Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council
Subject: Consideration of a Resolution approving a cannabis consumption lounge in conjunction with the commercial cannabis microbusiness permit issued to Mercy Wellness of Cotati at 7950 Redwood Drive (PA# 23-04).
Date: August 08, 2023
Written by: Jon-Paul Harries, Senior Planner
Recommendation
It is recommended by the Community Development Department that the City Council approve a Resolution approving a cannabis consumption lounge in conjunction with the commercial cannabis microbusiness permit issued to Mercy Wellness of Cotati at 7950 Redwood Drive.
Request
The applicant, Mercy Wellness of Cotati (“Mercy”), is requesting approval to operate a cannabis consumption lounge in conjunction with their existing commercial cannabis microbusiness permit.
The lounge would be located in two commercial suites (#15 & #16) in the same building as Mercy’s existing operations at 7950 Redwood Drive. The subject suites are currently permitted by the City to operate as a bar/tavern/night club/restaurant.
Background
On August 22, 2007, the City Council adopted Ordinance No. 787 adding Chapter 8.24 to the Cotati Municipal Code, which authorized the establishment of Medical Marijuana Dispensaries within the City of Cotati. Then, on March 20, 2010, the City Council granted its first (and only) medical marijuana dispensary license to Mercy Medical Dispensary (Mercy) at 7950 Redwood Drive. The City Council renewed Mercy’s medical dispensary license annually until 2018 when City laws changed (coupled with changes in State law), allowing for the sale of both medicinal and recreational adult-use marijuana (cannabis).
In response to the California Compassionate Use Act, the California Medical Cannabis Regulation and Safety Act, the Adult Use of Marijuana Act, SB 94, and the Medicinal and Adult Use Cannabis Regulation and Safety Act; on February 23, 2018, the City Council adopted Ordinance No. 883 - adding Section 17.42.200 (Commercial Cannabis Uses), amending Tables 2-2 and 2-3 of Chapter 17.22 (Allowable Uses and Permit Requirements), amending Chapter 17.90 (Definitions), and repealing Chapter 8.24 (Medical Marijuana Dispensaries) of the Cotati Municipal Code to allow and regulate certain commercial cannabis uses within the City.
On June 12, 2018, the City Council awarded a commercial cannabis microbusiness permit to Mercy Wellness of Cotati - allowing for small indoor cultivation (less than 10,000 square feet of canopy), non-volatile manufacturing, distribution, and store-front retail activities (under State License Type 12 - Microbusiness) at 7950 Redwood Drive. Since 2018, the City has biannually renewed Mercy’s commercial cannabis microbusiness permit, and the permit remains in good standing. Currently, Mercy is active in all permitted commercial cannabis activities - retail, cultivation, manufacturing & distribution.
As allowed by State law, on April 26, 2022, the City Council authorized the establishment of cannabis consumption lounges at permitted store-front cannabis retail facilities by adopting Ordinance 908, amending Section 9.31.060 (Places where Smoking is Optional), amending Chapter 17.22 Table 2-2 (Allowable Land Uses), amending Section 17.42.200 (Commercial Cannabis Uses and Requirements), and amending Chapter 17.90 (Definitions).
On February 21, 2023, the City received an application from Mercy Wellness of Cotati requesting that a cannabis consumption lounge be added to the permissible commercial cannabis activities allowed under their commercial cannabis microbusiness permit.
Similarly, Mercy applied to the California Department of Cannabis Control for a licensed premises change that would allow for a cannabis consumption lounge, and received State approval on April 11, 2023.
Analysis/Discussion
Proposal
The applicant is proposing to remodel two commercial suites of an existing commercial building at 7950 Redwood Drive and occupy them as a cannabis consumption lounge. The subject suites (#15 & #16) are the most southerly units in the building and are approximately 4,566 square feet in size with an outdoor patio area that is approximately 900 square feet.
The lounge would be located within the same building as Mercy’s existing commercial cannabis business, but there would not be direct access from the retail dispensary area to the lounge.
Presently, Mercy operates as a “microbusiness”, a state category of commercial cannabis permit which allows multiple commercial cannabis activities under a single permit. Mercy’s current activities include cultivation, manufacturing, distribution, and store-front retail activities. The current total space occupied by Mercy is approximately 24,502 square feet of the 40,485 building.
A specific breakdown of the space occupied by each of Mercy’s activities is described in the attached information provided by the applicant.
Consumption Lounge Operations
There are several cannabis consumption lounges located throughout the state, but this would be the first one in Sonoma County. It is expected that cannabis consumption lounges will continue to grow throughout the State, and they are generally viewed as the next step in the growth of the fledgling regulated cannabis industry. The intent of the consumption lounge is to allow customers to try new products in a safe and comfortable environment. This proposed lounge is also intended to showcase the multiple facets of Mercy’s cannabis production processes from seed to final product.
