HomeMy WebLinkAboutItem 35 - Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax Updates Planning and Building & Finance and Management Services Agencies
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Item # 35
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
May 3, 2022
TOPIC: Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax
Updates
AGENDA TITLE:
Public Hearing - Ordinance Amendment No. 2022-01 to Update Chapters 18, 21, And 40
of the Santa Ana Municipal Code Addressing Medicinal Cannabis Retail, Consumption
Lounges and Temporary Events, Measure BB Waitlist Termination, Retail Facility
Relocation, Commercial Cannabis Eligible Areas, Commercial Cannabis Tax Rate
Reductions for Commercial Cannabis Cultivation, Distribution, and Manufacturing, and
Adopt Language Addressing Proposed Tax Treatment of Microbusinesses and Shared
Manufacturing, and Make Other Administrative Amendments of a Complimentary Nature
RECOMMENDED ACTION
1. Approve first reading of an ordinance amending Chapters 18, 21, and 40 of the
Santa Ana Municipal Code addressing medicinal cannabis retail, consumption
lounges and temporary events, Measure BB Waitlist termination, retail facility
relocation, commercial cannabis eligible areas, commercial cannabis tax rate
reductions for commercial cannabis cultivation, distribution, and manufacturing,
and adopt language addressing proposed tax treatment of microbusinesses and
shared manufacturing, and make other administrative amendments of a
complimentary nature.
2. Adopt a resolution modifying various non-retail commercial cannabis tax rates.
3. Adopt a resolution establishing a map of commercial cannabis eligible areas in the
City.
DISCUSSION
Background
The City of Santa Ana permits a variety of types of cannabis business activity, which
include retail sales of medicinal and adult-use cannabis, and cannabis cultivation,
distribution, manufacturing, and testing. These cannabis business activities were
permitted through adoption of multiple ordinances beginning with Measure BB (Ordinance
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NS-2684) in November 2014 ending with Ordinance NS-2944 in May 2018. In November
2018, Santa Ana voters approved Measure Y (Ordinance NS-2962), which established
commercial cannabis business license taxes for adult-use cannabis retail sales, cannabis
cultivation, distribution, manufacturing, and testing. The most recent commercial
cannabis ordinance updates were adopted by the City Council in September 2019
(Ordinance NS-2973). These updates amended various sections of Chapters 18, 21, and
40 of the Santa Ana Municipal Code (SAMC) to address horizontal and vertical integration
of cannabis businesses, to streamline and modernize regulations in response to State
changes allowing microbusinesses and shared manufacturing, and to establish
consistency among various SAMC sections addressing employee badge requirements
and minimum purchasing age.
Ongoing changes to State cannabis laws and evolving market demands prompt the City
to regularly revisit its ordinances and tax collection to ensure that Santa Ana: (1) maintain
its competitive position in the region; (2) remain compliant with applicable State laws; and
(3) streamline and equalize its implementation of non-retail commercial cannabis taxation.
In response to these changes, the City is proposing to update the SAMC in various
chapters and sections to address medicinal cannabis retail, consumption lounges and
temporary events, Measure BB Waitlist termination, retail facility relocation, commercial
cannabis eligible areas, commercial cannabis tax rate reductions for commercial
cannabis cultivation, distribution, and manufacturing, and adopt language addressing
proposed tax treatment of microbusinesses and share. These updates are intended to
foster an environment in which commercial cannabis businesses continue to operate
safely and in accordance with all applicable local and State regulations while maintaining
Santa Ana’s top position in the regional cannabis industry.
Proposed Amendments – Financial (SAMC Chapter 21)
Table 1 (Proposed Amendments to Chapter 21) describes the finance-related ordinance
amendments. Additional details are provided in the subsections that follow.
Table 1: Proposed Financial Amendments
Item Impact
Amend (SAMC
Sections 21-127, 21-
133, and 21-135)
Amendment:
(1) Amend SAMC Chapter 21 (Licenses) provisions relating to
Article XII (Medical Marijuana) - Section 21-127- to reflect
definitional changes, and Article XIII (Commercial Cannabis) -
Section 21-133 – to adopt a separate business license tax rate
category for consumption lounges and temporary consumption/
special events and to reduce cannabis tax rates for commercial
cannabis cultivation, distribution, and manufacturing activities;
(2) by further amendment of Section 21-133 to administratively
simplify the taxation of shared manufacturing activities to
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Table 1: Proposed Financial Amendments
Item Impact
maintain Santa Ana’s competitive advantage visa via these
commercial cannabis business activities, and to also relax and
equalize square footage assessment treatment as between co-
located cannabis distribution and manufacturing businesses
who are not horizontally/vertically integrated and those that
are; and (3) also amend Section 21-135 to equalize the tax
treatment of microbusinesses to insure fair treatment.
The recommended Commercial Cannabis Tax Rate
Adjustments, including a $2,000 basic tax rate per license, are
described in detail in Exhibit 4.
Impacts:
Reduction of commercial cannabis business license tax rates
for commercial cannabis cultivation, distribution, and
manufacturing activities is estimated to result in a reduction
of non-retail commercial cannabis business tax revenue in
the range of approximately $730,000 to $920,000.
Current
FY 2022-23
Revenue
Projections
Potential
Revenue
Reduction
(Lower Range)
Potential
Revenue
Reduction
(Upper Range)
CULTIVATION $1,250,000 $312,500 $387,000
DISTRIBUTION $1,150,000 $287,500 $371,000
MANUFACTURING $130,000 $129,750 $159,000
Total $2,530,000 $729,750 $917,000
The foregoing non-retail commercial cannabis figures do not
include potential offsetting revenues which may be anticipated
from future shared manufacturing and microbusiness revenues
and from the enhanced natural growth of Santa Ana’s non-
retail commercial cannabis business community which will be
encouraged by the rate reductions, and the simplification and
equalization of tax treatments for cultivation, distribution,
manufacturing, shared manufacturing, and microbusinesses.
At present, however, the City is lacking in sufficient information
to reasonably project such additional revenues.
Likewise, the City may anticipate future increased revenues
from primary manufacturers and participating shared
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Table 1: Proposed Financial Amendments
Item Impact
manufacturers taking advantages of Santa Ana’s proposed
favorable and administratively streamlined treatment of shared
manufacturers and the proposed relaxation and equalization of
the tax treatment as between manufactures and distributors
who are co-located, regardless of whether they are horizontally
or vertically integrated or not.
Similarly, there will be an increased likelihood of formation of
microbusinesses based on Santa Ana’s going-forward
equalization of microbusiness tax treatment, so that
microbusinesses will not have to include the annual $2,000
basic tax rate assessment for each licensed category of
commercial cannabis business they choice to engage in, but
instead they will be liable to only pay once for the primary
commercial cannabis activity they choose to engage in. This
effectively affords microbusinesses the same net administrative
tax treatment as other categories of commercial cannabis
business.
Consumption Lounges & Temporary Consumption/Special Events and Shared-Use
Manufacturing – Elimination of Alternate Square Footage Tax Assessment
Consumption Lounges & Temporary Consumption/Special Events are locations where an
underlying retail cannabis business licensee is already subject to a square footage
assessment. Likewise, Shared Manufacturing premises are places where multiple shared
manufacturers (also known as sub-manufacturers) rotate on a variable schedule and
share space and equipment provided by a primary commercial cannabis manufacturing
business, the alternate square footage method of assessment is made too cumbersome
to apply and the need to impose it is mitigated by the fact that the primary manufacturing
business owning and controlling the manufacturing premises is already subject to the
assessment. Therefore, staff recommends that the City Council establish both the
Consumption Lounge & Temporary Consumption/Special Events and Shared Use
Manufacturing square footage tax rates at zero ($0) dollars, effectively eliminating the
Alternate Square Footage Tax Assessment method as a component in computing taxes
owed by shared manufacturers operating at primary manufacturing locations within the
City. Effective elimination of the alternate tax will remove the principle administrative tax
impediment to facilitating consumption and shared manufacturing within the City.
Microbusinesses – Elimination of De facto Assessment of Multiple Basic Tax Rate
Assessments
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The City’s Business License Tax Code dealing with cannabis businesses establishes an
annual Basic Tax Rate assessment of $2,000 per each licensed commercial cannabis
activity engaged in at a single location in the City. This requirement poses a challenge for
microbusinesses, which were not contemplated as a commercial cannabis category to be
authorized to do business in the City at the time the Basic Tax Rate assessment was
adopted for commercial cannabis businesses pursuant to Voter Ballot Measure Y. The
Basic Tax Rate assessment was primarily intended as the means - together with the
Alternate Square Footage Tax - of assuring a minimum level of City revenue from
commercial cannabis businesses. Microbusinesses are required by the state to engage
in a minimum of three commercial cannabis activities, and thus are required by the City
to obtain business license for each of these activities. (No administratively reasonable
methodology exists or is likely to become available for combining all categories of
commercial cannabis assessment into one business license account.)
However, the requirement for multiple Basic Tax Rate assessments can be seen to have
a negative impact on the formation of microbusinesses within the City. To address this
issue, staff recommends that the City Council adopt a special proviso for microbusinesses
allowing them to pay the annual Basic Tax Rate only upon their predominate commercial
cannabis activity, and thus allow them to be exempted from the requirement on all of their
other licensed activities engaged in at a single location within the City.
Proposed Amendments – Regulatory (SAMC Chapters 18 and 40)
In addition to the proposed changes listed in Table 1, the City is proposing to update and
streamline certain sections of Chapter 18 (Medicinal Marijuana) and Chapter 40
(Commercial Cannabis Business Activities Other Than Medicinal Marijuana). Table 2
(Proposed Amendments to Chapters 18 and 40) describes the regulatory-framework
ordinance amendments.
Table 2: Proposed Regulatory Amendments
Item Amendment and Impact
Repeal and Readopt
Medicinal Cannabis
Retail Regulations
(SAMC Article XIII of
Chapter 18)
Amendment:
Removes medicinal cannabis retail regulations from Chapter 18 by
deleting Article XIII and readopting as Article II of Chapter 40.
Impacts:
Creates a single SAMC chapter addressing all commercial cannabis
(medicinal and adult-use) business activities, including retail,
cultivation, distribution, manufacturing, and testing.
Enhances internal consistency of commercial cannabis regulations by
consolidating all regulations into a single chapter within the SAMC.
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Table 2: Proposed Regulatory Amendments
Item Amendment and Impact
Community Benefits
and Sustainable
Business Practices
(SAMC Sec. 40-1)
Amendment:
Updates community benefit and sustainable business practices
requirement by codifying requirements and providing options to satisfy.
Impacts:
Addresses the termination date of existing commercial cannabis
operating agreements, which are set to expire December 31, 2022.
Codifies requirement for all commercial cannabis businesses to
submit and have a Community Benefit and Sustainable Business
Practices Plan on file with the City.
Allows the City to require proof of satisfaction of the community benefit
and sustainable business practices plan.
Provides businesses an option to allow the City to provide community
benefits by executing an operating agreement and paying additional
operating fees to the City based on gross receipts.
Commercial Cannabis
Eligible Areas (SAMC
Secs. 40-5, 40-6, and
40-105)
Amendment:
Establishes an updated commercial cannabis eligible areas map to
maintain a buffer between commercial cannabis businesses and
sensitive land uses, such as schools, parks, and residential zones.
Impacts:
Updates the existing map of commercial cannabis eligible areas
adopted March 18, 2020, and requires adoption of the new map by
resolution of the City Council.
Maintains a buffer between commercial cannabis businesses and
sensitive land uses.
Creates consistency between ordinance and adopted map.
Relocation of
Commercial Cannabis
Retail Facilities
(SAMC Secs. 40-7 and
40-106)
Amendment:
Allows relocation of pending/selected and existing commercial cannabis
retail locations within Santa Ana.
Impacts:
Addresses facilities impacted by changes in market conditions and/or
impacted by projects such as the Costa Mesa (SR-55) Freeway
widening.
Facilitates the opening of final and remaining retailer “slots.”
Allows the City to achieve its full revenue-generating potential of the
commercial cannabis ordinance.
Requires new locations to be separated from any other
pending/selected or waitlisted location by 500 feet so as to not
negatively impact any other location, subject to full compliance with all
zoning, buffer, and separation requirements.
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Table 2: Proposed Regulatory Amendments
Item Amendment and Impact
Consumption
Lounges as an
Ancillary Component
of Retail (SAMC Secs.
40-5 and 40-8)
Amendment:
Establishes a means by which cannabis retailers may apply to construct
and operate a consumption lounge.
Impacts:
Consistent with State law, allows cannabis consumption lounges as
an ancillary component to retail activities subject to full compliance
with State licensing, local permitting, environmental and public health,
and building and fire safety regulations.
Allows the City to achieve its full revenue-generating potential of the
commercial cannabis ordinance.
Maintains Santa Ana’s competitive edge and leadership position
within the regional cannabis industry.
Temporary Cannabis
Special Events (SAMC
Sec. 40-8)
Amendment:
Establishes a means by which cannabis retailers may apply to conduct
special events that include cannabis sales and consumption.
Impacts:
Allows up to a total of six (6) special events per year annually total
among all operators in the City.
No more than two (2) events could be permitted in a single month, and
a single operator could be permitted to conduct a maximum of one (1)
independent event per calendar year, except that multiple operators
may form a single event and file a single application.
Activities would be required to satisfy all applicable State licensing,
local permitting, environmental and public health, and building and fire
safety regulations.
Allows the City to achieve its full revenue-generating potential of the
commercial cannabis ordinance.
Maintains Santa Ana’s competitive edge and leadership position
within the regional cannabis industry.
Various
Administrative
Amendments for
Internal Consistency
(SAMC Secs. 40-2, 40-
9, 40-9.2, 40-10, 40-
101, 40-103, 40-110,
40-111, and 21-127)
Amendments:
Updates various sections of Chapters 21 and 40 to establish internal
consistency in terminology and regulations, update background check
requirements, and require plan submittal and opening for all remaining
pending cannabis retail businesses.
Impacts:
Edits title of Chapter 40 and updates definitions to address
amendments described above.
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Table 2: Proposed Regulatory Amendments
Item Amendment and Impact
Updates application selection process for commercial cannabis
businesses and addresses consumption lounges.
Modifies various sections to remove references to now-defunct Article
XIII of Chapter 18.
Clarifies and enhances background check requirements for those
involved in commercial cannabis businesses in Santa Ana
Requires all pending medicinal and adult-use retail locations to submit
construction plans by December 31, 2022 and open within 180 days
of permit issuance.
Among the proposed amendments, the number of permitted retail locations and relocation
of pending/selected and existing retailers, termination of the Measure BB Waitlist,
changes to the buffer requirements from sensitive land uses, and consumption lounges
and temporary events represent substantive changes that are described in further detail
in the subsections below. These amendments are intended to address evolution in market
conditions for cannabis businesses in Santa Ana and maintain the City’s competitive
position in the regional cannabis industry.
Number of Permitted Retail Locations, Retail Relocation, and Termination of the Measure
BB Waitlist
Existing ordinance regulations permit up to 20 medicinal and 30 adult-use cannabis retail
locations; however, such facilities may be co-located in a single facility. The proposed
amendments would allow an additional five (5) retail locations, for a total of 35 storefronts
in the City. If approved, the amendments would allow all 35 retail licenses to sell both
medicinal and adult-use cannabis.
There are currently 27 operating storefront retailers in the City. Of these, 20 sell medicinal
and adult-use cannabis, and 7 sell adult-use only cannabis. In addition, there are 1
pending/selected medicinal-only and 2 pending/selected adult-use retailers. The
amendment would incentivize the pending/unopened retailers to open sooner and provide
the retailers greater revenue-generating potential through both medicinal and adult-use
retail cannabis sales.
The amendments would also allow existing and pending/selected retailers to relocate
subject to full compliance with all zoning, buffer, and separation requirements from other
existing or pending/selected locations. This amendment is intended to address the SR-
55 widening project, which will result in physical impacts to at least one retailer, as well
as evolving market conditions as the industry matures in Santa Ana. Currently, relocation
is prohibited, and those businesses that have relocated have done so pursuant to various
agreements with the City. The amendments would standardize the process for all entities
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and further incentivize the pending/selected businesses that have not yet opened to
properly locate and open.
Lastly, the amendments would terminate the Measure BB Waitlist, which has consistently
shrunk since 2015 from 575 entities to its current five (5). Pursuant to Measure BB, each
year waitlisted entities must notify the City of their desire to remain on the Waitlist, and
the City updates the Waitlist annually between April and May. The amendments would
set forth a process by which the City may notify the waitlisted entities of the intended
termination and allow them to apply for the five (5) new retail locations under the proposed
ordinance. In addition, as with the 2018 process for new adult-use retailers, those
waitlisted entities would be subject to a merit-based scoring of their application and would
receive “bonus” points for having been on the Measure BB Waitlist. This method will
ensure consistency with prior processes and create a fair opportunity for those waitlisted
entities to submit competitive applications to operate new retail locations in the City.
Buffer Requirement Modification
All commercial cannabis businesses were initially subject to specific, codified regulations
for separation from sensitive land uses (schools, parks, and residential zones) under
Measure BB for medicinal cannabis retail sales, and subsequently by Ordinance No. NS-
2929, which created Chapter 40 of the Santa Ana Municipal Code for all other commercial
cannabis business activities. The regulations allowed commercial cannabis business
activity in the City’s light and heavy (M1 and M2) industrial zoning districts and required
a 1,000-foot separation from these sensitive land uses; no accompanying map was
officially adopted to illustrate these parameters.
Following redevelopment of industrial properties east of the Costa Mesa (SR-55)
Freeway, the City Council adopted a map of commercial cannabis eligible areas on March
20, 2018 in which commercial cannabis business activities could locate subject to full
compliance with applicable local, County, and State regulations. The map, however, is
currently in conflict with existing ordinance language requiring the 1,000-foot buffer from
residential zones.
Among the actions proposed for City Council consideration to address this conflict is
adoption of a resolution establishing new map largely based on a new 600-foot buffer
from schools, parks, or properties zoned for residential purposes. The new map would
expand the available properties for commercial cannabis businesses east and west of
SR-55 and in the industrial areas near Harbor Boulevard and the San Diego (I-405)
Freeway. The proposed ordinance would also be modified to reflect the map, rather than
specify the buffer in text. Modification to the map could take place with future resolutions
as needed, without requiring an amendment to the overall ordinance.
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Original State regulations did not specify exact zoning requirements but had set a default
buffer of 600 feet from sensitive land uses such as schools, parks, or properties zoned
for residential purposes. However, local agencies were permitted to reduce that buffer to
zero through adoption of local ordinances. In 2021, the State revised its regulations to
completely eliminate the default 600-foot buffer. Table 3 below illustrates how the
proposed modification would increase the availability of industrial properties and buildings
in cannabis eligible areas.
Table 3: Analysis of Buffer Modification*
Buffer Approx. Cannabis
Eligible Building
Square Footage
Approx. Cannabis
Eligible Zone
Acreage
Approx. Cannabis
Eligible Number of
Buildings
1,000 feet (current)41,695,434 957 762
600 feet (proposed)57,893,609 1,329 1,147
Difference +16,198,175 +372 +385
Approx. Change +18%+18%+34%
*Analysis based on available GIS data in 2021
Consumption Lounges and Temporary Events
State law was modified in 2019 to create a framework allowing cannabis consumption
lounges and temporary (special) events with cannabis consumption. Cannabis
consumption lounges are permitted to be opened and operated by businesses holding a
retailer license. The proposed amendments would allow the City’s commercial cannabis
retail businesses to submit applications to operate consumption lounges on the same site
as and physically contiguous to a cannabis retailer. In addition, standards would be in
place to allow up to a total of six temporary consumption special events per year in the
City, with regulations paralleling those for consumption lounges to minimize community
impacts.
Several development and operating standards are included to ensure the health and
safety of visitors to retailers and to minimize impacts onto surrounding properties. Among
these, lounges will need to be designed so that a patron need not enter a consumption
lounge in order to access a retail-only portion of the facility, and the lounges may only be
accessible to those aged 21 or older. Lounges and special events may also offer food
and non-alcoholic beverages, but the sale or consumption of alcohol or tobacco products
will be prohibited.
In addition, smoking cannabis will be prohibited in open-air areas, and consumption or
smoking of cannabis products shall not be visible from any public place, public right-of-
way, or area where minors may be present. If the consumption lounge or event contains
an outdoor area, the outdoor area shall be oriented so as to eliminate visibility from any
adjacent public place, public right-of-way, area where minors may be present, or adjacent
business, tenant space, or building. As with all other commercial cannabis businesses,
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odor control and ventilation systems must be in place to eliminate any odors. Lastly, all
facilities or event operators must abide by odor control response measures specified in
the ordinance.
Orange County Grand Jury and Orange County Advocacy Alliance
On June 3, 2021, the Orange County Grand Jury (OCGJ) issued an investigate report
with findings and recommendations regarding the City’s licensed retail adult-use cannabis
program and regulatory framework. Subsequent staff reports were presented on the
matter to the City Council, most recently on September 7, 2021. Following the September
7 meeting, the City issued a letter on September 13, 2021 to the Honorable Erick Larsh,
Presiding Judge, with the City’ responses to six findings and three recommendations. The
proposed ordinance will maintain the City’s commercial cannabis regulatory framework in
keeping with these findings and response. Moreover, the proposed amendments to
community benefit and sustainable business practice requirements reflect the OCGJ’s
recommendation to further streamline and unify such obligations by the licensed
commercial cannabis businesses operating in Santa Ana, and enable more routine and
accurate reporting of such engagements.
Most recently, the Orange County Advocacy Alliance (OCAA) issued a letter to the City
Council urging a modification to commercial cannabis tax rates as “the number one
priority to create a sustainable, competitive, and profitable cannabis business
marketplace.” The proposed tax code amendments to reduce certain non-retail
commercial cannabis tax rates reflect not just OCAA’s sentiments, but also feedback
received by dozens of business operators and research that the Planning and Building
and Finance and Management Services agencies’ staff performed between 2020 and
2022 into competitive jurisdictions’ commercial cannabis tax rates.
Community Benefits and Sustainable Business Practices
In response to recommendations from the OCGJ investigative report and industry
feedback, the City is also proposing modifications to its community benefit and
sustainable business practice requirements that would clarify and streamline obligations,
options, and reporting. The proposed amendments would sunset the requirement for
individual operating agreements but would require all commercial cannabis businesses
to maintain a community benefit and sustainable business practices plan on file with the
City.
Staff met with a focused group of industry representatives on April 21, 2022 to obtain
insight on the proposed code amendments. Representatives recommended modifications
to the required community benefits and sustainable business practices to reflect current
labor trends and industry practices. In addition, representatives expressed a desire to
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standardize reporting to the City. Following this engagement, staff crafted more tailored
community benefit and sustainable business practice options in the proposed ordinance.
All commercial cannabis businesses will be required to report community benefit and
sustainable business practice obligations on a twice-yearly basis as a condition of
maintaining the regulatory safety permit in good standing and as a condition of annual
renewal. The annual reporting will require descriptions of the following components:
1. Action – a thorough breakdown of all stated commitments/obligations and the actions
taken by the business to satisfy those commitments/obligations.
2. Value – A detailed, quantitative description of the value of the
commitments/obligations, either as money spent or time/resources committed by the
business and its staff.
3. Community Benefit Value – A qualitative description of the resulting value of the
commitments/obligations’ quantitative impacts, otherwise known as the “local
multiplier effect” when one dollar is spent locally.
4. Local Engagement – A detailed narrative of engagement by business owners with
local organizations, community groups, and civic/government organizations.
Examples include coordination with the City’s Economic Development Division, the
Santa Ana WORK Center, job fairs, local educational institutions’ skills training, and
local community and not-for-profit organizations.
A final component of the ordinance (Section 11) requires that the City return with
recommendations to the City Council to revisit any staff recommendations for adoption of
social equity policies or a social equity program. These policies or programs would
consider measures to assist or prioritize applications submitted by individuals with
previous cannabis-related criminal histories, members of disadvantaged communities,
local applicants, and/or other individuals or entities identified at the time requiring
assistance with application processes and/or filing fees, local tax payments, and other
related components of the commercial cannabis application and buildout process in the
City. The tax revenues generated by commercial cannabis consumption lounges would
be utilized to further these goals and for the development and maintenance of social
equity programs administered by the City. Programs may include workforce training,
education, and development within the Santa Ana community in the cannabis industry.
