Agenda Item No. 8
CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: October 15, 2024 FROM: Matthew Bronson, City Manager
PREPARED BY: Nick Szamet, Director of Administrative Services SUBJECT: Approve Contract with HDL, Inc. for Cannabis Auditing Services
RECOMMENDATION
Approve an agreement with HDL, Inc. for cannabis auditing services for a term of three years with two, one-year extensions and authorize the City Manager to execute the agreement on behalf of the City.
BACKGROUND
The City issued a request for proposals (RFP) for cannabis auditing services which includes annual business audits, compliance inspections, and optional technical assistance services to qualified firms in July 2024. The role of the cannabis auditor is twofold:
• Audit business activities for cannabis license holders and ensure all revenues have been paid to the City or any refund overpayments of tax back to license holder; • Compliance inspections to ensure the business, based on type of cannabis activity, are following City’s ordinance relative to health, safety, and tax regulations.
The City received 9 proposals from the firms listed below:
• HDL, Inc. (current audit firm)
• Kanha, Inc.
• Avenu Insights
• Canna Business Services
• BMC
• Davis Farr
• Global G
• Tulip Oak
• SCI Consulting Group.
The City setup a review team comprised of the three primary departments involved in cannabis regulation (Administrative Services, Community Development, and Police). The team rated the proposals and selected HDL, Inc. for award of a new contract for a base term of three years with two, one-year extensions available upon mutual consent.
The review team determined HDL had the highest scores across all rating factors which included:
• Understanding of Scope of Work (25%)
• Approach and Methodology (25%)
• Experience and Expertise (35%)
• References (5%)
• Completeness (10%).
Staff Report: Cannabis Auditor Contract Page 2
October 15, 2024
Attachment 1 shows the proposed agreement ready for execution pending Council’s approval.
FISCAL IMPACT
The cost of the agreement is $400,000 over the three-year base term. However, there will be minimal fiscal impact to the City as all costs for auditing and inspections are passed onto the businesses. Although unlikely, there could be some hourly costs related to technical assistance for work done on an as needed basis.
ALTERNATIVES
The Council has the following alternatives to consider:
1. Approve an agreement with HDL, Inc. for cannabis auditing services for a term of three years with two, one-year extensions and authorize the City Manager to execute the agreement on behalf of the City;
2. Do not approve agreement; or
3. Provide alternate direction to staff.
PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act.
Attachments
1. Agreement
AGREEMENT
WITH HINDERLITER, DE LLAMAS & ASSOCIATES
FOR AUDITING SERVICES
This Agreement for auditing services (“Agreement”) is made and entered into effective the 15th day of October 2024, ("Effective Date”) by and between the CITY OF GROVER BEACH, a California municipal corporation (hereinafter referred to as “CITY”) and Hinderliter de Llamas & Associates. (hereinafter referred to as “CONSULTANT”).
RECITALS
WHEREAS, CITY desires to obtain Cannabis Auditing and Inspection Services, hereinafter referred to as the “Project”; and
WHEREAS, CONSULTANT is engaged in the business of furnishing technical and expert services and hereby represents that it desires to, and is professionally and legally capable of, performing the services called for by the Agreement; and WHEREAS, CONSULTANT acknowledges that this Agreement is subject to the requirements of the City of Grover Beach; and
WHEREAS, this Agreement will be administered for CITY by its City Manager (hereinafter referred to as “Administrator”) or his/her designee.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the covenants, conditions and premises hereinafter contained to be kept and performed by the respective parties, it is mutually agreed as follows:
1. Scope of Services. CONSULTANT shall perform to the satisfaction of CITY the services described in Exhibit A, including all work incidental to, or necessary to perform, such services even though not specifically described in Exhibit A.
2. Term of Agreement and Time for Performance. This Agreement shall be effective from the date first set forth above (“Effective Date”) and shall continue in full force and effect for a term of three (3) years from the Effective Date (“Initial Term”), unless earlier terminated in accordance with this Agreement. Upon expiration of the Initial Term, CITY AND CONSULTANT, upon mutual agreement, shall have the option to extend this Agreement for up to two (2) additional one-year periods (each, an “Extension Term”), exercisable by written notice of each party at least thirty (30) days prior to the expiration of the then-current term.
The services of CONSULTANT as described in Exhibit A are to commence upon the Effective Date and shall be completed in a sequence assuring expeditious completion, but in any event, all such services shall be completed prior to expiration of this Agreement (including any Extension Term) and in accordance with any performance schedule set for in Exhibit A.
3. Compensation.
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE Attachment 1 a. CONSULTANT’S sole compensation for satisfactory performance of all services required or rendered pursuant to this Agreement shall be as follows:
For the Initial Term of three (3) years, CONSULTANT shall be paid a total fee of four hundred thousand dollars ($400,000.00). For the first one-year Extension Term, if mutually exercised by the CITY and CONSULTANT, CONSULTANT shall be paid a fee of one hundred thirty-three thousand dollars ($133,000.00). For the second one-year Extension Term, if mutually exercised by the CITY and CONSULTANT, CONSULTANT shall be paid an additional fee of one hundred thirty-three thousand dollars ($133,000.00).
Payment schedule and terms shall be as defined in Exhibit A. The fees specified herein constitute the total compensation for all services, including any additional site visits, and CONSULTANT shall not be entitled to any further compensation unless agreed upon in writing by both parties through a formal amendment to this Agreement.
b. Detailed statements shall be available monthly for services performed in the preceding month and will be payable in the normal course of CITY business.
CITY shall not be obligated to reimburse any expenses for which it has not received a detailed invoice with applicable copies of representative and identifiable receipts or records substantiating such expense. c. The parties may modify this Agreement to increase or decrease the scope of services or provide for the rendition of services not required by this Agreement, which modification shall include an adjustment to CONSULTANTS compensation. Any change in the scope of services must be made by written amendment to the Agreement signed by an authorized representative for each party. CONSULTANT shall not be entitled to any additional compensation if services are performed prior to a signed written amendment.
4. Termination, Remedies and Force Majeure.
a. This Agreement shall terminate without any liability of CITY to CONSULTANT upon the earlier of: (i) CONSULTANT’S filing for protection under the federal bankruptcy laws, or any bankruptcy petition or petition for receiver commenced by a third party against CONSULTANT; (ii) 30 calendar days prior written notice with or without cause by CITY to CONSULTANT; (iii) one hundred eighty (180) calendar days prior written notice with or without cause by CONSULTANT to CITY; (iv) CITY’S non- appropriation of funds sufficient to meet its obligations hereunder during any CITY fiscal year of this Agreement, or insufficient funding for the Project; or (v) expiration of this Agreement.
b. Immediately upon any termination or expiration of this Agreement, CONSULTANT shall (i) immediately stop all work hereunder; (ii) immediately cause any and all of its subcontractors to cease work; and (iii) return to CITY any and all unearned payments and all properties and materials in the possession of CONSULTANT that are owned by CITY. Subject to the terms of this Agreement, CONSULTANT shall be paid compensation for services Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE satisfactorily performed prior to the effective date of termination.
