Administrative Record - Review Hearing - Herbal Dragon LLC Page 21 of 345Page 2409 of 4584 criminal history of the Applicant or Cannabis Permittee that was disclosed to or discovered by the City prior to issuance of the Cannabis Permit and is confirmed by the Applicant or Cannabis Permittee. For any criminal history that was not disclosed to or discovered by the City prior to issuance of a Cannabis Permit, or that arose after the issuance of the Cannabis Permit, the City shall conduct a thorough review of the nature of the crime, conviction, circumstances, and evidence of rehabilitation of the Applicant or Cannabis Permittee, and shall evaluate the suitability of the Applicant or Cannabis Permittee based upon such review. In determining which offenses are substantially related to the qualifications, functions, or duties of the Applicant or Cannabis Permittee, the City shall consider factors set forth in Business and Professions Code Section 26057; (vi) the Applicant or Cannabis Permittee is employing or allowing to volunteer any person whose criminal history indicates that such person is not of Good Moral Character; (vii) the Applicant or Cannabis Permittee fails to allow inspection by City officials of the security recordings, activity logs, business records, or other accessible records pertaining to the activities conducted on the applicable Premises; or (viii) the Applicant or Cannabis Permittee allows for Physician Services to be conducted on the applicable Premises. (u) "Good Moral Character" means having a personal history that demonstrates the propensity to serve the public in a manner that reflects openness, honest, fairness, and respect for the law and rights and well-being of others. In determining Good Moral Character, the following standards shall apply: (i) a judgment of guilt in a criminal prosecution or a judgment in a civil action shall not be used, in and of itself, as proof of an individual's lack of Good Moral Character.
Such judgment, however, may be used as evidence in the determination and when so used, the individual shall be notified and shall be permitted to rebut the evidence by showing that, at the current time, he or she has the ability to, and is likely to serve the public, in a fair, honest, and open matter, that he or she is rehabilitated, and/or that the substance of the former offense is not substantially related to the applicable Commercial Cannabis Activity; and (ii) a prior conviction where the sentence, including any term of probation incarceration, or supervised release is completed for the possession of, possession for sale, sale, manufacture, transportation, or cultivation of a controlled substance, is not considered substantially related, and shall not be the sole ground for denial of a Cannabis Permit, except that any of the convictions set forth in Business and Professions Code Section 26057(b)(4), as may be amended, shall be deemed substantially related to applicable Commercial Cannabis Activity. (v) "Health and Safety Code" means the California Health and Safety Code, as amended from time to time.
(w) "Indoor" means within a Fully Enclosed and Secure Structure. (x) "Manufacture" or "Manufacturing" means to compound, blend, extract, infuse, or otherwise make or prepare a Cannabis Product from such blends, extractions, or infusions.
)
Administrative Record - Review Hearing - Herbal Dragon LLC Page 22 of 345Page 2410 of 4584 (y) uManufacturing Permit" means a Cannabis Permit to Manufacture in accordance with the terms and conditions of this Chapter and the conditions of approval for the applicable Cannabis Permit issued to the particular Manufacturing Permittee.
(z) "Manufacturing Permittee" means a Person that has been issued a Manufacturing Permit by the City pursuant to the terms and conditions of this Chapter.
(aa) "Medicinal Permittee" means a Person who is issued a Cannabis Permit to engage in Commercial Cannabis Activity with respect to medicinal Cannabis in accordance with applicable City law and State Law, including MAUCRSA. (bb) "Microbusiness" means a commercial medicinal cannabis business facility of cultivation of medicinal cannabis on areas less than 10,000 square feet and also acts as a licensed distributor, manufacturer, and Delivery-only retailer, pursuant to State Law, including MAUCRSA. Microbusinesses shall not be open to the public for point-of-sale retail Cannabis sales.
(cc) "Microbusiness Permit" means a Cannabis Permit to establish and conduct a Microbusiness in accordance with the terms and conditions of this Chapter and the conditions of the Development Agreement for the applicable Cannabis Permit issued to the particular Microbusiness Permittee. (dd) "Microbusiness Permittee" means a Person who has been issued a Microbusiness Permit by the City pursuant to the terms and conditions of this Chapter.
(ee) "Outdoors" means any location within the City that is not within a Fully Enclosed and Secure Structure.
(ff) "Owner" means any of the following: (i) a Person with an aggregate ownership interest of 20% or more in the Person applying for a Cannabis Permit, unless the interest is solely a security, lien, or encumbrance; (ii) the chief executive officer of a nonprofit or other entity; a member of the boards of directors of a nonprofit; (iv) an individual who will be participating in the direction, control, or management of the person applying for a Cannabis Permit. (gg) "Permit Zone" means, with respect to a Person holding a Cannabis Permit, the overlay zone described in Cudahy Municipal Code Chapter 20.120 where such Cannabis Permit type is permitted to operate pursuant to a Development Agreement with the City.
(hh) "Person" includes any individual, entity, firm, co-partnership, joint venture, association, corporation, limited liability company, estate, trust, business trust, receiver, syndicate, or any other group or combination acting as a unit, and the plural as well as the singular.
(ii) "Physician Services" means the consultation by a State-licensed physician of a patient with the possible recommendation by such physician of medicinal Cannabis for such patient.
Administrative Record - Review Hearing - Herbal Dragon LLC Page 23 of 345Page 2411 of 4584 OD "Premises" means the designated structure or structures and land specified in the application that is owned, leased, or otherwise held under the control of the Cannabis Permittee applicant or Cannabis Permittee where the Commercial Cannabis Activity will be or is conducted. The premises shall be a contiguous area and shall only be occupied by one Cannabis Permittee. (kk) "Retail Delivery" means the commercial transfer or delivery of Cannabis or Cannabis Products to a customer, patient, primary caregiver or Cannabis Permittee.
(II) "Retail Delivery Establishment" means a location where Cannabis or Cannabis Products are, either individually or in any combination, Delivered pursuant to State Law, including MAUCRSA. Retail Delivery Establishments shall not be open to the public for point-of-sale retail sales. (mm) "Retail Delivery Permit" means a Cannabis Permit to Deliver Cannabis and Cannabis Products to customers, patients, and primary caregivers in accordance with the terms and conditions of this Chapter and the conditions of the Development Agreement for the applicable Cannabis Permit issued to the particular Retail Delivery Permittee.
(nn) "Retail Delivery Permittee" means a Person that has been issued a Retail Delivery Permit by the City pursuant to the terms and conditions of this Chapter. (oo) "State" means the State of California.
(pp) "State Law" means all laws of the State of California, including, but not limited to, all rules and regulations adopted by State agencies and State regulatory entities, including subsequent amendments to such laws, rules, and regulations.
(qq) "State Medicinal license" means a State license for medicinal Commercial Cannabis Activities issued pursuant to State Law. (rr) "Testing" means the activities conducted by a Testing Laboratory. (ss) "Testing Laboratory" means an accredited laboratory, facility, or entity in the City that offers or performs tests of medicinal cannabis or medicinal cannabis products in accordance with State Law and City law:
(tt) "Testing Permit" means a Cannabis Permit for Testing the quality and makeup of Cannabis and Cannabis Products pursuant to the terms and conditions of this Chapter and the conditions of the Development Agreement for the applicable Cannabis Permit issued to the particular Testing Permittee. (uu) "Testing Permittee" means a Person who has been issued a Testing Permit by the City pursuant to the terms and conditions of this Chapter. (vv) "Volatile Solvent" means a Class I Flammable liquid as defined by the National Fire Protection Association, including butane and propane. (ww) "Youth Center" means any public or private facility that is primarily used to host recreational or social activities for minors, including, but not limited to,
Administrative Record - Review Hearing - Herbal Dragon LLC Page 24 of 345Page 2412 of 4584 private youth membership organizations or clubs, social service teenage club facilities, video arcades, or similar amusement park facilities.
5.20.030 Commercial Cannabis Activity Prohibited.
All Commercial Cannabis Activity within the City is prohibited except as permitted by this Chapter.
5.20.040 Certain Commercial Cannabis Activity Permitted. Medicinal Commercial Cannabis Activities, except retail dispensaries that are open to the public for point-of-sale purchases, shall be allowed within the area set forth in the overlay zone/Permit Area illustrated in Exhibit "A" to City Council Ordinance No. 673 pursuant to a development agreement adopted in accordance with the Development Agreement Law (Gov. Code,§ 65864 et seq.) and Cudahy Municipal Code Chapter
20.28 (Development Agreements). No such activities shall be permitted without a Development Agreement within or outside of the boundaries of such overlay zone.
The City may approve or deny such a Development Agreement in its sole and absolute discretion. The City Manager is authorized to develop and promulgate policies and procedures consistent with the intent and spirit of this Chapter concerning the applications, application process, including, but not limited to, the information required of Applicants, and application review procedures, which shall inform the administration and protocols to be used and followed by the City in the application and hearing processes.
5.20.050 Business standards.
Commercial Cannabis Activity within the City shall be in conformance with the standards set forth in this Section, in addition to those additional standards that may be imposed through negotiated Development Agreement. The City Manager is hereby authorized to formulate and impose additional Business Requirements applicable to Cannabis Permittees in furtherance of the public health, safety, and/or welfare.
(a) Commercial Cannabis Activity shall only be allowed upon application and issuance of a Cannabis Permit and a Development Agreement by the City in accordance with the criteria and process set forth in this Chapter and City Code. (b) Zoning and Land Use.
(1) Operation Near Schools, Day Cares, and Youth Centers. Following the enactment of this Chapter, no new Premises shall be established, developed, or operated within 600 feet of a Day Care Center, Youth Center, or public or private school providing instruction in kindergarten or any grades 1 through 12 that is in existence at the time the Cannabis Permit is issued. All distances shall be measured in a straight line, without regard to intervening structures, from the nearest point of the building or structure in which the Premises are, or will be, located to the nearest property line of those uses describe in this Subsection. The restrictions set forth in this Subsection shall not apply to Premises which operate within 600 feet of any Day Care Center, Youth Center, or public or private school
Administrative Record - Review Hearing - Herbal Dragon LLC Page 25 of 345Page 2413 of 4584 providing instruction in kindergarten or any grades 1 through 12, if such Premises existed prior to the establishment of the applicable Day Care Center, Youth Center, or school that is located within 600 feet of such Premises.
(2) Co-Location. All Commercial Cannabis Activity shall fully comply with all l mandates set forth in State Law. To the extent not prohibited under State Law, a Cannabis Permittee may be located within the same unit of the same Premises or building, facility or real property parcel as another Cannabis Permittee.
(3) Development Agreement.
a) Prior to commencing operations, all Cannabis Permittees shall enter into a Development Agreement with the City.
b) All Premises shall be operated in accordance with the terms of the applicable Development Agreement for the specified parcel of real property (or sub-portion thereof) upon which the Premises is located. c) Except as specified, Commercial Cannabis Activities shall not exceed the square footage authorized pursuant to the applicable Development Agreement.
d) All Premises shall be located in the Permit Zone pursuant to the applicable Development Agreement.
(c) Commercial Cannabis Activity is allowed only within Fully Enclosed and Secure Structures that are inaccessible to minors.
(d) Signage for any business must be applied for through the City's Planning Division, which shall require review and approval prior to installation. Business identification signage shall be limited to that needed for identification only, and shall not contain any logos or information that identifies, advertises, or lists the services or the products offered. No Cannabis Permittee shall advertise by having a person holding a sign and advertising the business to passersby, whether such person is on the Premises of the Cannabis Permittee or elsewhere including, but not limited to, the public right-of-way. (e) From any public right-of-way, there shall be no visible evidence of the consumption of any Cannabis Products. Commercial Cannabis Activity shall not adversely affect the health or safety of the nearby residents by creating dust, glare, heat, noise, smoke, traffic, vibration, odor or other impacts, and shall not be hazardous due to use or storage of materials, processes, products, or wastes. (f) Hours of operation limits, if any, shall be specified in terms mutually agreed upon in a Development Agreement.
(g) All Cannabis and Cannabis Products shall be kept in a secured manner during all business and nonbusiness hours.
(h) All Commercial Cannabis Activities shall operate within Premises that are compliant with all applicable State Laws and local laws.
Administrative Record - Review Hearing - Herbal Dragon LLC Page 26 of 345Page 2414 of 4584 (i) Cannabis Permittees must pay all applicable taxes pursuant to all federal, State, and local laws, including, but not limited to, fees relating to infrastructure improvements within the Permit Zone.
U) Cannabis Permittees shall provide sufficient odor absorbing ventilation and exhaust systems so that odors outside the applicable Premises are not a nuisance on any adjacent property of public right-of-way. Any violation of this Section shall be remedied within thirty (30) days of the Cannabis Permittee receiving notice of such violation.
(k) Cannabis Permittees shall utilize product and inventory tracking software and accounting software that is consistent with reasonable business practices within the industry and the seed-to-sale tracking software being developed by the State. (I) Except permitted in this Chapter, on-site smoking, ingestion, or consumption of Cannabis or Cannabis Products shall be prohibited on Premises. Except to the extent otherwise permitted pursuant to this Chapter, the entrance of the Premises shall be clearly and legibly posted with a notice indicating that smoking, ingesting, or consuming Cannabis, Cannabis Products or alcohol on such Premises is prohibited.
(m) Signage for all Premises shall be in compliance with the City's sign code and application for all signs must be submitted to the City's Planning Division and comply with its sign permitting protocol.
(n) Alcoholic beverages and tobacco shall not be sold, stored, distributed, or consumed on the Premises. Cannabis Permittees shall not hold or maintain a license from the State Department of Alcohol Beverage Control to sell alcoholic beverages, or operate a business that sells alcoholic beverages or tobacco with respect to the Premises. In addition, alcohol shall not be provided, stored, kept, located, sold, dispensed, or used on the Premises.
(o) Physician Services shall not be provided at any Premises. (p) The Premises shall fully comply with all applicable rules, regulations, and laws including, but not limited to, zoning and building City Codes, the City's business license ordinances, the Revenue and Taxation Code, the Americans with Disabilities Act, and MAUCRSA.
(q) Each Cannabis Permittee shall provide the City Manager, or the City Manager's designee, with the name, phone number, facsimile number, and email address of an on-site representative of such Cannabis Permittee to whom the City and the public can provide notice if there are any operational problems associated with such Cannabis Permittee's Premises. Each Cannabis Permittee shall make reasonable and good faith efforts to encourage residents and the public to call this representative to resolve any operational problems before any calls or complaints are made to the City or law enforcement. (r) All Cannabis Permittees must comply with the following security requirements:
(1) General Security Requirements.
Administrative Record - Review Hearing - Herbal Dragon LLC Page 27 of 345Page 2415 of 4584 a) Security cameras shall be installed and maintained in good working condition and used in a format approved by the City Manager. The cameras shall be in use 24 hours per day, 7 days per week. The areas to be covered by the security cameras include areas as determined by the City Manager, including, but not limited to, the area in which the primary Commercial Cannabis Activity occurs, e.g. the Cultivation area for a for a cultivator.
b) The Premises shall be alarmed with a reliable commercial alarm system that is operated and monitored by a security company or alarm business in a manner satisfactory to the City Manager.
c) Entrance to any storage areas shall be locked at all times and under the control of staff of the Cannabis Permittee.
d) The business entrance(s) and all window areas shall be illuminated during evening hours. The Applicant shall comply with the City's lighting standards regarding fixture type, wattage, illumination levels, shielding, etc., and secure the necessary approvals and permits, as necessary. e) All windows on the Premises shall be appropriately secured with all Cannabis and Cannabis Products securely stored.
f) Each Cannabis Permittee shall implement track and trace protocols, as noted above in this Section, in order to prevent diversion of Cannabis or Cannabis Products.
g) All waste and disposal containers shall be locked at all times and stored ins a secure area and, at all times, under the control of the Cannabis Permittee.
(2) Security Alarm Systems - Minimum Requirements.
a) Each Premises shall have a security alarm system installed by a licensed alarm company on all perimeter entry points and perimeter windows.
b) Each Premises must ensure that its location is continuously monitored. Premises may engage the services of outside vendors to fulfill this requirement, such as a private security firm.
c) Each Premises shall maintain up to date and current records and existing contracts on the Premises that describe the location and operation of each security alarm system, a schematic of security zones, the name of the licensed alarm company, and the name of any vendor monitoring the Premises.
(3) Lock Standards. At a minimum, all points of ingress and egress shall be secured with commercial-grade, non-residential door locks. (4) Video Surveillance Requirements.
Administrative Record - Review Hearing - Herbal Dragon LLC Page 28 of 345Page 2416 of 4584 a) Prior to exercising the privileges of a Cannabis Permit issued under this Chapter, an Applicant must install fully operational video surveillance and camera recording system. The recording system must record in digital format and meet the requirements outlined herein.
b) All video surveillance records and recording must be stored in a secure area that is only accessible to the management staff of the Cannabis Permittee.
c) Video surveillance records and recordings must be made available upon request to the City Manager or designee for a purpose authorized by this Chapter or for any other State or local law enforcement purpose. d) Video surveillance shall be held in confidence by all employees and representatives of the City Manager, except that the City Manager may provide such records and recordings to any State or local law enforcement agency for any purpose authorized under this Chapter for any State or local law enforcement purpose.
e) A sign shall be posted in a conspicuous place near each point of public access, which shall not be less than 12 inches wide and 12 inches long, composed of letters not less than one inch in height, stating that "All Activities Monitored by Video Camera" or "These Premises Are Being Digitally Recorded" or otherwise advising of all persons entering the Premises that a video surveillance and camera recording system is in operation and recording all activity as provided in this Section. f) The Premises shall utilize video surveillance equipment and a camera system that shall be remotely accessible by the City and Los Angeles County Sheriff's Department.
(5) Video Surveillance Equipment.
a) Video surveillance equipment shall, at a minimum, consist of digital or network video recorders, cameras capable of meeting the recording requirements described in this Section, video monitors, digital archiving devices, and a color printable capable of delivering still photos. b) All video surveillance systems must be equipped with a failure notification system that provides prompt notification to a Cannabis Permittee of any prolonged surveillance equipment interruption and/or the complete failure of the surveillance.
c) Cannabis Permittees are responsible for ensuring that all surveillance equipment is properly functioning and maintained so that the playback quality is suitable for viewing and the surveillance equipment is capturing the identity of all individuals and activities in the monitored Premises.
d) All video surveillance equipment shall have sufficient battery backup to support a minimum of four hours of recording in the event of a power outage.
Administrative Record - Review Hearing - Herbal Dragon LLC Page 29 of 345Page 2417 of 4584 (6) Placement of Cameras and Required Camera Coverage.
a) Camera placement shall be capable of identifying activity occurring within 20 feet of all points of ingress and egress and shall allow for the clear and certain identification of any individual and activities on the Premises.
b) All entrances and exits to the Premises shall be recorded from both indoor and outdoor vantage points.
c) The system shall be capable of recording all pre-determined surveillance areas in any lighting conditions. If the Premises has a medicinal cannabis cultivation area, a rotating schedule of lighted conditions and zero-illumination can occur as long as ingress and egress points to those areas remain constantly illuminated for recording purposes.
d) Areas where medicinal cannabis is grown, tested, cured, manufactured, or stored shall have a camera placed in the room facing the primary entry door at a height that will provide a clear unobstructed view of activity without sight blockage from lighting hoods, fixtures, or other equipment.
e) Cameras shall also be placed at each location where weighing, packaging, preparation, tagging activities occur, or other distribution preparation activities occur.
f) At least one camera must be dedicated to record the access points to the secured surveillance recording area.
(7) Location and Maintenance of Surveillance Equipment. a) Surveillance recording equipment must be housed in a designated, locked, and secured room or other enclosure with access limited to authorized employees, the City Manager or designee, Los Angeles County Sheriff's Department, as authorized by this Chapter, other State or local law enforcement purpose, and service personnel or contractors. b) Premises must keep a current list of all authorized employees and service personnel who have access to the surveillance system and/or surveillance system room on the Premises. Premises must keep a surveillance equipment activity log on the Premises to record all service activity, including the identity of all individuals performing services on system service, the service date and time, and the reason for such service to the surveillance system.
c) Off-site monitoring and video recording storage of the Premises by an independent third party may be authorized so long as standards exercised at the remote location meets or exceeds all of the standards applicable to onsite monitoring.
Administrative Record - Review Hearing - Herbal Dragon LLC Page 30 of 345Page 2418 of 4584 d) Each Premises located in a common or shred building must have a separate surveillance room/area that is dedicated to that specific Premises. The facility that does not house the central surveillance room is required to have a review station, printer, and map of camera placement on the Premises. All minimum requirements for equipment and security standards as set forth in this Section apply to such review station. (8) Video Recording Retention Requirements.
a) All camera views of all recorded areas must be continuously recorded 24 hours a day.
b) All surveillance recordings must be kept for a minimum of 30 days and be in a format that can be easily accessed for viewing. Video recordings must be archived in a format that ensures authentication of the recording as legitimately-capture video and guarantees that no alteration of the recorded image has taken place.
c) The surveillance system or equipment must have the capabilities to produce a color still photograph form any camera image, live, or recorded, of the Premises.
d) The date and time must be embedded on all surveillance recordings without significantly obscuring the picture. e) Time is to be measured in accordance with the official United States time established by the National Institute of Standards and Technology and the U.S. Naval Observatory at www.time.gov. f) After the 30-day surveillance retention schedule has lapsed, surveillance video recordings must be erased or destroyed prior to being discarded or disposed of for any other purpose. Surveillance video recordings shall not be destroyed if the Cannabis Permittee knows or should have known of a pending criminal, civil, or administrative investigation or any other proceeding sfor which the recording may contain relevant information.
(9) Other Records. All records applicable to the surveillance system and cannabis tracking system shall be maintained on the Premises. At a minimum, Premises shall maintain a map of the camera locations, directions of coverage, camera numbers, surveillance equipment maintenance activity log, user authorization list and operating instructions for the surveillance equipment.
(s) Audit. Each Cannabis Permittee shall maintain accurate books and records in an electronic format, which detail all revenues and expenses of the business, including, but not limited to, all assets and liabilities. On no less than an annual basis, or at any time upon reasonable request of the City, each Cannabis Permittee shall file a sworn statement detailing business activity during the previous 12-month period (or shorter period based upon the timing of the request). The statement shall include gross sales for each month and all
Administrative Record - Review Hearing - Herbal Dragon LLC Page 31 of 345Page 2419 of 4584 applicable taxes and fees paid or due to be paid. On an annual basis, each owner and operator shall submit to the City a financial audit of the business's operations conducted by an independent certified public accountant. Each Cannabis Permittee shall be subject to a regulatory compliance review and financial audit as determined by the City Manager or designee. (t) Inspections. The City Manager, or designee, or Los Angeles County Sheriff's Department shall have the right to enter all Premises from time to time unannounced during a Cannabis Permittee's hours of operation for the purpose of making reasonable inspections to observe and enforce compliance with this Chapter, to inspect and copy records required to be maintained under this Chapter, or to inspect, view, and copy recordings made by security cameras, all without requirement for a search warrant, subpoena, or court order, and subject to appropriate fees, as specified in the Development Agreement, or adopted by the City.
5.20.060 Application and fee requirements.
(a) All applicants wishing to obtain a Cannabis Permit from the City shall file an application with the City upon a form approved by the City Manager and shall pay a permit application fee as established by the City. The fee may vary depending on the type of Cannabis Permit. The City Manager or designee may require and conduct background checks, as necessary, to process and evaluate Cannabis Permit applications.
(b) Prior to operating in the City, each Cannabis Permittee shall timely and fully pay all fees associated with the establishment of Commercial Cannabis Activity.
The fees shall be as set forth in the schedule and fees and charges established by the City Council, including, but not limited to, the following:
(1) Application fee for accepting a registration application, due and payable in full at the time an application is submitted;
(2) Processing fee for the cost to the City of processing an application and reviewing, investigating, and scoring each application in accordance with any evaluation system to determine eligibility for issuance of a Cannabis Permit, due and payable in full at the time a registration application is submitted;
(3) Permit issuance fee for the cost to the City of preparing a Development Agreement, Planning Commission and City Council review of the Development Agreement and the Cannabis Permit, and preparation and issuance of the Cannabis Permit, as authorized by the Cannabis Permit; (4) Amended registration fee for the cost to the City of reviewing amendments or changes to the registration form previously filed on behalf of an Applicant, due and payable in full at the time amendments or changes to any Cannabis Permit form is submitted to the City;
Administrative Record - Review Hearing - Herbal Dragon LLC Page 32 of 345Page 2420 of 4584 (5) Permit renewal fee for the cost ot the City of processing an application to renew a Cannabis Permit, due and payable in full at the time application is made to renew a Cannabis Permit; and
(6) Any fees set forth in the applicable Development Agreement.
5.20.070 Permit conditions.
(a) A Cannabis Permit application may be denied and not awarded by the City if:
(1) The Applicant or the Applicant's agent(s) has made one or more false or misleading statements or omissions in the application or during the application process.
(2) The proposed Premises or Commercial Cannabis Activity at the Premises is not allowed by State Law or City law.
(3) The Applicant is not a legal representative of the proposed Cannabis Permittee.
(4) The Applicant or any of its officers, directors, owners, managers, or employees is under 21 years of age.
(5) The Applicant's facility or its location is in violation of any building, zoning, health, safety, or other provision of this Chapter or of any State or local law that substantially affects the public health, welfare, safety, or morals, or the facility or its location is not permitted in the proposed area, or the issuing or continuation of a Cannabis Permit would be contrary ro the public health, welfare, safety, or morals.
(6) The Applicant or any of its officers, directors, owners, managers, or employees has been sanctioned by the City, State, or any county for unauthorized cannabis activities or has had a registration revoked under this Chapter in the previous 3 years.
(7) The Applicant or the Applicant's agent(s) have engaged in unlawful, fraudulent, unfair, or deceptive business acts or practices. (8) The Applicant has not been or is not in good standing with the City related to other or previous business activities operated in the City. (9) The Applicant has not satisfied all requirement of this Chapter. (10) For Good Cause, as defined in this Chapter.
(b) A Cannabis Permit shall be awarded by the City to Applicants in accordance with the process established by the City Manager.
(c) Before a Cannabis Permit can be issued to an applicant, a Cannabis Permit fee must be paid to offset all related costs to the City, and the proposed Premises must pass all applicable inspections.
Administrative Record - Review Hearing - Herbal Dragon LLC Page 33 of 345Page 2421 of 4584 (d) Each Cannabis Permit is subject to the conditions of approval in the applicable Development Agreement for the parcel of real property upon which the Premises is located.
(e) Each Cannabis Permit is subject to any additional conditions that may be applied by the City at the time of issuance or renewal as necessary to properly regulate the applicable Commercial Cannabis Activities and to protect the public. (f) Each Cannabis Permittee shall execute a Development Agreement with the City to, among other things, fully reimburse the City for all fiscal impacts, costs, expenses, fees, and attorneys' fees incurred by the City related to the Cannabis Permit and the related Commercial Cannabis Activity of such Cannabis Permittee.
(g) Each Cannabis Permittee shall:
(1) Carry liability insurance in the amounts and types set by the City Manager or the City Manager's designee, and name the City as an additional insured on all such insurance policies.
(2) Execute an Indemnification Agreement prepared by the City that fully indemnifies the City for all liabilities associated with the Cannabis Permit, the Cannabis Permittee's Commercial Cannabis Activities, and any action taken by the Cannabis Permittee pursuant to this Chapter. Such indemnification may be set forth in the applicable Development Agreement.
(3) Defend the City, at the Cannabis Permittee's sole expense, in any action against the City or its agents, officers, officials, or employees associated with the Cannabis Permit, the Cannabis Permittee's Commercial Cannabis Activities, or any action taken by the Cannabis Permittee pursuant to this Chapter. The City may, at its sole discretion, participate in the defense of any such action, but such participation shall not relieve the Cannabis Permittee of its indemnification and reimbursement obligations. (4) Reimburse the City for all costs, expenses, fees, and attorney's fees incurred by the City related to any action against the City or its agents, officers, or employees associated with the Cannabis Permit, the Cannabis Permittee's Commercial Cannabis Activity, or any action taken by the Cannabis Permittee pursuant to this Chapter.
