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PLANNING COMMISSION
AGENDA REPORT
MEETING DATE: February 24, 2025 ITEM NUMBER: PH-3 SUBJECT: CONDITIONAL USE PERMIT PCUP-24-0011 FOR A RETAIL CANNABIS STOREFRONT BUSINESS WITH DELIVERY (“GREEN
MART”) LOCATED AT 1912 HARBOR BOULEVARD
FROM: ECONOMIC AND DEVELOPMENT SERVICES
DEPARTMENT/PLANNING DIVISION
PRESENTATION BY: MICHELLE HALLIGAN, SENIOR PLANNER
FOR FURTHER
INFORMATION
CONTACT:
MICHELLE HALLIGAN
714-754-5608
[email protected]
RECOMMENDATION:
Staff recommends the Planning Commission:
1. Find that the project is categorically exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to Section 15301 (Class 1) Existing Facilities; and
2. Approve Conditional Use Permit PCUP-24-0011 based on findings of fact and subject to the conditions of approval as contained in the Resolution.
APPLICANT OR AUTHORIZED AGENT:
The applicant is Keith Scheinberg on behalf of RDK Group Holdings, LLC and the property owner, Dave Ruffel.
ATTACHMENT 5
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PLANNING APPLICATION SUMMARY
Location: 1912 Harbor Boulevard Application Number: PCUP-24-0011 Request: PCUP-24-0010 is for a Conditional Use Permit for the establishment of a cannabis retail storefront with delivery.
SUBJECT PROPERTY: SURROUNDING PROPERTY:
Zone: C1 (Local Business District) North: C1 (Local Business District) General Plan: Commercial Residential South: C1 (Local Business District) Lot Dimensions: 50’ x 130’ East: PDC (Planned Development Commercial)
C2 (General Commercial)
Lot Area: 6,500 SF West: C2 (General Commercial)
Existing
Development:
The property is developed with a 2,400-square-foot single-story commercial building.
DEVELOPMENT STANDARDS COMPARISON
Development Standard Required/Allowed
C1 Zone
Provided/Proposed
Building Height 2 stories/30’ 1 story/12’-8”
Setbacks:
Front 20’ 60’-5”
Side 15’/0’ 6’/0’ 1
Rear 0’ 4’-9”
Landscape Setback – front 20’ 0 1
Parking 75 57 1,2
Floor area ratio (FAR) 0.20 0.37 1
1: Landscape setback, one side setback, parking, and FAR are legal nonconforming 2: The subject site shares a surface parking lot with five adjacent properties. The proposed parking count includes a bike rack credit of one space. Under AB 2097, the project is located within a half -mile of a major transit stop and is therefore exempt from the City’s parking requirements.
CEQA Status Exempt per CEQA Guidelines Section 15301 (Class 1, Existing Facilities) Final Action Planning Commission
BACKGROUND
The subject property is an approximate 6,500-square-foot site located at 1912 Harbor Boulevard. The midblock site has street frontage on Harbor Boulevard and is located between 19th Street and Bernard Street. A 20-foot-wide alley with access from Harbor Boulevard and West 19th Street also provides access to the rear of the subject property (including access to several parking spaces in a shared parking lot ). The site is zoned C1 (Local Business District) and is surrounded by C1 properties to the north and south.
There is a property zoned PDC (Planned Development Commercial) and a property zoned C2 (General Commercial) located to the east and Properties located to the west across Harbor Boulevard are zoned C2 (General Commercial). The site has a General Plan Land Use Designation of Commercial Residential.
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Existing development on the subject property consists of a 2,400 -square-foot, one - story commercial building (see the below Image 1) with surface parking located in the front and rear of the building. Vehicular access to the site is provided by three common access driveways from Harbor Boulevard. The proposed cannabis retail establishment with delivery (“Green Mart”) would occupy the entire building. Although currently vacant, the previous tenant was a barbeque equipment store. The subject property is located along one of the Cit y’s primary commercial corridors which includes a variety of uses. Neighboring uses include, but are not limited to, retail stores, offices, medical offices, car dealerships, residences, and a cannabis storefront.
Image 1 – Existing Condition, 1912 Harbor Boulevard
Non-Conforming Development
The existing development is legal nonconforming in terms of a side-setback, landscaping, parking, and floor area ratio, and therefore is subject to the nonconforming provisions of the Costa Mesa Municipal Code Section 13-204. Pursuant to this code section, a conforming use may be located on a nonconforming property as long as the new site modifications do not result in greater site nonconformities, and proposed improvements bring the site into greater conformance with Code requirements.
Improvements would be made to bring this structure into compliance with current building and safety codes; however, and as specifically allowed by the CMMC, the existing site nonconformities can remain pursuant to the City’s legal nonconforming provisions. The applicant is proposing to bring the property into closer conformance by removing an unpermitted 145-square -feet enclosed area, adding a bike rack for a credit of one parking space, and adding 274-square -feet of landscaping. Proposed improvements are further described later in this report.
