Agenda packet — Cathedral City City Council, April 20, 2022

CITY COUNCIL
AGENDA

Special Meeting
Wednesday, April 20, 2022
2:00 PM

City Council Chambers
68-700 Avenida Lalo Guerrero
Cathedral City, CA 92234

THIS MEETING WILL BE CONDUCTED IN PERSON AND VIA VIDEOCONFERENCE. IF YOU WOULD LIKE TO ATTEND VIA ZOOM PLEASE USE THE FOLLOWING LINK TO REGISTER IN ADVANCE:

AFTER REGISTERING, YOU WIL L RECEIVE A CONFIRMATION EMAIL CONTAINING INFORMATION ABOUT JOINING THE MEETING.

MAYOR
Ernesto Gutierrez

CITY COUNCIL MEMBERS

Mayor Pro Tem
Rita Lamb

Councilmember
Mark Carnevale

Councilmember
Nancy Ross

Councilmember
Raymond Gregory
• CALL TO ORDER
• ROLL CALL
• AGENDA FINALIZATION
At this time the City Council may announce any items being pulled from the agenda or continued to another date.
• STATEMENT OF PARTICIPATION BY THE CITY CLERK

1. AGENDA ITEMS
A. Cannabis Regulation and Tax Update
Recommendation: This item is presented for information, discussion and direction only.

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ADJOURN
NOTES TO THE PUBLIC:

The City of Cathedral City complies with the Americans with Disabilities Act of 1990. If you require special assistance to participate in this mee ting, please call the City Clerk’s Office at (760) 770-0322 at least 48 hours prior to the meeting.

If you desire to address the City Council during the meeting, please complete a Request to Speak Form available at the entrance and present it to the City Clerk. Speakers will be called upon at the appropriate time.

Any documents provided to a majority of the City Council regarding any item on this agenda will be made available for p ublic inspection in the City Clerk’s office at City Hall located at 68 -700 Avenida Lalo Guerrero during normal business hours. In addition, such documents will be posted on the City’s website at www.cathedralcity.gov.

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Staff Report

City Council

Item No. 1.A

Meeting Date: April 20, 2022
From: Charles McClendon, City Manager
Title: Cannabis Regulation and Tax Update

RECOMMENDATION:

This item is presented for information, discussion and direction only.

BACKGROUND:

With the passage of Proposition 64 by California voters, C annabis businesses became fully legal for both medicinal and adult use. The full implementation of Prop 64 became effective January 1, 2018. The industry continues to grow and mature in Cathedral City.

On September 8, 2021, Staff provided an update to the City Council at their study session, covering the history of tax collections in Cathedral City and discussed a request from a business owner to consider a retail “tax holiday”. At that t ime, Council declined to proceed with a tax holiday.

After the last Cannabis Task Force meeting held on November 29, 2021, staff provided an update to the City Council in study session on January 12, 2022 and reviewed the discussions of the Task Force. As result of that meeting, Council asked staff to conduct a full review of the City’s Municipal Code provisions related to Cannabis, the tax and fee structure and related data.

The data and staff suggestions resulting from that review were presented to the Cannabis Task Force during a meeting on April 11, 2022. All task force members were present for the discussion and the primary topics of the meeting will be reviewed with Council during the presentation on this item.

DISCUSSION:

A staff working group w as formed, consisting of staff involved in cannabis licensing, enforcement and tax collection, with the assignment to review in detail the current ordinances governing the operation of cannabis businesses in Cathedral City.

PART I MUNICIPAL CODE

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Following is a summary of the issues related to the ordinance that were identified and related policy questions that need to be addressed:

• Under 5.88.025 Definitions there is a definition of Good Cause to deny or suspend a local license. The current language is as follows:
“Good cause” for purposes of denying an initial local license issuance, for suspending or revoking a local license, or for denying a local license renewal, means:

1. The applicant or licensee has violated any of the terms, conditi ons or provisions of this chapter, of state law, of any regulations and rules promulgated pursuant to state law, any applicable local rules and regulations, or any special terms or conditions placed upon its conditional use permit, state license, or local license;
Staff recommends that the language be modified as follows:

1. The applicant or licensee has been cited for violating any of the terms, conditions or provisions of this chapter, of state law, of any regulations and rules promulgated pursuant to state law, any applicable local rules and regulations, or any special terms or conditions placed upon its conditional use permit, state license, or local license;
• In the same section, also under the Good Cause definition is the following:

6. The applicant o r licensee, or any owner of the applicant or licensee, operated a cannabis business in violation of this chapter or Chapter 9.108 of the code;
Staff recommends this be deleted as it is covered under the proposed language in item 1 above.
• The following language is under the definition of Owner:

1. A person with an aggregate ownership interest of ten percent or more in the person applying for a license or a licensee, u nless the interest is solely a security, lien, or encumbrance.

State law uses 20 percent and staff recommends aligning with state law. • Under 5.88.035 Local license required there is the following language:

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five days from the date that the state begins accepting applications. If the state denies t he application for a temporary or permanent license(s) for any reason, the cannabis business must cease operations until such time as it obtains the appropriate temporary or permanent state license(s).

This was part of the initial transition to legal canna bis in California after the passage of Prop 64. The transition language is no longer necessary, and staff recommends this section be modified to read as follows:

B. It is unlawful for a cannabis business to operate in the city unless it has been granted the appropriate temporary or permanent state license(s) for its commercial cannabis activities. If the state denies the application for a temporary or permanent license(s) for any reason, the cannabis business must cease operations until such time as it o btains the appropriate temporary or permanent state license(s).
• Under 5.88.040 Local license application process there is the following language:

A. The local licensing authority shall not accept an application for a dispensary proposed to be located south of Interstate 10 after November 23, 2016.

This language was adopted when the retail industry was rapidly expanding in Cathedral City and the Council was concerned about the density of businesses that might develop.

The retail sector is no longer expanding, and the current number of retail licenses is below those authorized in 2016. Council may want to have a policy discussion on whether or not they feel it is necessary to continue with the moratorium. • Also under 5.88.040 Local license application process is the following language:

E. The chief of police or designee shall conduct a background check of any owner of the cannabis business, as “owner” is defined in MAUCRSA, and shall prepare a report to the local licensing authority on the acceptability of the background of the owner(s).

F. The local licensing authority shall issue a license to any applicant who has submitted a complete application and paid the application fee unless the local licensing authority finds that good cause exists to deny the lice nse. A local license shall not be issued to a dispensary that is proposed to be located south of Interstate 10 unless the application for the license was made on or before November 23, 2016.

If the language related to ownership definition is revised and/or if the moratorium is lifted these sections will need to be revised to be consistent with those revisions.

Staff is also investigation the feasibility of adding language to our local code that may provide better access to background information from out of state potentially negating the need to separate background investigations. The result of this research remains to be seen at this time.

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• Under 5.88.050 Changes and modifications of local licenses is the following language:

C.3. The local licensing authority may permit a dispensary that is located south of Interstate 10 to relocate to a new location north or south of Interstate 10. A dispensary that is located north of Interstate 10 may only relocate to a new location that is north of Interstate 10. (Ord. 800 § 1, 2017) If the moratorium is lifted this provision should be deleted. • Under 5.88.055 Renewal of a local license is the following language:

4. For licensees that have ten or more full -time equivalent non -supervisorial employees, proof that the licensee has entered into and abided by the terms of a labor peace agreement.

State law sets the threshold for requiring a labor peace agreement at 20 employees.

The policy question for Council is do they wish to continue with a provision that is more restrictive than the state.
• Under 5.88.065 Cannabis business operational requirements is the following language:

D. Background Checks. Prior to commencing any work within a cannabis business, any individual who will work within a licensed premises or have access to cannabis or cannabis -products must submit to a background check that demonstrates they are of good moral character and receive a cannabis industry worker identification card from the city. The background check must include fingerprinting for criminal his tory conducted by the Cathedral City police department or any other entity determined to be satisfactory by the Cathedral City police department. Each cannabis industry worker identification card issued shall expire after two years unless renewed. A decisi on to deny or not renew a cannabis industry worker identification card may be appealed in accordance with Section 5.88.060. A cannabis industry worker identif ication card may be revoked or suspended by the city at any time, in accordance with the procedures in Chapter 13.150 of this code, if it is determined that the card holder is no longer of good moral character. A cannabis business shall not employ or utilize the services of any individual who is required to have a city -issued cannabis industry worker identification card less that individual possesses a valid city -issued cannabis industry worker identification card at all times, regardless of whether the individual is an employee, independent contractor, or volunteer. The city may charge a fee to recover its reasonable costs of processing and issuing cannabis industry worker identification cards in an amount established by resolution of the city council.

E. Worker Register. Cannabis businesses must maintain a complete register of all persons that work at the licensed premises or have access to cannabis or cannabis products, whether as an employee, independent contractor, or volunteer. This register must include:

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1. The individual’s complete name, address, and last known telephone number;

2. The individual’s hire date and, if applicable date of termination;

3. A copy of the individual’s city -issued cannabis industry worker identification card;
The register and required records must be made available for inspection by any city officer or official for purposes of determining compli ance with the requirements of this chapter during standard business hours of the licensed facility or at any other reasonable time.

These provisions cover background requirements for employees of a cannabis business. Requirements for owners and managers a re covered elsewhere.

Requirements related to all non-management or ownership employees are costly for the businesses and cumbersome for the City to administer and enforce. The policy question is should the City continue to place such requirements on the businesses related to all employees or does a business have adequate incentives on their own to screen and monitor their employees. Based on the policy decision made these sections may be deleted from the code.
• Also under 5.88.065 Cannabis business opera tional requirements is the following language:

P. Seed to Sale Tracking Required. Until such a time that the state of California fully implements the track and trace program required by Section 26067 of the Business and Professions Code , a cannabis business must utilize seed to sale software, third -party software that tracks all sales, transfers, purchases, receipts, deliveries of cannabis and cannabis products. The softw are must be capable of producing electronic shipping manifests, tracking all cannabis inventory in possession of the cannabis business, promptly identifying a discrepancy in the stock, and tracking cannabis from the end purchaser back to its source in the event of a serious adverse event.

The state program described is in place and this section of the code can now be deleted.
• Also under 5.88.065 Cannabis business operational requirements is the following language:

R. 2. Cannabis Waste. Cannabis waste mus t be made unusable and unrecognizable prior to leaving the licensed premises by grinding it and incorporating it with fifty percent non -medicinal cannabis waste. If necessary to protect the health and safety of individuals working on a licensed premises, a cannabis business may grind the stalk of a cannabis plant outside of its licensed premises provided all grinding activities occur within twenty feet of the licensed premises and cannot be seen from any public street.

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R. 3. Composting. A cannabis busin ess may compost cannabis waste onsite, in accordance with this provision and all other applicable laws, rules, and regulations.

Staff has encountered some issues with odors that have been traced to the handling of waste. It is recommended that language be added reinforcing that waste and cannabis operations must be done in accordance with the conditional use permit which will consider placement of containers and impose odor control requirements. • Under 5.88.070 Dispensary operational requirements is the following language:

A. Limited Hours of Operation. A dispensary may only be open to the public and engage in sales between the hours of eight a.m. and ten p.m.

1. Product Not Visible To Public. The display of cannabis and cannabis products for sale shall not be visible from outside the licensed premises.

