CITY OF
LONG
Department of Financial Management
411 West Ocean Boulevard, 6th Floor
Long Beach, CA 90802
April 5, 2022
HONORABLE MAYOR AND CITY COUNCIL
City of Long Beach
California
RECOMMENDATION:
62 70- 25
H-24
Receive the supporting documentation into the record, conclude the hearing, and adopt the hearing officer's recommendation to revoke business license number BU21903666 issued to SOCAL Equity Holdings, LLC, located at 214-216 Atlantic Avenue, Long Beach. (District 1)
DISCUSSION
Attached is Hearing Officer Ashleigh N. Stone, Esq.'s written report regarding the appeal of the business license revocation for SOCAL Equity Holdings, LLC. Hearing Officer Stone recommends the revocation of business license BU21903666 that was issued to SOCAL Equity Holdings, LLC, located at 214-216 Atlantic Avenue, Long Beach, for commercial/industrial space rental.
Below is the chronological order of events leading up to the hearing officer's decision:
• On August 18, 2021, a business license revocation hearing was conducted in compliance with Long Beach Municipal Code (LBMC) Section 3.80.429.1. • On September 15, 2021, the hearing officer recommended the Director of Financial Management revoke business license number BU21903666 (Attachment A). • On October 6, 2021, the Department of Financial Management revoked the commercial/industrial space rental business license issued to SOCAL Equity Holdings, LLC, located at 214-216 Atlantic Avenue, Long Beach (Attachment B), due to failure to comply with applicable laws and regulations pursuant to LBMC Sections 5.90.030, 5.92.210, and 5.92.1420.
• On October 14, 2021, the licensee submitted its written request for an appeal (Attachment C). Pursuant to LBMC Section 3.80.429.5, a licensee can appeal the revocation of a business license to the City Council.
• On December 7, 2021, the City Council referred the appeal of the business license revocation for SOCAL Equity Holdings, LLC, to a hearing officer.
HONORABLE MAYOR AND CITY
COUNCIL April 5, 2022
• On February 9, 2022, the revocation appeal hearing was held. The hearing officer that was assigned by the City Clerk's Office to hear the matter was Ashleigh N.
Stone, Esq.
• On February 28, 2022, the hearing officer recommended that the business license issued to SOCAL Equity Holdings, LLC, should be revoked due to violations of LBMC Section 5.92.210 (Attachment D).
LBMC Section 2.93.050(A) requires that the City Council set a time for a hearing to review and consider the hearing officer's report and recommendation. After review of the hearing officer's report, the City Council may adopt, reject, or modify the recommended decision.
This matter was reviewed by Deputy City Attorney Arturo D. Sanchez on March 10, 2022.
TIMING CONSIDERATIONS
The hearing date of April 5, 2022, has been posted at the business location, and the property owner has been notified by mail.
FISCAL IMPACT
There is no fiscal or local job impact associated with this item.
SUGGESTED ACTION:
Approve recommendation.
Respectfully submitted,
/<w_ R+
KEVIN RIPER
DIRECTOR OF FINANCIAL MANAGEMENT
ATTACHMENTS: A..:..ORIGINAL HEARING OFFICER REPORT
8-REVOCATION LETTER FROM CITY
C -APPEAL LETTER FROM BUSINESS OWNER
D -APPEAL HEARING OFFICER REPORT
APPROVED:
THOMAS B. MODICA
CITY MANAGER
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24 A D1\:IINISTRATIVE l lEARING
CITY OF LO'.'iG BEACH
ATTACHMENT A
ADfl.•1!N!STRAI !VI•: III•:1\RINC, FOR RECOMMENDATION ANU flNDINGS RUSlNESS l .lCENSE NUMBER
BlJ2 l 90J666 ISSlJI•:D 10 SOCIAL . ! !EARING DATE : 8/l 8/21 1-: () I J I TY HO I. I) l N (j S. l. I. C J\ T
21 11-716 /\TLANTIC AVENUE TO ADMIN HF/\RIN(,
SllOW CAL SE \,\11 I Y ns UCf:NSE CffffCER l,,1\RR Y MINSKY SHOUI .D NOT Hh RFVOKEI)
PURSUANT TO I.ONC, BEACII
Tv1UNICIPJ\L CODE CHAPTER
'.1.80.il.29.1 FOR ALLOWINC;
UNLICENSED Ci\NN/\RIS
ACTIVITIES TO OCClJR AT
214-21(, ;\TLANTIC AVI·:NUI: IN
VIIOLATION OF LONG BEACI I
rv1lJNIC!PAL COIW Cl IAPTFR
5 <J2,210
I. INTIH)DUCTION A~I> POSITIONS OF THE PARTIES
Thi;;; maltcr cami.: on for h~aring remotely vrn the \·'A:bEx platform 011 i\11p,11st 18, 2021 at 9:JO a.m. The I lcarinf' ,,,,•as ctmdt1clcd by /\drninistrative I !caring Officer Lany \-1111sky, assig111.:d 10 this matter by the CITY OF LONG Hl-:/\CH (City) to liL:~ir lhl': ti111,,:ly appl~al filed by i\pp~:llan1 H)1 JITY IIOLDlN( iS, I.LC HEARll'\G OFrlCER'<:; RFCOM:\IF.\IIM.TIOI\ A~I> Fl~Dl1'.CS 2 4
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(Appdhrnt) relative ID tlic City's dcc1s1011 lo revoke Appellant's Crty Commercial/ I 11dustrial Space Rental Business License Number BlJ21903(J()6 which enabled Appcllan! lo upc, ale a m>1H.:;11rnabis-related busine::,;s al 214-2 l 5 Atlantic Avenue, Lo11g Beach, Cahl"omia, 90802 (Prope1ty). The City's decision tn revoke Appel I ant\ ( 'omm<..:n:.ial/lndustrial I ,iccnse was predicated on its conclusion that 1\ppellant had been cnga!!tllg i11 un;111thoril(.:d, 11ori-licc11scd cannabis activity al l hat Property. ( Sec: Ci ly Fx h1 bi ts al pages 12-l 7.) The C1ty nnt1ficd 1\ppellant ofits intent to hold this hearing by lcncr dated t\fay l 8, 7071 and thereafter, as a result of Appellant's request for a ctmli11uancc of said hc-nring, by lc1tc1 dated .l1ily 26, 2021 (St:c· City Exhibits al paEcs 4 and :5.) The City contends Appellant was engaging in unlawful cannabis-related activilv at the Prnpe11y in violation of the City·s Municipal Code. r-..fore specifically. 1hi.: City contends .. i11lcr alia. that 011 lkcc111bcr I ?020, 1\ppclla111 was found to hnve been using the Prope11y to store cannabis at the Prope11y and/or use the Property as part of Appellant's delivery operations and that its cannabis opc,ntion.s \vvrc-, throu?,h it:::- µcr::-urrnd, ;,;renting a public nuisance Appclb111 co11lc11ds: (a) i1 had a Slalc-issucd lict:11s.c to distrihutc cannahrs; (b) c;-11111abis \.vas 1101 fo1J11d by Ilic City i11.sp<:ctur\ inside the Prope11y m anv point Jurm.i; !h-: City 1!1::;pcctor's visit w the Propi..:rty; ~111d. (c) ;rs ~ulmit1(:d in i\ppellnn1',, Closinf, Statements. It 1s their position tlrnt 1t 1s not 1llcral to have its cmmab1s delivery a1r,e11ts/cmplnyccs use ihe Properly 1o rest, cnJoy meal or rest breaks or 2 HEARING OFFICER'S RECOMMENDATI0'.'1 A1'D FINDl1'GS
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IL SlJ1\·J1\·fARY OF RELEVANT EVIDENCE
A. DOCll\lENTARV EVIDENCE
I. The ( 'itv's Exhibits:
Tile ( 'ily m!roduced a series or documents consisting or various letters, City business. licensing records, am! va1ious Jm:.rnm.:nb w1<l photographs p1qKm:d or scc1m.:d hy the ( 'ity's Busmcss I ,icxnsinp Department and/or City Hus111css Inspector, Ms. Lori Voss ( Voss). These documents vvcre number from 00 l through 071.; all vvt:1c au111ittcd without objcl'.lirn1. An adui1io11al docurnc111, an e-mail from Voss dated D1:ccmbcr 2, 2020 cons1i11Jti11g Voss's inve_;;.tigativc adivitie:-,, and observations of the Properly, bcimng C!ly Fxhib1t PH!'.C 1111111hcr 07.1 ( 12/J. cm ail) ,vas also admitted dming the ltca1i11g.
