Building Official has determined
that there are no notices of nuisance or other code compliance issues
recorded or on the property.
iv. The Planning Manager or designee has issued zoning clearance
documenting compliance with the following:
The use is permitted;
2. All land use permits, if any, have been approved and all conditions of
approval have been met or are in good standing; and,
24
75A-66
3. No zoning violations exist on the property.
e. The Director of Planning and Building or his or her designee(s) shall review
each application upon submission and ensure that the application is complete.
Incomplete applications will be promptly rejected and the applicant shall be
notified that business day of the deficiencies. The applicant shall be given an
opportunity to cure any incomplete or deficient application prior to the
conclusion of the application processing term, if such time period is applicable.
3.1 Commercial Cannabis — Registration Application and Regulatory Safety Permit
for Additional Commercial Cannabis Business Activities on the Same Premises (Co -
Location).
a. An existing commercial cannabis business with an RSP may co -locate
additional non -retail commercial cannabis business activities (cultivation,
distribution, and/or manufacturing) by applying for a new RSP for the additional
use(s). The new RSP must meet the all requirements of the Santa Ana
Municipal Code except that background checks (live scans) shall only be
required for any new staff as outlined in Section 40-8. A single RSP that lists
any and all approved cannabis business activity/activities may be renewed
annually thereafter.
b. New or o -ending RSP applicants wishing to co -locate additional non -retail
(cultivation, distribution, and/or manufacturing) uses may submit a new RSP for
any of the non -retail commercial cannabis business activities. The additional
RSP must meet the all requirements of the RSP except that background checks
(live scans) shall only be required for any new staff as outlined in Section 40-8.
A single RSP that lists any and all approved cannabis business activity/activities
may be renewed annually thereafter.
c. New commercial cannabis business applicants — co -location.
1. New commercial cannabis retail applicants wishing to co -locate additional
non -retail (cultivation, distribution, and/or manufacturing) uses shall submit
a separate RSPs for the proposed retail activity and another RSP for any of
the non -retail (cultivation, distribution, and/or manufacturing) commercial
cannabis business activities. Each RSP application will be evaluated
independently and must meet any applicable requirements of the RSP as
outlined in Sections 40-8 and 40-9, including, but not limited to, merit
evaluation and additional separation requirements for the retail RSP. A
single RSP that lists any and all approved cannabis business
activity/activities may be renewed annually thereafter.
2. New non -retail commercial cannabis applicants wishing to co -locate
additional non -retail (cultivation, distribution, and/or manufacturing) uses
may submit a single RSP for the proposed activity or activities. The RSP
application must meet any applicable requirements of the RSP as outlined
in Sections 40-8 and 40-9. A single RSP that lists any and all approved
cannabis business activity/activities may be renewed annually thereafter.
4. Regulatory Safety Permit Annual Renewal.
25
75A-67
a. Applications for the renewal of a permit shall be filed with the Director of
Planning and Building or designee(s) at least sixty (60) calendar days before
the expiration of the current permit. Temporary permits will not be issued. Any
permittee allowing their permit to lapse or which permit expired during a
suspension shall be required to submit a new application, pay the
corresponding original application fees and be subject to all aspects of the
selection process.
b. Any person desiring to obtain a renewal of their respective permit shall file a
written application under penalty of perjury on the required form with the
Director of Planning and Building or trier or her designee(s) who will conduct a
review. The application shall be accompanied by a nonrefundable filing fee
established by the City Council to defray the cost of the review required by this
article. An applicant shall be required to update the information contained in
their original permit application and provide any new and/or additional
information as may be reasonably required by the Director of Planning and
Building or designee(s) in order to determine whether said permit should be
renewed based on compliance with all applicable provisions of the Santa Ana
Municipal Code.
5. Appeal of Denial of Regulatory Safety Permit/Denial of RSP Renewal. The City
Manager or his or her designee(s) will review all Regulatory Safety Permit
applications and renewal requests, along with all other relevant information, and
determine if a RSP should be granted and/or renewed based on compliance with all
applicable provisions of the Santa Ana Municipal Code. If the City Manager
determines that the permit shall not be granted and/or renewed, the reasons for
denial shall be provided in writing to the applicant. No such denial shall become
effective until the applicant for the regulatory safety permit and/or renewal has been
notified in writing by certified mail of the right to appeal the denial decision pursuant
to the provisions of Chapter 3 of this Code. If a timely appeal is filed, the denial shall
be effective only upon decision of a hearing officer as provided for in Chapter 3 of
the Santa Ana Municipal Code. Otherwise, the denial shall become effective after
the timely appeal period has passed. The matter may be subject to judicial review
under the provisions of California Code of Civil Procedure Sections 1094.5 and
1094.6.
Sec. 40-9.1. - Non -retail commercial cannabis business (cultivation,
manufacturing, distribution, and testing facility/laboratory) selection process.
