Planning Commission Resolution #4113 — City Council/Public Finance and Economic Development Authority/Parking Authority, July 17, 2023

CITY OF MERCED
Planning Commission

Resolution #4113

WHEREAS, the Merced City Planning Commission at its regular meeting of June 7, 2023, held a public hearing and considered Zoning Ordinance Amendment #23- 01, initiated by the City of Merced. This application involves changes to the Merced Zoning Ordinance (Title 20 of the Merced Municipal Code) which would amend Merced Municipal Code Section 20.44.170 (Regulation of Commercial Cannabis Activities – Commercial Cannabis Business Permit Required) . This amendment would increase the maximum number of retail cannabis dispensaries allowed within the City from five to ten, add a new section allowing Council consideration of alternative sites for retail cannabis business applications under appeal, include local ownership requirements for cannabis retail permits issued after November 3, 2021, and various other amendments; and,

WHEREAS, the Merced City Planning Commission concurs with Findings/Considerations A through D of Staff Report #23-439 (Exhibit A); and,

NOW THEREFORE, after reviewing the City’s Draft Environmental Determination, and discussing all the issues, the Merced City Planning Commission does resolve to hereby recommend to City Council adoption of a Categorical Exemption regarding Environmental Review #23- 12, and approval of Zoning Ordinance Amendment #23-01, as outlined in Exhibit B and subject to the Findings set forth in Exhibit A attached hereto and incorporated herein by this reference.

Upon motion by Commissioner Camper, seconded by Commissioner Delgadillo, and carried by the following vote:

AYES: Commissioner Delgadillo, Greggains, Camper, and Chairperson Harris
NOES: None
ABSENT: Commissioner White, Gonzalez (1 vacancy)
ABSTAIN: None

ATTACHMENT 1

EXHIBIT A
OF PLANNING COMMISSION RESOLUTION #4113

Page 1 ends

Findings and Considerations
Planning Commission Resolution #4113
Zoning Ordinance Amendment #23-01

FINDINGS/CONSIDERATIONS:

General Plan Policies Related to This Application
A) The proposed zoning ordinance amendment would make changes to the City’s Merced Municipal Code (MMC) Section 20.44.170 (Commercial Cannabis Businesses), per the directive of the City Council. General Plan Implementing Action L-2.3.d calls for the City to review and update the Zoning Ordinance as needed.

Proposed Changes to Zoning Ordinance
B) The ordinance changes are contained in the Draft Ordinance at Exhibit B of Planning Commission Resolution #4113 (Attachment A of Planning Commission Staff Report #23-349 ) and presented in redline form at Attachment B of Planning Commission Staff Report #23-349. In general, the changes directed by the City Council during their meeting of March 20, 2023, can be summarized as follows:
1) Land Use Table 20.44 -1(Footnote 1) and Section 20.44.170 (F)(1) would increase the maximum number of retail cannabis dispensaries allowed within the City from 5 to 10.
2) Section 20.44.170(L)(4)(g) would add a new section allowing Council consideration of alternative sites for retail cannabis business applications under appeal.
3) Section 20.44.170(L)( 7)(b)(iii) would include local ownership requirements for cannabis retail permits issued after November 3, 2021.

Time Frames
C) If recommended for approval by the Planning Commission on June 7, 2023, the Ordinance revisions would be scheduled for a City Council public hearing on July 17, 2023. A second reading and adoption would follow on August 7, 2023, with the Ordinance being effective 30 days later on or about September 6, 2023.

EXHIBIT A
OF PLANNING COMMISSION RESOLUTION #4113

Page 2 ends

Environmental Clearance
D) Planning staff has conducted an environmental review of the project in accordance with the requirements of the California Environmental Quality Act (CEQA), and a Categorical Exemption is being recommended (see Attachment D of Staff Report #23-439).

EXHIBIT A
OF PLANNING COMMISSION RESOLUTION #4113

Page 1 ends

Findings and Considerations
Planning Commission Resolution #4113
Zoning Ordinance Amendment #23-01

FINDINGS/CONSIDERATIONS:

EXHIBIT A
OF PLANNING COMMISSION RESOLUTION #4113

Page 2 ends

ORDINANCE NO. ____

AN ORDINANCE OF THE CITY COUNCIL OF

THE CITY OF MERCED, CALIFORNIA,
AMENDING SECTION 20.44.170,
"REGULATION OF COMMERCIAL

CANNABIS ACTIVITIES
- COMMERCIAL
CANNABIS BUSINESS PERMIT REQUIRED,"

OF THE MERCED MUNICIPAL CODE

THE CITY COUNCIL OF THE CITY OF MERCED DOES
ORDAIN AS FOLLOWS:

SECTION 1. AMENDMENT TO CODE. Section 20.44.170,
"Regulation of Commercial Cannabi s Activities - Commercial Cannabis Permit Required," of the Merced Municipal Code is hereby amended to read as follows:

"20.44.170 -REGULATION OF

COMMERCIAL CANNABIS ACTIVITIES -

COMMERCIAL CANNABIS BUSINESS

PERMIT REQUIRED

A. Zoning Compliance and Commercial
Cannabis Business Permit Requirements

Specific commercial cannabis businesses are allowed
as a special use in the C-C, C-O, C-G, C-N, C-T, B-P,
I-L, and I-H Zoning Districts and Planned
Developments which have the equivalent General Plan
land use designations of those zones. Commercial
cannabis activities are expressly prohibited in all other zones in the City of Merced. Commercial cannabis
businesses shall apply for and conduct business only
in the appropriate zones as described in Table 20.44-1
and the City of Merced's zoning ordinance as a
requisite for obtaining a Commercial Cannabis
Business Permit (CCBP). No commercial cannabis
business may operate in the City of Merced without a
Commercial Cannabis Business Permit.
2 This Land Use Table 20.44-1 shall be used to
determine whether a cannabis business is not
permitted - 'X', or permitted - 'P'. Any Commercial
Cannabis business in the City of Merced shall also
operate in compliance with the City's zoning ordinance.

If a Zoning District is not listed in the Land Use Table in this section, then the use is expressly not permitted.

Commercial
Cannabis
Business
Activities Use
Type
City of Merced Municipal Code Table 20.44‐1 Additional Specific Use
Standards
Land Use
Classification [4]
[5]
C‐C
Zone
C‐O
Zone
C‐G
Zone
C‐N
Zone
C‐T
Zone
B‐P
Zone
I‐L
Zone
I‐H
Zone
Cultivator Greenhouse, Type
A X X X X X P P P Sec.

20.44.170(i)
Cultivator Greenhouse, Type
B X X X X X P P P Sec.

20.44.170(i)
Cultivator Greenhouse, Type
C X X X X X P P P Sec.

20.44.170(i)
Nursery Greenhouse, Type
D X X X X X P P P Sec.

20.44.170(i)
Manufacturing Manufacturing,
non‐volatile X X X X X P P P Sec.

20.44.170(h)
Manufacturing Manufacturing,
volatile X X X X X P P P Sec.

20.44.170(h)
Dispensary [1]
[2]
Pharmaceutical,
medical P P P P P P P X Sec.

20.44.170(f)
Dispensary [1]
[2]
Retail, non‐
medical/combined P P P P P P P X Sec.

20.44.170(f)
Testing
Laboratory No Retail P P P X X P P P Sec.

20.44.170(j)
Distribution
[3] Freight/Transport X X P X X P P P Sec.

20.44.170(k)
3 Footnotes

1. Only five (5) ten (10) dispensaries shall
operate within the Merced City Limits. At least one
(1) of those dispensaries shall also dispense
medicinal cannabis goods. If State law allows
medical and adult use dispensaries on the same
premises, the City of Merced would allow a
combined use, but in no case shall more than five
(5) ten (10) dispensaries of any kind be allowed
within the City of Merced at any one time.

2. Dispensaries (medical or adult use) are
prohibited in the City Center area between 19th and
16th Streets and O Street and Martin Luther King
Jr. Way, including properties fronting on either side
of each of the above streets.

3. Only allowed in General Commercial (C-G)
zones if it meets the pr ovisions of Section

20.44.170 (K)(10).

4. If listed as 'Permitted' in a specific zone
above, then that use is also 'Permitted' in Planned
Development (P-D) zones that have the equivalent
General Plan land use designation as that zone.

5. No cannabis dispensary may be located
within a 1,000-foot radius from a school or within a
600-foot radius from a day care center, youth
center, library or public park that is in existence
at the time the Application for a Commercial
Cannabis Business Permit is submitted to the
City, as required in Merced Municipal Code
Section 20.44.l 70(E)(3)(f). No cultivation facility,
manufacturing facility, testing facility or any other
commercial cannabis business facility may be
located within a 600-foot radius from a school, day
4 care center, youth center, library, or public park
that is in existence at the time the Application
for a Commercial Cannabis Business Permit is
submitted to the City, as required in Merced
Municipal Code Section 20.44.170(E)(3)(f).

5 Land Use Classifications:

Greenhouse, Commercial A - Permitted cultivation
area: 0 to 5,000 square feet
Greenhouse, Commercial B - Permitted cultivation
area: 5,000 to 10,000 square feet
Greenhouse, Commercial C - Permitted cultivation
area: 10,000 to 22,000 square feet
Greenhouse, Commercial D - Permitted cultivation
area: 22,000 square feet

B. Cultivation of Cannabis for Personal Use
in Residential Zones

1. When authorized by State regulations, an
authorized resident shall be allowed to cultivate
cannabis only in a private re sidence in a residential
zone, only indoors, and only for personal use, subject
to the following regulations:

a. The cannabis cultivation area shall be
located indoors within a resi dential structure and shall not exceed fifty square feet and not exceed ten feet in height, nor shall it come with in twelve (12) inches of the ceiling or any cultivation lighting, nor shall it exceed the limits set forth in Section 20.44.170(8)(I)(i) below.

Cultivation in a greenhouse or other legal accessory
structure on the property of the residence, but not
physically part of the home, is permitted as long as it is fully enclosed, secure, not visible from a public right- of-way, and meeting all requirements in this Chapter.