2. A ppc-llant's Exhibits:
Altl1ough Appdhmt wa~ .spccilically advised of his nght and given the opportunity to present exhibits during the hearing, Appellant offered no exhibits.
However. atlached In its pos!-hcari11g Closing Statc111c11I (Stakrncnt), Appellant attached various documents. Though received after the cl osc of testimony, said documents were considered by this I !caring Officer.
B. TESTll\10NY
Following !In; p1csc11{aliuu ur' ils Opt:11i1Jg Stakrnent. the City of'fi.::rcd unly the testimony of Voss and /\ppdlm11 offered only its agent, \!tr. Jorge I.nrio~ J
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24 (Larios) No other witness tcst11nony \Vas presented Lanos was the /\ppcllant s sole representative at the I leanng: his name 1s hsted a~ the aulhor of Appellant s S1atcmcn1
Aided by her fik aml City Jrn.:.umcnts, Voss lcstificJ lo th:: follm-\>i11g. City ri.:crnds rcnect Appellant has but a singk City business. license, tliat being, a Commercial/lndustnal Space Rental Business license hearing City License Nmnbi:r Bl.121903()() I liat liccnsl'. pc1111it1cd Appcllanl to conduct only comnH.:n:ial or industrial activities on the Properly. Appdla11t h,b 110 cannabis- rdatcd City licclls(: Voss kstificd I ,arins is :issocialed wilh 111111H.:rn11s cannabis busirn:sscs cnlllics/curporat1ons 111 his tcstimo11y and Stalc111c11t I .arios admits ownership in various cannab1s-relatcd busmcsscs. al kasl oHc ol' \Vl11eli mvolvcd 1bc delivery or cannabis with a State license.
Voss kstiricd. ,ts co11rinm:d hy ht:.:r l Ii:< c11wil thai i11 h1k November 2020, Voss h~:;))lJl umdticl 111~'. smvcil hmc.: of 1 Ii~ 1.>rnpcr ty as a result of a citizcu complaint. Voss h.~amed from the complarniny Citizen (C1l1zc11) tha1 persons wen:
cnlcrillg and kavi11g tli10u\;li the rcaf or the Prope1iy at all hours of thi.: day I hi;:
Citizen ·s description of the problems SlWJ'Cs!cd In Voss that t licre wa:-;, 1i-; sht: sinks in liL:1 I lil L:111ail, illegal 11tarij11ana busrncss opcrntin;1• ,it the Properly·· (St:L:· Cit} Exhibits at 073)
During her surveillance, Voss testified she observed "cvcrnl white vans 4 IIFAl{INC (H I1ICl'.I{'~ IU:COi\li\H'.NJ.>\TIO'I Al'ID Fl1'D11"G~ j
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parked in a parki111i lo11ocatcd adjacent lo the rear or the Property. (See infra:
while vans were observed and photographed on December I. 2020 dcpit:ting :-i:tcablL: q11an11I1cs or cannabis and cannabis-related item:'> in 1hc cargo spact ol' \Vhit<.: vans.) In his Statement, Larios admits 10 having 'pwducl i11 :--.aid licc11scd vans
Voss testified th~1t the pa1king lot wa'i owned by Appellant In i\ppcllant·s Statc:rnrnC I ,arios admit::,; he \vas a member of a social bike club ,vhich docs use the adjacent parking lot for social events and had 1ect:11lly (some timi: prior lo December I, 2020) been i.:nga~~cd in au activity rcsultinii m complaints from neighbor::- due to the loudness of1hc mu:-.ic comin1.1. from lhe event \:\/hite vans were seen parked 1n this lot both during VDss\; Novcmbi.:1 su1vi..:illa11cz: and during her Dz.:ccmlH.:r l, :w:>.n 111spcctlon of the Property
Following her surveillance on December I, 2020, Voss, acrornpuJ1iz.:J by City Code l•:nfr,rccmc111 l11spec1ur Kay Barajas (md I-in.: l11spc1..:tor Jolin l·ort. (kam), conducted an in~pccrioia of Ilic Pwpc11y. Appcllant ':-, propi.:rly ,vas
1.111:ivailahlc fnr in-,pcction ,vhcn the Team mTivt~d Voss testified lo maklllf'. cffnrls to have I .arios make the Property opi.:n for inspc<:tio11: the I cmn llcvcr J~aincd access lu the Property dircdly tlm)IJgh 1.ario-,
TlH::rc is no dispuiC th.11 Vo~,s and I .ario:, miked on the phone 1rn m uliipk oci..:as1ons on December l, ?.020. /\ccord111g to Voss. dtm111•, one such convcrsatwn Larios admitted to operating a cannabis dell very business out of the Property, a 5 IIF.ARl~G O~'FICFWS IU:C0,\1,\H'1'D.\Tl0N .\.,\'D Fll\'IHNCS 2 4
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11 conlc11l1011 Larios disputed 1hw11J1 li his direct i:xam1nation. The: Record 1c!kc1s 1 .. anos agnx.·d to make the Propc1ty opc:11 i:m<l availahk lo Voss fnr her to mspect thL: Prnpcrty in Lhc afternoon Based rn1 ~aid representation, the Team left the Property to rc1u111 later that day. Soon after thL: I L:am lcl't. Voss \Vas notilied that boxes were being taken 011t of the Prope1iy and moved into vans located 111 the adj;1ccn! parkrng lol. /\s a re-..ult of that 11oli l'ic;1tion, the TL':arn rdurt1<..::tl to t!tc Propcr1y at approximately 1.:10 pm 011 Dc<:cmber 1, 2020 and \vit11L:sscd scv,;,;ral men carcying bo:w:-. oul of Ilic Property and pla<.:ing thL:111 i1110 \vhiti.: vans located in the adjacent park mg lot. lns.pcctiou of the boxcs, depicted m the Team's pliotoi•.raphs (City Exhil>ih .ii par.es o:-;:).()7)) revealed the boxes contained c;-innahis and cannabis paraphcrnalw .. The white vans parked in the adjacent parki1111• lot were also inspected and the cargtl spaces of lhc vans were ti.,trnd to contain larµc amrnmls of cannabis and cannabis-related items Voss and Team member Fort liad p1cvioi1sly rnt:t rn1c nf the men movmt•. Ilic boxes n1it of the Property and knew lti11111.> be working for l.arios 1\ccord1111~ In Voss. thJ.t man advised lier thal. (I) the men mnvmr the bo,cs had bct.·11 in::-..lrncted by Larios tn quickly gel all cannabis and related product out uf the Prnpcriy and mto the \vhitc vans, and (2) Ilia! Larios was opcra1i11t•. a c;11111abis-relntcd b11sim:ss at the Property.
