Agenda packet — Cannabis Program and Permit Review Committee, April 28, 2025

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www.modestogov.com
AGENDA
City of Modesto

SPECIAL CANNABIS PROGRAM AND PERMIT REVIEW

COMMITTEE / COUNCIL WORKSHOP
2001-40 Del Puerto Room.

Tenth Street Place, 1010 10th Street
Modesto, California
Monday, April 28, 2025 at 10:00 AM
Roll Call: Sue Zwahlen, Chair
Chris Ricci, Vice-Chair
David Wright, Member
Alternates: Nick Bavaro, Rosa Escutia-Braaton, Eric Alvarez, Jeremiah Williams Council has not delegated directive or final approval authority to the Committees.

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

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

THE MEETING CAN BE VIEWED BY ZOOM VIDEO

CONFERENCING OR TELEPHONE
Joining the Committee meeting via Zoom
The City of Modesto is now offering the ability to view Committee meetings via telephonic conferencing via “Zoom” video conferencing computer technology. The meeting may be accessed through the use of Zoom using the following options:
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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: 958 9549 7651 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] - 2 -
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(include Agenda Item Number in the subject line). All comments will be shared with the Committee 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/council-meetings 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.

CONSENT ITEMS - ROLL CALL VOTE REQUIRED
Information concerning the consent items listed below has been forwarded to each Committee Member prior to this meeting for study. Unless some member of the audience or Committee Member has a question concerning an item and asks that it be withdrawn from the consent list, the Committee approves the items at one time. The action taken by the Committee in approving consent items is set forth in the explanation of this individual item.

CONSENT
An item may be removed from consent and discussed at the request of an audience member or Committee member.

Consent
1 Consider approving a Commercial Cannabis Change in Ownership request for Legacy Nursery LLC. (Funding Source: Cannabis Annual Permit Fee)  Resolution approving a Commercial Cannabis Change in Ownership request resulting in Ann Endsley acquiring eighty percent (80%) of Legacy Nursery LLC.

CED; Sean Rando, 209-577-5473, [email protected]
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HEARINGS
Published in the Modesto Bee on April 16, 2025.
2 Hearing to consider a relocation request of CR & D Inc. from 439 Maze Boulevard to 1313 McHenry Avenue and forwarding to Council for approval. (Funding Source:

Cannabis Permit Application Fee)
 Motion recommending the approval of the relocation request of CR & D Inc. from 439 Maze Boulevard to 1313 McHenry Avenue with the granting of a residential proximity waiver and forwarding to Council for approval.

CED; Sean Rando, 209-577-5473, [email protected]
Published in the Modesto Bee on April 16, 2025.
3 Hearing to consider a relocation request of McHenry Business Services LLC from 500 East Glenn Avenue to 1300 North Carpenter Road Suite E and F and forwarding to Council for approval. (Funding Source: Cannabis Permit Application Fee)  Motion recommending the approval of the relocation request of McHenry Business Services LLC from 500 East Glenn Avenue to 1300 North Carpenter Road Suite E and F and forwarding to Council for approval.

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

NEW BUSINESS
4 Consider the renewal of eight Commercial Cannabis Retail Permits for dispensaries in the City for a two-year period ending June 30, 2027, and forwarding to Council for approval. (Funding Source: Commercial Cannabis Permit Fee)  Motion recommending the renewal of CR & D Inc’s commercial cannabis retail permit for a two-year period ending June 30, 2027, and forwarding to Council for approval.
 Motion recommending the renewal of CV Wellness LLC’s commercial cannabis retail permit for a two-year period ending June 30, 2027, and forwarding to Council for approval.
 Motion recommending the renewal of Jonesa LLC’s commercial cannabis retail permit for a two-year period ending June 30, 2027, and forwarding to Council for approval.
 Motion recommending the renewal of McHenry Comic Management LLC’s commercial cannabis retail permit for a two-year period ending June 30, 2027, and forwarding to Council for approval.
 Motion recommending the renewal of McHenry Business Services LLC’s commercial cannabis microbusiness permit for a two-year period ending June 30, 2027, and forwarding to Council for approval.
 Motion recommending the renewal of DC Modesto LLC’s commercial cannabis retail permit for a two-year period ending June 30, 2027, and forwarding to Council for approval.
 Motion recommending the renewal of Phenos Collective Inc’s commercial cannabis retail permit for a two-year period ending June 30, 2027, and forwarding to Council for approval.
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 Motion recommending the renewal of Paradise West Inc’s commercial cannabis retail permit for a two-year period ending June 30, 2027, and forwarding to Council for approval.

CED; Sean Rando, 209-577-5473, [email protected]
5 Consider an update regarding the use of Grant Funds provided through the Cannabis Program Providing Local Equity Development Grants and Education (PLEDGE). (Funding Source: Cannabis Equity Grant)
 Motion accepting an update regarding the use of Grant Funds provided through the Cannabis Program Providing Local Equity Development Grants and Education (PLEDGE).

CED; Sean Rando, 209-577-5473, [email protected]
6 Consider providing a recommendation regarding the two remaining unissued Commercial Cannabis Retail Permits and forwarding to Council for approval. (Funding Source: Cannabis Application Fee)
 Motion providing a recommendation regarding the two remaining unissued Commercial Cannabis Retail Permits and forwarding to Council for approval.

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
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

April 28, 2025
Date: March 19, 2025
TO: Cannabis Program and Permit Review Committee
Sue Zwahlen, Chair
Chris Ricci, Vice-Chair
David Wright, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: Jessica Hill, Director of Community and Economic Development SUBJECT: Legacy Nursery Change in Ownership Request
CONTACT: Sean Rando, Business Analyst,
[email protected], 209-577-5473
DESCRIPTION:

Consider approving a Commercial Cannabis Change in Ownership request for Legacy Nursery LLC. (Funding Source: Cannabis Annual Permit Fee)
STRATEGIC PLAN ELEMENT:

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

BACKGROUND:

In December 2017, the City Council adopted Ordinance 3684-C.S. legalizing certain commercial cannabis business operations in particular zoning districts. The City Council was the approving body regarding all cannabis businesses operating in the City.

On March 1, 2022, by Resolution No. 2022-109, the Council expanded the role of the Committee to advise the Council on all cannabis-related issues and renamed the Committee to the Cannabis Program and Permit Review Committee. The City Council remains the approval authority for all matters regarding retail cannabis dispensaries.

Legacy Nursery LLC (Legacy) was one of the first newly permitted commercial cannabis wholesale businesses to pursue a business under the legalized cannabis industry in Modesto.