ENVIRONMENTAL IMPACT
In accordance with the California Environmental Quality Act (CEQA), these actions are
exempt from further CEQA analysis pursuant to CEQA Guidelines Section 15061(b)(3),
as the proposed amendments address business activities already permitted in the City
and will not result in any significant physical effect on the environment. A Notice of
Exemption, Environmental Review (ER) No. 2022-15, will be filed for these actions.
FISCAL IMPACT
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There is a projected fiscal impact associated with approval of the recommended actions
as they will reduce the projected commercial cannabis revenues for cultivation,
distribution, and manufacturing already incorporated within the City’s 2022-23 budget by
between approximately $730,000 and $920,000. However, other elements of the staff
recommendations contained within this Staff Report relating to shared manufacturing,
microbusinesses, notably consumption lounges and temporary events, and allowing all
retailers to sell both medicinal and adult-use cannabis, will likely provide some degree of
offsetting revenues. Staff, however, lacks reasonable data on which to make reliable
revenue projections. Likewise, the addition of five (5) potential added retail sales
locations, while encouraging in terms of future revenue, cannot as yet be counted as a
reliable projected revenue for the approaching 2022-23 fiscal year due to the lead times
involved in bringing such locations into operation.
Failure to adopt the above recommended action items, however, would have a negative
impact on a significant number of established cannabis businesses as well as pending
commercial cannabis applicants awaiting adoption of those recommended items before
committing to entering the approval, permitting, and licensing process and who will defer
or cancel their decision to enter the Santa Ana market, thus causing the hoped for
revenues to not be realized.
EXHIBIT(S)
1. Ordinance
2. Resolution modifying various commercial cannabis tax rates
3. Resolution establishing a map of commercial cannabis eligible areas in the City
4. Recommended Commercial Cannabis Tax Rate Adjustments table
Submitted By: Minh Thai, Executive Director of Planning and Building Agency and
Kathryn Downs, Executive Director of Finance and Management Services Agency
Approved By: Kristine Ridge, City Manager
Ordinance No. NS-XXX
Page 1 of 73
ORDINANCE NO. NS-XXX
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA READOPTING AND AMENDING CERTAIN
SECTIONS OF ARTICLE XIII OF CHAPTER 18 OF THE
SANTA ANA MUNICIPAL CODE PERTAINING TO
MEDICINAL MARIJUANA RETAIL AND CHAPTER 40 OF
THE MUNICIPAL CODE PERTAINING TO COMMERCIAL
CANNABIS RETAIL BUSINESSES TO MODIFY THE
MAXIMUM NUMBER OF RETAIL BUSINESSES,
SEPARATION, AND ZONING REQUIREMENTS;
TERMINATE THE MEDICINAL RETAIL WAITLIST; ALLOW
AND REGULATE RETAIL FACILITY RELOCATION,
CANNABIS CONSUMPTION LOUNGES, AND
TEMPORARY CONSUMPTION/SPECIAL EVENTS; AND
AMEND BACKGROUND CHECK AND BADGE
REQUIREMENTS; AND AMENDING CERTAIN SECTIONS
OF ARTICLES XII AND XIII OF CHAPTER 21 OF THE
SANTA ANA MUNICIPAL CODE PERTAINING TO THE TAX
TREATMENT OF COMMERCIAL CANNABIS
MICROBUSINESSES AND SHARED MANUFACTURING
BUSINESSES TO REDUCE THE TAX RATES FOR
COMMERCIAL CANNABIS CULTIVATION, DISTRIBUTION,
AND MANUFACTURING / SHARED MANUFACTURING
AND TO ADOPT A SEPARATE TAX RATE CATEGORY FOR
CANNABIS CONSUMPTION LOUNGES, AND
TEMPORARY CONSUMPTION/SPECIAL EVENTS
THE CITY COUNCIL OF THE CITY OF SANTA ANA HEREBY ORDAINS AS
FOLLOWS:
Section 1. The City Council of the City of Santa Ana hereby finds, determines and
declares as follows:
A.On November 4, 2014, Santa Ana voters approved Santa Ana’s Medical
Marijuana Regulatory Program ordinance (“Measure BB”) which was codified in
Chapters 18 and 21 of the Santa Ana Municipal Code. Such regulations govern
medicinal marijuana and the retail sale thereof.
B.In 2015, the Governor signed into law Senate Bill 643, Assembly Bill 266,
and Assembly Bill 243, collectively referred to as the Medical Marijuana Regulation
and Safety Act, further amended in 2016 as the Medical Cannabis Regulation and
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Safety Act, which established regulations and a state licensing system for medical
cannabis cultivation, manufacturing, delivery, and dispensing.
C.In November 2016, the voters of the State of California approved
Proposition 64, the California Marijuana Legalization Initiative, also known as the Adult
Use of Marijuana Act.
D.In 2017, the Governor signed into law Senate Bill 94 also known as
Medicinal and Adult-Use Cannabis Regulation and Safety Act.
E.On November 9, 2017, the City Council created Chapter 40 of the Santa
Ana Municipal Code (Ordinance No. NS-2929), allowing adult-use commercial
cannabis retail businesses in the city, and amended certain sections of Chapters 18
and 21 of the Santa Ana Municipal Code to ensure consistency with State law and
Chapter 40.
F.Since November 2014, the City of Santa Ana has permitted the retail sale
of cannabis for medicinal purposes and since January 2018 for adult-use purposes.
On March 20, 2018, the City Council adopted Ordinance NS-2941 and NS-2942,
allowing and regulating commercial cannabis testing laboratories.
G.On April 17, 2018, the City Council adopted Ordinance NS-2944 allowing
and regulating commercial cannabis cultivation, distribution, and manufacturing
activities.
H.On November 6, 2018, the voters of the City of Santa Ana approved
Measure Y (Ordinance NS-2962), establishing a tax on commercial cannabis business
activities except medicinal cannabis retail sales, which continue to be subject to taxes
under Measure BB.
I.On September 3, 2019, the City Council adopted Ordinances NS-2972 and
NS-2973 amending certain sections of chapters 18, 21, and 40 of the Santa Ana
Municipal Code allowing vertical and horizontal integration of cannabis businesses;
updating ownership transfers procedural standards and requirements, security
deposits, and various administrative processes; updating and streamlining regulatory
components; reducing cannabis testing taxes to two percent of gross receipts; and
adopting a canopy measurement and square footage allocation service fee.
J.The State of California continues to update its regulations on commercial
cannabis business licensing, resulting in the need for local jurisdictions to update and
amend local commercial cannabis ordinances from time to time.
K.It is the desire of the City Council to combine and unify the regulations for
medicinal cannabis retail and all other types of commercial cannabis business
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activities, currently contained in Chapters 18 and 40 of the Santa Ana Municipal Code,
respectively, for clarity and cohesion.
L.The City Council recognizes those entities that have remained on the
Medicinal Cannabis Waitlist pursuant to Santa Ana Municipal Code Section 18-617.1
(d), (e), and (f), and those entities that were scored as part of the merit-based selection
process in Section 40-9.
M.Commercial cannabis businesses form an integral part of the Santa Ana
economy, contributing revenues and community benefits through business
engagement with the Santa Ana community.
N.The City Council of the City of Santa Ana intends that nothing in this article
shall be deemed to conflict with federal law as contained in the Controlled Substances
Act, nor to otherwise permit any activity that is prohibited under that Act or other
applicable law.
O.The City of Santa Ana has a compelling interest in ensuring that cannabis
is not sold, cultivated, manufactured, tested, consumed, or distributed in an illicit
manner, in protecting the public health, safety and welfare of its residents and
businesses, in preserving the peace and quiet of the neighborhoods in which these
uses may operate, and in providing access of cannabis to residents.
P.The City Council has held a duly noticed public hearing on April 19, 2022 in
connection with consideration and adoption of this ordinance.
Section 2. This Ordinance is adopted pursuant to the authority granted by the
California Constitution and State law, including but not limited to: Article XI, Section 7 of
the California Constitution, the Compassionate Use Act of 1996 (California Health and
Safety Code Section 11362.5), the Medical Marijuana Program (California Health and
Safety Code Section 11362.7 et seq.), the Medical Marijuana Regulation and Safety Act
(AB 266, AB 243, and SB 643; hereafter “MMRSA”), the Adult Use of Marijuana Act
(Proposition 64), and the Medical and Adult Use Cannabis Regulation and Safety Act (SB
94; hereafter “MAUCRSA”).
Section 3. Pursuant to the California Environmental Quality Act (“CEQA”) and
the State CEQA Guidelines, the adoption of this ordinance is exempt from CEQA review
pursuant to California Code of Regulations section 15061(b)(3), which is applicable if it
can be seen with certainty that there is no possibility that the project may have a
significant effect on the environment. As a result, a Notice of Exemption will be filed upon
the adoption of this ordinance.
Section 4. All provisions of the Santa Ana Municipal Code which are repeated
herein are repeated solely in order to comply with the provisions of Section 418 of the
City Charter. Any such restatement of existing provisions of the Code is not intended,
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nor shall it be interpreted, as constituting a new action or decision of the City Council, but
rather such provisions are repeated for tracking purposes only in conformance with the
Charter.
Section 5. The title of Chapter 40 of the Santa Ana Municipal Code is hereby
amended to read in its entirety as follows:
Chapter 40 - REGULATION OF COMMERCIAL CANNABIS BUSINESS
ACTIVITIES OTHER THAN MEDICINAL CANNABIS RETAIL ACTIVITIES
Section 6. Article I of Chapter 40 of the Santa Ana Municipal Code is hereby
amended to read in its entirety as follows:
Sec. 40-1. Purpose and intent, intent, and community benefits required.
A.The purpose and intent of this article is to regulate commercial cannabis business
activities, as defined in this article, in order to ensure the health, safety and welfare of
the residents of the City of Santa Ana by establishing regulations necessary for
commercial cannabis business operating in the City of Santa Ana to obtain and
maintain a Regulatory Safety Permit ("RSP"). Any commercial cannabis businesses
operating in the City of Santa Ana shall at all times be in compliance with current State
Law and this article. All commercial cannabis facilities shall operate in accordance
with the regulations in this article and with the conditions of approval associated with
the applicable zone for the parcel of real property upon which the commercial
cannabis activities are conducted. Any commercial cannabis business shall qualify for
and receive a Regulatory Safety Permit from the City of Santa Ana as provided by this
article and operate only in a zone in compliance with Santa Ana Municipal Code before
commencing with any commercial cannabis business activity. Any commercial
cannabis business without a Regulatory Safety Permit is in violation of this article. The
regulations in this article, in compliance with the Compassionate Use Act, the
Medicinal Marijuana Program Act, SB 94, AB 133, Proposition 64, and the California
Health and Safety Code (collectively referred to as "State Law") do not interfere with
the right to use adult-use cannabis or medicinal cannabis as authorized under State
Law, nor do they criminalize the possession of cannabis as authorized under State
Law.
B.Any person operating a medicinal marijuana collective/cooperative (as defined in
Chapter 18 Article II of this Code Chapter) as of December 14, 2017, or who has a
RSP application pending to operate a medicinal collective/cooperative, and has met
all of the requirements of Chapter 18 Article II, shall be allowed to apply for a
Regulatory Safety Permit for the sale of Adult-Use cannabis provided that they enter
into the Commercial Cannabis Operating Agreement with the City.
C.The Commercial Cannabis Operating Agreement shall be a legally binding written
agreement between each commercial cannabis business operator and the City,
executed by the City Manager, or his or her designee, and in a form and substance
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satisfactory to the Executive Director of Planning and Building and the City Attorney,
and containing those provisions necessary to ensure that the requirements of this
article are satisfied. A distinct Commercial Cannabis Operating Agreement shall be
required for each location of a commercial cannabis business activity taking place at
an approved Commercial Cannabis Business Community Benefits Required.
1. Effective January 1, 2023, all commercial cannabis businesses operating in the
City shall be required to provide community benefits through a Community Benefits
and Sustainable Business Practices Plan in a format acceptable by the City as
reviewed and verified from time to time as a component of issuance of a regulatory
safety permit (RSP). Each commercial cannabis business operating in the City
shall commit to:
a) Hiring a minimum percentage of staff from the Santa Ana community, including
volunteers, employees, and managers;
b) Local sourcing of construction materials and cannabis products from within
Santa Ana;
c) Pay prevailing industry wages;
d) Other community benefit commitments that promote health and sustainability
of the community, including, but not limited to:
a. Transit incentives to reduce individual/private automobile use;
b. Healthy living incentives, including but not limited to health club
memberships, nutritional counseling, adequate break times, onsite physical
health and ergonomic trainings, and other measures intended to promote
healthy living of staff;
c. Constructing the facility with “green” technologies intended to reduce waste,
electricity use, and water use;
d. Engaging the local artist community; and
e. Any other measures designed to promote the community benefits principles
outlined in this subsection.
2. Documentation of the aforementioned community benefits shall be submitted to
the Code Enforcement Division on an annual basis, including as part of a renewal
application for an RSP during the annual renewal process. Said documentation
shall detail said business’s community benefits obligations as mandated by this
Chapter and shall be evaluated for satisfaction by the Executive Director of the
Planning and Building Agency or his or her designee. Failure to provide the
requested documentation shall result in a suspension or revocation of an RSP, or
delay or denial of an RSP renewal application, as applicable.
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3. City Option to Satisfy Community Benefits and Sustainable Business Practices.
a) A commercial cannabis business may opt to allow the City to satisfy community
benefits obligations through execution of an operating agreement in a form to
the satisfaction of the City Manager, City Attorney, and Executive Directors of
the Planning and Building and Community Development agencies.
b) Said operating agreement shall detail the City’s program to provide community
benefits supported by the commercial cannabis business’ opting in to
reimburse the City through reimbursement of expenses based on a percentage
of gross receipts established by the City.
c) The operating agreement shall be binding and enforceable, and fully executed
prior to issuance of the RSP. All terms shall be satisfied and reviewed on an
annual basis as part of the annual RSP renewal process.
Sec. 40-2. Definitions.
The definitions are incorporated herein as fully set forth and are applicable to this article.
All definitions are intended to comply with those set forth by the State of California for all
commercial cannabis business activities.
1. "Applicant" means a person who is required to file an application for a permit under
this article, including an individual owner, managing partner, officer of a corporation,
or any other operator, manager, employee, or agent of a commercial cannabis
business.
2. "Adult-Use" means cannabis or cannabis products that are intended to be used for
non-medicinal purposes by a person twenty-one (21) years of age or older.
3. "Adult-Use Cannabis Retailer Operating Agreement" or "Operating Agreement"
means the agreement entered into by and between the City and the commercial
cannabis business operator which will specify terms for local hiring and sourcing,
community benefit plans, and fees to compensate for authorized impacts on City
services.
4. "Adult-Use cannabis retail business" means an Adult-Use retail business that obtains
a Regulatory Safety Permit and engages in the delivery or sale of Adult-Use cannabis,
or an Adult-Use cannabis product, except as related Business and Professions Code
Section 19319, or Health and Safety Code Sections 11362.1 through 11362.45, as
amended from time to time, excepting medicinal cannabis retail.
5. "Authorized City of Santa Ana representative" means any police officer, city employee,
contractor or agent of the city designated by the director of any city department which
has the authority and responsibility to enforce provisions as set forth in this article.
6. "Business owner" means any of the following:
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a) A person with an aggregate ownership interest of twenty (20) percent or more in
the person applying for a license or a licensee, unless the interest is solely a
security, lien, or encumbrance.
b) The chief executive officer of a nonprofit or other entity.
c) A member of the board of directors of a nonprofit.
d) An individual who will be participating in the direction, control, or management of
the person applying for a license.
7. "Cannabis" or "cannabis product" means all parts of the Cannabis sativa Linnaeus,
Cannabis Indica, or Cannabis Ruderalis, whether growing or not; the seeds thereof;
the resin, whether crude or purified, extracted from any part of the plant; and every
compound, manufacture, salt, derivative, mixture, or preparation of the plant, its
seeds, or resin. "Cannabis" also means the separated resin, whether crude or purified,
obtained from marijuana. "Cannabis" also means marijuana as defined by Section
11018 of the California Health and Safety Code as enacted by Chapter 14017 of the
Statutes of 1972. "Cannabis" does not include the mature stalks of the plant, fiber
produced from the stalks, oil or cake made from the seeds of the plant, any other
compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks
(except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of the
plant which is incapable of germination. For the purpose of this chapter, "cannabis"
does not mean industrial hemp as that term is defined by Section 81000 of the
California Food and Agricultural Code or Section 11018.5 of the California Health and
Safety Code.
8. "City" means the City of Santa Ana, a charter city and municipal corporation.
9. "Commercial cannabis activity" means the cultivation, possession, manufacture,
distribution, processing, storing, laboratory testing, packaging, labeling,
transportation, delivery or sale of cannabis and cannabis products as provided for this
Chapter. Permitted commercial cannabis activities are listed in Land Use Table 40-5
of this Chapter and are allowed in the Commercial Cannabis Eligible Areas Map as
adopted and modified from time to time by resolution of the City Council.
10. "Commercial cannabis business" means a business that obtains a Regulatory Safety
Permit and engages in the cultivation, possession, manufacture, processing, storing,
laboratory testing, labeling, distribution, delivery, or sale of adult-use cannabis,
medicinal cannabis or an adult-use cannabis or medicinal cannabis product, except
as related Business and Professions Code Section 19319, or Health and Safety Code
Sections 11362.1 through 11362.45, as amended from time to time.
11. "Cultivation" means to plant, grow, harvest, dry, cure, grade or trim cannabis, as
defined by California Business and Professional Code Section 26001, as amended
from time to time.
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12. "Customer" means a natural person twenty-one (21) years of age or over.
13. "Delivery" means the commercial transfer of cannabis or cannabis products from a
retail cannabis business to a customer up to an amount determined to be authorized
by the State of California, or any of its departments or divisions. "Delivery" also
includes the use by a retail cannabis business of any technology platform owned,
controlled, and/or licensed by the retail cannabis business, or independently licensed
by the State of California under the State law (as amended from time to time), that
enables anyone to arrange for or facilitate the commercial transfer by a licensed retail
cannabis business of cannabis or cannabis products. For the purposes of this article,
"delivery" does not include distribution or purchase of cannabis from a licensed
cultivator, and cannabis products from a licensed manufacturer, for sale to a licensed
cannabis retail business.
14. "Delivery employee" means an individual employed by a licensed retail cannabis
business who delivers cannabis goods from the permitted retail premises to a
customer at a physical address.
15. "Display" means cannabis goods that are stored in the licensed retail business during
the hours of operation.
16. "Distribution" means the procurement, sale, and transport of cannabis or cannabis
products between Licensees.
17. "Edible cannabis product" means manufactured cannabis that is intended to be used,
in whole or in part, for consumption. An edible cannabis product is not considered food
as defined by Section 109935 of the California Health and Safety Code or a drug as
defined by Section 109925 of the California Health and Safety Code.
18. "Free sample" means any amount of commercial cannabis goods provided to a
purchaser of cannabis without cost or payment or exchange of any other thing of
value.
19. "Labor Peace Agreement" means a legally binding agreement between an employer
and a labor organization in which the employer agrees to remain neutral in the event
its employees wish to unionize, as described more fully in Business and Professions
Code 26001(x), as amended from time to time.
20. "License/Licensee" means a license issued by the State and includes both an A-
license (Adult-Use) and an M-license (Medicinal), and the holder of such license.
21. "Manufacturer" means a Licensee that conducts the production, preparation,
propagation, or compounding of cannabis or cannabis products either directly or
indirectly or by extraction methods, or independently by means of chemical synthesis,
or by a combination of extraction and chemical synthesis at a fixed location that
packages or repackages cannabis or cannabis products or labels or relabels its
container.
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22. "Manufacturing" means all aspects of the extraction and/or infusion processes,
including processing, preparing, holding, storing, packaging, or labeling of cannabis
products. Manufacturing also includes any processing, preparing, propagating,
holding, or storing of components and ingredients.
22.5. “Shared Manufacturing” means manufacturers who work in a shared-use facility.
Shared-use facilities are places where multiple shared manufacturers engaging in
cannabis extraction using butter or cooking oils, infusion, and/or packaging and
labeling rotate on a schedule and share space and equipment. All or part of
manufacturing premises may be registered as a shared-use facility.
23 "Medicinal cannabis patient" is a person whose physician has recommended the use
of cannabis to treat a serious illness, including cancer, anorexia, AIDS, chronic pain,
spasticity, glaucoma, arthritis, migraine, or any other illness for which cannabis
provides relief.
24. "Microbusiness" means a commercial cannabis business that cultivates cannabis on
an area less than ten thousand (10,000) square feet and acts as a licensed
distributor, Level 1 manufacturer, and retailer.
25. "Nursery" means a commercial cannabis Licensee that produces only clones,
immature plants, seeds, and other agricultural products used specifically for the
planting, propagation, and cultivation of cannabis.
26. "Medicinal/medical cannabis" or "Medicinal cannabis product," means cannabis or a
product containing cannabis, including, but not limited to, concentrates, and
extractions, intended to be sold for use by medicinal cannabis patients in California
pursuant to the Compassionate Use Act of 1996, found at Section 11362.5 of the
California Health and Safety Code. Medicinal cannabis retail is regulated by this
Chapter 18 and Chapter 21 of the Santa Ana Municipal Code.
27. "Outdoor cultivation" means the cultivation of cannabis outside a permanent enclosed
building. Outdoor cultivation is prohibited within the City of Santa Ana.
28. "Ownership interest" means an interest held by a person who is an owner as defined
by State of California commercial cannabis regulations or who has a financial interest
in the commercial cannabis business of twenty (20) percent or more.
29. "Package" and "Packaging" means any container or wrapper that may be used for
enclosing or containing any cannabis goods for final retail sale. "Package" and
"packaging" does not include a shipping container or outer wrapping used solely for
the transport of cannabis goods in bulk quantity to a Licensee.
30. "Person" includes any individual, firm, partnership, joint venture, association,
corporation, limited liability company, estate, trust, business trust, receiver, syndicate,
or any other group or combination acting as a unit, and the plural as well as the
singular.
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31. "Premises" means the designated structure(s) and land specified in the application
that are in possession of and used by the applicant or Licensee to conduct the
commercial cannabis activity.
32. "Primary Caregiver" has the same meaning as that term is defined in Section 11362.7
of the Health and Safety Code, as amended from time to time.
33. "Private Residence" shall have the same definition as that contained in Health and
Safety Code section 11362.2(5) and also means a lawfully established structure,
suitable for human occupancy as required by section 17922 and 17958 of the
California Health and Safety Code. A recreational vehicle does not constitute a lawfully
established structure for the purposes of this article.
34. "Private security officer" has the same meaning as that term as defined in the State of
California Business and Professions Code section 7574.01.
35. "Purchase" means obtaining cannabis goods in exchange for consideration.
36. "Purchaser" means a person who is engaged in a transaction with a Licensee for
purposes of obtaining cannabis goods.
37. "Qualified patient" has the same meaning as such term is defined in California Health
and Safety Code section 11362.5, as amended from time to time, and means a person
whose physician has recommended the use of cannabis to treat a serious illness,
including cancer, anorexia, AIDS, chronic pain, spasticity, glaucoma, arthritis,
migraine, or any other illness for which cannabis provides relief.
38. "Responsible person" means any of the following:
a) A person who causes a Code violation to occur.
b) A person who maintains or allows a Code violation to continue by way of his or her
action or failure to act.
c) A person whose agent, employee, or independent contractor causes a Code
violation by its failure to act.
d) A person who is the owner of, and/or a person who is a lessee or sub lessee with
the current right of possession of, real property where property-related Code
violation occurs.
e) A person who is the on-site manager of a business who normally works daily at
the site when the business is open and is responsible for the activities of such
premises.
39. "Retail business" means a premises where cannabis, cannabis products, or devices
for the use of cannabis or cannabis products are offered, either individually or in any
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combination for retail sale, including an establishment that delivers cannabis or
cannabis products as part of a retail sale.
39.1 For the purposes of this Chapter, “Consumption lounge” means a facility for
the onsite retail sale and consumption or smoking of cannabis or cannabis
products that is a licensed premises that is a physical location from which
commercial cannabis activities are conducted, as defined by Business and
Professions Code Section 26070 as amended from time to time. For the purposes
of this definition, “consumption” and “smoking” shall also include inhalation, vaping,
and/or ingestion.