(h) A Cannabis Permittee shall keep the City and law enforcement updated with the names, addresses, and relevant criminal histories of the Applicant's Agents.
Relevant criminal histories shall include any drug-related or felony convictions, the nature of such offenses, and the sentences received for such convictions. (i) Transfer.
(1) Any Cannabis Permittee may not sell, transfer, pledge, assign, grant an option, or otherwise dispose of his or her ownership interest in the Commercial Cannabis Business authorized pursuant to the Cannabis Permit.
l
Administrative Record - Review Hearing - Herbal Dragon LLC Page 34 of 345Page 2422 of 4584 (2) In order for a Cannabis Permittee to transfer its Cannabis Permit to any Person, such Cannabis Permittee must submit a transfer application to the City Manager or City Manager's designee. The City Manager or designee may create a transfer application and reasonable transfer application process, including mandatory fee, that Cannabis Permittees and the City must follow and pay for Cannabis Permit transfer requests. Each transfer request of a Cannabis Permit and the related transfer application is subject to the prior approval of the City Manager or designee. (3) Applicants for Cannabis Permits must show proof of lawful possession of the applicable location. Evidence of lawful possession consists of properly executed deeds of trust, leases, and other written instruments, as may be accepted by the City.
(4) The location shall only be the geographical area that is specifically and accurately described in executed documents verifying lawful possession.
No Cannabis Permittee is authorized to relocate to other areas or units within a building structure without first filing a change of location application and obtaining approval form the City regardless of any possessory interest or right to possession to such additional space. No Cannabis Permittee shall add additional contiguous units or areas, thereby altering initially-approved Premises without filing an application to modify the location on forms prepared by the City Manager, including any applicable processing fee.
(5) No Cannabis Permittee is authorized to sublet any portion of any Premises for any purpose unless all necessary forms and applications to modify the existing location to accomplish any subletting have been approved by the City.
(6) The City Manager shall develop and promulgate a process for the renewal of Cannabis Permits and the establish related fees, in accordance with applicable laws.
U) To the fullest extent permitted by law, the City does not assume any liability, and expressly does not waive sovereign immunity, with respect to any Commercial Cannabis Activities, or for the other activities of any Cannabis Permittee or for any other activities taking place at Premises. (k) Changing, Altering, or Modifying Location.
(1) After issuance of a Cannabis Permit, the Cannabis Permittee shall not make any physical change, alteration, or modification to the Premises that materially or substantially alters the location, production estimates, and/or usage of the location form the plans originally approved under the applicable Development Agreement, without the prior written approval of the City Council or designee. The Cannabis Permittee whose Premises are to be materially or substantially changed is responsible for filing an application with the City in order to obtain requisite approval.
Administrative Record - Review Hearing - Herbal Dragon LLC Page 35 of 345Page 2423 of 4584 (2) Material or substantial changes, alterations, or modifications requiring approval include, but are not limited to, the following: (i) an increase or decrease in the total physical size or capacity of the location; (ii) the sealing off, creation of or relocation of a common entryway, doorway, passage, or other such means of public ingress and/or egress, when such common entryway, doorway, or passage alters or changes limited access areas; or (iii) the installation or replacement of electric fixtures or equipment, the lowering of a ceiling, or electrical modifications made for the purpose of increasing power usage ..
(3) The City Council or designee may grant approval for the types of changes, alterations, or modifications described herein upon the filing of an application by the Cannabis Permittee and payment of any applicable fee, subject to any requisite amendments to the applicable Development Agreement. The Cannabis Permittee must submit all information requested by the City Council or designee including, but not limited to, documents that verify the following: (i) the Cannabis Permittee will continue to have the exclusive possession of the Premises, as changed, by ownership, lease, rental agreement, or other means, and sole control over all activities; and (ii) the proposed change conforms to any and all City restrictions related to the time, manner, and place of regulation of the applicable Commercial Cannabis Activity.
(I) To the fullest extent permitted by law, the City does not assume any liability, and expressly does not waive sovereign immunity, with respect to any Commercial Cannabis Activities, or for the other activities of any Cannabis Permittee or for any other activities taking place at Premises.
5.20.080 Enforcement and Appeals.
(a) Any Commercial Cannabis Activity within the City in violation of this Chapter is hereby declared to be unlawful and a public nuisance. (b) Any Person who willfully or knowingly (i) engages in a violation of this Chapter or (ii) owns, possesses, controls, or has charge of any parcel of real property in the City upon which a violation of this Chapter is maintained and who has actual knowledge of such violation ( or would have actual knowledge of such violation after a reasonable inquiry), shall be subject to the penalties and remedies provided by this Chapter.
(c) Any violation of this Chapter shall constitute a separate offense for each and every day the violation occurs or persists.
(d) Any Person in violation of any provision of this Chapter or who causes another Person to be in violation of this Chapter shall have committed a misdemeanor. In addition which shall be punishable by a fine of up to one thousand dollars ($1,000) for each violation and for each day the applicable violation continues to persist.
Administrative Record - Review Hearing - Herbal Dragon LLC Page 36 of 345Page 2424 of 4584 (e) Any person in violation of any provision of this Chapter shall be punishable by an administrative fine of up to a $1,000 per offense.
(f) Any material violation of this Chapter or any other relevant City law or State Law by a Cannabis Permittee, or a Cannabis Permittee's agent, is grounds for suspending or revoking the relevant Cannabis Permit. In addition, the City Manager or the City Manager's designee may suspend or revoke a Cannabis Permit, disqualify an Applicant from the application process, or elect not to renew a Cannabis Permit if any of the following occur:
(1) The City Manager or the City Manager's designee determines that the Cannabis Permittee has failed to comply with this Chapter, any condition of approval, or any agreement or covenant as required pursuant to this Chapter.
(2) The Cannabis Permittee's Commercial Cannabis Activities cease for more than ninety (90) calendar days.
(3) Ownership of the Cannabis Permittee is changed without approval from the City.
(4) The licensed Commercial Cannabis Activity moves from the licensed Premises to a different, unauthorized location.
(5) The Cannabis Permittee fails to provide remote access to the security cameras to the City Manager, the City Manager's designee, or Los Angeles County Sheriff's Department, or fails to allow inspection of the security recordings, the activity logs, or of the Premises by authorized City officials.
(g) Any decision regarding the suspension or revocation of a Cannabis Permit, disqualification of an Applicant from the application process, or election not to renew a Cannabis Permit may be appealed to an independent neutral third-party administrative hearing officer appointed by the City Manager or the City Manager's designee (the "Hearing Officer"). Said appeal shall be made by a notice of appeal from the Person appealing within thirty (30) days from the date of the City's decision. The appeal shall be accompanied by a written verified declaration setting forth the basis for the claim that the City's decision was improper. The Hearing Officer's decision shall be final and binding upon the City and the appellant Cannabis Permittee or Applicant. Alternatively, the City Manager may provide for the appeal to be made to the City Council, in lieu of a hearing officer. In such case, the City Council's decision shall be final and binding upon the City and the appellant.
(h) These penalties and remedies are cumulative, and in addition to any other penalties and remedies available to the City.
5.20.090 State Medicinal License Requirement.
(a) Cannabis Permittees must obtain a State Medicinal License in accordance with State Law, including, but not limited, to the temporary and permanent State Medicinal Licenses provided for in MAUCRSA.
Administrative Record - Review Hearing - Herbal Dragon LLC Page 37 of 345Page 2425 of 4584 (b) Each Cannabis Permittee must expeditiously provide proof of receipt of the applicable State Medicinal License by such Cannabis Permittee to the City Manager or designee.
5.20.100 Medicinal Cannabis Cultivation.
(a) Purpose. The purpose and intent of this Section is to permit and regulate the medicinal Cannabis Cultivation in order to promote the health, safety, morals, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to State Law. (b) Scope; Medicinal Cannabis. This Section permits and regulates the medicinal Cannabis Cultivation pursuant to State Law, including MAUCRSA.
Subject to the terms of this Chapter, Cultivation Permits may be issued by the City for medicinal Cannabis Cultivation pursuant to and in accordance with State Law, including MAUCRSA.
(c) Outdoor Cultivation is prohibited within the City.
(d) Indoor Cultivation is permitted only on properties within the applicable Permit Zone with a valid Cultivation Permit and other requisite permits and entitlements. (e) Indoor Cultivation may include growing Cannabis plants, harvesting Cannabis plants, and drying Cannabis flowers but shall not include the Manufacturing or of Cannabis Products, unless otherwise authorized pursuant to this Chapter. (f) Entrance to the Cultivation area, and all storage areas, of the applicable Premises shall be locked at all times and under the control of the staff of such Premises.
5.20.110 Medicinal Cannabis Products Manufacturing.
(a) Purpose. The purpose and intent of this Section is to permit and regulate the medicinal Cannabis Products Manufacturing to promote the health, safety, morals, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to State Law. (b) Scope; Medicinal Cannabis. This Section permits and regulates medicinal Cannabis Products Manufacturing pursuant to State Law, including MAUCRSA.
Subject to the terms of this Chapter, Manufacturing Permits may be issued by the City for medicinal Cannabis Products Manufacturing, pursuant to and in accordance with State Law, including MAUCRSA.
(c) Medicinal Cannabis Products Manufacturing is a permitted use only on properties within the applicable Permit Zone with a valid Cultivation Permit and other requisite permits and entitlements.
(d) A Manufacturing Permittee must employ at least one (1) member of its personnel dedicated full time to quality control.
(e) The Manufacturing Permittee must establish standard operating procedures and batch records that comply with current good manufacturing practices and applicable State Law, including MAUCRSA.
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Administrative Record - Review Hearing - Herbal Dragon LLC Page 38 of 345Page 2426 of 4584 (f) All Cannabis Products produced by a Manufacturing Permittee must be labeled in compliance with applicable State Law, including MAUCRSA. (g) All Cannabis Products produced by a Manufacturing Permittee must be packaged in child resistant containers prior to leaving the Premises fOf such Manufacturing Permittee in accordance with applicable State Law, including MAUCRSA.
(h) Manufacturing Permittees may conduct Manufacturing using any type of solvents, including Volatile Solvents, or Manufacturing processes if such Manufacturing complies with the requirements of this Chapter and State or local law, including but not limited to Health and Safety Code Section 11362.775 (or any successive State Law) all applicable fire and building codes in the City and any other laws of the City designed to ensure the safety of such operation. (i) Manufacturing Permittees using Volatile Solvents for Manufacturing Cannabis Products must operate in a manner to reduce the risk of explosion or danger to public health, including through the use of a close-loop · or solvent dispersion system consistent with the requirements of Health and Safety Code Section 11362.775 (or any successive State Law).
U) If hazardous materials, flammable gas, flammable liquefied gas, flammable and combustible liquids, or other flammable material, as those terms are defined in California Fire Code Section 202, are to be used in the processing of medicinal Cannabis, then the provisions of California Fire Code Section 407 shall be applicable where hazardous materials are subject to permits under California Fire Code Section 50 (Hazardous Materials) are located on the Premises or where required by the applicable building or fire official.
(k) Storage, use, and handling of compressed gases in compressed gas containers, cylinders, tanks, and systems shall comply with California Fire Code Chapter 53. Partially full compressed gas containers, cylinders, or tanks containing residual gases shall be considered as full for the purposes of the controls required. Compressed gases classified as hazardous materials shall also comply with California Fire Code Chapter 50 for general requirements and California Fire Code Chapter 53 addressing specific hazards, including California Fire Code Chapter 58 (Flammable Gases), California Fire Code Chapter 60 (Highly Toxic and Toxic Materials), California Fire Code Chapter 63 (Oxidizers, Oxidizing Gases and Oxidizing Cryogenic Fluids, and California Fire Code Chapter 64 (Pyrophoric Materials). Prevention, control, and mitigation of dangerous conditions related to storage, use, dispensing, mixing, and handling of flammable and combustible liquids shall be in accordance with California Fire Code Chapters 50 and 57.
(I) Labeling Requirements - Edibles.
(1) Before a Manufacturing Permittee prepares any edible Cannabis or edible Cannabis Product for retail sale, it shall be labeled and placed in tamperevident packaging which at least meets the requirements of State Law, including, but not limited to, MAUCRSA.
Administrative Record - Review Hearing - Herbal Dragon LLC Page 39 of 345Page 2427 of 4584 (2) All items to be sold or distributed shall be individually wrapped at the original point of preparation by the Cannabis Permittee. (3) Labeling must include a warning if nuts or other known allergens are used, and must include the total weight (in ounces or grams) of Cannabis in the package, not to exceed ten (10) milligrams of tetrahydrocannabinol (THC) per serving.
(4) A warning that the item is a medication and not a food must be clearly legible on the front of the package and/or must comply with state packing requirements.
(5) The package must have a label warning that the product is to be kept away from children.
(6) The label must also state that the product contains Cannabis and must specify the date of Manufacture and the Manufacture Permittee's information, including, but not limited to, address, and phone number. (7) Distributions must be in a properly labeled opaque package when distributed.
(8) The City Manager, or designee, may impose additional packaging and labeling requirements on Cannabis or Cannabis Products.
5.20.120 Medicinal Cannabis and Cannabis Products Retail Delivery (Retail Delivery Only, Dispensaries Prohibited).
(a) Purpose. The purpose and intent of this Section is to regulate the Retail Delivery of medicinal Cannabis and Cannabis Products in order to promote the health, safety, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to the State Law. (b) Scope; Medicinal Cannabis Only. This Section permits and regulates the Retail Delivery of medicinal Cannabis and Cannabis Products pursuant to State Law, including MAUCRSA. Subject to the terms of this Chapter, Retail Delivery Permits may be issued by the City for the Retail Delivery of medicinal Cannabis and Cannabis Products pursuant to and in accordance with State Law, including MAUCRSA. The point-of-sale sale of Cannabis or Cannabis Products is strictly prohibited.
(c) Retail Delivery of Cannabis and Cannabis Products is a permitted use only on properties within the applicable Permit Zone with a valid Retail Delivery Permit and other requisite permits and entitlements.
(d) The Retail Delivery of medicinal Cannabis and Cannabis Products may only include the Retail Delivery of Cannabis and Cannabis Products by a Retail Delivery Permittee to a customer, patient or primary caregiver, in accordance with State Law, including MAUCRSA.
(e) Retail Delivery Permittees shall implement sufficient security measures to both deter and prevent unauthorized entrance into areas containing Cannabis
Administrative Record - Review Hearing - Herbal Dragon LLC Page 40 of 345Page 2428 of 4584 and Cannabis Products and theft of Cannabis and Cannabis Products from the Retail Delivery Establishment or employees participating in Retail Delivery. (f) All Cannabis and Cannabis Products shall be stored in a secured and locked room, safe, or vault, and in a manner as to prevent diversion, theft, or loss. (g) Individuals shall not be allowed to remain on the Premises comprising of the Retail Delivery Establishment unless they are engaging in activity expressly related to the operations of the Retail Delivery Establishment or are a customer. (h) A Retail Delivery Permittee shall notify the City Manager or the City Manager's designee within 24 hours of discovering any of the following:
(1) Significant discrepancies identified during inventory. The level of significance shall be determined by the City Manager or the City Manager's designee.
(2) Diversion, theft, loss, or any criminal activity involving the Retail Delivery Establishment or any agent or employee of the Retail Delivery Establishment.
(3) The loss or unauthorized alteration of records related to Cannabis, Cannabis Products, registered qualifying patients, primary caregivers, or Retail Delivery Establishment agents or employees.
(4) Any other material breach of security.
(i) The Retail Delivery of medicinal Cannabis and Cannabis Products shall comply with all State and local Law, including all laws requiring presentment of government-issued identification card, physician's recommendation, or medicinal Cannabis identification card at the time of initial purchase.
U) With respect to medicinal Cannabis, physicians' recommendations for medicinal cannabis use shall be verified by a Retail Delivery Permittee prior to the Retail Delivery any medicinal Cannabis to a qualified patient or primary caregiver and at least every six months thereafter.
(k) A Retail Delivery Establishment may not employ or enter into any agreements with any physicians who recommend medicinal Cannabis; Physician Services are prohibited from any and all Retail Delivery Establishments. (I) A Retail Delivery Permittee shall inspect all Cannabis and Cannabis Products received for quality assurance prior to the Retail Delivery to any Person. (m) The Retail Delivery of Cannabis and Cannabis Products shall occur only after such Cannabis and Cannabis Products have been inspected and quality tested in accordance with applicable State Law, including MAUCRSA. (n) Each Retail Delivery Establishment shall do regular monthly inventories and record the total quantity of Cannabis and Cannabis on the Premises. These records shall be maintained for three years from the date created and shall be open to inspection by the City Manager, the City Manager's Designee, and law enforcement.
Administrative Record - Review Hearing - Herbal Dragon LLC Page 41 of 345Page 2429 of 4584 (o) A Retail Delivery Permittee shall register with the City each location where Cannabis or Cannabis Products are stored for purposes of Retail Delivery by such Retail Delivery Permittee within the City.
(p) A Retail Delivery Establishment shall maintain customer and patient and other business records in a secure location (including electronically or cloud-based) j. that is compliant with, as applicable, HIPAA and other federal and state privacy laws.
(q) During the Retail Delivery of Cannabis or Cannabis Products, each vehicle driver shall carry a copy of the Retail Delivery Permit, a copy of the Retail Delivery request, a form of government-issued identification, and all other information required by State and local Law. The driver shall present these documents upon the request of law enforcement, the City Manager, or the City Manager's designee.
(r) Prior to Retail Delivery of Cannabis and Cannabis Products, such Cannabis and Cannabis Products shall be labeled and placed in a tamper-evident package.
Labels and packages of Cannabis and Cannabis Products shall, at minimum, meet the requirements specified under State Law, including MAUCRSA. (s) All Retail Delivery vehicles shall:
(1) Be equipped with, and utilize, a vehicle alarm system. (2) Have and utilize a direct communication system with the related Retail Delivery Establishment.
(3) Keep all Cannabis and Cannabis Products in a secure and locked container.
(4) Have an internal partition between the driver and all passengers from the Cannabis and Cannabis Products storage containers that prevents access by the driver and passengers to all cannabis products from inside the vehicle.
(5) Not carry more Cannabis and Cannabis Products than allowed by State and local Law and required to fulfill all immediate Retail Delivery requests (6) Not display any logo, signage, or other information that identifies, advertises, or lists the services or the products offered.
5.20.130 Medicinal Cannabis and Cannabis Products Distribution. (a) Purpose. The purpose and intent of this Section is to permit and regulate the Distribution of Cannabis and Cannabis Products between Cannabis Permittees in order to promote the health, safety, morals, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to State Law.
(b) Scope; Medicinal Cannabis Only. This Section permits and regulates the Commercial Cannabis Activity of Distribution of medicinal Cannabis and Cannabis Products pursuant to State Law, including MAUCRSA. Subject to the terms of this Chapter, Distribution Permits may be issued by the City for the
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Administrative Record - Review Hearing - Herbal Dragon LLC Page 42 of 345Page 2430 of 4584 )
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Distribution of medicinal Cannabis and Cannabis Products pursuant to and in accordance with State Law, including MAUCRSA. Distribution of Cannabis and Cannabis Products requires a Development Agreement with the City and must be located within the applicable Permit Zone. -,
(c) Distribution activities includes the receiving and releasing of Cannabis and Cannabis Products for inspection, Testing, and quality assurance, as required under applicable State Law and such other activities as are permitted pursuant to State Law.
(d) A Distribution Permittee shall only Distribute Cannabis and Cannabis Products between Cannabis Permittees or to facilities or portions of facilities wholly controlled by such Distribution Permittee to the extent permitted by State Law.
(e) A Distribution Permittee shall inspect all Cannabis and Cannabis Products received by it for quality assurance prior to Distributing to any Cannabis Permittee, as required under applicable State Law.
(f) In addition to the application requirements in Section 0, a Distribution Permittee shall register with the City each location within the City where Cannabis and Cannabis Products are stored for purposes of Distribution activities within the City.
(g) A Distribution Permittee shall Distribute Cannabis and Cannabis Products to Cannabis Permittees only after such Cannabis and Cannabis Products have been inspected and quality tested in accordance with applicable State Law, including MAUCRSA.
(h) A Distribution Permittee may also hold any other Permit type to the extent permitted by State Law. To the extent permitted by State law, a Distribution Permittee that also holds another Permit type may self-distribute its Cannabis Products.
5.20.140 Medicinal Cannabis and Cannabis Products Microbusiness. (a) Purpose. The purpose and intent of this Section is to permit and regulate the medicinal Cannabis and Cannabis Products Microbusiness in order to promote the health, safety, morals, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to State Law, including MAUCRSA.
(b) Scope; Medicinal Cannabis Only. This Section permits and regulates Microbusinesses, pursuant to State Law, including MAUCRSA. Subject to the terms of this Chapter, Microbusiness Permits may be issued by the City pursuant to and in accordance with State Law, including MAUCRSA. (c) All Microrobusinesses shall require a Development Agreement with the City and must be located within the applicable Permit Zone.
(d) All components of a Microbusiness (i.e., Cultivation, Manufacturing, etc.) must be in compliance with the provisions of this Chapter and State Law, including MAUCRSA.
Administrative Record - Review Hearing - Herbal Dragon LLC Page 43 of 345Page 2431 of 4584 (e) The City may authorize the smoking, vaporizing, and ingestion of Cannabis or Cannabis Products on the Premises of a Microbusiness if all of the following are met:
(1) Access to the area where Cannabis consumption is allowed is restricted to persons 21 years of age and older.
(2) Cannabis consumption is not visible from any public place or nonagerestricted area. (3) Sale or consumption of alcohol or tobacco is not allowed on the Premises.
5.20.140 Medicinal Cannabis and Cannabis Products Testing. (a) Purpose. The purpose and intent of this Section is to permit and regulate the Testing of medicinal Cannabis and Cannabis Products in order to promote the health, safety, morals, and general welfare of the residents and businesses within the City. The City intends to be on the forefront of medicinal Cannabis research and Testing. The City is authorized to regulate this activity pursuant to State Law.
(b) Scope; Medicinal Cannabis Only. This Section permits and regulates Cannabis and Cannabis Products Testing, pursuant to State Law, including MAUCRSA. Subject to the terms of this Chapter, Testing Permits may be issued by the City for the Testing of medicinal Cannabis and Cannabis Products pursuant to and in accordance with State Law, including MAUCRSA. (c) Testing of Cannabis and Cannabis Products requires a Development Agreement with the City and must be located within the applicable Permit Zone. (d) Each Testing Permittee must employ at least one (1) full time quality control personnel employee.
(e) Testing Permittees must operate, and all Cannabis and Cannabis Products must be properly tested by Testing Permittees, in accordance with applicable State Law.
(f) All Testing devices used by a Testing Permittee must be "UL listed," and/or otherwise approved for the intended use by the City's Building Official, the Fire Department or other person designated by the City Manager or designee. (g) Each Testing Permittee must notify the State Department of Public Health and the City Manager, or the City Manager's designee, within one business day after the receipt of notice of any kind that its accreditation has been denied, suspended, or revoked.
SECTION 10. Recognizing that there is a potential conflict between federal and State law, it is the City Council's intention that this Ordinance shall be deemed to comply with applicable State Law and shall defer to such applicable State Law through preemption.
SECTION 11. The City Council determines that it is in the best interest of the residents of the City to allow Commercial Cannabis Activities in compliance with applicable State Law, including MAUCRSA, to be established and operated as permitted uses within certain areas of the City subject to the regulations and restrictions provided in this
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Administrative Record - Review Hearing - Herbal Dragon LLC Page 44 of 345Page 2432 of 4584 Ordinance. It is the City Council's intention that nothing in this Ordinance shall be construed to:
1. Allow a Person to engage in conduct that endangers others or causes a public nuisance.
2. Allow any activity relating to Cannabis that is otherwise not permitted under State law.
SECTION 12. The City Council finds that the actions contemplated by this Ordinance are exempt from the California Environmental Quality Act pursuant to Section 15061 (b )(3) and 15305 of the Guidelines, in that the Ordinance alone does not have the potential for causing a significant effect on the environment. Further permits and approvals will be required before any activity that will affect the environment will be permitted. In addition, Business and Professions Code Section 26055 exempts local ordinances from CEQA that authorizes commercial cannabis activity through discretionary review and approval.
SECTION 13. If any section or provision of this Ordinance is for any reason held to be invalid, unconstitutional, illegal, or unenforceable by any court of competent jurisdiction, or contravened by reason of any preemptive legislation, then such section or provision shall be severed and shall be inoperative, and the remainder of this Ordinance shall remain in full force and effect.
SECTION 14. By regulating Commercial Cannabis Activity, the City is only undertaking to preserve the general welfare through implementing the MAUCRSA. The City Council is not assuming, nor is it imposing on its officers and employees, an obligation for which a breach thereof would expose the City to liability in money damages to any Person who claims that such breach proximately caused injury. To the fullest extent permitted by law, the City shall assume no liability whatsoever, and expressly does not waive sovereign immunity, with respect to any provision of this Ordinance or for the activities of any Cannabis Permittee. To the fullest extent permitted by law, any actions taken by a public officer or employee under the provisions of this Ordinance shall not become a personal liability of any public officer or employee of the City. Nothing in this Ordinance shall be deemed or considered in any respects to constitute authorization to violate any law.
SECTION 15. Inconsistent Provisions. Any provision of the Cudahy Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further, is hereby repealed or modified to the extent necessary to implement the provisions of this Ordinance.
SECTION 16. Severability. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this Ordinance, or any part thereof is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance or any part thereof. The City Council hereby declares that it would have passed each section, subs,ection, subdivision, paragraph, sentence, clause or phrase thereof,
Administrative Record - Review Hearing - Herbal Dragon LLC Page 45 of 345Page 2433 of 4584 irrespective of the fact that any one or more section, subsection, subdivision, paragraph, sentence, clause or phrase would be subsequently declared invalid or unconstitutional.
SECTION 17. Publication and Effective Date. The Mayor shall sign and the City Clerk shall attest to the passage of this Ordinance. The City Clerk shall cause the same to be published once in a newspaper of general circulation within fifteen (15) days after its adoption. This Ordinance shall become effective thirty (30) days after adoption.
PASSED, APPROVED AND ADOPTED by the City Council of the City of Cudahy at the / ." ,_, regular meeting of this 11th day of September, 2017. ,.,_,,,_ /4. ~VY
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
CITY OF CUDAHY
)
)
)
SS:
Chris Garcia
Mayor
I, Richard Iglesias, Deputy City Clerk of the City of Cudahy, hereby certify that the foregoing Ordinance No. 673 was introduced for a first reading on the 14th day of August 2017 and approved for a second reading and adopted by said Council at its regular meeting held on the 11th day of September, 2017 by the following vote, to-wit:
AYES: Markovich, Hernandez, Garcia
)
I
l
NOES: Guerrero
ABSTAIN: None
ABSENT: Sanchez
.. --;' ~ j ~~----'~ -
Richard lgles~a~ / 7 · · · ·-:---___ __
Deputy City B r:I<
Administrative Record - Review Hearing - Herbal Dragon LLC Page 46 of 345Page 2434 of 4584 EXHIBIT "A": OVERLAY ZONE
IIABI! NA~ l'!ATIJRl!B
,-.... I._.J Cuclohy Boundary
-Railroad, EXISTING ZONING - Boundaries of Overlay Zone .,r Portion of High Density Residential Zone which shall be available for Medicinal Commercial Cannabis Activity upon rezoning by the City Council by General Plan Amendment, Zoning Map Amendment, or other means.
CUDAHY GENERAL PLAN
Administrative Record - Review Hearing - Herbal Dragon LLC Page 47 of 345Page 2435 of 4584 ATTACHMENT B.
City Council Resolution No. 18-17
Administrative Record - Review Hearing - Herbal Dragon LLC Page 48 of 345Page 2436 of 4584 RESOLUTION NO.18-17
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF CUDAHY, CALIFORNIA, APPROVING THE
ISSUANCE OF COMMERCIAL CANNABIS PERMIT NO. CCPlS0019 (LOCATION: 4916 CECILIA STREET, APPLICANTS:
CUPER DEVELOPMENT, THE 420 CLUB, GENIUS DISTRIUTION,
GO CUDAHY, DANIEL AND GOLIATH, DAVINA, HERBAL
DRAGON).
