CITY OF COMMERCE AGENDA REPORT
Item No.
TO: Honorable City Council
FROM: Economic Development and Planning Director
SUBJECT: Consideration of Rejection of Commercial Cannabis Permit Applicant Nos. 18-053 and 18-010 MEETING DATE: September 26, 2023
RECOMMENDATION:
City Staff recommends that the City Council formally reject applicants 18-053 and 18-010 based on failure to move forward and diligently process their respective development agreement applications.
BACKGROUND
Pursuant to Ordinance No. 700, which established a process by which qualified Commercial Cannabis Permit applicants who fulfill the requirements pursuant to Ordinance No. 700 could lawfully establish a commercial cannabis business in the City of Commerce.
On November 16, 2018, applicants who received a “Notice of Selection” were notified that the issuance of a Notice of Selection is conditional and contingent on selected applicants fulfilling and completing the requirements pursuant to Ordinance No. 700 to lawfully establish a commercial cannabis business in the City of Commerce. Furthermore, all applicants were reminded that the City reserved the right to reject any application, at any time, including for any of the enumerated reasons listed in Commerce Municipal Code Section 5.61.090(c), as adopted by ordinance No. 700.
This report will focus on two applicants who have not satisfied certain procedural obligations to maintain their applications and status in satisfactory states. To that end, City staff request that the City Council consider rejecting Application Nos. 18-053 and 18-010 based on the facts shared below.
RS Innovations, LLC
CCP Application #
Applicant
Address and Zone
Uses
18-053
RS Innovations, LLC
4170 E. Washington Blvd.; C/M-1
M/D/RD
RS Innovations first appeared before the Planning Commission to recommend approval for the City Council’s consideration of a development agreement on February 13, 2019, with a location on 5940 E. Washington with proposed owner Rana Singh Pasricha though the site was denied by the Planning Commission.
On January 7, 2020, the City Council adopted eleven ordinances, one of which was ordinance No. 744, which allowed Applicant No. 18-053 to legally conduct commercial cannabis operations on 4170 E. Washington Boulevard, in the City of Commerce. At the time of approval, RS Innovations held legal or equitable interest in real property being considered.
However, on July 7, 2020, the City Council took action to repeal all eleven ordinances, including Ordinance No. 744 due to qualified referendum petitions that were submitted against them. As a result of this action, RS Innovations no longer had a valid development agreement and was requested to resubmit a development agreement application. During this time, the original applicant, Rana Singh Pasricha had informed staff that he was looking to change location and resubmit a development agreement application once the location was confirmed.
The proposed operator provided City staff with several proposed business locations that did not fit the eligibility requirements for commercial cannabis operations in the City of Commerce. During this time, CCP staff did not receive a complete application for RS Innovations.
On February 06, 2023, CCP staff sent a notice to RS Innovations regarding their pending application that had remained at a standstill for over three years. Staff requested that the owner provide a completed development agreement application with a business location and provide the City sufficient evidence of the legal right to occupy and use the proposed location to operate a commercial cannabis business by no later than March 08, 2023, to avoid rejection proceedings.
On February 17, 2023, the applicant’s attorney stated that they had been working on securing a property and had requested an extension through September 9, 2023, to secure a property and submit a replacement application. CCP staff emailed the representative on February 22, 2023, stating that the City would not be able to accommodate the request as there had been sufficient time to secure a viable property and move its application forward. CCP staff further stated that if no complete application is submitted prior to the deadline CCP staff will move forward with the rejection of the application in question.
The applicant failed to submit a development agreement application and secure a site for commercial cannabis operations before the due date, the applicant attempted to submit a second site address on March 31, 2023, in which CCP staff requested additional documentation to assess the viability to which the owner was not able to provide. Staff received partial information from the applicant regarding the second potential site. Then on April 10, 2023, and April 17, 2023, CCP staff followed up with the applicant to proceed with a development agreement application.
During the last attempt to reach Rana Singh Pasricha on August 3, 2023, City staff received a notice that the email was deleted without being read on August 6, 2023, at 3:45 pm. (See Attachment).
City staff respectfully requests that City Council reject Application No. 18-053 for failure to submit a complete application for the consideration of a development agreement by the City Council in accordance with Commerce Municipal Code Section 5.61.090(c)(3). Additionally, in accordance with Section 5.61.290, the City Manager or his/her designee, in this case the Economic Development and Planning Director is authorized to create program rules and in this case reject an application if an operator fails to perform on their second reading and fails to provide a complete application more than 30 days after the first reading. The City adopted an administrative policy to this effect on October 10, 2022.