39.2 For the purposes of this Chapter, “Temporary Consumption” and “Special
Event” shall mean an event that may be single- or multi-day where people can sell
and consume cannabis subject to full compliance with local, County, and State
licensing requirements.
40. "Regulatory Safety Permit (RSP)" means a permit issued by the City pursuant to this
article to a commercial cannabis business.
41. "Sell," "sale," and "to sell" include any transaction whereby, for any consideration, title
to cannabis is transferred from one (1) person to another, and includes the delivery of
cannabis goods pursuant to an order placed for the purchase of the same and
soliciting or receiving an order for the same, but does not include the return of
cannabis goods by a Licensee to the Licensee from whom such cannabis goods were
purchased.
42. "State" means the State of California.
43. "Testing Facility" or "Testing Laboratory" defined in the Business and Professions
Code section 26001, as amended from time to time, means a laboratory, facility, or
entity in the State that offers or performs tests of cannabis or cannabis products and
that is both of the following:
a) Accredited by an accrediting body that is independent from all other persons
involved in commercial cannabis activity in the State; and,
b) Licensed by the Bureau of Cannabis Control.
44. "Wholesale" means the sale of cannabis goods to a distributor for resale to one (1) or
more retail cannabis businesses.
Sec. 40-3. Compliance with state and local licensing requirements.
A. Any commercial cannabis business as defined by the State of California and the City
of Santa Ana shall operate in conformance with all regulations and standards set forth
in this article to assure that the operations of any commercial cannabis business as
defined by the State of California and allowed by the City of Santa Ana are in
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compliance with local and State law and are established to mitigate any adverse
secondary effects from its operations.
B. Commercial cannabis businesses shall be required to obtain a Regulatory Safety
Permit (RSP) from the City of Santa Ana and a State license, and shall comply with
any applicable State licensing requirements, such as operational standards and
locational criteria.
C. Co-location of commercial cannabis businesses proposed on any one (1) site shall
occur only if authorized by the State and the City of Santa Ana and only if allowed
pursuant to the City's Zoning Code. Any commercial cannabis activity not specifically
permitted by this article is prohibited.
Sec. 40-4. Maximum number of regulatory safety permits for commercial cannabis
retail businesses.
A. The total number of cannabis retail businesses in operation shall be determined
based on the number of locations which have been issued a Regulatory Safety
Permit by the City of Santa Ana. In no case shall the City of Santa Ana allow
more than thirty-five (35) the than the following commercial cannabis retail
businesses to operate within City limits, regardless of the location's compliance
with any other Section specified in this article:.
B. Until the Waitlist, as specified in Section 40-107.1, is terminated, the maximum
number of medicinal cannabis retail businesses, including collectives or
cooperatives, is twenty (20).
A. Twenty (20) total medicinal cannabis retail businesses (as regulated by Article
XIII of Chapter 18);
Thirty (30) total adult-use cannabis retail businesses (which could include any or all of the
medicinal cannabis retail businesses)
Sec. 40-5. Zoning compliance and regulatory safety permit requirements.
Commercial cannabis activities are expressly prohibited in all zones in the City of Santa
Ana; however, specific commercial cannabis businesses are allowed in the Industrial
zoning districts (M-1, M-2), as specified on the adopted Commercial Cannabis Eligible
Areas Map. The allowed current permit types are described in Table 40-5 and the City of
Santa Ana's zoning ordinance as a requisite for obtaining a Regulatory Safety Permit. No
commercial cannabis business may operate in the City of Santa Ana without a Regulatory
Safety Permit.
This Land Use Table 40-5 shall be used to determine whether a commercial cannabis
business is permitted — "P," or not permitted — "X." Any commercial cannabis business
in the City of Santa Ana shall also operate in compliance with the City's zoning ordinance.
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If a Zoning District is not listed in the Land Use Table in this section then the use is
expressly not permitted.
City of Santa Ana Municipal Code Table 40-5
Commercial
Cannabis
Business
Activities Use
Type
Land Use
Classification
Light and Heavy
(M1 and M2)
Zoning Districts,
as Indicated on
the Commercial
Cannabis Eligible
Areas Map
Zone
M-2
Zone
Regulatory
Safety
Permit
Required
Cultivator/Nursery Indoor only P P Yes
Cultivator/Nursery Outdoor or mixed-
light X X NA
Cultivator/Nursery
Indoor/Outdoor —
Type 5A
(Cultivation;
Indoor; Large)
Grows, as defined
and amended by
the State,
permitted
beginning
January 1, 2023)
X P X P NA Yes
Manufacturing
(including “shared
manufacturing”)
Manufacturing P P Yes
Retail
Medicinal Retail
(SAMC Chapter
18)
P P Yes
Retail Adult-Use Retail P P Yes
Testing Laboratory
Adult-Use and/or
Medicinal
Industrial
P P Yes
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Distribution Freight/Transport P P Yes
Microbusiness
Cultivation/Retail/
Manufacturing/
Distribution
P – only as part of
a vertically-
integrated/co-
located business
in full
conformance
with the
requirements of
this and Chapter
18.
P – only as part
of a vertically-
integrated/co-
located
business in full
conformance
with the
requirements of
this article and
Chapter 18.
Yes
Consumption
Lounge
Consumption
Lounge, as an
ancillary
component to
Retail
P P Yes
Sec. 40-6. Location and Separation requirements for all commercial cannabis retail
businesses.
A. Commercial cannabis businesses may only operate within an Industrial zoning district
(M-1, M-2) in accordance with the Commercial Cannabis Areas Map as adopted by
resolution of the City Council.
B. No commercial cannabis retail business shall be located within five hundred (500) feet
of another retail cannabis business, except for permitted co-location.
(a) No commercial cannabis retail business shall be located within one thousand
(1,000) feet of any:
(1) School (K-12) as defined by Section 11362.768 of the Health and Safety Code; or
(2) Park; or
(3) Existing Residential zones in place on November 4, 2014.
(b) No commercial cannabis retail business shall be located within five hundred (500)
feet of another retail cannabis business, except for permitted co-location.
Sec. 40-7. Separation requirements for non-retail (cultivation, manufacturing,
testing laboratory, and distribution) commercial cannabis businesses Relocation
of commercial cannabis retail businesses (medicinal and/or adult-use).
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(a) Relocation of an existing or pending medical marijuana collective, medical marijuana
cooperative, and/or adult-use cannabis retail business as defined in this Chapter is
permitted within the City of Santa Ana subject to the following:
(1) The medical marijuana collective, medical marijuana cooperative, and/or adult-use
cannabis retail business must hold a valid RSP, business license, and the
appropriate State commercial cannabis license, or be on a selected or eligible list
with a pending RSP;
(2) The existing RSP holder and existing location must be in good standing, including
but not limited to full compliance with all requirements of the Santa Ana Municipal
Code, no active code enforcement and/or building safety violations, violations of
regulations imposed by the State of California and County of Orange, and have no
outstanding business license fees and taxes, except those subject to and
performing under a Finance and Management Services Agency approved
payment plan agreement.
(3) The proposed new location of the medical marijuana collective, medical marijuana
cooperative, and/or adult-use cannabis retail business is in full compliance with the
zoning and separation requirements for commercial cannabis retail businesses as
outlined in Sections 40-5 and 40-6 of the Santa Ana Municipal Code.
(4) The proposed new location of the medical marijuana collective, medical marijuana
cooperative, and/or adult-use cannabis retail business must comply with
separation requirements of this Chapter except that the proposed new location
must also satisfy said separation requirements from any location identified on the
Qualified Registration Applicant List (“Waitlist”), as defined in Section 40-107.1 .
(b) Every medical marijuana collective, medical marijuana cooperative, and/or adult-use
cannabis retail business wishing to relocate shall be required to concurrently: (1) File
an application for an RSP and (2) Submit all required construction plans for plan check
by the City, subject to the requirements of this Chapter and other applicable chapters
of the Santa Ana Municipal Code, and open within 180 days of construction permit
issuance. An extension may be issued for a period of time as may be reasonably
required to affect upgrades, modifications, repairs, or other property issue mitigations
as approved by the Director of Planning and Building or his or her designee.
(c) Upon issuance of the RSP for the new location, the previous location’s RSP and
certificate of occupancy immediately becomes null and void and the location must
cease to operate.
(d) Within 60 days of issuance of the RSP for the new location, the applicant must provide
the City documentation demonstrating that any State-issued commercial cannabis
retailer license associated with the previous location has been cancelled, rescinded,
or updated to reflect the new location.
Exhibit 1
Ordinance No. NS-XXX
Page 16 of 73
(a) No non-retail commercial cannabis business shall be located within one thousand
(1,000) feet of any:
(1) School (K-12) as defined by Section 11362.768 of the Health and Safety Code; or
(2) Park; or
(3) Existing Residential zones in place on November 4, 2014.
Sec. 40-8. General provisions for commercial cannabis activities in the City of
Santa Ana.
1. Regulatory Safety Permit Required.
(a) Each commercial cannabis business shall obtain a Regulatory Safety Permit (RSP)
specific to the business activity or activities defined by the State pertaining to that
activity. The only allowed current activity types pursuant to this article are for
commercial cannabis retail sales and cultivation, distribution, manufacturing, and
testing laboratories/facilities. Co-location is permitted pursuant to Section 40-9.
(b) It shall be unlawful for any person, as defined by this ordinance, to engage in, conduct
or carry on, in or upon any premises within the City of Santa Ana any commercial
cannabis business without a RSP. A commercial cannabis business shall register and
obtain a RSP from the City of Santa Ana prior to operation. The RSP applicant shall
pay an annual non-refundable application fee in an amount established by the City
Council.
(c) A copy of the RSP shall be displayed at all times in a place visible to the public.
(d) A RSP shall be valid for a period of one (1) year from the date of issuance, unless
sooner revoked. No permit granted herein shall confer any vested right to any person
or business for more than the above-referenced period.
2. Maintenance of Records and Reporting. All records shall be maintained by the
commercial cannabis business for a period of five (5) years and shall be made
available by the commercial cannabis business to an authorized City of Santa Ana
representative upon request. If they are not produced as requested, the City may seek
a search warrant, subpoena, or court order. In addition to all other formats that the
commercial cannabis business may maintain, these records shall be stored by the
business at the location in a printed format in a fireproof safe or filing cabinet. Any
loss, damage or destruction of the records shall be reported to the Police Department
within twenty-four (24) hours of the loss, destruction or damage.
(a) The business shall obtain and maintain a valid Seller's Permit from the California
Department of Tax and Fee Administration (CDTFA).
Exhibit 1
Ordinance No. NS-XXX
Page 17 of 73
(b) Financial records include, but are not limited to: bank statements, sales invoices,
receipts, tax records, and all records required by the CDTFA under Title 18
California Code of Regulations section 1968.
(c) Personnel records, including each employee's full name, address, phone number,
social security, or individual tax payer identification number, date of beginning
employment, and date of termination of employment if applicable.
(d) Training records, including, but not limited to, the content of the training provided
and the names of the employees that received the training.
(e) Contracts with other businesses regarding commercial cannabis business activity.
(f) Permits, licenses, and other local authorizations to conduct the commercial
cannabis business activity.
(g) Security records, as outlined in the Operational Standards for All Commercial
Cannabis Business Activities.
(h) Proof of building ownership or landlord letter acknowledging business type.
(i) Proof of insurance.
3. Operational Standards for All Commercial Cannabis Business Activities.
(a) The location, interior and exterior, shall be monitored at all times by web-based
closed circuit television for security purposes. The camera and recording system
must be of adequate quality, color rendition and resolution to allow the ready
identification of any individual committing a crime anywhere on or adjacent to the
location. The recordings shall be maintained unaltered in a secure location for a
period of not less than ninety (90) days. The Police Department may request the
recordings in connection with an investigation.
(b) All controlled access areas, security rooms and all points of ingress/egress to
limited access areas and all point of sale (POS) areas shall have fixed camera
coverage capable of identifying activity occurring within a minimum of twenty (20)
feet.
(c) The surveillance system storage device or cameras shall be transmission control
protocol/TCP capable of being accessed through the internet by the police
department or their designee on request.
(d) If applicable, the applicant shall conduct and pay for any required CEQA reviews
and analyses, and pay for all costs, including those of the City, associated with
project review under CEQA.
(e) Commercial cannabis businesses shall create and maintain an active account
within the State's track and trace system prior to commencing any commercial
Exhibit 1
Ordinance No. NS-XXX
Page 18 of 73
cannabis retail activity. In the event of system failure, the business shall keep a
hard copy record and transfer the information to the track and trace system within
twenty-four (24) hours of the system being available.
(f) No physical modification of the licensed premises is allowed without written prior
permission by the City of Santa Ana and payment of any additional fees required
by the City.
(g) Commercial cannabis business businesses shall provide adequate off-street
parking and comply with the City of Santa Ana Municipal Code parking
requirements in order to service customers without causing negative impact.
(h) The commercial cannabis business shall provide adequate disabled access
parking per the requirements in the California Building Code.
(i) The commercial cannabis business shall minimize nuisances such as trash, litter,
and graffiti.
(j) Any and all signage, packaging, and facilities shall not be "attractive," as it is
defined by the State, to minors.
(k) Commercial cannabis business facilities shall be required to provide an air
treatment system that ensures off-site odors shall not result from its operations.
This requirement at a minimum means that the facility shall be designed to provide
sufficient odor absorbing ventilation and exhaust systems so that any odor
generated inside the location is not detected outside the building, in any adjacent
tenant suites, on adjacent properties or public rights-of-way, or within any other
unit located within the same building as the facility if the use occupies only a portion
of a building.
(l) The commercial cannabis business shall comply with all State regulations
regarding:
i. Testing, labeling and storage of all cannabis products.
ii. Use of appropriate weighing devices.
iii. Electrical and plumbing regulations subject to periodic and unannounced
inspections to ensure compliance.
iv. State deadlines for applying for a State license and receiving a State license
within six (6) months after the date the State begins issuing licenses. This may
be waived if the State has longer delays in issuing licenses of the type the
commercial cannabis business seeks.
(m)The commercial cannabis business shall maintain a comprehensive general
liability combined single occurrence insurance policy issued by an "A" rated
Exhibit 1
Ordinance No. NS-XXX
Page 19 of 73
insurance carrier in an amount no less than two million dollars ($2,000,000.00),
with primary coverage, naming the City of Santa Ana as additional insured.
(n) No free samples of any cannabis or cannabis product may be distributed at any
time.
(o) All agents, private security officers or other persons acting for or employed by a
collective shall display a laminated an identification badge at least two (2) inches
by two (2) inches in size, issued by the City. The badge, at a minimum, shall include
the employee's first and last name, date of most recent Live Scan, expiration date
of Live Scan results after the one-year period, and a color photo of the employee
that shows the full front of the employee's face.
(p) All private security officers acting for or employed by a commercial cannabis
business shall be licensed by the State and issued a security/patrol services
business license from the City of Santa Ana.
(q) The commercial cannabis business shall have a centrally monitored fire and
burglar alarm system which shall include all perimeter entry points and perimeter
windows and the building or portion of the building where the business is located
shall contain a fireproof safe or fireproof filing cabinet and include a safety and
security plan.
(r) The commercial cannabis business shall ensure a licensed alarm company
operator or one (1) or more of its registered alarm agents installs, maintains,
monitors and responds to the alarm system. The alarm company shall obtain a
City of Santa Ana business license.
(s) The commercial cannabis business shall provide the name and phone number of
an on-site staff person to the police department and the Code Enforcement
Division of the Planning and Building Agency for notification if there are operational
problems with the establishment.
(t) The commercial cannabis business must obtain and maintain a valid City business
license at all times as a condition for receiving, renewing, and maintaining its
regulatory safety permit.
(u) Occupancy shall not exceed that required under the Uniform Building Code and
Uniform Fire Code, and the maximum occupancy load shall be posted at the main
entrance.
(v) For any commercial cannabis business with two (2) or more employees, the
business owner shall attest that he/she has entered into a labor peace agreement
and provide a copy of the agreement to the City.
(w) Each commercial cannabis business owner, operator(s) and employees shall
complete a criminal background check and wear a visible photo ID at all times
Exhibit 1
Ordinance No. NS-XXX
Page 20 of 73
during operating hours. Owners, operator(s), employees, managers or volunteers
may not have been:
i. convicted of, or pleaded guilty/no-contest to a felony within the past four (4)
years or currently on formal probation or parole;
ii. convicted of an infraction or misdemeanor drug charge within the past four
(4) years or required to registered as a controlled substance offender
pursuant to Health and Safety Code section 1590 as part of their sentence
for any other charge(s);
iii. an owner or operator of property or a business in which the applicant knew,
or should have known, that an unlicensed cannabis location was present
within the past four (4) years.
If a collective owner(s), operator(s) or employees has a pending criminal infraction,
misdemeanor or felony case involving a drug charge, the applicant must provide
written documentation from the prosecuting entity of their intent to either prosecute
or dismiss the matter. If the prosecuting entity indicates that a pending criminal
case involving the applicant is actively being prosecuted, the applicant will not be
disqualified; however, their application will be put on hold pending final adjudication
of that case.
(x) All signage for the commercial cannabis business must comply with Article XI of
Chapter 41 of the Santa Ana Municipal Code.
(y) Inspections by an authorized City of Santa Ana representative may be conducted
anytime during the business's regular business hours.
4. Additional Operational Standards for Adult-Use Cannabis Retail Business.
(a) At all times the Adult-Use cannabis retail business is open, it shall provide at least
one (1) private security guard who is licensed, possesses a valid Department of
Consumer Affairs "security guard card," and has a valid business license from the
City of Santa Ana as a security/private patrol service.
(b) The private security guard and adult-use retail cannabis business personnel shall
monitor the site and the immediate vicinity of the site to ensure that patrons
immediately leave the site and do not consume cannabis in the vicinity of the retail
business or on the property or in the parking lot.
(c) Exterior signage shall comply with Article XI of Chapter 41 of the Santa Ana
Municipal Code. Interior signage or advertising may not be visible from the exterior.
Retail cannabis businesses must comply with the advertising and marketing
provisions of Business and Professions Code §§ 26150—26155.
(d) There shall be no on-site sales of alcohol or tobacco products, (excluding rolling
papers and lighters) and no on-site consumption of alcohol or tobacco by patrons.
Exhibit 1
Ordinance No. NS-XXX
Page 21 of 73
Food may not be consumed on site, except as permitted by Section 40-8 (10) of
this chapter.
(e) Hours of operation shall be limited to: 7:00 a.m. to 10:00 11:00 p.m. daily. No
licensed retail business shall be open to the public between the hours of 10:01
11:01 p.m. and 6:59 a.m. of any day.
(f) The Adult-Use cannabis retail business shall notify patrons of the following both
verbally and through posting of a sign in a conspicuous location:
i. Secondary sale, barter or distribution of adult-use cannabis is a crime and can
lead to arrest.
ii. That loitering on and around the retail site is prohibited by California Penal
Code § 647(e) and that patrons must immediately leave the site and not
consume cannabis in the vicinity of the retail site or on the property or in the
parking lot.
iii. A warning that patrons and/or employees may be subject to prosecution under
federal cannabis laws.
iv. That the use of cannabis may impair a person's ability to drive a motor vehicle
or operate machinery.
(g) No one under the age of twenty-one (21) shall be allowed to enter an Adult-Use
cannabis facility unless the licensed Adult-Use cannabis facility holds a medicinal
use cannabis RSP issued by the City and retail license issued by the State, and
the licensed premises for the adult-use cannabis license and medicinal cannabis
license are the same in accordance with Business and Professions Code section
26140.
(h) If non-cannabis food is distributed, the retail business shall comply with all relevant
State laws, County and City ordinances pertaining to the preparation, distribution
and sale of food.
(i) All Adult-Use cannabis retail businesses shall establish and implement a program
to incentivize the recycling of used containers. Failure to establish and implement
a program to incentivize the recycling of used containers will result in a violation of
the terms of the required commercial cannabis Operating Agreement requiring
sustainable building or business practices.
(j) Adult-Use cannabis retail businesses shall also record on the video surveillance
system point-of-sale areas and areas where cannabis goods are displayed for
sale.
(k) Adequate signage shall clearly state who has inspected any cannabis product for
pesticides, or other regulated contaminants, distributed at this location.
Exhibit 1
Ordinance No. NS-XXX
Page 22 of 73
(l) Shipments of cannabis goods may only be accepted during regular business
hours.
(m)Inventory shall be secured using a lockable storage system during non-business
hours.
(n) No cannabis product shall be visible from the exterior of the business.
(o) All required labelling shall be maintained on all product, as required by State law,
at all times.
(p) Educational tours of adult-use retail cannabis businesses shall be allowed.
(q) A permitted commercial cannabis retail business shall have one hundred eighty
(180) days after construction permit issuance by the City of Santa Ana to operate.
A permitted commercial cannabis retail business that ceases to operate for more
than ninety (90) calendar days shall be deemed "abandoned" and the permit shall
be forfeited. A permitted commercial cannabis business may temporarily suspend
operations for a period of time as may be reasonably required to affect upgrades,
modifications, repairs, or other property issue mitigations as approved by the
Director of Planning and Building or his or her designee. For the purposes of this
section, "operate" shall mean that the gross receipts fees charged for the business
exceed the fee per square foot calculations by the end of the one hundred eighty
(180) day period. A pending commercial cannabis retail business shall be required
to concurrently: (1) File an application for an RSP and (2) Submit all required
construction plans for plan check by the City by December 31, 2022, subject to the
requirements of this Chapter and other applicable chapters of the Santa Ana
Municipal Code, and open within 180 days of construction permit issuance. An
extension may be issued for a period of time as may be reasonably required to
affect upgrades, modifications, repairs, or other property issue mitigations as
approved by the Director of Planning and Building or his or her designee. Failure
to submit a completed RSP application satisfy these requirements by that deadline
will disqualify the applicant from the RSP Eligibility List and the Waitlist described
in subsection (d). Relocation is permitted pursuant to Section 40-7 of this Chapter.
(r) A licensee that is authorized to make retail sales may donate cannabis or cannabis
products and the use of equipment in compliance with any State compassionate
use, equity, or other similar program in accordance with Section 26071 to the
Business and Professions Code.
5. Additional Operational Standards for Commercial Cannabis Retail Delivery Services.
(a) Commercial cannabis retail deliveries may be made only from a commercial
cannabis retail business permitted by the City in compliance with this article, and
in compliance with all State regulations.
Exhibit 1
Ordinance No. NS-XXX
Page 23 of 73
(b) All employees who deliver cannabis shall have valid identification and a copy of
the commercial cannabis retail business' Regulatory Safety Permit and State
license at all times while making deliveries.
(c) All commercial cannabis retail businesses shall maintain proof of vehicle insurance
for any and all vehicles being used to transport cannabis goods as required by
State law.
(d) Deliveries may only take place during normal business hours of the commercial
cannabis retail business.
(e) During delivery, the delivery employee shall maintain a physical or electronic copy
of the delivery request and shall make it available upon request by the licensing
authority and law enforcement officers. The delivery request documentation shall
comply with State law.
(f) A licensed delivery employee shall not leave the State of California while
possessing cannabis products.
(g) A commercial cannabis retail business shall maintain a list of all deliveries,
including the address delivered to, the amount and type of product delivered, and
any other information required by the State.
(h) A manifest with all information required in this section shall accompany any
delivery person at all times during the delivery process and delivery hours.
(i) Any delivery method shall be made in compliance with State law, as amended,
including use of a vehicle that has a dedicated GPS device for identifying the
location of the vehicle (cell phones and tablets are not sufficient).
(j) Each delivery request shall have a receipt prepared by the commercial cannabis
retail business with the following information:
i. Name and address of the commercial cannabis retail business.
ii. The name of the employee who delivered the order.
iii. The date and time the delivery request was made.
iv. The complete delivery addresses.
v. A detailed description of the cannabis goods requested for delivery including
the weight or volume, or any accurate measure of the amount of cannabis
goods requested.
vi. The total amount paid for the delivery including any fees or taxes.
(k) At the time of the delivery, the date and time delivery was made, and the signature
of the person who received the delivery.
