HomeMy WebLinkAboutSWEETWATER CANYON DEVELOPMENT LLC, DBA MALIBU GOLDA-2017-385
INSURANCE NOT REQUIRED
WORK MAY PROCEED
CLERK Of COUNCIL
r1ATr.- AUG 3 G 2019
OPERATING AGREEMENT FOR NON -MEDICINAL RETAIL
COMMERCIAL CANNABIS BUSINESSES
This Operating Agreement ("AGREEMENT") is dated JULY W 2019. between the City of
Santa Ana, a charter city and municipal corporation ("CITY") and SWEETWATER CANYON
DEVELOPMENT LLC, dba Malibu Gold ("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
DISTRIBUTION AND CULTIVATION services in whole or in part of its operations transacted and
carried -on by OPERATOR at the following subject property location, 3030 Oak Street Santa Ana,
CA 92707.
1. Public Benefit.
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 experience working with community -based groups
such as school districts, college districts, city or county agencies, non-profit organizations,
artist or downtown groups. The Plan shall also include a description of OPERATOR's
efforts for recruiting and hiring local persons and businesses. Said Plan must also outline
commitments by OPERATOR to engage its staff in community service events or programs
in the City of Santa Ana. Plan must also outline and address sustainable business
practices, OPERATOR shall adequately document that it has met the Plan's obligations
and commitments as a condition of renewalla dension of this AGREEMENT upon expiration
of the inflial germ and any extensions.
2. ggmsci s tnsomction earl tfo. erns)) Auit
OPERATOR acknowledges and agrees that CITY is empowered under fhie Agreement
to inspect, amine and audit OPERATORs books and excess (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 nail inspection, examination and
audit of such books and records (including tax dings and returns) at any reasonable tend,
Including but not limited to, during normal business hours. In the event any such books,
metric, tax filings and returns cannot be made fully available within the City of Santa Area,
OPERATOR acknowledges and agrees that it II numburce CITY for the cost of all
transportation, lodging, waste, portal-tmissual travel dark. and other formental seats
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
consultant that a net operating agreement fee payment deficiency of greater than Five
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.
This AGREEMENT shall start on the date indicated above and shall terminate on
December 31, 2029 regardless of starting date unless terminated earlier in accordance with
Section 9 or 19 of this AGREEMENT, The AGREEMENT will have one (1) two-year
extension period until Drammitter 31, 2022 exercisable by a writing executed by the City
Manager and City Attorney's Office with the approval of OPERATOR.
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 entify to commence, transact or carry -on cannabis
business activity in the City of Santa Ana without first having groomed a City of Santa Ana
cannabis business license.
< s
OPERATORa
A. It is the holder of a valid Regulatory Safety Permit issued by CfTY In accordance with
the procedures Santa Ana Municipal Code unkers: requirements of Article I of Chapter 40, of the Santa Ana
Municipal Codiru and
S. At such #ire 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
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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 deity'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
AGREEMENT and/or CITY's approval of a Regulatory Safety Permit. -CITY may, at
its sole discretion, participate at its awn expense in the defense of any such action,
but such participation shall not relieve the OPERATOR of its obligation hereunder.
7, S1PEij,�TQ$G�mr�llar}ggyftthiaws.
OPERATOR agrees to comply with the City of Santa Ana Charter and Municipal Code,
including but not limited
to Chapters 16, 21 and 40, and the laws and regulations of the
State of California.
8. I�fau i�aryd Termination her 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 Businesspractices Plan,
D. Unauthodzed 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;
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C. Failure by OPERATOR to cooperate with CITY or 's authorized agents in any
inspection, examination and audit of OP T R's commercial cannabis business
books and records (Including tax fifingir and returns),
H. OPERATOR shell cure the default resulting Sam the cause for termination within
thirty (30) days of the date of the notice of tornermfirm. If OPERATOR fans to cure
the default within thirty (30) slays of the date of the notice of termination for cause,
#hie AGREEMENT Atli be terming
I. This AGREEMENT will automatically Generate It.
L P TOR'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 Coda section 40-92.
�. Termta�a€tasn tthots4 Cause.
Upon mutual written agrooment of the Parties, this AGREEMENT may be terminated
with deny (30) days' no
9ti. 'fe tneftore - R dt on Prtnr �rlttsattorto.
Upon any gatekeeper of this AGREEMENT, OPR T R'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 roes shalt continue to operas and be applicable until all
operating fees dug under this AGREEMENT are Paid In full. OPT T R's liability for any
remaining unpaid past due penalties poster late interest charges shell continue until fully
satisfied,
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This clause shall not preclude parties tram 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 12 500 to CITY within
thirty (30) days of execution of this AGREEMENT.
13, Attomev 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
AGREEMENT, the prevailing party's reasonable atiomeys' fees and_iitigation 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, o i _.
