Regular Meeting
03/17/25 05:30 PM
Planning
Amy Sanchez
Resolution
Doc ID: 5914
AGENDA ITEM
AGENDA MATTER:
CONSIDERATION OF DEVELOPMENT AGREEMENT TERMINATIONS FOR COMMERCIAL CANNABIS BUSINESS OPERATORS WINNERS CIRCLE HD, LLC; SKY CLUB HD, LLC; LA 2 VEGAS, INC.; BARSTOW COMPANY, INC.; 1919 BUILDING, INC.; GROW ORGANIC 5, INC.; GROW ORGANIC 6, INC.; GROW ORGANIC 11, INC.; GROW ORGANIC 12, INC.; MERCHANTS BARSTOW LLC; MERCHANTS BARSTOW 3 LLC; MERCHANTS BARSTOW 4 LLC; MERCHANTS BARSTOW 13 LLC; AND MERCHANTS BARSTOW 14 LLC
EXECUTIVE SUMMARY:
The City Manager placed this item on the agenda for City Council consideration. Staff is recommending that the City Council adopt a resolution terminating the development agreements the City has entered into with: (1) Winners Circle HD, LLC, (2) Sky Club HD, LLC, (3) LA 2 Vegas, Inc., (4) Barstow Company, Inc., (5) 1919 Building, Inc., (6) Grow Organic 5, Inc., (7) Grow Organic 6, Inc., (8) Grow Organic 11, Inc., (9) Grown Organic 12, Inc., (10) Merchants Barstow LLC, (11) Merchants Barstow 3 LLC, (12) Merchants Barstow 4 LLC, (13) Merchants Barstow 13 LLC, and (14) Merchants Barstow 14 LLC, for failure to comply with the terms of their development agreements.
DISCUSSION:
All commercial cannabis business operators (“Operators”) within the City are subject to, and must operate their commercial cannabis businesses in compliance with, development agreements entered into by each individual Operator and the City.
The development agreements and Barstow Municipal Code chapter 19.27 require that Operators obtain a cannabis business permit and pay a cannabis permit application fee prior to operating a cannabis business within the City. Operators must annually renew their permits and pay the permit renewal fee established through City Council resolution to the City. Under the City’s Resolution No. 5096-2022, the permit renewal application fee for permits renewed in fiscal year 2023 is $14,107.85. Under the City’s Resolution No. 5169-2024, the permit renewal application fee for permits renewed in fiscal year 2024 is $14,107.85.
The development agreements further require that Operators comply with: (a) all provisions of the resolution that adopted their development agreement; (b) Barstow Municipal Code Chapter 19.27, et. seq.; (c) all terms imposed by the City-issued Commercial Cannabis Permit; (d) all terms imposed by the City-issued Conditional Use Permit; and (e) all other requirements of applicable City law and permits.
Terminating a development agreement because of an Operator’s breach requires at least a 30-days written notice of the default and opportunity to cure, then a public hearing and Council decision.
Regular Meeting
03/17/25 05:30 PM
Planning
Amy Sanchez
Resolution
Doc ID: 5914
AGENDA ITEM
The specific Operators and development agreement breaches before the City Council for public hearing are as follows:
. Winners Circle HD, LLC
In 2023, the City entered into a development agreement with Winners Circle HD, LLC concerning the property located at 2588 Mercantile Way, Building 18B, Assessor’s Parcel Number 0428-211-26- 0000. A copy of the development agreement is attached as Attachment 1.
On January 27, 2022, Winners Circle HD, LLC paid its initial application fee to the City for its cannabis business permit. Thereafter, Winners Circle HD, LLC failed to pay its annual cannabis business permit renewal application fee during fiscal year(s) 2023/2024 and 2024/2025.
On January 21, 2025, the City sent Winners Circle HD, LLC a letter informing it of its breach, providing it with 35 days to cure by paying the unpaid cannabis permit fees, and notifying it of the City’s intent to terminate the development agreement at a public hearing at Barstow City Hall on March 17, 2025 at 7:00 p.m. Winners Circle HD, LLC failed to cure the breach within 35 days of the City’s letter. A copy of the City’s notice of default to Winners Circle HD, LLC is attached as Attachment 2. A resolution terminating the development agreement is attached as Attachment 3. . Sky Club HD, LLC
In 2023, the City entered into a development agreement with Sky Club HD, LLC concerning the property located at 2588 Mercantile Way, Building 18A, Assessor’s Parcel Number 0428-211-26-0000. A copy of the development agreement is attached as Attachment 4.
