Agenda packet — Cannabis Program and Permit Review Committee, January 10, 2024

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www.modestogov.com
AGENDA
City of Modesto

SPECIAL CANNABIS PROGRAM AND PERMIT REVIEW

COMMITTEE / COUNCIL WORKSHOP
Room 2001-40 Del Puerto Room
Tenth Street Place, 1010 10th Street
Modesto, California
Wednesday, January 10, 2024 at 3:00 PM
Roll Call: David Wright, Chair
Sue Zwahlen, Vice-Chair
Chris Ricci, Member
Alternates: Nick Bavaro, Rosa Escutia-Braaton, Eric Alvarez, Jeremiah Williams Council has not delegated directive or final approval authority to the Committees.

Committee actions are recommendations to the full City Council, not final decisions on an issue. * Public Comment will only be in-person. Members of the public who wish to address the Committee, by providing public comment, during the meeting must do so in-person in the 2001-40 Del Puerto Room. As an alternative, members of the public may also provide written public comment submitted via email as indicated in the Submitting Comments by Email instructions on this agenda. Zoom will still be available for viewing and Wordly translation. *Members of the public will be allowed to provide public comment through Zoom if a Committee Member is participating remotely pursuant to the provisions of Assembly Bill 2449. *Effective March 1, 2023, if a technical issue arises with Zoom or the phone dial-in option, the Committee meeting will continue unless the meeting is being held pursuant to the provisions of Assembly Bill 2449. Alternative viewing options are listed below, and the meeting is physically open to the public.
“Wordly” can translate into 25+ different languages! To access written translation during the meeting, please scan the QR Code or click this link https://attend.wordly.ai/join/RJDY-6364.
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"Wordly" puede traducir a más de 25 idiomas diferentes! Para acceder a la traducción durante la reunión, por favor escanee el código QR o haga clic en el enlace https://attend.wordly.ai/join/RJDY-6364.

You may observe a livestream of the meeting at http://media.modestogov.com. You may also view or listen to the meeting as indicated below.

THE MEETING CAN BE VIEWED BY ZOOM VIDEO

CONFERENCING OR TELEPHONE
Joining the Committee meeting via Zoom
The City of Modesto is now offering the ability to view Committee meetings via telephonic conferencing via “Zoom” video conferencing computer technology. The meeting may be accessed through the use of Zoom using the following options:
 Enter the following link into an Internet Browser
https://us02web.zoom.us/j/86945970570,
 Enter the following link into an Internet Browser https://zoom.us/ and using the Webinar ID 869 4597 0570
 Passcode 84326
To use Zoom, please visit: https://zoom.us/ and either sign-up for a free Zoom account or continue as a guest. Once you have downloaded the app onto your mobile device, joined from your web browser, or downloaded the Zoom software on your computer you will be ready for the upcoming Committee meeting.

Joining the Committee meeting via Telephone
If you don’t have a smart phone or computer to access the meeting via Zoom, you can listen by phone, by calling 1-877-853-5257 (Toll Free) or 1-888-475-4499 (Toll Free) and enter the Webinar ID 869 4597 0570 Passcode 84326

PUBLIC COMMENTS IN PERSON
Three-minute time limit per speaker.

Only interested persons in the audience may present these matters. Under State law, Committee Members may respond to matters being presented under this item only as follows:
a. Briefly respond to statements made or questions raised. b. Ask a question for clarification.
c. Provide a reference to staff or other resources for factual information. d. Request staff to report back at a subsequent meeting. e. Finally, a Committee Member or the Committee itself may take action to direct staff to place a matter of business on a future agenda.

SUBMITTING COMMENTS BY E-MAIL
Written comments may be submitted via email to: [email protected] (include Agenda Item Number in the subject line). All comments will be shared with the Committee - 2 -
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Members and placed in the record but will not be read aloud during the meeting. Written comments must be received two hours before the meeting.

This Agenda is on file in the City Clerk’s Office, Sixth Floor, 10th Street Place, Posting Board at entry of 10th Street Place, and is available on the City’s Web site at www.modestogov.com.

Materials related to an item on this Agenda submitted to the Council after distribution of the agenda packet are available for public inspection in the Clerk’s office during normal business hours. Such documents are also available online, subject to staff’s ability to post the documents before the meeting, at the following website www.modestogov.com/councilmeetings In accordance with the requirements of Title II of the Americans with Disabilities Act (“ADA”) of 1990, the Fair Employment & Housing Act (“FEHA”), the Rehabilitation Act of 1973 (as amended), Government Code section 11135 and other applicable codes, the City of Modesto (“City”) will not discriminate against individuals on the basis of disability in the City’s services, programs, or activities. For more information, please visit the City of Modesto website at https://www.modestogov.com/865/Americans-with-Disabilities-Act-ADA In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk (209) 577-5396. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting
Any and all of the following agenda items are subject to action by the Modesto City Council.