State law allows businesses to operate from 6 a.m. to 10 p.m. The policy question is does the City want to be more restrictive than state law. Additionally, the Planning Commission has recommended the elimin ation of item B. They believe that the requirement makes buildings less aesthetically pleasing and inhibits the use of windows and glass as design features. The same provision related to visibility exists related to cultivation businesses in 5.88.080 Cultivation operational requirements in section D. • Also under 5.88.070 Dispensary operational requirements is the following language:

I. Sale of Untested Products. A dispensary may sell cannabis or cannabis products that have not been tested by a testing laborat ory from January 1, 2018 until such time as determined by the state. Thereafter, all cannabis and cannabis products sold by a dispensary must be tested by a testing laboratory prior to sale to a purchaser in accordance with MAUCRSA.

Testing facilities are now available and operational, and this provision can be deleted. • Also under 5.88.070 Dispensary operational requirements is the following language:

2. Cannabis consumption must occur within the interior building space of the dispensary. Consumption may not o ccur on patios, in parking areas, or in any other space that is not fully enclosed.

This is a policy question for the Council. Currently outdoor lounges are not permitted, and Council has expressed concern over odor control. An alternative is to allow out door lounges with appropriate odor control which is already required. • Under 5.88.095 Packaging and labeling is the following language:

D. State-Mandated Warnings and Information. All cannabis and cannabis product labels and inserts shall include the sta te-mandated warnings and

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information contained in Business and Professions Code Section 26120(c).

Notwithstanding the foregoing, during the period of time that the state per mits untested cannabis and cannabis products to be sold to purchasers, all cannabis and cannabis products must have a label affixed to each package that clearly states “This product has not been tested as required by the Medicinal and Adult - Use Cannabis Re gulation and Safety Act” and must comply with any other labeling requirements imposed by the state. (Ord. 800 § 1, 2017) The transition period is over, and testing is a state requirement. The text in red above can now be deleted.
• Under 5.88.120 Civil fines is the following language:

Any person convicted of an infraction or misdemeanor violation shall, for each separate violation of this chapter, be subject to the following civil fines in addition to any infraction or misdemeanor penalties:

A. A f ine in an amount not to exceed two hundred fifty dollars for a first conviction of an offense;
B. A fine in an amount not to exceed five hundred dollars for a second conviction of the same offense within a twelve -month period of the date of the first offense;
C. A fine in an amount not to exceed seven hundred fifty dollars for a third conviction of the same offense within a twelve -month period of the date of the first offense; and
D. A fine of one thousand dollars for the fourth a nd subsequent convictions of the same offense within a twelve-month period of the date of the first offense.

The City is converting from having fines listed in the code to have fines adopted through a companion resolution and Council may want to consider a similar approach here.

Chapter 9 of the Municipal Code deals with land use and includes a section related to cannabis 9.108 CANNABIS BUSINESSES
The following provisions in Chapter 9 were reviewed by the working group and should be considered for revision:
• Under 9.108.030 Definitions is the following language:
“Excessive concentration” means either of the following: (1) for proposed dispensaries south of Interstate 10, the approval of the conditional use permit would result in more than twenty dispensarie s being approved to operate south of Interstate 10; or (2) for proposed dispensaries north of Interstate 10, the proposed dispensary is located less than five hundred feet from another approved dispensary, measured in accordance with Section 9.108.070(C).

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If Council decides to lift the moratorium on dispensaries the language in red above should be deleted.
• Under 9.108.050 Conditional use permit application is the following language:

B.1. Proof that the applicant has received a local license for the proposed premises, and the local license is in good standing, or a statement that the applicant is applying for a local license for the proposed premises concurre ntly with the conditional use permit application.

Staff recommends that this provision be eliminated. Requiring a local license prior to the Condition Use Permit process increases the time necessary to get a business approved and operating. The CUP proce ss is related to land use and can be considered in advance of a license being issued. Many times, the applicant for a CUP is a developer and this provision requires them to get a license that they will never use since the ultimate licensee will be another party.
• Also under 9.108.050 Conditional use permit application is the following language:
a. An environmental plan indicating how cultivation and/or manufacturing will be conducted in accordance with state and local laws related to hazardous material disposal, land conversion, grading, electricity usage, water usage, and agricultural discharges.
b. An emergency response plan which complies with Title 8 of this code and California Fire Code Section 401, and sets out standard operating procedures to be followed by all individuals in case of a fire, chemical release, chemical spill, or other emergency.

Staff recommends that these provisions be eliminated as permit and inspection requirements from the water agencies, County and State cover these items and the information is duplicative and is not necessary for the City CUP application. • Under 9.108.070 Locational requirements is the following language:

A. 2. Within two hundred fifty feet of East Palm Canyon Drive or a residential zone.

B. 3. Within two hundred fifty feet of East Palm Canyon Drive.

C. 2. Setbacks from East Palm Canyon Drive shall be measured to the nearest edge of the right-of-way for East Palm Canyon Drive.

Staff recommends that the 250 -foot setback from East Palm Canyon (EPC) be eliminated. There is no other street in the City with a similar prohibition and the design standards applied to cannabis businesses have resulted in facilities of at least as high quality as surrounding businesses. If the EPC setback is eliminated the language in red above should be deleted.
• Under 9.108.080 Conditions of approval is the following language:

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A. 6. From a public right -of-way, there should be no exterior evidence of the cannabis business except for any permitted on-site signage.

If the decision is made to accept the Planning Commission recommendation related to visibility into a business, this provision should be eliminated.

PART II TAXES AND FEES
In calendar year 2021, total cannabis taxes paid to Cathedral City were $4,971,001.

Retail cannabis taxes collected in 2021 declined compared to the previous year:

Total cannabis taxes collected in 2021 were the highest ever:

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Taxes in Neighboring Jurisdictions

Staff reviewed the taxes charged to cannabis businesses in the cities of Palm Spring s, Palm Desert, Desert Hot Springs and Coachella. Indio, La Quinta, Indian Wells and Rancho Mirage do not currently allow cannabis businesses.

Retail Taxes:

City Tax Rate
Cathedral City – 10% tax on gross proceeds
Palm Springs - 10% tax on gross proceeds
Palm Desert - 10% tax on gross proceeds
Desert Hot Springs - 10% tax on gross proceeds
Coachella - 6% tax on gross proceeds

Cultivation Taxes:

Note: Since some cities have variable rates based on the size of the facility a calculation is included showing the annual tax on a 6,000 square foot facility which is the average among all currently operating cultivation facilities in Cathedral City.

City Tax Rate Tax on 6000 sq. ft.
*Desert Hot Springs - $10.20/sq.’ $61,200
*Coachella - $15/sq.’ up to 20k; $7.50/sq.’ over $90,000

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Cathedral City $15/sq.’ $90,000
Palm Desert $13/sq.’ $78,000
Palm Springs $10/sq.’ $60,000

*In addition to the square foot tax Coachella also charges a gross proceeds tax of 4% *Desert Hot Springs previously had a two -tiered rate structure and recently eliminated the tiers resulting in a rate of $10.20 per square foot regardless of size.

Manufacturing Taxes:

Coachella - $15/sq.’ up to 20k; $7.50/sq.’ over plus 2% gross proceeds Cathedral City - $.05/gram on crude; $.10/gram on distillate; $.40/gram other Palm Springs 2% tax on gross proceeds
Palm Desert 2% tax on gross proceeds
Desert Hot Springs 0

*The Cathedral City enabling legislation requires a per gram tax on products manufactured. The current schedule was designed to approximate the 2% gross proceeds level. The mix of products produced will affect taxes paid.

Distribution and Testing Taxes:

Coachella - 2% gross proceeds on distribution, 1% gross proceeds on testing Cathedral City - 0 on product cultivated or manufactured (and taxed) in CC Palm Springs - 0
Palm Desert - 0
DHS - 0

Previous discussions with the task force and the Council have indicated a need to review the City tax structure. Staff has narrowed the realistic options for revisions to the following for ease of discussion:

1. Cultivation Taxes – Cathedral City cultivation taxes are very consistent in terms of collection and payment and represent the most reliable component of the tax base. If a revision in cultivation taxes is desired, staff recommends limiting it to the definition of the taxable area. Questions and concerns have arisen over time regarding taxing the entire facility (our current practice) as opposed to just the canopy space. Most of the regional cities report taxing the canopy space only (which we would define as the grow rooms). Changing the definition of cannabis cultivation space in section 3.48.020 would apply equally to all businesses regardless of size and would tr eat existing cultivators consistently with future operators. If Cathedral City adopted a provision to tax only the grow rooms themselves staff estimates the result would be a reduction in the taxable area of 10 to 15% which would result in a revenue reduc tion (based on 2021 taxes paid) of approximately $246,000 to $369,000 annually.

Staff has also received a request to consider a delay in the start date for when taxes must be paid. Currently cultivation taxes become due when a business receives its certificate of occupancy (COO). The argument is that it takes time to load in the plants and then time for the crop to mature before the business generates any revenue. An alternative is making taxes due 60 days after COO.

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This would not affect any existing business and would not reduce existing revenues.

2. Retail Taxes – In general the retail industry reports they are struggling due to continued competition with the black market and due to the proliferation of retailers in Palm Springs. Cathedral City’s tax rate currently is consistent with all of the other Coachella Valley cities except for Coachella. Each 1% reduction in the tax rate would result in a reduction in revenue to the City of approximately $150,000 based on 2021 collections.

3. Manufacturing Taxes – Manufacturing taxes represent the smallest part of the City’s tax collections. Manufacturing taxes have already been reduced two times on the promise that reduced taxes would result in increased activity. This has not proven to be the case and staff recommends no further reductions.

4. Fees – The costs associated with the Condition Use Permit process, background checks and initial licenses are recovered on a deposit basis where the business makes an initial deposit of $7,500 and actual costs of service s are charged against the deposit. If additional costs are incurred the applicant is charged and any overpayment is refunded once the permits are all issued, and the review process is completed. Renewal fees are $5,900 per renewal. Fees are all based on actual costs incurred and may not generate a “profit” for the City. Reducing ordinance requirements, such as the number of background checks required would have the effect of reducing fees accordingly.

FISCAL IMPACT:

In calendar year 2021, total cannabis taxes paid to Cathedral City were $4,971,001.

ATTACHMENTS:

Chapter 5.88 Cannabis Regulations
Chapter 9.108 Cannabis Land Use

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5.88.010 Purpose and intent.

A. This chapter shall provide for the regulation and licensing of medicinal and adult-use cannabis businesses throughout the city in conformance with applicable state and local laws and regulations pertaining to medicinal and adult-use cannabis.

B. The city council finds that it is necessary for Cathedral City to adopt local licensing standards for medicinal and adult-use cannabis businesses for the purpose of controlling and regulating the cultivation, distribution, transport, storage, manufacturing, processing, and sale of medicinal cannabis and medicinal cannabis products to qualified patients, and adult-use cannabis and adult-use cannabis products to adults twenty-one years of age and over.

C. The purpose of this chapter is to regulate all commercial cannabis activity in Cathedral City, as defined in the MAUCRSA, to the extent authorized by state law and in a manner designed to minimize negative impacts on the city and neighboring uses, and promote the health, safety, morals, and general welfare of residents and businesses within the city. (Ord. 800 § 1, 2017)

5.88.015 Findings.

The city council finds and determines that local licensing standards pertaining to cannabis business activities are necessary to protect the public health and safety. The city council further finds that public health and safety is best served by the adoption of the ordinance codified in this chapter. (Ord. 800 § 1, 2017)

5.88.020 Relationship to other laws.

A. Except as otherwise specifically provided herein, this chapter incorporates the requirements and procedures set forth in the MAUCRSA. In the event of any conflict between the provisions of this chapter and the provisions of the MAUCRSA or any other applicable state or local law, the more restrictive provision shall control.

