Mendota City Council
May 5, 2026

Minutes of City Council Meeting 1 April 21, 2026

MINUTES OF MENDOTA

REGULAR CITY COUNCIL MEETING
Regular Meeting April 21, 2026
Meeting called to order by Mayor Martinez at 6:05 PM
Roll Call
Council Members Present: Mayor Victor Martinez, Mayor Pro Tem Jose Alonso, and Council Members Libertad “Liberty” Lopez,
Jesus “Jesse” Mendoza and Joseph R. Riofrio
Council Members Absent: None
Flag salute led by Council Member Lopez
Invocation led by Police Chaplain Robert Salinas

FINALIZE THE AGENDA

1. Adjustments to Agenda.

2. Adoption of final Agenda.

A motion was made by Council Member Lopez to adopt the agenda, seconded by Council Member Riofrio; unanimously approved (5 ayes).

PRESENTATION

1. City Council to recognize Don Fermin and Griselda Ochoa for their contributions to the community.

Mayor Martinez introduced the item and read the Plaque of Recognition into the record.

Griselda Ochoa thanked the City Council for the recognition and shared a few words.

The City Council commented on the recognition.

Minutes of City Council Meeting 2 April 21, 2026
Kevin Romero commented on the recognition.

MAYOR AND COUNCIL REPORTS AND INFORMATIONAL ITEMS

1. Council Member(s)
Council Member Mendoza commented on the recognition of Don Fermin and Griselda Ochoa; the Mendota Community Corporation’s (“MCC”) inaugural soccer tournament; the Divisadero Street Reconstruction project; former Mayor Alex Valdez attending the Central Valley Honor Flight; and thanked everyone for attending.

Mayor Pro Tem Alonso commented on the MCC’s inaugural soccer tournament; thanked staff for their work; commented on the groundbreaking ceremony for the new Our Lady of Guadalupe Catholic Church; the upcoming Cal Cities City Leader’s Summit; and the recognition of Don Fermin and Griselda Ochoa.

Council Member Lopez commented on the Pool Park Rehabilitation Project, including community use of Pool Park during Easter Weekend; the MCC’s inaugural soccer tournament; and the Divisadero Street Reconstruction project.

Council Member Riofrio thanked staff for their work; thanked Mayor Martinez for his representation on the Fresno Council of Governments; thanked the City Council for their work; thanked Cal Fire; and thanked the Mendota Police Department for their work.

2. Mayor
Mayor Martinez thanked everyone for attending; commented on the Westside Economic Development meeting held on April 17th; the Community Center Project; road repair projects, including the Divisadero Street Reconstruction project; the 2024 Local Streets Reconstruction project; the 2nd Street Reconstruction project; Moving Forward Together initiative; status update on grants for new lights on State Highway 33 and flashing beacons on State Highway 180; and potentially hosting a groundbreaking ceremony for the Community Center.

PUBLIC COMMENT
Kevin Romero provided an update on local high school sports.

Discussion was held on the update provided by Mr. Romero.

APPROVAL OF MINUTES AND NOTICE OF WAIVING OF READING

1. Minutes of the regular City Council meeting of March 17, 2026 and of the special City Council meeting of April 8, 2026.

Minutes of City Council Meeting 3 April 21, 2026

2. Notice of waiving of the reading of all resolutions and/or ordinances introduced and/or adopted under this agenda.

A motion was made by Council Member Riofrio to approve items 1 and 2, seconded by Mayor Pro Tem Alonso; unanimously approved (5 ayes).

CONSENT CALENDAR

1. APRIL 8, 2026 THROUGH APRIL 14, 2026
a. WARRANT LIST CHECK NOS. 57815 THROUGH 57868
b. TOTAL FOR COUNCIL APPROVAL = $910,752.76

2. Proposed adoption of Proclamation No. 26-03, recognizing and honoring Stamoules Produce Company for their contributions to the City of Mendota.

3. Proposed adoption of Resolution No. 26-20, approving the award of the construction contract for the Mendota Community Center project to Marko Construction Group, Inc. in the amount of $8,855,315.00.

4. Proposed adoption of Resolution No. 26-21, approving the quote from David’s Plumbing for professional services to conduct annual backflow prevention assembly testing.

5. Proposed adoption of Resolution No. 26-22, approving the quote submitted by TruTrailers, Inc. for the purchase of one 14-foot dump trailer for the Public Works Department.

6. Proposed adoption of Resolution No. 26-23, approving amendments to the agreement with Precision Civil Engineering, Inc., for professional engineering services.

A request was made by Council Member Riofrio to pull item 3 of the Consent Calendar for discussion.

A motion was made by Council Member Riofrio to approve items 1,2,4,5, and 6 of the Consent Calendar, seconded by Council Member Lopez; unanimously approved (5 ayes).

Discussion was held on item 3 of the Consent Calendar.

A motion was made by Council Member Riofrio to approve item 3 of the Consent Calendar, seconded by Council Member Lopez; unanimously approved (5 ayes).

BUSINESS

1. City Council discussion and consideration of Resolution No. 26-24, accepting the City of Mendota Audit Committee Letter, Management Comment Letter, and Financial Statements for Fiscal Year 2024-2025.

Minutes of City Council Meeting 4 April 21, 2026
At 6:54 p.m. Council Member Lopez left the Council Chambers and returned at 6:55 p.m.

Mayor Martinez introduced the item and Finance Director Valdez provided the report and introduced Fausto Hinojosa with Price Paige & Company who presented the City of Mendota’s Audit Committee Letter, Management Comment Letter, and Financial Statements for Fiscal Year 2024-2025.

Discussion was held on the item.

Mayor Martinez opened the public comment period and seeing no one willing to comment closed it within the same minute.

A motion was made by Council Member Lopez to adopt Resolution No. 26-24, seconded by Council Member Riofrio; unanimously approved (5 ayes).

PUBLIC HEARING

1. Council discussion and consideration of the proposed waiver of the second reading and adoption of Ordinance No. 26-01, amending Title 15 of the Mendota Municipal Code to adopt the 2025 California Building Code and related Trade Codes by reference.

Mayor Martinez introduced item and Finance Director Valdez provided the report.

Discussion was held on the report provided by Finance Director Valdez.

At 7:09 p.m. Mayor Martinez opened the hearing to the public and seeing no one willing to comment closed it within the same minute.

A motion was made by Council Member Riofrio to waive the second reading and adopt Ordinance No. 26-01, seconded by Mayor Pro Tem Alonso; unanimously approved (5 ayes).

DEPARTMENT REPORTS AND INFORMATIONAL ITEMS

1. Animal Control, Code Enforcement, and Police Department a) March Monthly Logs
b) Spay and Neuter Action Project (S.N.A.P.) Spay and Neuter Clinic Update Police Sergeant Antuna provided an update on S.N.A.P.; a planned spay and neuter clinic and the Animal Control Department.

Discussion was held on the update provided by Sergeant Antuna; the Police Department addressing a situation involving a community member under the influence of drugs; and an individual being assaulted on the corner of Lolita Street and Divisadero Street.

2. City Attorney
Minutes of City Council Meeting 5 April 21, 2026
Assistant City Attorney Castro stated it was nice to see everyone and commented on working with Community Service Officer Navarro on weed abatement issues.

Discussion was held on the update provided by Assistant City Attorney Castro.

3. City Manager
a) Relocation of Westside Youth, Inc.’s Open Market
City Manager Gonzalez provided an update on the Community Center Groundbreaking Ceremony.

Discussion was held on the update provided by City Manager Gonzalez; relocation of Westside Youth, Inc’s Open Market; the 2024 Local Streets Reconstruction project; the Audit Committee’s Letter presented by Price Paige and Company; potentially having a small groundbreaking ceremony for the 2024 Local Street Reconstruction project; and thanking staff for their work.

CLOSED SESSION

1. CONFERENCE WITH REAL PROPERTY NEGOTIATORS
Pursuant to Government Code section 54956.8
Property: APNs 013-221-05 and 013-221-06
Agency Negotiator: Cristian Gonzalez, City Manager
Negotiating Party: Ernestine & Sergio Torres
Under Negotiation: Price and Terms of Payment
At 7:29 p.m. the City Council entered into Closed Session.

At 7:44 p.m. the City Council reconvened in Open Session, at which time Assistant City Attorney Castro reported that there was no reportable action on item 1.

ADJOURNMENT
With no more business to be brought before the City Council, a motion for adjournment was made at 7:44 p.m. by Mayor Martinez, seconded by Council Member Riofrio; unanimously approved (5 ayes).
_______________________________
Victor Martinez, Mayor
ATTEST:
_______________________________
Celeste Cabrera-Garcia, City Clerk

CITY OF MENDOTA

CASH DISBURSEMENTS
04/17/2026 - 4/23/2026
CK# 057869 - 057915
Check Date Check Number Check Amount Vendor Name Department Description April 17, 2026 57869 $ 517.28 AFLAC GENERAL AFLAC INSURANCE FOR APRIL 2026 April 17, 2026 57870 $ 3,504.26 BARNES WELDING SUPPLY, BARNES

GENERAL, WATER, SEWER,

STREETS
POWERMAX45 75° HAND TORCH & 5/32 FW-180 WELDING SUPPLIES FOR

ALL DEPARTMENTS
April 17, 2026 57871 $ 459.00 BMI GENERAL MUSIC LICENSE FEE 4/01/2026 - 3/31/2026 April 17, 2026 57872 $ 1,877.60 CALIFORNIA BUSINESS MACHINES GENERAL, WATER, SEWER COPIER CONTRACT SERVICES BASE APRIL 2026 & USAGE FOR MARCH 2026
April 17, 2026 57873 $ 19.60 DIVISION OF THE STATE ARCHITECT GENERAL DISABILITY ACCESS & EDUCATION FEE FOR QUARTER 1 FOR JANUARY - MARCH 2026
April 17, 2026 57874 $ 1,100.79 COMCAST BUSINESS GENERAL FRESNO COUNTY SHERIFFS MENDOTA PD CIRCUIT FOR MARCH 2026 April 17, 2026 57875 $ 184.48 CORELOGIC INFORMATION GENERAL, WATER, SEWER REAL QUEST SERVICES FOR MARCH 2026 April 17, 2026 57876 $ 9,705.67 CORE & MAIN LP WATER
WATER DEPARTMENT SUPPLIES - (2) BRZ STRAP, (2) BALL CORP, (210) PE TUBE, (14)CTS, (4) BRS CPLG, & (13) BRS TEE PJ CT
April 17, 2026 57877 $ 22,726.47 DELTA, SAND, GRAVEL, & RECYCLING GENERAL, WATER, STREETS DIRT LOADS (10), CLASS II AGG BASE ROCK TRUCK LOAD (21), YARD PILE (3), & (11.99) TONS FOR POOL PARK
April 17, 2026 57878 $ 1,070.00 FASTECH STREETS (1) HOUR - PLC SWITCHOVER PM SERVICE FOR MARCH 2026 April 17, 2026 57879 $ 150.00 FRESNO CITY COLLEGE GENERAL (2) INTERVIEW & INTERROGATION TRAINING FOR THE POLICE

DEPARTMENT
April 17, 2026 57880 $ 19,117.96 FRESNO COUNTY SHERIFF GENERAL, WATER DISPATCH SERVICES AND RMS/JMS ACCESS FEE FOR APRIL 2026 April 17, 2026 57881 $ 42,810.28 GUTHRIE PETROLEUM INC

GENERAL, WATER, SEWER,

STREETS
FUEL - (1596) GALLONS OF DIESEL & (6969) GALLONS OF UNLEADED GAS

FOR ALL DEPARTMENTS
April 17, 2026 57882 $ 270.86 MULTI SERVICE TECHNOLOGY SOLUTION GENERAL (1) GAS POWERED CULTIVATOR FOR PARKS & GROUNDS April 17, 2026 57883 $ 2,660.00 iCAD INC. SEWER

WATER/ WWTP SERVICES - PLANT BYPASS REPAIR, STAGE REST &

REMOTE WWTP REVIEW
April 17, 2026 57884 $ 208,519.10 MID VALLEY DISPOSAL, INC REFUSE, STREETS SANITATION SERVICE FOR MARCH - APRIL 2026, FEBRUARY - MARCH 2026 USAGE & PUBLIC WORKS REFUSE JAN/MAR 16-31, 2026
April 17, 2026 57885 $ 320.00 MINERAL KING PUBLISHING, INC. GENERAL PUBLIC NOTICE - ORDINANCE 26-01: ADOPTION OF 2025 BUILDING CODES April 17, 2026 57886 $ 3,000.00

NICHOLS LOCAL GOVERNMENT

CONSULTATION GENERAL
PREPARATION OF SB 90/STATE MANDATE COST CLAIMS ON BEHALF OF THE CITY OF MENDOTA FOR JUNE 30, 2026
April 17, 2026 57887 $ 3,044.75 PURCHASE POWER GENERAL, WATER, SEWER POSTAGE METER REFILLS FOR 3/16/2026 - 3/17/2026 & 4/08/2026 - 4/09/2026 April 17, 2026 57888 $ 200.00 STATE WATER RESOURCES CONTROL STREETS APPLICATION ID # 598091 FEE FOR DIVISADERO STREET

RECONSTRUCTION
April 17, 2026 57889 $ 150.00 SALVADOR VILLASENOR GENERAL SOCCER FIELD SIGN - (1) DANNY TREJO SIGN April 17, 2026 57890 $ 302,137.70 W.M. LYLES CO. WATER WESTSIDE WATER TANK & PUMP STATION 3/1/2026 - 3/31/2026 April 17, 2026 57891 $ 163.60 DISTRIBUTOR OPERATIONS,INC. GENERAL Ck# 057891->057837 REPLACEMENT (1) MTP - T4 BATTERY & (1) ATCORE

BATTERY FOR FORD FUSION (PD) VEHICLE
April 17, 2026 57892 $ 59.52 MULTI SERVICE TECHNOLOGY SOLUTION GENERAL Ck# 057892->057853 REPLACEMENT (1) FOLDABLE HAND TRUCK & (1) 3500 LB STEP BUMPER FOR BULIDINGS AND GROUNDS
April 21, 2026 57893 $ 1,590.13 AMAZON CAPITAL SERVICES, INC GENERAL, WATER, SEWER APRIL 2026 - CITYHALL, P.DEPARTMENT & EARTH DAY SUPPLIES: USB

FLASH DRIVE, PLANNERS, FILE FOLDERS, VEST, BRUSHES
April 21, 2026 57894 $ 622.90 CABRERA, CELESTE GENERAL

PER DIEM & MILEAGE - CITY CLERK CALIFORNIA MUNICIPAL CLERK ASSOCIATION CONFERENCE IN ANAHEIM 4/28/2026 - 5/01/2026 April 21, 2026 57895 $ 72.00

CALIFORNIA BUILDING STANDARDS

COMMISSION GENERAL
BUILDING STANDARDS ADMINISTRATION FUND FOR QUARTER 1 FOR JANUARY - MARCH 2026
April 21, 2026 57896 $ 146.32
DEPT. OF CONSERVATION DIVISION OF

ADMINISTRATIVE SERVICES GENERAL

STRONG MOTION INSTRUMENTATION & SEISMIC HAZARD MAPPING FEE QUARTER 1 JANUARY - MARCH 2026
April 21, 2026 57897 $ 4,082.79 ECS HOUSE INDUSTRIES, INC. SEWER

SERVICE MAINTENANCE FOR WASTEWATER - ROUTINE OIL CHANGE, &

RESERVOIR WITH GREASE INCLUDING BATTERIES
April 21, 2026 57898 $ 193.20 FRESNO PET CEMETERY GENERAL GROUP CREMATION SERVICE FOR 5 CASES TOTAL WEIGHT 322 LBS April 21, 2026 57899 $ 47,475.00 GERALD MELE & ASSOCIATES, INC. GENERAL PROFESSIONAL SERVICES - 100% AGENCY REVIEW, 100% BIDDING, & 10%

CONSTRUCTION ADMIN FOR COMMUNITY CENTER
April 21, 2026 57900 $ 170.00 INTERNATIONAL CODE GENERAL GOVERNMENTAL MEMBERSHIP FEE AND MEMBER BENEFIT COLLECTION April 21, 2026 57901 $ 400.00 INSYARATH, KHAMPHOU GENERAL POLICE DEPARTMENT STATISTICS FOR MARCH 2026

CITY OF MENDOTA

CASH DISBURSEMENTS
04/17/2026 - 4/23/2026
CK# 057869 - 057915
April 21, 2026 57902 $ 5,061.77 PACE SUPPLY CORP WATER

WATER SUPPLIES - BRASS BALL VALVES, CTS FITTINGS, METERS, BRASS

TEES/ ADAPTERS, SWIVEL ADAPTERS & REPAIR KIT
April 21, 2026 57903 $ 18,396.00 PRICE PAIGE & COMPANY CERTIFIED

GENERAL, WATER, SEWER,

REFUSE, STREETS
PROFESSIONAL SERVICES FOR JUNE 30, 2025 AUDITED STATE

CONTROLLERS REPORTS
April 21, 2026 57904 $ 9,535.80 PROVOST & PRITCHARD GENERAL

PROFESSIONAL SERVICES - MENDOTA GENERAL PLAN, HOUSING
ELEMENT, VESTING MAP, & WEBSITE MANAGEMENT MARCH 2026
April 21, 2026 57905 $ 416.00 PURL'S SHEETMETAL & AIR GENERAL, WATER, SEWER

PUBLIC WORKS YARD - DIAGNOSTIC SERVICE FOR NON - OPERATIONAL FAN
April 21, 2026 57906 $ 574,722.39 SAS CONSTRUCTION GENERAL

PRE-ENGINEERED METAL BUILDING FOR NEW COMMUNITY CENTER
3/16/2026
April 21, 2026 57907 $ 5,601.90 SORENSEN MACHINE WORKS

GENERAL, WATER, SEWER,
STREETS MARCH 2026 CITYWIDE DEPARTMENT SUPPLIES
April 21, 2026 57908 $ 420.85 UNION PACIFIC RAILROAD COMPANY STREETS PUBLIC ROADWAY ENCROACHMENT FOR MAY 2026 April 21, 2026 57909 $ 240.00 TOP DOG TRAINING CENTER GENERAL SERVICE K-9 MAINTENANCE TRAINING - OFFICER LOPEZ & YANOSCH FOR 3/30/2026 & 4/06/2026
April 21, 2026 57910 $ 5,000.00 TOWNSEND PUBLIC AFFAIRS, INC. GENERAL, WATER, SEWER CONSULTING SERVICES FOR THE MONTH OF APRIL 2026 April 21, 2026 57911 $ 796.60 VERIZON WIRELESS GENERAL, WATER, SEWER CITYWIDE CELLPHONE SERVICES 3/07/2026 - 4/06/2026 April 21, 2026 57912 $ 370.06 VESTIS GROUP, INC. GENERAL, WATER, SEWER PUBLIC WORKS UNIFORM SERVICES FOR 3/19/2026 & 3/26/2026 April 21, 2026 57913 $ 260.00 VETERINARY MEDICAL CENTER GENERAL (5) CITY EUTHANASIA DOGS April 22, 2026 57914 $ 214,828.00 CITY OF MENDOTA PAYROLL GENERAL PAYROLL TRANSFER FOR 4/06/2026 - 4/19/2026 April 23, 2026 57915 $ 400.00 INSYARATH, KHAMPHOU GENERAL CK# 057915->057737 REPLACEMENT POLICE DEPARTMENT STATISTICS FOR FEBRUARY 2026
$ 1,514,570.63

1 AGENDA ITEM – STAFF REPORT
TO: HONORABLE MAYOR AND COUNCILMEMBERS
FROM: FRANK RENTERIA, CHIEF OF POLICE
VIA: CRISTIAN GONZALEZ, CITY MANAGER
SUBJECT: APPROVING THE AGREEMENT WITH THE COUNTY OF FRESNO FOR LAW ENFORCEMENT DISPATCH SERVICES/9-1-1 ANSWERING RESPONSIBILITIES DATE: MAY 5, 2026
ISSUE
Shall the City Council adopt Resolution No. 26-25, approving the agreement with the County of Fresno for law enforcement dispatch services/9-1-1 answering responsibilities?

BACKGROUND
The City of Mendota (“City”) has utilized the Fresno County Sheriff’s Office for dispatching services under an agreement implemented in January 2022. These dispatchers have provided exceptional services, acting as the primary link between the public and our police officers. The Fresno County Sheriff’s Department is well-positioned to continue with this support, offering a broad range of information and assistance essential for timely and accurate response operations.

The current agreement for law enforcement dispatching services provided by the County of Fresno is set to expire on June 30, 2026. The City must consider extending this agreement to ensure continued, high quality emergency communication services for the Mendota Police Department and the community.

ANALYSIS
The Fresno County Sheriff’s dispatchers provide critical infrastructure that enhances the safety and security of law enforcement personnel in the field. By utilizing the Computer Aided Dispatch (“CAD”) System, dispatchers provide faster and more coordinated responses through the transmission of actionable information in real time.

Furthermore, this partnership expands access to specialized regional resources when circumstances require them, including:
• FSO Helicopter support
• K9 Units
• Specialized Detectives
• Search and Rescue teams
• UAV/Drones and other support services
2 The agreement acknowledges that monthly compensation is subject to updates based on “per resident charges” and “population estimates”, with rate changes typically proposed in March of each year for July 1st implementation.

FISCAL IMPACT
The compensation structure is based on the County’s Master Schedule of Fees (Section 2609, subdivision d). Dispatcher Per Capita - Master Schedule of Fees may experience an estimated 10% increase, primarily as a result of the rise in the population served and the increase in supervisory costs and salary and benefits costs.

The maximum compensation for the total term is estimated at $1,389,742.00, which includes a 10% annual increase contingency. As of FY 2025-26, the cost is based on a population of 12,710 at a rate of $17.91 per capita.

Fiscal Year Basis of Calculation Estimated Amount
FY 2025-26 (Year 1) 12,710 x $17.91 $227,636.10
FY 2026-27 (Year 2) 10% Est. Increase $250,399.71
FY 2027-28 (Year 3) 10% Est. Increase $275,439.68
FY 2028-29 (Year 4) 10% Est. Increase $302,983.65
FY 2029-30 (Year 5) 10% Est. Increase $333,282.01

Total Estimated Ceiling: $1,389,742.00

RECOMMENDATION
Staff recommends that the City Council adopt Resolution No. 26-25, approving the agreement with the County of Fresno for law enforcement dispatch services/ 9-1-1 answering responsibilities.

Attachments:

1. Resolution No. 26-25

2. Exhibit “A” – Agreement with Fresno County
1 BEFORE THE CITY COUNCIL
OF THE

CITY OF MENDOTA, COUNTY OF FRESNO
RESOLUTION NO. 26-25

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MENDOTA APPROVING

THE AGREEMENT WITH THE COUNTY OF FRESNO FOR LAW ENFORCEMENT DISPATCH SERVICES/9-1-1 ANSWERING RESPONSIBILITIES
WHEREAS, the City of Mendota (City) and the County of Fresno previously entered into an agreement for law enforcement dispatching services in January 2022, which is set to expire on June 30, 2026; and
WHEREAS, the Fresno County Sheriff’s Office has consistently provided highquality dispatching and 9-1-1 services, ensuring that both frontline responders and community members receive timely, accurate information and coordinated responses through the Computer Aided Dispatch (CAD) System; and
WHEREAS, the City finds that continuing this partnership is essential for maintaining the safety and security of law enforcement personnel and the public by providing access to specialized regional resources such as aerial support, K9 units, and search and rescue teams.

NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Mendota hereby:

1. Approves the agreement with the County of Fresno for law enforcement dispatch services and 9-1-1 answering responsibilities for the period beginning July 1, 2026, as attached hereto as Exhibit “A”.

2. The maximum compensation payable under the terms of this agreement shall not exceed $1,389,742.00, unless otherwise amended by the City Council.

3. Authorizes the City Manager, or their designee, to execute the agreement and any necessary documents to implement the terms described therein on behalf of the City.
______________________________
Victor Martinez, Mayor
2 ATTEST:

I, Celeste Cabrera-Garcia, City Clerk of the City of Mendota, do hereby certify that the foregoing resolution was duly adopted and passed by the City Council at a regular meeting of said Council, held at the Mendota City Council Chambers located at 725 Riofrio Street, Mendota, California 93640, on the 5th day of May, 2026, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
______________________________
Celeste Cabrera-Garcia, City Clerk

EXHIBIT A
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1 SERVICE AGREEMENT
This Service Agreement (“Agreement”) is dated ___________________ and is between the County of Fresno, a political subdivision of the State of California (“County”) and City of Mendota, a municipal corporation, whose address is 643 Quince Street, Mendota, CA 99640 (“City”). County and City may be collectively referred to herein as “Parties” or in the singular as “Party.”
Recitals
A. WHEREAS, City desires to secure law enforcement dispatch services/9-1-1 answering responsibilities for City from County, through the Fresno County Sheriff’s Office, within City’s boundaries;
B. WHEREAS, County has provided these services to City through its Sheriff’s Office or its designee (“Sheriff’s Office”) since January of 2022;
C. WHEREAS, County agrees to continue to render such law enforcement dispatch services/9-1-1 answering responsibilities for City within the City’s boundaries (“Services”), and City agrees to pay County the cost of performing such services at the rates and according to the terms and conditions set forth in this Agreement.

The parties therefore agree as follows:

County’s Services

1.1 Scope of Services. County shall provide law enforcement dispatch services as described in Exhibit A, attached and incorporated by this reference.

1.2 The performance of Services for City, including the standards of performance, the discipline and control of personnel and officers, and all other matters incident to the performance of these Services shall be the right and responsibility of County. In the case of a dispute between the Parties as to the extent of the duties, functions, or the minimum level or manner of performance of such services to be rendered under this Agreement, the final and conclusive determination shall be made by the County, through its Sheriff’s Office. 1 2
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2 1.3 Representation. The County represents that it is qualified, ready, willing, and able to perform all Services provided in this Agreement.

1.4 Compliance with Laws. The County shall, at its own cost, comply with all applicable federal, state, and local laws and regulations in the performance of its obligations under this Agreement, including but not limited to workers compensation, labor, and confidentiality laws and regulations.

City’s Responsibilities

2.1 Obligations of the City. City agrees to convert the radios in its police vehicles to such frequencies as required by the Sheriff’s Office’s communications systems. City shall also place radios in its police vehicles that have a primary and secondary channeling ability for the purpose of ensuring reasonable communications backup, as determined by the Sheriff’s Office.

2.2 City shall have its police personnel use such alpha-numerical identifier system as determined by the Sheriff’s Office, and City assumes responsibility for keeping the Sheriff’s office communications system secure, as required by law.

2.3 City agrees that its personnel shall comply with the Sheriff’s Office radio procedures, and that it shall hold its employees accountable for failing to comply with such radio procedures.

2.4 City shall timely pay County for the Services rendered under this Agreement, as provided in Article 3.

Compensation, Invoices, and Payments

3.1 The City agrees to pay, and the County agrees to receive, compensation for the performance of its Services under this Agreement as described in Exhibit B to this Agreement, titled “Compensation.” The Parties also recognize and agree that the monthly compensation due to County for Services rendered under this Agreement may be updated from time to time based upon changes to the “per resident charge” and “population estimate” figures in Exhibit B.

County shall provide City with written notice of any changes to the monthly compensation due to County. Such notice shall be given in March of every year of the term of this Agreement. Upon 1 2
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3 City’s written approval of the changes to the monthly compensation due to the “per resident charge” and “population estimate” figures, the new monthly compensation amount shall be effective July 1st of the same year such notice of the change was given by County.

3.2 The parties acknowledge that the County’s Master Fees Schedule is subject to change. As indicated in Exhibit B, the rate specified per resident (Dispatcher Per Capita) to be charged by County, and subsequently paid by City, are the rates set forth in the County’s Master Schedule of Fees, Charges, and Recovered Costs, Section 2609, subdivision (d) (“Master Fee Schedule”), for performing the Services. The Parties agree that if and when the Master Fee Schedule is amended, changed, or revised, in any way that changes the rates being charged for the Services, that County shall provide City with written notice of such new rate proposed to be charged by the County for Services under Exhibit B, and such new rates shall replace any contrary or conflicting rate. The City shall pay such revised rate from the effective date of the amendment, change, or revision, going forward.

3.3 Maximum Compensation. The maximum compensation payable to the County under this Agreement shall not exceed a total of $753,476 for the initial term, $1,056,460 for the first extension and the initial term, or $1,389,742 for the second extension, including the initial term and first extension. The County acknowledges that the City is a local government entity, and does so with notice that the County’s powers are limited by the California Constitution and by State law, and with notice that County may receive compensation under this Agreement only for services performed according to the terms of this Agreement and while this Agreement is in effect, and subject to the maximum amount payable under this section. The County further acknowledges that City employees have no authority to pay the County except as expressly provided in this Agreement. The maximum total is estimated with a 10% increase, which may be less or more, depending on the approved Master of Schedule Fees. As of fiscal year 2025-26, City’s population is 12,710 multiplied by the Dispatcher Per Capita rate at $17.91. Thereafter, the estimated 10% increases are as follows:

FY 2025-26 (Year 1) (Population 12,710 x rate $17.91) $227,636.10 1 2
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4 FY 2026-27 (Year 2) (Estimated 10% increase ($227,636.10 x 10% = $22,763.61) $250,399.71
FY 2027-28 (Year 3) (Estimated 10% increase ($250,399.71 x 10% = $25,039.97) $275,439.68
FY 2028-29 (Year 4) (Estimated 10% increase ($275,439.68 x 10% = $27,543.97) $302,983.65
FY 2029-30 (Year 5) (Estimated 10% increase ($302,983.65 x 10% = $30,298.36) $333,282.01
Total $1,389,741.15, rounded up to $1,389,742.00.

3.4 Invoices. The County shall submit monthly invoices to the City and City shall pay the County within thirty (30) calendar days of receipt of any such invoice. At the end of the Fiscal Year, or the expiration or termination of this Agreement, County may, in the discretion of Sheriff or its designee, submit a final invoice for all amounts then unpaid, including, but not limited to, any remaining, unpaid hours of Services, as outlined in Article 1 and City shall pay the full amount of this final invoice within thirty (30) days of receipt thereof.

3.5 Payment. The City shall pay each correctly completed and timely submitted invoice within thirty (30) days after receipt. Any payment made more than thirty (30) days after receipt of an invoice may result in contract termination of service reduction, in the sole discretion of the Fresno County Sheriff’s Office, without any penalty or recourse against County. City shall remit payments to the County’s address specified in the invoice.

3.6 Incidental Expenses. The County is solely responsible for all of its costs and expenses that are not specified as payable by the County under this Agreement.

Term of Agreement

4.1 Term. This Agreement is effective July 1, 2026, and terminates on June 30, 2028, except as provided in section 4.2, “Extension,” or Article 6, “Termination and Suspension,” below.
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5 4.2 Extension. The term of this Agreement may be extended for no more than two (2), one-year periods upon written approval by both Parties at least thirty (30) days prior to the termination date referenced in Section 4.1, and at least thirty (30) days prior to the termination date of the first one-year extension period. The Sheriff or his or her designee is authorized to sign the written approval on behalf of the County based on the City’s satisfactory performance.

The City’s Chief of Police is authorized to sign the written approval on behalf of the City. The extension of this Agreement by the County is not a waiver or compromise of any default or breach of this Agreement by the City existing at the time of the extension whether or not known to the County.

Notices

5.1 Contact Information. The persons and their addresses having authority to give and receive notices provided for or permitted under this Agreement include the following:

For the County:

Sheriff’s Captain
Sheriff-Coroner-Public Administrator
County of Fresno
2200 Fresno Street
Fresno, CA 93721
[email protected]
Fax: 559-600-8318
For the City:

Chief of Police
Mendota Police Department
City of Mendota
643 Quince Street
Mendota, CA 93640
Phone No.: 559-655-3291

5.2 Change of Contact Information. Either Party may change the information in section

5.1 by giving notice as provided in section 5.3.

5.3 Method of Delivery. Each notice between the County and the City provided for or permitted under this Agreement must be in writing, state that it is a notice provided under this Agreement, and be delivered either by personal service, by first-class United States mail, by an 1 2
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6 overnight commercial courier service, by telephonic facsimile transmission, or by Portable Document Format (PDF) document attached to an email.
(A) A notice delivered by personal service is effective upon service to the recipient. (B) A notice delivered by first-class United States mail is effective three (3) business days after deposit in the United States mail, postage prepaid, addressed to the recipient. (C) A notice delivered by an overnight commercial courier service is effective one (1) business day after deposit with the overnight commercial courier service, delivery fees prepaid, with delivery instructions given for next day delivery, addressed to the recipient. (D) A notice delivered by telephonic facsimile transmission or by PDF document attached to an email is effective when transmission to the recipient is completed (but, if such transmission is completed outside of County business hours, then such delivery is deemed to be effective at the next beginning of a business day), provided that the sender maintains a machine record of the completed transmission.

5.4 Claims Presentation. For all claims arising from or related to this Agreement, nothing in this Agreement establishes, waives, or modifies any claims presentation requirements or procedures provided by law, including the Government Claims Act (Division 3.6 of Title 1 of the Government Code, beginning with section 810).

Termination and Suspension

6.1 Termination for Non-Allocation of Funds. The terms of this Agreement are contingent on the approval of funds by the appropriating government agency. If sufficient funds are not allocated, then the County or City, upon at least thirty (30) days’ advance written notice to the other Party, may:
(A) Terminate this Agreement; or
(B) The Parties may modify the Services and compensation and negotiate a new agreement.

6.2 Termination for Breach.
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7 (A) Upon County determining that a breach (as defined in paragraph (C) below) has occurred, the County shall give written notice of the breach to the City. The County may not suspend performance of Services under this Agreement without first providing written notice of the breach to the City and providing no less than thirty (30) days for City to cure the breach.
(B) If the City fails to cure the breach to the County’s satisfaction within the time stated in the written notice, the County may terminate this Agreement immediately upon City’s failure to cure.
(C) For purposes of this section, a breach occurs when, in the determination of the County, the City has failed to comply with or improperly performed any part of this Agreement.

6.3 Termination without Cause. In circumstances other than those set forth above, either Party may terminate this Agreement by giving at least thirty (30) days advance written notice to the other Party.

6.4 No Penalty or Further Obligation. Any termination of this Agreement by the City or County under this Article 6 is without penalty to, or further obligation of, the City or County.

Independent Contractor

7.1 Status. In performance of the work, duties and obligations assumed by County under this Agreement, it is mutually understood and agreed that County, including any and all of County’s officers, agents, and employees, will at all times be acting and performing as an independent contractor, and shall act in an independent capacity, and not as an officer, agent, servant, employee, joint venturer, partner, or associate of the City. Furthermore, City shall have no right to control or supervise or direct the manner or method by which County shall perform its work and function. However, City shall retain the right to administer this Agreement to verify that County is performing its obligations in accordance with the terms and conditions thereof.

7.2 Verifying Performance. City and County shall comply with all applicable provision of law and the rules and regulations, if any, of governmental authorities having jurisdiction over 1 2
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8 matters the subject thereof. The City has no right to control, supervise, or direct the manner or method by which County shall perform its work or function, but the City may verify that the County is performing according to the terms of this Agreement.

7.3 Benefits. The Parties shall be solely liable and responsible for providing to, or on behalf of, their employees all legally-required employee benefits. In addition, the Parties shall be solely responsible for all matters relating to payment of their respective employees, including compliance with Social Security withholding and all other regulations governing such matters, and hold harmless the other Party from disputes arising from such matters.

7.4 Services to Others. The Parties acknowledge that, during the term of this Agreement, the County may provide services to other entities unrelated to the City.

Indemnity and Defense

8.1 Indemnity. The City agrees to indemnify, save, hold harmless, and at County’s request, defend County, its officers, agents, and employees from any and all costs and expenses (including attorney’s fees and costs), damages, liabilities, claims, and losses occurring or resulting to County in connection with the performance, or failure to perform, by City, its officers, agents, or employees under this Agreement, and from any and all costs and expenses (including attorney’s fees and costs), damages, liabilities, claims, and losses occurring or resulting to any person, firm, or corporation who may be injured or damaged by the performance, or failure to perform, of City, its officers, agent, or employees under this Agreement.

The County agrees to indemnify, save, hold harmless, and at City’s request, defend City, its officers, agents, and employees from any and all costs and expenses (including attorney’s fees and costs), damages, liabilities, claims, and losses occurring or resulting to City in connection with the performance, or failure to perform, by County, its officers, agents, or employees under this Agreement, and from any and all costs and expenses (including attorney’s fees and costs), damages, liabilities, claims, and losses occurring or resulting to any 1 2
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9 person, firm, or corporation who may be injured or damaged by the performance, or failure to perform, of County, its officers, agent, or employees under this Agreement.

8.2 Survival. This Article 8 shall survive the termination or expiration of this Agreement.

Reserved
Inspections, Audits, and Public Records

10.1 Inspection of Documents. Either Party shall make available for examination at any time during regular business hours, all of the other Party’s records and data with respect to the matters covered by this Agreement, excluding attorney-client privileged communications. A Party shall, upon request by the other Party, permit the requesting Party to audit and inspect all such records and data to ensure the Party’s compliance with the terms of this Agreement.

10.2 State Audit Requirements. Since this Agreement exceeds $10,000, the County and City shall be subject to the examination and audit of the California State Auditor, as provided in Government Code section 8546.7, for a period of three (3) years after final payment under this Agreement. This section survives the termination of this Agreement.

10.3 Public Records. The County is not limited in any manner with respect to its public disclosure of this Agreement or any record or data that the City may provide to the County. The County’s public disclosure of this Agreement or any record or data that the City may provide to the County may include but is not limited to the following:
(A) The County may voluntarily, or upon request by any member of the public or governmental agency, disclose this Agreement to the public or such governmental agency.
(B) The County may voluntarily, or upon request by any member of the public or governmental agency, disclose to the public or such governmental agency any record or data that the City may provide to the County, unless such disclosure is prohibited by court order.
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10 (C) This Agreement, and any record or data that the City may provide to the County, is subject to public disclosure under the Ralph M. Brown Act (California Government Code, Title 5, Division 2, Part 1, Chapter 9, beginning with section 54950). (D) This Agreement, and any record or data that the City may provide to the County, is subject to public disclosure as a public record under the California Public Records Act (California Government Code, Title 1, Division 10, beginning with section 7920.000) (“CPRA”).
(E) This Agreement, and any record or data that the City may provide to the County, is subject to public disclosure as information concerning the conduct of the people’s business of the State of California under California Constitution, Article 1, section 3, subdivision (b).
(F) Any marking of confidentiality or restricted access upon or otherwise made with respect to any record or data that the City may provide to the County shall be disregarded and have no effect on the County’s right or duty to disclose to the public or governmental agency any such record or data.

10.4 Public Records Act Requests. If a Party (“Requesting Party”) receives a written or oral request under the CPRA to publicly disclose any record that is in the other Party’s (“Disclosing Party”) possession or control, and which the Requesting Party has a right, under any provision of this Agreement or applicable law, to possess or control, then the Requesting Party may demand, in writing, that the Disclosing Party deliver to the Requesting Party, for purposes of public disclosure, the requested records that may be in the possession or control of the Disclosing Party. Within five (5) business days after the Requesting Party’s demand, the Disclosing Party shall (a) deliver to the Requesting Party all of the requested records that are in the Disclosing Party’s possession or control, together with a written statement that the Disclosing Party, after conducting a diligent search, has produced all requested records that are in the Disclosing Party’s possession or control that are responsive to the CPRA request, or (b) provide to Requesting Party a written statement that the Disclosing Party, after conducting a 1 2
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11 diligent search, does not possess or control any of the requested records responsive to the CPRA request.

The Disclosing Party shall cooperate with the Requesting Party with respect to any such demand for such records. If the Disclosing Party wishes to assert that any specific record or data is exempt from disclosure under the CPRA or other applicable law, it must deliver the record or data to the Requesting Party and assert the exemption by citation to specific legal authority within the written statement that it provides to the Requesting Party under this section.

The Disclosing Party’s assertion of any exemption from disclosure is not binding on the Requesting Party, but the Requesting Party will give at least ten (10) days’ advance written notice to the Disclosing Party before disclosing any record subject to the Disclosing Party’s assertion of exemption from disclosure. The Disclosing Party shall indemnify the Requesting Party for any court-ordered award of costs or attorney’s fees under the CPRA that results from the Disclosing Party’s delay, claim of exemption, failure to produce any such records, or failure to cooperate with the Requesting Party with respect to the Requesting Party’s demand for any such records.

Reserved
General Terms

12.1 Modification. Any matters of this Agreement may be modified from time to time by written consent of all Parties without, in any way, affecting the remainder. Except as provided in Article 6, “Termination and Suspension,” this Agreement may not be modified, and no waiver is effective, except by written agreement signed by both Parties. The City acknowledges that County employees have no authority to modify this Agreement except as expressly provided in this Agreement.

12.2 Non-Assignment. Neither Party may assign its rights or delegate its obligations under this Agreement without the prior written consent of the other Party. 1 2
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12 12.3 Governing Law. The laws of the State of California govern all matters arising from or related to this Agreement.

12.4 Jurisdiction and Venue. This Agreement is signed and performed in Fresno County, California. City consents to California jurisdiction for actions arising from or related to this Agreement, and, subject to the Government Claims Act, all such actions must be brought and maintained in Fresno County.

12.5 Construction. The final form of this Agreement is the result of the Parties’ combined efforts. If anything in this Agreement is found by a court of competent jurisdiction to be ambiguous, that ambiguity shall not be resolved by construing the terms of this Agreement against either Party.

12.6 Days. Unless otherwise specified, “days” means calendar days.

12.7 Headings. The headings and section titles in this Agreement are for convenience only and are not part of this Agreement.

12.8 Severability. If anything in this Agreement is found by a court of competent jurisdiction to be unlawful or otherwise unenforceable, the remaining terms of this Agreement shall remain in full force and effect, and the Parties shall make their best efforts to replace the unlawful or unenforceable part(s) of this Agreement with lawful and enforceable terms intended to accomplish the Parties’ original intent.

12.9 Nondiscrimination. During the performance of this Agreement, the Contractor shall not unlawfully discriminate against any employee or applicant for employment, or recipient of services, because of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, military status or veteran status pursuant to all applicable State of California and federal statutes and regulation.

12.10 No Waiver. Payment, waiver, or discharge by the County of any liability or obligation of the City under this Agreement on any one or more occasions is not a waiver of performance of any continuing or other obligation of the City and does not prohibit enforcement by the County of any obligation on any other occasion.
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13 12.11 Entire Agreement. This Agreement, including its exhibits, is the entire agreement between the City and the County with respect to the subject matter of this Agreement, and it supersedes all previous negotiations, proposals, commitments, writings, advertisements, publications, and understandings of any nature unless those things are expressly included in this Agreement. If there is any inconsistency between the terms of this Agreement without its exhibits and the terms of the exhibits, then the inconsistency will be resolved by giving precedence first to the terms of this Agreement without its exhibits, and then to the terms of the exhibits.

12.12 No Third-Party Beneficiaries. This Agreement does not, and is not intended to, create any rights or obligations for any person or entity except for the Parties.

12.13 Authorized Signature. The City represents and warrants to the County that:
(A) The City is duly authorized and empowered to sign and perform its obligations under this Agreement.
(B) The individual signing this Agreement on behalf of the City is duly authorized to do so and his or her signature on this Agreement legally binds the City to the terms of this Agreement.

12.14 Electronic Signatures. The parties agree that this Agreement may be executed by electronic signature as provided in this section.
(A) An “electronic signature” means any symbol or process intended by an individual signing this Agreement to represent their signature, including but not limited to (1) a digital signature; (2) a faxed version of an original handwritten signature; or (3) an electronically scanned and transmitted (for example by PDF document) version of an original handwritten signature.
(B) Each electronic signature affixed or attached to this Agreement (1) is deemed equivalent to a valid original handwritten signature of the person signing this Agreement for all purposes, including but not limited to evidentiary proof in any administrative or judicial proceeding, and (2) has the same force and effect as the valid original handwritten signature of that person.
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14 (C) The provisions of this section satisfy the requirements of Civil Code section 1633.5, subdivision (b), in the Uniform Electronic Transaction Act (Civil Code, Division 3, Part 2, Title 2.5, beginning with section 1633.1).
(D) Each Party using a digital signature represents that it has undertaken and satisfied the requirements of Government Code section 16.5, subdivision (a), paragraphs (1) through (5), and agrees that each other Party may rely upon that representation.
(E) This Agreement is not conditioned upon the parties conducting the transactions under it by electronic means and either Party may sign this Agreement with an original handwritten signature.

12.15 Counterparts. This Agreement may be signed in counterparts, each of which is an original, and all of which together constitute this Agreement. [SIGNATURE PAGE FOLLOWS]
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15 The Parties are signing this Agreement on the date stated in the introductory clause.

CITY OF MENDOTA
_________________________________
Frank Renteria
Chief of Police
City of Mendota
1759 7th Street
Mendota, CA 93640

COUNTY OF FRESNO
_________________________________
Garry Bredefeld, Chairman of the Board of
Supervisors of the County of Fresno
_________________________________
Attest:

Bernice E. Seidel
Clerk of the Board of Supervisors
County of Fresno, State of California
By: _______________________
Deputy
For accounting use only:

Org No.: 31113320
Account No.: 4975
Fund No.: 0001
Subclass No.: 10000
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Exhibit A
A-1
Scope of Services
Law Enforcement Dispatch Services: County agrees, through its Sheriff’s Office, to receive phone calls at the Sheriff’s Office communications center for requests to dispatch City’s police department personnel for law enforcement responses to such requests. The Services provided under this Agreement do not include, and the Sheriff’s Office shall not provide, any dispatch services for requests for emergency medical services or fire suppression services. If the Sheriff’s Office receives telephone calls requesting emergency medical services or fire suppression services within City boundaries, the Sheriff’s Office shall transfer those calls to the emergency medical services dispatching center. The Sheriff’s Office shall provide Services via the radio to direct City’s police department personnel to various calls for service.

The Sheriff’s Office shall also provide, within the limitations of this Agreement, training to City’s police personnel in the use of the Sheriff’s Office’s radio procedures and language as deemed necessary by the Parties. This training shall cover the computer priority systems, uniformity of dispositions, and radio language and proper radio etiquette. 1 2
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Exhibit B
B-1
The County will be compensated for performance of its Services under this Agreement as provided in this Exhibit B. The County is not entitled to any compensation except as expressly provided in this Exhibit B, and as described in this Agreement.

1. County agrees to perform Services for the City at the rate specified below per resident of the City (as determined by the State Department of Finance certified population estimated as of January 1st of that year) until such time as the rate is updated pursuant to Article 3 of this Agreement. Under this Agreement, the County’s cost recovery shall be 100%, at the then-current rate (i.e. the rate listed at the time the service is provided) listed in the Master Schedules of Fees Charges, and Recovered Costs, Section 2609, subdivision (a), for the Dispatcher Per Capita at the rate, per hour. City acknowledges that these rates are subject to change, as delineated in the Agreement. The total amount of the Law Enforcement Dispatch Services to be provided and paid for, and the manner of invoicing, is described in the Agreement.

2. Monthly Charge for FY 2025-26 (July 1, 2026 - June 30, 2027) (the “2026-2027 Monthly Charge”) is charged to the latest Master Schedule of Fees (MSF) approved on December 9, 2025, rates for the following:

A. The methodology to calculate these amounts are as follows:
• (July 1, 2026 – June 30, 2027) Per resident charge = $17.91 (100% of $17.91 per resident)
• Number of residents in City (as determined by State Department of Finance certified population estimate as of January 1, 2025) = 12,710 1 AGENDA ITEM – STAFF REPORT
TO: HONORABLE MAYOR AND COUNCILMEMBERS
FROM: MICHAEL OSBORN, PROJECT MANAGER
VIA: CRISTIAN GONZALEZ, CITY MANAGER
SUBJECT: AWARDING THE CONSTRUCTION CONTRACT TO WALSH MONTGOMERY CONSTRUCTION, INC. FOR THE 2024 LOCAL STREET RECONSTRUCTION PROJECT DATE: MAY 5, 2026
ISSUE
Shall the City Council adopt Resolution No. 26-26, awarding the construction contract to Walsh Montgomery Construction, Inc. for the 2024 Local Streets Reconstruction project?

BACKGROUND
The City is responsible for maintaining 31.6 centerline miles of public streets and alleys. The current pavement condition index of 38 (measured in a scale of 1 to 100) is lower than the state average of 65. The majority of the City’s street network is functionally classified as “local” streets and therefore, not eligible for funding through Caltrans/Federal Highway Administration.

This makes it fiscally impossible to improve the City’s street network with local street funds alone.

In 2024 the City was awarded a $5,000,000 Community Project Funding (“CPF”) grant through congressional action. These funds are administered by the Federal Department of Housing and Urban Development (“HUD”) for the 2024 Local Streets Reconstruction (the “Project”). The scope of the Project is, generally, the reconstruction and rehabilitation of ten roadway segments within the City including Americans with Disabilities Act (“ADA”) upgrades and water main and service line improvements.

At a Special City Council Meeting in April 2024, the City Council identified the following street segments for potential use of the grant funding:

Priority Segments:
• Tule Street (7th to 9th)
• Jennings Street
• Quince Street (10th to near Belmont)
• Lolita Street (Divisadero to 10th)
• 4th Street (L to I)
• 9th Street (Marie to Airport Blvd, striping only)
Additional Segments:
• 4th Street (H to I)
• I Street (Kate to Divisadero)
2 • Kate Street (north of I)
• Rio Frio Street (4th to 5th & 6th to 7th)
• 4th Street (Oller to Rio Frio)
Public Works staff identified which of these street segments have had leaks and repairs needed on the underground municipal water system and which should be addressed with this project to avoid potential damage to the new pavement. The water improvements are incorporated in the project.

Provost & Pritchard staff and City staff worked diligently with HUD to make the funding available as soon as possible. The City has cleared environmental review (CEQA & NEPA), satisfied HUD’s award requirements, and completed the construction documents (plans and specifications) with a base bid that includes the priority street segments and add alternates for each additional street segment.

The request for bids was initially advertised in the Business Journal and construction documents were made available to contractors through local Builder’s Exchanges on Friday, February 27, 2026 and advertised again on Friday, March 6, 2026. On Tuesday, April 14, 2026 at 2:00 p.m. the public bid opening was held at City Hall. Four general contractors attended and submitted bids, along with staff and the Project Manager. The bid results were as follows:

Contractor Name Base Bid
4th Street
(H Street to I
Street) I Street Kate Street Rio Frio Street
4th Street
(Oller Street to
Rio Frio Street)
1 Dave Christian Construction Co., Inc $2,903,291.05 $601,235.20 $1,092,269.85 $151,173.85 $625,852.10 $794,735.15 2 Walsh Montgomery Construction, In $2,905,636.50 $392,425.00 $1,028,056.80 $69,679.00 $573,915.40 $551,305.70 3 Avison Construction, Inc. $3,203,610.00 $562,364.00 $973,382.00 $61,146.00 $553,997.00 $530,197.00 4 Cal Valley Construction $2,996,899.50 $395,643.00 $1,016,326.00 $53,823.00 $539,626.00 $587,003.00 Add Alternates

ANALYSIS
Staff at Provost & Pritchard have reviewed the submitted bid packages. The base bids were all very close.

The basis of comparison is the Base Bid plus any selected Add Alternate(s). Although Dave Christian Construction had the lowest Base Bid amount, once any add alternates are included, Walsh Montgomery Construction is the apparent lowest bidder.

It would be prudent to hold some of the funds as a contingency to cover unforeseen conditions and/or request modifications to the scope of work during construction. It is generally recommended that a 10% contingency be budgeted for this; however, that would mean that the City would potentially leave 10% of the funding unused. Staff recommends reserving less than 10% and utilizing enterprise funds should additional funding be necessary. 3 To maximize the grant funding of $4.2 million allotted for the construction contract, staff recommends the following 10 street segments be included in the award; these segments are highlighted in the figure that follows:

1. Tule Street (7th to 9th)

2. Jennings Street

3. Quince Street (10th to near Belmont)

4. Lolita Street (Divisadero to 10th)

5. 4th Street (L to I)

6. 9th Street (Marie to Airport Blvd,
striping only)

7. Kate Street (north of I)

8. Rio Frio Street (4th to 5th)

9. Rio Frio Street (6th to 7th)

10. 4th Street (Oller to Rio Frio)
4 The apparent lowest bidder, Walsh Montgomery Construction, Inc., has a total bid price for this combination of streets (base plus selected add alternates) of $4,100,536.60 and their bid package was reviewed and found to be complete and responsive. Walsh Montgomery Construction, Inc. has a good reputation for street and water projects and is a licensed Class A contractor.

Staff will work with the contractor for scheduling, but work is anticipated to start in June and be completed in November.

FISCAL IMPACT
The lowest responsive and responsible bid price is significantly lower than the Engineer’s Estimate and fits within the budget. The City will submit for and receive reimbursement for 100% of the project costs ($5,000,000); this includes all design work to-date as well as expenses for Construction Administration, Staking and Inspection services. This project will not impact the General Fund.

RECOMMENDATION
Staff recommends that the City Council adopt Resolution No. 26-26, awarding the construction contract for construction for the 2024 Local Streets Reconstruction to the lowest responsible, responsive bidder, Walsh Montgomery Construction, Inc. in the total amount of $4,100,536.60 and authorizing the City Manager or their designee to execute all documents necessary for the completion of the Project.

Attachment(s):

1. Resolution No. 26-26
1 BEFORE THE CITY COUNCIL
OF THE

CITY OF MENDOTA, COUNTY OF FRESNO
RESOLUTION NO. 26-26

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MENDOTA AWARDING THE CONSTRUCTION CONTRACT FOR THE 2024 LOCAL STREETS
RECONSTRUCTION TO WALSH MONTGOMERY CONSRUCTION, INC. IN THE AMOUNT OF $4,100,536.60
WHEREAS, the City of Mendota (“City”) owns and maintains 31.6 centerline miles of public streets and alleys; and
WHEREAS, the pavement condition index of the City’s street network is currently 38 out of 100; and
WHEREAS¸ in 2024 the City of Mendota was awarded a $5,000,000 Community Project Funding grant through congressional action administered through the Federal Housing and Urban Development for the 2024 Local Streets Reconstruction (“Project”); and
WHEREAS, all necessary right of way and environmental (CEQA & NEPA) clearances have been obtained; and
WHEREAS, on February 27, 2026 and March 6, 2026 notice was published in the Business Journal and regional Builder’s Exchanges notifying all interested parties to submit bids for the project; and
WHEREAS, a public bid opening was held promptly after the deadline published in the notice on Tuesday, April 14, 2026 at 2:00 p.m. at City Hall; and WHEREAS, four companies submitted bids before the deadline; and WHEREAS, the basis of comparison is the base bid inclusive of any selected add alternates;
WHEREAS, the apparent lowest responsible bidder was Walsh Montgomery Construction, Inc. whose proposal was found to be responsive and within the overall project budget; and
WHEREAS, the City will be fully reimbursed for all expenses incurred for this Project.

NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Mendota hereby awards the construction contract for the 2024 Local Streets Reconstruction to Walsh Montgomery Construction, Inc. in the amount of $4,100,536.60 2 and authorizes the City Manager or their designee to execute all documents necessary for the completion of the Project.
______________________________
Victor Martinez, Mayor
ATTEST:

I, Celeste Cabrera-Garcia, City Clerk of the City of Mendota, do hereby certify that the foregoing resolution was duly adopted and passed by the City Council at a regular meeting of said Council, held at the Mendota City Council Chambers located at 725 Riofrio Street, Mendota, California 93640, on the 5th day of May, 2026, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
______________________________
Celeste Cabrera-Garcia, City Clerk
1 AGENDA ITEM – STAFF REPORT
TO: HONORABLE CITY COUNCIL
FROM: WANGER JONES HELSLEY PC
SUBJECT: PUBLIC HEARING TO CONSIDER AND REVIEW STATUS OF

DEVELOPMENT AGREEMENT DEFAULT, ENTITLEMENTS, AND
TERMINATION OF DEVELOPMENT AGREEMENT WITH ELEMENT 7

MENDOTA, LLC
DATE: MAY 5, 2026
ISSUE
The City Council of the City of Mendota (“City”) is holding a hearing to consider and review the status of the development agreement default, entitlements, and termination of the development agreement with Element 7 Mendota, LLC, in connection with the construction and operation of a commercial cannabis dispensary.