1. Non -Retail Commercial Cannabis Businesses — Registration Application (Phase
1) and Regulatory Safety Permit (Phase 2) Required.
a. Every Non -Retail Commercial Cannabis Business shall apply for the Phase 1
(Registration Application) and Phase 2 (Regulatory Safety Permit Application) in
the manner described in Section 40-9, except that the Director of Planning and
Building or his or her designee may accept Phase 1 and Phase 2 applications
for a Non -Retail Commercial Cannabis Business concurrently, and shall review
such applications and issue the Regulatory Safety Permit Application without
26
75A-68
consideration of the merit based point system, insofar as the applications satisfy
all other requirements of this article and Chapter 18.
b. Applications for a Non -Retail Commercial Cannabis Business shall be
accepted during normal City Hall business hours and are not subject to the
thirty (30) day Phase 1 or Phase 2 application periods.
Section 11. Sections 40-10 of Article I of Chapter 40 of the Santa Ana Municipal
Code are hereby amended to read in full as follows:
Sec. 40-10. - Audits.
Annual audits. No later than jURe 30th September 30th of every year, each licensed
commercial cannabis business shall file with the City an audit or financial review of its
operations of the previous calendar year. The form and contents of the document shall
be specified by the Executive Director of Finance and Management Services, or his or
her designee(s).
Section 12. Severability. If any section, subsection, sentence, clause, phrase or
portion of this ordinance is for any reason held to be invalid or unconstitutional by the
decision of any court of competent jurisdiction, such decision shall not affect the validity
of the remaining portions of this ordinance. The City Council of the City of Santa Ana
hereby declares that it would have adopted this ordinance and each section,
subsection, sentence, clause, phrase or portion thereof irrespective of the fact that any
one or more sections, subsections, sentences, clauses, phrases, or portions be
declared invalid or unconstitutional.
///
N
W
27
75A-69
ADOPTED this day of , 2019.
Miguel A. Pulido
Mayor
APPROVED AS TO FORM
Sonia R. Carvalho, City Attorney
By:
Lisa torck
Assistant City Attorney
AYES: Councilmembers:
NOES: Councilmembers:
ABSTAIN: Councilmembers:
NOT PRESENT: Councilmembers:
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, DAISY GOMEZ, Clerk of the Council, do hereby attest to and certify that the
attached Ordinance No. NS- to be the original ordinance adopted by the
City Council of the City of Santa Ana on , 2019 and that said
ordinance was published in accordance with the Charter of the City of Santa Ana.
Date:
Clerk of the Council
City of Santa Ana
zs
75A-70
EXHIBIT 3
LS 8.20.19
RESOLUTION NO. 2019-xx
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA REDUCING THE COMMERCIAL CANNABIS
GROSS RECEIPTS TAX FOR TESTING LABORATORIES
FROM FIVE (5%) PERCENT TO TWO (2%) PERCENT
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS
FOLLOWS:
Section 1. The City Council of the City of Santa Ana hereby finds, determines and
declares as follows:
A. In November 2016, the California Marijuana Legalization Initiative, also known
as the Adult Use of Marijuana Act (AUMA or Proposition 64) was approved by the voters of
the State of California. The AUMA legalized recreational marijuana.
B. In 2017, the Governor signed into law Senate Bill 94 also known as Medicinal
and Adult -Use Cannabis Regulation and Safety Act (MAUCRSA) establishing state
regulations and licensing for retail sales, manufacturing, distribution, delivery and testing of
adult -use (also called recreational) marijuana.
C. On November 9, 2017, the City Council created Chapter 40 of the Santa
Ana Municipal Code, allowing adult -use commercial cannabis retail businesses in the
city, and amended certain sections of Chapters 18 and 21 of the Santa Ana Municipal
Code to ensure consistency with State law and Chapter 40. Since 2014, the City has
allowed medicinal marijuana collectives/ cooperatives to operate within the City pursuant
to regulations set forth in Chapter 18 and Chapter 21 of the Santa Ana Municipal Code.
D. On March 20, 2018, the City Council adopted Ordinance NS-2941 and NS-
2942, allowing and regulating commercial cannabis testing laboratories.
E. A general business license tax based on the gross receipts derived from
commercial cannabis businesses and gross square footage would generate essential
funds for protecting vital City services and facilities and place such businesses on more
equal footing with existing City businesses, including medical marijuana businesses
which already pay a business license tax.
75A-71
F. The City Council is authorized to impose general and special taxes in order
to fund municipal services and facilities, subject to requisite voter approval as set forth in
Government Code section 53720.
G. The voters of the City of Santa Ana approved Measure Y (Ordinance NS-
2962) on November 6, 2018, for the purpose of fixing the rate of taxation for commercial
cannabis businesses including delivery, distribution, manufacturing, cultivation, testing
and retail sales of cannabis and related products. The taxes required to be paid under
this article are declared to be required pursuant to the taxing power of the City of Santa
Ana solely for the purpose of obtaining revenue and are not regulatory permit fees.
H. The City of Santa Ana desires to remain at the forefront of commercial
cannabis by allowing and regulating commercial cannabis business activities, routinely
updating and amending its ordinances, and establishing commercial cannabis gross
receipts tax rates that are competitive and provide for the needs of the Santa Ana
community.