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City of Costa Mesa Medical Marijuana Measure (Measure X) and Costa Mesa Retail Cannabis Tax and Regulation Measure (Measure Q)
In November 2016, Costa Mesa voters approved Measure X, allowing medical cannabis manufacturing, packaging, distribution, research and development laboratories, and testing laboratories in “Industrial Park” (MP) and “Planned Development Industrial” (PDI) zoned properties north of South Coast Drive and west of Harbor Boulevard (“The Green Zone,” excluding the South Coast Collection property located at 3303 Hyland Avenue).
Measure X provisions are included in Titles 9 and 13 of the CMMC.
In 2018, non -medical adult use cannabis became legal in California under the State’s Medicinal and Adult-Use Cannabis Regulation and Safety Act (Proposition 64). On April 3, 2018, the City Council adopted Ordinance No. 18-04 to allow non-medical cannabis facilities in the same manner and within the same geographic area as were previously allowed pursuant to Measure X.
On November 3, 2020, Costa Mesa voters approved Measure Q, the Costa Mesa Retail Cannabis Tax and Regulation Measure. This measure allowed the City to adopt regulations permitting cannabis storefront retail (dispensaries) and non-storefront retail (delivery) within the City subject to numerous operational requirements. On June 15, 2021, the City Council adopted Ordinances No. 21-08 and No. 21-09 to amend Titles 9 and 13 of the CMMC to establish regulations for legal cannabis storefront and non - storefront uses. A “non-storefront” retailer sells packaged cannabis goods to customers through direct delivery. On May 7, 2024, the City Council adopted Ordinances No. 24- 03 and No. 24-04 to amend the City’s retail cannabis provisions in Titles 9 and 13.
Cannabis Business Permit (CBP) Application Process
The process to establish a retail cannabis business is subject to an extensive submittal and application review procedure. Pursuant to the CMMC, retail cannabis applicants must obtain the following City approvals and obtain State approval before conducting business in Costa Mesa:
• Pre-Application Determination;
• CBP Notice to Proceed;
• Conditional Use Permit (CUP);
• Building Permit(s);
• Final City Inspections;
• CBP Issuance; and
• City Business License.
The “Pre-Application Determination” includes staff review of a detailed applicant letter that describes the proposed business, an existing site plan, statement attesting that there is/has been no unpermitted cannabis activity at the site within one year, a nd a -5-
detailed map demonstrating the proposed storefront’s distance from regulated sensitive uses. Staff also conducts a site visit at this time. Planning staff has completed the aforementioned pre-application review, visited the site, and issued a letter indicating that the application complies with the City’s required separation distances from sensitive uses and may proceed to submittal of a CBP.
Following completion of the pre-application review, the applicant submitted a CBP application for the initial phase of the CBP review. Staff’s initial CBP review includes:
• A background check of the business owner(s)/operator(s); • An evaluation of the proposed business plan (including a capitalization analysis); and
• An evaluation of the proposed security plan by the City’s cannabis security consultant, HdL Companies (HdL).
The applicant successfully passed these evaluations and staff issued a “CBP Notice to Proceed,” which allows the applicant to submit a CUP application.
The CUP application and required supportive materials were submitted by the applicant and reviewed for conformance with City standards and regulations by the Planning Division, Building Division, Public Works Department (including Transportation and Engineering Divisions), Fire Department, and Police Department.
If the Planning Commission approves the CUP, the applicant may then begin the remaining steps of the CBP process, which include:
• Obtaining building permits;
• Completing tenant improvements; and
• Demonstrating through various City reviews/inspections that all conditions of approval have been satisfied, and that all other requirements of the CMMC have been met.
After passing the final City and HdL inspections, the CBP can be issued. CBP approval is valid for a two-year period and must be renewed (every two years) prior to expiration.
During the two-year CBP period, the Community Improvement Division (CID), along with other City staff, will conduct site inspections to verify that the b usiness is operating in compliance with CUP and CBP requirements. Violations identified during site inspections may be grounds for revocation of issued permits or non-renewal of a CBP.
After obtaining the CBP, the applicant would apply for and obtain a City Business License through the City’s Finance Department. Lastly, the applicant must obtain the appropriate license from the State Department of Cannabis Control (DCC) prior to operating.
Cannabis retail businesses are subject to a City established seven-percent gross receipts tax, which must be paid to the City of Costa Mesa’s Finance Department. Records and revenues are audited regularly by the Finance Department and HdL Companies.
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DESCRIPTION
Conditional Use Permit application PCUP-24-0011 is a request to allow a 2,400-square- foot retail cannabis storefront with delivery in an existing commercial building at 1912 Harbor Boulevard. The affiliated State license is a Type 10 “storefront retailer” license.