On January 27, 2022, Sky Club HD, LLC paid its initial application fee to the City for its cannabis business permit. Thereafter, Sky Club HD, LLC failed to pay its annual cannabis business permit renewal application fee during fiscal year(s) 2024/2025.
On January 21, 2025, the City sent Sky Club HD, LLC a letter informing it of its breach, providing it with 35 days to cure, and notifying it of the City’s intent to terminate the development agreement at a public hearing at Barstow City Hall on March 17, 2025 at 7:00 p.m. Sky Club HD, LLC failed to cure the breach within 35 days of the City’s letter. A copy of the City’s notice of default to Operator is attached as Attachment 5. A resolution terminating the development agreement is attached as Attachment 6. . LA 2 Vegas, Inc.
In 2023, the City entered into a development agreement with LA 2 Vegas, Inc. concerning the property located at 2596 Mercantile Way, Building 22, Assessor’s Parcel Number 0428-211-26-0000. A copy of the development agreement is attached as Attachment 7.
On March 30,2022, LA 2 Vegas, Inc paid its initial application fee to the City for its cannabis business permit. Thereafter, LA 2 Vegas, Inc failed to pay its annual cannabis business permit renewal application fee during fiscal year(s) 2024/2025.
Regular Meeting
03/17/25 05:30 PM
Planning
Amy Sanchez
Resolution
Doc ID: 5914
AGENDA ITEM
On January 21, 2025, the City sent LA 2 Vegas, Inc a letter informing it of its breach, providing it with 35 days to cure, and notifying it of the City’s intent to terminate the development agreement at a public hearing at Barstow City Hall on March 17, 2025 at 7:00 p.m. LA 2 Vegas, Inc failed to cure the breach within 35 days of the City’s letter. A copy of the City’s notice of default to Operator is attached as Attachment 8. A resolution terminating the development agreement is attached as Attachment 9. . Barstow Company, Inc.
In 2023, the City entered into a development agreement with Barstow Company, Inc. concerning the property located at 2592 Mercantile Way, Building 20, Assessor’s Parcel Number 0428-211-26-0000.
A copy of the development agreement is attached as Attachment 10.
On March 30, 2022, Barstow Company, Inc. paid its initial application fee to the City for its cannabis business permit. Thereafter, Barstow Company, Inc. failed to pay its annual cannabis business permit renewal application fee during fiscal year(s) 2024/2025.
On January 21, 2025, the City sent Barstow Company, Inc. a letter informing it of its breach, providing it with 35 days to cure, and notifying it of the City’s intent to terminate the development agreement at a public hearing at Barstow City Hall on March 17, 2025 at 7:00 p.m. Barstow Company, Inc. failed to cure the breach within 35 days of the City’s letter. A copy of the City’s notice of default to Operator is attached as Attachment 11. A resolution terminating the development agreement is attached as Attachment 12.
. 1919 Building, Inc.
In 2023, the City entered into a development agreement with 1919 Building, Inc. concerning the property located at 2590 Mercantile Way, Building 19A, Assessor’s Parcel Number 0428-211-26-0000. A copy of the development agreement is attached as Attachment 13.
On March 30,2022, 1919 Building, Inc. paid its initial application fee to the City for its cannabis business permit. Thereafter, 1919 Building, Inc. failed to pay its annual cannabis business permit renewal application fee during fiscal year(s) 2024/2025.
On January 21, 2025, the City sent 1919 Building, Inc. a letter informing it of its breach, providing it with 35 days to cure, and notifying it of the City’s intent to terminate the development agreement at a public hearing at Barstow City Hall on March 17, 2025 at 7:00 p.m. 1919 Building, Inc. failed to cure the breach within 35 days of the City’s letter. A copy of the City’s notice of default to Operator is attached as Attachment 14. A resolution terminating the development agreement is attached as Attachment 15. . Grow Organic 5, Inc.
In 2023, the City entered into a development agreement with Grow Organic 5, Inc. concerning the property located at 2837 Lenwood Rd, Building 5, Assessor’s Parcel Number 0428-211-26-0000. A copy of the development agreement is attached as Attachment 16.
On September 23, 2022, Grow Organic 5, Inc paid its initial application fee to the City for its cannabis business permit. Thereafter, Grow Organic 5, Inc failed to pay its annual cannabis business permit renewal application fee during fiscal year(s) 2023/2024 and 2024/2025.
Regular Meeting
03/17/25 05:30 PM
Planning
Amy Sanchez
Resolution
Doc ID: 5914
AGENDA ITEM
On January 21, 2025, the City sent Grow Organic 5, Inc a letter informing it of its breach, providing it with 35 days to cure, and notifying it of the City’s intent to terminate the development agreement at a public hearing at Barstow City Hall on March 17, 2025 at 7:00 p.m. Grow Organic 5, Inc failed to cure the breach within 35 days of the City’s letter. A copy of the City’s notice of default to Operator is attached as Attachment 17. A resolution terminating the development agreement is attached as Attachment 18.