CONSULTANT shall not be paid for any work or services performed or costs incurred which reasonably could have been avoided.
c. In the event of termination due to failure of CONSULTANT to satisfactorily perform in accordance with the terms of this Agreement, CITY may withhold an amount that would otherwise be payable as an offset to, but not in excess of, CITY’S damages caused by such failure. In no event shall any payment by CITY pursuant to this Agreement constitute a waiver by CITY of any breach of this Agreement which may then exist on the part of CONSULTANT, nor shall such payment impair or prejudice any remedy available to CITY with respect to the breach.
d. Upon any breach of this Agreement by CONSULTANT, CITY may (i) exercise any right, remedy (in contract, law or equity), or privilege which may be available to it under applicable laws of the State of California or any other applicable law; (ii) proceed by appropriate court action to enforce the terms of the Agreement; and/or (iii) recover all direct, indirect, consequential, economic and incidental damages for the breach of the Agreement. If it is determined that CITY improperly terminated this Agreement for default, such termination shall be deemed a termination for convenience. CITY will remain liable for payment for services rendered by CONSULTANT to the date of termination. e. CONSULTANT shall provide CITY with adequate written assurances of future performance, upon Administrator’s request, in the event CONSULTANT fails to comply with any terms or conditions of this Agreement. f. CONSULTANT shall be liable for default unless nonperformance is caused by an occurrence beyond the reasonable control of CONSULTANT and without its fault or negligence such as, acts of GOD or public enemy, acts of CITY in its contractual capacity, fire, floods, epidemics, quarantine restrictions, strikes, unusually severe weather, and delays of common carriers. CONSULTANT shall notify Administrator in writing as soon as it is reasonably possible after the commencement of any excusable delay, setting forth the full particulars in connection therewith, and shall remedy such occurrence with all reasonable dispatch, and shall promptly give written notice to Administrator of the cessation of such occurrence.
5. Confidential Information and Ownership of Documents. a. Any reports, information, or other data prepared or assembled by CONSULTANT pursuant to this Agreement shall not be made available to any individual or organization by CONSULTANT without the prior written approval of the Administrator. During the term of this Agreement, and thereafter, CONSULTANT shall not, without the prior written consent of CITY, disclose to anyone Confidential Information. The term Confidential Information for the purposes of this Agreement shall include all proprietary and confidential information of CITY, including but not limited to business plans, marketing plans, financial information, materials, compilations, documents, instruments, models, source or object codes and other information disclosed or submitted, orally, in writing, or by any other medium or media. All Confidential Information Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE shall be and remain confidential and proprietary in CITY. b. Any and all writings and documents prepared or provided by CONSULTANT pursuant to this Agreement are the property of CITY at the time of preparation and shall be turned over to CITY upon expiration or termination of the Agreement. CONSULTANT shall not permit the reproduction or use thereof by any other person except as other expressly provided herein. c. If CONSULTANT should subcontract all or any portion of the services to be performed under this Agreement, CONSULTANT shall cause each subcontractor to also comply with the requirements of this Section 5. d. This Section 5 shall survive expiration or termination of this Agreement.
6. Professional Skill. It is further mutually understood and agreed by and between the parties hereto that inasmuch as CONSULTANT represents to CITY that CONSULTANT and its subcontractors, if any, are appropriately and currently licensed and skilled in the profession and shall perform in accordance with the standards of said profession necessary to perform the services agreed to be done by it under this Agreement, CITY relies upon the skill of CONSULTANT and any subcontractors to do and perform such services in a skillful manner and CONSULTANT agrees to thus perform the services and require the same of any subcontractors. Therefore, any acceptance of such services by CITY shall not operate as a release of CONSULTANT or any subcontractors from said professional standards.
7. Indemnification. To the furthest extent allowed by law, CONSULTANT shall indemnify, hold harmless and defend CITY and each of its officers, officials, attorneys, employees, agents and volunteers from any and all loss, liability, fines, penalties, forfeitures, costs and damages (whether in contract, tort or strict liability, including but not limited to personal injury, death at any time and property damage), and from any and all claims, demands and actions in law or equity (including reasonable attorney’s fees and litigation expenses) that arise out of, pertain to, or relate to the negligence, recklessness or willful misconduct of CONSULTANT, its principals, officers, employees, agents or volunteers in performance of this Agreement. If CONSULTANT should subcontract all or any portion of the services to be performed under this Agreement, CONSULTANT shall require each subcontractor to indemnify, hold harmless and defend CITY and each of its officers, officials, attorneys, employees, agents and volunteers in accordance with the terms of the preceding paragraph.
This section shall survive termination or expiration of this Agreement.
8. Insurance. Throughout the life of this Agreement, CONSULTANT shall pay for and maintain in full force and effect all insurance as required in Exhibit B or as may be authorized in writing by CITY’S Risk Manager or his/her designee at any time and in his/her sole discretion.
a. If at any time during the life of the Agreement or any extension, CONSULTANT or any of its subcontractors fail to maintain any required insurance in full force and effect, all services and work under this Agreement shall be discontinued Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE immediately, and all payments due or that become due to CONSULTANT shall be withheld until notice is received by CITY that the required insurance has been restored to full force and effect and that the premiums therefore have been paid for a period satisfactory to CITY. Any failure to maintain the required insurance shall be sufficient cause for CITY to terminate this Agreement. No action taken by CITY pursuant to this section shall in any way relieve CONSULTANT of its responsibilities under this Agreement. The phrase “fail to maintain any required insurance” shall include, without limitation, notification received by CITY that an insurer has commenced proceedings, or has had proceedings commenced against it, indicating that the insurer is insolvent.
b. The fact that insurance obtained by CONSULTANT shall not be deemed to release or diminish the liability of CONSULTANT, including, without limitation, liability under the indemnity provisions of this Agreement. The duty to indemnify CITY shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by CONSULTANT.
Approval or purchase of any insurance contracts or policies shall in no way relieve from liability nor limit the liability of CONSULTANT, its principals, officers, agents, employees, persons under the supervision of CONSULTANT, vendors, suppliers, invitees, consultants, sub-consultants, subcontractors, or anyone employed directly or indirectly by any of them. c. Upon request of CITY, CONSULTANT shall immediately furnish CITY with a complete copy of any insurance policy required under this Agreement, including all endorsements, with said copy certified by the underwriter to be a true and correct copy of the original policy. This requirement shall survive expiration or termination of this Agreement.
d. If CONSULTANT should subcontract all or any portion of the services to be performed under this Agreement, CONSULTANT shall require each subcontractor to provide insurance protection in favor of CITY and each of its officers, officials, employees, agents and volunteers in accordance with the terms of this section, except that any required certificates and applicable endorsements shall be on file with CONSULTANT and CITY prior to the commencement of any services by the subcontractor.
9. Conflict of Interest and Non-Solicitation.
a. Prior to CITY’S execution of this Agreement, CONSULTANT shall complete a City of Grover Beach conflict of interest disclosure statement in the form as set forth in Exhibit C. During the term of this Agreement, CONSULTANT shall have the obligation and duty to immediately notify CITY in writing of any change to the information provided by CONSULTANT in such statement. b. CONSULTANT shall comply, and require its subcontractors to comply, with all applicable (i) professional canons and requirements governing avoidance of impermissible client conflicts; and (ii) federal, state and local conflict of interest laws and regulations including, without limitation, California Government Code Section 1090 et. seq., the California Political Reform Act Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE (California Government Code Section 87100 et. seq.) and the regulations of the Fair Political Practices Commission concerning disclosure and disqualification (2 California Code of Regulations Section 18700 et. seq.). At any time, upon written request of CITY, CONSULTANT shall provide a written opinion of its legal counsel and that of any subcontractor that, after a due diligent inquiry, CONSULTANT and the respective subcontractor(s) are in full compliance with all laws and regulations. CONSULTANT shall take, and require its subcontractors to take, reasonable steps to avoid any appearance of a conflict of interest. Upon discovery of any facts giving rise to the appearance of conflict of interest, CONSULTANT shall immediately notify CITY of these facts in writing.
