Loading...
HomeMy WebLinkAboutPEOPLES REFINERY-HERO OAK, LLCA-2017-369-87 Dn( u9lgn EnvelopeubQ 2FC2C2D4-'DFn8-4E6E-ADE2-F599A4E2366E iK OF COUNCIL. UA(E' OPERATING AGREEMENT FOR NON -RETAIL DEC 2 0 2022 COMMERCIAL CANNABIS BUSINESSES uo) yt �� This Operating Agreement ("AGREEMENT") is dated December 13, 2022 between the City of Santa Ana, a charter city and municipal corporation ("CITY") and PEOPLE'S REFINERY -HERO OAK, LLC, a California limited liability company ("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 MEDICINAL MANUFACTURING services in whole or in part of its operations transacted and carried -on by OPERATOR at the following subject property location, 2910 Oak St., Santa Ana, CA 9270. 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 renewallextension 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 DocuSign Envelope ID: 2FC2C2D4-DFD8-4D6E-ADE2-F699A4E2366E 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, 2022 regardless of starting date unless terminated earlier in accordance with Section 9 or 10 of this AGREEMENT. 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 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. DocuSign Envelope ID: 2FC2C2D4-DFD6-4D6E-ADE2-F599A4E2366E 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; 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 I. 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. DocuSign Envelope ID: 2FC2C2D4-DFD8-4D6E-ADE2-F599A4E2366E 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 agrpes to pay 12,M 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 DocuSign Envelope ID: 2FC2C2D4-DFD8-4D6E-ADE2-F599A4E2366E 20 Civic Center Plaza (M-29) P.O. Box 1988 Santa Ana, California 92702-1988 Fax 714-647-6515 To OPERATOR: People's Refinery -Hero Oak, LLC 3843 S. Bristol St. #618 Santa Ana, CA 92707 Tel: (714) 485-7379 Email : license@peoplescali.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 DocuSign Envelope ID: 2FC2C2D4-DFD8-4D6E-ADE2-F599A4E2366E 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 at. 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-2017-369-87 DocuSign Envelope ID: 2FC2C2D4-DFDB-4D6E-ADE2-F599A4E2366E IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT the date and year first above written. ATTEST: ;--Clerk of the Council APPROVED AS TO FORM: SONIA R. CARVALHO City Attorney Bv: 'Il Jose Montoya Assistant City Attorney RECOMMENDED FOR APPROVAL: P Minh Thai, Executive Director Planning & Building Agency CITY OF SANTA ANA -::�::%- � KRISTINE RIDGE City Manager OPERATOR LEGAL NAME: People's Refinery -Hero Oak, LLC SIGNATORY NAME: Bernard Steimann TITLE: Managing Member TAXPAYER ID: 83-1201062 Fuswn y: I Guvat^�. $fu�awn. VM' re' DocuSign Envelope ID: 2FC202D4-DFD6-4D6E-ADE2-F599A4E2366E EXHIBIT A COMMUNITY BENEFIT AND SUSTAINABLE BUSINESS PRACTICES PLAN PEOPLE'S REFINERY -HERO OAK, LLC Overview PEOPLE'S REFINERY -HERO OAK, LLC ("HERO") Is committed to creating a long-lasting, positive impact ill the community of Santa Ana and the greater Orange County region. To accomplish this goal, HERO will strive to foster meaningful partnerships with local businesses and organizations, HERO's management team understands the Importance of not only being an employer but also an active participant in the community. We will build our business on a foundation of compliance, transparency, and communication to ensure a positive impact on the community for years to come. As such, we have developed the following Community Outreach Plan, compromised of the following: f. Support of Local Non -Profit Organizations HERO Is partnered with the Max Love Project, which Is a non-profit organization located in Orange County that provides resources to children fighting life threatening diseases, Including aggressive cancers. HERO Is committed to providing the Max Love Project community of families with financial support, volunteer hours, and access to trained educators in the cannabis industry specifically regarding how various forms of cannabis industry on how various forms of cannabis can be used to heal specific ailments related to the side effects of chemotherapy. HERO is committed to supporting Max Love Project in both financial contributions and volunteer hour commitments, focused on the following programs: Annual Max Love Project Farm to Fork o $5,000 Financial sponsor contribution and volunteer hour commitment (2 hours per month per employee in the 3 months leading up to the event) Annual Max Love Project Thrive Golf Tournament o $5,000 Financial sponsor contribution and volunteer hour commitment (2 hours per month per employee in the 3 months leading up to the event) Max Love Project Cannabis Continued Education o 2 hours per month per employee (*equivalent $2,400 annual man hours) will be dedicated to supporting Max Love Project in continued cannabis education initiatives, health and wellness -focused brand education, and new cannabinoid research studies relevant to the Max Love Project community. Specifically, HERO will coordinate in -person training from industry specialists, HERO category experts, proprietary data reports, and access to other forms of electronic industry reports and studies related to health and wellness. o HERO will also provide Max Love Project leadership with access to HERO's network of related businesses and business partners to raise the Max Love Project profile in the cannabis industry. 2. Community Support HERO will partner with Orange County Rescue Mission ("OCRM") and their vision to provide community assistance in the areas of guidance, counseling, education, job training, shelter, food, clothing, health care and independent living. HERO employees will assist in volunteer areas that leverage our expertise and also support the seasonal needs of OCRM. HERO will volunteer at least 2 DocuSign Envelope ID: 2FC2C2D4-DFD8-4D6E-ADE2-F599A4E2366E hours per month per employee (equivalent $2,400 annual man hours) to help in the following as - needed specialized areas: • Warehouse - clean, organize, stock, receive product. • Folding Dept- organize, fold and Inventory clothes, • Kitchen - cook, clean, serve -breakfast or lunch HERO will also contribute as -needed logistics and inventory management support that may be relevant to OCRM throughout the year. 3. Neighborhood Outreach & Monthly 'Pickup Party" Cleanup HERO is committed to our surrounding neighborhood and to the revitalization of blighted areas within Santa Ana. In addition to the cosmetic and aesthetic upgrades we have made to our facility, we are committed to spending two hours per employee per month to execute a monthly "Pickup Party" day committed to the removal of trash and accumulated junk around our neighborhood and surrounding neighborhoods in Santa Ana. To drive participation and program awareness, we will reach out to neighboring organizations to Introduce ourselves, introduce the program, and solicit additional participation in an effort to build community and improve the neighborhood, as part of our outreach, we will also create and distribute marketing materials to neighboring organizations that describe the program details. To support the success of this initiative, HERO will commit $1,500 of annual budget to be used for cleanup materials, paint materials, bags, tools, tents, tables, advertising materials, and food and beverages. Hero will also commit the front parking area of both 3002 and 2910 Oak Street as the "Pickup Party headquarters during monthly "Pickup Party". 4. Local Hiring and Sourcing HERO will place an emphasis on providing employment opportunities to individuals living in Santa Ana specifically, HERO is Invested in the health and well-being of the local community and the economy. By hiring locally, HERO will diversity its workforce and continue to provide training opportunities to the residents of Santa Ana, and Orange County at large. HERO will strive to maintain a minimum of 50% local hiring. HERO will publish employment advertisements on various online platforms for visibility, to target Santa Ana locals. HERO will offer an incentive program to current employees who refer Santa Ana, or Orange County, residents to Join the team. HERO will also focus on promoting from within the company to support the career growth of Its loyal employees.