On September 10, 2019, by Resolution No. 2019-403, Council approved a type four (4) cultivation nursery permit for Legacy to operate at 901 E. Whitmore Avenue which subsequently #1.
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Cannabis Program and Permit Review Committee, April 28, 2025 Legacy Nursery Change in Ownership Request

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was adjusted to 1919 Morgan Road1. The approved ownership group included Jennina Chiavetta and Marc Etchebarne2. There have been several requests for ownership changes since the adoption of the commercial cannabis land use ordinance. According to Modesto Municipal Code, 10-3.704(d), permits issued in accordance with the City’s Cannabis ordinance are not transferable to another individual or physical location without City approval.

To provide additional guidance to local businesses and City officials, staff prepared a set of policies and procedures for the approval of change in ownership requests. On June 27, 2023, by Resolution No. 2023-298, Council formally approved a change in ownership policy for commercial cannabis permits within the City.

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

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

DISCUSSION:

On November 30, 2023, Jennina Chiavetta requested approval for a change in ownership for Legacy Nursery LLC which would result in Ann Endsley acquiring eighty percent (80%) of the business with Jennina Chiavetta, an original owner, retaining the remaining twenty percent (20%).

Cannabis Program Administrative Staff reviewed the application for completeness. The documents included the following:
o Executed agreements documenting the change in ownership provided on the business modification request form.
o A completed background check for the new owner stating that there were no disqualifying factors that would prevent the applicant from being an operator of a commercial cannabis business in the City of Modesto.
1 This change did not result in a physical relocation that would require prior City approval. The name and number of the premises was the only change.
2 Marc Etchebarne later relinquished his equity in Legacy resulting in Jennina Chiavetta becoming the sole owner. This transaction complies with the change in ownership policy and it did not require formal approval. #1.
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Cannabis Program and Permit Review Committee, April 28, 2025 Legacy Nursery Change in Ownership Request

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Legacy Nursery was also required to correct deficiencies noted in the 2023 financial audit which resulted in the City’s inability to determine reportable gross receipts due to incomplete record keeping by the business. A list of required corrections was provided to Legacy on June 4, 2024, with the stipulation that a change in ownership could not be moved through the approval process until the successful completion of the 2024 audit. The required audit was completed on December 3, 2024, and it was determined that all City reporting requirements were met and the business has also been found to be current on all taxes and fees.

FISCAL IMPACT:

On November 14, 2023, by Resolution No. 2023-504, Council approved two separate annual commercial cannabis permit fees which cover costs related to the administration and monitoring of the cannabis permit program. Operational businesses remit a fee of $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. Cannabis nurseries currently pay a 1% tax on their reportable gross receipts.

RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Resolution approving a Commercial Cannabis Change in Ownership request resulting in Ann Endsley acquiring eighty percent (80%) of Legacy Nursery LLC.

Approved by:

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

1. Resolution

2. Business Modification Request Checklist

3. Commercial Cannabis Business Modification Request
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CITY OF MODESTO

CANNABIS PROGRAM AND PERMIT REVIEW COMMITTEE
RESOLUTION NO. -2025

RESOLUTION APPROVING A COMMERCIAL CANNABIS CHANGE IN

OWNERSHIP REQUEST RESULTING IN ANN ENDSLEY ACQUIRING
EIGHTY PERCENT (80%) OF LEGACY NURSERY LLC
WHEREAS, on September 10,2019, by Resolution 2019-403, Council issued a commercial cannabis permit for Legacy Nursery LLC to operate a cannabis cultivation nursery located at 901 E. Whitmore Avenue; and
WHEREAS, while the physical premises of the nursery did not change, the address was subsequently updated to 1919 Morgan Road; and WHEREAS, pursuant to Modesto Municipal Code, 10-3.704(d), permits issued in accordance with the City’s Cannabis Ordinance are not transferable to another individual without City approval; and
WHEREAS, on June 27, 2023, by Resolution No. 2023-298, Council approved a change in ownership policy for commercial cannabis permits within the City to provide guidance on the approval process for these changes; and WHEREAS, the policies and procedures include the following requirements:
• If a new individual acquires an aggregate ownership interest of fifty-one (51%) percent of a cannabis business when they previously had not will require City Council approval for Dispensaries or approval by the Cannabis Program and Permit Review Committee for non-dispensaries. • If an originally approved owners retain one hundred (100%) percent interest in the cannabis business amongst them then this transaction #1.
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would not meet the definition of a change in ownership per California Department of Cannabis Control (DCC) regulations section 15023. • An original owner(s) must retain a minimum of twenty (20%) percent ownership interest in the businesses to continue operating under their current commercial cannabis permit following City approval of the change, otherwise the business must cease operation and reapply for a commercial cannabis permit under the new business structure; and WHEREAS, Legacy Nursery was initially jointly owned by Jennina Chiavetta, and Marc Etchebarne at the time of permit issuance in 2019; and WHEREAS, Marc Etchebarne relinquished his equity in the business which resulted in Jennina Chiavetta becoming the sole owner. This change did not meet the definition of a change in ownership that would require City approval since an original owner retained one hundred (100%) percent of the business; and WHEREAS, on November 30, 2023, Jennina Chiavetta requested approval for a change in ownership for Legacy Nursery LLC which would result in Ann Endsley acquiring eighty percent (80%) of the business with Jennina Chiavetta, an original owner, retaining the remaining twenty percent (20%); and
WHEREAS, the City requested and received documentation from the business that included the successful completion of background checks as required by Modesto City Code section 10-3.704(3)(2), executed purchase agreements, and the successful completion of the 2024 financial audit; and
WHEREAS, the new ownership structure complies with the requirements of the City of Modesto’s adopted change in ownership policy.
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NOW, THEREFORE, BE IT RESOLVED by the City of Modesto Cannabis Program and Permit Review Committee, that it hereby approves a commercial cannabis change in ownership request resulting in Ann Endsley acquiring eighty percent (80%) of Legacy Nursery LLC.
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The foregoing resolution was introduced at a regular meeting of the Cannabis Program and Permit Review Committee held on the 28th day of April, 2025 by Committee Member , who moved its adoption, which motion being duly seconded by Chair , was upon roll call carried and the resolution adopted by the following vote:

AYES: Committee Members:

NOES: Committee Members:

ABSENT: Committee Members:

ATTEST: _____________________________
SUE ZWAHLEN, Chair
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Business Name:

Reviewed by: Sean M. Rando
Review Date: 2/4/2025
Task Reviewed Review Date Reviewed By
Complete business modification form X 2/4/2025 Sean M. Rando Bylaws, executed agreements
documenting the change X 2/4/2025 Sean M. Rando
Background check for all new owners x 2/4/2025 Sean M. Rando Completion of financial audit X 2/4/2025 Sean M. Rando
Business Modification Request
Change in Ownership
Review Checklist
Legacy Nursery
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COMMUNITY AND ECONOMIC

DEVELOPMENT-CANNABIS PERMIT

PROGRAM
1010 Tenth Street, Suite 3300, P.O. Box
642 Modesto, California 95354
209.571.5157
[email protected]
Commercial Cannabis Business Modification Request:

Change in Ownership
Instructions: Please provide a list of all current business owners and their percentages of ownership followed by the new ownership structure being requested.