Additionally, all structures must meet setback, height
limitations, and be constructed in accordance with all
local requirements as well as all applicable Building
Codes.

b. If the resident is not the property owner,
they must have the prope rty owner's express written
authorization to conduct cannabis cultivation. Nothing
contained herein shall limit the property owners right

6 to deny or revoke permi ssion to allow cannabis
cultivation as set forth by State law.

c. The use of gas products such as, but not
limited to CO2, butane, methane, or any other
flammable or non-flammable gas for marijuana or
cannabis cultivation or processing is prohibited.

d. There shall be no exterior visibility or
evidence of cannabis cultivation outside the private
residence from the public right-of-way, including but
not limited to any marijuana or cannabis plants,
equipment used in the growing and Cultivation
operation, and any light emanating from cultivation
lighting.

e. The authorized resident shall reside full-
time on the property where the cannabis cultivation
occurs.

f. The residence shall include fully functional
and usable kitchen, bathroom, and bedroom areas for
their intended use by the resident authorized grower,
and the premises shall not be used primarily or
exclusively for cannabis cultivation.

g. The cannabis cultivation area shall be in
compliance with the current adopted edition of the
California Building Code including§ 1203.4 Natural
Ventilation or§ 402.3 Mechanical Ventilation (or
equivalent), as amended from time to time.

h. The Building Official may require additional
specific standards to meet the California Building Code and Fire Code, including but not limited to, installation of fire suppression sprinklers.

i. The cannabis cultivation area shall not result
in a nuisance or adversely affect the health, welfare, or safety of the resident or nearby residents by creating

7 dust, glare, heat, noise, noxious gasses, odors, smoke, traffic, vibration, or other impacts, or be hazardous due to use or storage of materials, processes, products or
wastes.

j. No more than six (6) cannabis plants,
mature or immature, for pers onal use, are permitted per residence for indoor pers onal cultivation under this
Chapter, unless permitted under State regulations.

k. Cannabis in excess of twenty-eight and
one- half (28.5) grams produced by plants kept for
indoor personal cultivation under this Chapter must be
kept in a locked space on the grounds of the private
residence not visible from the public right-of-way.

i. The authorized grower shall not provide
any cannabis in any form to animals or any
minors that are not authorized users under
Medical Marijuana Regulation and Safety
Act or the Adult Use of Marijuana Act.

Anyone found in violation shall be
prosecuted pursuant to State regulations.

ii. Outdoor cultivation of cannabis is
expressly prohibited in all zones and
districts of the City of Merced.

C. Definitions

The definitions are incorporated herein as fully set
forth and are applicable to this ordinance. All
definitions are intended to comply with those set forth by the State of California for all commercial cannabis
activities.

1. 'Applicant' means a person who is required to
file an application for a permit under this chapter,
including an individual owner, managing partner,
officer of a corporation, or any other operator,

8 manager, employee, or agent of a dispensary.

2. '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. 'Cannabis' also means the separated
resin, whether crude or purified, obtained from
marijuana. 'Cannabis' also means marijuana as defined
by Section 11018 of the Calif ornia Health and Safety
Code as enacted by Chapter 14017 of the Statutes of
1972. 'Cannabis' does not incl ude 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 chapter, 'cannabis' does not mean industrial hemp as that term is defined by Section 81000 of the California Food and Agricultural Code or Section 11018.5 of the
California Health and Safety Code.

3. 'Cannabis waste' means waste that is not
hazardous waste, as defined in Public Resources Code
section 40191, that contains cannabis and that has
been made unusable and unrecognizable in the manner
prescribed by the State.

4. 'Canopy' means all of the following:

a. The designated area(s) at a licensed
premises that will contain mature plants at any point
in time;

b. Canopy shall be calculated in square feet
and measured using clearly identifiable boundaries of
all area(s) that will contain mature plants at any point

9 in time, including all of the space(s) within the
boundaries;

c. Canopy may be noncontiguous but each
unique area included in the total canopy calculation
shall be separated by an identifiable boundary such as
an interior wall or by at least 10 feet of open space; and

d. If mature plants are being cultivated using
a shelving system, the surface area of each level shall be included in the total canopy calculation.

5. 'City' means the City of Merced.

6. 'Commercial cannabis business permit (CCBP)'
means a permit issued by th e City pursuant to this
chapter to a commercial cannabis business.

7. 'Commercial cannabis activity' includes the
cultivation, possession, manufacture, processing,
storing, laboratory testing, labeling, distribution,
delivery, or sale of cannabis or a cannabis product,
except as set forth in Section 19319 of the Business
and Professions Code, related to qualifying patients
and primary caregivers.

8. 'Commercial vehicle' means a vehicle as
defined in Vehicle Code section 260.

9. 'Concentrated cannabis product' means
a consolidation of cannabinoids made by
dissolving cannabis in its plant form into a
solvent.

10. 'Cultivation' means any activity involving
the propagation, planting, growing, harvesting,
drying, curing, grading, or trimming of cannabis.

11. 'Customer' means a natural person 21 years
of age or over or a natural person 18 years of age or

10 older who possesses a physician's recommendation.

12. 'Day Care Center' means any child day care
facility other than a family day care home, and
includes
infant centers, preschool s, extended day care
facilities, and school age child care centers as defined in Health and Safety Code Sections 1596.76,
1596.7915, 1576.750, and 1596.78.

13. 'Delivery' means the commercial transfer of
cannabis or cannabis products to a customer.
'Delivery' also includes the use by a retailer of any
technology platform owned and controlled by the
retailer, or independently licensed under this
division, that enables cust omers to arrange for or
facilitate the commercial transfer by a licensed retailer of cannabis or cannabis products.

14. 'Delivery employee' means an individual
employed by a licensed dispensary who delivers
cannabis goods from the permitted dispensary
premises to a medical cannabis patient or primary
caregiver or qualified purchaser at a physical address.

15. 'Dispensary' means a premises 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 that delivers cannabis or
cannabis products as part of a retail sale.

16. 'Display' means cannabis goods that are stored in
the licensed dispensary's retail area during the hours of operation.

I 7. 'Display case' means container in the licensed
dispensary retail area where cannabis goods are
stored and visible to customers.

18. 'Distribution' means the procurement, sale,

11 and transport of cannabis or cannabis products
between entities licensed pursuant to the Medical and
Adult Use of Cannabis Regulation and Safety Act and
any subsequent State of California legislation
regarding the same.

19. 'Edible cannabis product' means manufactured
cannabis that is intended to be used, in whole or in part, for human consumption. An edible cannabis product is
not considered food as defined by Section 109935 of the California Health and Safety Code or a drug as defined
by Section 109925 of the California Health and Safety
Code.

20. 'Fully Enclosed and Secure Structure' means
a fully-enclosed space within a building that complies
with the California Building Code ('CBSC'), as adopted
in the City of Merced, or if exempt from the permit
requirements of the CBSC, th at has a complete roof, a
foundation, slab or equivalent base to which the floor
is secured by bolts or similar attachments, is secure
against unauthorized entry, is accessible only through
one or more lockable doors, and is not visible from a
public right-of-way. Walls and roofs must be
constructed of solid materi als that cannot be easily
broken through such as two-inch by four-inch nominal
or thicker studs overlaid wi th three-eighths inch or
thicker plywood or the equivalent. Plastic sheeting,
regardless of gauge, or similar products do not satisfy this requirement. If indoor lighting or air filtration
systems are used, they must comply with the
California building, electrical, and fire codes as
adopted in the City of Merced.

21. 'Free sample' means any amount of cannabis
goods provided to any person without cost or payment
or exchange of any other thing of value.

22. 'Greenhouse' means a facility in which plants
are grown and is inclusive of facilities using solely

12 artificial light and facilities using mixed-light. In order to be lawful and permitted in the City of Merced, a
greenhouse must be a 'Fully Enclosed and Secure
Structure' as defined above in 20.44.170(C), Subsection

20. 23. 'Indoors' means within a fully enclosed
and secure structure as that structure is defined
above in 20.44.170(C), Subsection 20.

24. ‘Labor Peace Agreement’ means an
agreement between a licensee and any bona fide
labor organization that, at a minimum, protects the
City’s proprietary interests by prohibiting labor
organizations and members from engaging in
picketing, work stoppages, boycotts, and any other
economic interference with the applicant’s
business. This agreement means that the applicant
has agreed not to disrupt efforts by the bona fide
labor organization to communicate with, and
attempt to organize and represent, the applicant’s
employees. The agreement shall provide a bona
fide labor organization access at reasonable times
to areas in which the applicant’s employees work,
for the purpose of meeting with employees to
discuss their right to representation, employment
rights under state law, and terms and conditions of
employment. This type of agreement shall not
mandate a particular method of election or
certification of the bona fide labor organization.

25. 'License' means a state license issued under
this division, and includes both an A-license and an
M- license, as well as a testing laboratory license.

26. 'Limited-access area' means an area in which
cannabis goods are stored or held and which is only
accessible to a licensee and the licensee's employees
and contractors.

13 27. 'Medical' or 'Medicinal' have the same meaning
under the terms of this ordinance.

28. 'Medical cannabis goods' means
cannabis, including dried flower, and
manufactured cannabis products.

29. 'Medical cannabis patient' is a person whose
physician has recommended the use of cannabis to treat a serious illness, including cancer, anorexia, AIDS,
chronic pain, spasticity, glaucoma, arthritis, migraine, or any other illness for whic h cannabis provides relief.

30. 'Manufacturer' means a licensee 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 relabels its container.

31. 'Manufacturing' or 'manufacturing operation'
means all aspects of the extraction and/or infusion
processes, including proces sing, preparing, holding,
storing, packaging, or la beling of cannabis products.

Manufacturing also includes any processing,
preparing, holding, or storing of components and
ingredients.

32. 'Nonvolatile solvent' means any solvent used
in the extraction process that is not a volatile solvent.

For purposes of this chapter, a nonvolatile solvent
includes carbon dioxide used for extraction, or as it
may be defined and amended by the State.

33. 'Operating hours' means the hours within a day
during which a permitted retail sales outlet may allow
qualified cannabis purchasers and primary caregivers

14 to enter the dispensary premises and purchase cannabis goods.

34. 'Owner' or 'Ownership interest' means an
interest held by a person or entity who is an owner as
defined by State of California commercial cannabis
regulations or who has a financial interest in the
commercial cannabis business of 5% or more. In the
event an entity holds a financial interest in the
commercial cannabis business of 5% or more, any
person who holds a financial interest in said entity of 5% or more is also considered an ' owner' of the
commercial cannabis business.

35. 'Package' and 'Packaging' means any
container or wrapper that may be used for enclosing or
containing any cannabis goods for final retail sale.
'Package' and
' packaging' does not include a shipping container or
outer wrapping used solely for the transport of
cannabis
goods in bulk quantity to a licensee.

36. 'Patient or qualified patient' shall have the
meaning given that term by California Health and
Safety Code and possesses a valid physician's
recommendation.

37. 'Person' includes any individual, firm,
partnership, joint venture, association, corporation,
limited liability company , estate, trust, business trust, receiver, syndicate, or any other group or combination
acting as a unit, and the plural as well as the singular.

38. 'Pest' means undesired insect, rodent,
nematode, fungus, bird, vertebrate, invertebrate, weed, virus, bacteria, or other microorganism that is injurious to human health.

39. 'Physician's recommendation' means a
recommendation by a physician and surgeon that a

15 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.