WHEREAS, to strengthen the public planning process, encourage private participation in comprehensive planning and reduce the economic risk of development, the Legislature of the State of California adopted Section 65864 et seq. of the California Government Code (the Development Agreement Statute"); and
WHEREAS, the Development Agreement Statute authorizes the City to enter into a property development agreement with any person having legal or equitable interest in real property for the development of such property in order to establish certain development rights; and WHEREAS, in accordance with California law, the City of Cudahy has adopted Municipal Code Chapter 20.28 (Development Agreements) establishing the procedures and requirements for the consideration of development agreement with the City; and WHEREAS, on September 11, 201 7, the City Council for the City of Cudahy passed Ordinance No. 673 establishing regulations and a discretionary review process for the allowance of medicinal-only commercial cannabis activities ( cultivation, distribution, manufacturing, deliveries, micro-business and laboratory testing) in a specified Overlay Zone through a development agreement; and
WHEREAS, all procedures of the California Environmental Quality Act ("CEQA"), California Public Resources Code §21000 et seq., and the CEQA guidelines, title 14 of the California Code of Regulations, chapter 3, §15000 et seq. have been satisfied. The City has found that the proposed Project is Categorically Exempt from California Environmental Quality Act (CEQA) requirements under provisions of CEQA Guidelines Section 15301 -Existing Facilities.
This exemption applies to projects characterized as alterations to existing facilities meeting the conditions described in Section 15301;
WHEREAS, the City of Cudahy Planning Commission ("Planning Commission") conducted a properly noticed public hearing to consider approval of a Commercial Cannabis Permit and a Development Agreement, at which testimony and evidence, both written and oral, were presented to and considered by the Planning Commission; and WHEREAS, the City Council shall approve a development agreement by ordinance; and WHEREAS, subsequent to receipt of the recommendation of the Planning Commission, the City Council conducted a properly noticed public hearing to consider the approval of a Commercial Cannabis Permit No. CCP18-0019 and Development Agreement(s) Nos. DA18-019C, DA18-012C, DA18-016C, DA18-018C, DA18-020C, DA18-021C and DA18-022C, at which testimony and Administrative Record - Review Hearing - Herbal Dragon LLC Page 49 of 345Page 2437 of 4584 Resolution No. 18-17
evidence, both written and oral, were presented to and considered by the City Council.
NOW THEREFORFE, THE CITY COUNCIL OF THE CITY OF CUDAHY
DOES HEREBY RESOLVE, DECLARE AND DETERMINE AS FOLLOWS:
SECTION 1. RECITALS
That the above Recitals are true and correct and are incorporated as though fully set forth herein.
SECTION 2. APPROVAL OF COMMERCIAL CANNABIS PERMIT
That the City Council hereby approves Commercial Cannabis Permit No. CCP18-0019, subject to the terms and conditions stated therein, to allow a Commercial Cannabis Facility for the Site located at: 4916 Cecilia Street. A copy of the permit is attached hereto and incorporated herein by this reference as Exhibit "A." The Commercial Cannabis Permit shall be issued upon execution by the City of a Development Agreement for the Site.
SECTON3. SEVERABILITY
That the City Council declares that, should any provision, section, paragraph, sentence or word of this Resolution be rendered or declared invalid by any final court action in a court of competent jurisdiction or by reason of any preemptive legislation, the remaining provisions, sections, paragraphs, sentences or words of this Resolution as hereby adopted shall remain in full force and effect.
PASSED, APPROVED, AND ADOPTED by the City Counc~f the City regular meeting on this 15th day of May, 2018. / /
ATTEST:
Richard
Deputy City
Iglesias
Clerk
~
u.
Chris Garcia
Mayor
udahy at its
l
Administrative Record - Review Hearing - Herbal Dragon LLC Page 50 of 345Page 2438 of 4584 Resolution No. 18-17
STATE OF CALIFORNIA )
CERTIFICATION
COUNTY OF LOS ANGELES ) SS:
CITY OF CUDAHY )
I, Richard Iglesias, Deputy City Clerk of the City of Cudahy, do hereby certify that the above and foregoing Resolution No.18-17, signed by the Mayor and attested by the Deputy City Clerk at a meeting of said City Council of the City of Cudahy held on this 15th day of May 2018, and that said Resolution was adopted by the following votes to wit:
A YES: Markovich, Hernandez, and Garcia
NOES: None
ABSTAIN: None
ABSENT: Guerrero and Sanchez
Richard Iglesias
Deputy City Cl k
Administrative Record - Review Hearing - Herbal Dragon LLC Page 51 of 345Page 2439 of 4584 Resolution No. 18-17
EXHIBIT "A"
COMMERCIAL CANNABIS PERMIT
SEEATTACHMENT
[The Permit will be based upon the Staff Report with
Conditions of Approval and Issued in a Letter to Follow] Administrative Record - Review Hearing - Herbal Dragon LLC Page 52 of 345Page 2440 of 4584 ATTACHMENT C.
CCP18-0019 Conditions of Approval
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CONDITIONS OF APPROVAL
COMMERCIAL CANNABIS PERMIT NO, CCP18-0019
DEVELOPMENT AGREEMENT NOS. DA18-012C, DA18-016C,
DA DA18-018C-DA18-022C
4916 CECLILA STREET - CUPER DEVELOPMENT, ET. AL.
GENERAL CONDITIONS OF APPROVAL
Condition of Approval No. 1 - Financial Responsibility for Compliance Monitoring and Enforcement
a. Cost Responsibilities: The Permittee shall bear the full costs of all City staff time, materials, and City-retained consultants associated with condition compliance review and monitoring, CEQA mitigation monitoring, other permit monitoring programs, and enforcement activities, actions, and processes conducted pursuant to the City of Cudahy Municipal Code (§ 5.20.060) related to this Commercial Cannabis Permit (CCP) and Development Agreement (DA). Such condition compliance review, monitoring and enforcement activities may include (but are not limited to): periodic site inspections; preparation, review, and approval of studies and reports; review of permit conditions and related records; enforcement hearings and processes; drafting and implementing compliance agreements; and attending to the modification, suspension, or revocation of permits. Costs will be billed at the rates set forth in the Planning Division or other applicable City Fee Schedule, and at the contract rates of City-retained consultants, in effect at the time the costs are incurred.
Establishment of Compliance Account: Within 10 calendar days of the effective date of the final decision approving this CCP, the Permittee shall submit a new, updated, and completed reimbursement agreement for Condition Compliance Case No. CCP18-0019 in a form provided by the City, obligating the Permittee to pay all condition compliance review, monitoring, and enforcement costs, and any civil administrative penalties, subject to the Permittee’s right to challenge all such charges and penalties prior to payment.
b. Billing Process: The Permittee shall pay all City invoices within 30 days of receipt thereof. Failure to timely pay an invoice shall subject the Permittee to late fees and charges set forth in the City Fee Schedule, and shall be grounds for suspension, modification, or revocation of this CCP. The Permittee shall have the right to challenge any charge or penalty prior to payment.
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Condition of Approval No. 2 - Defense and Indemnification a. The Permittee shall defend, at the Permittee's sole expense with legal counsel acceptable to the City, against any and all claims, actions, or proceedings against the City, any other public agency with a governing body consisting of the members of the City Board of Supervisors, or any of their respective board members, officials, employees and agents (collectively, “Indemnified Parties”) arising out of or in any way related to the City’s issuance, administration, or enforcement of this CUP. The City shall promptly notify the Permittee of any such claim, action or proceeding and shall cooperate fully in the defense.
b. The Permittee shall also indemnify and hold harmless the Indemnified Parties from and against any and all losses, damages, awards, fines, expenses, penalties, judgments, settlements, or liabilities of whatever nature, including but not limited to court costs and attorney fees (collectively, “Liabilities”), arising out of or in any way related to any claim, action or proceeding subject to subpart (a) above, regardless of how a court apportions any such Liabilities as between the Permittee, the City, and/or third parties.
c. Except with respect to claims, actions, proceedings, and Liabilities resulting from an Indemnified Party’s sole active negligence or intentional misconduct, the Permittee shall also indemnify, defend (at Permittee’s sole expense with legal counsel acceptable to City), and hold harmless the Indemnified Parties from and against any and all claims, actions, proceedings, and Liabilities arising out of, or in any way related to, the construction, maintenance, land use, or operations conducted pursuant to this CCP, regardless of how a court apportions any such Liabilities as between the Permittee, the City, and/or third parties. The City shall promptly notify the Permittee of any such claim, action, or proceeding and shall cooperate fully in the defense.
d. Neither the issuance of this CCP, nor compliance with the conditions hereof, shall relieve the Permittee from any responsibility otherwise imposed by law for damage to persons or property; nor shall the issuance of this CCP serve to impose any liability upon the Indemnified Parties for injury or damage to persons or property.
Condition of Approval No. 3 Relationship of CCP Conditions, Laws, and Other Entitlements
The Permittee shall implement the Project in compliance with all applicable requirements and enactments of federal, state, and local authorities. In the event of conflict between various requirements, the more restrictive requirements shall apply. In the event the City Manager determines that any CCP condition contained herein is in conflict with any other CPP condition contained herein, when principles of law do not provide to the contrary, the CCP condition most protective of public health and safety and environmental resources shall prevail to the extent feasible.
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No condition of this CCP for uses allowed by the City Municipal Code shall be interpreted as permitting or requiring any violation of law, lawful rules, or regulations, or orders of an authorized governmental agency. Neither the approval of this CPP, nor compliance with the conditions of this CPP, shall relieve the Permittee from any responsibility otherwise imposed by law for damage to persons or property.
The Permittee shall obtain a business tax certificate and regulatory licenses for the operation of Commercial Cannabis operations.
Condition of Approval No. 4 - Contact Person
PURPOSE: To establish a contact person responsible for responding to City and/or community complaints.
The Permittee shall designate a contact person(s) to respond to complaints from citizens and the City which are related to the permitted uses of this CUP.
The Permittee shall provide the City with the contact information (e.g., name and/or position title, address, business and cell phone numbers, and email addresses) of the Permittee’s Community Agent who receives all orders, notices, and communications regarding matters of condition and code compliance at the Project site.
Timing: Prior to the issuance of a Zoning Clearance for use inauguration, the Permittee shall provide the Planning Division the contact information of the Permittee’s field agent(s) for the Project file. If the address or phone number of the Permittee’s field agent(s) should change, or the responsibility is assigned to another person, the Permittee shall provide Planning Division staff with the new information in writing within three calendar days of the change in the Permittee’s field agent.
The Planning Division maintains the contact information provided by the Permittee in the Project file. The Planning Division has the authority to periodically confirm the contact information consistent with the requirements of this permit.
Condition of Approval No. 5 - Resolution of Complaints
PURPOSE: To establish a process to resolve complaints.
The following process shall be used to resolve complaints related to the Project:
a. The Permittee shall post the telephone number for the designated Contact Person as identified pursuant to Condition No. 4 in a visible location on the site. The Contact Person shall be available via telephone on a 24-hour basis. Persons with concerns about an activity as it is occurring may directly contact the Contact Person;
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b. If City staff receives a written complaint about the Project, the City Manager, or his designee, may contact the Permittee’s Contact Person or the Permittee to request information regarding the alleged violation; and
c. If, following a complaint investigation by City staff, a violation of the City Municipal Code or a condition of this CCP is confirmed, City staff may initiate enforcement actions, in accordance with City Municipal Code.
Condition of Approval No. 6 - Reporting of Major Incidents PURPOSE: To ensure that the Planning Director is notified of major incidents associated with, or resulting from, the Project, he Permittee shall immediately notify the Planning Director by telephone, email, FAX, and/or voicemail of any incidents (e.g., fires, explosions, spills, landslides, or slope failures) that could pose a hazard to life or property inside or outside the Project Site.
Upon request of any City, County or State regulatory agency, the Permittee shall provide a written report of any incident that shall include, but not limited to: a description of the facts of the incident; the corrective measures used, if any; and the steps taken to prevent a recurrence of the incident.
Timing: The Permittee shall provide the written report to the requesting agency and Planning Division within seven days of receiving the request.
The Planning Division maintains any documentation provided by the Permittee related to major incidents in the Project file.
Condition of Approval No. 7 - Change of Permittee
To ensure that the Planning Division is properly and promptly notified of any change of Permittee, the Permittee shall file, as an initial notice with the Planning Director, the new name(s), address(es), telephone/FAX number(s), and email addresses of the new owner(s), lessee(s), operator(s) of the permitted uses, and the company officer(s). The Permittee shall provide the Planning Director with a final notice once the transfer of ownership and/or operational control has occurred.
The initial notice must be submitted with the new Permittee’s contact information. The final notice of transfer must include the effective date and time of the transfer and a letter signed by the new Property Owner(s), lessee(s), and/or operator(s) of the permitted uses acknowledging and agreeing to comply with all conditions of this CCP.
Timing: The Permittee shall provide written notice to the Planning Director 10 calendar days prior to the change of ownership or change of Permittee. The Permittee shall provide the final notice to the Planning Director within 15 calendar days of the effective date of the transfer.
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The Planning Division maintains notices submitted by the Permittee in the Project file and has the authority to periodically confirm the information consistent with the requirements of this permit.
COMMERCIAL CANNABIS CULTIVATION (ORD. 673, SEC 5.20.100) PURPOSE: The purpose and intent of this section is to permit and regulate the commercial Cannabis Cultivation in order to promote the health, safety, morals, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to State Law.
Condition of Approval No. 8 - Cultivation Operating Fees.
Operator/Permittee must pay all operating fees as stipulated within Development Agreement No. DA18-018C and DA18-019C.
Condition of Approval No. 9 – Outdoor Cultivation.
Outdoor Cultivation is prohibited within the City.
Condition of Approval No. 10 – Indoor Cultivation.
Indoor Cultivation is permitted only on properties within the applicable Permit Zone with a valid Cultivation Permit and other requisite permits and entitlements. Indoor Cultivation may include growing Cannabis plants, harvesting Cannabis plants, and drying Cannabis flowers but shall not include the Manufacturing or of Cannabis Products, unless otherwise authorized pursuant to this Chapter.
Condition of Approval No. 11 – Cultivation Security Control.
Entrance to the Cultivation area, and all storage areas, of the applicable Premises shall be locked at all times and under the control of the staff of such Premises.
Prior to the issuance of a Zoning Clearance for Use Inauguration, the Permittee shall prepare and submit a security plan compliant with and applicable State Law, including MAUCRSA, to the City Manager, or his designee and obtain approval of said plan.
Condition of Approval No. 12 – Zoning and Land Use.
No new premises shall be established, developed, or operated within 600 feet of a Day Care Center, Youth Center, or public or private school providing ng K-12 instruction.
COMMERCIAL CANNABIS PRODUCTS MANUFACTURING (ORD. 673, SEC
5.20.110)
PURPOSE: The purpose and intent of this Section is to permit and regulate the commercial Cannabis Products Manufacturing to promote the health, safety, morals, and Administrative Record - Review Hearing - Herbal Dragon LLC Page 58 of 345Page Page 118 of 1494 2446 of 4584 Planning Commission Hearing – April 30, 2018
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general welfare of the resident and businesses within the City. The City is authorized to regulate this activity pursuant to State Law.
Condition of Approval No. 13 - Manufacturing Operating Fees.
Operator/Permittee must pay all operating fees as stipulated within Development Agreement Nos. DA18-019C, DA18-021C and DA18-022C.s
Condition of Approval No. 14 – Manufacturing Properties.
Commercial Cannabis Products Manufacturing is a permitted use only on properties within the applicable Permit Zone with a valid Cultivation Permit and other requisite permits and entitlements.
Condition of Approval No. 15 – Quality Control Employee.
The Permittee must employ at least one (1) member of its personnel dedicated full time to quality control.
Condition of Approval No. 16 – Standard Operating Procedures and Batch Record.
The Manufacturing Permittee must establish standard operating procedures and batch record that comply with current good manufacturing practices and applicable State Law, including MAUCRSA.
Condition of Approval No. 17 – Labeling and Packaging.
a) All Cannabis Products produced by a Manufacturing Permittee must be packaged in child resistant containers prior to leaving the Premises for such Manufacturing Permittee in accordance with applicable State Law, including MAUCRSA. b) All Cannabis Products produced by a Manufacturing Permittee must be labeled in compliance with applicable State Law, including MAUCRSA. c) Labeling Requirements – Edibles
i. Before a Manufacturing Permittee prepares any edible Cannabis or edible Cannabis Product for retail sale, it shall be labeled and placed in tamperevident packaging which at least meets the requirements of State Law, including, but not limited to, MAUCRSA.
ii. All items to be sold or distributed shall be individually wrapped at the original point of preparation by the Cannabis Permittee.
iii. Labeling must include a warning if nuts or other known allergens are used and must include the total weight (in ounces or grams) of Cannabis in the package, not to exceed ten (10) milligrams of tetrahydrocannabinol (THC) per serving.
iv. A warning that the item is a medication and not a food must be clearly legible on the front of the package and/or must comply with state packing requirements.
v. The package must have a label warning that the product is to be kept away from children.
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vi. The label must also state that the product contains Cannabis and must specify the date of Manufacture and the Manufacture Permittee’s information, including, but not limited to, address, and phone number. vii. Distribution must be in a properly labeled opaque package when distributed. viii.The City Manager, or designee, may impose additional packaging and labeling requirements on Cannabis or Cannabis Products.
Condition of Approval No. 18 – Use of Solvents.
a) Manufacturing Permittees may conduct Manufacturing using any type of solvents, including Volatile Solvents, or Manufacturing processes if such Manufacturing complies with the requirements of this Chapter and State or local law, including but not limited to Health and Safety Code Section 11362.775 (or any successive State Law) all applicable fire and building codes in the City and any other laws of the City designed to ensure the safety of such operation.
b) Manufacturing Permittees using Volatile Solvents for Manufacturing Cannabis Products must operate in a manner to reduce the risk of explosion or danger to public health, including through the use of a close-loop or solvent dispersion system consistent with the requirements of Health and Safety Code Section 11362.775 (or any successive State Law).
Condition of Approval No. 19 – Use of Hazardous and Flammable Materials.
If hazardous materials, flammable gas, flammable liquefied gas, flammable and combustible liquids, or other flammable material, as those terms are defined in California Fire Code Section 202, are to be used in the processing of commercial Cannabis, then the provisions of California Fire Code Section 407 shall be applicable where hazardous materials are subject to permits under California Fire Code Section 50 (Hazardous Materials) are located on the Premises or where required by the applicable building or fire official.
Timing: Prior to the issuance of a Temporary/Certificate of Occupancy, the Permittee must obtain LA County Fire Approval for site design, water and access, and hazardous materials.
Condition of Approval No. 20 – Compressed Gases.
Storage, use, and handling of compressed gases in compressed gas containers, cylinders, tanks, and systems shall comply with California Fire Code Chapter 53. Partially full compressed gas containers, cylinders, or tanks containing residual gases shall be considered as full for the purposes of the controls required. Compressed gases classified as hazardous materials shall also comply with California Fire Code Chapter 50 for general requirements and California Fire Code Chapter 53 addressing specific hazards, including California Fire Code Chapter 58 (Flammable Gases), California Fire Code Chapter 60 (Highly Toxic and Toxic Materials), California Fire Code Chapter 63 (Oxidizers, Oxidizing Gases and Oxidizing Cryogenic Fluids, and California Fire Code Chapter 64 (Pyrophoric Administrative Record - Review Hearing - Herbal Dragon LLC Page 60 of 345Page Page 120 of 1494 2448 of 4584 Planning Commission Hearing – April 30, 2018
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Materials). Prevention, control, and mitigation of dangerous conditions related to storage, use, dispensing, mixing, and handling of flammable and combustible liquids shall be in accordance with California Fire Code Chapters 50 and 57.
Timing: Prior to the issuance of a Temporary/Certificate of Occupancy, the Permittee must obtain LA County Fire Approval for site design, water and access, and hazardous materials.
COMMERCIAL CANNABIS AND CANNABIS PRODUCTS RETAIL DELIVERY (ORD. 673, SEC 5.20.120)
PURPOSE: The purpose and intent of this Section is to regulate the Retail Delivery of commercial Cannabis and Cannabis Products in order to promote the health, safety, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to the State Law.
Condition of Approval No. 21 – Retail Delivery Operating Fees.
Operator/Permittee must pay all operating fees as stipulated within Development Agreement Nos DA18-012C and DA18-020C.
Condition of Approval No. 22 – Retail Delivery Permitted Use Locations.
Retail Delivery of Cannabis and Cannabis Products is a permitted use only on properties within the applicable Permit Zone with a valid Retail Delivery Permit and other requisite permits and entitlements.
Condition of Approval No. 23 – Retail Delivery Customers.
The Retail Delivery of commercial Cannabis and Cannabis Products may only include the Retail Delivery of Cannabis and Cannabis Products by a Retail Delivery Permittee to a customer, patient or primary caregiver, in accordance with State Law, including MAUCRSA.
Condition of Approval No. 24 – Retail Delivery Security. a) Retail Delivery Permittees shall implement sufficient security measures to both deter and prevent unauthorized entrance into areas containing Cannabis and Cannabis Products and theft of Cannabis and Cannabis Products from the Retail Delivery Establishment or employees participating in Retail Delivery. b) All Cannabis and Cannabis Products shall be stored in a secured and locked room, safe, or vault, and in a manner as to prevent diversion, theft, or loss.
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Condition of Approval No. 25 – Retail Delivery Premises.
Individuals shall not be allowed to remain on the Premises comprising of the Retail Delivery Establishment unless they are engaging in activity expressly related to the operations of the Retail Delivery Establishment or are a customer.
Condition of Approval No. 26 – Retail Delivery 24 Hour Notifications.
A Retail Delivery Permittee shall notify the City Manager or the City Manager’s designee within 24 hours of discovering any of the following:
a) Significant discrepancies identified during inventory. The level of significance shall be determined by the City Manager or the City Manager’s designee. b) Diversion, theft, loss, or any criminal activity involving the Retail Delivery Establishment or any agent or employee of the Retail Delivery Establishment. c) The loss or unauthorized alteration of records related to Cannabis, Cannabis Products, registered qualifying patients, primary caregivers, or Retail Delivery Establishment agents or employees.
d) Any other material breach of security.
Condition of Approval No. 27 – Retail Delivery Compliance.
The Retail Delivery of commercial Cannabis and Cannabis Products shall comply with all State and local Law, including all laws requiring presentment of government-issued identification card, physician's recommendation, or commercial Cannabis identification card at the time of initial purchase.
Condition of Approval No. 28 – Retail Delivery Physician Recommendation Verification.
With respect to commercial Cannabis, physicians' recommendations for commercial cannabis use shall be verified by a Retail Delivery Permittee prior to the Retail Delivery any commercial Cannabis to a qualified patient or primary caregiver and at least every six months thereafter.
Condition of Approval No. 29 – Retail Delivery Physician Employment.
A Retail Delivery Establishment may not employ or enter into any agreements with any physicians who recommend commercial Cannabis; Physician Services are prohibited from any and all Retail Delivery Establishments.
Condition of Approval No. 30 – Retail Delivery Inspection, Quality Testing and Quality Assurance.
a) A Retail Delivery Permittee shall inspect all Cannabis and Cannabis Products received for quality assurance prior to the Retail Delivery to any Person. b) The Retail Delivery of Cannabis and Cannabis Products shall occur only after such Cannabis and Cannabis Products have been inspected and quality tested in accordance with applicable State Law, including MAUCRSA.
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Condition of Approval No. 31 – Retail Delivery Monthly Inventories.
Each Retail Delivery Establishment shall do regular monthly inventories and record the total quantity of Cannabis and Cannabis on the Premises. These records shall be maintained for three years from the date created and shall be open to inspection by the City Manager, the City Manager's Designee, and law enforcement.
Condition of Approval No. 32 – Retail Delivery Registration.
A Retail Delivery Permittee shall register with the City each location where Cannabis or Cannabis Products are stored for purposes of Retail Delivery by such Retail Delivery Permittee within the City.
Condition of Approval No. 33– Retail Delivery Business Records.
A Retail Delivery Establishment shall maintain customer and patient and other business records in a secure location (including electronically or cloud-based) that is compliant with, as applicable, HIPAA and other federal and state privacy laws.
Condition of Approval No. 34 – Retail Delivery Vehicle Driver Documents.
During the Retail Delivery of Cannabis or Cannabis Products, each vehicle driver shall carry a copy of the Retail Delivery Permit, a copy of the Retail Delivery request, a form of government-issued identification, and all other information required by State and local Law. The driver shall present these documents upon the request of law enforcement, the City Manager, or the City Manager's designee.
Condition of Approval No.35 – Retail Delivery Labeling and Packaging.
Prior to Retail Delivery of Cannabis and Cannabis Products, such Cannabis and Cannabis Products shall be labeled and placed in a tamper-evident package. Labels and packages of Cannabis and Cannabis Products shall, at minimum, meet the requirements specified under State Law, including MAUCRSA.
Condition of Approval No. 36 – Retail Delivery Requirements.
All Retail Delivery vehicles shall:
a) Be equipped with, and utilize, a vehicle alarm system. b) Have and utilize a direct communication system with the related Retail Delivery Establishment.
c) Keep all Cannabis and Cannabis Products in a secure and locked container. d) Have an internal partition between the driver and all passengers from the Cannabis and Cannabis Products storage containers that prevents access by the driver and passengers to all cannabis products from inside the vehicle. e) Not carry more Cannabis and Cannabis Products than allowed by State and local Law and required to fulfill all immediate Retail Delivery requests f) Not display any logo, signage, or other information that identifies, advertises, or lists the services or the products offered.
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COMMERCIAL CANNABIS AND CANNABIS PRODUCTS DISTRIBUTION (ORD. 673, SEC 5.20.130)
PURPOSE: The purpose and intent of this Section is to permit and regulate the Distribution of Cannabis and Cannabis Products between Cannabis Permittees in order to promote the health, safety, morals, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to State Law.
Condition of Approval No. 37 - Distribution Operating Fees.
Operator/Permittee must pay all operating fees as stipulated within Development Agreement No. DA18-016C and DA18-019C.
Condition of Approval No. 38 – Distribution Development Agreement and Location.
Distribution of Cannabis and Cannabis Products requires a Development Agreement with the City and must be located within the applicable Permit Zone.
Condition of Approval No. 39 - Distribution Activities.
Distribution activities includes the receiving and releasing of Cannabis and Cannabis Products for inspection, Testing, and quality assurance, as required under applicable State Law and such other activities as are permitted pursuant to State Law.
Condition of Approval No. 40 – Distribution Customers.
A Distribution Permittee shall only Distribute Cannabis and Cannabis Products between Cannabis Permittees or to facilities or portions of facilities wholly controlled by such Distribution Permittee to the extent permitted by State Law.
Condition of Approval No. 41 – Distribution Quality Assurance. a) A Distribution Permittee shall inspect all Cannabis and Cannabis Products received by it for quality assurance prior to Distributing to any Cannabis Permittee, as required under applicable State Law.
b) A Distribution Permittee shall Distribute Cannabis and Cannabis Products to Cannabis Permittees only after such Cannabis and Cannabis Products have been inspected and quality tested in accordance with applicable State Law, including MAUCRSA.
Condition of Approval No. 42 – Distribution Registration.
A Distribution Permittee shall register with the City each location within the City where Cannabis and Cannabis Products are stored for purposes of Distribution activities within the City.
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Condition of Approval No. 43 – Multiple Permit Types.
A Distribution Permittee may also hold any other Permit type to the extent permitted by State Law. To the extent permitted by State law, a Distribution Permittee that also holds another Permit type may self-distribute its Cannabis Products.
OTHER OPERTIONAL CONDITIONS
PURPOSE: To ensure compliance with all applicable City, State and other regulatory agency requirements.
Condition of Approval No. 44 – Final Floor Plan Approval PURPOSE: To ensure Operators perform all proposed Tenant Improvements timely and applicable City fees are assessed accurately pursuant to the proposed project request.