Please note that failure to inform the City of permit transfers to another individual may be grounds for permit revocation pursuant to MMC:10-3.705
Original Ownership Structure
Name Ownership Percentage
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Completed applications must be submitted to:

Community and Economic Development
Department
1010 Tenth Street, Suite 3300, P.O. Box 642
Modesto, CA 95353
Telephone (209) 577-5267
New Ownership Structure Requested
Name Ownership Percentage
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Additional Comments:

Completed applications must be submitted to:

Community and Economic Development
Department
1010 Tenth Street, Suite 3300, P.O. Box 642
Modesto, CA 95353
Telephone (209) 577-5267
I certify under penalty of perjury under the laws of the State of California, that the information contained herein is true and correct.

Print Name: Title:

Signature: Date:

Name of Business:

City of Modesto Use Only:

The City of Modesto has examined the following form and supporting documentation thereto, and that all information therein is true, correct, and complete to the best of my knowledge.

Form Complete Form Incomplete
Staff reviewer Title Date
Approved by (Print Name or Name of Approving Body)
Signature or Resolution Number Title Date
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Completed applications must be submitted to:

Community and Economic Development
Department
1010 Tenth Street, Suite 3300, P.O. Box 642
Modesto, CA 95353
Telephone (209) 577-5267
Supplementary Information:

Approval requirements necessary for change of ownership requests pursuant to MMC:10-3.704(d) are as follows:

A. Any change affecting any ownership interest of a Cannabis Business, including, but not limited to, any change in ownership that affects an aggregate ownership interest of less than 20% of the Cannabis Business, must be promptly disclosed, in writing, to the City within 30 days of the intent to initiate a change.

B. Applicant understands that no commercial cannabis operations may commence until the requested changes are approved by the State, pursuant to MMC Section 10-3.704 C. Any change affecting any ownership interest of a Cannabis Business that results in a Person holding ownership interest of a Cannabis Business, when that Person did not previously hold an ownership interest in the Cannabis Business shall require the Permittee to promptly obtain approval from the appropriate City representative:
a. A Person who now holds an aggregate ownership interest of 51% of a Cannabis Business when they previously had not will require City Council approval for Dispensaries or approval by the Cannabis Program and Permit Review Committee for non-dispensaries b. If a Person who previously held ownership interests of a Cannabis Business no longer holds an interest in the business, whether as a result of a single transaction or multiple over time, will require City Council approval for Dispensaries or approval by the Cannabis Program and Permit Review Committee for non-dispensaries if a new owner or owners take their place.
i. If originally approved owners retain 100% of the interest in the Cannabis Business amongst them then this transaction would not meet the definition of a permit transfer per Department of Cannabis Control Regulations section 15023. c. All other transfers will require the approval of the City Manager or their designee d. An original owner(s) must retain a minimum of 20% ownership interest in the businesses to continue operating under their current commercial cannabis permit following City approval of the change, otherwise the business must cease operation and reapply for a commercial cannabis permit under the new businessstructure.

D. Any transfers that would lower an equity owner’s interest below the required 51% are disallowed and may be grounds for permit revocation and/or loss of equity status E. Documents that may be requested at the discretion of the City include but are not limited to:
a. Proof of filing with the Secretary of State (with new ownership listed) b. Bylaws, Executed Operating Agreement, Partnership Agreement (documenting the change)
c. Corporate Meeting Minutes (documenting the change), if applicable d. Completion of background check for new owners as required by Modesto CityCode section 10-3.704(3)(2), if applicable
e. Signed declaration by the relinquishing party acknowledging the change #1.
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

April 28, 2025
Date: March 28, 2025
TO: Cannabis Program and Permit Review Committee
Sue Zwahlen, Chair
Chris Ricci, Vice-Chair
David Wright, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: Jessica Hill, Director of Community and Economic Development SUBJECT: CR&D Inc Relocation Request
CONTACT: Sean Rando, Business Analyst, [email protected], 209-577-5473 DESCRIPTION:

Hearing to consider a relocation request of CR & D Inc. from 439 Maze Boulevard to 1313 McHenry Avenue and forwarding to Council for approval. (Funding Source: Cannabis Permit Application Fee)
STRATEGIC PLAN ELEMENT:

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

BACKGROUND:

On April 13, 2021, by Resolution No. 2021-132, Council established the Cannabis Permit Review Committee (Committee) and delegated the authority to approve non-dispensary and non-delivery cannabis businesses to that Committee. On March 1, 2022, by Resolution No. 2022-109, the Council expanded the role of the Committee to advise the Council on all cannabis-related issues and renamed the Committee, the Cannabis Program and Permit Review Committee. City Council remains the approval authority for all matters regarding retail dispensaries.

On December 19, 2018, by Resolution 2018-566, the City Council approved and issued eight (8) cannabis retail permits. CR & D Inc (CRD) received a permit to operate a type ten (10) commercial cannabis retail storefront, also known as a dispensary, at 439 Maze Blvd. Following the issuance of a permit, and once the business becomes operational, each permittee is then required to pass annual financial audits and compliance inspections. The audits review business #2.
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records including point of sale reports, invoices, and Metrc system1 data to verify that all cannabis excise tax payments to the City are accurately calculated based on the actual gross receipts of the company. Compliance inspections confirm whether a cannabis business is following the requirements pursuant to the Modesto Municipal Code for commercial cannabis land uses2 as well as Department of Cannabis Control (DCC) regulations3.

Since 2018, cannabis permittees have requested relocations of their businesses for a variety of reasons ranging from lease disputes to identifying a location that would result in improved economic opportunities for the business. Pursuant to section 10-3.704(d) of the Modesto Municipal Code, permits are not transferable to another physical location without City approval.

To provide guidance to businesses regarding City approval, a general process and application was developed for relocation requests. The business applying for a relocation must provide a narrative explanation justifying the relocation, updated security plans, updated premises diagrams, lease agreements, and they must pay a cannabis application fee of $6,380.

City Staff with current cannabis consultant support reviews the updated security plan and premises diagram for compliance with State and Local regulations. The Planning Division performs a zoning analysis to determine compliance with Modesto Municipal Code section 10-

3.703. Cannabis businesses are generally required to be located in a commercial or industrial zone and are subject to the following proximity requirements:

1. No commercial cannabis use shall be located within six hundred (600) feet of a school, childcare center, or youth center, as measured from the nearest property lines.

2. No commercial cannabis use shall be located within one hundred (100) feet of any residential use; this distance shall be measured from any building or structure containing a commercial cannabis use to an existing residential structure used for residential purposes.

3. No commercial cannabis use shall be located within two hundred (200) feet of a park or library, as measured from the nearest property lines.

