GTON
BEACH
City of Huntington Beach
Cannabis Regulatory
Framework & Draft Ordinances
City Council Meeting
June 21, 2022
SUPPLEMENTAL
COMMUNICATION
Meeting Date: 6/21/2022
#24622-4447
Agenda lem No.:
Background - City of Huntington Beach
• The City prohibits medicinal and recreational cannabis activities in the City. • Exception: allowing/regulating non-medical marijuana cultivation per a private residence up to six plants
• Two private parties have filed separate cannabis petitions requesting that the City prepare documents allowing their proposed regulations to be placed before the voters of Huntington Beach for consideration.
• November 3, 2021 - Huntington Beach Cannabis Taxation and Regulation Act • December 2, 2021 - Huntington Beach Cannabis Regulation & Land Use Measure • These initiative measures were created without City Council or staff input.
CITE
June 21, 2022 City Council Meeting 2
Background - Continued
• On December 21, 2021 Study Session, the City Council formed an ad-hoc subcommittee, consisting of Councilmembers Bolton, Kalmick and Peterson, to further assess, research and present a balanced cannabis regulatory framework for the Council's consideration.
• On February 15, 2022 Study Session, the Subcommittee presented the preliminary framework to the City Council.
• On March 1, 2022, the City Council voted to place a measure on the 2022 Primary Election ballot, Measure A: Cannabis Business Tax Measure, asking voters whether to adopt a special tax levied on cannabis retail and non-retail businesses if they were to be permitted.
HU
ON BEACH
June 21, 2022 City Council Meeting 3
Background - Continued
The City Council directed staff and the Subcommittee members to discuss the implications of various unresolved policy and regulatory matters associated with cannabis and report back to the City Council.
The City has solicited input from residents, businesses, and community stakeholders on the proposed regulatory framework through a community forum held on June 9, 2022 and by accepting written comments via email and the City website. • Email: [email protected]
• Website: www.huntingtonbeachca.gov/cannabis
City staff is presenting the draft regulatory ordinance and zoning text amendments for the City Council's further direction.
TON BEA
CH
June 21, 2022 City Council Meeting 4
COUNTY CALED
Background - Continued
MEASURE A:
• YES • NO
Cannabis Business Tax
• Retail tax: up to 6%
• Non-retail tax: up to 1% 35.4%
• Special Tax with revenues being 64.6%
restricted to Police and Homeless &
Behavioral Services
• 100% cost recovery on city expenses
through fees, approved by the City As of 6/20/2022
Council via resolution.
June 7, 2022 Primary Election - HB Voters
IGTON BEACH
June 21, 2022 City Council Meeting 5
ORP
Cannabis laws adopted by Voters and Council
City staff is recommending that the City:
• Place two ballot measures on the November 2022 General Election asking voters whether the City should allow and regulate retail and non-retail cannabis businesses; and if allowed, impose local excise taxes on such commercial activities as General Tax.
Extend to voters authority as to whether and how commercial cannabis activities are permitted.
* Maintain the City Council's ability to develop policy positions while allowing timely flexibility to respond to the ever-evolving State's laws and market condition without necessitating the delay and expense of conducting a municipal election. * Cannabis Business Tax measure will be similar to the Measure A:
> Up to 6% on the gross receipts of retailers and up to 1% to non-retailers but as > General Tax, with proceeds going to the General Fund for general municipal rINGTON services.
June 21, 2022 City Council Meeting 6
, CA
Cannabis Regulations adopted by Council resolution
The City will develop an administrative regulation that specifies and governs:
* Application and renewal procedure
* Pre-operational requirements and operational standards including security, fire safety, and code enforcement related requirements Other administrative procedures necessary to carry out the purpose of the regulatory ordinance and zoning code.
Op TON BEACH
June 21, 2022 City Council Meeting 7
Key Features of Cannabis Regulatory Framework
**IMPORTANT: These key features of working draft are based on the Subcommittee's recommendations and subject to change**
Cannabis Industry Types
PERMITTED PROHIBITED
• Retailers - Storefront dispensaries • Sales on vehicles/mobile stores, kiosk, or (w/delivery) temporary structures
• Retailers - Non-storefront, delivery- • Sale by vending machine only facilities
• Non-Retailers - Indoor Cultivation • Outside cultivation • Non-Retailers - Manufacturing • microbusinesses
• Non-Retailers - Testing Labs • Cannabis events/event organizers • Non-Retailers - Distribution
TIGTON BEACH
June 21, 2022 City Council Meeting 8
Key Features of Cannabis Regulatory Framework
Permitted Cannabis Business Types in the Supply Chain
X MICROBUSINESS
A combination of these types
of business at one location
X EVENT ORGANIZERS
Indoor only TESTING LAB Holding an event where
cannabis will be sold
TESTING LAB
CULTIVATOR
MANUFACTURER
DISTRIBUTOR
1/
RETAIL CONSUMER
Key Features of Cannabis Regulatory Framework
Number of Permits:
• Retailers up to 10 permits
• Non-retailers controlled by zoning restrictions without a cap > A separate permit will be required for each type of commercial cannabis activity. > Limit 1 license type per owner (e.g. 1 owner can apply for 1 retailer and 1 manufacturer permit)
> No more than 1 application per property, per license type > A permit will be valid for 1 year from the date of issuance and expires unless renewed annually.