Any notice, tender, demand, delivery, or other communication pursuant to this
AGREEMENT shall be in writing and shall be deemed to be property given if delivered in
person, or mailed by first class or cer+.ified 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 Im
Santa Ana, CA 92702-1988
Fax 714-647-6958
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 71fi-973-1469
City Attorney
City of Santa Ana
20 Civic Center Plaza {M-29}
P.O. Box 1988
Santa Ana, California 92702-1988
Fax 714-647-6615
5.:.
To OPERATOR: DAN NATHANSON
SWEETNATER CANYON DEVELOPMENT, LL
doe MALIBU GOLD
3030 OAK STREET
SANTA ANA, CA 92707
Tal, (424) 1086
Small: dan@swcdevelopmenfllc.com
A party may change its address by giving signed notme in writing to the other party.
Thereafter, any communication shall be addressed and tramorafted to the now address, If
sent by mail, communication shall be Adaptive or deemed to have how given do (3) days
after it has been deposited In ft United States mail, duly registered or comfied, with
postage prepaid, and addressed as set forth above. It dent by fax or email document
attachment, communication shah be offortive or deemed to have been given my -four
(24) hours after the time set forth on the "handsome report leaned by the humankind
faoslrnila machine, addressed as set forth above. For purposes of calculating these time
frames, weekends, federal, spite, County or City holidays, or City Hall closure dates shall be
excluded,
id,-,Exct€rslvitvsn�men rrt,
This AGREEMENT statementsthe complete and exclusive statement between CITY and
OPERATOR, and sups des any and all other agreements, oral or written, between the
parties. This AGREEMENT y 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, loduconerms, 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.
i6. Etigglifigifififidt
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 vokL
OPERATOR shall not discriminate because of race, color, creed, religion, sex, "water
status, sexual orientation, age, national origin, ancestry, or disability, as defined and
prohibited by applicable lave, 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 tabor laws
and regulations.
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or proceeding that may be brought or arise out of, in connection with or by reason of this
AGREEMENT.
19. Levera ii &J#
If any part of this AGREEMENT is found to conflict with applicable focal or state laws or
regulations, such part shall be inoperative, null and void insofar as it conflict with said taws
or regulations, or may be modified or suspended as may be necessary to comply with any
local or state taw or regulation but the remainder of the AGREEMENT shall continue in full
force and effect,
20. Counteroarfs,
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.
21. - QisclaiMu.
Despite California's commercial cannabis laws and the terms and conditions of this
AGREEMENT or arty Regulatory Safety Permit issued pertaining to OPERATOR or the
hereinabove specified property location, California commercial cannabis cultivators,
transporters, distributors, cannabis testing facllttytlaboratory 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 § $01 at. seq.; prohibits the
manufacture, manufacturing, and possession of cannabis without any exemptionsfor
medical or non -medicinal use,
22. Authority fo Bind.
Each undersigned represents and warrants that its signature herembetow 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.
-Signature Page Below-
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A t
IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT the date and year
first above written -
DAISY GOMEZ
CLERK OF THE COUNCIL
APPROVED AS TO FORM:
SONIA R. CARVALHO
City Attorney
Lisa Storck
Assistant City Attorney
RECOMMENDED FOR APPROVAL:
Minh Thai, Executive Director
Planning & Building Agency
CITY OF SANTA ANA
RIDGE'
ManagerCity
OPERATOR
LEGAL
NAME: SWEETWATER CANYON
DEVELOPMENT LLC
SIGNATORY DAN NATHANSON
NAME:
TITLE: CEO
TAXPAYER ID: i 88-0804212
SIGNATURE:` 1......._"._..m....i3C
EXHIBIT A
COMMUNITY BENEFIT AND SUSTAINABLE BUSINESS PRACTICES PLAN
Sweetwater Canyon Development is committed to the community and the non-profit
organizations that help shape this community's wellness and culture, As follows are some
community benefit programs and commitments Sweetwater Canyon Development will partake
in:
Donation to local charity
Sweetwater Canyon Development is devoted to contributing to charity to assist those in need
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Sweetwater will donate at least. $5,000 across the following charity organ€zationle): fNercyHouse
Living Centers, KidWorks, and Susan G. Korean foundation.
Starting in 2020, during Breast Cancer Awareness month, Sweetwater Canyon will distribute
their products in support of the breast cancer awareness efforts made by the Susan G. Korean
foundation whereas $0,05 will be donated to the foundation for each 1/8th Jar unit of our
flagship Malibu Gold branded cannabis flower sold throughout the sister, This campaign is
projected to raise thousands of dollars.
Sweetwater Canyon is committed to dedicating at least 24 hours volunteering with charities per
year:
Sweetwater Canyon will send records and documentation to the City of Santa Ana that show the
results of our campaign such as copies of canceled checks, journal logs, bank statements,
charity receipts„ and product order invoices 1 manifest documents for related distribution sales
associated with the campaign during Breast Cancer Awareness month.
