- 1 -
4/22/2024 4:00:00 PM
www.modestogov.com
AGENDA
City of Modesto
SPECIAL CANNABIS PROGRAM AND PERMIT REVIEW
COMMITTEE / COUNCIL WORKSHOP
Basement Chambers
Tenth Street Place, 1010 10th Street
Modesto, California
Monday, April 22, 2024 at 4:00 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.
- 1 -
4/22/2024
- 2 -
4/22/2024 4:00:00 PM
"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 -
4/22/2024
- 3 -
4/22/2024 4:00:00 PM
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 directing staff to prepare an Agreement with Tulip & Oak Consulting, Inc., not to exceed $35,000 to provide direct Technical Assistance Services for the Modesto Cannabis Program Providing Local Equity Development Grants and Education (PLEDGE). (Funding Source: Cannabis Equity Grant)
Motion directing staff to prepare an Agreement with Tulip & Oak Consulting, Inc., not to exceed $35,000 to provide direct Technical Assistance Services for the Modesto Cannabis Program Providing Local Equity Development Grants and Education (PLEDGE), and to execute the Agreement under the approval authority of the City Manager.
CED; Sean Rando, 209-577-5473, [email protected]
2. Consider providing a recommendation regarding the two remaining unissued commercial cannabis retail permits and forwarding to Council for consideration. (Funding Source: Cannabis Application Fee)
Motion providing a recommendation regarding the two remaining unissued commercial cannabis retail permits and forwarding to Council for consideration.
CED; Sean Rando, 209-577-5473, [email protected]
- 3 -
4/22/2024
- 4 -
4/22/2024 4:00:00 PM
3. Consider approving the City’s Cannabis Equity Program (Providing Local Equity Development Grants and Education (PLEDGE)) to provide up to four grants to verified PLEDGE participant owned businesses, in an amount not to exceed $70,000 per grant. (Funding Source: Cannabis Equity Grant)
Motion approving the City’s Cannabis Equity Program (Providing Local Equity Development Grants and Education (PLEDGE)) to provide up to four grants to verified PLEDGE participant owned businesses, in an amount not to exceed $70,000 per grant.
CED; Sean Rando, 209-577-5473, [email protected]
ADJOURNMENT
Posted pursuant to Government Code Section 54954.2 on the bulletin board at Tenth Street Place on at by
date time signature
- 4 -
4/22/2024
CITY OF MODESTO
COMMITTEE AGENDA REPORT
DATE OF MEETING:
April 22, 2024
Date: March 15, 2024
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: Agreement with Tulip & Oak Consulting, Inc. for Cannabis Equity Direct Technical Assistance
CONTACT: Sean Rando, Business Analyst,
[email protected], 209-577-5473
DESCRIPTION:
Consider directing staff to prepare an Agreement with Tulip & Oak Consulting, Inc., not to exceed $35,000 to provide direct Technical Assistance Services for the Modesto Cannabis Program Providing Local Equity Development Grants and Education (PLEDGE). (Funding Source:
Cannabis Equity Grant).
STRATEGIC PLAN ELEMENT:
Expanding opportunity and reducing barriers to enter the regulated commercial cannabis market promotes economic vitality consistent with the City Council 2020-2025 Strategic Plan Goal E, Drive Economy Vitality.
BACKGROUND:
In November 2016, California voters approved Proposition 64, to Control, Regulate, and Tax Adult Use of Marijuana Act (AUMA). In its statement of purpose and intent, AUMA calls for regulating cannabis in a way that “reduces barriers to entry into the legal, regulated market.” Although a legal framework now exists to participate in the adult use commercial cannabis industry, barriers to start a commercial cannabis business may still exclude some Modesto entrepreneurs from entering the legal cannabis market.
Individuals convicted of a cannabis offense during the era of prohibition and criminalization policies have a more difficult time entering the new adult-use cannabis industry due, in part, to a lack of access to capital, business space, technical support, and regulatory compliance assistance. The State of California’s Cannabis Equity Grants program for Local Jurisdictions is designed to promote economic opportunity for individuals negatively impacted by cannabis #1.
- 5 -
Cannabis Program and Permit Review Committee, April 22, 2024 Agreement with Tulip & Oak Consulting, Inc. for Cannabis Equity Direct Technical Assistance
prohibition and criminalization policies by reducing barriers to enter the regulated cannabis industry for equity applicants and licensees.
There are two (2) types of grant applications with specific funding requirements for the program.
The award of funds for a Type 1 application may only be used for the purposes of conducting an equity assessment and/or developing an equity program. Assessments are conducted prior to the development of a program to help inform the needs of the program. The award of funds for a Type 2 application may only be used for the purpose of assisting equity applicants to gain entry to the regulated cannabis marketplace by providing measures to help mitigate the barriers identified in the assessment report.
On January 26, 2021, by Resolution No. 2021-024, Council directed staff to submit a Type 1 application for grant funding. In March 2021, The Governor’s Office of Business and Economic Development (GO-Biz) announced that the City of Modesto application was selected for funding in the amount of $75,000. On April 27, 2021, by Resolution No. 2021-156, Council authorized the City Manager to execute a grant Agreement to accept the $75,000 grant to conduct a cannabis equity assessment and develop a cannabis equity program.
From December 22, 2021, to October of 2022, City staff worked alongside knowledgeable consultants to complete a cannabis equity assessment to address the need in the communities affected the most from cannabis prohibition. The majority of this task was performed by the Brenda Davis Law Group (Brenda Davis). Using the Type 1 funds, assessment information was collected through the following methods:
Two (2) bilingual surveys, a baseline and a secondary, conducted via SurveyMonkey, the first beginning in May 2022 and the second beginning in July 2022. Two (2) community forums that hosted a total of eighty-six (86) attendees convened on June 17 and July 21, 2022.
Thirteen (13) lived experience interviews conducted on July 9 and 23, 2022. Four (4) focus groups engaged on July 21, 2022.
The completed assessment report identified three (3) primary barriers to entry into the legal commercial cannabis industry which an adopted City of Modesto cannabis equity program would address. These barriers are education and technical training, community reinvestment, and access to capital.
On December 13, 2022, by Resolution No. 2022-478, Council accepted the findings in the City of Modesto Cannabis Equity Assessment Report and on the same date by Resolution No. 2022- 479, Council adopted a City of Modesto Cannabis Equity Program. To fund this adopted program, GO-Biz provides the Type 2 grant previously mentioned. On December 13, 2022, by resolution No. 2022-480, Council authorized the application for a Type 2 grant. City staff then promptly submitted an application with GO-Biz for a total amount of $1,300,000 on December 14, 2022.
On January 31, 2023, GO-Biz informed the City that it was deemed eligible to receive a grant award in the amount of $350,000. On March 14, 2023, by Resolution No. 2023-110, Council formally authorized a grant agreement with GO-Biz to secure this funding. The award is required to be spent towards the following tasks:
1. Providing grants, no-interest loans, or low interest loans to local equity applicants.
2. No more than ten (10) percent may be used to provide direct technical assistance. #1.
- 6 -
Cannabis Program and Permit Review Committee, April 22, 2024 Agreement with Tulip & Oak Consulting, Inc. for Cannabis Equity Direct Technical Assistance
3. No more than ten (10) percent may be used for administrative expenses related to the operation of the cannabis equity program.
DISCUSSION:
Following Council’s acceptance of the cannabis equity grant from GO-Biz, Staff began the process to bring on a consultant who could provide the necessary technical assistance. A request for proposal (RFP) was released on May 23, 2023. City Staff participated in the panel to review the five (5) proposals that were received; however, each consultant’s proposed cost exceeded $70,000. The GO-Biz grant agreement allows $35,000 to be spent towards providing direct technical assistance to program participants. GO-Biz defines this assistance as:
One-on-one consulting and training, including direct interactions in group settings, to provide equity applicants and licensees the technical knowledge and expertise necessary to facilitate business ownership and employment in the cannabis industry. Small business support services, professional mentorship services, training and education regarding state cannabis licensing and regulatory requirements, manufacturing assistance, financial management, and business resilience such as emergency preparedness.
Staff also received feedback that members of the community would like to be on the RFP review panel to select a consultant. Because of this, and the proposal costs, staff determined it would be appropriate to issue a new RFP. The new RFP clarified that the City is only authorized to expend $35,000 towards direct technical assistance. Local community members were also invited to participate on the evaluation committee to provide valuable input into the needs of the individuals who would be served by this program.
The RFP was posted to the City’s publicly available PlanetBids website on October 12, 2023. 837 vendors viewed the Request for Proposal, one (1) firm downloaded the document. Eight (8) proposals were subsequently received via email.
The Brenda Davis Law Group
Oaksterdam University
California Asian Pacific Chamber of Commerce (CalAsian) Tulip & Oak Consulting (Tulip)
Debrief/Next Steps
Roads Consulting
LAV8 Corporation
Canna Business Services
The review panel, which included City staff and a community member, evaluated each proposal based on the criteria further outlined in the RFP (Attachment 1).
The updated scope of work request included:
1. Providing an education curriculum to include educational materials, one-on-one consultations, and leading technical training workshops for equity applicants.
2. The course would cover areas including preparation of business plans, the complete cycle of business formation, operations, steady growth, and planned exits, accounting practices, insurance requirements, inventory and quality control procedures, local cannabis permitting requirements, state cannabis licensing requirements, search for real estate, application review, and business mentorship programs.
#1.
- 7 -
Cannabis Program and Permit Review Committee, April 22, 2024 Agreement with Tulip & Oak Consulting, Inc. for Cannabis Equity Direct Technical Assistance
Community and Economic Development and Purchasing Staff finalized the RFP evaluation on February 1, 2024. The consultants were ranked in the following order from highest to lowest scores:
1. The Brenda Davis Law Group
2. Tulip & Oak Consulting
3. CalAsian
4. Oaksterdam University
5. Debrief/Next Steps
6. Canna Business Services
7. Roads Consulting
8. LAV8 Corporation
Modesto Municipal Code Section 8-3.203 generally requires purchases for material, equipment, or contractual services of over $100,000 to follow formal bid procedures. Accordingly, this requirement does not apply to the contract for direct technical services because it is only for $35,000. Nevertheless, the City proceeded with formal bid procedures. The Award of Proposal and Agreement for the direct technical assistance services for Community and Economic Development’s use to Tulip & Oak Consulting, Inc., Fremont, CA, conforms to the Modesto Municipal Code because the City complied with formal bid procedures and Tulip & Oak Consulting, Inc. was the second highest ranked proposal based on the evaluation criteria (Attachment 3). While the Brenda Davis Law Group had been ranked first, the City was unable to reach a satisfactory agreement regarding their overall cost proposal following good faith negotiations initiated on February 12, 2024, which resulted in the award of proposal and contract to Tulip & Oak. MMC 8-3.203 provides that price is one of several relevant factor for determining to whom the City should award a contract. Staff will prepare and execute an agreement with Tulip & Oak Consulting, following the recommendation of the Cannabis Program and Permit Review Committee, under the contract approval authority of the Modesto Municipal Code. MMC 8-3.102 authorizes the City Manager to approve and authorize all contracts and purchase orders involving expenditure of City funds in the total amount of $100,000.