NEW BUSINESS
1 Consider a Change in Ownership Request for Retail Dispensary Medallion Wellness and forwarding to Council for approval. (Funding Source: Cannabis Annual Permit Fee)
 Motion recommending the approval of the Change in Ownership Request for Retail Dispensary Medallion Wellness and forwarding to Council for approval.

CED; Sean Rando, 209-577-5473, [email protected]

HEARINGS
Published in the Modesto Bee on December 29, 2023.
2 Hearing to consider a Relocation Request of Medallion Wellness from 1313 McHenry Avenue to 408 Paradise Road with the granting of a Residential Proximity Waiver and forwarding to Council for approval. (Funding Source: Cannabis Permit Application Fee and Annual Permit Fee)
 Motion recommending the approval of the Relocation Request for Medallion Wellness from 1313 McHenry Avenue to 408 Paradise Road with the granting of a Residential Proximity Waiver and forwarding to Council for approval.

CED; Sean Rando, 209-577-5473, [email protected]
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ADJOURNMENT
Posted pursuant to Government Code Section 54954.2 on the bulletin board at Tenth Street Place on at by
date time signature
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

January 10, 2024
Date: December 11, 2023
TO: Cannabis Program and Permit Review Committee
David Wright, Chair
Sue Zwahlen, Vice-Chair
Chris Ricci, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: Jessica Hill, Director of Community and Economic Development SUBJECT: Business Modification Request for Medallion Wellness-Change in Ownership CONTACT: Sean Rando, Business Analyst
[email protected], 209-577-5473
DESCRIPTION:

Consider a Change in Ownership Request for Retail Dispensary Medallion Wellness and forwarding to Council for approval. (Funding Source: Cannabis Annual Permit Fee) STRATEGIC PLAN ELEMENT:

This item is consistent with the City Council 2020-2025 Strategic Plan Goal E, Drive Economy Vitality.

BACKGROUND:

In December 2017, the City Council adopted Ordinance 3684-C.S. legalizing certain commercial cannabis business operations in particular zoning districts. The City Council was the approving body regarding all cannabis businesses operating in the City. On April 13, 2021, by Resolution No. 2021-132, Council established the Cannabis Permit Review Committee (Committee) and delegated the authority to approve non-dispensary and non-delivery cannabis businesses to that Committee. On March 1, 2022, by Resolution No. 2022-109, the Council expanded the role of the Committee to advise the Council on all cannabis-related issues and renamed the Committee, the Cannabis Program and Permit Review Committee. City Council remains the approval authority for all matters regarding retail dispensaries.

On December 19, 2018, by Resolution 2018-566 the City Council approved and issued eight (8) cannabis retail permits, which were valid for a two (2) year period from that date. At this time, Medallion Wellness was one of the approved dispensaries. On December 19, 2020, by Resolution 2020-485-489, City Council approved the initial renewal applications for the eight (8) retail locations. This renewal period was set to expire on December 19, 2022. #1.
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Cannabis Program and Permit Review Committee, January 10, 2024 Business Modification Request for Medallion Wellness-Change in Ownership

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On November 1, 2022, by Resolution No. 2022-442, Council approved the extension of the eight (8) issued commercial cannabis retail permits from December 19, 2022, to June 30, 2023, and adjusted the two-year renewal period from a calendar year to a fiscal year which runs from July to June. On June 27, 2023, by Resolution No. 2023-297, Council approved the renewal of the eight (8) commercial cannabis retail permits for dispensaries in the City for a further twoyear period ending June 30, 2025.

Business Modifications-Changes in Ownership:

According to Modesto Municipal Code, 10-3.704(d), permits issued in accordance with the City’s Cannabis ordinance are not transferable to another individual or physical location without City approval. On June 27, 2023, by Resolution No. 2023-298, Council approved a change in ownership policy for commercial cannabis permits within the City to provide guidance on the approval process for these changes.

Policies and procedures include:
 If a new individual acquires an aggregate ownership interest of fifty-one (51%) percent of a cannabis business when they previously had not will require City Council approval for Dispensaries or approval by the Cannabis Program and Permit Review Committee for non-dispensaries.
 If an originally approved owners retain one hundred (100%) percent interest in the cannabis business amongst them then this transaction would not meet the definition of a change in ownership per California Department of Cannabis Control (DCC) regulations section 15023.
 An original owner(s) must retain a minimum of twenty (20%) percent ownership interest in the businesses to continue operating under their current commercial cannabis permit following City approval of the change, otherwise the business must cease operation and reapply for a commercial cannabis permit under the new business structure.

Documents detailing business modification requests for changes in ownership that may be requested at the discretion of the City include proof of filing with the Secretary of State, Bylaws, Operating Agreements, Partnership Agreements, Corporate Meeting Minutes, Completion of background check for new owners as required by Modesto City Code section 10-3.704(3)(2), and signed declaration by the relinquishing party acknowledging the change.