B. Except as expressly stated herein, cannabis businesses must comply with all other city codes and regulations. Nothing in this chapter shall be construed as permitting a cannabis business to operate at any time in a manner that is in violation of all other applicable state and local laws. (Ord. 800 § 1, 2017)

5.88.025 Definitions.

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update) Unless otherwise defined herein, the terms in this chapter shall have the same meaning as set forth in the MAUCRSA and any rules promulgated pursuant thereto. In addition, the following terms shall be defined as follows:
“Cannabis business” means any person engaged in commercial cannabis activity. “Certificate of accreditation” means a certificate issued by an accrediting body to a licensed testing laboratory, entity, or site to be registered in the state. “City” means Cathedral City, California.
“City manager” shall mean the city manager of the city or duly authorized designee. “Community development director” shall mean the community development director of the city or duly authorized designee.
“Dispensary” means a cannabis business that engages in the retail sale and delivery of cannabis or cannabis products to customers. A dispensary, as that term is used in this code, is a “retailer” under the MAUCRSA.
“Distribution site” means a facility where cannabis and cannabis products are stored or inspected by a distributor for the purposes of distribution. “Distributor” means a cannabis business that engages in the distribution and transportation of cannabis and cannabis products to other cannabis businesses. “Good cause” for purposes of denying an initial local license issuance, for suspending or revoking a local license, or for denying a local license renewal, means:

1. The applicant or licensee has violated any of the terms, conditions or provisions of this chapter, of state law, of any regulations and rules promulgated pursuant to state law, any applicable local rules and regulations, or any special terms or conditions placed upon its conditional use permit, state license, or local license;

2. The premises has been or is proposed to be operated in a manner that adversely affects the public health, safety or welfare or the safety of the immediate neighborhood in which the establishment is located;

3. The applicant or licensee has knowingly made false statements, misrepresentations or material omissions on an application form, renewal form, or any other document submitted to the city;

4. The criminal history of the applicant’s or licensee’s owner(s) indicates that one or more of the owner(s) lack good moral character;

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update) 5 An owner of the applicant or licensee is a licensed physician providing physician’s recommendation to qualified patients for medicinal cannabis;

6. The applicant or licensee, or any owner of the applicant or licensee, operated a cannabis business in violation of this chapter or Chapter 9.108 of the code;

7. The applicant or licensees, or any owner of the applicant or licensee, is a person who is prohibited from holding the license under this chapter;

8. The premises proposed to be licensed or the licensed premises is located on land that is owned by the United States and held in trust for any federally-recognized Indian tribe or any member of the tribe, or that is subject to a restriction on alienation imposed by the United States;

9. For renewals, suspensions and revocations, the licensee has allowed a person whose criminal history indicates that person is not of good moral character to work within the premises as an employee, independent contractor, or volunteer; or

10. For renewals, suspensions and revocations, the licensee fails to allow inspection of the security recordings, activity logs, or business records of the licensed premises by city officials.
“Good moral character” means having a personal history that demonstrates the propensity to serve the public in the licensed area in a manner that reflects openness, honesty, fairness, and respect for the rights of others and for the law. In determining good moral character, the following standards shall apply:

1. A person who has been convicted of any of the following offenses shall not be considered to be of good moral character:
a. A violent felony, as specified in Penal Code Section 667.5(c); b. A serious felony, as specified in Penal Code Section 1192.7(c); c. A felony conviction involving fraud, deceit, or embezzlement; d. A felony conviction for hiring, employing, or using a minor in transporting, carrying, selling, giving away, preparing for sale, or peddling, any controlled substance to a minor;
e. A felony conviction for selling, offering to sell, furnishing, offering to furnish, administering, or giving any controlled substance to a minor; f. A felony conviction for drug trafficking with enhancements pursuant to Section 11370.4 or 11379.8 of the Health and Safety Code.

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update)

2. Except as provided in paragraph 1 of this definition, and notwithstanding Chapter 2 of Division 1.5 of the California Business and Professions Code, a prior conviction where the sentence, including any term of probation, incarceration, or supervised release is completed for possession of, possession for sale, sale, manufacture, transportation, or cultivation of cannabis shall not be the sole ground for a determination that a person lacks good moral character.

3. An owner of a licensee who is convicted of any controlled substance felony subsequent to issuance of a local license shall be deemed to lack good moral character. “Identification card” or “ID card” means a valid identification card issued pursuant to Section 11362.7 et seq., of the California Health and Safety Code. “Identification card holder” or “ID card holder” means an individual who is a qualified patient who has applied for and received a valid ID card pursuant to Article 2.5 of Chapter 6 of Division 10 of the California Health and Safety Code. “Licensed premises” means a premises for which a local license has been issued pursuant to this chapter.
“Licensee” means a person who has been issued a local license pursuant to this chapter.
“Limited access area” means a building, room or other area that is part of the licensed premises where cannabis is grown, cultivated, stored, weighed, displayed, packaged, or sold to other cannabis businesses with limited access to only authorized personnel.
“Local license” means a license granted by the local licensing authority, pursuant to this chapter.
“Local licensing authority” means the city manager.
“Manufacturing site” means a premises where a manufacturer engages in the manufacture of cannabis products.
“Medicinal and Adult-Use Cannabis Regulation and Safety Act” or “MAUCRSA” means Division 10 of the California Business and Professions Code. “Medicinal cannabis patient” means both a qualified patient without an identification card and an ID card holder.
“Non-supervisorial employee” means an individual employed by the licensee that does not have the authority to hire, fire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibility to direct them or to adjust their grievances, or effectively to recommend such action, if, in connection

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update) with the foregoing, the exercise of that authority is not of a merely routine or clerical nature, but requires the use of independent judgment. For the purposes of this definition, an individual shall not be considered an employee of a licensee if the individual is working for the licensee pursuant to a written agreement that expressly states the individual is an independent contractor.
“Owner” means any of the following:

1. A person with an aggregate ownership interest of ten percent or more in the person applying for a license or a licensee, unless the interest is solely a security, lien, or encumbrance.

2. The chief executive officer of a nonprofit or other entity.

3. A member of the board of directors of a nonprofit.

4. An individual who will be participating in the direction, control, or management of the person applying for a license.
“Physician,” as used in this chapter, shall mean an individual who possesses a license in good standing to practice medicine or osteopathy from the state of California. “Primary caregiver” shall have the meaning set forth in Section 11362.7(d) of the California Health and Safety Code.
“Qualified patient” shall have the meaning set forth in Section 11362.7(f) of the California Health and Safety Code.
“Seed to sale software” means the track and trace inventory control system established pursuant to Section 26067 of the California Business and Professions Code that utilizes a unique identifier pursuant to Section 26069 of the California Business and Professions Code and tracks transfers of cannabis from seed through sale. Until such a time that the state of California implements Section 26067 of the California Business and Professions Code, the “seed to sale software” shall refer to the third-party tracking software required by Section 5.88.065(P) of this chapter. “State law(s)” shall mean and include California Health and Safety Code Section 11362.5 (Compassionate Use Act of 1996); California Health and Safety Code Sections 11362.7 to 11362.85 (Medicinal Marijuana Program Act); the MAUCRSA, and all other applicable laws and regulations of the state of California. “State license” means a state license issued under MAUCRSA, and includes both an A-license and an M-license, as well as a testing laboratory license.

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update) “State licensing authority” shall mean the state agency responsible for the issuance, renewal, or reinstatement of a state license, or the state agency authorized to take disciplinary action against a state licensee. (Ord. 817 § 1, 2018; Ord. 800 § 1, 2017)

5.88.030 Local license in addition to business license
or other permit.

The local license required by this chapter shall be in addition and supplemental to any other business license or any permit required by any ordinance of the city. (Ord. 800 § 1, 2017)

5.88.035 Local license required.

A. It is unlawful to operate any cannabis business in Cathedral City without first having obtained a local license under this chapter. Notwithstanding the foregoing, a temporary cannabis event organizer and cannabis businesses participating in a temporary cannabis event put on by a temporary cannabis event organizer are not required to obtain a license under this chapter provided that the organizer and participants comply with subsection D below.

B. Beginning January 1, 2018, it is unlawful for a cannabis business to operate in the city unless it has been granted the appropriate temporary or permanent state license(s) for its commercial cannabis activities. Notwithstanding the foregoing, any licensee operating in the city prior to January 1, 2018 may continue to operate without a state license provided that it applies for the appropriate temporary or permanent license(s) from the state no later than forty-five days from the date that the state begins accepting applications. If the state denies the application for a temporary or permanent license(s) for any reason, the cannabis business must cease operations until such time as it obtains the appropriate temporary or permanent state license(s).

C. The city may grant a local license prior to the applicant having obtained a state license. A cannabis business must possess the requisite state and local licenses prior to receiving a certificate of occupancy from the city.

D. The city may permit temporary cannabis events by granting the applicant a special use permit for the event in accordance with the procedures for special use permits established in Chapter 9.68 of this code. Notwithstanding any provision in Chapter 9.68 to the contrary, the city council shall have the authority to approve, conditionally approve or deny a special use permit for a temporary cannabis event. A special use permit for a temporary cannabis event shall only be granted to a person who holds a cannabis event organizer license issued by the California Bureau of Cannabis Control, a copy of which must be submitted with the special use permit application. The applicant shall provide the city with a copy of the temporary cannabis event license approved by the state prior to the commencement of the temporary

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update) cannabis event. Temporary cannabis events shall comply with all regulations set forth in 16 C.C.R. Sections 5601—5604, as they may be amended from time to time.

Temporary cannabis event organizers and cannabis businesses participating in a temporary cannabis event shall not be subject to the cannabis business operational requirements in Sections 5.88.065 through 5.88.100, inclusive, of this chapter or Sections 9.108.070 and 9.108.080 of this code, but the city council may apply appropriate conditions of approval on the operation of the temporary cannabis event pursuant to Section 9.28.060. Cannabis event organizers and cannabis businesses that participate in temporary cannabis events are subject to the tax imposed in Section 3.48.020 of this code. (Ord. 829 § 1, 2019; Ord. 800 § 1, 2017)

5.88.040 Local license application process.

A. The local licensing authority shall not accept an application for a dispensary proposed to be located south of Interstate 10 after November 23, 2016.

B. All applications for local licenses required pursuant to this chapter shall be made upon current forms prescribed by the local licensing authority. All applications for local licenses must be accompanied by the application fee as established by resolution of the city council as amended from time to time.

C. An applicant shall file with the local licensing authority the following at the time of application for a local license:

1. An operating plan for the proposed cannabis business including the following information:
a. A general description of the types of products and services to be provided by the facility;
b. A floor plan designating all interior dimensions of the licensed premises and the layout of the cannabis business, including all limited access areas, areas of ingress and egress, and all security cameras. Such floor plan shall also show the principal uses of the floor area depicted therein. For cultivation sites, such floor plan shall distinguish all dimensions of areas in which plants are located;
c. An employee, independent contractor, and volunteer list, if one exists; and d. For a dispensary, a statement confirming whether delivery service of cannabis to any location outside the premises will be provided and the extent of such service, and in the event delivery is provided, a detailed delivery plan detailing how the dispensary will comply with all requirements of this chapter, MAUCRSA, and any other applicable state or local laws.