Following registration but prior to the beginning of the program, eligible equity participants will be provided a brief initial assessment of skill levels to determine what areas of technical skills should be focused on. Tulip & Oak’s scope of work will include a six (6) week series of in-person workshops. Each session will be six (6) hours in length and will cover the following topics relating to business operations in the cannabis industry:
Workshop 1: Introduction to the California cannabis market and the steps to build a cannabis business.
Workshop 2: Cannabis accounting, finance, real estate, and security plans. Workshop 3: Cannabis business operations with an overview of the supply chain and branding practices.
Workshop 4: State and Local licensing with business plan review. Workshop 5: Operating and expanding a cannabis business with hands-on training by license type. Workshop 6: On-site visits to licensed cannabis facilities. At the end of each workshop session participants will log into Tulip & Oak’s learning management system for additional activities, resources, and a final exam. The consultant will highlight the set of business deliverables that will be necessary should PLEDGE program participants seek available grant funding for startup expenses. The deliverables include a business plan, corporate filings with the State of California, a working budget, and organizational charts. Participants will also be provided the opportunity for one-on-one business coaching and #1.
- 8 -
Cannabis Program and Permit Review Committee, April 22, 2024 Agreement with Tulip & Oak Consulting, Inc. for Cannabis Equity Direct Technical Assistance
mentorship programs to assist them as they move forward with opening a cannabis business of their own.
FISCAL IMPACT:
The agreement would be funded through the GO-Biz grant award budgeted in project 101328.
RECOMMENDED COMMITTEE ACTION:
Staff Recommendations:
Motion directing staff to prepare an Agreement with Tulip & Oak Consulting, Inc., not to exceed $35,000 to provide direct Technical Assistance Services for the Modesto Cannabis Program Providing Local Equity Development Grants and Education (PLEDGE), and to execute the Agreement under the approval authority of the City Manager.
Approved by:
Jessica Hill,
Director of Community and Economic Development
Joseph P. Lopez, City Manager
Attachments:
1. RFP INF 24-05 Consulting Services for Providing Education and Technical Assistance
2. RFP Response from Tulip & Oak Consulting
3. Scoring Abstract
#1.
- 9 -
RFP INF 24-05 Request for Proposals:
Professional Services for Providing Direct Education and Technical Assistance to Eligible Cannabis PLEDGE Program Participants
#1.
- 10 -
PROJECT OVERVIEW
On November 8, 2016, California voters approved Proposition 64, the Control, Regulate, and Tax Adult Use of Marijuana Act (AUMA). In its statement of purpose and intent, AUMA calls for regulating cannabis in a way that “reduces barriers to entry into the legal, regulated, market.”
In accordance with the California Equity Act as amended by AB97 (Stats. 2019, Ch.40), the California Bureau of Cannabis Control, now the California Department of Cannabis Control (DCC), entered into an interagency agreement with The Governor’s Office of Business and Economic Development (GO-biz) to administer the Cannabis Equity Grants Program for Local Jurisdictions to aid local equity program efforts to support equity applicants and equity licensees.
The purpose of the Cannabis Equity Grants Program is to advance economic justice for populations and communities negatively impacted by cannabis prohibition by providing support to local jurisdictions as they promote equity and eliminate barriers to enter the newly regulated cannabis industry for equity program applicants and licensees.
On December 13, 2022, the Modesto City Council formally adopted a local equity program which has now been developed into the Cannabis Providing Local Equity Development Grants and Education (PLEDGE) Program.
On January 31, 2023, the City of Modesto was awarded $350,000 in grant funding to serve equity applicants. The term “equity”, as defined from community outreach efforts, refers to fairness and justice, as distinguished from “equality”: As defined by the National Association of Colleges and Employers, “Whereas equality means providing the same to all, equity means recognizing that we do not all start from the same place and must acknowledge and adjust imbalances”.
To support the requirements of the 2018 California Cannabis Equity Act, the Modesto Cannabis Program PLEDGE will serve individuals that were the most adversely affected by past cannabis criminal justice policies. The criteria to become eligible for the program will include:
a. Residency for at least five (5) years, between the years of 1980 and 2011 in the following zip codes: 95355, 95354, 95350,95351; and one of the following:
b. The applicant was arrested or convicted for a crime relating to the sale, possession, use, or cultivation of cannabis in California, excluding those offenses which would be disqualifying for cannabis licensure under current State law; or c. The applicant had a parent, guardian, child, or sibling convicted of a crime relating to the sale, possession, use, or cultivation of cannabis in California, excluding those offenses which would be disqualifying for cannabis licensure under current State law. #1.
- 11 -
The City of Modesto Community and Economic Development Department is soliciting informal proposals from qualified consulting firms and/or individuals, to provide the City with education and technical training services for Cannabis PLEDGE program participants. All interested contractors must submit a detailed executive summary, which outlines past work experiences, and sample work products to demonstrate that the proposer is qualified to administer business and cannabis industry specific curriculum to eligible equity applicants.
The successful consultant must have operated for a minimum of two years as an established firm in providing one or more of the following areas: program planning or evaluation; public relations and marketing; fiscal management or organizational development. Additionally, the consultant must have knowledge of California Cannabis rules and regulations; California Cannabis Social Equity goals and program guidelines; training and development services, leading presentations, and leading training activities.
Following the receipt of vital community feedback, the City of Modesto has elected to rerelease this request for proposals to provide additional clarity and direction regarding the available funding for the requested professional services. The terms of the City’s agreement with GO-Biz provides a no more than ten (10) percent funding threshold for direct technical assistance to equity program participants. This type of assistance is further defined as including:
• One-on-one consulting and training, including direct interactions in group settings, to provide equity applicants and licensees the technical knowledge and expertise necessary to facilitate business ownership and employment in the cannabis industry. • Small business support services, professional mentorship services, training and education regarding state cannabis licensing and regulatory requirements, manufacturing assistance, financial management, and business resilience such as emergency preparedness.
Prospective respondents to this RFP should draft their proposal to fit within an operating budget not to exceed $35,000 which represents ten (10) percent of the $350,000 awarded by the Governor’s Office of Business and Economic Development.
PROPOSED TIMELINE
Release of Request for Proposal: September 21, 2023
Questions Due by: September 28, 2023
Addendum Posted to Planet Bids (if any): October 5, 2023 Proposals Due by: October 12, 2023 at 5:00pm
Interviews: Week of October 16, 2023
Selected Firm Notified: Week of October 23, 2023
Anticipated Contract Award: December 2023
#1.
- 12 -
The City of Modesto assumes no responsibility for delay in the delivery of any proposal(s). All costs associated with the preparation and delivery of any proposal(s) shall be borne by the proposer(s).
TRANSMITTAL LETTER
This letter must contain an expression of the proposer's interest in the work, a summary statement regarding the qualifications of the proposer to do the work, and a brief summary of any information about the project team or the proposer that may be useful or informative to the City.
The proposal should be signed by an officer authorized to bind the proposing firm. Indicate the name of the organization submitting the proposal, its mailing address, telephone number, and identify the primary point of contact.
Acknowledge that the proposer agrees to be bound by the representations in their proposal during the term of the agreement in addition to a statement that the proposal is valid for a period of 90 days.
QUALIFICATIONS
1. Provide:
a. A description of the firm, including relevant work experience. c. Background and experience in equity issues and/or serving underserved communities, including but not limited to racial equity and economic justice work experience as well as work on previous cannabis equity programs.
d. A statement of your understanding of the services needed and a high-level general description of your proposed approach to the scope of services and a timeline. f. A description of actions taken by the firm to reduce implicit bias and implement cultural competency for employees and principals.
g. A description of the firm’s commitment to racial equity or a racial equity/equity statement, including but not limited to a statement on Diversity, Equity, and Inclusion for the firm and its work.
h. In addition to the specific qualifications requested above, identify and/or recommend any additional or innovative services provided by your firm that may be related to or helpful to a comprehensive equity study of this nature. i. A valid City of Modesto business license-if required #1.
- 13 -
2. Identify the lead(s) and the team who will be assigned to the work as well as:
a. Their credentials and relevant work experience.
b. Resume(s) of the lead(s).
c. Must have familiarity with engaging small business owners, writing standard operating procedures as well as having a strong familiarity with State and Local cannabis laws and regulations
3. Conflicts of Interest and Confidentiality:
a. Describe the systems the firm has in place to avoid conflicts and these systems’ effectiveness.
b. Describe the systems the firm has in place to maintain confidentiality of data provided.
SCOPE OF WORK
1. Provide a curriculum calendar which should include providing educational materials, one-on-one consultations, and leading technical training workshops for equity applicants.
a. Examples of the necessary topics to be included in the proposed curriculum should include, but should not be limited to the following:
i. Preparation of business plans
ii. The complete cycle of business formation, operations, steady growth, and planned exits
iii. Accounting practices
iv. Insurance requirements
v. Inventory and quality control procedures
vi. Local cannabis permitting requirements, state cannabis licensing requirements
vii. Search for real estate
viii. Application review
ix. Business mentorship programs
x. Hands on experience in the diverse segments of the cannabis industry which could include visits to Retail, Cultivation, Manufacturing, or Distribution facilities to see how a licensed cannabis business operates in the State of California.
#1.
- 14 -
b. The City of Modesto currently estimates an initial population of equity program participants to be 40 individuals.
2. The proposed curriculum should also be structured to meet the needs of a population of potential program participants who have been deprived of general education and business experience due to the impacts of past criminal justice policies. The needs identified directly from impacted community members included:
a. A need for skills training in how to plan for, start up and run a business (e.g., business planning and development fundamentals). For example, equity community members want to be coached by subject matter experts on how to progress from an idea to a workable plan for a business. They also want to be taught the essential technical and financial components of business ownership and how to use their transferable skills to advance from opening day through maintaining legal operations over the course of their 3-year, 5- year or longer planning horizons.
b. The proposed timeframe, whether in months or weeks, for the direct technical assistance offered should be tailored to meet the needs of potential equity program participants.
COST PROPOSAL
1. Cost proposal shall be broken down by task in a similar format to the following table:
Task Unit Price
Education Materials
One on One Consultations
Technical Workshops
Other services
TOTAL
Additional Costs
Miscellaneous Cost (please describe)
TOTAL $35,000
#1.
- 15 -
2. A fee schedule should be included listing the rates for all team members
3. Be complete, accurate, and include all proposed allowable costs
4. Please prepare your cost proposal to align with the program budget of $35,000 for direct technical assistance.
5. If all of the requested support does not fit in the budget, please provide a supplemental schedule to your firm’s cost proposal detailing additional recommended costs beyond the $35,000 limitation for direct technical assistance.
Proposers understand and agree that:
• Proposals submitted will be reviewed by an evaluation committee comprised of City Staff and Community Stakeholders. City Staff will select the proposal which best fulfills the City’s requirements as determined by the evaluation committee. • Overall responsiveness to this notice and invitation is an important factor in the evaluation process.
The City of Modesto reserves the right to reject any or all qualifications submitted or any part thereof and to accept in whole, or in part, such qualifications as may be deemed in the best interest of the City.
• References (e.g., history, customer reviews) will be checked and should be assumed to factor into any decision(s) about consulting firm selection made by City staff.
INSURANCE REQUIREMENTS
Insurance Type or Requirement Requirement
General Liability $1,000,000
Automobile $1,000,000
Worker’s Compensation (if there are
employees of the business)
$1,000,000
Professional Liability or Errors and Omissions $1,000,000 and $2,000,000 aggregate Waiver of Subrogation Form Required
Additional Insured Endorsement Additional Named Insured language required: The City of Modesto, its officers,
officials, employees, agents, and volunteers
are to be covered as additional insureds.