Exhibit 1
Ordinance No. NS-XXX
Page 24 of 73
(l) No cannabis delivery vehicle shall display signs, decals or any other form of
advertisement with the exception of a maximum four-inch by four-inch decal.
(m) Inspections by an authorized City of Santa Ana representative may be conducted
anytime during regular business hours.
6. Additional Operational Standards for Commercial Cannabis Testing Facilities or
Laboratories.
(a) A licensed cannabis testing facility or laboratory business, its owners and
employees may not hold an interest in any other cannabis business except another
testing laboratory business.
(b) Inspections by an authorized City of Santa Ana representative may be conducted
anytime during the business's regular business hours.
(c) Educational tours of cannabis testing facility/laboratory businesses shall be
allowed.
7. Additional Operational Standards for Commercial Cannabis Manufacturing Facilities.
(a) A licensed commercial cannabis manufacturing facility may conduct all activities
permitted by the State. This includes, but is not limited to: extractions, repackaging
and relabeling, infusions and extractions.
(b) Any manufacturing that will be conducted by the commercial cannabis business
shall be included on the application. No additional manufacturing activity can be
conducted without notifying the Executive Director of the Planning and Building
Agency or his or her designee, after which a determination will be made if the new
activity may commence with or without modification to the RSP or if a new RSP is
required.
(c) At all times, the commercial cannabis manufacturing facility will be compliant with
all State regulations for cannabis manufacturing including Health and Safety Code
§ 11362.775, as amended from time to time. Signage shall be posted regarding
the type(s) of chemicals being used at the manufacturing facility.
(d) Cannabis manufacturing facilities shall not contain an exhibition or product sales
area or allow for retail distribution of products at that location unless the facility is
co-located with an approved commercial cannabis retail business with a RSP.
(e) Extraction equipment and extraction process utilizing hydrocarbon solvents shall
be located in a room or area dedicated to extraction.
(f) All commercial cannabis manufacturing/processing facilities shall comply with any
and all applicable safety guidelines adopted by the Orange County Fire Authority,
the State of California, and/or the City of Santa Ana for cannabis plant processing
and extraction.
Exhibit 1
Ordinance No. NS-XXX
Page 25 of 73
8. Additional Operational Standards for Indoor Commercial Cannabis Cultivation
Facilities.
(a) There shall be no exterior evidence of cannabis cultivation from a public right-of-
way.
(b) The Building Official may require additional specific standards to meet the
California Building Code and Fire Code, including, but not limited to, installation of
fire suppression sprinklers.
(c) Compliance with Section 13149 of Water Code as enforced by the State Water
Resources Control Board is required.
(d) All commercial cannabis cultivation facilities shall comply with any and all
applicable safety guidelines adopted by the Orange County Fire Authority, the
State of California, and/or the City of Santa Ana for cannabis carbon dioxide
enrichment systems.
(e) Cannabis cultivation facilities shall not contain an exhibition or product sales area
or allow for retail distribution of products at that location unless the facility is co-
located with an approved commercial cannabis retail business with a RSP.
9. Additional Operational Standards for Commercial Cannabis Distribution Facilities.
(a) Inspections by an authorized City of Santa Ana representative may be conducted
anytime during the business's regular business hours.
(b) A distributor shall ensure that all cannabis goods stored in compliance with all
applicable State regulations to ensure conformance to any and all applicable Track
and Trace systems required by the State.
(c) Employee breakrooms, eating areas, changing facilities, locker rooms and
bathrooms shall be completely separated from the storage areas.
10. Additional Operational Standards for Commercial Cannabis Consumption Lounges.
(a) Inspections by an authorized City of Santa Ana representative may be
conducted anytime during the business's regular business hours.
(b) Consumption lounges are permitted as an ancillary use to a commercial
cannabis medicinal or adult-use retail business.
(c) Consumption lounges must be on the same site as and physically contiguous
to a commercial cannabis retail business.
(d) Two (2) parking spaces per 1,000 square feet of gross building square footage
shall be provided for any building expansion constructed for a consumption
lounge.
Exhibit 1
Ordinance No. NS-XXX
Page 26 of 73
(e) Consumption lounges shall be designed such that a patron need not enter a
consumption lounge in order to access a retail-only portion of the facility. There
shall be no connection between a consumption lounge and another tenant
suite.
(f) Medicinal or adult-use cannabis and cannabis products may be sold on the
premises of a consumption lounge, subject to the following:
i. The operator must hold a valid adult-use and/or medicinal retail business
RSP.
ii. Products shall be sold for on-site consumption only. Products may not be
sold for off-site consumption. All cannabis products purchased and opened
at the facility must be smoked or consumed on site and shall not be
permitted to leave the facility unless in a resealed package that meets all
State guidelines.
iii. All products consumed or smoked on premises shall be sold at the
consumption lounge. Operators shall not permit patrons to bring their own
personal cannabis or cannabis products to the consumption lounge.
(g) Cannabis may only be smoked within the indoor portion(s) of a consumption
lounge as may be allowable under state law. Outdoor smoking is prohibited.
(h) Food may be consumed in the consumption lounge; however, the sale or
consumption of alcohol or tobacco products is prohibited.
(i) Access to the consumption lounge shall be restricted to persons twenty-one
(21) years of age or older, or as allowed by State law.
(j) The consumption or smoking of cannabis products shall not be visible from any
public place, public right-of-way, or area where minors may be present. If the
consumption lounge contains an outdoor area, the outdoor area shall be
oriented so as to eliminate visibility from any adjacent public place, public right-
of-way, area where minors may be present, or adjacent business, tenant space,
or building.
(k) Commercial cannabis consumption lounges shall be required to provide an air
treatment system that ensures off-site odors shall not result from its operations.
The facility shall be designed to provide sufficient odor absorbing ventilation
and exhaust systems so that any odor generated inside the location is not
detected outside the building, in any adjacent tenant suites, on adjacent
properties or public rights-of-way, or within any other unit located within the
same building as the facility if the use occupies only a portion of a building.
(l) Odor control response.
Exhibit 1
Ordinance No. NS-XXX
Page 27 of 73
i. Within twenty-four (24) hours of any complaint concerning odors emanating
from or originating at the facility, the operator shall respond to the complaint
in question and shall timely file a written disclosure to the Planning and
Building Agency documenting any and all actions taken and planned to
address the odor complaint(s). The City, upon determination of the
continued existing of detectable odor from the facility may require an
operator to submit an implementation plan and/or a performance schedule,
above and beyond this written disclosure filed within twenty-four (24) hours,
to ensure the employment of measures to control the odor.
ii. The Executive Director of the Planning and Building Agency shall have the
authority to require an operator of a consumption lounge to amend any
implementation plan and/or performance schedule submitted pursuant to
this sub-section to cause compliance herewith.
iii. Any failure to timely submit a written disclosure, a more detailed
implementation plan and/or performance schedule or amendment thereto,
to timely adhere to terms of either, or to complete any required
improvements within the timeframe specified by the Executive Director of
the Planning and Building Agency shall be grounds for revocation of the
RSP.
iv. Odors from a consumption lounge are identified as a public nuisance
pursuant to the Santa Ana Municipal Code. The City may pursue all
administrative, civil, and criminal remedies available in relation to any
nuisance determined to exist with respect to the operation of a consumption
lounge in violation of this sub-section.
v. All consumption lounges shall be equipped with point-of-sale or similar
equipment to distinguish sales of products made for onsite consumption
from sales of retail products for offsite consumption.
11. Additional Operational Standards for Temporary Consumption and/or Special Events.
(a) Inspections by an authorized City of Santa Ana representative may be
conducted anytime during the event.
(b) Up to six (6) temporary consumption and/or special events are permitted per
calendar year as an ancillary use to a commercial cannabis medicinal or adult-
use retail business subject to review and approval of a Land Use Certificate
(LUC), pursuant to Section 41-675 through 41-677 of the Santa Ana Municipal
Code, and verification of any applicable required valid business licenses
required pursuant to Chapter 21, Articles XII and XIII of this Code.
(c) Once the sixth (6th) LUC application for a temporary consumption and/or
special event is received per calendar year, the City shall stop accepting
Exhibit 1
Ordinance No. NS-XXX
Page 28 of 73
additional applications unless an LUC application for a temporary consumption
and/or special event is withdrawn or determined by the City to be incomplete.
Once six (6) complete LUC applications are accepted, no new LUC applications
for a temporary consumption and/or special event may be accepted for the
remainder of the calendar year.
(d) Applications for temporary consumption and/or special event LUCs must be
submitted at least 30 days and no more than 60 days prior to the event date.
(e) A single operator shall be permitted to conduct one (1) independent temporary
consumption and/or special event LUC approved per calendar year, except that
multiple operators may form a single event and file a single application.
(f) No more than two (2) temporary consumption and/or special event LUCs shall
be approved for any single month.
(g) The event shall last no longer than 48 hours and in all cases shall begin no
earlier than 8:00 a.m. and end no later than 10:00 p.m.
(h) Location. Temporary consumption and/or special events:
i. May be on the same site as a commercial cannabis medicinal or adult-use
retail business.
ii. May be offsite at a private or City-owned facility subject to approval by the
operator of a valid adult-use and/or medicinal retail business RSP and by
third-party landlord approval, if applicable.
(i) Medicinal or adult-use cannabis and cannabis products may be sold on the
premises during temporary consumption and/or special events, subject to the
following:
i. The operator must hold a valid adult-use and/or medicinal retail business
RSP.
ii. Products shall be sold for on-site consumption only. All cannabis products
purchased and opened at the facility must be smoked or consumed on site
and shall not be permitted to leave the facility.
iii. All products consumed or smoked on premises shall be sold at the facility.
Operators shall not permit patrons to bring their own personal cannabis or
cannabis products to the event.
(j) Cannabis may only be smoked within the enclosed portion(s) of a temporary
consumption site as may be allowable under state law, subject to sufficient odor
control and ventilation equipment. Open-air smoking is prohibited.
Exhibit 1
Ordinance No. NS-XXX
Page 29 of 73
(k) Food may be consumed; however, the sale or consumption of alcohol or
tobacco products is prohibited.
(l) Access to the temporary consumption and/or special event shall be restricted
to persons twenty-one (21) years of age or older.
(m)The consumption or smoking of cannabis products shall not be visible from any
public right-of-way or area where minors may be present. If the temporary
consumption and/or special event takes place in an outdoor area, the outdoor
area shall be oriented to eliminate visibility from any adjacent public place,
public right-of-way, area where minors may be present, or adjacent business,
tenant space, or building, and shall be oriented to minimize odor intrusion onto
adjacent tenant spaces and properties.
(n) All events shall be required to provide an air treatment system that ensures off-
site odors shall not result from its operations. The site shall be designed to
provide sufficient odor absorbing ventilation and exhaust systems so that any
odor generated inside the location is not detected outside the building, in any
adjacent tenant suites, on adjacent properties or public rights-of-way, or within
any other unit located within the same building as the facility if the use occupies
only a portion of a building. Outdoor smoking, including vaping and the use of
other electronic inhalation devices, must take place within ventilated
enclosures subject to the satisfaction of the Planning and Building Agency and
Orange County Fire Authority.
(o) Odor control response.
i. Odors from a temporary consumption or special events are identified as a
public nuisance pursuant to the Santa Ana Municipal Code. The City may
pursue all administrative, civil, and criminal remedies available in relation to
any nuisance determined to exist with respect to the operation of a
consumption lounge in violation of this Chapter.
ii. Upon receipt of any complaint concerning odors emanating from or
originating at the temporary consumption and/or special event, the Planning
and Building Agency may suspend or revoke the LUC.
(p) All temporary consumption or special events shall be equipped with point-of-
sale or similar equipment to distinguish sales of products made for onsite
consumption from sales of retail products for offsite consumption.
Sec. 40-9. Commercial cannabis selection process.
1. Commercial Cannabis — Registration Application and Regulatory Safety Permit
Required.
Exhibit 1
Ordinance No. NS-XXX
Page 30 of 73
a. Existing medicinal cannabis business operators, or those with pending
applications for a medicinal RSP, who desire to operate an adult cannabis retail
business shall apply for the cannabis Regulatory Safety Permit ("RSP") on or
before December 14, 2017. The Director of Planning and Building shall review
such application and issue the RSP, without consideration of the merit based point
system, so long as they satisfy all other requirements of this Chapter article and
Chapter 18.
b. The Regulatory Safety Permit ("RSP") selection process will be conducted in two
(2) phases, Phase 1 (Registration Application) and Phase 2 (Regulatory Safety
Permit Application). Registration Applications will be reviewed by the Director of
Planning and Building or designees(s) for completeness and compliance, and if
eligible, will be notified in writing to enter placed on the "Regulatory Safety Permit
("RSP") Eligibility List" and entered into the Phase 2 Regulatory Safety Permit
Application process. In Phase 2, the City of Santa Ana has established a merit
based point system for adult-use commercial cannabis retail businesses to
objectively award permits as described in the Regulatory Safety Permit
Application.
2. Phase 1 — Registration Application.
a. Following the adoption of this article, the Director of Planning and Building shall
prepare commercial cannabis business registration application forms and a related
administrative policy. Each commercial cannabis business interested in operating
pursuant to this article may submit an application together with a non-refundable
processing fee in an amount established by the City Council.
b. The Registration Application period shall be thirty (30) calendar days from the date
the applications are released. Following the application period, the Director of
Planning and Building or designee(s) shall stop accepting applications and review
all applications received in Phase 1. Each application that is complete and in
compliance with the application requirements in Phase 1 shall be placed on the
"RSP Eligibility List" and shall be notified in writing whether they are a "RSP Eligible
Applicant" or not. Each complete and compliant applicant on the RSP Eligibility
List may then choose to file an application for a RSP in Phase 2.
c. The requirements for Phase 1 include, but are not limited to:
i. All application documents required in the City's Phase 1 Registration
Application package.
ii. Application was submitted during the application period.
iii. Application forms are filled out completely.
iv. Phase 1 application fee is paid.
Exhibit 1
Ordinance No. NS-XXX
Page 31 of 73
v. A signed statement that the proposed location of the commercial cannabis
business on the application meets the zoning criteria established in this article
including, but not limited to, any and all sensitive use separation criteria
required by this article.
vi. Proof of site control for commercial cannabis retail businesses submitting
Phase 1 applications on or after July 1, 2018.
d. The Director of Planning and Building or his or her designee(s) shall determine
whether each application demonstrates compliance with the minimum
requirements (above) and be placed on the RSP Eligibility List and entered into
the Phase 2 application and review process.
(e) (d) The Director of Planning and Building or his or her designee(s) shall review
each application upon submission and ensure that the application is complete.
Incomplete applications will be promptly rejected and the applicant shall be notified
in writing of the deficiencies. The applicant shall be given an opportunity to cure
any incomplete or deficient application prior to the conclusion of the application
processing term, if such time period is applicable.
3. Phase 2 — Regulatory Safety Permit Application.
(a) Each complete and compliant applicant identified on the RSP Eligibility List may
choose to complete and file a RSP application to the Director of Planning and
Building. The application shall be filed together with a nonrefundable fee as
established by resolution of the City Council, to defray the cost of investigation
required by this article.
(b) The RSP application period shall be open for thirty (30) calendar days and may
run concurrently with the Phase 1 review period. Following the RSP application
period, the Director of Planning and Building or designee(s) shall stop accepting
applications and review all applications received in Phase 2.
(c) The Director of Planning and Building or designee(s) will review all application
documents required in the City's Phase 2 application package plus the additional
requirements in subsection (d) below. The Director of Planning and Building or his
or her designee(s) will use a merit based point system to review and rank each of
applications from the most to the least points and objectively award the top
applicants a RSP. A complete description of the merit based point system and all
merit based point considerations shall be included with the application forms.
(d) Phase 2 requirements include, but are not limited to:
i. All application documents required in the City's Phase 2 RSP application
package.
Exhibit 1
Ordinance No. NS-XXX
Page 32 of 73
ii. Phase 2 application fee is paid and a comprehensive background check is
completed on all owners, employees, volunteers, managers, security guards,
and/or agents.
iii. The Building Official or designee has inspected all structures in which the use
is located to determine that all applicable standards and requirements are met.
If a building permit is required for site improvements, Permit issuance will be
deferred until a certificate of occupancy or other building permit approval is
issued. Additionally, the Building Official has determined that there are no
notices of nuisance or other code compliance issues recorded or on the
property.
iv. The Planning Manager or designee has issued zoning clearance documenting
compliance with the following:
a. The use is permitted;
b. All land use permits, if any, have been approved and all conditions of
approval have been met or are in good standing; and,
c. No zoning violations exist on the property.
(e) The Director of the Planning and Building Agency or his or her designee(s) shall
review each application upon submission and ensure that the application is
complete. Incomplete applications will be promptly rejected and the applicant shall
be notified that business day of the deficiencies. The applicant shall be given an
opportunity to cure any incomplete or deficient application prior to the conclusion
of the application processing term, if such time period is applicable.
3.1 Commercial Cannabis — Registration Application and Regulatory Safety Permit for
Additional Commercial Cannabis Business Activities on the Same Premises (Co-
Location).
(a) An existing commercial cannabis business with an RSP may co-locate additional
non-retail commercial cannabis business activities (cultivation, distribution, and/or
manufacturing) by applying for a new RSP for the additional use(s). The new RSP
must meet the all requirements of the Santa Ana Municipal Code except that
background checks (live scans) shall only be required for any new staff as outlined
in Section 40-8. A single RSP that lists any and all approved cannabis business
activity/activities may be renewed annually thereafter.
(b) New or pending RSP applicants wishing to co-locate additional non-retail
(cultivation, distribution, and/or manufacturing) uses may submit a new RSP for
any of the non-retail commercial cannabis business activities. The additional RSP
must meet the all requirements of the RSP except that background checks (live
scans) shall only be required for any new staff as outlined in Section 40-8. A single
Exhibit 1
Ordinance No. NS-XXX
Page 33 of 73
RSP that lists any and all approved cannabis business activity/activities may be
renewed annually thereafter.
(c) New commercial cannabis business applicants — co-location.
1. New commercial cannabis retail applicants wishing to co-locate additional non-
retail (cultivation, distribution, and/or manufacturing) uses shall submit
separate RSPs for the proposed retail activity and another RSP for any of the
non-retail (cultivation, distribution, and/or manufacturing) commercial cannabis
business activities. Each RSP application will be evaluated independently and
must meet any applicable requirements of the RSP as outlined in Sections 40-
8 and 40-9, including, but not limited to, merit evaluation and additional
separation requirements for the retail RSP. A single RSP that lists any and all
approved cannabis business activity/activities may be renewed annually
thereafter.
2. New non-retail commercial cannabis applicants wishing to co-locate additional
non-retail (cultivation, distribution, and/or manufacturing) uses may submit a
single RSP for the proposed activity or activities. The RSP application must
meet any applicable requirements of the RSP as outlined in Sections 40-8 and
40-9. A single RSP that lists any and all approved cannabis business
activity/activities may be renewed annually thereafter.
4. Regulatory Safety Permit Annual Renewal.
(a) Applications for the renewal of a permit shall be filed with the Director of Planning
and Building or designee(s) at least sixty (60) calendar days before the expiration
of the current permit. Temporary permits will not be issued. Any permittee allowing
their permit to lapse or which permit expired during a suspension shall be required
to submit a new application, pay the corresponding original application fees and
be subject to all aspects of the selection process.
(b) Any person desiring to obtain a renewal of their respective permit shall file a written
application under penalty of perjury on the required form with the Director of
Planning and Building or his or her designee(s) who will conduct a review. The
application shall be accompanied by a nonrefundable filing fee established by the
City Council to defray the cost of the review required by this article. An applicant
shall be required to update the information contained in their original permit
application and provide any new and/or additional information as may be
reasonably required by the Director of Planning and Building or designee(s) in
order to determine whether said permit should be renewed based on compliance
with all applicable provisions of the Santa Ana Municipal Code.
(c) Compliance with Section 40-1 (C) to provide for community benefits is required for
all commercial cannabis businesses seeking renewal of the RSP.
Exhibit 1
Ordinance No. NS-XXX
Page 34 of 73
5. Appeal of Denial of Regulatory Safety Permit/Denial of RSP Renewal. The Executive
Director of the Planning and Building Agency City Manager or his or her designee(s)
will review all Regulatory Safety Permit applications and renewal requests, along with
all other relevant information, and determine if a RSP should be granted and/or
renewed based on compliance with all applicable provisions of the Santa Ana
Municipal Code. If the Executive Director of the Planning and Building Agency City
Manager determines that the permit shall not be granted and/or renewed, the reasons
for denial shall be provided in writing to the applicant. No such denial shall become
effective until the applicant for the regulatory safety permit and/or renewal has been
notified in writing by certified mail of the right to appeal the denial decision pursuant
to the provisions of Chapter 3 of this Code. If a timely appeal is filed, the denial shall
be effective only upon decision of a hearing officer as provided for in Chapter 3 of the
Santa Ana Municipal Code. Otherwise, the denial shall become effective after the
timely appeal period has passed. The matter may be subject to judicial review under
the provisions of California Code of Civil Procedure Sections 1094.5 and 1094.6.
Sec. 40-9.1. Non-retail commercial cannabis business (cultivation, manufacturing,
distribution, and testing facility/laboratory) selection process.
1. Non-Retail Commercial Cannabis Businesses — Registration Application (Phase 1)
and Regulatory Safety Permit (Phase 2) Required.
a. Every Non-Retail Commercial Cannabis Business shall apply for the Phase 1
(Registration Application) and Phase 2 (Regulatory Safety Permit Application) in
the manner described in Section 40-9, except that the Director of the Planning and
Building Agency or his or her designee may accept Phase 1 and Phase 2
applications for a Non-Retail Commercial Cannabis Business concurrently, and
shall review such applications and issue the Regulatory Safety Permit Application
without consideration of the merit based point system, insofar as the applications
satisfy all other requirements of this article and Chapter 18.
b. Applications for a Non-Retail Commercial Cannabis Business shall be accepted
during normal City Hall business hours and are not subject to the thirty (30) day
Phase 1 or Phase 2 application periods.
Sec. 40-9.2. Commercial cannabis consumption lounge selection process.
(a) After the adoption of this Ordinance, the Executive Director of the Planning and
Building Agency shall prepare application forms and a related administrative policy.
Each commercial cannabis retail business interested in operating a consumption
lounge pursuant to this article may submit an RSP application together with a non-
refundable processing fee in an amount established by the City Council.
(b) The Director or his or her designee shall determine whether each RSP application
demonstrates compliance with this article as prescribed by Section 40-9 of this
Chapter. Each RSP application that is in compliance with this article shall be placed
Exhibit 1
Ordinance No. NS-XXX
Page 35 of 73
on the "Qualified Consumption Lounge Applicant List" and the Director shall notify the
applicant in writing that it is a "Qualified Consumption Lounge Applicant."
(c) Qualified Consumption Lounge Applicants shall be notified by the City that they may
submit any/all required documentation and plan drawings to complete the City’s plan
check and permitting process to construct a consumption lounge.
(d) Upon notification of placement on the Qualified Consumption Lounge Applicant List,
applicants shall have 180 days to complete the plan check and construction process,
and be issued a certificate of occupancy, unless an extension is granted by the
Executive Director of the Planning and Building Agency to resolve required building or
site upgrades, modifications, repairs, or other property issue mitigations tied directly
to construction of the lounge.
Sec. 40-10. Audits - Commercial Cannabis Businesses.
Annual audits. No later than September 30 of every year, each licensed commercial
cannabis business, except commercial cannabis businesses licensed and operating
solely as shared manufacturers, shall be liable to file with the City an independent audit
or financial review of its operations of the previous calendar year. Provided, however, that
licensed commercial cannabis businesses which operate as microbusiness, or that
operate on a vertically or horizontally integrated basis as established in Chapter 21,
Article XIII of this Code, or that are co-located on shared premises may file a consolidated
independent audit or financial review. The form and contents of the document shall be
specified by the Executive Director of Finance and Management Services, or his or her
designee(s). The Executive Director of Finance and Management Services, or his or her
designee(s) may waive this requirement for certain licensed commercial cannabis
businesses in accordance with guidelines established by the Finance and Management
Services Agency.
Sec. 40-11. Inspection and enforcement responsibilities.