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update)

2. Authorization for the local licensing authority and community development director to seek verification of the information contained within the application and authorization for the chief of police to conduct background checks of the owner(s).

3. Proof of the nature of the cannabis business’s organizational status, such as articles of incorporation, by-laws, organizational minutes, partnership agreements, and other documentation may be required by the city.

4. Proof that the applicant is, or will be, entitled to possession of the premises for which application is made. Evidence of lawful possession consists of properly executed deeds of trust, leases, evidence of ownership of the licensed premises, or other written documents acceptable to the local licensing authority. The applicant must disclose whether, to the applicant’s knowledge, the premises is located on land that is owned by the United States and held in trust for any federally-recognized Indian tribe or any member of the tribe, or that is subject to a restriction on alienation imposed by the United States.

5. The applicant shall provide any additional information that the local licensing authority may request to process and fully investigate the application. Failure to provide such additional information may result in denial of the application.

D. If the application is incomplete, the applicant shall have an opportunity to cure the incompleteness within thirty days of written notice of incompleteness by the local licensing authority.

F. The local licensing authority shall issue a license to any applicant who has submitted a complete application and paid the application fee unless the local licensing authority finds that good cause exists to deny the license. A local license shall not be issued to a dispensary that is proposed to be located south of Interstate 10 unless the application for the license was made on or before November 23, 2016.

G. Upon the approval of a local license, and as a condition of the license becoming effective, the applicant shall pay to the city the regulatory licensing fee, if any, established by resolution of the city council.

H. A local license issued pursuant to this chapter shall specify the date of issuance, the period of licensure, the name of the licensee, the address of the licensed premises, and the nature of the cannabis business licensed. All local licenses are valid for one year. (Ord. 800 § 1, 2017)

5.88.045 Conditions of approval, administrative rules.

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update) A. The local licensing authority may place conditions upon the approval of any local license which are, in the opinion of the local licensing authority, reasonably related to the protection of the health, safety and welfare of the neighborhood in which the proposed licensed premises is to be located and of the general public.

B. The local licensing authority is authorized to make rules, policies and procedures consistent with the intent and spirit of this chapter concerning the applications, the application process, the information required of applicants, the application procedures, and the administration and procedures to be used and followed in the application process. (Ord. 800 § 1, 2017)

5.88.050 Changes and modifications of local licenses.

In addition to any requirements in Chapters 9.108 and 9.72 of this code, the following requirements apply for transfers of or changes to the ownership of a licensee, modifications to a licensed premises, and changes of location of a cannabis business.

A. Change of Ownership. Subsequent to the issuance of a local license, the licensee shall report any transfer of ownership in the cannabis business to the local licensing authority on forms prescribed by the local licensing authority and pay the processing fee established by resolution of the city council. A change of ownership that solely involves a previously approved owner no longer being an owner of the cannabis business shall be reported to the local licensing authority within thirty days of the change. A change in ownership that involves adding a new owner to the previously approved ownership must be approved by the local licensing authority in advance. All proposed new owners must submit to a background check conducted by the chief of police. The local licensing authority shall approve the change in ownership unless there is good cause to deny the change.

B. Modification of Licensed Premises. A licensee shall not make physical changes, alterations, or modifications to the licensed premises that materially or substantially alters the licensed premises from the plans approved by the local licensing authority without the prior written approval of the local licensing authority. Material changes include, but are not limited to: an increase or decrease in the total square footage of the licensed premises or the addition, sealing off, or relocation of a wall, common entryway, doorway, or other means of public ingress and/or egress.

Applications for modifications of licensed premises shall be made on forms prescribed by the local licensing authority and shall be accompanied by the processing fee established by resolution of the city council. The local licensing authority shall approve the proposed modification if it meets all requirements of this chapter and all other applicable state laws and city codes and ordinances, and will not present a threat to the public health, safety or welfare.

C. Change of Location.

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update)

1. A licensee may apply to the local licensing authority to change the location previously approved for such local license to any other place in Cathedral City, but it is unlawful to cultivate, manufacture, distribute, test, store or sell cannabis at any such place or location until express permission to do so is granted by local licensing authority and the city has issued a conditional use permit to the licensee at the new location.

Applications for changes of location shall be made on forms prescribed by the local licensing authority and be accompanied by the processing fee established by resolution of the city council.

2. In permitting a change of location, the local licensing authority may change any existing conditions of approval on the license and/or add new conditions of approval as determined appropriate by the local licensing authority.

3. The local licensing authority may permit a dispensary that is located south of Interstate 10 to relocate to a new location north or south of Interstate 10. A dispensary that is located north of Interstate 10 may only relocate to a new location that is north of Interstate 10. (Ord. 800 § 1, 2017)

5.88.055 Renewal of a local license.

A. A cannabis business that desires to renew its license shall apply for the renewal no less than thirty days prior to the local license’s expiration date. If the cannabis business files a renewal application within thirty days prior to expiration, the cannabis business must provide a written explanation detailing the circumstances surrounding the late filing. The local licensing authority may accept or reject such late filing in its discretion. The local licensing authority may elect to administratively continue a local license past its expiration date, provided that the licensee has submitted a renewal application that is pending final action.

B. An application for renewal shall be submitted on forms provided by the local licensing authority, accompanied by the processing fee established by resolution of the city council. The following information shall be submitted as a part of the renewal application:

1. An up to date list of the employees, independent contractors, and volunteers working at the licensed premises.

2. Proof that no changes to the ownership of the licensee has occurred since last approved by the local licensing authority.

3. Proof that the licensee is still entitled to the possession and use of the licensed premises.

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update)

4. For licensees that have ten or more full-time equivalent non-supervisorial employees, proof that the licensee has entered into and abided by the terms of a labor peace agreement.

5. Any other information that the local licensing authority deems necessary to determine whether to renew the local license.

C. All owners of the cannabis business must be fingerprinted each year at renewal if required in the discretion of the local licensing authority.

D. The local licensing authority shall renew a local license if the licensee has submitted a complete application and paid the application processing fee, unless the local licensing authority finds that good cause exists to deny the license renewal.

Notwithstanding the foregoing, the local licensing authority in its discretion may elect not to renew any local license if it determines that the licensed premises has not been used for a cannabis business, without reasonable cause as determined by the local licensing authority, for a period of at least one year.

E. Unless administratively continued pursuant to subsection A, a local license is immediately invalid upon expiration and the cannabis business shall cease operations.

If a local license expires, the local licensing authority may approve a renewal of the expired license at any time up to three months from the expiration date of the license.

After the license has been expired for three months, the license may not be renewed by the local licensing authority, and the holder of the expired license must apply for and obtain a new cannabis license to resume operations. (Ord. 817 § 1, 2018; Ord. 800 § 1, 2017)

5.88.060 Appeal of decision on local license.

Any decision regarding the local licensing authority’s approval, conditional approval, denial, of an initial local license, renewal thereof, or a change to the license requested under Section 5.88.050 may be appealed to the city council in accordance with the provisions of Section 2.04.100 et seq., of this code. (Ord. 800 § 1, 2017)

5.88.065 Cannabis business operational requirements.

All cannabis business must comply with the requirements set forth in this section.

A. General Obligation to Operate in Compliance. A cannabis business shall operate in compliance with all applicable state and local laws and regulations governing cannabis businesses.

B. General Obligation to Pay Taxes. A cannabis business must pay all applicable taxes pursuant to federal, state, and local law, including but not limited to, the cannabis

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update) tax required by Chapter 3.48, state and local sales and use taxes, and state excise taxes.

C. General Obligation for Compliant Facilities. The licensed premises shall fully comply with all applicable rules, regulations, and laws including, but not limited to, building and safety codes, and the Americans with Disabilities Act.

D. Background Checks. Prior to commencing any work within a cannabis business, any individual who will work within a licensed premises or have access to cannabis or cannabis-products must submit to a background check that demonstrates they are of good moral character and receive a cannabis industry worker identification card from the city. The background check must include fingerprinting for criminal history conducted by the Cathedral City police department or any other entity determined to be satisfactory by the Cathedral City police department. Each cannabis industry worker identification card issued shall expire after two years unless renewed. A decision to deny or not renew a cannabis industry worker identification card may be appealed in accordance with Section 5.88.060. A cannabis industry worker identification card may be revoked or suspended by the city at any time, in accordance with the procedures in Chapter 13.150 of this code, if it is determined that the card holder is no longer of good moral character. A cannabis business shall not employ or utilize the services of any individual who is required to have a city-issued cannabis industry worker identification card less that individual possesses a valid city-issued cannabis industry worker identification card at all times, regardless of whether the individual is an employee, independent contractor, or volunteer. The city may charge a fee to recover its reasonable costs of processing and issuing cannabis industry worker identification cards in an amount established by resolution of the city council.

1. The individual’s complete name, address, and last known telephone number;

2. The individual’s hire date and, if applicable date of termination;

3. A copy of the individual’s city-issued cannabis industry worker identification card;
The register and required records must be made available for inspection by any city officer or official for purposes of determining compliance with the requirements of this chapter during standard business hours of the licensed facility or at any other reasonable time.

F. Employees and Volunteers Age Requirement. A cannabis business shall not employ an individual less than twenty-one years of age, nor may a cannabis business

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update) permit an individual less than twenty-one years of age to volunteer at the cannabis business. Notwithstanding the foregoing, a cannabis business may employ and allow persons eighteen years of age or older to volunteer at the cannabis business if the business holds an M-license from the state and the state expressly permits such persons to work within the business.

G. Age Restrictions. A cannabis business may not permit an individual less than twenty-one years of age to enter, or be within, its licensed premises, except that a cannabis business with an M-license from the state may allow persons eighteen years of age or older within the licensed premises if they are an ID card holder or qualified patient with physician’s recommendation from a licensed physician.

H. Secure Storage of Product. Cannabis and cannabis products possessed by a cannabis business shall be kept and stored in a secured manner at all times.

I. Cannabis Consumption on Licensed Premises. Smoking, vaporizing, ingesting, or otherwise consuming cannabis and cannabis products at a licensed premises is prohibited, except on the premises of a licensed dispensary in accordance with Section 5.88.070(K). “Licensed premises” as used in this subsection includes the actual building, as well as any accessory structures, common areas and parking areas. A sign shall be posted at each entrance to a licensed premises that clearly and legibly states, “Smoking, vaporizing, ingesting, or otherwise consuming cannabis or cannabis products on these premises or in their vicinity is prohibited and a violation of the Cathedral City Municipal Code.”
J. Prohibition on Alcohol and Tobacco Sales, Distribution, or Consumption on Licensed Premises. A cannabis business shall not sell, provide, store, or distribute any alcoholic beverages or tobacco products, or allow such products to be consumed on the licensed premises.

K. On-Site Signage. On-site signage for a cannabis business that is viewable from the exterior of the cannabis business shall comply with all local signage laws applicable to the licensed premises, including Chapter 9.62 of this code. Signage may not be designed to appeal to children, or contain any false or misleading statements, or make any misrepresentations.