#1.
- 16 -
CONFIDENTIALITY
If any of the submittals, or any portion of the submittals, are considered confidential by the respondent, such documents should be submitted with a single copy in a separate sealed envelope clearly marked “Confidential” on the outside of the envelope.
All information and documents, excluding the confidential financial information, submitted in response to this RFP are subject to the California Public Records Act, California Government Code §§ 6250 through 6276.48) (“CPRA”), which mandates the disclosure of documents in the possession of the City upon the request of any person, unless the content of the document falls within a specific exemption category of the CPRA. On each page that contains information that the respondent believes is exempt from mandatory disclosure under CPRA, respondent shall include the following separate legend:
“CONFIDENTIAL – NOT FOR PUBLIC DISTRIBUTION”
“THIS PAGE CONTAINS INFORMATION THAT IS EXEMPT FROM MANDATORY DISCLOSURE UNDER THE CALIFORNIA PUBLIC RECORDS ACT.”
Should the City receive a request to review confidentially labeled information, the City will notify the respondent of the request and delay the access to the materials for seven (7) days after notification to respondent to allow respondent to act in protection of its labeled information.
Failure to so act shall constitute a complete waiver.
All responses will be considered public records that are subject to public disclosure. In the event a respondent considers its submittal as a proprietary trade secret or otherwise exempt from disclosure under the CPRA, the respondent must designate its submittal as confidential. The City will withhold designated applications from public disclosure only if permitted by applicable law.
The City will not be responsible or liable for disclosure of any information, including without limitation those marked confidential, if disclosure is deemed by the City to be required by law, or by a court of competent jurisdiction.
Disclaimers, Reservation of Rights, Conflicts of Interest, and Form of Agreement Upon receipt, each Proposal becomes the sole property of the City and will not be returned to the Respondent. Each Respondent is solely responsible for the costs it incurs to prepare and submit its Proposal. The City reserves, in its sole discretion, the right to reject any and all Proposals, including the right to cancel or postpone the RFP or the Project at any time, or to decline to award the Agreement to any of the Respondents. The City reserves the right to waive any immaterial irregularities in a Proposal or submission of a Proposal. The City reserves the right to reject any #1.
- 17 -
Proposal that is determined to contain false misleading, or materially incomplete information.
City of Modesto employees are prohibited from participating in the selection process for this RFP if they have any financial or business relationship with any Respondent. This RFP process will be conducted in compliance with all laws regarding political contributions, conflicts of interest, or unlawful activities, including, but not limited to, the City’s Conflict of Interest Policy.
A copy of the City’s standard Consulting Services Agreement (“Agreement”) is attached as Exhibit A to this RFP and incorporated herein. By submitting a Proposal, the Respondent agrees that it will enter into the Agreement using the attached form with no exceptions to the form of the Agreement.
EVALUATION CRITERIA
WRITTEN PROPOSAL
Qualifications – Clearly describes and
demonstrates the required background and
experience working with the targeted
communities
Criteria – Clearly meets all required criteria
Scope of Work and Deliverables – Provided
clear understanding of project goals and a
practical outline of the scope of work and
deliverables to meet those goals
Cost Proposal – Prepares an adequate budget
necessary to support the program objectives
and activities.
References
INTERVIEW (Optional)
Presentation – experience, program design
and approach, clear and measurable
deliverables, reasonable fee proposal.
Q&A – response to panel’s questions.
#1.
- 18 -
Please direct your proposal to:
Jessica Hill, Director of Community and Economic Development City of Modesto P.O. Box 642 Modesto CA 95353
Should you have any questions, please forward them to our Cannabis Program Mailbox at [email protected] .
I hope this opportunity will be of interest to you and look forward to your response.
Sincerely,
Jessica Hill
Director of Community and Economic Development
#1.
- 19 -
Proposal Bidder: Tulip & Oak Consulting, Inc.
Request for Proposal: RFP INF 24-05 (Professional Services for Providing Direct Education and Technical Assistance to Eligible Cannabis PLEDGE Program Participants) Submittal Due Date & Time: Thursday, October 12, 2023 5:00 p.m. PST Response to Request for Proposals
City of Modesto, California
Submitted By:
Tulip & Oak Consulting, Inc.
www.tulipandoak.com
[email protected]
(510) 426-0101
1 #1.
- 20 -
TRANSMITTAL LETTER..................................................................................................3 QUALIFICATIONS............................................................................................................5 Description of the Firm.............................................................................................................................5 Background and Experience in Equity Issues........................................................................................5 Statement of Understanding.................................................................................................................... 6 Reducing Implicit Bias................................................................................................................................ 7 Additional & Innovative Services.............................................................................................................8 Valid City of Modesto Business License................................................................................................ 8 LEADS AND THE TEAM................................................................................................. 9 Andrea Unsworth, Team Lead.................................................................................................................9 Blake Hoffmann, Project Manager........................................................................................................ 12 CONFLICTS OF INTEREST AND CONFIDENTIALITY...........................................14 Conflict of Interest Policy.......................................................................................................................14 Maintaining Confidentiality of Data...................................................................................................... 16 SCOPE OF WORK.......................................................................................................... 18 Proposed Curriculum Overview...........................................................................................................18 Group-Setting Workshops..................................................................................................................... 18 Online Learning Management System (LMS)..................................................................................... 22 One-On-One Business Coaching......................................................................................................... 22 Mentorship Program................................................................................................................................22 Curriculum Calendar...............................................................................................................................23 COST PROPOSAL.......................................................................................................... 24 INSURANCE REQUIREMENTS.................................................................................... 25 CONCLUSION................................................................................................................ 25 REFERENCES...................................................................................................................26 APPENDIX - SEE ATTACHED.......................................................................................28 2 #1.
- 21 -
TRANSMITTAL LETTER
October 12, 2023
Jessica Hill
Director of Community and Economic Development
City of Modesto
P.O. Box 642
Modesto, CA 95353
RE: RFP INF 24-05
Dear Jessica Hill and to Whom It May Concern,
Tulip & Oak is pleased to submit a comprehensive proposal to fulfill the City of Modesto’s goal to educate and train local equity operators entering the legal cannabis market. With ten years of experience building and operating successful cannabis businesses, our team has worked with cannabis business operators throughout the state of California, including the City of Modesto, providing technical assistance and coaching. We have successfully built relationships in all sectors of the cannabis industry, supporting the existing market in the Central Valley.
Through a partnership with Oaksterdam University, the team has provided one-on-one technical assistance to the City’s 600+ Equity operators with support including operations, compliance, licensing, inspection preparation, inventory management, business planning, and manufacturing protocols. Most recently, Andrea presented the Business Finance for Equity Operators webinar and workshop for the City of Los Angeles, providing critical financial concepts that all cannabis business operators should be familiar with.
This proposal will leverage our team’s decade of experience with educational technologies including a cannabis-centered Learning Management System (LMS), in-person workshops, virtual learning, networking opportunities, one-on-one business coaching, and self-paced coursework.
Our proposal is intended to offer assistance to all eligible operators, with educational resources and a platform that will be made available to all applicants and operators on an on-going basis. 3 #1.
- 22 -
Tulip & Oak Consulting, Inc. agrees to be bound by the representations in our proposal during the term of the agreement. This proposal is valid for a period of 90 days from the date of submission.
Sincerely,
Andrea Unsworth
Andrea Unsworth, MBA
Founder & Owner
Tulip & Oak Consulting, Inc.
39116 Fremont Hub #1227
Fremont, CA 94538
4 #1.
- 23 -
QUALIFICATIONS
Description of the Firm.
Tulip & Oak Consulting was founded in 2018 following the passage of Proposition 64 to support Legacy businesses navigating legalization and an entirely new licensing process. Tulip & Oak provides strategic cannabis business consulting in the areas of Management and Operations, Financial Services, Permits and Applications, Strategy and Planning, and Legal Services. The team also hosted a number of free seminars for Equity applicants, including Finance for Equity Operators.
Powered by a team committed to helping shape a diverse and community-centered cannabis industry, our experts have advised clients on cannabis license applications locally, statewide and across the country. With clients in all sectors of the cannabis industry, our team has secured over fifty licenses in multiple jurisdictions including San Francisco, Oakland, Hayward, Modesto, Patterson, Oakdale, Stanislaus County, and Santa Rosa.
Using our broad financial, organizational and regulatory expertise, the team supports clients through every step of the application process while also helping lay the groundwork for establishing a sustainable business. The team fosters enduring relationships with clients, working with them as partners and using their network to seek out solutions.
From 2021-2023, Tulip & Oak served on the Board of the Oakland Equity Collective, helping design and implement the first publicly-funded cannabis shared kitchen. The collective works to increase the number of equity operators in the manufacturing sector of the industry by offering technical assistance, coaching, and a rent-free cohort program for eligible equity operators.
Tulip & Oak Consulting is a certified small business (micro), was founded by and is owned by a Woman of Color.
Background and Experience in Equity Issues.
Andrea Unsworth, a co-Founder and former board member of Supernova Women, has helped dozens of Social Equity applicants and operators throughout her career. Supernova Women is a 501(c)3 nonprofit organization founded in 2015 that works to empower Black and Brown 5 #1.
- 24 -
people to become self-sufficient shareholders in the cannabis and natural plant medicine space through education, advocacy, and network building.
Andrea has worked intimately with the City of Oakland and was a subcontractor under Elevate Impact, developing and designing a cannabis Equity Grant and Loan program that launched in 2019. She then worked with Elevate Impact to issue the first round of Equity funding by processing and reviewing applications for the first (6) months of the program.
Most recently, the company provided technical assistance to Equity operators in the cities of Oakland, Palm Springs, and Los Angeles. The work has included compliance reviews, SOP development, operational planning, financial statement preparation, and website development.
Tulip & Oak also served on the board of the Oakland Equity Collective, working to increase the presence of Equity operators in the manufacturing sector of the cannabis industry.
Statement of Understanding.
Our proposal is to develop and deliver a technical assistance program that works to advance economic justice for those most harmed by the War on Drugs. Our goal is to educate and train as many business operators as possible, preparing them for local and state licensing, and teaching them how to use their transferable skills to operate a profitable business.
Given our years of experience as operators and consultants, we understand the barriers at each stage of the application process and business life cycle. This proposed program will enable the operators to build a strong business foundation utilizing local grant funds (if eligible), and then seek additional funding from investors or other funding sources with a solid business plan.
By combining both synchronous and asynchronous learning styles, we have developed a work plan that will accommodate all types of learning that is student-centered, interactive, and easily adaptable to the size of the program. The timeline for our proposed approach is detailed in the Scope of Work section.
Our proposed learning approach would be a combination of:
❖ In-Person Workshop Series (9)
➢ Direct Instruction
➢ Guest Speakers
➢ Written materials
6 #1.
- 25 -
➢ Interactive Activities
➢ Technical Assistance
❖ Online Education
➢ Key Learning Objectives
➢ Quizzes
➢ Final Evaluations
❖ One-One Operational Coaching
➢ Technical Assistance
Reducing Implicit Bias.
Tulip & Oak Consulting recognizes that each participant comes to the program with unique needs and circumstances that brought them to that particular time and place in life. Below are some of the foundational principles that we utilize in our company setting and feel will be essential in working with program participants.
