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HomeMy WebLinkAboutMAJOR D. BAY LLC(116URANCE NOT ON FILE A-2017-369-70 (h WORK MAY NOT PROCEED CLERK OF COUNCIL DATE: APR 19 2022 OPERATING AGREEMENT FOR NON -RETAIL COMMERCIAL CANNABIS BUSINESSES This Operating Agreement ("AGREEMENT") is dated April 6, 2022between the City of Santa Ana, a charter city and municipal corporation ("CITY") and Major D Bay LLC ("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 AND/OR MEDICINAL MANUFACTURING services in whole or in part of its operations transacted and carried -on by OPERATOR at the following subject property location, 3200 S. Susan St., 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. 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. Term. This AGREEMENT shall start on the date indicated above and shall terminate on December 31, 2022 regardless of starting date unless terminated earlier in accordance with Section 9 or 10 of this AGREEMENT. 4. Business License Reauired. 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. 2 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 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. 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 JZ,50 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 Id 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: Wendy Kleid Major D Bay LLC 3200 S. Susan St. Santa Ana, CA 92704 Tel 818-968-1353 Email jdkleid@yahoo.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. 1.9 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 orfederal 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- A-2017-369-70 IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT the date and year first above written. ATTEST: DAISY GOMEZ Jerk of the Council APPROVED AS TO FORM: SONIA R. CARVALHO City Attorney By. �4 /1' -3:ze John M. Funk Sr. Assistant City Attorney FOR APPROVAL: Minh Thai, Executive Director Planning & Building Agency CITY OF SANTA ANA KRISTINE RIDGE City Manager OPERATOR LEGAL NAME Major D Bay LLC SIGNATORY NAME: Wendy Kleid TITLE: Owner TAXPAYER ID: 87-4039367 Signature EXHIBIT A COMMUNITY BENEFIT AND SUSTAINABLE BUSINESS PRACTICES PLAN COMMUNITY BENEFITS WHEREAS, OPERATOR is a Type-S License manufacturer, a small cannabis business operator WHEREAS, by enabling OPERATOR to operate in the city, the City of Santa Ana is promoting and supporting small and local businesses. WHEREAS, OPERATOR will make best efforts to contribute to the City of Santa Ana by selecting one or more of several options to create a Community Benefit and Sustainable Business Practices Plan ("Plan") to impact the City of Santa Ana in relation to its ability to do so. WHEREAS, the 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. Contribution to the Community As a Type S Operator, we intend to integrate our business into the Santa Ana community through several stages of development. Our goals will be as follows: 1) Working towards one or more community impact goals offered at My Green Network or outside of MyGN to benefit the City of Santa Ana Community; and 2) To remain in compliance and follow all sustainable business practices within the My Green Network facility. We will appoint a founding member of our company to act as a community liaison to the City of Santa Ana. The community liaison will be the primary point of contact for any questions related to our business and will be accessible via phone, email, and social media. In addition, we intend to report as much of our efforts as possible to My Green Network in order to provide a larger impact as a community of cannabis operators due to our limited resources individually. The following categories represent the ways in which we believe we can contribute to making a positive impact to the City of Santa Ana. Hiring Local to Santa Ana As an Operator in Santa Ana, we will make best efforts to hire local Santa Ana residents. As a small business, we understand the benefits of sourcing talent locally to drive down our costs and build a stronger connection with the local community. Job Creation Once we have begun to scale our operations, we will need to hire help. These jobs can consist of (1) sales people (2) manufacturing help (3) marketing (4) legal, etc. We will give priority to hire Santa Ana residents for these positions. We intend to capitalize on the knowledge offered at My Green Network to provide a comprehensive training program for our positions that will include use of software and technology (e.g. inventory management software, emails, and spreadsheets), logistics management, and education about the cannabis industry. The skills will be transferable across all industries thereby providing staff with a long term professional asset. We will refer to the yearly Orange County Job Fair and any applicable Santa Ana job fair/career events. Living Wages Use living wages to attract qualified people within the community which will result in more economic prosperity for the community as a whole. Experience Working with Community Based Groups Major D Bay LLC has worked with Santa Ana veterans' group in the past and currently intends to use proceeds and effort from its current cannabis operation when licensed to reinitiate its efforts to Santa Ana community. Community Benefits Plan There are multiple ways we can potentially benefit the Santa Ana community. Our intention to positively impact the community is as follows: COMMUNITY BENEFIT PROGRAM Mandatory/Optional 1) Make Metro Classic Great Optional 2) Clothing and Food Drive Optional 3) Local Business as Resources Optional 4) Cannabis Workshop Optional 5) Santa Ana College Programs/Adult Education Optional 6) Youth Entrepreneur Workshop Optional 7) Art Events Optional 8) Resource Fair Optional 9) Retirement Community Participation Optional 10) Other Mandatory In collaboration with the entire MyGN community, OPERATOR, and the City of Santa Ana plan to discuss in good faith the implementation of this initiative in subsequent years and how we can make a stronger impact as a whole — rather than individual Operators. Make Metro Classic Great 10 A. Our facility is located near the territory of the Metro Classic Neighborhood Association. We intend to participate in this community group and enhance their mission of improving the community, for example, raising funds for park benches, bbq grills, painting public facilities, and removing weeds. We also intend to participate in the scholarship program offered every year from the Metro Classic Neighborhood Association community group for students graduating from high school and entering into college/university education. 