DISCUSSION:

A completed application was submitted on September 8, 2023, by the legal counsel for Phenos Collective Inc. to initiate the City approval process for a change in ownership of Medallion Wellness, a dispensary currently operating at 1313 McHenry Avenue. Medallion Wellness and Phenos Collective Inc. are commercial cannabis retail businesses that were approved in 2018.

A new business entity, Paradise West, Inc., would be formed with Phenos acquiring an eighty (80) percent ownership interest in the company and the original owner of Medallion Wellness retaining the remaining twenty (20) percent.

Cannabis Program Administrative Staff reviewed the application for completeness.

Documentation reviewed by Staff included:
o A signed Board of Directors resolution for Medallion Wellness acknowledging the proposed change by the original owner.
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Cannabis Program and Permit Review Committee, January 10, 2024 Business Modification Request for Medallion Wellness-Change in Ownership

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o Public filings with the California Secretary of State were provided confirming the new ownership structure.
o Completed background checks for the owners.

The requirements of the City of Modesto’s commercial cannabis change in ownership policy have been satisfied by the applicant.

FISCAL IMPACT:

The annual permit fee is currently set at $18,732, which covers costs related to the administration and monitoring of the permitted cannabis businesses.

RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion recommending the approval of the Change in Ownership Request for Retail Dispensary Medallion Wellness and forwarding to Council for approval.

Approved by:

Jessica Hill,
Director of Community and Economic Development
Joseph P. Lopez, City Manager
Attachments:

1. Commercial Cannabis Business Modification Request-Change in Ownership #1.
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

January 10, 2024
Date: December 11, 2023
TO: Cannabis Program and Permit Review Committee
David Wright, Chair
Sue Zwahlen, Vice-Chair
Chris Ricci, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: Jessica Hill, Director of Community and Economic Development SUBJECT: Business Modification Request for Medallion Wellness-Relocation CONTACT: Sean Rando, Business Analyst,
[email protected], 209-577-5473
DESCRIPTION:

Hearing to consider a Relocation Request of Medallion Wellness from 1313 McHenry Avenue to 408 Paradise Road with the granting of a Residential Proximity Waiver and forwarding to Council for approval. (Funding Source: Cannabis Permit Application Fee and Annual Permit Fee)
STRATEGIC PLAN ELEMENT:

This item is consistent with the City Council 2020-2025 Strategic Plan Goal E, Drive Economy Vitality.

BACKGROUND:

On December 19, 2018, by Resolution 2018-566, the City Council approved and issued eight (8) cannabis retail permits, which were valid for a two (2) year period from that date. On December 19, 2020, by Resolution 2020-485-489, City Council approved the initial renewal applications for the eight (8) retail locations. This renewal period was set to expire on December 19, 2022.
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Cannabis Program and Permit Review Committee, January 10, 2024 Business Modification Request for Medallion Wellness-Relocation

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Business Modifications-Relocation:

Relocation requests follow the process detailed below:

1. The business making the request provides the following to the City:
a. Narrative explanation of the reason for the relocation. b. Updated security plans for the intended location.
c. Proposed site and floor plans.
d. Copy of a lease agreement (if applicable).
e. Payment of a commercial cannabis permit application fee of $6,380.

2. The review process follows the steps outlined below:
a. City Staff alongside the City’s cannabis consultant reviews updated security plans for compliance with State and Local regulations.
b. The Planning Division performs a zoning analysis to determine compliance with Modesto Municipal Code section 10-3.703.
i. Proximity issues noted will need to be addressed by the applicant to satisfy waiver requirements which could include installing impassable barriers such as an eight (8) foot-high wrought iron fence or showing proof of the presence of a major highway.
c. Cannabis program admin staff also reviews the reason for change in location to determine if further research is necessary.
d. The Finance department provides confirmation that all applicant related taxes and fees are current.
e. Other conditions to be considered during the review process if applicable:
i. Compliance with annual inspections and audits.
ii. Stakeholder interviews and site inspections.

DISCUSSION:

A completed application was submitted on September 8, 2023, by the legal counsel for Phenos Collective Inc. to initiate the City approval process for a relocation of the Medallion Wellness dispensary located at 1313 McHenry Avenue to 408 Paradise Road. In addition to the relocation, a change in ownership where the owners of Phenos Collective would acquire a controlling interest in Medallion Wellness, was also requested which will be addressed in a separate agenda report.

Modesto Municipal Code section 10-3.703(a) regulates retailer type 10 businesses to operate in commercial zone C-2, C-3, C-M, as well as industrial zone M-1 and M-2 only. The proposed location of 408 Paradise Road is in a C-2 zone intended for general commercial purposes. #2.
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Cannabis Program and Permit Review Committee, January 10, 2024 Business Modification Request for Medallion Wellness-Relocation

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The application fee totaling $6,380 was paid in a timely manner. Cannabis Program Administrative Staff reviewed the application for completeness and noted that documentation for the relocation request was complete.