L. Advertising. A cannabis business shall not advertise in a manner intended to encourage persons under twenty-one years of age to consume cannabis or cannabis products. It shall be unlawful for any cannabis business to make any claims that a product is safe because it is tested. All advertisements, including off-site advertising signs, shall comply with Chapter 15 of MAUCRSA.

M. Display of License. A cannabis business shall display a copy of its local license issued pursuant to this chapter in a conspicuous place at or near the entrance to the licensed premises.

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update) N. No Physician Evaluations on Licensed Premises. A cannabis business shall not permit a physician to evaluate potential medicinal cannabis patients or to provide a physician’s recommendation for medicinal cannabis within its licensed premises.

Cannabis businesses shall not offer or provide any form of remuneration to a physician who provides physician’s recommendations for medicinal cannabis.

O. Community Relations Designee. A cannabis business must provide the community development director with the name, phone number, facsimile number, and email address of an on-site community relations representative or staff member or other representative to whom the city can provide notice if there are operating problems associated with the cannabis business or refer members of the public who may have complaints or concerns regarding the cannabis business. The cannabis business shall also provide this contact information to all neighboring businesses located within one hundred feet of the cannabis business, as measured in a straight line without regard to intervening structures, between the front doors of each establishment.

P. Seed to Sale Tracking Required. Until such a time that the state of California fully implements the track and trace program required by Section 26067 of the Business and Professions Code, a cannabis business must utilize seed to sale software, third- party software that tracks all sales, transfers, purchases, receipts, deliveries of cannabis and cannabis products. The software must be capable of producing electronic shipping manifests, tracking all cannabis inventory in possession of the cannabis business, promptly identifying a discrepancy in the stock, and tracking cannabis from the end purchaser back to its source in the event of a serious adverse event.

Q. Accurate Weights and Measures. Scales and weighing mechanisms used by a cannabis business to weigh non-waste products must be able to weigh to within 1/100th of a gram, shall be maintained in good working order and shall be subject to annual inspection by either a Riverside County agricultural commissioner’s office weights and measures official or a licensed scale company.

R. Waste Disposal.

1. Chemical, Dangerous and Hazardous Waste. Disposal of chemical, dangerous or hazardous waste must be conducted in a manner consistent with federal, state and local laws, regulations, rules or other requirements. This may include, but is not limited to, the disposal of all pesticide or other chemicals used in the cultivation process, certain solvents or other chemicals used in the production of cannabis concentrate.

2. Cannabis Waste. Cannabis waste must be made unusable and unrecognizable prior to leaving the licensed premises by grinding it and incorporating it with fifty percent non-medicinal cannabis waste. If necessary to protect the health and safety of individuals working on a licensed premises, a cannabis business may grind the stalk of a cannabis plant outside of its licensed premises provided all grinding activities occur within twenty feet of the licensed premises and cannot be seen from any public street.

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update)

3. Composting. A cannabis business may compost cannabis waste onsite, in accordance with this provision and all other applicable laws, rules, and regulations.

S. General Sanitary Requirements. A cannabis business must ensure that its licensed premises are maintained in a sanitary manner and activities on its licensed premises are conducted in a sanitary manner.

1. All facilities of a cannabis business must have adequate and sufficient access to bathrooms and hand-washing facilities with running water at a suitable temperature.

2. Hand-washing facilities shall be located where good sanitary practices require workers to wash or sanitize their hands, and provide effective hand-cleaning and sanitizing preparations and sanitary towel service or suitable drying devices.

3. All workers that engage in the preparation or dispensing of edible cannabis products must comply with the provisions of all relevant state and local laws regarding the preparation, distribution, and sale of food.

T. Security Requirements. The licensed premises of a cannabis business must comply with all of the following security requirements:

1. Video Surveillance. The licensed premises must be equipped with a video surveillance system that meets all of the requirements set forth in this subsection. a. Security cameras and digital storage of recordings shall be maintained in good condition and used in an on-going manner, twenty-four hours per day, seven days per week.
b. The security system must maintain at least one hundred twenty concurrent hours of digitally recorded video for each security camera in the licensed premises.

Security footage should be stored in an MPEG4, MJPEG, H.264, or another format approved by the local licensing authority in writing.
c. Security cameras must provide adequate and sufficient coverage for the facility, which must include, but need to be limited to, all limited access areas, all areas of ingress and egress, point of sale, the public areas, storage areas, and any other areas as required by this chapter and the MAUCRSA.
d. The video surveillance system must be equipped with a failure notification system that provides prompt notification to the manager of record of the licensed premises of the cannabis business of any surveillance interruption or complete failure of the surveillance system that lasts longer than fifteen minutes. e. The video surveillance system shall have sufficient battery backup to support a minimum of fifteen minutes of recording in the event of a power outage.

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update)

2. Alarm System. The licensed premises shall have an audible interior and exterior security alarm system installed on all perimeter entry points and perimeter windows, operated, and monitored by a security company licensed by the Department of Consumer Affairs, Bureau of Security and Investigative Services.

3. Signage Requirement. The licensed premises must comply with the following signage requirements.
a. A sign shall be posted in a conspicuous place near each point of public access which shall be not less than twelve inches wide and twelve inches long, composed of letters not less than one inch in height, stating “All Activities Monitored by Video Camera.”
b. Limited access areas shall be clearly identified by the posting of a sign which shall be not less than twelve inches wide and twelve inches long, composed of letters not less than one-half inch in height, which shall state, “Limited Access Area— Authorized Personnel Only.”

4. Lighting. The business entrance(s) and all window areas shall be illuminated during evening hours. The cannabis business shall comply with the city’s lighting standards regarding fixture type, wattage, illumination levels, and shielding.

5. Commercial-Grade Locks. All points of ingress and egress to a licensed premises shall ensure the use of commercial-grade, nonresidential door locks or window locks.

6. Notification of Local Licensing Authority and Law Enforcement. A cannabis business shall notify the local licensing authority and the appropriate law enforcement authorities within twenty-four hours after discovering any of the following:
a. Significant discrepancies identified during inventory; b. Diversion, theft, loss, or any criminal activity involving the dispensary or any employee or agent of the dispensary;
c. The loss or unauthorized alteration of records related to cannabis, cannabis patients, primary caregivers, or dispensary employees or agents; or d. Any other breach of security.

U. Subletting Prohibited. Licensees are not authorized to sublet any portion of a licensed premises for any purpose, unless all necessary applications to modify the existing licensed premises to accomplish any subletting have been approved by the local licensing authority.

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update) V. Recordkeeping. Cannabis businesses shall keep and maintain all records specified in Chapter 16 of the MAUCRSA and shall make the same available for inspection and examination of the local licensing authority or its duly authorized representatives during standard business hours of the licensed facility or at any other reasonable time. Cannabis businesses are required to exercise due diligence in preserving and maintaining all required records.

W. Transactions. Licensees shall only do business with cannabis businesses that licensed or permitted to do business in their respective jurisdictions. (Ord. 2827 § 1, 2019; Ord. 807 §§ 1, 2, 2018; Ord. 800 § 1, 2017)

5.88.070 Dispensary operational requirements.

In addition to the operation requirements in Section 5.88.065, a dispensary must comply with the requirements set forth in this section.

A. Limited Hours of Operation. A dispensary may only be open to the public and engage in sales between the hours of eight a.m. and ten p.m.

B. Product Not Visible To Public. The display of cannabis and cannabis products for sale shall not be visible from outside the licensed premises.

C. Age Restricted Entry. A dispensary may not permit an individual less than twenty-one years of age into the licensed premises, except a dispensary with an M- license from the state may permit an individual aged eighteen years or older into the licensed premises if the dispensary verifies the individual is an ID card holder or qualified patient with a physician’s recommendation.

D. Cannabis Paraphernalia Sales. Dispensaries may sell or otherwise provide equipment, supplies, and paraphernalia used to consume cannabis and cannabis products.

E. Electronic Point-of-Sale System Required. Dispensaries must have an electronic point of sale system that is either part of their seed to sale software or integrates with their seed to sale software. The electronic point of sale system must be capable of producing an electronic or automatic paper record for all transactions associated with any product sold, rented, or otherwise provided to the customer.

F. No Sales of Expired Product. A dispensary may not sell any expired products, cannabis or cannabis products. A dispensary shall not alter, edit, or adjust in any manner an expiration date on any item or product once affixed by its manufacturer.

G. Acceptable Forms of Payment. The local licensing authority may adopt regulations that prohibit a dispensary from accepting certain forms of payment from customers for cannabis and cannabis products. A dispensary may accept cash

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update) payments unless the local licensing authority has adopted a regulation prohibiting the acceptance of cash.

H. Handling of Edible Cannabis Products. A dispensary that possesses edible cannabis products shall comply with the provisions of all relevant state and local laws regarding the storage, handling, and sale of food.

I. Sale of Untested Products. A dispensary may sell cannabis or cannabis products that have not been tested by a testing laboratory from January 1, 2018 until such time as determined by the state. Thereafter, all cannabis and cannabis products sold by a dispensary must be tested by a testing laboratory prior to sale to a purchaser in accordance with MAUCRSA.

J. Delivery of Cannabis and Cannabis Products. A dispensary that provides delivery service shall comply with the following requirements:

1. The dispensary shall not delivery cannabis or cannabis products to any location outside of California or to any location within California where the delivery of cannabis or cannabis products has been prohibited by the city or county.

2. The delivery service must be approved by the local licensing authority as a part of the licensing process. The deliveries must be conducted in accordance with any relevant state laws, this code, any applicable local laws in the delivery location, and any conditions imposed upon the license.

3. The dispensary must keep in place standard operating procedures that ensure the safety and security of those individuals engaging in delivery and the and security of all cannabis being delivered, including procedures to prevent diversion.

4. A dispensary may only deliver cannabis to a specific street address requested by the purchaser. Deliveries to public parks and schools are expressly prohibited.

5. Upon arrival at the delivery address and prior to transferring any cannabis or cannabis products, the delivery person must verify and confirm that the identity of the recipient is the same as the person who requested the delivery and that the person is either twenty-one years of age or a qualified patient or primary caregiver.

6. A dispensary shall report to the local licensing authority and local law enforcement any vehicle accidents, diversions, losses, or other reportable incidents such as thefts or suspicious activity, that occur during transportation and delivery, within twenty-four hours.

7. The delivery shall keep a delivery manifest that includes the following information:
a. All cannabis that will be transported, accurately inventoried;

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update) b. Departure date and approximate time of departure; c. Arrival date and approximate time of arrival;
d. Name, address, local license number and CUP number of the originating cannabis business;
e. Name and address of the individual requesting the delivery; f. Delivery vehicle make, model, and license plate number; and g. Name and signature of the individual transporting the cannabis.

K. Consumption of Cannabis and Cannabis Products on Premises. Cannabis and cannabis products may be smoked, vaporized, ingested or otherwise consumed on the licensed premises of a dispensary, subject to the following regulations:

1. Access to the area where cannabis consumption is allowed must be restricted to persons twenty-one years of age and older. The dispensary shall be responsible for checking identification and ensuring that underaged individuals do not enter.

2. Cannabis consumption shall not be visible from any place where persons under the age of twenty-one are permitted.

3. Cannabis consumption must occur within the interior building space of the dispensary. Consumption may not occur on patios, in parking areas, or in any other space that is not fully enclosed.

