CITY OF COMMERCE AGENDA REPORT
Item No.
TO: Honorable City Council
FROM: Interim Economic Development and Planning Director SUBJECT: Consideration of Rejection of Commercial Cannabis Permit Applicant Nos. 18-036 and 18-028 MEETING DATE: January 14, 2025
RECOMMENDATION:
City Staff recommends that the City Council formally reject applicants Nos. 18-036 and 18-028 for failing 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 under 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 issuing a Notice of Selection is conditional and contingent on selected applicants fulfilling and completing the requirements under 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 applicants who did not satisfy certain procedural obligations to maintain their status in satisfactory states. To that end, City staff requests that the City Council consider rejecting Application Nos. 18-036 and 18-028 based on the facts shared below.
ANALYSIS:
Since the beginning of the Commerce Cannabis program in the City of Commerce, 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.
Applicant Nos. 18-036 and 18-028 have not processed their respective applications in good faith for over two years. They have chosen to not execute their respective development agreements following approval by the City Council. Claremont Capital has failed to provide CCP staff with a complete application for the consideration of an amendment to its approved development agreement.
Pursuant to Commerce Municipal Code Section 5.61.090(c)(3), the City reserves the right to reject an incomplete application. Additionally, per Section 5.61.290(a), the City Manager or his/her designee is authorized to adopt administrative policies and rules to ensure the City’s Cannabis program operates timely and efficiently. The City Manager’s Office adopted an administrative policy effective October 10, 2022, which requires persons or entities without an active application for over one year to 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.
Claremont Capital Partners LLC
CCP Application #
Applicant
Address
18-036
Claremont Capital Partners LLC
No address on file
Claremont Capital Partners LLC was first approved by the City Council for development agreement No. 716 along with 21 other development agreements on May 7, 2019. Claremont Capital was approved to conduct commercial cannabis operations at the location on 1538 S. Eastern Avenue for cultivation, manufacturing, and non-storefront retail delivery and approved owner, Casey Anne Dalton Schutt.
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 due to the procedural defect.
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 second readings for most of these development agreements.
On April 12, 2022, the City Council approved an express second reading for Claremont Capital correcting the initial procedural defect. The City Council approved development agreement No. 791, located at 1538 S. Eastern Ave., to allow the cultivation, manufacturing, distribution, and non-storefront retail delivery of commercial cannabis products at the site.
Furthermore, Commerce Municipal Code Section 5.61.290(a) provides that the City Manager with the following rule making authority:
“…the City [Manager] or his or her designee, is authorized to establish any additional rules, regulations, policies and standards governing the: application review and approval process; the issuance, denial or renewal of commercial cannabis permits; the ongoing operation of commercial cannabis businesses and the city's oversight of same; and/or concerning any other subject determined to be necessary to carry out the intent and purposes of this chapter, including without limitation, establishing time periods to solicit applications pursuant to this chapter, and corresponding deadlines for timely submittals of same to the city, as well as the drafting of any forms or applications, as required by this chapter.” Pursuant to Commerce Municpal Code Section 5.61.290(a), the City Manager’s Office adopted the following policy effective October 10, 2022 to help ensure the timely and efficient processing of outstanding applications:
“Any persons or entities without an active application for over one year must 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 immediate disqualification.” Following the second reading, the owner, Casey Anne Dalton Schutt made CCP staff aware that Claremont Capital Partners would be seeking an amendment as the current site on file was no longer viable. Ms. Schutt did not sign the approved development agreement. As a result, the City considers Claremont Capital Partners LLC. an applicant.
CCP staff sent a final notice of rejection dated November 26, 2024 to Claremont Capital Partners LLC. due to Claremont Capital’s failure to show a good faith effort move forward with its application. (See Attachment C.) The notice advised Claremont Capital that City staff would recommend rejection of its application to the City Council pursuant to Commerce Municipal Code Section 5.61.090(c)(2) and Claremont’s violation of the October 10, 2022 administrative policy. City staff did not receive a response from the applicant.
Accordingly, City staff respectfully requests that the City Council reject Application No. 18-036.
Synergy Business Management
CCP Application #
Applicant
Address
18-028
Synergy Business Management
No address on file
Similar to Claremont Capital, Synergy Business Management filed a development agreement application to cure the procedural defect previously mentioned. On June 14, 2022, the City Council approved the request for a change of license use to testing only, a change of location, and a change of ownership to designate Anresco Incorporated as the new owner of the license. The newly approved owners, Anresco Incorporated, chose not to execute its approved development agreement and contested the previously approved council fees.
City staff met with Anresco to discuss their concerns regarding cannabis fees for testing laboratories. Despite the recent approval by the City Council to lower testing fees, Anresco refused to agree to the fee changes and requested a much lower amount. To date, Synergy Business Management continues to be the owner on file for application number 18-028.
CCP staff sent a final notice of rejection dated November 26, 2024 to both Synergy Anresco due to Anresco’s failure to execute the approved development agreement. (See Attachment D.) The notice advised both parties that City staff would recommend rejection of its application to the City Council pursuant to Commerce Municipal Code Section 5.61.090(c)(2) and the violation of the October 10, 2022 administrative policy.
Accordingly, City staff respectfully requests that the City Council reject Application No. 18-028.
CONCLUSION:
Staff recommends that the City Council reject Applicant Nos. 18-036 and 18-028 pursuant to Commerce Municipal Code Section 5.61.090(c)(3) and the aforementioned administrative policy.
Prepared by: CCP Staff
Reviewed by: Ernie Hernandez, City Manager
Approved as to form by: Noel Tapia, City Attorney
Attachments:
Attachment A: Resolution – Claremont Capital Partners LLC.
Attachment B: Resolution – Synergy Business Management
Attachment C: Notice of Rejection – Claremont Capital Partners LLC Attachment D: Notice of Rejection – Synergy Business Management and Anresco Incorporated