The Code Enforcement Division of the Planning and Building Agency may enter and
inspect the location of any commercial cannabis business between the hours of 7:00 a.m.
and 10:00 p.m., or at any reasonable time, to ensure compliance with this article. In
addition, any police officer may enter and inspect the location of any commercial cannabis
business and the recordings and records maintained as required by this article, except
that the inspection and copying of private medical records shall be made available to the
police department only pursuant to a properly executed search warrant, subpoena, or
court order. It is unlawful for any owner, responsible person, landlord, lessee, member
including, but not limited to, a member engaged in the management), or any other person
having any responsibility over the operation of the commercial cannabis business to
refuse to allow, impede, obstruct or interfere with an inspection, review or copying of
records and closed-circuit monitoring authorized and required under this article, including,
Exhibit 1
Ordinance No. NS-XXX
Page 36 of 73
but not limited to, the concealment, destruction, and falsification of any recordings,
records, or monitoring.
Sec. 40-12. Violation and enforcement.
1. Violation/enforcement. Each and every violation of this article shall constitute a
separate violation and shall be subject to all remedies and enforcement measures
authorized by this Code. Additionally, as a nuisance per se, any violation of this article
shall be subject to injunctive relief, revocation of the commercial cannabis business
Regulatory Safety Permit, revocation of the certificate of occupancy for the location,
disgorgement and payment to the City of any and all monies unlawfully obtained, costs
of abatement, costs of investigation, attorney fees, and any other relief or remedy
available at law or equity. The City may also pursue any and all remedies and actions
available and applicable under local and State laws for any violations committed by
the commercial cannabis business and persons related or associated with the
business.
2. Suspension or revocation. When an authorized City of Santa Ana representative finds
that any person holding a Regulatory Safety Permit under the provisions of Chapter
40 has violated the provisions of this chapter or is found guilty of conduct which would
form the basis of denial of the Regulatory Safety Permit as set forth in Article XIII of
this Chapter 18, s/he may revoke or suspend the permit. No such revocation shall
become effective until the Regulatory Safety Permit holder has been notified in writing
by certified mail of the right to appeal the revocation decision pursuant to the
provisions or Chapter 3 of this Code. If a timely appeal is filed, the revocation shall be
effective only upon decision of a hearing officer as provided for in Chapter 3 of the
Santa Ana Municipal Code. Otherwise, the revocation shall become effective after the
timely appeal period has passed.
3. State License Suspension/Revocation. Revocation or suspension of a Licensee's
State issued commercial cannabis business permit or license by the State shall
constitute a violation of this article and result in revocation of the Licensee's RSP.
Sec. 40-13. Transfer of ownership.
1. Upon the transfer of any interest in a commercial cannabis business, the Regulatory
Safety Permit shall be null and void. Any person, firm or entity desiring to own and
operate the commercial cannabis business shall make a new Regulatory Safety
Permit application. Prior to or concurrent with the submission of said application the
transferee shall obtain all required business licenses, post all required security
deposits, acquire all necessary, certificates, permits or other licenses allowing the
doing of any act which the person paying or holding the same would not otherwise be
entitled to do; and any permit, license, variance or other instrument of approval or
evidence that any conditions exist as required by any other section of this Code or by
any statute or code provisions of the state must first be obtained or complied with
Exhibit 1
Ordinance No. NS-XXX
Page 37 of 73
before the doing of any act or thing for which it is required. A fee as established by
resolution of the City Council shall be payable for each such application involving
transfer of any interest in an existing commercial cannabis retail business. The
provisions of this section shall apply to any person, firm, or entity applying for a
Regulatory Safety Permit for premises previously used as such establishment.
2. Any such transfer of any interest in an existing commercial cannabis business or any
application for an extension or expansion of the building or other place of business of
the commercial cannabis retail business shall require inspection and compliance with
section 40-11 of this article.
3. The owner or operator of a commercial cannabis business shall be responsible for
notifying the City of any intention to rename, change management, or convey the
business to another person/entity. Notification to the City must be made a minimum
of sixty (60) days prior to such transfer.
Sec. 40-14. Limitations on the city's liability.
To the fullest extent permitted by law, the City shall not assume any liability whatsoever,
with respect to approving any Regulatory Safety Permits pursuant to this article or the
operation of any commercial cannabis business approved pursuant to this chapter. As a
condition of approval of a Regulatory Safety Permit as provided in this chapter, the
applicant or its legal representative shall:
1. Execute an agreement indemnifying the City from any claims, damages, injuries or
liabilities of any kind associated with the registration or operation of the commercial
cannabis business or the prosecution of the applicant or business or its members for
violation of federal or State laws;
2. Maintain insurance in the amounts and types that are acceptable to the City Attorney
or his or her designee;
3. Name the City as an additionally insured on all City required insurance policies;
4. Agree to defend, at its sole expense, any action against the City, its agents, officers,
and employees related to the approval of a Regulatory Safety Permit; and,
5. Agree to indemnify and reimburse the City for any court costs and attorney fees that
the City may be required to pay as a result of any legal challenge related to this
ordinance and/or the City's approval of a Regulatory Safety Permit. The 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.
Sec. 40-15. Fees and taxes.
All commercial cannabis businesses shall pay applicable fees and taxes, which shall
include one (1) or more of the following:
Exhibit 1
Ordinance No. NS-XXX
Page 38 of 73
1. Application Fees. The business owner shall submit a non-refundable fee to cover the
cost of processing an application for the commercial cannabis business. These fees
may be divided into two (2) fees according to Registration Application Fee (Phase 1)
and RSP Application Fee (Phase 2).
2. Regulatory Safety Permit Renewal Fees. The business owner shall submit a non-
refundable fee to cover the cost of processing an application renewal annually.
3. Business License Taxes. The business owner shall at all times maintain a current and
valid City of Santa Ana business license and shall pay all business license taxes,
deposits, charges, fees, deficiencies, penalties, interest, and other associated
assessments as may be required pursuant to ordinances of the City of Santa Ana
and/or the Santa Ana Municipal Code.
4. Operating Agreement Fees.
5. Additional cannabis-specific gross receipts, excise taxes, or other municipal tax
approved by the voters of the City of Santa Ana.
6. All required state taxes including sales and use taxes, business/franchise or income
taxes, payroll taxes, etc.
7. All required federal taxes.
Section 7. Article XIII of Chapter 18 of the Santa Ana Municipal Code (Medicinal
Marijuana Collectives/Cooperatives) is hereby deleted in its entirety, renamed
“Reserved,” and re-adopted and amended as Article II of Chapter 40 of the Santa Ana
Municipal Code to read as “Regulation of Commercial Cannabis Medicinal Retail
Activities” as follows:
ARTICLE II. – REGULATION OF COMMERCIAL CANNABIS MEDICINAL RETAIL
ACTIVITIES
Sec. 40-100. Purposes and intent.
It is the purpose and intent of this article to regulate the collective distribution of medical
marijuana in order to ensure the health, safety and welfare of the residents of the City of
Santa Ana. The regulations in this article, in compliance with the Compassionate Use Act,
the Medical Marijuana Program Act, and the California Health and Safety Code
(collectively referred to as "State Law") do not interfere with a patient's right to use medical
marijuana as authorized under State Law, nor do they criminalize the possession or
cultivation of medical marijuana by specifically defined classifications of persons, as
authorized under State Law. Under State Law, only qualified patients, persons with
identification cards, and primary caregivers may cultivate medical marijuana collectively.
Medical marijuana collectives shall comply with all provisions of the Santa Ana Municipal
Code ("Code"), State Law, the 2008 California Attorney General Guidelines for the
Security and Non-Diversion of Marijuana Grown for Medical Use, and all other applicable
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Ordinance No. NS-XXX
Page 39 of 73
local and state laws. Nothing in this article purports to permit activities that are otherwise
illegal under state or local law.
Sec. 40-101. Definitions.
(a) "Cultivation" and/or "Cultivate" shall mean the planting, growing, harvesting,
drying, curing, grading or trimming of one (1) or more marijuana plants or any part
thereof, as set forth in Business and Professions Code § 26001(l) as amended
from time to time.
(b) "Medical marijuana collective" or "cooperative" or "collective" means any facility
otherwise known as a commercial cannabis medicinal retail or retailer, or location
where medical marijuana is made available and/or distributed by or to one (1) or
more of the following: a primary caregiver, a qualified patient or a person with an
identification card in strict accordance with California Health and Safety Code §
11362.5 et seq., as sometimes amended. This term shall include any legal form of
business recognized in the State of California. A "medical marijuana collective"
shall not include the following uses, as long as the location of such uses are
otherwise regulated by this Code or applicable law: a clinic licensed pursuant to
Chapter 1 of Division 2 of the Health and Safety Code, a health care facility
licensed pursuant to Chapter 2 of Division 2 of the Health and Safety Code, a
residential care facility for persons with chronic life-threatening illness licensed
pursuant to Chapter 3.01 of Division 2 of the Health and Safety Code, a residential
care facility for the elderly licensed pursuant to Chapter 3.2 of Division 2 of the
Health and Safety Code, a residential hospice or a home health agency licensed
pursuant to Chapter 8 of Division 2 of the Health and Safety Code, as long as such
use complies strictly with applicable law including, but not limited to, Health and
Safety Code Section 11362.5 et seq.
(c) "Identification card" shall have the same definition as that contained in Health and
Safety Code § 11362.7 et seq., as sometimes amended.
(d) "Manager" means any person responsible for the establishment, organization,
supervision, or oversight of the operation of a Collective, including, but not limited
to, members who perform the functions of president, vice-president, director,
operating officer, financial officer, secretary, or treasurer. Ability to control one (1)
or more of the following functions shall be prima facie evidence that such person
is a manager:
(1) To hire, select, or separate employees or staff, including volunteers;
(2) To acquire facilities, furniture, equipment or supplies other than occasional
replenishment of stock;
(3) To disburse funds of the business other than occasional expenditures for
replenishment of stock; or
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Ordinance No. NS-XXX
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(4) To make, or participate in making, policy decisions relative to the operations
of the business.
(e) "Marijuana" shall have the same definition as that contained in Health and Safety
Code § 11018 as sometimes amended.
(f) "Medical marijuana" shall have the same definition as that contained in Health and
Safety Code § 11362.5 et seq., as sometimes amended.
(g) "Primary caregiver" shall have the same definition as that contained in Health and
Safety Code §§ 11362.5 and 11362.7, as sometimes amended.
(h) "Qualified patient" shall have the same definition as that contained in Health and
Safety Code § 11362.5 as sometimes amended.
(i) "Private Residence" shall have the same definition as that contained in Health and
Safety Code §§ 11362.2(5) and 17922. A recreational vehicle does not constitute
a lawfully established structure for the purposes of this article.
(j) "Premises" means a single, legal parcel of property. Where contiguous legal
parcels under common ownership or control, such contiguous legal parcels shall
constitute a single "premises" for purposes of this chapter.
(k) "Parcel" means property assigned a separate parcel number by the Orange
County Assessor.
(l) "Marijuana Products" shall have the same definition as that contained in Health
and Safety Code § 11018.1.
(m) "Marijuana Accessories" shall have the same definition as that contained in Health
and Safety Code § 11018.2.
(n) "Personal Cultivation" shall mean the planting, growing, harvesting, drying, curing,
grading or trimming of marijuana plants for personal use within a private residence
or accessory structure to a private residence.
(o) "Commercial Cultivation" shall mean the planting, growing, harvesting, drying,
curing, grading or trimming of marijuana plants in any structure other than a private
residence.
(p) "Outdoor Cultivation" shall mean the planting, cultivating, growing, harvesting,
drying, curing, grading or trimming of marijuana plants in any location within the
City of Santa Ana that is not within a fully enclosed and secure structure.
(q) "Fully enclosed and secure structure" means a space within a building,
greenhouse or other structure which has a complete roof enclosure supported by
connecting walls extending from the ground to the roof, which is secure against
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Ordinance No. NS-XXX
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unauthorized entry, provides complete visual screening, and which is accessible
only through one (1) or more lockable doors.
(r) "Delivery" means the commercial transfer of medical cannabis or medical
cannabis products from a dispensary, up to an amount determined to be
authorized by the State of California, or any of its departments or divisions, to
qualified patients and their caregivers. "Delivery" also includes the use by a
dispensary of any technology platform owned, controlled, and/or licensed by the
dispensary, or independently licensed by the State of California under the State
law (as amended from time to time), that enables anyone to arrange for or facilitate
the commercial transfer by a licensed dispensary of medical cannabis or medical
cannabis products. For the purposes of this article, "delivery" does not include
distribution or purchase of cannabis from a licensed cultivator, and cannabis
products from a licensed manufacturer, for sale to a licensed dispensary or a
wholesale establishment.
(s) "Dispensary" means a premises where medical cannabis or medical cannabis
products, or devices for the use of medical cannabis or medical cannabis products
are offered, either individually or in any combination, for retail sale, including an
establishment that delivers, pursuant to Business and Professions Code § 19340,
medical cannabis and medical cannabis products as part of a retail sale.
(t) "Responsible person" means any of the following:
(1) A person who causes a Code violation to occur.
(2) A person who maintains or allows a Code violation to continue, by his or her
action or failure to act.
(3) A person whose agent, employee, or independent contractor causes a Code
violation by its action or failure to act.
(4) A person who is the owner of, and/or a person who is a lessee or sub lessee
with the current right of possession of, real property where a property-related
Code violation occurs.
(5) A person who is the on-site manager of a business who normally works daily
at the site when the business is open and is responsible for the activities of
such premises.
For the purposes of this section "person" includes a natural person or legal
entity, and the owners, majority stockholders, corporate officers, trustees, and
general partners of a legal entity.
(u) "Distribution" means the procurement, sale and transport of cannabis and
cannabis products between entities licensed pursuant to the Medicinal and Adult-
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Use of Cannabis Regulation and Safety Act, and any subsequent State of
California legislation regarding the same.
(v) "Testing Facility" or "Testing Laboratory" defined in the Business and Professions
Code § 26001, as amended from time to time, means a laboratory, facility, or entity
in the State that offers or performs tests of cannabis or cannabis products and that
is both of the following:
(1) Accredited by an accrediting body that is independent from all other persons
involved in commercial cannabis activity in the State; and,
(2) Licensed by the Bureau of Cannabis Control.
Sec. 40-102. Scope of article.
The operating standards established in this article apply to any site, facility, location, use,
cooperative or business currently operating in the City of Santa Ana, or which commences
operations after the effective date of this article, that distributes, dispenses, stores, sells,
exchanges, processes, delivers, or gives away, medical marijuana to qualified patients,
health care providers, patients' primary caregivers, or physicians, pursuant to Health &
Safety Code § 11362.5 (adopted as Proposition 215, the "Compassionate Use Act of
1996") or any state regulations adopted in furtherance thereof. Any collective in the City
of Santa Ana shall operate in conformance with the operating standards set forth in
section 18-613 40-103 of this Code to assure that the operations of the collective are in
compliance with California law and to mitigate the adverse secondary effects from
operations of dispensaries.
Sec. 40-103. Operating Standards.
(a) At all times the collective is open, a collective shall provide at least one (1) security
guard who is licensed as a security/private patrol service, possesses a valid
department of consumer affairs "security guard card", and has a valid Santa Ana
Business License. In the event that the security guard is employed by an outside
security guard company; such security guard company shall maintain a valid Santa
Ana Business License as a security/private patrol service.
(b) The security guard and collective personnel shall monitor the site and the immediate
vicinity of the site to assure that patrons immediately leave the site and not consume
medical marijuana in the vicinity of the collective or on the property or in the parking
lot., except as permitted by Section 40-8 (10) of the Santa Ana Municipal Code.
(c) Exterior signage shall comply with Article XI of Chapter 41. Interior signage or
advertising may not be visible from the exterior. Collectives and dispensaries must
comply with the advertising and marketing provisions of Business and Professions
Code §§ 26150—26155.
(d) No recommendations from a doctor for medical marijuana shall be issued on-site.
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Ordinance No. NS-XXX
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(e) There shall be no on-site sales of alcohol or tobacco products, and no on-site
consumption of alcohol, tobacco or marijuana by patrons. Food may not be
consumed on site, except as permitted by Section 40-8 (10) of the Santa Ana
Municipal Code.
(f) Hours of operation shall be limited to: 7:00 a.m. to 11:00 p.m. daily. No licensed
dispensary/collective shall be open to the public between the hours of 11:01 p.m.
and 6:59 a.m. of any day.
(g) The property shall provide an air treatment system with sufficient odor absorbing
ventilation and exhaust systems so that odor generated inside the location is not
detected outside the building, anywhere on adjacent property or public rights-of-way,
or within any other unit located within the same building as the collective if the use
only occupies a portion of a building.
(h) A collective shall only dispense medical marijuana to qualified patients and their
caregivers as defined by California Health and Safety Code § 11362.5 (Proposition
215). This shall include possession of an original valid doctor's recommendation, not
more than one (1) year old, for medical marijuana use by the patient.
(i) A collective shall notify patrons of the following through posting of a sign in a
conspicuous location:
(1) Use of medical marijuana shall be limited to the patient identified on the
doctor's recommendation. Secondary sale, barter or distribution of medical
marijuana is a crime and can lead to arrest.
(2) That loitering on and around the collective site is prohibited by California Penal
Code § 647(e) and that patrons must immediately leave the site and not consume
medical marijuana in the vicinity of the collective or on the property or in the parking
lot.
(3) Forgery of medical documents is a felony crime.
(4) A warning that patrons may be subject to prosecution under federal marijuana
laws.
(5) That the use of medical marijuana may impair a person's ability to drive a motor
vehicle or operate machinery.
(j) A collective shall not provide marijuana to any individual in an amount not consistent
with personal medical use.
(k) All agents, private security officers or other persons acting for or employed by a
collective shall display a laminated an identification badge at least two (2) inches by
two (2) inches in size, issued by the City. The badge, at a minimum, shall include
the employee's first and last name, date of most recent Live Scan, expiration date
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Ordinance No. NS-XXX
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of Live Scan results after the one-year period, and a color photo of the employee
that shows the full front of the employee's face.
(l) No one under eighteen (18) years of age shall be permitted to enter establishment,
unless such person is a qualified patient and is accompanied by his or her primary
caregiver, licensed attending physician, parent(s) or documented legal guardian.
(m) A collective shall provide the name and phone number of an on-site staff person to
the police department and the code enforcement division of the planning and
building agency for notification if there are operational problems with the
establishment.
(n) Each collective/cooperative owner, operator(s) and employees shall complete a
criminal background check and wear a visible photo ID at all times during operating
hours. Owners, operator(s), employees, managers or volunteers may not have
been:
i. convicted of, or pleaded guilty/no-contest to a felony within the past four
(4) years or currently on formal probation or parole;
ii. convicted of an infraction or misdemeanor drug charge within the past
four (4) years or required to registered as a controlled substance
offender pursuant to Health and Safety Code section 1590 as part of
their sentence for any other charge(s);
iii. an owner or operator of property or a business in which the applicant
knew, or should have known, that an unlicensed cannabis location was
present within the past four (4) years.
If a collective owner(s), operator(s) or employees has a pending criminal infraction,
misdemeanor or felony case involving a drug charge, the applicant must provide
written documentation from the prosecuting entity of their intent to either prosecute
or dismiss the matter. If the prosecuting entity indicates that a pending criminal case
involving the applicant is actively being prosecuted, the applicant will not be
disqualified, however, their application will be put on hold pending final adjudication
of that case.
(o) Marijuana shall not be grown or cultivated at collective sites, except that cuttings of
the marijuana plant may be kept or maintained on-site for distribution to qualified
patients and primary caregivers as follows:
(1) The cuttings shall not be utilized by a collective as a source for the provision
of marijuana for consumption on-site, however, upon provision to a qualified patient
or primary caregiver, that person may use the cuttings to cultivate marijuana plants
off-site for their own use and they may also return marijuana from the resulting
mature plant for distribution by the collective.
Exhibit 1
Ordinance No. NS-XXX
Page 45 of 73
(2) For the purposes of this paragraph, the term "cutting" shall mean a rootless
piece cut from a marijuana plant, which is no more than six (6) inches in length, and
which can be used to grow another plant in a different location.
(p) A collective shall comply with applicable provisions of the California Health and
Safety Code §§ 11362.5 through 11362.83, inclusive.
(q) If food is distributed, the collective shall comply with all relevant state laws and city
and/or county ordinances pertaining to the preparation, distribution and sale of food.
(r) The location, interior and exterior, shall be monitored at all times by web-based
closed-circuit television for security purposes. The camera and recording system
must be of adequate quality, color rendition and resolution to allow the ready
identification of any individual committing a crime anywhere on or adjacent to the
location. The recordings shall be maintained for a period of not less than ninety (90)
days. The police department may request the recordings in connection with an
investigation.
(s) The location shall have a centrally monitored fire and burglar alarm system which
shall include all perimeter entry points and perimeter windows and the building or
the portion of the building where the collective is located shall contain a fireproof
safe or fireproof filing cabinet and include a safety and security plan.
(t) Reserved.
(u) Reserved.
(v) If the collective operator is not the owner of the property where the collective is to
operate, the operator shall provide evidence that the property owner(s) consent to
the operation of a collective on the property.
(w) Collectives must obtain and maintain a valid city business license at all times as a
condition for receiving, renewing, and maintaining their regulatory safety permit.
(x) Occupancy shall not exceed that required under the Uniform Building Code and
Uniform Fire Code, and the maximum occupancy load shall be posted at the main
entrance.
Sec. 40-104. Reserved.
Sec. 40-105. Zones permitted.
Collectives Medicinal cannabis retail business permitted zones. No collective shall
operate within a residential (R-1, R-2, R-3, R-4, RE, CR) zone, Professional (P) zone,
Arterial Commercial (C-5) zone, Planned Shopping Center (C-4) zone, Specific
Development (SD), Specific Plan (SP) or Agricultural (A-1) zone. A Collective Medicinal
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Ordinance No. NS-XXX
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cannabis retail business may only operate in an Industrial zone (M-1, M-2) in accordance
with this article Section 40-6 in Article I of this Chapter.
Sec. 40-106. Separation requirements between medicinal cannabis retailers.
(a) No collective medicinal cannabis retailer shall be located within five hundred (500)
feet of another medicinal cannabis retailer/medical marijuana collective or cooperative or
within one thousand (1,000) feet of any:
(1) School.
(2) Park.
(3) Residential zone.
Sec. 40-107.1 Cooperative/collective registration required.
(a) Within 30 days after the adoption of this Chapter, the The Director of Planning and
Building shall prepare Cooperative/Collective registration application forms and a
related administrative policy. Each collective interested in operating pursuant to this
article may submit an application together with a non-refundable processing fee in an
amount established by the City Council. Within 60 days after the adoption of this
article, the Director shall stop accepting applications and process all applications
received.
(b) The Director or his or her designee shall determine whether each application
demonstrates compliance with this article. Each application that is in compliance with
this article shall be placed on the "Qualified Registration Applicant List" and the
Director shall notify the applicant in writing that it is a "Qualified Registration
Applicant."
(c) Once all applications are processed, the Director shall hold an independent selection
process ("lottery") in an open and public location and select 20 applications. The 20
applications chosen through the independent selection process (lottery) will be placed
on the "Regulatory Safety Permit ("RSP") Eligibility List." Each applicant on the RSP
Eligibility List may then choose to file an application for a RSP pursuant to section 40-
107.2. All Aapplicants identified on the RSP Eligibility List following the February 5,
2015 independent selection process (lottery) must submit a completed RSP
application and construction plans within four (4) months of April 5, 2016 and no later
than August 5, 2016 shall be required to concurrently: (1) File an application for an
RSP and (2) Submit all required construction plans for plan check by the City by
December 31, 2022, subject to the requirements of this Chapter and other applicable
chapters of the Santa Ana Municipal Code, and open within 180 days of construction
permit issuance. An extension may be issued for a period of time as may be
reasonably required to affect upgrades, modifications, repairs, or other property issue
mitigations as approved by the Director of Planning and Building or his or her
designee. Failure to submit a completed RSP application satisfy these requirements
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by that deadline will disqualify the applicant from the RSP Eligibility List and the
Waitlist described in subsection (d). Relocation is permitted pursuant to Section 40-7
of this Chapter.