Permittee must submit to and obtain approval from the City Manager, or his designee, on all proposed Final Floor Plans. Final Floor Plan must address odor control, waste management, waste water filtration and all other operational information requested by the City.
All Final Floor Plans shall be stamped and dated by the Planning Department upon approval. Changes to the floor plan design or other elements (including, but not limited to security, fire or hazmat details) require administrative approval by the Planning Department, prior to any construction activity or Building Permit Issuance.
Timing: Prior to Zoning Clearance for Use Inauguration, Permittee shall prepare and submit a Final Floor Plan which demonstrates compliance with all City and State Commercial Cannabis regulations.
Condition of Approval No. 45 – Payment of Development Agreement Fees Operator(s) must pay all required DA fees in accordance with DA terms. Failure to pay fees, as assessed by the City Manager, will constitute a breach of the DA and may result in suspension or immediate revocation of the DA.
Condition of Approval No. 46 – Additional Plans and Approvals Purpose: To ensure all Commercial Cannabis facilities meet the development standards of the zoning code, policies, goals and programs of the general plan and City economic development activities—including City beautification and future public improvement projects.
A. Landscape Plan – The Operator must submit a landscaping plan, designed by a licensed landscape architect or arborist. The plan must include a fivefoot landscaped dedication measured from the property line, as illustrated on the approved Site Plan. The plan must include drought tolerant desert plants, approved by the City.
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B. Fencing Plan – Fencing must be provided along the front perimeter of all Commercial Cannabis facilities. Fencing may be constructed between 8 feet and 10 feet in the front and up to 15 feet in the back.
Materials: Corrugated metal, wrought iron, concrete and block wall are all allowed materials. Alternative materials may be allowed with City approval. Chain-link and razor wire are strictly prohibited.
Fences may be required to be constructed 5 feet from the property line to allow for future City improvements. All fencing plans must be submitted to and approved by the City prior to construction.
C. Façade Improvement Plan - All new Commercial Cannabis facilities must submit a Façade Improvement Plan for City approval. The plan must include new paint, siding or other building improvement materials, in a color scheme approved by the City. Plans must also include new paving, as needed, parking striping, and other site improvements, as determined by the City.
D. LA County Public Health Permit – The Operator must submit obtain a Cannabis Public Health Permit from the Los Angeles County Public Health.
E. City Business License – All operators must file for a City business license to conduct business within the City, pay all required business license fees and obtain a City Business License prior to conducting sales transactions in the City.
Timing: Prior to Building Permit, all plans and agency permits must be secured by the Operator(s).
Condition of Approval No. 47 – Site Maintenance
PURPOSE: To ensure that the Project site is maintained in a neat and orderly manner so as not to create any hazardous conditions or unsightly conditions which are visible from outside of the Project site.
The Permittee shall maintain the Project site in a neat and orderly manner, and in compliance with the Project description. Only equipment and/or materials which the City Manager, or his designee, determines to substantially comply with the Project description shall be stored within the Project site during the life of the Project.
The Permittee shall maintain the Project site in compliance with Condition No. 1 and the approved plans for the Project.
Monitoring and Reporting: The City Building Inspector, City Cannabis Enforcement staff, or Planning Department staff have the authority to conduct periodic site inspections to ensure the Permittee’s ongoing compliance with this condition.
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Condition of Approval No. 48 – Commercial Cannabis Permit (CCP) Modification Prior to undertaking any operational or construction-related activity which is not expressly described in these conditions, the Permittee shall first contact the City Manager, or his designee, to determine if the proposed activity requires a modification of this CCP. The City Manager may, at his sole discretion, require the Permittee to file a written and/or mapped description of the proposed activity in order to determine if a permit modification is required.
Condition of Approval No. 49 - Construction Activities
Prior to any construction, the Permittee shall obtain a Zoning Clearance for construction from the Planning Division and a Building Permit from the Building and Safety Division.
Condition of Approval No. 50 - Acceptance of Conditions and Schedule of Enforcement Responses
The Permittee’s acceptance of this CCP and/or commencement of construction and/or operations under this CCP shall constitute the Permittee’s formal agreement to comply with all conditions of this CCP. Failure to abide by and comply with any condition of this CCP shall constitute grounds for enforcement action provided in the City Municipal Code which shall include, but is not limited to, the following:
a. Public reporting of violations to the Planning Commission and/or City Council; b. Suspension of the permitted land uses;
c. Modification of the CCP conditions listed herein;
d. Recordation of a “Notice of Noncompliance” on the deed to the subject property; e. The imposition of civil administrative penalties; and/or f. Revocation of this CUP.
The Permittee is responsible for being aware of and complying with the CCP conditions and all applicable federal, state, and local laws and regulations. In the event of any actual and direct conflict between these Conditions of Approval and the terms of the approved Development Agreement, the terms of the Development Agreement shall control and take precedence.
Condition of Approval No. 51. - Time Limits
A. Use inauguration: The approval decision for this CCP becomes effective upon the expiration of the 15-day appeal period following the approval decision, or when any appeals of the decision are finally resolved. Once the approval decision becomes effective, the Permittee must obtain a Zoning Clearance for Use Inauguration to initiate the land uses set forth herein. i. This CCP shall expire and become null and void if the Permittee fails to obtain a Zoning Clearance for use inauguration within 90 days –from the date the approval decision of this CCP becomes effective. The City Administrative Record - Review Hearing - Herbal Dragon LLC Page 67 of 345Page Page 127 of 1494 2455 of 4584 Planning Commission Hearing – April 30, 2018
CCP18-0019
Manager may grant an extension of time to the Permittee in order to obtain the Zoning Clearance for use inauguration if the Permittee can demonstrate to the satisfaction of the City Manager that the Permittee has made a diligent effort to implement the Project, and the Permittee has requested the time extension in writing at least 30 days prior to 90- day expiration date.
ii. Within 90 days of the permit effective date, the Permittee must complete construction of Phase I, as indicated on the approved Final Floor plan and obtain a Temporary Certificate of Occupancy from the City Building Department. The City Manager may grant an extension of time to the Permittee to obtain the Zoning Clearance for use inauguration if the Permittee can demonstrate to the satisfaction of the City Manager that the Permittee has made a diligent effort to implement the Project iii. Within 180 of the permit effective date, the Permittee must complete all Tenant Improvements and construction as indicated on the approved Final Floor Plan and obtain a Certificate of Occupancy from the City Building Department. The City Manager may grant an extension of time to the Permittee to obtain the Zoning Clearance for construction if the Permittee can demonstrate to the satisfaction of the City Manager that the Permittee has made a diligent effort to implement the Project. iv. Prior to the issuance of the Zoning Clearance for construction or use inauguration, all fees and charges billed to that date by the City, as well as any fines, penalties, and sureties, must be paid in full. After issuance of the Zoning Clearance for Use Inauguration, any final billed processing fees must be paid within 30 days of the billing date or the City may revoke this CCP.
B Permit Life or Operations Period: This CCP will expire on April 30, 2028.
However, the Development Agreement contains terms and conditions for extending operations for an additional 10 years. The lack of additional notification of the expiration date provided by the City to the Permittee shall not constitute grounds to continue the uses that are authorized by this CCP after the CCP expiration date. The uses authorized by this CCP may continue after the CCP expiration date if:
(1) The Permittee has filed a permit modification application 90 days prior to April 30, 2018; and
(2) The City decision-maker grants the requested modification.
Administrative Record - Review Hearing - Herbal Dragon LLC Page 68 of 345Page Page 128 of 1494 2456 of 4584 Planning Commission Hearing – April 30, 2018
CCP18-0019
The uses authorized by this CCP may continue during processing of a timely-filed modification application, at the City Managers sole discretion.
In the event of any actual and direct conflict between these Conditions of Approval and the terms of the approved Development Agreement, the terms of the Development Agreement shall control and take precedence. [end of conditions]
Administrative Record - Review Hearing - Herbal Dragon LLC Page 69 of 345Page Page 129 of 1494 2457 of 4584 ATTACHMENT D.
Ordinance No. 682
Administrative Record - Review Hearing - Herbal Dragon LLC Page 70 of 345Page 2458 of 4584 j
ORDINANCE NO. 682
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
CUDAHY, CALIFORNIA, APPROVING THE DEVELOPMENT
AGREEMENT BY AND BETWEEN THE CITY OF CUDAHY AND
HERBAL DRAGON, [AN INDIVIDUAL, LIMITED LIABILITY
COMPANY, CORPORATION]
WHEREAS, to strengthen the public planning process, encourage private participation in comprehensive planning and reduce the economic risk of development, the Legislature of the State of California adopted Section 65864 et seq. of the California Government Code (the Development Agreement Statute"); and
WHEREAS, the Development Agreement Statute authorizes the City to enter into a property development agreement with any person having legal or equitable interest in real property for the development of such property in order to establish certain development rights; and WHEREAS, in accordance with California law, the City of Cudahy has adopted Municipal Code Chapter 20.28 (Development Agreements) establishing the procedures and requirements for the consideration of development agreement with the City; and WHEREAS, on September 11, 2017, the City Council for the City of Cudahy passed Ordinance No. 673 establishing regulations and a discretionary review process for the allowance of medicinal-only commercial cannabis activities (cultivation, distribution, manufacturing, deliveries, micro-business and laboratory testing) in a specified Overlay Zone through a development agreement; and
WHEREAS, all procedures of the California Environmental Quality Act ("CEQA"), California Public Resources Code §21000 et seq., and the CEQA guidelines, title 14 of the California Code of Regulations, chapter 3, §15000 et seq. have been satisfied. The City has found that the proposed Project is Categorically Exempt from California Environmental Quality Act (CEQA) requirements under provisions of CEQA Guidelines Section 15301 - Existing Facilities.
This exemption applies to projects characterized as alterations to existing facilities meeting the conditions described in Section 15301;
WHEREAS, the City of Cudahy Planning Commission ("Planning Commission") conducted a properly noticed public hearing to consider the Development Agreement (as defined below), at which testimony and evidence, both written and oral, were presented to and considered by the Planning Commission; and
WHEREAS, the City Council shall approve a development agreement by ordinance; and WHEREAS, subsequent to receipt of the recommendation of the Planning Commission, the City Council conducted a properly noticed public hearing to consider the Development Agreement, at which testimony and evidence, both written and oral, were presented to and considered by the City Council.
Administrative Record - Review Hearing - Herbal Dragon LLC Page 71 of 345Page 2459 of 4584 Ordinnnce No. 682
NOW THEREFORFE, THE CITY COUNCIL OF THE CITY OF CUDAHY
DOES ORDAIN AS FOLLOWS:
SECTION 1. RECITALS
That the above Recitals are true and correct and are incorporated as though fully set forth herein.
SECTION 2. APPROVAL OF DEVELOPMENT AGREEMENT
That the City Council hereby approves the Development Agreement By and Between the City of Cudahy and Herbal Dragon, [an individual, limited liability company, corporation] ("Development Agreement"), a copy of which is attached hereto and incorporated herein by this reference as Exhibit "A," subject to the terms and conditions stated therein.
SECTION 3. SEVERABILITY
That the City Council declares that, should any provision, section, paragraph, sentence or word of this Ordinance be rendered or declared invalid by any final court action in a court of competent jurisdiction or by reason of any preemptive legislation, the remaining provisions, sections, paragraphs, sentences or words of this Ordinance as hereby adopted shall remain in full force and effect.
SECTION 4. EFFECTIVE DATE OF ORDINANCE
That this Ordinance shall take effect thirty (30) days after its second reading by the City Council.
SECTION 5. EFFECTIVE DATE OF DEVELOPMENT AGREEMENT
The Development Agreement shall not be executed by the City until on or after the effective date of the Ordinance.
SECTION 6. RECORDATION OF DEVELOPMENT AGREEEMENT
That the City Clerk is hereby directed to record the fully executed Development Agreement with the County Recorder for the County of Los Angeles no later than ten (10) days after its execution.
SECTION 7. CERTIFICATION
That the City Clerk shall certify to the passage of this Ordinance and shall cause the same to be published according to law.
2 Administrative Record - Review Hearing - Herbal Dragon LLC Page 72 of 345Page 2460 of 4584 l
Ordinance No. 682
PASSED, APPROVED AND ADOPTED by the City Council of the City of Cudahy at its regular meeting of this 5th day of June, 2018.
ATTEST:
Deputy City Clerk
~
3 Chris Garcia
Mayor
Administrative Record - Review Hearing - Herbal Dragon LLC Page 73 of 345Page 2461 of 4584
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
CITY OF CUDAHY
)
)
)
CERTIFICATION
SS:
I, Richard Iglesias, Deputy City Clerk of the City of Cudahy, hereby certify that the foregoing Ordinance No. 682 was introduced for a first reading on the 15th day of May, 2018 and approved for a second reading and adopted by said Council at its regular meeting held on the 5th day of June, 2018 by the following vote, to-wit:
A YES: Markovich, Hernandez, and Garcia
NOES: None
ABSTAIN: Sanchez
ABSENT: None
4 Richard Igle
Deputy City
Administrative Record - Review Hearing - Herbal Dragon LLC Page 74 of 345Page 2462 of 4584 Ordinance No. 682
EXHIBIT "A"
DEVELOPMENT AGREEMENT
BY AND BETWEEN
THE CITY OF CUDAHY
AND HERBAL DRAGON,
[AN INDIVIDUAL, LIMITED LIABILITY COMPANY, CORPORATION]
SEE ATTACHMENT
5 Administrative Record - Review Hearing - Herbal Dragon LLC Page 75 of 345Page 2463 of 4584 ATTACHMENT E.
Development Agreement No. 18-022C
Administrative Record - Review Hearing - Herbal Dragon LLC Page 76 of 345Page 2464 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 77 of 345Page 2465 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 78 of 345Page 2466 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 79 of 345Page 2467 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 80 of 345Page 2468 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 81 of 345Page 2469 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 82 of 345Page 2470 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 83 of 345Page 2471 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 84 of 345Page 2472 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 85 of 345Page 2473 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 86 of 345Page 2474 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 87 of 345Page 2475 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 88 of 345Page 2476 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 89 of 345Page 2477 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 90 of 345Page 2478 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 91 of 345Page 2479 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 92 of 345Page 2480 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 93 of 345Page 2481 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 94 of 345Page 2482 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 95 of 345Page 2483 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 96 of 345Page 2484 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 97 of 345Page 2485 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 98 of 345Page 2486 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 99 of 345Page 2487 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 100 of 345Page 2488 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 101 of 345Page 2489 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 102 of 345Page 2490 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 103 of 345Page 2491 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 104 of 345Page 2492 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 105 of 345Page 2493 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 106 of 345Page 2494 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 107 of 345Page 2495 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 108 of 345Page 2496 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 109 of 345Page 2497 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 110 of 345Page 2498 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 111 of 345Page 2499 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 112 of 345Page 2500 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 113 of 345Page 2501 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 114 of 345Page 2502 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 115 of 345Page 2503 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 116 of 345Page 2504 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 117 of 345Page 2505 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 118 of 345Page 2506 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 119 of 345Page 2507 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 120 of 345Page 2508 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 121 of 345Page 2509 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 122 of 345Page 2510 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 123 of 345Page 2511 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 124 of 345Page 2512 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 125 of 345Page 2513 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 126 of 345Page 2514 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 127 of 345Page 2515 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 128 of 345Page 2516 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 129 of 345Page 2517 of 4584 ATTACHMENT F.
Exhibit A-F of Development Agreement
No. 18-022C
Administrative Record - Review Hearing - Herbal Dragon LLC Page 130 of 345Page 2518 of 4584 EXHIBIT “A”
LEGAL DESCRIPTION
Administrative Record - Review Hearing - Herbal Dragon LLC Page 131 of 345Page 2519 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 132 of 345Page 2520 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 133 of 345Page 2521 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 134 of 345Page 2522 of 4584 EXHIBIT “B”
PARCEL MAP
Administrative Record - Review Hearing - Herbal Dragon LLC Page 135 of 345Page 2523 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 136 of 345Page 2524 of 4584 EXHIBIT “C”
LANDLORD CONSENT
Administrative Record - Review Hearing - Herbal Dragon LLC Page 137 of 345Page 2525 of 4584 -58;4=> .8CH>5D307H %064
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>F4E4AC74 8CH<0:4B => A4?A4B4=C0C8>=
F74C74A>A=>C0??A>E0;>5C744E4;>?<4=C6A44<4=CF8;;D;C8<0C4;H1442>=><820;;H 14=458280;>A34CA8<4=C0;C>C74!0=3;>A3
??A>E0; >5 C74 4E4;>?<4=C 6A44<4=C F8;; ?A>E834 5>A C74 >A34A;H 4BC01;8B7<4=C>50<43820;20==018B5028;8CH0CC74'8C4?A>E834?D1;8214=458CB0=3B4C BC0=30A3B0=3A4@D8A4<4=CB5>AC7434E4;>?<4=C0=3?4A<8CC43DB4B>=C74'8C4 Administrative Record - Review Hearing - Herbal Dragon LLC Page 138 of 345Page 2526 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 139 of 345Page 2527 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 140 of 345Page 2528 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 141 of 345Page 2529 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 142 of 345Page 2530 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 143 of 345Page 2531 of 4584 EXHIBIT “A”
LEGAL DESCRIPTION
Administrative Record - Review Hearing - Herbal Dragon LLC Page 144 of 345Page 2532 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 145 of 345Page 2533 of 4584 EXHIBIT “B”
PARCEL MAP
Administrative Record - Review Hearing - Herbal Dragon LLC Page 146 of 345Page 2534 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 147 of 345Page 2535 of 4584 EXHIBIT “C”
LEASE
Administrative Record - Review Hearing - Herbal Dragon LLC Page 148 of 345Page 2536 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 149 of 345Page 2537 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 150 of 345Page 2538 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 151 of 345Page 2539 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 152 of 345Page 2540 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 153 of 345Page 2541 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 154 of 345Page 2542 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 155 of 345Page 2543 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 156 of 345Page 2544 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 157 of 345Page 2545 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 158 of 345Page 2546 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 159 of 345Page 2547 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 160 of 345Page 2548 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 161 of 345Page 2549 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 162 of 345Page 2550 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 163 of 345Page 2551 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 164 of 345Page 2552 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 165 of 345Page 2553 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 166 of 345Page 2554 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 167 of 345Page 2555 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 168 of 345Page 2556 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 169 of 345Page 2557 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 170 of 345Page 2558 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 171 of 345Page 2559 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 172 of 345Page 2560 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 173 of 345Page 2561 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 174 of 345Page 2562 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 175 of 345Page 2563 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 176 of 345Page 2564 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 177 of 345Page 2565 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 178 of 345Page 2566 of 4584 EXHIBIT “D”
SITE AND FLOOR PLANS
Administrative Record - Review Hearing - Herbal Dragon LLC Page 179 of 345Page 2567 of 4584 280' - 1"
167' - 1"
163' - 0"
DOSIFIER
82' - 5"
13' - 0" 13' - 0" 13' - 0" 13' - 9"
20' - 8" 20' - 5" 7' - 0"
7' - 0"
(N) SEC. DOOR
(N) SEC. DOOR
(E) ROLL-UP DOOR
EXTRACTION
UNIT
1 A3.1
1 A3.1
794 SF
VEG 6
788 SF
VEG 5
778 SF
VEG 2
765 SF
VEG 1
774 SF
VEG 4
1729 SF
FLOWER 6
784 SF
VEG 3
1731 SF
VEG 7
2370 SF
FLOWER 9
2134 SF
FLOWER 8
2143 SF
FLOWER 7
1222 SF
VEG 8
2156 SF
FLOWER 5
2143 SF
FLOWER 4
2143 SF
FLOWER 3
2152 SF
FLOWER 2
2156 SF
FLOWER 1
1928 SF
FLOWER 1
2210 SF
FLOWER 2
2167 SF
FLOWER 3
2170 SF
FLOWER 5
2213 SF
FLOWER 4
1877 SF
VEG 1
561 SF
MOTHER ROOM
642 SF
TISSUE CULTURE
416 SF
MAUNFACTURING
463 SF
OFFICE
449 SF
DRY ROOM
449 SF
DRY ROOM
449 SF
DRY ROOM
809 SF
DISTRIBUTION
1270 SF
MANUFACTURING
2530 SF
MANUFACTURING
383 SF
WATER RESERVOIR
474 SF
DRY ROOM
1475 SF
SHIPPING/ LOADING
130 SF
F EMP. LOCKERS
127 SF
M EMP. LOCKERS
913 SF
LOBBY
93 SF
EMP. CHECK IN
96 SF
BREAKROOM
275 SF
OFFICES/ CONFERENCE
83 SF
UTILITY
85 SF
LAUNDRY
80 SF
STORE
188 SF
OFFICE
181 SF
OFFICE 51 SF
SEC. VAULT
303 SF
TRIMMING
298 SF
PACKAGING
76 SF
BATHROOM
73 SF
BATHROOM
71 SF
BATHROOM
45 SF
BATHROOM
12' x 4' TRANSFORMAR PAD
6" BOLLARDS PROTECTION
22' - 8" 31' - 2" 40' - 7" 7' - 3" 40' - 8"
23' - 0"
25' - 3" 24' - 1" 24' - 10"
22' - 0" 22' - 5" 26' - 3" 4' - 0" 22' - 6" 23' - 1" 37' - 5" 6' - 0"
EXIT EXIT EXIT
EXIT
EXIT
EXIT EXIT
(E) ELECTRIC PANEL
(N) ELETRIC ROOM
547 SF
DRYING
520 SF
DRYING
549 SF
DRYING
475 SF
TRIMMING
484 SF
DISTRIBUTION
228 SF
M EMP. LOCKER
229 SF
F EMP. LOCKER
486 SF
CHECK-IN
499 SF
DELIVERY
814 SF
DELIVERY
38' - 0" 38' - 7" 38' - 11" 42' - 1" 42' - 2"
15' - 0" 14' - 4" 7' - 11" 10' - 7" 11' - 9" 40' - 3" 40' - 1" 44' - 6" 8' - 0" 10' - 3" 17' - 0" 20' - 2" 18' - 3" 21' - 4" 13' - 3"
39' - 3" 40' - 3" 40' - 2" 40' - 0" 40' - 0" 40' - 3" 35' - 0" 54' - 10"
27' - 6" 27' - 0" 7' - 6"
11' - 4" 11' - 4" 7' - 9"
47' - 4" 55' - 8" 54' - 8"
54' - 10" 7' - 4" 25' - 6"
42' - 1"
213' - 0"
136' - 7"
13' - 5" 21' - 3" 13' - 10" 10' - 3" 10' - 6" 5' - 5" 10' - 9" 26' - 2" 21' - 5" 33' - 5" 280' - 1"
163' - 8"
143' - 0"
443' - 9"
23' - 10" 7' - 8" 23' - 0"
54' - 6"
18' - 7"
42' - 4"
4' - 2" 30' - 11"
UNIT C : DIVINA LLC
UNIT D : GENIUS
UNIT F : DANIEL AND GOLIATH LLC UNIT G : 420 CLUB LLC
UNIT E : HERBAL DRAGON
UNIT B : GO CUDAHY UNIT B
UNIT B BTINU BTINU
UNIT B UNIT B UNIT B
UNIT B UNIT B UNIT B
ATINU ATINU ATINU ATINU ATINU
ATINU ATINU
ATINU ATINU
ATINU ATINU
UNIT A
UNIT A
ATINU ATINU ATINU UNIT A
UNIT A
UNIT A
UNIT A UNIT A
UNIT A
UNIT A
UNIT A
UNIT A
UNIT A
UNIT A
UNIT A
UNIT A
Scale
Drawn By
Date
Project Number
Woodland Hills, CA 91365P.O. Box 6004 406610
Global Construction Inc
EST. 2017
1/16" = 1'-0"
4/10/2018 3:50:15 PMA1.2
PROPOSED
PLAN
PHILLIPE KFOURY
DJ JE WC
04/10/2018
2018.003
No. Description Date
1/16" = 1'-0" 1 LEVEL 1 PROPOSED
4. Contractor shall provide, erect, and maintain all temporary barr
3. Do not scale from drawings.
2. All dimensions are too face of structure unless otherwise noted.
1. Any inconsistencies or unforeseen conditions to be reviewed by the Architect prior to proceeding with construction.NOTES:
iers and guards, and all temporary shoring and bracing as required by city and state regulations.
6. Contractor shall pro
5. Contractor shall provide adequate weather protection for the building and its contents during the course of the work. vide temporary sanitary facilities as to least impact neighbors and as directed by city regulations.
8. All casework dimensions to face of finish.
7. All door and window dimensions to be centerline of clear opening.
N
Administrative Record - Review Hearing - Herbal Dragon LLC Page 180 of 345Page 2568 of 4584
SITE
LOT DEPTH 484'-0"
LOT WIDTH 210'-0"
6'-0"
SIDEWALK
5'-0"
PLANTER
167'-1"
162'-2"
25'-5"
N
DRIVEWAY WIDTH 26'-5"
SIDE SETBACK 41'-0"
25'-0"
PL TO STREET CL
Exist fire department connection
WAREHOUSE BUILDING
EXISTING 70,079.2 sq ft
FRONT SETBACK 37'-8" 277'-6"
SIDE SETBACK 63'-5"
12 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 TYP. 9'-0'
18'-0" TYP.
TYP.
9'-0'
18'-0"
TYP.
21'0"
PROPERTY LINE
PROPERTY LINE
PROPERTY LINE
PROPERTY LINE
DRIVEWAY WIDTH 20'-6"
CECILIA ST. CL
Entrance Entrance Entrance
BUILDING
ENTRANCE
BUILDING
ENTRANCE
BUILDING
ENTRANCE
BUILDING
ENTRANCE
C D E B
A
F
G
H I
PATH OF TRAVEL 2%
CROSS SLOPE MAX
CROSS SLOPE MAX
PATH OF TRAVEL 2%
CROSS SLOPE MAX
PATH OF TRAVEL 2%
PATH OF TRAVEL 2%
CROSS SLOPE MAX
Scale
Proposed Site plan 1
16" = 1'-0"
New sliding Fence.
New Fence.
New Fence. New sliding Fence. New Fence.
New Fence.
CUPER DEVELOPMENT
Administrative Record - Review Hearing - Herbal Dragon LLC Page 181 of 345Page 2569 of 4584 EXHIBIT “E”
ADDITIONAL BUSINESS STANDARDS
(IF APPLICABLE)
Administrative Record - Review Hearing - Herbal Dragon LLC Page 182 of 345Page 2570 of 4584 EXHIBIT “F”
STANDARDS AND CONDITIONS FOR CONSTRUCTION
(IF APPLICABLE)
Administrative Record - Review Hearing - Herbal Dragon LLC Page 183 of 345Page 2571 of 4584 ATTACHMENT G.
Correspondence Letter – Notice of
Delinquency dated October 2, 2019
Administrative Record - Review Hearing - Herbal Dragon LLC Page 184 of 345Page 2572 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 185 of 345Page 2573 of 4584 ATTACHMENT H.
Correspondence Letter – Notice of
Default dated May 4, 2021
Administrative Record - Review Hearing - Herbal Dragon LLC Page 186 of 345Page 2574 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 187 of 345Page 2575 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 188 of 345Page 2576 of 4584 ATTACHMENT I.
Correspondence Letter – Final Demand
Letter dated October 19, 2021
Administrative Record - Review Hearing - Herbal Dragon LLC Page 189 of 345Page 2577 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 190 of 345Page 2578 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 191 of 345Page 2579 of 4584 ATTACHMENT J.