If the CUP is approved and the operator also obtains a CBP, City Business License, and State license, the business would be allowed to sell pre-packaged cannabis and pre - packaged cannabis products to customers onsite and by delivery, subject to conditions of approval and other City and State requirements.
ANALYSIS
Conditional Use Permit Required
Pursuant to CMMC Sections 13-28(B) and 13-200.93(c)(1), subject to the approval of the Planning Commission, a CUP is required for the establishment of cannabis retail storefronts in a commercial zone. To obtain a CUP, an applicant must show that the proposed use is compatible with the City’s applicable zoning and General Plan provisions/policies/findings, and will not be detrimental to public health, safety, and welfare.
The subject site is located within a commercial zone (C1 – Local Business District) where commercial development is allowed to include retail uses. As defined in the CMMC, “This district is intended to meet the local business needs of the community by providing a wide range of goods and services in a variety of locations throughout the City”. Pursuant to the CMMC, cannabis retail storefronts are subject to extensive regulation (as further described in this report). These regulations are adopted to prevent land use inconsistencies with adjacent properties. Pursuant to the CMMC, the approval of a CUP requires that the Planning Commission make findings related to neighborhood compatibility, health and safety, and land use compatibility. Pro posed uses subject to CUPs will generally have site- specific conditions of approval to ensure the required findings can be met. A detailed project analysis regarding CUP findings is provided below in this report.
Separation Requirements
The proposed project location was evaluated based on the separation requirements in effect during the pre -application submittal. At that time, CMMC Section 13- 200.93(e) stipulated that no cannabis retail storefront use shall be located within 1,000 feet from a K-12 school, playground, licensed child daycare, or homeless shelter, or within 600 feet from a youth center as defined in CMMC Title 9, Chapter VI, Section 9- 485, that is in operation at the time of submission of a completed application.
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Additionally, on June 7, 2024, the City Council adopted Ordinance No. 2024- 03, amending Title 13 pertaining to cannabis storefronts. Among other local cannabis regulatory changes, the amendment included increasing the minimum distance between a cannabis storefront and youth center from 600 to 1,000 feet and established a minimum separation of 250 feet between a cannabis storefront and properties zoned for residential use (no minimum distance was required prior). The subject site is located more than 1,000 feet from a youth center and approximately 27 feet from a property zoned PDC (Planned Development Commercial), where a master plan allowed the development of multifamily residences and a parking structure. However, the project location was determined to be in compliance with the separation requirements prior to the effective date of the revised Ordinance , and therefore the project is exempted from recently adopted changes regarding minimum distance from a property zoned for residential use.
All separation distances are measured in a straight line (“as the crow flies”) from the “premises” where the cannabis retail use is to be located to the closest property line of the sensitive use(s) (with the exception of playgrounds). For playgrounds, the property line is a 30- foot radius from the exterior physical boundaries of the playground equipment area. Premises is as defined in the State’s Business and Professions Code Section 26001 as the designated structure or structures and land specified in the application that is owned, leased, or otherwise held under the control of the applicant or licensee where the commercial cannabis activity will be or is conducted. The premises shall be a contiguous area and shall only be occupied by one licensee. Therefore, the premises only include the retail cannabis activity areas (including sales, storage, back-of- house and/or other ancillary areas) and excludes the parking lot and other areas that are not part of the area licensed by the State for commercial cannabis activity. The subject site complies with required separations from sensitive uses.
Exterior Improvements
The applicant proposes to update the commercial building into conformance with the Building Code, and improve the building façade with new awnings, doors, and paint.
Other proposed or conditioned exterior improvements include:
• Restriping the parking lot at 1912 Harbor Boulevard to be compliant with the City’s Parking Design Standards;
• Constructing a drive approach on the property that is consistent with the City’s Public Works Standards;
• Removing the unpermitted enclosure and securing the space with a wrought iron or similar fencing material;
• Adding a bicycle rack to encourage multi-modal transportation; • Adding irrigated landscaping planters to include at least one new 24-inch box tree and live, drought-tolerant plants. A detailed landscaping plan would be reviewed during the building plan check process; and
• Installing security lighting and surveillance cameras. -8-
Proposed business signs would be reviewed and permitted separately per the City’s sign code requirements. Pursuant to Condition of Approval No. 6 (Prior to Issuance of Building Permits), business signage shall not include references to cannabis, whether in words or symbols. A rendering of the proposed exterior is provided in Image 2.
Image 2 – Proposed Exterior
Interior Tenant Improvements
The proposed interior remodel includes improvements such as, but not limited to, demolishing existing demising walls, construction of new walls, constructing a second restroom, adding commercial showroom finishes, and installation of an odor control system. A proposed floor area summary is provided in Table 1.