(d) Qualified Registration Applicants will appear on the "Qualified Registration Applicant
List" in the order that they are selected during the independent selection process
(lottery). This list is the Waitlist. The Waitlist will become active if (1) an applicant on
the RSP Eligibility List is disqualified from that List; (2) a location appearing on the
RSP Eligibility List becomes available; or (3) a location not appearing on the RSP
eligibility list becomes available. A Qualified Registration Applicant's ability to move
from the Waitlist to the RSP Eligibility List is determined by the applicant's proposed
medical marijuana collective location and the applicant's position on the Waitlist.
(e) A Qualified Registration Applicant that moves from the Waitlist to the RSP Eligibility
List must submit a completed RSP application within three (3) months following
issuance of a written notice advising the applicant of that opportunity. Failure to submit
a completed RSP application by that deadline will disqualify the applicant from the
RSP Eligibility List and the Waitlist.
(f) The Director shall maintain the Waitlist and update it on an annual basis. A Qualified
Registration Applicant on that Waitlist must submit a written request each year to
maintain its status on the waitlist. The Director may place new applicants on the
Waitlist in the order in which the new registration applications are received.
(g) Upon the effective date of this Ordinance on July 1, 2022, the City shall terminate the
Waitlist by providing written notice to all individuals and/or entities on the Waitlist at
least 180 calendar days in advance of the Waitlist’s termination. The notice shall
contain details about each individual’s and/or entity’s position on the Waitlist and
information about any upcoming applications being accepted for new commercial
cannabis adult-use or medicinal retail selection processes as per the process outlined
in Section 40-9, subject to the processes and procedures promulgated in Article I of
this Chapter. No new medicinal retail applications shall be accepted following
termination of the Waitlist.
(h) In no event shall the City begin accepting applications for new commercial cannabis
retail businesses before the 180-day written notification to all affected individuals
and/or entities on the Waitlist.
(i) Upon termination of the Waitlist, any operating adult-use commercial cannabis retailer
with a valid RSP may also sell medicinal retail cannabis in full accordance with any
State licensing requirements.
(j) Relocation of an existing and licensed medical marijuana collective or medical
marijuana cooperative as defined in Article II of this Chapter that is operating in full
compliance with the provisions of this Article is permitted subject to Section 40-7 in
Article I of Chapter 40 of the Santa Ana Municipal Code.
Exhibit 1
Ordinance No. NS-XXX
Page 48 of 73
Sec. 40-107.2. Medical marijuana collective—Regulatory permit application
process.
(a) Any medical marijuana collective desiring a regulatory safety permit required by this
article shall, prior to initiating operations and after receiving notice of its successful
registration under section 40-107.1 as being on the RSP eligibility list, must complete
and file a regulatory safety permit application to the director of the planning and
building agency or designee on a form supplied by the planning and building agency.
The application shall be filed together with a nonrefundable fee as established by
resolution of the city council, to defray the cost of investigation required by this article.
The application shall contain all of the following:
(1) The address of the property where the proposed medical marijuana collective(s)
will operate;
(2) A site plan describing the property with fully dimensioned interior and exterior floor
plans including electrical, mechanical, plumbing, and disabled access compliance
pursuant to Title 24 of the State of California Code of Regulations and the federally
mandated Americans with Disabilities Act;
(3) Exterior photographs of the entrance(s), exits(s), street frontage(s), parking, front,
rear and side(s) of the proposed property;
(4) Photographs depicting the entire interior of the proposed property;
(5) If the property is being rented or leased or is being purchased under contract, a
copy of such lease or contract;
(6) If the property is being rented or leased, written proof that the property owner, and
landlord if applicable, were given notice that the property will be used as a medical
marijuana collective, and that the property owner, and landlord if applicable,
agree(s) to said operations;
(7) The name, address, telephone number, title and function(s) of each manager,
employee, volunteer, etc.;
(8) For each manager, employee, volunteer, a fully legible copy of one (1) valid
government issued form of photo identification, such as state driver's license or
identification card;
(9) If the medical marijuana collective is a corporation, a certified copy of the
collective's secretary of state articles of incorporation, certificate(s) of amendment,
statement(s) of information and a copy of the collective's bylaws;
(10) If the medical marijuana collective is an unincorporated association, a copy
of the articles of association;
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Ordinance No. NS-XXX
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(11) The name and address of the applicant's current agent for service of
process;
(12) A copy of the applicant's board of equalization seller's permit;
(13) A copy of the medical marijuana collective operating standards, listed in
section 40-103, containing a statement dated and signed by the responsible party
on-site stating under penalty of perjury, that they read, understand and shall
ensure compliance with the aforementioned operating standards.
(b) The director of the planning and building agency or designee shall have sixty (60)
calendar days in which to investigate the application and background of the applicant.
The department of building safety and housing, the fire department and the Orange
County Health Department shall inspect the premises proposed to be devoted to the
collective establishment and shall make separate recommendations to the director of
the planning and building agency or designee or designee concerning compliance with
the foregoing provisions.
(c) The director of the planning and building agency or designee, after receiving the
application and aforementioned recommendations, shall grant the permit if s/he finds:
(1) The required fee has been paid.
(2) The application conforms in all respects to the provisions of this article.
(3) The applicant has not knowingly made a material misrepresentation in the
application.
(4) The applicant has fully cooperated in the investigation of the application.
(5) The applicant has not had a regulatory safety permit or other similar license or
permit denied or revoked for cause by this city or any other city located in or out of
this state within the five (5) years prior to the date of application.
(6) The collective as proposed by the applicant would comply with all applicable laws
including, but not limited to, health, zoning, fire and safety requirements.
(7) The applicant has demonstrated compliance with the California Department of
Justice, Office of the Attorney General, "Guidelines for the Security and Non-
Diversion of Marijuana Grown for Medical Use" standards.
(d) Failure of an applicant listed on the RSP eligibility list to obtain a certificate of
occupancy within six (6) months of submitting a completed RSP application will result
in disqualification from the RSP eligibility list and waitlist. This sub-section applies to
RSP applications submitted after April 5, 2016.
Sec. 40-107.3. Medical marijuana collective—Regulatory permit annual renewal.
Exhibit 1
Ordinance No. NS-XXX
Page 50 of 73
(a) Applications for the renewal of a permit shall be filed with the director of the planning
and building agency or designee at least sixty (60) calendar days before the expiration
of the current permit. Temporary permits will not be issued. Any permittee allowing his
or her permit to lapse or which permit expired during a suspension shall be required
to submit a new registration application and pay the corresponding original application
fees.
(b) Any person desiring to obtain a renewal of his/her respective permit shall file a written
application under penalty of perjury on the required form with the chief of police who
shall conduct an investigation. The application shall be accompanied by a
nonrefundable filing fee established by separate resolution of the city council to help
defray the cost of the investigation required by this article. An applicant shall be
required to update the information contained in his/her original permit application and
provide any new and/or additional information as may be reasonably required by the
director of the planning and building agency or designee in order to determine whether
said permit should be renewed.
Sec. 40-107.4. Maintenance of records.
A medical marijuana collective shall maintain records at the location accurately and
truthfully documenting:
(1) The full name, address, and telephone number(s) of the owner, landlord and/or lessee
of the location;
(2) The full name, address, and telephone number(s) of all members who are engaged in
the management of the collective and the exact nature of each member's participation
in the management of the collective;
(3) The full name, address, and telephone number(s) of all patient members to whom the
collective provides medical marijuana, a copy of a government-issued identification
card for all patient members;
(4) The full name, address, and telephone number(s) of all primary caregiver members to
whom the collective provides medical;
(5) All receipts of the collective, including but not limited to all contributions,
reimbursements, and reasonable compensation, whether in cash or in kind, and all
expenditures incurred by the collective for the cultivation of medical marijuana; and
(6) Proof of compliance with the California Attorney General Guidelines for the Security
and Non-Diversion of Marijuana Grown for Medical Use.
These records shall be maintained by the collective for a period of five (5) years and shall
be made available by the collective to the police department and/or community
preservation division upon request. If they are not produced as requested the city may
seek a search warrant, subpoena, or court order. In addition to all other formats that the
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Ordinance No. NS-XXX
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collective may maintain, these records shall be stored by the collective at the location in
a printed format in its fireproof safe. Any loss, damage or destruction of the records shall
be reported to the police department within twenty-four (24) hours of the loss, destruction
or damage.
Sec. 40-107.5. Audits – Cooperatives/Collectives.
Annual audits. No later than September 30 of every year, each licensed medical
marijuana collective shall be liable to file with the city an independent audit or financial
review of its operations of the previous calendar year. Provided, however, that licensed
collectives which operate on a vertically or horizontally integrated basis as established in
Chapter 21, Article XII of this Code, or that are co-located on shared premises may file a
consolidated audit or independent financial review. The form and contents of the
document shall be specified by the executive director of finance and management
services, or his/her designee(s). The Executive Director of Finance and Management
Services, or his or her designee(s) may waive this requirement for certain licensed
collectives in accordance with guidelines established by the Finance and Management
Services Agency.
Sec. 40-107.11. Cooperative/Collective regulatory safety permit.
(a) Every medical marijuana collective shall obtain a regulatory safety permit from the
police department. The applicant shall pay a non-refundable fee in an amount
established by the city council. It shall be unlawful for any person, association,
partnership or corporation to engage in, conduct or carry on, in or upon any premises
within the city a medical marijuana collective without the required permit.
(b) A copy of the regulatory safety permit shall be displayed at all times in a place visible
to the public.
(c) A regulatory safety permit shall be valid for a period of one (1) year, unless sooner
revoked. No permit granted herein shall confer any vested right to any person or
business for more than the above-referenced period.
(d) A Regulatory Safety Permit shall not be issued to an individual or a business entity
associated with an individual who must comply with California Health & Safety Code
Section 11590. This subsection is applicable to all new registration applications
received after April 5, 2016.
Sec. 40-108. Inspection and enforcement responsibilities.
The code enforcement division of the planning and building agency may enter and inspect
the location of any collective between the hours of 7:00 a.m. and 11:00 p.m., or at any
reasonable time, to ensure compliance with this article. In addition, a designated unit
within the police department may enter and inspect the location of any collective and the
recordings and records maintained as required by this article, except that the inspection
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Ordinance No. NS-XXX
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and copying of private medical records shall be made available to the police department
only pursuant to a properly executed search warrant, subpoena, or court order. It is
unlawful for any owner, responsible person, landlord, lessee, member (including but not
limited to a member engaged in the management), or any other person having any
responsibility over the operation of the collective to refuse to allow, impede, obstruct or
interfere with an inspection, review or copying of records and closed-circuit monitoring
authorized and required under this article, including but not limited to, the concealment,
destruction, and falsification of any recordings, records, or monitoring.
Sec. 40-109. Applicability to existing medical marijuana operations.
Any existing medical marijuana collective, dispensary, operator, establishment, or
provider that does not comply with the requirements of this article must immediately cease
operation until such time, if any, when it complies fully with the requirements of this article.
No medical marijuana collective, dispensary, operator, establishment, or provider that
existed prior to the enactment of this article shall be deemed to be a legally established
use under the provisions of this article, and such medical marijuana collective,
dispensary, operator, establishment, or provider shall not be entitled to claim legal
nonconforming status.
Sec. 40-110. Compliance with this article and state law.
(a) It is unlawful for any person to:
i. Cause, permit or engage in the giving away of marijuana, or
ii. Own, establish, operate, use or permit the establishment or operation of a medical
marijuana collective or cooperative, or to participate as an employee, contractor,
agent, responsible person or volunteer of a collective or cooperative, except as
provided in this article, and pursuant to any and all other applicable local and state
laws.
iii. The prohibition in subsection (ii) above includes, renting, leasing, or otherwise
permitting a medical marijuana business to occupy or use a location, vehicle, or
other mode of transportation.
(b) It is unlawful for any person to cause, permit or engage in any activity related to
medical marijuana except as provided in Health and Safety Code § 11362.5 et seq.,
and pursuant to any and all other applicable local and state laws.
(c) It is unlawful for any person to knowingly make any false, misleading or inaccurate
statements or representations in any forms, records, filings or documentation required
to be maintained, filed or provided to the City under this article, or to any other local,
state or federal government agency having jurisdiction over any of the activities of
collectives.
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Ordinance No. NS-XXX
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(d) It shall be the sole responsibility of the members engaged in the management of the
collective to ensure that the collective is at all times operating in a manner compliant
with all applicable state laws and this article. Nothing in this article shall be construed
as authorizing any actions which violate state law with regard to the cultivation,
transportation, provision, and sale of medical marijuana.
(e) Cultivation of Marijuana.
(1) Personal Cultivation. Individuals twenty-one (21) years of age or older may plant,
cultivate, harvest, dry, or process up to six (6) living marijuana plants for personal
(non-commercial) use in a private residence or accessory structure to a single
private residence in the City of Santa Ana and must comply with the following
requirements:
i. The marijuana cultivation area shall be located indoors within a private
residence or accessory structure on a single parcel of property;
ii. No more than six (6) living marijuana plants is permitted for indoor personal
cultivation;
iii. Marijuana in excess of twenty-eight and one-half (28.5) grams produced by
plants kept for indoor personal cultivation must be kept in a locked space on
the grounds of the private residence not visible from the public right-of way.
iv. There shall be no exterior visibility or evidence of marijuana cultivation outside
the private residence from the public right-of-way, including but not limited to
any marijuana plants, equipment used in the growing and cultivation operation,
or any light emanating from the cultivation; or
v. The cultivation may not violate any California Building, Electrical or Fire Codes
or any other health and safety standards.
(2) Commercial Cultivation. Commercial cultivation of marijuana or cannabis is
prohibited anywhere in the City except as allowed and regulated in Article I of
Chapter 40 of the Santa Ana Municipal Code.
(3) Outdoor Cultivation. Outdoor cultivation of marijuana or medical marijuana is
prohibited anywhere in the City. No person, including a qualified patient or primary
caregiver, shall engage, permit, or participate in the outdoor cultivation of
marijuana in the City.
(4) Reserved.
(5) Public Nuisance Prohibited.
(i) It is hereby declared to be unlawful and a public nuisance for any person
owning, leasing, occupying, or having charge or possession of any parcel within
the City to create a public nuisance in the course of cultivating marijuana plants
Exhibit 1
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or any part thereof in any location, indoor or outdoor, except as allowed and
regulated in Chapter 40 of the Santa Ana Municipal Code. A public nuisance
may be deemed to exist, if such activity produces:
(1) Odors which are disturbing to people of reasonable sensitivity residing or
present on adjacent or nearby property or areas open to the public;
(2) Repeated responses to the parcel by law enforcement personnel;
(3) A repeated disruption to the free passage of persons or vehicles in the
neighborhood, excessive noise which is disturbing to people of normal
sensitivity on adjacent or nearby property or areas open to the public;
(4) Any other impacts on the neighborhood which are disruptive of normal
activity in the area including, but not limited to, grow lighting visible outside
the dwelling, excessive vehicular traffic or parking occurring at or near the
dwelling, and excessive noise emanating from the dwelling.
(5) Outdoor and Commercial growing and cultivation of marijuana, except as
allowed and regulated in Chapter 40 of the Santa Ana Municipal Code.
(f) A permitted medical marijuana dispensary may deliver medical marijuana only to a
qualified patient or caregiver. Medical marijuana delivery services by dispensaries
possessing regulatory safety permits must comply with Business and Professions
Code §19340. Delivery of cannabis from a dispensary permitted pursuant to this
Chapter can only be made in a city or county that does not expressly prohibit it by
ordinance. Delivery services by dispensaries not in possession of regulatory safety
permits is expressly prohibited.
(g) Non-Retail Commercial Cannabis Businesses for Medicinal and Adult-Use Cannabis
as defined in Chapters 18 and 40 of the Article I of Chapter 40 of the Santa Ana
Municipal Code (SAMC) are permitted subject to the regulations and standards
contained within Chapter 40 of the SAMC.
Sec. 40-111. Violation and enforcement.
A. Violation/enforcement. Each and every violation of this article shall constitute a
separate violation and shall be subject to all remedies and enforcement measures
authorized by this Code. Additionally, as a nuisance per se, any violation of this article
shall be subject to injunctive relief, revocation of the collective's registration,
revocation of the certificate of occupancy for the location, disgorgement and payment
to the city of any and all monies unlawfully obtained, costs of abatement, costs of
investigation, attorney fees, and any other relief or remedy available at law or equity.
The city may also pursue any and all remedies and actions available and applicable
under local and state laws for any violations committed by the collective and persons
related or associated with the collective.
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Page 55 of 73
B. Suspension or revocation. When the chief of police finds that any person holding a
regulatory safety permit under the provisions of this chapter 18 has violated the
provisions of this chapter or is found guilty of conduct which would form the basis of
denial of the regulatory safety permit as set forth in article XIII of this chapter 18, s/he
may revoke or suspend the permit. No such revocation shall become effective until
the regulatory safety permit holder has been notified in writing by certified mail of the
right to appeal the revocation decision pursuant to the provisions or of Chapter 3. If a
timely appeal is filed, the revocation shall be effective only upon decision of the city
council. Otherwise, the revocation shall become effective after the timely appeal
period has passed.
Sec. 40-112. Transfer of ownership.
A. Upon the transfer of any interest in a collective/cooperative, the regulatory safety
permit shall be null and void. Any person, firm or entity desiring to own or operate the
collective/cooperative shall make a new application. Prior to or concurrent with the
submission of said application the transferee shall obtain all required business
licenses, post all required security deposits, acquire all necessary, certificates, permits
or other licenses allowing the doing of any act which the person paying or holding the
same would not otherwise be entitled to do; and any permit, license, variance or other
instrument of approval or evidence that any conditions exist as required by any other
section of this Code or by any statute or code provisions of the state must first be
obtained or complied with before the doing of any act or thing for which it is required.
A fee as established by resolution of the city council shall be payable for each such
application involving transfer of any interest in an existing collective/cooperative. The
provisions of section 18-617.1 and 18-617.2 shall apply to any person, firm, or entity
applying for a regulatory safety permit for premises previously used as such
establishment.
B. Any such transfer of any interest in an existing collective/cooperative or any
application for an extension or expansion of the building or other place of business of
the collective/cooperative shall require inspection and compliance with section 18-
618.
C. The owner or operator of a collective/cooperative shall be responsible for notifying the
city of any intention to rename, change management, or convey the business to
another person/entity. Notification to the city must be made a minimum of sixty (60)
days prior to such transfer.
Section 8. Section 21-127 of Article XII of Chapter 21 of the Santa Ana Municipal
Code is hereby amended to read in full as follows:
Sec. 21-127. - Marijuana collectives/cooperatives—Annual business license tax
assessment.
(a) Annual business license tax assessment for marijuana collectives/cooperatives.
Exhibit 1
Ordinance No. NS-XXX
Page 56 of 73
(1) Every collective/cooperative whether it is organized or conducted as a "not
for profit" business, a "non-profit" business, or a "for-profit" business, shall
pay an annual business license tax in accordance with Chapter 21 and the
sections and subsections hereunder.
(2) For the purposes of this article, a marijuana collective/cooperative is defined
in section 40-101(b) and is considered to be a business as that term is
defined in section 21-3.
(3) For the purposes of this article, a collective/cooperative is not considered to
be a religious or charitable organization.
(4) "Medical marijuana collective/cooperative" or "collective/cooperative" shall
mean any activity regulated or permitted by chapter 18 40.
(5) For the purposes of this article, a marijuana collective/cooperative is not
considered to be a business or person having a "specified exemption" or
"specified exclusion" from business license taxation as set forth in sections
21-48 and 21-49.
(6) For the purposes of this article, a "nonprofit organization" shall mean any
institution or organization that is exempted from taxes measured by income
or gross receipts pursuant to Article XIII, Section 26 of the California
Constitution as codified under Chapter 4 (commencing with Section 23701)
of Part 11 of Division 2 of the Revenue and Taxation Code and Section
37101 (c) of the Government Code or Sub-Chapter F (commencing with
Section 501) of Chapter 1 of Subtitle A of the Internal Revenue Code of
1986. An institution or organization operating as a collective/cooperative
and claiming a gross receipts assessment business license tax exemption
under this section shall have the burden of furnishing to the collector such
information as the collector may require to validate the claim of exemption
including but not limited to such a determination by the California Franchise
Tax Board or any other information requested by the collector.
(7) For the purposes of this article, "gross receipts" shall mean any transfer of
title or possession, exchange or barter, conditional or otherwise, in any
manner or by any means whatsoever, of tangible personal property for a
consideration including any monetary consideration for marijuana
whatsoever, including, but not limited to, membership dues,
reimbursements provided by members, regardless of form, or the total
amount of cash or in-kind contributions, including all operating costs related
to the growth, cultivation or provision of marijuana or any transaction related
thereto. "Gross receipts" shall also include without limitation anything else
of value obtained by a collective/cooperative. The term "gross receipts"
shall also include the total amount of the sale price of all sales, the total
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Ordinance No. NS-XXX
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amount charged or received for the performance of any act, service or
employment of whatever nature it may be, whether or not such service, act
or employment is done as a part of or in connection with the sale of goods,
wares, merchandise, for which a charge is made or credit allowed, including
all refunds, cash credits and properties of any amount or nature, any
amount for which credit is allowed by the seller to the purchaser without any
deduction therefrom, on account of the cost of the property sold, the cost of
materials used, the labor or service cost, interest paid or payable, losses,
or any other expense whatsoever; provided that cash discounts allowed or
payment on sales shall not be included. "Gross receipts" shall also include
the amount of any federal, manufacturer's or importer's excise tax included
in the price of property sold, even though the manufacturer or importer is
also the retailer thereof and whether or not the amount of such tax is stated
as a separate charge. "Gross receipts" shall not include the amount of any
federal tax imposed on or with respect to retail sales whether or not the
amount of such tax is stated as a separate charge. "Gross receipts" shall
not include the amount of any federal tax imposed on or with respect to retail
sales whether imposed upon the retailer or the consumer and regardless of
whether or not the amount of federal tax is stated to customers as a
separate charge, or any California state, city or city and county sales or use
tax required by law to be included in or added to the purchase price and
collected from the consumer or purchaser, or such part of the sales price of
any property previously sold and returned by the purchaser to the seller
which is refunded by the seller by way of cash or credit allowances given or
taken as part payment on any property so accepted for resale. "Gross
receipts" shall be calculated without any deduction on account of any of the
following:
(i) The cost of tangible property sold or bartered;
(ii) The cost of materials or products used, labor or service cost,
interest paid, losses, or other expense; or
(iii) The cost of transportation of the marijuana, or other property or
product.
(b) Business license tax rates for marijuana collectives/cooperatives.
(1) Every collective/cooperative, excepting a qualified "nonprofit organization,"
whether it is organized or conducted as a "not for profit" business, a "non-
profit" business, or a "for-profit" business, shall pay a separate business
license tax at a rate of up to ten (10) percent of the gross receipts generated
or otherwise received for each branch establishment or separate property
location of the business. The gross receipts tax shall be initially set at a rate
of five (5) percent. The maximum tax rate shall not exceed ten (10) percent
Exhibit 1
Ordinance No. NS-XXX
Page 58 of 73
of gross receipts. This tax shall not be adjusted for inflation pursuant to
section 21-121.
(2) Notwithstanding the maximum tax rate of ten (10) percent of gross receipts
imposed under subsection (b)(1), the city council may in its discretion at any
time by ordinance implement a lower gross receipts tax rate for all marijuana
collectives/cooperatives, as defined in such ordinance, subject to the
maximum rate of ten (10) percent of gross receipts. The city council may by
ordinance increase any such gross receipts tax rate from time to time, not
to exceed the maximum gross receipts tax rate established under
subsection (b)(1).
(3) Effective January 1, 2018, the gross receipts tax initially set at a rate of five
(5) percent pursuant to subsection (b)(1), shall be increased to a rate of six
(6) percent. The maximum tax rate shall not exceed ten (10) percent of
gross receipts. This tax rate shall not be adjusted for inflation pursuant to
section 21-121.
(4) As part of the gross receipts tax imposed by this article, each
collective/cooperative shall pay a minimum basic rate of two thousand
dollars ($2,000.00) annually for each separate branch location or separate
property location of the business.