❖ Allow ample time for decision making.
❖ Always consider the physical and social environment.
❖ Meet people where they are, and set reasonable expectations based on their specific abilities and resources.
❖ Collect and Analyze data, constantly update and refresh methods. ❖ Require Accountability.
❖ Increase empathy and empathic communication.
❖ Practice Mindfulness.
❖ Maintain an inclusive outreach and hiring program that works with community and faith-based organizations.
Statement on Diversity, Equity, and Inclusion.
“Tulip & Oak is dedicated to ensuring the inclusion and success of Legacy operators in the cannabis industry. We appreciate and respect the necessity for a diverse, equitable, and inclusive work environment, industry, and society. We are committed to the inclusion and respect of all participants and partners whatever their race, ethnicity, national origin, ancestry, color, age, sex, gender identity, sexual orientation or identity, language, disability, veteran status, height, weight, domestic partner status, marital status, parental status, AIDS/HIV status, educational background, or socio-economic status. We value and encourage the inclusion of all voices, and believe that sharing varied experiences and backgrounds only enhances the industry and enriches the lives of those involved. We always offer education, technical assistance, support, 7 #1.
- 26 -
memberships, hiring opportunities, and partnerships in a nondiscriminatory manner that provides equitable access to opportunities within our programs” Additional & Innovative Services.
All Tulip & Oak coursework is taught by operators that have had hands-on experience in completing the licensure process in almost all segments of the cannabis industry. Every team member of Tulip & Oak has been a cultivator, manufacturer, distributor, or retail operator in the legal cannabis industry; we teach from experience.
With over a decade in the cannabis industry, our team members have an extensive network and access to many events, facilities, and networking opportunities that our participants would find useful for building their respective businesses. Our team partners with CPAs that specialize in cannabis accounting to build curriculum, provide quarterly updates regarding tax law changes, and are available as a resource to all of our participants outside of the program. Other partners include lawyers that offer Pro Bono services for Equity operators. We have negotiated special pricing with local vendors including banking and financial services, which are imperative and difficult to navigate for cannabis business operators.
Tulip & Oak offers extensive website development, brand design services, IT, packaging compliance, and other technical services not typically found in most consulting firms. We also have access to a manufacturing facility, and numerous retail dispensaries that will allow us to give real-time access to PLEDGE participants.
Valid City of Modesto Business License.
Upon award, Tulip & Oak Consulting will hold and maintain a valid City of Modesto business license and all applicable licenses required by the City of Modesto. 8 #1.
- 27 -
LEADS AND THE TEAM
Andrea Unsworth, Team Lead
Credentials and Relevant Work Experience.
A proven cannabis advocate, Andrea joined the cannabis industry after an impressive career as a bond analyst for Moody’s Investors Service. After publishing numerous pieces about the cannabis industry, she started a delivery-only dispensary in 2014 with her father called StashTwist. A case study on MSNBC’s “The Profit”, her delivery service became a model for other women and minorities interested in becoming business owners in the industry.
In 2015, Andrea led the Bay Area chapter of Women Grow, a national for-profit entity whose mission is to serve as a catalyst for women to influence and succeed in cannabis.
That same year Andrea co-founded Supernova Women, an organization that champions for the education and advancement of individuals most impacted by the War on Drugs in the pursuit of their entrepreneurial goals. Founded with the mission to foster community empowerment through education, advocacy, and network building, the organization fosters a safe space for and amplifies the messages of their constituents at the local, state, and national level.
For the next year, she worked intimately with the City of Oakland and Elevate Impact to develop and design a successful commercial cannabis program that launched in 2019. She then worked for the City to issue the first round of Equity funding by processing and reviewing applications for the first (6) months of the program.
Andrea launched her own cannabis consulting company, Tulip & Oak, in 2017 with clients in all sectors of the cannabis industry. Her team was responsible for securing licenses in multiple jurisdictions including San Francisco, Oakland, Hayward, Modesto, Patterson, Oakdale, Stanislaus County, and Santa Rosa. As a frequent speaker at national cannabis conferences, Andrea has successfully testified on behalf of cannabis regulation before the State of California.
From 2018 through 2021, Andrea joined The People’s Remedy as the General Manager of Operations, providing daily direction to team leaders while ensuring compliance at all levels of the organization. As the first licensed dispensary in Stanislaus County, Andrea helped lead the company’s expansion from (1) to (5) retail locations in three years. 9 #1.
- 28 -
Having operated a cannabis retail location in the City of Modesto, Andrea Unsworth is especially proud to return to continue building a successful, inclusive cannabis industry. The People’s Remedy (now Herbology) on McHenry Blvd. quickly became a strong tax-paying business upon opening and has operated consistently since 2019.
Through her consulting firm, Andrea worked as the Director of Compliance for Hummingbird Verde - a vertically integrated company with a Distribution Center, non storefront retail, and both volatile and non-volatile types of Manufacturing in Oakland. In 2022, Andrea worked as the General Manager of Lemonnade, opening the city’s second cannabis retail storefront location.
In 2022, Andrea was a board member and Assistant Director of the Oakland Equity Collective, a shared-kitchen and white-labeling facility that supports a cohort of Social Equity operators for 18 months at a time. OEC works to advance manufacturing and distribution opportunities for both the OEC team and a rotation of six additional equity manufacturers in OEC’s Shared-Use Facility.
Andrea provides Technical Assistance to Cannabis Equity operators in the cities of Oakland, Palm Springs, and Los Angeles. Most recently, she taught an online webinar entitled “Finance for Cannabis Equity Operators” through the City of Los Angeles’ Department of Cannabis Control.
Andrea has a B.A. from UCLA in Political Science and Sociology, and an MBA with a focus on Company Finance from USC. She has authored and published numerous articles about the cannabis industry over the last ten years, and continues to expand her knowledge base into new states and countries.
Years of strong experience with engaging small business owners.
Andrea led the Bay Area chapter of Women Grow in 2015, whose mission is to serve as a catalyst for women to influence and succeed in the cannabis industry as small business owners.
That same year, Andrea co- founded Supernova Women, which championed the education and advancement of business owners who were affected by the War on Drugs to own and operate small businesses.
Since 2017, Andrea has owned and operated a cannabis consulting service, Tulip & Oak Inc, which specializes in application preparation, licensing, operations, and compliance for Social Equity operators. She has over ten years of financial planning experience for small businesses, as 10 #1.
- 29 -
both an operator and a consultant and has built financial models for every sector. She and her team have secured licenses in multiple jurisdictions for operators with budgets as low as $50,000 in start-up funding.
Years of strong experience writing SOPs.
Andrea has developed Standard Operating Procedures and Master Manufacturing Protocols for numerous cannabis businesses in almost all sectors of the cannabis industry (with the exception of lab testing). From 2019-2021, Andrea served as General Manager of Operations for People’s Remedy, drafting all of their SOPs as they transitioned from the Prop 215 operating model. She updated these in 2020 specifically drafting COVID protocol for retail locations which enabled many dispensaries to remain open and safely serve customers and patients while protecting the health of employees. Most recently, Andrea co-authored all of the SOPs at the Oakland Equity Collective kitchen, and ensured all Batch Production Records were accurate and cohesive. She has years of experience working with the DCC and CA Department of Public Health in field inspections, maintaining open communication with inspectors.
Strong familiarity with state and local cannabis laws.
In 2014, Andrea became an outspoken advocate of licensure and Equity programs in the City of Oakland. Much of her work included drafting legislation and proposals for local and state cannabis laws. Andrea has years of experience with the permitting and approval process of local governments and public agencies, including completing multiple CUP applications. Andrea led the team at The People’s Remedy to obtain all licensing for retail locations, and to be the representative for all inspections and audits from local jurisdictions. Her consulting team has secured licenses for numerous clients, in the cities of San Francisco, Oakland, Hayward, Modesto and Santa Rosa spanning every license type including distribution, cultivation, manufacturing, and retail.
11 #1.
- 30 -
Blake Hoffmann, Project Manager
Credentials and Relevant Work Experience
Blake Hoffmann is currently a Project Manager at Tulip & Oak, and focuses on engaging customers that need a high level of technical support. His areas of focus include: (1) Manufacturing Protocols, (2) Packaging & Labeling Compliance, and (3) Operational Management.
Years of strong experience with engaging small business owners.
Blake led a career primarily in tech from his childhood in Southern California through the last 25 years he has lived in the Bay Area. He started consulting at a young age, which he has continued to do until today. After employment in different sectors of the tech and retail industries, Blake joined Fixswift IT Solutions in San Francisco, the City’s highest rated local and independent firm at that time. There he was the primary field technician, making inhouse visits to hundreds of small businesses around SF and the greater bay area. This ranged from Yoga Studios to Fortune 500 firms, usually dealing directly with the owners/CEO’s of each client. He also attended multiple networking events for his firm, soliciting new clients and garnering relationships he still uses today.
In 2011, Blake joined the team at The Cave Smoke Shop in San Mateo, California. The Cave is regarded as a worldwide leader in the Functional Glass Art movement, and Blake has spearheaded their online store, events, product launches, store openings, television appearances, and collaborations. As a premiere location for highly collectible functional glass art, Blake garnered relationships with multiple cultivation, manufacturing and retail cannabis business owners as a curator of highly-sought after items.
Blake joined Andrea at Tulip & Oak in 2020, and since then has become a partner after assisting with multiple projects across numerous clients in the Oakland Social Equity Technical Assistance Program. He works directly with multiple retail, delivery and manufacturing clients in brand identity, web design, packaging design, product formulation, compliance documentation and much more.
12 #1.
- 31 -
Years of strong experience writing SOPs.
For multiple clients, Blake has authored and updated multiple SOP’s as well as batch production records, master manufacturing protocols and equipment maintenance processes. From packaged flower and prerolls to water extraction and cartridge filling, Blake is well-versed in the majority of cannabis manufacturing processes and all related documentation.
Blake worked as General Manager of The Cave for over twelve years as the Company’s general problem solver & project manager. Alongside staff onboarding & education, Blake has created, trained, and implemented positions for The Cave’s Inventory Manager, Creative Designer, Photographer, Online Support Specialist, Shipping Specialist and more. As such, he has been a major asset in The Cave in becoming the most established store in its industry.
At Fixswift IT Solutions, as Windows department manager and Windows Server/Mac Server 2nd, Blake created technical SOPs for clients from every business type, including nation-leading law firms and Fortune 500 companies.
Strong familiarity with state and local cannabis laws.
Blake has years of experience working in a high-compliance industry, which has been essential to the operations of Tulip & Oak, as well as its clients. Currently, one of his focus areas is to complete the final compliance check on all packaging of our clients’ cannabis products. As such, Blake is responsible for ensuring that the local, state, and health department regulations are followed so that products can be safely released to the public - on behalf of our clients.
Blake is responsible for all state-required premises drawings for our clients, ensuring that that information is accurate and in compliance with the local and state regulations, as well as recommendations for OSHA and State-compliant manufacturing equipment. The manufacturing SOPs he authors and trains clients to ensure that they are following all laws from day one. 13 #1.
- 32 -
CONFLICTS OF INTEREST AND CONFIDENTIALITY
Conflict of Interest Policy
We strongly believe that it is important for our directors, officers, and staff to be aware that both real and apparent conflicts of interest or dualities of interest sometimes occur in the course of conducting the affairs of our company. The appearance of conflict can be troublesome even if there is in fact no conflict whatsoever.