2. Evidence l'n'.'s~nted hv Larios:
f .a1 ios admitted lie owrH.:d or \\·as one of the pnncipal owners of several (1
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28 cannabis-1dakd b11si11cssc:,;, incl11di111~ a cannabis delivery company. I le aJrnittcd he and otln.:rs used cannabis withm the Propct1y ,md that he owned variot1s devices used in the cannabi.-.. bu~incs:,;. I fl: admitted ownership of the strnfoers and scale~ along with 1he rcmn:111ts of cannabis flowers found in the Property which \ven.:
dcpic!cd in the Team's photographs. (Sec: City Lxhibib al pages 051-057, (l:"9- 7~ ) \Vhilc Larios admitted he and his crnployccs/agcnls did partake in the use of cannabis 011 Ilic property. he denied Voss's claim that he: had admitkd lo Voss tha1 he/Appellant was opcrntrng a cannabis delivery busi11c:-..s ottl or thc Properly, I ,,mos st.n.:sscd Voss·s admission that :-.he/the Tcarn did not find any ac111al carnrnlns inside the Propc1iy dm i11g Voss ·s inspi.x:tion other lhan the rcw flakes depicted in tilt: pliolns (St:c: City Exhibits at page 0(10.) Lmios adlllittcd i11 liis Stalc111c111 tlial his agents/workers from om: of lii:,/Appclla11l '.s busi11i:sscs, Daze/GLD Delivery, Inc, a State-licensed. slnlcwidc cannabis delivery companv, did use the Property for restroom, resi, and mcal bn~aks. Daze p1rnlucts wen: 1'01111d 011 December I, ?070 in tilt' v,,hitc van~ parked in rhi: adjacent parking loL Ill. STATEMENT OF JSSl IE
At times relevant herein, did Appellant u!ilizi: its 11011-cannabis, Ctm1111c1 cial/l11dt1slrial busin...:ss lici.:nsc to engage in or operate cannabis n .. datc<l activities, including the tkliv<.:ry ur ca1111abis p10d11c1s 1,,vi1lii11 tltc ( 'ily ol' Long lkacli at tl1c [)1opcrly a11d did said co11dm:! collslil11tc a violation ofAppdla11t\. commcrcial/indus.trinl license and the City\, t'vlunicipal Code: entitling lhi.:: City to 7 IIEARll\G OFFICER'S RECOMMENDATION AND FINDINGS
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revoke J\ppdlan1·s business commercial/mdustnal l1ccnse'? IV. DISCl.lSSIO:\
Appellant appears 10 argut: thal ils aclivitics or 11si111~ the Property for rest, meal, and restroom breaks for its employccs/agenls co11stil11lcs a legitimate and proper use of its City commercial/industrial license. J\ppdl:rnt asserts that their drivi..:r:-; ,ve1<.: 1111..:rcly stopping at the Property tu i..:ngagc i11 mx:cssary breaks in crnmcct1011 with their cannabis ddivt:ry business ,1 business authorized by its State lice11sc\ ,me! lhcrcf'ore their actions did not violalL: the krrns and conditions or its City license. ,1\ppc!lant also points out that 1he ( 'ity failed to establish the~ cxi~te111.:..:
of cannabis \Vithin its Property dming Voss's December I, 2020 111spectil)n and he-nee till: City cam101 leg1l1mately conclude /\ppcllant used thL' Prnpcrty lo engage ill ca1111:ib1:::-rcla1cd activity. 13ascd thereon, Appellant com:l11dcs the Cily\ dccisio11 to revoke ils liccn:-::.c \Vas improper and must be reversed. Appellant's conclusio11/posit1011 1s wirhlmt merit.
The clear weight of the evidence establishes that /\ppcllant was 111 foci using the Prnpc1iy In m least store cannabis. for kmporary or longer time periods and lo allow its delivery personnel to use :=..aid Propc1ty at all timi;s or the dav as a place where ib drivers cnuld eat, 1\:lax, and usc IL'slrnom facilities The f:icl !hat ,1\ppdlant hacl/h.as rt State license to opcrak a siatL:wide c;,m11abis delivery busrncss docs nrn prcc111pt the Ci1y·s slatnlmy n.:slrictions for npcra11111: c,11111,1h1s-rL:lated activ1t1cs \vithin its 1unsdict1011, nor docs 1t proh1b1t the City from requiring :ill 8 IH:ARI\IG 0Fl•IO:ICS 1u:co,,,.,1Ei\l>,\'I I0N Ai\l) l•INl>l:''IGS 2 7
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busmcsscs operating ,1i·ithin the City and c11gagi11g i11 c;:1111iabi~.-rt:lall':d adivity t'rorn satisfying i1s ca11nah1s-rclatcd licensing n:quircmcnts as set forth in the Cit)· 's fv111nic.:ipal Code 1\ppcllant was using the Prnperty as part orthc stream nf <.:1)rnmcrcc or its <.:mmabis-related businesses.
V. RECOM1\-IENDATIO:\ AND FINDl:"{GS
A. FINDINGS OF FACT:
I . .1\ppclla11t \Vas the licensed owner of'thc business located at 21,1-2 !<i !\tlanlic.: Ho11levard, Lo111~ Beach, Calikmm.l 90807.
1 !\1 times rdcva11t herein, the City had i:--.sucd /\ppdlanl a commcrcial/111dustrial license for the Prope1iy bearing Long Beach Business License Nurnhcr BlJ2 I 9036(i6.
3. Appellant and its owner( s:1 O\vn and operate various cannabis busincssc~,, 011c ofwhi<.:h is l)a/c/GU) lklivcry. Inc .. a cannabis delivery company
11. Appdla111 l1as no liu:11:-.c lluough th..: City ,Jllli1<Hizi11g it lo i.:llgagc in c,11mabis-rel,11l:d activ1l1cs at Ilic Property
5. On Dcccmhcr I, 2020, City inspcdors witnessed Appcllanfs agc11ts/<:mplnyccs trn11sporli11g c;m1rnbis and c,m11c1his-rclatcd prod11c1~ and other material from the Propaty and placinJ'. them into l\ppcllant\; wl1i1i..: vans pai k-:d in a par king lot c1djacc11t to the rca.1 tlf the Property. (J. Appellant's agents/employees, at the direction of !\ppcllant/Lanos, did ston.; cannabis within the Propcr1y and upon karning of the pending ')
HL\Rli\'G OFFICER'S RECOMME'.'IDATION ,\;',D FINDINGS
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27 h~arn 's inspection. did seek tu hidr.: the stor iug of said carn1abis p10ducl located in thr.: Pwperty frnm the City's ir1spcctors.
i .1\ ppclla11t 's clJ!cntsicmployccs adrn iHcd to City inspectors ihat l .arios:'/\ppellant \Va::-. operating a can11ahis-rdatcd business al/withi11 the Property.
8. Appellant did 11sc its Property for cannabis-r(:l:ncd bus1ni::s.s activity. 9 1\ppcllant was fully apprised or the City's intent to 1cvoh: Appclla111's license noted above anJ \\•3.:-propcrly affonkd due procc . ..;s relative to lite rnallc:1s add.ress<.:d lier<.:111.
I 0. To the extrnt :mv conclt1sio11 of law identified below constitutes a finding o!' fact, it i:-. !iL:td>y i11crnprnatcd
U. CONCLl ISIO:\S OF LA\\":
.1\ ppellant filed a timely appeal of the City's decision to revoke Appellant\ Busincss I ,icc-nsc Nw11 bcr BU2 I 1)03666
2. /\ppdl:-rnl wa,;; a11lhnri:1cd by said c0111111crci:ilh11d11slrial license In operate 11011 cannabis commercial or industrial activities on 1hc Pror~~rty 1 At times rckva11I ltcn.:in, /\ppcllanl OJH.:ratccliused 1ls l)rnp;;rly fur cannabi.;;-rcla1cd activities in vinla1ir111 nr LBtvlC :-.cction 5.<Jl 110 (,i\)(2). ,l_ /\1 time::;. relevant ltt.:reto, Appdlant pos.sc.s.s-:.d a State-i::-.sucd licc11.si.: tu .:; . At time::. rclcv:rnt hereto, t'\ppcllant dtd not possess any cannab1s-rdatcd Iii
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6. /\I times relevant hereto, Appellant \Vas using its commercial/111dustri;::il ln.:cns.c io operate ca1111abis-rclated busmess activitic:--. wi1hill thl: City i11 violation of the !.B1\·1C
7. The issuance of a cam1abis-n.:latcd license pcm1itting Appellant to operate a cannabis delivery business in !he Slak of California did not prevent the City from enforcing the provisions a11d rcslnctio11s imposed on /\ppcllant by its l\,•lU11ic1paJ Code and by Cal1fornin Business & Profossio11s Cmk scdi011 26200
8. To the extent any conclusion of fact idc11ti ficd almvc constitutes a co11clm,io11 of law said conclusion is hereby incorporated.
