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HomeMy WebLinkAboutBTJ VENTURES LLCINSURANCE NOT REQUIRED WORK MAY PROCEED n?rc. CLERK OF COUNCIL o: �bU�,� u�, �oeiol7kPovr ds OPERATING AGREEMENT FOR NON -MEDICINAL COMMERCIAL CANNABIS BUSINESSES A-2017-392 o This Operating Agreement ("AGREEMENT") is dated 3/19/2020, between the City of Santa c 4 Ana, a charter city and municipal corporation ("CITY") and BTJ Ventures LLC ("OPERATOR"), C1. collectively referred to as "the Parties". This AGREEMENT shall become effective on the date o that OPERATOR is issued a Regulatory Safety Permit by CITY for the operation of a commercial o°-- cannabis business conducting ADULT -USE MANUFACTURING & DISTRIBUTION services in ¢ whole or in part of its operations transacted and carried -on by OPERATOR at the following subject property location, 3301 S Harbor Blvd Suite 109, Santa Ana, CA 92704. 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 renewal/extension of this AGREEMENT upon expiration of the initial term and any extensions. 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 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. 3. 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 2 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. 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 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: BRANDON SISCO BTJ VENTURES LLC 3301 S HARBOR BLVD SUITE 109, SANTA ANA, CA 92704 Tel (949) 482-7058 Email brandon@btjventures.com 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 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, disability, gender identity, gender expression, medical condition, genetic information, military or veteran status. 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. 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. -Signature Page Below- IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT the date and year first above written. ATTEST: DAISY GOMEZ Acting Clerk of the Council APPROVED AS TO FORM: SONIA R. CARVALHO City Attorney By: , 4 � (- Lisa Storck Assistant City Attorney RECOMMENDED FOR APPROVAL: Minh Thai, Executive Director Planning & Building Agency CITY OF SANTA ANA KRI TINE RIDGE ' City Manager OPERATOR LEGAL BTJ Ventures LLC NAME: SIGNATORY NAME: Brandon Sisco f:3 TITLE: Managing Member TAXPAYER ID: 618-5e-0330 4el Signature EXHIBIT A COMMUNITY BENEFIT AND SUSTAINABLE BUSINESS PRACTICES PLAN BTJ Ventures is proud to operate in Santa Ana and is committed to making a positive impact on the city and community. Brandon Sisco, our Managing Director, is a longtime resident of Santa Ana whose commitment to participating in and improving the community led him to run for City Council in 2019 where he was exposed to the needs and opportunities for the city's residents. COMMUNITY BENEFIT STRONG FOCUS ON LOCAL HIRING BTJ prioritizes hiring and training Santa Ana residents to work in our manufacturing operation. In addition to Santa Ana's own Brandon Sisco, a founding members and Managing Director of BTJ Ventures, one of our initial hires is a lifetime resident of the city. Our job listings (Indeed, etc.) note that Santa Ana residents receive priority consideration. Our goal is to have our workforce comprised of 50%-100% local residents. We will achieve this, in part, by working with the City and local businesses to develop and implement a plan to develop a qualified cannabis job pool (see below.) DEVELOP QUALIFIED CANNABIS JOB POOL BTJ will partner with the city and our fellow Santa Ana cannabis industry companies to create a pool of badged candidates with preliminary training in the cannabis industry to benefit all parties; • Local residents by providing a leg up in obtaining local jobs; • Santa Ana -based cannabis businesses by having a pool of ready -to -go, pre -qualified employees; and • Santa Ana by reducing unemployment and developing a more highly skilled work force. A monthly two- to three-hour training session will provide an overview of the cannabis industry, the types of jobs available, and emphasize the responsibility to comply with all local and state regulations. Participants will be provided required forms and direction to complete a Live Scan and apply for a City Cannabis Worker's badge and provide the direction needed for interested parties to complete that essential part of the hiring process. PRIORITIZE LOCAL BUSINESSES BTJ Ventures will continue to seek out and choose local businesses as partners for goods and services where practicable. For example, our largest vendor to date, 1st Choice Development, the construction firm that built out our lab, is based in Santa Ana. We will contact Santa Ana cultivators first for source input material. We will first look to distribute our products through Santa Ana dispensaries before expanding to other regions. SUPPORT YOUTH PROGRAMS BTJ's founders will support the important work of the Boys and Girls Club of Santa Ana to ensure that Santa Ana's upcoming generations have the tools and support they need to lead fulfilling, successful lives. BTJ's founders and/or workforce commit to providing at least 50 hours of volunteer service with the Boys and Girls Club and provide quarterly contributions. We will work with the Club to determine how we can best support their needs including tutoring, mentoring, coaching, and/or just providing a friendly helping hand. Additionally, BTJ Ventures will donate each year to the Northeast Santa Ana Little League (NESALL). Baseball is a great way to develop athletic skills, teamwork, get exercise, sunshine and fresh air, and have lots of fun. Who knows, maybe we will help find the next major league player from Santa Ana joining Lenny Dykstra, Mitch Williams, Ben Francisco, Danny Espinosa and others on that illustrious list. ADDING TO THE TAX BASE BTJ is working to develop a successful manufacturing operation that will generate significant tax revenue for Santa Ana. We have made major improvements to a commercial space that has been unproductive for a number of years. While paying taxes is not anyone's favorite thing to do, we are pleased that our success can help support Santa Ana's growth and renewal. SUSTAINABLE BUSINESS PRACTICES PLAN BTJ seeks ways to reduce our impact on the environment in all of our business decisions and in the design and build out of our manufacturing operation. CLEANEST FORM OF CANNABIS PROCESSING While most cannabis extraction operations employ heavy petrochemicals like butane or propane, BTJ uses nothing harsher than water and ice in creating our products. That substantially reduces the amount of carbon -based chemicals that has to be produced and disposed of. Additionally, it avoids the storage of volatile and hazardous materials. ENERGY EFFICIENT COLD ROOM Many steps in BTJ's manufacturing process must be done in cold conditions — about 40 degrees Fahrenheit. BTJ installed a prefabricated "Cool Bot" cold room that requires far less energy to reach and maintain these cold temperatures. This solution requires 40% less energy use than a traditional walk-in cooler. LED LIGHTING BTJ has swapped out all existing fluorescent and incandescent lights for energy -efficient, longer lasting LED lights cutting energy use for lighting in half and, by using longer laster bulbs, decreases the amount of industrial waste. WATER & ENERGY EFFICIENT, ADA-COMPLIANT BATHROOMS Both bathrooms have been retrofitted with motion sensor/timed lights to reduce energy. Old style toilets were replaced with low flow/hi efficiency models. Sinks are low -flow versions to save additional water. Both bathrooms have been upgraded at BTJ's expense to be fully compliant with the Americans with Disabilities Act to enable us to accomodate the widest hiring pool. 10 PUBLIC TRANSPORTATION BTJ Ventures has several bus stops steps from our front door enabling local residents to use public transportation to travel to and from work. Combined with our focus on hiring local job candidates, we expect to reduce commuting among our workforce and have public transportation as a viable option. 11