40. 'Premises' means the designated structure(s) and
land specified in the application that are in possession of and used by the applicant or licensee to conduct the commercial cannabis activity.

41. 'Pre-roll' means dried cannabis flower rolled in
paper prior to retail sale.

42. 'Primary Caregiver' has the same meaning as
that term is defined in S ection 11362.7 of the Health
and Safety Code.

43. 'Private security officer' has the same
meaning as that term as defined in the State of
California Business and Professions Code section
7574.01.

44. 'Publicly owned land' means any building or real
property that is owned by a city , county, state, federal, or other government entity.

45. 'Purchase' means obtaining cannabis goods
in exchange for consideration.

46. 'Purchaser' means a person who is engaged in
a transaction with a licensee for purposes of obtaining cannabis goods.

47. 'Quarantine' means the storage or
identification of cannabis goods, to prevent
distribution or transfer of the cannabis goods, in a
physically separate area clearly identified for such
use.

48. 'Retail area' means a building, room, or

16 other area upon the licensed dispensary premises in
which cannabis or other goods are sold or
displayed.

49. 'School' means those sites upon which full-time
instruction in any of grades K through 12 is provided
where the primary purpose is education, as determined
in the sole discretion of the City Council, and which
are identified as a school on th e City's official List of Schools' as provided in Section 20.44.170(E)(3)(f)(i).
'School ' does not include any private site upon which
education is primarily conducted in private homes.

50. 'Security monitoring' means the continuous and
uninterrupted attention to potential alarm signals that can be transmitted from a security alarm system for the purpose of summoning law enforcement.

51. 'Selection Panel' means the group consisting
of the City Manager, Chief of Police, and Director of
Development Services, or their designees, convened
for the purpose of evaluating applicants based on the
merit- based scoring system, and making
recommendations to
the Planning Commission with
respect to issuance of Commercial Cannabis
Business Permits.

52. 'Sell,' 'sale,' and 'to sell' include any
transaction whereby, for any consideration, title to
cannabis is transferred from one person to another,
and includes the delivery of cannabis goods 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 goods by a licensee
to the licensee from whom such cannabis goods were
purchased.

53. 'Sublet' means to lease or rent all or part of
a leased or rented property.

17 54. 'State' means the State of California.

55. 'Testing Laboratory' means a facility, entity,
or site that offers or performs tests of cannabis or
cannabis products, and that is accredited as
operating to ISO standard 17025 by an accrediting
body, and registered with the State Department of
Public Health.

56. 'Vehicle alarm system' is a device or series of
devices installed to discourage theft of the commercial vehicle or its contents and is intended to summon
general attention or to summon law enforcement as a
result of an i
ndication of an attempted breach of the
commercial vehicle.

57. 'Volatile solvent' means any solvent that is or
produces a flammable gas or vapor that, when present in the air in sufficient quantities, will create explosive or ignitable mixtures. Examples of volatile solvents include but are not limited to, butane, hexane, propane, and
ethanol, or as it may be defined and amended by the
State.

58. 'Wholesale' means the sale of cannabis goods to
a distributor for resale to one or more dispensaries.

59. 'Youth Center' means any public or private
facility that is primarily used to host recreational or social a ctivities for minors, including, but not limited to, private youth membership organizations or clubs,
social service teenage club activities, video arcades
with over 10 or more video games on the premises, or
similar amusement park facilities, or as otherwise
described in Health and Safety Code Section
11353.l(e)(2).

18 D. Compliance with State and Local
Licensing Requirements

Any dispensary, cultivation facility, manufacturing
facility, testing facility or any other commercial
cannabis activity as defined by the State of California or the City of Merced shall operate in conformance
with all regulations and standards set forth in this
Section of the Municipal C ode to assure that the
operations of the dispen sary, cultivation facility,
manufacturing facility, distribution facility, testing
facility or any other commercial cannabis activity as
defined by the State of Ca lifornia or allowed by the
City of Merced are in compliance with local and State
law and are established to mitigate any adverse
secondary effects from its operations.

Cannabis operators shall be required to obtain a State
license once they become av ailable, and shall comply
with any applicable State licensing requirements, such
as operational standards and locational criteria.

Multiple cannabis uses and licenses proposed on any
one site shall occur only if authorized by the State and the City of Merced and onl y if all uses proposed are
allowed pursuant to the City's Zoning Code.

E. General Provisions for Commercial
Cannabis Activities in the City of Merced

1. Commercial Cannabis Business Permit Required

a. Each business shall have a Commercial
Cannabis Business Permit specific to the business
activity defined by the State pertaining to that activity and whether the activity is medical or non-medical or
any other commercial cannabis activity the State may
define and as they may be amended. Following is a list
of current license types:

19 i. Cultivation

ii. Distribution

iii. Manufacturing

iv. Retail sales (Dispensary)

v. Testing

b. It shall be unlawful for any person,
association, partnership, corporation, or other entity to engage in, conduct or carry on, in or upon any
premises within the City of Merced, any commercial
cannabis business without a Commercial Cannabis
Business Permit. A cannabi s business shall register
and obtain a Commercial Cannabis Business Permit
from the City of Merced prior to operation. The
Commercial Cannabis Business Permit applicant shall
pay an annual non-refundable regulatory fee in an
amount and at a frequency established by the City
Council by resolution.

c. A copy of the Commercial Cannabis
Business Permit shall be displayed at all times in a
place visible to the public.

d. A Commercial Cannabis Business Permit
shall be valid for one (1) year or until December 31 of each year, unless sooner revoked. In the event a
Commercial Cannabis Business Permit is issued on or
after October 1, said pe rmit shall be valid until
December 31 of the following calendar year. No
permit granted herein shall confer any vested right to
any person or business for more than the above-
referenced period.

e. A Commercial Cannabis Business Permit
shall not be issued to an individual or a business entity owned or managed in whole or in part by an individual

20 or a business entity employing an individual who has a previous conviction for or has entered a plea of nolo
contendere/no contest to any of the following:

i. A felony offense listed in California
Health and Safety Code Section 11590.

ii. A felony offense listed in California
Penal Code Section 667.S(c).

iii. A felony offense listed in California
Penal Code Sections l 197.2(c) or
Section 1192.8.

iv. A felony or misdemeanor offense
that substantially relate to the
qualifications, functions, or duties of
the business or profession.

v. A felony conviction involving fraud,
deceit, or embezzlement.

vi. A felony or misdemeanor offense
involving the sale or giving to a minor
of controlled substances, cannabis,
alcohol, or tobacco.

A Commercial Cannabis Business Permit may be
issued, at the discretion of the City, to an individual with a conviction listed above provided a period of
ten (10) years has elapsed in which the individual has
remained free of criminal convictions or violations of
parole or probation, and the individual has either
obtained a certificate of re habilitation pursuant to
Penal Code Section 4852.01 or received
expungement pursuant to California Penal Code
Section 1203.4.

f. The Commercial Cannabis Business

21 Permit shall be issued to the specific
person/persons/entity listed on the Cannabis Permit
Application.

g. A Commercial Cannabis Business
Permit is not transferable except under the terms of
Merced Municipal Code Secti on 20.44.170(L)(7), and
does not run with the land or with the business.

1. Maintenance of R ecords and Reporting

All records for the commerc ial cannabis business of
the following activities shall be maintained and
available to the City of Merced for at least 7 years.

Records shall be produced within 24 hours of a request
by an authorized
City of Merced representative:

a. The business shall obtain and maintain
a valid Seller's Permit from the State Board of
Equalization.

b. Financial records include, but are not
limited to: bank statements, sales invoices, receipts, tax records, and all records required by the California State Board of Equalization under Title 18 California Code of Regulations Section 1968.

c. Personnel records, including each
employee's full name, addre ss, phone number, social
security, or individual tax payer identification number, date of beginning employment, and date of termination
of employment if applicable.

d. Training records, including but not limited
to the content of the training provided and the names
of the employees that received the training.

e. Contracts with other licensees
regarding commercial cannabis activity.

22 f. Permits, licenses, and other local
authorizations to conduct the licensee's
commercial cannabis activity, including BOE
sellers permit.
g. Security records.

h. Records shall be kept in a manner that
allows the records to be produced for the City in
either hard copy or electronic form, whichever the
City requests.

i. Proof of building ownership or
landlord letter acknowledging business type.

J. Proof of insurance.

2. Operational Standards for All
Commercial Cannabis Business Activities

a. Interior and exterior locations of the
business property shall be monitored at all times by
closed circuit cameras fo r security purposes. The
cameras and recording system shall be of adequate
quality, color rendition and resolution to allow the
sufficient identification of any individual committing
a crime on the location premises. Cameras shall record
24 hours a day at a minimum of 20 frames per second.

b. The applicant shall conduct and pay for any
required CEQA reviews and analyses, and pay for all
costs, including those of the City, associated with
project review under CEQA.

c. The surveillance system storage device
or cameras shall be transmission control
protocol/TCP capable of being accessed through the
internet by the
Merced Police Department or their
designee on request.

d. All controlled access areas, security

23 rooms and all points of ingress/egress to limited
access areas and all point of sale (POS) areas shall
have fixed camera coverage capable of identifying
activity occurring within a minimum of twenty (20)
feet. Camera video recordings shall be maintained
unaltered in a secure location for a
period of not less
than thirty (30) calendar days, and be available for
inspection at any time. The City of Merced or law
enforcement may request the recordings in connection
with an investigation. If the recordings are not
voluntarily provided, the City or law enforcement may
seek a warrant or court order for the recordings

e. All commercial cannabis businesses shall
create and maintain an active account within the
State's track and trace system prior to commencing
any commercial cannabis activity. In the event of
system failure, the business shall keep a hard copy
record and transfer the information to the track and
trace system within 24 hours of the system being
available.

f. No cannabis dispensary may be located
within a 1,000-foot radius from a school or within a 600- foot radius from a day care center, youth center,
library or public park that is in existence at the time the Application for a Commercial Cannabis Business
Permit is submitted to the City. No cultivation facility, manufacturing facility, testing facility or any other
commercial cannabis business facility may be located
within a 600-foot radius from a school, day care center, youth center, library, or public park that is in existence at the time the Application for Commercial Cannabis
Business Permit is submitted to the City. For purposes
of this subsection only, a public park shall not include any park designated in Merc ed Municipal Code Section

9.70.030 as a bike path. The distance specified in this section shall be the horizontal distance measured in a
straight line from the property line of the sensitive use noted above to the closest pr operty line of the lot on

24 which the commercial cannabis business shall be
located without regard to intervening structures.