2. Clothing and Food Drive A. We intend to hold a clothing and/or food drive through our retail partnerships each quarter and will donate a percentage of profits to the following Santa Ana charities Assistance League of Santa Ana Community Action Partnership of Orange County (CAPOC) Habitat for Humanity of Orange County 3. Local Businesses as Resources A. We will collaborate/purchase products from local businesses within 25 miles and share them with the 30+ businesses within our facility. Our business will preserve the status -quo of the neighborhood and co -exist seamlessly with other existing businesses. We intend to use local businesses as resources for our business from packaging, storage, other local operators, etc. 4. Establishing a cannabis education workshop A. MyGN and the City of Santa Ana plan to discuss in good faith the implementation of this initiative in subsequent years. The growth of the cannabis industry will create jobs and will require specific skills and experience to participate in one of the most desired markets to eneter. We intend to hold consistent cannabis education workshops to educate adults on different aspects of the industry, including, distribution, logistics, manufacturing processes, and inter relationships between cultivators, manufacturers, and retail companies. Such workshops will provide a general overview of the industry and a potential opportunity to participate in the industry. 5. Participating in Santa Ana College programs: adult basic education program: GED math and writing A. Along with MyGN's core team of lawyers, chefs, and professional backgrounds — we will contribute to participating in college programs, adult education, and GED education. For example, we can provide educational workshops including, but not limited to tutoring in math and writing, fine arts, music, sports, feedback and guidance on college applications and entrance exams, and basic overall business knowledge and etiquette. Other examples include, food operators can teach on cooking skills, commercializing of a product, packaging operators on standardizing processes, beverage operators on complexity, formulations, etc. 6. Participating in Santa Ana Arts Events A. Consistent with Santa Ana's tradition of promoting the arts, we intend to participate in monthly arts events. 11 7. Participating in a "Resource Fair" A. Materials and supplies to support a "Resource Fair" that includes employment, health, education, childcare, and citizenship. 8. Entrepreneur workshop for youth A. Inspire high school students in the Santa Ana community to start their own businesses. We would like to create workshops at local high schools in Santa Ana with the goal of inspiring young entrepreneurs, and this would give young students a platform for making those goals into reality. We can provide guidance on how to start any kind of business. 9. Sunflower Gardens- Holistic Benefits of Cannabis Infused Products A. MyGN will work with participating Green Leaders manufacturing cannabis products with holistic benefits to hold a workshop or conduct a presentation for convalescent homes, such as Sunflower Gardens Retirement Community, to raise awareness of the benefits of such products. 10. Veterans' Donation Drive via existing Charity Organizations A. Once we have begun to scale our operations, we will work with existing charity organizations in performing charity drives specifically for US Military Veterans. We will support these organizations by providing them with: 1.) Charity Donations, 2.) Education for Cannabis Business and Products. Sustainable Business Practices ENVIRONMENTAL SUSTAINABILITY E-Waste Social Responsibility Awareness (Mandato Consistent with our philosophy to preserve the environment, we intend to participate in the monthly a -waste and file shredding program facilitated by Santa Ana. Alternative Transportation (Mandatory) As an OPERATOR, we will follow MyGN's model in using alternative transportation including: use of electric vehicles, bikes, carpooling, and other methods of travel to work in order to reduce emissions into the environment. Consistent with our philosophy to preserve the environment, we intend to participate in the monthly a -waste and file shredding program facilitated by Santa Ana. Ways our Facility will Contribute to the Preservation of the Environment (Mandatory) Separating our waste into compost and recyclables will help lessen the impact on our environment. Following Title 24 and utilizing more energy efficient lighting and insulating our large space helps us conserve energy and in turn save cost. 12 Clean Up Dav 4/20 (optional As an OPERATOR, we hope to contribute to sponsor and hold an annual clean-up day with the My Green Network community. We would work together with members of the community and participate in a clean-up of local neighborhoods. Planting Flower Day (optional) As an OPERATOR, we hope to contribute to sponsor and hold flower planting day with the My Green Network community. We would work together with members of the community to pull out weeds and plant flowers around the local neighborhoods. Greenhouse (optional) As an OPERATOR, we hope to contribute to funding greenhouse garden projects at local schools, from elementary and onwards. Adequate Documentation of the Implementation of Community Benefits Each of the community contributions and benefits that as an OPERATOR will provide to the community of Santa Ana will be managed and reported by the community liaison pursuant to the terms detailed in Exhibit A. OPERATOR will also be responsible for notifying My Green Network of the same. The community liaison will ensure that if one or more of the community benefits has not been completed, that OPERATOR will take the steps necessary to ensure those community benefits have been satisfied. 13