Tulip & Oak maintains a “Conflict of Interest Policy” to protect the company when it is contemplating entering into a transaction or arrangement that might benefit the private interest of an officer or director of the company or might result in a possible excess benefit transaction.
Conflicts are undesirable because they potentially or eventually place the interests of others ahead of the corporation’s obligations and to the public interest. Conflicts are also undesirable because they often reflect adversely upon the person involved and upon the institutions with which they are affiliated, regardless of the actual facts or motivations of the parties. “Each member of the board of directors and the staff of Tulip & Oak, Inc. has a duty of loyalty to the corporation, to prefer the interests of the corporation over the director’s/staff’s interest or the interests of others. In addition, directors and staff of the corporation shall avoid acts of self-dealing which may adversely affect the reputation of the corporation or cause there to arise any sanction or penalty by a governmental authority.”
All company representatives are required to abide by the company’s Conflict of Interest Policy, and must sign a statement each year attesting that they have received a copy of the Policy, they read and understand the Policy, they agree to comply with the Policy. Any individual that believes they have ongoing relationships or interests that may present a conflict must also make an annual disclosure, as described above, and is responsible for updating such disclosure upon the occurrence of any material change.
From our ByLaws
Procedures.
A. Disclosure. Interested Parties shall disclose potential conflicts of interest to the Board as soon as is practicable after becoming aware of the potential conflict as described above. Interested Parties are also required to complete an annual disclosure form to describe any ongoing interest that may create a conflict.
14 #1.
- 33 -
B. Evaluation. After the board receives any potential conflict or conflict disclosure from an Interested Party, the Board may request follow-up discussions or additional information. At this point, the Board will decide whether an actual conflict exists and whether it involves financial interest, material competition, self-dealing, or any other type of conflict. The Interested Party shall be screened from any discussions or voting regarding the conflict. The Board will fully determine the issue on a vote. Evaluation of conflicts is made on a case-by-case-basis.
C. Factors for Consideration. The Board may consider any factor it wishes in determining whether a conflict exists. Some of the factors for consideration may include:
i. Whether the Interested Party’s financial interest is minimal, in relation to the transaction ii. How involved the Interested party is with the other entity involved in any transaction with the Corporation
iii. The degree to which the Interested Party could personally benefit from the transaction or relationship at issue
D. Determination of Self-Dealing. If the Board determines that an actual conflict exists, the Board must also determine whether a self-dealing transaction is at issue. If so, the entirety of the Board must vote on whether to approve the transaction, and the transaction must be approved by a greater vote than just a simple majority. Approval of compensation for a director acting as director or officer shall not be considered a self-dealing transaction.
E. Determination of Transactional Conflict. If the Board determines that an actual conflict exists involving a financial transaction or arrangement, but it is not self-dealing, the Board will consider alternative scenarios that would not present a conflict. If the Board determines an appropriate alternative exists, the Board shall pursue that avenue. If an appropriate alternative does not exist, the Board shall determine whether the original proposed course of action is in the Corporations’ best interest and take a vote on such an issue, which a majority is required.
F. Determination of Other Conflict. In any other scenario in which the Board determines a conflict exists, the Board shall recommend a reasonable and appropriate course of action to protect the Corporation. The Board shall discuss the issue and determine how best to proceed forward.
15 #1.
- 34 -
Maintaining Confidentiality of Data
Confidential information is abundant and an important obligation for our company to keep safe.
From customer lists and pricing data to employee information, trade secrets and financial reports, Tulip & Oak works diligently to uphold our privacy obligations or they can experience a damaging information leak or fines for non-compliance. Below are some examples of the systems we currently use to protect data at Tulip & Oak.
Limited Access to Confidential Information
Providing limited access to confidential data on a need-to-know basis can prevent a serious breach from occurring. When granting access, the company keeps records of what confidential information has been disclosed and to whom. This permission is revoked upon project completion, termination of employment or when access is no longer appropriate.
Safeguard Confidential Information with a Visitor
Tulip & Oak visitors are required to check-in and check-out, sign a non-disclosure agreement, wear visitor badges and be accompanied by an employee for the duration of their visit while on company property.
Off-site Document Storage
Storing confidential information within the workplace increases the chance of a purposeful or accidental information leak. By storing documents off-site with a third-party records management service, confidential information is securely contained and managed with around-the-clock surveillance and strict safety protocols.
Information Destruction Policy
Tulip & Oak maintains a formal, company-wide, written policy that directs staff to securely dispose of documents when they are no longer needed. Instead of disposing of information in a trash can or recycling bin, the policy reviews what types of data must be destroyed and how, so that confidential information remains protected and isn’t improperly disclosed. 16 #1.
- 35 -
Document Retention Policy
Tulip & Oak maintains a document retention policy to establish standards for document integrity, retention, and destruction and to promote the proper treatment of company records; we have minimum retention periods for the following categories:
● Tax Records
● Employment /Personnel Records
● Board Materials
● Press Releases
● Public Filings
● Legal Files
● Marketing & Sales Documents
● Contracts
● IP and Trade Secrets
● Correspondence
● Banking and Accounting
● Insurance
● Audit Records
● E-mails
17 #1.
- 36 -
SCOPE OF WORK
Proposed Curriculum Overview
Our curriculum will be structured to meet the needs of the underrepresented groups, an audience we have years of experience in working with. We make a strong effort to accommodate multiple learning styles (written instruction, hands-on training, group learning, online learning, one-on-one consultations), and offer our materials in different formats so the information is accessible. Our team is composed of subject matter experts, and ALL coursework is taught by operators with hands-on experience in their field. All of the Tulip & Oak staff have been operators in California’s legal cannabis market, and have experience of transitioning from the Legacy market.
Assessments
Following registration, but prior to the start of the program, participants will complete a brief initial assessment of skill levels including literacy, numeracy, and English language proficiency, as well as aptitudes, abilities (including skills gaps), and supportive service needs. This may include diagnostic testing, or an in-depth interview to identify potential barriers and set appropriate goals. This is also the time to identify the appropriate combination of services for clients to achieve their entrepreneurial goals, including the list of, and information about, eligible training providers. Identifying the applicant’s transferable skills is essential to this process and the overall success of the business.
Group-Setting Workshops
The foundation of our technical assistance program is the 9-part series of in-person workshops.
Each workshop is a total of (6) hours, for a total of (54) hours of in-person instruction. The workshops are designed to teach the fundamental, core business and operational concepts which can then be applied to the specific sector of the cannabis industry that the operator is in.
Speakers will be invited that have a practical knowledge base and expertise to provide real-time support or solutions, as opposed to theory and a reliance on textbooks. Importantly, the curriculum and the structure of the program are designed to be useful at any stage. Following the morning sessions of the workshop, each participant will take a quiz to ensure that they are comprehending the key principles of the course and allowing the moderator to make any adjustments or re-reachings in real time.
18 #1.
- 37 -
Workshop 1:
WELCOME TO THE
CALIFORNIA CANNABIS
MARKET
Overview of the Cannabis Industry
License Types in Detail
The Supply Chain
White-Label Structure (non
license-holder)
The Shared-Kitchen Model
Event Licenses
19 Workshop 2:
BUILDING A CANNABIS
BUSINESS
Transferable Skills
Proof of Concept
Business Plan Development
Legal: Entity Formation & Partnerships
Building an Effective Team
Insurance & Asset Protection
Workshop 3:
FINANCE FOR CANNABIS
BUSINESSES
Accounting vs. Finance
Debt vs. Equity
Raising Capital & Predatory Lending
Basic Financial Statements / EBITDA
Liquidity
Exit Strategy
#1.
- 38 -
20 Workshop 4:
CANNABIS BUSINESS
OPERATIONS 101
(Handling Inventory)
Standard Operating Procedures
Inventory Management
METRC (Track-n-Trace)
Manufacturing Protocols
Quality Control
Odor Control & Waste Management
Workshop 5:
CANNABIS BUSINESS
OPERATIONS 102
(Back-End)
Accounting
Cannabis Bank Accounts
Identifying Suppliers
Packaging & Labeling
Distribution Contracts
Marketing & Advertising
Workshop 6:
REAL ESTATE - IDENTIFYING &
SECURING A PROPERTY
Green Zone Search
Own vs. Lease
Layout and Design
Premise Diagrams
Securing your Property
Emergency Preparedness
#1.
- 39 -
21 Workshop 7:
LOCAL & STATE LICENSING
The Importance of Compliance
Local & State Licensing Requirements
The CEQA Process
Transportation & Delivery Procedures
Real-time Application Review
Preparing for an Inspection
Workshop 8:
OPERATING & EXPANDING
THE BUSINESS
Human Resources & Payroll
Managing & Sustaining Growth
Record-Keeping Requirements
Equipment Purchase & Depreciation
Audit Preparation
Lobbying & Social Equity Activism
Workshop 9:
FIELD TRIP & GUEST
SPEAKERS
Guest Speaker: Cultivation
Guest Speaker: Non-Volatile
Manufacturing
Guest Speaker: Volatile Manufacturing
Guest Speaker: Distribution
Site Visit: Retail Dispensary #1
Site Visit: Retail Dispensary #2
#1.
- 40 -
Online Learning Management System (LMS)
At the end of each workshop, the participants will log into the LMS (Learning Management System) for some follow-up online learning activities, resources, and a final exam. There will also be a set of business deliverables for their operations which will be required to be completed prior to funding being released. Examples of deliverables include: Business Plan, Corporate filings with the State of California, a working CAPEX budget, and an organizational chart for hiring staff. Each participant will also complete an online evaluation (final exam) for each workshop that will complete the learning outcomes.
This LMS will be made available to ALL local equity applicants, on a perpetual basis, that will be updated as regulations and opportunities change; operators can begin or continue their training and education with the online resources. Continuing education is crucial to success for any professional and is especially important in the cannabis industry. With government regulations and market forces constantly shifting, timely and accurate information is critical to build profitable, innovative, and socially responsible business models. Our LMS will provide relevant content from experienced leaders on current topics in the cannabis industry.
One-On-One Business Coaching
Each operator will have one-on-one technical assistance support following the workshops and up until October 2024 when the funds are to be exhausted. Individual coaching is essential to the success of the program, as it gives the operator the opportunity to develop an individualized business plan, to identify their unique goals, and determine appropriate achievement objectives.
Tulip & Oak is available to offer continuous support throughout the lifecycle of the business, helping to ensure longevity and increasing the likelihood of success and profitability.
Mentorship Program
Upon completion of the program, each of the participants will be assigned a mentor that will continue to be available during the lifecycle of their business for follow-up, questions, or referrals to specialists.
22 #1.
- 41 -
Curriculum Calendar
Our proposed timeline is below, and ensures that the funds will be expended by October 2024 as obligated.
PROPOSED TIMELINE
December 2023
Anticipated Contract Award
Complete and Sign Contractor Paperwork with the City of Modesto January - February
2024
Technical Assistance Program Announcement
Technical Assistance Program - Application Period Open
March 2024
Website Launch - Resources for all Equity Applicants and current operators Participants Notified, Assessments begin
April -
May 2024
Nine (9) In-person workshops (details below)
Learning Management System Launches
Technical Assistance /One-On-One Coaching Period Begins June -
August 2024
Continued Technical Assistance through One-On-One Coaching Mentorship Program: Participants are connected with a mentor Mid-September -
October 2024
Technical Assistance Ends - Program Closes
Final Reporting and Accounting of Funds Disbursed
23 #1.
