Cannabis Retail Community Benefit Terms
Kathy Kleinbaum, Assistant City Manager
February 11, 2025
Belmont Retail Regulatory Framework
• City Council approved a regulatory framework for retail cannabis in October 2023
• Retail cannabis is only allowed on El Camino from O’Neill to F Street • Allows for up to 2 retail cannabis businesses to go through a planning entitlement process to be rezoned to S-3 Overlay District and get a CUP • Businesses must be at least 600 feet away from sensitive receptors such as schools or another cannabis business
• Businesses must also get a regulatory permit from the Police Department which requires background checks of ownership and review of security and operational plans
• Staff created pre-qualification process to vet interested businesses and invited 2 to apply for entitlements
State Regulatory Environment
• Cannabis businesses must obtain state licenses for cultivation, manufacturing, distribution, testing, and retail sales
• Track-and-Trace System – The state uses the METRC system to monitor cannabis from seed to sale, preventing diversion into the illicit market • Security & Operational Standards – Operators must meet stringent security, packaging, and labeling requirements, including child-resistant packaging and warning labels
• In addition, all products are tested for potency and ingredients and are required to be labeled accordingly for sale
• As a result, cannabis products purchased from licensed retailers are safer to consume than those purchased off of the black-market Canna-Bel Site – 1397 El Camino Real
Canna-Bel Ownership Cannabis Retail Businesses
NUG Site – 1538 El Camino Real, Suite C
NUG Ownership Cannabis Retail Businesses
Economic Development Opportunity
• Retail cannabis currently limited to just a few cities in San Mateo County • Provides a needed retail service to the community
• Provides a stable source of ongoing tax revenue for the City from sales tax and Business License taxes (6%)
• Additionally, each business has pledged ongoing community benefit contributions
• Surrounding cities have not experienced any public safety externalities due to cannabis storefronts
• Businesses are very different in character and may each attract a different customer base
• Staff strongly recommends the Council allow both applications to proceed Potential Annual Revenue Analysis
Gross Receipts per
Business
$3 Million $5 Million $8 Million $10 Million
Business License Tax $180,000 $300,000 $480,000 $600,000 Sales Tax $45,000 $75,000 $120,000 $150,000
Community Benefit
Contribution (1.5%) $45,000 $75,000 $120,000 $150,000
TOTAL Revenues $270,000 $450,000 $720,000 $900,000
Development Agreement
• Provides a mechanism for City to memorialize community benefit terms • Approved as part of the entitlement process
• Allows the City to outline specific remedies for non-payment of community benefits or other taxes and fees and/or non-compliance with operating standards
• Term of Development Agreement is 10 years with option for renewal for an additional 10-year period
• Community benefit contributions are unique to each business based on their initial proposals to the City and their operational and financial models
Canna-Bel Community Benefit Terms
• Community benefit contribution of 1.5% of gross receipts • The community benefit contribution will be distributed as follows:
o 30% directly for Parks and Recreation programming, scholarships, and capital needs
o 40% to Belmont Community Foundation
o 30% discretionary to be determined annually by Canna-Bel Community Advisory Board
NUG Community Benefit Terms
• $50,000 one-time donation for purchase of a mobile recreation vehicle • Community benefit contribution of 1.5% of gross receipts up to $12M, then 2% of gross receipts for revenues above $12M.
• The community benefit contribution will be distributed as follows:
o 50% directly for Parks and Recreation programming, scholarships, and capital needs
o 50% to Belmont Community Foundation
Next Steps
• Planning Commission entitlement hearing for recommendation on entitlement application – March 2025
• City Council review of entitlement applications – March/April 2025 City Council Discussion Items
1. Provide direction/comments on proposed Development Agreement deal terms
2. Provide direction on whether the Council will continue to support the consideration of both retail cannabis applications
Thank you!
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