c. In performing the work or service to be provided hereunder, CONSULTANT shall not employ or retain the services of any person which such person either is employed by CITY or is a member of any CITY council, commission, board, committee, or similar CITY body. This requirement may be waived in writing by the City Manager, if no actual or potential conflict is involved. d. CONSULTANT represents and warrants that it has not paid or agreed to pay any compensation, contingent or otherwise, direct or indirect, to solicit or procure this Agreement or any rights/benefits hereunder. e. Neither CONSULTANT, nor any of CONSULTANT’S subcontractors performing any services on this Project, shall bid for, assist anyone in the preparation of a bid for, or perform any services pursuant to, any other contract in connection with this Project unless fully disclosed to an approved by the City Manager, in advance and in writing. CONSULTANT and any of its subcontractors shall have no interest, direct or indirect, in any other contract with a third party in connection with this Project unless such interest is in accordance with all applicable law and fully disclosed to and approved by the City Manager, in advance and in writing. Notwithstanding any approval given by the City Manager under this provision, CONSULTANT shall remain responsible for complying with Section 9(b), above.
f. If CONSULTANT should subcontract all or any portion of the work to be performed or services to be provided under this Agreement, CONSULTANT shall include the provisions of this Section 9 in each subcontract and require its subcontractors to comply therewith.
g. This Section 9 shall survive expiration or termination of this Agreement.
10. General Terms.
a. Except as otherwise provided by law, all notices expressly required by CITY within the body of this Agreement, and not otherwise specifically provided for, shall be effective only if signed by the Administrator or his/her designee. b. Records of CONSULTANT’S expenses pertaining to the Project shall be kept on a generally recognized accounting basis and shall be available to CITY or its authorized representatives upon request during regular business hours throughout the life of this Agreement and for a period of three years after final Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE payment or, if longer, for any period required by law. In addition, all books, documents, papers, and records of CONSULTANT pertaining to the Project shall be available for the purpose of making audits, examinations, excerpts, and transcriptions for the same period of time. If any litigation, claim, negotiations, audit or other action is commenced before the expiration of said time period, all records shall be retained and made available to CITY until such action is resolved, or until the end of said time period whichever shall later occur. If CONSULTANT should subcontract all or any portion of the services to be performed under this Agreement, CONSULTANT shall cause each subcontractor to also comply with the requirements of this paragraph. This subsection 10(b) shall survive expiration or termination of this Agreement. c. Prior to execution of this Agreement by CITY, CONSULTANT shall have provided evidence to CITY that CONSULTANT is licensed to perform the services called for by this Agreement (or that no license is required). If CONSULTANT should subcontract all or any portion of the work or services to be performed under this Agreement, CONSULTANT shall require each subcontractor to provide evidence to CITY that subcontractor is licensed to perform the services called for by this Agreement (or that no license is required) before beginning work.
11. Nondiscrimination. To the extent required by controlling federal, state and local law, CONSULTANT shall not employ discriminatory practices in the provision of services, employment of personnel, or in any other respect on the basis of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, age, sexual orientation, or ethnicity. Subject to the foregoing and during the performance of this Agreement, CONSULTANT agrees as follows:
a. CONSULTANT will comply with all applicable laws and regulations providing that no person shall, on the grounds of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, age, sexual orientation, ethnicity, be excluded from participation in, be denied the benefits of, or be subject to discrimination under any program or activity made possible by or resulting from this Agreement. b. CONSULTANT will not discriminate against any employee or applicant for employment because of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, age, sexual orientation, or ethnicity, CONSULTANT shall ensure that applicants are employed, and the employees are treated during employment, without regard to their race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, age, sexual orientation, or ethnicity. Such requirements shall apply to CONSULTANT’S employment practices including, but not be limited to, the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship.
CONSULTANT agrees to post in conspicuous places, available to employees and applicants for employment, notices setting forth the provision of this nondiscrimination clause.
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE c. CONSULTANT will, in all solicitations or advertisements for employees placed by or on behalf of CONSULTANT in pursuit hereof, state that qualified applicants will receive consideration for employment without regard to race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, age, sexual orientation, or ethnicity.
d. If CONSULTANT will send to each labor union or representative of workers with which it has a collective bargaining agreement or other contract or understanding, a notice advising such labor union or workers’ representatives of CONSULTANT’S commitment under this section and shall post copies of the notice in conspicuous places available to employees and applicants for employment.
e. If CONSULTANT should subcontract all or any portion of the services to be performed under this Agreement, CONSULTANT shall cause each subcontractor to also comply with the requirements of this Section 11.
12. Independent Contractor.
a. In the furnishing of the services provided for herein, CONSULTANT is acting solely as an independent contractor. Neither CONSULTANT, nor any of its officers, agents or employees shall be deemed an officer, agent, employee, joint venture, partner or associate of CITY for any purpose. CITY shall have no right to control or supervise or direct the manner or method by which CONSULTANT shall perform its work and function. However, CITY shall retain the right to administer this Agreement so as to verify that CONSULTANT is performing its obligations in accordance with the terms and conditions thereof.
b. This Agreement does not evidence a partnership or joint venture between CONSULTANT and CITY. CONSULTANT shall have no authority to bind CITY absent CITY’S express written consent. Except to the extent otherwise provided in this Agreement, CONSULTANT shall bear its own costs and expenses in pursuit thereof.
c. Because of its status as an independent contractor. CONSULTANT and its officers, agents and employees shall have absolutely no right to employment rights and benefits available to CITY employees. CONSULTANT shall be solely liable and responsible for all payroll and tax withholding and for providing to, or on behalf of, its employees all employee benefits including, without limitation, health, welfare and retirement benefits. In addition, together with its other obligations under this Agreement, CONSULTANT shall be solely responsible, indemnify, defend and save CITY harmless from all matters relating to employment and tax withholding for and payment of CONSULTANT’S employees, including, without limitation, (i) compliance with Social Security and unemployment insurance withholding, payment of workers’ compensation benefits, and all other laws and regulations governing matters of employee withholding, taxes and payments; and (ii) any claim of right or interest in CITY employment benefits, entitlements, programs and/or funds offered employees of CITY whether arising by reason of any common Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE law, de facto, leased, or co-employee rights or other theory. It is acknowledged that during the term of this Agreement, CONSULTANT may be providing services to others unrelated to CITY or to this Agreement.
13. Notices. Any notices required or intended to be given to either party under the terms of this Agreement shall be in writing and shall be deemed to be duly given if delivered personally, transmitted by facsimile followed by telephone confirmation of receipt, or sent by United States registered or certified mail, with postage prepaid, return receipt requested, addressed to the party to which notice is to be given at the party’s address set forth on the signature page of this Agreement or at such other address as the parties may from time to time designate by written notice. Notices served by United States mail in the manner above described shall be deemed sufficiently served or given at the time of the mailing thereof.
14. Binding. Subject to Section 15, below, once this Agreement is signed by all parties, it shall be binding upon, and shall inure to the benefit of, all parties, and each parties’ respective heirs, successors, assigns, transferees, agents, servants, employees and representative.
15. Assignment.
a. This Agreement is personal to CONSULTANT and there shall be no assignment by CONSULTANT of its rights or obligations under this Agreement without the prior written approval of the City Manager or his/her designee. Any attempted assignment by CONSULTANT, its successors or assigns, shall be null and void unless approved in writing by the City Manager or his/her designee.
b. CONSULTANT hereby agrees not to assign the payment of any monies due CONSULTANT from CITY under the terms of this Agreement to any other individual(s), corporation(s) or entity(ies). CITY retains the right to pay any and all monies due CONSULTANT directly to CONSULTANT.
16. Compliance with Law. In providing the services required under this Agreement, CONSULTANT shall at all times comply with all applicable laws of the United States, the State of California and CITY, and with all applicable regulations promulgated by federal, state, regional, or local administrative and regulatory agencies, now in force and as they may be enacted, issued, or amended during the term of this Agreement.