Correspondence Letter – Notice of
Cannabis Deferment and Payment
Program dated December 7, 2022
Administrative Record - Review Hearing - Herbal Dragon LLC Page 192 of 345Page 2580 of 4584 P a g e | 1
5220 Santa Ana Street
Cudahy, CA, 90201
Phone: (323) 773-5143
Fax: (323) 771-2072
www.cityofcudahy.com
Mayor
Elizabeth Alcantar
Vice Mayor
Jose R. Gonzalez
Councilmember
Jack M. Guerrero
Councilmember
Blanca Lozoya
Councilmember
Daisy Lomeli
City Manager
Alfonso Noyola, ICMA-CM
Incorporated November 10, 1960
December 7, 2022
Via U.S. Mail and Email:
Herbal Dragon, LLC
Attn: Philip Kfoury, Manager
4916 Cecilia Street Unit E
Cudahy, CA 90201
Re: DA 18-022C
Dear Owner/Operator:
On December 6, 2022, the City Manager presented a Cannabis Deferment and Payment Program to the City Council. Within this program, the City Manager will be utilizing his discretionary authority allowed within the Development Agreements to assist Cannabis Operators with the accumulated non-operating and other fees by deferring and providing additional time for payment without penalty.
The stipulations of this Program will be as follows:
• Unpaid non-operating fees will be deferred (without penalty) until six (6) months after the Operator is issued a Certificate of Occupancy. Thereafter, the accumulated non-operating fees would be required to be repaid within twelve (12) months or other term negotiated with the City Manager.
o Any previous late penalties charged to non-operating fees would be waived provided that a payment agreement is reach and the operator follows all stipulations within the agreement
• Community Benefit and Cost Recovery Fees, as detailed in the Development Agreement, would have to be paid timely on a monthly basis. Any Fees incurred prior to the agreement would be put under a payment agreement and also required to be paid timely on a monthly basis. • Payment agreement terms would be subject to the discretion of the City Manager as negotiated with each operator
• The Operators would have to remain in good standing with the City with respect to Planning and Building and Safety Regulations.
In order to be eligible for this program, Operators must have negotiated with the City and entered into an executed payment agreement no later than January 31, 2023.
Administrative Record - Review Hearing - Herbal Dragon LLC Page 193 of 345Page 2581 of 4584 P a g e | 2
If you are interested in entering into this deferment and payment program, please contact Joshua Calhoun at [email protected].
Sincerely,
Joshua Calhoun, CPA
Finance Director
Administrative Record - Review Hearing - Herbal Dragon LLC Page 194 of 345Page 2582 of 4584 ATTACHMENT K.
Letter Agreement (Payment Plan) dated
February 1, 2023
Administrative Record - Review Hearing - Herbal Dragon LLC Page 195 of 345Page 2583 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 196 of 345Page 2584 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 197 of 345Page 2585 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 198 of 345Page 2586 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 199 of 345Page 2587 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 200 of 345Page 2588 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 201 of 345Page 2589 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 202 of 345Page 2590 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 203 of 345Page 2591 of 4584 ATTACHMENT L.
Correspondence Letters – April, May,
and June Delinquency notices.
Administrative Record - Review Hearing - Herbal Dragon LLC Page 204 of 345Page 2592 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 205 of 345Page 2593 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 206 of 345Page 2594 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 207 of 345Page 2595 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 208 of 345Page 2596 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 209 of 345Page 2597 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 210 of 345Page 2598 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 211 of 345Page 2599 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 212 of 345Page 2600 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 213 of 345Page 2601 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 214 of 345Page 2602 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 215 of 345Page 2603 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 216 of 345Page 2604 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 217 of 345Page 2605 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 218 of 345Page 2606 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 219 of 345Page 2607 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 220 of 345Page 2608 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 221 of 345Page 2609 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 222 of 345Page 2610 of 4584 ATTACHMENT M.
Final Demand Letter dated June 23, 2023
Administrative Record - Review Hearing - Herbal Dragon LLC Page 223 of 345Page 2611 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 224 of 345Page 2612 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 225 of 345Page 2613 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 226 of 345Page 2614 of 4584 ATTACHMENT N.
Correspondence – Notice of Escrow
Account dated August 9, 2023
Administrative Record - Review Hearing - Herbal Dragon LLC Page 227 of 345Page 2615 of 4584 Mayor
Daisy Lomeli
Vice Mayor
Jose R. Gonzalez
Councllmember
Elizabeth Alcantar
Councilmember
Martin U. Fuentes
Councllmember
Cynthia Gonzalez
City Manager
Alfonso Noyola, ICMA-CM
CUDAHY
OP!;N MINDS, OP!;N DOORS
Incorporated November 10, 1960
5220 Santa Ana Street
Cudahy,CA,90201
Phone: (323) 773-5143
Fax: (323) 771-2072
www.cityofcudahy.com
August 9, 2023
Via U.S. Mail and Email:
Herbal Dragon, LLC
Attn: Philip Kfoury, Manager
4916 Cecilia Street Unit E
Cudahy, CA 90201
Re: DA 18-022C- Cannabis Related Cost Recovery Fees-Escrow Dear Owner/Operator:
On June 5, 2018, Herbal Dragon, LLC ("Owner") entered into a Development Agreement (the "Agreement") with the City ofCudahy (the "City") for certain cannabis related non-retail business. Under Section 7 of the Agreement, Owner agreed to pay all fees, charges, and costs set forth.
Furthermore, Section 8 of the Agreement allows City to assess Cost Recovery Fees ("Fees") to recover City's reasonable processing and monitoring costs related to the cannabis business activities. The City is authorized to apply new rules, regulations, and policies which do not conflict with those rules, regulations, and policies set forth in the Agreement (see Section 17) and City may modify the Agreement under the City's "Reserved Powers" and to ensure Owner's compliance in good faith, provided that no modification increases Owner's liability or reduces Owner's rights.
As a result of industry wide delays in the timely payment of assessed Fees, this letter serves as formal City-wide written notice to all Agreement holders, that effective September 15, 2023, City will require upfront payment of the assessed quarterly Fees to be made as a deposit in escrow. Fees placed in escrow will be used to reimburse City's assessed Fees on a monthly basis beginning Q4 2023 and escrow will be replenished quarterly, as further required.
City reserves its right to conduct Periodic Reviews ofeach cannabis operation on a selective basis and if a determination is made, based on substantial evidence, that an operation is out of compliance, City may terminate or modify the Agreement. Section 19(g) provides that all costs incurred by City in connection with the Periodic Review are paid by Owner.
Any failure to abide by this determination may be viewed as "knowingly and intentionally" violating a lawful order and may be subject to increased penalties allowed under the law.
Finally, know that the conviction and punishment of any person does not relieve such person from paying any tax, fee, penalty, or interest due and unpaid at the time of such conviction. All
Administrative Record - Review Hearing - Herbal Dragon LLC Page 228 of 345Page 2616 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 229 of 345Page 2617 of 4584 ATTACHMENT O.
Notice of Review Hearing dated October
12, 2023
Administrative Record - Review Hearing - Herbal Dragon LLC Page 230 of 345Page 2618 of 4584
5220 Santa Ana Street
Cudahy, CA 90201
Phone: (323) 773-5143
Fax: (323) 771-2072
www.cityofcudahy.com
Mayor
Daisy Lomeli
Vice Mayor
Jose R. Gonzalez
Councilmember
Elizabeth Alcantar
Councilmember
Martin U. Fuentes
Councilmember
Cynthia Gonzalez, Ed.D
City Manager
Alfonso Noyola, ICMA-CM
Incorporated November 10, 1960
SENT VIA USPS-CERTIFIED MAIL
October 12, 2023
Attn: Abraham Aghachi, Managing Member
Herbal Dragon, LLC
10901 Santa Monica Blvd.
West Los Angeles, CA 90025
Herbal Dragon, LLC
4916 Cecilia Street, Unit E
Cudahy, CA 90201
RE: 4916 Cecilia St., Unit E Cudahy, CA 90201 – Herbal Dragon, LLC Development Agreement No. DA18-022C
Commercial Cannabis Permit No. CCP18-0019
NOTICE OF REVIEW HEARING
Hearing Date: Tuesday, November 14th, 2023.
Time: 9:00 a.m.
Place: 5220 Santa Ana St. Cudahy CA 90201 – Bedwell Hall, Council Chambers.
Dear Herbal Dragon, LLC,
This letter is to inform you that the City Manager of the City of Cudahy (“City”) has appointed Steve Napolitano to act as an independent hearing officer for a Review Hearing on your compliance with the terms of your Development Agreement (“Agreement”) with the City.
Under Section 19 of the Development Agreement, the City may conduct Periodic and Special Reviews of the Owner's "good faith compliance with the terms of the Agreement." The burden of proof is on the Owner to demonstrate compliance. Please submit any arguments and supporting documents evidencing compliance ten (10) days prior to the Review Hearing. In the event of a finding of noncompliance, the City Council may terminate the Agreement or impose such conditions as are reasonably necessary to protect the interests of the City in accordance with the Agreement and state law. The decision of the City Council shall be final, subject only to judicial review pursuant to Code of Civil Procedure Section 1094.5.
This letter shall also serve as notice that the findings of this Review Hearing may inform the City Manager’s decision to revoke or suspend Commercial Cannabis Permit No. CCP18-019 Administrative Record - Review Hearing - Herbal Dragon LLC Page 231 of 345Page 2619 of 4584
pursuant to Cudahy Municipal Code (“CMC”) Section 5.20.080(6), due to a failure to comply with the requirements of Chapter 5.20 of the CMC, or any condition of approval, or any other agreement or covenant required – inclusive of this Agreement.
The estimated cost for the Review Hearing is $12,695. The Owner is responsible for the cost of the Review Hearing. You are requested to deliver a cashier's check payable to the City of Cudahy three (3) days prior to the hearing date. The Review Hearing will proceed as scheduled whether or not the deposit is made; however, the City may consider the failure to make the deposit a further default on the Development Agreement. The hearing is set for:
Date: Tuesday, November 14, 2023.
Time: 9:00 a.m.
Place: 5220 Santa Ana St. Cudahy CA 90201 – Bedwell Hall – Council Chambers.
Please contact Cecilia Madrigal-Gonzalez, Senior Planner at 323-773-5143 ext. 252 or [email protected] no later than ten (10) days from the date of this letter to confirm your appearance at the Review hearing. If we do not hear back from you by this date, we will assume you waive your right to present evidence at the hearing. Please be advised that the City’s Staff Report with exhibits will be available, upon request, for your review ten (10) days prior to the Hearing.
Respectfully,
Cecilia Madrigal-Gonzalez
Senior Planner
cc: Law Office of Glenn Ward Calsada, Special Counsel
Stephanie A. Arechiga, Esq., City Attorney
Alfonso Noyola, City Manager
Juan Arauz, AICP, Community Development Director
Joshua Calhoun, Finance Director
Jessica Guillen, Assistant Planner
Philip Kfoury, (via email)
Daffodil Tyminski, (via email)
Shaoul J. Levy, Manager, Cudahy Cecilia, LLC (via mail) Administrative Record - Review Hearing - Herbal Dragon LLC Page 232 of 345Page 2620 of 4584 ATTACHMENT P.
Correspondence – Notice of updated
payment of fees dated October 24, 2023
Administrative Record - Review Hearing - Herbal Dragon LLC Page 233 of 345Page 2621 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 234 of 345Page 2622 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 235 of 345Page 2623 of 4584 ATTACHMENT Q.
Invoices from 2019 to September 15,
2023
Administrative Record - Review Hearing - Herbal Dragon LLC Page 236 of 345Page 2624 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 237 of 345Page 2625 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 238 of 345Page 2626 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 239 of 345Page 2627 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 240 of 345Page 2628 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 241 of 345Page 2629 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 242 of 345Page 2630 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 243 of 345Page 2631 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 244 of 345Page 2632 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 245 of 345Page 2633 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 246 of 345Page 2634 of 4584 Administrative Record - 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5220 Santa Ana Street
Cudahy, CA, 90201
Phone: (323) 773-5143
Fax: (323) 771-2072
www.cityofcudahy.com
Mayor
Elizabeth Alcantar
Vice Mayor
Jose R. Gonzalez
Councilmember
Jack M. Guerrero
Councilmember
Blanca Lozoya
Councilmember
Daisy Lomeli
City Manager
Alfonso Noyola, ICMA-CM
Incorporated November 10, 1960
November 14, 2022
Via U.S. Mail and Email:
Herbal Dragon, LLC
Attn: Philip Kfoury, Manager
4916 Cecilia Street Unit E
Cudahy, CA 90201
Re: DA 18-022C
Dear Owner/Operator:
Below is a summary of past and current amounts due under Development Agreement DA 18-022C for Ordinance No 682, with an Effective date of June 5, 2018.
Fee Type Payment
Amount
Payment Period City
Code
Community Benefit Program $22,476.33
$11,428.65
Outstanding balance through July
31, 2021
Monthly installments ($761.91)
from August 2021 to October 2022
CBP
Cost Recovery Fee $21,081.27
$37,728.49
Outstanding balance through July
31, 2021
City Labor from August 2021 to
October 2022
URBF1
Non-Operating Fee $36,128.40
$15,939.00
$1,115.73
Outstanding balance through July
31, 2021
August 2021 through October 2022.
The monthly non-operating fee is
$1,062.60 (.42 x 2,530-square
footage of the premises)
Penalties from August 2022 to
October 2022
OPFEE
Total Fees $145,897.87 Due November 30, 2022
Administrative Record - Review Hearing - Herbal Dragon LLC Page 312 of 345Page 2700 of 4584 P a g e | 2
Community Benefit Program
The Community Benefit Program (CBP) payment amount is due the first day of each month and is considered late if payment is received on or after the fifth day of the month. All CBP outstanding balance as of July 31, 2021, and current CBP monthly installments totaling $33,904.98 are due November 30, 2022.
Cost Recovery Fee
The outstanding balance as of July 31, 2021, the City labor, and third-party contractors from August 2021 to October 2022 totaling $58,809.76 are due November 30, 2022.
Non-Operating Fees
The outstanding balance as of July 31, 2021, and the current monthly non-operating fees from August 2021 to October 2022 totaling $52,067.40 are due November 30, 2022.
Late Payment Penalties
Penalties totaling $1,115.73 from August 2022 to October 2022 are due November 30, 2022.
Per the Development Agreement, amounts that are more than 30 days late after the due date shall result in a penalty equal to the sum of 25% of the non-operating/operating fees. In addition, a 10% shall be added to the first day of each calendar month following the month of the imposition of the 25% penalty if the fees remain unpaid in whole or in part-up to a maximum of 100% of the fee payable. The City will be enforcing these penalties for amounts due from July 2022 to present, as appliable. No penalties will be imposed on amounts outstanding prior to this date. This will be separately listed on current and future invoice letters provided by the City. Should you wish to avoid penalties, ensure that either amounts payable are paid timely or contact the City to discuss entering into a payment plan on prior amounts outstanding.
Please pay no later than November 30, 2022, to avoid any penalties. If you have any questions related to these items, please contact Joshua Calhoun at [email protected].
Sincerely,
Joshua Calhoun, CPA
Finance Director
See supporting detail attached of monthly billings and payments from August 2021 through current.
Administrative Record - Review Hearing - Herbal Dragon LLC Page 313 of 345Page 2701 of 4584 CBP URBF1 OPFEE OPFEE
Operator Comm Benefit Cost Recovery Non Operating Penalties Outstanding Herbal Dragon, LLC
September 22, 2021 Letter 22,476.33 21,081.27 36,128.40 79,686.00
BILLINGS
Aug 2021 761.91 335.18 1,062.60 2,159.69 Sep 2021 761.91 406.78 1,062.60 2,231.29 Oct 2021 761.91 351.00 1,062.60 2,175.51 Nov 2021 761.91 2,723.23 1,062.60 4,547.74 Dec 2021 761.91 130.65 1,062.60 1,955.16 Jan 2022 761.91 494.28 1,062.60 2,318.79 Feb 2022 761.91 1,137.30 1,062.60 2,961.81 Mar 2022 761.91 875.25 1,062.60 2,699.76 Apr 2022 761.91 1,103.88 1,062.60 2,928.39 May 2022 761.91 2,115.39 1,062.60 3,939.90 Jun 2022 761.91 127.60 1,062.60 1,952.11 Jul 2022 761.91 924.63 1,062.60 2,749.14 Aug 2022 761.91 932.38 1,062.60 265.65 3,022.54 Sep 2022 761.91 2,550.29 1,062.60 371.91 4,746.71 Oct 2022 761.91 1,914.65 1,062.60 478.17 4,217.33
PAYMENTS
Aug 2021
Sep 2021
Oct 2021
Nov 2021
Dec 2021
Jan 2022
Feb 2022
Mar 2022
Apr 2022
May 2022
Jun 2022
Jul 2022
Aug 2022
Sep 2022
Oct 2022 0.00 0.00 0.00 0.00 0.00
Annual City Reimbursement Costs 72,020.00
Cost per operator (10) 7,202.00
Three years(2019‐2022) 3 years
City Labor 21,606.00 21,606.00 Balance as of October 31, 2022 33,904.98 58,809.76 52,067.40 1,115.73 145,897.87 (a) City Reimbursement cost of $7,202 per year (x three years (2019‐2022)= $21,606.00 Administrative Record - Review Hearing - Herbal Dragon LLC Page 314 of 345Page 2702 of 4584 P a g e | 1
5220 Santa Ana Street
Cudahy, CA, 90201
Phone: (323) 773-5143
Fax: (323) 771-2072
www.cityofcudahy.com
Mayor
Elizabeth Alcantar
Vice Mayor
Jose R. Gonzalez
Councilmember
Jack M. Guerrero
Councilmember
Blanca Lozoya
Councilmember
Daisy Lomeli
City Manager
Alfonso Noyola, ICMA-CM
Incorporated November 10, 1960
December 12, 2022
Via U.S. Mail and Email:
Herbal Dragon, LLC
Attn: Philip Kfoury, Manager
4916 Cecilia Street Unit E
Cudahy, CA 90201
Re: DA 18-022C
Dear Owner/Operator:
Below is a summary of past and current amounts due under Development Agreement DA 18-022C for Ordinance No 682, with an Effective date of June 5, 2018.
Fee Type Payment
Amount
Payment Period City
Code
Community Benefit Program $22,476.33
$12,190.56
Outstanding balance through July
31, 2021
Monthly installments ($761.91)
from August 2021 to November
2022
CBP
Cost Recovery Fee $21,081.27
$40,319.97
Outstanding balance through July
31, 2021
City Labor from August 2021 to
November 2022
URBF1
Non-Operating Fee $36,128.40
$17,001.60
$1,700.16
Outstanding balance through July
31, 2021
August 2021 - November 2022
The monthly non-operating fee is
$1,062.60 (.42 x 2,530-square
footage of the premises)
Penalties Aug 2022 - Nov 2022
OPFEE
Total Fees $150,898.29 Due December 29, 2022
Administrative Record - Review Hearing - Herbal Dragon LLC Page 315 of 345Page 2703 of 4584 P a g e | 2
Community Benefit Program
The Community Benefit Program (CBP) payment amount is due the first day of each month and is considered late if payment is received on or after the fifth day of the month. All CBP outstanding balance as of July 31, 2021, and current CBP monthly installments totaling $34,666.89 are due December 29, 2022.
Cost Recovery Fee
The outstanding balance as of July 31, 2021, the City labor, and third-party contractors from August 2021 to November 2022 totaling $61,401.24 are due December 29, 2022.
Non-Operating Fees
The outstanding balance as of July 31, 2021, and the current monthly non-operating fees from August 2021 to November 2022 totaling $53,130 are due December 29, 2022.
Late Payment Penalties
Penalties totaling $1,700.16 from August 2022 to November 2022 are due December 29, 2022.
Per the Development Agreement, amounts that are more than 30 days late after the due date shall result in a penalty equal to the sum of 25% of the non-operating/operating fees. In addition, a 10% shall be added to the first day of each calendar month following the month of the imposition of the 25% penalty if the fees remain unpaid in whole or in part-up to a maximum of 100% of the fee payable. The City will be enforcing these penalties for amounts due from July 2022 to present, as appliable. No penalties will be imposed on amounts outstanding prior to this date. This will be separately listed on current and future invoice letters provided by the City. Should you wish to avoid penalties, ensure that either amounts payable are paid timely or contact the City to discuss entering into a payment plan on prior amounts outstanding.
Please pay no later than December 29, 2022 to avoid any penalties. If you have any questions related to these items, please contact Joshua Calhoun at [email protected].
Sincerely,
Joshua Calhoun, CPA
Finance Director
See supporting detail attached of monthly billings and payments from August 2021 through current.
Administrative Record - Review Hearing - Herbal Dragon LLC Page 316 of 345Page 2704 of 4584 CBP URBF1 OPFEE OPFEE
Operator Comm Benefit Cost Recovery Non Operating Penalties Outstanding Herbal Dragon, LLC
September 22, 2021 Letter 22,476.33 21,081.27 36,128.40 79,686.00
BILLINGS
Aug 2021 761.91 335.18 1,062.60 2,159.69 Sep 2021 761.91 406.78 1,062.60 2,231.29 Oct 2021 761.91 351.00 1,062.60 2,175.51 Nov 2021 761.91 2,723.23 1,062.60 4,547.74
Dec 2021 761.91 130.65 1,062.60 1,955.16 Jan 2022 761.91 494.28 1,062.60 2,318.79 Feb 2022 761.91 1,137.30 1,062.60 2,961.81
Mar 2022 761.91 875.25 1,062.60 2,699.76 Apr 2022 761.91 1,103.88 1,062.60 2,928.39
May 2022 761.91 2,115.39 1,062.60 3,939.90
Jun 2022 761.91 127.60 1,062.60 1,952.11 Jul 2022 761.91 924.63 1,062.60 2,749.14 Aug 2022 761.91 932.38 1,062.60 265.65 3,022.54 Sep 2022 761.91 2,550.29 1,062.60 371.91 4,746.71 Oct 2022 761.91 1,914.65 1,062.60 478.17 4,217.33 Nov 2022 761.91 2,591.48 1,062.60 584.43 5,000.42
PAYMENTS
Aug 2021
Sep 2021
Oct 2021
Nov 2021
Dec 2021
Jan 2022
Feb 2022
Mar 2022
Apr 2022
May 2022
Jun 2022
Jul 2022
Aug 2022
Sep 2022
Oct 2022
Nov 2022 0.00 0.00 0.00 0.00 0.00
Annual City Reimbursement Costs 72,020.00
Cost per operator (10) 7,202.00
Three years(2019‐2022) 3 years
City Labor 21,606.00 21,606.00
Balance as of November 30, 2022 34,666.89 61,401.24 53,130.00 1,700.16 150,898.29 (a) City Reimbursement cost of $7,202 per year (x three years (2019‐2022)= $21,606.00 Administrative Record - Review Hearing - Herbal Dragon LLC Page 317 of 345Page 2705 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 318 of 345Page 2706 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 319 of 345Page 2707 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 320 of 345Page 2708 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 321 of 345Page 2709 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 322 of 345Page 2710 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 323 of 345Page 2711 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 324 of 345Page 2712 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 325 of 345Page 2713 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 326 of 345Page 2714 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 327 of 345Page 2715 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 328 of 345Page 2716 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 329 of 345Page 2717 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 330 of 345Page 2718 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 331 of 345Page 2719 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 332 of 345Page 2720 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 333 of 345Page 2721 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 334 of 345Page 2722 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 335 of 345Page 2723 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 336 of 345Page 2724 of 4584 Mayor
Daisy Lomeli
Vice Mayor
Jose R. Gontalez
Coundlmember
Eliiabetl, Alcantar
Councilmember
Martin U. Fuentes
Councilmember
Cynthia Gonulez
CUDAHY
OP[N HINDS, OP�N DOORS
Incorporated November 10/ 1960
September 15, 2022
Via U.S. Mail and Email:
Herbal Dragon, LLC
Attn: Philip Kfoury, Manager
4916 Cecilia Street Unit E
Cudahy, CA 90201
5220 Santa Ana Street
Cudahy,CA, 90201
Phone: (323) 773-5143
Fax: (323) 771-2072
www.cityofcudahy.com
CityManager Re: DA 18-022C Alfonso Noyola, ICMA-CM
Dear Owner/Operator:
Below is a summary of past and current amounts due under Development Agreement DA 18-022C for Ordinance No 682, with an Effective date of June 5, 2018.
Fee Type Payment Payment Period
Amount
Community Benefit Program $36,190.71 Outstanding balance January 31, 2023. $6,095.28 Monthly installments ($761.91) from
Feb 2023 to Sep 2023.
Cost Recovery Fee $66,126.77 Outstanding balance as of January 31, 2023.
$13,275.76 City Labor from February 2023 to
August 2023.
$5,508.36 Escrow Deposit Beginning Charge
Non-Operating Fee $55,255.20 Outstanding balance as of January 31, 2023.
$8,500.80 Feb 2023 through Sep 2023.
The monthly non-operating fee is
$1,062.60 (.42 x 2,530-square footage
of the premises)
$11,476.08 Penalties from Aug 2022- Sep 2023
Total Fees $202,428.96 Due September 30, 2023
City
Code
CBP
URBFl
OPFEE
Administrative Record - Review Hearing - Herbal Dragon LLC Page 337 of 345Page 2725 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 338 of 345Page 2726 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 339 of 345Page 2727 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 340 of 345Page 2728 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 341 of 345Page 2729 of 4584 ATTACHMENT R.
Certificate of Status for Herbal Dragon,
LLC
Administrative Record - Review Hearing - Herbal Dragon LLC Page 342 of 345Page 2730 of 4584 Secretary of State
Certificate of Status
I, SHIRLEY N. WEBER, PH.D., California Secretary of State, hereby certify:
The above referenced entity's powers, rights and privileges are suspended in California.
This certificate relates to the status of the entity on the Secretary of State’s records as of the date of this certificate and does not reflect documents that are pending review or other events that may affect status.
No information is available from this office regarding the financial condition, status of licenses, if any, business activities or practices of the entity.
Suspended - FTB
Entity Name:
Entity No.:
Registration Date:
Entity Type:
201731310507
11/09/2017
Limited Liability Company - CA
Status:
Formed In: CALIFORNIA
HERBAL DRAGON, LLC
IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal of the State of California this day of October 31, 2023.
SHIRLEY N. WEBER, PH.D.
Secretary of State
Certificate No.:
To verify the issuance of this Certificate, use the Certificate No. above with the Secretary of State Certification Verification Search available at bizfileOnline.sos.ca.gov. 155802422
Administrative Record - Review Hearing - Herbal Dragon LLC Page 343 of 345Page 2731 of 4584 ATTACHMENT S.
Proof of certified mailing of Final
Demand Letter dated June 23, 2023
Administrative Record - Review Hearing - Herbal Dragon LLC Page 344 of 345Page 2732 of 4584 Administrative Record - Review Hearing - Herbal Dragon LLC Page 345 of 345Page 2733 of 4584 Attachment G
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DECISION and ORDER
Administrative Hearing Regarding Compliance by Herbal Dragon LLC (Respondent) with Commercial Cannabis Permit (CCP) 18-0019 and Development Agreement (DA) 18-022C Between Respondent and the City of Cudahy (City)
Hearing Date: November 14, 2023
Hearing Officer: Steve Napolitano, Esq.
The hearing took place in the City Council Chambers at Cudahy City Hall, 5220 Santa Ana St., Cudahy, CA 90201. The hearing was recorded and is available through the City Clerk’s Office.
Respondent: Genius Distribution LLC, 4916 Cecilia St., Unit E, Cudahy, CA 90201. Respondent did not appear and was not represented at the hearing.
City was present and represented by:
• Cecilia Madrigal-Gonzalez, Senior Planner.
• Joshua Calhoun, Finance Director
• Juan Arauz, Community Development Director
• Jessica Guillen, Assistant Planner
• Raul Diaz, Building Official
• Glenn Calsada, Special Counsel
• Paloma McEvoy, City Attorney
• Richard Iglesias, City Clerk
DECISION SUMMARY
Based on the evidence and analysis discussed below, this Hearing Officer finds that a preponderance of the evidence shows that Respondent, despite considerable notice and opportunities to cure any issues, has breached the terms and conditions of DA 18-022C and Respondent’s portion of its CCP and recommends that the Planning Commission and/or City Council repeal Ordinance No. 682 and terminate DA 18-022C and revoke Respondent’s interest under CCP 18-0019.