BACKGROUND
Element 7 Mendota, LLC (“Developer”), owns and operates a commercial cannabis business within the City’s borders. Developer’s business is located at 796 Oller Street, Mendota, California 93640 (the “Property”). The Property is owned by a third party and used by Developer through a lease agreement.

Developer’s business is a private enterprise subject to a development agreement with the City (the “DA”; Exhibit 1) ensuring legal compliance with the City’s applicable licensing and zoning requirements as required by the Mendota Municipal Code (“MMC”).

1. Approval of Developer’s DA
On October 9, 2015, Governor Jerry Brown signed three bills into law (Assembly Bill 266, Assembly Bill 243, and Senate Bill 643) which are collectively referred to as the Medical Cannabis Regulation and Safety Act (“MCRSA”). MCRSA established a statewide regulatory system for the cultivation, processing, transportation, testing, manufacturing, and distribution of medical marijuana to qualified patients and their primary caregivers.

On November 8, 2016, California voters enacted Proposition 64, the Control, Regulate and Tax Adult Use of Marijuana Act, also known as the Adult Use of Marijuana Act (“AUMA”), which established a comprehensive system to legalize, control, and regulate the cultivation, processing, manufacture, distribution, testing, and sale of nonmedical cannabis, including cannabis products, for use by adults 21 years and older, and to tax the growth and retail sale of cannabis for nonmedical use.
2 On June 27, 2017, Governor Jerry Brown signed into law the Medicinal and Adult- Use Cannabis Regulation and Safety Act (“MAUCRSA”), which created a single regulatory scheme for both medicinal and adult-use cannabis businesses. MAUCRSA retained the provisions in MCRSA and AUMA that granted local jurisdictions control over whether businesses engaged in commercial cannabis activity may operate in a particular jurisdiction.

In 2017, the City amended the MMC to create a commercial cannabis overlay district to “serve and promote the public health, safety, and welfare of the citizens of Mendota, to facilitate the establishment of permitted commercial cannabis businesses within the city while ensuring that such businesses do not interfere with other lawful land uses, and to provide new sources of revenue to fund city services.” (Mendota Ord. No. 17-13; MMC, § 17.99.010, subd. (B).) On June 11, 2019, the City of Council of the City of Mendota adopted Ordinance No. 19-06, amending Chapter 8.37 of the MMC to eliminate the ban on cannabis dispensaries and to establish regulations for commercial cannabis businesses.

On September 10, 2019, the City Council adopted Ordinance No. 19-09, modifying the location requirements for commercial cannabis retail businesses. At the September 10th meeting, the Council also adopted Resolution No. 19-65, establishing the amount of the commercial cannabis business permit fee and the commercial cannabis development agreement processing fee.

On September 24, 2019, the City Council adopted Ordinance No. 19-08, amending the City’s zoning code to permit commercial cannabis businesses in the C-3 district subject to a conditional use permit.

On October 8, 2019, the City Council adopted Resolution No. 19-75, establishing the application submittal period for applications to enter into a development agreement for commercial cannabis businesses.

On October 15, 2019, the City issued a formal invitation seeking applications for businesses to enter into development agreements for commercial cannabis activity. (Exhibit 2.) Developer submitted a formal response proposing a commercial cannabis retail operation. (Exhibit 3.) On September 8, 2020, the City Council adopted Ordinance No. 20-16, establishing additional requirements for the operation and entitlement of commercial cannabis businesses operating within the City.

On May 25, 2021, the City Council adopted Ordinance Nos. 21-07 and 21-08, revising the requirements applicable to the operation and entitlement of commercial cannabis businesses operating within the City.

On May 25, 2021, the City adopted Ordinance No. 21-09, approving Developer’s DA. The City recorded the DA with the Office of the Fresno County Recorder on December 15, 2021, designated Document No. 2021-0205311.
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3 2. DA Compliance
Developer’s DA requires them to make quarterly payments in a minimum annual amount of $5.00 per square foot of the Property and the greater of $50,000.00 or 3% of annual Gross Receipts, representing Developer’s Public Benefit Fee obligations. (Exhibit 1, § 4.2, subds. (a)(1) and (2).)
In mid-2025, the City was approached by representatives of Developer and/or its creditors, Nug, Inc. (“Nug”). Upon a review of Developer’s performance under the DA, the City determined Developer had not remained current with its Public Benefit Fee payment obligations beginning in 2023. Those individuals discussed the possibility of Element 7 selling or assigning its operations in the City to another entity as a means to get current on Developer’s payment obligations.

On September 17, 2025, the Los Angeles County Superior Court, Case No. 25SMCV04499, issued an order appointing receivers to take control of all of Element 7’s operations throughout California. (Exhibit 4.) Kevin Singer and his office were assigned as the receivers (the “Receivers”) in charge of Developer’s operations in the City. (Id.) The Receivers provided a copy of their appointing order to the City on October 30, 2025. City staff met with the Receiver’s office on October 31, 2025, to discuss the DA and provide information regarding the status of Developer’s operations on the Property. City staff answered questions from the Receiver and their consultants and received proposals regarding the disposition of Developer’s operations over the coming months.

On January 27, 2026, the City sent a Notice of Default and Demand for Cure to Developer and the Receiver. (Exhibit 5.) This Notice of Default identified a total of $170,537.34 in past due fees due pursuant to the DA, stretching back to 2023:
▪ $48,731.52 remaining due to the City for 2023 payment obligations; ▪ $59,173.82 remaining due to the City for 2024 payment obligations; and ▪ $62,632.00 due to the City for 2025 payment obligations.

The Notice of Default provided a deadline of March 4, 2026, for Developer to cure its default. (Id.)
Developer failed to pay the outstanding amounts due by March 4, 2026, and were in officially in default of the DA after that date. (See Exhibit 1, DA, § 8.1.) ///
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4 3. Developer’s Offer
On March 17, 2026, the City received an offer requesting the following revisions to the DA:
▪ Replace Element 7 with NUG Inc.
▪ A proposed payment plan […] $50,000 down payment and balance over 3 years.
▪ Changes to the city fees under the DA – currently in section 4.2 o Per square foot fee currently $5.00 – propose to reduce to $2.50 o The greater of 3% Gross Receipts or $50,000 Annual paid quarterly – Propose to reduce to 3% GRT only, paid quarterly. o 4.2.3 Asks for an additional $50,000 to be spent on ELEMENT 7 CARES initiate to support the community – Request to REMOVE o Maybe be realist and ask to remove – 4.2.5, 4.2.6, 4.2.8, 4.2.9 as all of these are …….

4. Planning Commission Hearing dated March 24, 2026
On or before March 11, 2026, City staff noticed the Planning Commission hearing via:
▪ Mailing to the owner of the Property;
▪ Mailing to all owners of real property within 300 feet of the Property; ▪ Publication in The Fresno Bee;
▪ Mailing to Developer and the Receiver;
▪ Posting on the City’s website; and
▪ Posting at City Hall, the City Council Chambers, and the library.

The Planning Commission held a public hearing as noticed on March 24, 2026. Developer was represented during the hearing by Jon Zimmerman. Following deliberation, the Planning Commission considered and voted to approve the following five recommendations for the City Council’s consideration:
▪ Recommendation that the City Council consider approving an assignment of the DA to NUG Inc.
▪ Recommendation that the City Council consider approving a repayment plan for the outstanding public benefit fees due via a down payment of 5 $50,000 plus repayment of the remainder in thirty-six equal monthly installments.
▪ Recommendation that the City Council consider decreasing the $5.00 per square foot charge in the MMC to just $2.50 per square foot. ▪ Recommendation that the City Council consider decreasing the DA’s public benefit fee amount to 3% of gross receipts.
▪ Recommendation that the City Council consider amending the DA’s social program obligations as applicable to NUG Inc.

5. City Council Hearing dated May 5, 2026
On or before April 20, 2026, City staff noticed this hearing via:
▪ Mailing to the owner of the Property;
▪ Mailing to all owners of real property within 300 feet of the Property; ▪ Publication in The Fresno Bee;
▪ Mailing to Developer and the Receiver;
▪ Posting on the City’s website; and
▪ Posting at City Hall, the City Council Chambers, and the library.

ANALYSIS
This hearing was set for the City Council to consider the Planning Commission’s recommendations and the status of Developer’s ongoing default under the DA.

1. Relevant DA Provisions
The DA’s terms relevant to public benefit fees, default, and termination are as follows:

Section 4.2. Public Benefit.
(a) The Parties acknowledge and agree that this Agreement confers substantial private benefit upon Developer that will place burdens upon City infrastructure, services, and neighborhoods. Accordingly, the Parties intend to provide consideration to City to offset these impacts that is commensurate with the private benefits conferred on Developer (the "Public Benefit Fees"). Developer acknowledges that the Public Benefit Fees provided for herein are greater than the annual fee provided for in Mendota Municipal Code section 17.99.070 and, despite this fact, voluntarily agrees to pay the fees acknowledging that the private benefits conferred are of equal or greater consideration to the fees, and waives any right to challenge said fees as a violation of any law. In consideration of the 6 foregoing, Developer shall remit to City the following payments (collectively referred to as the "Public Benefit Amount):

1. The applicant agrees to pay an annual fee, to be paid on the First (lst) business day of every Third (3rd) month, based on the total square footage of the developed portions of the Site ("Square Footage Payment") in an amount as follows:

A. Five dollars ($5.00 per square foot of the Site.

2. An annual payment in the grater of the following amounts:

A. Fifty Thousand Dollars ($50,000) ("Flat Rate Payment"), to be paid in quarterly installments of Twelve Thousand Five Hundred Dollars ($12,500) on the First (1st) business day of every Third (3rd) month after operations have begun on the Site; or
B. Three percent (3%) of Developer's yearly Gross Receipts ("Gross Receipts Payment") from the Project, to be paid in quarterly installments on the First (1
st) business day of every Third (3rd) month
after operations have begun on the Site, to be calculated as follows:

1. For Developer's first (1
st) year of operation, an estimated Three
Million Dollars ($3,000,000.00) in Gross Receipts equates to Ninety Thousand Dollars ($90,000.00) annually, paid in the amounts of Twenty-Two Thousand Five Hundred Dollars
($22,500.00) each quarter.

2. Not later than thirty (30) days after the close of each fiscal year, City shall retain and pay a third-party auditing company, the costs of which shall be fully reimbursed to City by Developer, to fully and completely audit Developer's financial records for the preceding year. In the event the preceding years' Gross Receipts were lower than outlined above, any amount overpaid by
Developer shall be offset against Developer's next Gross Receipts Payment. In the event the preceding year's Gross Receipts were higher than outlined above, Developer shall pay the difference owed City with Developer's following Gross Receipts Payment.

This pattern shall continue for the Term of this Agreement. (b) Developer shall remit the Square Footage Payment, Flat Rate Payment, and Gross Receipts Payment, as applicable, to City as described in subdivision (a) of this section. Failure to remit the Square Footage Payment, Flat Rate Payment, and/or Gross Receipts Payment, as applicable, is a material breach of this Agreement. 7 (c) In addition to the Public Benefit Amount, Developer shall also perform to support the following Community Benefit Programs, as more particularly outlined in Exhibit F, to benefit the City and its residents:
l. Developer shall use its best efforts to ensure eighty percent (80%) of its employees are hired from the Local area. Developer agrees to use its best efforts to promote the hiring and employment of Local residents to construct, if necessary, operate the business within the Project, and provide maintenance and security services to the Project, provided Developer has control over such hiring and employment. As part of such efforts, Developer agrees to include in any lease, license, or other conveyance of any right to use the Project such language that any transferee of such interest shall use its best efforts to hire and employ Local residents for its business;

2. Developer shall use its best efforts to ensure seventy-five percent (75%) of Developer's building, construction, equipment, repairs, and maintenance needs shall be serviced by Local businesses or individuals, with a minimum of Three Hundred Thousand Dollars ($300,000.00) spent Locally during the first (1 st) year
of operations at the Site and, following the first (1
st) year of operations at the Site,
Three Thousand Dollars ($3,000.00) spent Locally per month for the remainder of the Term of this Agreement;

3. After Developer obtains a business license from the City, Developer shall commit Fifty Thousand Dollars ($50,000.00) annually to the ELEMENT 7 CARES program for the purpose of actively building and creating facilities that contribute towards Local community development;

4. Developer shall develop and implement Local outreach and education efforts to build good will within the City, as more particularly described in Exhibit F, including, but not limited to:

A. Designating one of Developer's Senior Managers as its community Relations Officer;
B. During Developer's first (1
st) year of operations at the Site, the Senior
Manager designated as Developer's Community Relations Officer shall attend quarterly meetings with the City to discuss costs, benefits, and other community issues;
C. Developer's representatives personally visiting each business in a five hundred (500) foot radius of the Site within twenty-one (21) days of being awarded a conditional use permit for the Project;
D. Creating and utilizing an email database of all businesses within a five hundred (500) foot radius of the Site and sending them a bi-annual email offering news of the cannabis industry and Developer's business, asking 8 for proactive feedback on better business and community relations, and providing the name and phone number of Developer's Community Relations Manager;
E. Inviting Local businesses to attend a Business Feedback and Community Management Forum twice (2) each year, which will be hosted at a suitable venue in the proximate Locil area. Additionally, City residents within five hundred (500) feet of Element 7 shall also be invited to attend these forums and receive Developer's Community Relations Officer's contact information; and
F. Creating a dedicated email address for priority feedback regarding Developer's operations and circulating that email address to each business in the five hundred (500) foot radius of the Site within twenty-one (21) days of being awarded a conditional use permit.

5. Developer shall create and implement Local community educational outreach events and partnerships with non-profit organizations, municipal agencies, and neighborhood groups centered on the medicinal qualities of cannabis to be held quarterly each year for the entirety of the Term of this Agreement;

6. Developer shall create and implement a Staff Volunteer Program, wherein its fulltime employees shall be required to commit at least ten (10) hours quarterly to a Local cause or charity;

7. Developer shall create and implement a Medical Cannabis Discount Program, wherein Developer shall provide assistance to seniors, retired veterans, HIV and AIDS patients, children diagnosed with autism, epileptics, terminally ill patients, low-income customers on government assistance, and the like, with access to discounted medical cannabis;

8. Developer shall create and implement the E7 ONE program, wherein Developer shall create a Social Equity and Local Enterprise Board to oversee the development and implementation of Developer's social equity policies and practices. This Social Equity and Local Enterprise Board shall, at least once (1) per year, produce a report that assesses workplace demographics and other program performance indicators for use in achieving the E7 ONE program's specified goals and social equity outcomes. Where the Social Equity and Local Enterprise Board's analysis indicates persons from underrepresented or disadvantaged populations are not sufficiently represented in Developer's workforce, the Social Equity and Local Enterprise Board shall develop new strategies to fulfill Developer's commitments to diversity and inclusivity; and

9. Developer shall, at least annually, host Expungement Clinics in partnership with the Fresno County Public Defender's Office and/or the National Diversity and Inclusion Cannabis Alliance to provide Local residents with minor drug-related 9 criminal records to obtain free legal support in seeking expungement of said minor offenses from their criminal records.
(d) Developer shall prepare a written report explaining the progress of each of the Community Benefit Programs to be delivered to the City Council within sixty (60) days of the conclusion of each fiscal year. Said written report shall include financial records relating to any Community Benefit Program endeavor that required a certain sum of money to be spent. Said financial records shall be included in the annual third-party audit provided for in Section 4.2(a)(2)(B)(2), above.
(e) In the event Developer fails to develop, implement, create, or otherwise continue any of the Community Benefit Programs outlined in Section 4.2(c), above, upon which City has relied in good faith in extending this Agreement, Developer shall be found to be in breach of this Agreement and City may exercise any right contained in the Agreement to remedy the breach.

Section 4.4. Records.

Subsequent assignees shall keep records of all Commercial Cannabis Activity in accordance with Chapter 16 (commencing with Section 26160) of Division 10 of the Business and professions Code. All records required by this Article 4 shall be maintained and made available for City's examination and duplication (physical or electronic) upon the City Manager's request at the Site or at an alternate facility as approved in writing by the City Manager or his-or her designee.

Upon request, Developer shall make all records relating to this Article 4 available to City within three (3) business days.

Section 4.5. Penalty.

Developer acknowledges that to ensure proper compliance with the terms of this Agreement and any applicable laws, City must engage in costly compliance review, inspections, and, if necessary, enforcement actions to protect the health, safety, and welfare of its residents. penalty and interest provisions are necessary to assist City in compliance review and enforcement actions. If Developer fails to make any payment when due as required by this Agreement, including the public Benefit Amount, and fails to cure such failure within the allotted Cire period, Extended Cure Period, or any extension thereof mutually agreed upon by the Parties in writing, the City may impose a "Non-Performance Penalty." A Non-Performance Penalty of one percent (1%) shall be applied to all past due payments. City shall deliver to Developer a "Notice of Nonperformance Penalty,” attached hereto as Exhibit C. Payment of the Non-Performance Penalty shall be in a single installment due on or before a date fifteen (15) calendar days following delivery of the Notice of Non-Performance Penalty. ///
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10 Section 4.6. Interest on Non-Performance Penalty.

If Developer fails to pay the Non-performance penalty after City has delivered the Notice of Non-Performance Penalty, then, in addition to the principal amount of the Non-Performance Penalty, Developer shall pay City interest at the rate of eighteen percent (18%) per annum, computed on the principal amount of the Non-Performance Penalty, from a date fifteen (15) calendar days following delivery of the Notice of Non-Performance Penalty.

Section 4.7. Exempt from City Tax.

For the Term of this Agreement and except as otherwise provided herein, Developer shall be exempt from any City tax on commercial cannabis businesses. Notwithstanding the foregoing, Developer and Project shall be subject to any and all taxes, assessments, or similar charges or fees of general applicability enacted by the federal government, state government, or County of Fresno, including any tax applicable to an area greater than the city limits to which City may be a party (i.e., county tax sharing agreement). In the event that the City applies a new tax on commercial cannabis businesses, the City shall refund or credit the amount owed as public Benefit Amount by an equal amount up to the amount of Public Benefit Amount owed to the Developer and any assuming owner proportional to the percentage ownership share of the gross land area of the Site. For the purposes of clarification, other than the Public Benefit Amount, the Processing Fees, and any other fees contemplated pursuant to this Agreement, Developer shall be exempt from any and all City taxes and fees relating to commercial cannabis activity and commercial cannabis businesses passed following the execution of this Agreement.

Section 8.1. General Provisions.
(a) Subject only to any extensions of time by mutual consent in writing, or as otherwise provided herein, the failure or delay by any Party to perform in accordance with the terms and provisions of this Agreement shall constitute a default. Subject to Section 8.1(g), any Party alleging a default or breach of this Agreement ("Charging Party") shall give the other Party ("Charged Party") not less than thirty (30) calendar days written notice, which shall specify the nature of the alleged default and the manner in which the default may be cured ("Cure Period"). During any such Cure Period, the Charged Party shall not be considered in default for purposes of termination of this Agreement or institution of legal proceedings for the breach of this Agreement. (b) After expiration of the Cure Period, if such default has not been cured or is not in the process of being diligently cured in the manner set forth in the notice, or if the breach cannot reasonably be cured within thirty (30) calendar days, the Charging Party may, at its option, institute legal proceedings pursuant to this Agreement or give notice of its intent to terminate this Agreement pursuant to Government Code section 65868. In the event City is the Charging Party, City may, in its sole discretion, give notice, as required by law, to the Charged Party of its intent to revoke or rescind any operable Conditional Use Permit related to or concerning the Project.
11 (c) Prior to the Charging Party giving notice to the Charged Party of its intent to terminate, or prior to instituting legal proceedings, the matter shall be scheduled for consideration and review by City in the manner set forth in Government Code sections 65865, 65867, and 65868 or the comparable provisions of the Mendota Municipal Code within thirty (30) calendar days from the expiration of the Cure Period.
(d) Following consideration of the evidence presented and said review before City, and after providing the Charged Party an additional thirty (30) calendar day period to cure, the Charging Party may institute legal proceedings against the Charged Party or may give written notice of termination of this Agreement to the Charged Party. (e) Evidence of default may arise in the course of a regularly scheduled periodic review of this Agreement pursuant to Government Code section 65865.1, as set forth in Section 8.2.

If any Party determines that another Party is in default following the completion of the normally scheduled periodic review, without reference to the procedures specified in Section 8.1(c), said Party may give written notice of termination of this Agreement, specifying in the notice the alleged nature of the default and potential actions to cure said default where appropriate. If the alleged default is not cured in sixty (60) calendar days or within such longer period specified in the notice, or the defaulting Party is not diligently pursuing a cure, or if the breach cannot reasonably be cured within the period or the defaulting party waives its right to cure such alleged default, this Agreement may be terminated by the non-defaulting Party by giving written notice. (f) In the event Developer is in material default under the terms and conditions of this Agreement, no permit application shall be accepted by City nor will any permit be issued to Developer until the default is cured, or the Agreement is terminated. (g) In the event that a person or entity other than the Developer is in default, Developer shall use commercially reasonable efforts to bring the person or entity in default into compliance. The City shall provide Developer with notice and opportunity to cure as provided for in paragraph (a) through (e) above, except that the time periods in paragraphs (a), (b), (c) and (e) shall be ninety (90) days ("Extended Cure Period").

Section 8.5. Cumulative Remedies of Parties.

In addition to any other rights or remedies, City or Developer may institute legal or equitable proceedings to cure, correct, or remedy any default, enforce any covenant, or enjoin any threatened or attempted violation of the provisions of this Agreement, so long as any such action conforms to section 8.1(c) of this Agreement.

Section 10.1. Assignment and Assumption.

Developer shall not have the right to sell, assign, or transfer all or any part of its rights, title, and interests in all or a portion of Site, or Project, subject to or a part of this Agreement, to any person, firm, corporation, or entity during the Term of this Agreement without the advance 12 written consent of the City Manager, such consent shall not be unreasonably withheld or conditioned. Any assignment or transfer prohibited by this Agreement will be considered an immediate breach of this Agreement and City may elect to immediately terminate this Agreement as it applies to the assumed property. If the City Manager approves an assignment or transfer of any interest detailed in this Section 10.1, City and Developer shall execute an "Assignment and Assumption Agreement” in the form attached hereto as Exhibit E. Nothing in this Section 10.1 applies to the Developer’s capitalization or ownership provisions.

2. Relevant MMC Provisions
MMC section 17.99.070
Conditions of Development.

The development agreement required pursuant to Section 17.99.060(B)(1) shall include the following terms:

A. The applicant agrees to pay an annual fee based on the total square footage of the developed portions of the property in an amount as follows:

1. Five dollars ($5.00) per square foot for so long as the developed portions of the property are less than two hundred thousand (200,000) square feet.

2. Four dollars ($4.00) per square foot for so long as the developed portions of the property are between two hundred thousand (200,000) square feet and four hundred ninety-nine thousand, nine hundred ninety-nine (499,999) square feet.

3. Mutually agreeable terms between the city and applicant so long as the developed portions of the property are five hundred thousand (500,000) square feet or greater.

B. The fee required pursuant to subdivision (A) shall be paid by the applicant in quarterly installments at times and locations specified by the city, and may not be paid in cash.

C. The applicant shall be responsible for paying the fee required pursuant to subdivision (A) for all developed portions of the property regardless of whether portions of the developed property are leased or otherwise conveyed to third parties. Any transfer of the applicant's interest in the developed property shall not affect the applicant's obligation to pay the fee required pursuant to subdivision (A) unless the recipient assumes the applicant's obligation to pay the fee for all developed portions of the property as required by this Section 17.99.070.
13 MMC section 8.37.050
Permits required to engage in commercial cannabis operations.

It shall be unlawful for any person in or upon property located within the city to engage in, conduct or carry on (or to permit to be engaged in, conducted or carried on) commercial cannabis operations unless the person:
(1) Has applied for and entered into a development agreement with the city; (2) Has a valid commercial cannabis business permit from the city; (3) Has a valid state license for the business's cannabis activity; (4) Has a valid conditional use permit;
(5) Is currently in compliance with all applicable state and local laws; (6) Has a cannabis business license tax certificate.

MMC section 8.37.060
Development agreement required for commercial cannabis businesses.

A. Prior to operating in the city and as a condition of issuance of a conditional use permit for commercial cannabis operations, each commercial cannabis business shall enter into a development agreement pursuant to Government Code Section 65864 et seq. with the city setting forth the terms and conditions under which the commercial cannabis business will operate that are in addition to the requirements of this chapter, including, but not limited to, public outreach and education, community service, payment of fees and other charges as set forth in subsection (C) of this section, and such other terms and conditions that will protect and promote the public health, safety, and welfare. Further procedures and minimum standards for a development agreement may be enacted by resolution of the city council.

B. The planning commission shall make a recommendation to the city council on whether to approve a development agreement submitted to it by city staff. The city council shall make a final decision on whether to approve a development agreement recommended to the city council by the planning commission.

C. Development agreements shall include a provision requiring the payment of a public safety impact mitigation fee based on a pro-rata share of projected annual enforcement costs for commercial cannabis businesses within the city.

D. All cannabis businesses operating pursuant to a development agreement shall be subject to any applicable taxes approved by the voters.
14 MMC section 8.37.240
Fees, charges, and taxes.

A. No person may commence or continue any commercial cannabis activity in the city without timely paying in full all fees and charges required for the operation of a commercial cannabis business. Fees and charges associated with the operation of a commercial cannabis business shall be established by resolution of the city council which may be amended from time to time.

B. All commercial cannabis businesses authorized to operate under this chapter shall pay all sales, use, business, and other applicable taxes, and all license, registration, and other fees required under federal, state, and local law. Each commercial cannabis business shall cooperate with the city with respect to any reasonable request to audit the business' books and records for the purpose of verifying compliance with this section, including but not limited to a verification of the amount of taxes required to be paid during any period.

MMC section 8.37.310
Remedies cumulative and not exclusive.

The remedies provided herein are not to be construed as exclusive remedies. The city is authorized to pursue any proceedings or remedies provided by law.

MMC section 8.37.330
No vested rights.

Neither this chapter, nor any other provision of this code or action, failure to act, statement, representation, certificate, approval, or permit issued by the city or its departments, or their respective representatives, agents, employees, attorneys, or assigns, shall create, confer, or convey any vested or nonconforming right or benefit regarding any commercial cannabis activity. Any benefit conferred by this chapter shall expire permanently and in full on the effective date of the city council's enactment of new cannabis legislation or upon repeal of this chapter. Should the city repeal or amend this chapter, no claim for loss of property rights or due process of any kind shall be maintained against the city. ///
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15 3. Potential Hearing Results
In light of the provisions reproduced in the previous section, the City Council must consider Developer’s payment default before any other entitlement-based decisions may be issued by the City. The City Council must also consider, but need not adopt, the Planning Commission’s recommendations regarding next steps for addressing Developer’s default status. Again, those recommendations include:
▪ Recommendation that the City Council consider approving an assignment of the DA to NUG Inc.
▪ Recommendation that the City Council consider approving a repayment plan for the outstanding public benefit fees due via a down payment of $50,000 plus repayment of the remainder in thirty-six equal monthly installments.
▪ Recommendation that the City Council consider decreasing the $5.00 per square foot charge in the MMC to just $2.50 per square foot. ▪ Recommendation that the City Council consider decreasing the DA’s public benefit fee amount to 3% of gross receipts.
▪ Recommendation that the City Council consider amending the DA’s social program obligations as applicable to NUG Inc.

In the event the City Council decides it wants to pursue a compromise with Developer, it may fashion any compromise that is reasonable under the circumstances.

In the event the City Council decides it wants to pursue legal remedies against Developer based on its default, the City Council may vote to terminate the DA and/or choose to file suit to recover unpaid fees. If the City Council chooses to terminate the DA, it must provide another thirty-day window in which the Developer may cure its default before a written notice of termination may issue. (DA, § 8.1, subd. (d).)

FISCAL IMPACT
Developer currently owes the City $170,537.34 in past due fees due pursuant to the DA, stretching back to 2023.

The fiscal impact of the many potential City actions related to Developer’s DA and generally applicable revisions to the City’s cannabis regulations are not quantifiable in the abstract. ///
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16 RECOMMENDATIONS
Staff recommends the City Council discuss Developer’s performance under the DA and consider the recommendations received from the Planning Commission regarding:

1. Outstanding monies due to the City under the DA;

2. Next steps regarding City enforcement of Developers’ DA; and/or

3. City fees charged to cannabis businesses, either generally or as to Developers specifically.

Attachments:

1. Development Agreement

2. Formal Invitation

3. Developer’s Proposal

4. Stipulated Order for Appointment of Receiver
EXHIBIT EXHIBIT 1|
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FRESN0 County Recorder
Paul Dictos, CPR
l,lednesday , Dec 15 , 2OZI O2:2E z l7 Pl'l
PaEes: 4t

RECORDING REQUESTED BY

AND WHEN RECORDED MAIL
TO:

City of Mendota
643 Quince Street
Mendota, CA 93640
Attn: City Clerk
Titles: I
Fees :

CR SBZ Fee
Taxes :

Tota I :

CITY OF I"IENDOTR
$0
$0
$0
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SPACE ABOVE THIS LINE FOR RECORDER'S USE
Recording Fee Exempt per Government Code $6103 and 527388.1(a)(2XD)

DEVELOPMENT AGRE,EMENT
THIS DEVELOPMENT AGREEMENT ("Agreement") is made and entered into on this 25th day of May,202l,by and between the CITY OF MENDOTA, a municipal corporation of the State of California ("City"), and ELEMENT 7 MENDOTA, LLC, a Califomia limited liability company ("Developer"). City or Developer may be referred to herein individually as a ('Par["
or collectively as the "Parties." There are no other parties to this Agreement.

RE,CITALS
A. On October 9,2015, Governor Jerry Brown signed three bills into law (Assembly Bill266,Assembly Bill243, and Senate Bill 643) which are collectively referred to as the Medical Cannabis Regulation and Safety Act ("MCRSA"). MCRSA establishes a statewide regulatory system for the cultivation, processing, transportation, testing, manufacturing, and distribution of medical marijuana to qualified patients and their primary caregivers.

B. On November 8, 2016, California voters enacted Proposition 64, the Control, Regulate and Tax Adult Use of Marijuana Act, also known as the Adult Use of Marijuana Act ("AUMA"), which establishes a comprehensive system to legalize, control, and regulate the cultivation, processing, manufacture, distribution, testing, and sale of nonmedical cannabis, including cannabis products, for use by adults 21 years and older, and to tax the growth and retail sale of cannabis for nonmedical use.

C. On June 27,2017, Governor Jerry Brown signed into law the Medicinal and AdultUse Cannabis Regulation and Safety Act ("MAUCRSA"), which creates a single regulatory scheme for both medicinal and adult-use cannabis businesses. MAUCRSA retains the provisions in MCRSA and AUMA that granted local jurisdictions control over whether businesses engaged in Commercial Cannabis Activity, as defined in Section 1.4 of this Agreement, ffi&y operate in a particular jurisdiction.

D. Developer proposes to improve, develop, and use real property for the operation of Cannabis Businesses that engage in distribution and/or delivery of Cannabis and Cannabis Products, as defined in Section 1.4 of this Agreement, in strict accordance with Califomia I
v
Products, as defined in Section 1.4 of this Agreement, in strict accordance with California Cannabis Laws, as defined in Section 1.4 of this Agreement, as they may be amended from time to time, and the Municipal Code of the City of Mendota as it existed on the Effective Date (the "Project"). The Project includes approximately 2,315 square feet of floor space for Commercial Cannabis Activity.

E. To strengthen the public planning process, encourage private participation in comprehensive planning, and reduce the economic risk of development, the California Legislature adopted Government Code section 65864, et seq. (the "Development Asreement Statute"), which authorizes the City and an individual with an interest in real property to enter into a development agreement that establishes certain development rights in real property that is subject to a development agreement application.

F. Developer has submitted a request to the City for consideration of a development agreement.

G. Government Code section 65865 requires an applicant for a development agreement to hold a legal or equitable interest in the real property that is the subject of the development agreement. Developer is the lessee of or has an equitable interest in the real property located at 796 Oller Street, in the City of Mendota, County of Fresno, State of California, Assessor's Parcel Number 013-191-18 (the "Site"), more particularly described in the legal description attached hereto as Exhibit A and the Site Map attached hereto as Exhibit B.

H. On September 12,2017, the City Council of Mendota ("Citv Council") adopted Ordinance No. 17-13 establishing zoning limitations and requirements for all cannabis businesses, including the proposed cannabis facility to be located at the Site.

I. On June ll,20lg, the City Council adopted Ordinance No. 19-06, establishing additional requirements for the operation and entitlement of commercial cannabis businesses operating within the City.

J. On October l5,20l9,the City published a request for proposals seeking applicants desiring to enter into a development agreement for the development of a commercial cannabis dispensary within the City. In response to this request for proposals, Developer submitted an application for a development agreement pursuant to the requirements of Chaptet 17.99 of the Mendota Municipal Code, and the City Council subsequently directed City staff to engage in negotiations with Developer for the same.

K. On September 8, 2020, the City Council adopted Ordinance No. 20-16, establishing additional requirements for the operation and entitlement of commercial cannabis businesses operating within the City.

L. On February 23,2021,the City Council adopted Ordinance No.21-05 providing additional requirements for the operation and entitlement of commercial cannabis businesses operating within the City, made retroactively effective to the effective date of Ordinance No. 20-

16. M. On May 25,2021, the City Council adopted Ordinance No. 21-07 permitting the 2 v v
operation of additional commercial cannabis retailers within the City's territory.

N. Government Code section 65867.5 requires the Planning Commission to hold a public hearing to review an application for a development agreement.

O. On April 20, 2021, after a duly noticed and held meeting in accordance with Government Code $ 658 67, the City's Planning Commission voted to recommend approval of Developer's application for a development agreement for the Project. p. On May ll, 2021, the City Council, in a duly noticed and conducted public hearing, and conducted the first reading of proposed Ordinance No. 2l-09- a. Pursuant to Government Code section 65867.5,on May 25,2021,the City Council reviewed, considered, adopted, and entered into this Agreement pursuant to Ordinance No. 21-

09. K. This Agreement is entered into pursuant to the Development Agreement Statute and the Mendota MuniciPal Code.

L. City and Developer desire to enter into this Agreement to: (i) facilitate the orderly development of the Site in general and specifically to ensure that such development is consistent with Title l7 of the Mendota Municipal -ode; (ii) create a physical environment that is consistent with, complements, and promotes the purposes and intent of the Commercial Cannabis Overlay District and the regulations adopted therewith; (iii) protect natural resources from adverse impacts; and (vi) red--uce the economic risk of development of the Site to both City and Developer.

M. The Parties intend through this Agreement to allow Developer to develop and manage the Project in accordance with the terms of this Agreement.

N. The City Council has determined that this Agreement is consistent with City's General plan and have conducted all necessary proceedings in accordance with City's Municipal Code for the approval of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the Parties do hereby agree as follows:

AGREEMENT
ARTICLE, 1

GENE,RAL PROVISIONS
Section l.l. Findings. City hereby finds and determines that entering into this Agreement furthers the public health, rJ"ty, and general welfare and is consistent with City's General Plan, including all text and maps in the General Plan.
3 v
Section 1.2. Recitals. The Recitals above are true and correct and are hereby incorporated into and made apartof this Agreement. In the event of any inconsistency between the Recitals and the provisions of Articles I through 10 of this Agreement, the provisions of Articles I through 10 shall prevail.

Section 1.3. Exhibits. The following "Exhibits" are attached to and incorporated into this Agreement:

Desisnation lr.r..intion
trwhihit A t, eonl T)ese,rintinn
Exhibit B lsi,. Mao
Exhibit C lNotice of Non-Performance Penaltv
Exhibit D lNotice of Termination
Exhibit E larrignment and Assumption Agreement
Exhibit F
I
lDeveloper's "Community Benefits Plan"
Section 1.4. Definitions. In this Agreement, unless the context otherwise requires, the terms below have the following meaning:
(a) "Additional lnsureds" has the meaning set forth in Section 6.1. (b) "Additional License" means a state license to operate a cannabis business pursuant to the Califomia Cannabis Laws that is not an Authorized License. (c) "Adult-Use Cannabis" means a product containing cannabis, including, but not limited to, concentrates and extractions, intended for use by adults 2l years of age or over in California pursuant to the California Cannabis Laws.
(d) "Agreement" means this Development Agreement, inclusive of all Exhibits attached hereto.
(e) "Application" means the application for a development agreement submitted by Developer to the City.
(0 "Assignment and Assumption Agreement" has the meaning set forth in Section

10.r.
(g) rrAIJ'MArt means the Adult Use of Marijuana Act (Proposition 64) approved by California voters on November 8,2016.
(h) "Authorized License" has the meaning set forth in Section 2.3. (i) "Bureau" means the Bureau of Cannabis Control within the Department of Consumer Affairs, formerly named the Bureau of Marijuana Control, the Bureau of Medical Cannabis Regulation, and the Bureau of Medical Marijuana Regulation. 4 v
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0) "California Building Standards Codes" means the California Building Code, as amended from time to time, in Part 2, Volumes I and2, as part of Title 24 of the Califomia Code of Regulations, as may be adopted by the Mendota Municipal Code. (k) "Califomia Cannabis Laws" includes AUMA, MAUCRSA and its implementing regulations, CUA, the Medical Marijuana Program Act of 2004, and any other applicable Califomia State laws that may be enacted or approved.
0) "Cannabis" means all parts of the plant Cannabis sativa Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. "Cannabis" also means the separated resin, whether "*d" or purif,red, obtained from cannabis. "Cannabis" does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of the plant which is incapable of germination. For the purpose of this division, "cannabis" does not mean "industrial hemp" as defined by Section 11018.5 of the Health and Safety Code. Cannabis and the term "marijuana" may be used interchangeably.
(m) "Cannabis Business" means a cannabis business operating pursuant to an Authorized License.
(n) "Cannabis Product" means cannabis that has undergone a process whereby the plant material haibeen transformed into a concentrate, including, but not limited to, concentrated cannabis, or an edible or topical product containing cannabis or concentrated cannabis and other ingredients.
(o) rrgEQArr means the California Environmental Quality Act, as set forth in Division 13 (Commencing with Section 21000) of the California Public Resources Code, and the CEQA Guidelines u, ,"i forth in Title 14 (Commencing with Section 15000) of the California Code of Regulations.
(p)
powers.
rrgiryrr means the City of Mendota, a municipal corporation having general police (r)
designee.
"City Council" means the City Council of the City of Mendota. "City Manager" means the City Manager of the City of Mendota, or his or her (s) "Charged Party" has the meaning set forth in Section 8.1. (t) "Charging Partv" has the meaning set forth in Section 8.1. (u) "Commercial Cannabis Activity" means to cultivate, manufacture, distribute, p.o"..r, ,to.", package, label, transport, deliver, sell, or test cannabis or cannabis products as (q)
5 \./ v
provided for by Division l0 (commencing with Section 26000) of the Business and Professions Code.
(v) "Conditional Use Permit" means a conditional use permit for the Project issued by the City pursuant to Mendota Municipal Code Chapter 17.08.050. (w) rrcf;Atr means the Compassionate Use Act (Proposition 215) approved by California voters on November 5,1996.
(x) "Developer" means ELEMENT 7 MENDOTA, LLC, and as further set forth in Section 6.1.
(V) "Development Agreement Statute" has the meaning set forth in Recital E. (z) "Exhibits" has the meaning set forth in Section 1.3. (aa) "Gross Receipts" shall mean total revenue received or receivable by the Developer or its assignees-from any Commercial Cannabis Activity on the Site or from operation of the Project o, th" Site, including: all sales, whether conducted at the Site or through the Project; the total amount of compensation received or receivable for the performance of any act or service, of whatever nature it rnay be, for which a charge is made or credit whether or not such act or service is done as part of or in connection with the sale of materials, goods, wares, or merchandise; and gains realLed from trading in stocks or bonds, interest discounts, rents, royalties, fees, iommissions, dividends, or other remunerations, however designated. Included in "Gross Receipts" shall be all receipts, cash, credits, and property of any kind or nature, without any a"a*tio, therefrom on account of the cost of the materials used, labor or service costs, interest paid or payable, or losses or other expenses whatsoever, except that the following shall be excluded therefrom:
(1) Cash discounts allowed and taken on Commercial Cannabis Activity sale; (2) Any tax required by law to be included in or added to the purchase price of Commercial Cannabis Activity and collected from the consumer or purchaser; (3) Such part of the sale price of property retumed by purchasers in any Commercial Cannabis Activity upon rescission of a contract of sale as is refunded either in cash or by credit; and
(4) Receipts of refundable deposits in any Commercial Cannabis Activity, except that such.deposits when forfeited and taken into income of the business shall not be excluded.

The intent of this definition is to ensure that in calculating the payments required under this Agreement, all sales related to Commercial Cannabis Activity or any other cannabis and cannabis pr:oducts at the Site or through the Project, including, but not limited to, non-storefront sales and deliveries, are captured. This definition shall be given the broadest possible interpretation consistent with this intent.
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(bb) "Local" or "Locally" mean the area within the territory of the City of Mendota, and its neighboring locales within the County of Fresno. (cc) "Maior Amendment" means an amendment that shall have a material effect on the terms of the Agreement. Major Amendments shall require approval by the City Council. (dd) "Marijuana" has the same meaning as Cannabis and those terms may be used interchangeably.
(ee) "MAUCRSA" means the Medicinal and Adult-Use Cannabis Regulation and Safety Act, codified as Business and Professions Code section 26000 et seq. and its implementing regulations.
(f0 rtMCRSArr has the meaning set forth in Recital A.
(gg) "Ministerial Fee" or "Ministerial Fees" has the meanings set forth in Section 4.1. (hh) "Minor Amendment" means a clerical amendment to the Agreement that shall not materialiy affect the terms of the Agreement (e.g., change of notice address) and any amendment described as minor herein.
(ii) "MQ{&gs" has the meaning set forth in Article 7'
(ii) "Non-Performance Penalty" has the meaning set forth in Section 4.5. (kk) "Notice of Non-Performance Penalty" has the meaning set forth in Section 4.5. (ll) "@" has the meaning set forth in Section 9'1' \/
(mm) "Processing costs" has the meaning set forth in Section I .1 l. (nn) ilPrqiectrr has the meaning set forth in Recital D. (oo) "Project Litigation" has the meaning set forth in Section 10.7. (pp) "Public Benefit Fees" has the meaning set forth in Section 4.2. (qq) "Public Bpqafita![au$" has the meaning set forth in Section 4.2. (rr) "Site" has the meaning set forth in Recital G.
(ss) "State Cannabis Manufacturing Regulations" means the regulations related to cannabis manufacturing issued by a State Licensing Authority in accordance with Chapter 13 (commencing with Seciion 26130) of Division l0 of the Business and Professions Code, which may be amended from time to time.
(t0 "State Licensing Authority" means the state agency responsible for the issuance, renewal, or reinstatement of a state cannabis license, or the state agency authorized to take disciplinary action against a business licensed under the Califomia Cannabis Laws. 7 \-, v
(uu) "subsequent City Approvals" has the meaning set forth in Section 3.1 (w) "Term" has the meaning described in Section 1.7.

Section 1.5. Project is a Private Undertaking. The Parties agree that the Project is a private development and that City has no interest therein, except as authorized in the exercise of its govemmental functions. City shall not for any purpose be considered an agent, partner, or joint venturer of Developer or the Project.

Section 1.6. Effective Date of Agreement. This Agreement shall become effective upon the date that the ordinance approving this Agreement becomes effective (the "Effective Date").

Section 1.7. Term. The "Term" ofthis Agreement is ten (10) years from the Effective Date, unless terminated or extended as set forth in this Agreement.
(a) Government Tolling or Termination. City may provide written notice to Developer to cease all Commercial Cannabis Activity, upon which Developer shall immediately comply, if City is specifically required to comply with federal or state law and such federal or state law ..q.rir.r cissation of Commercial Cannabis Activities. If City temporarily halts this Agreement to comply with federal or state law, this Agreement shall be tolled for an equivalent p.iiod of time (the ;'Tollins Period"). Developer shall not accrue or be liable to City for any Ministerial Fees, Public Benefit Amount, or any other fees contemplated under this Agreement during the Tolling Period. Developer shall resume paying any applicable fees after the Tolling Period ends. City and Developer shall discuss in good faith the termination of this Agreement if the Tolling Period exceeds one (l) calendar year.
(b) Developer Tolling or Termination. Developer may not temporarily halt or suspend this Agreement for any purpose without causing a default of this Agreement, except as otherwise allowed by this Agreement.
(c) Developer Termination. Developer may provide written notice to City of intent to cease all Commercial Cannabis Activity, if Developer is required, directed, or believes, in its sole and absolute discretion, it must terminate Commercial Cannabis Activity. In such an event, Developer's obligations under this Agreement shall terminate. Any resumption of Commercial Cannabis Activity shall be subject to approval by the City Manager. Notwithstanding anything to the contrary herein, temporary termination of Commercial Cannabis Activities for a period of up to three (3) months to make renovations, repairs, or comply with any applicable laws shall not be considered termination of Commercial Cannabis Activities.

Section 1.8. Priority of Enactment. In the event of conflict between the various land use documents referenced in this Agreement, the Parties agree that the following sequence of approvals establishes the relative priority of the approvals, each approval superior to the approvals listed thereafter: (a) General Plan, (b) Agreement, (d) Conditional Use Permit, and (e) Subsequent City Approvals, as defined in Section 3.1 of this Agreement.

Section 1.9. Amendment of Agreement. This Agreement shall be amended only by mutual consent of the Parties. All amendments shall be in writing. The City Council hereby expressly 8 \-
authorizes the City Manager to approve a Minor Amendment to this Agreement, upon notification of the City Council. A Major Amendment to this Agreement shall be approved by the City Council. The City Manager shall, on behalf of City, have sole discretion for City to determine if an amendment is a Minor Amendment or a Major Amendment. Nothing in this Agreement shall be construed as requiring a noticed public hearing, unless required by law.

Section 1.10. Recordation of Development Agreement. The City Clerk shall cause a copy of this Agreement to be recorded against the title of the Site within ten (10) business days of the Effective Date.

Section 1.11. Funding Agreement for Processing Costs. Developer has deposited Five Thousand Five Hundred and Twenty Dollars ($5,520) with City to pay for the Application, all actual, reasonable fees and expenses incurred by City that are related to the preparation, processing and annual review of this Agreement, including recording fees, publishing fees, staff time, consultant and reasonable attorney fees and costs (collectively, "Processing Costs"). The Processing Costs are refundable solely to the extent of non-expended Processing Costs.

Developer shall be entitled to a refund of available Processing Costs only after City determines all financial obligations associated with the Project have been received and paid by City. To the extent Developer's deposit outlined above is insufficient to cover the City's Processing Costs, Developer shall provide City with additional deposits, as necessary, sufficient to reimburse the City's unpaid Processing Costs within thirty (30) days of receiving an invoice from the City. (a) Apportionment of Processing Costs. If the amount deposited for purposes of Processing Costs is insuffrcient to cover all Processing Costs, City shall provide notice to Developer, and Developer shall deposit with City such additional funds necessary to pay for all Processing Costs within thirty (30) calendar days. The failure to timely pay any such additional amounts requested by City shall be considered a material default of this Agreement and City may immediately terminate this Agreement.
(b) Accounting. Developer may request, and City shall issue within a reasonable time, an accounting and written acknowledgement of Processing Costs paid to City.

ARTICLE2

DEVE,LOPME,NT OF PROPERTY
Section 2.1. Vested Right of Developer. During the Term, in developing the Site consistent with the Project described herein, Developer is assured that the development rights, obligation terms, and conditions specified in this Agreement, including, without limitation, the terms, conditions, and limitations set forth in the Exhibits, are fully vested in Developer and may not be modified or terminated by City except as set forth in this Agreement or with Developer's written consent.

Section 2.2. Vested Right to Develop. In accordance with Section 2.1, Developer shall have the vested right to develop and use the Project consistent with this Agreement, the existing City regulations and codes, the Conditional Use Permit, and Subsequent City Approvals. 9 v
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Section 2.3. Permitted Uses and Development Standards. Developer shall be authorized to develop, construct, and use the Site for Commercial Cannabis Activity consistent with the following license types and uses associated with said license types (the "Authorized License"):

License Description State License Type(s)
Non- Storefront Retail er 9
Dispensary; General 10
Dispensary; No More Than Three
Retail Sites
10A
Developer or its assignees shall be permittedto use the Site consistentwiththe Authorized License types for the Term of this Agreement and during the time Developer or its assignees are applying for the Authorized License with the applicable State Licensing Authority. Notwithstanding the foregoing, Developer or each of its assignees is required to apply for and obtain an Authorized License from the applicable State Licensing Authority. If the State Licensing Authority does not grant the Authorized License to Developer or its assignees, Developer or the assignee that was denied a license shall immediately cease Commercial Cannabis Activity on the Site. Developer or its assignees shall also, within ten (10) calendar days of receiving notice from the State Licensing Authority relating to a denial or rejection of a license, notifu City of the State Licensing Authority's denial or rejection of any license. If the Authorized License is not granted by the State Licensing Authority, or any such license is revoked, terminated, or suspended, Developer or its assignees shall immediately cease operations at the Site. In this situation, this Agreement shall terminate immediately. For the purposes of clarification, a denial or rejection of Developer's or assignee's Authorized License shall not result in the termination of this agreement provided: (i) other Authorized Licenses have been issued to Developer or its assignees; or (ii) Developer or its assignees are in the process of applying for an Authorized License. The Parties intend for this Agreement and the Conditional Use Permit to serve as the definitive and controlling documents for all subsequent actions, discretionary or ministerial, relating to development of the Site and Project.

Section 2.4. Major Amendment to Permitted Uses. Developer may request to add one or more of the license types then authorized by the California Cannabis Laws to the Authorized Licenses.

If City Council allows any additional Authorized Licenses ("Additional Licenses"), City Council shall make a finding of whether Developer's or its assignees' Additional Licenses will have any additional impact on City neighborhoods, infrastructure, or services. Developer shall be required to compensate City for all additional impacts on City infrastructure or services associated with any Additional Licenses and the Public Benefit Amount shall be revised as mutually agreed by the Parties. This process shall be a Major Amendment to this Agreement.

Section 2.5. Development Permit. Prior to commencing operation of any Commercial Cannabis Activity on the Site, Developer shall obtain a Conditional Use Permit and any applicable Subsequent City Approvals. Developer shall be required to comply with all provisions of the Mendota Municipal Code and any other City rules and administrative guidelines associated with implementation of the Commercial Cannabis Overlay District. Nothing in this Agreement shall 10 \-,
be construed as limiting the ability of City to amend the Mendota Municipal Code or issue rules or administrative guidelines associated with implementation of the Commercial Cannabis Overlay District or Developer's obligation to strictly comply with the same.

Section 2.6. Subsequent Entitlements, Approvals, and Permits. Successful implementation of the project shall require Developer to obtain additional approvals and permits from City and other local and state agencies. City shall comply with CEQA in the administration of all Subsequent City Approvals. in acting upon any Subsequent City Approvals, City's exercise of discretion and permit authority shall "oifor- to tiris Agrelment. Notwithstanding the foregoing, in the course of iaking action Ln the Subsequent City Approvals, City will exercise discretion in adopting mitigation measures as part oith" Conditional Use Permit. The exercise of this discretion is not prohlbited by this Agreernent, but the exercise of that discretion must be reasonable and consistent with this Rgreement. Nothing in this Agreement shall preclude the evaluation of impacts or consideration of mitigation measures or alternatives, as required by CEQA.

Section 2.T.lnitiatives and Referenda. If any City ordinance, rule or regulation, or addition to the Mendota Municipal Code is enacted or imposed by a citizen-sponsored initiative or referendum after the Effective Date that would conflict with this Agreement, an associated Conditional Use Permit, Subsequent City Approvals, or reduce the development rights or assurances provided to Developerin this Agreement, such Mendota Municipal Code changes shall not be uppii"d to the Site or irroject and this Agreement shall remain in full force and effect; provided, however, the Parties acknowledge that City's approval ofthis Agreement is a legislative action subject to referendum. City shalf cooperate with Developer and shall undertake such reasonable actions as may be appropriate to enzure this Agreement remains in full force and effect and is implemented in accordanie with its terms to the fullest extent permitted by state or federal law.

Section 2.g. Regulation by Other Government Entities. Developer acknowledges that City does not have authority or jurisdiction over any other govemment entities' ability to grant governmental approvals or permitstr to impose a moratorium or other limitations that may negatively affect the eio3ect or the ability of City to issue a permit to Developer or complV wltr the terms of this Agieement. Any moratorium imposed by another govemment entity, including the State L[ensing Authority, on City shall not cause City to be in breach of this Agreement.

Section 2.9. Developer's Right to Rebuild. Developer may renovate portions of the Site any time within the Term of tfris Afreement consistent with the Mendota Municipal Code. Any such renovation or rebuild shall be subject to all design, building code, and other requirements imposed on the Project by this Agreement.

Section 2.10. Changes in California Building Standards Codes. Notwithstanding any provision of this Agreement tJthe contrary, development of the Project shall be subject to changes occurring from time to time to the California Building Standards Codes.

Section 2.11. Changes Mandated by Federal or State Law. The Site and Project shall be subject to subsequently enicted state or federal laws or regulations that may preempt the Mendota Municipal Code, or mandate the adoption or amendment of local regulations, or are in conflict with this Agreement or local rules or guidelines associated with the Commercial Cannabis 1l
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Overlay District. As provided in Section 65869.5 of the Development Agreement Statute, in the event state or federal laws or regulations enacted after the Effective Date prevent or preclude compliance with one or more provisions of this Agreement, such provisions shall be modified or suspended as may be necessary to comply with such state or federal laws or regulations. Upon discovery of a subsequently enacted federal or state law meeting the requirements of this Section, City or Developer shall provide the other Party with written notice of the state or federal law or regulation, and a written statement of the conflicts thereby raised with the provisions of the Mendota Municipal Code or this Agreement. Promptly thereafter, City and Developer shall meet and confer in good faith in a reasonable attempt to modiff this Agreement, as necessary, to comply with such federal or state law or regulation provided City shall not be obligated to agree to any modification materially increasing its obligations or materially adversely affecting its rights and benefits hereunder. In such discussions, City and Developer will attempt to preserve the terms of this Agreement and the rights of Developer derived from this Agreement to the maximum feasible extent while resolving the conflict. If City, in its judgment, determines it necessary to modifr this Agreement to address such conflict, City shall have the right and responsibility to do so, and shall not have any liability to Developer for doing so or be considered in breach or default of this Agreement. City also agrees to process, in accordance with the provisions of this Agreement, Developer's proposed changes to the Project that are necessary to comply with such federal or state law and that such proposed changes shall be conclusively deemed to be consistent with this Agreement without further need for any amendment to this Agreement.

Section 2.12. Health and Safety Emergencies. In the event that any future public health and safety emergencies arise with respect to the development contemplated by this Agreement, City agrees that it shall attempt, if reasonably possible as determined by City in its discretion, to address such emergency in a way that does not have a material adverse impact on the Project. If City determines, in its discretion, that it is not reasonably possible to so address such health and safety emergency, to select that option for addressing the situation which, in City's discretion, minimizes, so far as reasonably possible, the impact on development and use of the Project in accordance with this Agreement, while still addressing such health and safety emergency in a manner acceptable to City.

Section 2.13 Necessary Improvements. Developer shall make the following necessary improvements to the Site prior to conducting business thereon:
(a) The City has determined the current number of "off-street" parking spaces (17) is inadequate because those spaces are shared or used by neighboring apartment buildings.