VI. CONCLCSIO~
Till.: Kccord here cstabhshes by a preponderance or the cvidcncl! that Appdlan1 used its City Business License: Nurnhcr BtI2 I 90J666 for opcrnling can11abi~-1dall!d adiv1l1es nut nl' 11-; Property. The City's deci:-ion to revoke /1, ppcllanl ·s commcrcial/ind11:::trinl nusinc-:--,s l .icl!nsc .N 11mht.:r IH P 1()016661::; upheld.
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L/\:R.RY MlNSK '{ •·
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HEARI~G OFFICER'S Rf.CO,\iMEI\UA'I IO~ Al'\O flli"I/OINCS '..?.
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ADfV11NISTtU\TIVI-: HEARINCi OFFIC!:I{
L/\RRY f'v11NSK Y, ES()., SBN 09()592
J\dmi11is1rnt1ve lieannu Officer
'I'.elephonc. (~()2) 4]5~7878
l--:icsm1ile· (''1(,2) ,L<~-3822
Email: larr)'(ti:1nii11skycsq.com
12 Ht:Al<INC ()lo~ I( ·~.!CS RF< '0\1 \IIINl>A'f IOI\ .\ ~D FJ~l)l'lj(;'-j
CITY OF
LONG
October 6, 2021
SOCAL Equity Holdings, LLC
214 Atlantic Avenue
Long Beach, CA 90802
ATTACHMENT B
Department of Financial Management
411 West Ocean Boulevard, 6th Floor
Long Beach, CA 90802
(562) 570-6211
RE: Notice of Business License Revocation for Business License Application BU21903666 Dear Sir or Madam:
Please be advised that business license BU21903666, issued to SOCAL Equity Holdings, Inc., located at 214- 216 Atlantic Avenue, Long Beach, CA 90802 has been revoked, pursuant to Long Beach Municipal Code ("LBMC") Section 3.80.429.1 (a), effective October 6, 2021. Pursuant to LBMC Section 3.80.429.5, you have 10 calendar days from the date of this letter to file an appeal of the revocation, otherwise the revocation will be final. Your appeal must be submitted no later than October 16, 2021.
To file the appeal, a request must be made in writing and must set forth the specific ground(s) on which the appeal is based and must be accompanied by a non-refundable cashier's check or money order, made payable to the City of Long Beach, in the amount of $1,471. The request for appeal must be mailed to the City of Long Beach Financial Management Department, Business License Division, Attn: Susan Gonzalez, 411 W. Ocean Boulevard 6th Floor, Long Beach, California, 90802.
Failure to cease operations at this location after October 16, 2021 shall constitute a criminal offense pursuant to LBMC Sections 3.80.429.1 (b) and 3.80.210. Pertinent sections of the LBMC are attached.
Should you have any questions, please contact Susan Gonzalez, Administrative Analyst, at (562) 570-6162 or by email at [email protected].
Sincerely,
Tara Mortensen
Recovery and Business Services Bureau Manager
CC: Art Sanchez, Deputy City Attorney
Council District
3.80.210 - License and tax payment required.
There are hereby imposed upon the businesses, trades, professions, callings and occupations specified in this Chapter license taxes in the amounts hereinafter prescribed. It shall be unlawful for any person to transact and carry on any business, trade, profession, calling or occupation in the City without first having procured a license from said City to do so and paying the tax hereinafter prescribed and without complying with any and all applicable provisions of this Code, and every person conducting any such business in the City shall be required to obtain a business license hereunder.
This Section shall not be construed to require any person to obtain a license prior to doing business within the City if such requirement conflicts with applicable statutes of the United States or of the State of California.
Any person who engages in any business for which a business license is required, shall be liable for the amount of all taxes and penalties applicable from the date of commencement of the business, whether or not such person would have qualified for such business license; however, such payment shall not create any right for the person to remain in business.
All payments of business license tax received by the City, irrespective of any designation to the contrary by the taxpayer, shall be credited and applied first to any penalties and tax due for prior years in which the tax was due but unpaid.
(Ord. C-7783 § 2, 2002: Ord. C-6259 § 1 (part), 1986)
3.80.429.1 - Suspension or revocation.
A. Whenever any person fails to comply with any provision of this Chapter pertaining to business license taxes or any rule or regulation adopted pursuant thereto or with any other provision or requirement of law, including, but not limited to, this Municipal Code and any grounds that would warrant the denial of initial issuance of a license hereunder, the Director of Financial Management, upon hearing, after giving such person ten (10) days' notice in writing specifying the time and place of hearing and requiring him or her to show cause why his or her license should not be revoked, may revoke or suspend any one (1) or more licenses held by such person. The notice shall be served in the same manner as notices of assessment are served under Section 3.80.444. The Director shall not issue a new license after the revocation of a license unless he or she is satisfied that the registrant will thereafter comply with the business license tax provisions of this Chapter and the rules and regulations adopted thereunder, and until the Director collects a fee, the amount of which shall be determined by Director in an amount to recover the actual costs of processing, in addition to any other taxes that may be required under the provisions of this Chapter.
B. Any person who engages in any business after the business license issued therefor has been suspended or revoked, and before such suspended license has been reinstated or a new license issued, shall be guilty of a misdemeanor.
(Ord. C-6259 § 1 (part), 1986)
3.80.429.5 - Appeal of license revocation.
Any licensee whose license is revoked under this Chapter shall have the right, within ten (10) days after the date of mailing of the written notice of revocation, to file a written appeal to the City Council. Such appeal shall set forth the specific ground or grounds on which it is based. The City Council shall hold a hearing on the appeal within thirty (30) days after its receipt by the City, or at a time thereafter agreed upon, and shall cause the appellant to be given at least ten (10) days' written notice of such hearing. At the hearing, the appellant or its authorized representative shall have the right to present evidence and a written or oral argument, or both, in support of its appeal. The determination of the City Council on the appeal shall be final.
(Ord. C-6259 § 1 (part), 1986)
10/14/21
Appeal: BU21903666 Business License Revocation
216AtlanticAve, Long Beach CA 90802
To the City of Long Beach,
Attachment C
I strongly believe that the revocation of my license at'216 Atlantic Ave, Long Beach is strictly based on unwarranted assumptions. There was no actual evidence or proof of any illegal or legal cannabis business conducted at the respective location and hearsay is not enough ta revoke the business license. There was no definitive evidence presented at the city hearing and detective Lori Voss stated on the record that she did not find any Cann 1 abis · products inside the
building, 216Atlantic. By law an adult use patient is able to possess up to 28 grams of cannabis if they are 21 and older.and no limits that exceeded this were found at the location. It is unwarranted to revoke the business license at 216 Atlantic Ave, when there was no Cannabis products found.
The city first claims that the business license was revol<ed for "engaging In unauthorized, non-licensed cannabis activi~y at the property". That is a false claim as there was no actual cannabis activity occurring at the facility. There was clearly no violation there, and the city is assuming the cannabis activity without any clear evidence.
Detective Voss also claims that activity was being conducted at the property due to the fact that employees of anqther entity would safely be able to use the restroom or have a lunch break at 216 Atlantic Ave. This is also a misunderstanding by Voss, a.s it is no different than employees stopping at the gas station, grocery stores, convenience stores to use the restroom in the city of Long Beach, except they fall into a more dangerous situation during those experiences as they leave the vehicle unsupervised, possibly leading to a c.ar robbery in sketchy locations. BCC Regulations Section 5311 (H) states that a transporter should not leave the vehicle unattended. BCC Regulations 5311 (K) also states that transporters may not stop between delivery unless It is for necessary fuel or rest, a lunch break Is a form of necessary rest for our employees.
Another claim that has not been backed by any evidence is the statement that vans were being filled with Inventory after the inspection attempt occurred. This is a statement that has no merit as there are no individuals who can testify and the claim Is simply hearsay. Relative to the van situation, Voss claims that an employee of Larios, said to her that Larios instructed him to move all product into the van and that Larios was running a delivery business from the property.