ADMINISTRATIVE HEARING PROCEDURES
All state and local public entities are subject to due process of law. State agencies are subject to statutory requirements, including the Administrative Procedures Act. Local public agencies are, with some minor exceptions, not subject to the APA and generally subject only to the constitutional limitations of due process of law. Govt. Code §11410.30. While a local agency may elect to apply some or all of the provisions of the APA to its hearings, the City has not done so.
The process required by law are those imposed by our constitution(s) as well as any procedures adopted by the County. In Mohilef v. Janovici (1996) 51 Cal.App.4th 267 and E.W.A.P., Inc. v. City of Los Angeles (1997) 56 Cal.App.4th 310, the court explored what due process is necessary in an administrative proceeding. There is general agreement that there must be notice and an opportunity to be heard. Beyond this, “there is no precise manner of hearing which must be afforded; rather the particular interests at issue must be considered in determining what kind of hearing is appropriate. A Attachment HPage 2735 of 4584
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formal hearing, with full rights of confrontation and cross-examination is not necessarily required. (Saleeby v. State Bar (1985) 39 Cal.3d 547, 565, 216 Cal.Rptr. 367, 702 P.2d 525.) ‘Due process’ is an elusive concept. Its exact boundaries are undefinable, and its content varies according to specific factual contexts.” Mohilef at 286. Our Supreme Court has stated, “[D]ue process may require only that the administrative agency comply with the statutory limitations on its authority.” People v. Ramirez (1979) 25 Cal.3d 260, 269
Beyond notice and a hearing, the procedures available in this case to the participants are those provided by Cudahy Municipal Code (CMC) 5.20.080.
The legal standard of review applicable to an administrative hearing is based on a preponderance of the evidence, or “evidence which is of greater weight and more convincing than the evidence which is offered in opposition to it; that is evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary, Fifth Edition.
BACKGROUND
Background information was presented in the City’s Staff Report dated November 14, 2023, with attachments A through S, which were admitted into the record.
On September 11, 2017, the City adopted Ordinance No. 673 (Attachment A) establishing the City of Cudahy's commercial cannabis production activity regulations codified in Chapter 5.20 of the Cudahy Municipal Code (“CMC”). CMC Section 5.20.040 authorizes medicinal commercial cannabis activities within a designated overlay zone, pursuant to a development agreement adopted in accordance with the Development Agreement Law (Govt. Code Section 65864 et seq.) and Chapter 20.28 of the CMC.
On April 30, 2018, the Planning Commission recommended the City Council to approve CCP18- 0019 for cannabis delivery at 4916 Cecilia St Unit E., subject to the approval of a development agreement between the City and the Respondent for cannabis manufacturing activities.
On May 15, 2018, the City Council adopted Resolution No. 18-17 (Attachment B) approving the issuance of CCP18-0019 (Attachment C) with conditions of approval to the Respondent upon the execution of a development agreement with the City.
On June 5, 2018, the City Council adopted Ordinance No. 682 (Attachment D) approving DA18- 022C (Attachment E) inclusive of exhibits A-F (Attachment F) between the Respondent and the City authorizing commercial cannabis manufacturing activities at 4916 Cecelia Street Unit E (“Site”) as illustrated in Figures 1 and 2 of the City’s staff report. Recital I of the Development Agreement permits the Respondent to utilize approximately 2,530 square feet of the Site for cannabis manufacturing. The Respondent is one of seven tenants at the Site which all have separate development agreements with the City but each tenant is subject to the same CCP conditions of approval.
On October 2, 2019, the City provided the Respondent with a Notice of Delinquency (Attachment G) prior to placing the Respondent in default status due to payment non-compliance with the Development Agreement, inclusive of the payment of Community Benefit Fees, Cost Recovery Fees, and NonOperating Fees in the amount of fourteen thousand eight hundred and ninety-six dollars and forty-three cents ($14,896.43). The Respondent was given no later than October 17, 2019, to cure the amount, however, the delinquency was not timely cured.
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On May 4, 2021, the City provided the Respondent with a Notice of Default (Attachment H) due to noncompliance with a payment of fees and associated penalties in the amount of sixty-eight thousand three hundred fifty-seven dollar and ninety-nine cents ($68,357.99). The Respondent was given no later than 30 days to cure the default, however, the default was not timely cured.
On October 19, 2021, the City provided the Respondent with a Final Demand Letter (Attachment I) due to payment non-compliance informing the Respondent that fees and penalties had accumulated to seventy-five thousand six hundred fifty-six dollars and three cents ($75,656.03). The Respondent was given no later than 30 days to cure the default and comply with their payment obligations, however, the default was not timely cured.
On December 7, 2022, the City Manager offered a Cannabis Deferment and Payment Program (Attachment J) to assist cannabis operators with the accumulated non-operating and other fees by deferring and providing additional time for payment without penalty. All cannabis operators interested in participating in this program were given no later than January 31, 2023, to execute a payment agreement. The City received interest from the Respondent and due to their good-faith negotiations between both parties, the City extended the deferment and payment program.
On February 1, 2023, the City’s Finance Department presented the Respondent with a Letter of Agreement agreeing to a payment plan to forbear outstanding payment due on the DA (Attachment K).
The Respondent accepted the proposed terms on February 2, 2023, and agreed to begin payments on March 2, 2023. The Respondent also acknowledged and agreed “that the past due amounts stated are true and correct and are in fact presently due and owing. The parties agree that the Respondent is in ‘default status’ on its obligations under its Development Agreement with the City.” Between April and June 2023, the City notified the Respondent with three (3) Notices of Delinquency (Attachment L) and provided an opportunity to cure outstanding payments due. However, the default on the Letter Agreement was not timely cured and therefore was terminated and no longer in full force and effect as of June 16, 2023. Accordingly, the total of all past due amounts at the time the Letter Agreement was terminated and an amount of $181,252.79 and was due and owed.
On June 23, 2023, the City sent a Final Demand Letter (Attachment M) demanding the Respondent to respond to the following demands: 1) Proof of the revival (or request for revival) of the LLC’s entity status with the California Secretary of State; 2) Forwarding payment for the total past due amount; and 3) Contact City staff for a meeting to revise the CCP’s Schedule of Performance and for further information to become compliant with the DA and CCP. The Respondent did not respond in a timely manner and has failed to make any attempt to cure any defaults. As of the writing of this report, the City has received limited payment of fees due under DA18-021C since the Development Agreement has been in effect.
On August 9, 2023, the City issued an Escrow Account Letter (Attachment N) requiring all cannabis operators to open an escrow account by September 15, 2023, to ensure payment of Cost Recovery Fees. As of the writing of this report, the Respondent has not opened an escrow account nor made any payments into the account.
On October 12, 2023, the City issued the Respondent a Notice of Review Hearing (Attachment O) with the hearing date, time, and place.
On October 24, 2023, the City issued a letter (Attachment P) updating the Respondent on their payment and fees related to the DA by correcting the amount due to an error in the total amount billed.
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The City provided a credit in the amount of $14,950.50. As of October 24, 2023, Respondent owes the City one hundred eighty-six thousand one hundred seventy dollars and ninety-eight cents ($186,170.98). Community Benefit Fees, Cost-Recovery and Non-operating Fees plus penalties continue to accrue and the total amount due may be higher since the date of the Review Hearing on November 14, 2023.
PROCEDURAL ISSUES
As noted, Respondent did not participate and was not represented at the hearing. No evidence was submitted by Respondent.
Evidence submitted prior to the hearing by City staff and testimony and statements made at the hearing by City staff are incorporated herein by reference, including the City’s staff report dated November 14, 2023, with attachments A through S, which were admitted into evidence.
Pursuant to CMC 5.20.080(6), the City Manager or his designee may determine if a Cannabis Permittee has failed to comply with any condition, agreement, or covenant with the City. In the event of any material violation, the City Manager or his designee may suspend or revoke a cannabis permit.
Under section 19 of Respondent’s DA, the City may conduct Periodic and Special Reviews of Respondent’s “good faith compliance with the terms of the Agreement,” noting that the burden of proof is on the Owner [Respondent]. In the event of a finding of noncompliance, the City Manager may report the matter to the Planning Commission and City Council with recommended actions. The City Council may terminate the Agreement or impose such conditions as are reasonably necessary to protect the interests of the City.
Pursuant to Section 22 of the Development Agreement the City sent a Review Hearing notice via certified mail, and a courtesy email notice, to all concerned parties on October 12, 2023. The notice advised that the Review Hearing would be held on the hearing date at such location designated in Attachment O. Proof of certified mailing is provided in Attachment S.
The City engaged this Hearing Officer to conduct an impartial, independent review of the evidence in this matter and determine whether Respondent is in compliance with its CCP and DA between itself and the City.
No objections or other procedural issues were raised.
Presenting City Staff members were sworn in prior to giving testimony.
EVIDENCE
Cecilia Madrigal-Gonzalez, Senior Planner, provided an overview of the City’s staff report. Ms.
Madrigal-Gonzalez asked the Hearing Officer to make the recommended findings to repeal and revoke Respondent’s portion of the CCP and their DA in its entirety based on the City’s staff report and the testimony by City staff at the hearing.
Joshua Calhoun, Finance Director, testified as to the accuracy of amounts owed by Respondent and that Respondent had failed to make their required payments.
Glenn Calsada, Special Counsel, confirmed that Respondent’s status as a legal entity was suspended.
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Raul Diaz, Building Official, testified that no permits were issued for any site improvements and no certificate of occupancy had been issued to Respondent. Ms. Madrigal-Gonazalez also confirmed that no zoning clearances were issued.
Richard Iglesias, City Clerk, testified that all documents were true and correct copies and all mailing procedures under the CMC were followed.
ANALYSIS
Pursuant to the CMC 5.20.080(6)(a), “Any material violations of this chapter or any other relevant city law by a cannabis permittee, or cannabis permittee’s agent, is grounds for suspending or revoking the relevant cannabis permit.” To suspend or revoke a cannabis permit the City Manager or the City Manager’s Designee [Hearing Officer] must determine “that the cannabis permittee has failed to comply with any conditions of approval, or any agreement or covenant as required pursuant to this chapter” (CMC 5.20.080(6)(a)).
The City asserts that Respondent has made several material violations of the CCP and/or DA as outlined in the City’s Staff Report and testimony, which will be discussed as follows.
1. Breach of Payment Obligations
Pursuant to the DA Article. 5.b (Community Benefit Fees), Article. 7.c (Operating Fees) and Article. 8 (Cost Recovery Fees), the Respondent must pay the City an annual community benefit fee in the amount of $9,523.86 ($1,904.77 down payment and monthly payments in the amount of $761.91), a cost recovery fee, and an operating [or non-operating] fee each year since 2018. The Respondent is also obliged to make payments for these fees under Condition of Approval No. 45; the obligation for Non-Operating Fees is also repeated in Condition of Approval No. 13 for manufacturing activities.
The Respondent has not made the required timely payments and as of October 24, 2023, is past due in the amount of $186,170.98 as shown in Table 1 of the City’s staff report. Past-due payments continue to accumulate, including late payment penalties. The Respondent must pay all required DA fees in accordance with DA terms. Failure to pay fees constitutes a breach of the DA and may result in suspension or immediate revocation of the DA. Accordingly, the Respondent is in breach of its payment obligation under DA No. 18-022C.
On June 5, 2018, Respondent executed Development Agreement No. 18-022C, which is a legally binding contract between the Respondent and the City of Cudahy pursuant to DA Art. 5.b [Community Benefit Fees], Art. 7.c [Operating Fees] Art. 8 [Cost Recovery Fees]. In December 2022, the City offered a deferment and payment plan option to the Respondent which was accepted and the first payment was due on March 1, 2023. The Respondent did not make a single required payment in March, April and May of 2023. The Respondent did not cure the delinquency and as a result, the payment plan was null and voided on June 16, 2023. Proper notice of default was given with the opportunity to cure, but the Respondent has failed to fulfill its monetary obligations owed to the City.
This failure is a material breach of the DA and grounds for termination of the DA.
The City staff report theorizes several potential defenses that Respondent may assert and discusses how each defense would fail. The Hearing Officer agrees but finds no need for further analysis as Respondent has made no such argument itself, as Respondent failed to provide any evidence contrary to that presented by the City. Respondent knew and accepted the terms of the agreement, including all
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payment provisions, willingly and voluntarily and has not disputed their imposition. It is understood that Respondent requested the City forgive Non-Operating Fees for an 18 month period but did not provide a legally valid reason that would allow such a forgiveness, nor was such a forgiveness ever approved by the City.
Based on the evidence provided by the City above, and the failure of Respondent to provide any evidence to the contrary, a preponderance of the evidence shows that Respondent has breached the terms of DA No. 18-016C by failing to make all required payments to the City as required.
Similarly, The Respondent has failed to comply with Conditions of Approval No. 1(a) and (b) of the CCP, which required the Respondent to pay all City-issued invoices within 30 days of receipt thereof.
The City approved Development Agreement No. 18-022C subject to Conditions of Approval, which are incorporated as part of Development Agreement No. 18-022C. Condition of Approval 1(b) provides that the Respondent is required to pay all City-issued invoices within 30 days of receipt thereof. The City has sent the Respondent regular monthly invoices since 2019 (Attachment Q). The current outstanding fees owed by the Respondent have been owed to the City for longer than 30 days. Despite demand and after proper notice of default and the opportunity to cure the Respondent has failed to cure its monetary obligations owed to the City.
Additionally, the City asserts that pursuant to Condition of Approval Nos. 13 and 45, the Respondent’s failure to pay all fees constitutes a cross-breach of Development Agreement No. 18-022C and is grounds for revocation of the CCP.
The Respondent’s non-payment of Non-Operating Fees due under the Development Agreement and all fees due under the Development Agreement, respectively in violation of Condition Nos. 13 and 45 and constitute grounds for revocation of the Respondent's interest in the CCP for the Site.
Again, based on the unrefuted evidence presented by the City above, a preponderance of the evidence shows that Respondent breached multiple conditions of their DA and CCP. Despite multiple attempts and notices by the City to gain compliance, the evidence shows that Respondent failed to comply with their payment obligations, which constitutes the necessary grounds for termination of the DA and revocation of the CCP under the CMC.
2. Noncompliance with State Law
Under DA Art. 4.a. [Facility Operations], Respondent must be a lawful entity capable of operating in accordance with a state-issued cannabis license at all times.
Attachment R shows the Certificate of Status with the Secretary of State of California dated October 31, 2023, which states, “The above-referenced entity’s [Respondent] powers, rights and privileges are suspended in California.” Despite notice of default and opportunity to cure, Respondent’s entity status remains “FTB/SOS” suspended by the California Secretary of State and, as such, the entity is unable to operate in the State of California.
According to the California Franchise Tax Board website, a suspended entity cannot do business in California until they cure the reason for their suspension, which is supported by Rev. & Tax Code Sec. 23301 and case law cited by the City: Casiopea Bovet, LLC v. Chiang (2017) 12 Cal.App.5th 656, 662; City of San Diego v. San Diegans for Open Government (2016) 3 Cal.App.5th 568, 577.
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Based on the evidence provided by the City, and the failure of Respondent to provide any evidence to the contrary, a preponderance of the evidence shows that Respondent is not a current legal entity capable of operating in California in violation of DA Art. 4.a.
3. Breach of Conditions of Approval No. 51 (Time Limits) Under CCP 18-0019 CCP Condition No. 51.A. states the approval decision for this CCP becomes effective upon the expiration of the 15-day appeal period following the approval decision, or when any appeals of the decision are finally resolved. The CCP effective date for Respondent’s DA was June 20, 2018. No appeal was ever filed and thus CCP Condition No. 51.A.i sets a 90-day time limit from the effective date of the CCP for the Permittee/Respondent to obtain a Zoning Clearance. CCP Condition No. 51A.ii sets a 90-day time limit from the effective date of the CCP for the Permittee/Respondent to complete construction of Phase I. CCP Condition No. 51A.iii sets a 180-day time limit from the effective date of the CCP for the Permittee/Respondent to complete all Tenant Improvements and construction and to obtain a Certificate of Occupancy from the City Building Department. The City Manager may grant an extension of time if the Permittee/Respondent has made a diligent effort to implement the Project.
Here, Respondent has not provided the City with any evidence it has obtained a Zoning Clearance, completed construction of Phase I, completed all Tenants Improvements, or obtained a Certificate of Occupancy for the Site within the time limits set forth in Condition of Approval No. 51. Without an extension, the deadlines expired in 2019. The City has no record of any request by the Respondent for an extension of time by the City Manager and there is no evidence the Respondent has made substantial progress such as submitting for a zoning clearance or submitting for a building permit plan check.
Respondent was given notice of default and an opportunity to cure by the City’s Final Demand letter dated October 12, 2023 with no response from Respondent.
Based on the evidence provided by the City, and the failure of Respondent to provide any evidence to the contrary, a preponderance of the evidence shows that Respondent has failed to meet its conditions of approval for CCP18-0019 by failing to implement the Project within the time limits set forth in Conditions of Approval No. 51.
DECISION AND ORDER
Based on the evidence and analysis discussed above, this Hearing Officer finds that a preponderance of the evidence shows that Respondent, despite considerable notice and opportunities to cure any issues, has breached the terms and conditions of DA 18-022C and Respondent’s portion of its CCP and recommends that the Planning Commission and/or City Council repeal Ordinance No. 682 and terminate DA 18-022C and revoke respondent’s interest under CCP 18-0019.
This decision does not affect the payments and penalties outlined in the City’s Staff Report, which are still accumulating, owed and due to City from Respondent.
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Submitted January 18, 2024 by Steve Napolitano, Esq., Administrative Hearing Officer.
Steve Napolitano, Esq.
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1 From: Sebastian Rucci <[email protected]>
Sent: Saturday, January 6, 2024 12:03 AM
To: Jose R. Gonzalez; Elizabeth Alcantar; Daisy Lomeli; [email protected]; [email protected]; [email protected]; [email protected]; Cecilia Madrigal; Richard Iglesias; [email protected]; Paloma McEvoy; [email protected]; Juan Arauz; [email protected]
Cc: Daffodil; Daffodil; Cudahy - Phil Kfoury; Cudahy - Christian Subject: NOTICE TO CURE BREACH OF DEVELOPMENT AGREEMENTS Attachments: Cudahy Notice to Cure Default (1-05-23).pdf; Exhibit Mammoth Lakes Case.pdf NOTICE TO CURE BREACH OF DEVELOPMENT AGREEMENTS for 4916 Cecilia Street; Notice of Protest to Illegal Fees and Agreement to Post Bond Pending Outcome of Fee Dispute under Gov. Code § 66020.
Dear Mayor, Vice Mayor, Council Members, City Officials, and City Representatives:
Our office represents the seven cannabis operators with development agreements at 4916 Cecilia Street, see Ordinance No. 676 through 682. Under Section 14, titled “Defaults and Remedies,” the cannabis operators give the City notice of its “default” and “breach” of the development agreements, specifying “the nature of the alleged default and the manner in which said default may be satisfactorily cured.” (Dev. Agmt. § 14(a)). The City’s “failure” to cure within 30 days “shall constitute a default.” (Dev. Agmt. § 14(a)). “After notice and expiration” of the 30 days to cure, the cannabis operators “may institute legal proceedings.” (Id.)
The development agreements were approved on June 5, 2018, a total of 2,039 days (68 months or 5.6 years) from the date of this Notice. The City agreed its contractual promises “shall survive beyond the terms of the present Council members, that this Agreement will serve to bind the City and future Councils to the obligations hereby undertaken.” (Dev. Agmt. Recital M). The City also agreed “after notice and expiration of the 30 days” to cure its default, the cannabis operators “may institute legal proceedings” and “nothing contained herein shall modify or abridge the operator’s rights or remedies (including its rights for damages, if any) resulting from bad faith intentional acts, the grossly negligent or malicious acts of the City and its officials, officers, agents, and employees.” (Dev. Agmt. § 14(a)).
Under Section 14, the Cannabis Operators Give the City Notice of Default and provide 30 days to cure the default, or they will file a lawsuit for breach of the development agreement. The operators prefer that the City comply with its contractual promises; however, if it does not cure its default, this Notice identifies “all claims for money or damages against local public entities” as Gov. Code § 905 requires.
The Cannabis Operators also Give Notice to Proceed Under Protest and seek an “arrangement” to pay the disputed fees under protest by posting a bond under Gov. Code § 66020. The operators identify the “factual elements of the dispute and the legal theory forming the basis for the protest.” (Cal Gov Code § 66020(a)). The operators protest all nonoperating fees, All fees for delays by the city in redesigning approved plans and construction delays, and All fees during the coronavirus closure.
City Officials, Officers, Employees, and Consultants Are Given Notice of Claims for Individual Liability if the defaults are not cured. As explained below, they are individually liable for damage under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-68. The development agreements expressly permit the operators to pursue “damages resulting from bad faith intentional acts, the grossly negligent or malicious acts of the City and its officials, officers, agents, and employees.” (Dev. Agmt. § 14(a)).
Attachment IPage 2743 of 4584
2 The detailed notice (attached letter) identifies the City’s default, including:
(1) The City demands fees during the fifteen-month closure due to the coronavirus pandemic (2) The City demands fees caused by its delays in redesigning approved plans. (3) The City demands non-operating fees from operators progressing towards opening. (4) The City’s temporary 90-day occupancy permit is conditioned on paying illegal fees. (5) Review hearings by a hearing officer instead of the City Council, which violates the agreements.
The City must cure the plethoras of defaults identified in the attached letter and undertake the following acts:
(1). The City must remove all non-operating fees if the facility is not open. (2). The City must waive all fees during the 15-month pandemic. (3). The City must waive all fees during any delays caused by the City. (4). The City must waive all fees when the City was in default under the agreements. (5). The City must issue a regular occupancy permit, not a temporary one. (6). The City must withdraw the defective review hearing with the hearing officer. (7). The City must expedite permits and proceed with the expedited opening of the facilities.
The operators will, of course, pay the operating fee; once they are operating, they will pay the community benefit fee and cost recovery fee as agreed. Nothing in this Notice modifies the agreement; the operators interpret the document precisely as they signed it.
This Notice seeks to bring the City’s actions into compliance with its contractual promises. The City must cure the defaults identified above. The City must “ensure this agreement remains in full force and effect.” (Dev. Agmt. § 23(c)).
The City must correct the many violations identified in this Notice. The cannabis operators have worked on trying to open for 68 months. They have endured many violations, and enough is enough, and then some.
Regarding the defective hearings set for January 8, with a hearing officer. Note the following. The City contractually agreed 68 months ago not to charge fees when the City delayed construction or shut the project down. The “Force Majeure” clause promised that unforeseen events, including “local, state or national emergencies” or “any default by the City” which “substantially interferes with the development, construction or operation of the project,” will entitle the operator to “an extension of time.” (Dev. Agmt. § 23(i)). There are no fees during the period of City caused delays or closures caused by the City.
The City also contractually agreed that any “delay” to “perform” its promises “shall constitute a default.” (Dev. Agmt § 14(a)). Therefore, under § 23(i) “any default by City” which “substantially interferes” with the project will entitle the operator to an “extension of time.” (Dev. Agmt. § 23(i)). The City is in default for its demand for fees for City-caused delays and closures caused by the City under § 14(a) and § 23(i).
The City contractually agreed that “the City Council shall review this agreement annually” to “ascertain operator’s good faith compliance with this agreement.” (Dev. Agmt. § 19(a)). The annual review hearings provided that at the hearing, the “operator shall document any request for an extension of the term due to delays beyond the control of operator (see Section 23(i) force majeure).” (Dev. Agmt. § 19(a)). The annual review hearings under § 19(a) incorporated force majeure delays under § 23(i), which gave the operators a forum to present city-caused delays and closures caused by the City and receive a waiver of fees for these delays.
The City also agreed that the operator could not “compel [the yearly review] hearing” and further agreed that “no implication will be made to operator’s detriment if a hearing is not held.” (Dev. Agmt. § 19(a)). The City promised to hold its first review hearing 55 months ago, the second 43 months ago, the third 31 months ago, the fourth 19 months ago, and the fifth seven months as of the date of this Notice. However, the City refused to hold a single hearing for 68 months, preventing a review of its delays in breach of §§14(a), 19(a), and 23(i).
3 With no hearings by the City Council, the developers turned to City staff and blocked the operators from appearing before the City. The recent notice by the City of “review hearings” before an appointed “hearing officer” to determine compliance with “Section 19 of the agreement” is defective. Section 19 required that “the City Council shall review this agreement annually.” (Dev. Agmt. § 19(a)). Most recently, on December 29, 2023, the City stated in a letter that the operator's “failure to confirm your appearance at the January 8, 2024 review hearing, you have waived your right to present evidence at and otherwise participate at the review hearings.” However, the City contractually promised in the development agreement that “at the time and place set for the review hearing, the operator shall be allowed to be heard.” (Dev. Agmt. § 19(d)). The right to be heard is at the time of the hearing, not before. This breached the agreement in multiple ways.
The plethora of defects, the liability for lost damages, and likely individual liability for civil RICO violations are identified.
Please take a serious review of the information in the letter. The case that accompanies the letter displays that lost profits damages are substantial. However, the City has 30 days to cure, and we sincerely hope you take this route.
I am available anytime to discuss the contents of this Notice, or make a full presentation before the City Council, or meet with City officials or City representatives.
Please take a look at the attached detailed letter and the exhibit (Mammoth Lakes case) attached to the letter.
Respectfully submitted,
Sebastian Rucci
Law Office of Sebastian Rucci, P.C.
16400 Pacific Coast Highway, Suite 212
Huntington Beach, CA 92649
Phone: (562) 901-0199
Fax: (562) 249-6910
Email: [email protected]
cc: cannabis operators
LAW OFFICE OF SEBASTIAN RUCCI, P.C.
16400 Pacific Coast Highway, Suite 212
Huntington Beach, CA 92649
Phone: (562) 901-0199
Fax: (562) 249-6910
[email protected]
January 5, 2024
City of Cudahy
5220 Santa Ana Street
Cudahy, California 90201
Mayor, Jose R. Gonzalez ([email protected])
Vice Mayor, Elizabeth Alcantar ([email protected]) Councilmember, Daisy Lomeli ([email protected]) Councilmember, Martin U. Fuentes ([email protected]) Councilmember, Dr. Cynthia Gonzalez ([email protected]) City Manager, Alfonso Noyola ([email protected]) Finance Director, Joshua Calhoun, CPA ([email protected]) Senior Planner, Cecilia Madrigal-Gonzalez ([email protected]) City Clerk, Richard Iglesias ([email protected]) Special Council, Glenn Ward Calsada ([email protected]) City Attorney Paloma Perez-McEvoy ([email protected]) City Attorney Stephanie Arechida ([email protected]) Community Development Director, Juan Arauz ([email protected]) Building Official, Raul Diaz ([email protected]) RE: NOTICE TO CURE BREACH OF DEVELOPMENT AGREEMENTS for 4916 Cecilia Street; Notice of Protest to Illegal Fees and Agreement to Post Bond Pending Outcome of Fee Dispute under Gov. Code § 66020.
Dear Mayor, Vice Mayor, Council Members, City Officials, and City Representatives:
Our office represents the seven cannabis operators with development agreements at 4916 Cecilia Street, see Ordinance No. 676 through 682. Under Section 14, titled “Defaults and Remedies,” the cannabis operators give the City notice of its “default” and “breach” of the development agreements, specifying “the nature of the alleged default and the manner in which said default may be satisfactorily cured.” (Dev. Agmt. § 14(a)). The City’s “failure” to cure within 30-days “shall constitute a default.” (Dev. Agmt. § 14(a)). “After notice and expiration” of the 30 days to cure, the cannabis operators “may institute legal proceedings.” (Id.)
The development agreements were approved on June 5, 2018, a total of 2,039 days (68 months or 5.6 years) from the date of this Notice. The City agreed its contractual promises “shall survive beyond the terms of the present Council members, that this Agreement will serve to bind the City and future Councils to the obligations hereby undertaken.” (Dev. Agmt.
Recital M). The City also agreed “after notice and expiration of the 30 days” to cure its default, the cannabis operators “may institute legal proceedings” and “nothing contained herein shall modify or abridge the operator’s rights or remedies (including its rights for damages, if any) resulting from bad faith intentional acts, the grossly negligent or malicious acts of the City and its officials, officers, agents, and employees.” (Dev. Agmt. § 14(a)).