4. All commercial cannabis uses are prohibited in the Downtown Cannabis Prohibition Overlay.

The Finance department provides confirmation that all applicant related taxes and fees are current. Cannabis program administrative staff also confirms that the business is compliant with annual inspections and audits and a site inspection is conducted to confirm that unauthorized cannabis actives are not engaged in at the proposed location.

DISCUSSION:

On July 11, 2024, the owners of CR&D applied to relocate from 439 Maze Blvd. to 1313 McHenry Ave. The applicant indicated that they are requesting this relocation to move to a larger previously approved cannabis retail location due to modern amenities, a centralized location within the City, and current property availability. Staff initially reviewed the application 1 Metrc provides track and trace software services for the California Department of Cannabis Control which monitors the movement of cannabis through the supply chain from cultivation through sale to a consumer: https://cannabis.ca.gov/wp-content/uploads/sites/2/2022/04/Track-and-Trace_System_5-Steps.pdf 2Modesto Municipal Code cannabis land use
requirements:https://library.municode.com/ca/modesto/codes/code_of_ordinances?nodeId=TIT10ZORE_CH3LAUSRE_ART7COCA US
3 DCC code of regulations:
https://govt.westlaw.com/calregs/Browse/Home/California/CaliforniaCodeofRegulations?guid=ICB5239D0543B11ECAE2D000D3A7 C4BC3&originationContext=documenttoc&transitionType=Default&contextData=(sc.Default) #2.
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for completeness and found that the required plans, diagrams, lease agreement, and fee payment were included. A zoning and proximity review was also performed. The proposed location was found to be in a mixed-use pedestrian (MU-P) zone which allows for general commercial uses equivalent to a C-2 zone which would allow for commercial cannabis retail uses. The results of the proximity review are included below with estimated distances to 1313 McHenry Avenue.

Land Use Location Identified Distance
from
proposed
cannabis site
Residential 1312 Alma Ave 36 feet
School Our Lady of Fatima School at
505 W Granger Ave
2,200 feet
Daycare or
Youth
center
Orangeburg Christian School
313 E Orangeburg Ave
1,500 feet
Park Roosevelt Park at 801 W
Orangeburg Avenue
2,550 feet
Library Stanislaus County Library at
1500 I St
6,917 feet
Commercial
Cannabis
Phenos Dispensary at 1234
McHenry Ave
534 feet
The security plan and premises diagram were initially reviewed on August 14, 2024, and comments were provided to the business regarding security camera placement, the use of dye packs, installation of self-closing door mechanisms, and a revision to the premises diagram to remove a proposed non-conforming consumption lounge. Revised documents were submitted to the City on February 14, 2025, with additional comments provided back to the applicant for security plan revisions. All City comments were subsequently addressed on March 18, 2025, and after a final review it was determined that the security plan and premises diagram satisfied State and Local requirements. The Finance Department has also confirmed that the applicant is current on all City taxes and fees, and the business has passed each annual inspection and audit since becoming operational.

As a result of the proximity review, it was noted that the residence at 1312 Alma Avenue was within 100 feet of the proposed dispensary location. Pursuant to Modesto Municipal Code section 10-3.703(c) proximity requirements may be waived by the decision-maker when the applicant can show that an actual impassible physical separation exists between land uses or parcels, such as a building, sound wall, major street or highway, such that no negative off-site impacts could occur that would result in harm or likely harm to the public health, safety, or welfare or the health, safety, or welfare of nearby resident or tenant, unless otherwise prohibited under State law.

The applicant submitted a letter of justification for the waiver of the residential proximity requirements due to the subject location and residential property being separated by two (2) fences providing significant physical seperation, including an impassible barrier in the form of the primary seven (7) foot wrought iron fence. The properties are also noted to be separated by a twenty-five (25) foot wide alleyway, and the fence itself contains an emergency access gate that would remain closed during all hours except for emergency access. In 2018, the Medallion #2.
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Cannabis Program and Permit Review Committee, April 28, 2025 CR&D Inc Relocation Request

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Wellness retail dispensary, which has since relocated, was also granted a proximity waiver; however, these waivers do not run with the land, and they must be separately approved for each application for the use of a potential cannabis premises. The impassable barriers proposed by the applicant would comply with the Modesto Municipal Code; however, the granting of the waiver would be at the discretion of the City Council, which serves as the approving authority for all dispensary matters.

FISCAL IMPACT:

Staff and consultant time dedicated to the review of the applications is recovered through an application fee of $6,380. Each business will also be subject to an annual permit fee. On November 14, 2023, by Resolution No. 2023-504, Council approved two (2) separate annual commercial cannabis permit fees which cover costs related to the administration and monitoring of the cannabis permit program. Operational businesses remit a fee of $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. Cannabis retail businesses are also subject to an 8% tax on the business’ gross receipts.

RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion recommending the approval of the relocation request of CR & D Inc. from 439 Maze Boulevard to 1313 McHenry Avenue with the granting of a residential proximity waiver and forwarding to Council for approval.

Approved by:

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

1. Business Modification Request Checklist

2. Security Plan Evaluation

3. Proximity Waiver Justification Letter
#2.
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Business Name:

Reviewed by: Sean M. Rando
Review Date: 2/10/2025
Task Reviewed Review Date Reviewed By
Complete business modification form X 2/10/2025 Sean M. Rando Updated Security plan X 3/27/2025 Sean M. Rando
Proposed site and floor plans X 3/27/2025 Sean M. Rando Copy of lease agreements (if Appicable) X 2/10/2025 Sean M. Rando Completed Owner's Statement of
Consent X 2/10/2025 Sean M. Rando
Payment of $6,380 X 2/10/2025 Sean M. Rando
Business Modification Request
Location
Review Checklist
CR and D, INC. (DBA Modesto Cannabis Collective)
#2.
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CITY OF MODESTO

SUPPLEMENTAL SECURITY PLAN EVALUATION

PROOF OF CORRECTIVE ACTIONS - CONCLUSION
On February 10, 2025, HdL Companies conducted a business relocation supplemental evaluation of the revised Security Plan and Premises Diagram provided by CR and D, Inc. (“Applicant”) located at 1313 McHenry Ave., Modesto, CA 95350. After evaluating the supplemental material, recommendations were made and detailed in an email sent to the Applicant for corrective actions. A report was completed and sent to the City on February 14, 2025.

On March 18, 2025, the Applicant provided a revised Security Plan and Premises Diagram addressing the recommendations outlined within the corrective action notice. Upon review, HdL concludes the Applicant has satisfied the local and state requirements in the documents submitted for evaluation.

The revised Security Plan and Premises Diagram will be retained on file at HdL and available upon request.

Review Date March 27, 2025
Reviewer Name HdL Companies
Business Name CR and D, Inc.