(c) Modification, repeal or amendment. The city council may repeal the ordinance codified
in this article, or amend it in a manner which does not result in an increase in the tax
or taxes imposed herein, without further voter approval. The city council may likewise
by ordinance adopt and add additional provisions to any other article of this chapter
and relate them to this article, or amend any existing provisions of any article of this
chapter as they may already relate to this article in any manner which does not result
in an increase in the tax or taxes imposed herein, without further voter approval. If the
city council repeals said ordinance or any provision of this article, it may subsequently
reenact it without voter approval, as long as the reenacted ordinance or section does
not result in an increase in the tax or taxes imposed herein.
(d) Administration—Rules, regulations, and guidelines; interpretation/clarification. In
order to aid in the city's collection of taxes due under this article and to ensure that all
marijuana collectives/cooperatives are taxed consistently to the best of the city's
ability, the collector, with the concurrence of the city attorney, may promulgate rules,
regulations, and guidelines, to implement and administer this article including, but not
limited to rules, regulations, and guidelines harmonizing other provisions of this
chapter with the provisions of this article in any manner not inconsistent with the intent
of this article and which does not result in an increase in the tax or taxes imposed
herein. The collector may also, with the concurrence of the city attorney, interpret or
clarify the methodology of the tax, or any definition applicable to the tax, so long as
Exhibit 1
Ordinance No. NS-XXX
Page 59 of 73
such interpretation or clarification (even if contrary to some prior interpretation or
clarification) is not inconsistent with the language of this article.
(e) Occasional transactions—Exemptions.
(1) The provisions of this article shall not apply to persons having no fixed place of
business within the city who come into the city for the purpose of transacting a
specific item of marijuana collective/cooperative business at the request of a
specific patient, client or customer, provided that such person does not come
into the city for the purpose of transacting business on more than five (5) days
during any calendar year.
(2) For any person not having a fixed place of business within the city who comes
into the city for the purpose of transacting collective/cooperative activities, the
business tax payable by such person may be apportioned by the collector in
accordance with this chapter.
(f) Reporting and remittance. Beginning as set forth in subsection (k) below, and monthly
thereafter, each marijuana collective/cooperative (except qualified nonprofit
organizations exempt from taxes measured by income or gross receipts) required to
pay a tax based on gross receipts under this article, shall report to the city any gross
receipts received during the preceding monthly reporting period and shall likewise
remit to the city the taxes due and owing during said period. For purposes of this
section, month shall mean calendar month, and taxes shall begin to accrue on the
date that a person or entity first receives a business license or other permit to operate
as a collective/cooperative.
The payment of the two thousand dollars ($2,000.00) minimum basic rate gross receipts
tax required annually for each separate branch location or separate property location of
the business in accordance subsection (b)(3), shall be made annually prior to the
beginning of the fiscal year beginning April first of the current year and expiring on the
31st day of March of the following year. In the case of a new collective/cooperative the
minimum basic rate gross receipts tax shall be paid in advance prior to any new business
activity being undertaken. Every new licensee shall pay in advance an amount equal to
one-quarter (¼) of the annual minimum basic rate gross receipts tax, for each quarter and
fraction of a quarter remaining during the period for which the new license is issued.
(g) Delinquent date—Penalty. Any individual or entity who fails to pay the taxes required
by this article when due shall be subject to penalties and interest as set forth in
accordance with this chapter. The collector is not required to send a delinquency or
other notice or bill to any person subject to the provisions of this chapter and failure to
send such notice or bill shall not affect the validity of any tax or penalty due under the
provisions of this chapter.
(h) Payment of tax does not authorize unlawful business.
Exhibit 1
Ordinance No. NS-XXX
Page 60 of 73
(1) The payment of a business tax required by this article, and its acceptance by
the city, shall not entitle any person to carry on any collective/cooperative
unless the person has complied with all of the requirements of this Code and
all other applicable laws, nor to carry on any collective/cooperative in any
building or on any premises in the event that such building or premises are
situated in a zone or locality in which the conduct of such collective/cooperative
is in violation of any law.
(2) No tax paid under the provisions of this article shall be construed as authorizing
the conduct or continuance of any illegal or unlawful business, or any legal
business in an illegal manner, or any business in violation of any ordinance of
the city. Nothing in this article implies or authorizes that any activity connected
with the distribution or possession of marijuana is legal unless otherwise
authorized and allowed by California and federal law. Nothing in this section
shall be applied or construed as authorizing the sale of marijuana.
(i) Business license tax certificate—Required. There are imposed upon all persons
engaged in transacting and carrying on any collective/cooperative business activity in
the city taxes in the amounts prescribed in this article. It shall be unlawful for any
person, either for him or herself or for any other person, to commence, transact or
carry on any business in the city without first having procured a business license from
the city under this chapter and having paid the taxes set forth in this article, and without
complying with any and all applicable provisions contained in this chapter. The
carrying on of any collective/cooperative without complying with all the provisions of
this article shall constitute a separate violation of this chapter for each and every day
that such collective/cooperative is so carried on.
(j) Classification of business license assessment type—Term and renewal. The business
license issued to marijuana collectives/cooperatives shall be classed as a gross
receipts assessment type, issued for the same term of license as set forth in
subsection 21-71(c) and shall be subject to renewal in accordance with sections 21-
72(c), 21-73(c), and 21-77.
(k) Operative date. Upon the approval by the majority of the voters of the city at the
November 4, 2014 general election, the taxes imposed by this article shall become
operative and shall be applied by the collector upon all marijuana
collectives/cooperatives.
(l) Operative date of increased gross receipts tax rate. The gross receipts tax set initially
at a rate of five (5) percent pursuant to subsection (b)(1) shall be increased to a rate
of six (6) percent effective January 1, 2018, pursuant to subsection (b)(3).
Section 9. Section 21-133 of Article XIII of Chapter 21 of the Santa Ana Municipal
Code is hereby amended to read in full as follows:
Exhibit 1
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Page 61 of 73
Sec. 21-133. Commercial cannabis businesses—Annual business license tax
assessment.
Every person engaged in a “commercial cannabis business” or “commercial
cannabis activity” shall pay an annual business license tax as outlined below. This Article
shall not apply, except with respect to medical marijuana cooperatives/collectives (also
referred to as medicinal cannabis retail businesses) which are vertically and/or
horizontally integrated with commercial cannabis businesses, to medical marijuana
cooperatives/collectives which are governed by Article XII of this Chapter, or to personal
cultivation as defined in section 40-101(b) of this Code.
(a) For each branch establishment or separate property location of a commercial
cannabis business transacted and carried on in the city, and for each separate type
of commercial cannabis business conducted at the same location, the higher of the
two (2) following tax rates shall be due to the City for each monthly reporting period:
(1) Up to ten percent (10%) of each dollar of gross receipts received or
generated for each monthly reporting period.
(2) Up to $35.00 per square foot (annual tax rate) prorated monthly to one-
twelfth (1/12th) of the annual tax rate amount.
(b) These tax rates shall not be adjusted for inflation pursuant to section 21-121 of this
Chapter.
(c) Notwithstanding the tax rates imposed herein under subsection (a), the City Council
may, in its discretion, at any time by resolution, implement any lower tax rate it
deems appropriate, and may by resolution increase such tax rate from time to time,
not to exceed the maximum rates established by subsection (a).
(d) As of the operative date of this Article, the business license gross receipts tax rates
and square footage tax rates application to specific commercial cannabis business
activities shall be established as follows:
Exhibit 1
Ordinance No. NS-XXX
Page 62 of 73
Commercial Cannabis Business
Activity
Gross Receipts
Tax Rate
Gross Square
Footage Tax Rate
Adult-use Cannabis Retail Business
(including Delivery, but not including
Consumption Lounges and
Temporary Consumption and/or
Special Events) (effective beginning
December 21, 2018)
8% $ 25.00
Consumption Lounges and
Temporary Consumption and/or
Special Events) (effective
beginning July 1, 2022)
8% $ 0.00
Cultivation
(effective December 21, 2018
through June 30, 2022)
6% $ 10.00
Cultivation
(effective beginning July 1, 2022) 4% $ 7.00
Distribution
(effective December 21, 2018
through June 30, 2022)
6% $ 4.00
Distribution
(effective beginning July 1, 2022) 4% $ 3.00
Manufacturing
(effective December 21, 2018
through June 30, 2022)
6% $ 10.00
Manufacturing
(effective beginning July 1, 2022) 4% $ 7.00
Shared Manufacturing
(effective beginning July 1, 2022) 4% $ 0.00
Testing Facility or Testing
Laboratory (effective December 21,
2018 through June 30, 2019)
5% $ 1.50
Exhibit 1
Ordinance No. NS-XXX
Page 63 of 73
Commercial cannabis businesses not having a fixed place of business within the city
but conducting regular, non-incidental commercial cannabis business activities
within the city shall be subject to the gross receipts tax rate(s) as set out in the table
above based on the category/categories of commercial cannabis activity conducted.
However, such out-of-town commercial cannabis businesses shall not be subject to
any gross square footage tax rate(s).
(e) As part of the annual gross receipts/square footage tax(es) imposed by this Article,
each commercial cannabis business located within the city shall pay a minimum
basic rate of two thousand dollars ($2,000.00) annually for each branch
establishment or separate property location of the commercial cannabis business
transacted and carried on in the city, and for each separate type of commercial
cannabis business conducted at the same location. Commercial cannabis
businesses having no fixed place of business within the city shall be exempted from
this requirement. Provided that commercial cannabis microbusinesses shall pay a
minimum basic rate of two thousand dollars ($2,000.00) annually for each branch
establishment or separate property location of the commercial cannabis business
transacted and carried on in the city, but not for each separate type of commercial
cannabis business conducted at the same location.
(f) In the event the City should in the future permit additional categories of commercial
cannabis business activity, as may from time to time be licensed by the State of
California, such categories of commercial cannabis activates shall be subject to the
same maximum tax rates as imposed herein. The City may by ordinance of the City
Council initially set the required gross receipts/gross square footage tax rates based
on category of cannabis business activity at lesser rates as may be deemed
appropriate by the City Council.
(g) For purposes of this Article, a commercial cannabis business is not considered to
be a business or person having a “specified exemption” or “specified exclusion” from
business license taxation as set forth in sections 21-48 and 21-49 of this Chapter.
(h) For purposes of this Article any person claiming an exemption from the gross
receipts tax rate component of the combined gross receipts/square footage tax
imposed under this Article on the basis of a claim of being a qualified "nonprofit
organization" shall have the burden of substantiating their claim to the same extent
and in the same manner as a marijuana collective/cooperative in accordance with
section 21-127(a)(6) of this Chapter.
(i) Cannabis businesses shall not pass the taxes imposed by this Article through to an
adult-use cannabis retail business customer or commercial cannabis business
customer in any fashion except as part of the basic product sales and/or service
price.
Exhibit 1
Ordinance No. NS-XXX
Page 64 of 73
(j) Definitions. For purposes of this Article, the following terms have the following
meanings:
(1) “Adult-Use cannabis retail business” as defined in section 40-2(4) of this
Code.
(2) “Commercial Cannabis Activity” as defined in section 40-2(9) of this Code.
(3) “Commercial cannabis business” as defined in section 40-2(10) of this
Code excluding medical marijuana collectives/cooperatives also referred
to as medicinal cannabis retail sales.
(4) “Cultivation” as defined in section 40-2(11) of this Code.
(5) “Delivery” as defined in section 40-2(13) of this Code.
(6) “Distribution” as defined in section 40-2(16) of this Code.
(7) "Gross receipts" – section 21-3 of this Chapter notwithstanding, “gross
receipts” for the purposes of this Article shall mean:
(A) Transfer of title or possession, exchange or barter, conditional or
otherwise, in any manner or by any means whatsoever, of tangible
personal property for a consideration including any monetary
consideration for cannabis, including, but not limited to, membership
dues, reimbursements provided by members, regardless of form, or
the total amount of cash or in-kind contributions, including all
operating costs related to the growth, cultivation, manufacturing,
distribution, testing, or provision of cannabis or any transaction
related thereto.
(B) Anything else of value obtained by an a cannabis business;
(C) The total amount of the sale price of all sales and services;
(D) The total amount charged or received for the performance of any act,
service or employment of whatever nature it may be, whether or not
such service, act or employment is done as a part of or in connection
with the sale of goods, wares, or merchandise (whether at wholesale
or retail), for which a charge is made or credit allowed, including all
refunds, cash credits and properties of any amount or nature;
(E) Any amount for which credit is allowed by the seller to the purchaser
without any deduction therefrom, on account of the cost of the
property sold, the cost of materials used, the labor or service cost,
interest paid or payable, losses, or any other expense whatsoever;
provided that cash discounts allowed or payment on sales shall not
be included;
Exhibit 1
Ordinance No. NS-XXX
Page 65 of 73
(F) The amount of any federal manufacturer's or importer's excise tax
included in the price of property sold, even though the manufacturer
or importer is also the retailer thereof;
(G) The amount of any California state cannabis excise tax or state
cannabis cultivation tax included in the price of the product;
(H) “Gross receipts" shall not include the following:
i. The amount of any federal tax imposed on or with respect to retail
or wholesale sales or the sale of services whether imposed upon
the cannabis business or the consumer whenever the amount of
federal tax is authorized by law to be stated and passed through
to customers as a separate charge.
ii. Any California state, county, or city sales or use tax, including any
add-on, district, or transaction and use tax, required by law to be
included in or added to the purchase price and collected from the
consumer or purchaser, or such part of the sales price of any
property previously sold and returned by the purchaser to the
seller which is refunded by the seller by way of cash or credit
allowances given or taken as part payment on any property so
accepted for resale; or
iii. The amount of the sale price of business personal property (all
property owned or leased by a cannabis business operator used
in the operation cannabis business activities, including but not
limited to: furniture, fixtures, and business equipment); real
property, including land, buildings and other improvements.
iv. The amount of equity contributions, investments, and/or loan
proceeds to cannabis business’ operation, and/or proceeds from
the sale or transfer of cannabis business’ retail or commercial
cannabis business.
v. The amount of interparty sales and/or transfers of goods within a
single vertically and/or horizontally integrated cannabis business,
where the sales or transfers goods are between two or more
commercial cannabis business licensees (excluding testing
facilities or testing laboratories), or one or more said commercial
cannabis business licensee(s) and one or more medicinal
cannabis retail business licensee(s), as set forth in accordance
with section 21-131.2 and/or section 21-142.
(I) ”Gross receipts" shall be calculated without any deduction on
account of any of the following:
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Ordinance No. NS-XXX
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i. The cost of tangible or intangible property sold or bartered;
ii. The cost of materials or products used, labor or service cost,
interest paid, losses, or other expense;
iii. The cost of transportation of cannabis, or other property or
product;
iv. The amount of any federal or state income or franchise
taxes; and
v. Any other business costs or expenses, unless otherwise
specifically exempted.
(8) “Gross Square foot” or “gross square footage” for the purposes of this
Article shall mean:
(A) In the case of commercial cannabis businesses licensed by the state
to engage in an adult-use cannabis retail business, the gross number
of square feet comprising the adult-use cannabis retail property
location as confirmed by the corresponding “approved building set”
or “approved certificate of occupancy” on file with the City of Santa
Ana Planning and Building Agency, whichever is the greater of any
square footage indicated, whether such adult-use cannabis retail
business is part of an on-site vertically or horizontally integrated
cannabis business or not.
(B) In the case of commercial cannabis businesses licensed by the state
to engage in cultivation, the aggregate number of square feet
comprising all areas of the premises under “canopy”, whether such
sum is greater or lesser than the gross square footage as stated in
the “approved building set” or “approved certificate of occupancy”,
and whether such commercial cannabis cultivation business is part
of an on-site vertically integrated cannabis business or not.
“Canopy” shall mean the designated area(s) of a premise that will
contain mature plants at any point in time. Canopy shall be calculated
in square feet and measured using clearly identifiable boundaries of
all area(s) that will contain mature plants at any point in time,
including all of the space(s) within the boundaries. Canopy may be
noncontiguous, but each unique area included in the total canopy
calculation shall be separated by an identifiable boundary which
includes interior walls, shelves, greenhouse walls, hoop house walls,
garden benches, hedgerows, fencing, garden beds, or garden plots;
and if mature plants are being cultivated using a shelving system, the
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Ordinance No. NS-XXX
Page 67 of 73
surface area of each level shall be included in the total canopy
calculation.
Canopy shall be subject to independent measurement and
calculation by duly authorized employees or agents of the City at the
time of application for a Santa Ana Business License and annually
thereafter at the time of the renewal of such license, or more often
as may be deemed necessary in the discretion of the collector.
Whenever an independent canopy measurement and calculation is
required under the terms of this Article or whenever the collector in
his or her discretion determines that the independent measurement
and calculation of a licensee’s canopy is desirable to effectuate the
proper assessment or collection of the business license taxes
required to be paid under the terms of this Chapter, or for any other
purposes related to the express aims of this Article then a canopy
measurement shall be performed and a corresponding service fee
shall be applicable in the amount as specified by resolution of the
City Council.
(C) In the case of commercial cannabis businesses licensed by the state
to engage in distribution or manufacturing and that are not occupying
the same premises with another cannabis business, the gross
number of square feet as confirmed by the corresponding “approved
building set” or “approved certificate of occupancy” on file with the
City of Santa Ana Planning and Building Agency, whichever is the
greater of any square footage indicated.
(D) In the case of commercial cannabis businesses licensed by the state
to engage in distribution or manufacturing and occupying the same
premises with another cannabis business, the gross number of
square feet allocated by the commercial cannabis business
owner/operator respectively for either distribution use or for
manufacturing use, whether the combined sum of all uses is less
than, equal to, or greater than the gross square footage as stated in
the “approved building set” or “approved certificate of occupancy”.
The number of square feet allocated (“Allocated Square Footage”)
shall be subject to independent measurement and calculation by duly
authorized employees or agents of the City at the time of application
for a Santa Ana Business License and annually thereafter at the time
of the renewal of such license, or more often as may be deemed
necessary in the discretion of the collector. Whenever an
independent allocated square footage measurement and calculation
is required under the terms of this Article or whenever the collector
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Ordinance No. NS-XXX
Page 68 of 73
in his or her discretion determines that the independent
measurement and calculation of a licensee’s allocated square
footage is desirable to effectuate the proper assessment or collection
of the business license taxes required to be paid under the terms of
this Chapter, or for any other purposes related to the express aims
of this Article then an Allocated Square Footage measurement shall
be performed and a corresponding service fee shall be applicable in
the amount as specified by resolution of the City Council.
(E) In the case of commercial cannabis businesses licensed by the state
to engage in testing facilities or testing laboratory businesses, the
gross number of square feet comprising such commercial cannabis
business’ property location as confirmed by the corresponding
“approved building set” or “approved certificate of occupancy” on file
with the City of Santa Ana Planning and Building Agency, whichever
is the greater.
(9) “Manufacturing” as defined in section 40-2(22) of this Code.
(10) “Microbusiness” as defined in section 40-2(24) of this Code.
(11) “Consumption Lounge” as defined in section 40-2(39.1) of this Code.
(12) “Retail businesses” as defined in section 40-2(40) of this Code.
(13) “Shared manufacturing” as defined in section 40-2(22.5) of this Code.
(14) “Temporary Consumption” and “Special Events” as defined in section 40-
2(39.2) of this Code.
(15) ”Testing Facility” or “Testing Laboratory” as defined in section 40-2(44) of
this Code.
(16) “Wholesale" as defined in section 40-(46) of this Code.
(k) Modification, repeal or amendment. The City Council may repeal the ordinance
codified in this Article, or amend it in a manner which does not result in an increase
in the tax or taxes imposed herein, without further voter approval. The City Council
may likewise by ordinance adopt and add additional provisions to any other Article
of this Chapter and relate them to this Article, or amend any existing provisions of
any Article of this Chapter as they may already relate to this Article in any manner
which does not result in an increase in the tax or taxes imposed herein, without
further voter approval. If the City Council repeals said ordinance or any provision of
this Article, it may subsequently reenact it without voter approval, as long as the
Exhibit 1
Ordinance No. NS-XXX
Page 69 of 73
reenacted ordinance or section does not result in an increase in the tax or taxes
imposed herein.
(l) Administration—Rules, regulations and guidelines. In order to aid in the city's
collection of taxes due under this Article and to ensure that all commercial cannabis
businesses are taxed consistently to the best of the city's ability, the collector, with
the concurrence of the city attorney, may promulgate rules, regulations, and
guidelines, to implement and administer this Article including, but not limited to rules,
regulations, and guidelines harmonizing other provisions of this Chapter with the
provisions of this Article in any manner not inconsistent with the intent of this Article
and which does not result in an increase in the tax or taxes imposed herein. The
collector may also, with the concurrence of the city attorney, interpret or clarify the
methodology of the tax, or any definition applicable to the tax, so long as such
interpretation or clarification (even if contrary to some prior interpretation or
clarification) is not inconsistent with the language of this Article.
(m) Occasional transactions—Exemptions.
(1) The provisions of this Article shall not apply to persons having no fixed
place of business within the city who come into the city for the purpose
of transacting a specific item of commercial cannabis business at the
request of a specific client or customer, incidental to a commercial
cannabis business principally established elsewhere, provided that such
person does not come into the city for the purpose of transacting such
business on more than three (3) days during any calendar year.
(2) For any person not having a fixed place of business within the city who
comes into the city for the purpose of transacting commercial cannabis
business activities, the business license tax(es) payable by such person
may be apportioned by the collector in accordance with this Chapter.
(n) Reporting and remittance.
(1) Beginning as set forth in subsection (r) below, and monthly thereafter,
each commercial cannabis business required to pay a tax or taxes based
on gross receipts under this Article (except qualified nonprofit
organizations exempt from taxes measured by income or gross receipts),
shall report to the city any gross receipts received during the preceding
monthly reporting period. In addition, each cannabis business (including
qualified nonprofit organizations) required to pay a tax or taxes based on
square footage shall report to the city the gross square footage of the
cannabis business’ property location. Every cannabis business shall then
compute the business license taxes at both the gross receipts rate and
the gross square footage rate - prorated monthly to one-twelfth (1/12th) of
the annual tax rate amount - and shall then remit to the city the amount of
Exhibit 1
Ordinance No. NS-XXX
Page 70 of 73
the higher of the two tax calculations due and owing during said period in
accordance with section 21-133, subsection (d). In the case of a qualified
nonprofit organization only the gross square footage computation shall be
made and the amount of such calculation shall represent the amount due
and owing during said period. All reporting and remitting made shall be
done in accordance with instructions from the collector and shall be made
using forms provided or approved by the collector.
(2) For purposes of this section, month shall mean calendar month and shall
include any fraction of a month. Taxes shall begin to accrue on the date
that a person or entity first receives a business license or other city permit
to operate as a commercial cannabis business or upon the operative date
of this Article should a person or entity already possess a commercial
cannabis business license or other city permit to operate as a commercial
cannabis business.
(3) The payment of the two thousand dollars ($2,000.00) minimum basic rate
gross receipts tax required annually for each separate branch location or
separate property location of the business in accordance with this section,
shall be made annually prior to the beginning of the fiscal year beginning
April first of the current year and expiring on the 31st day of March of the
following year. In the case of a new commercial cannabis business the
minimum basic rate gross receipts tax shall be paid in advance prior to
any new business activity being undertaken. Every new licensee shall pay
in advance an amount equal to one-quarter (¼) of the annual minimum
basic rate gross receipts tax, for each quarter and fraction of a quarter
remaining during the period for which the new license is issued.
(o) Delinquent date—Penalty. Any individual or entity who fails to pay the taxes required
by this Article when due shall be subject to penalties and interest as set forth in
accordance with this Chapter. The collector is not required to send a delinquency or
other notice or bill to any person subject to the provisions of this Article and failure
to send such notice or bill shall not affect the validity of any tax or penalty due under
the provisions of this Article.
(p) Business license tax certificate/receipt—Required. There are imposed upon all
persons engaged in transacting and carrying on any commercial cannabis business
activity in the city taxes in the amounts prescribed in this Article. It shall be unlawful
for any person, either for him or herself or for any other person, to commence,
transact or carry on any business in the city without first having procured a business
license from the city under this Chapter and having paid the taxes set forth in this
Article, and without complying with any and all applicable provisions contained in
this Chapter. The carrying on of any commercial cannabis business activity without
complying with all the provisions of this Article shall constitute a separate violation
Exhibit 1
Ordinance No. NS-XXX
Page 71 of 73
of this Chapter for each and every day that such commercial cannabis activity is so
carried on.