Developer must propose a plan to ensure enough parking spaces to mitigate the number of customers parking on the street as determined by the City's traffic engineer, in his or her profe ssional j udgment.
(b) The City has determined that the egress alleyway, though not part of the parcel, would be inadequate for egress from the Site. Developer must propose a plan to improve the egress alleyway to improve the egress from the Site, which shall be considered for approval by the City's traffic engineer, in his or her professional judgment.
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ARTICLE 3

ENTITLEMENT AND PERMIT PROCESSING, INSPECTIONS
Section 3.1. Subsequent City Approvals. City shall permit the development, construction, and conditionally permitted use contemplated in this Agreement. City agrees to timely grant, pursuant to the terms of this Agreement and the Mendota Municipal Code as it existed on the Effective Date, any Subsequent City Approvals reasonably necessary to complete the goals, objectives, policies, standards, and plans described in this Agreement. The Subsequent City Approvals shall include any applications, permits, and approvals required to complete the improvements necessary to develop the Site, in general accordance with this Agreement ("Subsequent City Approvals").

Nothing herein shall require City to provide Developer with Subsequent City Approvals prior to, or without complying with, all of the requirements in this Agreement, the Mendota Municipal Code as it existed on the Effective Date, and any applicable state law.

Section 3.2. Timely Processing. City shall use its reasonable best efforts to process and approve, within a reasonable time, any Subsequent City Approvals or environmental review requested by Developer during the Term of this Agreement.

Section 3.3. Cooperation between City and Developer. Consistent with the terms set forth herein, City agrees to cooperate with Developer, on a timely basis, in securing all permits or licenses that may be required by City or any other government entity with permitting or licensing jurisdiction over the Project.

Section 3.4. Further Consistent Discretionary Actions. The exercise of City's authority and independent judgment is recognized under this Agreement, and nothing in this Agreement shall be interpreted as limiting City's discretion or obligation to hold legally required public hearings.

Except as otherwise set forth herein, such discretion and action taken by City shall, however, be consiitent with the terms of this Agreement and not prevent, hinder or compromise development or use of the Site as contemplated by the Parties in this Agreement.

ARTICLE 4

PUBLIC BENEFIT, PROCESSING, AND OVERSIGHT
Section 4.1. Processing Fees and Charges. Developer shall pay to City those processing, inspection, plan checking, and monitoring fees and charges required by City which are in force and effect at the time those fees and charges are incurred (including any post-Effective Date increases in such fees and charges) for processing applications and requests for building permits, inspections, other permits, approvals and actions, and monitoring compliance with any permits issued or approvals granted or the performance of any conditions (each a "Miui5tgri.al Jse" and collectively, the "Ministerial Fees").

Section 4.2. Public Benefit.
(a) The Parties acknowledge and agree that this Agreement confers substantial private benefit upon Developer that will place burdens upon City infrastructure, services, and neighborhoods. Accordingly, the Parties intend to provide consideration to City to offset these impacts that is commensurate with the private benefits conferred on Developer (the "Public Benefit 13 \-/ v
Fees"). Developer acknowledges that the Public Benefit Fees provided for herein are greater than the annual fee provided for in Mendota Municipal Code section 17.99.070 and, despite this fact, voluntarily agrees to pay the fees acknowledging that the private benefits conferred are of equal or greater consideration to the fees, and waives any right to challenge said fees as a violation of any law. In consideration of the foregoing, Developer shall remit to City the following payments (collectively referred to as the "Public Benefit Amounf'):

1. The applicant agrees to pay an annual fee, to be paid on the First (l't) business day of every Third (3'd) month, based on the total square footage of the developed portions of the Site ("Square Footaqe Paymeff") in an amount as follows:

A. Five dollars ($5.00) per square foot of the Site.

2. An annual payment in the greater of the following amounts:

A. Fifty Thousand Dollars ($50,000) ("Flat Rate Payment"), to be paid in quarterly installments of Twelve Thousand Five Hundred Dollars ($12,500) on the First (1st) business day of every Third (3'd) month after operations have begun on the Site; or B. Three percent (3%) of Developer's yearly Gross Receipts ("Gross Receipts Payment") from the Project, to be paid in quarterly installments on the First (l't) business day of every Third (3'd) month after operations have begun on the Site, to be calculated as follows:

I For Developer's first (ltt) year of operation, an estimated Three Million Dollars ($3,000,000.00) in Gross Receipts equates to Ninety Thousand Dollars ($90,000.00) annually, paid in the amounts of Twenty-Two Thousand Five Hundred Dollars ($22,500.00) each quarter.
2 Not later than thirty (30) days after the close of each fiscal year, City shall retain and pay a third-party auditing company, the costs of which shall be fully reimbursed to City by Developer, to fully and completely audit Developer's financial records for the preceding year. In the event the preceding years' Gross Receipts were lower than outlined above, any amount overpaid by Developer shall be offset against Developer's next Gross Receipts Payment. In the event the preceding year's Gross Receipts were higher than outlined above, Developer shall pay the difference owed City with Developer's following Gross Receipts Payment.

This pattern shall continue for the Term of this Agreement. (b) Developer shall remit the Square Footage Payment, Flat Rate Payment, and Gross Receipts Payment, as applicable, to City as described in subdivision (a) of this section. Failure to remit the Square Footage Payment, Flat Rate Payment, and/or Gross Receipts Payment, as applicable, is a material breach of this Agreement.
(c) In addition to the Public Benefit Amount, Developer shall also perform to support the following Community Benefit Programs, as more particularly outlined in Exhibit F, to benefit the City and its residents:
l. Developer shall use its best efforts to ensure eighty percent (80%) of its employees are hired from the Local area. Developer agrees to use its best efforts to promote the t4
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hiring and employment of Local residents to construct, if necessary, operate the business within the Project, and provide maintenance and security services to the Project, provided Developer has controlover such hiring and employment. As part of such efforts, Developer agrees to include in any lease, license, or other conveyance of any right to use the Project such language that any transferee of such interest shall use its best efforts to hire and employ Local residents for its business;

2. Developer shall use its best efforts to ensure seventy-five percent (75%) of Developer's building, construction, equipment, repairs, and maintenance needs shall be serviced by Local businesses or individuals, with a minimum of Three Hundred Thousand Dollars ($IOO,OOO.00) spent Locally during the first (l't) year of operations at the Site and, following the first (l't) year of operations at the Site, Three Thousand Dollars ($3,000.00) spent Locally per month for the remainder of the Term of this Agreement;

3. After Developer obtains a business license from the City, Developer shall commit Fifty Thousand Dollars ($50,000.00) annually to the ELEMENT 7 CARES program for the purpose of actively building and creating facilities that contribute towards Local community development;

4. Developer shall develop and implement Local outreach and education efforts to build good will within the City, as more particularly described in Exhibit F, including, but not limited to:

A. Designating one of Developer's Senior Managers as its community Relations Officer;
B. During Developer's first (1't) year of operations at the Site, the Senior Manager designated as Developer's Community Relations Officer shall attend quarterly meetings with the City to discuss costs, benefits, and other community issues; C. Developer's representatives personally visiting each business in a five hundred (500) foot radius of the Site within twenty-one (21) days of being awarded a conditional use permit for the Project;
D. Creating and utilizing an email database of all businesses within a five hundred (500) foot radius of the Site and sending them a bi-annual email offering news of the cannabis industry and Developer's business, asking for proactive feedback on better business and community relaiions, and providing the name and phone number of Developer's Community Relations Manager;
E. Inviting Local businesses to attend a Business Feedback and Community Management Forum twice (2) each year, which will be hosted at a suitable venue in the proximate Locil area. Additionally, City residents within five hundred (500) feet of Element 7 shall also be invited to attend these forums and receive Developer's Community Relations Officer's contact information; and
F. Creating a dedicated email address for priority feedback regarding Developer's operations and circulating that email address to each business in the five hundred 15 v v
(500) foot radius of the Site within twenty-one (21) days of being awarded a conditional use permit.

5. Developer shall create and implement Local community educational outreach events and partnerships with non-profit organizations, municipal agencies, and neighborhood groups centered on the medicinal qualities of cannabis to be held quarterly each year for the entirety of the Term of this Agreement;

6. Developer shall create and implement a Staff Volunteer Program, wherein its full-time employees shall be required to commit at least ten (10) hours quarterly to a Local cause or charity;

7. Developer shall create and implement a Medical Cannabis Discount Program, wherein Developer shall provide assistance to seniors, retired veterans, HIV and AIDS patients, children diagnosed with autism, epileptics, terminally ill patients, low-income customers on govemment assistance, and the like, with access to discounted medical cannabis;

8. Developer shall create and implement the E7 ONE program, wherein Developer shall create a Social Equity and Local Enterprise Board to oversee the development and implementation of Developer's social equity policies and practices. This Social Equity and Local Enterprise Board shall, at least once (1) per year, produce a report that assesses workplace demographics and other program performance indicators for use in achieving the E7 ONE program's specified goals and social equity outcomes. Where the Social Equity and Local Enterprise Board's analysis indicates persons from underrepresented or disadvantaged populations are not sufficiently represented in Developer's workforce, the Social Equity and Local Enterprise Board shall develop new strategies to fulfill Developer's commitments to diversity and inclusivity; and

9. Developer shall, at least annually, host Expungement Clinics in partnership with the Fresno County Public Defender's Office and/or the National Diversity and Inclusion Cannabis Alliance to provide Local residents with minor drug-related criminal records to obtain free legal support in seeking expungement of said minor offenses from their criminal records. (d) Developer shall prepare a written report explaining the progress of each of the Community Benefit Programs to be delivered to the City Council within sixty (60) days of the conclusion of each fiscal year. Said written report shall include financial records relating to any Community Benefit Program endeavor that required a certain sum of money to be spent. Said financial records shall be included in the annual third-party audit provided for in Section a.2@)(2)(B) (2), above.
(e) In the event Developer fails to develop, implement, create, or otherwise continue any of the Community Benefit Programs outlined in Section 4.2(c), above, upon which City has relied in good faith in extending this Agreement, Developer shall be found to be in breach of this Agreement and City may exercise any right contained in the Agreement to remedy the breach.

Section 4.3. Reporting. Developer shall provide City with copies of Authorized Licenses issued by a State Licensing Authority to Developer or its assignees within forty-five (45) calendar days r6
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of issuance of such license to any assignee and each annual renewal thereafter ("State Licenses").

Developer shall also provide Ciiy with a written report documenting Developer's performance of its duties in accordance with Section a.2(cX1) of this Agreement within thirty (30) calendar days of each anniversary of the Effective Date of this Agreement ("Local Workforce-Report"). Failure or refusal of Developer to pay the Public Benefit Amount shall constitute full and suffrcient grounds for the revocation oisuspension of the Conditional Use Permit. Notwithstanding anything Io the contrary herein, failure to provide copies of State Licenses or Local Workforce Report within the applicable time period shall not amount to a material default of this Agreement and shall not "ot.titut"
grounds for the revocation or suspension of the Conditional Use Permit.

Section 4.4. Records. Subsequent assignees shall keep records of all Commercial Cannabis Activity in accordance with Chapter 16 (iommencing with Section26l60) of Division 10 of the Business and professions Code. All records required by this Article 4 shall be maintained and made available for City's examination and duplication (physical or electronic) upon the City Manager's request at the Site or at an alternate facility as approved in writing by the City Manager or his-or her designee. Upon request, Developer shall make all records relating to this Article 4 available to City within three (3) business days.

Section 4.5. penalty. Developer acknowledges that to ensure proper compliance with the terms of this Agreement and any aiplicable laws, City must engage in costly compliance review, inspectlons, and, if necessary, enforcement actions to protect the health, safety, and welfare of its residents. penalty and interest provisions are necessary to assist City in compliance review and enforcement actions. If Developer fails to make any payment when due as required by this Agreement, including the public Benefit Amount, and fails to cure such failure within the allotted Cire period, ExtendJd Cure Period, or any extension thereof mutually agreed upon by the Parties in writing, the City may impose a "Non-Performance Penalty." A Non-Performance Penalty of one percent ftX; rtuti be applied to all past due payments. City shall deliver to Developer a "Notice if Norr-ierfo.-urr"" p"rralty," attached herelo as Exhibit C. Payment of the Non-Perfonnance ta1lmentdueonorbeforeadatefifteen(l5)calendardaysfollowing delivery of the Notice of Non-Performance Penalty.

Section 4.6. Interest on Unpaid Non-Performance Penalty. If Developer fails to pay the Nonperformance penalty after -City
has delivered the Notice of Non-Performance Penalty, then, in addition to the principal amount of the Non-Performance Penalty, Developer shall pay City interest at the rate of eighteen percent ( 1 S%) per annum, computed on the principal amount of the Non-perfonnance PenJty, from a date fifteen (15) calendar days following delivery of the Notice of Non-Performance PenaltY.

Section 4.7. Exempt from City Tax. For the Term of this Agreement and except as otherwise provided herein, DJveloper shali be exempt from any City tax on commercial cannabis businesses. irlotwithstanding the foiegoing, Developer and Project shall be subject to any and all taxes, assessment., o. ri-ilu. charges or fees of general applicability enacted by the federal government, state govemment, or County of Fresno, including any tax applicable to an area greater than the city iimits to which City may be a party (i.e., county tax sharing agreement). In the event that the City applies a new tax on commercial cannabis businesses, the City shall refund or credit the amount owed as public Benef,rt Amount by an equal amount up to the amount of Public Benefit Amount owed to the Developer and any assuming owner proportional to the percentage ownership t7
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share of the gross land area of the Site. For the purposes of clarification, other than the Public Benefit Amount, the Processing Fees, and any other fees contemplated pursuant to this Agreement, Developer shall be exempt from any and all City taxes and fees relating to commercial cannabis activity and commercial cannabis businesses passed following the execution of this Agreement.

Section 4.8. Manner of Payment. All payments required to be made to City pursuant to this Agreement shall be paid by Developer via check, ACH payment, or wire transfer through a bank licensed and in good st*ding with all appropriate regulatory bodies. No payment required pursuant to this Agreement may be made in cash. Developer understands and agrees that any iailure to comply with this Section 4.8 shall constitute a material breach of this Agreement.

Section 4.9. Charitable Donation. Upon the full execution of this Agreement, Developer shall make a one-time donation in the amount of Ten Thousand Dollars ($10,000) to a charity or program focused on drug education or rehabilitation as selected by the City.

Section 4.10. Site Beautification. Upon the full execution of this Agreement, Developer shall spend Ten Thousand Dollars ($10,000) to clean up the vacant land portions of the Site and building facades. Developer agrees to use its best efforts to promote the hiring and employment of Local residents to complete this Site beautification work.

ARTICLE 5

PUBLIC FACILITIES, SERVICES, AND UTILITIES
City shall use the Public Benefit Amount to pay for the impact on and maintenance or imirovement of City neighborhoods, for the general welfare of the residents of Mendota, and the "*irtirrg
level of service of City infrastructure and services to accommodate for the Project.

ARTICLE 6

INSURANCE AND INDEMNITY
Section 6.1. Insurance. Developer shall require all persons doing work on the Project, including its contractors and subcontractois (collectively, "Developer" for purposes of this Article 6 only), to obtain and maintain insurance of the types and in the amounts described in this Article with carriers that are reasonably satisfactory to City.
(a) General Liability Insurance. Developer shall maintain commercial general liability irr*un"" or equivalent form with a limit of not less than One Million Dollars ($1,00b,000) (or as otherwise approved, in writing, by City) per claim and Two Million Dollars ($2,000,000) each occurrence. Such insurance shall also:
(i) Name City, its elected and appointed councils, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insureds. l8
(ii) Be primary with respect to any insurance or self-insurance programs covering City, its officials, employees, agents, and representatives. (iii) Contain standard separation of insured provisions. (b) Automotive Liability Insurance. Developer shall maintain business, automobile liability inr**"" or equivalent form with a limit of not less than One Million Dollars ($1,00b,000) for each accident. Such insurance shall include coverage for owned, hired, and nonowned automobiles. Such insurance shall also:
(i) Name City, its elected and appointed councils, boards, commissions, officers, agents, employees, urrd ."pr"sentatives as Additional Insureds by endorsement with respect to lerformance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed Additional Insureds. (ii) Be primary with respect to any insurance or self-insurance programs covering City, its officials, employees, agents, and representatives. (iiD Contain standard separation of insured provisions' (c) Workers' Compensation Insurance. Developer shall take out and maintain during ih. T".* of this Agreement, workers' compensation insurance for all of Developer's emplJyees employed at or on the Project, and in the case any of the work is subcontracted' Oevetoper strail require any general contractor or subcontractor similarly to provide workers'. compensation insurance for such contractor's or subcontractor's employees, unless such .-pioy"", are covered by the protection afforded by Developer. In case any class of employee .ngug.a in work on the Piojectls not protected under any workers' compensation law, Developer shill-provide and shall .urrr. each contractor and subcontractor to provide adequate insurance for the piotection of employees not otherwise protected. Developer hereby indemnifies City for any damage resulting from failure of Developer, its agents, employees, contractors, or subcontractors to take out or maintain such insurance. Workers' compensation insurance with statutory limits and employer's liability insurance with limits of not less than one Million Dollars ($1,000,000) for each accident shall be maintained.

Section 6.2. Other Insurance Requirements. Developer shall do all of the following:
(a) Prior to taking any actions under this Agreement, fumish City with properly executed certificates of insuianc" thut clearly evidence all insurance required in this Article, including evidence that such insurance will not be canceled, allowed to expire, or be materially reducedln coverage without thirty (30) days prior written notice to City. Provide to City, upon request, and within seven (7) calendar days of said request, certified copies of endorsements and poii"i"., and properly execuied certificates of insurance evidencing the insurance required herein. (b) Replace or require the replacement of certificates, policies, and endorsements for any insurance required herein expiring prior the termination of this Agreement. (c) Maintain all insurance required herein from the Effective Date of this Agreement to the earlier of the expiration of the Term or the mutual written termination of this Agreement. t9
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(d) Place all insurance required herein with insurers licensed to do business in California with a current Best's Key Rating Guide reasonably acceptable to City.

Section 6.3. Indemnity. To the fullest extent permitted by law, Developer shall defend, indemnifu, and hold harmless City and its agents, elected and appointed officials, officers, employees, consultants, and volunteers (collectively, "City's Agents") from any and all liability arising out of a claim, action, or proceeding against City, or City's Agents, to attack, set aside, void, or annul an approval concerning the Project, this Agreement, any applicable Conditional Use Permit, or Subsequent City Approvals.

Upon receiving notice of a claim, action, or proceeding, Developer shall assume the defense of the claim, action, or proceeding and the payment of all attorneys' fees and costs, incurred in good faith and in the exercise of reasonable discretion, of City's counsel in defending such an action prior to Developer's assumption of such defense. In the event City elects to contract with outside counsel, to provide for such a defense, City shall meet and confer with Developer regarding the selection of counsel, and Developer shall pay all costs related to retention of such counsel. City shall have the absolute and sole authority to control the litigation and make litigation decisions, including, but not limited to, approving counsel to defend City and settlement or other disposition of the *utte., provided the City shall not reject any reasonable good faith settlement. If City does reject a reasonable, good faith settlement that is acceptable to Developer, Developer may enter into a settlement of the action, as it relates to Developer, and City shall thereafter defend such action (including appeals) at its own cost and be solely responsible for any judgment rendered in connection with such action. This Section 6.3 applies exclusively to settlements pertaining to monetary damages or damages which are remedial by the payment of monetary compensation.

The City's remedies are limited to that portion of the Project that is in breach of this Section 6.3.

Section 6.4. Failure to Indemniff; Waiver. Failure to indemniry Ciry, when required by this Agreement and upon receiving proper notice, shall constitute a material breach of this Agreement and of any applicable Conditional Use Permit and Subsequent City Approvals, which shall entitle City to ail remedies available under law, including, but not limited to, specific performance and damages. Failure to indemnifu shall constitute grounds upon which City may rescind its approval of any applicable Conditional Use Permit. Developer's failure to indemnifu City shall be a waiver by nlveloper of any right to proceed with the Project, or any portion thereof, and a waiver of Developer\s right to file a claim, action or proceeding against City or City's Agents based on City's rescission or revocation of any Conditional Use Permit, Subsequent City Approvals, or City's failure to defend any claim, action, or proceeding based on Developer's failure to indemniff City.

Section 6.5. Waiver of Damages. Notwithstanding anything in this Agreement to the contrary, the Parties acknowledge that City would not have entered into this Agreement had it been exposed to liability for damages from Developer and, therefore, Developer hereby waives all claims for damages against City for breach of this Agreement. Developer further acknowledges that under the Divelopment Agreement Statute, land use approvals (including development agreements) must be approved by the City Council and that, under law, the City Council's discretion to vote in any particular way may not be constrained by contract. Developer therefore waives all claims for damages against City in the event that this Agreement or any Project approval is: (l) not approved by the City Council or (2) is approved by the City Council, but with new changes, amendments, conditions, or deletions to which Developer is opposed. Developer further acknowledges that, as 20 v
an instrument which must be approved by ordinance, a development agreement is subject to referendum; and that, under law, the City Council's discretion to avoid a referendum by rescinding its approval of the underlying ordinance may not be constrained by contract, and Developer waives all claims for damages against City in this regard. Notwithstanding the foregoing, nothing in this Section 6.5 shall amount to a waiver of Developer's right to exercise any of the administrative remedies available to Developer under applicable law and pursue any and all equitable remedies against the City in the event of the City's breach of this Agreement, including without limitation exercising its right to appeal, filing a Writ of Mandamus, or seeking specific performance.

ARTICLE 7

MORTGAGEE PROTECTION
This Agreement, once executed and recorded, shall be superior and senior to any lien placed upon the Site or any portion thereof following recording of this Agreement, including the lien of any deed of trust or mortgage ("Mortgase"). Prior to the Effective Date, Developer shall secure subordination ugr""-.nts from any person who as recorded a deed of trust or other lien against the Site. Notwithstanding the foregoing, no breach hereof shall defeat, render invalid, diminish, or impair the lien of any Mortgage made in good faith and for value. This Agreement shall immediately be deemed in default and immediately terminate upon the foreclosure or transfer of any interesi in th. Site or Project, provided such foreclosure or the transfer ofinterest results in thi change of Developer, whether by operation of law or any other method of interest change or transfer, unless the City Manager has authorized such change or transfer in advance, in writing, which authorization shall not be unreasonably withheld.

ARTICLE 8

DEFAULT
Section 8.1. General Provisions.
(a) Subject only to any extensions oftime by mutual consent in writing, or as otherwise provided herein, the failure or delay by any Party to perform in accordance with the terms and provisions of this Agreement shall constitute a default. Subject to Section 8.1(g), any Party alleging a default or breach of this Agreement ("Charging Party") shall give the other Party ("Charged Party") not less than thirty (30) calendar days written notice, which shall specify the ,ut"." of tfre alieged default and the manner in which the default may be cured ("euIg Jgliod").

During any such Cure Period, the Charged Party shall not be considered in default for purposes of termination of this Agreement or institution of legal proceedings for the breach of this Agreement.
(b) After expiration of the Cure Period, if such default has not been cured or is not in the process of being diligently cured in the manner set forth in the notice, or if the breach cannot reasonably be cured within thirty (30) calendar days, the Charging Party may, at its option, institute legal proceedings pursuant to this Agreement or give notice of its intent to terminate this Agreement pursuant to Government Code section 65868. In the event City is the Charging Party, Ciiy may, in its sole discretion, give notice, as required by law, to the Charged Party of its intent to ievoke or rescind any operable Conditional Use Permit related to or concerning the Project. 21 v
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(c) Prior to the Charging Party giving notice to the Charged Party of its intent to terminate, or prior to instituting legal proceedings, the matter shall be scheduled for consideration and review by City in the manner set forth in Government Code sections 65865, 65867, and 65868 or the comparable provisions of the Mendota Municipal Code within thirty (30) calendar days from the expiration of the Cure Period.
(d) Following consideration of the evidence presented and said review before City, and after providing the Charged Party an additional thirty (30) calendar day period to cure, the Charging Party may institute legal proceedings against the Charged Party or may give written notice of termination of this Agreement to the Charged Party. (e) Evidence of default may arise in the course of a regularly scheduled periodic review of this Agreement pursuant to Government Code section 65865.1, as set forth in Section

8.2. If any Party determines that another Party is in default following the completion of the normally scheduled periodic review, without reference to the procedures specified in Section

8.1(c), iaid Party may give written notice of termination of this Agreement, speciffing in the notice the alleged nature of the default and potential actions to cure said default where appropriate.

If the alleged Jefault is not cured in sixty (60) calendar days or within such longer period specified in the notlce, or the defaulting Party is not diligently pursuing a cure, or if the breach cannot reasonably be cured within the period or the defaulting party waives its right to cure such alleged default, this Agreement may be terminated by the non-defaulting Party by giving written notice' (0 In the event Developer is in material default under the terms and conditions of this Agreement, no permit application shall be accepted by City nor will any permit be issued to Developer until the default is cured, or the Agreement is terminated. (g) In the event that a person or entity other than the Developer is in default, Developer shall uselommercially reasonabli efforts to bring the person or entity in default into compliance.

The City shall provide Developer with notice and opportunity to cure as provided for in paragraph (a) through (e) above, except that the time periods in paragraphs (a), (b), (c) and (e) shall be ninety (90) davs ("Extended Cure Period")'
Section 8.2. Annual Review. City shall, every twelve (12) months during the Term of this Agreement, review the extent of good faith, substantial compliance of Developer and City with thi t..-, of this Agreement. Such periodic review by City shall be limited in scope to compliance with the terms of this Agreement pursuant to California Government Code section 65865.1. City shall deposit in the mail or email to Developer a copy of all staffreports and, to the extent practical, related exhibits concerning this Agreement or the Project's performance, at least seven (7) calendar days prior to suchannual review. Developer shall be entitled to appeal a determination of City or City Manager to the City Council. Any appeal must be filed within ten (10) calendar days of the Developer;s receipt of the written decision of City or the City Manager, respectively.

Developer shall bL permitted an opportunity to be heard orally or in writing regarding its performance under this Agreement before City, the City Manager, or City Council, as applicable.

Section g.3. Estoppel Certificates. City shall, with at least twenty (20) calendar days prior written notice, execute, acknowledge, and deliver to Developer, Developer' lender, potential investors, or assignees an Estoppel Certificate in writing which certifies that this Agreement is in full force and 22 \-/ v
effect, that there are no breaches or defaults under the Agreement, and that the Agreement has not been modified or terminated and is enforceable in accordance with its terms and conditions. (a) At Developer's option, City's failure to deliver such Estoppel Certificate within the stated time period shall be conclusive evidence that the Agreement is in full force and effect, that there are no uncured breaches or defaults in Developer's performance of the Agreement or violation of any City ordinances, regulations, and policies regulating the use and development of the Site or the Project subject to this Agreement.

Section 8.4. Default by City. In the event City does not accept, review, approve, or issue any permits or approvals in a timely fashion, as defined by this Agreement, or if City otherwise defaults under the terms of this Agreement, City agrees that Developer shall not be obligated to proceed with or complete the Project, and shall constitute grounds for termination or cancellation of this Agreement by DeveloPer.

Section 8.5. Cumulative Remedies of Parties. In addition to any other rights or remedies, City or Developer may institute legal or equitable proceedings to cure, correct, or remedy any default, enforce any covenant, or enjoin any threatened or attempted violation of the provisions of this Agreement, so long as any such action conforms to section 8.1 (c) of this Agreement.

Section 8.6. Enforced Delay, Extension of Times of Performance. Delays in performance, by either p*ty, shall not be deerned a default if such delays or defaults are due to war, insurrection, strikes, walkouts, riots, floods, earthquakes, fires, casualties, acts of God, governmental restrictions imposed where mandated by govemmental entities other than City including in the event of a pandemic, enactment of conflicting state or federal laws or regulations, new or supplementary environmental regulations enacted by the state or federal government, litigation, or-o^th.. force majeure events. An extension of time for such cause shall be in effect for the period of forced delay or longer, as may be mutually agreed upon.

ARTICLE 9

TERMINATION
Section 9.1. Termination Upon Completion of Development. This Agreement shall terminate upon the expiration of the T"r-, unless it is terminated earlier pursuant to the terms of this Agreement. Upo., termination of this Agreement, City shall record a notice of such termination in substantial corfor*urrce with the "Notice of Termination" attached hereto as Exhibit D, and this Agreement shall be of no further force or effect except as otherwise set forth in this Agreement.

Section 9.2. Effect of Termination on Developer's Obligations. Termination of this Agreement shall eliminate any further obligation of Developer to comply with this Agreement, or some portion thereof, if such termination relates to only part of the Site or Project. Termination of this igreement, in whole or in part, shall not, however, eliminate the rights of Developer to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination.

Section 9.3. Effect of Termination on City's Obligations. Termination of this Agreement shall eliminate any further obligation of City to comply with this Agreement, or some portion thereof, 23 \-' v
if such termination relates to only part of the Site or Project. Termination of this Agreement shall not, however, eliminate the rights of City to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination.

Section 9.4. Developer Compliance with Amendment In Lieu Of Termination. At the City's election, in the er.nt Developer is in default of this Agreement and is unable to pay monetary amounts due City hereunder to cure said default within the applicable Cure Period, Developer shall comply with City's efforts to amend this Agreement to substitute Developer for another party which intends to take over Developer's future operations of the Project and obligations under this Agreement.

Section 9.5. Survival After Termination. The rights and obligations of the Parties set forth in this Sectiong.5,Section 2.8, Section6.3, Section 10.3, Section 10.4, Section 10.5, Section l0'7, and any right or obligation of the Parties in this Agreement which, by its express terms or nature and context is inteided to survive termination of this Agreement, will survive any such termination.

ARTICLE 10

OTHE,R GENERAL PROVISIONS
Section 10.1. Assignment and Assumption. Developer shall not have the right to sell, assign, or transfer all or any part ofits rights, title, and interests in all or a portion ofSite, or Project, subject to or a part of this Agreement, to any person, firm, corporation, or entity during the Term of this Agreement without ihe advance written consent of the City Manager, such consent shall not be urieasonably withheld or conditioned. Any assignment or transfer prohibited by this Agreement will be considered an immediate breach of thiJag.eement and City may elect to immediately terminate this Agreement as it applies to the assumed property. If the City Manager approves an assignment or transfer of any irrjterest detailed in this Section 10.1, City and Developer shall exeJute an "Assignment and
-Assumption
Agreement" in the form attached hereto as Exhibit E.

Nothing in tnir S..ti* tOf uppti.. to the Diveloper's capitalizationor ownership provisions.

Section 10.2. Covenants Running with the Land. All of the provisions contained in this Agreement shall be binding ,rpo, ttre Parties and their respective heirs, successors and assigns, re[resentatives, lesseer, *I uil oth.r persons acquiring all or a portion of interest in the site or project, whether by opeiation of law oi ir, *y manner whatsoever. Att of the provisions contained in ihis Agreement shall be enforceable as equitable servitudes and shall constitute covenants running ,,iitt ttt" land pursuant to Califomia law, including Califomia Civil Code Section 1468.

Each covenant herein to act or refrain from acting is for the benefit of or a burden upon the Project, as appropriate, runs with the Site, and is binding upon Developer' Section 10.3. Notices. Any notice or communication required hereunder between City and Developer must be in writing, and may be given either personally, by facsimile or email (with originai forwarded by regulart.S. uaii), by iegistered or certified mail (retum receipt requested), or 6y Federal Express, tipS or other similar couriers providing overnight delivery. If personally delivered, a notict stratt ue deemed to have been given when delivered to the Party to whom it is addressed. If given by facsimile or email transmission, a notice or communication shall be deemed to have beerigiven and received upon actual physical receipt of the entire document by the 24 \-, \,'
receiving Party's facsimile machine. Notices transmitted by facsimile or email after 5:00 p.m. on u rro*ul business day, or on a Saturday, Sunday, or holiday shall be deemed to have been given and received on the next normal business day. If given by registered or certified mail, such notice or cofilmunication shall be deemed to have been given and received on the first to occur of (i) actual receipt by any of the addressees designated below as the party to whom notices are to be sent, or (iif frv! (5j days after a registered or certified letter containing such notice, properly addressed,-with postagi prepaid, is deposited in the United States mait. If given by Federal Express or similar ro*i"i, a notice or communication shall be deemed to have been given and reciived on the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at any time, by giving ten (10) days written notice to the other Party hereto, designate any other address in substitution ofthe address to which such notice or communication shall be given. Such notices or communications shall be given to the Parties at their addresses set forth below:

If to City: City of Mendota
643 Quince Street
Mendota, CA 93640
Attention: City Manager
And to: Wanger Jones Helsley PC
265 E. River Park Circle, Suite 3 10
Fresno, Californi a 93720
Attention: John P. KinSeY, Esq.

If to Developer: ELEMENT 7 MENDOTA, LLC
645 West 9th Street
IJnit #110-63 1
Los Angeles, CA 90015
Attention: Robert M. DiVito, Jr.

And to: ELEMENT 7 LLC
4612 Glencoe Avenrte, #4
Marina Del Rey, CA 90292
Attention: Sheila Merchant Esq
Section 10.4. Governing Law and Binding Arbitration. The validity, interpretation, and performance of this Agreement shall be controlled by and construed pursuant to the laws of the -State
of California. eny dispute, claim, or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation, or validity thereof, including the determination of the scope or applicability of this Agreement to arbitrate, shall be determined by binding arbitration in Fiesno,
-CaHfornia,
before one arbitrator. The arbitration shall proceed
p*..ruit to the Comprehensive Arbitration Rules and Proceedings ("Rules") of the Judicial Arbitration and Mediation Services ("JAMS."). If the Parties cannot agree on an arbitrator within 30 days of the first notice by either Party of the need for arbitration, the arbitrator shall be chosen in actordance with the then current Rules of JAMS. The arbitrator shall apply Califomia 25 \-, v
substantive law and shall have the power to enforce the rights, remedies, duties, liabilities and obligations of discovery by the imposition of the same terms, conditions and penalties as can be imposed in like circumstances in a civil action by a court of competent jurisdiction of the State of Califomia The arbitrator shall have the power to grant all legal and equitable remedies provided by Califomia law and award compensatory damages provided by California law, except that punitive damages shall not be awarded. The arbitration award shall be final and binding upon the Parties and may be enforced through an action thereon brought in the Superior Court for the State of Califomia in Los Angeles County.

Section 10.5. Invalidity of Agreement/Severability. If this Agreement in its entirety is determined by a court to be invalid or unenforceable, this Agreement shall automatically terminate as of the date of final entry of judgment. If -any term or provision of this Agreement shall be determined by a court to be invalid and unenforceable, or if any term or provision of this Agreement is rendered invalid or unenforceable according to the terms of any federal or state statute, any provisions that are not invalid or unenforceable shall continue in full force and effect and shall be construed to give effect to the intent of this Agreement. The Parties expressly agree that each Party is strictly prohibited from failing to perform any and all obligations under this Agreement onthe basis that this Agreement is invalid, unenforceable, or illegal. By entering into thir Ag.""-ent, each Party disclaims any right to tender an affirmative defense in any arbitration or.o,r.t of competent jurisdiction, that performance under this Agreement is not required because the Agreement is invalid, unenforceable, or illegal.

Section 10.6. Cumulative Remedies. In addition to any other rights or remedies, City and Developer may institute legal or equitable proceedings to cure, correct, or remedy any default, to specifically "rrfor""
any covenant or agreement herein, or to enjoin any threatened or attempted violation of tfr. provisions of this Agreement. The prevailing party in any such action shall be entitled to reasonable attorneys' fees and costs. Notwithstanding the foregoing or any other provision of this Agreement, in the event of City default under this Agreement, Developer agrees ihat Develop.. rnuy ,ot seek, and shall forever waive any right to, monetary damages against City, but excluding therlfrom the right to recover any fees or charges paid by Developer in excess of those permitted hereunder.

Section 10.7. Third Party Legal Challenge. In the event any legal action or special proceeding is commenced by any person or entity challenging this Agreement or any associated entitlement, permit, o, upprorai granted by City to Developer for the Project (collectively, "Project Litigation";, the farties agree to cooperate with each other as set forth herein. City may elect to tendir the defense of any lawsuit filed and related in whole or in part to Project Litigation with legal counsel selected by City. Developer will indemniff, hold City harmless from, and defend City from all costs and expenses incurred in the defense of such lawsuit, including, but not limited to, damages, attorneys' feis, and expenses of litigation awarded to the prevailing party or parties in such liiigation. Developer shall pay all litigation fees to City, within thirty (30) days of receiving a written iequest and accounting of such fees and expenses, from City. Notwithstanding the aforementiorr.d, City may request, and Developer will provide to City within seven (7) days of any such request, a deposit to cover City's reasonably anticipated Project Litigation fees and costs.

Section 10.8. Constructive Notice and Acceptance. Every person who after the Effective Date and recording of this Agreement owns or acquires any right, title, or interest to any portion of the 26 v
Site is and shall be conclusively deemed to have consented and agreed to every provision contained herein, whether or not any reference to this Agreement is contained in the instrument by which such person acquired an interest in the Site, and all rights and interests of such person in the Site shall be subject to the terms, requirements, and provisions of this Agreement.

Section 10.9. Statute of Limitations and Laches. City and Developer agree that each Party will undergo a change in position in detrimental reliance upon this Agreement from the time of its e*""uiio1 and subsequently. The Parties agree that section 65009(c)0)@) of the California Government Code, *hi"h provides for a ninety (90) day statute of limitations to challenge the adoption of this Agreement, is applicable to this Agreement. In additiotr, ffiY person who may chailenge the validity of this Agreement is hereby put on notice that, should the legality or validity of this Agreement be challenged by any third party in litigation, which is filed and served more than ninety (90) days after the execution of this Agreement, City and Developer shall each assert the affrrmative defense of laches with respect to such challenge, in addition to all other available defenses. This Section in no way limits the right of a Party, claiming that the other Party breached the terms of this Agreement, to bring a claim against the other Party within the four (4) year statute of limitations set forth in Section 337 of the California Civil Code.

Section 10.10. Change in State Regulations. [n no event shall Developer operate the Project in violation of the Agreement, or any applicable regulations issued pursuant to the California Cannabis Laws, as may be amended from time to time.

Section 10.11. Standard Terms and Conditions.
(a) Venue. Venue for all legal proceedings shall be in the Superior Court of California in and for the County of Fresno.
(b) Waiver. A waiver by any Party of any breach of any term, covenant, or condition herein contained or a waiver of any right or remedy of such Party available hereunder, at law or in equity, shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant, or condition herein contained or of any continued or subsequent right to the same right or remedy. No party shall be deemed to have made any such waiver unless it is in writing and signed by the Party so waiving.
(c) Completeness of Instrument. This Agreement, together with its specific references, attachmints, and Exhibits, constitutes all of the agreements, understandings, representations, conditions, warranties, and covenants made by and between the Parties hereto.

Unless set forth herein, no Party to this Agreement shall be liable for any representations made, express or implied.
(d) Supersedes Prior Agreement. It is the intention of the Parties hereto that this Agreement shall supersede any prior agreements, discussions, commitments, or representations, *riitt.rr, electronic, or oral, between the Parties hereto with respect to the Site and the Project. (e) Captions. The captions of this Agreement are for convenience and reference only and the words coniained therein shall in no way be held to explain, modiff, ampliff, or aid in the interpretation, construction, or meaning of the provisions of this Agreement. 27 v
\-/ v
(f) Number and Gender. In this Agreement, the neutral gender includes the feminine and masculine, and the singular includes the plural, and the word "person" includes corporations, partnerships, firms, or associations, wherever the context requires. (g) Mandatory and Permissive. "Shall" and "wi11" and "agrees" are mandatory. "May" or "can" are permissive.
(h) Term Includes Extensions. All references to the Term of this Agreement shall include any extensions of such Term.
(i) Counterparts. This Agreement may be executed simultaneously and in several counterparts, each of which shall be deemed an original, but which together shall constitute one and the same instrument.
0) Other Documents. The Parties agree that they shall cooperate in good faith to u"ro*pii.h the objectives of this Agreement and, to that end, agree to execute and deliver such other instruments or documents as may be necessary and convenient to fulfill the purposes and intentions of this Agreement.
(k) Time is of the Essence. Time is of the essence in this Agreement in each covenant, term, and condition herein.
0) Authority. All Parties to this Agreement warrant and represent that they have the power and authority to enter into this Agreement and the names, titles, and capacities herein stated on behalf of any entities, persons, states, or firms represented or purported to be represented by such entitier, p...o.r., staies, or firms and that all former requirements necessary or required by state or federal law in order to enter into this Agreement had been fully complied with. Further, by entering into this Agreement, no Party hereto shall have breached the terms or conditions of any other contract o. ufr."-.nt to which such Party is obligated, which such breach would have a material effect hereon.
(m) Document Preparation. This Agreement will not be construed against the Party preparing it, but will be construed as if prepared by all Parties. (n) Advice of Legal Counsel. Each Party acknowledges that it has reviewed this Agreement with its own legal-counsel and, based upon the advice of that counsel, freely entered into this Agreement.
(o) Attorney's Fees and Costs. If any action at law or in equity, including action for declaratory relief, is brought to enforce or interpret provisions of this Agreement, the prevailing party shali be entitled to reasonable attorney's fees and costs, which may be set by the court in the same action or in a separate action brought for that purpose, in addition to any other relief to which such Party may be entitled.
(p) Calculation of Time Periods. Unless expressly stated otherwise, all time referenced in this Agreement shall be calendar days, unless the last day falls on a legal holiday, Saturday, or Sunday, in which case the last day shall be the next business day. 28 \-, v
IN WITNESS WHEREOF, this Agreement has been entered into by and between Developer and City as of the Effective Date of the Agreement, as defined above. .OCITY" OODEVELOPER"
Date r{ 2021 Date: 202r

CITY OF MENDOTA, CA
a California Municipal Corporation
ELEMENT 7 MENDOTA, LLC, a California
Limited Liability Company
By:

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Cristian Gonzalez
City Manager
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ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or
VA of that document.

State of California
County of FWSYIo )
On before ffie,
(insert name and of the cer)
personally appea red 0''$nr\n {TfiLdL(k
who proved to me on the basis of s
subscribed to the within instrument and acknowledged to me that he/st15 \n/y executed [he sa'me in histh/rtthy'r authorized capacity(i96), and that by histl6rtti26ir signature6|l o" the instrument the perdonJpfi, or the entity upon behalf of which the personfd) acted, executed the instrument.

I certify under PENALry OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal. ffi C ELESTE CABR ER,A.G.ARC IA Notary Public - Californit
Fresno County
Cornmission I Z26l396
lly Comm, Expires Nov I 6. ZOZL
Signature (Seal)
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ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or
validity of that document.

State of California
County of S.r^ Qzr,.r.t UD )
before me, l.{rr,rw -,li*r- Ss Notar,,r P,rH
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(insert name inO -'
personally appeared
who proved to me on the of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal ilhINA LING SO
Notary Public .

San Fnncisco
California
Commisslon #
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EXHIBIT A

LEGAL DESCRIPTION
Lots I I through 16 (inclusive) of Block 48 of The Town of Mendota, according to the map thereof recorded in Book I of Miscellaneous Maps at Page 18, Fresno County Records, in the City of Mendota, County of Fresno, State of California.

APN 013 -191 -18

END OF DESCRTPTION
616121
No. 8468

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DATE: 6 /6 /21
LoTS 11, 12, 15, 1+, 15, & 16 0F BLoCK 4g

OF THE TOWN OF MENDOTA
BOOK 1, PAGE 18, MISCELLANEOUS MAPS
CITY OF MENDOTA, COUNTY OF FRESNO JOB N0: 35J620012

PROVOST&

PRITCHARD
An Employee Owned Company EXHIBIT B SHEET 1 oF 1
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Exhibit C
Notice of Non-Performance Penalty
Pursuant to Article 4, Section 4.5 of the Development Agreement by and between the City of Mendota ("City") and ELEMENT 7 MENDOTA, LLC ("Developer"), for the development of real property located at796 Oller Street, Mendota, California 93640 ("Agreement"), if Developer fails to make any payment required by the Agreement, the City may impose a Non-Performance Penalty of one percent (l%) to all past due payments. Pursuant to the Agreement, City shall deliver a Notice of Non-Performance Penalty ('Notice") to Developer, and Developer shall pay the Non-Performance Penalty in a single installment due on or before a date fifteen (15) calendar days following delivery of the Notice.

City hereby informs Developer that Developer has failed to make payment(s) required by the Agreement. The past due amount is . Accordingly, pursuant to Section 4.5 of the Agreement, a penalty of ("Penalty Amount") is hereby imposed. Please remit payment of the Penalty Amount by
City Manager
City of Mendota
Date
32 \-,
Exhibit D

RECORDING REQUESTED BY

AND WHEN RECORDED MAIL
TO:

City of Mendota
643 Quince St
Mendota, CA 93640
Attn: City Manager

SPACE ABOVE THIS LINE FOR RECORDER'S USE
Recording Fee Exempt per Government Code $6103
of Mendota ("City") and ELEMENT 7 MENDOTA,LLC
property located at 796 O1ler Street, Mendota,
informs that the
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("Developer") for the development of
California 93640 ("Agreement"),
Agreement is hereby terminated, in
Notice of Termination
Pursuant to Article 9, Section 9.1 of the Development Agreement by and between the City accordance with the terms and conditions as stated therein, pursuant to Article _,
Section
In accordance with Article 9, Section 9.1 of the Agreement, City shall record this Notice of Termination.

Title:

Entity:

Date
33 \-/ v
Exhibit E
Assignment and Assumption Agreement
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT ("Agreement") is made and entered into this day of by and between the CITY OF MENDOTA, a municipal corporation of the State of California ("City"), ELEMENT 7 MENDOTA, LLC, a California limited liability company ("Assignor"), and a
("Assignee"). City, Assignor, or Assignee may be referred to herein individually as a "Party" or collectively as the "Parties." There are no other parties to this Agreement.

RECITALS
A. City and Assignor entered into a development agreement, dated zozl,for the development of property located at796 Oller Street, in the City of Mendota, County of Fresno, State of California, Assessor's Parcel Number 013-191-18 ("Development Agreement"), attached hereto as Exhibit "l" and incorporated herein by this reference; B. Pursuant to Article 10, Section 10.1 of the Development Agreement, Assignor may transfer all or part of its rights, title, and/or interests in all or a portion of Site, or Project, as those terms are defined in the Development Agreement, to any person, firm, corporation, or entity during the Term of the Development Agreement only with the advance written consent of the City Manager, who shall not unreasonably withhold or condition such consent; C. Assignor desires to transfer to Assignee some or all of Assignor's rights and obligations under the Development Agreement, in accordance with Article 10, Section 10.1 of the Development Agreement;
D. Assignee desires to assume some or all of Assignor's rights and obligations under the Development Agreement, in accordance with Article 10, Section 10.1 of the Development Agreement;
E. The City Manager has agreed to permit Assignor's transfer of some or all of Assignor's rights and obligations under the Development Agreement to Assignee, and to Assignee's assumption of same, subject to the terms and conditions specified in this Agreement; F. The Parties intend through this Agreement to allow Assignor to transfer, and Assignee to assume, some or all of Assignor's rights and obligations under the Development Agreement, in accordance with Article 10, Section 10.1 of the Development Agreement.

G. The City Council has conducted all necessary proceedings in accordance with City's Municipal Code for the approval of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and legal suffrciency of which are hereby acknowledged, the Parties do hereby agree as follows:
34 v

AGRE,E,ME,NT
Section 1. Assignment. Assignor hereby assigns to Assignee (all/some) of Assignor's rights and obligations under the Development Agreement. If Assignor is transferring only some of Assignor's rlghts and obligations under the Development Agreement, then the specific rights and obligations subject to transfer shall be specif,red in Exhibit "1," attached hereto and incorporated herein by this reference.

Section 2. Assumption. Assignee hereby accepts and assumes the foregoing transfer or assignment of (alllsome) of Assignor's rights and obligations under the Development Agreement.

Section 3. Consent. In accordance with Article 10, Section 10.1 of the Development Agreement, the City Manager hereby consents to Assignor's transfer of, and Assignee's asiumption of, Assignor's rights and obligations under the Development Agreement, as specified herein, subject to any rearorribl" terms and conditions the City Manager may require, as set forth in Exhibit "2," attached hereto and incorporated herein.

Section 4. Conditions of Assignment. The Parties hereby agree to abide by the terms or conditions of assignment, if any, set forth in Exhibit 2, andacknowledge that City's consent would not have been provided but for the Parties' agreement to abide by the terms or conditions of assignment.

Section 4. Effective Date. The assignment and assumption of rights and obligations as specified herein shall be effective on
Section 5. Terms of the Development Agreement. The terms of the Development Agreement are incorporated herein by this reference. Assignor acknowledges and agrees that the representations, warranties, covenants, agreements and indemnities contained in the Development Agreement shall not be superseded hereby but shall remain in full force and effect to the fulI extent provided therein.

Section 6. Inconsistency. In the event of any conflict or inconsistency between the terms of the Development Agreement and the terms of this Agreement, the terms of the Development Agreement shall govern.

Section 7. Further Actions. Each of the Parties hereto covenants and agrees, at its own expense, to execute and deliver, at the request of the other Parties hereto, such further instruments of transfer and assignment and to take such other action as such the other Parties may reasonably request to more effectively consummate the assignments and assumptions contemplated by this Agreement.
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"City"
Date:

CITY OF MENDOTA, CA
a California Municipal Corporation
v
ttAssignor"
Date:

ELEMENT 7 MENDOTA, LLC, A California
D,Jth>
t'Assignee"
Date:

Name:

Corporate Status:

Title:

Name:

By:

Its:

Attest:

Cristian Gonzalez
City Manager Its
City Clerk
Approved to as Form:

John P. Kinsey
City Attorney
36 Exhibit 1
(Interest Subject to Transfer)
37 Exhibit 1
(Interest Subject to Transfer)
37 v v
Exhibit 1
(Interest Subject to Transfer)
37 Exhibit 2
(Conditions of Consent)
38 Exhibit 2
(Conditions of Consent)
38 \- \,,
Exhibit 2
(Conditions of Consent)
38 Exhibit F
Community Benefit Plan
[PAGES 143-151 OF JULY PRESENTATION]
Exhibit F
Community Benefit Plan
[PAGES 143-151 OF JULY PRESENTATION]
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Exhibit F
Community Benefit Plan
IPAGES 143-151 OF JULY PRESENTATIONI
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EXHIBIT EXHIBIT 22

FORMAL INVITATION

FOR THE SUBMITTAL OF APPLICATIONS TO

ENTER INTO A DEVELOPMENT AGREEMENT FOR

COMMERCIAL CANNABIS ACTIVITY
Dated: October 15, 2019

TABLE OF CONTENTS
I. Introduction .......................................................................................................................... 1 II. Background .......................................................................................................................... 1 III. Development Agreement Application Process .................................................................... 1 A. Application Process........................................................................................................ 1 B. Application Format ........................................................................................................ 2 C. Application Contents ...................................................................................................... 2 IV. Additional Requirements for Commercial Cannabis Businesses ........................................ 5 V. Application Review and Selection....................................................................................... 5 VI. Development Agreement Application Submission .............................................................. 5 V. Limitations and Conditions .................................................................................................. 6 1 I. INTRODUCTION
The City of Mendota is accepting applications from qualified parties (“Applicants”) to enter into a development agreement for commercial cannabis business activities. Pursuant to Mendota Municipal Code (MMC) Section 8.37.070(A)(2), applications to enter into a development agreement for commercial cannabis businesses must be submitted during the Development Agreement Application Submittal Period, which is from Monday, October 14, 2019 to Friday, December 13, 2019.

Applicants are encouraged to submit a proposal in accordance with the requirements set forth herein and as provided by Chapter 8.37 of the MMC. Once the Application Submittal Period terminates, the City will review and score all submitted proposals in accordance with the provisions described in Chapter 8.37 of the MMC.

II. BACKGROUND
On June 11, 2019, the City of Council of the City of Mendota adopted Ordinance No. 19-06, amending Chapter 8.37 of the Mendota Municipal Code (MMC) to eliminate the ban on cannabis dispensaries and to establish regulations for commercial cannabis businesses. A copy of Chapter 8.37 of the MMC is attached hereto as Attachment “A”.

On September 10, 2019, the City Council adopted Ordinance No. 19-09, modifying the location requirements for commercial cannabis retail businesses, of which a copy is attached hereto as Attachment “B”. A diagram showing the available properties that comply with the location requirements as set forth by Ordinance No. 19-09 is attached hereto as Attachment“C”.

At the September 10th meeting, the Council also adopted Resolution No. 19-65, establishing the amount of the commercial cannabis business permit fee and the commercial cannabis development agreement processing fee, of which a copy is attached hereto as Attachment “D”.

On September 24, 2019, the City Council adopted Ordinance No. 19-08, amending the Mendota zoning code to permit commercial cannabis businesses in the C-3 district subject to a conditional use permit, of which a copy is attached hereto as Attachment “E”.

On October 8, 2019, the City Council adopted Resolution No. 19-75, establishing the application submittal period for applications to enter into a development agreement for commercial cannabis businesses, of which a copy is attached hereto as Attachment “F”.

III. DEVELOPMENT AGREEMENT APPLICATION PROCESS
Applicants must a submit development agreement application in accordance with the provisions contained within Section 8.37.070 of the Mendota Municipal Code (MMC). A copy of Chapter 8.37 of the MMC is attached hereto as Attachment "A". A summary of the aforementioned provisions are as follows:

A. APPLICATION PROCESS
Section 8.37.070(A) of the Mendota Municipal Code (MMC) specifically describes the process for a development agreement application. In summary Applicants are required to ensure that:
2 1. Completed development agreement applications shall be submitted via United States Mail or in person to City Hall, located at 643 Quince Street, Mendota, California, with the attention to the City Manager.

2. Completed development agreement applications shall be submitted during the development agreement application submittal period which is from Monday, October 14, 2019 to Friday, December 13, 2019. The City Council may by resolution establish one or more submittal periods, as necessary.

3. Applicants are required to submit one unbound and two bound copies of the complete application, including all appendix and/or attachments. Applicants are also required to submit the complete application on either a USB thumb drive or CD.

4. Development agreement applications must be submitted in accordance with the requirements set forth in Section 8.37.070(B) of the MMC. A required cost recovery deposit of $3,473.90 (three thousand, four hundred and seventy-three dollars and ninety cents) must also accompany the application. A copy of Resolution No. 19-65, which establishes the required cost recovery deposit, is attached hereto as Attachment "D".

B. APPLICATION FORMAT
Section 8.37.070(B) of the Mendota Municipal Code (MMC) specifically describes the format for a development agreement application. In summary, applicants are required to ensure that:

1. The application shall be limited to seventy-five (75) pages, including all responses, appendix, tables, etc. The page total does not include the applicant/owner information form or proof of payment, but does include the cover letter. Any submittal pages beyond this requirement will not be considered. Double-sided pages county as two pages.

2. Twelve (12) point font shall be used in the narrative portions of the application. All pages shall measure 8.5" x 11" and all pages are to be numbered in sequential order.

C. APPLICATION CONTENTS
Section 8.37.070(C) of the Mendota Municipal Code (MMC) specifically describes the contents for a development agreement application. Development agreement applications shall include all required information set forth below and shall be provided and labeled in the application in the same order as shown below:

1. Location of Proposed Cannabis Business.

Proposed commercial cannabis businesses may only operate in a location where such land uses will be consistent with the provisions of Title 17 of the Mendota Municipal Code. A copy of Ordinance No. 19-08 which amends the Mendota zoning code to permit commercial cannabis businesses in the C-3 district subject to a conditional use permit, is attached hereto as Attachment “E”. A copy of Ordinance No. 19-09, which modifies the location requirements for commercial cannabis retail businesses, is attached hereto as Attachment “B”. Moreover, a diagram which shows the available 3 properties that comply with the location requirements as set forth by Ordinance No. 19-09 is attached hereto as Attachment “C”.

2. Evidence of Owner Consent.

Evidence that the applicant has consent of the owner of the property to operate a commercial cannabis business at the proposed location is required. A real estate letter of intent (“RELOI”) to lease or buy from an authorized party, a lease, an option to lease or purchase and ownership are acceptable forms of control. Letters of interest of any kind shall not be accepted. RELOIs, lease options and leases must clearly and specifically state that the RELOI, lease option or lease is for the type of establishment listed in the proposal. The RELOI, lease option or lease must be for two years of longer.