DBA Modesto Wellness Collective
Permit Type Type 10-Storefront Retail
Business Contact Information Zach Drivon
3439 Brookside Rd., STE 104
Stockton, CA 95219
[email protected]
#2.
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#2.
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

April 28, 2025
Date: March 7, 2025
TO: Cannabis Program and Permit Review Committee
Sue Zwahlen, Chair
Chris Ricci, Vice-Chair
David Wright, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: Jessica Hill, Director of Community and Economic Development SUBJECT: McHenry Business Services Relocation Request
CONTACT: Sean Rando, Business Analyst,
[email protected], 209-577-5473
DESCRIPTION:

Hearing to consider a relocation request of McHenry Business Services LLC from 500 East Glenn Avenue to 1300 North Carpenter Road Suite E and F and forwarding to Council for approval. (Funding Source: Cannabis Permit Application Fee) STRATEGIC PLAN ELEMENT:

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

BACKGROUND:

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

On December 19, 2018, by Resolution 2018-566, the City Council approved and issued eight (8) cannabis retail permits. McHenry Business Services LLC (Herbology) received a permit to operate a type twelve (12) commercial cannabis microbusiness permit at 500 East Glenn Avenue. The components of their microbusiness included a retail dispensary, cannabis manufacturing, and cannabis distribution services. On September 10, 2024, a management services agreement (MSA) between Mission Nurseries (Kolaboration Ventures) and Herbology #3.
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Cannabis Program and Permit Review Committee, April 28, 2025 McHenry Business Services Relocation Request

Page 2 of 4 ends

was approved under the City Manager’s authority according to the provisions of the City’s commercial cannabis change in ownership policy. Mission Nurseries provides staffing expertise and equipment for the manufacturing portion of Herbology’s business. The MSA temporarily transferred control over a portion of the manufacturing business, however equity ownership in the overall business was maintained by the originally approved owner which qualified for administrative approval.

Following the issuance of a permit, and once the business becomes operational, each permittee is then required to pass annual financial audits and compliance inspections. The audits review business records including point of sale reports, invoices, and Metrc system1 data to verify that all cannabis excise tax payments to the City are accurately calculated based on the actual gross receipts of the company. Compliance inspections confirm whether a cannabis business is following the requirements pursuant to the Modesto Municipal Code for commercial cannabis land uses2 as well as Department of Cannabis Control (DCC) regulations3.

With current cannabis consultant support, City Staff reviews the updated security plan and premises diagram for compliance with State and Local regulations. The Planning Division performs a zoning analysis to determine compliance with Modesto Municipal Code section 10-

3.703. Cannabis businesses are generally required to be located in a commercial or industrial zone and are subject to the following proximity requirements:

1. No commercial cannabis use shall be located within six hundred (600) feet of a school, childcare center, or youth center, as measured from the nearest property lines.

3. No commercial cannabis use shall be located within two hundred (200) feet of a park or library, as measured from the nearest property lines.

4. All commercial cannabis uses are prohibited in the Downtown Cannabis Prohibition Overlay.
1 Metrc provides track and trace software services for the California Department of Cannabis Control which monitors the movement of cannabis through the supply chain from cultivation through sale to a consumer: https://cannabis.ca.gov/wp-content/uploads/sites/2/2022/04/Track-and-Trace_System_5-Steps.pdf 2Modesto Municipal Code cannabis land use
requirements:https://library.municode.com/ca/modesto/codes/code_of_ordinances?nodeId=TIT10ZORE_CH3LAUSRE_ART7COCA US
3 DCC code of regulations:
https://govt.westlaw.com/calregs/Browse/Home/California/CaliforniaCodeofRegulations?guid=ICB5239D0543B11ECAE2D000D3A7 C4BC3&originationContext=documenttoc&transitionType=Default&contextData=(sc.Default) #3.
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Cannabis Program and Permit Review Committee, April 28, 2025 McHenry Business Services Relocation Request

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DISCUSSION:

On February 24, 2025, the owners of McHenry Business Services LLC applied to relocate from 500 East Glenn Avenue to 1300 N. Carpenter Road Suite E and F. The applicant indicated that they are requesting this relocation to a new site that enhances safety and accessibility for their customers and community. They state that the new location offers closer proximity to emergency services with faster response times and improved access to public transportation with multiple nearby bus routes. According to the operators, this location supports a faster, more convenient experience while aligning with the City’s goals for public safety and sustainability.

Staff initially revised the application for completeness and found that the required plans, diagrams, lease agreement, and fee payment were included. A zoning and proximity review was also performed. The new location was verified to be in an M-1 light industrial zone allowing for all cannabis business types under Herbology’s microbusiness permit, and no proximity issues were noted. The results of the proximity review are included below with the estimated distances from 1300 N. Carpenter Road:

Land Use Location Identified Distance from
proposed
cannabis site
Residential 1601 Woodland Ave 165 feet
School Alberta Martone Elementary
at 1413 Poust Rd
4,300 feet
Daycare or
Youth
center
Fairytale Daycare at 1701
Judy Ct
1,400 feet
Park Charles M Sharp Park at
1900 Torrid Ave
2,000 feet
Library Stanislaus County Library at
1500 I St
9,000 feet
Commercial
Cannabis
Fiji Weed Company at 1420
Granite Lane
920 feet
The security plan and premises diagram were initially reviewed on February 26, 2025, and comments were provided to the business regarding camera placement and the security of cannabis storage as well as limited access areas. On March 3, 2025, the applicant submitted revised documents which addressed all review comments provided, and the application was deemed eligible for consideration of approval by the Cannabis Program and Permit Review Committee followed by the City Council. To finalize the relocation review process, City staff conducted a site visit on March 10, 2025, with no noted signs of unpermitted commercial cannabis activity, and the Finance Department confirmed that the applicant is current on all City taxes and fees.
#3.
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Cannabis Program and Permit Review Committee, April 28, 2025 McHenry Business Services Relocation Request

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FISCAL IMPACT:

Staff and consultant time dedicated to the review of the applications is recovered through an application fee of $6,380. The City is currently exploring the adoption of separate fees for future business modification requests for changes in ownership and location. The application fee of $6,380 was paid by the applicant on February 26, 2025. Each business will also be subject to an annual permit fee.

On November 14, 2023, by Resolution No. 2023-504, Council approved two separate annual commercial cannabis permit fees which cover costs related to the administration and monitoring of the cannabis permit program. Operational businesses remit a fee of $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. Cannabis microbusinesses are also taxed on sales at the activity level which would result in Herbology remitting a tax of 8% of retail gross receipts, 4% for manufacturing sales, and 2.5% for distribution sales.

RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion recommending the approval of the relocation request of McHenry Business Services LLC from 500 East Glenn Avenue to 1300 North Carpenter Road Suite E and F and forwarding to Council for approval.