Table 1 – Floor Plan Summary
Operational Area Square Feet
Lobby 138
Retail Area 1,196
Receiving 80
Storage 342
Offices 200
Breakroom 100
Restrooms 120
Hallways 224
Total 2,400
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Customer and Employee Access
Customer access would be limited to the lobby and retail area. Customer circulation into the proposed establishment includes entering the licensed premise through the door fronting Harbor Boulevard into the lobby. An employee would verify the customer’s identity and age before allowing the customer to enter the retail sales area.
After a customer’s identity and age is verified and their transaction is completed, they must exit the retail sales area through an exit directly into the lobby. Customers would have to leave the premise through the front door. As further conditioned, staff and a security guard would monitor the area to ensure that customers are following regulations.
All other areas of the premises would be accessible only to employees with the proper security credentials. Employees would enter through the customer entrance or two access-controlled entrances that lead directly into the back -of-house area. Employees would be able to exit through the access -controlled doors or through the main entrance/exit.
Vendor Delivery Operations and Access
All vendors (licensed distributors) will have pre -committed arrival times set by the storefront’s operational managers for product delivery. A limited access (secured) door is located on the south side of the building. All vendor vehicles will load and unload at the closest non-accessible parking space located approximately 45 feet from the limited access door. Vendors would only be allowed to enter the premise while accompanied by an employee with the proper security credentials. The access-controlled door, product path of travel, and vehicle loading/unloading area would be under camera surveillance at all times.
Storefront Operations
The proposed business is required to comply with the City’s adopted retail storefront operational requirements as follows:
• Display State license, CBP, and City business license in a conspicuous building location;
• The hours of operations are limited to 7:00 AM to 10:00 PM Monday through Sunday;
• Shipments of cannabis goods may only be accepted during regular business hours;
• Cannabis inventory shall be secured using a lockable storage system during non- business hours;
• At least one licensed security guard shall be on premises during business hours; -10-
• The premises and the vicinity must be monitored by security and/or other staff to ensure that patrons immediately leave and do not consume cannabis onsite or within close proximity. The CMMC prohibits the consumption of cannabis or cannabis products in public areas; cannabis consumption is limited to non - public areas, such as within a private residence. State law further prohibits cannabis consumption and open container possession wi thin 1,000 feet of sensitive uses and while riding in or driving a vehicle; • There must be continuous video monitoring and recording of the interior and exterior of the premises;
• Adequate security lighting shall be provided and shall be designed to prevent offsite light spill;
• Onsite sales of alcohol or tobacco products and on-site consumption of alcohol, cannabis, and tobacco products is prohibited;
• No one under the age of 21 is allowed to enter the premises.
If the business holds
a retail medical cannabis license (M-license) issued by the State, persons over the age of 18 may be allowed with the proper medical approvals i.e. physician’s recommendation or medical card pursuant to CMMC Section 9-495(h)(6); • Prior to employment, all prospective employees must successfully pass a background check conducted by the City, and the employee must obtain a City issued identification badge;
• Customers are only granted access to the retail area after their age and identity has been confirmed by an employee;
• Each transaction involving the exchange of cannabis goods between the business and consumer shall include the following information:
o Date and time of transaction;
o Name and employee number/identification of the employee who processed the sale;
o List of all cannabis goods purchased including quantity; and o Total transaction amount paid.
• There must be video surveillance of the point-of-sale area and where cannabis goods are displayed and/or stored;
• Cannabis products shall not be visible from the exterior of the building; • Free samples of cannabis goods are prohibited;
• When receiving new inventory from licensed distributors, employees will verify the distributor’s identity and license prior to allowing them to enter the facility through an access-controlled door. After distributor’s credentials have been confirmed, an employee will escort the distributor to the shipping and receiving area and remain with them throughout the process;
• Cannabis goods to be sold at this establishment (either storefront or delivery) must be obtained by a licensed cannabis distributor and have passed laboratory testing;
• Cannabis product packaging must be labeled with required test results and batch number;
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• Packaging containing cannabis goods shall be tamper- resistant; if packaging contains multiple servings, the package must also be re-sealable; • When processing orders for cannabis delivery, employees will collect the pre- packaged materials, load products into a secured container and transport the containers to delivery vehicles outside the building. Video surveillance cameras will be installed with direct views of the path of travel and loading and unloading area. All loading and unloading of delivery vehicles will be monitored by the required security guard;
• Cannabis deliveries must be made in -person by an employee of the licensed retailer. An independent contractor, third-party courier service, or an individual employed through a staffing agency would not be considered employed by the licensed retailer;
• The applicant shall maintain proof of vehicle insurance for any and all vehicles being used to deliver cannabis goods;
• During delivery, the employee shall maintain a physical or electronic copy of the delivery request and shall make it available upon request by the licensing authority and law enforcement officers;
• A delivery employee shall not leave the State of California while possessing cannabis products and while performing their duties for the cannabis retailer; • The business shall maintain a list of all deliveries, including the address delivered to, the amount and type of product delivered, and any other information required by the State;
• Any delivery method shall be made in compliance with State law, as amended, including use of a vehicle that has a dedicated global positioning system (GPS) device for identifying the location of the vehicle (cell phones and tablets are insufficient);
• Signs, decals or any other form of advertisement on the delivery vehicles are prohibited;
• Deliveries must be made to a physical address that is not on publicly owned land and cannot be a school, a day care, homeless shelter, or a youth center; and • A cannabis delivery employee shall not carry cannabis goods valued in excess of $5,000 at any time, with no more than $3,000 of cannabis goods that are not already part of a customer order that was processed prior to leaving the premises.