I. The City of Santa Ana has a compelling interest in ensuring that cannabis
is not sold in an illicit manner, in protecting the public health, safety and welfare of its
residents and businesses, in preserving the peace and quiet of the neighborhoods in
which these businesses may operate, and in providing access to safe and tested
cannabis to residents. To ensure safe and tested cannabis, the City desires to see the
establishment and successful operation of testing facilities and testing laboratories in the
City.
J. Section 21-133 (d) of Article XIII of Chapter 21 of the Santa Ana Municipal
Code establishes the initial commercial cannabis testing facility of testing laboratory gross
receipts tax rate at five (5%) percent.
K. Section 21-133 (c) of Article XIII of Chapter 21 of the Santa Ana Municipal
Code allows the City Council by resolution to implement any lower tax rate it deems
appropriate.
L. The City Council conducted a duly noticed public hearing on August 20, 2019,
to consider the proposed tax reduction.
Section 2. The City Council hereby establishes the commercial cannabis testing
facility/testing laboratory gross receipts tax rate at two (2%) percent, lowering it from five
(5%) percent. The reduced two (2%) percent gross receipts tax rate shall be deemed
effective July 1, 2019.
Resolution No. 2M-m
Page 2 of 3
75A-72
ADOPTED this day of 2019.
Miguel A. Pulido
Mayor
APPROVED AS TO FORM:
Sonia R.
Carvalho, City AttorneyBy: mX
Lisa Storck
Assistant City Attorney
AYES: Councilmembers
NOES: Councilmembers
ABSTAIN: Councilmembers
NOT PRESENT: Councilmembers
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, DAISY GOMEZ, Clerk of the Council, do hereby certify the attached Resolution No.
2019- to be the original resolution adopted by the City Council of the City of Santa
Ana on 2019.
Date:
Clerk of the Council
City of Santa Ana
Resolution No. 2019-xx
Page 3 of 3
75A-73
75A-74
EXHIBIT 4
LS 8.20.19
RESOLUTION NO.2019-xx
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA
ESTABLISHING A CANOPY MEASUREMENT SERVICE FEE AND AN
ALLOCATED SQUARE FOOTAGE MEASUREMENT SERVICE FEE
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS
FOLLOWS:
Section 1. The City Council of the City of Santa Ana hereby finds, determines and
declares as follows:
A. In November 2016, the California Marijuana Legalization Initiative, also known
as the Adult Use of Marijuana Act (AUMA or Proposition 64) was approved by the voters of the
State of California. The AUMA legalized recreational marijuana.
B. In 2017, the Governor signed into law Senate Bill 94 also known as Medicinal
and Adult -Use Cannabis Regulation and Safety Act (MAUCRSA) establishing state regulations
and licensing for retail sales, manufacturing, distribution, delivery and testing of adult -use (also
called recreational) marijuana.
C. On November 9, 2017, the City Council created Chapter 40 of the Santa Ana
Municipal Code, allowing adult -use commercial cannabis retail businesses in the city, and
amended certain sections of Chapters 18 and 21 of the Santa Ana Municipal Code to ensure
consistency with State law and Chapter 40. Since 2014, the City has allowed medicinal
marijuana collectives/cooperatives to operate within the City pursuant to regulations set forth
in Chapter 18 and Chapter 21 of the Santa Ana Municipal Code.
D. On March 20, 2018, the City Council adopted Ordinance NS-2941 and NS-
2942, allowing and regulating commercial cannabis testing laboratories.
E. A general business license tax based on the gross receipts derived from
commercial cannabis businesses and gross square footage would generate essential funds
for protecting vital City services and facilities and place such businesses on more equal
footing with existing City businesses, including medical marijuana businesses
which already pay a business license tax.
Resolution No. 2019-m
Page 1 of 3
75A-75
F. The City Council is authorized to impose general and special taxes in order to
fund municipal services and facilities, subject to requisite voter approval as set forth in
Government Code section 53720.
G. The voters of the City of Santa Ana approved Measure Y (Ordinance NS-2962)
on November 6, 2018, for the purpose of fixing the rate of taxation for commercial cannabis
businesses including delivery, distribution, manufacturing, cultivation, testing and retail sales
of cannabis and related products. The taxes required to be paid under this article are
declared to be required pursuant to the taxing power of the City of Santa Ana solely for the
purpose of obtaining revenue and are not regulatory permit fees.
H. The City of Santa Ana desires to remain at the forefront of commercial
cannabis by allowing and regulating commercial cannabis business activities, routinely
updating and amending its ordinances, and establishing commercial cannabis gross
receipts tax rates that are competitive and provide for the needs of the Santa Ana
community.
I. Section 21-133, subsection (j)(8)(B) of Article XIII of Chapter 21 of the Santa
Ana Municipal Code states that the gross square footage of cultivation canopy shall be
subject to independent measurement and calculation by duly authorized employees or
agents of the City and that a corresponding canopy measurement fee amount be
specified by resolution of the City Council.