> A no-warehousing provision, requiring that permittee must begin operation within 1 year after permit is granted, otherwise the license will be revoked. > Non-transferable to others in 3 years but transferees must submit the same permit application information to the City and pay applicable fees.
June 21, 2022 City Council Meeting 10
Key Features of Cannabis Regulatory Framework
Zones & Buffer Restrictions
Retail
Commercial Locations
• Retailers
• Storefront dispensaries: allowed in the
Commercial, Specific Plan Areas, &
Industrial Zone with buffer restrictions
• Non-storefront/delivery-only retailers can
locate in the Industrial Zone with buffers
• Exclude Downtown (SP5) and Sunset
Beach Specific Plan (SP13) Commercial General - 183 properties Commercial Office - 11 properties
Commercial Vetoe - 24 properties
• Exclude Coastal Overlay Zone
one tens 203 omorrie
600! from Grade Kis Schook
1000 from Grade 6-12 Schools
500' from Parks
from Commercial Day Care
600* from Youth Centers
TON BEACH
June 21, 2022 City Council Meeting 11
COUNTI
Key Features of Cannabis Regulatory Framework
Zones & Buffer Restrictions
• Retailers - Continued Retail
Commercial Locations
• Permitted in multistore front buildings
• No buffer requirement between shops
• Established businesses will be
grandfathered to continue operation even
if a new sensitive receptor opens within
existing buffers
• Buffer Distance:
> 1,000 ft. from high & middle schools; and
Commercial General - 183 properties
Commercial Office - 11 properties
> 600 ft. from K-5 schools (inclusive of all
Commercial Vestor - 24 properties
Specife Plan Commercis Gener.
canaled Ates. 25 conte
public, private, and charter schools); and
0 000000. 203 orole
600* from Grade K-5 Schools
> 600 ft. from parks, licensed commercial 1000* from Grade 6-12 Schools 600* from Parks
600° from Commercial Day Care
daycare centers, and youth centers. 600' from Youth Centers June 21, 2022 City Council Meeting 12
Key Features of Cannabis Regulatory Framework
Zones & Buffer Restrictions
Non-Retail
• Non-Retailers Industrial Locations
• Allowed in the Industrial Zone with buffer
restrictions that are same as retailers.
> 1,000 ft. from high & middle schools;
> 600 ft. from K-5 schools; and
> 600 ft. from parks, licensed
commercial daycare centers, and
youth centers.
AU STON
BEACH
June 21, 2022 City Council Meeting 13
Key Features of Cannabis Regulatory Framework
Permit Application and Selection Process:
> Merit-based (RFQ/RFA) application process to identify highest quality operators and make the permitting process efficient and streamlined.
STEP 1 2 3
PRE-APPLICATION APPLICATION SITE PLAN REVIEW
SCREENING REVIEW AND INSPECTIONS
This review is required to Applicants on the Eligibility Applicants must meet all fire, determine if applicants List are evaluated by a set planning and building meet minimum of criteria and meet requirements and pass all requirements set by the additional requirements inspections before final City. and must be above a permits/certificates of occupancy certain score (e.g. 70- are granted. A State cannabis
80%). license and HB business license
will be required.
Key Features of Cannabis Regulatory Framework
Permit Application and Selection Process:
STEP 1 to screen applicants for Eligibility List:
• Complete application with applicable fees paid to the City on time • Sworn affidavit that the proposed location meets the zoning criteria • Proof of ownership or control of the site upon which the cannabis business is to operate
• Proof of having at least 4 current permits or licenses in CA, one of which must be retail if applying for retail permits
• Refundable security deposit of a fixed amount set by the Council (e.g. $250K) • Proof of having an identified local philanthropy partner that benefits the City • No past violations
TON BEACH
June 21, 2022 City Council Meeting 15
Key Features of Cannabis Regulatory Framework
Permit Application and Selection Process:
STEP 2 to evaluate applications on the Eligibility List based on a set of evaluation criteria including:
• Ownership structure
• Owner qualifications including prior successful experience • Capitalization plan
• Business and Operation plan that may include employee training, standard operating procedures, ordering systems, etc.