Business Plan
The applicant has submitted a detailed business plan that was evaluated by the City’s cannabis consultant (HdL). The business plan describes the owner’s experience, proof of capitalization, start-up budget, a three-year pro forma, target customers, key software, and daily operations. The business plan contains proprietary details and is therefore not included as an attachment to this staff report. The City’s cannabis consultant determined that the applicant’s business plan was appropriate for the proposed retail storefront use.
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Security Plan
The applicant has submitted a professionally prepared security plan for the proposed retail cannabis establishment. The City’s cannabis consultant reviewed the security plan and determined that appropriate security measures were included to address the City’s security requirements pursuant to CMMC Title 9, Chapter VI, and State law. In May of 2024, the City Council adopted Ordinance No. 2024 -04 amending Title 9 of the Municipal Code, which included a modification to the cannabis storefront security guard requirement from 24 hours per day to only during business hours, unless the Chief of Police determines otherwise. Therefore, and pursuant to the Municipal Code, staff has conditioned the proposed operations to provide security only during business operation, unless otherwise directed by the Chief of Police to maintain security twenty -four (24) hours per day.
Since the security plan contains sensitive operational details that require limited public exposure to remain effective, the plan is not included as an attachment. However, the following is a list of general security measures that are required for all cann abis retail storefronts:
• One security guard will be on -site during business hours, unless otherwise directed by the Chief of Police to have a security onsite twenty-four (24) hours per day;
• All employees, including drivers, must pass a “Live Scan” background check; • City-issued identification badges are required for employees; • An inventory control system shall be maintained;
• Exterior and interior surveillance cameras shall be monitored and professionally installed;
• An alarm system shall be professionally installed, maintained, and monitored; • Surveillance footage must be maintained for a minimum of 90 days; • Cash, cannabis, and cannabis products shall be kept in secured storage areas; • Sensors shall be installed that detect entry and exit from all secured areas; • Security lighting (interior and exterior) shall be installed; • Emergency power supply shall be installed;
• Employees shall be trained for use with any/all emergency equipment; • Delivery drivers shall be trained on delivery safety protocols; • Employees and vendors will be trained regarding cash and product transportation protocol;
• Visitor/customer specific security measures shall be required; • All facility entry and exit points and locations where cash or cannabis products are handled or stored shall be under camera surveillance;
• The applicant shall submit a list of all vehicles to be used for retail delivery purposes to the Costa Mesa Police Department. The list shall identify the make, model, color, license plate number, and registered owner of each vehicle. The -13-
applicant shall submit an updated vehicle list each quarter with the required quarterly update to the employee roster pursuant to the CBP; • Delivery vehicle drivers shall be at least age 21, have a current driver’s license, successfully complete a live scan, and have a City-issued badge; and • The business operator shall ensure that all delivery vehicles are properly maintained, all delivery drivers have a good driving record, and each driver conducts a visual inspection of the vehicle at the beginning of a shift.
Circulation and Parking
Vehicular access to the aforementioned properties is provided via the shared parking lot and three driveways located along Harbor Boulevard. Access and p arking is also provided at the rear of the subject property via a public alley that is accessed from Harbor Boulevard and West 19
th Street.
On December 12, 2016, the City of Costa Mesa Planning Commission approved PA- 16-65, a CUP for shared parking for the subject property and five adjacent parcels (1912 through 1942 Harbor Boulevard), and to allow a deviation from parking requirements to facilitate the expansion of an existing massage business. Pursuant to the CMMC Section 13-6, when there is a mixture of uses within a single development that share the same parking facilities, the total requirement for parking is determined by the Costa Mesa shared parking analysi s procedures which is adopted by City Council Resolution. In 2016, the shared parking for the site and adjacent properties was considered by the Planning Commission and determined to meet the parking requirements pursuant to the City’s parking provisions. Further, CMMC Section 13-204 permits that when a use is c hanged that requires the same amount of parking as the previous use, no additional parking is required. The previous and proposed use at 1912 Harbor Boulevard are both retail uses and subject to the same parking ratio requirement (four spaces per 1,000 square feet of gross floor area), and therefore the project complies with the City’s parking standards.