J. Section 21-133, subsection (j)(8)(D) of Article XIII of Chapter 21 of the Santa
Ana Municipal Code states that the gross square footage of allocated square footage
amounts reported by commercial cannabis business owners/operators respectively for
either distribution use or for manufacturing use, shall be subject to independent
measurement and calculation by duly authorized employees or agents of the City and that
a corresponding allocated square footage measurement fee amount be specified by
resolution of the City Council.
K. The City Council conducted a duly noticed public hearing on August 20, 2019,
to consider the proposed fee modifications.
Section 2. Pursuant to Santa Ana Municipal Code Section 21-133, subsection
0)(8)(B) the City Council hereby establishes a canopy measurement fee in the amount of
$100.57 per hour. Said fee shall be added to the City's Miscellaneous Fee Schedule and be
subject to the Consumer Price Index changes annually. The canopy measurement fee
amount shall become operational upon the effective date of Section 21-133, subsection
G)(8)(B).
Section 3. Pursuant to Santa Ana Municipal Code Section 21-133, subsection
(j)(8)(D) the City Council hereby establishes an allocated square footage measurement fee
in the amount of $100.57 per hour. Said fee shall be added to the City's Miscellaneous Fee
Schedule and be subject to the Consumer Price Index changes annually. The allocated
Resol don No. 2019-wc
Page 2 of 3
75A-76
square footage measurement fee amount shall become operational upon the effective date
of Section 21-133, subsection 0)(8)(D).
Section 4. The City Council finds that the fees adopted by this Resolution do
not exceed the reasonable costs of providing the services for which the fees are charged.
ADOPTED this day of
Miguel A. Pulido
Mayor
APPROVED AS TO FORM:
Sonia R. Carvalho, City Attorney
By .
Lisa Storck
Assistant City Attorney
AYES:
NOES:
ABSTAIN:
NOT PRESENT:
Councilmembers
Councilmembers
Councilmembers
Councilmembers
2019.
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, DAISY GOMEZ, Clerk of the Council, do hereby certify the attached Resolution No.
2019 - to be the original resolution adopted by the City Council of the City of Santa
Ana on .2019.
Date:
Clerk of the Council
City of Santa Ana
Resolution No. 2010-xx
Page 3 of 3
75A-77
75A-78
EXHIBIT 5
LS 8.20.19
RESOLUTION NO. 2019-xx
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA AUTHORIZING AMENDMENT OF THE
COMMERCIAL CANNABIS OPERATING AGREEMENT
TEMPLATE TO IDENTIFY SOCIAL EQUITY GOALS, AND
REQUIREMENTS AND SPECIFY REQUIREMENTS FOR
COMMUNITY BENEFIT AND SUSTAINABLE BUSINESS
PRACTICES PLANS AND AUTHORIZE THE CITY
MANAGER TO EXECUTE THE CANNABIS OPERATING
AGREEMENTS
WHEREAS, the City has adopted an ordinance to permit certain adult -use and
medicinal cannabis retail uses in the City's Light and Heavy Industrial zoning districts;
WHEREAS, the City Council approved Ordinance NS-2929 on November 21,
2017 to regulate and permit adult -use retail cannabis business activities in Santa Ana
subject to issuance of regulatory safety permits and execution of operating
agreements;
WHEREAS, the City Council adopted Resolution No. 2017-074 on November
21, 2017, which authorized the City Manager to execute adult -use cannabis retailer
operating agreements;
WHEREAS, the City Council approved Ordinances NS-2941, NS-2942, and
2944 to regulate and permit medicinal and adult -use testing laboratories, cultivation,
distribution, and manufacturing facilities in Santa Ana on March 20, 2018, April 3,
2018, and May 1, 2018, respectively subject to issuance of regulatory safety permits
and execution of operating agreements;
WHEREAS, pursuant to Chapter 40 of the Santa Ana Municipal Code, all
commercial cannabis businesses seeking to operate in Santa Ana must enter into an
operating agreement with the City. The operating agreement specifies terms and
conditions including local hiring and sourcing and Community Benefit and Sustainable
Business Practices Plans;
WHEREAS, the City Council has an interest in ensuring that Santa Ana
residents and businesses continue to benefit from the burgeoning commercial
cannabis industry in Santa Ana. The commercial cannabis operating agreement is the
tool by which the City ensures that residents and businesses benefit from the
commercial cannabis industry in the City; and
WHEREAS, the City Council also desires to include social equity goals and
requirements in the operating agreements to reflect its commitment to promote
equitable ownership and employment opportunities in the cannabis industry in order to
Resolution No. 2019-xx
75A-79 Page 1 of 3
decrease disparities in life outcomes for marginalized communities.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA ANA
DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. The City Council of the City of Santa Ana hereby finds, determines
and declares asfollows:
A. The Commercial Cannabis Operating Agreement template is hereby
amended to require the following minimum components of the Community
Benefit and Sustainable Business Practices Plan:
a. Requirements for local hiring and local sourcing. A minimum portion
(50 percent) of all employees, as specified in the Commercial
Cannabis Operating Agreement template, employed by a Santa Ana
commercial cannabis business shall reside in Santa Ana, and
reasonable efforts shall be made to secure local labor and sources for
construction.
b. Community reinvestment. All commercial cannabis businesses shall
commit to a plan for community reinvestment with metrics and
measurable results in the form(s) of local pathways to opportunities
for professional, entrepreneurial and career development; internships;
mentorship programs; community engagement; and/or community
contributions.
c. Sustainable business practices. All commercial cannabis businesses
shall commit to sustainable business practices, green building
methods and features, and other designs meant to reduce the impact
of commercial cannabis business activities on the environment.
d. A Social Equity requirement addressing employment and ownership
opportunities, training with the City's Workforce Development
program, and employee investment opportunities.
