City of Corona
Staff Report
400 S. Vicentia Ave.
Corona, CA 92882
File #: 22-0530
REQUEST FOR CITY COUNCIL ACTION
DATE: 06/15/2022
TO: Honorable Mayor and City Council Members
FROM: Legal & Risk Management Department
SUBJECT:
Urgency Ordinance and Regular Ordinance amending Section 5.36.060 of the Corona Municipal Code to establish a process to resolve tied scores for the last available commercial cannabis permit for storefront retailers and/or storefront retail microbusinesses.
EXECUTIVE SUMMARY:
City Council consideration of Urgency Ordinance No. 3350 and Regular Ordinance No. 3351, Ordinances of the City of Corona, California, amending Section 5.36.060 of the Corona Municipal Code to establish a process to resolve tied scores for the last available commercial cannabis permit for storefront retailers and/or storefront retail microbusinesses. The review of commercial cannabis permit applications for storefront retailers and storefront retail microbusinesses and the subsequent issuance of commercial cannabis permits is based upon the applicant’s ranking, which is determined as a result of the applicant’s score in the merit-based evaluation process conducted by HdL. There are some applicants on HdL’s final ranking that have tied scores. Neither the Corona Municipal Code nor the rules and regulations adopted by the City Council for permitting commercial cannabis businesses provides a rule or guidance on how to resolve a tie in the merit-based review scores.
Adoption of the proposed Ordinance would allow applicants with tied scores to each have the opportunity to obtain provisional approval for the last available commercial cannabis permit for storefront retailers and/or storefront retail microbusinesses, thus potentially expanding the number of approved final permits.
RECOMMENDED ACTION:
That the:
a. City Council adopt Urgency Ordinance No. 3350, an Ordinance of the City of Corona, California amending Section 5.36.060 of the Corona Municipal Code to establish a process to resolve tied scores for the last available commercial cannabis permit for storefront retailers and/or storefront City of Corona Page 1 of 4 Printed on 6/9/2022
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File #: 22-0530
retail microbusinesses.
b. City Council introduce by title only and waive full reading of Ordinance No. 3351, first reading of an ordinance amending Section 5.36.060 of the Corona Municipal Code to establish a process to resolve tied scores for the last available commercial cannabis permit for storefront retailers and/or storefront retail microbusinesses.
BACKGROUND & HISTORY:
Adopted Rules & Regs
Corona Municipal Code (“CMC”) 5.36 (Commercial Cannabis) was enacted to establish a comprehensive set of rules, regulations, and standards for the permitting and operation of certain types of commercial cannabis businesses (storefront retail, non-storefront retail, manufacturing, distribution, testing laboratories, and microbusinesses) within the City’s industrial zones (M-1, M-2, M -3 and M-4 zones). The City Council also adopted Resolution No. 2021-022 establishing rules and regulations to govern the permitting of commercial cannabis businesses (“Rules & Regs”). City staff is currently in the middle of the application process for storefront retailers and storefront retail microbusinesses and has encountered a situation that is not addressed in the CMC or the Rules & Regs.
Maximum 12 Retail Permits - Ranking Process
CMC § 5.36.060 provides that the maximum number of commercial cannabis permits to be issued for storefront retailers and/or storefront retail microbusinesses shall be 12, based upon the population formula as set forth in § 5.36.060. The Rules & Regs require applicants for storefront retailer and/or storefront retail microbusiness commercial cannabis permits to participate in a competitive meritbased evaluation process conducted by the City’s consultant, Hinderliter, DeLlamas & Associates (“HdL”). At the conclusion of the merit-based evaluation process, HdL scores each applicant, ranks them from highest to lowest based upon those scores and prepares a final written ranking to the City.
Ties Identified
The City is in the middle of the application process for storefront retailers and storefront retail microbusinesses, and has received HdL’s final ranking of the applicants. There are some applicants that have the same score and, thus, have tied for the same position in the ranking. For example, Circle City Trade Group LLC, which was ranked number 15 on HdL’s final ranking, has the same score as Corona Culture Business Partners, Inc., dba Culture Cannabis Club. We also have identified ties at the number 17 and 18 spots, as well as the number 27, 28 and 29 spots, if for any reason the process moves that low on the list. Neither the CMC nor the Rules & Regs provide guidance on how to resolve a tie score.