Lastly, Assembly Bill 2097 (AB 2097) was signed into law by Governor Newsom and became effective on January 1, 2023. The primary objective of this legislation is to limit local governments from imposing minimum parking regulations on commercial and residential projects that are located within 0.5 miles of a major transit stop. AB 2097 defines “major transit stop” as an existing rail or bus rapid transit station, a ferry terminal served by either a bus or rail transit service, or the intersection of two or more majo r bus routes with a frequency of service interval of 20 minutes or less during the morning and afternoon peak commute periods. Staff reviewed the nearby public transit facilities and determined that the subject property is located within 0.5 miles of a maj or transit stop (near the intersection of Harbor Boulevard and W. 19th Street). Therefore, pursuant to AB 2097 the City of Costa Mesa cannot impose a minimum parking requirement on this land use entitlement.
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As proposed and conditioned, the applicant would install a bike rack to encourage multimodal transportation. As also conditioned, vendor and delivery vehicles would schedule or coordinate arrivals (phone, text, etc.) to ensure adequate parking is available on the subject property , and if parking shortages or other parking -related problems occur that are related to the proposed cannabis storefront, the business owner or operator will be required to monitor the parking lot and institute appropriate operational measures necessary to minimize or eliminate the problem in a manner deemed appropriate by the Director of Economic and Development Services (see “Operational Conditions” of Approval No. 7 in the attached Resolution). Examples of parking demand management techniques include, but are not limited to, reducing operating hours of the business during peak hour parking lot demand periods, hiring an employee to monitor parking lot use and assist with customer parking lot circulation, encouraging delivery services to reduce in person store visits, and incentivizing employee carpooling/cycling/walking.
Traffic
CMMC Section 13-275(e) indicates that any increase in traffic generation by a change of use that is required to obtain a discretionary permit, shall be subject to review by the appropriate reviewing authority, which may impose fees to address increased trip generation. If required, the fee collected is used to fund the City’s comprehensive transportation system improvement program. The purpose of the program is to ensure that the City’s transportation system has the capacity to accommodate additional trips.
The Citywide Traffic Impact Fee related to new and expanding developments is determined using estimated Average Daily Trips (ADT), which is the combined total number of vehicular trips both in and out of a development generated throughout an average weekd ay. The Transportation Services Division determined that the appropriate ADT for a cannabis retail establishment is approximately 108 trips per 1,000 square feet based on the Institute of Transportation Engineers (ITE) 11 th Edition
Trip Generation Manual f or the most similar use - “pharmacy/drug store with drive - through”.
CMMC Section 13-275(a), specifies that “a traffic impact study shall be required for all development projects estimated by the Public Works Department to generate one hundred (100) or more vehicle trip ends during a peak hour.” The highest peak hour trips in either the AM or PM is used to estimate the number of vehicular trips generated both in and out of a new or expanded development known as vehicle trip-ends during a peak hour. Staff reviewed and determined that the proposed use would have 8.75 net peak hour trips and therefore does not meet the threshold of 100 peak hour trips requiring a traffic study. However, t he proposed use would be subject to a traffic impact fee, which is estimated to be $28,670. The fee calculation would be finalized during the building permit plan check process and must be paid prior to building permit issuance.
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Odor Attenuation
If approved, cannabis products would arrive in State compliant packaging that is odor- resistant sealed and remain unopened while on the premises. Pursuant to the CMMC, “odor control devices and techniques shall be incorporated in all cannabis businesses to ensure that odors from cannabis are not detectable off site”. Further, as conditioned, if cannabis odor is detected outside of the building or off-site, the business owner/operator will be required to institute further operational measures necessary to eliminate off-site odors in a manner deemed appropriate by the Director of Economic and Development Services or their designee. Lastly, cannabis products are subject to State mandated waste protocols and are not allowed to be disposed of in any exterior trash enclosure.
Proximity to Residential
Similar to many commercial areas in the City, this area is developed with a mixture of commercial and residential uses. To ensure compatibility with residences in the area, proposed project conditions and requirements include the following:
• The business hours are limited from 7 AM to 10 PM;
• Security lighting is shielded and directed down/away from adjacent properties.
As conditioned, a photometric study would be required to be submitted during plan check to demonstrate that light levels are appropriate; • Operator shall post signs in the parking lot at 1912 Harbor Boulevard to remind customers and vendors to keep noise levels to a minimum (the security guard shall also be responsible for noise enforcement);
• A security guard shall be onsite during hours of operation; and • A staff person or the security guard will regularly monitor the site’s parking lot to ensure that customers are quiet, turn off vehicle engines promptly, do not play loud music, etc.
GENERAL PLAN CONFORMANCE
The Costa Mesa General Plan establishes the long‐range planning and policy direction that guides change and preserves the qualities that define the community. The 2015- 2035 General Plan sets forth the vision for Costa Mesa for the next two decades. This vision focuses on protecting and enhancing Costa Me sa’s diverse residential neighborhoods, accommodating an array of businesses that both serve local needs and attract regional and international spending, and providing cultural, educational, social, and recreational amenities that contribute to the quality of life in the community. Over the long term, General Plan implementation will ensure that development decisions and improvements to public and private infrastructure are consistent with the goals, objectives, and policies contained in this Plan.