B. The City Manager is hereby authorized to continue to enter into and execute
the modified Commercial Cannabis Operating Agreement attached hereto
and incorporated as Exhibit A, with all businesses seeking to engage in
commercial cannabis business activity/activities in Santa Ana.
Section 2. In the event the City decides to expand the cannabis licensing
program sometime in the future or provides for an associated competitive process for
future licenses, the City Council hereby directs staff to incorporate mandatory
requirements for expedited processing and renewal assistance for low-income and
resident applicants, potential fee deferrals and staff assistance to such applicants.
Section 3. This action has been reviewed for compliance with the California
Environmental Quality Act (CEQA). Pursuant to CEQA Guidelines Section 15268, the
proposed actions are exempt from further CEQA review as executions of operating
Resolution No. 2019-xx
Page 2 of 3 75A-80
agreements are ministerial actions. A Notice of Exemption will be filed for the
proposed actions.
Section 3. This Resolution shall take effect immediately upon its adoption by
the City Council and the Clerk of the Council shall attest to and certify the vote
adopting this Resolution.
ADOPTED this 20 h day of August, 2019.
Miguel A. Pulido
Mayor
APPROVED AS TO FORM:
Sonia Carvalho
City Attorney
By:<
Lisa Storck
Assistant City Attorney
AYES: Councilmembers
NOES: Councilmembers
ABSTAIN: Councilmembers
NOT PRESENT: Councilmembers
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, DAISY GOMEZ, Clerk of the Council, do hereby attest to and certify the attached
Resolution No. 2019-xx to be the original resolution adopted by the City Council of the
City of Santa Ana on August 20, 2019.
Date:
Daisy Gomez
Clerk of the Council
City of Santa Ana
75A-81 Resolution No.
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OPERATING AGREEMENT FOR NON -MEDICINAL RETAIL
COMMERCIAL CANNABIS BUSINESSES
This Operating Agreement ("AGREEMENT") is dated FULL DATE, between the City of
Santa Ana, a charter city and municipal corporation ("CITY") and LEGAL NAME OF BUSINESS,
dba DBA NAME ("OPERATOR"), collectively referred to as "the Parties". This AGREEMENT
shall become effective on the date that OPERATOR is issued a Regulatory Safety Permit by
CITY for the operation of a commercial cannabis business conducting ADULT -USE RETAIL,
MANUFACTURING, DISTRIBUTION, AND/OR CULTIVATION, OR TESTING services in whole
or in part of its operations transacted and carried -on by OPERATOR at the following subject
property location, XXXXX, Santa Ana, CA 927XX.
1. Public Benefit and Social Equity.
A. Intent. The purpose of this Operating AGREEMENT is to ensure positive
community impacts from commercial cannabis business operations through local hiring and
local sourcing, community benefit and sustainable business practices, and the collection of
required fees and taxes as applicable for the operation of a commercial cannabis business
and to provide mitigation options to be used by CITY to compensate for impacts to CITY
services, residents, and/or businesses as set forth in Santa Ana Municipal Code Chapter 40.
The Parties agree that this AGREEMENT confers substantial private benefits on
OPERATOR which should be balanced by commensurate public benefits. As part of the
cannabis Regulatory Safety Permit process, OPERATOR agrees to enter into this
AGREEMENT. OPERATOR acknowledges that CITY and OPERATOR have had extensive
negotiations and proceedings prior to entering into this AGREEMENT. OPERATOR has
elected to execute this AGREEMENT as it provides OPERATOR with important economic
benefits. Accordingly, the Parties intend to provide consideration to the public to balance
the private benefits conferred on OPERATOR by providing mitigation measures to the public
and to pay for CITY services.
B. Local Hiring and Sourcing. OPERATOR agrees to use its reasonable efforts to
hire qualified City of Santa Ana residents living in Santa Ana to work at its commercial
cannabis businesses. OPERATOR shall also use reasonable efforts to retain the services
of qualified contractors and suppliers who are located in the City of Santa Ana or who
employ a significant number of City of Santa Ana residents. OPERATOR shall make a good
faith effort to advertise on various social media sites, at local job fairs, and through public
agencies and organizations.
C. Community Benefit and Sustainable Business Practices Plan. OPERATOR
agrees to submit a Community Benefit and Sustainable Business Practices Plan ("Plan") to
CITY that is hereby attached and incorporated into this AGREEMENT as ("EXHIBIT A").