(i) The City shall establish an official "List
of Schools" which are located within the City
of Merced by resolution of the City Council
after a public hearing. Said list shall be
reviewed on an
annual basis on or before
January 31st of each year, and/or whenever a
commercial cannabis business permit for a
dispensary becomes available. If amendments
are needed, the amendments shall be considered
by the City Council at a public hearing.

g. No physical modification of the permitted
premises is allowed wit hout written prior permission
by the City of Merced and payment of any additional
fees required by the City.

h. All commercial cannabis activities shall
provide adequate off-street parking and comply with
the City of Merced Munici pal Code requirements in
Chapter

20.38 Parking and Loading, to service customers
without causing negative impact.

i. The commercial cannabis business
shall provide adequate handicapped parking per
the requirements in the California Building Code.

J. The commercial cannabis business shall
provide adequate interior and exterior lighting for
safety and security as determined by the Police Chief or designee.

k. The commercial cannabis business
shall minimize nuisances such as trash, litter, and
graffiti.

1. Any and all signage, packaging, and

25 facilities shall not be 'attractive', as it is defined by the State, to minors.

m. All commercial cannabis facilities shall
be required to provide an air treatment system that
ensures off-site odors sh all not result from its
operations. This
requirement at a minimum means that
the facility shall be designed to provide sufficient odor absorbing ventilation and exhaust systems so that any
odor generated inside the location is not detected
outside the building, on adjacent properties or public
rights-of-way, or within any other unit located within
the same building as the facility if the use occupies
only a portion of a building. The air
treatment system
must also prevent the build-up of mold within the
facility.

n. A permitted commercial cannabis
business entity shall have 180 days after permit
issuance by the City of Merced to begin initial
operations, unless otherwise approved by the
Development Services Director or designee. A
permitted commercial cannabis business entity that
remains inoperative for more than 60 calendar days
after initial operations begin shall be deemed
'abandoned' and the permit shall be forfeited. A
business may temporarily suspend operations for a
period of time as may be reasonably required to affect
upgrades, modifications, repairs, or other property issue mitigations
as approved by the Development Services
Director or designee.

o. The cannabis business shall comply with
all State and City of Merced regulations regarding
testing, labeling and storag e of all cannabis products.

p. The cannabis business shall meet all
State and local regulations for the disposal of all
cannabis materials and materials used in conjunction
with processing, distributing and cultivating of

26 cannabis as well as any unsold cannabis or cannabis
products.

q. The cannabis business shall conform to
all State regulations regard ing the use of appropriate weighing devices.

r. The cannabis business shall conform to all
State and local regulations regarding water usage. No
liquids of any kind shall be discharged into a public
or private sewage or drainage system, watercourse,
body of water or into the ground, except in
compliance with applicable regulations of the
California Regional Water Quality Control Board
(California Administrative Code, Title 23, Chapter 3).

s. The cannabis businesses' electrical and
plumbing shall comply with State and local
regulations.

t. The cannabis business shall maintain a
comprehensive general liability combined single
occurrence insurance policy issued by an 'A' rated
insurance carrier in an amount no less than two
million dollars and naming the City of Merced as
additional insured.

u. No free samples of any cannabis or
cannabis product may be distributed at any time.

v. All agents, private security officers or
other persons acting for or employed by a licensee shall display a laminated identification badge at least 2" X 2" in size, issued by the licensee. The badge, at a
minimum, shall include the licensee's 'doing business
as' name and license number, the employees first and
last name, and a color photo of the employee that
shows the full front of
the employee’s face.

w. The commercial cannabis business shall

27 have a centrally-monitored fire and burglar alarm
system which shall include all perimeter entry points
and perimeter windows.

x. A licensee shall ensure a licensed alarm
company operator or one or more of its registered alarm agents installs, maintains, monitors and responds to the alarm system. The alarm company shall obtain a City
of Merced business license.

y. Meet all State deadlines for applying for a
State license and receive a State license within six (6) months after the date the State begins issuing licenses.

This may be waived if the State has longer delays in
issuing licenses of the type the commercial cannabis
business seeks. The permittee must inform the City in
writing within 10 days of receipt of a State license.

Said notification shall be addressed to the Director of Development Services or designee at 678 W. 18th St.,
Merced, CA 95340.

z. All persons hiring employees to engage in
commercial cannabis activities shall document
compliance with the following employee safety
practices:

i. Emergency action response planning
as necessary
ii. Employee accident reporting
and investigation policies

iii. Fire prevention

iv. Hazard communication policies,
including maintenance of material safety
data sheets

v. Materials storage and handling
policies

28 vi. Personal protective equipment
policies
vii. Operation manager contacts
viii. Emergency responder
contacts
ix. Poison control contacts
aa. All persons with ownership interest; and
all employees agents, officers or other persons acting for or employed by a permittee must be at least 21
(twenty-one) years of age.

F. Additional Regulations for Dispensary
and Retail Sales of Cannabis

1. Only five (5) ten (10) dispensaries shall
operate within the Merced City Limits, regardless of
the location's compliance with any other Section
specified in this ordinance. At least one (1) of those
dispensaries shall also dispense medicinal cannabis
goods. If State law allows medical and adult use
dispensaries on the same premises, the City of
Merced would allow a combined use, but in no case
shall more than five (5)ten (10) dispensaries of any
kind be allowed within the City of Merced.

2. No retail cannabis facility may engage in
check cashing activities at any time.

3. Only one dispensary permit per person with
ownership interest is allowed in the City of Merced.

Any person with community property rights of an
ownership interest is considered a person with
ownership interest in this section.

29 4. Restrooms shall rema in locked during
business hours and not open to the public.

5. The total number of disp ensaries in operation
shall be determined based on the number of locations
which have been issued a Commercial Cannabis
Business Permit for a di spensary by the City.

6. Display of cannabis products shall be limited
to only an amount necessary to provide a visual
sample for customers.

7. At all times, when the cannabis dispensary is
open to the public, the dispensary shall provide at
least one security guard who is registered with
Bureau of Security and Investigative Services, and
possesses a valid and current security guard
registration card on their person while on-duty.

8. Security guards are permitted, but not
mandated, to carry firearms.

9. All cannabis products available for sale shall
be securely locked and stored

10. The security guard and cannabis dispensary
personnel shall monitor th e site and the immediate
vicinity of the site to ensu re that patrons immediately leave the site and do not consume cannabis in the
vicinity of the dispensary or on the property or in the parking lot.

11. Medical Cannabis Dispensa ries shall maintain
the full name, address, and telephone number(s) of
all patient members to whom the business provides
medical cannabis, and a copy of a physician-issued
recommendation card or State-issued card for all
patient members.

30 12. Dispensaries shall also record on the video
survei11ance system point-of-sale areas and areas
where cannabis goods are displayed for sale.

13. Any commercial cannabis retail or medical
retail sales facility shall be open to the public a
minimum of 40 hours per week, unless otherwise
specified in the Commercial Cannabis Business
Permit.

14. Hours of operation in Commercial Office (C-
O) zones shall be limited to no earlier than 8 a.m.

Pacific Time and no later than 7 p.m . Pacific Time.

Hours of operation in all other zones shall be limited
to no earlier than 8 a.m. Pacific Time and no later
than 10 p.m. Pacific Time, unless zoning regulations
specify more restrictive hours .

15. Exterior signage shall be limited to one wall
sign not to exceed twenty (20) square feet in area.

Interior signage or advertising may not be visible
from the exterior. No temporary signs (banners, A-
frames, etc.) or window signs are allowed.

16. On-site consumption of cannabis or cannabis
products is specifically pr ohibited on the premises at all times. The following information shall be
provided on a sign posted in a conspicuous location
inside the cannabis dispensary: 'Smoking, ingesting or
consuming cannabis on this property or within 100
feet of the business is prohibited.'

17. An adult use license shall not sell cannabis
products to persons under 21 years of age or allow any
person under 21 years of age on its premises, unless
such licensee a1so holds a medicinal license and the
licensee holds a CCBP for both adult use and
medicinal cannabis. A medicinal licensee may sell

31 cannabis products to and allow on the premises, any
person 18 years of age or older who possesses a valid
government issued identification card, and either a
valid county-issued identification card under Section
11362.712 of the Health and Safety Code or a valid
physician's recommendation for himself or herself or
for a person for whom he or she is a primary caregiver .

18. Adequate signage shall clearly state that the
City of Merced has not tested or inspected any
cannabis product for pesticides, or other regulated
contaminants, distributed at this location.

19. No recommendations from a doctor for
medical cannabis shall be issued on-site.

20. Shipments of cannabis goods may only
be accepted during regular business hours.

21. There shall be no on-site sales of alcohol or
tobacco products, and no on-site consumption of
food, alcohol, or tobacco by patrons.

22. Inventory shall be secured and locked in a
room, safe, or vault, and in a manner reasonably
designed to prevent diversion, theft, and loss during
non-business hours.

23. No cannabis product shall be visible from the
exterior of the business.

24. All required labelling sh all be maintained on
all product, as required by State regulations, at all
times.

25. The business shall post signs that spell out the
'Prohibited Conduct Involving Marijuana and Marijuana
Products' contained in Health and Safety Code Section
11362.3 in a conspicuous manner on the business
premises for the education of patrons. The City shal1

32 develop a standard format and content for such signs.

26. The use of vending machines (i.e. a machine
that dispenses articles when a coin, bill, or token is
inserted) to dispense cannabis is strictly prohibited.

27. No drive-through facilities shall be allowed and
no cannabis shall be sold through a drive-through
facility.

G. Additional Regulations for
Commercial Cannabis Delivery Services

1 . Commercial cannabis deliveries may be made
only from a commercial cannabis dispensary permitted
by the City in compliance with this ordinance, and in
compliance with all State regulations.

2. All employees who deliver cannabis shall have
valid identification and a copy of the dispensary's
Commercial Cannabis Business Permit at all times
while making deliveries.

3. All commercial cannabis businesses shall
provide proof of insuran ce in a minimum amount of
$1,000,000 for any and all ve hicles being used to
transport cannabis goods.

4. Deliveries may only take place during the hours
of 8:00 a.m. and 7:00 p.m. daily.

5. A customer requesting de livery shall maintain
a physical or electronic copy of the delivery request
and s
hall make it available upon request by the
licensing authority and la w enforcement officers,
only as required by State regulations.

6. The following applies to all deliveries of
cannabis products:

33 a. May only be made to a physical
address in California; and

b. A licensed delivery employee shall not
leave the State of Calif ornia while possessing
cannabis products.

7. A dispensary shall maintain a list of all
deliveries, including the address delivered to, the
amount and type of produc t delivered, and any other
information and for the durati on of time required by
State regulations.

8. A cannabis business shall only deliver cannabis
in aggregate amounts as ordered by the customer. A
cannabis business shall ensure compliance with State
delivery limits as they regard the amount of cannabis
and cannabis products.