Under Section 14, the Cannabis Operators Give the City Notice of Default and provide 30 days to cure the default, or they will file a lawsuit for breach of the development agreement. The operators prefer that the City comply with its contractual promises; however, if it does not cure its default, this Notice identifies “all claims for money or damages against local public entities” as required by Gov. Code § 905.
The Cannabis Operators also Give Notice to Proceed Under Protest and seek an “arrangement” to pay the disputed fees, under protest, by posting a bond, under Gov. Code § 66020. The operators identify the “factual elements of the dispute and the legal theory forming the basis for the protest.” (Cal Gov Code § 66020(a)). The operators Protest All Non-Operating Fees, they Protest All Fees for Delays by the City in redesigning approved plans and construction delays, and they Protest All Fees During the Coronvirus Closure.
City Officials, Officers, Employees, and Consultants Are Given Notice of Claims for Individual Liability if the defaults are not cured. As explained below, they are individually liable for damage under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-68. The development agreements expressly permit the operators to pursue “damages resulting from bad faith intentional acts, the grossly negligent or malicious acts of the City and its officials, officers, agents, and employees.” (Dev. Agmt. § 14(a)).
1. INTRODUCTION OF CITY’S BREACH OF DEVELOPMENT AGREEMENTS The operators paid over $750,000 in fees; however, 68 months after securing approval, six facilities are still not open for refusing to pay illegal fees. The City’s default include:
(1) City demands fees during the fifteen month closure due to the coronavirus pandemic (2) City demands fees caused by its delays in redesigning approved plans. (3) City demands non-operating fees from operators who progressed towards opening. (4) City’s temporary 90 day occupancy permit are conditioned on paying illegal fees. (5) Review hearings by hearing officer instead of City Council violate the agreements.
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . . . PAGE 2
Over five years ago, 2,039 days or 68 months ago, Cudahy approved seven identical development agreements. During the past 68 months, the operators paid $3/4 million in fees and invested over $10 million in renovating an existing warehouse; however, after 68 months, only one of the seven operators is open. The City issued one operator a 90-day temporary occupancy permit, violating its vested rights. The other six are facing revocation hearings for failure to pay disputed and illegal fees in full, a violation of many of their rights..
The City contractually agreed 68 months ago not to charge fees when the City delayed the construction or shut the project down. The “Force Majeure” clause promised that unforeseen events, including “local, state or national emergencies” or “any default by the City” which “substantially interferes with the development, construction or operation of the project,” will entitle the operator to “an extension of time.” (Dev. Agmt. § 23(i)). There are no fees during the period of City caused delays or closures caused by the City.
The City also contractually agreed that any “delay” to “perform” its promises “shall constitute a default.” (Dev. Agmt § 14(a)). Therefore, under § 23(i), “any default by City” which “substantially interferes” with the project will entitle the operator to an “extension of time.” (Dev. Agmt. § 23(i)). The City is in default for its demand for fees for City-caused delays and closures caused by the City under § 14(a) and § 23(i).
The City contractually agreed that “the City Council shall review this agreement annually” to “ascertain operator’s good faith compliance with this agreement.” (Dev. Agmt. § 19(a)). The annual review hearings provided that at the hearing, the “operator shall document any request for an extension of the term due to delays beyond the control of operator (see § 23(i) force majeure).” (Dev. Agmt. § 19(a)). The annual review hearings under § 19(a) incorporated force majeure delays under § 23(i), which gave the operators a forum to present city-caused delays and closures and receive a waiver of fees for these delays.
The City agreed that the operator could not “compel [the review] hearing” and further agreed that “no implication will be made to operator’s detriment if a hearing is not in fact held.” (Dev. Agmt. § 19(a)). The City promised to hold its first review hearing 55 months ago, the second 43 months ago, the third 31 months ago, the fourth 19 months ago, and the fifth 7 months as of the date of this Notice. However, the City refused to hold a single hearing for 68 months, preventing any review of its delays in breach of §§14(a), 19(a), and 23(i).
Without any review hearing by the City Council, the developers turned to City staff and they blocked the operators from appearing before the City. City attorney Paloma McEvoy stated in a letter that the City Council considered your demand to appear before City Council and “has decided not to negotiate the repayment of fees and to continue with” the revocation hearings.
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . . . PAGE 3
The reference to the hearing is to the City’s recent notice of “review hearings” before an appointed “hearing officer” to determine compliance with “Section 19 of the agreement.” However, § 19 required that “the City Council shall review this agreement annually.” (Dev.
Agmt. § 19(a)). On December 29, 2023 the City stated in a letter that the operators “failure to confirm your appearance at the January 8, 2024 review hearing, you have waiver your right to present evidence at and otherwise participate at the review hearings.” However, the City promised that “at the time and place set for the review hearing, operator shall be given an opportunity to be heard.” (Dev. Agmt. § 19(d)). The right to be heard is at the time of the hearing, not before. This breached the agreement in multiple ways. This confirms that the City’s staff will prevent the City Council from ever hearing about the plethora of breaches by staff.
At a minimum, the purported fees during the pandemic caused delays are illegal. The Operators were shut down for 453 days (15 months) from March 19, 2020, when the shelter-in-place orders started, through June 15, 2021, when the shelter-in-place ended. For 15 months, the operators could not perform any legal construction. Nonetheless, the City demanded $511,140 in fees during the 15-month closure ($28,560 monthly for operating fees and $66,668 per year for community benefit fees). The City’s demand for fees during the closures is a patent breach of its contractual promises under section 23(i).
The imposition of fees during the pandemic closure is compounded by the lengthier delays by City consultants who revised approved plans in breach of the incorporated site and floor plans: “The operator’s site plan and floor plan for the facility are attached hereto as Exhibit D and incorporated into the application.” (Dev. Agmt. § 3(a)). The “cannabis permit application” and detailed construction plans were also incorporated. (Dev. Agmt. § 1(d)). These delays breached the agreement that the “Operator shall receive priority processing for any corresponding City permits.” (Dev. Agmt. Recital F). The City agreed the “project shall vest” (Dev. Agmt. Recital N) and the “Operator may operate cannabis-related activities.” (Id. § 4(a)).
The plan approval delays were compounded by consultants imposed construction procedure not found in the agreements in breach of the agreements which incorporated the construction procedure: “During any on-site construction” for the “remodeling of existing buildings, operator shall comply with all applicable conditions of City’s standard conditions for construction, attached and incorporated as Exhibit F.” (Dev. Agmt. § 13). The operators agreed to comply with the “construction requirements contained” in the agreement. (Id. § 1(d)).
It fell on the City Council to review City caused delays to the project. However, since these reviews were being blocked by City staff, the operators wrote to City Manager Noyola and presented documentation of the delays. City Manager Noyola agreed that the “documentation of disruptions and difficulties with business development and/or operations caused by the pandemic impacted your business operations for a portion of the time past due fees have accrued.” Notice that “and/or” refers to delays and/or closures from the pandemic.
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . . . PAGE 4
However, instead of removing fees for City caused delays, City Manager Noyola continued to demand the fees and used various illegal tactics to extort payment of these fees.
In the words of City Manager Noyola, the operators “will remain in default status on its development agreement until all past due fees . . . have been paid.” The default status prevented any construction work for failing to pay illegal fees and violated the agreements.
The City placed the operators in default, which shut down the construction. Since the fees are not due, this is a default of the City’s promise that any “delay” by the City to “perform” its promises “shall constitute a default.” (Dev. Agmt § 14(a)). The 90-day conditional occupancy permit is applying a word that does not exist in the agreements and violates the promise that the agreements “vest certain rights in the operator.” (Dev. Agmt. Recital B), that “the operator’s land use entitlements for the project shall vest” (Dev. Agmt. Recital N), and that “the operator may operate cannabis-related activities.” (Dev. Agmt. § 4(a)).
On Nov. 15, 2023, the City stated in response to a Public Records Request that the cannabis operators have been billed by the City total non-operating fees of $5,404,282. The non-operating fees from the operators total $1,913,520 ($28,560 x 68 months). Because the word non-operating is not found in the agreements, the non-operating fees must be discerned from “the mutual intention of the parties as it existed at the time of contracting.” (Civ.
Code, § 1636.) Firsthand account at the time of contracting is provided by former vice mayor Christian Hernandez who spearheaded the cannabis policy for the City, and by Philip Kfoury, the operators’ principal, who negotiated the development agreements for the operators.
They explain that at the time of the agreement, the City was focused on revenue from gross receipts, not fees from businesses under construction and trying to open. The City was concerned that the operators would squat on their license. This resulted in the sentence requiring operating fees “until the operator is operating.” It is important to note that this requires payment of operating fees while not operating. The word non-operating is not used in the development agreements or the municipal code. That sentence was included to alleviate the City’s concern about operators squatting on their license and does not apply if the operator is progressing to open. Otherwise, operators would have to pay operating fees while trying to open but while strategically delayed by the city, which is precisely what is happening. Support for this interpretation is found in the development agreements, municipal code, and state law.
It should be readily apparent if the $511,140 in fees during the pandemic closures, the fees for redesign delays and construction delays, and the $1.9 million non-operating fees are not owed. The operator’s payment of $3/4 million to date makes them current and shows that the City is leveraging its plethora of breaches to secure illegal fees. This supports civil RICO claims for individual liability and is permitted by the City’s agreement that the operators may pursue “damages from bad faith intentional acts, the grossly negligent or malicious acts of City and its officials, officers, agents, and employees.” (Dev. Agmt. § 14(a))..
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . . . PAGE 5
2. RELEVANT FACTS IDENTIFYING THE CITY’S CONTRACTUAL PROMISES
2.1 Agreements Guarantee Many Rights Including that the Project is Vested.
Shortly after the City adopted Ordinance No. 673 allowing commercial cannabis, Philip Kfoury, the cannabis operators principal, met with City officials about opening a cannabis manufacturing facility. After being assured that the facility would open within one year, they applied for a cannabis cultivation, manufacturing, and distribution facility at 4916 Cecilia.
The City moved quickly as it promised. On April 30, 2018, the planning commission held a public hearing and received an extensive presentation from its cannabis consultants. Two weeks later, on May 15, 2018, the City adopted resolutions approving the seven agreements. On June 5, 2018, the City executed development agreements with Cuper Development, Go Cudahy, Davina, Genius Distribution, Herbal Dragon, Daniel and Goliath, and 420 LLC (“operators”).
The development agreements comprise 41 pages, without exhibits, and were adopted as law in Ordinances No. 676 through 682. The development agreements confirm that the “City concluded that the pursuit of the Project will serve the best interests of its citizens and that the public health, safety, and welfare are best served by entering into this obligation.” (Dev.
Agmt. Recital M). The City “found that the Project” is “in the best interest of the City of Cudahy and its residents.” (Agmt. Recital P).
The development agreements identify that one of its main “purpose” is “to establish certain development rights” in the project “regardless of intervening changes” in order to “reduce the economic risk of development.” (Dev. Agmt. Recital A).
The City agreed that the development agreements “establish certain development rights” and “vest certain rights in the operator.” (Dev. Agmt. Recital B). “The City agrees the operator’s land use entitlements for the project shall vest” (Dev. Agmt Recital N), “the operator may operate cannabis-related activities” (Dev. Agmt. § 4(a)), and the “property may be used for commercial cannabis” cultivation, manufacturing, and distribution. (Id. § 1(c)).
2.2 The City Agreed to Proceed in Good Faith and Implemented the Agreement in Accordance with its Terms and to the Fullest Extent Permitted by Law.
The agreements include many provisions requiring the City to act in good faith. “If the operator disagrees with” cost recovery fees “the operator and the City shall work, in good faith to resolve operator’s written request. The dispute shall be decided in favor of operator if the City does not respond to the written request within thirty days of actual receipt.” (Dev.
Agmt. § 8(d)). If a citizen initiative imposes a cannabis tax, the “operator agrees to renegotiate in good faith the terms of this development agreement with the City.” (Dev. Agmt. § 9(b)).
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . . . PAGE 6
If conflicting state or federal law impact the project the parties shall “meet and confer in good faith and attempt to modify this agreement to bring it into compliance with any such federal or state law.” (Dev. Agmt. § 23(o)). If an amendment is necessary to comply with conflicting state or federal law “the City shall cooperate with the operator in securing any City permits, licenses or other authorizations that may be required as a result of any amendment resulting from actions initiated by the City.” (Dev. Agmt. § 23(o)).
Contractually, the City promised to ensure the agreements remains in force: “The parties shall cooperate with each other and undertake such reasonable actions as may be appropriate to ensure this agreement remains in full force and effect and is implemented in accordance with its terms and to the fullest extent permitted by state or federal law.” (Dev. Agmt. § 23(c)).
Several actions taken by the City to terminate the agreement as a result of refusing to pay illegal fees are intended to terminate the agreement in bad faith in violation of the many promises made by the City in the development agreements.
2.3 Approved Plans Were Incorporate in the Agreements and the City Contractually Agreed Redesigning Approved Plans is Considered a Default.
Section 3 titled “Operator’s Site and Floor Plans” incorporate the site and floor plans as an exhibit: “The operator’s site plan and floor plan for the facility are attached hereto as Exhibit D and incorporated into the application.” (Dev. Agmt. § 3(a)). The “cannabis permit application” and its detailed construction plans were also incorporated. (Dev. Agmt. § 1(d)).
The development agreements confirm that “the Project will consist of a vertically integrated” facility providing “cannabis production, processing, and distribution.” (Dev. Agmt.
Recital I). The existing “industrial/warehouse building” comprising 68,000-square-feet will be divided into seven spaces. (Dev. Agmt. Recital I). Construction includes the “renovation or remodeling of existing buildings.” (Dev. Agmt. § 13).
The City contractually agreed that its “failure” to “perform any term or provision of this agreement” after “notice and cure period shall constitute a default.” (Dev. Agmt. § 14(a)). The City also agreed to provide “an extension of time” for “any default by City.” (Dev. Agmt. § 23(i)). The City contractually agreed that any redesign of approved plans would constitute a default and require fees during this period of delay to be extended, i.e., waived.
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . . . PAGE 7
2.4 City Agreed to Expedite Permits and Contractually Promised that Delays by the City in Expediting Permits is Considered a Default.
The City agreed that the “Operator shall receive priority processing for any corresponding City permits.” (Dev. Agmt. Recital F). The City “acknowledge[d] that changes to the project or development plans and related approvals may be appropriate and mutually desirable to carry out the intent and purpose of this agreement.” (Dev. Agmt. § 23(n)).
The City agreed if conflicting laws “require changes in plans, maps or permits approved by the City, this agreement shall remain in full force” and the parties shall “meet and confer in good faith and attempt to modify this agreement to bring it into compliance” and “the City shall cooperate with operator in securing any City permits.” (Dev. Agmt. § 23(o)).
The City contractually agreed that its “failure” to “perform any term or provision of this agreement” after “notice and cure period shall constitute a default.” (Dev. Agmt. § 14(a)). The City also agreed to provide “an extension of time” for “any default by City.” (Dev. Agmt. § 23(i)). The City contractually agreed that its failure to expedite construction would require fees during this period of delay to be extended, i.e., waived.
2.5 Construction Procedures Were Incorporated in the Agreements and the City Agreed Any Construction Delays by the City is Considered a Default.
Section 13 titled “Standard Conditions for Construction” incorporate the construction procedure as an exhibit: “During any on-site construction activities related to development of the project site and any buildings thereon, or renovation or remodeling of existing buildings, operator shall comply with all applicable terms and conditions of City’s standard conditions for construction, attached and incorporated as Exhibit F.” (Dev. Agmt. § 13).
The construction included dividing an existing 68,000-square-foot “industrial/warehouse building” into seven spaces. (Dev. Agmt. Recital I). The operator agreed to comply with the “construction requirements contained in the agreement.” (Dev. Agmt. § 1(d)).
The City agreed that its “failure” to “perform any term or provision of this agreement” after a “cure period shall constitute a default.” (Dev. Agmt. § 14(a)). The City agreed to provide “an extension of time” for “any default by the City.” (Dev. Agmt. § 23(i)). In effect, if the City required any construction procedure, other than the one attached to the agreement, it would be in default and any fees due would be extended, i.e., waived, during the period of default.
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . . . PAGE 8
2.6 Force Majure Delays Require an Extension for Local, State or National Emergencies and an Extension for Any Default by the City.
Section 23(i) titled “Force Majeure” provides “an extension of time” during delays due to “local, state or national emergencies” or delays due “any default by the City” as follows:
“23(i). Force Majeure. If delays are caused by unforeseen events beyond the control of the operator, such delays will entitle operator to an extension of time as provided in this section. Such unforeseen events (‘Force Majeure’) shall mean war, insurrection, acts of God, local, state or national emergencies, strikes and other labor difficulties beyond the party’s control, or any default by the City hereunder, which Force Majeure event substantially interferes with the development, construction or operation of the Project.” On March 19, 2020, Governor Newsom ordered all individuals to stay home at their place of residence, except the individuals working in critical infrastructure sectors identified in the order. The order restricted all non-essential travel and activities outside the home. On March 19, 2020, the County of Los Angeles issued a Mandatory Stay at Home Order. On March 23, 2020, the City of Cudahy adopted Resolution No. 20-06 which declared a Local Emergency due to the public threat caused by the coronavirus and shut down all non-essential businesses.
The City contractually agreed when it closed the operators’ construction for 15 months during coronavirus, this was a force majeure delay due to the “local, state or national emergencies” and all fees during this period were extended, i.e., waived. The City also contractually agreed that its “failure” to “perform any term or provision of this agreement” after a “cure period shall constitute a default.” (Dev. Agmt. § 14(a)).
The City also agreed that any City caused force majeure delay in redesigning approved plan (Dev. Agmt. §§ 1, 3(a)), or any City caused force majeure delay in failing to expedite permits (Dev. Agmt. Recital F), or any City caused force majeure delay with inspections or construction (Dev. Agmt. § 13) require that fees during this period be extended, i.e., waived.
The City agreed that its “failure” to “perform any term or provision of this agreement” after a “cure period shall constitute a default.” (Dev. Agmt. § 14(a)).
On April 18, 2022, Philip Kfoury, sent a letter to City Manager Noyola, documenting the “difficulties in obtaining approval” that City consultants restarted the “approval process from the beginning” that “COVID-19 pandemic created further delays” prohibiting construction work, and that these were “Force Majeure-related items and totally out of our control.” January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . . . PAGE 9
City Manager Noyola responded in language repeated in many letters that he agreed the delays impacted their business during a portion of the time past due fees have accrued:
“You have provided the City with information and documentation of disruptions and difficulties with business development and/or operations caused by the COVID-19 pandemic. These difficulties appear to have impacted your business operations for a portion of the time past due fees have accrued.” However, City Manager Noyola did not comply with the City’s contractual promise that the documented force majeure delays entitled the operators to an extension of time, i.e., waiver of fees “for a portion of the time past due fees have accrued.” Instead, the City placed the operators in default, and stopped all construction, for refusing to pay disputed and illegal fees during the force majeure delays. The City’s demand for fees during the pandemic closure of construction is a breach of the City’s contractual promises under section 23(i).
2.7 The City Breached the Development Agreements by Placing the Operators in Default Status and Agreeing to Only Issue Conditional 90-Day Occupancy Permits, Only Renewable if Disputed and Illegal Fees are Current.
City Manager Noyola stated in many letters that the operators “will remain in default status on their development agreement until all past due fees have been paid” and once the fees are paid “the City will only issue a temporary certificate of occupancy for the site valid for 90 days. The temporary certificate of occupancy may be reissued if the Operator remains in compliance” with the fees. The default status by the City Manager prevented any construction work for failing to pay illegal fees and violated the development agreement.
The City contractually promised that the City Council would review the operators’ compliance and modify and terminate the agreement. (Dev. Agmt. § 19(a)). This did not occur in violation of the agreement. The City agreed that the procedure to place the operators in default required the procedure identified in § 14. This procedure was not followed, of course, refusing to pay illegal fees is not a default.
The City also promised that it may “modify this Agreement (except no modification shall increase Owner’s liability nor reduce Owner’s rights).” (Dev. Agmt. § 19). Denying construction for refusing to pay illegal fees is an un-permitted modification and a breach of the agreements. The parties agreed that only “minor amendments that do not affect a substantive provision of this Agreement may be approved by the City Manager on behalf of the City.” (Dev.
Agmt. § 23(a)). The default without construction permission is not minor, it major, and the City Manager placed the operators in default as a pretext to securing illegal fees, this violated the development agreements.
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . PAGE 10
The City believes that a business which has not yet opened for over five years, and is prevented from opening by the City, must pay operating fees to the City. Moreover, once the fees are paid, the City limit operations to a temporary occupancy permit lasting only 90 days.
In effect, it takes over fives to open, but the operations get a limited 90-day window. The operators are private landowners, they have rights, more importantly, their rights are agreed upon in the contract with the City. The attempt by City Manager Noyola to limit occupancy permits to ensure payment of illegal fees, in bad faith, its illegal extortion, and it’s a breach of the development agreements..
The agreements have no discussion about issuance of a “temporary occupancy permit.” On the contrary the agreements confirm that the agreement “vest certain rights in the operator.” (Dev. Agmt. Recital B). “The City agrees the operator’s land use entitlements for the project shall vest” (Dev. Agmt Recital N), “the operator may operate cannabis-related activities” (Dev.
Agmt. § 4(a)), and the “property may be used for commercial cannabis” cultivation, manufacturing, and distribution. (Dev. Agmt. § 1(c)). The City contractually agreed that the agreement “shall remain in full force and effect so long as the subject property is used for a commercial cannabis facility.” (Dev. Agmt. § 2). The City agreed that the “agreement remains in full force and effect and is implemented in accordance with its terms.” (Dev. Agmt. § 23(c).) The operators are not in default for refusing to pay disputed and illegal fees. In failing to set annual review hearings, the City denied the operators a forum to present force majeure delays. The City contractually promised that the operators could not “compel such hearing, and no implication will be made to operator’s detriment if a hearing is not in fact held.” (Dev. Agmt. § 19(a)). City staff prevented a hearing before the City Council, and this allowed City staff to push illegal fees without review. There was no waiver by the operators in not addressing the illegal fees sooner. The failure to hold yearly review hearings was on the City, which breached the development agreement, municipal code and state law.
A the very minimum, the fees during the pandemic shut-down is flatly illegal. Assuming arguendo, that the operators are in default (they’re not) for refusing to pay illegal fees, the best that the City can do under the agreements is refuse to issue buildings: “No building permit shall be issued . . . after the operator is determined by the City to be in default . . . until such default thereafter is cured by the operator or is waived by the City.” (Dev. Agmt. § 14(f)).
The operators are in their 68th month in attempting to open. Building permits were issued years ago, and the permits vested. Since the operators are not seeking building permits and denying them the right to proceed with construction for already issued building permits, is a violation of the development agreements. Certainly, the City is aware that building permits are not the same as occupancy permits. The word “temporary occupancy permit” is missing from the agreements and not existent in the municipal code. The issuance of temporary occupancy permits for failure to pay illegal fees is in bad faith and a breach of the development agreements.
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . PAGE 11
2.8 City Correspondence Confirms the Scheme to Extort Illegal Fees, the City Contacted the State and Reported them in Default, the City Would Only Issue Temporary Operating Permits and Placing the Operators in Default.
In the scheme to secure dispute illegal fees, the City contacted the State and reported the operators as being in default with the City. This extortion scheme is explicitly documented in City correspondence. On April 8, 2022, a text message from building inspector Louis Morales to City Manager Noyola, noted operator, cupper development, owes $600,000 and he is aware of a “request from the State” and had an idea that will “get them to the table now.” The City was aware that after five years, one of the operators (Go Cudahy) was close to opening. Hence, the City accepted the scheme to “force them to the table” by contacting the California department of cannabis control and informed them, that cannabis operators, were in default with the City and therein jeopardized renewal of their state cannabis permit. The State permit was a requirement of the development agreement. The City’s bad faith is self-evident.
Inspector Morales and City Manager Noyola used fear of economic loss, and fear under color of law, to secure fees that were not owed, or at the very minimum were honestly dispute, to jeopardize the operators’ state permits, so that they will “get them to the table now” is in bad and supports a civil RICO claim for extortion. It also violates the development agreement by failing to follow the procedure for default under § 14 outlined in the agreement.
The operators learned that the City had reported to the State that they were not in good standing with the City, and therefore they could not renew their state license. The operators were blindsided by the City’s extortion in securing non-operating fees, at large majority of which were caused by City delays. This also was the first time the operators were told that the City would not be forgiving any fees for any reason.
On April 18, 2022, Philip Kfoury, sent a letter to City Manager Noyola, describing the unforeseen delays and the “difficulties in obtaining approval from the City to begin work.” That Willdan, the City’s consultants restarted the “approval process from the beginning.” That the “pandemic created further delays” and the State prohibited them “from continuing work.” The letter stated that these were “Force Majeure-related items and totally out of our control.” January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . PAGE 12
The April18, 2022 letter stated that “the City reported to the State that these licenses were not compliant, resulting in the state denying them provisional state licenses.” He asked the City to communicate to “appropriate state agencies that the licenses are in compliance” so they can “receive a provisional license.” The letter asked for confirmation “that Go Cudahy LLC will receive a Certificate of Occupancy for its portion of the facility” so that it “can begin operations.” This is mandated by the agreement. The operators quickly learned they would only receive a temporary occupancy permit in breach of the agreements. On April 22, 2022, a text from inspector Morales to City Manager Noyola, stated he told the operators the “City’s position for payment for Cuper Development and their provision license issue.” It was later discovered that the plan to get the operators to pay disputed fees included that they would only receive temporary 90-day occupancy permits, and required them to return to the City for permits every 90 days, wherein the City would ensure they are current on their disputed fees. This scheme violates a plethora of the City’s promises under the agreements.
On April 22, 2022, Philip Kfoury, sent a letter to City Manager Noyola, asking him to inform the State that they are “working towards compliance” and that the operators could amortize what is owed over two years, but could not make substantial payments as requested.
The letter noted that it has been five years since they started and are still months from opening:
On May 2, 2022, City Manager Noyola, sent a letter stating that the City would not waive any fees, but the City “is willing to enter into a onetime, forbearance agreement” but the operators “shall remain in default status under its development agreement until all past due fees are paid in full.” The letter noted the operators need a certificate of occupancy to open and “the City will only issue a temporary certificate of occupancy” valid for 90 days, but the temporary permits are renewed if the operators are current with their fees:
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . PAGE 13
On May 26, 2022, the operators asked once again for the City to inform the State that “Local Compliance is underway” and for further dialogue with the City on the non-operating fees. The letter noted that the “Operators were unable to move forward with the projects because of various delays outside of anyone’s control” in this passage:
On October 18, 2022, City Manager Noyola stated in a letter regarding Go Cudahy that it provided the City with documentation of difficulties with the business caused by the pandemic which impacted the business operations while fees accrued.
Instead of removing fees for City-caused delays, City Manager Noyola continued to demand the fees and used various illegal tactics noted above to extort these disputed fees. In the words of City Manager Noyola, the operators “will remain in default status on its development agreement until all past due fees... have been paid.” The default status prevented construction for failing to pay illegal fees and violated § 14(a), § 19(a), and § 23(i). § 4(a))..
The letter stated that “While in ‘default status,’ the City will only issue a temporary certificate of occupancy (a “TCO”) for the Site valid for 90 days. A TCO may be reissued if the Operator remains in compliance . . .”
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . PAGE 14
The letter stated that “While in default status, the City will only issue a temporary certificate of occupancy for the site valid for 90 days. A temporary certificate of occupancy may be reissued if the Operator remains in compliance . . .” In effect, a business that has not been able to open for over five years, is given a gift, it can pay illegal fees for not being open, it can pay cost recovery fees which are magically the same amount, $3,954.66, for each month during the past year. As is apparent, the City seeks to secure payment of the fees, not by getting the facilities open, but by providing a temporary occupancy permit for a mere 90 days. The occupancy permit is held over its head to ensure the payment of illegal fees. This is not good faith, and it violates the development agreements.