ANALYSIS:
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Provisional and Final Approval of Permits
The application and review process for storefront retail commercial cannabis permits, which is set forth in the Rules & Regs, involves the following three distinct phases: preliminary approval, provisional approval and final approval. The City is currently in the provisional approval phase, which requires applicants to: 1) identify the preferred premises (which must have been included in the applicant’s application) where they propose to operate a commercial cannabis business; 2) provide proof of the legal right to occupy and use those premises (i.e., deed, lease agreement, etc.); and 3) execute an operational agreement. Once provisional approval is granted, applicants advance to the final approval phase, which requires applicants to obtain a license from the State, a City business license and all building and occupancy permits.
12th Spot for Provisional Approval - Ties Possible
Because the CMC limits the number of storefront retail commercial cannabis permits to 12, City staff will grant provisional approval to 12 applicants and allow those applicants to advance to final approval. The remaining applicants on HdL’s final ranking will remain on the list, which is valid for at least 12 months. In the event any of the applicants that were granted provisional approval fail to obtain final approval, City staff will continue with the remaining applicants on the list in ranked order until such time that 12 commercial cannabis permits are issued.
With the implementation of the regulations and standards set forth in CMC Chapter 5.36 and the Rules & Regs, which has resulted in some of the top 12 applicants being re-ranked to the bottom of the list of all ranked applicants, it is possible that applicants ranked lower than number 12 on HdL’s final ranking may be in a position to obtain a commercial cannabis permit. Currently, city staff anticipates that the applicant that is ranked number 15 will be the 12th applicant to be reviewed for provisional approval. As indicated above, applicant number 15 has the same score as the applicant that is currently ranked number 16. Neither the CMC nor the Rules & Regs contain a rule or any guidance on how to resolve this tie.
Urgency & Regular Ordinances - Proposed Solution
The attached Urgency Ordinance, which includes the necessary urgency findings, would amend CMC § 5.36.060 to permit an increase in the possible number of commercial cannabis permits that may be issued for storefront retailers and storefront retail microbusinesses if there is a tie situation for the last available permit to be considered for provisional approval. This could result in the total number of permits issued being increased beyond the current maximum of 12.
If the attached Ordinance is adopted and the City grants provisional approval to both applicant number 15 and applicant number 16, the City would have 13 applicants advancing to the final approval phase. If all 13 applicants obtain final approval, the City would issue 13 commercial cannabis permits. However, if one or more of the 13 applicants that were granted provisional approval fails to obtain final approval, or even has its final permit revoked or forfeited for any reason, the maximum number of commercial cannabis permits would remain at or return to 12.
Also attached is an identical version of the Urgency Ordinance to be introduced and adopted as a City of Corona Page 3 of 4 Printed on 6/9/2022
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regular ordinance. The reason for this is in the event the urgency findings are challenged and found not to be legally sufficient, the provisions of the Ordinance will still be valid and in full force and effect thirty (30) days following its second reading and adoption. If the regular Ordinance is adopted tonight, second reading will occur on July 6, 2022 and it will be in effect on August 6, 2022.
FINANCIAL IMPACT:
There is no financial impact.
ENVIRONMENTAL ANALYSIS:
This action is exempt pursuant to Section 15061(b)(3) of the Guidelines for the California Environmental Quality Act (CEQA), which states that a project is exempt from CEQA if the activity is covered by the commonsense exemption that CEQA applies only to projects that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. This action makes minor text amendments to the CMC to resolve situations where there is a tied score for the last available commercial cannabis permit, and there is no possibility that adopting this Ordinance will have a significant effect on the environment.
Therefore, no environmental analysis is required.
PREPARED BY: JAMIE RAYMOND, CHIEF DEPUTY CITY ATTORNEY
REVIEWED BY: DEAN DERLETH, CITY ATTORNEY/LRM DIRECTOR
Attachments:
1. Exhibit 1 - Urgency Ordinance No. 3350
2. Exhibit 2 - Regular Ordinance No. 3351
3. Exhibit 3 - Redline of CMC Changes
City of Corona Page 4 of 4 Printed on 6/9/2022
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