Approved by:

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

1. Business Modification Review Checklist

2. Security Plan Evaluation
#3.
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Business Name:

Permit Type:

Current Address:

Proposed new address:

Reviewed by: Sean M. Rando
Review Date: 2/25/2025
Task Reviewed Review Date Reviewed By
Complete business modification form X 2/25/2025 Sean M. Rando Updated Security plan X 3/3/2025 Sean M. Rando
Proposed site and floor plans X 3/3/2025 Sean M. Rando
Copy of lease agreements (if Appicable) X 2/25/2025 Sean M. Rando Completed Owner's Statement of
Consent X 2/25/2025 Sean M. Rando
Payment of $6,380 x 2/25/2025 Sean M. Rando
Zoning Check X 2/25/2025 Sean M. Rando
Proximity Check X 2/25/2025 Sean M. Rando
1300 N. Carpenter Rd Suite #E&F Modesto, CA 95351
Microbusiness Type 12 (Retail, Manufacturing, and
Distribution
Business Modification Request
Location
Review Checklist
McHenry Business Services LLC (dba Herbology)
500 East Glenn Ave Modesto, CA 95358
#3.
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CITY OF MODESTO

SUPPLEMENTAL SECURITY PLAN EVALUATION

PROOF OF CORRECTIVE ACTIONS - CONCLUSION
On February 26, 2025, HdL Companies, Inc. conducted a business relocation supplemental evaluation of the revised Security Plan and Premises Diagram provided by McHenry Business Services LLC dba Herbology (“Applicant”) for 1300 N. Carpenter Road, Suite E & F., Modesto, CA 95351. After evaluating the supplemental material, recommendations were made and detailed in an email sent to the Applicant for corrective actions. A report was completed and sent to the City on February 28, 2025.

On March 3, 2025, the Applicant provided a revised Security Plan and Premises Diagram addressing the recommendations outlined within the corrective action notice. Upon review, HdL concludes the Applicant has satisfied the local and state requirements in the documents submitted for evaluation.

The revised Security Plan and Premises Diagram will be retained on file at HdL and available upon request.

Review Date March 3, 2025
Reviewer Name HdL Companies
Business Name McHenry Business Services LLC
DBA Herbology
Permit Type Microbusiness Type-12
Business Contact Information Marlowe Mercado
500 East Glenn Avenue
Modesto, CA 95350
[email protected]
#3.
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

April 28, 2025
Date: March 18, 2025
TO: Cannabis Program and Permit Review Committee
Sue Zwahlen, Chair
Chris Ricci, Vice-Chair
David Wright, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: Jessica Hill, Director of Community and Economic Development SUBJECT: Commercial Cannabis Retail Permit Renewals
CONTACT: Sean Rando, Business Analyst,
[email protected], 209-577-5473
DESCRIPTION:

Consider the renewal of eight (8) Commercial Cannabis Retail Permits for dispensaries in the City for a two-year period ending June 30, 2027, and forwarding to Council for approval. (Funding Source: Commercial Cannabis Permit Fee)
STRATEGIC PLAN ELEMENT:

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

BACKGROUND:

In December 2017, the City Council adopted Ordinance 3684-C.S. legalizing certain commercial cannabis business operations in particular zoning districts.

On December 19, 2018, by Resolution 2018-566 the City Council approved and issued eight (8) cannabis retail permits, which were valid for a period two (2) years from that date. Each permitted business has been successfully renewed their permit for additional two (2) year cycles since 2018 with the current permit period expiring on June 30, 2025.

Pursuant to Modesto Municipal Code section 10-3.704 (f)(5), commercial cannabis permits shall be valid for two (2) years, although the City may require an annual permit fee. On November 14, 2023, under Resolution No. 2023-504, the City Council approved the current amounts for this Annual Commercial Cannabis Permit Fee noted below:
 Operational cannabis businesses are charged $18,732 annually for the on-going program administration and monitoring, annual inspections, and financial audits. #4.
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Cannabis Program and Permit Review Committee, April 28, 2025 Commercial Cannabis Retail Permit Renewals

Page 2 of 5 ends

 Non-operational cannabis businesses are $4,307 annually for on-going administrative monitoring and regulatory support as they work towards completing their tenant improvements on their way to becoming a revenue generating operational business.

The City has also established a permit renewal application process to provide guidance and supplement the payment of the annual fee with a structured permit renewal process. The applications serve as a fact finding and document updating procedure that requests the following pieces of information from each applicant:
 A signed conditions of approval agreement which confirms the permit holder’s understanding of municipal code requirements including that permits are not transferrable to another individual or location without City approval, posting requirements for all health and safety signage, and complying with periodic inspections. The conditions also establish allowable hours of operation from 9:00am to 10:00pm for cannabis retail businesses while also requiring all properties to be kept free of weeds, trash, and other debris.
 Proof of community benefit fulfillment through non-profit donation support, volunteer programs, or community health education programs regarding cannabis use. For the 2025 renewal cycle, City staff requested retail businesses to provide the monetary or in-kind value of their community benefits.  State license information to confirm the business is in compliance with State requirements.
 Proof of a current lease or property ownership to verify that the location is secured throughout the permit period.
 Current employee roster which is used to check for potential discrepancies in approved City background check applications required before any individual can be employed in the cannabis industry.
 Proof of current insurance coverage.
 Business organization documents to confirm the current ownership structure of each business.
 Proof of a zero-balance due in City cannabis taxes and fees.

DISCUSSION:

On February 20, 2025, Cannabis Program administrative staff issued requests for permit renewal applications from the following eight (8) permitted cannabis retail dispensaries in the City:
 CR & D (Modesto Cannabis Collective) 439 Maze Blvd. 1  CV Wellness (Authentic 209) 426 McHenry Ave.
 Jonesa LLC (Cookies) 1944 W. Orangeburg Ave.
 McHenry Comic Management (McHenry Comic) 2308 McHenry Ave.  McHenry Business Services (McHenry Business) 500 E. Glenn Ave.  DC Modesto (Levels) 121 Phoenix Ave.
 Phenos Collective (Phenos) 1234 McHenry Ave.
 Paradise West (Club W) 408 Paradise Rd.
1 Relocation requests are currently in process, requiring separate Council approval, for CR&D to move to 1313 McHenry Avenue and for McHenry Business Services to move to 1300 N. Carpenter Road Suites E and F. #4.
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Cannabis Program and Permit Review Committee, April 28, 2025 Commercial Cannabis Retail Permit Renewals

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Following the issuance of a permit, and once the business becomes operational, each permittee is required to pass annual financial audits and compliance inspections. The audits review business records including point of sale reports, invoices, and Metrc system2 data to verify that all cannabis excise tax payments to the City are accurately calculated based on the actual gross receipts of the company. Compliance inspections confirm whether a cannabis business is following the requirements pursuant to the Modesto Municipal Code for commercial cannabis land uses3 as well as Department of Cannabis Control (DCC) regulations4. The City conducted inspections and audits for the permitted dispensaries in July of 2024, and each business was found to be operating in compliance with State and Local regulations. The businesses were also found to be current on all taxes and fees with an exception noted for Paradise West Inc. which was formally known as Medallion Wellness. While they have now become current on taxes, the City and the business continue to negotiate outstanding penalties and interest.