That Is not a true statement and the employee Is willing to testify that he did not state either of those statements to Lori Voss. There is no prior statement that would justify the validity of that statement. Voss also has. claimed that Larios has admitted that he operated the delivery service out of the property which ls not true. There are numerous claims by Voss about the business connected to the property that are without merit.
A statement in the hearing officer's revocations and findings also claims that a justification for the revocation of the business license is that Mr. Larios did not possess any cannabis related business license in the city of Long Beach, which is completely irrelevant to the situation. Flrstly, It was never proven that there was any type of cannabis activity at said locatlon as therefore the possession of a license in the City of Long Beach is Irrelevant to the situation.
Secondly, a statewide delivery license supersedes the jurisdiction of the city of long beach according to : Regulation 5416(d) which states that local control ls not absolute and while the city can regulate and even ban cannabis delivery businesses established within their local borders, the city cannot ban licensed businesses that are established in other cities or counties from delivering into the city's jurisdictions. It is also unlawful for cities to 'ban the applicable citizens within their borders from or~ering and receiving their delivery orders from state licensed delivery operators as long as they meet the qualifications to order such as age requirements.
Such an example can be demonstrated when the cities of Beverly Hills, Santa Cruz, Riverside sued the state for allowing statewide delivery within their borders, ultimately losing the court case against the BCC because cities cannot override the regulations set forth by the State. If the city does not outline these rules then the state laws apply and supersede the city guidelines.
A crucial assumption that the City of Long Beach does not understand is the relationship between my ownership of a licensed Cannabis license and my ownership of a business llcepse at 216 Atlantic Ave. Just because I am an owner of both does not mean that the two separate entities are operating together. I, owner of 216 Atlantic Ave allowed employees to safely use the restroom and enjoy their deserved lunch breaks, does not constitute that I, owner of Cannabis license allowed my employees to use the location for business acth(ity by.allowing them access t9 the restroom or to have a safe lunch while their transport fleet are not in danger. The two operations are not related in any manner, and it does not justify the city's assumptions that we conducted either legal or illegal activity at said location. Neither ever occurred nor can be proven by evidence to have occurred.
The City of Long Beach's core values are listed as Ethics, Intelligence and Respect and neither of the three have been displayed in their duties to justice and equality, a picture is being painted that is Inconclusive to my own ethics and there is an obvious mistake In the revocation of my license without· any clear evidence. The revocation of my business license is unwarranted and without evidence, and I will continue to seek justice for the situation that has without evidence or cause affected my livelihood.
Jorge Larios
Property Owner
216 Atlantia Ave Long Beach
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ATTACHMENT D
ADMINISTRATIVE HEARING FOR THE CITY OF LONG BEACH
ADMINISTRATIVE HEARING TO
SHOW CAUSE WHY BUSINESS
LICENSE NUMBER BU21903666
ISSUED TO SOCAL EQUITY
HOLDINGS, LLC SHOULD NOT
HA VE BEEN REVOKED PURSUANT
TO LONG BEACH MUNICIPAL CODE
§ 5.92.210.
I. Introduction
Business License #BU21903666
HEARING OFFICER'S
RECOMMENDATION AND FINDINGS
Hearing Date: February 9, 2022
Administrative Hearing Officer: Ashleigh N.
Stone
This matter came on a noticed hearing pursuant to Long Beach Municipal Code ("LBMC") § 3.80.429.5 before Administrative Hearing Officer Ashleigh N. Stone, Esq. on February 9, 2022, at 9:00 a.m. via Zoom for a Business License Revocation Appeal Hearing to show cause why Business License No. BU21801274 for business address 214-216 Atlantic A venue, Long Beach, CA 90802 (hereinafter "Property") issued SOCAL Equity Holdings, LLC (hereinafter "Appellant" or "SOCAL Equity Holdings") should not have been revoked at the Business License Revocation Administrative hearing held on August 18, 2022, based upon a violation ofLMBC § 5.92.210.
Mr. Jorge Larios appeared in pro per and on behalf of the business license holder SOC AL Equity Holdings, LLC and building owner of214-216 Atlantic Avenue, Long Beach, CA 90802. 1 HEARING OFFICER'S RECOMMENDATION AND FINDINGS
1 Deputy City Attorney Arturo D. Sanchez appeared on behalf of the City of Long Beach, 2 Department of Financial Management.
3 Additionally present were, Jorge Carillo, witness, Lori Voss, Business License Inspector 4 for the City of Long Beach Business License Department, Brian Tuliau, Acting Business Service 5 Officer for the City of Long Beach, Ramone Barajas, Code Enforcement for City of Long Beach, 6 Emily Armstrong, City of Long Beach Department of Financial Management. 7 II. Legal Authority for Hearing
8 The authority to conduct this hearing is found in Long Beach Municipal Code ("LBMC") 9 § 3.80.429.5, Appeal of license revocation, which states:
10 "Any licensee whose license is revoked under this Chapter shall have the right, within ten 11 (10) days after the date of mailing of the written notice ofrevocation, to file a written appeal to 12 the City Council. Such appeal shall set forth the specific ground or grounds on which it is based. 13 The City Council shall hold a hearing on the appeal within thirty (30) days after its receipt by the 14 City, or at a time thereafter agreed upon, and shall cause the appellant to be given at least ten 15 (10) days written notice of such hearing. At the hearing, the appellant or its authorized 16 representative shall have the right to present evidence and a written or oral argument, or both, in 17 support of its appeal. The determination of the City Council on the appeal shall be final." 18 III. January 28, 2022 Notice of February 9, 2022 Appeal Hearing 19 The City's case file includes a January 28, 2022 Notice of the February 9, 2020 appeal 20 hearing. (City's Ex. 1). Mr. Tara Mortensen stated she reviewed and signed the Appeal of 21 Revocation Hearing Letter dated January 28, 2022, on that same date. While the letter states 22 there are attachments, it appears such no documents referencing the applicable Long Beach 23 Municipal Code were attached. Once signed, Emily Armstrong stated she served the Notice 24 Letter and the City's case file via email to Mr. Larios on January 28, 2022. Mr. Armstrong stated 25 the "attachment" was the City's case file, which was provided to Mr. Larios. In that case file, 26 the LBMC referred to as City's Exhibits 12 to 18 were listed in the table of contents but were 27 omitted. However, in light of this notice issue, there was good cause to move forward. 28 Specifically, Mr. Larios was on notice of the basis of the revocation of his business license in the 2 HEARING OFFICER'S RECOMMENDATION AND FINDINGS
1 underly matter and related ruling and LMBC § 3.80.429.5 was cited to in the January 28, 2022, 2 Notice Letter, and no objection was made by Mr. Larios who was prepared to present his case 3 and witness.
4 5
IV. Summary of Evidence Presented by SOCAL Equity Holding, LLC
1. Summary of Testimony of Jorge Larios.
6 Mr. Jorge Larios owns the four-unit Property which has two commercial properties on 7 the first floor and two residential properties on the second floor. 8 On December 1, 2020, Mr. Larios received a call from Ms. Lori Voss, a business license 9 inspector for the City of Long beach, requesting to inspect the Property. He was at the gym in 10 Hermosa beach at the time. He needed some time to figure out how to give her access when 11 Mr. Carillo was working at another property. He made several attempts to get ahold of Mr. 12 Carillo but was having trouble reaching him for at least an hour. Mr. Larios testified once he 13 was able to get a hold of Mr. Carillo, he told him to clear out the space because they needed to 14 do an inspection. However, he later testified he told Mr. Carillo to go there, but since he was 15 there to clear out the space. He had a building permit to begin renovations at the Property. 16 He called Ms. Voss an hour after she had first called him, but was unable to reach her. 17 He testified that he was calling her to tell her he was on his way to the property and would be 18 there around 3 :00 pm.