3. State of Qualifications.

The applicant must describe applicant’s qualification relative to the application, and experience running businesses similar to the one proposed, including cannabis and/or non-cannabis businesses. Applicants should also provide a plan demonstrating a minimum percentage of locally hired employees and proposed recruitment strategies for new hires.

4. Business Implementation.

The applicant must provide verifiable, detailed descriptions and other background information for owners, key personnel and staff of the business, including the estimated number of employees to be hired in the first year, second year, third year, fourth year and fifth year and hourly wages for each employee. Describe other resources, including financial resources, dedicated to implement this proposal.

5. Understanding the Approach.

The applicant must provide a statement demonstrating the business’ understanding and approach to running the business and how that approach will integrate the business into the community in which it is located. This section shall include the following:
a. Description of day-to-day operations to meet industry’s best practices for the specific type of license in which applying for in the City. b. Description of how and where inventory will be kept, including the specific manner of securing the inventory, and how records will be maintained. c. Description of how any transaction information including patient records, reports, manifest and any other documents will be stored. d. Description of how medical and adult-use will be tracked and monitored to prevent diversion.
4 e. Description of applicant’s practices for preventing deterioration of any cannabis goods held by the applicant, including any practices for responding to product recalls.
f. Description of applicant’s practice for transfer/transport of cannabis products to and from premises.
g. Description of method(s) that will be used to dispose of unused cannabis. h. A schedule for beginning operations, including a narrative outlining any proposed construction, improvements, and a timeline for completion. i. Description of any environmentally-friendly business practices relating to energy and climate, water conservation and materials/waste storage. j. Description of the method(s) by which the applicant will mitigate any potentially adverse impact, such as loitering, graffiti, traffic, light, odor or noise, on surrounding property owners.
k. Site Plan. A scaled premises diagram showing the boundaries of the property and proposed premises with all boundaries, dimensions, entrances and exits, interior partition walls, labeling of each room, windows and common shared entryways. If the proposed premises consist of only a portion of the property, the diagram shall be labeled indicating which part of the property is the proposed premises and what the remaining property is used for. A floor plan shall also be included.
l. Business Plan. A budget for construction, operation, maintenance, compensation of employees, equipment costs, utility costs, and other operational costs. The budget must demonstrate sufficient capital in place to pay startup costs and at least three months of operating costs, as well as a description of the source and uses of funds.
m. Air Quality Management Plan. Must demonstrate that air circulation does not impact those surrounding the business, surrounding outdoor areas, and employee health and welfare.
n. If the application is for a retail business with delivery services:
1) Description of the process to ensure driver and patient safety. 2) Description of the process to verify delivery is to a qualified purchaser and to a qualified location.
3) Description of the process to track and maintain communication with the delivery person at all times.
4) Description of the process to verify deliveries and provide accurate manifest for audit purposes.
5 o. Local Ownership and Community Benefit. Describe the business plan, if any, to maximize local ownership and community benefit.

IV. ADDITIONAL REQUIREMENTS FOR COMMERCIAL CANNABIS

BUSINESSES
The aforementioned information regarding the requirements for development agreement applications is not an exhaustive list of all requirements for commercial cannabis businesses. For information on all of the requirements for both commercial cannabis businesses, and the development agreement application, please refer to Chapter 8.37 of the Mendota Municipal Code and the documents attached hereto this formal invitation for the submittal of applications to enter into a development agreement for commercial cannabis activity.

V. APPLICATION REVIEW AND SELECTION
Upon the termination of the Development Agreement Application Submittal Period on Friday, December 13, 2019, the review and selection process of the submitted development agreement applications will commence.

The City of Mendota will follow the application review and selection procedures that are in accordance with Section 8.37.070(A) of the Mendota Municipal Code. In summary:
● The City Manager shall review the development agreement applications for completeness within thirty (30) days after the end of the submittal period. ● Within sixty (60) days after the end of the submittal period, development agreement applications shall be scored by an independent five-member application evaluation committee, selected by the City Manager. The City shall employ blind scoring, whereby the identities of the owners will not be revealed, when the written proposals are scored by the application evaluation committee in accordance with the criteria set forth in the guidelines. No individual reviewing applications for completeness may participate in the selection of applicants by the application evaluation committee. ● The top two scoring development agreement applicants for all authorized license-types shall be placed on the qualified applicant list maintained by the City Manager. Upon conclusion of any appeal of the selections made by the application evaluation committee, or the appeal period if no appeal is filed, the applicants on the qualified application list shall be notified that they are invited to submit an application for a Conditional Use Permit.
● Applicants applying for more than one license type, or more than one location may not combine their application submittal package. A separate independent application must be submitted for each license type.

VI. DEVELOPMENT AGREEMENT APPLICATION SUBMISSION
The City will begin accepting development agreement applications on Monday, October 14, 2019 and will continue to accept applications until Friday, December 13, 2019. 6 Completed applications shall be submitted via United States Mail or in person to City Hall, located at 643 Quince Street, Mendota, California, with the attention to the City Manager.

Applicants are required to submit one unbound and two bound copies of the complete application, including all appendix and/or attachments. Applicants are also required to submit the complete application on either a USB thumb drive or CD.

Development agreement applications must be submitted in accordance with the requirements set forth in Section 8.37.070(B) of the MMC. A required cost recovery deposit of $3,473.90 (three thousand, four hundred and seventy-three dollars and zero cents) must also accompany the application. A copy of Resolution No. 19-65, which establishes the required cost recovery deposit, is attached hereto as Attachment "D".

V. LIMITATIONS AND CONDITIONS

1. The City Council reserves the right to establish, by resolution, one or more submittal periods, as necessary.

2. Respondent’s Duty to Investigate:
a. The information presented in this formal invitation and in any document or other information provided by the City is provided solely for the convenience of the interested parties. It is the responsibility of interested parties to assure themselves that the information contained in this invitation or other documents is accurate and complete. The City and its employees and advisors provide no representations, assurances, or warranties pertaining to the accuracy of the information and no person responding to this formal invitation is entitled to rely upon any of the information provided.

AATTACHMENT TTACHMENT A A
Chapter 8.37 - COMMERCIAL CANNABIS BUSINESSES
Sections:

8.37.010 - Purpose and intent.

It is the purpose and intent of this chapter to implement the provisions of the Medicinal and Adult Use Cannabis Regulation and Safety Act ("MAUCRSA") to accommodate the needs of medically-ill persons in need of and provide access to cannabis for medicinal purposes as recommended by their health care provider(s), as well as provide access to adult use cannabis, while imposing sensible regulations on the use of land to protect the city's residents, neighborhoods, and businesses from disproportionately negative impacts. As such, it is the purpose and intent of this chapter to regulate the cultivation, processing, manufacturing, testing, sale, delivery, distribution, and transportation of cannabis, cannabis products, medicinal cannabis, and medicinal cannabis products in a responsible manner to protect the health, safety, and welfare of the residents of the city and to enforce rules and regulations consistent with state law. The provisions of this chapter are in addition to any other permits, licenses, and approvals which may be required to conduct business in the city, and are in addition to any permits, licenses, and approvals required under state, city, or other law.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.020 - Definitions.

When used in this chapter, the following words shall have the meanings ascribed to them as set forth herein. Any reference to California statutes includes any regulations promulgated thereunder and is deemed to include any successor or amended version of the referenced statute or regulatory provision. "Bureau" means the Bureau of Cannabis Control within the Department of Consumer Affairs, formerly named the Bureau of Marijuana Control, the Bureau of Medical Cannabis Regulation, and the Bureau of Medical Marijuana Regulation.
"Cannabis" means all parts of the Cannabis sativa Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. It also means the separated resin, whether crude or purified, obtained from cannabis. It includes medicinal cannabis, intended to be sold for use pursuant to the Compassionate Use Act of 1996 (Proposition 215), found at Section 11362.5 of the Health and Safety Code, by a medicinal cannabis patient in California who possesses a physician's recommendation. It does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, the sterilized seed of the plant which is incapable of germination, or "industrial hemp" as defined by Section 11018.5 of the Health and Safety Code. "Cannabis products" has the same meaning as in Section 11018.1 of the Health and Safety Code. "Cannabis retail business" means a business where cannabis, cannabis products, or devices for the use of cannabis or cannabis products are offered, either individually or in any combination, for retail sale, including an establishment (whether fixed or mobile) that delivers, pursuant to express authorization, cannabis and cannabis products as part of a retail sale, and where the operator holds a valid commercial cannabis business permit from the city authorizing the operation of a retailer, and a valid state A-license or M-license as required by state law to operate a retailer. "Canopy" means the designated area(s) at a licensed premise, except nurseries, that will contain mature plants at any point in time.
(1) Canopy shall be calculated in square feet and measured using clearly identifiable boundaries of all areas(s) that will contain mature plants at any point in time, including all of the space(s) within the boundaries;
(2) Canopy may be noncontiguous but each unique area included in the total canopy calculation shall be separated by an identifiable boundary which include, but are not limited to: interior walls, shelves, greenhouse walls, hoop house walls, garden benches, hedgerows, fencing, garden beds or garden plots; and if mature plants are being cultivated using a shelving system, the surface area of each level shall be included in the total canopy calculation. "Caregiver" or "primary caregiver" has the same meaning as that term is defined in Section 11362.7 of the California Health and Safety Code.
"Chief of police" means the chief of police of the city of Mendota, or his or her designee(s). "City" means the city of Mendota.
"City manager" means the city manager of the city of Mendota, or his or her designee(s). "Code" means the Mendota Municipal Code.
"Commercial cannabis activity" includes the cultivation, possession, manufacture, distribution, processing, storing, laboratory testing, packaging, labeling, transportation, delivery or sale of cannabis or cannabis products by an operator who has a license issued by the state. "Commercial cannabis business" means any business or operation which engages in commercial cannabis activity.
"Commercial cannabis business permit" means a regulatory permit issued by the city pursuant to this chapter to a commercial cannabis business, and is required before any commercial cannabis activity may be conducted in the city. The initial permit and annual renewal of a commercial cannabis business permit is made expressly contingent upon the business' ongoing compliance with all of the requirements of this chapter and any regulations adopted by the city governing the commercial cannabis activity at issue. "Cultivation" means any activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of cannabis.
"Cultivation site" means a location where cannabis is planted, grown, harvested, dried, cured, graded, or trimmed, or a location where any combination of those activities occurs. "Cultivator" means a person holding a valid commercial cannabis business permit for cultivation issued by the city, and a valid state license for cultivation. "Customer" means a natural person twenty-one (21) years of age or over or a natural person eighteen (18) years of age or older who possesses a physician's recommendation. "Day care center" has the same meaning as in Section 1596.76 of the Health and Safety Code. "Delivery" means the commercial transfer of cannabis or cannabis products to a customer. It also includes the use by a retailer of any technology platform owned and controlled by the retailer. Delivery must be part of a store-front retailer.
"Dispensing" means any activity involving the retail sale of cannabis or cannabis products from a retailer.
"Distribution" means the procurement, sale, and transport of cannabis and cannabis products between licensees.
"Distributor" means a person holding a valid commercial cannabis business permit for distribution issued by the city, and, a valid state license for distribution, required by state law to engage in the business of purchasing cannabis from a licensed cultivator, or cannabis products from a licensed manufacturer, for sale to a licensed retailer.
"Dried flower" means all dead cannabis that has been harvested, dried, cured, or otherwise processed, excluding leaves and stems.
"Greenhouse" means a fully enclosed permanent structure that is clad in transparent material with climate control, such as heating and ventilation capabilities and supplemental artificial lighting, and that uses a combination of natural and supplemental lighting for cultivation. "Harvest batch" means a specifically identified quantity of dried flower or trim, leaves, and other cannabis plant matter that is uniform in strain, harvested at the same time, and, if applicable, cultivated using the same pesticides and other agricultural chemicals and harvested at the same time. "Labeling" means any label or other written, printed, or graphic matter upon a cannabis product, upon its container.
"License" means a license issued by the state to engage in commercial cannabis activity, and includes both an A-license and an M-license, as well as a testing laboratory license. "Licensee" means any person holding a state license, regardless of whether the license held is an Alicense or an M-license, and includes the holder of a testing laboratory license. "Limited-access area" means an area in which cannabis is stored or held and is only accessible to some licensee and authorized personnel.
"Live plants" means living cannabis flowers and plants, including seeds, immature plants, and vegetative stage plants.
"M-license" means a state license issued for commercial cannabis activity involving medicinal cannabis.
"Manufacture" means to compound, blend, extract, infuse, or otherwise make or prepare a cannabis product.
"Manufacturer" means a licensee with a valid commercial cannabis business permit that conducts the production, preparation, propagation, or compounding of cannabis or cannabis products either directly or indirectly or by extraction methods, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis at a fixed location that packages or repackages cannabis or cannabis products or labels or container.
"Microbusiness" means the cultivation of cannabis on an area less than ten thousand (10,000) square feet, by an entity authorized to act as a licensed distributor, Level 1 manufacturer, and retailer under state law, provided such licensee can demonstrate compliance with all requirements imposed by state law on licensed cultivators, distributors, Level 1 manufacturers, and retailers to the extent the licensee engages in such activities. Microbusiness licenses that authorize cultivation of cannabis shall include the license conditions described in subdivision (b) of Section 26060.1 of the Business and Professions Code.
"Operation" means any act for which licensure is required under the provisions of state law or any commercial transfer of cannabis or cannabis products.
"Owner" means any of the following:
(1) A person with an aggregate ownership interest of twenty (20) percent or more in the person applying for a license or a licensee, unless the interest is solely a security, lien, or encumbrance;
(2) The manager of a nonprofit or other entity;
(3) A member of the board of directors of a nonprofit; or (4) An individual who will be participating in the direction, control, or management of the person applying for a license or who has a financial interest in the business other than a fixed lease of real property.
"Patient" or "qualified patient" shall have the same definition as California Health and Safety Code Section 11362.7 et seq., as it may be amended, and which means a person who is entitled to the protections of California Health and Safety Code Section 11362.5. "Person" includes any individual, firm, partnership, joint venture, association, corporation, limited liability company, estate, trust, business, business trust, receiver, syndicate, or any other group or combination acting as a unit, and the plural as well as the singular. "Physician's recommendation" means a recommendation by a physician and surgeon that a patient use cannabis provided in accordance with the Compassionate Use Act of 1996 (Proposition 215), found at Section 11362.5 of the Health and Safety Code.
"Premises" means the designated structure or structures and land specified in the application that is owned, leased, or otherwise held under the control of the applicant or licensee where the commercial cannabis activity will be or is conducted. The premises shall be a contiguous area and shall only be occupied by one licensee unless the operator is granted an M-license and an A-license for the same type of activity and such operation is lawful under state and local laws, rules and regulations. "Sell," "sale," and "to sell" include any transaction whereby, for any consideration, title to cannabis or cannabis products are transferred from one person to another, and includes the delivery of cannabis or cannabis products pursuant to an order placed for the purchase of the same and soliciting or receiving an order for the same, but does not include the return of cannabis or cannabis products by a licensee to the licensee from whom the cannabis or cannabis product was purchased. "Testing laboratory" means a laboratory, facility, or entity with a commercial cannabis business permit that offers or performs tests of cannabis or cannabis products and that is both of the following:
(1) Accredited by an accrediting body that is independent from all other persons involved in commercial cannabis activity in the state;
(2) Licensed by the bureau.
"Transport" means the transfer of cannabis products from the permitted business location of one licensee to the permitted business location of another licensee, for the purposes of conducting commercial cannabis activity authorized by MAUCRSA which may be amended or repealed by any subsequent state of California legislation regarding the same. "Youth center" means any public or private facility that is primarily used to host recreation or social activities for minors, including, but not limited to, private youth membership organizations or clubs, social service teenage club facilities, video arcades where ten (10) or more video games or game machines or devices are operated, and where minors are legally permitted to conduct business, or similar amusement park facilities. It shall also include a park, playground or recreational area specifically designed to be used by children which may have play equipment installed, including public grounds designed for athletic activities such as baseball, softball, soccer, or basketball or any similar facility located on a public or private school grounds, or on city, county or state parks. This definition shall not include any private martial arts, yoga, ballet, music or similar studio of this nature nor shall it include any private athletic training facility, pizza parlor, dentist office or doctor's office primarily serving children. (Ord. No. 19-06, § 4, 6-11-2019)

8.37.030 - Commercial cannabis operations prohibited except as specifically authorized by this chapter.

Except as specifically authorized in this chapter, the commercial cultivation, manufacture, processing, storing, laboratory testing, labeling, sale, delivery, distribution or transportation (other than as provided under Business and Professions Code section 26090(e)), of cannabis or cannabis products and medicinal cannabis or medicinal cannabis product is expressly prohibited in the city. (Ord. No. 19-06, § 4, 6-11-2019)

8.37.040 - Compliance with laws.

This chapter is intended to implement state law. Every cannabis retail business and commercial cannabis business must comply with all applicable state and local laws. (Ord. No. 19-06, § 4, 6-11-2019)

8.37.050 - Permits required to engage in commercial cannabis operations.

It shall be unlawful for any person in or upon property located within the city to engage in, conduct or carry on (or to permit to be engaged in, conducted or carried on) commercial cannabis operations unless the person:
(1) Has applied for and entered into a development agreement with the city; (2) Has a valid commercial cannabis business permit from the city; (3) Has a valid state license for the business's cannabis activity; (4) Has a valid conditional use permit;
(5) Is currently in compliance with all applicable state and local laws; (6) Has a cannabis business license tax certificate.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.060 - Development agreement required for commercial cannabis businesses.

A. Prior to operating in the city and as a condition of issuance of a conditional use permit for commercial cannabis operations, each commercial cannabis business shall enter into a development agreement pursuant to Government Code Section 65864 et seq. with the city setting forth the terms and conditions under which the commercial cannabis business will operate that are in addition to the requirements of this chapter, including, but not limited to, public outreach and education, community service, payment of fees and other charges as set forth in subsection (C) of this section, and such other terms and conditions that will protect and promote the public health, safety, and welfare.

Further procedures and minimum standards for a development agreement may be enacted by resolution of the city council.

B. The planning commission shall make a recommendation to the city council on whether to approve a development agreement submitted to it by city staff. The city council shall make a final decision on whether to approve a development agreement recommended to the city council by the planning commission.

C. Development agreements shall include a provision requiring the payment of a public safety impact mitigation fee based on a pro-rata share of projected annual enforcement costs for commercial cannabis businesses within the city.

D. All cannabis businesses operating pursuant to a development agreement shall be subject to any applicable taxes approved by the voters.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.070 - Development agreement application.

A. Application Process.

1. Completed development agreement applications shall be submitted via U.S. Mail or in person to City Hall, located at 643 Quince St, Mendota, CA 93640, with attention to the city manager.

2. Completed development agreement applications shall be submitted during the development agreement application submittal period (the "submittal period"), which shall be established by resolution of the city council. The city council may by resolution establish one or more submittal periods, as necessary to implement the provisions of this chapter.

3. Applicants are required to submit one unbound and two bound copies of the complete application, including all appendix and/or attachments. Applicants are also required to submit the complete application on either a USB thumb drive or CD.

4. Development agreement applications must be submitted in accordance with the requirements set forth in subdivision (B) herein, and with the required cost recovery deposit, which shall be established by resolution of the city council.

5. The city manager shall review development agreement applications for completeness within thirty (30) days after the end of the submittal period.

6. Within sixty (60) days after the end of the submittal period, development agreement applications shall be scored by an independent five-member application evaluation committee, selected by the city manager. The city shall employ blind scoring, whereby the identities of the owners will not be revealed, when the written proposals are scored by the application evaluation committee in accordance with the criteria set forth in the guidelines. No individual reviewing applications for completeness may participate in the selection of applicants by the application evaluation committee.

7. The top two scoring development agreement applicants for all authorized license-types shall be placed on the qualified applicant list maintained by the city manager. Upon conclusion of any appeal of the selections made by the application evaluation committee, or the appeal period if no appeal is filed, the applicants on the qualified application list shall be notified that they are invited to submit an application for a conditional use permit.

8. Applicants applying for more than one license type, or more than one location may not combine their application submittal package. A separate independent application must be submitted for each license type.

B. Application Format.

1. Application shall be limited to seventy-five (75) pages, including all responses, appendix, tables, etc. The page total does not include the applicant/owner information form or proof of payment, but does include the cover letter. Any submittal pages beyond this requirement will not be considered. Double-sided pages count as two pages.

2. Twelve (12) point font shall be used in the narrative portions of the application. All pages shall measure 8.5" x 11" and all pages are to be numbered in sequential order.

C. Application Contents. Development agreement applications shall include all required information set forth below and shall be provided (and labeled) in the application in the same order as shown below:

1. Location of Proposed Cannabis Business. Proposed commercial cannabis businesses may only operate in a location where such land uses will be consistent with the provisions of Title 17 of this code.

2. Evidence of Owner Consent. Evidence that the applicant has consent of the owner of the property to operate a commercial cannabis business at the proposed location. A real estate letter of intent ("RELOI") to lease or buy from an authorized party, a lease, an option to lease or purchase and ownership are acceptable forms of control. Letters of interest of any kind shall not be accepted. RELOIs, lease options and leases must clearly and specifically state that the RELOI, lease option or lease is for the type of establishment listed in the proposal. The RELOI, lease option or lease must be for two years or longer.

3. Statement of Qualifications. Describe applicant's qualification relative to the application, and experience running businesses similar to the one proposed, including cannabis and/or noncannabis businesses. Applicants should also provide a plan demonstrating a minimum percentage of locally hired employees and proposed recruitment strategies for new hires.

4. Business Implementation. Provide verifiable, detailed descriptions and other background information for owners, key personnel and staff of the business, including the estimated number of employees to be hired in the first year, second year, third year, fourth year and fifth year and hourly wages for each employee. Describe other resources, including financial resources, dedicated to implement this proposal.

5. Understanding and Approach. Provide a statement demonstrating the business' understanding and approach to running the business and how that approach will integrate the business into the community in which it is located. This section shall include the following:
i. Description of day-to-day operations to meet industry best practices for the specific type of license in which applying for in the city.
ii. Description of how and where inventory will be kept, including the specific manner of securing the inventory, and how records will be maintained. iii. Description of how any transaction information including patient records, reports, manifest and any other documents will be stored.
iv. Description of how medical and adult-use will be tracked and monitored to prevent diversion.
v. Description of applicant's practices for preventing deterioration of any cannabis goods held by the applicant, including any practices for responding to product recalls. vi. Description of applicant's practice for transfer/transport of cannabis products to and from premises.
vii. Description of method(s) that will be used to dispose of unused cannabis. viii. A schedule for beginning operations, including a narrative outlining any proposed construction, improvements, and a timeline for completion. ix. Description of any environmentally-friendly business practices relating to energy and climate, water conservation and materials/waste storage. x. Description of the method(s) by which the applicant will mitigate any potentially adverse impact, such as loitering, graffiti, traffic, light, odor or noise, on surrounding property owners.
xi. Site Plan. A scaled premises diagram showing the boundaries of the property and proposed premises with all boundaries, dimensions, entrances and exits, interior partitions walls, labeling of each room, windows and common shared entryways. If the proposed premises consist of only a portion of the property, the diagram shall be labeled indicating which part of the property is the proposed premises and what the remaining property is used for. A floor plan shall also be included.
xii. Business Plan. A budget for construction, operation, maintenance, compensation of employees, equipment costs, utility costs, and other operation costs. The budget must demonstrate sufficient capital in place to pay startup costs and at least three months of operating costs, as well as a description of the source and uses of funds. xiii. Air Quality Management Plan. Must demonstrate that air circulation does not impact employee health and welfare, those surrounding the business, and surrounding outdoor areas.
xiv. If the application is for a retail business with delivery services:

1. Description of the process to ensure driver and patient safety.

2. Description of the process to verify delivery is to a qualified purchaser and to a qualified location

3. Description of the process to track and maintain communication with the delivery person at all times

4. Description of the process to verify deliveries and provide accurate manifest for audit purposes.

6. Local Ownership and Community Benefit. Describe the business plan, if any, to maximize local ownership and community benefit.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.080 - Location and design requirements for commercial cannabis businesses.

A. Each proposed commercial cannabis business shall:

1. Be within a fully enclosed building and must not be visible from the public right-of-way.

2. Conform to the general plan, any applicable specific plans, master plans, and design requirements.

3. Comply with all applicable zoning and related development standards.

4. Be constructed in a manner that prevents odors to surrounding uses, and promotes quality design and construction, and consistency with the surrounding properties. Odors from the commercial cannabis business shall not be detectable from outside the premises. Best available odor control technology shall be utilized.

5. Be adequate in size and shape to accommodate the yards, walls, fences, parking and loading facilities, landscaping and all items required for the development.

6. Be served by highways adequate in width and improved as necessary to carry the kind and quantity of traffic such use will generate.

7. Be provided with adequate electricity, sewerage, disposal, water, fire protection and storm drainage facilities for the intended purpose.

8. Each applicant shall provide a neighborhood responsibility plan so the review authority may find that the proposed use and its operating characteristics are not detrimental to the public health, safety, convenience, or welfare of persons residing, working, visiting, or recreating in the surrounding neighborhood and will not result in the creation of a nuisance.

B. Each proposed commercial cannabis business shall:

1. Demonstrate compatibility with the surrounding character of the neighborhood and blend in with existing buildings. The establishment should look like any other similarly situated building.

2. Comply with all applicable zoning and related development standards including, but not limited to, parking, lighting, materials, and colors.

3. Signage, as described below, shall be limited to that needed for identification only and shall not contain any logos or information that identifies, advertises, or lists the services or the products offered.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.090 - Additional location requirements for retail cannabis businesses.

A. All cannabis retail businesses must be located on property zoned C-3 (Central Business and Shopping) and must meet all of the requirements for development in that zone.

B. All properties in which the cannabis retail business is located shall be no closer than eight hundred (800) feet from any parcel containing any of the following:

1. A cannabis retail business.

2. A school providing instruction for any grades pre-school through twelve (12) (whether public, private, or charter, including pre-school, transitional kindergarten, and K-12).

3. A day care center licensed by the state department of social services that is in existence at the time a complete commercial cannabis business permit application is submitted.

4. A youth center that is in existence at the time a complete commercial cannabis business permit application is submitted.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.100 - Limit on number of retail cannabis businesses permitted to operate.

A maximum of one cannabis retail business shall be permitted for every twenty thousand (20,000) residents in the city.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.110 - Operating requirements for commercial cannabis businesses.

A. Cannabis shall not be consumed by any person on the premises of any commercial cannabis business.

B. No person shall cause or permit the sale, dispensing, or consumption of alcoholic beverages on or about the premises of the commercial cannabis business.

C. No person shall cause or permit the sale of tobacco products on or about the premises of the commercial cannabis business.

D. No cannabis or cannabis products or graphics depicting cannabis or cannabis products shall be visible from the exterior of any property issued a commercial cannabis business permit, or on any of the vehicles owned or used as part of the commercial cannabis business or cannabis retail business.

No outdoor storage of cannabis or cannabis products is permitted at any time.

E. Commercial cannabis businesses shall have in place a point-of-sale or management inventory tracking system to track and report on all aspects of the business including, but not limited to, such matters as cannabis tracking, inventory data, gross sales (by weight and by sale) and other information which may be deemed necessary by the city. Cannabis retail businesses and commercial cannabis businesses shall ensure that such information is compatible with the city's record-keeping systems. In addition, the system must have the capability to produce historical transactional data for review. Furthermore, any system selected must be approved and authorized by the city manager or his/her designee(s) prior to being used by the permittee.

F. All cannabis and cannabis products sold, distributed, or manufactured shall be cultivated, manufactured, and transported by licensed facilities that maintain operations in full conformance with state and local laws.

G. Commercial cannabis businesses shall provide the city manager or his/her designee(s) with the name, telephone number (both landline and mobile, if available) of an on-site employee or owner to whom emergency notice can be provided at any hour of the day.

H. Signage.

1. Business identification signage shall conform to the requirements of this code.

2. No signs placed on the premises of a cannabis retail business or a commercial cannabis business shall obstruct any entrance or exit to the building or any window.

3. Each entrance shall be visibly posted with a clear and legible notice indicating that smoking, ingesting, or otherwise consuming cannabis or cannabis products on the premises or in the areas adjacent to the business is prohibited.

4. Business identification signage shall be limited to that needed for identification only and shall not contain any logos or information that identifies, advertises, or lists the services or the products offered. No commercial cannabis business may advertise by having a person holding a sign and advertising the business to passersby, whether such person is on the premises or elsewhere including, but not limited to, the public right-of-way.

5. Signage shall not be directly illuminated, internally or externally. No banners, flags, billboards or other prohibited signs may be used at any time.

I. Minors.

1. Except as provided below, persons under the age of twenty-one (21) years shall not be allowed on the premises of a commercial cannabis business and shall not be allowed to serve as a driver for a delivery service. It shall be unlawful and a violation of this chapter for any person to employ any person who is not at least twenty-one (21) years of age.

2. The entrance to a commercial cannabis business shall be clearly and legibly posted with a notice that no person under the age of twenty-one (21) years of age is permitted to enter upon the premises of the commercial cannabis business.

3. Persons at least eighteen (18) years old shall be allowed on the premises of a medicinal cannabis retail business to purchase medicinal cannabis or medicinal cannabis products. The entrance to a medicinal cannabis retail business shall be clearly and legibly posted with a notice that no person under the age of eighteen (18) is permitted to enter upon the premises of the medicinal cannabis retail business.

J. Best available odor control technology and devices shall be incorporated in a commercial cannabis business to ensure that odors from cannabis are not detectable off-site. A sufficient odor absorbing ventilation and exhaust system shall be provided so that odor generated inside the premises that is distinctive to its operation is not detected outside of the facility, anywhere on adjacent property or public rights-of-way, on or about the exterior or interior common area walkways, hallways, breezeways, foyers, lobby areas, or any other areas available for use by common tenants or the visiting public, or within any other unit located inside the same building as the cannabis retail business or commercial cannabis business. The following equipment, or any other equipment which the city manager or his/her designee(s) determine is a more effective method or technology, must be installed and maintained:

1. An exhaust air filtration system with odor control that prevents internal odors and pollen from being emitted externally;

2. An air system that creates negative air pressure between the premises' interior and exterior, so that the odors generated inside the premises are not detectable outside the premises.

K. The original copy of the commercial cannabis business permit issued by the city and the city-issued business license shall be posted inside the commercial cannabis business in a location readily visible to the public.

L. The owner and/or operator of a commercial cannabis business shall prohibit loitering by persons outside the facility both on the premises and within fifty (50) feet of the premises.

M. Community Relations.

1. Each commercial cannabis business shall provide the name, telephone number, and email address of a community relations contact to whom notice of problems associated with the business can be provided. Each commercial cannabis business shall also provide the above information to all businesses and residences located within one hundred (100) feet of the commercial cannabis business.

2. During the first year of operation pursuant to this chapter, the owner, manager, and community relations representative from commercial cannabis business shall attend meetings with the city manager or his/her designee(s), and other interested parties as deemed appropriate by the city manager or his/her designee(s), to discuss costs, benefits, and other community issues arising as a result of implementation of this chapter. After the first year of operation, the owner, manager, and community relations representative from each commercial cannabis business shall meet with the city manager or his/her designee(s) when and as requested by the city manager or his/her designee(s).

3. Each commercial cannabis business or cannabis retail business shall develop a city-approved public outreach and educational program for youth organizations and educational institutions that outlines the risks of youth use of cannabis, and that identifies resources available to youth related to drugs and drug addiction.

N. The commercial cannabis business shall continually maintain the premises and its infrastructure so that it is visually attractive and not dangerous to the health, safety and general welfare of employees, patrons, surrounding properties, and the general public. The premises shall not be maintained in a manner that causes a public or private nuisance. Litter must be removed daily from the premises, including adjacent public sidewalks and all parking lots under the control of the cannabis retail business or commercial cannabis business; these areas must be swept or cleaned, either mechanically or manually, on a weekly basis to control debris; upkeep and operating characteristics must be compatible with abutting properties and the surrounding neighborhood. (Ord. No. 19-06, § 4, 6-11-2019)

8.37.120 - Operating requirements for cannabis retail businesses.

A. General.

1. Cannabis retail businesses, including delivery of cannabis, may operate between the hours of 6 :00 a.m. and 10:00 p.m. Other non-sales related activities germane to the business may take place on premises after hours.

2. There shall not be a physician located on the premises, or available through electronic means, such as video conference, at any time for the purpose of evaluating patients for the issuance of a cannabis recommendation or card where applicable.

3. Prior to dispensing cannabis or cannabis products to any person, the cannabis retail business shall verify the age of each customer.

4. Entrances shall be locked at all times with entry strictly controlled. A "buzz-in" electronic/mechanical entry system shall be utilized to limit access to and entry to the retailer to separate it from the reception/lobby area. Individuals must show their identification in order to gain access into the retailer.

5. A cannabis retail business may have only that quantity of cannabis and cannabis products readily available to meet the daily demand for sale on-site in the retail sales area of the premises.

6. All restroom facilities shall remain locked and under the control of management.

7. Delivery vehicles shall be unmarked vehicles with no indication that the vehicles are transporting cannabis or cannabis products.

B. Security Measures.

1. A permitted cannabis retail business shall implement sufficient security measures to deter and prevent the unauthorized entrance into areas containing cannabis or cannabis products, and to deter and prevent the theft of cannabis or cannabis products at the cannabis retail business.

Except as may otherwise be determined by the city manager or his/her designee(s), these security measures shall include, but shall not be limited to, all of the following:
i. Premises contain a secured lobby/trap room, where a customer first enters and awaits verification by the cannabis retail business that the customer is a qualified to purchase cannabis.
ii. Premises contain only one entrance which members of the public enter and exit. iii. Premises shall have a professionally installed, maintained, and monitored real-time alarm system by a security company licensed by the State of California Bureau of Security and Investigative Services.
iv. Premises shall have perimeter security and lighting, including motion sensors, as approved by the chief of police.
v. Prevent individuals from remaining on the premises and nearby vicinity if they are not engaging in an activity directly related to the permitted operations of the cannabis retail business.
vi. Establish limited access areas accessible only to authorized cannabis retail business personnel.
vii. All cannabis and cannabis products shall be stored in a secured and locked vault or vault equivalent. All safes and vaults shall be compliant with Underwriters Laboratories burglaryresistant and fire-resistant standards. All cannabis and cannabis products shall be kept in a manner as to prevent diversion, theft, and loss.
viii. Install twenty-four (24) hour security surveillance cameras of at least HD-quality to monitor all entrances and exits to and from the premises, all interior spaces within the cannabis retail business which are open and accessible to the public, all interior spaces where cannabis, cash, or currency, is being stored for any period of time on a regular basis and all interior spaces where diversion of cannabis could reasonably occur. All cameras shall record in color. All exterior cameras shall be in weatherproof enclosures, shall be located so as to minimize the possibility of vandalism, and shall have the capability to automatically switch to black and white in low light conditions. The cannabis retail business shall be responsible for ensuring that the security surveillance camera's footage is remotely accessible by the city manager or his/her designee(s), and that it is compatible with the city's software and hardware. In addition, remote and real-time, live access to the video footage from the cameras shall be provided to the city manager or his/her designee(s). Video recordings shall be maintained for a minimum of ninety (90) days and shall be made available to the city manager or his/her designee(s) upon request. Video shall be of sufficient quality for effective prosecution of any crime found to have occurred on the site of the cannabis retail business, and shall be capable of enlargement via projection or other means. Internet protocol address information shall be provided to the Mendota Police Department by the cannabis retail business, to facilitate remote monitoring of security cameras by the Mendota Police Department or its designee. ix. Sensors shall be installed to detect entry and exit from all secure areas, and shall be monitored in real time by a security company licensed by the State of California Bureau of Security and Investigative Services.
x. Panic buttons shall be installed with direct notification to Mendota Police Department dispatch, and shall be configured to immediately alert dispatch for the Mendota Police Department.
xi. Any bars installed on the windows or the doors shall be installed only on the interior of the building.
xii. Armed security personnel shall be on-site during operating hours. If armed security personnel are not on-site when the cannabis retail business is closed, a verified response security patrol shall be utilized. Security personnel must be licensed by the State of California Bureau of Security and Investigative Services personnel and shall be subject to the prior review and approval of the city manager or his/her designee(s), with such approval not to be unreasonably withheld. Firearms shall be carried by security personnel at all times that they are on duty, except as otherwise authorized by the chief of police. xiii. Premises shall have the capability to remain secure during a power outage and shall ensure that all access doors are not solely controlled by an electronic access panel to ensure that locks are not released during a power outage. xiv. Entrance areas are to be locked at all times and under the control of a designated responsible party that is either: (a) an employee of the cannabis retail business; or (b) a licensed security professional.
xv. The interior must have at least one camera placed to focus on each transaction, to include the clerk as well as the customer waiting area. At least one camera should be focused on the entrance, and the camera view should clearly show an image of a color-coded height tape installed on the inside of the door jamb.
xvi. An accounting software system in place to provide point of sale data as well as audit trails of both product and cash, where applicable.
xvii. Demonstrate to the chief of police, city manager or their designees, compliance with the state's track and trace system for cannabis and cannabis products. xviii. State of the art network security protocols in place to protect computer information and all digital data.
xix. Exterior vegetation shall be planted, altered, and maintained in a fashion that precludes its use as a hiding place for persons on the premises.

2. Each cannabis retail business shall identify a designated security representative/liaison to the city, who shall be reasonably available to meet with the city manager or his/her designee(s) regarding any security related measures or operational issues. The designated security representative/liaison shall, on behalf of the cannabis retail business, annually prepare and submit to the chief of police a security plan for approval and maintain a copy of the current security plan on the premises, to present to a peace officer immediately upon request that meets the following requirements:
i. Confirms that a designated manager will be on duty during business hours and will be responsible for monitoring the behavior of patrons.
ii. Identifies all managers of the cannabis retail business and their contact phone numbers. iii. Confirms that first aid supplies and operational fire extinguishers are located in the service areas and the manager's office.
iv. Confirms that burglar, fire, and panic alarms are operational and monitored by a licensed security company twenty-four (24) hours a day, seven days a week, and provides contact information for each licensed security company.
v. Identify a sufficient number of licensed, interior and exterior security personnel who will monitor individuals inside and outside the premises, the parking lot, and any adjacent property under the business' control.
vi. Confirm that the licensed security personnel shall regularly monitor the parking lot and any adjacent property to ensure that these areas are: (a) free of individuals loitering or causing a disturbance; (b) are cleared of patrons and their vehicles one-half hour after closing.

3. Provide a storage and transportation plan, which describes in detail the procedures for safely and securely storing and transporting all cannabis, cannabis products, and any currency. For delivery, include provisions relating to vehicle security and the protection of employees and product during loading and in transit.

4. Cooperate with the city whenever the city manager or his/her designee(s) makes a request, without prior notice, to inspect or audit the effectiveness of any security plan or of any other requirement of this chapter.

5. Notify the city manager or his/her designee(s) within twenty-four (24) hours after discovering any of the following:
i. Significant discrepancies identified during inventory. The level of significance shall be determined by the regulations promulgated by the city manager or his/her designee(s). ii. Diversion, theft, loss, or any criminal activity involving the cannabis retail business or any agent or employee of the cannabis retail business.
iii. The loss or unauthorized alteration of records related to cannabis, registering qualifying patients, primary caregivers, or employees or agents of the cannabis retail business. iv. Any other breach of security.

6. Compliance with the foregoing requirements shall be verified by the chief of police prior to commencing business operations. The chief of police may supplement these security requirements once operations begin, subject to review by the city manager if requested by the business owner.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.130 - Operating requirements for cannabis distributors.

A. General.

1. Distributors may operate twenty-four (24) hours a day. Operations shall be subject to the provisions of the Noise Control Ordinance, Title 9, Chapter 9.05 of this code, as may be amended.

2. Distributor vehicles shall be unmarked vehicles with no indication that the vehicles are transporting cannabis or cannabis products.

3. Distributor shall comply with all applicable state standards and laws, including but not limited to, Section 26001 (r) of the Business and Professions Code, as may be amended.

B. Security Measures.

1. A permitted distributor shall implement sufficient security measures to deter and prevent the unauthorized entrance into areas containing cannabis or cannabis products, and to deter and prevent the theft of cannabis or cannabis products. Except as may otherwise be determined by the city manager or his/her designee(s), these security measures shall include, but shall not be limited to, all of the following:
i. Premises shall have a professionally installed, maintained, and monitored real-time alarm system by a security company licensed by the State of California Bureau of Security and Investigative Services.
ii. Premises shall have perimeter security and lighting, including motion sensors, as approved by the chief of police.
iii. Prevent individuals from remaining on the premises if they are not engaging in an activity directly related to the permitted operations of the distributor. iv. Establish limited access areas accessible only to authorized personnel. v. All cannabis and cannabis products shall be stored in a secured and locked vault or vault equivalent. All safes and vaults shall be compliant with Underwriters Laboratories burglaryresistant and fire-resistant standards. All cannabis or cannabis products shall be kept in a manner as to prevent diversion, theft, and loss.
vi. Install twenty-four (24) hour security surveillance cameras of at least HD-quality to monitor all entrances and exits to and from the premises, all interior spaces which are open and accessible to the public, all interior spaces where cannabis, cannabis products, cash, or currency, is being stored for any period of time on a regular basis and all interior spaces where diversion of cannabis could reasonably occur. All cameras shall record in color. All exterior cameras shall be in weather-proof enclosures, shall be located so as to minimize the possibility of vandalism, and shall have the capability to automatically switch to black and white in low light conditions. The distributor shall be responsible for ensuring that the security surveillance camera's footage is remotely accessible by the city manager or his/her designee(s), and that it is compatible with the city's software and hardware. In addition, remote and realtime, live access to the video footage from the cameras shall be provided to the city manager or his/her designee(s). Video recordings shall be maintained for a minimum of ninety (90) days and shall be made available to the city manager or his/her designee(s) upon request. Video shall be of sufficient quality for effective prosecution of any crime found to have occurred on the site of the distributor, and shall be capable of enlargement via projection or other means. Internet protocol address information shall be provided to the Mendota Police Department by the distributor, to facilitate remote monitoring of security cameras by the department or its designee. vii. Sensors shall be installed to detect entry and exit from all secure areas, and shall be monitored in real time by a security company licensed by the State of California Bureau of Security and Investigative Services.
viii. Panic buttons shall be installed with direct notification to Mendota Police Department dispatch, and shall be configured to immediately alert dispatch for the Mendota Police Department.
ix. Any bars installed on the windows or the doors of the premises shall be installed only on the interior of the building.
x. Armed security personnel shall be on-site during all hours of operation or alternative security as authorized by the city manager or his/her designee(s). Security personnel must be licensed by the State of California Bureau of Security and Investigative Services personnel and shall be subject to the prior review and approval of the city manager or his/her designee(s), with such approval not to be unreasonably withheld. Firearms shall be carried by security personnel at all times that they are on duty, except as otherwise authorized by the chief of police.
xi. Premises shall have the capability to remain secure during a power outage and shall ensure that all access doors are not solely controlled by an electronic access panel to ensure that locks are not released during a power outage. xii. Entrance areas are to be locked at all times and under the control of a designated responsible party that is either: (a) an employee of the distributor; or (b) a licensed security professional.
xiii. The interior must have at least one camera placed to focus on each transaction. At least one camera should be focused on the entrance, and the camera view should clearly show an image of a color-coded height tape installed on the inside of the door jamb. xiv. An accounting software system in place to provide point of sale data as well as audit trails or both product and cash, where applicable.
xv. Demonstrate to the chief of police, city manager or their designees, compliance with the state's track and trace system for cannabis and cannabis products. xvi. Have state of the art network security protocols in place to protect computer information and all digital data.
xvii. Exterior vegetation shall be planted, altered, and maintained in a fashion that precludes its use as a hiding place for persons on the premises.
xviii. Identify a designated security representative/liaison to the city, who shall be reasonably available to meet with the city manager or his/her designee(s) regarding any security related measures or and operational issues. The designated security representative/liaison shall, on behalf of the distributor, annually prepare and submit to the chief of police a security plan for approval and maintain a copy of the current security plan on the premises of the business, to present to a peace officer immediately upon request that meets the following requirements:

1. Confirms that a designated manager will be on duty during business hours and will be responsible for monitoring the behavior of patrons.

2. Identifies all managers and their contact phone numbers.

3. Confirms that first aid supplies and operational fire extinguishers are located in the service areas and the manager's office.

4. Confirms that burglar, fire, and panic alarms are operational and monitored by a licensed security company twenty-four (24) hours a day, seven days a week, and provides contact information for each licensed security company.

5. Identify a sufficient number of licensed, interior and exterior security personnel who will monitor individuals inside and outside the commercial cannabis business, the parking lot, and any adjacent property under the business' control.

6. Confirm that the licensed security personnel shall regularly monitor the parking lot and any adjacent property to ensure that these areas are: (a) free of individuals loitering or causing a disturbance; (b) are cleared of patrons and their vehicles one-half hour after closing.

2. As part of the application and permitting process each distributor shall have a storage and transportation plan, which describes in detail the procedures for safely and securely storing and transporting all cannabis, cannabis products, and any currency. The distributor shall stagger transportation times, vary routes from the premises, and take other security measures as requested by the chief of police.

3. The distributor shall cooperate with the city whenever the city manager or his/her designee(s) makes a request, without prior notice, to inspect or audit the effectiveness of any security plan or of any other requirement of this chapter.

4. Notify the city manager or his/her designee(s) within twenty-four (24) hours after discovering any of the following:
i. Significant discrepancies identified during inventory. The level of significance shall be determined by the regulations promulgated by the city manager or his/her designee(s). ii. Diversion, theft, loss, or any criminal activity involving the distributor or any agent or employee of the distributor.
iii. The loss or unauthorized alteration of records related to cannabis, or employees or agents of the commercial cannabis business.
iv. Any other breach of security.

5. Compliance with the foregoing requirements shall be verified by the chief of police prior to commencing business operations. The chief of police may supplement these security requirements once operations begin, subject to review by the city manager if requested by the business owner.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.140 - Operating requirements for cannabis cultivators.

A. General.

1. Cultivator may operate twenty-four (24) hours a day. Operations shall be subject to the provisions of the Noise Control Ordinance, Title 9, Chapter 9.05 of this code, as may be amended.

2. Outdoor Cultivation Prohibited. The cultivation of all cannabis must occur indoors or in a greenhouse.

3. Cannabis plants shall not be visible from a public or private road, sidewalk, park, or any common public viewing area.

4. Cultivator shall only be allowed to cultivate the square feet of canopy space permitted by state law.

5. Cannabis cultivation shall be conducted in accordance with state and local laws related to land conversion, grading, electricity, water usage, water quality, woodland and riparian habitat protection, agricultural discharges, and similar matters.

6. Pesticides and fertilizers shall be properly labeled and stored to avoid contamination through erosion, leakage or inadvertent damage from pests, rodents or other wildlife.

7. The cultivation of cannabis shall at all times be operated in such a way as to ensure the health, safety, and welfare of the public, the employees working at the cultivation site, visitors to the area, neighboring properties, and the end users of the cannabis being cultivated, to protect the environment from harm to streams, fish, and wildlife; to ensure the security of the cannabis being cultivated; and to safeguard against the diversion of cannabis.

8. All applicants seeking a commercial cannabis business permit for cultivation uses shall submit the following in addition to the information generally otherwise required for a commercial cannabis business permit:
i. A cultivation and operations plan that meets or exceeds minimum legal standards for water usage, conservation and use; drainage, runoff, and erosion control; watershed and habitat protection; and proper storage of fertilizers, pesticides, and other regulated products to be used on the parcel, and a description of the cultivation activities (indoor, mixed-light) and schedule of activities during each month of growing and harvesting, or explanation of growth cycles and anticipated harvesting schedules for all-season harvesting (indoor, mixed-light).
ii. A description of a legal water source, irrigation plan, and projected water use. iii. Identification of the source of electrical power and plan for compliance with applicable building codes and related codes.
iv. Plan for addressing public nuisances that may derive from the cultivation site.

B. Security Measures.

1. A permitted cultivator shall implement sufficient security measures to deter and prevent the unauthorized entrance into areas containing cannabis or cannabis products and to deter and prevent the theft of cannabis and cannabis products at the commercial cannabis business.

Except as may otherwise be determined by the city manager or his/her designee(s), these security measures shall include, but shall not be limited to, all of the following:
i. Premises shall have a professionally installed, maintained, and monitored real-time alarm system by a security company licensed by the State of California Bureau of Security and Investigative Services.
ii. Premises shall have perimeter security and lighting, including motion sensors, as approved by the chief of police.
iii. Prevent individuals from remaining on the premises and nearby vicinity if they are not engaging in an activity directly related to the permitted operations of the cultivator. iv. Establish limited access areas accessible only to authorized personnel. v. Except for live growing plants which are being cultivated at a cultivation facility, all cannabis and cannabis products shall be stored in a secured and locked vault or vault equivalent. All safes and vaults shall be compliant with Underwriters Laboratories burglary-resistant and fire-resistant standards. All cannabis and cannabis products, including live plants that are being cultivated, shall be kept in a manner as to prevent diversion, theft, and loss. vi. Install twenty-four (24) hour security surveillance cameras of at least HD-quality to monitor all entrances and exits to and from the premises, all interior spaces within the business which are open and accessible to the public, all interior spaces where cannabis, cannabis products, cash, or currency, is being stored for any period of time on a regular basis and all interior spaces where diversion of cannabis could reasonably occur. All cameras shall record in color. All exterior cameras shall be in weatherproof enclosures, shall be located so as to minimize the possibility of vandalism, and shall have the capability to automatically switch to black and white in low light conditions. The cultivators shall be responsible for ensuring that the security surveillance camera's footage is remotely accessible by the city manager or his/her designee(s), and that it is compatible with the city's software and hardware. In addition, remote and real-time, live access to the video footage from the cameras shall be provided to the city manager or his/her designee(s). Video recordings shall be maintained for a minimum of ninety (90) days and shall be made available to the city manager or his/her designee(s) upon request. Video shall be of sufficient quality for effective prosecution of any crime found to have occurred on the cultivation site business, and shall be capable of enlargement via projection or other means. Internet protocol address information shall be provided to the Mendota Police Department by the cultivator, to facilitate remote monitoring of security cameras by the Mendota Police Department or its designee.
vii. Sensors shall be installed to detect entry and exit from all secure areas, and shall be monitored in real time by a security company licensed by the State of California Bureau of Security and Investigative Services.
viii. Panic buttons shall be installed with direct notification to Mendota Police Department dispatch, and shall be configured to immediately alert dispatch for the Mendota Police Department.
ix. Any bars installed on the windows or the doors shall be installed only on the interior of the building.
x. Armed security personnel shall be on-site during all hours of operation. Security personnel must be licensed by the State of California Bureau of Security and Investigative Services personnel and shall be subject to the prior review and approval of the city manager or his/her designee(s), with such approval not to be unreasonably withheld. Firearms shall be carried by security personnel at all times that they are on duty, except as otherwise authorized by the chief of police.
xi. Premises shall have the capability to remain secure during a power outage and shall ensure that all access doors are not solely controlled by an electronic access panel to ensure that locks are not released during a power outage. xii. Entrance areas are to be locked at all times and under the control of a designated responsible party that is either; (a) an employee of the cultivator; or (b) a licensed security professional.
xiii. The interior must have at least one camera placed to focus on each transaction. At least one camera should be focused on the entrance, and the camera view should clearly show an image of a color-coded height tape installed on the inside of the door jamb. xiv. An accounting software system in place to provide point of sale data as well as audit trails of both product and cash, where applicable.
xv. Demonstrate to the chief of police, city manager or their designees, compliance with the state's track and trace system for cannabis and cannabis products. xvi. State of the art network security protocols in place to protect computer information and all digital data.
xvii. Exterior vegetation shall be planted, altered and maintained in a fashion that precludes its use as a hiding place for persons on the premises.
xviii. Each cultivator shall identify a designated security representative/liaison to the city, who shall be reasonably available to meet with the city manager or his/her designee(s) regarding any security related measures or and operational issues. The designated security representative/liaison shall, on behalf of the cultivator, annually prepare and submit to the chief of police a security plan for approval and maintain a copy of the current security plan on the premises, to present to a peace officer immediately upon request that meets the following requirements:

1. Confirms that a designated manager will be on duty during business hours.

2. Identifies all managers and their contact phone numbers.

3. Confirms that first aid supplies and operational fire extinguishers are located in the service areas and the manager's office.

4. Confirms that burglar, fire, and panic alarms are operational and monitored by a licensed security company twenty-four (24) hours a day, seven days a week, and provides contact information for each licensed security company.

5. Identify a sufficient number of licensed, interior and exterior security personnel who will monitor individuals inside and outside the premises, the parking lot, and any adjacent property under the business' control.

6. Confirm that the licensed security personnel shall regularly monitor the parking lot and any adjacent property to ensure that these areas are: (a) free of individuals loitering or causing a disturbance; (b) are cleared of patrons and their vehicles one-half hour after closing.

2. As part of the application and permitting process each cultivator shall have a storage and transportation plan, which describes in detail the procedures for safely and securely storing and transporting all cannabis, cannabis products, and any currency.

3. Cooperate with the city whenever the city manager or his/her designee(s) makes a request, without prior notice, to inspect or audit the effectiveness of any security plan or of any other requirement of this chapter.

4. Notify the city manager or his/her designee(s) within twenty-four (24) hours after discovering any of the following:
i. Significant discrepancies identified during inventory. The level of significance shall be determined by the regulations promulgated by the city manager or his/her designee(s). ii. Diversion, theft, loss, or any criminal activity involving the cultivator or any agent or employee of the cultivator.
iii. The loss or unauthorized alteration of records related to cannabis, or employees or agents of the commercial cannabis business.
iv. Any other breach of security.

5. Compliance with the foregoing requirements shall be verified by the chief of police prior to commencing business operations. The chief of police may supplement these security requirements once operations begin, subject to review by the city manager if requested by the business owner.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.150 - Operating requirements for cannabis testing laboratory.

A. General.

1. Testing laboratories may operate twenty-four (24) hours a day. Operations shall be subject to the provisions of the Noise Control Ordinance, Title 9, Chapter 9.05 of this code, as may be amended.

2. Testing laboratories shall comply with all applicable state standards and laws. Standard operating procedures, as recommended by the bureau, must be followed.

3. Testing laboratories shall be required to conduct all testing in a manner pursuant to Business and Professions Code 26100 and shall be subject to any additional or subsequent state and local law.

B. Security Measures.

1. A permitted testing laboratory shall implement sufficient security measures to deter and prevent the unauthorized entrance into areas containing cannabis or cannabis products, and to deter and prevent the theft of cannabis and cannabis products. Except as may otherwise be determined by the city manager or his/her designee(s), these security measures shall include, but shall not be limited to, all of the following:
i. Premises shall have a professionally installed, maintained, and monitored real-time alarm system by a security company licensed by the State of California Bureau of Security and Investigative Services.
ii. Premises shall have perimeter security and lighting, including motion sensors, as approved by the chief of police.
iii. Prevent individuals from remaining on the premises if they are not engaging in an activity directly related to the permitted operations of the testing laboratory. iv. Establish limited access areas accessible only to authorized personnel. v. All cannabis and cannabis products shall be stored in a secured and locked vault or vault equivalent. All safes and vaults shall be compliant with Underwriters Laboratories burglaryresistant and fire-resistant standards. All cannabis and cannabis products shall be kept in a manner as to prevent diversion, theft, and loss.
vi. Install twenty-four (24) hour security surveillance cameras of at least HD-quality to monitor all entrances and exits to and from the premises, all interior spaces which cannabis, cannabis products, cash, or currency is being stored for any period of time on a regular basis and all interior spaces where diversion of cannabis could reasonably occur. All cameras shall record in color. All exterior cameras shall be in weather-proof enclosures, shall be located so as to minimize the possibility of vandalism, and shall have the capability to automatically switch to black and white in low light conditions. The distributor shall be responsible for ensuring that the security surveillance camera's footage is remotely accessible by the city manager or his/her designee(s), and that it is compatible with the city's software and hardware. In addition, remote and realtime, live access to the video footage from the cameras shall be provided to the city manager or his/her designee(s).