The Finance department also verified that both Medallion Wellness and Phenos were both current on all City taxes and fees as of September 8, 2023.

Planning staff confirmed that the proposed location is properly zoned in a commercial C-2 area.

They also performed a proximity analysis to determine if there were any locations of sensitive use near the proposed dispensary. Modesto High School and James Marshall Elementary were found to be over 1,000 feet away from the dispensary site which complies with the Municipal Code’s distance requirement of six hundred (600) feet away from schools.

Two (2) separate locations were identified as potential areas of sensitive use that would require Council approved proximity waivers. A residence at 315 Sutter Ave was found to be within approximately ninety-five (95) feet of the dispensary and the Neighborhood Center at Marshall Park (NCAMP) would be within three hundred and fifty-three (353) feet of the relocated business.

Staff initially highlighted NCAMP as a potential youth center which would be required to be six hundred (600) feet away from commercial cannabis locations according to section 10-

3.703(b)(1) of the Modesto Municipal Code. NCAMP does offer a variety of after school youth programs ranging from expanded learning opportunities to summer day camps. However, the center also serves as a joint service facility which includes office space for City departments.

Modesto Municipal Code Section 10-3.702(II) defines a youth center as a public or private facility that is primarily used to host recreational or social activities for minors. City Staff determined that NCAMP would not meet the definition of a youth center according to the provisions of the Modesto Municipal Code because its primary use is not for recreational or social activities for minors, and it would therefore be exempt from the commercial cannabis proximity requirements.

Pursuant to section 10-3.703(b)(2), commercial cannabis businesses are required to be one hundred (100) feet away from residential areas. The proposed location of 408 Paradise Rd. will require the issuance of a proximity waiver for the residence located at 315 Sutter Ave. Section 10-3.704(c) of the Modesto Municipal code allows proximity requirements to be waived by the decision-maker when the applicant can show that an actual impassible physical separation exists between land uses or parcels, such as a building, sound wall, major street or highway. In order to request the granting of this waiver the applicant submitted a memo indicating their intent to install an eight (8) foot impassible wrought iron fence between the dispensary and the Sutter Avenue residence. The planned additional fencing allows the applicant to be eligible for the approval of a proximity waiver at the discretion of the decision maker which in this case would be the Modesto City Council.

Staff also reviewed locations that are not currently subject to the commercial cannabis proximity requirements of the Modesto Municipal code but may cause concerns of public safety issues within the community. Two land uses comprising this search were places of religious service and substance abuse facilities. The nearest place of religious service was found to be the Westside Neighborhood Church which is approximately over 2,300 feet away from the proposed dispensary, and there were no substance abuse facilities noted in proximity to 408 Paradise Rd. #2.
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Cannabis Program and Permit Review Committee, January 10, 2024 Business Modification Request for Medallion Wellness-Relocation

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The City’s current cannabis consultant, HDL Companies, Inc., concurrently conducted a thorough evaluation of the Security Plan provided by the applicant for the proposed cannabis retail facility. The Applicant’s Security Plan was prepared by an in-house security team in cooperation with licensed industry professional Knight Surveillance Group, Nor-Cal Security & Low Voltage Services, and Next Level Protection. The provisions of the plan including perimeter security, video monitoring systems, alarm system, access control, secure storage, theft prevention, operational security, cash management, and employee trainings were found to be in compliance with the regulatory requirements of the California DCC and the City of Modesto.

FISCAL IMPACT:

The annual permit fee is currently set at $18,732, which covers costs related to the administration and monitoring of the permitted cannabis businesses. The commercial cannabis permit application fee of $6,380 pays for the services provided by the Planning Division and the City’s Cannabis Consultant through the review of security, site plans, and zoning.

RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion recommending the approval of the Relocation Request for Medallion Wellness from 1313 McHenry Avenue to 408 Paradise Road with the granting of a Residential Proximity Waiver and forwarding to Council for approval.

Approved by:

Jessica Hill,
Director of Community and Economic Development
Joseph P. Lopez, City Manager
Attachments:

1. Business Modification Request Form-Change in Location

2. Final Modesto Proximity Waiver Memo 9.27.23

3. 408 Paradise Rd Proximity Map
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EXHIBIT A:

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ARCHITECTURE PLUS INC,
4335-B NORTH STAR WAY
MODESTO, CA 95356
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www.apiarc.com
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EXHIBIT B:
408 Paradise-NCAMP Context Map(s)
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Cannabis Program and Permit Review CommitteeJanuary 10, 2024

Cannabis Program and Permit Review Committee
January 10, 2024