• Traffic/Circulation/Parking Plan
• Safety and Security plan for the Commercial Cannabis Facility • Labor Peace Agreement
• Community Benefit Plan
• Local Hire/Sourcing programs
• Other criteria established by the City's Commercial Cannabis Regulations.
NGTON
June 21, 2022 City Council Meeting 16
Key Features of Cannabis Regulatory Framework
SECURITY MEASURE AND OPERATIONAL REQUIREMENTS
L2 21-
City
24/7 Video Extensive No Customer Comprehensive
personnel
security monitoring background consumption check-in state and local may access
guards on inside & checks for allowed and age permitting surveillance
the outside of owners & onsite or near verification process (21+) videos at any
premises building employees premises
time
June 21, 2022 City Council Meeting 17
Key Features of Cannabis Regulatory Framework
FIRE SAFETY REQUIREMENTS
• HBFD inspection required prior to occupancy
requirement.
• Commercial cannabis facilities must submit plans
demonstrating compliance with CA Fire Code,
identify any hazardous processes, and fire
protection systems.
Commercial cannabis facilities are subject to
routine fire and life safety inspections at the
frequency identified in the HBFD's Community Risk
Assessment.
STON BEACH
June 21, 2022 City Council Meeting 18
Key Features of Cannabis Regulatory Framework
CODE ENFORCEMENT
• All owners/operators must remedy any expired building permits for the subject tenant space before being in operation.
• Permittees must carry and display a copy of the issued permits for public view. • Refrain from displaying cannabis products or graphics to be visible from the exterior. • The City shall board any doors and windows associated with illegal cannabis businesses.
• The City may shut off the electric or water service to businesses in violation, in addition to criminal and administrative penalties.
OF ON BEACH
June 21, 2022 City Council Meeting 19
Additional Community Feedback
I. Medicinal cannabis businesses and customers:
a. Allow medicinal cannabis sales to medical patients under 21(18+ with a valid medical card and ID) similar to the State; and/or b. Differentiate tax rates and apply a lower tax rate for medicinal cannabis products than adult-use, recreational cannabis sales; and/or c. Permit cannabis businesses to donate medical products to veterans per SB34.
Il. Operation Hours:
> Extend the operation hours of storefront retailers from 6am to 10pm following the State requirement. This will be consistent with retail deliveries.
GON BEACH
June 21, 2022 City Council Meeting 21
Additional Community Feedback
Ill. Buffer measurements:
a. From property line to property line, instead of the occupied premises to the property line; or
b. From premises to premises.
IV. Pre-application requirement to have at least 4 local permits or State licenses, one of which must be retail for retailers for retail applicants:
> Consider the number of required permits to a lower threshold or alternatives to measure applicants' qualification such as years of operating successful businesses.
NOTON BEACH
June 21, 2022 City Council Meeting 22
CALIFORNIA
COUNTY
Additional Community Feedback
V. Local residency requirement and/or preference:
Support local residents and business owners by adding the following components:
a. Requiring that business owners) have been Huntington Beach residents for at least 3 years and/or at least 51% of their employees are residents; and/or
b. Allocating 2 permits out of total 10 permits or allow 2 additional permits (total of 12) to "Locals only-Equity" businesses that get processed after the first ten and lower the entry points/less restrictive requirements. (OTON BEACH BEA
June 21, 2022 City Council Meeting 23
Additional Community Feedback
VI. Location/Property Requirement:
Consider not requiring a proof of ownership or site control of a property > It could lower entry barriers for small businesses and widen the application pool
> It may create a situation where applicants go through vigorous application process but cannot open a business due to lack of the viable property in areas zoned for cannabis commercial activity within the City limit.
ON
BEACH
June 21, 2022 City Council Meeting 24
Recommended Actions:
A) Direct staff to prepare and return to the City Council to adopt a resolution placing a City-sponsored ballot measure on the November 8, 2022 General Election, asking voters if the City should allow and regulate cannabis retailers and non-retailers for both medical and recreational to operate in areas zoned for cannabis commercial activity within Huntington Beach; and
B) Direct staff to prepare and return to the City Council regulatory and zoning ordinances regarding commercial cannabis activities for City Council adoption and the City's Commercial Cannabis Regulations to be adopted by Council resolution; and
C) Direct staff to prepare and return to the City Council to adopt a resolution placing a City-sponsored cannabis tax measure on the November 8, 2022 General Election ballot as a General Tax.
June 21, 2022 City Council Meeting 25
OL COUL CLIE
QUESTIONS?
COUNTY CALFON