9. A manifest with all information required in
this section shall accompany any delivery person at
all times during the delivery process and delivery
hours.

10. Any delivery method shall be made in
compliance with State regulations and as it may be
amended, including use of a vehicle that has a
dedicated GPS device for identifying the location of
the vehicle (cell phones and tablets are not
sufficient).

11. The maximum limit of any cannabis goods
carried by the delivery vehicle may not exceed
$3,000 at any time.

12. Each delivery request shall have a receipt
prepared by the dispensary with the following
information:

34 a. Name and address of the
licensed dispensary;

b. The name of the employee who
delivered the order;

c. The date and time the delivery request was
made;

d. The complete delivery address;

e. A detailed description of the cannabis
goods requested for delivery including the weight or
volume, or any accurate measure of the amount of
cannabis goods requested;

f. The total amount paid for the
delivery including any fees or taxes; and

g. At the time of the delivery, the date and
time delivery was made, and the signature of the
person who received the delivery.

13. The delivery business shall provide a flyer that
spells out the 'Prohibited Conduct Involving
Marijuana and Marijuana Products' contained in
Health and Safety Code Section 11362.3 to all
delivery customers. The City shall develop a standard
format and content for such flyers.

H. Additional Requirements for
Manufactured Cannabis Businesses

1. A licensed cannabis manufacturing facility
may conduct all activities permitted by the State.

This includes, but is not limited to, volatile and

35 non-volatile extractions, repackaging and
relabeling, and infusions.

2. Any manufacturing activity that will be
conducted by the licensee shall be included on the
application. No additional manufacturing activity can
be conducted without applying for and receiving
written permission from the City of Merced for that
additional activity.

3. At all times, the cannabis manufacturing
facility will be compliant with all State regulations
for cannabis manufacturing including Health and
Safety Code 11362.775 and as it may be amended.

4. Inspections by the City Fire Chief or designee
may be conducted anytime during the business’
regular business hours.

5. Cannabis manufacturing facilities shall not
contain an exhibition or product sales area or allow for retail distribution of products at that location.

6. All cannabis manufacturing activities shall
occur indoors within a fully enclosed and secured
structure and also within a secure fence at least eight (8) feet in height that fully encloses the premises. The fence must include a lockable gate(s) that is locked at all times, except for during times of active
ingress/egress. Said fence shall not violate any other
ordinance, code section, or provision of law regarding
the height, location, materials, or other fencing
restrictions and shall not be constructed or covered
with plastic or cloth. All screening shall conform to
the requirements of applicable area, community,
specific and design plans. Notwithstanding the
foregoing fencing requireme nts, the Director of
Development Services shall have the discretion to

36 grant an exception in the event fencing which fully
encloses the premises is impossible or impractical,
and there are other appropri ate security measures in
place on the premises. Outdoor manufacturing of
cannabis is expressly prohibited.

I. Additional Requirements for
Cannabis Cultivation Businesses

1. The cannabis business shall register with
the Department of Pesticide Regulation if using
any pesticides.

2. From a public right-of-way, there shall be
no exterior evidence of marijuana cultivation.

3. The Building Official may require additional
specific standards to meet the California Building Code and Fire Code, including but not limited to installation of fire suppression sprinklers.

4. Compliance with Section 13149 of Water Code
as enforced by the State Water Resources Control
Board.

5. All outdoor lighting used for security
purposes shall be shielded and downward facing.

6. The use of generators for cultivation is
prohibited, except for temporary use in the event of a
power outage or emergency.

7. Cannabis plants shall not be visible from offsite
or the public right-of-way. All cannabis cultivation
activities shall occur within a fully enclosed and secured structure and within a secure fence at least eight (8)
feet in height that fully encloses the premises. The
fence must include a lockable gate(s) that is locked at all times, except for during times of active
ingress/egress. Said fence shall not violate any other

37 ordinance, code Section, or provision of law regarding the height, location, materials, or other fencing
restrictions and shall not be constructed or covered
with plastic or cloth. All screening shall conform to the requirements of applicable area, community, specific
and design plans. Notwithstanding the foregoing
fencing requirements, the Director of Development
Services shall have the discretion to grant an exception in the event fencing which fully encloses the premises is impossible or impractical, and there are other appropriate security measures in place on the premises. Outdoor
cultivation of cannabis is expressly prohibited.

J. Additional Requirements for Cannabis
Testing Laboratory Businesses

1. A licensed cannabis testing facility shall
comply with all State regulations.

2. Any cannabis testing facility shall maintain
all certifications required by the State.

3. A licensed cannabis testing facility business, its
owners and employees may not hold an interest in any
other cannabis business ex cept another testing
business.

4. Inspections by the City Fire Chief or designee
may be conducted anytime during the business's regular
business hours.

K. Additional Requirements for
Cannabis Distribution Businesses

1. A licensed cannabis distribution facility
shall comply with all State regulations.

2. Any cannabis distribution facility shall provide
proof of a bond of at least five thousand dollars to
cover the costs of destruction of cannabis or cannabis

38 products if necessitated by a violation of licensing requirements.

3. Inspections by the City Police Chief or
designee may be conducted anytime during the
business's regular business hours.

4. A distributor shall ensure that all cannabis
goods batches are stored separately and distinctly from other cannabis goods batches on the distributor's
premises.

5. A distributor shall ensure a label with the
following information is physically attached to
each container of each batch:

a. The manufacturer or cultivator's name
and license number;

b. The date of entry into the
distributor's storage area;

c. The unique identifiers and batch
number associated with the batch;

d. A description of the cannabis goods
with enough detail to easily identify the batch; and

e. The weight of or quantity of units in the batch.

6. A distributor shall store harvest batches and
edible cannabis products that require refrigeration at 35 to 42 degrees Fahrenheit. In addition, a distributor shall store harvest batches in a da rkened area with no more
than 60% humidity.

7. A distributor shall store medical cannabis goods
in a building designed to permit control of temperature and humidity and shall prevent the entry of

39 environmental contaminants such as smoke and dust.

The area in which medical cannabis goods are stored
shall not be exposed to direct sunlight. A distributor may not store medical cannabis goods outdoors.

8. Employee breakrooms, eating areas, changing
facilities, and bathrooms shall be completely
separated from the storage areas.

9. All cannabis distribution activities shall occur
within a fully enclosed and secured structure and within a secure fence at least eight (8 ) feet in height that fully encloses the distribution area. The fence must include a lockable gate(s) that is lock ed at all times, except for during times of active ingress/egress. Said fence shall not violate any other ordinance, code Section, or provision of law regarding the height, location, materials, or
other fencing restrictions and shall not be constructed or covered with plastic or cloth. All screening shall
conform to the requirements of applicable area,
community, specific and design plans. Notwithstanding
the foregoing fencing requirements, the Director of
Development Services shall have the discretion to grant an exception in the event fencing which fully encloses
the premises is impossible or impractical, and there are other appropriate security measures in place on the
premises.

10. If located in a General Commercial (C-G) zone,

a. The cannabis distribution business shall
be located on a parcel no less than 20,000 square feet
in size; and

b. All loading and unloading activities shall
take place within the secu red fenced area required
above.

L. Commercial Cannabis Business
Permit Selection Process

40 1. Selection Process for Dispensaries/Retail Sales
(Limited Number of Permits Available)

a. The Commercial Cannabis Business
Permit selection process will be conducted in two
phases, Phase 1 and Phase 2. In Phase 1, each
Applicant interested in operating a commercial
cannabis business will pay an application fee in an
amount established by the City Council by resolution.

The application will be reviewed for completeness by
the Director of Development
Services or designee.

b. A pre-application conference with the
Director of Development Services is strongly
encouraged. A pre-applica tion conference can be
scheduled by calling 209-385-6858 during regular City
of Merced business hours.

c. The City of Merced has established a
merit based scoring system to objectively award
permits as described in the application documents in
Phase 2 to be used in the event that there are more
applications than there are Commercial Cannabis
Business Permits for a specific license type, such as
for retail dispensaries.

d. The initial application period shall be 21
calendar days from the date the applications are released.

Should the 21st day fall on a day when City Hall is
closed, the application period shall be extended to the next open day at 4:00 p.m. Following the application
period, the Director of Development Services or
designee shall stop accepting applications and review
all applications received as described in Phase I. The
Director of Development Services or designee will
evaluate the applications received and determine the
eligibility of each application. Each application that is complete and in compliance with the application
requirements in Phase 1 shall be placed on the

41 'Qualified Commercial Cannabis Business Application
List- Dispensaries/Retail Sales' and shall be notified in writing that they are a 'Qualified Commercial Cannabis
Business Applicant- Dispensaries/Retail Sales'. The
qualified applicants will be entered into the Phase 2
review
process.

e. If any of the items listed in the application
process are not met, the Director of Development
Services shall notify the a pplicant of the deficiency
within thirty (30) calendar days, after which the
applicant will have 10 calendar days from receipt of
notice to correct the deficiency. Should the 10th day
fall on a day when City Hall is closed, the correction
period shall be extended to the next open day at 4:00
p.m. If the deficiency is not corrected within 10
calendar days, the Director of Development Services
may deny the permit and notify the applicant of this
determination in writing within 10 calendar days
following the Director of Development Services
decision.

f. Commercial Cannabis Business
Permit- Dispensaries/Retail Sales Selection - Phase 1
- Initial Review.

The Director of Development Services or designee(s)
shall determine whether each application demonstrates
compliance with the minimum requirements and be
placed on the 'Qualified Applicant List for
Dispensaries/Retail Sales' and entered into the Phase
2 review process. These requirements include but are
not limited to:

i. All Application documents required in
the City's Phase 1 application package;

ii. Application was submitted during
the application period.

42 iii. Application forms are filled out
completely;
iv. Business Owner(s)/ Applicant(s)
referenced
on the application provide a Live Scan that
was conducted within 14 days prior to
submitting the application;
v. Phase 1 application fee is paid; and
vi. A signed statement that the
proposed
location of the commercial cannabis
business on the application meets the zoning
criteria established in this ordinance
including, but not limited to, any and all
sensitive use separation criteria required
by this ordinance.

g. Commercial Cannabis Business Permit-
Dispensaries/Retail Sales Selection - Phase 2 -
Final Review and Scoring.

Phase 2 requirements include, but are not limited to:

i. Phase 2 application fee is paid and a
comprehensive background check of any
person or entity holding an ownership
interest of 5% or more, is completed to
the satisfaction of the Chief of Police.

Upon completion of the comprehensive
background check, the Chief of Police
shall have the discretion to disqualify an
applicant if any of the following are
discovered:

43 a. Any civil judgment(s) against
any owner for torts involving
dishonesty, including, but not limited
to, fraud, embezzlement, theft, and
breach of fiduciary duties;

b. Any outstanding liens and/or
judgments against any owner for
unpaid state, federal, or local taxes; or

c. Any material misrepresentation
made by the applicant in the application
for a Commercial Cannabis Business
Permit.