17. Waiver. The waiver by either party of a breach by the other of any provision of this Agreement shall not constitute a continuing waiver or a waiver of any subsequent breach of either the same or a different provision of this Agreement. No provisions of this Agreement may be waived unless in writing and signed by all parties to this Agreement. Waiver of any one provision herein shall not be deemed to be a waiver of any other provision herein.
18. Governing Law and Venue. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California, excluding, however, any conflict of laws rule which would apply the law of another jurisdiction.
Venue for purposes of the filing of any action regarding the enforcement or interpretation of this Agreement and any rights and duties hereunder shall be San Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE Luis Obispo County, California.
19. Headings. The section headings in this Agreement are for convenience and reference only and shall not be construed or held in any way to explain, modify or add to the interpretation or meaning of the provisions of this Agreement.
20. Severability. The provisions of this Agreement are severable. The invalidity, or unenforceability of any one provision in this Agreement shall not affect the other provisions.
21. Interpretation. The parties acknowledge that this Agreement in its final form is the result of the combined efforts of the parties and that, should any provision of this Agreement be found to be ambiguous in any way, such ambiguity shall not be resolved by construing this Agreement in favor of or against either party, but rather by construing the terms in accordance with their generally accepted meaning.
22. Attorney’s Fees. If either party is required to commence any proceeding or legal action to enforce or interpret any term, covenant or condition of this Agreement, the prevailing party in such proceeding or action shall be entitled to recover from the other party its reasonable attorney’s fees and legal expenses.
23. Exhibits. Each exhibit and attachment referenced in this Agreement including the Recitals listed above are, by the reference, incorporated into and made a part of this Agreement.
24. Precedence of Documents. In the event of any conflict between the body of this Agreement and any Exhibit or Attachment hereto, the terms and conditions of the body of this Agreement shall control and take precedence over the terms and conditions expressed within the Exhibit or Attachment. Furthermore, any terms or conditions contained within any Exhibit or Attachment hereto which purport to modify the allocation of risk between the parties, provided for within the body of this Agreement, shall be null and void.
25. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.
26. No Third Party Beneficiaries. The rights, interests, duties and obligations defined within this Agreement are intended for the specific parties hereto as identified in the preamble of this Agreement. Notwithstanding anything stated to the contrary in this Agreement, it is not intended that any rights or interests in this Agreement benefit or flow to the interest of any third parties.
27. Extent of Agreement. Each party acknowledges that they have read and fully understand the contents of this Agreement. This Agreement represents the entire and integrated agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations, representations or agreements, either written or oral. This Agreement may be modified only by written instrument duly authorized and executed by both CITY and CONSULTANT.
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE IN WITNESS WHEREOF, CITY and CONSULTANT, intending to be legally bound hereby, have duly executed this Agreement as of the dates set forth below.
CITY OF GROVER BEACH Hinderliter de Llamas & Associates Matthew Bronson, City Manager Robert Gray, Vice President Attest:
Wendi B. Sims, City Clerk
Approved as to Form:
Rob Lomeli, City Attorney
Attachments: Exhibit A – Scope of Service
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE City of
Grover Beach
CANNABIS COMPLIANCE & FINANCIAL AUDITING
SERVICES
August 5, 2024
SUBMITTED BY
HdL Companies
120 S. State College Blvd., Ste200
Brea, CA 92821
hdlcompanies.com
CONTACT
Matt Eaton
T: 714.879.5000
E: [email protected]
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE 1 Cannabis Compliance and Financial Auditing and Services August 5, 2024
1. TRANSMITTAL LETTER……………...........................................................................................2
2. UNDERSTANDING……….........................................................................................................4
3. EXPERIENCE…………………….....................................................................................................9
4. REFERENCES…………………………………….………………………………………………....................15
5. FEE PROPOSAL………………………………………………………………………………………....,........16
TABLE OF CONTENTS
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE 2 Cannabis Compliance and Financial Auditing and Services August 5, 2024 August 5, 2024
Nick Szamet, Administrative Services Director
City of Grover Beach
154 S 8th Street
Grover Beach, CA 93433
Re: Cannabis Compliance and Financial Auditing Services Thank you for the opportunity to submit this proposal to provide Cannabis Compliance and Financial Auditing Services for the City of Grover Beach. Our proposal addresses all of the services contemplated in the City’s RFP, including annual cannabis revenue audits, regulatory compliance inspections, and additional hours of technical assistance and general subject matter expertise to be used as needed or requested by the City.
HdL was incorporated in 1983 and has over 40 years of experience providing revenue enhancement and consulting services to local governments in California. HdL was established to maximize local government revenues by providing audit, compliance, economic development, consulting services and software products. Our audit and consulting services include sales, use and transaction taxes, economic development, transient occupancy taxes, business license services and a Cannabis Management Program. Our systematic and coordinated approach to revenue management and economic data analysis is currently being utilized by over 700 agencies nationwide. The firm currently serves 51 counties, 352 cities and 132 transactions tax districts in California.
HdL is recognized as the industry leader in the development, implementation and enforcement of cannabis management programs for local governments in California. We have partnered with over 200 California cities and counties on cannabis-related programs including development of tax and regulatory ordinances, community outreach and education, fiscal analyses and revenue projections, merit-based application and permitting processes, staffing plans and cost recovery studies, financial audits, compliance inspections and law enforcement training.
Our cannabis team has unmatched expertise, with more than 80 years’ combined experience in the development, implementation and enforcement of cannabis regulatory and tax programs. Our team members have conducted over 11,000 cannabis compliance inspections and audits in California, Colorado and Nevada, and have reviewed, scored and processed over 1,700 cannabis business applications in the last six years in California. HdL Companies works for the benefit of public agencies and has no private-sector clients in the cannabis industry.
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE 3 Cannabis Compliance and Financial Auditing and Services August 5, 2024 HdL is a California S-Corporation, incorporated in 1985 and is a 100% employee-owned company.
The company’s primary offices are in Brea, California, with additional offices in San Dimas, Fresno, Pleasanton, Colorado, Georgia and Texas. Over 60 employees work out of the Brea headquarters, with over 250 employees nationally. Our company information and primary contact person for this scope of services are provided below:
Company Information:
Hinderliter, de Llamas and Associates
120 S. State College Blvd., Suite 200
Brea, CA 92821
Website: www.hdlcompanies.com
Primary contact person:
Matt Eaton, Compliance Director
Phone: 714.879.5000
Fax: 909.861.7726
Email: [email protected]
HdL Companies is a Corporate Partner of the League of California Cities and California State Association of Counties and works extensively with the State Association of City Auditors, California Society of Municipal Finance Officers (CSMFO) and California Municipal Revenue and Tax Association (CMRTA) on anticipation and planning of programs to strengthen local government revenues.
HdL anticipates that all key staff identified in this proposal shall remain employees of the company for the first year of any agreement. Should any identified staff leave their employment with HdL during the term of this project, HdL shall timely notify the City and shall provide an updated staffing plan including bios or resumes for any additional staff not previously identified.
No information on this proposal is considered proprietary. All terms of this proposal shall remain in effect for at least 120 days from the date of this proposal, or until a contract resulting from this RFP has been executed, whichever comes first.
We look forward to the opportunity to partner with the City of Grover Beach to provide the services as described. If you have any questions or require additional information, please feel free to our Compliance Director Matt Eaton at [email protected] or by phone at 714.879.5000.
I have read and understand the City’s RFP in its entirety, including, without limitation, the scope and nature of the work, all appendices, attachments, exhibits, schedules, and addenda, as applicable. HdL requests no exceptions to either the RFP or the City’s standard agreement and shall comply with all requirements of this RFP, including the insurance requirements described in Exhibit B.