City Staff completed a review of all documents submitted with the renewal applications returned by each business for completeness and all requested documents were included. Conditions of approval agreements were signed, state licenses were provided, valid lease agreements were submitted, employer rosters noted no background check discrepancies, each business carries current insurance coverage, and the business organization documents confirmed no changes in documented ownership. The impact of each dispensary’s community benefit program is noted below as well:

Permitted
Business
Community
Benefit
Value
Club W Black history month she deserves a crown donation and Love Modesto volunteer support.
$980
Phenos Modesto Swat Association donation and Love Modesto volunteer support.
$1,040
Modesto Cannabis
Collective
None, due to pending relocation. N/A
Cookies Sierra Vista Brunch, Pals Golf Tournament, Special Olympics Golf Tournament, Assyrian Church of the East
Youth Dinner Fundraiser, CCSYA Youth Basketball
Sponsorship, CCSYA Youth Soccer Sponsorship, and
food Drives for Second Harvest of Greater Valley Food
Bank Nov - Dec 2024.
$10,450 and 28
lbs of donated
food
Levels Hired at least half of their employees from the Modesto area, instituted a good neighbor policy, and provided
daily litter removal services.
$7,200
Authentic 209 61% of Authentic 209's employees are Modesto residents. All Authentic 209 employees are granted 16
hours of paid leave to participate in volunteer events on $6,587
2 Metrc provides track and trace software services for the California Department of Cannabis Control which monitors the movement of cannabis through the supply chain from cultivation through sale to a consumer: https://cannabis.ca.gov/wp-content/uploads/sites/2/2022/04/Track-and-Trace_System_5-Steps.pdf 3Modesto Municipal Code cannabis land use
requirements:https://library.municode.com/ca/modesto/codes/code_of_ordinances?nodeId=TIT10ZORE_CH3LAUSRE_ART7COCA US
4 DCC code of regulations:
https://govt.westlaw.com/calregs/Browse/Home/California/CaliforniaCodeofRegulations?guid=ICB5239D0543B11ECAE2D000D3A7 C4BC3&originationContext=documenttoc&transitionType=Default&contextData=(sc.Default) #4.
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Cannabis Program and Permit Review Committee, April 28, 2025 Commercial Cannabis Retail Permit Renewals

Page 4 of 5 ends

a yearly basis. Authentic 209 has established and
maintained a Good Neighbor Policy wherein it publicly
posts an email address and phone number for
comments or concerns to be directed to. Volunteers from Authentic 209 participated in the 2023 Modesto Dia De
Los Muertos Festival at Tenth Street Plaza providing
hands on support for event organizers, as well as
passing out free Authentic branded merch and prizes to
the community. Authentic 209 hosted a canned food
drive and donated all products to the food initiative of greater Stanislaus.

McHenry Comic Participates in an annual weed for warrior programing providing free cannabis to veterans in accordance with
California senate bill thirty-four (34)5, a dedication to nuisance prevention and professionalism, a commitment
to hiring at least 50% of their workforce from nearby
neighborhoods, litter cleanup, and community outreach
programs.
$250,000
McHenry
Business
Participates in an annual weed for warrior programing
providing free cannabis to veterans in accordance with
California senate bill thirty-four (34), a dedication to nuisance prevention and professionalism, litter cleanup, and community outreach programs.
$250,000

FISCAL IMPACT:

On November 14, 2023, by Resolution No. 2023-504, Council approved two separate annual commercial cannabis permit fees which cover costs related to the administration and monitoring of the cannabis permit program. Operational businesses remit a fee of $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. Cannabis retailers currently pay an 8% cannabis excise tax on their reportable gross receipts.

RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion recommending the renewal of CR & D Inc’s commercial cannabis retail permit for a two-year period ending June 30, 2027, and forwarding to Council for approval.

Motion recommending the renewal of CV Wellness LLC’s commercial cannabis retail permit for a two-year period ending June 30, 2027, and forwarding to Council for approval.

Motion recommending the renewal of Jonesa LLC’s commercial cannabis retail permit for a two-year period ending June 30, 2027, and forwarding to Council for approval.

Motion recommending the renewal of McHenry Comic Management LLC’s commercial cannabis retail permit for a two-year period ending June 30, 2027, and forwarding to Council for approval. 5 Codified in section 26071 of the California Business and Professions Code (BPD):
https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=26071.&lawCode=BPC #4.
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Cannabis Program and Permit Review Committee, April 28, 2025 Commercial Cannabis Retail Permit Renewals

Page 5 of 5 ends

Motion recommending the renewal of McHenry Business Services LLC’s commercial cannabis microbusiness permit for a two-year period ending June 30, 2027, and forwarding to Council for approval.

Motion recommending the renewal of DC Modesto LLC’s commercial cannabis retail permit for a two-year period ending June 30, 2027, and forwarding to Council for approval.

Motion recommending the renewal of Phenos Collective Inc’s commercial cannabis retail permit for a two-year period ending June 30, 2027, and forwarding to Council for approval.

Motion recommending the renewal of Paradise West Inc’s commercial cannabis retail permit for a two-year period ending June 30, 2027, and forwarding to Council for approval.

Approved by:

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

1. Commercial Cannabis Renewal Checklist
#4.
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Business Name Permit Number Permit Expiration date
Completed Renewal
Application received
Received Signed
Conditions of
Approval
Proof of Community
Benefit Fulfillment State License
State License
Application
Proof of Valid Lease (or
property Ownership)
Current List of
Employees
Proof of
Current
Insurance
Zero Balance
due in taxes
and fees
Business
Organization
Documents
Cannabis
Ownership
Confirmation
Form
Licensed
w/State State license number
PHENOS COLLECTIVE, INC DIS-18-009 6/30/2025 X X X X X X X X X X X Yes C10-0000197-LIC McHenry Comic Management LLC (Herbology
North) DIS-18-019 6/30/2025 X X X X X X X X X X X Yes C10-0000403-LIC DC Modesto, LLC (LEVELS) DIS-18-014 6/30/2025 X X X X X X X X X X X Yes C10-0001211-LIC C R AND D INC (Modesto Cannabis Collective) DIS-18-008 6/30/2025 X X None, pending
relocation X X X
No employees are
actively working,
pending
relocation request X X X X Yes C10-0000163-LIC
CV Wellness LLC (AUTHENTIC 209) DIS-18-004 6/30/2025 X X X X X X X X X X X Yes C10-0000448-LIC Jonesa LLC (COOKIES) DIS-18-015 6/30/2025 X X X X X X X X X X X Yes C10-0000638-LIC Paradise West Inc. DIS-18-007 6/30/2025 X X X X X X X X X X Yes C10-0000674-LIC McHenry Business Services LLC (Herbology Micro) DIS-18-018 6/30/2025 X X X X X X X X X X X Yes C12-0000155-LIC Additional Comments:

Paradise west payment plan negotiations in
process
#4.
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

April 28, 2025
Date: March 28, 2025
TO: Cannabis Program and Permit Review Committee
Sue Zwahlen, Chair
Chris Ricci, Vice-Chair
David Wright, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: Jessica Hill, Director of Community and Economic Development SUBJECT: Cannabis Equity Program Grant Receipt Report
CONTACT: Sean Rando, Business Analyst,
[email protected], 209-577-5473
DESCRIPTION:

Consider an update regarding the use of Grant Funds provided through the 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:

Individuals convicted of a cannabis offense during the era of cannabis prohibition and criminalization have a more difficult time entering the now legalized 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 prohibition and criminalization policies by reducing barriers to enter the regulated cannabis industry for equity applicants and licensees.