In the event an applicant is disqualified by the Chief of Police as provided herein, the applicant shall be given written notice of the disqualification within (10) ten
days of
such decision. Thereafter, the application will
be removed from the Phase 2 process. The decision
of the
Chief of Police shall be final and there shall be
no further right to appeal said decision.

ii. The Building Official or designee has
inspected all structures in which the use is
located to determine that all applicable
standards and requirements are met. If a
building permit is required for site
improvements, Permit issuance will be
deferred until a certificate of occupancy
or other building permit approval is issued.

Additionally, the Building Official has
determined that there are no notices of
nuisance or other code compliance issues
recorded or on the property.

iii. The Zoning Administrator or designee has
issued a Provisional Zoning Clearance
documenting compliance with the

44 following:

a. The use is permitted in the
Zoning District;

b. The location of the cannabis
business meets the distance requirements
from sensitive uses;

c. All land use permits, if any, have
been approved and all conditions of
approval have been met or are in good
standing;
d. No zoning violations exist on
the property;

e. A planning and/or building permit
with a receipt proving payment for
processing from the City of Merced
Planning Department for the property
location the commercial cannabis
business will occupy; and

f. The Provisional Zoning
Clearance shall be subject to final
approval by the Planning Commission.

iv. The Director of Development Services or
designee, after reviewing the applications
approved in Phase 1 and the aforementioned
information, will convene a Selection Panel
composed of the City Manager, Chief of

Police, and the Director of Development
Services, or their designees. The Selection
Panel will review all application
documents required in the City's Phase 1
application package plus an additional
background check of all owners
conducted to the satisfaction of the Chief

45 of Police, and individually score each
application in accordance with the merit
based scoring
system established by
Resolution of the City Council. A complete
description of the merit-based system and
all merit-based considerations shall be
included with the application forms. An
average score for each applicant based
upon the merit-based scoring of the
Selection Panel shall be calculated and
the applications shall be
ranked from
highest to lowest in accordance with the
average score. The applications, in order of
ranking, shall then be placed on the
Qualified Commercial Cannabis Business
Application List-Dispensaries/Retail Sales
in the order of ranking. The Selection Panel
will recommend the highest ranked
applicant(s) on the Qualified Commercial
Cannabis Business Application List-
Dispensaries/Retail to the Planning
Commission for the issuance of a
Commercial Cannabis Business Permit -
Dispensaries/Retail Sales. The number of
applicants recommended to the Planning
Commission by the Selection Panel shall
be the same number of Commercial
Cannabis Business Permits -
Dispensaries/Retail Sales then available.

Any element of an application that
provided a successful applicant with
points on the merit-based scoring system
is subject to review and inspection by the
City, which may include self-certification
by the licensed business, on-site
inspection, or other methods of
enforcement.

a. The Qualified Commercial

46 Cannabis Business Application List-
Dispensaries/Retail established on
September 20, 2018, shall have no
further force and effect after September
20, 2019 and the Ci ty shall have no
further obligations to applicants on said
list.

b. Should a Commercial Cannabis
Business Permit-Dispensaries/Retail
become available after September 20,
2019, whether by creation of a new
permit or by vacancy of
an existing
permit, then a new application period
shall be opened as provided in Section

20.44.170(L)(l).

c. The Qualified Commercial
Cannabis Business Application List-
Dispensaries/Retail shall be v alid for a
period not to exceed one year from the
date the last available Commercial
Cannabis Business Permit-
Dispensaries/Retail is issued by the
Planning Commission. The City shall have
no further
obligations to applicants on the
Qualified Commercial Cannabis Business
Application List-Dispensaries/Retail after
one year has elapsed since the last available
Commercial
Cannabis Business Permit
was issued.
h. Commercial Cannabis Business Permit-
Dispensaries/Retail Sales Selection - Phase 2 –
Planning Commission

The Planning Commission will review the Commercial
Cannabis Business Permit- Dispensaries/Retail Sales
application(s) recommended by the Selection Panel as

47 provided herein, and all other relevant information, and determine if a CCBP sh ould be granted, granted
with conditions, denied, or modified. Prior to issuing
a Commercial Cannabis Business Permit-
Dispensaries/Retail Sales, the Planning Commission will provide all public notices and conduct a public hearing as described in the City of Merced Municipal Code
Section 20.70.010 through S ections 20.70.040. No
Commercial Cannabis Business Permit-
Dispensaries/Retails Sales shall be issued otherwise.

2. Selection Process for All Other Commercial
Cannabis Business Permits (No Limits On the
Number of Permits Available)

a. The Commercial Cannabis Business
Permit- All Other Cannabis Businesses selection
process will be conducted in two phases, Phase 1 and
Phase 2. In Phase 1, each Applicant interested in
operating a commercial cannabis business will pay an
application fee in an amount established by the City
Council by resolution. The app lication will be reviewed for completeness by the Director of Development
Services or designee.

b. A pre-application conference
with the Director of Development Services is
strongly encouraged. A pre-application
conference can be
scheduled by calling 209-385-6858 during regular
City of Merced business hours.

c. The initial application period shall be
21 calendar days from the date the applications are
released.

Should the 21st day fall on a day when City
Hall is closed, the application period shall be
extended to the next open day at 4:00 p.m.

Following the application period, the Director of
Development Services or designee shall stop

48 accepting applications and review all applications
received as described in Phase 1. The Director of
Development Services or designee will evaluate the
applications received and determine the eligibility
of each application. Each application that is
complete and in complian ce with the application
requirements in Phase 1 shall be placed on the
'Qualified Commercial Cannabis Business
Application List-All Other Cannabis Businesses'
and shall be notified in writing that they are a
'Qualified Commercial Cannabis Business
Applicant-All Other Cannabis Businesses'. The
qualified applicants will be entered into the Phase 2
review process. The Director of Development
Services shall maintain the 'Qualified Application
List for All Other Cannabis Businesses'.

d. If any of the items listed in the
application process are not met, the Director of
Development Services shall notify the applicant of
the deficiency within thirty (30) calendar days,
after which the applicant will have 10 calendar
days from receipt of notice to correct the
deficiency. Should the 10th day fall on a day when
City Hall is closed, the correction period shall be
extended to the next open day at 4:00 p.m. If the
deficiency is not corrected within 10 calendar days,
the Director of Development Services may deny the
permit and notify the applicant of this
determination in writing within 10 calendar days
following the Director of
Development Services’
decision. A new application, with new fees, would then
be required for any subsequent consideration of that
same or similar proposal at the same location.

e. Commercial Cannabis Business Permit-
All Other Cannabis Businesses Selection - Phase I -
Initial Review

49 The Director of Development Services or designee(s)
shall determine whether each application demonstrates
compliance with the minimum requirements and be
placed on the 'Qualified Applicant List for All Other
Cannabis Businesses' and entered into the Phase 2
review process. These requirements include, but are
not limited to:

i. All Application documents required in
the City's Phase 1 application package;

ii. Application was submitted during
the application period;

iii. Application forms are filled out completely;

iv. Business Owner(s)/Applicant(s) referenced
on the application provide a Live Scan that
was conducted within 14 days prior to
submitting the application;
v. Phase 1 application fee is paid; and
vi. A signed statement that the
proposed
location of the commercial cannabis
business on the application meets the zoning
criteria established in this ordinance
including, but not limited to, any and all
sensitive use separation criteria required by
this ordinance.

f. Commercial Cannabis Business Permit-
All Other Cannabis Businesses Selection - Phase 2 -
Final Review

Phase 2 requirements include, but are not limited to:

50 i. Phase 2 application fee is paid and a
comprehensive background check of any
person or entity holding an ownership
interest of 5% or more, is completed to the
satisfaction of the Chief of Police. Upon
completion of the comprehensive
background check, the Chief of Police shall
have the discretion to disqualify an
applicant if any of the following are
discovered:

a. Any civil judgment(s) against any
owner for torts involving dishonesty,
including, but not limited to, fraud,
embezzlement, theft, and breach of
fiduciary duties;

b. Any outstanding liens and/or
judgments against any owner for
unpaid state, federal, or local taxes; or

c. Any material misrepresentation by
the applicant in the application for a
Commercial Cannabi s Business Permit.

In the event an applicant is disqualified by
the Chief of Police as provided herein, the
applicant shall be given written notice of
the disqualification within ten (10) days of
such decision. Thereafter, the application
will be removed from the Phase 2 process.

The decision of the Chief of Police shall
be final and there shall be no further right
to appeal said decision.

ii. The Building Official or designee has
inspected all structures in which the use is
located to determine that all applicable

51 standards and requirements are met. If a
building permit is required for site
improvements, Permit issuance will be
deferred until a certificate of occupancy
or other building permit approval is issued.

Additionally, the Building Official has
determined that there are no notices of
nuisance or other code compliance issues
recorded or on the property.

iii. The Zoning Administrator or designee has
issued a Provisional Zoning Clearance
documenting compliance with the
following:

a. The use is permitted in the
Zoning District;

b. The use meets the
distance requirements from
sensitive uses;
c. All land use permits, if any, have
been approved and all conditions of
approval have been met or are in good
standing;

d. No zoning violations exist on the
property;

f. The Provisional Zoning
Clearance shall be subject to final
approval by the
Planning Commission.

52 iv. The Director of Development Services
or designee, after reviewing the
applications approved in Phase I and
reviewing the foregoing information
will make a recommendation to the
Planning Commission to approve or
reject the
application for the
Commercial Cannabis Business Permit
for All Other Cannabis Businesses.

g. Commercial Cannabis Business Permit-All
Other Cannabis Businesses Selection - Phase 2 -
Planning Commission

The Planning Commission will review the Commercial
Cannabis Business applications for All Other Cannabis
Businesses recommended by the Director of
Development Services and all other relevant information and determine if a CCBP should be granted, granted
with conditions, denied, or modified. Prior to issuing a Commercial Cannabis Business Permit for All Other
Cannabis Businesses, the Planning Commission will
provide all public notices and conduct a public hearing as described in the City of Merced Municipal Code
Section 20.70.010 through Se ctions 20.70.040. No
Commercial Cannabis Business Permit shall be issued
otherwise.