Yearly Food and Toy Drives
Sweetwater Canyon Development will bold annual food and toy drives from November through
December to donate to KidWorks Santa Ana and Mercy House Laving Centers.
Sweetwater Canyon will send the City of Sane Ana documentation of our food and toy drives in
the form of videos, photos, and/or other relevant materialstdpcuments/receipts that will record
these activities:
Current Community Involvement
Sweetwater Canyon Development has already donated to the following Santa Ana
organizations;
KidWorks - donation of $500 made in July of 2019
MarcyHouse Living Centers donation of $500 made in July of 2019
Commitment to Employing Santa Arcs Residents
Sweetwater Canyon Development will use best efforts to hire qualified residents of the City of
Santa Ana to work at its cultivation and distribution businesses across all our employment
categories (full-time, Fart -time, hourly, temporary, intern, etc), We have already Partnered with a
local Santa Ana based staffing agency, Priority Workforce based at 600 5 Grand Ave M7,
Santa Ana, CA 92705 to help us ormwer as much Ideal Santa Ana based talent as possible for
our business. As of August 16th 2019, five of ft eight candidates we ate targeting for open
positions at the company are Santa Ana residents,
Operator is committed to interview at least one Santa Ana resident for every open entry level
position of our business, furthermore we are targeting an aggressive 20% of our total employee
workforce across all categories to be comprised of Santa Ana residerim.
Sweetwater Canyon will send records and documentation to the City of Santa Ana that
demonstrate the results of our efforts for the above mentioned targets, Such as We forms,
California Employment Development Department (EDD) documents and/or any other relevant
Human resource related documents that demonstrate each worker's residency,
Additionally, Sweetwater Canyon will offer qualified employees up to a 600 reimbursement to
assist in any efforts in relocating to Santa Ana. The following qualifying expenses covered under
the $500:
Transportation to move personal household items.
Deposit or down payment for residences.
Reasonable transportation cost,
Economic Benefits
Sweetwater Canyon Development is committed to Santa Ana and the City's Economic
Opportunity Plan, which aims to create and maintain a diverse, stable and sustainable
economic base by meeting the plan's objectives:
1. Create higher paying jobs for Santa Ana citizens
2. increase revenues that will allow the City to provide quality public services for its
residents
3. Improve and maintain the City's appearance including public facilities and infrastructure
Sweetwater will Fay employees a starling hourly rate of $15.00 per hour, $3 above the minimum
wage in California as of 2019, generate high tax revenues for the City through a high volume of
cultivation and distribution sales, and donate to local charities and homeless stations to assist in
improving the City's appearance. Sweetwater will also prioritize the hire of qualified Santa Ana
residents to assist in creating higher paying jobs for Santa Ana citizens.
Sweetwater Canyon will send records and documentation to the City of Santa Ana that
demonstrate pay to our employees is above the California minimum wage, such as the payroll
journals forms 940 A 941, Was, and California Unemployment Documents (EDO) documents
such as topics of the DE 4 California Payroll Tax form dealer other human Resources related
documentation.
Sustainable Business Practices
Sweetwater Canyon Development is devoted to economic viability, socially responsibility and
environmental consciousness.
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Sweetwater will be installing a solar panel on our building's roof to help reduce our carbon
footprint. The facility's irrigation system is set op to reclaim and reuse approximately 60% of
water used for all operations, and uses no harmful pesticides on any of its products.
Furthermore, Sweetwater has completely upgraded our building's electrical gear, including
panels, transformers and breakers, with brand-new state of the art equipment to ensure
efficiency and safety. These measures are important to help improve health and safety in the
workplace while at the same reducing operating costs,
Cementing & Gwen Q mrY i
Sweetwater Canyon will encourage green commuting for all staff to and from work. This will
include carpooling with other employees, and the use of public transportation, To encourage
this initiative we will offer staff who use public transportation a weekly reimbursement of up to
In addition to encouraging carpooling and use of public transportation, Electric Car Charging
stations will be installed for employees who drive plug-in Electric 1 Hybrid vehicles, and Bicycle
Racks will be installed for those able and willing to dde their bike to work,
e ling'
Sweetwater encourages all staff to recycle to help control the amount of waste produced, The
facility will be equipped with a recycling receptacle in every area there is a trash can,
Lastly, Sweetwater is exploring options with our retail partners to incentivize customers to
recycle our packaging.
Records and Documentation submittals to The City of Santa Ana
If for any reason the city is not satisfied with the initial records submittal by the Operator
regarding the above mentioned actiwlias outlined throughout this Exhibit A, the City can contact
Sweetwater Canyon Development via phone or email to request additional supporting materials,
records; and documents, The Operator will comply with such request within 30 days of notice.
All records and documentation submitted to the City will be compliant with all privacy laws
regarding the disclosure of worker's personal information and data records at Operator's facility,
I