- 42 -
COST PROPOSAL
This proposal reflects a plan for educational programming that is high-impact and low-cost, so that the majority of funding is not only allocated to direct teaching but to also developing an online educational platform that continues to evolve.
TASK UNIT PRICE COST
BUDGET $ 35,000
Educational Materials (flash drives, binders, pens, pads) $2,000 $ (2,000) Website and Learning Management System 1.0 $5,000 ($5,000) Guest Speaker Stipend 6.0 $1,000 ($6,000)
Technical Assistance Workshops 8.0 $1,000 ($8,000)
One-On-One Consultations (approx 5 hours per
participant)
200.0 $70 ($14,000)
Total ($35,000)
FEE SCHEDULE
Rate Amount Total
Lead Team Member #1 - Hourly Rate $80 / Hr 150.0 $12,000 Team Member #2 - Hourly Rate $60 / Hr 100.0 $6,000
Team Member #3 - Hourly Rate $30 / Hr 70.0 $2,100
Stipends - Guest Speakers $1,000 / Day 6.0 $6,000
Total $27,000
24 #1.
- 43 -
INSURANCE REQUIREMENTS
Upon award, Tulip & Oak Consulting will hold and maintain all applicable insurance types and Certificates of Insurance evidencing the following coverage:
➔ General Liability $1,000,000 each occurrence
➔ Worker’s Compensation $1,000,000 each occurrence $2,000,000 aggregate ➔ Professional Liability or Errors and Omissions $1,000,000 and $2,000,000 aggregate The additional named insured language will include: “The City of Modesto, its council members, directors, officers, officials, employees, agents, and volunteers will be covered as additional insureds” as requested.
CONCLUSION
While Equity programs are designed to serve the operators most harmed by the War on Drugs, the result is a benefit for the entire community, the consumers, and the cannabis industry as a whole. In a fast-paced market with continual challenges (and opportunities), local cannabis programs can serve as hubs of innovation and opportunity for its operators and other small businesses.
Our team has a deep and personal understanding of the impact of the War on Drugs. A natural supply chain is built when operators are encouraged and supported to work together to build a strong network of operators. Licensing and compliance become a less daunting task for an industry with operators that support and rely on each other for success.
Tulip & Oak Consulting has dedicated a decade to building and supporting California’s legal cannabis industry, with a particular focus on Legacy and Equity operators. Our team has worked with operators to build sustainable and profitable cannabis companies through education, advocacy, and network building. It is with great enthusiasm that we submit this RFP, and look forward to an opportunity to continue our work with the City of Modesto and the PLEDGE program participants.
25 #1.
- 44 -
REFERENCES
Company Name: Oaksterdam University
Address: 3630 High St #19271
City, State, Zip Code: Oakland, CA 94619
Contact Person: Dale Sky Jones, Executive Chancellor
Telephone Number: (949) 680-5452
Email: [email protected]
Company Name: The City of Oakland
Address: 1 Frank Ogawa Plaza
City, State, Zip Code: Oakland, CA 94621
Contact Person: Greg Minor, Assistant to the City Administrator Telephone Number: n/a
Email: [email protected]
Company Name: Centers for Equity and Success, Inc.
Address: 1449 Webster St.
City, State, Zip Code: San Francisco, CA 94115
Contact Person: Angela White, Program Manager
Telephone Number: (415) 549-7002
Email: [email protected]
26 #1.
- 45 -
Company Name: Posh Green Cannabis Boutique
Address: 828 Innes Ave Suite 110
City, State, Zip Code: San Francisco, CA 94124
Contact Person: Reese Benton, Owner
Telephone Number: (415) 623-6459
Email: [email protected]
Company Name: Euphorium Delivery
Address: N/A
City, State, Zip Code: Oakland, CA
Contact Person: Bryce Fluellen, Owner
Telephone Number: (510) 220-0767
Email: [email protected]
Company Name: The Cave Smoke Shop
Address: 2499 S. El Camino Real
City, State, Zip Code: San Mateo, CA
Contact Person: Chuck Husary, Owner
Telephone Number: (650) 222-4625
Email: [email protected]
27 #1.
- 46 -
APPENDIX - SEE ATTACHED
❖ RESUMES OF TEAM LEADS
❖ SAMPLE WORK PRODUCTS
➢ LOS ANGELES WEBINAR: FINANCE FOR EQUITY OPERATORS
➢ SOP: INVENTORY CONTROL - RECEIVING CANNABIS INVENTORY ❖ EMERALD MAGAZINE ARTICLE - AUTHORED BY ANDREA UNSWORTH ❖ NEWS ARTICLE: DOPE MAGAZINE
❖ SBE CERTIFICATION
❖ PROOF OF INSURANCE
28 #1.
- 47 -
#1.
- 48 -
#1.
- 49 -
#1.
- 50 -
#1.
- 51 -
#1.
- 52 -
#1.
- 53 -
#1.
- 54 -
#1.
- 55 -
#1.
- 56 -
#1.
- 57 -
#1.
- 58 -
#1.
- 59 -
#1.
- 60 -
#1.
- 61 -
#1.
- 62 -
#1.
- 63 -
#1.
- 64 -
#1.
- 65 -
#1.
- 66 -
#1.
- 67 -
#1.
- 68 -
#1.
- 69 -
RFP No. INF 24-05 Consulting Services For Cannabis Equity Program (Rebid)
Max
Score
Tulip
Oak Consulting
Brenda Davis Law
Group
CalAsian
Oaksterdam
Roads Consutling
Group
Canna Business Services
Lava8
Debrief
Requirements - Primary Selection Criteria - 100 total points possible Qualifications 25 20 23 23 23 13 13 12 10
Criteria 40 38 39 35 28 12 18 9 23
Scope of Work and Deliverables 15 15 14 14 12 5 9 4 8
Cost 10 10 10 10 10 10 10 10 10
References 10 10 10 9 9 9 8 6 10
Total Score 100 93 96 91 82 49 58 41 61
Ranking 2 1 3 4 7 6 8 5
The Score for each is the AVERAGE of all committee member's scoring. #1.
- 70 -
CITY OF MODESTO
COMMITTEE AGENDA REPORT
DATE OF MEETING:
April 22, 2024
Date: April 18, 2024
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: Cannabis Dispensary Permits
CONTACT: Sean Rando, Business Analyst,
[email protected], 209-577-5473
DESCRIPTION:
Consider providing a recommendation regarding the two (2) remaining unissued commercial cannabis retail permits and forwarding to Council for consideration. (Funding Source: Cannabis Application Fee)
STRATEGIC PLAN ELEMENT:
Expanding opportunity and reducing barriers to enter the regulated commercial cannabis market promotes economic vitality consistent with the City Council 2020-2025 Strategic Plan Goal E, Drive Economy Vitality.
BACKGROUND:
In December 2017, the Council adopted Ordinance 3684-C.S. legalizing certain commercial cannabis business operations in particular zoning districts. While there were no limitations placed on the number of cannabis wholesale business permits that may be issued under the requirements of the Modesto Municipal Code, there is a limitation placed on dispensary permits.
Pursuant to Modesto Municipal Code section 10-3.704(b) the total number of Commercial Cannabis Permits granted for each State license type may be established by Council Resolution.
On December 12, 2017, by Resolution No. 2017-525, Council limited the total number of permits that may be issued for commercial cannabis retail dispensaries to an amount not to exceed ten (10) permits. Council also directed Staff to prepare a Request for Proposal (RFP) process to gather applications for dispensary permits under the authority of the same resolution.
As a result of the RFP process, the City received twenty (20) cannabis dispensary proposals.
City staff, along with the cannabis program consultant HDL, reviewed the applications against technical requirements and assigned each a score, up to a maximum of fifty-five (55) points. #2.
- 71 -
Cannabis Program and Permit Review Committee, April 22, 2024 Cannabis Dispensary Permits
Technical scoring included an assessment of applicant qualifications, business plan and budgets, proof of capitalization, security and operating plan, facility, environmental, and design issues, and convenience to the community.
Council appointed an Ad Hoc Cannabis Committee who conducted interviews of each applicant regarding the community benefits of each proposal. The specific community benefits explored in the interviews were the creation of local jobs and wages, neighborhood improvements and nuisance mitigation, and contributions to the community including youth programs and intervention work. Each applicant team was asked the same questions and had the same time limitations.
The Ad Hoc Cannabis Committee considered the technical and community benefit scores, as well as issues related to the collective impact of having up to ten (10) dispensaries Citywide.
Areas considered included diversity of operator background, variety of operation sizes and business locations, as well as general neighborhood and safety impacts. The Committee expressed a desire to have the dispensaries dispersed in various locations throughout the City to lessen collective impacts, increase chances of success, and allow for accessibility from various areas of the City.
The Committee recommended that eight (8) applications be awarded cannabis dispensary permits and forwarded to Council for approval based on a combination of technical scores, community benefit scores, and applicant interviews. On December 19, 2018, by Resolution No. 2018-566, Council approved the issuance of eight (8) commercial cannabis retail dispensary permits based on the recommendation of the Committee. These dispensaries were to be assessed an eight (8) percent excise tax on the business’ gross receipts.
In November 2016, California voters approved Proposition 64, the Control, Regulate, and Tax Adult Use of Marijuana Act (AUMA). In its statement of purpose and intent, AUMA calls for regulating cannabis in a way that “reduces barriers to entry into the legal, regulated market.” Although a legal framework now exists to participate in the adult use commercial cannabis industry, barriers to start a commercial cannabis business may still exclude some Modesto entrepreneurs from entering the legal cannabis market. Individuals convicted of a cannabis offense during the era of prohibition and criminalization policies have a more difficult time entering the new adult-use cannabis industry due, in part, to a lack of access to capital, business space, technical support, and regulatory compliance assistance. In response to this the California legislature passed the Cannabis Equity Act in 2018 which established a State-run program intended to widen participation among marginalized and economically disadvantaged communities in the cannabis industry.
The City, in alignment with the intentions of the Cannabis Equity Act and in partnership with key members of the community, worked towards the creation of its own local cannabis equity program.
On December 13, 2022, by Resolution No. 2022-478, Council accepted the findings in the Cannabis Equity Assessment Report and on the same date by Resolution No. 2022-479, Council adopted a Cannabis Equity Program where eligible equity applicants will be eligible for direct technical assistance courses as well as grants.
DISCUSSION:
Staff worked with HDL to review neighboring cities of similar populations and determined the average cannabis retail business permits per capita is 32,058 and the average sales per capita #2.
- 72 -
Cannabis Program and Permit Review Committee, April 22, 2024 Cannabis Dispensary Permits
is $138. Stanislaus County’s cannabis retailer per capita is 19,750 with a sale per capita of $292 as of the date of HDL’s report on September 21, 2022. The City, as of the date of the report, had seven (7) dispensaries which were in operation in the City. In addition to this, there were two (2) dispensaries which were in the City Sphere of Influence, and nineteen (19) county-wide.