Sincerely,
Andy Nickerson
President, HdL Companies
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE 4 Cannabis Compliance and Financial Auditing and Services August 5, 2024 The City of Grover Beach has retained the services of HdL Companies since 2016 to assist with the exploration, development and implementation of a program to permit and regulate commercial cannabis businesses in the City. That assistance has included outreach and education, policy development, regulatory programs, enforcement strategies, training of staff, application processes and reviews, applicant interviews, compliance inspections, revenue audits and general subject matter expertise.
There are currently 10 licensed cannabis businesses operating in the City of Grover Beach, of which 4 are storefront cannabis retailers. The City is now requesting additional assistance to provide ongoing regulatory compliance reviews and financial audits of these permitted cannabis businesses, along with additional general consulting on cannabis-related issues as needed. HdL appreciates the opportunity to continue to provide these ongoing cannabis compliance services as described below.
Objective 1: Annual Revenue Audits
HdL will conduct an annual revenue audit of each cannabis business to verify the accuracy of the revenue reported and remitted to the City during the review period and will recommend a tax adjustment should the audit reveal any variances in reported revenue. As part of the audit process, HdL will conduct a risk-based review of each business using our proprietary methodology, which was developed to specifically address the unique challenges associated with auditing the cannabis industry. Our methodology allows audit staff to cross-analyze multiple business records to identify reporting variances, discrepancies and outliers to produce the most accurate measure of gross receipts on behalf of the City.
To initiate the process, the City shall provide HdL with a list of all licensed cannabis businesses subject to audit. HdL shall work with the City to determine the appropriate review period for each business and to develop a schedule for conducting all audits. As the time for each audit approaches, HdL will prepare a notification letter informing the licensee of the impending audit and providing a list of all records and documentation the business is required to provide, including remote access to the business’s point-of-sale (POS) system where applicable. HdL recommends that the notification letter be sent by the City to communicate HdL’s authority to conduct the audit and to encourage cooperation by the business.
The full annual audit shall include:
• Review Point-of-Sale (POS) system structure
• Review inventory system (subject to METRC data)
• Analyze and compare POS data with other available data sources, including:
o City cannabis tax returns
o State tax returns
o Federal tax returns
UNDERSTANDING
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE 5 Cannabis Compliance and Financial Auditing and Services August 5, 2024 o METRC sales and inventory data
o CDTFA data
o Bank statements
o Sales receipts
o Other financial documents as available
• Identify any variances or over/under reporting
• Calculate any taxes or fees due to the City
• Prepare and issue report
Where cannabis cultivation is taxed on a square-footage basis, the audit shall include one annual site inspection to verify compliance with maximum permitted canopy area. Square footage audits may also consider documented findings from inspections by the City, DCC or other agencies, where available.
A business that holds multiple state cannabis licenses shall be considered a single business for audit purposes, provided that all licenses are held and operated under the same name, ownership, location, and a single tax ID number. Any variation may indicate separate business entities requiring separate audits. Any such determination shall be made on a case-by-case basis in consultation with the City.
HdL will provide a draft audit report to the commercial cannabis business. The business will be given an appropriate opportunity to respond or appeal the report in accordance with the City ordinance.
HdL will review any documentation provided by the business to dispute the findings and will adjust the tax/fee assessment as necessary prior to issuing the final report to the City.
The cost for this service assumes a standard 12-month review period. The cost for a longer term shall be increased per each additional 6-month period (2 fiscal quarters). Pricing available upon request.
This cost also assumes reasonable cooperation from the licensee. Non-cooperation by the licensee may result in additional charges at HdL’s hourly rate, or in termination of the audit and potential enforcement action by the City. Any such action or additional charges would be determined in consultation with the City.
The cost does not include assistance with administrative appeals or enforcement of audit findings, cannabis tax policy questions or guidance, or other services not directly associated with preparing the revenue audit report. Any costs associated with such additional services would be billed at HdL’s hourly rate.
Objective 2: Compliance Inspections
HdL will conduct one or more on-site compliance inspections annually, as requested by the City, for each permitted cannabis business to determine compliance with State and/or local laws. If HdL identifies any non-compliant activities, we will provide the City with a recommended appropriate action to address the deficiency and to ensure future compliance by the permittee.
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE 6 Cannabis Compliance and Financial Auditing and Services August 5, 2024 The cost for these services includes all of the following:
• Notifying permittee of pending inspection
• On-site inspection to ensure that each business complies with all State and local laws and regulatory protocols for all of the following:
o Inventory management
o Cash handling procedures
o Access control
o Video surveillance
o Product safety
o Alarm system maintenance and safety
o Lock standards
o Packaging and labeling
o Waste management
o Transportation documentation
o Surveillance equipment maintenance
o Occupational badges
o Business records
o Other items as necessary to ensure compliance with laws • Preparation of a draft report detailing the findings of the inspection and providing recommendations for improvement where needed. If the inspection identifies any violations of law or other non-compliance issues, then HdL will prepare a notice to comply as an included part of the report.
• All travel costs associated with the inspection, assuming a minimum of four inspections per day. If fewer than four inspections are requested, HdL will charge for travel based upon hourly rates, or a flat fee to be determined in consultation with City. • All phone, email and other communications involved in preparing for, scheduling and coordinating the inspections and providing the report.
Facilities greater than 30,000 square feet will be subject to an additional cost at HdL’s hourly rate to account for the additional time involved in conducting inspections, documenting issues of noncompliance and preparing reports. HdL will notify the City in advance if additional hourly charges are necessary to complete the inspection.
The cost for this service does not include any follow-up re-inspection or review of any documents provided to address or contest any findings of non-compliance, nor does it include any assistance with the appeal of any enforcement action by the City. Any costs associated with such additional services would be billed at HdL’s hourly rate.
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE 7 Cannabis Compliance and Financial Auditing and Services August 5, 2024 Objective 3: Technical Assistance and Subject Matter Expertise HdL will provide additional hours of general consulting to be utilized on an as-needed basis at the City’s request. Such assistance may include technical assistance, subject matter expertise, research and analysis, education, monitoring of changes to State laws and regulations, participation in conference calls, responding to staff inquires via phone and email, reviewing staff reports to the City Council, assisting with responses to inquiries from the public, or other issues as mutually agreed to by the City and HdL.
Project Workplan
At the start of the project, HdL’s team will meet with City staff to discuss the approach and expectations, to develop an implementation timeline and determine the City’s desired schedule for each of the services contemplated by this RFP. The project management team will meet and confer on a regular basis with the City’s designated contact person or persons to review the progress of any work products and to discuss any changes in direction or needed details.
Cannabis revenue audits will be scheduled in consultation with the City. The City will provide HdL with a list of all licensed cannabis businesses and will inform HdL when a new cannabis business receives final permission to operate (i.e., through the issuance of a conditional use permit, certificate of occupancy or other indication the business has opened). HdL will then work with the City to schedule annual audits and will coordinate with the City as the time for each service approaches.
Annual audits can be scheduled separately for each business based upon their permit issuance date.
If the City prefers, HdL can develop a schedule to conduct annual audits for all businesses at the same time each year (e.g; all audits to be started in Q1 for the previous fiscal year). Any such schedule would be developed in consultation with the City and would be dependent upon the availability of annual tax filings and other reporting information for each business.
HdL’s audit process divides the audit schedule into 4 distinct phases. Phase 1 includes pre-audit work, such as issuance of a notification letter to the business, providing a list of all financial records that will be required and allowing an appropriate timeframe for receipt of those records.