Video recordings shall be maintained for a minimum of ninety (90) days and shall be made available to the city manager or his/her designee(s) upon request. Video shall be of sufficient quality for effective prosecution of any crime found to have occurred on the site of the testing laboratory, and shall be capable of enlargement via projection or other means.

Internet protocol address information shall be provided to the Mendota Police Department by the testing laboratory, to facilitate remote monitoring of security cameras by the department or its designee.
vii. Sensors shall be installed to detect entry and exit from all secure areas, and shall be monitored in real time by a security company licensed by the State of California Bureau of Security and Investigative Services.
viii. Panic buttons shall be installed with direct notification to Mendota Police Department dispatch, and shall be configured to immediately alert dispatch for the Mendota Police Department.
ix. Any bars installed on the windows or the doors of the premises shall be installed only on the interior of the building.
x. Security personnel shall be on-site during all hours of operation or alternative security as authorized by the city manager or his/her designee(s). Security personnel must be licensed by the State of California Bureau of Security and Investigative Services personnel and shall be subject to the prior review and approval of the city manager or his/her designee(s), with such approval not to be unreasonably withheld.
xi. Premises shall have the capability to remain secure during a power outage and shall ensure that all access doors are not solely controlled by an electronic access panel to ensure that locks are not released during a power outage. xii. Entrance areas are to be locked at all times and under the control of a designated responsible party that is either; (a) an employee of the testing laboratory; or (b) a licensed security professional.
xiii. The interior must have at least one camera placed to focus on each transaction. At least one camera should be focused on the entrance, and the camera view should clearly show an image of a color-coded height tape installed on the inside of the door jamb. xiv. An accounting software system in place to provide point of sale data as well as audit trails or both product and cash, where applicable.
xv. Demonstrate to the chief of police, city manager or their designees, compliance with the state's track and trace system for cannabis and cannabis products. xvi. Have state of the art network security protocols in place to protect computer information and all digital data.
xvii. Exterior vegetation shall be planted, altered, and maintained in a fashion that precludes its use as a hiding place for persons on the premises.
xviii. Identify a designated security representative/liaison to the city, who shall be reasonably available to meet with the city manager or his/her designee(s) regarding any security related measures or and operational issues. The designated security representative/liaison shall, on behalf of the testing laboratory, annually prepare and submit to the chief of police a security plan for approval and maintain a copy of the current security plan on the premises of the business, to present to a peace officer immediately upon request that meets the following requirements:

1. Confirms that a designated manager will be on duty during business hours and will be responsible for monitoring the behavior of patrons.

2. Identifies all managers and their contact phone numbers.

3. Confirms that first aid supplies and operational fire extinguishers are located in the service areas and the manager's office.

4. Confirms that burglar, fire, and panic alarms are operational and monitored by a licensed security company twenty-four (24) hours a day, seven days a week, and provides contact information for each licensed security company.

5. Identify a sufficient number of licensed, interior and exterior security personnel who will monitor individuals inside and outside the testing laboratory, the parking lot, and any adjacent property under the business' control.

6. Confirm that the licensed security personnel shall regularly monitor the parking lot and any adjacent property to ensure that these areas are: (a) free of individuals loitering or causing a disturbance; (b) are cleared of patrons and their vehicles one-half hour after closing.

2. As part of the application and permitting process each testing laboratory shall have a storage and transportation plan, which describes in detail the procedures for safely and securely storing and transporting all cannabis, cannabis products, and any currency.

3. The testing laboratory shall cooperate with the city whenever the city manager or his/her designee(s) makes a request, without prior notice, to inspect or audit the effectiveness of any security plan or of any other requirement of this chapter.

4. Notify the city manager or his/her designee(s) within twenty-four (24) hours after discovering any of the following:
i. Significant discrepancies identified during inventory. The level of significance shall be determined by the regulations promulgated by the city manager or his/her designee(s). ii. Diversion, theft, loss, or any criminal activity involving the testing laboratory or any agent or employee of the testing laboratory.
iii. The loss or unauthorized alteration of records related to cannabis, or employees or agents of the commercial cannabis business.
iv. Any other breach of security.

5. Compliance with the foregoing requirements shall be verified by the chief of police prior to commencing business operations. The chief of police may supplement these security requirements once operations begin, subject to review by the city manager if requested by the business owner.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.160 - Reserved.

8.37.170 - Other operational requirements.

The city manager or his/her designee may develop other commercial cannabis activity operational requirements or regulations as are determined to be necessary to protect the public health, safety and welfare.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.180 - Commercial cannabis business permits.

Prior to commencing operations, a commercial cannabis business shall obtain a commercial cannabis business permit.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.190 - Effect of state license suspension, revocation, or termination.

Suspension of a license issued by the state shall immediately suspend the ability of a commercial cannabis business to operate within the city, until the state reinstates or reissues the license. Should the state revoke or terminate the license of a commercial cannabis business, such revocation or termination shall also revoke or terminate the ability of the commercial cannabis business to operate within the city. (Ord. No. 19-06, § 4, 6-11-2019)

8.37.200 - City business license.

Prior to commencing operations, a commercial cannabis business shall obtain a city business license.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.210 - Building permits and inspection.

Prior to commencing operations, a commercial cannabis business shall be subject to a mandatory building inspection and must obtain all required permits and approvals which would otherwise be required for any business of the same size and intensity operating in that zone. (Ord. No. 19-06, § 4, 6-11-2019)

8.37.220 - Promulgation of regulations, standards, and other legal duties.

A. In addition to any regulations adopted by the city council, the city manager or his/her designee is authorized to establish any additional rules, regulations and standards governing the issuance, denial or renewal of commercial cannabis business permits, the ongoing operation of commercial cannabis businesses and the city's oversight, or concerning any other subject determined to be necessary to carry out the purposes of this chapter.

B. Regulations shall be published on the city's website.

C. Regulations promulgated by the city manager shall become effective upon date of publication. (Ord. No. 19-06, § 4, 6-11-2019)

8.37.230 - Records and recordkeeping.

A. Each owner and operator of a commercial cannabis business shall maintain accurate books and records in an electronic format, detailing all of the revenues and expenses of the business, and all of its assets and liabilities. On no less than an annual basis (at or before the time of the renewal of a commercial cannabis business permit issued pursuant to this chapter), or at any time upon reasonable request of the city, each commercial cannabis business shall file a sworn statement detailing the number of sales by the commercial cannabis business during the previous twelve (12) month period (or shorter period based upon the timing of the request), provided on a per-month basis. The statement shall also include gross sales for each month, and all applicable taxes paid or due to be paid. On an annual basis, each owner and operator shall submit to the city a financial audit of the business's operations conducted by an independent certified public accountant. Each permittee shall be subject to a regulatory compliance review and financial audit as determined by the city manager or his/her designee(s).

B. Each owner and operator of a commercial cannabis business shall maintain a current register of the names and the contact information (including the name, address, and telephone number) of anyone owning or holding an interest in the commercial cannabis business or cannabis retail business, and separately of all the officers, managers, employees, agents and volunteers currently employed or otherwise engaged by the commercial cannabis business. The register required by this paragraph shall be provided to the city manager or his/her designee(s) upon a reasonable request.

C. All commercial cannabis businesses shall maintain an inventory control and reporting system that accurately documents the present location, amounts, and descriptions of all cannabis and cannabis products for all stages of the growing and production or manufacturing, laboratory testing, and distribution processes until purchase as set forth [in] MAUCRSA.

D. Subject to any restrictions under the Health Insurance Portability and Accountability Act (HIPAA) regulations, each commercial cannabis business shall allow the city to have access to the business's books, records, accounts, together with any other data or documents relevant to its permitted commercial cannabis activities, for the purpose of conducting an audit or examination. Books, records, accounts, and any and all relevant data or documents will be produced no later than twentyfour (24) hours after receipt of the city's request, unless otherwise stipulated by the city. The city may require the materials to be submitted in an electronic format that is compatible with the city's software and hardware.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.240 - Fees, charges, and taxes.

A. No person may commence or continue any commercial cannabis activity in the city without timely paying in full all fees and charges required for the operation of a commercial cannabis business.

Fees and charges associated with the operation of a commercial cannabis business shall be established by resolution of the city council which may be amended from time to time.

B. All commercial cannabis businesses authorized to operate under this chapter shall pay all sales, use, business, and other applicable taxes, and all license, registration, and other fees required under federal, state, and local law. Each commercial cannabis business shall cooperate with the city with respect to any reasonable request to audit the business' books and records for the purpose of verifying compliance with this section, including but not limited to a verification of the amount of taxes required to be paid during any period.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.250 - Limitations on city's liability.

To the fullest extent permitted by law, the city shall not assume any liability whatsoever with respect to having issued a commercial cannabis business permit pursuant to this chapter or otherwise approving the operation of any commercial cannabis business. As a condition to the approval of any commercial cannabis business permit, the applicant shall be required to meet all of the following conditions before they can receive the commercial cannabis business permit:

A. They must execute an agreement, in a form approved by the city attorney, agreeing to indemnify, defend (at applicant's sole cost and expense), and hold the city, and its officers, officials, employees, representatives, and agents, harmless, from any and all claims, losses, damages, injuries, liabilities or losses which arise out of, or which are in any way related to, the city's issuance of the commercial cannabis business permit or the alleged violation of any federal, state or local laws by the commercial cannabis business or cannabis retail business or any of its officers, employees or agents.

B. Maintain insurance at coverage limits and with conditions thereon determined necessary and appropriate from time to time by the city manager.

C. Reimburse the city for all costs and expenses, including but not limited to legal fees and costs and court costs, which the city may be required to pay as a result of any legal challenge related to the city's approval of the applicant's commercial cannabis business permit. The city may, at its sole discretion, participate at its own expense in the defense of any such action, but such participation shall not relieve any of the obligations imposed hereunder. (Ord. No. 19-06, § 4, 6-11-2019)

8.37.260 - Permit holder responsible for violations.

The person to whom a commercial cannabis business permit is issued pursuant to this chapter shall be responsible for violations of any laws, whether committed by the permittee or any employee or agent of the permittee, which occur in or about the premises of the commercial cannabis business or cannabis retail business.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.270 - Inspection and enforcement.

A. The city manager, or his/her designee(s) charged with enforcing the provisions of this chapter, may enter the location of a commercial cannabis business at any time, without notice, and inspect the premises as well as any recordings and records required to be maintained pursuant to this chapter under applicable provisions of state law.

B. It is unlawful for any person to impede, obstruct, interfere with, or otherwise not to allow, the city to conduct an inspection, review or copy records, recordings or other documents required to be maintained by a commercial cannabis business under this chapter or under state or local law. It is also unlawful for a person to conceal, destroy, deface, damage, or falsify any records, recordings or other documents required to be maintained by a commercial cannabis business under this chapter or under state or local law.

C. The city manager, or his/her designee(s) charged with enforcing the provisions of this chapter may enter the premises of a commercial cannabis business at any time during the hours of operation and without notice to obtain samples of the cannabis to test for public safety purposes. Any samples obtained by the city shall be logged, recorded, and maintained in accordance with established procedures by the city manager.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.280 - Violations declared a public nuisance.

Each and every violation of the provisions of this chapter is hereby deemed unlawful and a public nuisance.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.290 - Each violation a separate offense.

Each and every violation of this chapter shall constitute a separate violation and shall be subject to all remedies and enforcement measures authorized by the city. Additionally, as a nuisance per se, any violation of this chapter shall be subject to injunctive relief, any permit issued pursuant to this chapter being deemed null and void, disgorgement and payment to the city for any monies unlawfully obtained, costs of abatement, costs of investigation, attorney fees, and any other relief or remedy available at law or in equity. The city may also pursue any and all remedies and actions available and applicable under state and local laws for any violations committed by the commercial cannabis business, or persons related to, or associated with, the commercial cannabis activity. Additionally, when there is determined to be an imminent threat to public health, safety or welfare, the city manager, or his/her designee(s), may take immediate action to temporarily suspend a commercial cannabis business permit issued by the city. (Ord. No. 19-06, § 4, 6-11-2019)

8.37.300 - Criminal penalties.

Each and every violation of the provisions of this chapter may in the discretion of the district attorney or city attorney be prosecuted as a misdemeanor and upon conviction be subject to a fine not to exceed one thousand dollars ($1,000.00) or imprisonment in the county jail for a period of not more than twelve (12) months, or by both such fine and imprisonment. Each day a violation is committed or permitted to continue shall constitute a separate offense.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.310 - Remedies cumulative and not exclusive.

The remedies provided herein are not to be construed as exclusive remedies. The city is authorized to pursue any proceedings or remedies provided by law.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.320 - Severability.

If any section, sentence, clause or phrase of this chapter is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portion of this chapter. The city council hereby declares that it would have passed this ordinance and adopted this chapter and each section, sentence, clause or phrase thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid or unconstitutional.
(Ord. No. 19-06, § 4, 6-11-2019)

8.37.330 - No vested rights.

Neither this chapter, nor any other provision of this code or action, failure to act, statement, representation, certificate, approval, or permit issued by the city or its departments, or their respective representatives, agents, employees, attorneys, or assigns, shall create, confer, or convey any vested or nonconforming right or benefit regarding any commercial cannabis activity. Any benefit conferred by this chapter shall expire permanently and in full on the effective date of the city council's enactment of new cannabis legislation or upon repeal of this chapter. Should the city repeal or amend this chapter, no claim for loss of property rights or due process of any kind shall be maintained against the city. (Ord. No. 19-06, § 4, 6-11-2019)

8.37.340 - Yearly review.

The city manager shall review the operation of this chapter within twelve (12) months of its effective date and report his/her findings and recommendations to the city council. After the initial twelve (12) month review, the city council shall annually review this chapter and its effects on the community. (Ord. No. 19-06, § 4, 6-11-2019)

AATTACHMENT TTACHMENT B B

BEFORE THE CITY COUNCIL
OF THE

CITY OF MENDOTA, COUNTY OF FRESNO

AN ORDINANCE OF THE CITY COUNCIL

OF THE CITY OF MENDOTA AMENDING

THE CITY'S CANNABIS ORDINANCE TO

MODIFY THE LOCATION REQUIREMENTS

FOR COMMERCIAL CANNABIS RETAIL

BUSINESSES
ORDINANCE NO. 19-09
WHEREAS, in 2019, the City enacted Ordinance No. 19-06, which amended Chapter 8.36 of the Mendota Municipal Code (MMC) to eliminate the ban on cannabis dispensaries, and added Chapter 8.37 to the MMC, which established regulations for the operation of commercial cannabis businesses, including cannabis dispensaries, referred to therein as commercial cannabis retail businesses; WHEREAS, in light of the developments to state laws and regulations regarding commercial cannabis retail businesses, the City initiated proceedings to amend its zoning code to permit a limited number of commercial cannabis retail businesses in its primary commercial district, the C-3 district, subject to a conditional use permit; WHEREAS, on July 16, 2019, the City's Planning Commission recommended approval of a proposed ordinance amending the City's zoning code to permit a limited number of commercial cannabis retail businesses in the C-3 district, subject to a conditional use permit, on the condition that the City amend Section 8.37.090 of the MMC to provide that cannabis retail business shall be located at least 500 feet from other cannabis retail businesses, schools, day care centers, and youth centers, rather than at least 800 feet, as originally required in Ordinance No. 19-06; WHEREAS, on August 12, 2019 the City Council voted to accept the Planning Commission's recommendation and directed staff to amend Section 8.37.090 of the MMC to provide that cannabis retail business shall be located at least 500 feet from other cannabis retail businesses, schools, day care centers, and youth centers, rather than at least 800 feet;
WHEREAS, staff has prepared this Ordinance No. 19-09 to amend Section

8.37.090 of the MMC to provide that cannabis retail business shall be located at least 500 feet from other cannabis retail businesses, schools, day care centers, and youth centers, rather than at least 800 feet.

NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF MENDOTA, CALIFORNIA DOES HEREBY ORDAIN AS FOLLOWS:

SECTION 1. The Recitals set forth above are incorporated herein and by this reference made an operative part hereof.

SECTION 2. Section 3 amends Title 8, Chapter 8.37, Section 8.37.090, Subdivision (8) by modify the distance requirement from 800 feet to 500 feet.

SECTION 3.Title 8, Chapter 8.37, Section 8.37.090 is hereby amended to read as follows:

8.37 .090 - Additional Location Requirements for Retail Cannabis Businesses A. All cannabis retail businesses must be located on property zoned C-3 (Central Business and Shopping) and must meet all of the requirements for development in that zone.

B. All properties in which the cannabis retail business is located shall be no closer than eighlfive hundred (8§.00) feet from any parcel containing any of the following:

1. A cannabis retail business.

2. A school providing instruction for any grades pre-school through 12 (whether public, private, or charter, including pre-school, transitional kindergarten, and K-12).

3. A day care center licensed by the state Department of Social Services that is in existence at the time a complete commercial cannabis business permit application is submitted.

4. A youth center that is in existence at the time a complete commercial cannabis business permit application is submitted.

SECTION 4. Severability. If any part of this Ordinance is held to be invalid for any reason, such decision shall not affect the validity of the remaining portions of this Ordinance, and the City Council hereby declares that it would have passed the remainder of this Ordinance, as if such invalid portion thereof had been deleted.

SECTION 5. The City Council hereby finds and determines that its adoption of this Ordinance is not subject to environmental review under the Public Resources Code, § 21000 et seq., the California Environmental Quality Act (CEQA), because the amendments do not have the potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable · indirect physical change in the environment and therefore are not considered a "project" under CEQA. (Pub. Res.

Code, § 21065; 14 Cal. Code Regs., § 15378(a).) Further, the uses permitted as a result of the amendment contained herein may never actually occur and therefore any potential environmental impacts remain wholly speculative. (14 Cal. Code Regs., §15064(d)(3).) Finally, any uses permitted as a result of the amendment contained herein will be subject to environmental review under CEQA prior to the issuance of a conditional use permit. Accordingly, the City Clerk is hereby directed to file a Notice of Exemption.

SECTION 6.This ordinance shall take effect thirty (30) days after its passage.

SECTION 7 .The Mayor shall sign and the City Clerk shall certify to the passage of this Ordinance and will see that it is published and posted in the manner required by law. **********
The foregoing ordinance was introduced on the 2ih day of August, 2019 and duly passed and adopted by the City Council of the City of Mendota at a regular meeting thereof held on the 1 oth day of September, 2019 by the following vote:

AYES: 4 - Mayor Silva, Mayor Pro Tern Castro, Councilors Mendoza and Rosales
NOES: 0
ABSENT: 1 - Councilor Martinez
ABSTAIN: 0

AATTACHMENT TTACHMENT C C
P
R-2R-3C-1C-2C-3
R-AA-D
P-F
S-C
ZONE DISTRICTS:SPECIAL USE DISTRICTS
O

OVERLAY DISTRICTS
UR
(PD)

AGRICULTURAL DISTRICTS

COMMERCIAL DISTRICTSINDUSTRIAL DISTRICTS
M-1M-2

RIVER RANCH OVERLAY DISTRICTS
TC
IP

MULTIPLE FAMILY RESIDENTIAL
R-3-A
MHP

CITY OF MENDOTA

OFFICIAL ZONING MAP
April 29, 2019
(PZ)

CUP XX-XX
EIZ
CC

SINGLE FAMILY RESIDENTIAL
R-1-A
R-1
BD
RNRC
RP
RS

AATTACHMENT TTACHMENT D D

BEFORE THE CITY COUNCIL
OF THE

CITY OF MENDOTA, COUNTYOF FRESNO

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF MENDOTA ESTABLISHING

THE AMOUNT OF THE COMMERCIAL

CANNABIS BUSINESS PERMIT FEE AND

THE COMMERCIAL CANNABIS DEVELOPMENT

AGREEMENT PROCESSING FEE
RESOLUTION NO. 19-65
WHEREAS, on June 11, 2019, the City Council adopted Ordinance No. 19-06, which amended the Mendota Municipal Code (MMC) to establish regulations for commercial cannabis businesses operating within the City of Mendota (City), including requirements that, prior to commencing any commercial cannabis activity, such businesses apply for and execute a development agreement with the City and obtain a commercial cannabis business permit; and
WHEREAS, the City will incur certain costs associated with accepting, processing, and reviewing applications for development agreements for commercial cannabis activity, as well as costs associated with accepting, processing, and reviewing applications for commercial cannabis business permits and the enforcement of the City's commercial cannabis business regulations, and desires to recover such costs; and
WHEREAS, pursuant to the provisions of the California Constitution and the laws of the State of California, the City is authorized to adopt and implement rates, fees, and charges for municipal services and the enforcement of regulatory programs; provided, however, that such rates, fees, and/or charges do not exceed the estimated reasonable cost of providing such services; and
WHEREAS, as amended by Ordinance No. 19-06, the MMC requires that prior to engaging in any commercial cannabis activity, a commercial cannabis business must apply for a development agreement with the City, which includes payment of a cost recovery fee, and authorizes the City Council to establish the amount of such fee by resolution (Commercial Cannabis Development Agreement Processing Fee); and WHEREAS, as amended by Ordinance No. 19-06, the MMC requires that prior to engaging in any commercial cannabis activity, a commercial cannabis business must obtain a commercial cannabis business permit, and authorizes the City Council to establish the amount of the fee for such permit by resolution (Commercial Cannabis Business Permit Fee); and
WHEREAS, the City Engineer has prepared a fee study, attached hereto as Exhibit "A" and incorporated herein by this reference, that calculates the estimated reasonable costs of accepting, processing, and reviewing applications for development 1 agreements for commercial cannabis activity, and of accepting, processing, and reviewing applications commercial cannabis business permits, as well as enforcing the City's regulations for commercial cannabis businesses (Fee Study); and WHEREAS, on September 10, 2019 the City held a public hearing at a regularly scheduled meeting of the City Council at which the public had the opportunity to make oral or written presentations regarding the amount of the Commercial Cannabis Development Agreement Processing Fee and the Commercial Cannabis Business Permit Fee; and
WHEREAS, the City published notice of the public hearing in accordance with Government Code Section 6062a, and made the data upon which the Commercial Cannabis Development Agreement Processing Fee and the Commercial Cannabis Business Permit Fee are based available to the public fourteen days prior to the public hearing; and
WHEREAS, the City has complied with all applicable legal requirements for the establishment of the Commercial Cannabis Development Agreement Processing Fee and the Commercial Cannabis Business Permit Fee; and
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Mendota, State of California, as follows:

1. The above recitals are true and correct and are incorporated herein by this reference.

2. The City Council hereby finds that the amount of the Commercial Cannabis Business Permit Fee as set forth in the Fee Study does not exceed the estimated reasonable cost of accepting, processing, and reviewing applications for commercial cannabis business permits and enforcing regulations applicable to commercial cannabis businesses operating in the City of Mendota.

3. The City hereby establishes the amount of the Commercial Cannabis Permit Fee pursuant to Section 8.37.240 of the MMC as set forth in the Fee Study.

4. The City Council hereby finds that the amount of the Commercial Cannabis Development Agreement Processing Fee as set forth in the Fee Study does not exceed the estimated reasonable cost of accepting, processing, and reviewing applications for development agreements for commercial cannabis businesses.

5. The City hereby establishes the amount of the Commercial Cannabis Development Agreement Processing Fee pursuant to Section

8.37.070(A)(4) of the MMC as set forth in the Fee Study. 2 ATTEST:

I, Celeste Cabrera-Garcia, City Clerk of the City of Mendota, do hereby certify that the foregoing resolution was duly adopted and passed by the City Council at a regular meeting of said Council, held at the Mendota City Hall on the 1 oth day of September, 2019, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
4 - Mayor Silva, Mayor Pro Tern Castro, Councilors Mendoza and Rosales
0 1 - Councilor Martinez
0 3
Exhibit Exhibit A A
City of Mendota
Cannabis Permit Fee Study
August 2019
Prepared for:

City of Mendota
Prepared by:

Provost & Pritchard Consulting Group
286 W Cromwell Ave, Fresno, CA 93711
COPYRIGHT 2019 by PROVOST & PRITCHARD CONSUL TING GROUP

ALL RIGHTS RESERVED
Provost & Pritchard Consulting Group expressly reserves its common law copyright and other applicable property rights to this document. This document is not to be reproduced, changed, or copied in any form or manner whatsoever, nor are they to be assigned to a third party without first obtaining the written permission and consent of Provost & Pritchard Consulting Group In the event of unauthorized reuse of the information contained herein by a third party, the third party shall hold the firm of Provost & Pritchard Consulting Group harmless, and shall bear the cost of Provost & Pritchard Consulting Group's legal fees associated with defending and enforcing these rights.

Report Prepared for:

Cristian Gonzalez
City Manager
City of Mendota
643 Quince Street
Mendota, CA 93640
Contact:

Cristian Gonzalez, City Manager
(559) 655-3291
Report Prepared by:

Provost & Pritchard Consulting Group
David McGlasson, PE, PLS, City Engineer
Michael Osborn, PE, Assistant City Engineer
Contact:

David McGfasson
(559) 449-2700
[email protected]
C:\Users\celestelAppData\Local\Microsoft\Windows\INetCache\Content.Outlook\TCTS9102\Cannabis Fee Study Report.docx Table of Contents
City of Mendota
Cannabis Permit Fee Study
Introduction and Background ..................... ......................................................................................................... 1-1 2 User Fee Concepts ... ........................ ............ .......................................................................................................... 2-1

2.1 Fee Concepts Under California La\v .............................. .......................................................................... 2-1

2.2 Fee Policy Considerations .......................................................................................................................... 2-1 3 Fee Study Methodology ........................................................................................................................................ 3-1

3.1 Average Cost Analysis Methodology ....................................................................................................... 3-1 4 Proposed Cannabis Permit Fee ........................................................................................................................... 4-1

4.1 Processing Time Estimate ..................................................... ..................................................................... 4-1

4.2 Determination of Recommended Fee ....... .............................. ....... ......................................................... 4-1

4.3 Updating Fees in Future Years .................................................................................................................. 4-2 Provost & Pritchard Consulting Group •August 2019 iv
Section One: Introduction and Background
Cannabis Permit Fee Study
1 Introduction and Background
The City of Mendota commissioned this study to gather information on the cost of preparing and issuing permits for cannabis production, processing, wholesale distribution and retail sale, and to consider development of a revised schedule of fees and charges intended to recover all, or a larger portion of, the costs of providing these services.

Having fees that are closely related to the cost of providing services will give City leaders the opportunity to make more informed decisions as they work to meet the budgetary and policy goals of the City.

In general, the "user fees" included in this study are those that the City provides to businesses and citizens where the result of the service is an individual rather than general benefit. In order to be fair to the general population and not confer special benefits on only a small number of individuals, the City charges for such services.

This study evaluates the actual costs of providing the particular services, with the goal of identifying the full cost of providing the service, which is the maximum amount that can legally be charged.

In order to accomplish this goal, a number of objectives were identified. These include ensuring that the calculated maximum fees are fair and reasonable, that the fee is clear and as simple as practical, and that the fee structure correctly follows the City's processes while creating a nexus between the fees and the service provided.

This study was based information developed in collaboration with City staff, who were instrumental in understanding the time and people required to provide the service addressed. The study did not evaluate the effectiveness or efficiency of any of the City's processes, but focused on the actual cost of providing service in accordance with existing procedures.

Provost & Pritchard Consulting Group •August 2019 1-1
Section Two: User Fee Concepts
Cannabis Permit Fee Study
2 User Fee Concepts
This report section looks at some concepts which are important to agency fee-setting in California. Fees are not totally discretionary on the part of the City, but must be set in accordance with specific rules as set forth by the State of California. There is, however, a good deal of latitude within these policies for cities to set fees in a manner that City leaders believe provides maximum benefit to the City, its citizens and customers.

2.1 Fee Concepts Under California Law
The primary source of General Fund revenues for cities are tax revenues, collected by the County and the state and distributed by the state under a variety of names and distribution methodologies. Since there never seems to be enough tax revenue available to meet all of a city's needs or wants, other funding methods have been created over time, including fees, special charges, fines, and grant revenues. Most of these methods generate revenue that is specific to one department or program; they do not typically contribute to the general fund revenues.

While most city services have a citywide benefit, there are a number of services where the benefits are conferred primarily on one individual. It's those services for which the City can charge cost recovery fees in an effort to be fair to the broader population. A key concept is that the cost recove1y fee must be closely related to the actual cost of providing the service in question. In other words, a user fee cannot be a "fund raiser" with a broad benefit to the City, but must be set at or below the actual cost of providing the service.

The costs recovered can be very thorough. For example, if issuing a particular permit requires an hour of a clerk's time, the cost is not limited to a one-half-hour share of that person's direct hourly wage. The full salary cost, including all benefits and overhead, can be used. Also, the cost of any review time, inspections, and any other worker's time cost may be included. If any special equipment is required to cany out the se1-vice, a fair charge may be made for that equipment. In fact, eve1y amount of labor, benefits, materials, tools and equipment required to cany out the work associated with the fee can be included.

All that said, it is uncommon for a City to set full reimbursement fees for every permit and se1-vice it carries out. The decision to set fees for full or partial cost recove1y is made by the City Council. This report identifies the full-cost-recovery amount. Determination of the actual fees to be included in a new schedule of fees will be a job done at the direction of the City Council, with the administrative assistance of City Staff.

2.2 Fee Policy Considerations
\Y'hile in general it may be most advantageous for a city to set fees for full cost recovery, there are several policy subjects worth consideration as the final fee strncture is being set:
• Will the number of people requesting a se1-vice decline if the fee is set too high? Is that good or bad for the City? While revenue may decline if the cost is believed to be too high, does the City perceive a benefit from having to spend less time providing that particular se1-vice? • Some subsidy of fees can encourage behavior the City would like to see increase, or may allow certain individuals with fewer resources to take advantage of a service they would otherwise have to pass by. • To avoid overcharging individuals for se1-vices which may have a partial public benefit.

Provost & Pritchard Consulting Group •August 2019 2-1
Section Three: Fee Study Methodology
Cannabis Permit Fee Study
3 Fee Study Methodology
This section looks at the methodology applied to calculated costs and from there the maximum permissible fee.

3.1 Average Cost Analysis Methodology
As mentioned above, the purpose of a fee study is to determine the average full cost of providing the services offered by the City, so that City leaders can intelligently establish a fee schedule to recover all or a major part of the cost of providing a service without violating the state law which prohibits charging more tl1an the cost of providing tl1at service.

Cost recove1y provides a way to create equity where the provision of certain se1vices doesn't seem equitable; the service benefits a group of people, or an individual, while having no effect on other members of the community. If tl1e se1vice were to be provided without fee, or even with a subsidized fee, the community would be paying all or part of the cost of providing a benefit to individual members of the public. The exaction of user fees tied to full cost recovery eliminates that inequity.

The study metl1odology looked at several standard factors:
• The amount of labor required to carry out the se1vice • The cost of the labor being provided, including all benefits and overhead • The cost of any equipment used to provide the se1vice • The costs, including taxes, delive1y and any other factors, of any materials required For each department involved in tl1e study, the needs and practices of the department determined the stmcture of the study. Because even similar applications often require differing amounts of time to process, this approach looks at typical, or average, processing times, so a single fee amount can be applied to similar applications witl1out going tlltough detailed project cost accounting, which would also entail trying to either collect fees in arears, or to collect a large up-front deposit designed to cover all possible expenses, witl1 any unused deposit being returned when the process is complete. Both of these approaches would require a great deal of additional administrative effort and would add to overall processing costs without bringing substantial value to the City.

Provost & Pritchard Consulting Group •August 2019 3-1
Section Four: Proposed Cannabis Permit Fee
Cannabis Fee Study
4 Proposed Cannabis Permit Fee

4.1 Processing Time Estimate
The City determined that two departments would be involved in the Cannabis Permit issuance and ongoing enforcement. These will be the Police Department and the administrative staff at City Hall. A review of the expected processes and procedures was held, and estimates of the range of likely processing times was developed. From that range, average processing timeswere agreed upon.

These averagesare believed to be conse1vative; it may well be that the actual average processing times will be somewhat longer than shown in the tables below, making the recommended fees lower than the maximums that could be justified. Because of the City's lack of experience with this permit, the decision was made to err on the low side of the estimates and to make any necessary corrections in the future as experience is gained.

4.2 Determination of Recommended Fee
The City has determined that there will bemultiple parts to the Cannabis Permit Fee, depending upon the proposed use being applied for. Any use involving wholesale or retail commerce will require the full procedure and all of the steps outlined in this section. Some will be charged under existing City permitting ordinances, while others will be new, established pursuant to this fee study. The steps involved will include:

Development Agreement Application Processing: Initial City screening of an application, for completeness and adequacy, by City staff. Following acceptance of a complete application, the application will be reviewed by a five-member review committee to establish conditions of approval.

D eve opment A .greement A .pp r 1cat1on p rocessmg
Staff Type Hours Hourly Rate Total
City Clerk 5.0 52.04 260.20
Police Officer 5.0 40.22 201 .10
City Manager 5.0 93.76 468.80
City Planner 5.0 93.76 468.80
City Engineer 5.0 165.00 825.00
City Attorney 5.0 250.00 1,250.00
Total Fee: $3,473.90
Development Agreement: Once conditions of approval are established, the actual development agreement can be prepared. This will be done by staff, the City Planner, the City Engineer and the City Attorney as appropriate, and will be paid based on a deposit paid by the applicant, the amount of which will be determined by the City Manager. The deposit may be increased or decreased during preparation of the Development Agreement if deemed necessa1y by the City Manager. Cost recovery shall be built into the Development Agreement itself; no specific fees will be charged.

Conditional Use Permit: Applicants will be required to secure a Conditional Use Permit in accordance with established City ordinance and policy. Standard fees will apply.

Provost & Pritchard Consulting Group •August 2019 4-1
Section Four: Proposed Cannabis Permit Fee
Cannabis Fee Study
City Business License: All cannabis-related businesses operating within the City shall obtain a City of Mendota business license, pursuant to existing City ordinance.

Annual Permit Compliance: The City anticipates there will be significant ongoing annual costs of enforcing permit conditions for cannabis permits, which should not be borne by the other citizens of Mendota or other permitholders in general. The estimated costs of ongoing enforcement are shown in the table below. Tasks anticipated include annual compliance checking by the police department; occasional compliance spot checking provided by the police department, City Clerk and City Attorney;citizen interface and questions by City Clerk and City Manager;and annual City Manager review including City Manager and City Attorney.

A nnua IC anna b' p . c 1s erm1t omp r 1ance E f n orcement Staff Type Hours Hourly Rate Total
Police Officer 24.0 40.22 965.28
City Clerk 2.0 52.04 104.08
City Manager 5.0 93.76 468.80
City Attorney 5.0 250.00 1,250.00
Total Fee: $2,788.16

4.3 Updating Fees in Future Years
Fees will be automatically updated in future years by incrementing in proportion to increases in the Consumer Price Index (CPI). Changes to the fees as a result of CPI increases will be effective each year on July 1.

Additionally, the City may from time to time revisit the staff involved, the labor hours expended and the actual salary rates related to each position classification, as the City's situation changes. Changes in any of these factors, for any of the fees listed, may be incorporated into the fee calculation included herein by resolution of the City Council.

Provost & Pritchard Consulting Group •August 2019 4-2

AATTACHMENT TTACHMENT E E

BEFORE THE CITY COUNCIL
OF THE

CITY OF MENDOTA, COUNTY OF FRESNO

AN ORDINANCE OF THE CITY COUNCIL

OF THE CITY OF MENDOTA AMENDING

THE ZONING CODE TO PERMIT

COMMERCIAL CANNABIS RETAIL
BUSINESSES IN THE C-3 DISTRICT

SUBJECT TO A CONDITIONAL USE PERMIT
ORDINANCE NO. 19-08
WHEREAS, pursuant to the authority granted the City of Mendota (City) by Article XI, Section 7 of the California Constitution, the City has the police power to adopt regulations designed to promote the public health, the public morals, or public safety; and
WHEREAS, comprehensive zoning regulations and regulations upon the use of land and property lie within the City's police power; and WHEREAS, in 1996, the voters of the State of California adopted the Compassionate Use Act of 1996 (CUA), the intent being to enable persons who are in need of cannabis for medical purposes to be able to obtain and use it without fear of state criminal prosecution under limited, specified circumstances; and WHEREAS, in 2003, Senate Bill 420, titled the "Medical Marijuana Program Act" (MMPA), was enacted to clarify the scope of the CUA and to promulgate rules by which counties and cities can adopt and enforce regulations consistent with its provisions; and WHEREAS, in 2011, Assembly Bill 2650 was enacted, affirming that counties and cities can under state law adopt ordinances that control and restrict the location and establishment of a medical cannabis cooperative, collective, dispensary, operator, establishment, or provider; and
WHEREAS, in late 2015, the Legislature passed, and the Governor signed, three pieces of legislation, AB 266, AB 243, and SB 643, collectively called the Medical Marijuana Regulation and Safety Act (MMRSA), which provides a statewide program for the licensing and regulation of commercial medical cannabis activity, specifically, the operation of medical cannabis dispensaries and the delivery and cultivation of medical cannabis; and
WHEREAS, in November 2016, the voters of the State of California adopted the Adult Use of Marijuana Act (AUMA), the intent being to establish a comprehensive system to legalize, control, and regulate the cultivation, processing, manufacturing, distribution, testing, and sale of nonmedical cannabis, including cannabis products, for use by adults 21 years and older, and to tax the commercial growth and retail sale of cannabis; and
1 WHEREAS, in June of 2017, the Governor approved the Medicinal and AdultUse Cannabis Regulation and Safety Act (MAUCRSA), which established a uniform licensing regime for both medical and adult-use cannabis, thereby supplanting the MMRSA and adjusting various provisions of the AUMA; and WHEREAS, on January 16, 2019 the Office of Administrative Law officially approved state regulations developed by the Bureau of Cannabis Control (Bureau) for cannabis businesses across the supply chain (Regulations); and WHEREAS, the Regulations at 16 C.C.R. § 5416, subd. (d) expressly provide that "a [cannabis] delivery employee may deliver to any jurisdiction within the State of California provided that such delivery is conducted in compliance with all delivery provisions of this division"; and
WHEREAS, in 2012, as amended in 2016 and 2017, the City adopted Chapter

8.36 of the Mendota Municipal Code (MMC) pertaining to recreational and medical cannabis activities (Cannabis Ordinance), which banned commercial cannabis cultivation, commercial deliveries of cannabis, and cannabis dispensaries in the City based upon various health, safety and welfare and land use findings relating to cannabis cultivation, dispensing, and consumption, which findings are incorporated herein by reference; and
WHEREAS, in 2017, the City enacted Ordinance No. 17-13, which created the Commercial Cannabis Overlay District to allow the establishment of commercial cannabis businesses involving the cultivation, manufacturing, distribution, and testing of cannabis products in a limited area of the City, but retained the ban on cannabis dispensaries; and
WHEREAS, in 2019, the City enacted Ordinance No. 19-06, which amended Chapter 8.36 of the MMC to eliminate the ban on cannabis dispensaries, and added Chapter 8.37 to the MMC, which established regulations for the operation of commercial cannabis businesses, including cannabis dispensaries, referred to therein as commercial cannabis retail businesses; and
WHEREAS, in light of the developments to state laws and regulations regarding commercial cannabis retail businesses, the City now desires to permit a limited number of commercial cannabis retail businesses in its primary commercial district, the C-3 district, subject to a conditional use permit; and
WHEREAS, on July 16, 2019, the City's Planning Commission recommended approval of a proposed ordinance amending the City's zoning code to permit a limited number of commercial cannabis retail businesses in the C-3 district, subject to a conditional use permit, on the condition that the City amend Section 8.37.090 of the MMC, as set forth in Ordinance No. 19-06, to provide that cannabis retail business shall be located at least 500 feet from other cannabis retail businesses, schools, day care centers, and youth centers, rather than at least 800 feet; and 2 WHEREAS, on August 12, 2019 the City Council voted to accept the Planning Commission's recommendation and directed staff to amend Section 8.37.090 of the MMC to provide that cannabis retail business shall be located at least 500 feet from other cannabis retail businesses, schools, day care centers, and youth centers, rather than at least 800 feet; and
WHEREAS, on August 27, 2019 the City Council conducted a public hearing and first reading for Ordinance No. 19-09, amending Section 8.37.090 of the MMC to provide that cannabis retail businesses shall be no close than 500 feet from any other cannabis retail business, school, day care center, or youth center; and WHEREAS, on September 10, 2019 the City Council adopted Ordinance No. 19- 09, amending Section 8.37.090 of the MMC to provide that cannabis retail businesses shall be no close than 500 feet from any other cannabis retail business, school, day care center, or youth center; and
WHEREAS, having amended Section 8.37.090 in accordance with the Planning Commission's recommendation, the City now desires to adopt the proposed ordinance amending the City's zoning code to permit a limited number of commercial cannabis retail businesses in the C-3 district, subject to a conditional use permit.

NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF MENDOTA, CALIFORNIA DOES HEREBY ORDAIN AS FOLLOWS:

SECTION 1. The Recitals set forth above are incorporated herein and by this reference made an operative part hereof.

SECTION 2. Section 3 amends Title 17, Chapter 17.52, Section 17.52.030 by adding Subdivision KK.

SECTION 3. Title 17, Chapter 17.52, Section 17.52.030 is hereby amended to read as follows:
17 .52.030 - Uses permitted subject to conditional use permit.

In the C-3 central business and shopping center district, uses permitted subject to conditional use permit are as follows:

A. Auditoriums;
B. Automatic self-serve car wash;
C. Automobile parts sales;
D. Automobile service stations (with incidental repair); E. Bakeries (wholesale);
F. Bars, provided that no bar may be located within five hundred (500) feet of a church, school or other bar;
G. Bowling establishments;
H. Buildings with heights greater than two stories;
3 I. Bus stations;
J. Car sales (new and used);
K. Churches;
L. Clinics and laboratories;
M. Communications substations, gas regulator stations, utility pumping stations, radio and television stations;
N. Convenience markets;

0. Drive-in restaurants;
P. Dry cleaners;
Q. Hospitals;
R. Janitorial services;
S. Linen supply services;
T. Mortuaries;
U. Nurseries (within or behind the main buildings);
V. Nursing and convalescent hospitals or homes;
W. Private clubs, lodges;
X. Public grounds and buildings;
Y. Parking lots, in conjunction with permitted uses;
Z. Radio and television repair;
AA. Restaurant/bars;
BB. Significant tobacco retailers, provided that no significant retailer may be located within five hundred (500) feet of a school;
CC. Theaters;
DD. Trade and professional schools;
EE. Day nurseries, child care nurseries or nursery schools, not exceeding two hundred fifty (250) children;
FF. Light Manufacturing (where required for the repair or assembly of premanufactured components of the retailed goods, and where the floor space devoted to the repair and/or assembly process is less than ten ( 10) percent of the total floor are of business);
GG. Pool halls and billiards clubs.

HH. Planned developments, including mixed commercial-residential and/or mixed office-residential uses, pursuant to Chapter 17.84.

11. Social facilities;
JJ. Wireless telecommunications facilities-:~
KK. Cannabis retail businesses.

SECTION 4. Severability. If any part of this Ordinance is held to be invalid for any reason, such decision shall not affect the validity of the remaining portions of this Ordinance, and the City Council hereby declares that it would have passed the remainder of this Ordinance, as if such invalid portion thereof had been deleted.

SECTION 5. The City Council hereby finds and determines that its adoption of this Ordinance is not subject to environmental review under the Public Resources Code, § 21000 et seq., the California Environmental Quality Act (CEQA), because the amendments to the zoning code, in and of themselves, do not have the potential for 4 resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment and therefore are not considered a "project" under CEQA. (Pub. Res. Code, § 21065; 14 Cal. Code Regs., § 15378(a).) Further, the uses permitted as a result of the amendments contained herein may never actually occur and therefore any potential environmental impacts remain wholly speculative. (14 Cal. Code Regs., §15064(d)(3).) Finally, any uses permitted as a result of the amendments contained herein will be subject to environmental review under CEQA prior to the issuance of a conditional use permit. Accordingly, the City Clerk is hereby directed to file a Notice of Exemption.

SECTION 6.This ordinance shall take effect thirty (30) days after its passage.

SECTION 7.The Mayor shall sign and the City Clerk shall certify to the passage of this Ordinance and will see that it is published and posted in the manner required by law. * * * * * * * * * *
The foregoing ordinance was introduced on the 13th day of August, 2019 and duly passed and adopted by the City Council of the City of Mendota at a regular meeting thereof held on the 24th day of September, 2019 by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Jo
4 - Mayor Silva, Mayor Pro Tern Castro, Councilors Mendoza and Rosales
0 1 - Councilor Martinez
0 5

AATTACHMENT TTACHMENT F F

BEFORE THE CITY COUNCIL
OF THE

CITY OF MENDOTA, COUNTY OF FRESNO

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF MENDOTA ESTABLISHING

THE APPLICATION SUBMITTAL PERIOD

FOR APPLICATIONS TO ENTER INTO A

DEVELOPMENT AGREEMENT FOR

COMMERCIAL CANNABIS ACTIVITY
RESOLUTION NO. 19-75
WHEREAS, on May 28, 2019 the City Council of the City of Mendota (City) adopted Ordinance No. 19-06, amending the Mendota Municipal Code (MMC) to eliminate the ban on cannabis dispensaries and to establish regulations for commercial cannabis businesses; and
WHEREAS, as amended by Ordinance No. 19-06, MMC Chapter 8.37 requires that businesses desiring to engage in commercial cannabis activities must first apply for and enter into a development agreement with the City, among other requirements; and WHEREAS, pursuant to MMC§ 8.37.070(A)(2), applications for a development agreement for commercial cannabis businesses must be submitted during the Development Agreement Application Submittal Period (Application Submittal Period), which shall be established by resolution of the City Council; and WHEREAS, pursuant to MMC§ 8.37.070(A)(6), within sixty days after the end of the Application Submittal Period, applications must be scored by an independent fivemember Application Evaluation Committee, the members of which are to be selected by the City Manager; and
WHEREAS, the City Council desires to establish the Application Submittal Period pursuant to MMC § 8.37 .070(A)(2), to direct the City Manager to select the members of the Application Evaluation Committee pursuant to MMC§ 8.37.070(A)(6), and to direct the City Clerk to provide notice to the public of the establishment of the Application Submittal Period; and
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Mendota that pursuant to MMC§ 8.37.070(a)(2) the Application Submittal Period for the submission of applications to enter into a development agreement for commercial cannabis activities is hereby established and shall commence on October 14, 2019 and last until December 13, 2019.

BE IT FURTHER RESOLVED, by the City Council of the City of Mendota that pursuant to MMC§ 8.37.070(A)(6) the City Manager is hereby directed to select the members of the Application Evaluation Committee.
1 BE IT FURTHER RESOLVED, by the City Council of the City of Mendota that the City Clerk is hereby directed to provide notice to the public of the commencement of the Application Submittal Period.

ATTEST:

I, Celeste Cabrera-Garcia, City Clerk of the City of Mendota, do hereby certify that the foregoing resolution was duly adopted and passed by the City Council at a regular meeting of said Council, held at the Mendota City Hall on the 8th day of October, 2019, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
4 - Mayor Silva, Mayor Pro Tern Castro, Councilors Martinez and Mendoza
0 1 - Councilor Rosales
0 2
EXHIBIT EXHIBIT 33

L I C E N S E A P P L I C A T I O N

CITY OF MENDOTA

C O M M E R C I A L C A N N A B I S

CANNABIS RETAIL DISPENSARY WITH DELIVERY
(M-TYPE and A-TYPE)
796 Oller Street, Mendota, CA 93640
Element 7 Mendota LLC
www.e7ca.com
WWW.E7CA.COM

O P P O R T U N I T Y

T H A N K S F O R T H E
We are looking to significantly expand our operations across the State of California in 2020 and Mendota is at the top of our priority list. If we are successful in securing a cannabis permit, you will have my full commitment to doing all that we can to work with the City to achieve common goals of properly and purposefully accelerating development and commencing operations.

Our location at 796 Oller Street, Mendota is the optimal location in the City of Mendota for a cannabis retail business. With 160 feet of street frontage, the property will be upgraded, remodelled, and renovated, improving the street scape in Mendota and spurring additional investment into the City.

We are tremendously excited about the opportunity and look forward to working with the City, community, and constituents of Mendota to build a cannabis business, operated in partnership with the local community, you will embrace.

We believe that the quality of the Element 7 cannabis education positioning and our existing California market experience and retail footprint, combined with the retail cannabis understanding, discipline, and guidance that our team brings, is the perfect model for your City and local community.

Our unique business model, built off our Cannabis with a Conscience business mission and brand ethos, will allow community groups and local staff to own equity in the business, making it a true local enterprise. My personal cell phone number is (312) 823 7638. I can be reached at any time if you would like to discuss any aspect of our application further.

Yours sincerely,
Robert ‘Bobby’ DiVito
Founder and CEO
Element 7
[email protected]
Phone (312) 823 7638
Dear City Staff & the Mendota Cannabis Committee,
WWW.E7CA.COM

D E A R R E A D E R

W E ' R E B R I N G I N G C O M P L I A N T C H A N G E Before then, we want to give you a personal glimpse into what our motivations are and how we plan to bring about enormous beneficial and compliant change to your city.

But first, let’s talk about YOU.

Many people (maybe even you) are suffering from health problems across the country, and many of these problems can be eradicated by a few lifestyle and habit changes.

People are exercising less than they did last year, our diets are getting worse, and 36% of American adults are now obese. The leading cause of cardio-vascular disease and cancer is obesity. You’d be better off living in Chile or the Czech Republic than in California — California now has the worst disparity in health in the country, and the gap will widen over the next decade.

Mental distress now affects 1 in 8 Americans. It’s all quite overwhelming and exhausting, right? Sadly, there is a 33% chance that you won’t get enough sleep tonight either, and a 35% chance you’ll reach for an opioid to help you try to relax and sleep soundly throughout the night.

What's our point you ask?
Health is a state of complete physical, mental, and social well-being and NOT merely the absence of a disease. Element 7’s primary goal is to promote complete holistic wellness which will start to solve this health crisis.

Upon entering an Element 7 store, you’ll learn as much about the importance of spiritual and emotional balance as you will about cannabis products — we promote Pilates, yoga and balanced diets as much as we talk about cannabis-infused brownies and cookies.

Why do we do all of this, you may ask? Well, because we’re concerned about the future of our country and people as much as you are. Beyond that, we feel that by promoting physical, spiritual, and mental health, our customers will become more informed and engaged about ways to vastly improve their lives through health while embracing a brand and company that has their best interests in mind.

Happy reading, and thanks in advance for your energy and time! Hello. We’re excited that you’re considering us to become part of your community! We hope to meet with you to discuss the incredible opportunities that our holistic health organization offers one day soon.

WWW.E7CA.COM

C A N N A B I S E D U C A T I O N
E L E M E N T 7 I S
with a vision and a plan for educating the industry.

I took a General Manager role at one of the State's largest cannabis greenhouse operations (StrayLight Farms). With over 700,000 square feet of cultivation, manufacturing and distribution operations, this role gave me oversight across the entire industry and spurned my belief that the only way we as an industry could eradicate the black market and produce clean cannabis at-scale, was to treat it like any other crop with large-scale agricultural production.

In 2017 I was successful in lobbying the State to adopt the 'Campus Model' in California's MAUCRSA, and landing 'big-ag's' first financial foray into the commercial cannabis industry. Having secured a strong position on the supply side of the industry, I decided in 2018 that it was important to focus on demand. That led to the formation of Element 7 - a company focused on educating cities across California on the positive benefits of a clean, compliant, and controlled cannabis industry and what that can do for economic development in small communities.

Today, Element 7 has educated over 100 cities and communities across California and we continue to be one of the leading advocates for change, micro-development, and agile growth in an industry that will look very different tomorrow than it does today.

Our business model - Cannabis with a Conscience - directly puts equity in our business into the hands of the local community and constituents. We are tremendously excited to bring this unique business model to Mendota and creating real sustainable economic change and growth.
old and ready to make my mark on a nascent industry ripe for disruption. I'd grown my car-parking business from a single employee to over seven hundred in three short years and was ready to take on a new challenge.

The business idea was ahead of it's time for an industry not yet ready for a technological change, and so, I moved back to Chicago and founded my next business - Imagination
Children's Academy - an EQ based educational institute for young children. In only its third year of operations, it was voted Chicago's 'Best Children's Academy'.

With California marching towards adult-use legalization, I decided it was time to re-enter the cannabis industry and I once again found myself back in California, this time armed My journey in the cannabis industry started in 2010 when I ventured from Chicago to California. I was twenty-eight years WWW.E7CA.COM
Our store in Santa Ana, currently branded and operating as Kannabis Works, has increased revenue by 40% since our California Retail Director, Mark Malatesta, took over operations in November 2019. The store has improved profit by 52%, testament to Mark's deep understanding of retail operations, gained from 30 years working with organizations including Kohl's, Walmart, Macy's, Guess Jeans, and Levis.

Kannabis Works now serves as our Southern California training base - the current General Manager and Head of Buying have both taken roles within Element 7 to help us expand operations in California, and a new Head of HR and Head of Finance will be joining the company in the next month to help us further scale operations as we look to expand Element 7 operations in Northern California.

We are scheduled to launch Element 7 operations in Fort Bragg, Dunsmuir, Rio Dell, and South San Francisco by the end of the year.

The Fort Bragg store, 'The Bakery by Element 7' is our 2nd retail concept and focused on a slightly younger consumer looking for a cannabis experience and product range more focused on adult-use and recreational consumers. The Element 7 core brand is more attuned to wellness and older customers who need to be educated and engaged, and have different product needs.

WWW.E7CA.COM

C A N N A B I S O P E R A T O R

W E A R E A N E X P E R I E N C E D L O C A L
Element 7 has existing dispensary operations in Santa Ana with a 2nd dispensary scheduled to open for operations in Fort Bragg in September 2020 and a 3rd in Rio Dell in October 2020.

C A L I F O R N I A

O U R E X P A N D I N G F O O T P R I N T A C R O S S
Element 7 is one of California's fastest growing cannabis companies. With a central team of over 30 professionals financially backed by one of the State's largest vertically integrated cannabis companies and a family fund, we are expanding operations across the Golden State at a pace that will scale.

With a mission of becoming the most local cannabis retailer in the State of California, we are well on our way to achieving our mission and disrupting the industry and have projects under development in over 20 cities across the State with great local partners.

We have the team, experience, financial backing, and business model that will most benefit your City as we look to become the most compliant, controlled, taxed, tested, and trusted cannabis business in Mendota.

Unlike like other large retailers though, our Cannabis with a Conscience business model doesn't funnel profits back to a large holding company. We put equity directly in the business into the hands of the community, partners, and constituents, bringing the discipline and structure  of a retail operations group while ensuring that the enterprise remains local. We believe this is the optimal model for compliant sustainable retail business operations - centrally regulated operations with a very local footprint.

WWW.E7CA.COM

AS FEATURED IN THE FOLLOWING

PUBLICATIONS & CHANNELS
Convicted Of A Weed Crime?
Expungement Clinic Aims To
Help People Clear Their
Records In West Loop This
Weekend CLEAN YOUR RECORO. CHANGE YOUR LIFE.

These two SLO cannabis businesses were just given
the go-ahead to start operations
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Free clinic aims to help Fresno residents clear their
records of cannabis-related crimes
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FINANCE
The Fresno Bee 3 Chicago Cribune
ea | HE TRIBUNE T TELEMUNDO
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WAN AY =y for Were) |

WWW.E7CA.COM

P U B L I C A T I O N S & C H A N N E L S

A S F E A T U R E D I N T H E F O L L O W I N G
This site presents us with an opportunity to create a unique cannabis business on the site, incorporating a cannabis dispensary and cannabis education learning center that would be unique to Mendota with a prime main-street retail frontage.

With cannabis consumption and acceptance growing at robust levels, Mendota is uniquely positioned to benefit from California's booming cannabis industry, but it needs sustainable forward-thinking operators like Element 7.