County; All Agencies Population Number of
Retailers
Population
per Retailer
Total Retail Sales Sales per
Capita
Alameda 1,656,791 204 8,122 $273,569,272 $165
Calaveras 45,040 4 11,260 $12,423,700 $276
Contra Costa 1,154,158 18 64,120 $120,344,037 $104
El Dorado 195,380 12 16,282 $33,003,661 $169
Humboldt 130,859 41 3,192 $49,077,328 $375
Imperial 186,064 14 13,290 $20,842,841 $112
Kern 915,273 8 114,409 $20,419,736 $22
Lake 63,948 6 10,658 $9,718,775 $152
Los Angeles 10,045,420 434 23,146 $1,554,227,438 $155
Marin 257,879 8 32,235 $14,162,740 $55
Mendocino 86,672 30 2,889 $28,613,877 $330
Merced 284,857 9 31,651 $52,402,374 $184
Mono 13,296 5 2,659 $5,899,438 $444
Monterey 437,347 26 16,821 $77,441,041 $177
Napa 137,689 6 22,948 $11,508,038 $84
Orange 3,154,577 29 108,779 $273,249,465 $87
Riverside 2,454,741 137 17,918 $374,176,140 $152
Sacramento 1,561,232 101 15,458 $304,252,948 $195
San Bernardino 2,177,209 41 53,103 $113,933,330 $52
San Diego 3,316,066 62 53,485 $464,746,668 $140
San Francisco 875,062 74 11,825 $231,270,261 $264
San Joaquin 783,722 8 97,965 $63,426,658 $81
San Luis Obispo 271,190 21 12,914 $55,021,831 $203
San Mateo 765,487 17 45,029 $31,851,931 $42
Santa Barbara 441,224 29 15,215 $72,488,624 $164
Santa Clara 1,934,704 17 113,806 $220,033,935 $114
Santa Cruz 261,131 27 9,672 $62,332,024 $239
Shasta 177,810 12 14,818 $52,694,135 $296
Siskiyou 44,338 8 5,542 $6,371,830 $144
Solano 438,603 23 19,070 $68,154,581 $155
Sonoma 484,238 33 14,674 $106,595,333 $220
Stanislaus 552,999 28 19,750 $161,463,512 $292
Tulare 481,818 10 48,182 $59,822,581 $124
Ventura 835,467 19 43,972 $58,482,685 $70
Yolo 217,531 8 27,191 $35,786,055 $165
Totals: 36,839,825 1,529 $5,099,808,823 $138
32,058
Average Sales per Capita:
$138
$84
$207
$226
$283
Note: This data assumes that all microbusinesses include a retail component Cannabis Retailers, Sales, and Sales per Capita by County 2021 Counties with more than 1 retailer per 40,000 residents Counties with more than 1 retailer per 10,000 residents Counties with more than 1 retailer per 20,000 residents All counties with active cannabis retailers
Average Population per Retailer:
Counties with fewer than 1 retailer per 40,000 residents #2.
- 73 -
Cannabis Program and Permit Review Committee, April 22, 2024 Cannabis Dispensary Permits
Since the approval of the cannabis dispensaries in 2018, the City has been collecting the excise tax revenue at eight percent (8%) of the business’ gross receipts. Revenue and sales peaked from January 2019 – May 2021 at $5,572,406. Following this time, sales have consistently declined from 1-7% on a monthly basis with an average decline of 25% annually over the last three (3) fiscal years.
Staff completed an assessment of the sales and dispensaries within California in 2022. From this study, the consultant recommended a ratio of one (1) commercial cannabis retail business to every twenty thousand (20,000) citizens. As of June 1, 2022, there were approximately twentyeight (28) cannabis retailers serving an approximate population of 552,878 within Stanislaus County resulting in a current ratio of one (1) dispensary to nineteen thousand seven hundred and fifty (19,750) residents.
Since the inception of the cannabis program and following the formal creation of the Cannabis Equity Program, staff has received multiple inquiries regarding the remaining dispensary permits, from the general population, and more so from those interested in the Cannabis Equity Program.
Participants of the adopted Cannabis Equity Program, Providing Local Equity Development Grants and Education (PLEDGE) will be eligible for direct technical assistance workshops as well as grants to assist with the payment of business start-up expenses necessary to become an operational commercial cannabis business.
There is precedent for this across other cannabis equity programs in California to also open cannabis retail business permits to equity only participants. In November of 2020, The City of Sacramento approved 10 dispensary permits exclusively for participants in their Cannabis Opportunity Reinvestment and Equity (CORE) program.
FISCAL IMPACT:
The cost associated with the review and approval of commercial cannabis permit applications, including an RFP for retail dispensary permits, is recovered through the application fee which currently amounts to $6,380. Commercial cannabis businesses are required to remit an annual permit fee in addition to the application fee. On November 14, 2023, by Resolution No. 2023-504, Council approved two separate annual commercial cannabis permit fees which covers costs related to the administration and monitoring of the cannabis permits. Operational businesses remit $18,732 while non-operational businesses are required to pay a lower fee of $4,307. The annual permit fee is reviewed and reconciled annually to capture increases or decreases related to administrative oversight of the cannabis permit program, and it is budgeted and recognized in cost center 14471. A cannabis excise tax is also paid based on total gross receipts which is currently set at 8% for commercial cannabis retail businesses.
The addition of two (2) new cannabis retailers into the market in Stanislaus County will reduce the retailer per capita rate to 18,433 which would result in sales revenue being spread across a wider market. Based on the current cannabis consultant’s general rule of one (1) dispensary to every 20,000 citizens it is unlikely that the addition of more retail businesses will result in increased sales revenue.
RECOMMENDED COMMITTEE ACTION:
#2.
- 74 -
Cannabis Program and Permit Review Committee, April 22, 2024 Cannabis Dispensary Permits
Staff Recommendations:
Motion providing a recommendation regarding the two (2) remaining unissued commercial cannabis retail permits and forwarding to Council for consideration.
Approved by:
Jessica Hill,
Director of Community and Economic Development
Joseph P. Lopez, City Manager
Attachments:
#2.
- 75 -
CITY OF MODESTO
COMMITTEE AGENDA REPORT
DATE OF MEETING:
April 22, 2024
Date: April 18, 2024
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: Cannabis Equity Program Grants
CONTACT: Sean Rando, Business Analyst,
[email protected], 209-577-5473
DESCRIPTION:
Consider approving the City’s Cannabis Equity Program (Providing Local Equity Development Grants and Education (PLEDGE)) to provide up to four (4) grants to verified PLEDGE participant owned businesses, in an amount not to exceed $70,000 per grant. (Funding Source: Cannabis Equity Grant).
STRATEGIC PLAN ELEMENT:
Expanding opportunity and reducing barriers to enter the regulated commercial cannabis market promotes economic vitality consistent with the City Council 2020-2025 Strategic Plan Goal E, Drive Economy Vitality.
BACKGROUND:
In November 2016, California voters approved Proposition 64, the Control, Regulate, and Tax Adult Use of Marijuana Act (AUMA). In its statement of purpose and intent, AUMA calls for regulating cannabis in a way that “reduces barriers to entry into the legal, regulated market.” Although a legal framework now exists to participate in the adult use commercial cannabis industry, barriers to start a commercial cannabis business may still exclude some Modesto entrepreneurs from entering the legal cannabis market.
Individuals convicted of a cannabis offense during the era of prohibition and criminalization policies have a more difficult time entering the new adult-use cannabis industry due, in part, to a lack of access to capital, business space, technical support, and regulatory compliance assistance. The State of California’s Cannabis Equity Grants program for Local Jurisdictions is designed to promote economic opportunity for individuals negatively impacted by cannabis #3.
- 76 -
Cannabis Program and Permit Review Committee, April 22, 2024 Cannabis Equity Program Update
prohibition and criminalization policies by reducing barriers to enter the regulated cannabis industry for equity applicants and licensees.
There are two (2) types of grant applications with specific funding requirements for the program.
The award of funds for a Type 1 application may only be used for the purposes of conducting an equity assessment and/or developing an equity program. Assessments are conducted prior to the development of a program to help inform the needs of the program. The award of funds for a Type 2 application may only be used for the purpose of assisting equity applicants gain entry to the regulated cannabis marketplace by providing measures to help mitigate the barriers identified in the assessment report.
On January 26, 2021, by Resolution No. 2021-024, Council directed staff to submit a Type 1 application for grant funding. In March 2021, The Governor’s Office of Business and Economic Development (GO-Biz) announced that the City of Modesto application was selected for funding in the amount of $75,000. On April 27, 2021, by Resolution No. 2021-156, Council authorized the City Manager to execute a grant Agreement to accept the $75,000 grant to conduct a cannabis equity assessment and develop a cannabis equity program.
From December 22, 2021 to October of 2022, City staff worked alongside knowledgeable consultants in order to complete a cannabis equity assessment to address the need in the communities affected the most from cannabis prohibition. The majority of this task was performed by the Brenda Davis Law Group (Brenda Davis). Using the Type 1 funds, assessment information was collected through the following methods:
Two (2) bilingual surveys, a baseline and a secondary, conducted via SurveyMonkey, the first beginning in May 2022 and the second beginning in July 2022. Two (2) community forums that hosted a total of eighty-six (86) attendees convened on June 17 and July 21, 2022.
Thirteen (13) lived experience interviews conducted on July 9 and 23, 2022. Four (4) focus groups engaged on July 21, 2022.
The completed assessment report identified three (3) primary barriers to entry into the legal commercial cannabis industry which an adopted City of Modesto cannabis equity program would address. These barriers are education and technical training, community reinvestment, and access to capital.
On December 13, 2022, by Resolution No. 2022-478, Council accepted the findings in the City of Modesto Cannabis Equity Assessment Report and on the same date by Resolution No. 2022- 479, Council adopted a City of Modesto Cannabis Equity Program. To fund this adopted program, GO-Biz provides the Type 2 grant previously mentioned. On December 13, 2022, by resolution No. 2022-480, Council authorized the application for a Type 2 grant. City staff then promptly submitted an application with GO-Biz for a total amount of $1,300,000 on December 14, 2022.
On January 31, 2023 GO-Biz informed the City that it was deemed eligible to receive a grant award in the amount of $350,000. On March 14, 2023, by Resolution No. 2023-110, Council formally authorized a grant agreement with GO-Biz to secure this funding. The award is required to be spent towards the following tasks:
1. Providing grants, no-interest loans, or low interest loans to local equity applicants.
2. No more than ten (10) percent may be used to provide direct technical assistance. #3.
- 77 -
Cannabis Program and Permit Review Committee, April 22, 2024 Cannabis Equity Program Update
3. No more than ten (10) percent may be used for administrative expenses related to the operation of the cannabis equity program.
A separate Committee item details the award of proposal and agreement for direct technical assistance services as well as the consideration of commercial cannabis retail dispensary permits.
DISCUSSION:
Individuals affected by the War on Drugs can qualify to receive assistance in the form of technical assistance workshops and grant opportunities through the PLEDGE program by meeting a set of eligibility criteria. At a minimum, applicants will be required to qualify under the following eligibility requirements:
1. The applicant has lived for at least five (5) years, prior to November 8, 2016, in the following zip codes: 95355, 95354, 95350,95351; and
2. In the year prior to submitting the application, the individual resided in a household with an income at or below 80% of the Area Median Income for Modesto; and
3. The applicant meets one of the following criteria:
a. Was arrested or convicted for a crime relating to the sale, possession, use, or cultivation of cannabis in California prior to November 8, 2016, excluding those offenses which would be disqualifying for cannabis licensure under current State law; or
b. Had a parent, guardian, child, or sibling convicted of a crime relating to the sale, possession, use, or cultivation of cannabis in California prior to November 8, 2016, excluding those offenses which would be disqualifying for cannabis licensure under current State law.