4. The cannabis business must install and maintain in good working order an odor control system in accordance with Section 9.108.080(A)(1). Odors caused by the consumption of cannabis at the dispensary must not be detectable from any public place.

5. Cannabis consumption shall occur in a space within the licensed premises that is separate from the space that is used to sell cannabis and cannabis products for on- site or off-site consumption.

6. Only cannabis and cannabis products purchased from the dispensary during the same visit by the customer may be consumed within the dispensary. Individuals may not bring cannabis or cannabis products into a dispensary for the purposes of consumption.

7. Cannabis and cannabis products that are only partially consumed on the premises of the dispensary must be repackaged in accordance with Section 5.88.095 prior to leaving the dispensary.

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update)

8. Representatives of the city, including, but not limited to, police officers, must be permitted to enter the licensed premises, including all areas where consumption is allowed, at any time during the regular business hours of the cannabis business and/or whenever consumption is occurring on-site. (Ord. 807 § 3, 2018; Ord. 800 § 1, 2017)

5.88.075 Manufacturing site operational requirements.

In addition to the operational requirements in Section 5.88.065, manufacturers must comply with the requirements set forth in this section.

A. Edible Cannabis Products. Edible cannabis products shall be manufactured, packaged and labeled in compliance with MAUCRSA and any implementing regulations adopted by the state.

1. Edible cannabis products must be individually packaged and ready for sale by the manufacturer prior to sale or transfer to another cannabis business.

2. Any person that is involved in the manufacture of edible cannabis products must be a state certified food handler. The valid certificate number of such person must be on record at the manufacturing site where that individual produces edible cannabis products.

3. Any facility used by a cannabis business to manufacture edible cannabis products shall be constructed, operated and inspected in accordance with the applicable building code and applicable food safety requirements.

4. A cannabis business that manufactures edible cannabis products must comply with the provisions of all relevant state and local laws regarding the preparation, distribution, and sale of food; which shall include, but not be limited to, hand-washing requirements, use of gloves for packaging, and policies prohibiting individuals suffering from symptoms associated with communicable diseases or infections from engaging the production of edible cannabis products.

B. Expiration Date. A cannabis business engaged in the manufacture of cannabis products, including an edible cannabis product, that is perishable shall assign an expiration-date or use-by date, whichever is appropriate, to all perishable cannabis products. Once an expiration date or use-by date is assigned to cannabis products, it shall be unlawful for a person to alter that date or affix a new label with a later use-by or expiration date.

C. Extraction Requirements.

1. A manufacturer engaged in extraction may only engage in type of extraction approved by the local licensing authority in its application for a local license. The

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update) licensee shall not make any modifications to the method of extraction without first obtaining a modification of its local license.

2. Within the limitations set forth by state law, a cannabis business that extracts cannabis or produces cannabis concentrate using a solvent must use a professional- grade, closed-loop extraction system capable of recovering the solvent used and must only use a solvent that is permissible under the MAUCRSA and the manufacturer’s state license. (Ord. 800 § 1, 2017)

5.88.080 Cultivation operational requirements.

In addition to the operational requirements in Section 5.88.065, a cultivator must comply with the requirements set forth in this section.

A. Cultivators must comply with the Federal Worker Protection Standard (40 CFR 170).

B. The cultivation of cannabis must be conducted in accordance with all applicable federal, state, and local laws and regulations governing the use of pesticides.

C. The use of pesticides must be recorded in a log in accordance with 16 CCR Section 1970.

D. The cultivation of cannabis shall be conducted in a secure manner and shall not be visible from a public right-of-way. As used in this subsection D, the term “visible” means capable of being seen without visual aid by an individual of normal acuity.

E. A licensee may not distribute, sell, dispense, or administer cannabis on the licensed premises of a cultivation site except for as authorized by the MAUCRSA and other applicable state law. (Ord. 800 § 1, 2017)

5.88.085 Distribution operational requirements.

In addition to the operational requirements in Section 5.88.065, distributors shall comply with the requirements of this section.

A. Quality Assurance and Testing.

1. Prior to distribution, the distributor shall inspect cannabis for quality assurance as required by MAUCRSA and to ensure the labeling and packaging of the cannabis and cannabis products conforms to the requirements of this chapter and MAUCRSA.

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update)

2. Distributors shall ensure that cannabis and cannabis products in its custody are tested by a licensed testing laboratory in accordance with MAUCRSA prior to distributing the cannabis and cannabis products to a dispensary.

B. Transportation.

1. A distributor may not transport cannabis to or from another cannabis business outside the state of California.

2. An individual may only transport cannabis on behalf of a distributor if the individual:
a. Is an employee of the distributor and is listed on the distributor’s employee list; b. Possesses a copy of the distributor’s local license; and c. Possesses a copy of a transportation manifest that meets all the requirements of MAUCRSA and subsection (B)(3).

3. Transportation Manifest.
a. A cannabis business must create a transportation manifest in accordance with this chapter for every transport and delivery of cannabis. A cannabis business must ensure that a copy of the appropriate transportation manifest accompanies every transport and delivery of cannabis and is kept for retention by the originating cannabis business.
b. If a cannabis businesses makes multiple pick-ups or deliveries during a single trip, then a separate transportation manifest shall be required for each pick-up or delivery.
c. A transportation manifest will be deemed sufficient if it accurately reflects:
i. All cannabis that will be transported to the address reflected on the manifest, accurately inventoried to include the weight of any raw cannabis or cannabis concentrate and the number of individual cannabis products; ii. Departure date and approximate time of departure; iii. Arrival date and approximate time of arrival;
iv. Name, address, local license number and CUP number (or, for cannabis businesses outside of Cathedral City, a similar number issued by the cannabis business’s local jurisdiction) of the originating cannabis business;

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update) v. Name, address, local license and CUP number (or, for cannabis businesses outside of Cathedral City, a similar number issued by the cannabis business’s local jurisdiction) of the receiving cannabis business;
vi. Delivery vehicle make, model, and license plate number; and vii. Name and signature of the individual transporting the cannabis.

4. A cannabis business with a local license may only transport cannabis between licensed premises by way of motor vehicle, unless the transport is between two licensed premises that are within the same building or at the same street address.

5. A cannabis business with a local license shall transport cannabis in a manner that is secure and not visible from outside the vehicle.

6. An employee transporting cannabis pursuant to this chapter must take a direct route from the distributor to the destination of the other cannabis business(es) and may not make any stops other than those necessary in the ordinary course of business.

C. Bonding. Transporters shall comply with applicable state laws and regulations, if any, requiring that they be bonded and insured.

D. Preparation of Cannabis and Cannabis Products for Transportation.

1. All cannabis and cannabis products must be appropriately and completely tracked in a cannabis business’s inventory tracking system prior to transportation to another cannabis business. This must include verifying and documenting the weight of any raw cannabis or cannabis concentrate and the number of individual cannabis products being transported.

2. Preparations for the transport of cannabis and cannabis products must be conducted in a limited access area on camera.

E. Receiving Cannabis and Cannabis Products.

1. A distributor may not receive cannabis or cannabis products unless accompanied by a transportation manifest that meets all of the requirements set forth in subsection (B)(3). The distributor must retain copies of transportation manifests associated with all deliveries of cannabis.

2. Immediately upon receipt, all cannabis and cannabis products must be appropriately and completely tracked in the distributor’s inventory tracking system. This must include verifying and documenting the weight of any raw cannabis or cannabis concentrate and the number of individual cannabis products being transported.

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update) F. Perishable Cannabis Products. A cannabis business must provide adequate refrigeration when engaged in the transportation of perishable cannabis products. (Ord. 800 § 1, 2017)

5.88.090 Testing laboratory operational requirements.

In addition to the operational requirements in Section 5.88.065, a testing laboratory shall comply with the requirements of this section.

A. No Other Ownership. An owner of a testing laboratory shall not have an ownership or other direct financial interest in any other commercial cannabis business license type.

B. Accreditation. A testing laboratory shall obtain and maintain ISO/IEC 17025 accreditation.

C. Operating Procedures. A testing laboratory shall adopt and adhere to standard operating procedures to ensure the reporting of accurate test results, including, but not limited to, equipment, calibration, and methodology standards, that are consistent with its ISO/IEC 17025 accreditation.

1. A testing laboratory shall obtain samples of cannabis and cannabis products for testing in accordance with a statistically valid method designed to ensure that a sample is representative of the whole. Sampling methods should have at least a ninety- five percent confidence rate.

2. A testing laboratory shall destroy and safely dispose of the remains of any samples of cannabis or cannabis products tested upon completion of the analysis and the expiration of any retention time pursuant its standard operating procedures.

3. A testing laboratory shall maintain all testing results as a part of their respective business records and must keep such records pursuant to Section 5.88.065(V). (Ord. 800 § 1, 2017)

5.88.095 Packaging and labeling.

A. Compliance with State Law. All packaging and labeling of cannabis and cannabis products by a cannabis business must, at a minimum meet the requirements of Chapter 12 of MAUCRSA and any implementing regulations, as the same may be amended from time to time or superseded or replaced by subsequent state legislation or by any state department or division.

B. Tamper-Evident, Child-Resistant Packaging Required. Prior to delivery or sale at a dispensary to a purchaser, cannabis and cannabis products shall be labeled and

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update) placed in a resealable, tamper-evident, child-resistant package and shall include a unique identifier for the purposes of identifying and tracking cannabis and cannabis products.

C. Cannot Be Attractive to Children. Cannabis packaging and labeling shall not be designed to appeal to children, including, but not limited to, cartoon characters or similar images.

D. State-Mandated Warnings and Information. All cannabis and cannabis product labels and inserts shall include the state-mandated warnings and information contained in Business and Professions Code Section 26120(c). Notwithstanding the foregoing, during the period of time that the state permits untested cannabis and cannabis products to be sold to purchasers, all cannabis and cannabis products must have a label affixed to each package that clearly states “This product has not been tested as required by the Medicinal and Adult-Use Cannabis Regulation and Safety Act” and must comply with any other labeling requirements imposed by the state. (Ord. 800 § 1, 2017)

5.88.100 Visitor requirements.

A. Visitors. Any individual permitted to enter a limited access area who is not an person that has undergone a background check in accordance with this chapter and is listed on the licensed premises worker list shall be considered a visitor. Notwithstanding the foregoing, state and local employees, or their official designees, shall not be considered a visitor provided the individual is on the licensed premises for purposes of official government business.

B. Visitors Identification and Record Requirements. Prior to permitting a visitor into a limited access area, a cannabis business must check the individual’s valid government issued identification. The visitor shall be required to sign the cannabis business’s visitor log, which must include the individual’s name, date of entry, and purpose for entry.

C. Visitors Must Be at Least Twenty-One Years of Age. A cannabis business may not permit a visitor who is less than twenty-one years of age to enter a limited access area.