3. Minor Modifications to Pending Application
for Commercial Cannabis Business Permit (All
Types).

a. Applicants may make a written request to
the Director of Development Services for a minor
modification to a Commercial Cannabis Business
Permit application at any point in the application
process.

b. The Director of Development Services shall

53 have the discretion to approve minor modifications to the application. Minor modifications to an application
include, but are not limited to, the following:

i. A change to the name of the
proposed business and/or entity;

ii. A change in the organizational
structure of a proposed
business;
iii. A change of owner or ownership
interest, provided that any change in
ownership affecting a financial
interest of 5% or more shall require
a new and separate background
investigation, payment of fees for
the costs for investigation, and must
meet t he requirements of Section

20.44.170(E)( 1)(e);

iv. A change in building elevations,
floor plans, or site plans;

v. A change in operational procedures
or security plans or procedures;

vi. Modifications to the parcel upon
which the proposed Commercial
Cannabis Business will be located,
provided that the modifications do
not otherwise render the parcel
nonconforming to the underlying
zoning district standards.

c. The Director of Development Services will
review any proposed modifica tions to the application
and shall provide a written determination within thirty (30) days from the day the written request is received by the City. The decision of the Director of Development

54 Services shall be final a nd there shall be no further right to appeal.

4. Appeal or Approval of Denial of
Commercial Cannabis Business Permit (All
Types)
The Planning Commission will review the
Commercial Cannabis Business applications and all
other relevant information, and determine if a CCBP
should be granted, as provided in Sections 20.44. l
70(L)(l)(h) and 20.44.170(L)(2)(g) herein . If the
Planning Commission determines that the permit shall
not be granted, the reasons for denial shall be
provided in writing to the applicant. Any decision of
the Planning Commission may be appealed to the
City Council.

a. A written appeal shall be filed within five
(5) business days (excluding official city
holidays) following a Planning Commission
decision.

b. When an appeal has been filed, the matter shall be
scheduled for a public hearing before the City Council. The public hearing should be heard within ninety (90) calendar days of receiving the appeal, unless otherwise mutually agreed to by the applicant and appellant or continued pursuant to

20.44.170(L)(4)(d).

c. Notice of the hearing of the appeal shall
be provided to the applican t at least ten (10) calendar days prior to the public hearing.

d. Any interested person may appear and
be heard regarding the appeal.

e. A matter being heard on appeal may
be continued for good cause.

55 f. The City Council's review shall be a de
novo review. At the conclusion of the hearing, the City Council will make its own determination to grant , or
deny, modify, or hold in abeyance per MMC

20.44.170(L)(4)(g) the permit. The decision of the City Council shall be the City's final decision in this regard and shall be dispositive of the matter subject to
judicial review under the provisions of California
Code of Civil Procedure Sections 1094.5 and 1094.6.

f.g. If the City Council wishes to consider a
change in location for a retail cannabis dispensary
permit under appeal based on its location only, the City Council may agree to hold the appeal in abeyance while
the permit applicant is given an opportunity to submit
an application within 120 days to the Director of
Development Services at no additional cost for a retail cannabis permit at a new location which meets all the
requirements of the City’s ordinance, including the
distance from sensitive uses, and would be eligible for at least the same amount of Merit‐Based non‐discretionary
points based on location per MMC 20.44.170(L)(1)(g)(4)
per the determination of the Director of Development
Services.  If no application for the change in location is submitted within 120 days, the appeal shall be returned to the City Council for further action within 30 days.  If an application for change in location is submitted, the Director of Development Services shall schedule a public hearing before the Planning Commission to be held
within 60 days of the application submittal regarding the change in location only for the Planning Commission to
make a recommendation to the City Council on whether
the change in location should be approved.  Within 60
days of the Planning Commission hearing on this matter, the change in location and the appeal that has been
held in abeyance shall be scheduled and heard at a
public hearing before the City Council.  At the conclusion

56 of the hearing, the City Council shall make its own
determination to grant or deny the appeal, and to
approve or deny the permit and/or the change in
location. The City shall provide all public notices and conduct all public hearings as described in the City of Merced Municipal Code Section 20.70.010 through

20.70.040.

5. Commercial Cannabis Business Permit
Annual Renewal (All Types)
a. Applications for the renewal of a permit
shall be filed with the Director of Development
Services at least sixty (60) calendar days before the
expiration of the current permit. Any permittee
allowing their permit to laps e, or which permit expired during a suspension shall be required to submit a new
application, pay the corresponding original application fees and be subject to all aspects of the selection
process.

b. Any person desiring to obtain a renewal
of their respective permit shall file a written
application under penalty of perjury on the required
form with the Director of Development Services who
will conduct a review. The application shall be
accompanied by a nonrefundable filing fee
established by the City Council to defray the cost of
the review required by this Section. An applicant
shall be required to update the information contained
in their original permit application and provide any
new and/or additional information as may be
reasonably required by the Director of De velopment
Services in order to determine whether said permit
should be renewed. The Development Services
Director, in consultation with the Selection Panel if
they were involved in the or iginal review, will review all Commercial Cannabis Business renewal
applications and all other relevant information, and

57 determine if a renewal CCBP should be granted.

c. The Director of Development Services
or designee may deny the annual renewal of a
Commercial Cannabis Business Permit if the
permittee or the permittee's agent or employee has
committed any one of the following acts:

i. Any act which would be
considered a ground for denial of
the permit in the first instance;

ii. Violates any other provi sion of this
section or any City of Merced or
State law, statute, rule, or regulation
relating to the business's permitted
activity;

iii. Engages in or permits
misconduct substantially related
to the qualifications, functions, or
duties of the permittee;

iv. Conducts the permitted business in
a manner contrary to the health,
safety, or welfare of the public;

v. Fails to take reasonable measures
to control patron conduct, where
applicable, resulting in
disturbances, vandalism, or crowd
control problems occurring inside of
or outside the premises, traffic
control problems, or creation of a
public or private nuisance, or
obstruction of the operation of
another business;

vi. Violates or fails to comply with the

58 terms and conditions of the permit;
or

vii. Fails to pay all applicable City,
State, or Federal taxes and fees.

6. Appeal of Denial of Commercial
Cannabis Business Permit Renewal (All
Types)

a. The Development Services Director, in
consultation with the Selection Panel if they were
involved in the original review, will review all
Commercial Cannabis Business renewal
applications and all other relevant information, and
determine if a renewal CCB P should be granted. If
the Development Services Director determines that
the permit shall not be granted, the reasons for
denial shall be provided in writing to the applicant.

The applicant shall have fourteen (14) calendar
days from the date of the receipt of the written
denial to correct the reas ons for denial and request
in writing reconsideration of permit issuance.

Following review of the amended permit application,
the Development Services Di rector will approve or
deny the permit by providing written notice to the
applicant.

b. Any decision of the Development
Services Director may be appealed to the Planning
Commission. An appeal shall be filed within five (5)
business days (excluding official city holidays)
following a decision by the Director of Development
Services.

i. When an appeal has been filed, the
matter shall be scheduled for a
public hearing before the Planning

59 Commission. The public hearing
should be heard within ninety (90)
calendar days of receiving the
appeal, unless otherwise mutually
agreed to by the applicant and
appellant or continued pursuant to

20.44.170(L)(6)(b)(v).

ii. Notice of the hearing shall be
provided to the applicant at least
ten

(10) calendar days prior to the
public hearing.

iii. Any interested person may appear
and be heard regarding the appeal.

iv. The Planning Commission's review
of the appeal shall be limited to
review of the Development Services
Director decision and shall not be a
de novo review.

v. A matter being heard on appeal
may be continued for good cause.

vi. The decision of the Planning
Commission may be appealed to
the City Council.

a. A written appeal shall be
filed within five (5) business days
(excluding official city holidays)
following a Planning Commission
decision.

b. When an appeal has been filed,
the matter shall be scheduled for a
public hearing before the City

60 Council. The public hearing should
be heard within ninety (90)
calendar days of receiving the
appeal, unless otherwise mutually
agreed to by the applicant and
appellant or continued pursuant to

20.44.170(L)(6)(b)(vi)(e).

c. Notice of the hearing of
the appeal shall be provided to
the applicant at least ten (10)
calendar days prior to the public
hearing.

d. Any interested person
may appear and be heard
regarding the appeal.

e. A matter being heard on
appeal may be continued for good
cause.

f. The City Council's review
shall be a de novo review. At the
conclusion of the hearing, the City
Council will make its own
determination to grant or deny the
permit. The decision of the City
Council shall be the City's final
decision in this regard and shall be
dispositive of the matter subject to
judicial review under the provisions
of California Code of Civil
Procedure Sections 1094.5 and
1094.6.

7. Modifications to Commercial Cannabis
Business Permit (All Types)

61 a. A Commercial Cannabis Permit holder
may make a written request to the Director of
Development Services for modification of an existing
permit at any time.

b. The Director of Development Services shall
have the discretion to approve minor modifications to
the permit. Minor modifications to an application
include, but are not limited to, the following:

i. A change to the name of the
proposed business and/or entity;

ii. A change in the organizational structure of
a proposed business;

iii. A change of owner or ownership interest,
provided that any change in ownership
affecting a financial interest of 5% or more
shall require a ne w and separate
background investigation, payment of fees
for the costs for investigation in
accordance with 20.44.170(O)(7), and
must meet the
requirements of Section

20.44.l70(E)(1)(e). Any business approved
after November 3, 2021, that is awarded
points on the merit-based selection
criteria for local ownership shall not be
approved for any request for minor
modification that proposes to reduce
local ownership below the minimum
threshold for which points were awarded
in the first place, those businesses
awarded prior to November 3, 2021 are
exempt from these requirements ;

iv. A change in building elevations, floor
plans, or site plans;

v. A change in operational procedures

62 or security plans or procedures;

vi. Modifications to the parcel upon which
the proposed Commercial Cannabis
Business will be located, provided that the
modifications do not otherwise render the
parcel nonconforming to the underlying
zoning district standards.

c. Any change to the location of a
Commercial Cannabis Business after issuance of a
Commercial Cannabis Business Permit may require a
new application with payment of associated fees, at the discretion of the Director of Development Services. Any change to the location of a Commercial Cannabis
Business shall be subject to approval by the Planning
Commission. Prior to approval of a change in location
of a Commercial Cannabis Business, the Planning
Commission will provide all pub lic notices and conduct a public hearing as described in the City of Merced
Municipal Code Section

20.70.010 through 20.70.040.

d. The Director of Development Services
will review any requests for modifications to the permit and shall provide a written determination within thirty (30) days from the day the written request is received
by the City. The decision of the Director of
Development Services shall be final and there shall be
no further right to appeal.