A detailed description of how the lounge will operate is provided in the attached information, and the Conditions of Approval listed in the attached Resolution, but can be summarized as follows:
• The lounge will initially be open for limited hours and days but is expected to eventually be open Monday through Sunday from 9:00 am to 10:00 pm. • The lounge will offer consumption of cannabis by smoking, vaping, topical application, and ingestion.
• The consumption of cannabis products will be screened from all public and non-agerestricted areas. • All cannabis consumption that produces smoke will be consumed in a designated outdoor area or an area served by an adequate carbon-filtered ventilation system. • Only people 21 years of age or older will be allowed into the lounge. This restriction must be conspicuously posted at the entrance to the lounge. • No alcohol or tobacco will be sold or consumed within the lounge area. • This permit authorizes the sale of pre-packaged food and non-alcoholic beverages, and the sale of food from legally operating food trucks. Mercy would be responsible for acquiring any local or state permits that may be required for such activity. However, there is pending state legislation to allow food service in a cannabis consumption lounge. If this bill passes, food service would be offered subject to approval of a Food Facility Operating Permit from the County Department of Health Services.
• No outside cannabis will be permitted in the lounge. All cannabis consumed in the lounge must be purchased from Mercy. Cannabis products will be ordered from the lounge and delivered from the dispensary to the lounge. All cannabis sold will be tested, pre- packaged products in keeping with the requirements of state law. • The permit authorizes events to be held during standard operating hours that may include live music, celebrity appearances, comedy performances, food truck vendors, cannabis brand activations, and onsite consumption. All advertised events require Mercy to notify the Department of Community Development and the Police Department at least 60 days prior to the event. Upon review, the City may deny the event or apply certain conditions to the event’s operation or hours.
Consumption Lounge Safety
To ensure the cannabis consumption lounge operates as safely as possible, the applicant has proposed a number of safety-focused operating procedures and policies, which are described in the attached information provided by the applicant. Additionally, there are a series of safety items set forth in the Conditions of Approval listed in the attached Resolution. The project proposal and conditions of approval that address safety matters include, but are not limited to:
• Prior to entry, Mercy will provide the customer with a membership agreement with a list of rules and regulations that must be adhered to. This agreement educates the customer on safe cannabis consumption and the risks associated with cannabis consumption, including driving.
• The use of Patronscan, which is a technology system that scans and analyzes IDs, including driver’s licenses and passports. The system can identify fake IDs and also includes a database of over 50,000 individuals known for assaults, chargebacks, serious drug violations, and property damage. This significantly reduces the potential of incidents by spotting and refusing entry to restricted individuals before a problem occurs. • Lounge employees will be required to attend a “Responsible Cannabis Sever” and a “Responsible Beverage Server” certification course within one (1) month of employment and must satisfactorily pass each exam with an 80% score or better. These trainings include how to properly verify IDs as well as methods to identify intoxicated individuals to prevent over-serving.
• Alcohol (and tobacco) will not be allowed to be sold or consumed within the lounge. • Any customer identified as impaired or overly intoxicated will not be allowed admittance into the lounge.
• Any attendee who has been identified as intoxicated will not be allowed to drive and will be offered alternative transportation. Any attendee actively resisting such efforts and who enters a vehicle with the intention of driving shall be immediately reported to the Police.
This shall include a description and direction of the vehicle and the patron’s name if known. • Mercy has partnered with Uber and will be providing free transportation to those they feel are unsafe to drive. Mercy will promote and incentivize patrons to have a rideshare or designated driver. They are also required to provide written literature explaining the dangers of driving while under the influence of cannabis. • A security plan approved by the Cotati Chief of Police will be required to be installed prior to opening and adhered to while in operation.
• Mercy has developed a Safe Consumption Policy, which is focused on educating customers about consuming cannabis safely and the different methods of consuming cannabis, which can have very different effects on individuals.
Financial Considerations
There is no direct fiscal impact to the City general fund associated with processing of the requested permit, and the project does not require the expenditure of City funds. All commercial cannabis permit applicants pay an application 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. Mercy Wellness of Cotati is also subject to the City’s cannabis business tax requirements as a commercial cannabis microbusiness facility.
If granted, the request to allow a cannabis consumption lounge at Mercy will likely lead to an increase in sales revenue and tax receipts, as well as promote visitor/tourist activity within the City.
Environmental Issues
Based on all available information, the project qualifies for a Class 1 Categorical Exemption, pursuant to California Environmental Quality Act (CEQA) Guidelines Section 15301 (Existing Facilities), because the proposed project is the re -use of two suites within an existing commercial building with no increase in square footage, and with a land use found to meet all City of Cotati development criteria; therefore no further environmental documentation is required.
Attachments:
Council Information - Mercy Wellness Consumption Lounge (PDF)