19 Mr. Larios denied there was anyone in the building the morning of December 1, 2020. 20 Mr. Carillo testified there were no cannabis products inside the Property on December 1, 2020. 21 He denied storing any cannabis at the Property. The cannabis products were already in the van 22 as part of his cannabis delivery business.
23 Mr. Larios testified the only cannabis in the property was for personal, lawful use. 24 He arrived at the Property to show Ms. Voss and the other inspectors the property at 25 3 :00 pm, but no one was there. He testified he placed several calls to Ms. Voss, but wasn't able 26 to reach her. The vans were gone by that time.
27 Mr. Larios owns twelve corporations, and all mail goes to 216 Atlantic Avenue - the 28 Property.
3 HEARING OFFICER'S RECOMMENDATION AND FINDINGS
1 Mr. Larios is the owner of Daze, which has a California-issued license to deliver 2 cannabis throughout the State of California. He acquired Daze in April 2020. From April 2020 3 to December 2020, Daze employees used the Property an estimated three to four times for safe 4 meal and rest breaks. Starting in December 2020, it occurred on a weekly basis after it became 5 unsafe and untenable to use local grocery stores and gas stations for meal and rest breaks. The 6 drivers travel between Long Beach and Davis, California. The state delivery license requires 7 the delivery trucks to be parked in safe, private parking lots. 8 2. Summary of Testimony of Jorge Carillo.
9 Mr. Jorge Carillo has worked with Mr. Larios for more than ten years providing services 10 related to maintenance and construction. He performed maintenance for various properties 11 owned by Mr. Larios. 214-216 Atlantic is used as an office for SOCAL Equity Holdings, LLC 12 business. He's at 214-216 Atlantic nearly every day to use the restrooms, eat meals, and use it 13 as a meeting space on construction projects meeting with contractors and survey plans. They 14 also use the commercial space to store equipment for nearby construction projects and other 15 business files for SOCAL Equity Holdings, Inc.
16 On December 1, 2020, he was removing the items from the Property because they were 17 getting ready to start the demolition on that property. He does not recall the time he arrived on 18 that day and denied being there in the morning. He was there when she arrived in the 19 afternoon. He testified he observed paperwork in the boxes. He said the other boxes were 20 closed so he didn't know what was inside. They were loading the van to the left, but didn't 21 open the right van until they were instructed to do so by the inspectors. Mr. Carillo denied 22 loading the second van to the right. He didn't know what was in the second van. Mr. Carillo 23 stated he's the only employee that works for Mr. Larios to do this type of work. 24 He stated he was not the person identified by Ms. Voss as the man who was carrying 25 and dropped the box. Mr. Carillo testified it was another man named Anthony who was helping 26 him that day. A second man named Walter was helping him as well. Mr. Carillo didn't see 27 Anthony drop the box. He didn't know he dropped a box but knows the other person outside at 28 the time was Anthony.
4 HEARING OFFICER'S RECOMMENDATION AND FINDINGS
1 He testified the only cannabis he's seen at the commercial location was for personal use. 2 Mr. Larios called him on December 1, 2022 and told him to clear out the building, but 3 denied he was told to remove cannabis products. He arrived at the Property approximately 40 4 minutes later.
5 Mr. Carillo testified he hadn't yet packed up the table with the loose cannabis and scale. 6 He did previously observe other workers and contractors smoking cannabis at the 7 Property for personal use.
8 Mr. Carillo stated there was a cannabis odor in the building, but attributedit to probably 9 being caused by smoking cannabis based upon his prior observations of such personal use at 10 the Property.
11 Mr. Carillo testified he moved construction equipment in and out of the Property after 12 hours. The neighbors regularly called the cops and every time they went to the property after 13 hours and on weekends.
14 Mr. Carillo confirmed he met Ms. Voss at the inspection of the other business location 15 prior to the December 1, 2020 inspection.
16 3. Summary of Testimony of Lori Voss.
17 Ms. Voss has just over 10 years of experience as a business license inspector. She 18 conducted over 200 inspections for cannabis-related businesses. 19 In approximately mid-November 2019, she began her investigation of the Property after 20 receiving a complaint by an anonymous nearby residential neighbor of a cannabis business 21 being operated at the Property. Specifically, the complaining neighbor alleged after-hours 22 activity involving people, the movement of boxes, and parties taking place at the Property, 23 which was after City inspection hours. Ms. Voss checked the business license record for the 24 Property and determined there was no active cannabis business license for the Property. She 25 conducted four visual inspections to determine what business, if any, was being conducted out 26 of the Property during business hours. During her visual inspections, she did not see any illegal 27 cannabis business being conducted out the Property, but her inspections were limited to regular 28 business hours. Business being conducted after business hours can be an indication of an intent 5 HEARING OFFICER'S RECOMMENDATION AND FINDINGS
1 to conceal business conduct from city officials, who only work during regular business hours. 2 Additionally, she observed the building with vans and other cars going in and out from the 3 parking lot directly behind the Property. That parking lot is a separate address, but also owned 4 by SOCAL Equity Holdings, LLC. Based upon her experience, there was an indication there 5 was an illegal cannabis business being conducted out of the Property. From there, she set up a 6 team inspection of the Property for December 1, 2020. 7 A week prior to December 1, 2020, Ms. Voss met Mr. Jorge Carillo at a business license 8 inspection at another property where he was introduced as Mr. Larios' associate. 9 On December 1, 2020, Ms. Voss, John Fort, retired fire and arson inspector, and 10 Ramond Barajas, from code enforcement, went to inspect the Property. They first arrived at 11 11 :00 a.m. and were unable to gain access to the Property. She observed the front door was 12 dusty, had cobwebs, and hadn't been used in some time. They knocked on the back door, heard 13 people inside the property, but no one answered. Ms. Voss called Mr. Larios and informed him 14 of the complaint of the illegal operation and requested an inspection. He said he'd be at the 15 Property in an hour. They waited for an hour and fifteen minutes. She called him again and he 16 said he could not yet give them access because he didn't have the keys. He agreed to give them 17 access later that afternoon. There were two commercial vans parked at the parking lot behind 18 the Property and she observed they were both empty. While they were waiting two additional 19 neighbors approached Ms. Voss to complain about the Property. They thereafter left the 20 Property with the plan to return when Mr. Larios arrived to give them access. 21 While at another inspection location, Ms. Voss received a call from the original 22 complaining neighbor that items were quickly being removed from the Property. 23 At approximately 2:00 pm, Ms. Voss, Mr. Fort, and Mr. Barajas returned to the Property. 24 They went back and saw the vans had been loaded and contained cannabis products. 25 When they first pulled into the parking lot directly behind the Property she observed 26 three men actively working on loading the vans with boxes from the Property. The vans were in 27 the same location and both had their doors opened, indicating they both were being loaded. The 28 left van was only half full and the right van contained all the observed cannabis products. 6 BEARING OFFICER'S RECOMMENDATION AND FINDINGS
1 When she arrived, she immediately recognized Mr. Carillo carrying a box out of the 2 property in a hurried manner to load into the van to the left, which he dropped when he turned 3 and saw them pull into the parking lot behind the Property. When the box dropped packaged 4 cannabis products fell out of the box. Mr. Carillo then went behind the van to conceal himself. 5 Ms. Voss then saw two other men that came out of the Property. 6 She did a visual inspection of the van and observed 20 to 30 boxes, several of which 7 were open. She observed a box of marketing materials for Daze, one to two boxes of empty 8 cannabis packaging, a bulk package of unpackaged cannabis, and an estimated 2,000 packaged 9 and jarred cannabis products ready for sale for five to seven different cannabis companies. 10 Ms. Voss and the other inspectors went up to Mr. Carillo and introduced themselves and 11 asked to conduct an inspection of the Property.
12 She identified Mr. Carillo during the zoom hearing.
13 When they first entered the Property she first noticed a strong smell of cannabis. She 14 observed a table with loose cannabis along with a scale, which was evidence of cannabis 15 packaging being conducted at the Property. She also found flyers for the cannabis delivery 16 business.