8. Revocation of Commercial Cannabis
Business Permit (All Types)

a. The Director of Development Services or
designee may suspend or revoke a Commercial
Cannabis Business Permit when the permittee or the
permittee's agent or employee has committed any one or
more of the following acts:

63 i. Any act which would be considered a
ground for denial of the permit in the
first instance.

ii. Violates any other provision of this
section or any City of Merced or State
law, statute, rule, or regulation relating to
the business's permitted activity.

iii. Engages in or permits misconduct
substantially related to the
qualifications, functions, or duties of the
permittee.

iv. Conducts the permitted business in a
manner contrary to the health, safety, or
welfare of the public.

v. Fails to take reasonable measures to
control patron conduct, where applicable,
resulting in disturbances, vandalism, or
crowd control problems occurring inside of
or outside the premises, traffic control
problems, or creation of a public or
private nuisance, or obstruction of the
operation of another business.

vi. Violates or fails to comply with the
terms and conditions of the permit.

vii. Fails to pay all applicable City, State,
or Federal taxes and fees.

b. Prior to suspension or revocation of the
applicable permit, the Director of Development
Services shall conduct a hearing. Written notice of the time and place of such hearing shall be served upon the permittee at least ten (10) calendar days prior to the
date set for such hearing. The notice shall contain a
brief statement of the grounds to be relied upon for

64 revoking or suspending the permit. Notice may be given either by personal delivery or by certified U.S. mail,
postage prepaid.

c. Any decision of the Development Services
Director may be appealed to the Planning Commission.

An appeal shall be filed within five (5) business days
(excluding official city holidays) following a decision by the Director of Development Services.

i. When an appeal has been filed, the
matter shall be scheduled for a public
hearing before the Planning
Commission. The public hearing should
be heard within ninety (90) days of
receiving the appeal unless otherwise
mutually agreed to by the applicant and
appellant or continued pursuant to

20.44.170(L)(8)(c)(v).

ii. Notice of the hearing shall be provided
to the applicant at least (ten) 10
calendar days prior to the public hearing.

iii. Any interested person may appear and
be heard regarding the appeal.

iv. The Planning Commission's review of the
appeal shall be limited to review of the
Development Services Director’s decision
and shall not be a de novo review.

v. A matter being heard on appeal may
be continued for good cause.

vi. The decision of the Planning
Commission may be appealed to the
City Council.

a. A written appeal shall be

65 filed within five (5) business days
(excluding official city holidays)
following a Planning Commission
decision.

b. When an appeal has been filed,
the matter shall be scheduled for a
public hearing before the City
Council. The public hearing should
be heard within ninety (90) calendar
days of receiving the appeal, unless
otherwise mutually agreed to by the
applicant and appellant or continued
pursuant to

20.44.170(L)(8)(c)(vi)(e).

c. Notice of the hearing of
the appeal shall be provided to
the applicant at least ten (10)
calendar days prior to the public
hearing.

d. Any interested person may
appear and be heard regarding
the appeal.

e. A matter being heard on
appeal may be continued for good
cause.

f. The City Council’s review
shall be a de novo review. At the
conclusion of the hearing, the City
Council will make its own
determination to grant or deny the
permit. The decision of the City
Council shall be the City's final
decision in this re gard and shall be
dispositive of the matter subject to
judicial review under the provisions

66 of California Code of Civil
Procedure Sections 1094.5 and
1094.6.

M. Limitations on the City's Liability

To the fullest extent permi tted by law, the City shall not assume any liability whatsoever, with respect to
approving any Commercial Cannabis Business
Permit pursuant to this ordinance or the operation of
any cannabis facility approved pursuant to this
chapter. As a condition of approval of a Commercial
Cannabis Business Permit as provided in this
chapter, the applicant or it s legal representative shall:

1. Execute an agreement in demnifying the City
from any claims, damages, injuries, or liabilities of
any kind associated with th e registration or operation of the commercial cannabis facility or the
prosecution of the applicant or permittee or its
members for violation of federal or State laws;

2. Maintain insurance in the amounts and types
that are acceptable to the City Attorney or designee;

3. Name the city as an additionally insured on
all City required insurance policies;

4. Agree to defend, at its sole expense, any action
against the City, its agents, officers, and employees
related to the approval of a Commercial Cannabis
Business permit; and

5. Agree to reimburse the City for any court costs
and attorney fees that the City may be required to pay as a result of any legal challenge related to the City's
approval of a 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

67 participation shall not re lieve the operator of its obligation hereunder.

N. Enforcement

1. A violation of the regulations in this ordinance
by an act, omission, or failure of an agent, owner,
officer or other person acting in concert with or
employed by a permittee within the scope of their
employment or office, shall be deemed the act,
omission, or failure of the permittee.

2. A permitted Commercial Cannabis Business shall
notify the Police Chief or designee of the City of
Merced upon discovery of any of the following
situations:

a. A discrepancy of more than $1,000 in
inventory over a period of 24 hours or $3,000 over a
period of 7 days.

b. A reason to suspect diversion, loss, theft or
any other criminal activity pertaining to the operation of the commercial cannabis business.

c. The loss or alteration of records related
to cannabis goods, registered medical cannabis
patients, caregivers or dispensary employees or
agents.

d. Any other reason to suspect any
other breach of security.

3. Each and every violation of this Section shall
constitute a separate violation and shall be subject to all remedies and enforcement measures authorized by the
Municipal Code. Additionally, as a nuisance per se, any violation of this article shall be subject to injunctive relief, revocation of the business's Commercial Cannabis Business Permit, disgorgeme nt and payment to the

68 City of any and all monies unlawfully obtained, costs of abatement, costs of investigation, attorney fees, and any other relief or remedy available at law or equity.

The City may also pursue any and all remedies and
actions available and applic able under local and state laws for any violations committed by the cannabis
business and/or any owner, agent, officer, or any other person acting in concert with or employed by the
cannabis business.

4. City Officials or their designees may enter and
inspect the location of any commercial cannabis business during normal business hours to ensure compliance with
this Section. In addition, law enforcement may enter
and inspect the location of any cannabis business and the recordings and records maintained as required by this
Section, except that the inspection and copying of private medical records shall be made available to law
enforcement only pursuant to a properly executed search warrant, subpoena, or court order. A person engaging in commercial cannabis business without a permit and
associated unique identifiers required by this chapter
shall be subject to civil penalties of up to twice the
amount of the permit fee fo r each violation, and the
department, state or local authority, or court may order the destruction of cannabis associated with that
violation. A violator shall be responsible for the cost of the destruction of cannabis associated with the violation, in addition to any amount covered by a bond required as a condition of licensure. Each day of operation shall
constitute a separate violation of this section.

O. Fees and Taxes

All Cannabis Operations shall pay applicable fees and
taxes, which may include one or more of the
following:

1. Initial Application Fees. The Business
Applicant shall submit a non-refundable fee to cover

69 the cost of processing an initial application for the commercial cannabis business. These fees may be
divided into two fees according to Initial Review
(Phase 1) and Final Review (Phase 2).

2. Application Renewal Fees. The Business
Owner shall submit a non-refundable fee to cover the
cost of processing an application renewal annually.

3. Business License Fee. The Business Owner shall
at all times maintain a current and valid business
license and pay all business taxes required by the Merced Municipal Code.

4. Commercial Cannabis Re gulatory Fee. The
Business Owner shall pay an annual regulatory fee
('Regulatory Fee') to cover the costs of anticipated
enforcement relating to the Cannabis Operation. The
amount of the fee shall be set by Resolution of the
City
Council and be supported by the estimated
additional costs of enforcement and monitoring
associated with the Cannabis Operation. The Regulatory
Fee shall be due and payable prior to opening for
business and thereafter on or before the anniversary date.

The Regulatory Fee may be
amended from time to time
based upon actual costs.

5. All required taxes incl uding sales and use
taxes, business, payroll etc.

6. Additional cannabis-specific gross receipts,
excise, cultivation, or any other tax approved by the
voters of the City of Merced.

7. Fees for background checks for businesses with
more than one owner of 5% or more interest in a
Commercial Cannabis Business. The application fees
approved by City Council in Resolution 2021-43 account
for a single owner’s background check. Fees for
additional owners shall be determined by the Chief of

70 Police, approved by the Finance Officer, and updated each fiscal year. Requests for minor modifications to
permits in accordance with 20.44.170(L)(7)(b)(iii) that propose changes to ownership and require background
checks for new owners with 5% or more interest in a
Commercial Cannabis Business will be subject to the
same fees.

P. Labor Peace Agreements

1. All Commercial Cannabis Businesses with five
(5) or more employees applying for a Commercial
Cannabis Business Permit on or after November 3,
2021, shall provide the City with a notarized
statement that the business will enter into, or
demonstrate to the City that it has already entered
into, and abide by the terms of a labor peace
agreement. Such statement or demonstration shall be
provided to the City as part of the application for a
Commercial Cannabis Business Permit.

2. All Commercial Cannabis Business with five
(5) or more employees that received a Commercial
Cannabis Business Permit prior to November 3, 2021,
are encouraged to provide to the City a statement or
demonstration consistent with 20.44.170(P)(1) above.

3. All Commercial Cannabis Businesses with four
(4) or fewer employees that apply for a Commercial
Cannabis Business Permit on or after November 3,
2021, shall provide a notarized statement indicating
that the applicant will enter into and abide by the
terms of a labor peace agreement within 60 days of
employing its 5th employee. Such statement shall be
provided to the City as part of the application for a
Commercial Cannabis Business Permit.

4. All Commercial Cannabis Businesses with four
(4) or fewer employees that received a Commercial

71 Cannabis Business Permit prior to November 3, 2021,
are encouraged to provide to the City with a
statement consistent with 20.44.170(P)(3) above.

72 SECTION 2. EFFECTIVE DATE. This Ordinance shall be in full force and effect thirty (30) days after its adoption.

SECTION 3. SEVERABILITY. If any section, subsection,
subdivision, sentence, clause, phrase, or portion of this Ordinance, is for any reason held to be invalid or unconstitu tional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have adopted this Ordinance, and each section, subsection, subdivision, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections , subsections, subdivi sions, sentences, clauses, phrases, or portions thereof be declared invalid or unconstitutional.

SECTION 4. PUBLICATION. The City Clerk is directed to cause a summary of this Ordinance to be publis hed in the official newspaper at least once within fifteen (15) days after its adoptio n showing the vote thereon.

The foregoing Ordinance was introduced at a regular meeting of the City Council of the City of Merced on the ___ day of _____, 202 13, and was passed and adopted at a regular meeting of said City Council held on the ____ day of _____, 20213, by the following called vote:

AYES:

NOES:

ABSTAIN:

ABSENT:

Council Members:

APPROVED:

__________________________

73 Mayor

74 ATTEST:

STEPHANIE DIETZ, CITY CLERK

BY:_______________________________
Assistant/Deputy City Clerk

(SEAL)

APPROVED AS TO FORM:

____________________________________
City Attorney Date

City Council/Public Finance and Economic Development Authority/Parking AuthorityJuly 17, 2023

City Council/Public Finance and Economic Development Authority/Parking Authority
July 17, 2023