Commerce Cannabis
CCP Application #
Applicant
Commerce Cannabis
Address and Zone
Uses
18-010
Commerce Cannabis Company
2645 Yates Ave; M-2
M/D/RD
Commerce Cannabis Company first appeared before the Planning Commission for a recommendation of approval to the City Council for a development agreement on January 1, 2019, with the location on 2645 Yates Avenue and the proposed owner, Arsen Kazanchian.
On May 7, 2019, the City Council approved 21 development agreements, including Development Agreement No. 710 for Commerce Cannabis Company. The approval of the development agreements was legally challenged via a lawsuit alleging the approval of the 21 development agreements was invalid due to a procedural defect related to the second reading. In its ruling, the court ruled on behalf of the petitioner and found that the 21 development agreements were invalid.
As a result of the ruling, the City must now treat the aforementioned development agreements as applicants, until their second reading is performed to address the procedural defect, or they submit a new Development Agreement application if they are unable to comply with all the terms of the original development agreement. To date, the City has been able to cure the defective reading for a majority of these aforementioned development agreements. However, Commerce Cannabis Company is among the businesses impacted that has not worked with the City to correct the second reading defect. As a result, the City considers Commerce Cannabis Company an applicant.
On March 12, 2023, City staff sent a notice to Arsen Kazanchian, related to the rejection of application No. 18-010. The letter stipulated that it had been five years since the application process began, and there had been no good-faith effort to move forward with proceeding with a second reading. Additionally, City staff requested that the owner, Arsen Kazanchian, commit to a business location and provide the City with sufficient evidence of the legal right to occupy and use the proposed location to operate a commercial cannabis business.
On August 3, 2023, City staff sent a second letter to the owner of the application Kazanchian regarding a final notice to reject application 18-010 due to no good faith effort to move forward with an application. Pursuant to Commerce Municipal Code Section 5.61.09(c)(3), the City has the authority to reject an application based on failure to provide a complete application. Additionally, the letter stipulated that in accordance with Section 5.61.290, the City Manager or his/her designee is authorized to apply program rules and in this case, reject an application if an operator fails to perform on their second reading and fails to provide a complete application more than 30 days after the first reading. The City adopted an administrative policy to this effect on October 10, 2022 as noted previously.
Both owners listed on the applications were sent the agenda regarding the disqualification for applicant Nos. 18-053 and 18-010 and invited to attend to state their respective cases if they disagree in any part.
ANALYSIS:
Since the beginning of the Commerce Cannabis program in the City of Commerce, required for all operators who have executed development agreements have agreed to pay all fees which include non-operating, operating, and community benefit fees to enable the City to promote, protect, and enhance the health, safety, and welfare of the community and its residents and its quality of life.
It has been over four years since the application process began and RS Innovations, LLC’s application has been at a standstill three of the four years with no good faith effort on their part to move forward with proposing an appropriate site in the City to conduct commercial cannabis operations. The City made numerous attempts to reach the applicant, however, the City did not receive a response.
Commerce Cannabis failed to provide a complete application and move forward with their second reading, therefore, both applicants No. 18-053 and 18-010 (RS Innovations and Commerce Cannabis) are considered applicant status due to their inability to proceed with a final second reading within 30 days and/or failure to submit a complete application for a revised development agreement following the first reading.
Pursuant to Commerce Municipal Code Section 5.61.090(c)(3), the City reserves the right to reject an incomplete application. Additionally as noted above, in accordance with Section 5.61.290, the City Manager or designee is authorized the establishment of an additional administrative policy effective October 10, 2022, requiring that persons or entities without an active application for over one year submit a complete development agreement application within 30 days of the effective date of the administrative policy. Failure to do so may subject the applicant to rejection as an applicant.
CONCLUSION:
Staff recommends that the City Council reject Applicant Nos. 18-053 and 18-010 pursuant to Commerce Municipal Code Section 5.61.090(c)(3) and the aforementioned administrative policy.
Prepared by: Gisselle S. Delgado
Reviewed by: Edgar P. Cisneros, City Manager
Approved as to form by: Noel Tapia, City Attorney
Attachments:
Attachment A: Resolution – Applicant No. 18-053 - RS Innovations, LLC Attachment B: Resolution – Applicant No. 18-010 – Commerce Cannabis Company Attachment C: Correspondence sent to Applicant No. 18-053 Attachment D: Correspondence sent to Applicant No. 18-010