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The following analysis evaluates the proposed project’s consistency with applicable policies and objectives of the 2015-2035 General Plan.
1. Policy LU -1.1: Provide for the development of a mix and balance of housing opportunities, commercial goods and services and employment opportunities in consideration of the need of the business and residential segments of the community.
Consistency: The proposed use would provide commercial goods, and employment opportunities on the subject commercial property. The Municipal Code, amended in 2024, allows the processing of cannabis storefront applications that passed the pre -application phase prior to the May 2024 cannabis Ordinance amendments, up to 35 approvals. Currently there are 26 approved CUPs for cannabis storefronts, of which 12 are open. The proposed use passed the pre-application phase prior to the May 2024, and if approved would not result in the exceedance of the cannabis storefront limit established by the City Council in 2024.
2. Objective LU-6B: Encourage and facilitate activities that expand the City’s revenue base.
Consistency: Retail cannabis uses are subject to a unique local tax that does not apply to other retail businesses in Costa Mesa. Retail cannabis uses are expected to generate increased tax revenues due to a seven-percent local tax on gross receipts. Most of this revenue will be used for community services and infrastructure improvements that serve the community. A half percent of the retail cannabis tax funds the City’s Arts and Culture Master Plan and another half percent is set aside for the City’s First Time Homebuyers Fund.
3. Policy LU-6.15: Promote unique and specialized commercial and industrial districts within the City which allow for incubation of new or growing businesses and industries.
Consistency: The proposed use is part of the specialized industry that is limited in Orange County. Out of 34 cities in the county, only four have cannabis storefronts--Costa Mesa, Laguna Woods, Santa Ana, and Stanton.
Approval of this CUP would facilitate a business opportunity in a specialized and expanding industry along one of the City’s primary commercial corridors.
4. Policy LU-3.1: Protect existing stabilized residential neighborhoods, including mobile home parks (and manufactured housing parks), from the encroachment of incompatible or potentially disruptive land uses and/or activities.
Consistency: The subject property is located along Harbor Boulevard in an area categorized by a mixture of uses. As conditioned, the proposed use would operate during limited hours, operator would post signs regarding -17-
noise in the parking lot, be required to control odor, and to provide onsite security during business hours, in addition to 24 -hour video camera surveillance and other security features. The cannabis operation conditions of approval and the State and local cannabis reg ulations exceed typical requirements for other retail uses.
FINDINGS
Pursuant to Title 13, Section 13-29(g), Findings, of the Costa Mesa Municipal Code, in order to approve the project, the Planning Commission must find that the evidence presented in the administrative record substantially meets specified Conditional Use Permit findings as follows:
• The proposed development or use is substantially compatible with developments in the same general area and would not be materially detrimental to other properties within the area.
The subject site is located within a commercial zone (C1, Local Business District) where commercial development is specifically allowed to include retail uses. In addition, the property is located on one of the City’s primary commercial corridors that is predominantly intended for commercial uses. Pursuant to the CMMC, cannabis retail storefronts are permitted uses in the C1 zone and are subject to extensive regulation as described in this report.
All retail sales would take place under the roof, no outdoor storage or sales are proposed nor would be allowed, and operations would be conditioned to be compliant with applicable local and State laws, as well as to minimize potential impacts on neighboring properties. Staff does not anticipate that the proposed retail cannabis use would be materially detrimental to uses in the vicinity such as restaurants, retail stores, offices, medical offices, car dealerships, and residences.
Lastly, the proposed use would not be materially detrimental to adjacent uses because the project would include features to ensure compatibility such as following a photometric plan so security lighting is shielded from adjacent properties, having a security guard onsite during hours of operation, and implementing odor control measures. As proposed and conditioned, the retail cannabis use would be compatible with other properties within the area, and in compliance with local and State requirements.
• Granting the conditional use permit will not be materially detrimental to the health, safety and general welfare of the public or otherwise injurious to property or improvements within the immediate neighborhood.
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The proposed cannabis retail storefront use would follow safety measures detailed in a professionally-prepared security plan. The security plan was evaluated for compliance by the City’s cannabis consultant, HdL. Measures designed to maintain safety at the site include, but are not limited to, at least one security guard that would be onsite during the hours of operation and security devices shall be installed before operation. Examples of security devices include window and door alarms, motion -detectors, limited access areas, and a monitored video surveillance system covering all exterior entrances, exits, and all interior limited access spaces. In addition, the business employees, including part -time staff, must pass a live scan background check and obtain an identification badge from the City that indicates they have passed certain employee requirements . The conditions of approval include, but are not limited to, the aforementioned security measures to ensure that the use would not be materially detrimental to the health, safety and general welfare of the public or be otherwise injurious to property or improvements within the immediate neighborhood.