(q) Classification of business license assessment type—Term and renewal. The
business license issued to commercial cannabis businesses shall be classed as a
gross receipts assessment type, issued for the same term of license as set forth in
subsection 21-71(c) of this Chapter and shall be subject to renewal in accordance
with sections 21-72(c), 21-73(c), and 21-77.
(r) Operative date. Upon the approval by the majority of the voters of the city at the
November 6, 2018 general election, the taxes imposed by this Article shall become
operative and shall be applied by the collector upon all commercial cannabis
businesses.
(s) Operative date of decreased gross receipts tax rate. The gross receipts tax set
initially at a rate of five (5%) percent for testing facilities or testing laboratories
pursuant to subsection (d) above shall be decreased to a rate of one (1%) percent
by resolution of the City Council [Santa Ana City Council Resolution No, 2019-068
as hereinabove provided for in accordance with subsection (c), which reduced rate,
under the terms of said City Council resolution, shall become retroactively effective
July 1, 2019.
(t) Operative date of decreased gross receipts tax rate. The gross receipts tax set
initially at a rate of six (6%) percent for cultivation, manufacturing, and distribution
pursuant to subsection (d) above shall be decreased to a rate of four (4%) percent
by resolution of the City Council [Santa Ana City Council Resolution No, 2022-XXX]
as hereinabove provided for in accordance with subsection (c), which reduced rate,
under the terms of said City Council resolution, shall become effective July 1, 2022.
(u) Operative date of decreased square footage tax rate. The square footage tax set
initially at a rate of ten ($10) dollars per square foot for cultivation and manufacturing,
and four ($4) dollars per square foot for distribution pursuant to subsection (d) above
shall be decreased to a rate of seven (7%) dollars per square foot for cultivation and
manufacturing, and to a rate of two ($2) dollars per square foot for distribution, and
to a rate of zero ($0) dollars per square foot for shared manufacturing by resolution
of the City Council [Santa Ana City Council Resolution No, 2022-XXX] as
hereinabove provided for in accordance with subsection (c), which reduced rates,
under the terms of said City Council resolution, shall become effective July 1, 2022.
Section 10. Section 21-135 of Article XIII of Chapter 21 of the Santa Ana
Municipal Code is hereby amended to read in full as follows:
Sec. 21-135. - Single property location; multiple state licenses; separate city
business licenses.
Exhibit 1
Ordinance No. NS-XXX
Page 72 of 73
Sections 21-7, 21-8, and 21-9 of this chapter notwithstanding, separate city business
licenses, issuable to commercial cannabis businesses pursuant to this article, shall be
required for each separate type of commercial cannabis business activity transacted and
carried on at a single city property location for which a commercial cannabis business
may seek licensure by the state, or for which a state license has been approved or issued.
Provided, however, that commercial cannabis business activity transacted and carried on
at a single city property location for which a commercial cannabis business may seek
licensure by the state as a microbusiness, or for which a state license has been approved
or issued as a microbusiness, shall in such case be required to obtain a separate city
business license business for each of the commercial cannabis activities transacted and
carried on.
Section 11. Social Equity. Within two (2) years of the effective date of this
Ordinance on July 1, 2022, the City Council shall revisit any staff recommendations for
adoption of social equity policies or a social equity program. Such policies or the program
shall consider measures to assist or prioritize applications submitted by individuals with
previous cannabis-related criminal histories, members of disadvantaged communities,
local applicants, and/or other individuals or entities identified at the time requiring
assistance with application processes and/or filing fees, local tax payments, and other
related components of the commercial cannabis application and buildout process in the
City. The tax revenues generated by commercial cannabis consumption lounges shall be
utilized to further these goals and for the development and maintenance of social equity
programs administered by the City. Such programs may include workforce training,
education, and development within the Santa Ana community in the cannabis industry.
Section 12. If any section, subsection, sentence, clause, phrase or portion of this
ordinance is for any reason held to be invalid or unconstitutional by the decision of any
court of competent jurisdiction, such decision shall not affect the validity of the remaining
portions of this ordinance. The City Council of the City of Santa Ana hereby declares that
it would have adopted this ordinance and each section, subsection, sentence, clause,
phrase or portion thereof irrespective of the fact that any one or more sections,
subsections, sentences, clauses, phrases, or portions be declared invalid or
unconstitutional.
Section 13. This Ordinance shall become effective July 1, 2022.
Section 14. The Clerk of the Council shall certify the adoption of this ordinance
and shall cause the same to be published as required by law.
Exhibit 1
Ordinance No. NS-XXX
Page 73 of 73
ADOPTED this _______ day of ___________, 2022.
________________________________
Vicente Sarmiento
Mayor
APPROVED AS TO FORM
Sonia R. Carvalho, City Attorney
By: _________________________
John M. Funk
Assistant City Attorney
AYES: Councilmembers: __________________________________
NOES: Councilmembers:__________________________________
ABSTAIN: Councilmembers: _________________________________
NOT PRESENT: Councilmembers: _________________________________
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, DAISY GOMEZ, Clerk of the Council, do hereby attest to and certify that the
attached Ordinance No. NS-______ to be the original ordinance adopted by the
City Council of the City of Santa Ana on ________________, 2022 and that said
ordinance was published in accordance with the Charter of the City of Santa Ana.
Date: ______________________ ________________________________
Clerk of the Council
City of Santa Ana
Exhibit 1
Resolution No. 2022-XXX
Page 1 of 5
RESOLUTION NO. 2022-XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA ADDING A COMMERCIAL CANNABIS TAX
CATEGORY AND ESTABLISHING RELATED GROSS
RECEIPTS AND SQUARE FOOTAGE TAX RATES FOR
CONSUMPTION LOUNGES AND TEMPORARY
CONSUMPTION/SPECIAL EVENTS AND REDUCING THE
COMMERCIAL CANNABIS GROSS RECEIPTS AND
SQUARE FOOTAGE TAX RATES FOR CULTIVATION
ACTIVITIES, DISTRIBUTION ACTIVIES, AND
MANUFACTURING ACTIVITIES (INCLUDING SHARED
MANUFACTURING)
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS
FOLLOWS:
Section 1. The City Council of the City of Santa Ana hereby finds, determines and
declares as follows:
A.In November 2016, the California Marijuana Legalization Initiative, also known
as the Adult Use of Marijuana Act (AUMA or Proposition 64) was approved by the voters of
the State of California. The AUMA legalized specified personal use and cultivation of
marijuana for adults 21 years of age or older.
B.In 2017, the Governor signed into law Senate Bill 94 also known as Medicinal
and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) establishing state
regulations and licensing for retail sales, manufacturing, distribution, delivery and testing of
adult-use (also called recreational) marijuana.
C.On November 21, 2017, the City Council created Chapter 40 of the Santa
Ana Municipal Code, allowing adult-use commercial cannabis retail businesses in the city,
and amended certain sections of Chapters 18 and 21 of the Santa Ana Municipal Code
to ensure consistency with State law and Chapter 40. Since 2014, the City has allowed
medicinal marijuana collectives/cooperatives to operate within the City pursuant to
regulations set forth in Chapter 18 and Chapter 21 of the Santa Ana Municipal Code.
D.In 2018, the City Council adopted Ordinance Nos. NS-2941 and NS-2942,
allowing and regulating commercial cannabis businesses.
E.A general business license tax based on the gross receipts derived from
commercial cannabis businesses and gross square footage serves to generate essential
funds for protecting vital City services and facilities and places such businesses on more
Exhibit 2
Resolution No. 2022-XXX
Page 2 of 5
equal footing with existing City businesses, including medical marijuana businesses
which already pay a business license tax.
F. The City Council is authorized to impose general and special taxes in order
to fund municipal services and facilities, subject to requisite voter approval as set forth in
Government Code section 53720 et seq.
G. The voters of the City of Santa Ana approved Measure Y (Ordinance No.
NS-2962) on November 6, 2018, for the purpose of fixing the rate of taxation for
commercial cannabis businesses including delivery, distribution, manufacturing,
cultivation, testing and retail sales of cannabis and related products. The taxes required
to be paid under this article are declared to be required pursuant to the taxing power of
the City of Santa Ana solely for the purpose of obtaining revenue and are not regulatory
permit fees.
H. On September 3, 2019, the City Council adopted Ordinance No. NS-2972
amending certain sections of chapters 21 of the Santa Ana Municipal Code allowing
vertical and horizontal integration of cannabis businesses; updating ownership transfers
procedural standards and requirements, security deposits, and various administrative
processes; updating and streamlining regulatory components; reducing cannabis testing
taxes to two percent of gross receipts; and adopting a canopy measurement and square
footage allocation service fee.
I. The City of Santa Ana desires to remain at the forefront of commercial
cannabis by allowing and regulating commercial cannabis business activities, routinely
updating and amending its ordinances, and establishing commercial cannabis gross
receipts tax rates that are competitive and provide for the needs of the Santa Ana
community.
J. The City of Santa Ana has a compelling interest in ensuring that cannabis
is not sold in an illicit manner, in protecting the public health, safety and welfare of its
residents and businesses, in preserving the peace and quiet of the neighborhoods in
which these businesses may operate, and in providing access to safe and tested
cannabis to residents. To ensure safe and tested cannabis, the City desires to see the
establishment and successful operation of cultivation, distribution, and manufacturing
(including shared manufacturing) facilities in the City.
K. Section 21-133(d) of Article XIII of Chapter 21 of the Santa Ana Municipal
Code establishes current initial commercial cannabis gross receipts tax and square
footage tax rates as follows:
Exhibit 2
Resolution No. 2022-XXX
Page 3 of 5
Commercial Cannabis Business
Activity
Gross Receipts
Tax Rate
Gross Square
Footage Tax Rate
Adult-use Cannabis Retail
Business (including Delivery, but
not including Consumption
Lounges and Temporary
Consumption and/or Special
Events) (effective beginning
December 21, 2018)
8% $ 25.00
Consumption Lounges and
Temporary Consumption and/or
Special Events) (effective
beginning July 1, 2022)
8% $ 0.00
Cultivation
(effective December 21, 2018
through June 30, 2022)
6% $ 10.00
Cultivation
(effective beginning July 1, 2022) 4% $ 7.00
Distribution
(effective December 21, 2018
through June 30, 2022)
6% $ 4.00
Distribution
(effective beginning July 1, 2022) 4% $ 3.00
Manufacturing
(effective December 21, 2018
through June 30, 2022)
6% $ 10.00
L. Section 21-133(c) of Article XIII of Chapter 21 of the Santa Ana Municipal
Code allows the City Council by resolution to implement any lower tax rate it deems
appropriate.
Section 2. The City Council hereby establishes: (1) the consumption lounge and
temporary consumption/special events gross receipts tax rate; (2) the commercial
cannabis cultivation gross receipts tax rate; (3) the manufacturing (including shared
manufacturing) gross receipts tax rate; and (4) the distribution gross receipts tax rate at
four (4%) percent, lowering it from six (6%) percent. The reduced four (4%) percent gross
receipts tax rate for cultivation activities, manufacturing (including shared manufacturing)
activities, and distribution activities shall become effective July 1, 2022.
Section 3. The City Council hereby establishes: (1) the consumption lounge and
temporary consumption/special events square footage tax rate at zero ($0) dollars per
square foot; (2) the commercial cannabis square footage tax for cultivation activities and
manufacturing activities at seven ($7) dollars per square foot, and for shared
Exhibit 2
Resolution No. 2022-XXX
Page 4 of 5
manufacturing activities at zero ($0) dollars per square foot, lowering it from ten ($10)
dollars per square foot; and (3) the commercial cannabis square footage tax for
distribution activities at three ($3) per square foot, lowering it from four ($4) per square
foot. The reduced seven ($7) per square foot tax rate for cultivation activities and
manufacturing activities, the reduced zero ($0) per square foot tax rate for consumption
lounge and temporary consumption/special events and shared manufacturing, and the
reduced three ($3) per square foot tax rate for distribution activities shall become effective
July 1, 2022.
Section 4. This Resolution shall take effect immediately upon its adoption by the
City Council, and the Clerk of the Council shall attest to and certify the vote adopting this
Resolution.
ADOPTED this ____ day of ___________________, 2022.
Vicente Sarmiento
Mayor
APPROVED AS TO FORM:
Sonia R. Carvalho, City Attorney
By:
John M. Funk
Senior Assistant City Attorney
AYES: Councilmembers
NOES: Councilmembers
ABSTAIN: Councilmembers
NOT PRESENT: Councilmembers _
Exhibit 2
Resolution No. 2022-XXX
Page 5 of 5
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, Daisy Gomez, Clerk of the Council, do hereby certify the attached Resolution No. 2022 -
_____ to be the original resolution adopted by the City Council of the City of Santa Ana on
_____________________, 2022.
Date:
Clerk of the Council
City of Santa Ana
Exhibit 2
Resolution No. 2022-XXX
Page 1 of 4
RESOLUTION NO. 2022-XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA ESTABLISHING A MAP OF COMMERCIAL
CANNABIS ELIGIBLE AREAS IN WHICH COMMERCIAL
CANNABIS BUSINESSES AS DEFINED AND REGULATED
BY CHAPTERS 21 AND 40 OF THE SANTA ANA MUNICIPAL
CODE MAY OPERATE
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS
FOLLOWS:
Section 1. The City Council of the City of Santa Ana hereby finds, determines, and
declares as follows:
A.On December 9, 2014, following voter approval, the City Council adopted
Ordinance No. NS-2864 to regulate the establishment, operation, and taxation of medical
marijuana collectives and cooperatives in the City. The ordinance was originally known as
and subsequently became referred to as “Measure BB.”
B.In November 2016, the California Marijuana Legalization Initiative, also known
as the Adult Use of Marijuana Act (AUMA or Proposition 64) was approved by the voters of
the State of California. The AUMA legalized specified personal use and cultivation of
marijuana for adults 21 years of age or older.
C.In 2017, the Governor signed into law Senate Bill 94, also known as Medicinal
and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), establishing state
regulations and licensing for retail sales, manufacturing, distribution, delivery and testing of
adult-use (also called recreational) marijuana.
D.On November 21, 2017, the City Council created Chapter 40 of the Santa
Ana Municipal Code, allowing adult-use commercial cannabis retail businesses in the city,
and amended certain sections of Chapters 18 and 21 of the Santa Ana Municipal Code
to ensure consistency with State law and Chapter 40. Since 2014, the City has allowed
medicinal marijuana collectives/cooperatives to operate within the City pursuant to
regulations set forth in Chapter 18 and Chapter 21 of the Santa Ana Municipal Code.
E.In 2018, the City Council adopted Ordinance Nos. NS-2941 and NS-2942,
allowing and regulating commercial cannabis testing laboratories, and Ordinance No. NS-
2944, allowing commercial cannabis cultivation, manufacturing, and distribution activities.
F.The City of Santa Ana desires to remain at the forefront of commercial
cannabis by allowing and regulating commercial cannabis business activities, routinely
updating and amending its ordinances, and establishing commercial cannabis gross
Exhibit 3
Resolution No. 2022-XXX
Page 2 of 4
receipts tax rates that are competitive and provide for the needs of the Santa Ana
community.
G. Measure BB and subsequent ordinances specified that commercial
cannabis business activity is permitted in the City’s light and heavy industrial zoning
districts (M1 and M2) and must be located 1,000 feet from schools, parks, and properties
zoned for residential uses. Proposition 64 subsequently set a minimum separation of 600
feet but allowed local jurisdictions to adopt lower or higher separation requirements.
H. Following redevelopment of industrial properties east of the Costa Mesa
(SR-55) Freeway, the City Council adopted a map of commercial cannabis eligible areas
on March 20, 2018 in which commercial cannabis business activities could locate subject
to full compliance with applicable local, County, and State regulations.
I. Since the last adoption of the map, the increasing demand for industrial
properties in Santa Ana following the COVID-19 pandemic has reduced the availability of
commercial cannabis eligible properties in the industrial zoning districts, creating strain
on cannabis business applicants, other business types, tenants, and property owners. A
reduction of the 1,000-foot buffer to 600 feet would result in an increase of 28percent in
the approximate square footage, 37percent increase of acreage of commercial cannabis
eligible sites, and a 40percent increase in the approximate number of commercial
cannabis eligible buildings.
J. The City of Santa Ana desires to maintain commercial cannabis businesses
in locations adequately buffered from sensitive land uses such as schools, parks, and
properties zoned for residential uses, while maintaining a sufficient amount of properties
eligible to apply for and operate a commercial cannabis business.
K. The City of Santa Ana has a compelling interest in ensuring that cannabis
is not sold in an illicit manner, in protecting the public health, safety and welfare of its
residents and businesses, in preserving the peace and quiet of the neighborhoods in
which these businesses may operate, and in providing access to safe, locally produced
and retailed, and tested cannabis to residents and visitors.
L. In view of the foregoing, the City Council now wishes to establish a new
map of areas in which commercial cannabis business, as defined and regulated by
Chapters 21 and 40 of the Santa Ana Municipal Code, may operate.
M. On May 3, 2022, the City Council conducted a duly noticed public hearing
to consider the proposed map included here as Attachment A.
Section 2. The City Council hereby establishes the map of commercial
cannabis eligible areas, included here as Attachment A, and referenced in Santa Ana
Municipal Code Sections 40-2, 40-5, and 40-6. This map reflects a minimum 600-foot
distance from properties containing schools, parks, and properties zoned for residential
uses.
Exhibit 3
Resolution No. 2022-XXX
Page 3 of 4
Section 3. This Resolution shall take effect immediately upon its adoption by the
City Council, and the Clerk of the Council shall attest to and certify the vote adopting this
Resolution.
ADOPTED this ____ day of ___________________, 2022.
Vicente Sarmiento
Mayor
APPROVED AS TO FORM:
Sonia R. Carvalho, City Attorney
By:
John Funk
Senior Assistant City Attorney
AYES: Councilmembers
NOES: Councilmembers
ABSTAIN: Councilmembers
NOT PRESENT: Councilmembers _
Exhibit 3
Resolution No. 2022-XXX
Page 4 of 4
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, DAISY GOMEZ, Clerk of the Council, do hereby certify the attached Resolution No.
2022 - _____ to be the original resolution adopted by the City Council of the City of Santa
Ana on _____________________, 2022.
Date:
Clerk of the Council
City of Santa Ana
Exhibit 3
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Zoning Classification
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Note: final verification of eligible applications will be based on information provided via written communication for renewals or for new registration applications.
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Note: final verification of eligible applications will be based on information provided via written communication for renewals or for new registration applications.
Commercial Cannabis Retail(Medicinal & Adult-Use)
Zoning Availability Map 1 of 3
Note: No Adult-Use cannabis retail business shall be located within 500 feet
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COLUMBINE AVLOWELL STLOWELL STLOWELL STLOWELL STD
U
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A
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SIERRA
SIERRA WRIGHT STPARTON STPARK DRGARRY AV
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A
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PULLM
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NCYPRESS AVCYPRESS AVROSS STROSS STROSS STPULLMAN STPULLMAN STPULLMAN STSTANDARD AVROUSSELLE STAV
AV
AV
AV
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CARRIAGE DR
CATHERINE WYHATHAWAY STANAHURST PL
STST
STSTADAMS STADAMS ST
EMMETT STGARNSEY STGARNSEY STGARNSEY STMURPHY AV ORANGE AVORANGE AVSYC
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MORESTYOUNG ST EVERGREEN STEVERGREEN STBRO
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MACARTHUR PLSYCAMORE STSYCAMORE STPASTEURTOWNER STTOWNER STTOWNER STTOWNER STTOWNER STB
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POINTEWOODLAND AVTEAKWOOD STWOODLAND PLRAMONA DRRAMONA DRRAMONA DRRAMONA DRM
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MACARTHURROSSAURORA AURORAAURORA BROADWAYMURPHY
COLUM MEASORROWLAND
COWANMAYWOOD
MACARTHUR PLWARNER AV
RED HILL AVW
A
R
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MAIN STAL
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DYER RDFLOWER STM
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DCOSTA MESA (55) FWYMacArthurFundamentalIntmd
Esqueda Elem
MonroeElem
SaddlebackHigh
TaftElem
WashingtonElem
BomoKoralPark
DelhiPark
LillieKingPark
SandpointePark
SegerstromTriangle Park
Note: final verification of eligible applications will be based on information provided via written communication for renewals or for new registration applications.
Commercial Cannabis Retail(Medicinal & Adult-Use)
Site Availability Map 2 of 3
Note: No Adult-Use cannabis retail business shall be located within 500 feet
of another retail cannabis business, except for permitted co-location.
600 ft Buffer
I0500 1,000
Feet
Map Creation Date: 3/8/2022City of Santa Ana - GIS Section
Legend
Schools
Parks
600 ft Buffer from Schools, Parks, and ResidentialZoning ClassificationsZoning Areas Suitable for CommercialCannabis Business
M1 - Light Industrial
M2 - Heavy Industrial
Exhibit 3
?sE
WARNER AV
W
A
R
N
E
R
A
V
EDINGER AV
MC FADDEN AV
GRAND AVCentury High
Edward B.ColeAcademy
MadisonElem
KennedyElem
MonroeElem
EdisonElem
VillaFundamentalIntmd
RooseveltElem
WalkerElem
DelhiPark
MadisonPark
PacificElectricPark
SantaAna Zoo atPrentice ParkRooseveltCommunityCenter Park
McFadden/Standard Field
MapleOccidentalExercise Park
Legend
Schools
Parks
600 ft Buffer from Schools, Parks, and Residential
Zoning Classifications
Zoning Areas Suitable for Commercial Cannabis Business
M1 - Light Industrial
M2 - Heavy Industrial
Note: final verification of eligible applications will be based on information provided via written communication for renewals or for new registration applications.
Commercial Cannabis Retail(Medicinal & Adult-Use)
Zoning Availability Map 3 of 3
Note: No Adult-Use cannabis retail business shall be located within 500 feet
of another retail cannabis business, except for permitted co-location.
600 ft Buffer
I0500 1,000
Feet
Map Creation Date: 3/8/2022City of Santa Ana - GIS Section
Exhibit 3
Exhibit 4
Recommended Commercial Cannabis Tax Rate Adjustments Table
Commercial Cannabis Business Activity Gross Receipts Tax
Rate
Gross Square
Footage Tax Rate
Consumption Lounges and Temporary Consumption and/or Special
Events) (effective beginning July 1, 2022) 8% $ 0.00
Cultivation
(effective December 21, 2018 through June 30, 2022) 6% $ 10.00
Cultivation
(effective beginning July 1, 2022) 4% $ 7.00
Distribution
(effective December 21, 2018 through June 30, 2022) 6% $ 4.00
Distribution
(effective beginning July 1, 2022) 4% $ 3.00
Manufacturing
(effective December 21, 2018 through June 30, 2022) 6% $ 10.00
Manufacturing
(effective beginning July 1, 2022) 4% $ 7.00
Shared Manufacturing
(effective beginning July 1, 2022) 4% $ 0.00
Microbusinesses
(Tax rates apply proportionally to microbusiness’ activities
corresponding to Retail / Cultivation / Manufacturing / Distribution -
effective September 3, 2019 through June 30, 2022)
Retail
8%
Cultivation,
Distribution &
Mfg.
6%
Retail
$ 25.00
Cultivation & Mfg.
$ 10.00
Distribution
$ 4.00
Microbusinesses †
(effective beginning July 1, 2022)
† $2,000 Basic Tax Rate assessment to be reduced for
microbusinesses to a single levy on a microbusiness’ dominant
gross receipts activity.
Retail
8%
All Others
4%
Retail
$ 25.00
Cultivation & Mfg.
$ 7.00
Distribution
$ 3.00
Shared Mfg.
$ 0.00
Note:
Shared manufacturers work in a shared-use facility operated by a commercial cannabis manufacturer. Shared
manufacturers can:
Extract cannabis using butter or cooking oils
Make cannabis products through infusion
Package and label cannabis
Exhibit 4
Exhibit 4
Microbusiness are a single commercial cannabis businesses license type allowing for at least three of the following
activities at one location:
1.Cultivation – up to 10,000 total square feet
2.Manufacturing – use of non-volatile solvents,
mechanical extraction or infusion
3 Distribution or distribution transport-only
4 Adult Use Retail – storefront or non-storefront. ‡
‡ - Santa Ana restricts to storefront retail, and only for pre-existing adult use retailers seeking to expand into a microbusiness.
Exhibit 4