. Grow Organic 6, Inc.
In 2023, the City entered into a development agreement with Grow Organic 6, Inc. concerning the property located at 2829 Lenwood Rd, Building 6, Assessor’s Parcel Number 0428-211-26-0000. A copy of the development agreement is attached as Attachment 19.
On March 30,2022, Grow Organic 6, Inc. paid its initial application fee to the City for its cannabis business permit. Thereafter, Grow Organic 6, Inc. failed to pay its annual cannabis business permit renewal application fee during fiscal year(s) 2023/2024 and 2024/2025.
On January 21, 2025, the City sent Grow Organic 6, Inc. a letter informing it of its breach, providing it with 35 days to cure, and notifying it of the City’s intent to terminate the development agreement at a public hearing at Barstow City Hall on March 17, 2025 at 7:00 p.m. Grow Organic 6, Inc. failed to cure the breach within 35 days of the City’s letter. A copy of the City’s notice of default to Operator is attached as Attachment 20. A resolution terminating the development agreement is attached as Attachment 21.
. Grow Organic 11, Inc.
In 2023, the City entered into a development agreement with Grow Organic 11, Inc. concerning the property located at 2825 Lenwood Rd, Building 11, Assessor’s Parcel Number 0428-211-26-0000. A copy of the development agreement is attached as Attachment 22.
On March 30, 2022, Grow Organic 11, Inc. paid its initial application fee to the City for its cannabis business permit. Thereafter, Grow Organic 11, Inc. failed to pay its annual cannabis business permit renewal application fee during fiscal year(s) 2023/2024 and 2024/2025.
On January 21, 2025, the City sent Grow Organic 11, Inc. a letter informing it of its breach, providing it with 35 days to cure, and notifying it of the City’s intent to terminate the development agreement at a public hearing at Barstow City Hall on March 17, 2025 at 7:00 p.m. Grow Organic 11, Inc. failed to cure the breach within 35 days of the City’s letter. A copy of the City’s notice of default to Operator is attached as Attachment 23. A resolution terminating the development agreement is attached as Attachment 24.
. Grow Organic 12, Inc.
In 2023, the City entered into a development agreement with Grow Organic 12, Inc. concerning the property located at 2833 Lenwood Rd, Building 12, Assessor’s Parcel Number 0428-211-26-0000. A copy of the development agreement is attached as Attachment 25.
On September 13, 2022, Grow Organic 12, Inc. paid its initial application fee to the City for its Regular Meeting
03/17/25 05:30 PM
Planning
Amy Sanchez
Resolution
Doc ID: 5914
AGENDA ITEM
cannabis business permit. Thereafter, Grow Organic 12, Inc. failed to pay its annual cannabis business permit renewal application fee during fiscal year(s) 2023/2024 and 2024/2025.
On January 21, 2025, the City sent Grow Organic 12, Inc. a letter informing it of its breach, providing it with 35 days to cure, and notifying it of the City’s intent to terminate the development agreement at a public hearing at Barstow City Hall on March 17, 2025 at 7:00 p.m. Grow Organic 12, Inc. failed to cure the breach within 35 days of the City’s letter. A copy of the City’s notice of default to Operator is attached as Attachment 26. A resolution terminating the development agreement is attached as Attachment 27.
. Merchants Barstow LLC
In 2023, the City entered into a development agreement with Merchants Barstow LLC concerning the property located at 2552 Mercantile Way, Building 23, Assessor’s Parcel Number 0428-211-26-0000.
A copy of the development agreement is attached as Attachment 28.
On March 30, 2022, Merchants Barstow LLC paid its initial application fee to the City for its cannabis business permit. Thereafter, Merchants Barstow LLC failed to pay its annual cannabis business permit renewal application fee during fiscal year(s) 2023/2024 and 2024/2025.
On January 21, 2025, the City sent Merchants Barstow LLC a letter informing it of its breach, providing it with 35 days to cure, and notifying it of the City’s intent to terminate the development agreement at a public hearing at Barstow City Hall on March 17, 2025 at 7:00 p.m. Merchants Barstow LLC failed to cure the breach within 35 days of the City’s letter. A copy of the City’s notice of default to Operator is attached as Attachment 29. A resolution terminating the development agreement is attached as Attachment 30.