Said Plan shall detail OPERATOR's commitment to incorporate the following practices as
part of the commercial cannabis business:
a. Requirements for local hiring and local sourcing. A minimum portion (50 percent) of
all employees, as specified in the Commercial Cannabis Operating Agreement
template, employed by a Santa Ana commercial cannabis business shall reside in
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Santa Ana, and reasonable efforts shall be made to secure local labor and sources
for construction.
b. Community reinvestment. All commercial cannabis businesses shall commit to a
plan for community reinvestment with metrics and measurable results in the form(s)
of local pathways to opportunities for professional, entrepreneurial and career
development; internships; mentorship programs; community engagement; and/or
community contributions.
c. Sustainable business practices. All commercial cannabis businesses shall commit to
sustainable business practices, green building methods and features, and other
designs meant to reduce the impact of commercial cannabis business activities on
the environment.
OPERATOR shall adequately document that it has met the Plan's obligations and
commitments as a condition of annual Regulatory Safety Permit (RSP) renewal and
renewal/extension of this AGREEMENT upon expiration of the initial term and any
extensions.
D. Social Equity Goals and Requirements. Operator acknowledges and agrees with
the City's commitment to providing Social Equity opportunities to its residents and low-
income individuals who desire to participate in the economic opportunities presented by the
growth and sustainability of the cannabis industry in the City. To further these goals,
Operator shall:
a. Notify the Santa Ana Work Center of all employment opportunities associated with its
cannabis business operations in the City and meet the employment requirements in
Section 1.C. above.
b. Offer all employees an opportunity to invest in its cannabis business in the City.
c. Define specific steps for local hire employees to acquire management and executive
positions, and offer these employees compensation options that result in equity
ownership of respective operations, or profit sharing opportunities.
2. Records Inspection, Examination and Audit.
OPERATOR acknowledges and agrees that CITY is empowered under this Agreement
to inspect, examine and audit OPERATOR's books and records (including tax filings and
returns), to ascertain the amount of operating fees due and owing. CITY or its authorized
agents shall have the power and authority to conduct a full inspection, examination and
audit of such books and records (including tax filings and returns) at any reasonable time,
including but not limited to, during normal business hours. In the event any such books,
records, tax filings and returns cannot be made fully available within the City of Santa Ana,
OPERATOR acknowledges and agrees that it shall reimburse CITY for the cost of all
transportation, lodging, meals, portal-to-portal travel time, and other incidental costs
reasonably incurred by CITY or its authorized agents in obtaining said full inspection,
examination and audit. In the event that said records inspection, examination and audit
determines that a net operating agreement fee payment deficiency of greater than Five
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Percent (5%) exists; OPERATOR acknowledges and agrees that it shall reimburse CITY for
the full cost of said records inspection, examination and audit reasonably incurred by CITY
or its authorized agents.
Term.
This AGREEMENT shall start on the date indicated above and shall terminate on
December 31, 2020 regardless of starting date unless terminated earlier in accordance with
Section 9 or 10 of this AGREEMENT. The AGREEMENT will have one (1) two-year
extension period until December 31, 2022 exercisable by a writing executed by the City
Manager and City Attorney's Office with the approval of OPERATOR.
4. Business License Required.
A valid City of Santa Ana Business License is required for all persons engaged in
transacting and carrying on any commercial cannabis business activity in the City of Santa
Ana. It is unlawful for any person or legal entity to commence, transact or carry -on cannabis
business activity in the City of Santa Ana without first having procured a City of Santa Ana
cannabis business license.
5. Operating Commercial Cannabis Business.
OPERATOR shall not operate a commercial cannabis business authorized under the
Santa Ana Municipal Code unless:
A. It is the holder of a valid Regulatory Safety Permit issued by CITY in accordance with
the procedures and requirements of Article 1 of Chapter 40, of the Santa Ana
Municipal Code; and
B. At such time as the State of California requires cannabis business facilities and
businesses to hold a valid license or permit issued by the State of California, it also
holds such license or permit; unless, however, such permit or license is subsequently
not required by the State of California for the type of cannabis facility or business
operation that is the subject of this AGREEMENT.
C. OPERATOR remains in compliance with any and all other laws and regulations
pertaining to commercial cannabis businesses.
D. OPERATOR shall remain in compliance with the operating requirements applicable
to commercial cannabis businesses contained in the City's Municipal Code.
6. OPERATOR Indemnification of CITY.
A. OPERATOR will indemnify CITY from any claims, damages, injuries, or liabilities of
any kind whatsoever sustained or incurred by CITY resulting from entering into this
AGREEMENT, and OPERATOR's performance and/or breach of this AGREEMENT.
B. OPERATOR agrees to defend, at its sole expense, any action against CITY, its
agents, officers, and employees related to this AGREEMENT. OPERATOR agrees
to indemnify and reimburse CITY for any court costs and attorney fees that CITY
may be required to pay as a result of any legal challenge related to this
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AGREEMENT and/or CITY's approval of a Regulatory Safety Permit. CITY may, at
its sole discretion, participate at its own expense in the defense of any such action,
but such participation shall not relieve the OPERATOR of its obligation hereunder.