Program applicants will be required to verify their eligibility by submitting documentation with examples further broken down into the sections below:
a. Proof of Income: Proof of income shall be supported with federal and state tax returns and at least one of the following documents from the last five (5) years:
two months of pay stubs; proof of current eligibility for General Assistance, food stamps, Medi-Cal/CalWORKs, supplemental security income, or social security disability, or similar documentation.
b. Proof of residency: Proof of residency shall be supported by a minimum of two of the following documents: California driver’s or identification card records, property tax billings and payments, signed rental agreement, verified copies of state or federal tax returns with an address in the geographic area of the City of Modesto, school records, medical records, banking records, Housing Authority records, or utility, cable, or internet company billing and payment records. c. Proof of arrest or conviction of a cannabis related crime: Proof of an arrest or conviction of a cannabis related crime shall be demonstrated by federal or state court records indicating the disposition of the criminal matter, records expungement documentation, or any other applicable law enforcement record.
The direct technical assistance consultant will provide a six (6) week workshop to eligible program applicants. These courses will cover a variety of topics including, an overview of the cannabis industry, business plan development, business entity formation, accounting, debt financing options, standard operating procedure development, and securing real estate. Each operator will #3.
- 78 -
Cannabis Program and Permit Review Committee, April 22, 2024 Cannabis Equity Program Update
also have the opportunity for one-on-one business coaching following the workshops up until October 2024 when the funds are to be exhausted.
Equity program participants, following the completion of the course work, will be assigned a mentor that will continue to work with the applicant.
The direct technical assistance workshops will lead into grants being made available to eligible equity business owners that successfully complete the coursework. These grants may be used towards startup expenses which would include costs such as attorney fees, State and Local regulatory fees, and rent.
Staff recommends utilizing the $280,000 available for grants to issue $70,000 to up to four (4) commercial cannabis businesses owned by PLEDGE program participants. This amount is comparable to grant maximums provided by cannabis equity programs in Sacramento, San Francisco, Oakland, Los Angeles, and Long Beach. To be eligible to receive grant funding the proposed cannabis business must:
Have an owner with no less than 51% ownership interest that is a verified PLEDGE program participant.
The grant applicant must have completed the technical assistance workshops. The applicant must also have submitted a completed commercial cannabis permit application.
Funding recipients will be required to enter into a grant agreement with the City of Modesto. If funding is found to be used for expenditures not authorized under the terms of the agreement and the GO-Biz requirements the City will be authorized to pursue remedies ranging from requiring funds to be returned to barring the applicant from future grant opportunities.
All funding for grants, direct technical assistance services, and administrative costs must be expended or returned by October 31, 2024 under the terms of the grant agreement with GO-Biz.
FISCAL IMPACT:
The direct grants to program participants would be funded through the GO-Biz grant award budgeted in project 101328.
RECOMMENDED COMMITTEE ACTION:
Staff Recommendations:
Motion approving the City’s Cannabis Equity Program (Providing Local Equity Development Grants and Education (PLEDGE)) to provide up to four (4) grants to verified PLEDGE participant owned businesses, in an amount not to exceed $70,000 per grant.
Approved by:
Jessica Hill,
Director of Community and Economic Development
Joseph P. Lopez, City Manager
#3.
- 79 -
Cannabis Program and Permit Review Committee, April 22, 2024 Cannabis Equity Program Update
Attachments:
1. City of Modesto cannabis equity program policy
#3.
- 80 -
Community & Economic
Development Department
P.O. Box 642
Modesto, California 95354
209.577.5267
Modestogov.com
City of Modesto Cannabis Program Providing Local Equity Development Grants and Education (PLEDGE)
The City of Modesto has determined, based on its 2022 Cannabis Equity Assessment, that a cannabis equity program should be adopted which will be dedicated to assisting communities who were subject to criminal law enforcement of cannabis related crimes disproportionately compared to the population at large within the City.
The policies set forth in the following program description will be monitored and subject to change as City Staff continue to develop internal controls and administrative functions to ensure the effective, efficient, and properly controlled distribution of funds to eligible equity applicants.
Definitions
a. "Ancillary business” means support business services (e.g., human resources or payroll and call centers).
b. "Applicant” means an individual or business who makes a formal application to be admitted in the Program.
c. "Business” means a firm, organization, association, partnership, business trust, corporation, company, or like entity.
d. "Cannabis Social Enterprise” or "CSE” means a cannabis business in the city that incubates and/or employs Classification 1 participants and uses commercial strategies to maximize improvements in financial, social, and environmental well-being of the disadvantaged community the organization sits in. This may include maximizing social impact alongside profits for external shareholders. CSEs can be structured as a for-profit or non-profit organization and may take the form of a co-operative, mutual organization, a disregarded entity, a social business, a benefit corporation, a community interest company, a company limited by guarantee, or a charity organization. They can also take more conventional structures. Social enterprises have both business goals and social goals. As a result, their social goals are embedded in their objective, which differentiates them from other organizations and corporations. e. "Equity share” means an ordinary share, including a fractional or part ownership in which a shareholder, as a fractional owner, undertakes the maximum entrepreneurial risk associated with a business venture. The holders of such shares are members of the company and have voting rights.
f. "Floor space” means at least 10%, but not less than 800 square feet, of building space. g. "Host” means to rent or lease operations-ready building or floor space to a participant that resides in the city district where the cannabis business sits, if any, free of charge for two years, or at a rate of 30% of the market value for four years; and to provide that participant with business or #3.
- 81 -
technical assistance.
h. "Immediate family member” means a person in the first, second, or third degree of lineal or collateral kinship as defined in chapter 13 of Part 1 of Division 1 of the California Probate Code. i. "Incubate” means to assist one or more participants that reside in the city district where the cannabis business sits, if any, to enter the cannabis industry by hosting, providing training, technical assistance, and general business guidance. If no such participants exist, participants from other applicable areas shall be utilized.
j. "Incubator” means a cannabis business which as a condition for receiving priority processing, either:
i. Hosts a participant; 30% of its workforce are Classification 1 eligible participants, measured by hours worked; and contracts no less than 51% of its cannabis products or services and ancillary business support with eligible participants; or ii. Is a shared manufacturing cannabis business and donates at least 10% of its hours of operation to allow participant(s) to utilize 100% of its business’ floor space and equipment; or
iii. Is a cannabis business that sells, gives or otherwise transfers no less than a 33% equity share in the Incubator’s cannabis business to eligible participants; 30% of its workforce be Classification 1; and contracts no less than 30% of its cannabis and ancillary business with Classification 1 eligible participants.
k. "Individual” means a person.
l. "Low income household” has the same meaning provided in Modesto Municipal Code section 10-
8.402.
m. "Operations-ready” means a hosted building or floor space that is in compliance with the applicable health and safety laws and regulations and has the appropriate equipment and licensure to lawfully run or conduct any type of cannabis business. n. "Participant” means an individual or a business that has been admitted to participate in the Program.
o. "Priority processing” or "priority” means the City will review cannabis related business or conditional use permit applications or renewals of participants, if any, before any cannabis related business or conditional use application or renewal received by the City that would otherwise be processed on a first come, first served basis.
p. "Sits” means to be engaged in its cannabis business. q. “Direct Technical Assistance” refers to support to help cannabis equity applicants and licensees acquire the knowledge and/or skills necessary in order to gain entry to, and to successfully operate in, the regulated cannabis marketplace. Direct technical assistance includes:
i. One-on-one consulting and training, including direct interactions in group settings, to provide equity applicants and licensees the technical knowledge and expertise necessary to facilitate business ownership and employment in the cannabis industry. ii. Small business support services, professional mentorship services, training and education regarding state cannabis licensing and regulatory requirements, manufacturing assistance, financial management, and business resilience such as emergency preparedness.
#3.
- 82 -
Applications
1. In addition to the information required per city code section 10-3.704 an applicant shall also provide the following with its application for the Program, in addition to any other documentation that the City deems necessary to determine the applicant’s eligibility:
a. Proof of Income: Proof of income shall be supported with federal and state tax returns and at least one of the following documents from the last five (5) years: two months of pay stubs; proof of current eligibility for General Assistance, food stamps, Medi-Cal/CalWORKS, supplemental security income, or social security disability, or similar documentation. b. Proof of residency: Proof of residency shall be supported by a minimum of two of the following documents: California driver’s or identification card records, property tax billings and payments, signed rental agreement, verified copies of state or federal tax returns with an address in the geographic area of the City of Modesto, school records, medical records, banking records, Housing Authority records, or utility, cable, or internet company billing and payment records. c. Proof of arrest or conviction of a cannabis related crime: Proof of an arrest or conviction of a cannabis related crime shall be demonstrated by federal or state court records indicating the disposition of the criminal matter, records expungement documentation, or any other applicable law enforcement record.
2. Individual
a. Must be lawfully able to work in the United States;
b. Twenty-one (21) years of age or older;
3. Business
1. A description of the statutory entity or business form that will serve as the legal structure for the applicant and a copy of its formation and organizing documents, including, but not limited to, articles of incorporation, certificate of amendment, statement of information, articles of association, bylaws, partnership agreement, operating agreement and fictitious business name statement. a. A statement dated and signed by the applicant, under penalty, affirming that the applicant meets the program eligibility requirements as applicable to the particular applicant.
Review Process
City Staff or qualified consultants, as designated by the City Manager, shall review and approve all program applications that meet the eligibility requirements described herein.
Eligibility for Equity Assistance Program
Classification 1: To be eligible for the Equity Assistance Program as an equity employee, an individual shall satisfy the following criteria:
1. Be a natural person; and
2. Has lived for at least five (5) years, prior to November 8, 2016, in the following zip codes: 95355, 95354, 95350,95351; and
3. In the year prior to submitting the application, the individual resided in a household with an income at or below 80% of the Area Median Income for Modesto; and
#3.
- 83 -
4. Meets one of the following criteria:
a. Was arrested or convicted for a crime relating to the sale, possession, use, or cultivation of cannabis in California prior to November 8, 2016, excluding those offenses which would be disqualifying for cannabis licensure under current State law; or b. Had a parent, guardian, child, or sibling arrested or convicted of a crime relating to the sale, possession, use, or cultivation of cannabis in California prior to November 8, 2016, excluding those offenses which would be disqualifying for cannabis licensure under current State law.
Classification 2: A cannabis business with not less than 51% ownership by individuals meeting Classification 1 criteria.
Classification 3: A Cannabis Social Enterprise with not less than 51% ownership by individuals meeting the Classification 1 criteria.
Assistance Available to Equity Employees and Equity Business Owners Individuals applying as equity employees at a Cannabis Business or applying for a Cannabis Business Registration as an equity business owner or a Cannabis Social Enterprise applicant, may be eligible to receive benefits including but not limited to technical assistance, priority application processing, training for prospective employees, and other services dependent upon funding.
Regulations for Equity Assistance Program
The City Manager shall promulgate regulations further establish an application process and procedures for the Equity Assistance Program. Such regulations may include eligibility verification procedures and registration requirements.
#3.
- 84 -