Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council
Subject: Issuance of a commercial cannabis permit to Barlow Printing, LLC to allow commercial cannabis distribution activities at 481 Aaron Street (PA# 22/16) Date: July 25, 2023
Written by: Jon-Paul Harries, Senior Planner
Recommendation
It is recommended that the City Council adopt a Resolution granting a commercial cannabis permit to Barlow Printing, LLC (a wholly-owned subsidiary of HC Solutions of California, LLC) to allow commercial cannabis distribution activities at 481 Aaron Street.
Background
Cannabis Regulations and City Actions
In October 2015, the Governor signed three bills into law collectively known as the Medical Marijuana Regulation and Safety Act (MMRSA) establishing California’s first licensing system for commercial medical cannabis activity.
In November 2016, California voters approved Proposition 64, legalizing adult use and possession of cannabis.
On November 7, 2017, Cotati voters passed a cannabis business tax (Measure G), which levies business taxes on cannabis businesses operating within the City. The ballot measure authorizes maximum tax limits, while allowing the City Council to establish lesser rates on a bi-annual basis at any rate up to the maximums set by the voters.
On February 13, 2018, the City Council adopted Ordinance No. 883, establishing the parameters under which personal cultivation could occur on residentially zoned properties, and the locations, types, and numbers of permissible commercial cannabis permits.
The numbers and types of commercial cannabis uses allowed under the adopted regulations are shown below.
License Type Maximum # to be Permitted
2A Small Indoor Cultivation
3A Medium Indoor Cultivation
4 (Indoor Only) Nursery (Cultivation)
5 6 Non-Volatile Manufacturing
7 Volatile Manufacturing
8 Testing Labs
9 Non-Storefront Retailer
111 Distributor
72 10 Storefront Retailer
12 Microbusiness 23
Notes:
1. Only standalone Type 11 Distribution licenses count toward the permit limits; businesses holding a State Type 11 in conjunction with another license type are unlimited.
2. No more than one Type 9 Non-Storefront Retailer permit may be issued.
3. No more than one of the retail permit types may be a Type 12 microbusiness.
Since adoption of the ordinance allowing for commercial cannabis uses, the City Council has granted permits to sixteen potential businesses. Of those granted permits, seven permittees have established active businesses or are making sufficient progress towards establishing the businesses in conformance with the conditions of their approvals. The remaining issued permits have either expired due to insufficient progress toward establishing operational businesses or were withdrawn or abandoned by the permittees. The following commercial cannabis permits are active:
Applicant Address License Type
Mercy Wellness of Cotati 7950 Redwood Dr. Type 12 - Microbusiness Jane Dispensary 8145 Highway 116 Type 10 – Retailer
Type 11 - Distributor
Barlow Printing
(dba: Henry’s Original) 481 Aaron St. Type 6 – Level 1 Manufacturing Type 11 – Distributor
Drops Cali 351 Alder Ave Type 6 – Non-Volatile Manufacturing Type 11 - Distributor
Clearlake Growth Fund II
(dba: Stachs/Eaze) 471 Aaron St. Suite B
Type 9 – Non-Storefront Retailer
(Delivery only)
Eagle Eye 531 Mercantile Dr.
Type 3A -Medium Indoor Cultivation
Type 7 – Volatile Manufacturing Type
11 - Distributor
TetraCert 445 Portal St #8 Type 4 – Indoor Nursery
Type 11 – Distributor
Barlow Printing
On June 25, 2019, the City Council awarded a commercial cannabis permit to Heritage Holding of California, LLC (dba: Henry’s Original) to allow non-volatile manufacturing and distribution at 481 Aaron Street.
In January 2021, Heritage Holding of California formed a wholly-owned subsidiary to define and control their Cotati operations, and adopted the name of the building’s former business, Barlow Printing.
On July 14, 2021, the City Manager authorized the biennial renewal of the commercial cannabis permit and recognized the permit holder’s name change from Heritage Holding of California, LLC to Barlow Printing, LLC.
On September 27, 2022, the City received an application from HC Solutions of California, LLC for a commercial cannabis distribution permit. HC Solutions of California indicated that they were acquiring Barlow Printing from Heritage Holding of California and would operate as Barlow Printing within Cotati. HC Solutions of California is wholly owned by HC Solutions Holdings Inc., and HC Solutions Holdings is 80% owned by Humble & Fume, Inc. and 20% owned by Green Acre Capital Distribution Corp.
Analysis/Discussion
Barlow Printing will operate as a commercial cannabis distribution business in the same location that Barlow Printing (under different ownership) is currently operating, but solely as a cannabis product distributor. Like the current Barlow Printing operation, the new Barlow Printing will receive tested, packaged, retail ready cannabis goods from other licensees throughout the state of California and distribute the goods to licensed retail stores and delivery services. The cannabis goods include flower and flower-only pre-rolls, infused pre-rolls, concentrates, edibles, tinctures, topicals, and beverages. Barlow Printing will also store and distribute branded accessories on behalf of distribution clients on a case-by-case basis. The distribution permit also allows for packaging, repackaging, labeling, pre-roll manufacturing, and storage.
It should be noted that this permit will be limited to distribution activities only. The application notes that they will also acquire a “Processor” license with their acquisition of Barlow Printing, but this license type is a State license that is not offered by the City of Cotati. A State processing license allows for cultivation-related activities such as trimming, sifting, curing, drying, packaging and labeling of cannabis, however only distribution related activities are being permitted with this action. Historically, the City allowed those types of activities (including at this location) when associated with a microbusiness, cultivation, or manufacturing permit; however, due to issues related to taxation and alignment with state licensing procedures and practices, the City now only allows activities such as sifting, drying, curing and trimming with an active cultivation or microbusiness permit and no longer allows those activities with a manufacturing permit, which is not included with this approval.
A commercial cannabis business has been operating from this site for approximately four years.
The proposed business will continue to operate with its activities focused on distribution activities alone. There have been no complaints or issues related to the commercial cannabis activities at this site. As the business will largely collect and distribute prepackaged retail-ready products, there will be little to no odor associated with the business. Warehousing and distribution activities use significantly less power and water compared to more intensive light or medium industrial activities, such as when the facility operated as an actual printing facility.
Financial Considerations
There is no adverse fiscal impact to the City. All commercial cannabis permit applicants file a $6,943 fee in conjunction with their applications. Staff time to review the application, inspect the premises and coordinate with the California Department of Cannabis Control are charged against this application fee. If approved, Barlow Printing will fall under the cannabis business tax requirements as a cannabis distribution facility (2%).
Environmental Issues
The project qualifies for a Class 1 Categorical Exemption, pursuant to CEQA Guidelines Section 15301 (Existing Facilities) in that the proposed project is the re-use of an existing industrial building with no increase in square footage, and with an industrial land use found to meet all City of Cotati development criteria.
Attachments:
Council Information - Barlow Printing (PDF)