7. OPERATOR Compliance with Laws.
OPERATOR agrees to comply with the City of Santa Ana Charter and Municipal Code,
including but not limited to Chapters 18, 21 and 40, and the laws and regulations of the
State of California.
8. Default and Termination for Cause.
This AGREEMENT may be terminated by CITY for cause with thirty (30) days' written
notice to OPERATOR. Cause as used in this section, is defined as:
A. Failure to comply with the terms of the City of Santa Ana Cannabis Regulatory
Safety Permit issued to OPERATOR by CITY;
B. Failure of OPERATOR to maintain a valid active City of Santa Ana Business License
as the commercial cannabis business approved by the Regulatory Safety Permit and
as operating;
C. Failure of OPERATOR to comply with the requirements of the Community Benefits
and Sustainable Business Practices Plan;
D. Unauthorized transfer by OPERATOR of the City of Santa Ana cannabis business
Regulatory Safety Permit issued by CITY;
E. Failure by OPERATOR to accurately report gross receipts information or other data
necessary for CITY to calculate/confirm operating agreement fees;
F. Failure by OPERATOR to pay operating agreement fees and related reimbursement
costs within thirty (30) days of the date those fees are due;
G. Failure by OPERATOR to cooperate with CITY or CITY's authorized agents in any
inspection, examination and audit of OPERATOR's commercial cannabis business
books and records (including tax filings and returns).
H. OPERATOR shall cure the default resulting from the cause for termination within
thirty (30) days of the date of the notice of termination. If OPERATOR fails to cure
the default within thirty (30) days of the date of the notice of termination for cause,
this AGREEMENT will be terminated.
I. This AGREEMENT will automatically terminate if:
i. OPERATOR's Regulatory Safety Permit is revoked by CITY or is not renewed by
CITY, or
ii. OPERATOR transfers its Regulatory Safety Permit pursuant to Santa Ana
Municipal Code section 40-12.
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9. Termination Without Cause.
Upon mutual written agreement of the Parties, this AGREEMENT may be terminated
with thirty (30) days' notice.
10. Termination - Effect on Prior Obligations.
Upon any termination of this AGREEMENT, OPERATOR's obligation to report and remit
operating agreement fees due and payable under the terms of this AGREEMENT for each
month or fraction of a month of a cannabis business operation engaged in within the City of
Santa Ana prior to termination of this AGREEMENT shall continue to be in effect. Past due
penalties and late interest charges shall continue to accrue and be applicable until all
operating fees due under this AGREEMENT are paid in full. OPERATOR's liability for any
remaining unpaid past due penalties and/or late interest charges shall continue until fully
satisfied.
11. Remedies.
A. It is acknowledged by the parties that CITY would not have entered into this
AGREEMENT if it were to be liable in damages under this AGREEMENT, or with
respect to this AGREEMENT or the application thereof, except as hereinafter
expressly provided.
B. Each of the parties hereto may pursue any remedy at law or equitable relief available
for the breach of any provision of this AGREEMENT, except that CITY shall not be
liable in monetary damages, unless expressly provided for in this AGREEMENT.
C. Any dispute, claim or controversy arising out of or relating to this Agreement or the
breach, termination, enforcement, interpretation or validity thereof, including the
determination of the scope or applicability of this agreement to arbitrate, shall be
determined by arbitration in Orange County California before three arbitrators. The
arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration
Rules and Procedures pursuant to JAMS' Streamlined Arbitration Rules and
Procedures. Judgment on the Award may be entered in any court having jurisdiction.
This clause shall not preclude parties from seeking provisional remedies in aid of
arbitration from a court of appropriate jurisdiction.
12. Reimbursement Clause.
In consideration of the time and costs incurred by CITY in the drafting and
implementation of this AGREEMENT, OPERATOR agrees to pay $2,500 to CITY within
thirty (30) days of execution of this AGREEMENT.
13. Attorney Fees and Costs.
In any action or proceeding between CITY and OPERATOR brought to interpret or
enforce this AGREEMENT, or which in any way arises out of the existence of this
AGREEMENT or is based upon any term or provision contained herein, the "prevailing
party" in such action or proceeding shall be entitled to recover from the non -prevailing party,
in addition to all other relief to which the prevailing party may be entitled pursuant to this
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AGREEMENT, the prevailing party's reasonable attorneys' fees and litigation costs, in an
amount to be determined by the court. The prevailing party shall be determined by the court
in accordance with California Code of Civil Procedure Section 1032. Fees and costs
recoverable pursuant to this Section 17 include those incurred during any appeal from an
underlying judgment and in the enforcement of any judgment rendered in any such action or
proceeding.