A cannabis educational center in Mendota would allow the City to take a leading role in educating cannabis' newest and eager customers - soccer moms, 'conservative experimentalists', and suburban housewives. Mendota presents the ideal environment for these consumers to learn about cannabis in a safe and inviting space.

Backed by one of California's largest vertically integrated cannabis companies, Element 7 is fully funded, financed and ready to expand its California operations in Mendota, We have attached images below of the current and proposed site design.

W E   W A N T T O B E A R O B U S T

D E V E L O P M E N T P A R T N E R
Element 7 has identified a property at 796 Oller Street, Mendota which is compliantly zoned for cannabis business.

WWW.E7CA.COM
WWW.E7CA.COM

G R E A T E S T A S S E T

W E K N O W T H A T O U R P E O P L E A R E O U R
Amber Norwood (Chief Compliance Officer) is an Attorney and previously worked for the US Attorney General within the Miami Field Office.  She is a minority rights advocate, and member of NORML, California Minority Alliance and WomenGrow. Amber heads Element 7's regulatory and compliance measures,
overseeing all efforts to ensure no other cannabis business is controlled compliant, taxed, tested or trusted as Element 7.

Robert DiVito (Founder, CEO and Owner)
founded the Element 7 brand and business and
is a cannabis expert with experience across all
aspects of the industry including cultivation,
distribution, brand development, and retail operations. He is the former General Manager of StrayLight Farms. Robert is the Founder, CEO and owner of Element 7.

Neil Demers (Retail Operations) was voted the industry's #1 Executive at the 2017 Cannabis Business Awards. He holds a Masters in Finance (University of Denver) and is the Founder and CEO of Diego Pellicer, the #1 cannabis dispensary in North Americ a in 2017 and 2018 (National Cannabis Business Awards). Neil brings over a decade of cannabis retail understanding,
experience, design, and customer management to Element 7.

Nicholas Jack (Retail Experience) is the Chief Retail Officer of Diego Pellicer. Voted the industry's #1 Retail Manager in 2017 at the National Cannabis Business Awards, Nicholas has unmatched experience building, operating and scaling cannabis dispensaries.

He is transforming the cannabis retail industry through his exceptional attention to detail, understanding of the cannabis consumer, and eye for products that create disruption and change.

Mark Malatesta (Chief Retail Officer) brings 30+ years of traditional ‘big box’ retail understanding and experience to the Element 7 team, and 15 years of cannabis retail knowledge and operations as an owner and operator of Kannabis Works (Santa Ana). At Kohl’s, Mark was responsible for the management and operations of 1,400 stores in North America. He’s worked for Target, Walmart, Sam’s Club, Macy’s, Guess Jeans, and Levi’s during his extensive retail career.

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G R E A T E S T A S S E T

W E K N O W T H A T O U R P E O P L E A R E O U R
Eric Greenberg (Chief Financial Officer) is an accounting, financial control, and taxation specialist. He is a Certified CPA, member of AICPA, and is an Adjunct Lecturer at De Paul University (Chicago) in the Commerce Faculty. He holds a Masters in Business and Taxation and has over 30 years experience in accounting, taxation and financial risk management. His experience spans consumer goods, services, professional athletes, and capital markets.

Lynne Lyman (Policy Advisor) is the former California State Director for the Drug Policy Alliance, the nation’s leading organization promoting alternatives to the war on drugs. Lyman oversaw the DPA’s Los Angeles and San Francisco offices and provided oversight, strategy, and direction for DPA’s Californiabased efforts on criminal justice reform, harm reduction and marijuana law reform. Her writing contributed to Prop 64. brands. He is the former CEO for WPP's (world's largest media and marketing services holding company) content and entertainment business. He is a published author, named in the media industries '40 Under 40' in 2016 and has judged industry awards in Cannes.

Josh Black (Chief Marketing Officer) is a
former Marketing Director with PepsiCo,
managing Tropicana, Aquafina and Gatorade
Sheila Merchant (Chief Legal Officer) is a Columbia University Law School graduate and has practiced law for over a decade in California. Sheila brings an incredible depth of contractual law experience working with municipalities at a local and regional level. Her work in the cannabis industry covers all license types and jurisdictions from City to State.

Corey English (Chief Security Officer) is Element 7's strategic security lead and oversees all security measures and efforts for the Element 7 brand. His security guidance covers all risk management, threat suppression, and systems to guide the Element 7 business and team. He is the President of LEAPS (Law Enforcement and Private Security) and has over 2 decades of experience working for some of the world's largest companies.

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G R E A T E S T A S S E T

W E K N O W T H A T O U R P E O P L E A R E O U R
Justin Calvino (Head of Product Quality) is a founding board member of the Mendocino Cannabis Industry Association and the California Growers Association. He founded the industries leading craft cannabis initiative - the Emerald Exchange - as well as the Mendocino Appellations Project, Mendocino Coast Farmers Market, and Mendocino Cannabis Policy Council. Most recently he helped launch the California Cannabis Tourism Association.

Elicia Terry (Licensing Director) is one of
Element 7's key Licensing Directors and
oversees the team's State Licensing needs,
ensuring that Element 7 is exceeding State requirements where possible, and at the forefront of industry best-practices across product management, security, inventory, consumer safety, education, product handling, and environmental issues.

Gabriel Wiesen (CEO Illinois and Retail Operations) brings over a decade of general F&B retail experience to the team. He has built and operated two of Illinois' largest food truck operations, is the former Head of the Illinois Food Truck Association and has grown Beaver's Donuts and Dapper Donuts to national franchises with over 100 stores in operation across a dozen US States. Gabriel is the CEO of our Illinois operation and provides retail operations experience across the full Element 7 business.

Scott Neiss (Head of Design and Architect) leads all architectural, interior design, and building permit works for Element 7. He brings over 3 decades of experience to the Element 7 team and his team has designed over 3,500 projects across North America in the last 30 years. Scott holds architecture and interior design licenses, and specializes in restaurant, fashion, and lifestyle design Taylor Munoz (Human Resources) leads Element 7's policies, processes, and human resource systems. Taylor oversees all aspects of hiring, retention, training, and engagement with the UFCW. Before joining Element 7, Taylor was with Hyatt Regency and Collection Technology Inc., overseeing compensation and benefits, human resources, and employee relations. Taylor holds a Bachelor's Degree in Business Admin. from Sonoma State University.

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I N D U S T R Y L E A D E R S

O U R T E C H N I C A L E X P E R T S A R E
Larry Frogoso was born and raised in Tracy, CA. In 1974 he began his fire fighting career, working for the City for 23 years with the Tracy Rural Fire District. In 1999 he returned to the City of Tracy Fire Department as a Battalion Chief and retired as a Division Chief in May of 2005. He presently operates a small R.V. park in Oroville and joins the Element 7 team as a strategic advisor on all aspects of fire safety, processes, and site design with 29 years experience.

Bob Hoban (Legal Advisor) is the preeminent attorney in the North American and global cannabis industry. With offices in 13
States and 10 countries, 'Hoban Law Group'
has more than 72 practicing cannabis attorneys. Bob's groundbreaking 'Cannamart' case in 2010 paved the way for Colorado's cannabis regulatory system.

Dr. YuFu Cheng (Sustainability Advisor) is a medical cannabis advocate and China’s Director for Global Warming at the R20 United Nations program. Chaired globally by Arnold
Schwarzenegger, R20 accelerates the implementation of 'green infrastructure' projects in waste optimization, renewable energy, and efficiency. YuFu Cheng holds a Ph.D., Ecology (Climate Change) from UC Davis.

Bradley Bernard (Odor Management Advisor) is a HVAC and Odor Management Specialist from Martinez, CA, with over 25 years of experience designing, constructing, installing, and managing airconditioning, cooling, heating, and odor control management systems. Bradley is a Licensed C20 heating and HVAC Contractor and consults with Element 7 across its odor management
processes, systems, hardware, and installations across California.

Kevin Sullivan (Data Security Advisor) is a proven and experienced business leader with over 30 years experience in data security, military systems, and government contracts. Kevin rose to the rank of Lieutenant Colonel in the US Army (Director of Aviation, US Army Pacific, Fort Shafter, Hawaii), spending 20 years serving his country.

He is the Founder of Leading Points Corporation which provides data security, biosecurity, and enterprise solutions globally.

J U S T I C E R E F O R M
E L E M E N T 7   H E L P S E X P U N G E R E C O R D S Element 7 created history in 2019 when it hosted Fresno's first ever Expungement Clinic with the Fresno Public Defender.

Other events have been held in Chicago and LA in 2019.

The Expungement Clinic, held in partnership with the Fresno County Public Defender’s Office, NDICA (National Diversity and Inclusion Cannabis Alliance), and Element 7, paves the way for Fresno residents with minor drug related criminal records to enter the legal and licensed cannabis industry to gain meaningful employment, or as owners and investors.

Expungement clinics are part of the much needed reparative justice for the harms of cannabis prohibition, which targeted people of color and from marginalized communities. Volunteers from the Fresno County Public Defender’s Office were available at the Clinic to provide free legal assistance to Fresno residents with drug related criminal records, including Prop 64 and Prop 47. In the previous 2 years, the Public Defender had only expunged the records of 89 persons. In a single day we expunged 120 records! In addition, we handed out over 100 food bags, helped 40 people sign up to vote, and assisted 30 families to received food Stamps.

Carmen Romero, attorney with the Fresno Public Defenders Office Clean Slate Program said, “We encourage the community to come take advantage of the opportunity to clear their criminal convictions and begin the overcome the obstacles to better jobs, housing and other benefits.” This was the Fresno Public Defenders first expungement clinic in partnership with NDICA and Element 7 at the national and local level.

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C A R E E R S N O T J O B S
E L E M E N T 7   C R E A T E S E M P L O Y M E N T
Element 7 recently partnered with the State of California Economic Development Department (EDD) to host a Careers Fair in Van Nuys, Los Angeles.

The Economic Development Department is committed to assisting workers and job seekers to gain meaningful employment in California, and assists with training, labor law, and a range of other employment services to businesses and employment seekers.

At the event, Element 7 met with over 40 potential candidates and hopes to employ a number of these workers in the next 6 months,
Element 7 is committed to recruiting and
retaining the very best talent in the market and
our work with the EDD is key to this ambition.

T H E C I T Y O F M E N D O T A

W E W I L L S E T A N E W I N D U S T R Y S T A N D A R D I N We are proud to present our vision for Element 7, and we are confident that the site we have selected will help us meet the needs of the City and its vibrant community. It will also be fully compliant with the City’s Cannabis Municipal Code dealing with public safety, health, comfort, and economic development.

While Element 7 has over a decade of
cannabis experience and has recently
been awarded additional permits in
California's Coastal Region (San Luis
Obispo), Humboldt County (Rio Dell), and
the Bay area (Walnut Creek), the changing
and evolving retail landscape means
we are continually looking to innovate our
brand and add deeper intellect to our
team. We will continue to push the
boundaries driving change and ushering in
new retail standards that tomorrow's
cannabis customer will demand, elevating
our offer continuously.

We are committed to being the most
trusted, tested, taxed, controlled, and
compliant cannabis operator that the City
could identify and partner with to expand
the City's cannabis business strategy and
operations.

We know that the immersive and personalized environment delivered at Element 7 Mendota will set new standards in the cannabis industry and help the City define how cannabis brands and businesses should operate and be governed in 2020 and beyond, and we are excited to partner with the City through our Cannabis with a Conscience positioning and brand ethos to achieve our shared ambitions.

Kind Regards,
Robert DiVito
Founder and CEO
Element 7
WWW.E7CA.COM
7 SECTION A

SECURITY PLAN

SECTION A

SECURITY PLAN
ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets.

SECURITY PLAN
Security Prepared and Reviewed by A Professional Security Consultant Element 7 has contracted with GSG Protective Services, a minority and veteran-owned business with over 17 years in the security industry, and one of its most experienced security experts, Corey English, to act as an advisor and Chief Security Officer for all Element 7 security matters. Corey provides strategic guidance on risk management, security policies and programs, and oversight on all threat assessment, while working in conjunction with a locally selected guard and security services firm. Element 7 will perform quarterly Security Plan and Policy assessments and reviews and will contract the services of RSA Security once annually for a full security audit.

GSG Security Services
Strategic security advisement for Element 7 is provided by GSG Security Services, a specialized security service company that will provide high-level guidance for Element 7 security operations across all aspects of the business, working in conjunction with a local State-Licensed Security firm approved by Local City law enforcement.

GSG Security Services
License Number: #16545
Key Contact: Corey English
Contact Number: (310) 425 3516
Corey English, Element 7’s Chief Security Officer, is a 22+ year veteran in the security industry. He has worked with a variety of companies, ranging from small/local organizations to international and Fortune 500 companies, building their systems and processes for protecting their assets and staff. This has given Corey a unique perspective on how different industry leaders and businesses excel, depending on their team, clients, and environment. GSG was founded in 2000 in Nevada and 2005 in California and has ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets. been a trusted leader in the security industry for over 17 years. The business operates in 9 States across the US and brings over 300 years of combined security, law enforcement and military forces experience to Element 7 operation. GSG is a minority and veteranowned business.

Element 7 takes a comprehensive approach towards security. We deploy four approaches in our plans that manage risk, prevent diversion, loss of cannabis products and currency, prevent youth access, as well as deter other related criminal activity that could harm our employees, customers and negatively affect the surrounding communities. The four approaches we implement include mechanical, technological, physical and educational security measures.

Schematic Site Plan and Security Risks
Please refer to Section B for the Site Plan, Floor Plan, and Premises Security Diagram, a shortened version of which plans, is attached below.

The key aspects of this Floor Plan from a security perspective are:
• Every room has 2 x CCTV Cameras centrally monitored
• Panic Buttons are located in multiple points of the facility • Entrance includes a ‘man-trap’ so that customers have to pass through 2 doors to access the retail dispensary
• Strict ‘Levels of Access’ system in place to restrict access to sensitive areas within the business including secure storage rooms
• Separate entrance for deliveries and staff
ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets. • Dedicated security room within the facility
• Multiple secure storage rooms for products and cash
• Security plan reviewed annually by 3rd party for compliance / improvements • Entire property is monitored and managed by our industry leading Bosch central security platform
Building Security, Monitoring and Safety and Surveillance Element 7 has forecasted in its budget for a range of security hardware, software, and human personnel - our goal is to exceed City and State measures for security compliance and management. The Security Department is critical to the success and well-being of the facility and has four overarching responsibilities that fulfill the primary role of the department. They are:
● Safeguard cannabis products at every stage, from receipt of the cannabis to its eventual sale;
● Protect the facility property, confidentiality and assets from theft, damage, or acts of vandalism; and
● Maintain a safe and secure environment that ensures the well-being of staff, patients, customers, and visitors.
● Monitor, maintain, and upgrade (as necessary) a comprehensive security system and plan.

Security Camera Placement
Our security cameras will be installed throughout the perimeter of the premises and within the facility (2 per room and corridor). All points of exterior and interior ingress and egress will be monitored, including limited and restricted access areas, such as the reception area, retail floor area, each point-of-sale register, cannabis product and waste storage areas, main office, reinforced vault, break room, count/quarantine room, loading and unloading area, parking lot and the exterior of the facility, including the roof. Cameras will be securely mounted in designated areas of the facility that remain unobstructed. The quality of the images will enable our Company, law enforcement and the Department to obtain clear images, including facial features and license plates.

Security Hardware and Equipment
• Network E-Video Recorder, Supports up to 128 IP Camera Streams • High Definition 1080p resolution (Full HD) live display equivalent to Mega Pixel IP System/ Audio / D1 Full Resolution Recording / FAST INTERNET REMOTE VIEW / H.264 CODEC / Pentaplex / HDMI
• 3000 GB Hard Drive
• Low Light, High Definition 1080p resolution equivalent to 4 Mega Pixel IP camera with 3.7mm Megapixel lens, 3DDNR, SENS-UP, BLC, DC 12V
• High Definition 1080p resolution equivalent to 4 Mega Pixel IP camera, Waterproof Large Bullet IR with 2.8~12mm VF Megapixel lens, low light, 80 IR LED range up to 200 ft, 3DDNR, SENS-UP, BLC, DC 12V,
• HD, multi-directional, 1080p resolution equivalent to 4 Mega Pixel IP dome cameras • 40" LCD VGA Monitor with 1680x1050, 1 22" LCD VGA Monitor with 1680x1050 • Lock Box with keys and internal fan to Keep System Cool and last long Standard (BW-200 20"Wx20"Dx8"H)
• Video Printer
ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets.

Intrusion Detection and Alarm System
The facility will operate with a centrally-monitored fire and burglar alarm system that is monitored by an alarm company properly licensed by the State of California Department of Consumer Affairs Bureau of Security and Investigative Services in accordance with California Business and Professions Code Section 7590 et seq. and whose agents are properly licensed and registered under applicable law.

Intrusion Detection devices will be installed at all entry points and motion detectors will be installed to cover all areas of the Facility. A licensed and accredited company will monitor the alarm system and perform a monthly service on the system. The system will be put into test mode and tested at least once a month for any failures. In addition, the alarm system will have an audible interior and exterior alarm system in place.

Alarms will be inspected and tested daily, monthly, and semi- annually, by security officers, the Head of Security, and our contracted alarm system provider. In the event that alarms fail inspections, operations will be suspended until all alarms are replaced or repaired to good working condition. Inspection, testing and maintenance logs and reports will be maintained for up to two years on our cloud-based data system.

Alarm monitoring will be performed by our contracted licensed alarm monitoring provider. In the event that an alarm is tripped, the General Manager, Chief of Security and owners will be notified via telephone call, text message and email. In the event that none of the authorized representatives are immediately responsive, local, and state police will be notified. For certain alarms, such as panic, duress, hold up and burglary, local and state police will be notified immediately.

Security Equipment, Systems, and Hardware
Robust and compliant security systems, equipment, and effective policies and procedures that mirror local, state, and federal regulations and requirements are necessary when operating within a regulated cannabis market. Our experience operating licensed and compliant cannabis dispensaries in California has allowed us to develop effective safety and security operating procedures, and establish relationships with leaders in compliance, security systems, security training, equipment manufacturers and licensed security professionals. These relationships extend beyond California and will enable us to source, implement and monitor user-friendly, state-of-the-art security equipment and systems.

Video Camera Surveillance and Building Surveillance Plan All video surveillance will be monitored by security personnel from the Central Security Control Room. Security personnel will have direct contact lines to local law enforcement authorities to report any suspicious activities and/or emergency situations.

The City of Mendota Police Department or a Department representative will have access to all security video monitoring systems, as necessary or required by law.

Panic/duress alarms will be in multiple locations in the Facility – Lobby, Loading Bay, Central Security Room, Storage Room, and Office. All staff will be trained on the proper use of panic/duress alarms and the processes that follow if a panic/duress alarm is activated.

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets.

Daily surveillance reports are created and stored by the security personnel which are then shared with the General Manager for review. All reports will be available to the City of Mendota Police Chief at any time.

The entire interior and exterior of the Facility will be protected and monitored by 24-hour video surveillance in the Central Security Control Room. Areas that will have security surveillance cameras include all interior spaces within the facility which is accessible to the public (Lobby and Retail Floor), all interior spaces where cannabis, cash or currency is being stored and all interior spaces where diversion could reasonably occur.

Any irregular surveillance video footage would be investigated by the General Manager with the appropriate steps then taken to resolve any issues. Security personnel will have direct contact lines to local law enforcement authorities to report any suspicious activities and/or emergency situations. Daily surveillance reports are created and stored by the security personnel which are then shared with the Head of Security at Element 7 and the General Manager for review.

All regular surveillance will record continuously 24 hours per day and stored on hard disc for a minimum of 90 days. The storage device on which surveillance recordings are stored will be secured in a manner to protect the recording from tampering or theft. The surveillance-system storage device and cameras will be remote accessible through transmission control protocol (TCP).

In addition, all security systems at the site are attached to an uninterruptible power supply that can provide continuous power.

Alarm Systems
Part of our comprehensive security system includes professionally installed and maintained alarms that include:
• Panic Buttons: buttons will be placed in the reception, register/check out, main office, locker room, and loading / unloading areas. Delivery vehicles will also be equipped with panic buttons.
• Hold-Up Alarm: a hold-up alarm will be placed in the reception and register/check out areas.
• Burglary: a burglary alarm will be connected to the main alarm system. • After Hours: The main alarm system will be engaged between hours of operation.

The alarm will be activated once the facility is closed for the day and deactivated once the facility is opened for regular hours of operation. • Motion Detectors: Motion detectors will be placed in each area of the facility, including the roof.
• Glass Break Detectors: Glass break detectors will be installed at each window.

Security Plan Policy and Procedure Reviews, Assessments and Updates In order for our operations to consistently exceed industry standards, maintain employee, customer, and community safety, and continue to lead industry innovation, Element 7 will perform quarterly Security Plan and Policy assessments and reviews. These assessments will be performed by the Chief of Security, in conjunction with the General Manager, GSG and the Chief of Compliance.

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets.

Equipment Inspections, Maintenance and Testing
All surveillance cameras will be inspected daily by security officers. During daily inspections, cameras will be tested via monitor surveillance testing. Inspections include making sure each camera’s view remains unobstructed and recordings are being uploaded to the physical storage device and the cloud-based data system.

In the event that a camera’s view is found to obstructed, security officers are authorized to remove the obstruction. Cameras that are found to be malfunctioning will be replaced or repaired, whichever can be done immediately. When a camera is being replaced or repaired by our contracted security surveillance contractor, supplemental security measures will be deployed to ensure that secure and compliant operations are maintained until the camera is replaced or repaired. Logs pertaining to security surveillance camera inspections, maintenance and testing will be maintained on file for two (2) years.

Community Liaison
As part of our security plan, we will also be assigning a Community Liaison, whose contact information will be posted in the facility’s reception area and on our website.

The Community Liaison will be available 24/7 to receive and respond to comments, suggestions, concerns and feedback from customers, the community, State Police, local government and the Department.

Employee Security
Element 7 has provided a safe and secure working environment for its employees – secured by both the hardware installed at the facility (including alarms, duress and panic buttons, CCTV cameras, and a range of other installations and systems), and the processes, policies, and procedures put in place to secure the facility from theft and intruders. Employee training sits at the heart of the operation and seeks to keep both customers, patients, and staff safe and secure at all times when on, or near, the premises. At the end of each shift, staff will be escorted to their vehicles for safety.

All Company employees will be subject to LiveScan background checks. Prospective employees that are found to have been convicted of a crime involving the illegal distribution of narcotics within the last seven years, dated from the time of conviction, or if the conviction required incarceration, the time of release, whichever is later – in addition to violent felonies, or crimes of moral turpitude (no time exclusions).

No person may be an employee of the facility whose Live Scan results reveal the conviction of a crime involving the illegal distribution of narcotics within the last seven years, dated from time of conviction, or if the conviction required incarceration, the time of release, whichever is later - in addition to violent felonies, or crimes of moral turpitude (no time exclusions).

Visitor Security, Ingress / Egress Security, Deliveries, and Perimeter Security Integrated Visitor Management System
We permit visitors into our facilities on the condition that their visit is pre-approved by the General Manager, Chief of Retail, Security or Compliance, or owners. To ensure the security of our facility, our customers, and the visitor, we deploy integrated visitor management, that utilizes U.S. Military grade technology. Visitor records will be maintained on our secure, cloud-based data storage system, and reports will be ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets. generated for the Department at their request. Our Integrated Visitor Management system features:
• Real time monitoring and management of audio and video verification systems • Managed access control and on-line visitor management • Visitor Badge Printing
• On-line visitor reports
• Secured 256-bit communication
• Single click evacuation list
• Barred Visitor Control
• Access control integration with security system
Visitor Badge Access
In the event Element 7 allows any outside vendor, state inspectors, contractor, or visitor (collectively, “Visitor”) to access the facility, each visitor must have written authorization from a Type I Badge/Cardholder or the appropriate state/local authority prior to entering the facility.

Visitors who have been authorized, in writing, to enter the facility by the appropriate state/local authority must obtain a visitor identification badge from an Element 7 security team member prior to entering the facility. To obtain a visitor ID badge, the visitor must be present and provide a valid proof of identification and state the purpose of the visit.

The security guard will maintain a visitor log (mentioned above), which will include the name of the visitor, date, time, and purpose of the visit. This log will be available to the BCC and/or local authorities at all times during operating hours and upon request.

A facility employee will escort and monitor the visitor at all times while the visitor is in the facility. The visitor identification badge will be visible at all times. Element 7 requires visitors to return the identification badge to an Element 7 employee and sign-out at the visitor kiosk upon exiting the facility.

Product Deliveries
The Facility will have a dedicated secured loading and unloading area at the rear of the building. This secured loading and unloading area allows for the safe and secure delivery of goods without any disruption to retail store operations.

Delivery vehicles will be instructed to call upon arrival. After the area is secured with no visible threats, the vehicle will be unloaded with all stock to be moved immediately to the secured product storage area inside Element 7. After all checks and balances are completed and all inventory is accounted for as per the Delivery manifest, the storage room will be locked and secured.

Element 7 will request that any Distributors that it works with ensure that all deliveries are made to the rear of the building during operational hours and that deliveries are made in non-branded vehicles. Deliveries will be overseen by security staff.

Perimeter Security: Window Tint, Lighting and Landscaping The perimeter of the facility consists of all the outer/exterior areas of the facility on the premises. This includes the parking lot, front exterior portion of the facility and roads, streets and walkways surrounding the premises that could be used by a customer to gain access to the dispensary. The perimeter will be continuously monitored by security.

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets.

Perimeter Security: External Facility Lighting
The front and rear of the Facility will be equipped with security lighting as approved by the City. The entrance and rear of building lighting will be continuously illuminated. Each light will provide at least 1-foot candle intensity. The Facility will be lit by exterior lighting between the hours of dusk and dawn, 365 days a year. There may be occasions (e.g., inclement weather) when the lights are required to be used during the day, which will be at the judgement of the General Manager. All outdoor lighting used for security purposes will be shielded and downward facing. In any case, we will adjust our external lighting to the City of Mendota’s guidance.

Perimeter Security: Landscaping
Part of our facility perimeter security policies include landscaping provisions to ensure that any trees, bushes, other foliage or debris on the premises will be removed or maintained in a manner that does not allow for a person to conceal himself or herself from sight.

Door Security
All exterior doors will remain locked and be accessible for operation by employees only, and all windows will be secured against entry from the outside. Exterior doors will be properly equipped with panic hardware as required by all applicable state codes.

All external doors on site will be heavy-duty reinforced security doors. All internal doors will be sealed and heavy-duty interior doors. We use commercial-grade, non-residential locks on all points of entry and exit to the premises in accordance with the approved security plan in accordance with the Mendota Municipal Code. All doors will remain locked from the outside to prevent unauthorized ingress. Ingress will be allowed by means of a remote release operated from within the location.

In all cases, doors will be able to be opened from the inside to allow egress without the use of a key or special knowledge. If installed, access-controlled egress doors will comply with Section 1008.1.3.4 of the California Building Code. Windows and roof hatches will be secured from the inside with bars so as to prevent unauthorized entry and will be equipped with latches that may be released quickly from the inside to allow exit in the event of emergency in compliance with all applicable Codes.

The image below demonstrates the reinforced locks, bio-scan and fob-lock system deployed by Element 7.

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets.

4.5 Diversion Prevention
Element 7 has designed its facilities in a manner that provides for controlled contact and access to cannabis and cannabis products, cash and currency, and other sensitive records and materials to prevent diversion, theft, loss and other related criminal activity that may put its operations, employees and the surrounding community at risk.

Diversion
Employee theft reduction starts with the hiring and retention programs created by the business – Element 7 is committed to hiring the best talent it can find, training them, creating a ‘career’ for them with Element 7, offering them ‘ownership’ of the business through a Stock Plan, and ensuring that there are continuous open lines of communication with management.

Element 7 has a zero-tolerance policy for theft. If an employee is caught stealing or attempting to divert medical cannabis, he/she will be terminated immediately and referred to the relevant local authorities.

Element 7 will actively seek law enforcement involvement and seek to have criminal charges imposed against any employee stealing or diverting medical cannabis and will cooperate with the local police department in investigating any such activity. Employees found to be diverting medical cannabis are subject to arrest, prosecution, fine, imprisonment and will be punished to the fullest extent of the law.

Diversion Prevention - Best Practices
Element 7 will implement the following “Best Practices” to prevent diversion from within the Company. These strategies include:

1. Pre-Employment and on-going annual background checks and reporting of necessary findings.

2. Policies prohibiting personal tools, supplies and equipment.

3. Employee Personal and Bag Searches (with signed consent).

4. Employee Tracking via security surveillance and electronic access system.

5. Escorting vendors, contractors and visitors at all times while on facility premises.

Theft Reduction Measures
The Company will implement the following employee theft reduction measures. • Employees are required to wear uniforms while on duty in the storefront dispensary, while out on delivery, and/or while on dispensary premises. • Uniforms will consist of Company issued pocket-less pants and shirts. • No personal items or bags, that do not fit into the Company issued clear case, can be brought outside of the locker room area.
• Employees will be required to log in and out from Company time tracker. • Employees will be required to use their Company issued key cards to enter into, and exit, the facility.

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets. • Security Officers will perform spot and bag checks before employee’s leave the premises.
• Entry/Exit of employees will be monitored by video surveillance, time tracking software, Employee badge cards that permit access to limited access areas, as well by visual surveillance by the security officer.

Background Checks
Pursuant to California Penal Code Sections 11105(b) (11) and 13300(b)(11), every person listed as an owner, manager, supervisor or employee within the Facility, must submit fingerprints and other information requested by the Mendota Chief of Police, for a background check. In addition, Element 7 plans to conduct annual background checks on all employees.

Pursuant to California Penal Code Sections 11105(b) (11) and 13300(b)(11), no person will be issued a permit to operate or work within the Facility unless they have first cleared the background check.

A Log of all Background check documents will be held by both the Head of Security and the Head of Human Resources at Element 7 and the General Manager at Element

7. Product and Facility Access Protocols
Cannabis or cannabis product will not be stored, kept, or otherwise, accessed from outside the building. Loading and unloading of cannabis or cannabis products is allowed during business operating hours only and must be completed at the rear of the building. All cannabis present or kept at the premises will be securely stored against both unauthorized access as well as theft.

A Safe with a UL-Approved safe with a fire rating that is 2-hour and 1,700 degrees F or better rated with a complex locking device only known to the General Manager will be installed at the Facility. The CEO for Element 7 will also have access to safe.

Main Facility Access
The front of the facility will have a Lobby which will be staffed by a Security Guard during all hours of operation. There will also be Concierge Staff to facilitate age and identity verification, as well as new patient and customer intake. All persons must present their ID Card and sign-in to the Facility at this point. Any persons without a valid ID Card will be asked to leave the facility immediately.

Limited Access Areas
Element 7 will ensure that any person on the business premises, except for employees and contractors of Element 7 are always escorted by at least one employee of the licensee when in the limited-access areas of the premises. • Element 7 will establish limited-access areas and permit only authorized individuals to enter the limited-access areas. An example of the type of signage used by Element 7 is demonstrated below.
• Authorized individuals include employees as well as any outside vendors, contractors, or other individuals conducting business that requires access to the limited-access area.

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets. • Element 7 will maintain a log of all authorized individuals who are not employees that enter the limited-access area. These logs will be made available to licensing authorities upon request.

Facility Layout and Access Plan
Employees will be designated a Level of Access based on their job scope, title, and responsibilities. They will then be assigned a personalized security pass (with name, photo and Access Level boldly displayed) for movement within the Facility. Every employee will be trained on Element 7’s strict “anti-piggybacking” rules and procedures which prevent unauthorized persons accessing areas within the Facility that they are not approved for.

Anybody caught in an Access Level beyond their assigned level will be immediately taken to a meeting room with the General Manager for an explanation and investigation of consequences of such security breach. Any serious breaches could result in immediate suspension and up to termination of the employee from the Facility.

All security passes given to employees must be returned to the on-site security guard prior to exiting the facility.

Electronic Access, Limited and Restricted Access Areas
To ensure that accurate and reliable logs of access to restricted areas are monitored and recorded, the facility will be installed with an electronic access system. This system requires dual factor authentication via Company-issued access cards and facial recognition software. Passwords are sufficient in maintaining an effective dual factor authentication process but can be easily stolen or retrieved by unauthorized individuals.

Facial recognition reduces the chances of replicating an individual’s facial features and provides a more robust security measure that is more difficult to circumvent.

Electronic Access Systems record information pertaining to the access of areas controlled by its system. This means that we will be able to identify which employees access certain limited and restricted access areas, the time and date they accessed the area and how much time was spent in that particular area. This system complies with current regulatory requirements and ensures accurate and reliable reporting.

Keys, IDs and Access Card Policies and Procedures: Electronic Access Element 7 has chosen to implement a comprehensive Electronic Access Control system (i.e. Biometric, RFID, Smartcard) which will be installed throughout the facility. All employees, management, and visitors will be required to wear an identification badge/card for specific access. These Electronic Access Control systems will be continuously monitored. Element 7' security personnel will track the movement of employees and visitors throughout the facility using human surveillance, video surveillance and Electronic Access and Control monitoring. Attributes of this platform include:
● Dual factored authorization and authentication measures – Contact and Control Card (CAC) and Biometric Fingerprint;
● Access Privilege - based upon employee’s duties and roles; ● Contact and Control Card lockout times;
● Continuous Monitoring and Recording of Access Entry/Exit; and ● Biometric restricted access to Limited and Restricted Access areas.

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets.

Company Issued Electronic Access Cards and Employee Badges Electronic access allows for permission controls that allow authorized agents to access specific areas of the facility in order to complete tasks related to their assigned roles. To ensure that access to an area is limited to the authorized agent, we will be issuing Access Cards embedded with unique employee permissions that are integrated with employee facial imaging signatures. These cards will only be issued to employees by the General Manager. Although cards may be duplicated, facial recognition, which is the second layer of access authentication, will prohibit unauthorized individuals from accessing the facility or areas of the facility.

Employee Badges
Element 7 will be issuing employee badges in compliance with state regulations (California Code of Regulations, Title 16, Division 42, Section 5043). Employee ID badges will include the following:
• Element 7 name and license number
• Employee’s first name
• Employee number exclusively assigned to the employee for identification purposes • Color photograph of the employee clearly showing the full front of the employee’s face, at least 1 inch in width and 1.5 inches in height Staffing Changes
Element 7’s operations manager will notify the Chief of Police within three (3) business days of any proposed staffing changes.

4.6 Sufficiency of Security Personnel
Element 7 will have two (2) unarmed licensed security personnel on-site during its hours of operation. This will ensure and perpetuate safe operations and provide additional security to the community. These guards will arrive thirty (30) minutes before Element 7 commences operations each day and leave thirty (30) minutes after operations end each evening. They will sweep the perimeter on each occasion and a vehicle will intermittently survey and check on the premises each night.

All security personnel and guards employed for security work at Element 7 will be licensed by the State Bureau of Security and Investigative Services (BSIS) with a valid Department of Consumer Affairs Security Guard License (‘Security Guard Card’) which is obtained by completing the annual pre-licensing course.

Element 7 Security Guards will also undertake pre-work training with GSG who conduct advanced training covering threat assessment, risk mitigation, customer management, systems and hardware and incident management. GSG is a Bureau-certified training provider.

All security guards must be at least 21 years of age, have undergone a criminal history background check through the California Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI), and complete the Power to Arrest Training, which includes:
• 40 hours of training in security officer skills; and
• 8 hours of continual training which must be completed during the second year of service.

Location – Element 7 will implement a policy that requires Security Guards to patrol the business during all hours of operation. All guards will be issued a hand-free single wire ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets. earpiece with Push-to-Talk function for covert communications. We will have one dedicated security guard inside of the facility during hours of operation (including prior to opening and after closing hours). Guards will be stationed in Security Room and will roam the premises as needed
Security Personnel Responsibilities – Security Personnel shall be responsible for monitoring both patron and employee conduct at the facility and the parking areas to assure behavior does not adversely affect or detract from the quality of life for adjoining residents, property owners, and businesses. Security Personnel will be present in the security room and lobby; further, Security Personnel will irregularly, but consistently conduct “security sweeps” within the facility and the exterior of the facility. Security Personnel will have various duties and responsibilities, including, but not limited to:
• Screening/Checking-In Employees, Visitors, and Customers • Controlling access to the facility
• Monitoring Security Equipment
• Conducting Patrols of the interior and exterior of the facility • Reporting Suspicious Behavior
• Responding to Security Incidents
• Documenting Incidents
• Securing the Business Premise
Prevention of Trespassing
Element 7 will deploy one roving security officer to conduct security sweeps and inspections of the facility and its perimeter for two blocks in each direction to ensure that individuals are not loitering or trespassing (this will be conducted twice daily at a minimum). Human surveillance will be supplemented by video surveillance of the premises and its perimeter. In the event that illegal activities are occurring on the premises, security personnel have been instructed to determine the type and level of the incident and then respond accordingly. Violent type incidents require that security personnel contact the local police department for assistance. A full sweep of all areas of the facility will be conducted each night before closing to ensure nobody is hiding on the premises or remains on the premises after closing.

Quality of Security Technology
Element 7 implements cyber protection measures across all its facilities. This includes policies and procedures pertaining to Passwords, regular system and application updates, daily data back-up and the monitoring of customer-only WLAN networks. Element 7 has a cybersecurity consultant who will perform regular IT and network maintenance and security sweeps to ensure that its network is not breached.

In order to secure the facility’s networks, the facility will be using both a physical media storage device and a secure, cloud-based data back-up system for all its critical and sensitive data and information. Element 7 will have two separate Wi-Fi networks: one for operations and the other for guests. Element 7’s network is a secure Wi-Fi network that utilizes WPA2 encryption. It can be remotely accessed through a secure VPN by authorized owners and employees. The facility will be outfitted with the necessary firewalls that provide protection against cyber threats.

All measures to secure and protect data and network security protocols will meet UL Standards.

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets.

Cybersecurity and Personal Electronic Device Use Policies Cybersecurity ensures that proprietary and confidential information, such as customer records, company data and records and networks are secure at all times. Our Company has contracted a professional cybersecurity professional to develop a cybersecurity plan, source equipment and technology, install, repair, maintain and monitor all cybersecurity devices and systems.

Securing Networks and Cloud Services
Our network will consist of two separate networks: one for employees and customers, and another for confidential customer and Company records and data. We will be using two Virtual Private Networks that are supplemented by strict WIFI and personal electronic device Use policies. Our networks will be separated from the public internet through the use of:
• Strong User Authentication Mechanism
• Policy enforcement Systems: Firewalls and Web Filtering Proxies • Anti-virus Software
• Intrusion Detection Systems
The boundaries of our networks will be evaluated to determine the most efficient types of security controls to secure our data, records and customer confidentiality. Border routers will be configured to only route traffic to, and from, our public IP addresses, and firewalls will be deployed to restrict traffic only to, and from, the minimum set of necessary services.

Intrusion prevention systems will be configured to monitor for suspicious activity crossing our network’s perimeter. For our cloud-based data storage system, we will have back-up and restore services, as well as sophisticated data encryption.

Secure and Encrypted Cloud-Based Data System: Tresorit
Our Company relies heavily on deliberate and secure data encryption and storage technology to protect our data, assets, and the confidentiality of our customers. In order to facilitate secure data storage, we rely on Tresorit. Tresorit provides end-to-end encryption for file sync and sharing through zero-knowledge encryption and crossplatform support. Based out of Switzerland, where neutrality and data laws are advanced, Tresorit provides cloud-based data storage across multiple compliant Azure Data Centers in the EU, US, Canada and the UK. It is also ISO 27001 certified and complies with GDPR, HIPAA and other security and data protection requirements. The key attributes of Tresorit, which services our need for security and data encryption are:
• Public Key Cryptography: every file on Company-issued devices are encrypted using an Advanced Encryption Standard Algorithm using 256-bit keys before files are uploaded to the cloud. This also ensures that files are not decrypted on Tresorit’s servers. Key sharing is based on RSA-4096 with OAEP padding scheme, used in group mode, and PKI certificates, combining it with a tree of symmetric keys.
• Zero Knowledge Tech: Not even Tresorit can access files. Only individuals or organizations with permissions to access files will be able to download the file and access the content on the file.

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets. • Client-Side Integrity Protection: Message Authentication Codes are applied to each file uploaded onto the cloud which guarantees that files cannot be modified without our cybersecurity team knowing. Authorized employees with permission to access our Tresorit account/files will be prompted to deploy their Company-issued Message Authentication Code (MAC), which is a key known only to the authorized employee accessing the account, but not with the server. • Centralized control over Company Data and Records
• Define security policies: our cybersecurity team will apply policy templates to sets of authorized users and customize each template for the permissions of each authorized user. This includes 2-step verification, IP Filtering, Timeout policies, allowed devices and sharing policies.
• Monitoring devices and User statistics: the cybersecurity moderator will be able to monitor and decide which devices across our facilities will have access to our account— this designates specific devices where authorized users are allowed to log-in.
• Revoking Access to Users and Devices: the cybersecurity moderator will be able to revoke access to specific users and devices in cases where passwords and devices are compromised.
• Restore data lost due to ransomware: ability to easily restore files lost or compromised due to a malware attack or accidental deletion. • Secure Data Server Infrastructure: 24/7 monitoring and physical security, redundant storage and continuous patching
• Certified Microsoft Azure Data Centers: ISO27001:2005, SSAE 16, GDPR and HIPAA Compliant
• Non-convergent Cryptography: dedicated to state-of-the-art encryption and security, to ensure that our data is not scanned for similar content on cloud accounts of other Tresorit account holders.
• Secure cloud-storage
Cloud Firewall Protection: Cloudflare
Cloudflare is a web-based firewall application that provides next-gen firewall capabilities, DDoS protection, WAF, Rate Limiting, Bot Management, SSL / TLS, DNSSEC, Load Balancing, Web Optimization and Analytics. This system works with Amazon Web Services (AWS) and is can be customized to meet specific needs and / or requirements of each facility. Cloudflare is also ISO27001:2013, SOC 2 Type II, SOC 3, and PCI DSS 3.2.1 certified.

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets.

Virus and Malware: BitDefender
BitDefender is a virus and malware prevention solution that is run on all Company-issued electronic devices at regular, scheduled intervals.

Aegis Secure Key Flash Drives
Internal records, files and data, as well as personal information of customers will also be encrypted via built-in 256-bit AES XTS Hardware Encryption through the Aegis flash drive.

This storage device will be maintained on-site, within the Main Office’s secure vault.

Access to the files on this device is limited to those authorized individuals with the encryption key, which is needed to decrypt the files. Individuals with such authorization are the owners and the Head of Security.

The Aegis Secure Key can be configured with independent User and Admin PINs, making it an ideal device for corporate and government deployment. Should the User forget his or her PIN, the drive can still be unlocked with the Admin PIN after which, a new User PIN can then be created.

In case data stored on the drive needs to be inspected or audited, the device has two (2) Read-Only Modes, which is ideal for applications that require data to be preserved in its original, unaltered state and can’t be overwritten or modified. One is set by the admin in the admin mode and can’t be modified or disabled by anyone other than the admin. The second read-only mode can be set and disabled by a user but can also be overridden by the admin as well.

Secure Data Flow Control: Ubiquiti UniFi Switch
The UniFi Switch is for advanced enterprise switching and can securely control data flow.

It supports 802.1X authentication, dynamic and static VLAN tagging, Port Isolation, Storm Control and Guest Control.

Passwords and User Authentication
Our systems typically require two-factor authentication, which requires two types of evidence in authenticating user identity. Instead of just using static passwords, our systems will use a combination of system generated passwords and access ID’s that will be issued ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets. to employees upon completion of their required training. System generated passwords will be changed periodically and at various intervals.

Encrypted WIFI
The facility will have a Wireless Local Area Network (WLAN) for the use of customers, visitors and employees. The WLAN will be kept separate from our Company’s network so that public network traffic will never coincide or infiltrate our internal systems. The internal nonpublic WLAN will require unique credentials with preset expiration dates and will utilize WiFi Protected Access 2 (WPA2) encryption. Since our facility will be processing customer orders from our App and Website, we will secure a Secure Sockets Layer (SSL) Certificate that ensures all transactions are secure and data remains encrypted.

Systems and Applications Updating
All systems and software, including networking equipment, will be updated in a timely fashion as patches and firmware upgrades become available. Company policy requires the use of automatic updating services whenever possible, especially for security systems such as anti-malware applications, web filtering tools and intrusion prevention systems.

Safe Web Browsing and Personal Electronic Device Use
Our employee handbook outlines personal electronic device use guidelines that restrict the use and access of cellphones, tablets and laptops while at the facility. Employees will have access to the Public WLAN and will not be allowed to download or stream videos, movies, and music at any time. This policy also covers social media access and use, which instructs employees that they should not be on social media while at the facility. Public WLAN settings restrict the bandwidth of the network which significantly decreases the speed of the network that a customer or an employee can access. This prevents malicious software and intentional breaches to security through compromised devices or browsers from infiltrating the public WLAN.

Safe Use Flash Drive
Our cybersecurity policies include a Safe Use Flash Drive guideline that instructs employees to use only those flash drives that have been issued by the General Manager.

Emails
Email is an integral component of any business. Our Company has developed policies to protect the security and integrity of our email account by enabling email filters and antivirus programs. To protect Personally Identifiable Information (PII), our email account will utilize email encryption. Employees will also be instructed to restrict the use of PII in internal and external emails. To facilitate the transfer of significant data exchanges in a secure manner, we will be using Tresorit, which provides secure and encrypted data exchange.

IT Security Training
A strong IT security program must include training IT users on security policy, procedures and techniques, as well as the various management, operational and technical controls necessary and available to keep IT resources secure. In addition, IT infrastructure managers must have the skills necessary to carry out their assigned duties effectively.

Failure to give attention to the area of security training puts an enterprise at great risk because security of business resources is as much a human issue as it is a technology issue.

Employees will be appropriately trained in the proper IT system handling and internal policies and procedures. This includes keeping software and applications updated, ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets. proper password usage, data back-up, antivirus protection, and reporting incidents.

Employees will also be trained on data that is typically considered sensitive information:
• Government issued identification numbers (social security numbers, driver’s license numbers, etc.)
• Financial account information (bank account numbers, credit card numbers) • Salary Information
• Passwords
Training will also cover security policies for accessing and transmission of such data and records, including secure databases, emails, file transfers, encrypted electronic media and hard copies. Data privacy and security related materials, including updates to internal policies and procedures will be disseminated to employees via Company facilitated communication.

Product Security
Storage Procedures and Product Handling Best Practices
Ensuring that cannabis products are handled and transported throughout the facility in a secure manner facilitates in the prevention of diversion, loss and theft of cannabis products. This includes providing secure, sanitary and sufficient product storage, as well as equipment designed to maintain the integrity and security of cannabis products while being transported within the facility.

Authorized employees with access to the secure product storage area will be required to utilize Stash, the accompanying FlowHub Inventory application, which documents the movement of cannabis products throughout the facility. Company-issued handheld electronic devices with scanners will be provided to these employees so that reporting in real-time is developed as standard practice.

Cannabis products will be transported throughout the facility using a locked, wheeled, metal repository into which larger volumes of products can be moved through the Facility (and its various levels of security) between the secure product storage area and any other area within the Facility.

These devices ensure that products do not go missing while being transported. Keys for these transportation devices will be issued to specific employees for the duration of the facility’s hours of operation and must be surrendered prior to closing.

Product Security
Access to cannabis products within the facility will be limited to employees whose roles require them to transport, manage, handle or inspect cannabis products. Internal policies require that at least two (2) authorized employees are present when cannabis products are being transported, handled and prepared for release to customers at all times. Employee break-rooms, restrooms and locker rooms will remain separate, restricted access areas where cannabis products will not be allowed.

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets.

Product Security and Handling Best Practices
• Element 7 will limit the access of employees within the business premises to those areas necessary to complete job duties.
• At least two (2) employees will be present whenever cannabis is present or being handled; when possible, one employee will be the supervisor of the other. • Element 7 will not store cannabis outdoors.
• Employee break-rooms, changing facilities, and bathrooms will be separated from any and all cannabis storage areas.
• All bathroom facilities will remain locked and under the control of management. • No personal bags, purses, backpacks, or items that can be used to conceal cannabis or cannabis goods will be allowed in any area where cannabis or cannabis goods are present.
• Element 7 will dispose of cannabis waste in a secured waste receptacle or in a secured area on the licensed premises. Public access to the designated receptacle or area is prohibited.
• Element 7 will secure and back up electronic records in a manner that prevents unauthorized access and that ensures the integrity of the records is maintained.

The Facility will have a strict storage process and policy to prevent the diversion and theft of cannabis. All processed and packaged products will be immediately bar coded and moved to the locked Storage Room that will have four (4) central storage areas – ambient storage room, cold storage room, storage vault, and quarantine room. Access to all rooms will be strictly limited and implemented in line with the Facility’s ‘Level of Access’ policy.

Staff will only be able to access certain areas within the building based on their approved security access status.

These trolleys are packed within the dispatch / packing room with a manifest developed for each trolley. A trolley can only leave the dispatch / packing room once it has been ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets. checked by the Head of Inventory and locked. Once received at its destination within the Facility (which could be as close as the next room), the contents of the trolley will be emptied and checked against the manifest to ensure 100% accuracy, at which point the products will be logged into that area of the business within the inventory tracking section within FlowHub.

Ambient Storage
Ambient Storage deploys temperature, humidity and quality control features customized for cannabis products such as vape cartridges, tinctures, flower, pre-rolls and other cannabis-infused products that are not perishable.

Cold Storage
Cold Storage deploys lower temperatures for cannabis-infused products such as edibles.

Storage Vault
The storage vault complies with the DEA’s security requirements for Schedule I Controlled Substances. The Storage Vault will have at least eight inches of reinforced concrete and 18-gauge structural studs made of galvanized sheet metal meeting requirements of ASTM A1003; 9-gague, Type II, Class 1 carbon steel security mesh and attachment clips meeting ASTM F1267 on either side of the studs; and an interior covered by 49 UL and ULC Classified, Type X (per ASTM C1658), impact-resistant, moisture-resistant, noncombustible gypsum board tested to ASTM E136.

The door and frame unit of the vault is constructed to withstand 30 man-minutes against surreptitious entry, 10 man-minutes against forced entry, 20 man-hours against lock manipulation, and 20 man-hours against radiological techniques. The vault door is equipped with contact switches. The vault will be permanently affixed to the facility structure and will store currency and various equipment that will be sold at the facility and used to consume or administer cannabis products.

Quarantine
Cannabis and cannabis-infused products that are found to have been tampered with, damaged, expired, have been returned or have been recalled, will be kept in the quarantine room until the products have been reported as cannabis waste and have been weighed and measured. Products in quarantine will be destroyed and disposed within seven (7) days of its placement in the quarantine room, in compliance with state regulations.

Cannabis or cannabis product will not be stored, kept, or otherwise, accessed from outside the building. Loading and unloading of cannabis or cannabis products is allowed during business operating hours only and must be completed within the secure, fully enclosed loading/ unloading area at the rear of the building. All cannabis products that are kept at the facility will be securely stored to prevent diversion, theft, loss and other related criminal activity.

Inventory Reconciliation
Close attention to inventory is tantamount to Element 7’s successful and compliant operations. As a licensed dispensary, Element 7 will be the last point in the chain-ofcustody and must ensure that all inventory is accurately represented and reported. To ensure strict compliance with local and state regulations, Element 7 has developed a comprehensive inventory management plan that consists of the following:

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets.

1. Element 7 will reconcile all the inventories of cannabis goods at least once every 14 days.

2. If Element 7 finds a discrepancy between the inventory of stock and the inventory log or track and trace system that is outside of normal weight loss caused by moisture loss, Element 7 will commence a full audit of the batch in which the discrepancy was found.

3. Element 7 will notify licensing authorities and local law enforcement within 24 hours of discovery of a significant discrepancy. A significant discrepancy in inventory means a difference in actual inventory compared to records pertaining to inventory of at least $2,000 or 2 percent (2%) of the average monthly sales of the licensee, whichever is less.

Element 7 will notify the licensing authority and local law enforcement within 24 hours of discovery of any of the following situations:
- Element 7 discovers a significant discrepancy in its inventory. - Element 7 becomes aware of or has reason to suspect diversion, theft, loss, or any other criminal activity pertaining to the operations of the licensee. - Element 7 becomes aware of or has reason to suspect diversion, theft, loss, or any other criminal activity by an agent or employee of the licensee pertaining to the operations of the licensee.
- Element 7 becomes aware of or has reason to suspect the loss or unauthorized alteration of records related to cannabis goods, customers, or the licensee’s employees or agents.
- Element 7 becomes aware of, or has reason to suspect, any other breach of security.

Operational Security Needs Including Cash Handling and Inventory Control Cash Handling Plan
Our Company has successfully implemented a Cash Handling Plan that ensures cash is securely and safely maintained and transported to a financial institution for safekeeping.

Cash Handling begins with the purchase transaction. At the retail facility, a Budtender receives the cash and places it in the safe drop box located beneath the point-of-sale register. These drop boxes are emptied every two (2) hours by the General Manager.

The General Manager removes the cash from the drop boxes and places the cash into a cash bag. The Budtender is then required to print out all transaction receipts from the time the last cash transfer was conducted. These receipts are placed in the cash bag with the currency taken from the drop box and taken into the Main Office. Cash bags with currency and receipts are placed in the Master Vault. The movement of currency from Retail Floor to the Main Office are recorded on security surveillance cameras installed throughout the facility.

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets.

At the close of business day, the General Manager and the second most senior employee, usually the Dispensary Manager or the Dispensary Assistant Manager, will conduct the cash counts and receipt audits. Reports are logged onto QuickBooks, which works in tandem with our POS. The retail facility will only be allowed to carry up to 30,000 USD in cash at any one given time (which must be stored in the vault). Once currency reaches this limit, the General Manager will contact the armored car transport provider to schedule a pick-up.

Once the authorized representative for the armored car transport service arrives to the facility, the currency will be removed from the Vault in the Main Office by the General Manager. The Armored Car Provider’s Authorized Representative will receive the cash bags and will be escorted by the armored car transport’s armed security officer back to the armored vehicle. The Authorized Representative will take currency from the retail facility to our Company’s financial institution for safekeeping.

Element 7’s Cash Management Plan is geared towards security and accountability. Its goal is to prevent theft, loss, and diversion, and maintain accuracy and transparency in its cash handling policies and practices. This is enforced in Element 7’s cash handling practices, which are as follows:
• Operator invoices every sale and delivery order via billing module and POS system through Flow Hub
• System automatically records the sale and invoice
• Cash Payments are collected by bud tenders at point of sale and delivery drivers receive cash then drop off into cash safe upon return to facility • Credit card payments are automatically uploaded onto the POS system • At the close of business day, managers print out billing module metrics and POS metrics.
• The manager then counts all cash at the register to compare against the POS metric report. The Manager will also retrieve all cash at the cash drop off safe and will count the cash and compare against the billing module metric report. • Completed cash counts must be logged onto a Cash Count Log and uploaded onto internal drives for record retention purposes.
• Upon completion of the dispensary register and cash drop off safe cash counts, the manager places cash in cash bags ready to be transported to the armored vehicle pick up loading and unloading area.
• Cash exceeding $1,000 will be moved from the point-of-sale register and into the main office by the Operations manager.
• Cash Logs will be imported onto Zero or QuickBooks to be maintained and used for tax reporting purposes.

Cash Counting/Reconciliation
Daily cash counts and reconciliations will be performed to ensure that all currency and receipts are accounted for. All counts and reconciliations will be performed on video surveillance by the General Manager. A manual report will be completed and then uploaded on the cloud-based data storage system.
• Daily cash counts and reconciliations will be conducted by the General Manager. • Cash counts will be conducted before reconciliations against the point of sale system receipts / records.

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets. • A record of the count and reconciliation will be done prior to closing the facility every day. Only the General Manager will have access to the records and the safe where currency will be stored until it is picked up by our contracted armored vehicle provider’s authorized representative.
• Company policy outlines that all currency received will not be co-mingled to use, pay for, or cover for other invoices, expenses, and outsourced services.