17 Ms. Voss concluded that an illegal cannabis business was being operated out of the 18 business based upon the cannabis odor throughout both units of Property, which in her 19 experience was from stored cannabis product, and her observation of the cannabis products 20 being actively moved out of the Property. Based upon Ms. Voss' experience she's aware of the 21 difference between the smell of smoked cannabis and that of cannabis storage. 22 Prior to leaving the Property, she spoke with Mr. Carillo he told them he was instructed 23 by Mr. Larios to empty out the product as quickly as possible. The three men appeared nervous. 24 Mr. Larios didn't arrive at the property during their afternoon inspection. At first, he 25 denied it, but then stated he had a lot of outstanding cannabis business license applications so 26 he had to do what he needed to do while he was waiting. She understood this mean that he had 27 to make business whether or not the business was licensed. At the time, he had approximately 28 7
HEARING OFFICER'S RECOMMENDATION AND FINDINGS
1 20 pending cannabis business licenses. Since that time, four cannabis business licenses have 2 been approved for two different locations - one for cultivation and another for distribution. 3 Mr. Larios called Ms. Voss at around 5:30 pm that same day. She informed him she had 4 concluded there was an illegal cannabis business being operated out of the property. 5 Based upon the totality of the evidence available to them, all inspectors concluded there 6 was sufficient evidence to conclude an illegal cannabis operation was being conducted out of 7 the Property.
8 As of December 1, 2022, Ms. Voss was not aware of Mr. Larios' State of Califomia- 9 issued license to deliver cannabis products. The City of Long Beach does not regulate cannabis 10 delivery businesses, but instead, the City regulates physical locations within the City that have 11 a business operating out of that location. Regarding the State-wide license to deliver cannabis, 12 if you are delivering from the Property a cannabis business license would be required for that 13 location. It is not illegal for a cannabis delivery truck to stop at a gas station to refill their gas or 14 park at a store to get a meal or to use the restroom. However, an owner/occupier of a 15 commercial building must still need to obtain a cannabis business license to conduct lawful 16 business out of that location.
17 The amount of cannabis she observed in the van was over the legal limit pursuant to 18 Prop 65.
19 v. Summary of Relevant Evidence Introduced by The City 20 The City introduced into evidence its Case File, Exhibits 1 - 34 consisting of various 21 correspondence, business records and information, inspection records, photographs, and other 22 related documents. A google image showing an aerial view of the property was admitted and 23 marked as City's Exhibit 35 and another photo of the parking lot was admitted and marked as 24 Exhibit 36. All were admitted without objection. I find these exhibits to have inherent reliability 25 and credibility in an administrative hearing.
26 27
VI.
1. Statement of Issues Before the Hearing Officer
Weather there is good cause why the referenced City of Long Beach Business 28 License BU21903666 should not have been revoked at the original August 18, 2021 hearing for 8 HEARING OFFICER'S RECOMMENDATION AND FINDINGS
1 SOCAL Equity Holdings, LLC's violation ofLBMC 5.92.210 for unlicensed cannabis activities. 2 Specifically, LBMC 5.92.210 states, "It is unlawful for any person to engage in, operate, conduct, 3 carry on, or allow to be carried on, the business of adult-use cannabis in the City without having 4 first met the following requirements:
5 6 Code;
7 8
1. 2.
3. The person has paid any business license tax pursuant to Chapter 3.80 of this The person holds a valid permit pursuant to the requirements of this Chapter, and; The person holds a state license in accordance with the Cal. Bus. & Prof. Code 9 26000 et seq., and any applicable regulations implemented by the State or any of its departments 10 or divisions.
11 12
VII. Finding of Fact
1. Mr. Larios is an owner of numerous corporations, related and unrelated to the 13 cannabis industry. He uses 216 Atlantic Avenue - the Property - for all of his business 14 addresses.
15 2. The Property is also used regularly by SOCAL Equity Holdings, LLC for 16 storage, meetings, and for employee meal and rest breaks. 17 3. Ms. Lori Voss works as a business license inspector for the City of Long Beach. 18 She has just over 10 years of experience as a business license inspector. She has conducted 19 over 200 inspections for cannabis-related businesses. 20 4. In approximately mid-November 2019, she began her investigation of the 21 Property after receiving a reported complaint about the Property by an anonymous nearby 22 residential neighbor of a cannabis business being operated at the Property. Specifically, the 23 complaining neighbor alleged after-hours activity involving people, the movement of boxes, 24 and parties taking place at the Property, which was after City inspection hours. 25 5. Ms. Voss confirmed there was no cannabis business license issued to the 26 Property.
27 6. Ms. Voss conducted approximately four exterior visual inspections during 28 regular business hours and observed vehicles going in and out of the adjoining parking lot, but 9 HEARING OFFICER'S RECOMMENDATION AND FINDINGS
1 did not observe anything indicating a cannabis business was being conducted out of the 2 property.
3 7. Based upon her experience, there was an indication there was illegal business 4 being conducted out of the Property. From there, Ms. Voss scheduled a team inspection of the 5 Property for December 1, 2020.
6 8. A week before the December 1, 2020 inspection, Ms. Voss went to a business 7 license inspection of another property owned by Mr. Larios and met Mr. Carillo for the first 8 time.
9 9. On December 1, 2020, Ms. Voss, John Fort, retired fire and arson inspector, and 10 Ramond Barajas, from code enforcement, went to inspect the Property. They first arrived at 11 11 :00 a.m. and were unable to gain access to the Property. She observed the front door was 12 dusty, had cobwebs and hadn't been used in some time. They knocked on the back door, heard 13 people inside the property, but no one answered.
14 10. When they arrived there were two white commercial vans parked in the parking 15 lot. They conducted a visual inspection of the van through the windows and observed the vans 16 were both empty.
17 11. The inspection team waited for an hour and fifteen minutes. Mr. Larios agreed 18 to give the inspection team access to the Property later that afternoon. They left to inspect 19 another property.
20 12. Mr. Larios received a call from Ms. Lori Voss requesting to inspect the Property 21 in Long Beach. Mr. Larios was in Hermosa Beach and made attempts to contact Mr. Jorge 22 Carillo to let the inspectors in.
23 13. Mr. Carillo has worked for Mr. Larios for over ten years providing services 24 related to maintenance and construction at the properties owned by Mr. Larios. 25 14. Once he was able to contact Mr. Carillo, Mr. Larios told him to go to the 26 property to clear out the property because they needed to conduct an inspection. 27 28
10 HEARING OFFICER'S RECOMMENDATION AND FINDINGS
1 15. Mr. Carillo went to the property with two other workers and they began loading 2 up the vans. Mr. Carillo admitted to packing boxes of papers at the Property and loading them 3 into the left-side van.
4 16. While the inspection team was inspecting another property, Ms. Voss received a 5 call from the original complaining neighbor that items were quickly being removed from the 6 Property
7 17. When Ms. Voss and the other inspectors arrived at the property the same vans 8 were in the same location, but had their doors open, indicating they were both being loaded. 9 18. When Ms. Voss and the inspection team arrived at the Property, she 10 immediately recognized Mr. Carillo carrying a box out of the property in a hurried manner to 11 load into the van to the left, which he dropped when he turned and saw them pull into the 12 parking lot behind the Property. When the box dropped packaged cannabis products fell out of 13 the box. Mr. Carillo then went behind the van to conceal himself. Ms. Voss observed two 14 other men come out of the Property that were assisting with loading the vans. 15 19. Ms. Voss did a visual inspection of the van and observed 20 to 30 boxes, several 16 of which were open. She observed a box of marketing materials for Daze, one to two boxes of 17 empty cannabis packaging, a bulk package of unpackaged cannabis, and an estimated 2,000 18 packaged and jarred cannabis products ready for sale for five to seven different cannabis 19 compames.
20 20. Ms. Voss and the other inspectors went up to Mr. Carillo and introduced 21 themselves and asked to inspect the Property.
22 21. When they first entered the Property Ms. Voss first noticed a strong smell of 23 cannabis. She observed a table with loose cannabis along with a scale, which was evidence of 24 cannabis packaging being conducted at the Property. She also found flyers for the cannabis 25 delivery business.