14. Notice.
Any notice, tender, demand, delivery, or other communication pursuant to this
AGREEMENT shall be in writing and shall be deemed to be properly given if delivered in
person or mailed by first class or certified mail, postage prepaid, or sent by fax or other
telegraphic communication in the manner provided in this section, to the following persons:
To CITY: Clerk of the City Council
City of Santa Ana
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, CA 92702-1988
Fax 714-647-6956
Copies to: Executive Director— Planning and Building Agency
City of Santa Ana
20 Civic Center Plaza (M-20)
P.O. Box 1988
Santa Ana, California 92702-1988
Fax 714-973-1461
City Attorney
City of Santa Ana
20 Civic Center Plaza (M-29)
P.O. Box 1988
Santa Ana, California 92702-1988
Fax 714-647-6515
To OPERATOR: NAME OF APPLICANT
LEGAL BUSINESS NAME, dba DBA NAME
ADDRESS LINE ONE
ADDRESS LINE TWO, SANTA ANA, CA 927XX
Tel (XXX) XXX-XXXX
Email XXX@XXX.XXX
A party may change its address by giving signed notice in writing to the other party.
Thereafter, any communication shall be addressed and transmitted to the new address. If
sent by mail, communication shall be effective or deemed to have been given three (3) days
after it has been deposited in the United States mail, duly registered or certified, with
postage prepaid, and addressed as set forth above. If sent by fax or email document
attachment, communication shall be effective or deemed to have been given twenty-four
(24) hours after the time set forth on the transmission report issued by the transmitting
facsimile machine, addressed as set forth above. For purposes of calculating these time
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frames, weekends, federal, state, County or City holidays, or City Hall closure dates shall be
excluded.
15. Exclusivity and Amendment.
This AGREEMENT represents the complete and exclusive statement between CITY and
OPERATOR, and supersedes any and all other agreements, oral or written, between the
parties. This AGREEMENT may not be modified except by written instrument signed by
CITY and by an authorized representative of OPERATOR. Each party to this AGREEMENT
acknowledges that no representations, inducements, promises or agreements, orally or
otherwise, have been made by any party, or anyone acting on behalf of any party, which are
not embodied herein.
16. Assignment.
OPERATOR may not assign or transfer any interest herein without the prior written
consent of CITY and any such assignment or transfer without CITY's prior written consent
shall be considered null and void.
17. Discrimination.
OPERATOR shall not discriminate because of race, color, creed, religion, sex, marital
status, sexual orientation, age, national origin, ancestry, or disability, as defined and
prohibited by applicable law, in the recruitment, selection, training, utilization, promotion,
termination or other employment related activities. OPERATOR affirms that it is an equal
opportunity employer and shall comply with all applicable federal, state and local labor laws
and regulations.
18. Jurisdiction -Venue.
This AGREEMENT has been executed and delivered in the State of California and the
validity, interpretation, performance, and enforcement of any of the clauses of this
AGREEMENT shall be determined and governed by the laws of the State of California.
Both parties further agree that Orange County, California, shall be the venue for any action
or proceeding that may be brought or arise out of, in connection with or by reason of this
AGREEMENT.
19. Severability.
If any part of this AGREEMENT is found to conflict with applicable local or state laws or
regulations, such part shall be inoperative, null and void insofar as it conflict with said laws
or regulations, or may be modified or suspended as may be necessary to comply with any
local or state law or regulation but the remainder of the AGREEMENT shall continue in full
force and effect.
20. Counterparts.
This AGREEMENT may be executed in counterparts, each of which shall be deemed
an original but all of which together shall constitute one and the same instrument. The
execution of this AGREEMENT may be by actual, facsimile or electronic signature.
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21. Disclaimer.
Despite California's commercial cannabis laws and the terms and conditions of this
AGREEMENT or any Regulatory Safety Permit issued pertaining to OPERATOR or the
hereinabove specified property location, California commercial cannabis cultivators,
transporters, distributors, cannabis testing facility/laboratory businesses or possessors may
still be subject to arrest by state or federal officers and prosecuted under state or federal
law. The Federal Controlled Substances Act, 21 USC § 801 et. seq., prohibits the
manufacture, manufacturing, and possession of cannabis without any exemptions for
medical or non -medicinal use.
22. Authority to Bind.
Each undersigned represents and warrants that its signature hereinbelow has the
power, authority and right to bind their respective parties to each of the terms of this
AGREEMENT, and shall indemnify CITY fully, including reasonable costs and attorney's
fees, for any injuries or damages to CITY in the event that such authority or power is not, in
fact, held by the signatory or is withdrawn.
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IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT the date and year
first above written.
ATTEST:
DAISY GOMEZ
Clerk of the Council
APPROVED AS TO FORM:
SONIA R. CARVALHO
City Attorney
CITY OF SANTA ANA
KRISTINE RIDGE
City Manager
OPERATOR
LEGAL
NAME:
SIGNATORY
By: ` .� NAME:
Lisa Storck
Assistant City Attorney
RECOMMENDED FOR APPROVAL:
Minh Thai, Executive Director
Planning & Building Agency
TITLE:
TAXPAYER ID:
SIGNATURE:
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EXHIBIT A
COMMUNITY BENEFIT AND SUSTAINABLE BUSINESS PRACTICES PLAN
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