Cash Storage
Element 7 will securely store cash and currency in the main office, which is a secure, limited access area that has a cash drop box, where budtenders take cash accepted during their shift to drop off. Cash and currency will remain in the main office until the scheduled armored vehicle pick up arrives to take it to a financial institution or other offsite location. • All cash will be kept in a safe contained within a limited access area, that only the operations manager/s and facility owner/s will have access to. • The cash safe will meet all local and state requirements. • During business hours, cash will be kept in a register that is accessed through Flowhub.

Cash Collection and Secure Cash Transport
Cash will be collected daily from Element 7 by a State-Licensed cash collection company that will safely transport any cash and coins from Element 7 to our FDIC Regulated Bank. Cash will be collected four (4) times a week from the Facility with pickup times to be coordinated between the General Manager and the cash collection company on a rolling-forward 2-week schedule. Our preferred provider is GardaWorld.

GardaWorld has offices in Fresno and 19 other locations across California.

Cash and Gross Sales Reporting
Transactions and inventory will be monitored internally through FlowHub, the POS system.

The system will track and report inventory, gross sales by weight and sale, and other information and metrics. FlowHub has the capability to produce historical transactional data for review, and several other operational metrics that the Department may request.

Element 7 will provide detailed logs and reports to the City, Bureau, and other governmental agencies upon their request. Reports could include inventory data, gross sales by weight and product type, and other historical transactional data that the City may require at any given time.

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets.

Customer Transactions
All transactions are conducted as cash sales. Many of our peers in the industry accept credit card sales, have elaborate cryptocurrency cash transaction schemes in place, and others have advised the banks they deal with that the transactions are for an alternate business purpose. Unfortunately, none of these schemes and programs are compliant with Federal banking regulations, and we are forced, as an industry, to rely on cash transactions for now.

Element 7 has formed a relationship with FDIC regulated bank and is currently undergoing final auditing and compliance checks – if approved, this would allow us to bank cannabis funds into an FDIC regulated bank, and to possibly offer debit card and merchant services in the near future.

In addition, we install GenMega ATM machines into all of our facilities – GenMega have over 1,000 of these units deployed across North America.

These units store up to $15,000 in cash and are bolted into the floor, with a secondary plate that is welded to the bolts. The ATM is continuously monitored by camera and will be installed within the dispensary.

Cannabis Fees and Taxes
Element 7 will report and remit all sales, use, business, and other applicable taxes, as well as all licensing and registration fees to the City and the State in a timely fashion. These will be made with direct bank deposits to the relevant government or City departments.

Patient and Customer Transactions
Cash will be accounted for at the start and finish of each shift by each staff member with access to the cash register for that shift. Staff members with access to the register during their shift will be able to conduct transactions with a swipe card which identifies the transaction operator. A 360 camera will be installed above the cash register to monitor transactions continuously and will have the ability to record facial features.

All transactions will be managed through an industry-leading streamlined cash management POS software system that allows for:
• End-of-shift reporting and cash balancing platform
ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets. • Inventory control platform
• Integrated accounting system to monitor sales and costs • Staff management to track employee efficiency and performance • Hard copy or paper free receipts
• Back-office analytics and reporting
• Planning and scheduling
• Full data security (Compliant POS)
Our preferred system is Flowhub – one of the most-used and popular iPad-based POS Systems in the market, which is the first POS system to integrate with METRC. Flowhub is a top-of-the-line compliant management system.

Staff will undergo extensive training on the Flowhub platform before being allowed to handle transactions within the facility. Staff will be required to obtain a PASS score on the Flowhub Training Platform and then twice annually, all staff will be tested to ensure proficiency with the system and the full and latest functionality.

All cash will be moved to a secure, locked, walk-in vault at the end of each shift. A licensed cash management company licensed by the State of California will be contracted to then collect cash each day for transport to Element 7’s Credit Union.

All products will be sold with appropriate exit packaging that is tamper-free, child-proof and does not display the product.

Financial Records
Element 7 utilizes a software system (Flowhub) that provides point of sales data that can provide historical transactional information and records for inventory and cash. All sales and inventory data and records are considered financial records and will be maintained on Element 7’s data storage systems.

Financial records also include Element 7’s owner, operator and employee registry that will maintain a current list of names and contact information of individuals owning or holding an interest in Element 7. Financial records also include ledgers, books of business, financial accounts, data and documents related to its commercial cannabis retail activities. All written accounting or cash ledgers, receipts, credit card transactions and reimbursements, including operational expenditures and costs will be maintained for a minimum of three years.

The City Manager will have access to these records and Element 7 will facilitate any audit or investigation that the City Manager may perform. Records requested by the City Manager will be produced and submitted to the City Manager within 24-hours of his or her request. Any records of loss (financial, data, product) will be immediately notified to the City Manager and Chief of Police within 24-hours of such discovery.

Element 7 is in the process of establishing a banking relationship with an FDIC regulated bank in California which would allow us to deposit cash and write checks.

Preparing Against a Robbery
The overriding consideration in dealing with a robbery is to reduce the possibility of any injury by ensuring staff are trained and prepared on how to deal with such occurrence.

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets. • Use of CODE A practices – that can be used as a prompt to staff as to how to handle a robbery. CODE A is an acronym and can be easily memorized:
o Stay Calm – Remain calm and in control at all times.
o Obey – Do not resist the robber. Don’t be a hero. Do not take action that would jeopardize the safety of personnel or customers. In most situations robbers don’t harm people that are cooperating and calm. Try to inform the robbers of any surprises and inform the robber if you need to reach for anything such as a key. Follow the robber’s commands but do not volunteer assistance or information.
o Describe the Situation – Train staff to be observant and plan to be a good witness. Count the number of robbers, note their physical characteristics and distinguishing features, behavior, speech patterns, nicknames used, and other relevant details. Ensure that witnesses do not discuss or collaborate details until law enforcement arrives and takes witness statements. Have staff record their own version of events as soon as possible in writing after an incident.
o Maintain Evidence – Train staff to maintain and safeguard evidence. Do not let anyone touch counters, door handles, or any other surface before law enforcement arrives.
o Alarm – Activate the panic / duress buttons as quickly, safely, and discreetly as possible. Call the police. All actions must only be done when it is safe to do so.

Post-Robbery Procedures
By following a known set of procedures after a robbery, employees will be in a better position to assist law enforcement in apprehending robbers and protecting the community from harm. Employees will be assigned set responsibilities for who will do what after a robbery takes place – who will safeguard evidence, who will call police, who will care for anyone injured, who will identify the getaway vehicle.

The following policies are in place:
• Do not chase after robbers. The robbers may shoot at, or attack, and pursuers.

Responding law enforcement may confuse staff for robbers. • Secure the doors so that robbers cannot re-enter the premises. Stop all operations immediately. Do not let anyone enter except emergency and law enforcement personnel. Place a sign on the door saying “Premises are Temporarily Closed Due to an Emergency” so that more customers do not attempt to enter. • Call the police immediately on 911. Staff will be briefed to report if anyone is injured so that an ambulance may be dispatched if necessary. Report all details to law enforcement including descriptions and times.
• Care for any injured persons.
• Write down all details of what happened and inform staff to do so – witness description forms are kept behind all sales counters.
• Preserve potential evidence by protecting the crime scene and keeping people out of the area where the crime took place. Do not touch anything. • Ask witnesses to stay until law enforcement arrives.
• Contact Element 7 Chief of Security and CEO immediately to report the situation. • Do not discuss the crime with outsiders or the media – refer all questions to the police and the Element 7 CEO.
• Assist the investigating officers in every way possible including access to CCTV footage, and witness description forms.

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets. • Manage trauma situations through paid leave, counselling, or any other means necessary.

Sufficiency of Employee Security Training
Safety training is critical to ensuring Element 7 staff are informed, educated, and prepared for a range of responsive situations that could occur within daily operations. The training importantly includes clear directives, material, and instruction for customers. These policies and procedures include emergency evacuation procedures within the retail facility, safety hazards, returning cannabis products, recalls and other situations that may affect their safety and security while in the retail facility or while using cannabis products purchased at our facility.

Training and Instruction
We have established the following policy on training all workers with respect to workplace security.

All workers, including managers and supervisors, shall have training and instruction on general and job-specific workplace security practices. Training and instruction shall be provided when the IIP Program for Workplace Security is first established and periodically thereafter. Training shall also be provided to all new workers and to other workers for whom training has not previously been provided and to all workers, supervisors and managers given new job assignments for which specific workplace security training for that job assignment has not previously been provided. Additional training and instruction will be provided to all personnel whenever the employer is made aware of new or previously unrecognized security hazards.

General workplace security training and instruction includes, but is not limited to, the following:

1. Explanation of the IIP Program for Workplace Security including measures for reporting any violent acts or threats of violence.

2. Recognition of workplace security hazards including the risk factors associated with the three types of workplace violence.

3. Measures to prevent workplace violence, including procedures for reporting workplace security hazards or threats to managers and supervisors.

4. Ways to defuse hostile or threatening situations.

5. Measures to summon others for assistance.

6. Worker routes of escape.

7. Notification of law enforcement authorities when a criminal act may have occurred.

8. Emergency medical care provided in the event of any violent act upon a worker; and

9. Post-event trauma counseling for those workers desiring such assistance.

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets.

In addition, we provide specific instructions to all workers regarding workplace security hazards unique to their job assignment, to the extent that such information was not already covered in other training.

We have chosen the following checked items for Type I training and instruction for managers, supervisors and workers:
- Crime awareness.
- Location and operation of alarm systems.
- Communication procedures.
- Proper work practices for employees and security guards.

We have chosen the following checked items for Type II training and instruction for managers, supervisors and workers:
- Self-protection.
- Dealing with angry, hostile or threatening individuals. - Location, operation, care, and maintenance of alarm systems and other protective devices.
- Communication procedures.
- Determination of when to use the "buddy" system or other assistance from coworkers. - Awareness of indicators that lead to violent acts by service recipients.

We have chosen the following checked items for Type III training and instruction for managers, supervisors and workers:
- Pre-employment screening practices.
- Worker Assistance Programs.
- Awareness of situational indicators that lead to violent acts. - Managing with respect and consideration for worker well-being. - Review of anti-violence policy and procedures.

Security and Emergency Preparedness Training
Supervisors, managers and employees will also be required to complete Security and Emergency Preparedness training based on Federal Emergency Management Agency guidelines and courses. This includes:
• Natural hazards: floods, hurricanes, tornadoes, and earthquakes. • Health hazards
• Cybersecurity, power outages and equipment failure.
• Emergency alerts and the Integrated Public Alert and Warning Systems • Active Shooter, robbery, burglary, transportation incidents and workplace violence
• Attacks in Public Places
• Terrorism, bomb threats and suspicious packages
• Ensuring Building Security: evacuation, sheltering and lockdown • Severe Weather
• Recovering from Disaster
• Loss Prevention
• First Aid and CPR
Employee Safety and Security Training and Resources
Our supervisors, managers and employees will be required to complete safety training that covers OSHA requirements, Sexual Harassment and Workplace Violence, Emergency Preparedness and Safety and Security Policies and Procedures.

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets.

In order for our Company to maintain the safety and security of our employees, we will perform security and risk assessments at various stages of build-out and implementation, and on-going assessments while in operation, to identify workplace security issues. The fact that the cannabis industry is unable to access traditional banking services, high amounts of cash on-site and highly valuable items, such as cannabis products, may increase the risk of violence related to diversion, theft and other related criminal activity.

Although our security plan includes state-of-the art security systems, devices and professional, contracted security officers, we will have all facility supervisors and employees complete Worker Safety and Health training modeled after Cal/OSHA’s Cannabis Industry Health and Safety Program. Training will cover:
• Electrical hazards
• Hazard communication
• Injury and illness prevention
• Personal protective equipment
• Point of operation hazards
• Repetitive motion injuries
• Slips, trips, falls and use of ladders
• Sanitation and pest control
• Workplace violence
• Sexual harassment
• Discrimination
• Worker’s Rights
• Employer’s Rights
• Reporting and Resources
Cannabis Specific, In-Depth Security Training
We will contract a security professional to provide security and emergency preparedness training based on FEMA Emergency Management Agency guidelines that includes active shooter, emergency preparedness, burglary and robbery, bomb threats, cybersecurity threats and other potential security and safety threats that employees may encounter while on the job. Our contracted security professional will also train employees on ways to identify potential risks to workplace security, describe measures for improving workplace security and how to determine actions to take in response to a safety or security situation (e.g., burglary, armed hold-up, stroke and heart attack, loss of power). We also require, and provide, training refresher courses which will occur on an annual, ongoing basis for all employees. Refresher training courses will consist of a minimum of 32 (paid) hours annually, for security and safety training.

Our Chief of Security will also be providing, and managing, training on internal safety and security policies and procedures that have been developed with our Chief of Compliance. Facilities may have unique safety and security issues and our Chiefs of Security and Compliance will work on developing policies and procedures that address these unique issues. Internal Security and Safety policies and procedures include:
• Security Surveillance Systems
• Equipment: inspections, maintenance and reporting
• Alarm Systems: inspections, maintenance, monitoring, reporting • Duress
• Panic
ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets. • Burglary
• After-Hours
• Motion Detectors
• Glass Break Detectors
• Lighting: inspections, maintenance, monitoring, reporting • Facility Lighting
• Emergency Lighting
• Motion Detection Lights
• Cybersecurity
• Employee and Customer WIFI, Mobile Device Use Policies, Firewalls and VPNs
• Product and Currency Handling and Storage
• Shipments and Deliveries
• Logs, Data Management and Reporting
• Financial Plan
• Receipts
• Managing Cash on Hand
• Currency Pick Up
• Reporting
• Limited and Restricted Access Areas and Permissions
• Keys, Electronic Access Cards and Company Issued IDs
• Contracted Licensed Security Officers
• Bag Checks
• Clocking-In and Clocking-Out
• Roving Inspections
• Safety and Security Training Requirements
Situational Training
Staff are trained to deal with, and manage, a range of workplace scenarios – having staff adequately trained allows for rapid response, resolution, and risk minimization.

Emergencies
The Company has outlined steps that supervisors, managers, and employees should take in the event of certain emergency situations.

Fire
• Call 911 immediately if fire is uncontrollable.
• Use fire extinguisher to put out smaller fires.
• Evacuate the building immediately and allow the fire department full access to the facility.
• Have staff and witnesses fill out incident reports.
• Assist in clean up after fire has been extinguished properly. Management is to secure product in the safe if available.

Earthquake
• All employees find a safe spot during the event and exit store in calm fashion if possible.

ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets. • Manager on duty is to lock up doors and shut off gas line to business if accessible. • Manager is to account for all employees and vendors after the event is over and facilitate cleaning up the business if needed. No employee is to leave without contacting the manager first and receiving authorization to do so. • Manager is to call the owner and inform him of any damage. Owner is to call Insurance company in the event of damage and facilitate the repairs.

Medical
Any type of serious life-threatening medical emergency, such as seizures, asthma attacks, epilepsy, diabetic episodes, etc. will be handled by medical professionals and emergency responders will be called immediately via 9-1-1. Any type of accident wherein bodily fluids is present, only management is to deal with such fluids using proper cleaning supplies and gloves. If in abundance, use of professional cleaning service may be deemed necessary. Business will have a stocked first-aid kit in case of minor injuries at work. Employees will always have access to this kit.

Active Shooter
Employees will receive Active Shooter training from our contracted Security Professional.

Injury or Accident
Employees will be instructed to remain calm and assess the emergency situation. They will be trained to assess whether the injured individual requires need medical attention.

Injured individuals who refuse medical attention will be asked to complete and sign an incident report and refusal to receive medical attention waiver. Basic first-aid procedures can be used on employees in the event of a minor injury.

Hazardous Materials
Hazardous materials (hazmat) are substances or materials that the U.S. Department of Transportation (DOT) has determined are capable of posing an unreasonable risk to health, safety and property when transported in commerce. The Hazardous Materials Regulations (HMR) are a set of rules established by The Pipeline and Hazardous Materials Safety Administration (PHMSA) to ensure hazmat is packaged and handled safely during transport, storage, and handling.

Hazardous Material Security training is designed to introduce hazmat employees to security risks associated with the hazmat transportation process and ways to enhance security, as well as how to spot a possible security threat and respond appropriately.

Training will help employees meet the security awareness training requirement (49 CFR 172.704(a)(4)). Training will enable employees to determine if a material is hazardous, recognize the hazard classes and divisions used to identify hazardous materials, recall what makes a material hazardous substance, waste, marine pollutant, or elevated temperature material. All employees will be able to communicate a material’s hazards through the use of shipping papers, markings, labels, and placards.

All staff are trained in two (2) core Hazmat areas of concern, which training is included in staff on-boarding training and the annual training refresher program:
• Importance of Hazmat Security
• Reducing the Hazmat Risk
ELEMENT 7: SECURITY PLAN
Material on this page is requested to be exempt from disclosure under FOIA because it contains critical infrastructure information, highly confidential security information and trade secrets.

Workplace Safety
We have built our Company by maintaining the interests, safety and security of our employees – in 2019 Element 7 entered into a Labor Peace Agreement with the United Food and Commercial Workers Union (UFCW). We are under further discussions with UFCW for a Collective Bargaining Agreement in 2020.

Our training includes providing material and instruction on Worker’s Rights. Every employee should know that they have the right to safe working environments, access to protective equipment and information, records and reports about their employer, the facility they work in and the issues that they may be exposed to. Materials and instruction on Worker’s Rights will clearly state and explain that every employee has the right to:

1. Working conditions that do not pose a risk of serious harm. This means providing a safe and secure working environment for our employees at all times.

2. Employees also have the right to receive information and training, in a language and vocabulary that they understand, about workplace hazards, methods to prevent them and the OSHA standards that apply to their workplace.

3. Provide employees access to records of work-related injuries and illnesses.

4. File a complaint asking OSHA to inspect their workplace if they believe that there is a serious hazard or that their employer is not following OSHA’s rules.

5. Exercise their rights under the law, without fear of retaliation, including reporting an injury or raising health and safety concerns with their employer or OSHA.

Summary of Security Plan
Element 7's integrated security management plan is designed to allow for:
● Operational intelligence for better decision making
● Improved real-time response in the event of a threat
● Smarter business planning and resource allocation across the business ● Increased flexibility for future growth and adaption
● Reduced risk to staff, customers and business assets
● Enhance our ability to comply with regulatory requirements ● Lower our operational and life cycle business costs
● Provide a safer working, operating and shopping environment We are confident that with GSG and Corey’s expertise with cannabis security operations and partnering with a local security company and alarm system management company, that we can operate a business that puts security at the forefront of our business strategy, and will provide the framework that exceeds the expectations of local law enforcement who we are eager to partner with.

Continuous improvement is one of our core operational premises at Element 7- where we can continue to identify and find best-practices that improve our exhaustive security plan, we will continue to do so, keeping staff, security, customer, and patient safety at the top of our minds in all Element 7 operations.
7 SECTION B

FLOOR PLAN, SITE PLAN, AND

ELEVATIONS

SECTION B

FLOOR PLAN, SITE PLAN, AND

ELEVATIONS

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A01 SHEET NO: 1/6 DATE: 12/07/2019 SCALE: N.T.S.

SHEET NAME: PAPER SIZE: 11" x 17"COVER SHEET PROPERTY INFORMATION SATELLITE VIEW VICINITY MAP Property address 796 Oller Street, Mendota, CA 93640 County LaSalle APN 013-191-18 Property type Retail Building Class C Lot size 0.52 acres Number of stories 1 ELEMENT 7 MENDOTA LLC PROPOSED PROPERTY DEVELOPMENT CANNABIS RETAIL DISPENSARY (WITH DELIVERY) 796 Oller Street, Mendota, CA 93640 GOVERNING CODE This project shall comply with the: 2016 California Building Code (CBC) 2016 California Residental Code (CRC) 2016 California Mechanical Code (CMC) 2016 California Plumbing Code (CPC) 2016 California Electrical Code (CEC) 2016 California Green Building Standards Code (CGBS) 2016 California Energy Code BUILDING SUMMARY CODE ANALYSIS SHEET INDEX ARCHITECTURAL: A01 COVER SHEET A1 SITE PLAN A2 EXISTING FLOORPLAN A3 PROPOSED FLOORPLAN A4 PROPOSED ELEVATIONS A5 SECURITY PLAN PROJECT:

Prepared by: Viktor Paparov, Architectural Designs Studio APPLICANT: ELEMENT 7 MENDOTA LLC LOT SIZE: 0.52 acres FLOOR AREA: 2,315 sq.ft. 796 Oller Street, Mendota, CA 93640
Cannabis Retail Dispensary (with Delivery) N PARKING: 16 spaces 144.3' 144.3'
147.2'
147.2'
Oller Street (180) Public sidewalk
8th Street
LOADING /UNLOADING AREA Gate Fence Fence
Fence Fence
Fence PROJECT BUILDING 2,315 SQ.FT. Fence NOT IN SCOPE OF WORKS PARKING WITH 17 SPACES Landscape Fence
Fence A1 SHEET NO: 2/6 DATE: 12/07/2019 SCALE: 1 / 16'' = 1' - 0'' SHEET NAME: PAPER SIZE: 11" x 17"PROPOSED SITE PLAN
Prepared by: Viktor Paparov, Architectural Designs Studio N
PROJECT:
796 Oller Street, Mendota, CA 93640
Cannabis Retail Dispensary (with Delivery)
APPLICANT: ELEMENT 7 MENDOTA LLC
KITCHEN 25'-1"x 12'-9" RESTROOM 8'-0"x 5'-9" STORAGE 26'-10"x 24'-5" RESTROOM 8'-0"x 12'-6" HALL 2'-8"x 20'-10" BILLIARD ROOM 8'-0"x 5'-9" FOYER 8'-0"x 6'-4" SERVING AREA 50'-10"x 26'-0" SERVING AREA 16'-4"x 13'-3" BAR 35'-2"x 9'-2" A2 SHEET NO: 3/6 DATE: 12/07/2019 SCALE: 1 / 8'' = 1' - 0'' SHEET NAME: PAPER SIZE: 11" x 17"EXISTING FLOOR PLAN
Prepared by: Viktor Paparov, Architectural Designs Studio PROJECT:

N
796 Oller Street, Mendota, CA 93640
Cannabis Retail Dispensary (with Delivery)
APPLICANT: ELEMENT 7 MENDOTA LLC
NOT IN SCOPE OF WORKS DOOR SCHEDULE DOOR DESIGNATION DIMS (E)D1 45'' x 85'' (N)D2 36'' x 80'' WINDOW SCHEDULE WINDOW DIMS (E)W1 40'' x 50'' NOTES: 1. DOORS WITH GLASS AND WINDOWS ARE TEMPERED 2. ALL DOORS ARE SELF CLOSING 16'-2" 9'-2" 19'-6" 5'-5" 15'-3" 14'-1" 6'-4" 8'-11" 7'-5" 19'-9" 13'-3" 30'-7" 75'-8" 43'-7" 19'-1" 18'-4" TOILET 8'-1" x 12'-8" 102.39 sq.ft. DELIVERY 13'-3" x 15'-3" 247.92 sq.ft. STORAGE 2 13'-3" x 14'-1" 186.60 sq.ft. HALL 2 5'-7" x 17'-1" 95.38 sq.ft. HALL 1 13'-8" x 5'-0" 68.33 sq.ft. STORAGE 1 19'-9" x 11'-7" 228.77 sq.ft. OFFICE 13'-8" x 11'-7" 158.30 sq.ft. DISPENSARY 32'-11" x 19'-6" 641.88 sq.ft. POS 7'-5" x 29'-2" 216.32 sq.ft. SECURITY 8'-11" x 9'-2" 81.74 sq.ft. ENTRANCE 6'-4" x 9'-2" 58.06 sq.ft. LOBBY 16'-2" x 9'-2" 148.19 sq.ft.

RECEPTION
(N)D2
(N)D2
(N)D2
(N)D2
(N)D2
(E)D1
(E)D1
(E)D1
(E)D1
(E)D1 6'-1" DISPATCH 13'-3" x 6'-1" 80.60 sq.ft. (N)D2 (N)D2 CLIENT ENTRANCE ADA ACCESSIBLE PRIVATE ENTRANCE (E)W1 (E)W1 (N)W2 40'' x 40''
(N)W2
(N)W2
(N)D2
(E)W1 (E)W1 (E)W1 A3 SHEET NO: 4/6 DATE: 12/07/2019 SCALE: 1 / 8'' = 1' - 0'' SHEET NAME: PAPER SIZE: 11" x 17"PROPOSED FLOOR PLAN
Prepared by: Viktor Paparov, Architectural Designs Studio PROJECT: Limited Access AreaN
796 Oller Street, Mendota, CA 93640
Cannabis Retail Dispensary (with Delivery)
APPLICANT: ELEMENT 7 MENDOTA LLC
Not in scope of work
FRONT ELEVATION LEFT SIDE ELEVATION E L E M E N T 7 ELEMENT 7 REAR ELEVATION RIGHT SIDE ELEVATION A4 SHEET NO: 5/6 DATE: 12/07/2019 SCALE: 3 / 32'' = 1' - 0'' SHEET NAME: PAPER SIZE: 11" x 17"PROPOSED ELEVATIONS
Prepared by: Viktor Paparov, Architectural Designs Studio PROJECT:

Wood panels
N
Green wall panels
White panels
796 Oller Street, Mendota, CA 93640
Cannabis Retail Dispensary (with Delivery)
APPLICANT: ELEMENT 7 MENDOTA LLC
NOT IN SCOPE OF WORKS TOILET 8'-1" x 12'-8" 102.39 sq.ft. DELIVERY 13'-3" x 15'-3" 247.92 sq.ft. STORAGE 2 13'-3" x 14'-1" 186.60 sq.ft. HALL 2 5'-7" x 17'-1" 95.38 sq.ft. HALL 1 13'-8" x 5'-0" 68.33 sq.ft. STORAGE 1 19'-9" x 11'-7" 228.77 sq.ft. OFFICE 13'-8" x 11'-7" 158.30 sq.ft. DISPENSARY 32'-11" x 19'-6" 641.88 sq.ft. POS 7'-5" x 29'-2" 216.32 sq.ft. SECURITY 8'-11" x 9'-2" 81.74 sq.ft. ENTRANCE 6'-4" x 9'-2" 58.06 sq.ft. LOBBY 16'-2" x 9'-2" 148.19 sq.ft.

RECEPTION
(N)D2
(N)D2
(N)D2
(N)D2
(N)D2
(E)D1 (E)D1
(E)D1
(E)D1
(E)D1 DISPATCH 13'-3" x 6'-1" 80.60 sq.ft. (N)D2 (N)D2 CLIENT ENTRANCE ADA ACCESSIBLE PRIVATE ENTRANCE (E)W1 (E)W1 (N)W2
(N)W2
(N)D2
(E)W1 (E)W1 (E)W1 A5 SHEET NO: 6/6 DATE: 12/07/2019 SCALE: 1 / 8'' = 1' - 0'' SHEET NAME: PAPER SIZE: 11" x 17"PROPOSED SECURITY PLAN Prepared by: Viktor Paparov, Architectural Designs Studio LEGEND: Security camera Electronic Access Controls PROJECT:

N
"Mantrap"
796 Oller Street, Mendota, CA 93640
Cannabis Retail Dispensary (with Delivery)
APPLICANT: ELEMENT 7 MENDOTA LLC
7 SECTION C

BUSINESS AND OPERATIONS PLAN

SECTION C

BUSINESS AND OPERATIONS PLAN
ELEMENT 7: BUSINESS AND OPERATIONS PLAN

BUSINESS AND OPERATIONS PLAN
Introduction
Building, operating, and scaling a business only happens when the right team is in place and a clear and coordinated execution plan has been built. In the rapidly changing and developing cannabis industry, success is similarly the result of having the right people in place, agile planning, and disciplined focused execution. With an ever-changing cannabis regulatory environment, the execution plan must be especially agile, and accomplished in a deliberate and disciplined manner to be successful.

Success is also about knowing your customer and having a clear, consistent, and collaborative plan in place to win with that customer over. Customer engagement in the twenty-first century is the result of an attractive retail environment and an unparalleled brand experience. We will first create, and then nurture, each of these as demonstrated in our targeted and detailed brand and marketing plan.

Yesterday’s windowless and neon-lit dispensaries are giving way to warm and welcoming retail spaces that foster a deep sense of customer comfort. Our retail space design is taking note of innovative brands in the cannabis industry, but also of brands with long track records of elevating customer experience in highly competitive verticals including fashion, health and wellness, home indulgence, and electronics (e.g., Nike, Apple, Gentle Monster, Lush, T2, Ullah Johnson, and Warby Parker).

ELEMENT 7: BUSINESS AND OPERATIONS PLAN
Today’s most successful brands are those that place intense focus on creating inviting and entertaining retail environments where products are perfectly integrated with their surroundings. These environments are places for customers to purchase goods, but more than this, are destinations in themselves.

This is what is needed to counter the existential threat posed by online shopping. The sea change in retail markets has forced designers and brands to innovate—to think in entirely new ways about how customers engage with their products and their brands.

Element 7 will, like today’s most forward-thinking brands, incorporate cutting-edge, customer-centric design standards and continuously innovate, looking for ways to improve its retail model as new customer trends emerge.

Our Brand Story
Between 2015 and 2018, Robert DiVito surveyed the cannabis industry in the United States, visiting over 100 dispensaries in California, Oregon, Washington, New York and Arizona. He found a common thread among the small handful of extremely successful dispensaries: they had a story to tell—a purpose and a clear point of view that they communicated to their customer. They also understood their buyers in ways that went beyond the one-dimensional view of the customer as a cannabis consumer—these retailers engaged their customers on multiple levels: through the store by presenting a premium retail experience; through product branding, which embodied a compelling and relatable story; and through high quality, customer-oriented products that are designed to meet the existing customer’s needs. They had a vision that is reflected by the industry as it currently is, and how it will grow to be in the future. Their customers rewarded them for this ability to realize a vision of the cannabis industry that is focused on the consumer.

Most industry operators owned no more than a single store. Many of these were struggling to keep the lights on, thinking perhaps a month or two ahead (if that). Most of the operators who had more than one location showed precious little understanding of the importance of branding and customer experience consistency ELEMENT 7: BUSINESS AND OPERATIONS PLAN
across locations. They were more focused on the bottom line, and they assumed that cannabis as a product was compelling enough on its own to guarantee the success of their businesses.

After spending time with a range of industry professionals and health professionals and seeing the emergence of new groups of consumers interested in cannabis (soccer moms, young urban professionals, over 50s looking for alternatives to pharmaceutical drugs, and urban housewives), DiVito went looking for a retail concept that would appeal broadly and emotionally to these new customers. On a spring afternoon, while shopping in Walnut Creek, DiVito stumbled across LUSH, a handmade cosmetic store committed to cause-driven standards. They stand firmly against animal testing, and they both promise and provide hand-made craft products, ethical buying practices, charitable giving, and naked packaging.

He immediately picked up a scrap of paper and wrote down these brand characteristics. Then, at the center of the page, he wrote the word 'elements'. Later that day, DiVito wrote down seven core principles—the seven elements that would become the Element 7 brand. This happened to dovetail neatly with the periodic table. The seventh element is nitrogen—a major component of chlorophyll, which, with the sun’s help, allows plants to convert water and carbon dioxide into sugars.

Thus, the Element 7 brand was born.

Our Core Values and Beliefs: The 7 Elements
Our company adheres to seven core values and beliefs, each of which is carefully integrated into every decision we make, product we produce, and experience we create.

1. Excellence in Everything We Do: We live by the standards we set. Excellence is a choice, and its one we make every single day.

2. Trust is Earned, Not Given: Though there are countless opportunities to lose trust and destroy opportunities, you only get one chance to build trust. That opportunity must be seized.

3. We Only Have One Planet: Cannabis is a plant, not a commodity. Respect the plant, the soil it came from, and the larger world of which it is a part.

4. Make Compliance an Advantage: Survival in our industry depends entirely on compliance. Only the compliant and the controlled will survive.

5. Think Global, Be Local: Learn from adjacent industries, businesses, and practices, but always find a way to make these learnings matter locally.

6. Education is Our Foundation: Education is a force that will change our industry and our communities like nothing else.

7. Consistency is Everything: Our consumers will come to expect a certain feeling from us, and this feeling must be maintained at all times.

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These guiding values and beliefs are the bedrock on which Element 7’s mission, vision, and brand direction stand.

We are a Holistic Wellness Company
Holistic wellness is based on the principle of wholeness; it aims at the pinnacle of achievable human health. It embraces physical, mental, spiritual, and practical wellness, as well as the other pillars mentioned below. Element 7 will incorporate each of the following into its business model and communications strategy.

1. Physical Wellness: Physical wellness is comprised of several components including body mass, cholesterol and glucose levels, blood pressure, organ function, circulatory system, and overall strength, stamina, and endurance.

Element 7 will promote physical wellness to both its staff and its customers. Staff will be offered complimentary memberships to gyms, yoga studios, and other businesses dedicated to physical wellness and fitness. For customers, Element 7 will offer free yoga and Pilates classes as a part of programs such as Wellness Wednesdays. We will collaborate and cross-promote with local fitness and physical wellness businesses, encouraging all who visit us to lead healthy and balanced lives.

2. Emotional Wellness: Emotional wellness hinges on our ability to emotionally selfregulate and compartmentalize. It is what allows us to handle periods of stress and other emotional issues. For many users, cannabis plays an important role in emotional wellness, helping them find balance in stressful times and even helping those who are coping with emotional traumas. Our Holistic Wellness Center, Community Outreach Groups, monthly MeetUp Group and other initiatives and events will help us reach out to the community and promote emotional wellness to both staff and customers.

3. Social Wellness: Social wellness depends on the strength of our surrounding communities and our connections to them. In short, it reflects our sense of ELEMENT 7: BUSINESS AND OPERATIONS PLAN
belonging—so crucial to holistic wellness. Element 7 will cultivate a sense of community through its weekly and monthly events calendar. We aim to strengthen existing communities in which we operate through local enterprise management: we will hire 80% of our staff from within the local Mendota community.

4. Spiritual Wellness: Spiritual wellness means very different things to different people. Overall, spiritual wellness is a sense of connection between our deepest selves and the larger world (both natural and supernatural).

5. Intellectual Wellness: Learning is how we grow and come to better understand ourselves and the world around us. Element 7 will encourage intellectual wellness through our continuous learning process that will embrace staff and customers alike. Our website includes 10 white papers on cannabis-related topics, and a range of printed materials will be available in our stores. We want Element 7 to be a learning environment, with the centerpiece of this being the Element 7 Learning Zone, which will provide a wealth of educational resources for both experienced and first-time cannabis users.

6. Environmental Wellness: Element 7 will encourage appreciation for the planet and its resources—an appreciation that will be reflected in the overall design of the retail outlet (including our choice of sustainable and recycled building materials) and in the tone and look of our communication materials sourced from sustainable and environmentally friendly partners. Our packaging will use recycled and earth-friendly materials. Beyond this, we plan to achieve Net-Zero sustainability standards, which is why our team includes a LEED-certified employee and Dr. YuFu Cheng, one of the world's leading policy makers for global warming and sustainable business practices.

ELEMENT 7: HOLISTIC WELLNESS WHEEL
We Have a Unique Retail Concept
Our Element 7 retail stores draw inspiration from several concepts. We want to connect our retail spaces directly to the horticultural world in which they will play a part, which is why our stores will feature living plants used as decoration throughout ELEMENT 7: BUSINESS AND OPERATIONS PLAN
each location. Whites will be balanced with warm, neutral underlying tones and greens. Glass will be paired with natural-feeling building materials like stones and natural timbers, resulting in an eco-friendly and eco-modern feel. Like our products, our stores will both feel and be natural.

Upon arriving at Element 7, first-time visitors will be directed to the E7 Learning Zone.

Our desire to educate cannabis consumers (especially first-time users) will be a strong point of differentiation for our brand. Customers will be encouraged to interact with our staff and engage with our touch-screen terminals, which will educate customers about the cultivation of cannabis and the different types of cannabis and cannabis products (e.g., edibles, extracts, and smokables).

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Our BudTenders and BudMasters will be some of the most highly trained experts in the industry. Staff will undergo a minimum of 80 hours of classroom-based training before working in one of our retail outlets—that’s five times the industry average (BDS Analytics reports that retail staff in the industry receive around 16 hours of training— often substantially less). Our BudMasters have over 200 hours of classroom-based training, which doesn’t include the hundreds of hours spent on our retail floor, making them some of the most trained and well-qualified servers in the industry.

Element 7's Flower Product Wall is like none other we have seen in dispensaries in North America. Our Product Wall segments our products into three types (sativa, indica, and hybrid). Based on their needs or preferences, customers can easily select a perfectly suited product. If they are seeking playfulness and euphoria, they can choose one of our sativa products; if they are seeking bliss and serenity, our indica strains will fit the bill; if it’s sociability and creativity they’re after, they can choose one of our hybrids.

We’re taking the guess-work out of cannabis product selection.

Our Personal Shopping Nook’s are designed to enhance the shopping experience for customers that are new to cannabis and less familiar with the product benefits. These shoppers often feel intimidated in a dispensary and end up purchasing something that isn’t necessarily suited for them which can lead to a less than optimal product experience. The personal shopping nook allows them to discuss product choices and options with a knowledgeable BudTender without having to worry who is behind them in the queue.

Element 7 is committed to tackling the non-compliant and illegal cannabis markets which is estimated to be 3X the size of the legal market in California. A recent study found that there were 3,757 listings for non-compliant and illegal dispensaries and online delivery services, compared to just 873 licensed retailers. In 2020, legal cannabis sales are expected to hit $3.1B with non-compliant sales at $8.7B.

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Taxes partially contribute to this issue – cannabis consumers are driven by price more than any other factor and prices in the non-compliant product can be 30-40% cheaper than compliant sales as non-compliant operators avoid payroll and income taxes, excise duties, and cannabis taxes at the City and State level. Education and awareness are also a challenge as many consumers are not even aware they are purchasing non-compliant cannabis as many retailers masquerade as seemingly legitimate businesses.

Element 7 is able to challenge the non-compliant market as we are a vertically integrated business, from seed through to branded products on-shelf. Price-driven strategies such as the one demonstrated below are one of the most effective tactics that Element 7 will use to achieve this in your City.

Research, Product Development, Innovation, and Design
We have a strong commitment to science, research and innovation. To demonstrate this commitment, we have formed three key strategic partnerships that contribute to the advancement of cannabis research and medical understanding of cannabis compounds:

1. UCLA Cannabis Research Initiative: We work closely with Dr. Jeff Chen, providing crucial funding for advanced opioid and cannabinoid studies at UCLA’s Cannabis Research Initiative in Los Angeles, California.

2. UCLA Riverside Hemp Research Partnership: We have partnered with UCLA Riverside, the first university in California to apply for a DEA License to conduct research studies on hemp. Element 7 is assisting UCLA with the collection of field data.

3. PANAXIA (Israel): Element 7 is the only company in California to partner with Ocean Grown and Panaxia to bring world-leading pharmaceutical-grade medical cannabis products to California (we have similar arrangements in Illinois, Florida, New York and Nevada). PANAXIA products are currently sold in several US States, and the demand for them is incredibly high given PANAXIA’s pharmaceutical-grade approach to cannabis medicine.

4. Cura AI (California): Cura AI is a Data Science company at the intersection of patient care and the 3rd wave of artificial intelligent focused on precision medicine. What this means is that AI created through their platform will be able to provide personalized treatment recommendations based on previous treatment insight and treatment plans that have been verified and updated onto the Cura AI platform.

This platform is the first of its kind to cross over into the medicinal cannabis market.

With a focus on building precision treatment solutions; leveraging data analytics, ELEMENT 7: BUSINESS AND OPERATIONS PLAN
genomics, clinical testing and patient focus to quickly innovate, disrupt and penetrate the precision medicine market. Cura AI is working to help nearly one billion chronic pain and mental health patients that can be helped by medicinal cannabis.

Our Competitive Advantage
Our key advantages lie in our deep understanding of the cannabis industry, our relationships at all levels (including political and industrial), and our disciplined and corporate approach to the cannabis market and business development.

Our success in the City of Mendota will be achieved through:

1. Vertical Integration: Our industry cultivation and manufacturing partnerships allow us to deliver “wholesale at retail,” giving us a huge price advantage over our competitors.

2. Customer Focus: We will be relentlessly customer-focused. Our studies have shown that most dispensaries in California try to be “everything to everyone.” By being laser-focused on wellness seekers and conservative experimenters, we believe that we can address roughly half of the cannabis market and be more successful than those who try to address all of it.

3. Concept and Vision: Our concept in the City of Mendota is unique and highly differentiated. It balances the needs of the city and its residents. Our store design will drive interest and even intrigue passersby. Customers will come back over and over again seeking the unparalleled brand experience that Element 7 will be cultivating.

ELEMENT 7: BUSINESS AND OPERATIONS PLAN

4. Access to Premium Genetics and Products: Our relationships in the market allow us to deliver house strains of the most popular genetics in the market (OG, Kush and Cookies) and premium LA Genetics from some of the most highly soughtafter premium-price cultivators.

5. Systems, Processes and Practices: Our decades of experience in the cannabis industry give us a huge head-start over our competitors across everything from construction to compliance, operations, customer management, marketing, and inventory management. Our executives have worked at some of the world’s most prestigious companies, giving us the ability to drive business development with proven systems and processes.

6. Branding: Element 7 is being developed as a brand that will have strong top of mind recall, allowing us to maximize sales and marketing efforts in Mendota. We are aligning ourselves with some of the biggest brands and names in the industry to deepen our ability to offer a uniquely broad range of brands to consumers in Mendota.

7. Market Understanding: Our team members have diverse backgrounds ranging from entrepreneurship, small business management, finance, health and customer service. What we all have in common is a deep understanding of the constantly evolving cannabis industry.

8. Local Connection: Wherever Element 7 operates, we always ensure we build strong connections with the local community through a range of initiatives:
educating at risk youths, providing free medicine to disadvantaged customers, and supporting local community-outreach programs. We have a policy of hiring and promoting locally, which only further deepens our deep roots in the communities we serve.

9. Differentiated Positioning: At Element 7, we promote total body health and wellness: medical cannabis is far more effective when there is an emphasis on holistic health. A healthy diet, exercise like yoga or Pilates (which strengthen both body and mind), and a sympathetic network can together make a very large difference indeed. Element 7 will encourage holistic health, and this will be evident in our branding, in-store experience, products, and customer care.

10. Corporate Discipline: We have decades of experience working for some of the biggest brands and companies in the world at very senior regional and nationallevel positions. We also have, collectively, over 75 years of retail operations, growth and consolidation experience. This gives us a strong base of financial, management, business, and leadership discipline that most cannabis industry operators lack. We don’t cut corners, take the easy route, or relax on compliance issues. Business is business, and at Element 7, we do business right.

ELEMENT 7: BUSINESS AND OPERATIONS PLAN

STRATEGIC MARKETING PLAN
Target Audience
Our research has pointed us towards two groups (primary and secondary) that together will comprise our core target audience. We will focus the majority of our advertising, marketing, and product efforts on targeting these groups and on showing that our brand is a locus for the aspirational holistic wellness lifestyle that both groups are seeking. Rather than trying to be everything to everyone, our clear targeted positioning will allow us to continue to build a brand that clearly stands for something that resonates powerfully with our core customer base.

Element 7 will have two clearly defined audiences that we will market the dispensary business to, each with its own desires, needs, and level of sophistication:

1. Wellness Advocates: Wellness advocates are constantly seeking the next decision that will improve their life. They are looking for new ways to stay fit and be healthy, they like to eat natural foods, and they are mindful of their spiritual and mental wellbeing. Winning with this target audience sets up Element 7 to be a dominant player in the market, in part because a broader focus on wellness extends well beyond wellness advocates. A healthy and balanced lifestyle is appealing across a wide range of customer segments. It is therefore important that Element 7 be the #1 dispensary in Mendota for wellness advocates.

2. Conservative Experimenters: Conservative experimenters are one of the fastestgrowing cannabis industry segments. Cannabis is now acceptable to these customers as a health and wellness treatment, so they are cautiously approaching dispensaries with a willingness to explore and experiment. This group aspires to wellness advocacy—one more reason winning with wellness advocates is so important for Element 7.

There are two sub-sets of conservative experimenters:
(a) Price-Focused Conservative Experimenters: These customers want their product delivered quickly, efficiently and reliably. Element 7’s advantage is our vertical integration which gives us a significant price advantage over other businesses. Coupled with the overall Element 7 ELEMENT 7: BUSINESS AND OPERATIONS PLAN
experience and brand partnerships, we are confident that we will be a highly differentiated and therefore extremely strong competitor. (b) Quality-Focused Conservative Experimenters: Quality-focused conservative experimenters are looking for premium genetics, brands, and products that functionally and emotionally meet a range of needstates that other products of lesser quality don’t or can’t meet. Our partnerships and relationships in the market will provide us with direct access to a range of high-quality, limited edition and exclusive drops that will differentiate us from other dispensaries operating nearby the City of Mendota.

Convenience is critical if we are to deliver a great customer experience in the cannabis retail market for both target audiences. Our targeted customers may want to linger and thoroughly enjoy the brand experience, but it is just as likely that they want to park their car, enter the store, make their purchases quickly, and then leave.

We expect to receive up to 180-200 customers at our retail shop each day (averaged at 15 - 20 customers an hour). The site will have on-site parking, including dedicated ADA Parking Spaces for customers with mobility issues. With the average customer spending 4-5 minutes within the store, we believe that we have adequate parking onsite. We believe that the site will have minimal traffic impact on the community and surrounding businesses.

Value Proposition
Our value proposition is one of the most important elements in our marketing plan. It defines why our potential customers should choose Element 7 over other dispensaries in and around the County and City of Mendota.

Our two core target customers (wellness advocates and conservative experimenters) are both seeking brands, products, and services they can place their complete trust in, and that’s exactly what we will provide: a dependable product and trustworthy customer care.

This core value proposition will be achieved by focusing on retailing brands and products that meet our customers’ lofty expectations, but also through our focus on holistic wellness. Holistic wellness is achieved through a carefully balanced lifestyle— the body, mind, and soul are all things to work on, to perfect even. The inevitable result of perfect balance is complete and all-encompassing success, happiness, health and fulfillment. Imbalance (caused by neglect of even a single element of holistic health) produces the opposite. At Element 7, we believe that cannabis has a role to play in today’s consumers’ quest for balance and holistic health.

Market Analysis: Competitive Set
We will be operating the business with two distinct competitive sets:
● Licensed Dispensaries in Nearby Towns and Cities: With several dispensaries operating in nearby towns and cities, it is important that we have a strong offer.

Our key competitive advantages over these competitors will be our price, quality of both products and customer care, and ease of online shopping options.

ELEMENT 7: BUSINESS AND OPERATIONS PLAN
● Non-Compliant Market: With many non-compliant delivery businesses still operating in California, the competition from non-compliant sellers remains stiff.

We believe that our product quality, pricing, and consumer education efforts are important advantages for us in this regard. We are looking to work with several of our Advisory Board members to create a powerful consumer education campaign focused on arming our customers with the right information about the benefits of compliant cannabis. A ‘What’s in Your Cannabis’ campaign targeting consumers is part of our broader marketing plan. Our $20 online product shelf will help us compete head-to-head with the black market.

Product Range
Element 7 will retail a wide range of branded cannabis and cannabis-related products (e.g., flower, vapes, cartridges, and accessories) from its Mendota outlet.

These products will range from highly regarded premium brands (Wonderbrett, 710 Labs, Honey Vape, Dosist, West Coast Cure, Panaxia, and Stiiizy) through to a range of premium and everyday house brands produced under the Element 7 label and other brands that Element 7 are either investing in or developing.

We are leveraging our relationships in the market to ensure that Element 7 holds exclusive rights to retail premium brands like Panaxia and Wonderbrett at the ELEMENT 7: BUSINESS AND OPERATIONS PLAN
Mendota location. These exclusive supply agreements will ensure that Element 7 attracts savvy customers from Mendota and the surrounding areas who are very particular when it comes to brands and products they trust.

Our $20 Shelf initiative is one of the offers that will help us differentiate our dispensary from its competitors. This idea, which has never been tried before, will allow us to go head to head with non-compliant sellers while responsibly serving cannabis to many first-time and occasional adult-use customers. For $20, customers can purchase either

2.5 grams of cannabis flower, a house-branded ¾ gram cartridge, four pre-rolls, or a range of edible products. All of these will be—despite their affordable price tag— high-quality items.

We firmly believe that this initiative will be a strong differentiator for Element 7, allowing us to attract a constant stream of new adult-use customers without interfering with our larger goal of addressing our target audience with premium-range cannabis products and an unparalleled customer experience. The initiative will help support our core business mission: to be Mendota’s top source of “cannabis you can trust.” Product Mix

Natural Product Offerings
We are committed to sourcing cannabis products from state-licensed operators that provide products that have passed mandatory product quality testing. Products will only be accepted into our facility and sold to customers if products arrive in compliant pre-packaging and include demonstrable compliance with mandatory product quality testing.

We select preferred suppliers based on their long-term compliance with state regulations and industry best practices. Our quality assurance program includes internal random sampling and testing of products and quarterly site inspections with our suppliers’ farms and manufacturing facilities to ensure they comply with our stringent product-quality and safety standards.

Whenever possible, we will choose all-natural, organic and sun-grown cannabis products, grown in bio-organic live soils.

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Our Preferred Vendor Program scores existing and potential vendors on a 100-point scale, taking into account their compliance, sustainability, product quality, reliability, and brand innovation. To be considered for sales across our facilities, a vendor will need a pass-score of at least 80 points.

Data-Driven Product Offerings and Development
Our Company has an exclusive partnership with Brigade, the data company behind WeedMaps, which provides us with access to industry trends across the country. We intend to use this partnership to tailor our product offerings and develop innovative products that cater to our customer demographic.

We also have an exclusive partnership with Cura AI, the first AI platform to provide personalized, precise and predictive medical cannabis recommendations based on studies and feedback from existing medical cannabis patients.

Our product mix will represent cannabis products that are commonly purchased at retail dispensaries.

Advertising and Media Strategy
Element 7 will develop a carefully targeted advertising and media strategy that addresses our identified targeted audiences. The goal of our advertising and media strategy is to reach and persuade potential customers in the most efficient (cost per reach) and effective (optimal targeting) ways possible. Element 7 will use a mix of emotional and functional messaging to demonstrate the benefits connected to the product and the Element 7 brand. At the same time, we will emotionally connect with customers to place the Element 7 brand firmly within their consideration set.

A number of channels have been included in the plan to build scale for the advertising campaign (awareness) and targeted reach (trial). By focusing on awareness and trial, we will drive traffic into our retail outlet, where we can then demonstrate our holistic wellness positioning, brand experience, and product range.

Channel Activity Price-Focused
Consumers
Quality-Focused
Consumers
Direct Outreach Database Marketing ♦ ♦
SMS Messaging ♦ ♦
Industry Publications Advertisements ♦ ♦
Sponsored Content ♦ ♦
Editorial ♦ ♦
Social Media Instagram ♦ ♦
Weedmaps Site Advertising Package ♦ ♦
SEM / SEO Optimize Element 7 Web
Presence
♦ ♦
Print (Industry Magazines) Full-Page Advertorials ♦ ♦
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Outdoor Impact Sites ♦ ♦
Branded Content How-To Videos ♦
Cannabis Culture Videos ♦
Local Magazines Tactical Inserts ♦ ♦
Local Newspapers Tactical Inserts ♦ ♦
Our value proposition (our ‘Reason to Believe’) and positioning statement are our core to ensuring our customers continuously select our retail store and brands over our retail competitors and alternative medicines. Our value proposition, ‘Cannabis You Can Trust’ is a functional statement that demonstrates our commitment to quality producing tested and trusted products of the highest industry standards. Our positioning statement, ‘Cannabis with a Conscience’ is more emotional, building a connection with our consumers through advocacy, giving back to the community, changing and improving lives, and being micro-local.

Marketing activities are limited given the nature of the industry and will include print (local publications and industry magazines), proximity-focused outdoor, digital and social channels (including SEO and SEM), and in-store trade. Within these channels, we will have a mix of display and content, leaning of creating editorial partnerships to tell our story, educate customers, and address their concerns. By focusing on driving awareness and purchase intent, our strategy is to pull consumers into our facilities where they can be educated by our trained staff on our holistic wellness positioning, direct education efforts, unique brand experience and medical product range.

Education will play a huge role in expanding our customer base while responsibly meeting the unique needs and expectations of each customer. We want to enable our customers to make informed decisions about the cannabis they choose to consume, while giving them peace of mind knowing that the products they purchase is focused on their holistic well-being. Education initiatives and campaigns will include monthly educational seminars for the community, in-store events and wellness ‘focus months’, white papers, science and education partnerships, community outreach, and community service media campaigns that seek to educate the Adult Use Cannabis Community.

Each product and package sold will contain stories on the evolution of our brand, mission, ethos and brand philosophy. We will support local nonprofits through both direct financial contributions, and pro-bono hours. Cannabis should be a force for positive change and good, which is an important part of our brand story and ELEMENT 7: BUSINESS AND OPERATIONS PLAN
positioning. We have allocated an initial budget of $120,000 per Retail Store for marketing, advertising, media and communications in Year One of operations. This is an over-investment to build our brand, expand the category.

In Year 2 our marketing budget will represent 12% of revenue and in Year 3, 10% of revenue. We believe most of our competitors will allocate around 5-10% of their revenue to marketing, which will enable our Company to out-perform the industry in terms of brand building and gaining market share. For us, success will be measured by examining market share, repeat purchase intent, and positive customer sentiment towards our brand (brand trust and love).

We will continue to create trust, build community support, and educate the community, working with industry experts, local leaders, small businesses, communities and consumers. Our Company will continuously look to monitor customer data, optimizing the consumer brand experience, communications strategy, and brand positioning as needed to ensure revenues and growth are maximized and business objectives are achieved.

Summary: Success Plan
Our Company has identified three (3) significant milestones it needs to achieve in order for its business to succeed:

1. Establish Trust;

2. Educate the Community;

3. Deliver a Brand Experience People Can’t Stop Talking About.

First, we need to establish trust with the community. This can be accomplished by involving the community in the development of our operations. By creating an Advisory Board that consists of community leaders, we will be able to take the concerns and feedback of the community and implement proactive solutions into its operations, whereby the community, being represented by the Board, is able to direct and manage operations in a manner that aligns seamlessly with the community’s values and addresses its needs.

Second, we will need to provide targeted, relevant channel, and engaging access to accurate and reliable educational information about the holistic benefits of medical marijuana that is proven and supported by peer reviewed medical and recreational cannabis research; uses, dosages, and safe access to recreational cannabis, and the economic benefits of accepting the industry into the community.

We intend to provide this information by creating digital content, sponsoring seminars, running informative campaigns, providing consultations with pharmacists, and maintaining an open line of communication with the community through an assigned Community Liaison Manager who will be available to receive concerns, questions and feedback 24/7.

Lastly, we will need to create a sustained competitive advantage by building a brand experience that people can’t stop talking about, through unmatched brand service, product ranging, in-store experiences, engaging media content, and technology ELEMENT 7: BUSINESS AND OPERATIONS PLAN
that makes sense in-store. After establishing trust, respect and providing customers and the community with the educational tools, resources and information they need to make informed decisions, we will focus on developing, providing and maintaining adequate supplies of cannabis products that customers prefer at competitive prices.

Our Company intends to remain competitive by conducting periodic price monitoring, quantitative pricing research and product development and innovation to stay ahead in what will become an intensely competitive market.

FINANCIALS: FORECASTS AND ASSUMPTIONS
Commencing Operations
Element 7 will take possession of the premises once the commercial cannabis licenses have been issued. The site can be operational within six months.

Site works are estimated at $200,000, which covers all site works, minor building works, fit-out, and equipment costs. All building works will be conducted in full compliance and accordance with the Mendota Municipal Code and BCC Directives and Policy.