26 22. Mr. Larios attempted to reach Ms. Voss by phone to tell her he would be 27 arriving at 3:00 pm but was unable to reach her. Mr. Larios arrived at the Property at 3:00 pm. 28 No one was at the property and the vans had been driven away. 11 HEARING OFFICER'S RECOMMENDATION AND FINDINGS
1 23. Mr. Larios called Ms. Voss at around 5:30 pm that same day. She informed him 2 she had concluded there was an illegal cannabis business being operated out of the property. 3 24. Based upon the totality of the evidence available to them, all inspectors 4 concluded there was sufficient evidence to conclude an illegal cannabis operation was being 5 conducted out of the Property.
6 25. On August 18, 2021, there was an administrative hearing to show cause why the 7 subject business license should not be revoked pursuant to LMBC 3.80.429.1 for allowing 8 unlicensed cannabis activities to occur at the Property in violation ofLBMC 5.92.210. 9 26. On September 15, 2020, Administrative hearing officer Larry Minsky found the 10 clear weight of the evidence established Appellant was using the Property for unlicensed 11 cannabis use and upheld the revocation of the subject business license. 12 27. On October 14, 2021, Mr. Larios submitted an appeal to the September 15, 2021 13 ruling.
14 28. On January 28, 2022, the City of Long Beach, Department of Financial 15 Management sent written notice of the subject February 9, 2022 appeal hearing to show cause 16 why the referenced City of Long Beach Business License should not have been revoked at the 17 original hearing.
18 29. To the extent any conclusion of law identified below constitutes a finding of fact, 19 it is hereby incorporated.
20 VIII. Discussion
21 Mr. Larios seeks an appeal of the revocation of the subject business license claiming there 22 was inadequate evidence or proof of illegal or legal cannabis business conducted at the Property. 23 Second, Mr. Larios argued the statewide cannabis delivery license supersedes the jurisdiction of 24 the City of Long Beach pursuant to Regulation 5416( d) contending the City of Long Beach 25 cannot ban licensed businesses that are established within their location. 26 The City of Long Beach contends there was adequate evidence to support the revocation 27 of the subject business license and that Mr. Larios' claims he was acting lawfully according to 28 the statewide cannabis delivery license were not relevant. 12 HEARING OFFICER'S RECOMMENDATION AND FINDINGS
1 Upon review of the case file, the prior ruling, and evidence presented at the subject appeal 2 hearing, there is substantial evidence to conclude the Property was being used for cannabis 3 delivery business purposes, including the storage of cannabis. Mr. Larios admitted the Property 4 was being used for the storage of marketing materials and cannabis packaging. The Property was 5 being used also as a business address for the cannabis delivery business. The Property was further 6 being used by delivery employees meals and rest breaks. Mr. Larios equated this use to the 7 delivery drivers using a public gas station, however, looking at the totality of the evidence there 8 was much more use of the Property for the cannabis delivery company than the occasional use 9 of its restroom.
10 Most compelling is the fact the inspectors caught a substantial amount of packaged 11 cannabis product being actively removed from the property just after they requested to inspect 12 the property. While Mr. Carillo disputes he was the individual who dropped the box of packaged 13 cannabis, Ms. Voss' identification of him is credible, especially she had met him just a week 14 prior at another of Mr. Larios's properties and immediately recognized him. Mr. Carillo or not, it 15 is not in dispute that Ms. Voss personally observed cannabis product being removed from the 16 Property and loaded into vans that just two hours prior were inspected and sat empty. This is 17 further corroborated with evidence that the Property itself had the strong and distinct odor of that 18 related to cannabis storage. Mr. Larios argued the loose cannabis and odor was a result of 19 personal use and claimed the amount in the property was within the legal limits for personal use, 20 but, again, the evidence supports there was a large bulk quantity of cannabis product obtained 21 for white-label commercial distribution, along with over 2,000 packaged cannabis products. Ms. 22 Voss is experienced enough to distinguish the odor of personal use from storage. There is 23 additional evidence to support there was cannabis packaging going on at the Property given there 24 was packaging stored at the property along with bulk cannabis product, a scale, and loose 25 cannabis was on the table.
26 Moreover, Mr. Larios and Mr. Carillo confirmed Mr. Larios instructed him to go to the 27 Property and to clean out the property as a result of the request for inspection. Mr. Cabrillo was 28 in the middle other another project on December 1, 2020, however, as a result of the request for 13 HEARING OFFICER'S RECOMMENDATION AND FINDINGS
1 inspection, Mr. Carillo coordinated himself and two other men to quickly box up and move the 2 substantial amount of property into the vans. The items moved were related to the cannabis 3 delivery company so the argument the items were moved due to a building permit to renovate is 4 unpersuasive.
5 Mr. Larios claims he was conducting business lawfully according to the statewide license 6 issued for the cannabis delivery company. While the statewide license permits the delivery of 7 cannabis products, this license does not supersede the City's authority to require a business 8 license when cannabis business activities are being conducted at a commercial building in its 9 city. BCC Regulation Section 5311 does not negate the need to obtain a city business license. 10 Moreover, California Business & Professions Code § 26200(a)(l), states as follows, "This 11 division shall not be interpreted to supersede or limit the authority of a local jurisdiction to adopt 12 and enforce local ordinances to regulate businesses licensed under this division, including, but 13 not limited to, local zoning and land use requirements, business license requirements, and 14 requirements related to reducing exposure to secondhand smoke, or to completely prohibit the 15 establishment or operation of one or more types of businesses licensed under this division within 16 the local jurisdiction." Therefore, it's well within the City jurisdiction to enforce LBMC 17 5 .92.210 under the circumstances.
18 Pursuant to the relevant provisions ofLBMC Chapter 5.92.210 (A.), "It is unlawful for 19 any person to engage in, operate, conduct, carry on, or allow to be carried on, the business of 20 adult-use cannabis in the City without having.first met the following requirements: 1. The person 21 has paid any business license tax pursuant to Chapter 3.80 of this Code; 2. The person holds a 22 valid permit pursuant to the requirements of this Chapter; and 3. The person holds a State license 23 in accordance with California Business & Professions Code Section 2600 et seq., and any 24 applicable regulations implemented by the State or any of its departments or divisions. It is 25 undisputed that no valid cannabis business license was in place for the Property to satisfy the 26 requirements of LBMC Chapter 5.92.210(A). Therefore, based upon the clear weight of the 27 evidence, there was good cause for the revocation of the subject business licensed for violation 28 ofLBMC Chapter 5.92.210 in the underlying administrative hearing as well as now. 14 HEARING OFFICER'S RECOMMENDATION AND FINDINGS
1 IX. Conclusions of Law
2 1. At all times, Mr. Larios possessed a statewide license to operate a cannabis delivery 3 business.
4 2. Mr. Larios used the Property for cannabis delivery related business activities in 5 violation ofLBMC Chapter 5.92.210A(2).
6 3. At all times relevant, there was no adult-use cannabis-related business license in place 7 for the subject Property to satisfy the requirements ofLBMC Chapter 5.92.210A. 8 4. There was adequate evidence to support a revocation of the subject business license at 9 the August 18, 2021 hearing. Therefore, based upon a preponderance of the evidence, the 10 business license revocation is upheld.
11 5. To the extent any conclusion of fact identified above constitutes a finding of law, 12 it is hereby incorporated.
13 X. Conclusion
14 Based upon a preponderance of the evidence, there was adequate evidence to conclude 15 Mr. Larios used the Property and subject business licensed BU21903666 for operating 16 cannabis delivery related business activities. Therefore, the prior administrative hearing 17 determination to uphold the City's decision to revoke the subject business license is upheld. The 18 revocation should remain.
19 Date: February 28, 2022
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28 Respectfully submitted,
15 HEARING OFFICER'S RECOMMENDATION AND FINDINGS
1 Ashleigh N. Stone, Esq.
2 (562) 562-294-3215
3 [email protected]
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