The development agreements do not provide temporary occupancy permits if the operator defaults. The best that the City can do is deny a building permit. The development agreement provides: “No building permit shall be issued or building permit application accepted for any structure on the property after City determines operators to be in default of the terms and conditions of this Agreement until such default thereafter is cured by operator or is waived by City.” (Dev. Agmt. § 14(f)). The “failure to delay by either party to perform any term or provision of this Agreement beyond” a “cure period shall constitute a default.” (Id.) The City breached the development agreements by not complying with Section 14. Of course, the operators are not in default, and placing them in default was done in bad faith..
2.9 Three months ago, the City Demanded Immediate Payment of $200,000 From the Only Operator to Open Or Face Immediate Revocation.
On Sept. 6, 2023, City Manager Noyola demanded in a text message that Go Cudahy make an “immediate payment of $200,000" for overdue non-operating fees, allowing three days to pay, or the cannabis operator would be placed in default and face immediate revocation.
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . PAGE 15
The astounding demand in seeking “an immediate payment of $200,000" by City Manager Noyola is in a text message that confirms that failure to pay would result in the operator being sent “straight to a revocation hearing.” What is most ironic is that the the$200,000 was due since City Manager Noyola stated one year prior that he agreed that the “documentation of disruptions and difficulties with business development and/or operations caused by the pandemic impacted your business operations for a portion of the time past due fees have accrued.” The $200,000 was force majeure fees. Hence, the text demand violated the development agreement. See Dev. Agmt. § 14(a), § 19(a) and § 23(i).
Since the $200,000 demand by text message was not actually due, it was in bad faith and a clear example of extortion under the color of official right (City Manager) and constitute extortion under fear of economic loss (immediate revocation) and supports civil RICO claims.
The City demands $200,000 in illegal fees but is fully aware that the economic landscape has changed. The City’s economic development strategic plan 2023 stated that “rising industry taxes has led to cannabis-based businesses shutting down to diminishing profit margins...” On Nov. 15, 2023, the City stated in response to a Public Records Request that the cannabis operators have been billed by the City total non-operating fees of $5,404,282. The City has billed the cannabis operators as follows: $579,561 (2018); $1,396,975 (2019); $1,136,548 (2020); $941,915 (2021); $858,243 (2022); $491,037 (2023).
More facts displaying abuse include the October 17, 2023, letter from former federal prosecutor Daffodil Tyminski, who sought a hearing before the City Council. On October 24, 2023, attorney Paloma Perez-McEvoy responded for the City and stated the Mitigation Fee Act does not apply to development agreements. The city’s attorney’s letter stated: “the City Council considered your October 17 Demand and has decided not to negotiate the repayment of fees and to continue with the administrative process.”
More facts displaying the abuse include that one year ago the operators submitted revised floor plans for the building to City Manager Noyola for approval. Those plans have been pending for a year without approval. The City agreed the operator would “receive priority processing for any City permits. (Dev. Agmt Recital F). The City also agreed that “changes to the project . . . may be appropriate and mutually desirable.” (Dev. Agmt. § 23(n)).
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . PAGE 16
3. THE CITY BREACHED THE AGREEMENTS BY REFUSING TO WAIVE FEES DURING THE PANDEMIC CLOSURE AS PROMISED IN SECTION 23(i).
The agreements provide that “unforeseen events,” including “local, state or national emergencies” which “substantially interfere with” the project, are defined as force majeure and “such delays will entitle the operators to an extension of time” (Dev. Agmt. § 23(i)).
City Manager Noyola agreed in many letters that “documentation of disruptions and difficulties with business development and/or operations caused by the COVID-19 pandemic” have “impacted your business operations for a portion of the time past due fees have accrued.” The operators were also shut down for 453 days (15 months), from March 19, 2020, when the shelter-in-place orders started (Executive Order N-33-20), through June 15, 2021, when they ended (Executive Order N-07-21). The City seeks $511,140 in fees non-operating fees of $28,560 per month for 15 months, and community benefit fees of $66,667 per year for
1.2 years during the 15 months the operators were shut down.
In many invoices, the City demanded fees during the time that the City was closed due to the pandemic. It was not the intention of the City for the operators to pay fees if they were delayed by the City or closed by the City, see § 23(i)). The City’s demand for fees during the pandemic closure is a breach of the City’s contractual promise under section 23(i).
4. THE CITY BREACHED THE AGREEMENTS BY FAILING TO EXPEDITE APPROVALS AND BY SEEKING FEES FOR DELAYS CAUSED BY THE CITY.
The City caused delays in redesigning the approved plan (Dev. Agmt. §§ 1, 3(a)), the City failed to expedite permits (Dev. Agmt. Recital F), and the City was responsible for delays with inspections and construction (Dev. Agmt. § 13). These delays are a breach of the City’s contractual promise that any “delay” to “perform” its promises “shall constitute a default.” (Dev. Agmt. § 14(a)). The City also agreed that “any default by the City” which delayed the project “will entitle the operators to an extension of time.” (Dev. Agmt. § 23(i)). The operators were entitled to a waiver of fees for delays by the City and its consultants.
Nonetheless, the City demanded fees notwithstanding its many delays. The warehouse is still not open 68 months after signing the development agreements, and this is impossible without City delays; after all, the operators have decades of construction experience. The reason that after 68 months six facilities are still not open is due to City consultants who redesigned the approved plans, changed the approved construction procedure, and delayed inspections.
These delays explain why the renovation of an existing warehouse is still not open 68 months after securing approval when the operators believed it would be open within one year.
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . PAGE 17
The “mutual intention of the parties as it existed at the time of contracting” (Civ. Code, § 1636) is that any “delay” by the City to “perform” its promises “shall constitute a default.” (Dev. Agmt. § 14(a)). Six operators are still not open because the City breached its performance by redesigning approved plans and delayed approval of the construction. Additionally, the City is in default for demanding any fees during these City caused delays.
The only procedure to document these reviews under the agreements was at the annual review hearing where the “operators shall document any request for an extension of the term due to delays beyond the control of operators (see Section 23(j), Force Majeure).” (Dev. Agmt. § 19(a)). By failing to hold any annual review hearings during the past 68 months, the City denied the operators a forum to present City caused delays. “The operator has no obligation to compel such hearing, and no implication will be made to operator’s detriment if a hearing is not in fact held.” (Dev. Agmt. § 19(a)). Moreover, City staff prevented any hearing before the City Council, and this allowed staff to set illegal fees without review.
The fees due during City caused delays 68 months later fell on the City Council, who failed to review City caused delays by not holding annual review hearings. See Dev. Agmt. § 14(a), § 19(a) and § 23(i). The reasonable estimate is as follows. The parties anticipated it would take one year to open. Hence, the one-year falls on the operators. Deducting this one year from the 68 months leaves 58 months. Removing the 15 months during the pandemic further leaves 43 months. The operators suggest 30 months for the city-caused redesign and construction delays. This includes the fact that the City has illegally placed the project in default, halting any construction for over a year, and has even recently failed to return permits submitted over one year ago.
The fees during these 30 months of delays total $1,023,468 (community benefit fees of $66,667 for 2.5 years and non-operating fees of $28,560 per month for 30 months). The City is in default for its demand for fees during construction delays caused by the City.
5. CITY BREACHED THE AGREEMENTS BY DEMANDING NON-OPERATING FEES AS SHOWN BY THE PARTIES INTENT AT THE TIME OF SIGNING.
The City seeks operating fees from businesses that are not operating. The word “nonoperating fees” is not found in the development agreements, or the municipal code. On the other hand, community benefit fees are provided for in CMC § 5.20.020(16), which defines “development agreement” to means an agreement “which provides agreed-upon community benefits to the city.” The cost recovery fees are provided for in CMC § 5.20.070(6), mandating that the “development agreement” shall require the operators to “fully reimburse the city” for all costs, expenses and fees related to the commercial cannabis production. There is no provision in the municipal that a development agreements include operating fees.
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . PAGE 18
The development agreement in Section 7(c) titled “Operating Fees” defines the words premises, commercial cannabis activities, gross receipts, and production space, but does not define the word non-operating fees or the word operating fees. (Dev. Agmt § 7(c)). The definition of production space notes it excludes “non-operational common areas.” The word non-operating fees is not found in the agreements or the municipal code. The development agreement applies “operating fees” to a business that is “operating.” The agreement provides that the “production space” and “gross receipts” fees apply when a operator is open and operating. Accordingly, the word ambiguous and must be discerned from “the mutual intention of the parties as it existed at the time of contracting.” (Civ. Code, § 1636.)
5.1 Councilman Hernandez’s Recollection of the Intention of the Non-Operating Fees at the Time of Approval Confirms Non-Operating Feed Do Not Apply. “The mutual intention of the parties as it existed at the time of contracting” (Civ. Code, § 1636) is of high value from vice mayor Christian Hernandez, who spearheaded the cannabis policy and framework for the development agreements. He states from first-hand knowledge that he believed the City’s position of the non-operating fees at time of approval as follows:
Non-operational fees were included in the development agreements to prevent cannabis operators from holding licenses without opening. In 2018, the City was looking for serious cannabis businesses with a genuine desire to operate as soon as possible. The City was interested in new sources of recurring annual revenue for its general fund and community programs. In the cities of Lynwood, Palm Desert, and Coachella, cannabis licenses resold their licenses to operators who had no urgency to open. This was discussed at hearings, and fees for non-operations were incorporated to prevent license holders from flipping their licenses to operators who would not open rights away.
Naturally, non-operating fees were never intended to last in perpetuity, and they were not expected during natural disasters or other delays beyond the operator’s control. Otherwise, the operators would have to pay non-operational fees for delays beyond their control. Cannabis license holders were also expected to be operating within a year. The City expected its staff and consultants to expedite permits and inspections. Opening the cannabis facility was the City’s top priority.
Cannabis operators were paying recovery fees, so the City agreed to expedite their approval process. Since non-operating fees could only provide short-term revenue, they were not the City’s focus. As a result, the City focused on operating fees from the cannabis operators’ gross revenues since they yielded higher recurring revenues for the general fund.
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . PAGE 19
The City implemented the non-operating fees to mitigate the resale of cannabis licenses. Operators were incentivized to open within one year. It created a win-win scenario for the City and the operators. The operators benefitted by generating revenue, and the City benefited from the income they generated through operating fees.
In full disclosure vice mayor Christian Hernandez is a consultant with the operators when he saw the delays being foisted on them. His agreement does not impact his view of his recollection of the City’s position at the time of signing.
5.2 The Operators’ Recollection of the Intention of the Non-Operating Fees at the Time of Contracting Confirms Non-Operating Fees Do Not Apply.
Philip Kfoury, the cannabis operators’ principal, stated his belief of the intention of the parties at the time of contracting regarding the so-called non-operating fees as follows:
During the 2018 approval process, City officials focused on collecting revenue from gross receipts, and we agreed to pay operating fees based on gross revenue.
During the approval process, the City expressed concern about flipping the license to operators and not planning to open quickly. To remove this concern, we agreed to pay operating fees if we (or a future buyer) were allowed to open, but instead squatted on the license. According to my understanding, we would not be charged non-operational fees as long if we made efforts to open.
According to my understanding, the non-operational fees for not opening once we secured the right to open were set as a punishment for not opening. The non-operational fees were based on the total area, which is more than the production area, which is the default fee upon opening. However, we agreed to pay an operating fee based on gross revenues, which was more than the production area for squatting on the license. City officials focused on collecting revenue from gross receipts, not fees from closed businesses trying to open.
Because we expected to open within one year, the focus was on gross revenues, which provided much greater revenue than fees based on project area or production area.
According to our expectations, we would open within a year. In five years, six facilities still need to open. Many of the delays can be attributed to city staff and consultants redoing approved plans, and a portion of the delay is due to the fifteen-month closure during the pandemic. At no time were we able to open and January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . PAGE 20
instead squatted on our license. During the approval process, it was explained that we would not be liable for non-operational fees if we consistently progressed to open. This was the city’s official position for four years until Alphonso Noyola was hired as city manager. After that, the City changed its position and demanded operating fees from us, even though we were not open because of the countless delays caused by the City, its staff, and its consultants.
Attorney Daffodil Tyminski, a former federal prosecutor, was present at all the hearings during the approval process, and already stated in a letter to the City on July 14, 2023:
“Non-operating fees were designed to be a penalty for squatting on licenses, not a fine for businesses trying to operate but being prevented from doing so by the City. We were consistently told that the City was not currently enforcing payment on those fees if we were progressing towards opening.”
5.3 Non-Operating Fees are Illegal Taxes (No Voter Approval).
The City demands a $1,913,520 ($28,560 x 68 months) non-operating fee for the past 68 months or a yearly operating fee of $285,600 (12 x $28,560 per month) for the time that the business is closed due to City delays. It's not a fee; the non-operating fee is a tax. The City's economic development strategic plan 2023 (Resolution No. 23-41) identified fees on the cannabis operators as a tax in this passage:
“Light industrial processing/warehousing refers to facilities involved in activities such as cultivation, processing, and distribution of cannabis products. These operations may include growing and harvesting plants, manufacturing products like edibles or extracts, and storing inventory. Taxes can be collected through licensing fees, permit fees, and taxes based on the volume or value of products.”
The City is correct, the $1.91 million non-operating fee is a “tax based on the volume.” (Resolution No. 23-41). However, because the “non-operating fee” was not approved by the voters it violates Cal Const Art XIII A §4. “No local government . . . may impose any general tax unless. . . approved by a majority of the voters voting in an election on the issue.” (Gov. Code § 53723.) “No local government may impose any special tax” without a “two-thirds vote of the voters voting in an election on the issue.” (Gov. Code § 53722.) The City was fully aware that a cannabis tax requires approval by the voters by submitting the recent retail cannabis tax to the voters for approval and enacted it in Chapter 5.30 after voter approval. Non-operating fee/tax are illegal taxes because there was no public vote.
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . PAGE 21
CANNABIS RETAILER TAX: Chapter 3.50 the newly enacted Cannabis Retailer Tax approved by the voters imposes “an annual cannabis retailer tax.” (CMC § 3.50.040(1)). The tax is imposed “upon cannabis retailers that engage in business in the city. This cannabis retailer tax is levied based upon business gross receipts.” (CMC § 3.50.010(1)). “The tax rate upon the effective date of this chapter shall be 15 percent of the gross receipts derived from the retail sale of adult-use cannabis or adult-use cannabis products.” (CMC § 3.50.040(3)(a)).
CITY BUSINESS TAX: The municipal code provides a tax on businesses in Chapter 5.08 titled “Business License Tax -- Particular Businesses.” However, it does not include cannabis business in that list. CMC § 5.04.330 lists the “taxes on businesses other than those described in Chapter 5.08" and requires “a license tax based upon gross annual receipts.” If “Gross Annual Receipts” are “$2,000,000 or more” the “Per Annum Fee” is “$2,000 maximum.” The maximum annual fee of $2,000 is far less than the $285,600 yearly fee (12 x $28,560 per month) demanded by the City for the privilege of not being open due to delays by the City.
5.4 Non-Operating Fees/Tax are Illegal Impact Fees (No Findings).
The Mitigation Fee Act (Gov. Code, § 66000 et seq.) limits fees on projects. When a fee is imposed as a condition of approval. Gov. Code § 66001(a) provides procedures to establish fees and requires four findings included that the “reasonable relationship between the fee’s use and the type of development project on which the fee is imposed.” Gov. Code § 66006(e) provides that the “improper allocation of development fees hinders economic growth and is, therefore, a matter of statewide interest and concern. It is, therefore, the intent of the Legislature that this section shall supersede all conflicting local laws and shall apply in charter cities.” Non-operating fees/tax are illegal if they are a fee.
CITY DEVELOPMENT IMPACT FEES: Chapter 15.40, titled "Development impact fees," provides for monetary exactions in connection with project approval. (CMC § 15.40.020(12)).
Chapter 15.40 requires the City to make five statutory findings to impose a legal impact fee, including the "reasonable relationship between the fee and the project." (CMC § 15.40.200).
The City failed to make the necessary findings to charge the operators $1.9 million when their business was closed, mainly because of City delays.
The non-operating fee/tax are illegal if they are a general or special tax because there is no public vote, and if they are a fee, the City failed to make the necessary findings to charge the operators a $1,913,520 ($28,560 x 68 months), or a$285,600 yearly fee (12 x $28,560 per month) during a period when their business is closed, mainly due to City delays. In either case, the non-operating fee/tax violates the agreements, municipal code, and state law.
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . PAGE 22
CITY’S DEVELOPMENT IMPACT FEE STUDY: Further support is found in the City’s development impact fee study, dated April 7, 2021. Under CMC § 15.40.020(19) the “development impact fee study by Willdan dated April 7, 2021" is used to determine an impact fee. The total one-time impact fee is $11,480 ($1,945 traffic fee, $7,480 gen. gov. gee, and $2,055 parking fee). The $11,480 impact fee is far less than the $1.91 million demanded for the privilege of being closed. The City is in default for demanding non-operating fee/tax, from the cannabis operators who were progressing to open.
5.5 The City’s Interpretation of the Non-Operating Fees Apply to Operators Progressing to Open but Unable to Open Is a Breach of the Agreement.
The City has interpreted the “non-operating fees” as being due even irrespective of City cause delays or closures. This files in the face of the “mutual intention of the parties as it existed at the time of contracting” that “delays” and “state or national emergencies” or “any default by City” will “entitle operators to an extension of time.” (Dev. Agmt. § 23(h)). And any “delay” to “perform” its promises by the City “shall constitute a default.” (Dev. Agmt. § 14(a)).
The intention to not collect fees if a facility is not operation is supported by the City’s promise it will not sue for damages for unpaid fees if “the property is not developed, for lost profits or revenues which would have accrued to the City as a result of the development of the property.” (Dev. Agmt. § 14(a)). Simply put, there are no lost profits if the property is not developed and not in operation. This certainly applies if the City causes the failure to open.
The City fails to “give effect to the mutual intention of the parties as it existed at the time of contracting.” (Civ. Code, § 1636). “The whole of a contract is to be taken together, to give effect to every part.” (Civ. Code, § 1641). Instead, the City gives the contract an interpretation that places the operators in breach, after investing $10 million and 68 months into the project.
The City is forcing the breach and fails to recognize that a “contract must receive such an interpretation as will make it lawful.” (Civ. Code, § 1643). The City must “undertake such reasonable actions as may be appropriate to ensure this agreement remains in full force and effect.” (Dev. Agmt. § 23(c)). This requires the City to waive all fees caused by City delays. “The contract may be explained by reference to the circumstances under which it was made, and the matter to which it relates.” (Civ. Code, § 1647.) “Particular clauses of a contract are subordinate to its general intent.” (Civ. Code, § 1650.) The City fails to give effect to the fact that the parties entered into a contract for the development and opening of a cannabis cultivation, manufacturing, and distribution facility. (Dev. Agmt. § 1(c)).
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . PAGE 23
The City’s interpretation that operating fees are due when the facility is not operating, and when the City caused delays or closures, violates the agreements, and must be rejected. “Words in a contract which are wholly inconsistent with its nature, or with the main intention of the parties, are to be rejected.”(Civ. Code, § 1653.) The City seeks to impose an absurd interpretation of its intent at the time of contracting. The City is in default for demanding non-operating fees, from the cannabis operators who were progressing to open.
6. THE CITY BREACHED THE AGREEMENTS BY PREVENTING THE
YEARLY REVIEW HEARINGS.
6.1 The City Breached the Development Agreements by Failing to Hold Yearly Review Hearings Breached which Prevented the Operators From Presenting Documentation of the City’s Force Majeure Delays.
Section 19 titled “Periodic Reviews” requires yearly review hearing to determine the operators’ compliance with the agreement, and for the operator to document any force majeure delays allowing an extension for delays beyond the control of operators control, as follows:
“19(a). City Council shall review this Agreement annually, on or before each anniversary of the effective date, in order to ascertain operator’s good faith compliance with this agreement . . . planning department will schedule a hearing on the periodic review of the development agreement on or following the anniversary of the effective date, but the operator has no obligation to compel such hearing, and no implication will be made to operator’s detriment if a hearing is not in fact held. The operator shall document any request for an extension of the term due to delays beyond the control of operator (see Section 23(i), “Force Majeure”).”
The fundamental purpose of Section 19 was for the City to review the operators’ compliance, but also for the operators to demonstrate force majeure delays by the City under section 23(i) which provided that “local, state or national emergencies” or “any default by the City” which delayed the project “will entitle the operators to an extension of time.” The agreement provides that “the City Council shall review this agreement annually, on or before each anniversary of the effective date, in order to ascertain operator’s good faith compliance with this agreement.” (Dev. Agmt. § 19(a)). The municipal code provides for “periodic review of an applicant’s compliance with the terms of the development agreement at least once every 12 months.” (CMC § 20.84.600). State law similarly requires “periodic review at least every 12 months” to “demonstrate good faith compliance.” (Gov. Code § 65865.1).
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However, during the 48 months, the City did not review the agreement in violation of the municipal code and state law. This is important because under Section 19, the “the operator has no obligation to compel such hearing, and no implication will be made to operator’s detriment if a hearing is not in fact held.” (Dev. Agmt. § 19(a)). The operators did not waive anything by not having the delays addressed sooner. This fell on the City who breached the agreement, the municipal code and state law for failing to hold yearly review hearings.
The City’s failure to hold yearly review hearings would have allowed the operators to address force majeure delays many years ago. The First Review was required 1,674 days (55 months) from today, the Second Review 1,309 days (43 months) from today, the Third Review 944 days (31 months) from today, the Fourth Review 579 days (19 months) from today, and the Fifth Review 214 days (7 months) from today. Instead the operators have to address delays during the past 68 months. This falls on the City which has contractually agree “no implication will be made to operator’s detriment if a hearing is not in fact held.” (Dev. Agmt. § 19(a)).
6.2 The City Breached the Development Agreements by Setting Review Hearing Before a Hearing Officer Instead of the City Council.
The development provides that “the City Council shall review this agreement annually.” (Dev. Agmt. § 19(a)). State law requires that development agreements “include provisions requiring periodic review at least every 12 months” before the local agency to “demonstrate good faith compliance.” (Gov. Code § 65865.1).
Notwithstanding this clear demand on the City to hold the hearing yearly, or before the City Council, the City recently sent out notice of hearing letters which give notice that the city manager appointed a “hearing officer for a review hearing” to determine compliance with “Section 19 of the agreement” to allow operators to demonstrate their “good faith compliance” with the development agreement. The handpicked hearing officer by the city manager is not the same as the City Council, and the notice of hearings violates the development agreements.
On December 14, 2023, the undersigned (Sebastian Rucci) emailed Senior Planner Madrigal-Gonzalez that this office “wished to present the cannabis operator’s position [at the review hearing], preferably at a hearing before the city council.” Former federal prosecutor, Daffodil Tyminski, sent a letter to the City on July 14, 2023, asking to appear before the City Counsel stating, “only City Council can resolve this dispute.” She later sent another letter on October 17, 2023, and on October 24, 2023, City attorney Paloma McEvoy responded: “Please be advised that the city Council considered [attorney January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . PAGE 25
Daffodil Tyminski] October 17 demand [to appear before City Council] and has decided not to negotiate the repayment of fees and to continue with” the revocation hearings. Seldom is breach so openly stated in a letter. City attorney McEvoy is reminded that the City “shall cooperate” with the operators and “undertake such reasonable actions as may be appropriate to ensure this Agreement remains in full force and effect.” (Dev. Agmt. § 23(c)).
6.3 The City Breached the Development Agreements by Denying the Operators an Opportunity to Be Heard at the Review Hearing.
The City’s recent review hearing letters require the operators to submit “no later than ten days from the date of this Notice to confirm your appearance,” and if “we do not hear back from you by this date, we will assume you waive your right to present evidence at the hearing.” The conditional right to be heard at the hearing is a breach of the contractual promise that “at the time and place set for the review hearing, operator shall be given an opportunity to be heard.” (Dev. Agmt. § 19(d)). The right to be heard is at the time of the hearing, not before.
It is also noted that on November 14, 2023, Senior Planner Madrigal-Gonzalez received an email from the undersigned (Sebastian Rucci) stating he “wished to present the cannabis operator’s position [at the review hearing], preferably at a hearing before the city council.” One month later, on December 14, 2023, the undersigned emailed Senior Planner Madrigal-Gonzalez, transfer request forms (as she requested), adding our office as an additional point of contact for the seven cannabis operators. The email stated our office “intends to represent the cannabis operators positions before the City going forward.” On December 19, 2023, our office received a reply email stating that Philip Kfoury’s signature must be notarized; however, the transfer forms do not provide for notarized signatures.
On December 29, 2023, we received a letter from Senior Planner Madrigal-Gonzalez stating that the review hearing is scheduled for January 8, 2024; however, “as of today’s date, you have not confirmed your intent to appear or participate in the review hearing. Based on your failure to confirm your appearance at the review hearing, you have waiver your right to present evidence at and otherwise participate at the review hearings.” Seldom is an abuse so openly stated in a letter.
Our office represents the cannabis operators, and this does not require jumping through ad hoc hurdles, created to confuse and obfuscate the process. We notified the City we represent the operators, and we provided the requested form. Rather than putting the operators through unnecessary hurdles for refusing to pay disputed and illegal fees, the City should take a serious review of the many breaches identified in this Notice and move to correct its many breaches.
This is not just good business it is mandated by the development agreements.
January 5, 2024 Letter to City of Cudahy from the Seven 4916 Cecilia Street Cannabis Operators . . . . PAGE 26
The City is using its demand for illegal fees to pressure the operators with revocation to get them to pay illegal fees, which they dispute. By failing to set annual review hearings, the City denied a forum for the operators to document their delays. The operator could not “compel [the yearly review] hearing” and the City agreed that “no implication will be made to operator’s detriment if a hearing is not in fact held.” (Dev. Agmt. § 19(a)).
City staff prevented any hearing before the City Council, and this allowed staff to set illegal fees without review. The City breached Section 19(d) by denying the operators “an opportunity to be heard” at the defective review hearing. The development agreements do not give the City unbridled power to discern a default. On the contrary, § 14 titled “Defaults” provides that the “party alleging [a] default or breach shall give the other party not less than thirty day notice in writing specifying the nature of the alleged default and the manner in which said default may be satisfactorily cured during any such thirty day period.”
7. THE CITY IS GIVEN NOTICE THAT THE DAMAGES FOR BREACH OF THE DEVELOPMENT AGREEMENTS ARE $26.4 MILLION.
“After notice and expiration of the thirty-day period, the other party to this Agreement, at its option, may institute legal proceedings pursuant to this Agreement.” (Dev. Agmt. § 14(a)).
Under the development agreements, the cannabis operators may “pursue any remedy at law or equity available for the breach of any provision” of the agreement including pursuing “damages from bad faith intentional acts, the grossly negligent or malicious acts of City and its officials, officers, agents, and employees.” (Dev. Agmt. § 14(a)).
Breach of the development agreement is established by proving (1) the existence of a contract, (2) cannabis operator’s performance or excuse for nonperformance, (3) breach by the City of Cudahy, and (4) damage to the cannabis operators as a result of the City of Cudahy’s breach. The City of Cudahy has demonstrated its intention not to be bound by the agreement.
It actively refused to cooperate and sought to have the cannabis operator’s rights revoked.
7.1 CONTRACT DAMAGES FOR BREACH OF DEVELOPMENT AGREEMENT.
The case of Mammoth Lakes Land Acquisition v. Town of Mammoth Lakes (2010), 191 Cal. App. 4th 435 is attached for your review. In that case a jury awarded $30 million for the City’s breach of a development agreement. In Mammoth Lakes the Town entered into a development agreement to make improvements to its airport and to build a hotel at the airport. (Id. at 440.) The “development agreement is an enforceable contract between the municipality and the developer.” (Id. at 442.)
In Mammoth Lakes, the Town was “claiming a willingness to move forward with the project” but Town officials “actively sought to undermine the developer’s rights under the contract.” (Id. at 466-67.) Cudahy similarly claims it is willing to move forward, but its officials, officers, agents and employees actively undermine the operator’s rights in the project.
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