In Phase 2, HdL will conduct an initial review of all records submitted by the business. If the initial review identifies the need for additional documentation, HdL will work with the business to provide the remaining records. Once all necessary documentation has been obtained, HdL shall move forward with Phase 3, which involves a full, detailed review of all required records and the drafting of initial findings.
In Phase 4, HdL will issue a draft report with the initial findings, addressed to the business with a cc to the City. The report shall also recommend any needed adjustments, penalties or other corrective actions. The business will have an appropriate amount of time to review and respond to the draft report. HdL will review any such response and adjust the audit findings if necessary before issuing the final report, which shall be addressed to the City with a copy to the business.
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE 8 Cannabis Compliance and Financial Auditing and Services August 5, 2024 HdL’s audits are typically completed within 60 days from receipt of all requested documentation to issuance of the draft report. This timeline assumes reasonable cooperation by the auditee, which is not within HdL’s control. Delayed responses to any requests for additional information may increase this timeline. The overall timeline from issuance of the audit notification letter to the final report averages 6 to 9 months. This timeline may be increased or decreased depending upon cooperation by the permittee and completeness of the records provided.
Regulatory compliance inspections shall be conducted based on a schedule to be determined in consultation with City staff. HdL will endeavor to conduct inspections of multiple facilities on the same day wherever possible, with a maximum of 5 on any one day. Inspection reports shall be provided to the City no later than 2 weeks (14 days) following the inspection.
Additional inspections requested by the City in response to complaints or previous non-compliance shall be conducted within 2 weeks of receiving the request. Where there is urgency, HdL shall work with the City to schedule inspections at the earliest availability, typically within 3 to 5 days. HdL staff shall be available to assist with additional enforcement efforts as needed or requested by the City.
The City’s primary role in regard to compliance activities shall be to communicate and enforce HdL’s authority to conduct onsite inspections and to assist with development of an inspection schedule.
The City will also inform HdL when additional inspections are requested to address complaints or to follow up on required corrections, or when additional enforcement assistance is desired.
HdL shall distribute the audit and inspection workload among our staff to allow for timely performance. Our workplan and staffing can accommodate additional businesses as they become licensed and functioning over time.
Involvement of City Staff
HdL understands the value and costs associated with staff time and will make every effort to minimize the amount of City staff time necessary to carry out the objectives of this program. The City’s role shall be to provide guidance on City-specific regulations and priorities and to communicate and enforce HdL’s authority to conduct audits on the City’s behalf if a business resists participating.
HdL personnel will initially meet with designated City officials to review all service objectives.
Specifically, HdL requests that the City participate in a kickoff meeting to establish audit processes and priorities, be available to answer occasional questions about specific audit concerns and perform invoicing and collection activities after audit reports have been issued.
HdL requests that the City identify a staff member to serve as the primary audit contact for HdL staff.
Based on HdL staff’s vast experience of conducting cannabis business license tax audits HdL expects cumulative City time required to be on average no more than thirty minutes per business.
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE 9 Cannabis Compliance and Financial Auditing and Services August 5, 2024 Company Profile
Founded in 1983, HdL was established to maximize local government revenues by providing audit, compliance, economic development, consulting services and software products. Our audit and consulting services include sales, use and transaction taxes, transient occupancy taxes, economic development, business license services, transient occupancy tax and a cannabis compliance program. HdL is a California S-Corporation, incorporated in 1985 and is a 100% employeeowned company. The firm’s headquarters are located at 120 S. State College Blvd., Suite 200, Brea, CA 92821 with an additional office located in Fresno, CA. Over 60 employees work out of the Brea headquarters, with over 250 employees nationally.
HdL’s systematic and coordinated approach to revenue management and economic data analysis is currently being utilized by over 700 agencies nationwide. The firm currently serves 51 counties, 352 cities and 132 transactions tax districts in California.
HdL’s key staff has extensive experience serving local government and many have previously held positions in city management, finance, planning, economic development or revenue collection. HdL is a Corporate Partner of the League of California Cities and California State Association of Counties and works extensively with the County Auditor’s Association of California, California Society of Municipal Finance Officers (CSMFO) and California Municipal Revenue and Tax Association (CMRTA) on anticipation and planning of programs to strengthen local government revenues.
This close understanding of local government needs coupled with extensive databases and advanced methodology provides for the most relevant, productive and responsive revenue recovery; forecasting; and economic services available.
HdL is recognized as the industry leader in the development, implementation and enforcement of cannabis management programs for local governments in California. We have partnered with over 175 California cities and counties on cannabis-related programs, including ordinance development and review, community outreach and education, merit-based application and permitting processes, cost recovery studies, compliance inspections, revenue audits, fiscal analyses and law enforcement training.
EXPERIENCE
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE 10 Cannabis Compliance and Financial Auditing and Services August 5, 2024 Our cannabis team has unmatched expertise, with more than 80 years’ combined experience in the development, implementation and enforcement of cannabis regulatory and tax programs, including permit processes, staffing plans, cost recovery fees, setting cannabis tax rates, regulatory compliance, financial audits, and law enforcement training. Our team members have conducted over 11,000 cannabis compliance inspections and audits in California, Colorado and Nevada, and have reviewed, scored and processed over 1,700 cannabis business applications in the last six years in California. HdL Companies works for the benefit of public agencies and has no private-sector clients in the cannabis industry.
Project Management and Staff
The work contemplated by this proposal will be managed by HdL’s Compliance Director, Matt Eaton, who is one of the state’s most experienced cannabis regulatory professionals. Matt will oversee all aspects of the proposed workplan and will be the primary contact person for coordinating work with the City. Matt has previous experience as a Supervisory Criminal Investigator with the Colorado Department of Revenue’s Marijuana Enforcement Division, through which he conducted thousands of criminal investigations and compliance audits of cannabis businesses. This experience makes him ideally qualified to oversee the review, regulation and enforcement of licensed cannabis businesses.
Matt will be primarily assisted by Audit Manager Elizabeth Eumurian and Compliance Manager Brad Schneider. Elizabeth will work directly with the City in regard to cannabis surcharge audits and will lead HdL’s 8-person audit team. Elizabeth will work with the City to develop a work schedule for conducting audits of all licensed cannabis businesses in the City on an annual basis and will assign audit staff as needed to complete all audits in a timely manner.
Brad will lead HdL’s 3-person compliance team. Brad will consult with the City to develop the desired schedule for conducting regulatory compliance inspections and will coordinate with the City as the time for each inspection approaches.
Matt Eaton will directly oversee the review of cannabis facility applications and will assign applications to team members based upon the number of applications and staff availability. Matt will also oversee all background checks, assisted by Compliance Administrator Kristi Lervold.
Matt, Brad and Elizabeth will each meet and confer with the City as needed to ensure that all work is satisfactory and is being conducted in accordance with the delivery schedule to be developed in coordination with the City. This team will also be available to respond to questions or inquiries from the City as needed and to resolve any issues that may arise.
Team Availability
HdL shall dedicate an appropriate number of staff to ensure all services are provided in a timely manner. It is anticipated that all HdL staff identified shall remain with the company for the duration of this project. HdL shall immediately notify the City of any changes in staff assigned to this project and will adjust staffing levels as needed to ensure timely delivery of all work products.
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE 11 Cannabis Compliance and Financial Auditing and Services August 5, 2024 Matt Eaton – Compliance Director
Matt Eaton is the Compliance Director at HdL and plays a critical role in implementing the Cannabis Compliance Program for local agencies. Prior to joining the firm, he was a progressive law enforcement professional with 30 years’ experience conducting criminal/regulatory investigations, and corporate/individual background investigations. While working as a Supervisory Investigator at the Colorado Department of Revenue in the Marijuana Enforcement Division (MED), Matt managed criminal investigators and civilian staff in the Denver Metro and Longmont field offices.