D. Visitors Prohibited Conduct. A visitor shall not be permitted to engage in the cultivation, preparation, processing, manufacturing, packaging, labeling, transportation, or sale of cannabis. (Ord. 800 § 1, 2017)

5.88.105 Limitations on city’s liability.

To the fullest extent permitted by law, the city shall not assume any liability whatsoever, with respect to approving any local license pursuant to this chapter or the

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update) operation of any cannabis business approved for such local license pursuant to this chapter. As a condition of approval a local license granted under this chapter, the applicant or its legal representative shall:

A. Execute an agreement indemnifying and holding the city harmless from any and all claims, damages, legal or enforcement actions, including, but not limited to, any actions or claims associated with violation of federal law associated with the operation of the cannabis business and delivery of cannabis as provided in this chapter; and B. Maintain insurance in the amounts and of the types that are acceptable to the city pursuant to guidelines and policies set forth by the local licensing authority; and C. Name the city as an additionally insured on all city-required insurance policies; and
D. Agree to defend, at its sole expense, any action against the city, its agents, officers, and employees related to the approval of a local license or conditional use permit or the operation of the cannabis business; and
E. Agree to 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 (or federal enforcement action) related to the city’s approval of a local license or conditional use 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. (Ord. 800 § 1, 2017)

5.88.110 Inspections.

A. Recordings made by security cameras at any cannabis business shall be made immediately available to the local licensing authority upon verbal request for law or regulatory enforcement and criminal investigation purposes. Such recordings shall be considered confidential and shall not be released to the public pursuant to Government Code Section 6254(f) without the consent of the licensee.

B. The local licensing authority shall have the right to enter all cannabis businesses from time to time unannounced for the purpose of making reasonable inspections to observe and enforce compliance with this chapter. Such inspections shall be limited to observing the licensed premises for purposes of determining whether the cannabis business is being operated or maintained in compliance with this code, state law, and other applicable laws and regulations. Any cannabis business licensed pursuant to this chapter may be required to demonstrate, upon demand by the local licensing authority that the source and quantity of any cannabis or cannabis products found upon the licensed premises is in full compliance with any applicable local or state law or regulation.

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update) C. The local licensing authority shall have the right to inspect records of medicinal cannabis patients and primary caregivers that have made purchases of medicinal cannabis or medicinal cannabis products from a dispensary for the sole purpose of determining whether any and all such individuals are qualified to make such purchases.

Such inspections of records shall not be used for any other purposes, nor shall the records be removed off-site by the city without a court order.

D. The local licensing authority may delegate an act required to be performed pursuant to this section to any code enforcement officer or official of the city, including, without limitation, the chief of police, the fire chief, the building official, the finance director, the city attorney, or any designee of such officers or officials.

E. Applicants and licensees must cooperate with the local licensing authority and his designees who are conducting inspections or investigations relevant to the enforcement of laws and regulations related to this chapter. (Ord. 800 § 1, 2017)

5.88.115 Enforcement.

The provisions of this chapter may be enforced by the local licensing authority by any means provided for in Title 13 of this code in addition to any and all other remedies, civil, equitable or criminal, afforded to the city under the law. The operation of a cannabis business in violation of this chapter or any conditions of approval placed on a licensee’s local license is hereby deemed to be a public nuisance. As provided for in Title 13 of this code, the local licensing authority may issue administrative, infraction or misdemeanor citations, institute a summary abatement of a public nuisance that poses an immediate threat to the public health and safety, and/or institute proceedings to suspend, modify or revoke a local license. (Ord. 800 § 1, 2017)

5.88.120 Civil fines.

A. A fine in an amount not to exceed two hundred fifty dollars for a first conviction of an offense;
B. A fine in an amount not to exceed five hundred dollars for a second conviction of the same offense within a twelve-month period of the date of the first offense; C. A fine in an amount not to exceed seven hundred fifty dollars for a third conviction of the same offense within a twelve-month period of the date of the first offense; and

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Attachment: Chapter 5.88 Cannabis Regulations (3205 : Cannabis Regulation and Tax Update) D. A fine of one thousand dollars for the fourth and subsequent convictions of the same offense within a twelve-month period of the date of the first offense. (Ord. 800 § 1, 2017)

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9.108.010 Purpose.

A. The purpose of this chapter is to regulate cannabis business land uses, as permitted by Section 26200 of the California Business and Professions Code, in a manner designed to minimize negative impacts on the city and neighboring uses, and promote the health, safety, morals, and general welfare of residents and businesses within the city.

B. This chapter is further adopted and established pursuant to the specific authority granted to Cathedral City in Section 7 of Article XI of the California Constitution and Section 26200 of the California Business and Professions Code. This chapter shall govern all cannabis businesses within the jurisdiction of Cathedral City. (Ord. 801 § 3, 2017)

9.108.020 Relationship to other laws.

A. In the event of any conflict between the provisions of this chapter and the provisions of MAUCRSA or any other applicable state or local law, the more restrictive provision shall control.

9.108.030 Definitions.

Unless otherwise defined herein or in Section 9.08.020 of this code, the terms in this chapter shall have the same meaning as set forth in the MAUCRSA and any rules promulgated pursuant thereto. In addition, the following terms shall be defined as follows:
“Enclosed locked structure,” means a structure that: (1) does not allow for the visibility of the interior from the outside; (2) is secured with a lock; (3) is completely surrounded on all sides by a wall; and (4) is roofed. Enclosed locked structures may include greenhouses, provided that only the roof of the greenhouse is made of transparent glass, and accessory buildings.

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Attachment: Chapter 9.108 Cannabis Land Use (3205 : Cannabis Regulation and Tax Update) “Excessive concentration” means either of the following: (1) for proposed dispensaries south of Interstate 10, the approval of the conditional use permit would result in more than twenty dispensaries being approved to operate south of Interstate 10; or (2) for proposed dispensaries north of Interstate 10, the proposed dispensary is located less than five hundred feet from another approved dispensary, measured in accordance with Section 9.108.070(C).
“Limited access area” means a building, room or other area that is part of the premises where cannabis is grown, cultivated, stored, weighed, displayed, packaged, or sold to other cannabis businesses with limited access to only authorized personnel. “Local license” means a license granted by the local licensing authority pursuant to Chapter 5.88 of this code.
“Local licensing authority” means the city manager or designee. “Medicinal and Adult-Use Cannabis Regulation and Safety Act” or “MAUCRSA” means Division 10 of the California Business and Professions Code. “Outdoors” means any location within the city that is not within an enclosed locked structure.
“Residential zone” means any zoning district listed in Division II of this title where any residential use other than a “caretaker’s residence” is permitted by right. “State law(s)” shall mean and include California Health and Safety Code Section 11362.5 (Compassionate Use Act of 1996); California Health and Safety Code Sections 11362.7 to 11362.85 (Medical Marijuana Program Act); MAUCRSA, and all other applicable laws and regulations of the state of California. “Youth center” means any facility that is operated by a public agency or non-profit entity with the sole purpose of providing educational and/or recreational services to minors.
(Ord. 801 § 3, 2017)

9.108.040 Conditional use permit required.

A. Where one or more types of cannabis businesses are listed as a conditionally permitted use in a zoning district in Division II of this Title 9 of the code, a cannabis business of the type conditionally permitted in the subject zone may only operate after obtaining a conditional use permit pursuant to this chapter and Chapter 9.72 of this code. No person may operate any cannabis business that is a conditionally permitted use without having first obtained a conditional use permit.

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Attachment: Chapter 9.108 Cannabis Land Use (3205 : Cannabis Regulation and Tax Update) B. All cannabis businesses must be operated in strict compliance with the terms, conditions, limitations and restrictions of the MAUCRSA, the provisions of Chapter 5.88, this chapter, Chapter 9.72 of this code, and all other applicable state and local laws and regulations, as well as the terms and conditions of its local license and conditional use permit.

C. The community development director is authorized to make policies and procedures consistent with the intent and spirit of this chapter concerning the applications, the application process, the information required of applicants, the application procedures and the administration and procedures to be used and followed in the application and hearing process.

D. Chapter 9.72 of this code shall govern and apply to conditional use permits for cannabis businesses applied for or obtained pursuant to this chapter unless this chapter expressly states otherwise. All requirements contained in this chapter shall be in addition to the applicable requirements of Chapter 9.72. (Ord. 801 § 3, 2017)

9.108.050 Conditional use permit application.

A. All applications for a conditional use permit shall be filed with the community development director on the official form supplied by the city and shall be accompanied by the application fee established by resolution of the city council, as may be amended from time to time.

B. An application for a conditional use permit shall include, but shall not be limited to, the following information:

1. Proof that the applicant has received a local license for the proposed premises, and the local license is in good standing, or a statement that the applicant is applying for a local license for the proposed premises concurrently with the conditional use permit application.

2. Confirmation that the proposed premises is not currently permitted by the state or county for the production of non-cannabis infused food products.

3. The address of the proposed cannabis business.

4. A site plan and floor plan of the cannabis business denoting all the use of areas of the cannabis business, including storage, employee areas, exterior lighting, restrooms, security cameras, areas of ingress and egress, signage, limited access areas, and restricted access areas, if included.

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Attachment: Chapter 9.108 Cannabis Land Use (3205 : Cannabis Regulation and Tax Update)

5. Plans and specifications for the interior of the proposed premises if the building to be occupied is in existence at the time of the application. If the building is not in existence or alteration to the building is required at the time of the application, the applicant shall file a plot plan and a detailed sketch for the interior and shall further submit an architect’s drawing of the building to be constructed.

6. The name and address of the person that owns the real property upon which the cannabis business is to be operated. In the event the applicant does not legally own the property, the application must be accompanied by a notarized acknowledgement from the person that owns the property that a cannabis business will be operated on his or her property.

7. A description of the design of the proposed premises evidencing that the design conforms to applicable city laws.

8. For a Cultivation Site or Manufacturing Site.
a. An environmental plan indicating how cultivation and/or manufacturing will be conducted in accordance with state and local laws related to hazardous material disposal, land conversion, grading, electricity usage, water usage, and agricultural discharges.
b. An emergency response plan which complies with Title 8 of this code and California Fire Code Section 401, and sets out standard operating procedures to be followed by all individuals in case of a fire, chemical release, chemical spill, or other emergency. c. A description of the source of power (electric utility company, solar, diesel generators), the size of the electrical service or system, and the total demand to be placed on the system by all proposed uses on-site.
d. For a cultivation site, verification of all water sources used by the proposed premises and verification that the proposed premises does not utilize water that has been or is illegally diverted from any stream, creek, or river. e. For a manufacturing site, a report from a professional engineer that details the type of equipment that will be used to extract cannabinoids from cannabis. If flammable gas, flammable liquefied gas, flammable and combustible liquids, or compressed carbon dioxide (CO2) are used for extraction, then the report must certify that only closed-loop extraction system(s), that are UL or ETL listed or have a sign off by a professional engineer, capable of recovering the solvent are utilized. f. For a manufacturing site, a separate diagram of any room where extraction occurs that details the location of the extraction equipment, areas of ingress and egress, emergency eye-wash station, any other fire suppression or emergency equipment required by Title 8 of this code, city and California building codes, fire codes, electrical codes and all other applicable laws.

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9. A statement in writing by the applicant that he or she certifies under penalty of perjury that all the information contained in the application is true and correct.

10. Authorization for the community development director to seek verification of the information contained within the application.

11. Any such additional and further information as is deemed necessary by the community development director to administer this section or this chapter.

C. The community development director and appropriate city staff shall review, verify and investigate all information on the application and prepare a report for the planning commission incorporating the findings of such investigation and verification, including, but not limited to, the suitability of the proposed location, and the applicant’s compliance with the requirements of this chapter, Chapter 5.88 and Chapter 9.72. (Ord. 801 § 3, 2017)

9.108.060 Findings for approval or denial of conditional use permit.

A. The planning commission shall not hold a public hearing on or approve any application for a conditional use permit to operate a cannabis business unless the applicant holds a local license in good standing.