. Merchants Barstow 3 LLC
In 2023, the City entered into a development agreement with Merchants Barstow 3 LLC concerning the property located at 2853 Lenwood Rd, Building 3, Assessor’s Parcel Number 0428-211- 26-0000. A copy of the development agreement is attached as Attachment 31.
On August 31, 2022, Merchants Barstow 3 LLC paid its initial application fee to the City for its cannabis business permit. Thereafter, Merchants Barstow 3 LLC failed to pay its annual cannabis business permit renewal application fee during fiscal year(s) 2023/2024 and 2024/2025.
On January 21, 2025, the City sent Merchants Barstow 3 LLC a letter informing it of its breach, providing it with 35 days to cure, and notifying it of the City’s intent to terminate the development agreement at a public hearing at Barstow City Hall on March 17, 2025 at 7:00 p.m. Merchants Barstow 3 LLC failed to cure the breach within 35 days of the City’s letter. A copy of the City’s notice of default to Operator is attached as Attachment 32. A resolution terminating the development agreement is attached as Attachment 33.
. Merchants Barstow 4 LLC
In 2023, the City entered into a development agreement with Merchants Barstow 4 LLC concerning the property located at 2845 Lenwood Rd, Building 4, Assessor’s Parcel Number 0428-211- Regular Meeting
03/17/25 05:30 PM
Planning
Amy Sanchez
Resolution
Doc ID: 5914
AGENDA ITEM
26-0000. A copy of the development agreement is attached as Attachment 34.
On August 31, 2022, Merchants Barstow 4 LLC paid its initial application fee to the City for its cannabis business permit. Thereafter, Merchants Barstow 4 LLC failed to pay its annual cannabis business permit renewal application fee during fiscal year(s) 2023/2024 and 2024/2025.
On January 21, 2025, the City sent Merchants Barstow 4 LLC a letter informing it of its breach, providing it with 35 days to cure, and notifying it of the City’s intent to terminate the development agreement at a public hearing at Barstow City Hall on March 17, 2025 at 7:00 p.m. Merchants Barstow 4 LLC failed to cure the breach within 35 days of the City’s letter. A copy of the City’s notice of default to Operator is attached as Attachment 35. A resolution terminating the development agreement is attached as Attachment 36.
. Merchants Barstow 13 LLC
In 2023, the City entered into a development agreement with Merchants Barstow 13 LLC concerning the property located at 2849 Lenwood Rd, Building 13, Assessor’s Parcel Number 0428-211- 26-0000. A copy of the development agreement is attached as Attachment 37.
On August 31, 2022, Merchants Barstow 13 LLC paid its initial application fee to the City for its cannabis business permit. Thereafter, Merchants Barstow 13 LLC failed to pay its annual cannabis business permit renewal application fee during fiscal year(s) 2023/2024 and 2024/2025.
On January 21, 2025, the City sent Merchants Barstow 13 LLC a letter informing it of its breach, providing it with 35 days to cure, and notifying it of the City’s intent to terminate the development agreement at a public hearing at Barstow City Hall on March 17, 2025 at 7:00 p.m. Merchants Barstow 13 LLC failed to cure the breach within 35 days of the City’s letter. A copy of the City’s notice of default to Operator is attached as Attachment 38. A resolution terminating the development agreement is attached as Attachment 39.
. Merchants Barstow 14 LLC
In 2023, the City entered into a development agreement with Merchants Barstow 14 LLC concerning the property located at 2857 Lenwood Rd, Building 14, Assessor’s Parcel Number 0428-211-26-0000. A copy of the development agreement is attached as Attachment 40.
On August 31, 2022, Merchants Barstow 14 LLC paid its initial application fee to the City for its cannabis business permit. Thereafter, Merchants Barstow 14 LLC failed to pay its annual cannabis business permit renewal application fee during fiscal year(s) 2024/2025.
On January 21, 2025, the City sent Merchants Barstow 14 LLC a letter informing it of its breach, providing it with 35 days to cure, and notifying it of the City’s intent to terminate the development agreement at a public hearing at Barstow City Hall on March 17, 2025 at 7:00 p.m. Merchants Barstow 14 LLC failed to cure the breach within 35 days of the City’s letter. A copy of the City’s notice of default to Operator is attached as Attachment 41. A resolution terminating the development agreement is attached as Attachment 42.
Regular Meeting
03/17/25 05:30 PM
Planning
Amy Sanchez
Resolution
Doc ID: 5914
AGENDA ITEM
Attachment 1 - Development Agreement with Winners Circle HD, LLC Attachment 2 - January 21, 2025 Notice of Breach/Default to Winners Circle HD, LLC Attachment 3 - Resolution Terminating Development Agreement with Winners Circle HD, LLC Attachment 4 - Development Agreement with Sky Club HD, LLC Attachment 5 - January 21, 2025 Notice of Breach/Default Sky Club HD, LLC Attachment 6 - Resolution Terminating Development Agreement with Sky Club HD, LLC Attachment 7 - Development Agreement with LA 2 Vegas, Inc.