During his six-year tenure at the MED, he conducted approximately 10,000 criminal investigations and compliance reviews, including regulatory and financial investigations. He is a subject matter expert on track and trace systems and understands the complexity of reviewing data to ensure businesses are in compliance with state and local regulations. Matt was responsible for planning, developing and implementing report and field inspection protocols for the agency. He also played an instrumental role in recommending changes to current regulations and identifying essential language for new legislation in Colorado. Matt is well known for his ability to maintain working relationships with cannabis industry leaders and external stakeholders in resolving issues. Matt received his Bachelor of Science Degree from Biola University and maintained Police Officer Service Training (POST) certification for over 30 years in California and Colorado. He has also served as an adjunct instructor teaching law enforcement principle related to criminology, correctional processes, procedural law, interviews, interrogations and criminal evidence at AIMS Community College in Greeley, Colorado.
Mark Lovelace - Senior Policy Advisor
Mark Lovelace has 23 years of broad experience in public policy, community engagement and advocacy and is recognized as a leader in advancing the statewide discussion of medical and recreational cannabis as a legitimate policy issue in California. Mark served on the Humboldt County Board of Supervisors from 2009 through 2016 where he was instrumental in developing a comprehensive approach to regulating cannabis, including a voter-approved tax on commercial cultivation and an innovative track and trace pilot program. Mark established and co-chaired the Cannabis Working Group for the California State Association of Counties (CSAC) and helped draft CSAC’s cannabis legislative platform. Mark has worked extensively with public agencies and statewide organizations on cannabis issues and has led numerous presentations, workshops and panel discussions. Prior to his time on the Board, he worked for many years as a respected advocate on land use, planning, development, resource management and environmental issues. He received his Bachelor of Science degree in Industrial Design from San Jose State University.
Brad Schneider - Compliance Manager
Brad Schneider manages HdL’s team of cannabis compliance inspectors to ensure that licensed cannabis businesses are operating within state law and complying with all of their obligations under the terms of their local permit. He oversees the team to ensure that all inspections are conducted on a timely schedule in coordination with the local jurisdiction and that all reports are clear and fullydocumented. Brad brings 30 years of experience with the Ontario Police Department where he worked as a detective, background investigator and Sergeant. Brad spearheaded operations within the Narcotics Division, concentrating on identifying and mitigating illegal activities.
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE 12 Cannabis Compliance and Financial Auditing and Services August 5, 2024 Following his law enforcement career, he worked in aircraft sales where he managed contracts with state and local government agencies. Brad has broad experience in regulatory compliance from both the public and private sector, ensuring alignment with industry regulations and standards and directing training, safety programs and operational procedures.
Michelle Shaw - Compliance Inspector
Michelle conducts onsite inspections, examinations and other actions to monitor compliance with established standards for local licensed cannabis businesses. Prior to joining HdL, she was a Compliance Specialist Officer at a large, multinational bank where she managed, validated and oversaw the effectiveness and accuracy of numerous compliance issues within the consumer retail space. Throughout her eight years of experience at the bank, she performed assessments of affiliate businesses to determine compliance/non-compliance of their processes and procedures pursuant to bank standards and state regulations. A graduate of Cypress College, Michelle holds a Foundations of Banking Risk certificate from the Global Association of Risk Professionals and a paralegal certificate from the Southern California College of Business and Law.
Teresa Schneider - Compliance Inspector
Teresa Schneider served for 28 years with the Montclair Police Department, including 12 years in the Background Investigations Unit. In this capacity, Teresa was responsible for conducting background investigations of all City business license applicants, as well as all sworn and non-sworn positions within the police and fire departments and of civilians requesting access to police department records. Theresa previously served 4 years in the U.S. Army’s nursing program at Fort Campbell, Kentucky. During this time she attended college at the University of Kentucky and Austin Peay State University. After receiving an Honorable Discharge in 1990, Teresa was hired by the Montclair Police Department. During her 28-year career, she worked numerous assignments, including patrol, K9, detective bureau, court liaison, volunteer coordinator, and red-light automated enforcement. Teresa received many awards throughout her career, including Officer of the Year.
Elizabeth Eumurian - Audit Manager
Elizabeth Eumurian manages the HdL cannabis audit team. In her role she oversees the development and refining of HdL's proprietary audit methodology to better identify reporting variances, discrepancies and outliers, and to ensure audit accuracy and consistency. She also reviews audit reports, evaluates cannabis business financial information and assists with special projects. Before becoming manager, Elizabeth conducted cannabis audits for HdL. Elizabeth previously worked as a senior auditor in the entertainment industry. In this role, she executed testing procedures for targeted audit programs, analyzed findings and prepared audit and compliance reports. She also has experience working for a large financial institution analyzing data for reporting anomalies and performing internal audits. Elizabetj earned her Bachelor of Arts degree from California State University Fullerton and holds a certificate in CannaBusiness from Oaksterdam University Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE 13 Cannabis Compliance and Financial Auditing and Services August 5, 2024 Valerie Carter - Audit Supervisor
Valerie Carter works as a supervisor for HdL’s Cannabis Management Team, supporting the audit manager and assisting in overseeing day to day work of audit staff. Valerie has over 5 years of public sector work experience focusing on public policy, auditing and revenue tax implementation. She was a Tax Auditor II for the City of Oakland’s Revenue Management Bureau and an Assistant Management Analyst for the City of Berkeley’s Transportation division. Valerie earned a Bachelor’s Degree in Business Administration from Cal Poly Pomona, with an emphasis on Finance, Real Estate, and Law.
Tao Lu - Senior Auditor
Tao Lu works as an Auditor for HdL’s Cannabis Management Team. Tao has two and a half years’ experience as an accountant with an emphasis in information technology and food manufacturing industries. He also has public audit work experience at RSM China. Tao was born and raised in China. Tao earned a Bachelor’s Degree in Accounting and Finance from Syracuse University in New York before relocating to Southern California with his family.
Pam Davis - Auditor
Pam Davis conducts revenue audits of licensed cannabis businesses as a member of HdL’s Cannabis Management Team. Prior to joining HdL, Pam served as the Director for the Richland County (South Carolina) Business Service Center for over 15 years, where she was responsible for auditing businesses to ensure accurate reporting and remittance of a variety of local taxes. Pam also conducted research and rate impact analyses and developed policies, procedures and user manuals to ensure business and governmental compliance. Pam received a Master of Public Administration degree from the University of Georgia and a Bachelor’s Degree in Political Science from Clemson University. She also holds a certificate in CannaBusiness from Oaksterdam University.
Jennifer Erwin - Auditor
Jennifer Erwin is an Auditor for HdL’s Cannabis Management Team. Jennifer conducts revenue audits of licensed cannabis businesses to ensure they are reporting and remitting the proper amount of cannabis tax revenue to their host jurisdiction. Jennifer previously served as Finance Director for the City of Perris, California and as Assistant Controller for the Morongo Band of Mission Indians. Jennifer brings extensive experience with complex financial analyses, fee studies, cost accounting procedures and collections. Jennifer is a Certified Public Accountant (CPA #108992) and holds a Bachelor of Science degree in Business Administration from the University of Phoenix.
Eric Magana – Auditor
Eric Magana works as an Auditor for HdL’s Cannabis Management Team, conducting revenue audits of licensed cannabis businesses to ensure they are accurately reporting their revenues and remitting the proper amount of fees or taxes. Prior to joining HdL, Eric worked as a Loan Specialist for the U.S. Small Business Administration, where he processed over 5,000 business loans and grant applications. Eric holds a Bachelor's degree in Economics and Administrative Studies from the University of California at Riverside.