Start-Up Funding
Element 7 has budgeted for capital works, starting inventory, and operating capital of up to USD$1.3M to start and launch Element 7 in Mendota. This budget covers all construction costs, fit-out costs, external works, design and project management, security measures, POS Systems implementation, and branding required to open and operate the retail store through to positive cash flows ($500,000). It also includes $200,000 of starting inventory and $400,000 of operating capital with a further $200,000 of contingency funds.

A full-time Certified Public Accountant (CPA) will be hired by Element 7 to manage financials across the range of business anticipated by Element 7. In addition, a thirdparty auditor will be engaged to audit the business twice annually to ensure all investor, city, state and federal measures are being correctly managed and accounted for.

We are confident, based on our existing footprint of cannabis dispensary operations, that our projections for fit-out, security compliance, and design works are accurate.

Ongoing Operations
The CPA employed by Element 7 will manage all accounting processes, and a thirdparty auditor will be engaged to audit the business twice annually. A professional software (e.g., QuickBooks) will be used for all accounting and will integrate with our retail POS Systems.

Ongoing operations will be funded by business-generated cash flow, which is conservatively expected to be around $100,000 per month pre-tax in Year 2+ of operations.

Apart from the CPA employed by Element 7, we also have a strong executive team with significant business experience across all facets of financial management, P&L control, debt and equity structures, and cost management.

ELEMENT 7: BUSINESS AND OPERATIONS PLAN
Proof of Funds
Element 7 has attached a copy of its Proof of Funds Document demonstrating ready access to up to $5.0M capital for the improvements and operations of the proposed Dispensary.

ELEMENT 7: BUSINESS AND OPERATIONS PLAN

DISPENSARY OPERATING PLAN
Introduction
Element 7 is holistic wellness. Cannabis consumers are looking for a more holistic healing, health, and wellness brand that focuses on the body, mind, soul, and spirit.

The Element 7 brand aims to provide quality at an affordable price, allowing customers an immersive retail experience in a secure, relaxed, enjoyable and aesthetically pleasing environment.

The focus of our dispensary is our E7 Learning Zone which is a 200 sq. Ft dedicated space focused on first-time customers. This is where they can engage with dedicated Element 7 staff that will walk these customers through their first purchasing experience using touch-screen technology and interactive learning videos that describe and demonstrate cannabis.

Dispensary Operations
All customers will require a State ID to enter the Facility and must be 21 years of age or over. Once inside, new customers will be required to register with the Facility and be offered the opportunity to join our Mailing List for further information and news.

They will also be educated through the sign-up process on the potency and effects of cannabis.

Once inside the Dispensary, a range of shopping options from quick-serve grab-andgo, through to customized shopping guidance will be available. A range of products including flower, oils, edibles, topicals and lotions, and other products, all from StateLicensed Distributors will be available. We would look to price and push locally ELEMENT 7: BUSINESS AND OPERATIONS PLAN
manufactured products over those from other Cities / Operators as this is good for business and good for the City from a tax perspective.

Customers will be able to order in-store or through our APP or Responsive Website (which adapts itself to the customer viewing environment – phone, tablet or desktop computer) – first time users will be ID verified and then required to run through a 3- screen educational component educating them on cannabis potency, absorption and effects. They will then have the option of selecting a range of cannabis products and being able to use our ‘pick-and-go’ service at the Retail Outlet which streamlines the purchase journey with the retail outlet.

Management Model
Element 7's operations plan is rooted in compliance and customer satisfaction. Led by the Dispensary Manager, using industry best practices, day to day operations will divide the dispensary’s workforce according to different operational tasks, including reception and customer management, patient consultation, retail management, security, facility management, merchandising and inventory tracking.

Day to day operations will be overseen by a locally hired General Manager for the Facility and two (2) Shift Managers that will be sourced from the local community and ideally have previous cannabis retail experience and other adjacent retail experience in the liquor, pharmaceutical, hospitality, or other regulated industries.

Dispensary Management
● A Dispensary Manager and Dispensary Assistant Manager will oversee sales, inventory tracking, ordering, and all other day-to-day operations within the ELEMENT 7: BUSINESS AND OPERATIONS PLAN
dispensary. The Dispensary Assistant Manager will set up daily specials and create bundle packages. Dispensary Assistant Managers will act as a second level of expertise for customers beyond Dispensary Technicians. When a Dispensary Technician is unable to answer a specific health and wellness question, application of cannabis, or company procedure, they will alert the Dispensary Assistant Manager for help.
● Dispensary Assistant Managers will have access to inventory controls to enable them to reconcile inventory levels, fix user-errors in the point of sale system, and purchase order bulk product into business management platforms. Dispensary Assistant Managers will respond to inquiries sent to Element 7’s general information email address, oversee customer membership rewards / discounts, and reach out to vendors for purchasing wholesale flower and infused products.
● The Dispensary Assistant Manager will keep records for active inventory and back stock and report discrepancies to the Dispensary Manager. At the end of each business day, the Dispensary Assistant Manager will review the inventory reconciliation log prepared by the Dispensary Technician. The Dispensary Assistant Manager will then investigate discrepancies in physical and digital inventory levels. To ensure accuracy of records, the Flowhub platform will be reviewed on a daily basis by Element 7's Compliance department. ● The Dispensary Manager will be an expert in cannabis, its application for qualifying conditions, sales strategies, and customer service. The Dispensary Manager will oversee the daily operation of the dispensary. The Dispensary Manager will review all inventory reports and serve as the contact point for city officials, law enforcement officers, and state regulators. The Dispensary Manager will review daily inventory reports and any flagged items with irreconcilable discrepancies.
● As a best practice, the Dispensary Manager will report discrepancies in inventory to the City Chief of Police along with a description of the incident, probable causes, and with an explanation that the event did not occur because of unlawful diversion (Mendota Municipal Ordinance). Conversely, the Dispensary Manager will also handle reporting thefts and suspicious behavior to the City Chief of Police. The Dispensary Manager will schedule inspections, building maintenance, and work in coordination with the Facilities Manager, Heads of Security and Compliance, to ensure the dispensary is in good operational condition.
● The Dispensary Manager will hire employees to staff the dispensary and keep 90-day performance reviews for all employees. The Dispensary Manager will train employees on operations best practices and all company policies. As a resource for all dispensary employees, the Dispensary Manager will schedule employee work shifts and relay pertinent employment matters to the HR Director.
● The Dispensary Manager will manage daily finance operations within the dispensary, and they will have exclusive access to the depository safe. As part ELEMENT 7: BUSINESS AND OPERATIONS PLAN
of opening duties, the Dispensary Manager will count cash and other applicable payment receipts compiled from the previous day’s operation. The Dispensary Manager will coordinate cash management services, including scheduling deposit pick-ups from a cash services company. ● As part of that process, Dispensary Managers will keep a manual deposit log.

When the cash service provider enters the facility, the Dispensary Manager will prompt the representative to sign the log to verify the total deposit amount.

The Dispensary Manager will keep money to be deposited in tamper-evident envelopes, then place the envelopes in puncture-proof, lockable bank bags.

As an added precaution, only Dispensary Managers will transfer money to cash service providers. The Dispensary Manager will report deposits to Element 7’s financial manager, who will integrate data into sales performance reports and budget forecasts.
● As a best practice, the Dispensary Manager, financial manager and head of operations will remain in constant contact to ensure the financial sustainability of dispensary operations.

BudTenders
● Element 7 will prepare dispensary staff to accommodate all cannabis customers. Element 7 is a full-service store, where customers could conveniently access professional, attentive BudTenders and superior-quality cannabis.

BudTenders will have knowledge of strains, infused products, and services that may help customers treat qualifying conditions. In addition to providing faceto-face consultations, BudTenders will navigate electronic data systems and manual logs to ensure all inventory is traceable and accounted for at all times. ● BudTenders will greet each customer by their preferred name, in a kind, inviting voice and with a pleasant attitude. After a friendly greeting, BudTenders will invite customers to express what brought them in for their visit. Some customers will eagerly express their motivation: the symptoms they experience, what products work, the potency they require, and at a specified price. Others will be more hesitant to reveal their condition, their experience (or lack thereof) with cannabis, or what they can expect to pay for cannabis products. Some customers may appear in good health, while others may clearly be suffering.

As a best practice, BudTenders will quickly identify the appropriate tone of conversation for each customer. They will accomplish this by first asking customers, “Is this your first time in?” If so, the technician will recite a brief introduction to the company.
● Element 7 will be education-driven, and BudTenders will have a wealth of medical research, handouts, blogs, and publications on hand to best inform customers of the benefits and risks of cannabis. Technicians will answer all inquiries to the best of their ability, and when questions are outside their scope of knowledge, they will approach a manager to best accommodate the customer’s request.
● BudTenders will keep active inventory away from back stock and organize active inventory in a way that is accessible and easy to navigate. Each ELEMENT 7: BUSINESS AND OPERATIONS PLAN
BudTender will have a personal workspace that will include: a cash register and computer. When a customer selects a product, the BudTenders will write the order down. Then, the technician will search the inventory database for the requested product. The inventory tracking system will show the location of the product (active inventory or back stock). The BudTender will excuse himself or herself from the conversation to find the product. Upon returning with the product, the BudTender will ask the customer if they have any questions relating to applying or consuming it. To prevent diversion, the BudTender will place products out of the reach of customers while retrieving more products. ● When the BudTender completely fulfils the order, they will prompt the customer for payment. After payment is processed, the BudTender will offer a receipt.

Then, before saying goodbye to the customer, BudTenders will invite customers to write a review of their experience on various social media accounts and mapping websites.
● BudTender opening duties will include preparing dispensing workspaces, turning on all computers, lights, and digital scales, setting up display shelves, ensuring adequate supply of active inventory, creating digital menus, and familiarizing with daily specials. At the end of each business day, BudTenders closing duties will include: closing cash registers, dropping deposits into the depository safe, reporting total sales to the Dispensary Assistant Manager, placing product in the storage vault, cleaning the service room and other limited access areas, logging out of business management platforms, counting merchandise, and turning off applicable electronics.

Enhanced Retail Experience
The Facility will have full climate-control systems installed. Within the main retail area of the Facility, the front-entry doors will be motion-controlled, closing within 5-seconds of opening.

Ambient room temperature will be managed and maintained with ceiling-mounted air-conditioners that allow the temperature to remain at a steady temperature of 68 degrees Fahrenheit, a temperature that studies (Engbrocks, Stephanie. The Impact of Temperature on a Consumer’s Shopping Experience, 2008), have found that consumers prefer while shopping in a retail outlet.

Ceiling-mounted air conditioners will also ensure that air circulates through the store so that the store doesn’t become stale or too humid on wet summer days.

The Applicant is cognizant of the fact that climate-control systems are important for the overall shopping experience of the customer.

Storage-areas will be fully climate controlled to ensure that product is stored at the optimal temperature for product safety and shelf-life management.

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Customer Flow Management: Internal Space
In order for the Dispensary to be successful and build a loyal customer base, it is vital that we have a robust plan in place to acquire, retain, and reward customers, as well as managing customer flow and traffic within the store at peak times.

With a potential customer base of approximately 4,000 cannabis consumers living with 15-miles of the Dispensary, Element 7 knows it would see approximately 180-200 customers a day (15-20 customers per hour).

Two key aspects we keep in mind when managing this daily customer base are:

● Implementing the optimal dispensary layout for revenue management and maximization, and

● Understanding customer flow to deliver the best customer experience.

Both of these points are essential in allowing us to keep a flow of customers moving through the dispensary, and avoid customers lingering outside the facility.

Store Layout to Assist Customer Flow
Based on our experience with our other licensed dispensaries out-of-state, we monitor the number and patterns of customers at our various locations via closed-circuit television and analyzing purchase data information via TouchBistro, our smart kiosk.

Providing check out solutions to customers who may already know what they want to purchase, we are able to maintain the open-space retail set-up decongested and returning customers happy through short wait times and ease of check out.

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Our goal is to keep our customers excited about visiting our dispensary, and we will keep this excitement going by constantly introducing new products, strains, educational classes and exclusive merchandise. As such, promotions will be located in the dispensary’s high traffic areas, and high-profit products will be staggered in busy areas or the dispensary and high demand items will be in low traffic areas, such as at the back of our dispensary allowing us to draw customers all the way through the dispensary.

Element 7’s free-flowing layout will allow us to strategically group products, merchandise and other items throughout the store in a free-flowing pattern, allowing the customer to enjoy the space, while at the same time constantly noticing our placement of products.

Parking Management
Customer off-site parking will be minimized by developing on-site parking for up to 14 vehicles. In addition, the site has excellent proximity to public transport (buses) and freeways.

In-Store Operations
Various aspects of a cannabis retailer operation contribute to a cannabis retailer’s success. The long-term factors that affect compliance, success and societal impact are:

1. Managing customer flow
a. Customer Intake Process
b. Confidentiality and Privacy Policy
c. Denial of Access to Facility
d. Reporting
e. Purchase Process
f. Purchaser Education
i. Service offerings
ii. Community engagement, educational tools and resources, including personalized consultations
g. Product mix
h. Purchase Limits
i. Product Handling

2. Point-of-Sale, Reporting and Compliance
ELEMENT 7: BUSINESS AND OPERATIONS PLAN
a. Point-of-Sale
b. Track and trace and METRC
c. Inventory Reconciliations, Audits and Reports

3. Dispensary Management
a. Facility Layout to assist customer flow and processes b. BudTender to Customer Ratio
c. Customer Confidentiality
d. Receiving Product Shipments
e. Cash Handling
i. Cannabis Tax Remittance
Customer Intake Process
Industry best practices that supplement state regulations in the Customer Intake Process involves verifying the age and validity of customers and their government issued identification. Valid forms of government issued identification are identification cards, driver’s licenses, and passports, which should include a recent photograph and the customer’s date of birth.

The Customer Intake Process begins when a new, or returning customer, enters the dispensary and provides their government issued identification to security at the Reception area. Using a handheld scanning device that has the ability to verify forms of government issued ID, identification is scanned and information is transferred onto our system through FlowHub, our point-of-sale (POS) system. Verified new customers will be asked if they would like to join our mailing list and loyalty program. They will also be asked to read, acknowledge and agree to our Company’s policies and procedures for customers. New intakes will be instructed to download the Mobile App onto their mobile phone or handheld device either while waiting or at their own convenience at another time.

Customer Confidentiality
Customers’ personal information will not be recorded and / or stored on our data systems without their consent at all times. This information will be requested at the time ELEMENT 7: BUSINESS AND OPERATIONS PLAN
of intake when a customer is presented with Company policies and is required to acknowledge the recording and storage of their personal information. Customers who decline will not have any personal information recorded or stored on our data systems.

Our Privacy Policy
We comply with updated Consumer Data Privacy laws and provide our patients and customers with a copy of our Privacy Policy during our intake process. Our Privacy Policy includes the following information that requires the patient or customer’s acknowledgment and signature.

Children’s Online Privacy Protection Act Compliance
We take compliance seriously and our systems exceed the requirements of COPPA (Children’s Online Privacy Protection Act).

We do not collect any information from anyone under 21+ years of age. Our website, mobile app, products and services are all directed to people who are at least 21+ years old or older.

Online Privacy Policy Only
Our privacy policy applies to information collected during initial intake at our dispensaries, through our website and mobile app, and not to information collected offline.

Denial of Access to the Facility
In the event that a customer’s age and identity cannot be verified, or the system prompts the concierge to deny access to the prospective customer, the point-of-sale system will track the denial of intake and require the concierge to indicate the reason for denial. Typically, denials for intake involve fake forms of identification or the inability of the system to verify the form of identification that was provided.

Forms of identification that will not be able to be verified through the handheld scanning device include passports. Since there could be a high flow of non-resident traffic that includes individuals from out of the country, our protocols for passports require our receptionists to take a photograph of the passport, which will be added to the customer’s account information. Customers whose passports show that the individual is 21 years of age or older will continue with the intake process and will not be denied access to the facility.

Reporting
All customer information will remain confidential. This will be supported by the generation of Customer IDs and the encryption of culled identification information. All official documents, such as receipts, reports, accounts and other pertinent documentation that will be disclosed to the Department or other governmental or organizational authorities will only include the Customer’s Company-generated Customer ID number. Per our Company’s reporting protocols, the General Manager will maintain a registry of all non-resident intake information, including encrypted passport information in the event that the Department requests for such information to facilitate investigations.

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Customer Flow and Purchasing Process
Our Company vision has been to create an inclusive and welcoming environment for new and returning customers that complies with local and state regulations and requirements. The customer experience begins in the limited access Reception area where a Receptionist manages intake and check-in. A Security Officer will be stationed at the Reception Area to provide support, when needed.

Once they have been verified as a returning customer, or have been verified as eligible to proceed with the New Customer Intake Process, they will be asked to take a seat and browse through educational materials laid out within the Reception area, or they will be buzzed into the main retail area where BudTenders can provide consultations and walk them through our product mix by using the product display system found in the Learning Center. Customers will also be able to avail of services at our Wellness Lab, which will have its own waiting list and managed by a separate set of wellness coaches.

The product display system is a smart product desk within the Learning Zone that allows customers to pick up a cannabis product and scan the code on the bottom of the product sample. The product information related to the scanned item will immediately pop up on the display located in front of the customer. Information related to the product will include the product type, name, potency, origin, straintype, side effects, recommended administration method and dosage. If a customer requires more information or has questions, one of the roving BudTenders will be able to assist them.

Once a customer has decided which cannabis products they would like to purchase, they will be able to place their purchase order through our TouchBistro, a smart kiosk found along the retail area wall. These orders will be pushed to the BudTenders at the registers, who will then approve the order for fulfillment to the facility agents in the secure, limited access area behind the registers. Customers who prefer to place their

TOUCH BISTRO AND SMART DISPLAY
ELEMENT 7: BUSINESS AND OPERATIONS PLAN
purchase orders with the BudTenders managing the registers will be able to do so by approaching the register.

Once a purchase order is prepared and ready to be released to the customer, the customer’s ID will be called, and the customer will approach the register to make payment. All purchases will be prepared in the secure, limited access area and will be released to the BudTender officiating the transaction through a secure transaction window behind the register. Orders will be placed in compliant exit packaging and will include any accessories that were also purchased, as well as educational materials pertaining to the products that the customer purchased.

The fulfilled order will be scanned, and the transaction will be completed by the BudTender at the register. A receipt will be printed or emailed to the customer directly.

Cash transactions will require that the BudTender place the cash into the cash drop box found directly beneath the register station.

Purchaser Education
While waiting to be admitted on to
the retail floor, new customers will
have the opportunity to download
our mobile app, which provides
access to service offerings,
including educational materials,
tools and resources. New
Customers will be given a New
Customer Packet that includes
instructions on how to download,
register and navigate our app,
cannabis awareness and
educational materials that are
released by the California
Department of Public Health and
other curated cannabis-focused
material that we have developed
about our service offerings, product
mix, new consumer information and
relevant industry information.

EXIT PACKAGING

HANDOUTS
ELEMENT 7: BUSINESS AND OPERATIONS PLAN
Educational Product Material specific
to a customer’s purchase will also be
included in the exit packaging of the
customer to ensure that the customer
has access to information about the
purchased product/s, including side
effects and recommended
administration and dosage.

Service Offerings and Product Mix
Once inside the Dispensary, a range of
shopping options from quick-serve
grab-and-go, through to customized
shopping guidance will be available.

A range of products includes:
• Flower
• Concentrates
• Edibles: cookies, chocolates, gummies, mints, candy, honey, etc. • Topicals and lotions
• Tinctures
• Pre-rolls
• Accessories: vaporizes, pipes, rolling paper, etc.

In compliance with state regulations and industry best practices, our product offerings will only be sourced from licensed and compliant distributors.

On-line Purchases
Customers will be able to order in-store or through our mobile app or Responsive Website (which adapts itself to the customer viewing environment – phone, tablet or desktop computer) – first time users will be ID verified and then required to run through a 3-screen educational component educating them on cannabis potency, absorption and effects. They will then have the option of selecting a range of cannabis products and being able to use our ‘pick-and-go’ service at our retail facility, which provides a streamlined and comprehensive retail experience.

Other Service Offerings
Other service offerings we will provide to customers include curated educational material that culls information from the Department of Health and other leading cannabis organizations, studies and groups. This includes a monthly Z-Card which will contain content on new products, strains, breaking news, health and wellness and other curated tidbits that improve health and well-being.

Z CARDS
ELEMENT 7: BUSINESS AND OPERATIONS PLAN
Community Events and Workshops
We host various events such as Community Workshops, Meet-up Groups, a Drug Education Program, and weekly/ monthly Customer Micro Events (Wellness Wednesdays, Friday Happy Hour, Monthly Themed Wellness Event).

Website and Mobile Application
Staying on top of our tech-advancement, we will also have a responsive website and our mobile app that customers can use to communicate with our company and each other. We have various content partnerships that we utilize to curate accurate, reliable and exciting information about our products, health and wellness, cannabis the plant, medicine and lifestyle, and the industry in general.

Daily Limits, Tracking Purchases and Denial of Sale
Our BudTenders will receive training on the State’s daily limits to ensure that purchases made at our dispensary comply with State requirements. Although adult use cannabis possession limits are considered cumulative, BudTenders will also receive training on high-risk purchase behavior, which will serve as our Company’s internal control mechanism in dealing with diversion of cannabis products and preventing youth access to cannabis products.

The State has set daily limits as follows, per Section 26013, Business and Professions Code. Reference: Section 26012, Business and Professions Code; and Sections 11362.1 and 11362.77, Health and Safety Code:

Medical Patients:
8 ounces of mature dried flower or or the plant conversion as provided in Health and Safety Code section 11362.77
Adult Use Customers:
- 28.5 g non-concentrate cannabis (flower, pre-rolls and edibles) - 8 g cannabis concentrate
This means that a customer and/or a patient cannot exceed these daily purchase limits per day. Patients and customers cannot combine daily limits under two separate purchases, as determined by regulations. Our point-of-sale system (POS), FlowHub, can be programmed to set daily purchase limits that notifies Receptionists and BudTenders when a customer has exceeded purchase limits and cannot proceed onto the retail floor. Budtenders will also be notified during check out if a customer has exceeded the purchase limit for specific product types.

As a precaution, the POS monitors transactions and will flag BudTenders and the Receptionist when it finds a customer with a purchase history that exceeds an acceptable frequency, or if a customer attempts to purchase cannabis products at other Company dispensaries.

As a responsible operator, we take our commitment to preventing diversion and youth access to cannabis seriously. Internally setting controls that oversee customer spending habits that could promote diversion and youth access to cannabis is a component of responsible operations that will contribute to the success of a regulated cannabis industry and responsible consumption habits.

ELEMENT 7: BUSINESS AND OPERATIONS PLAN
Product Handling
Inventory Specialists are tasked with preparing purchased products for release to customers. This involves transporting products from the Secure Product Storage Area, to the Inventory Preparation Area where products are inspected according to our internal Quality Control policies and placed into reusable and compliant exit packaging. Appropriate Product and educational materials will be included with the order.

Complete orders will be passed to BudTenders at the register through a secure window behind the register. Products are never laid out on the Retail Floor.

Once the transaction has been processed, the complete order will be provided to the customer.

Denial of Sale
In the event that a customer is flagged for this reason, or has made several trips to our dispensaries, and a purchase exceeds the possession limit, then the transaction will be denied. A prompt will appear on the register and will require the BudTender to enter a reason why the transaction is denied. If a transaction is denied due to exceeding possession limits, then the customer will be able to remove products from their order so that their orders meet the possession limits set by the State.

Our point-of-sale system has the ability to monitor all our licensed dispensary’s customers’ transactions. In the event that a customer purchases cannabis from several of our dispensaries, and exceeds possession limits, the system will automatically notify the BudTender processing the transaction and deny the sale.

If a transaction is denied due to high-risk purchase behavior, then the customer will be warned and given a private consultation where the BudTender explains possession limits and purchase history monitoring. As a policy, customers are required to acknowledge and agree to our Company’s policies and procedures, which include possession limits and responsible consumption. If a customer is flagged a second time, our Company has the right to refuse service. A report will be completed and provided to the General Manager, who may or may not share the report with other licensed dispensaries or the Department.

Point-of-Sale System: FlowHub
Our Company’s preferred point-of-sale system (POS) is FlowHub, which we utilize across all our licensed dispensaries in California. FlowHub is a point-of-sale system that hosts and maintains the servers, databases and code that constitutes the point-ofsale system. Currently, FlowHub has over 700 licensed cannabis retail customers and 30 partners. FlowHub processes over $1 billion in sales annually. Licensed cannabis retailers in Alaska, Arizona, California, Colorado, Illinois, Maryland, Massachusetts, Michigan, Missouri, Montana, Nevada, Oklahoma, and Oregon utilize FlowHub as their front-to-back end point-of-sale solution provider.

The system is customizable and compliant with local and state laws and regulations and is currently working towards obtaining their API integration key with METRC. The POS is custom-built and provides intuitive, reliable and scalable solutions for cannabis dispensaries.

ELEMENT 7: BUSINESS AND OPERATIONS PLAN
FlowHub is a web-based application that can be downloaded to desktop and handheld devices with iOS operating systems. This means that all devices connected to our POS will be apple devices, such as iPhones and iPads for all Concierge, BudTender, Inventory and Register devices, and desktop Macs for the Main Office and Security.

Compliance with State Regulations
FlowHub modules are designed to comply with State regulations, such as real-time reporting to METRC. The POS is able to comply with regulations through innovative system architecture and the development of API integration with the State’s reporting system.

FlowHub Architecture
The POS System utilizes industry standard microservices and a restful API to continually adapt its modules to the demands of the operation. With a reactive front end and a creative JAVA stack, the system can be modified to comply with changes in regulations, or to facilitate in the implementation of developed best practices that addresses regulations.

Inventory Management through the STASH App
One unique feature of the POS is its STASH App, which significantly reduces the intake process and management of physical product inventory. STASH utilizes scanning technology to quickly monitor, manage and move inventory throughout the facility.

Without the need for manual data entry, reporting errors due to human error, is significantly reduced and reconciliations and audits are performed in a faster and more efficient manner by one (1) authorized employee.

Reporting to METRC and End-of-Day Reporting Best Practices The POS System regularly pushes data to METRC, when possible. End-of-Day Reporting best practices are still encouraged to ensure that data reported to METRC accurately reflect the facility’s operations and transactions. Operating guidelines and best practices have been developed to maintain accurate data retention in the event that METRC’s systems are unresponsive during hours of operation. The system also provides for its own back-up WIFI connection, queuing and secure cloud storage for data that cannot be automatically pushed to METRC when its systems are down.

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Reconciliations, Discrepancies and Reports
Using a POS is the best way to manage inventory, sales, returns, recalls, and compliance with track and trace. The software creates CSV files of historical transactional and inventory reports that are either pushed into the track and trace system or prepopulated into the system, which reduces errors associated to human data input.

FlowHub’s capabilities as a compliant, intuitive and customizable POS system that can integrate with the track and trace system utilized by the state is a key component in our Company’s successful, compliant and quickly growing cannabis retail operations. Not only does the system provide compliance safeguards throughout its retail, inventory, records and verification modules, it also has the ability to monitor and analyze consumer purchase trends and operational processes. These aspects of the system contribute to our Company’s ability to develop services and product offerings that customers and prospective consumers need and want, as well as internal operational process improvements that allow us to improve inadequate or defective policies and procedures that affect the overall performance of our operations.

Maintaining Customer Confidentiality
Instead of flushing customer information, our Company will encrypt customer data and information instead. Our POS has the capability to generate unique customer identification numbers that can be used across all transactional and reporting materials. All Data and information will be encrypted and then stored on our secure cloud-based, data system. Copies of customer’s government issued identification, information culled from government issued identification and other personal information such as emails, home address, telephone numbers and transactions will also be encrypted and stored on our cloud-based data system.

We have chosen to encrypt data instead of flushing customer information to be able to effectively and efficiently implement recall plans in the event that a product recall is required, effectively develop our loyalty and rewards programs and develop cannabis products our customers like.

BudTender to Customer Ratio Policy
Internal Company best practices dictate the most efficient BudTender to Customer ratio, that facilitates in effective and personalized customer management and managing retail floor security and safety. We define our ratio as 2:1, with one (1) BudTender serving, at most, two (2) customers at any given time. Reception will work with the Retail Floor team in ensuring this ratio is consistently implemented.

Receiving Cannabis Product Shipments
Our Company will only source compliant cannabis products from other State-licensed operators. We will not purchase and receive cannabis products from operators or distributors from outside of California.

Internal Company policy also dictates that all cannabis products from licensed transporters, cultivators and manufacturers, must arrive at the facility in sealed containers. We will randomly send cannabis products from our licensed suppliers for confirmation testing through a third-party testing facility. Cannabis products that have been opened by a testing facility will be quarantined and destroyed immediately.

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Cash Handling
Internal Company policy has defined register cash limits. Cash limits identify when cash in registers need to be removed and place in the Secure Vault installed within the Main Office. Register cash limits are set at $1,000.00. Once a register reaches $1,000, transactions will not be processed and the General or Assistant Manager will need to perform a Cash Drop. Cash Drops will be managed through FlowHub’s system.

A BudTender will place a call to the General or Assistant Manager to request for a Cash Drop. The Manager will approach the register with a money bag and remove the cash. The cash drop action will be processed through the register and will require the PIN of the manager in order to be performed. Once the process is completed through the register, the cash is placed in the money bag and the till is closed, the Manager will be escorted to the Main Office by security.

The Manager will perform a cash count before placing the cash in the money bag into the vault for safekeeping until a Pick-up with the contracted armored car agency is scheduled.

Inventory Management and Record Keeping Plans
Our Company’s Inventory Management and Recordkeeping policies and procedures have been developed to comply with applicable state and local laws and regulations, to reduce the rate of reporting and inventory errors associated with manual data entry and reconciliations, and to prevent diversion, theft and loss of cannabis products and currency.

Typical causes for inventory discrepancies are generally attributed to human error, such as misplacing items, double scanning items at checkout, scanning the wrong version, or flavor of an item, at checkout, failing to account for spoiled, expired or dropped products, and improperly processing returns. These scenarios are easily prevented by establishing robust policies and procedures surrounding inventory handling and management through our point-of-sale (POS) system, FlowHub.

FlowHub has streamlined data entry, inventory management and reporting by developing Stash, a mobile inventory management application that requires the use of a handheld scanning device that easily identifies, records and manages inventory.

With Stash, performing manual reconciliations that involve counting items in every single package in product storage, or various rooms within a facility, is no longer a requirement, and reduces errors when performing reconciliations and reporting. In a highly regulated industry that depends on accurate reporting, being able to utilize state-of-the-art technology that can push/pull data, in real time, towards the State’s mandated track and trace system is a powerful tool that ensures compliance and success.

Records pertaining to customer transactions, denials of sale, inventory acquisitions, management, movement, cannabis waste disposal, incident reports and corrective actions can be migrated from electronic devices that are used to perform functions through the POS onto our secure and encrypted cloud-based data system via file migration, which is facilitated by our data system. Specific data and records will also ELEMENT 7: BUSINESS AND OPERATIONS PLAN
be stored and maintained on a secure and encrypted physical media storage device, which will be kept in the Main Office’s vault.

Inventory Management and Recordkeeping Quality Control Standards Policies and procedures are developed to maintain compliance with applicable state regulations and industry best practices as they pertain to inventory management and recordkeeping. It is imperative to deploy control and assessment measures for these policies and procedures to ensure that they maintain compliance and efficiency. Our Company’s quality control standards provide reasonable assurance that the policies and procedures are sufficient in attaining the objectives of compliant and efficient inventory management and recordkeeping.

A system of quality control consists of policies designed to achieve the objectives of the system and the procedures necessary to implement and monitor compliance with those policies. The nature, extent, and formality of our quality control policies and procedures will depend on various factors such as: a properly functioning POS, effective departmental structuring, employee adherence to policies and procedures, successful and uninterrupted integration with METRC, effective troubleshooting, strict monitoring, and robust data storage, encryption, and security.

Transparency and Communication with Local and State Police and other Authorized Governmental Agencies
Transparency, communication and reporting to Local and State Police is included in our Inventory Management and Recordkeeping policies and procedures.

Maintaining an open line of communication and support with Local and State Police is an effective way to maintain and promote the safety and security of our facility and operations. Incidents of theft, loss and other related criminal activity will be reported to Local and State Police immediately upon its occurrence or discovery, whichever is sooner.

Customer Satisfaction
We have developed a recall policy that is fair, just, and flexible (where needed) to deal with customer issues, such as complaints and returns- immediately. The policy has been designed to put customers first and adapt to the numerous circumstances where required to ensure that our patients and customers are managed fairly and justly.

The policy is rigid where it needs to be, particularly in relation to Product Recalls where there is minimal, or no, flexibility for front-line retail sales staff.

Complaints
• The General Manager will act as the authorized individual to receive and process complaints. The General Manager must notify the Chief of Compliance within 12-hours of any complaint by completing a "Complaint Notice" form which records the time, date, name, location and situation, regarding where the complaint was received (e.g., phone, in-store, on-line etc.)
• Once a complaint is received, our Chief of Compliance will determine the following:

ELEMENT 7: BUSINESS AND OPERATIONS PLAN
- Receive and review product complaints to determine whether the product complaint involves a possible failure of a product to meet any of its specifications, or any other requirements, including but not limited to those specifications and other requirements that, if not met, may result in a risk of illness or injury; and
- Investigate any product complaint that involves a possible failure of a product to meet any of its specifications, or any other requirements of this part, including but not limited to those specifications and other requirements that, if not met, may result in a risk of illness or injury.
• Our Chief of Compliance is responsible for sending an initial 'Complaint Received' note to the person that made the complaint. Our Internal KPI for sending this note is within 24-hours of the complaint being received. Our Chief of Compliance will review and approve decisions about whether to investigate a product complaint and review and approve the findings and follow-up action of any investigation performed. This will be managed weekly in coordination with the General Manager for the Facility where the complaint was received.
• The review and investigation of the product complaint, and the review by the Chief of Compliance about whether to investigate a product complaint, and the findings and follow-up action of any investigation performed, must extend to all related batches and relevant records. Related batches may include, but are not limited to, batches of the same product, other batches processed on the same equipment or during the same time period, or other batches produced using the same batches or lots of components or packaging components.
• A written record of the complaint, and where applicable, its investigation must be kept, including:
- Identity of the product;
- Batch, lot or other control number of the product;
- Date the complaint was received and the name, address, or telephone number of the complainant, if available;
- Nature of the complaint including, if known, how the product was used;
- Names of personnel who do the following:
i. Review and approve the decision about whether to
investigate a product complaint;
ii. Investigate the complaint, and
iii. Review and approve the findings and follow-up actions of any investigation performed.
• Findings of the investigation and follow-up action taken when an investigation is performed; and a Response to the complainant, if applicable, which should be sent no later than 72-hours after the complaint was received.

ELEMENT 7: BUSINESS AND OPERATIONS PLAN
• The procedure for a product complaint that includes a report of an adverse event (an adverse event is a health-related event associated with the use of a product that is undesirable, and that is unexpected or unusual), includes the following:
- Reporting to any public health authority;
- Reporting to the physician of record for the individual reported to have experienced an adverse event, if known; and
- Product recall.

Returned Products
• Manufacturing, packaging, and/or labelling operations must establish written procedures describing the receipt, handling, and disposition of returned cannabis or cannabis-derived products.
• Returned products must be identified as such and be quarantined upon receipt.
• Returned product must be reviewed and approved or rejected by quality control personnel.
• If the conditions under which the returned product has been held, stored, or shipped, before or during its return, or if the condition of the product, its containers, or labelling, as a result of storage or shipping, casts doubt on the identity, purity, strength, composition, or freedom from contamination or adulteration of the product, the returned product will be rejected unless examination, testing, or other investigations prove the product meets appropriate standards of identity, purity, strength, and composition, and its freedom from contamination or adulteration.
• If the reason a product is returned implicates associated batches, an appropriate investigation must be conducted and must extend to all related batches and relevant records. Related batches may include, but are not limited to, batches of the same product, other batches processed on the same equipment or during the same time period, or other batches produced using the same components or packaging components. (f) Rejected returned product returned to the manufacturing, packaging, labelling, and holding operation must be destroyed as per section 7.3(c).
• A written record must be kept of the return, and where applicable its investigation, including:
- Identity of the product;
- Batch, lot or other control number of the product;
- Date the returned product was received;
- Name and address from which it was returned, and the means by which it was returned;
- Reason for the return;
- Results of any tests or examinations conducted on the returned product, or on related batches, if any;
- Findings of the investigation and follow-up action taken when an investigation is performed;
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- Any reprocessing performed on the returned product;
- The ultimate disposition of the returned product, and the date of disposition; and
- Names of the quality control personnel who do the following:
i. Review the reason for the product return;
ii. Review and approve any reprocessing, as applicable, and
iii. Review and approve the findings and follow-up actions of any investigation performed.

Cannabis Products that are returned by customers and patients will never be re-sold.

These products will be quarantined, rendered useless and destroyed.

Recordkeeping
Our ability to utilize our POS to receive, deny, handle, and manage inventory and cannabis waste allows us to perform highly regulated tasks with ease and reduce errors attributed to manual data entry. Migrating data onto our secure and encrypted cloud-based data system has been streamlined to maintain the COC and accurate reporting by migrating encrypted files from Company-authorized electronic devices, onto the cloud-based data system. Data and records will also be stored and maintained on a secure and encrypted physical media storage device that will be kept at the facility. All records will be maintained on our cloud-based data system and secure physical media storage device for at least seven (7) years from the reported date.

Site Management Plan
The Standard Operating Procedures for the management of the premises include the daily inspection of the outer area of the building for trash, graffiti and any other visual, functional, safety and security related disturbances. Any dumped trash or litter will be collected and placed into Element 7’s dumpster for collection by the City Council, and any graffiti will immediately be removed by re-painting.

The responsibility of daily inspections will be assigned to the General Manager who will open the premises each day.

A selection of paints and paint brushes will be stored on site to rectify any issues. The interior of the building will also be inspected by the Head of Retail each day at the start of the shift to ensure the walls and floors are free from scuff marks, all lights are working, all door locks are in good working condition, all cameras are operational as required, and that all trash and litter is removed from the premises. Any maintenance issues will immediately be logged and reported to the General Manager.

Streetscape and Minors
The exterior architecture of the premises will be designed in such a way so that the premises first of all fit naturally within the broader streetscape of the neighborhood and has a minimum seventy-five percent (75%) transparency along the façade in accordance with the City of Mendota Municipal Code.

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We are absolutely mindful that minors and children live in the neighborhood and will responsibly ensure that we don’t have any visible cannabis branding or products that could be seen from the exterior of the building pursuant to the Mendota Municipal Code.

Summary
Element 7 isn't just a retail cannabis outlet. Our vision is to create an interactive learning hub that allows first-time users, new cannabis consumers, and connoisseurs with a welcoming experience where they can learn, engage and shop within an inviting and open environment.

Analyzing the data and understanding that customers look to retail staff more than any other outlet or channel for product recommendations, we will ensure that our front line BudTenders are the most trained staff in industry.

Our design, customer experience, staffing and overall holistic wellness positioning all work together to seamlessly ensure that Element 7 will deliver a retail experience like no other.

Industrial Court L11 LLC
34 Tesla Drive, Irvine, CA 92618

PROOF OF CAPITAL FUNDING LETTER FOR CANNABIS LICENSES
May 2, 2020
Robert M. DiVito Jr.

Element 7 LLC
8033 Sunset Blvd., #987
Los Angeles, CA 90046
Dear Robert,
We, Industrial Court L11 LLC, located at 34 Tesla, Irvine CA 92618, hereby confirm our intent to make available cash funds of Five Million US Dollars ($5,000,000.00), to Element 7, Inc (or any of its named subsidiaries) with immediate effect.

Use of these funds is intended to support development, construction, operations, leasing and other capital and operational costs for Element 7’s endeavor to obtain commercial cannabis licenses in the state of California. These funds will be made immediately available in USD$ via wire transfer within 48 hours of when such request is made.

We further confirm that these cash funds on deposit are legally earned and are free of any liens or encumbrances. Said cash funds are immediately available and freely transferable

1. 2.

3. 4.

Should you require additional verification of the above-mentioned funds, please contact us at your convenience. I can be reached at (714) 330 7003.

Kind regards,
Sean Sand
Chief Financial Officer
7 SECTION D

DELIVERY PLAN

SECTION D

DELIVERY PLAN
ELEMENT 7: DELIVERY PLAN

DELIVERY PLAN
Introduction
Element 7 are proposing a delivery business attached to the dispensary, so that patients and customers with mobility issues, privacy concerns, or convenience needs can be met.

Element 7 delivers on-demand cannabis products to customer's homes in Cities and Towns across California. This aspect of our business is one of our fastest growing verticals driven by recent licensing wins we have secured in the Bay Area, Central Valley and San Diego regions in California.

Powered by our experience gained from our existing cannabis operations footprint, logistics management experience, and technology partnerships with Ready Cart, BURPY and Baker Technologies, Element 7 is strategically positioned to become one of the leading on-demand cannabis delivery companies in the State known for fast and on-time delivery, great pricing, product selection, and customer service.

The non-storefront retail (delivery) aspect of the business will be managed by a dedicated Head of Delivery within Element 7 Mendota, reporting to the General Manager of the local business.

Dispatch Manager
The Dispatch Manager will work directly with the dispatch team to assist in coordinating daily work flow, and work independently on safety requirements for the delivery team; in addition to being responsible for properly deploying and monitoring ELEMENT 7: DELIVERY PLAN
the status and locations of the delivery drivers. The Dispatch Manager will also be responsible for the following:

1. Answer incoming customer phone calls and take appropriate action for each call;

2. Maintain customer satisfaction ratings based on explicit criteria set forth by Element 7;

3. Assign orders to drivers, and follow-up until all orders are completed;

4. Attend mandatory training sessions to stay updated on product or company policy changes;

5. Route and set schedules for the delivery team;

6. Maximize productivity and ensure prompt, courteous and efficient service to, primary caregivers and customers; and

7. Build strong customer relationships.

Driver
Drivers will be responsible for transferring products from our non-storefront retail facility directly to patients, primary caregivers and customers throughout the city and collecting money in exchange for the cannabis goods from customers. Drivers will work with the Dispatch Manager to ensure timely delivery and full compliance with both local and state laws.Driver responsibilities include, but are not limited to:

1. Make a wide variety of deliveries as directed;

2. Keep accurate records of deliveries and customer authorizations;

3. Ensure all documentation is submitted to management on time;

4. Keep an accurate driver's log;

5. Follow a strict standard of operating procedure;

6. Load, unload, prepare, inspect and operate a delivery vehicle;

7. Collect payments and maintain petty cash.

ORDERING PROCEDURES AND POLICIES
Customer Ordering Procedures
Patients and customers will be able to order through our smartphone APP or responsive website (which adapts itself to the patient/customer viewing environment – phone, tablet or desktop computer) – first time users will be have to upload a photo of their government identification card in order to verify age, and will then be required to run through a 3-screen educational component educating them on cannabis potency, absorption and effects. They will then have the option of selecting a range of cannabis products and being able to track Element 7 delivery business through the smartphone APP or Website in much the same way that UBER or LYFT operates.

Our partner, Beyond Marketing Group has significant UX and UI experience within their company and will manage all development of such platforms.

Online Ordering System
Element 7’s online ordering system will allow its patients, primary caregivers and customers to place orders from our website, tablets or mobile app. Element 7 has partnered with a premier e-Commerce delivery company to create all online and web application features (Ready Cart). This will allow the website and application to ELEMENT 7: DELIVERY PLAN
have an online menu and shopping portal that directly and seamlessly connects to our inventory management system in real time.

In addition to Ready Cart, Element 7 will utilize Baker Technologies software platform which will allow Element 7 to communicate directly with patients/customers immediately after an online order is placed, inform patients/customers of new products, educate patients/customers via the smartphone app and create a Loyalty program that offers patients/customers "points" for being loyal to Element 7.

The online ordering system will display all the products for sale at the business, their prices, and product descriptions. (see demo images below) Technology Integration
We understand that as a licensed non-storefront retailer, we will not sell or otherwise transfer any cannabis goods to a customer through the use of an unlicensed third party, intermediary business, broker, or any other business or entity.

Element 7 will utilize Blackbird by Baker as a means to facilitate the sale and delivery of cannabis goods, in conjunction with best practices we’ve developed based on local and state regulations:

1. Element 7 will perform all of its own cannabis goods deliveries.

2. Element 7 will not share in the profits of the sale of cannabis goods with the technology platform service provider, or otherwise provide for a percentage or portion of the cannabis goods sales to the technology platform service provider.

3. Element 7 will not advertise or market cannabis goods in conjunction with the technology platform service provider, outside of the technology platform, and will ensure that the technology platform service provider does not use Element 7's license number, or legal business name, on any advertisement or marketing that primarily promotes the services of the technology platform.

4. Element 7 will ensure that the following information is provided to customers:

ELEMENT 7: DELIVERY PLAN
(i) Any cannabis goods advertised or offered for sale, on or through the technology platform, will disclose, Element 7's legal business name and license number.
(ii) Customers placing an order for cannabis goods through the technology platform will be able to easily identify Element 7 as the source of where the cannabis goods are being ordered or purchased from. This information will be available to the customer prior to the customer placing an order or purchasing the cannabis goods.
(iii) All required sales invoices and receipts, including any receipts provided to the customer, will disclose Element 7's legal business name, license number, and website information.
(iv) All other local and state delivery, marketing, and advertising requirements will be complied with.

Blackbird by Baker is a cutting-edge CRM platform that enables dispensaries to actively engage and market to patients and customers. The platform also facilitates online ordering, tastefully delivered menu boards, curated daily specials and promos, as well as targeted and personalized news and cannabis / CBD information for each patient / customer.

Ordering Procedures

1. Once a patient, primary caregiver or customer visits Element 7’s online delivery portal, they will be asked if they are above the age of 21;

2. Patients, primary caregivers and customers can view the Element 7 menu board, which showcases all cannabis products that are sold at Element 7’s facilities. These products will range from edibles to flower and other cannabis products;

3. After a selection has been made, selected items will be placed in a “Cart” and the patients, primary caregivers and customers can then proceed to checkout;
ELEMENT 7: DELIVERY PLAN

4. Once an order has been processed and filled at the delivery facility, the patients, primary caregivers and customers will receive an alert notification for an approximate delivery-time estimate; and

5. Element 7 Delivery employees will receive instant push notifications on all tablets and smartphones at the facility. Once a patient, a primary caregiver or customer has placed an order, it will be immediately filled by an employee, packaged and ready for delivery within a 15-minute time frame.

Online Ordering System (Educational Component)
The Element 7 online ordering system educational component will allow its patients, primary caregivers and customers to learn about the potency, effects, THC and CBD content of cannabis or cannabis goods prior to purchasing, as well as providing patients, primary caregivers and customers with the tools to incorporate a "Holistic Wellness" approach to their everyday lives.

In furthering Element 7' "Holistic Wellness" initiative to educate patients/customers on the benefits of cannabis, Element 7 seeks to work with Tokr to create a customized app experience for Element 7 patients and customers. Tokr allows patients and customers to learn which cannabis-based products can be used in their everyday life, and eases the anxiety or nervousness associated with not knowing how cannabis and cannabis related products may be used daily.

Element 7’s cannabis and cannabis products breakdown will equip patients, primary caregivers and customers with the knowledge and understanding of the benefits of a chosen cannabis strain or product. Having an educational component on Element 7 website informs patients, primary caregivers and customers how each strain of cannabis might affect them which can go a long way towards utilizing the plant’s potential therapeutic benefits.

ELEMENT 7: DELIVERY PLAN
The website will provide thorough descriptions of each type of strain - Sativa, Indica, Hybrid and CBD.

In furthering Element 7’s commitment to inform and empower the Mendota community on cannabis education, it is also worth mentioning that accurately estimating cannabinoid effects must be treated with some subjectivity. Each patient/customer has an individual reaction to each type of cannabis strain and experimentation with different types of strains is essential for new patients and customers to achieve desired results.

Element 7 suggests patients, primary caregivers and customers keep a journal and record both body and head reactions to each strain, which will remove much of the guesswork from selecting the strains that work best for them. Our content management system will automatically send an email 12 hours after a patient, primary caregiver or customer has made a purchase which requires that product feedback following a “first time” purchase of a given product, and prior to the patients and customers next purchase to ensure we are receiving as much feedback as possible.

Patient and Customer Education
One of our core beliefs and strengths is that education is the most efficient tool in shaping and empowering patients and customers. In providing access and resources to accurate and relevant information and insight, Element 7 is enabling potential and existing patients and customers to make better, more informed decisions about how they feel about cannabis, what products they like to try and will continue to use, and how to incorporate cannabis consumption into their lives as part of a holistic approach to achieving an ideal work-life balance.

We have developed several Educational tools and resources that are incorporated into our delivery operations. These platforms and materials include:

Mobile App
Our Company has developed an interactive application that customers can use to make purchases, place orders and deliveries, and access educational and informative tools and resources to further their understanding of cannabis, our products and other cannabis-specific issues that are discussed, analyzed, reported or discussed around the world. We are currently developing a platform within the app that supports a community-based discussion board, where our customers will be able to reach out directly to other customers across the country, start support groups, discussion groups or simply make comments and engage in dialogue with other cannabis consumers and patients.

Industry Websites and Platforms
We have developed partnerships with a range of industry bodies and groups including Weedmaps, CannaGather, The Marijuana Show and WomenGrow, so that our informative and educational cannabis materials can be delivered to the audiences of these platforms and industry bodies. This allows us to maximize our media efficiency, and drive messaging awareness to a much broader cannabis customer than those that shop at our outlets.

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FULFILLMENT PROCEDURES AND POLICIES
Transportation Vehicle Requirements
Element 7 will strictly adhere to all rules, requirements and regulations regarding transportation of cannabis within the state of California, as they are created and modified by City and State legislators. No deviation from those rules will be tolerated or allowed. The Head of Security will implement additional measures beyond the minimum requirements (i.e. transfer of currency for remitting City tax payments).

Element 7's delivery process begins when the delivery employee leaves the facility with the cannabis goods for delivery. The delivery process ends when the delivery employee returns to the facility after delivering the cannabis goods, or attempting to deliver the cannabis goods to the patient or customer (s). At no time will an Element 7 delivery employee engage in any activities except for cannabis goods delivery and necessary rest, fuel, or vehicle repair stops. Element 7 will maintain an accurate list of all delivery employees and required personal information.

Any vehicle used in the delivery of cannabis goods will be operated by a delivery employee of Element 7. Vehicles used for delivery will not have any indications on the exterior of the vehicle that may indicate that the delivery employee is carrying cannabis goods for delivery. Only Element 7 employees will be in the delivery vehicle.

In the event that an employee leaves the vehicle unattended, he/she will ensure that the vehicle is locked and equipped with an active vehicle alarm system.

All Element 7 vehicles will be outfitted with a dedicated Global Positioning System (GPS) device for identifying the geographic location of the delivery vehicle and recording a history of all locations traveled to by the delivery employee while engaged in delivery. The GPS device will be owned by Element 7 and used for delivery only. The device will be either permanently or temporarily affixed to the delivery vehicle and will remain active and inside of the delivery vehicle at all times during delivery. At all times, Element 7 will be able to identify the geographic location of all delivery vehicles that are making deliveries and document the history of all locations traveled to and by a delivery employee while engaged in delivery.

Delivery Vehicles
Element 7 utilizes Ford Flex with EcoBoost vehicles for deliveries. Flex with EcoBoost vehicles combine three (3) technologies- turbocharging, direct fuel injection and twin independent variable camshaft timing (Ti-VCT) for power and efficiency.

ELEMENT 7: DELIVERY PLAN
Delivery Dispatch and Management
Element 7 uses Onfleet, a trusted last mile delivery solution used by thousands of companies across dozens of industries including food and beverage, retail, pharmacy, parcel, cannabis and more. To date, Onfleet has powered over 50,000,000 plus deliveries, tracked over 100,000,000 miles and has entered into competitive markets in over 90 countries.

Because of Onfleet’s API configuration, it can seamlessly integrate with existing platforms and programs to create a robust collaboration of state-of-the-art tech that powers and drives a compliant and successful cannabis retail business.

Patients and customers feel more confident purchasing
their cannabis products online when they are able to
receive delivery updates in real time. As a retailer, we feel more confident about our ability to meet and exceed
patient and customer expectations when we are able to
manage our drivers and orders that enable us to be
efficient with our time, resources and operations—while maintaining compliance with all local and state
regulations.

Onfleet provides Auto-dispatching, which means efficient delivering. Auto-dispatching provides Route Optimization for drivers once they are assigned their new deliveries. This feature considers time, location, capacity and traffic to produce the most efficient routing solutions. Assigned
dispatchers don’t always need to assign deliveries but can over-ride any automatic assignments, search and filter
orders and re-assign deliveries as needed.

Last mile delivery management is provided in Real Time, all the time. Not to mention that Onfleet has the features
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needed to maintain local and state compliance via encrypted driver chat, proof of delivery, receipt printing, ID verification and predictive ETAs for dedicated GPS systems.

Delivery Inventory Ledger
• A LIVE delivery inventory ledger will be created which tracks all cannabis goods provided by Element 7 to the delivery driver, orders, purchase and product deliveries;
• For each cannabis good, the delivery inventory ledger will include the following:
- Type of good, the brand, the retail value;
- The track and trace identifier, and the weight, volume or other accurate measure of the cannabis good.
• After each customer delivery, the delivery inventory ledger will be updated to reflect the current inventory in possession of Element 7’s delivery driver. • No product will leave the Facility without being accompanied by an authorized driver of the Facility, together with transportation manifests to show the vehicle information, driver and accompanying personnel information, date and time the delivery business vehicle leaves the facility, the amount of product that is being transported, a breakdown of the individual boxes that will be delivered to individual patients and customers, the route that the vehicle will take, and expected delivery business times for delivery business to each delivery business.

Order Fulfillment (Pre-Delivery)
• Orders will be taken by Element 7 through an SSL Encrypted Responsive Website, Smart-Phone APP and by phone. All Patients and customers will be checked to ensure they have the appropriate ID Card by uploading a photo of their government-issued identification.
• Received Orders will then be approved by the Shift Manager and queued for Packing. A Packer Employee will fulfil the order from stock in either the Ambient Storage Room or Cold Storage Room, where it will be packed in the Packing Room. It will then be queued for Dispatch.
• Packed Orders will be assigned to a Driver by the Dispatch Manager and moved to the Dispatch Room from the Packing Room. Cannabis will only be sold to an individual in an amount consistent with personal possession and use limits allowed by the State of California and enforced by Mendota and Element 7.
• The order fulfilment boxes (plastic) containing cannabis to be delivered to patients and customers will be verified, recorded and sealed. Once sealed they will be loaded into the lock boxes in the delivery business vehicle from the Dispatch Room, employees will ensure that no cannabis goods are visible to the public. Cannabis goods will be locked in a fully enclosed box, container, or cage that is secured on the inside of the vehicle.

ELEMENT 7: DELIVERY PLAN
• Both the Inventory Control Specialist and the driver that will accompany the product will verify the number of boxes, the date and time of delivery business, the date and time that the delivery business vehicle leaves the Facility, and the addresses to which the product will be delivered.
• Element 7 will maintain a database and provide a list of the individuals and vehicles authorized to conduct vehicle dispensing, and a copy of the valid California driver’s license issued to the driver of any such vehicle on behalf of Element 7 to the Mendota Chief of Police.
• Only after the dispatch employee has completed the check with checklist for delivery business will the vehicle then be driven out of the lock area, and immediately began its delivery business route.
• Individuals making deliveries of cannabis or cannabis products on behalf of Element 7 will maintain a physical copy of the delivery request (and/or invoice) and will make it available upon the request of agents or employees of the City of Mendota requesting documentation.
• The total amount of cannabis carried in the vehicle should be equivalent to $5,000 with at least $2,000 of those products assigned to orders placed before the delivery vehicle leaves the facility.
• Delivery vehicles will have compliant exit bags where orders that are assigned to drivers while out on existing deliveries can be placed before the products are handed to the customer or patients.