Attachment 8 - January 21, 2025 Notice of Breach/Default to LA 2 Vegas, Inc.
Attachment 9 - Resolution Terminating Development Agreement with LA 2 Vegas, Inc.
Attachment 10 - Development Agreement with Barstow Company, Inc Attachment 11 - January 21, 2025 Notice of Breach/Default to Barstow Company, Inc Attachment 12 - Resolution Terminating Development Agreement with Barstow Company, Inc Attachment 13 - Development Agreement with 1919 Building, Inc.
Attachment 14 - January 21, 2025 Notice of Breach/Default to 1919 Building, Inc.
Attachment 15 - Resolution Terminating Development Agreement with 1919 Building, Inc.
Attachment 16 - Development Agreement with Grow Organic 5, Inc.
Attachment 17 - January 21, 2025 Notice of Breach/Default to Grow Organic 5, Inc.
Attachment 18 - Resolution Terminating Development Agreement with Grow Organic 5, Inc.
Regular Meeting
03/17/25 05:30 PM
Planning
Amy Sanchez
Resolution
Doc ID: 5914
AGENDA ITEM
Attachment 19 - Development Agreement with Grow Organic 6, Inc.
Attachment 20 - January 21, 2025 Notice of Breach/Default to Grow Organic 6, Inc.
Attachment 21 - Resolution Terminating Development Agreement with Grow Organic 6, Inc.
Attachment 22 - Development Agreement with Grow Organic 11, Inc.
Attachment 23 - January 21, 2025 Notice of Breach/Default to Grow Organic 11, Inc.
Attachment 24 - Resolution Terminating Development Agreement with Grow Organic 11, Inc.
Attachment 25 - Development Agreement with Grow Organic 12, Inc Attachment 26 - January 21, 2025 Notice of Breach/Default to Grow Organic 12, Inc Attachment 27 - Resolution Terminating Development Agreement with Grow Organic 12, Inc Attachment 28 - Development Agreement with Merchants Barstow LLC Attachment 29 - January 21, 2025 Notice of Breach/Default to Merchants Barstow LLC Attachment 30 - Resolution Terminating Development Agreement with Merchants Barstow LLC Attachment 31 - Development Agreement with Merchants Barstow 3 LLC Attachment 32 - January 21, 2025 Notice of Breach/Default to Merchants Barstow 3 LLC Attachment 33 - Resolution Terminating Development Agreement with Merchants Barstow 3 LLC Attachment 34 - Development Agreement with Merchants Barstow 4 LLC Attachment 35 - January 21, 2025 Notice of Breach/Default to Merchants Barstow 4 LLC Attachment 36 - Resolution Terminating Development Agreement with Merchants Barstow 4 LLC Attachment 37 - Development Agreement with Merchants Barstow 13 LLC Attachment 38 - January 21, 2025 Notice of Breach/Default to Merchants Barstow 13 LLC Regular Meeting
03/17/25 05:30 PM
Planning
Amy Sanchez
Resolution
Doc ID: 5914
AGENDA ITEM
Attachment 39 - Resolution Terminating Development Agreement with Merchants Barstow 13 LLC Attachment 40 - Development Agreement with Merchants Barstow 14 LLC Attachment 41 - January 21, 2025 Notice of Breach/Default to Merchants Barstow 14 LLC Attachment 42 - Resolution Terminating Development Agreement with Merchants Barstow 14 LLC FISCAL IMPACT:
The City is not expected to incur any negative fiscal impact from terminating these development agreements.
RECOMMENDED ACTION:
That the City Council adopt resolutions terminating the development agreement with Winners Circle HD, LLC; Sky Club HD, LLC; LA 2 Vegas, Inc.; Barstow Company, Inc.; 1919 Building, Inc.; Grow Organic 5, Inc.; Grow Organic 6, Inc.; Grow Organic 11, Inc.; Grow Organic 12, Inc.; Merchants Barstow LLC; Merchants Barstow 3 LLC; Merchants Barstow 4 LLC; Merchants Barstow 13 LLC; and Merchants Barstow 14 LLC (Attachments 3, 6, 9, 12, 15, 18, 21, 24, 27, 30, 33, 36, 39, and 42) and direct staff to take further steps to terminate the development agreements.
If the development agreements are terminated, then the City plans to assess its options for how to best use the properties.