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE 14 Cannabis Compliance and Financial Auditing and Services August 5, 2024 Dante Chegini - Audit Analyst
Dante Chegini conducts revenue audits as a member of HdL’s Cannabis Management Team to ensure that licensed cannabis businesses are reporting and remitting the proper amount of cannabis taxes to their host jurisdiction. Dante previously worked as a financial analyst at a public finance investment banking firm in Los Angeles, where he was lead analyst on over 30 deals with a total value exceeding $1 billion. Dante brings experience with organizing and analyzing large volumes of financial data to determine accurate revenues and debts. Dante received a Bachelor of Science degree in Business Administration from the University of Southern California, Marshall School of Business with a focus on financial and managerial accounting and business finance.
Michael Cimino - Audit Analyst
Michael Cimino is an Audit Analyst for HdL’s Cannabis Management Team. Michael conducts revenue audits of licensed cannabis businesses to ensure they are reporting and remitting the proper amount of cannabis taxes to their host jurisdiction. Michael previously worked as an information technology manager at an international manufacturing company where he performed internal security audits and risk analyses and implemented policies to ensure compliance with ISO standards. He also assisted with integration of ERP/CRM software across multiple departments and locations. Michael holds an Associate of Arts degree from Fullerton College.
Kristi Lervold - Compliance Administrator
Kristi Lervold is the Compliance Administrator for HdL’s cannabis team. In this role she supports individual team members, coordinates internal processes, and assists with client requests, contracts, billing reconciliation and invoicing. Kristi’s 18-year career includes ten years as the administrative assistant to HdL’s CFO, handling various operational responsibilities and supporting financial functions, as well as experience in the occupational health industry, facilitating services for federal, state, and local government clients. Kristi holds a Bachelor’s of Science degree in Business Management with a minor in Business Administration.
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE 15 Cannabis Compliance and Financial Auditing and Services August 5, 2024 City of Modesto Status: Ongoing
HdL has assisted the City of Modesto with cannabis business license tax audits, market analysis and revenue projections, compliance inspections, supplemental background checks, pre-license site visits and general subject matter expertise, along with ordinance development and an application process and reviews. We have so far conducted 21 audits and 57 compliance inspections for the City.
Dates: July 2018 - Present Contract amount: $1,948,300 (5 contracts) Contact: Gina Brown Title: Revenue and Collections Compliance Mgr.
Phone: 209.577.5381 Email: [email protected]
Assigned HdL Staff: Matt Eaton, Elizabeth Eumurian, Valerie Carter, Pam Davis, Michael Cimino, Mark Lovelace, Kristi Lervold
City of Moreno Valley Status: Ongoing
HdL has assisted the City of Moreno Valley with cannabis business license tax audits, compliance inspections, supplemental background checks and general subject matter expertise. HdL has also assisted the City with ordinance development, fiscal analysis, cost recovery fees, and an application process and reviews. We have so far conducted 15 audits and 79 compliance inspections for the City of Moreno Valley.
Dates: November 2017 - Present Contract amount: $1,316,000 (7 contracts) Contact: Launa Jimenez Title: Chief Financial Officer
Phone: 951.413.3000 Email: [email protected]
Assigned HdL Staff: Matt Eaton, Elizabeth Eumurian, Tao Lu, Dante Chegini, Pam Davis, Michelle Shaw, Teresa Schneider, Kristi Lervold
City of Maywood Status: Ongoing
HdL has assisted the City of Maywood with business license tax audits, compliance inspections, pre-license site visits and background checks, as well as general subject matter expertise. We have so far conducted 19 audits and 89 compliance inspections for the City.
Dates: May 2017 - Present Contract amount: $372,500 (3 contracts) Contact: Jennifer Vasquez Title: City Manager
Phone: 323.562.5721 Email: [email protected] Assigned HdL Staff: Matt Eaton, Elizabeth Eumurian, Jennifer Erwin, Eric Magana, Dante Chegini, Michelle Shaw, Kristi Lervold
REFERENCES
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE 16 Cannabis Compliance and Financial Auditing and Services August 5, 2024 Please see separate submission.
FEE PROPOSAL
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE City of
Grover Beach
CANNABIS COMPLIANCE & FINANCIAL AUDITING
SERVICES
FEE PROPOSAL
August 5, 2024
SUBMITTED BY
HdL Companies
120 S. State College Blvd., Ste200
Brea, CA 92821
hdlcompanies.com
CONTACT
Matt Eaton
T: 714.879.5000
E: [email protected]
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE 1 Cannabis Compliance & Financial Auditing Services
for the City of Grover Beach August 5, 2024
This proposal does not include any additional services that are not specifically enumerated herein.
The proposal assumes that HdL will not be a part of any enforcement action, appeal, arbitration, or civil litigation resulting from the findings of an inspection and/or audit. Any such additional reports, documentation or assistance that may be required would be in addition to the costs shown in the table below and shall be billed at HdL’s hourly rate. This includes assistance with administrative hearings and/or civil litigation involving cannabis licensees.
Prices are valid for 120 days from the date of this proposal to allow time for consideration and negotiating a service agreement. Once under contract, prices shall be honored for the first full year, with successive years subject to an annual increase based upon the Consumer Price Index for the Los Angeles-Long Beach-Anaheim region.
Conflicts of Interest and Non-Disclosure
HdL Companies works for the benefit of public agencies and has no private-sector clients in the cannabis industry. All cannabis business information will be kept confidential by HdL and will not be shared internally beyond those HdL employees who are required to have access for purposes of conducting the work contemplated herein, or for administrative purposes as necessary.
Scope of Service Objectives Estimated
Cost
Objective 1: Annual Revenue Audits
Assumes standard 12-month review period
$10,000
per audit
Objective 2: Compliance Inspections
One or more inspections per year, as requested by the
Cit
$2,500
per inspection
Objective 3: Technical Assistance and Subject Matter Expertise Billed at the hourly rate for the assigned staff
Hourly Rate
Travel: As needed for site visits or in-person meetings Hourly Rate1 Plus Expenses
TOTAL NOT TO EXCEED TBD
1 Or at a flat rate to be determined in consultation with the City All City costs may be fully recoverable from applicants or permittees
FEE PROPOSAL
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE 2 Cannabis Compliance & Financial Auditing Services
for the City of Grover Beach August 5, 2024
Services Billed at Hourly Rate
Service objectives shown as being billed at HdL’s hourly rate may be billed up to the maximum estimated hours. HdL will not exceed the maximum estimated hours without first notifying the City and receiving written approval in advance.
Hourly Rates for HdL Staff
The prices in this proposal are based on the hourly rates for HdL staff as shown in the chart below.
Any additional services requested by the client that are not specifically described in this proposal would be billed at the standard rate for the assigned staff person HdL Staff Person Title Hourly Rate
Matt Eaton Director of Cannabis Services $300
Mark Lovelace Senior Policy Advisor $300
Elizabeth Eumurian Audit Manager $300
Brad Schneider Compliance Manager $300
Valerie Carter Audit Supervisor $275
Tao Lu Senior Auditor $250
Kristi Lervold Compliance Administrator $235
Michelle Shaw Compliance Inspector $235
Teresa Schneider Compliance Inspector $235
Pamela Davis Auditor $235
Eric Magana Auditor $235
Jennifer Erwin Auditor $235
Dante Chegini Audit Analyst $225
Michael Cimino Audit Analyst $225
All rates current as of the date of this proposal
Docusign Envelope ID: 253BF938-107B-4DBB-BC10-D40669CFDCEE