• Granting the conditional use permit will not allow a use, density or intensity which is not in accordance with the General Plan designation and any applicable specific plan for the property.
The property has a General Plan land use designation of “Commercial Residential”. The intent of this land use designation is to allow a mix of commercial and residential uses. As stated in the General Plan Land Use Element, the City’s commercial designations “accommodate a full range of commercial activity present and desired in Costa Mesa.” The proposed storefront is consistent with General Plan policies related to providing a mixture of commercial goods, services, and employment opportunities; expanding t he City’s tax base; and promoting the incubation of specialized businesses. The City’s General Plan sets forth long-term policies that guide future development, whereas the Zoning Ordinance implements general plan policies through detailed development regulations, such as specific use types and building standards. Therefore, in determining General Plan compliance for the proposed cannabis retail storefront use, a comparison of the proposed use with the use, density and intensity allowed by the applicable zoning district is required. In this case, the applicable zoning district is “Local Business District” (C1). A variety of commercial uses are allowed in the C1 zone, including a retail cannabis storefront, subject to a CUP. No additional square footage is pr oposed; therefore, the proposed use would not increase the floor area ratio (building intensity) or increase the number of residential units onsite (density).
The subject site is located within the boundaries of the 19 West Urban Plan. The Urban Plan establishes an overlay that allows commercial and residential mixed- use development on properties with a minimum size of one -acre through a Master Plan, where such development is not permitted by the underlying -19-
zoning. The proposed project is not a mixed-use development and therefore is not utilizing any provisions of the 19 West Specific Plan.
ENVIRONMENTAL DETERMINATION
The project is categorically exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15301, for the permitting and/or minor alteration of Existing Facilities, involving negligible or no expansion of the existing or prior use. This project site contains an existing commercial building that has been used historically for commercial activities. The application does not propose an increase in commercial floor area or otherwise expand the prior commercial use.
The project is consistent with the applicable General Plan land use designation and policies as well as with the applicable zoning designation and regulations.
Furthermore, none of the exceptions that bar the application of a categorical exemption pu rsuant to CEQA Guidelines Section 15300.2 applies. Specifically, the project would not result in a cumulative impact; would not have a significant effect on the environment due to unusual circumstances; would not result in damage to scenic resources; is no t located on a hazardous site or location; and would not impact any historic resources.
ALTERNATIVES
The Planning Commission can consider the following decision alternatives:
1. Approve the project . The Planning Commission may approve the project as proposed, subject to the conditions outlined in the attached Resolution.
2. Approve the project with modifications . The Planning Commission may suggest specific changes that are necessary to alleviate concerns. If any of the additional requested changes are substantial, the hearing could be continued to a future meeting to allow a redesign or additional analysis. In the event of significant modifications to the proposal, staff will return with a revised Resolution incorporating new findings and/or conditions.
3. Deny the project . If the Planning Commission believes that there are insufficient facts to support the findings for approval, the Planning Commission must deny the application, provide facts in support of denial, and direct staff to incorporate the findings into a Resolution for denial. If the project is denied, the applicant could not submit substantially the same type of application for six months.
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LEGAL REVIEW
The draft Resolution and this report have been approved as to form by the City Attorney’s Office.
PUBLIC NOTICE
Pursuant to Title 13, Section 13-29(d) of the Costa Mesa Municipal Code, three types of public notification have been completed no less than 10 days prior to the date of the public hearing:
1. Mailed notice. A public notice was mailed to all property owners and occupants within a 500-foot radius of the project site. The required notice radius is measured from the external boundaries of the property.
2. On-site posting. A public notice was posted on each street frontage of the project site.
3. Newspaper publication. A public notice was published once in the Daily Pilot newspaper.
As of the date this report was circulated, no public comments have been received. Any public comments received prior to the February 24, 2025, Planning Commission meeting will be provided separately.
CONCLUSION
The proposed project is a retail cannabis storefront at an existing commercial property that is located on one of the City’s primary commercial corridors. Staff and the City’s cannabis consultant completed the Pre -application Determination, Business Plan a nd Security Plan evaluations, owner background checks, and thoroughly reviewed the CUP materials. If approved, the operation would be required to comply with all conditions of approval and extensive City and State regulations.
If the Planning Commission approves the project, the applicant would next obtain building permits, complete site and building improvements, and pass City inspections prior to obtaining a CBP and City Business License. The CBP would be valid for two years and must be continuously renewed, including inspections, prior to expiration.
During each two-year CBP period, the Community Improvement Division, along with other City staff, conducts site inspections to verify that the operation complies with CUP and CBP requirements.
As proposed and conditioned, the use would be consistent with other commercial uses in the C1 zone, the Zoning Code, and the City’s General Plan. The required findings for -21-
the CUP can be made, as described above, and therefore, staff recommends approval of PCUP-24-0011 subject to conditions of approval.