B. In addition to the findings set forth in Section 9.72.010 of this code, a conditional use permit for a cannabis business shall only be granted subject to the following findings:

1. The cannabis business as well as all operations as conducted therein, fully comply with all applicable building, electrical, zoning and fire codes, accessibility requirements of the Americans with Disability Act, and all relevant city and state law; and

2. The cannabis business fully complies with and meets all operating criteria required pursuant to state laws, Chapter 5.88 of this code, any other provisions of this code, and any specific, additional operating procedures and measures as may be imposed as conditions of approval in the conditional use permit; and

3. The cannabis business will be located in a zoning district where cannabis businesses of the type proposed are conditionally permitted, and all of the applicable locational restrictions in Section 9.108.070 are satisfied.

4. For dispensaries, the issuance of a conditional use permit to the applicant will not result in or add to an excessive concentration of dispensaries and/or result in a need for additional law enforcement resources.

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Attachment: Chapter 9.108 Cannabis Land Use (3205 : Cannabis Regulation and Tax Update) C. The planning commission may deny an application for a conditional use permit if it determines that one or more of the findings required by Section 9.72.010 or subsection B of this section for the granting of a conditional use permit cannot be made.

D. Based on the information set forth in the application and city staff’s report and testimony presented at the public hearing, the planning commission may impose reasonable terms and conditions on the proposed cannabis business in addition to those specified in and required to be included in every conditional use permit granted under this chapter.
(Ord. 801 § 3, 2017)

9.108.070 Locational requirements.

A conditional use permit for a cannabis business shall not be approved unless the proposed cannabis business will be located in a zoning district in which cannabis businesses of the type proposed are conditionally permitted. In addition, a conditional use permit shall not be approved for a cannabis business unless all of the following locational requirements applicable to the type of cannabis business proposed are satisfied:

A. Dispensaries. No dispensary shall be or located:

1. Within six hundred feet of a school, day-care center, or youth center; or

2. Within two hundred fifty feet of East Palm Canyon Drive or a residential zone.

B. Cultivation, Manufacturing and Distribution Sites. No cultivation, manufacturing, or distribution site shall be located:

1. Within six hundred feet of a school, day-care center, or youth center; or

2. Within three hundred feet of a residential zone; or

3. Within two hundred fifty feet of East Palm Canyon Drive.

C. All distances specified in this section shall be measured in a straight line, without regard to intervening structures or topography, from the nearest point of the building or structure in which the cannabis business is, or will be located, to the following locations, or until the city limit is reached. If the cannabis business is, or will be located, in a multi- unit building, the distances shall be measured from the nearest point of the suite in which the cannabis business is or will be located.

1. Setbacks from schools, day-care centers and youth centers, shall be measured to the nearest property line of the parcel where such use is located.

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Attachment: Chapter 9.108 Cannabis Land Use (3205 : Cannabis Regulation and Tax Update)

2. Setbacks from East Palm Canyon Drive shall be measured to the nearest edge of the right-of-way for East Palm Canyon Drive.

3. Setbacks from residential zones shall be measured to:
a. The nearest point of any legally permitted structure located in a residential zone; or b. If there is land within a residential zone with no legally permitted structure, the measurement shall be to the nearest property line unless the nearest property line is within the public right-of-way, in which case the measurement shall be to the edge of the right-of-way furthest from the proposed cannabis business. (Ord. 801 § 3, 2017)

9.108.080 Conditions of approval.

A. All Cannabis Businesses. Every cannabis business conditional use permit shall include the following conditions of approval.

1. The premises must be equipped with an odor absorbing ventilation and exhaust system so that odor generated inside the cannabis business that is distinctive to its operation is not detected outside the cannabis business, anywhere on adjacent property or public rights-of-way, on or about any exterior or interior common area walkways, hallways, breeze-ways, foyers, lobby areas, or any other areas available for common use by tenants or the visiting public, or within any other unit located within the same building as the cannabis business. As such, cannabis businesses must install and maintain the following equipment or any other equipment which local licensing authority determines has the same or better effectiveness:
a. An exhaust air filtration system with odor control that prevents internal odors from being emitted externally; or
b. An air system that creates negative air pressure between the cannabis businesses’ interior and exterior so that the odors generated inside the cannabis business are not detectable outside the cannabis business.

2. The applicant or its legal representative shall:
a. Indemnify and hold the city harmless from any and all claims, damages, legal or enforcement actions, including, but not limited to, any actions or claims associated with violation of federal law associated with the operation of the cannabis business; defend, at its sole expense, any action against the city, its agents, officers, and employees related to the approval of a conditional use permit or the operation of the cannabis business; 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 (or federal enforcement action) related

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Attachment: Chapter 9.108 Cannabis Land Use (3205 : Cannabis Regulation and Tax Update) to the city’s approval of a conditional use permit, and to execute a separate agreement to this effect.
b. Maintain insurance in the amounts and of the types that are acceptable to the city pursuant to guidelines and policies set forth by the local licensing authority and name the city as an additionally insured on all city-required insurance policies.

3. All windows on the premises of the cannabis business shall be appropriately secured and cannabis securely stored.

4. All cannabis businesses shall comply with the city’s lighting standards including, without limitation, fixture type, wattage, illumination levels, shielding, and secure the necessary approvals and permits as needed.

5. All cannabis businesses and all equipment used in the conduct of the business, must be operated in compliance with all applicable state and local laws and regulations, including all building, electrical, and fire codes, and in compliance with the businesses’ state and local licenses.

6. From a public right-of-way, there should be no exterior evidence of the cannabis business except for any permitted on-site signage.

B. Manufacturing Sites. Every conditional use permit for a manufacturing site shall include the following conditions of approval:

1. All manufacturing of cannabis products shall occur in an enclosed locked structure.

2. Manufacturing activities shall only occur in the areas depicted on the floor plan submitted by the applicant and shall not exceed the square footage authorized pursuant to the conditional use permit.

3. If hazardous materials, flammable gas, flammable liquefied gas, flammable and combustible liquids, or other flammable material, as those terms are defined in CFC Section 202, are to be used in the processing of cannabis, then the provisions of CFC Section 407 shall be applicable where hazardous materials subject to permits under CFC Section 50 (Hazardous Materials) are located on the premises or where required by the fire department official.

4. Storage, use and handling of compressed gases in compressed gas containers, cylinders, tanks and systems shall comply with CFC Chapter 53, including those gases regulated elsewhere in the Cathedral City Municipal Code. Partially full compressed gas containers, cylinders or tanks containing residual gases shall be considered as full for the purposes of the controls required. Compressed gases classified as hazardous materials shall also comply with CFC Chapter 50 for general requirements and CFC Chapter 53 addressing specific hazards, including CFC Chapter 58 (Flammable Gases), CFC Chapter 60 (Highly Toxic and Toxic Materials), CFC Chapter 63 (Oxidizers,

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Attachment: Chapter 9.108 Cannabis Land Use (3205 : Cannabis Regulation and Tax Update) Oxidizing Gases and Oxidizing Cryogenic Fluids) and CFC Chapter 64 (Pyrophoric Materials). Prevention, control and mitigation of dangerous conditions related to storage, use, dispensing, mixing and handling of flammable and combustible liquids shall be in accordance with CFC Chapters 50 and 57.

5. Manufacturing sites are a Group F-1 (Factory Industrial Moderate-Hazard) Occupancy under the Fire Code. All new construction is required to be fire sprinkled per the Fire Code. For manufacturing sites that will be sited in an existing structure, an automatic sprinkler system shall be provided throughout all buildings containing a Group F-1 occupancy where one of the following conditions exists:
a. A Group F-1 fire area exceeds twelve thousand square feet. b. A Group F-1 fire area is located more than three stories above grade plane. c. The combined area of all Group F-1 fire areas on all floors, including any mezzanines, exceeds twenty-four thousand square feet.

C. Cultivation Sites. Every conditional use permit for a cultivation site shall include the following conditions of approval:

1. All cultivation of cannabis shall occur in an enclosed locked structure.

2. Cultivation activities shall only occur in the areas shown on the floor plan submitted by the applicant, and shall not exceed the square footage authorized pursuant to the conditional use permit.

3. Areas where cannabis is cultivated are wet locations, and the electrical system in such areas must comply with Title 8 of this code, Article 300.6(D) of the National Electric Code, city and California building codes, fire codes, electrical codes and all other applicable laws.

4. Cultivation sites are a Group F-1 (Factory Industrial Moderate-Hazard) Occupancy under the Fire Code. All new construction is required to be fire sprinkled per the Fire Code. For cultivation sites that will be sited in an existing structure, an automatic sprinkler system shall be provided throughout all buildings containing a Group F-1 occupancy where one of the following conditions exists:
a. A Group F-1 fire area exceeds twelve thousand square feet. b. A Group F-1 fire area is located more than three stories above grade plane. c. The combined area of all Group F-1 fire areas on all floors, including any mezzanines, exceeds twenty-four thousand square feet.

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Attachment: Chapter 9.108 Cannabis Land Use (3205 : Cannabis Regulation and Tax Update) D. Distribution Sites. Every conditional use permit for a distribution site shall include the following conditions of approval

1. Distribution sites shall store all cannabis and cannabis products in a locked safe room, safe, or vault and in a manner to prevent diversion, theft, and loss.

2. The storage of cannabis and cannabis products shall only occur in the areas shown on the floor plan submitted by the applicant, and shall not exceed the square footage authorized pursuant to the conditional use permit.
(Ord. 801 § 3, 2017)

9.108.090 Limitations on city’s liability.

To the fullest extent permitted by law, the city shall not assume any liability whatsoever, with respect to approving any conditional use permit pursuant to this chapter or the operation of any cannabis business approved for such permit pursuant to this chapter.
(Ord. 801 § 3, 2017)

9.108.100 Inspections.

A. Recordings made by security cameras at any cannabis business shall be made immediately available to the community development director upon verbal request for the purposes of determining compliance with this chapter and the cannabis business’ conditional use permit.

B. The community development director shall have the right to enter all cannabis businesses from time to time unannounced for the purpose of making reasonable inspections to observe and enforce compliance with this chapter and the cannabis business’ conditional use permit. Such inspections shall be limited to observing the premises for purposes of determining whether the cannabis business is being operated or maintained in compliance with this code, state law, and other applicable laws and regulations.

C. Applicants and permittees must cooperate with employees and investigators of the city who are conducting inspections or investigations relevant to the enforcement of this chapter. No applicant or permittee shall by any means interfere with, obstruct or impede the any city official from exercising their duties under the provisions of this chapter and all rules promulgated pursuant to it.
(Ord. 801 § 3, 2017)

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Attachment: Chapter 9.108 Cannabis Land Use (3205 : Cannabis Regulation and Tax Update)

9.108.130 Enforcement.

The operation of a cannabis business in violation of any conditions of approval or the provisions of this chapter or Chapter 9.72 is a violation of this code, and a public nuisance. The city may seek to remedy such violations by any means provided for in law or equity, including but not limited to the enforcement mechanisms and remedies provided for in Title 13 of this code, or take action to revoke the conditional use permit pursuant to Section 9.72.130.

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Attachment: Chapter 9.108 Cannabis Land Use (3205 : Cannabis Regulation and Tax Update)

Cathedral City City CouncilApril 20, 2022

Cathedral City City Council
April 20, 2022