Page 2 of 4 ends

provides a Type 2 grant1 to aid local equity program participants in the form of grants for eligible startup expenses as well as direct technical assistance. 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 in the amount of $35,000.

3. No more than ten (10) percent may be used for administrative expenses related to the operation of the cannabis equity program in the amount of $35,000.

Applications to participate in the PLEDGE program were accepted and reviewed by staff in April of 2024. Twelve (12) applications were received in total with five (5) deemed eligible based on the program criteria. The verified PLEDGE participants were required to complete a technical assistance workshop to qualify for grant funding for any business venture they may be interested in pursuing. The City of Modesto partnered with Tulip & Oak Consulting to provide this six (6) week direct technical assistance workshop to. Topics ranged from an overview of general business skills as well as the knowledge needed to operate a cannabis business within the legal California market. The participants completed the educational workshops on August 10, 2024, and they were also provided the opportunity for one-on-one business mentorship sessions. During these sessions, Tulip and Oak Consulting assisted the participants in developing their grant application which included the completion of a cannabis permit application.

DISCUSSION:

On October 22, 2024, by Resolution No. 2024-385, Council approved grant agreements to provide funding to the four (4) commercial cannabis businesses below that are owned by verified PLEDGE participants in amounts not exceeding $70,000.

Owner: Joshua
Burrow
Jacob
and
Modesto
Resendez
Eric
Washington
LaPrice
Reynolds
Business
Name:

CLD, LLC Modesto’s
Finest, LLC
Que Tees, LLC Power High 99,
Inc.

Business
Type:

Distribution Distribution Distribution Cultivation
Address: 903
Kansas Avenue
1006 Lone Palm
Ave
1127
Kansas Avenue
Suite 47
1127
Kansas Avenue
Suite 52
Zoning: M-2
Heavy Industrial
M-1
Light Industrial
M-1
Light Industrial
M-1
Light Industrial
Grant Amount: $70,000 $70,000 $70,000 $70,000
Each applicant was required to enter into a grant agreement with the City of Modesto. The agreement requires that PLEDGE grant program funds may only be used for reasonable expenses incurred to launch and operate a licensed commercial cannabis business. Should the 1 GO-Biz Cannabis Equity Grants Program for Local Jurisdictions Webpage-https://business.ca.gov/cannabis-equity-grants-program-for-local-jurisdictions/ #5.
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grantee utilize funds for non-eligible expenses then the City will have the following remedies available through the terms of the agreement where the City may:

1. Terminate this Agreement, in whole or in part;

2. Deny Grantee’s Application and/or revoke Grantee’s cannabis permit or local authorization for a State license to conduct the commercial cannabis activity;

3. Demand immediate reimbursement of any funds disbursed under this Agreement;

4. Bring an action for equitable relief (1) seeking the specific performance by Grantee of the terms and conditions of the Agreement, and/or (2) enjoining, abating, or preventing any violation of said terms and conditions, and/or (3) seeking declaratory relief;

5. Bar Grantee from future funding by the City; and/or

6. Pursue any other remedy allowed at law or in equity.

Section six (6) of the Agreement calls for the ongoing monitoring of the use of funds with the submission of a receipt reporting package within six (6) months following funding issuance.

Reports and corresponding receipts were provided to the City on March 17, 2025. The receipts cover the period of October 25, 2024 through February 25, 2025. Based on a review of the receipts, invoices, and corresponding bank statements, it was determined that funds were used for eligible business startup and on-going expenses including regulatory fees, rent, equipment, distribution vehicle purchases, meetings with potential suppliers, and construction supplies for tenant improvements. A breakdown of the amounts spent to date is included below:

Grantee Amount Spent Percentage Spent Amount Available
CLD LLC $ 35,789 51% $ 34,211
Power High 99 LLC $ 55,598 79% $ 14,402
Que Tees LLC $ 26,767 38% $ 43,233
Modesto’s Finest LLC $ 46,420 66% $ 23,580
Totals $164,574 59% (average) $115,426
As noted, grant recipients have expended an average of 59% of the funding provided. Staff also requested an update regarding any potential alternative funding sources that may have been sought after or secured including family loans, bank loans, investor capital, or other grants. The grantees did not report other funding sources secured; however, efforts are being made by the PLEDGE business owners towards securing investments for their businesses to supplement the $70,000 provided through the City. Based on the current spend, and the fact that buildouts of each premises is ongoing, it is likely that requests for additional PLEDGE funding will be made at a later date. Staff anticipates there will be a notice of funding availability through GO-Biz in October 2025.

FISCAL IMPACT:

The direct grants to program participants are funded through the GO-Biz cannabis equity grant award budgeted in Project 101328.

RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion accepting an update regarding the use of Grant Funds provided through the Cannabis Program Providing Local Equity Development Grants and Education (PLEDGE). #5.
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Approved by:

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

1. PLEDGE Grant Receipt Reports
#5.
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Line Item Amount Amount Date
1 City of Modesto Commercial Cannabis Permit Application Fee $ 6,380.00 $ 6,380.00 N/A 2 Annual Commercial Cannabis Permit Fee for Non-Operational Businesses $ 4,307.00 $ 2,871.33 1/2/2025 3 State Application Fee $ 1,000.00 $ 1,029.90 12/24/2024 4 State Distribution License-<$1,000,000 $ 1,500.00 $ 1,544.85 3/8/2025 5 Buildout $ 9,900.00 $ 400.00 2/15/2025
6 Security $ 5,699.00 $ 84.00 1/17/2025
7 Overhead $ 26,090.00 $ 10,649.70 7/31/2024 - 3/1/2025 8 Administration $ 950.00 $ 8/3/2024 - 12/4/2024 780.00 9 Distribution $ 7,811.00 $ 8,300.00 2/20/2025
10 Contingency $ 6,363.00 $ 3,748.75 3/13/2025
Totals $ 70,000.00 $ 35,788.53 $ 34,211.47
51%
Line Item Amount
1 N/A
2 3
4 5
6 7
8 9
10 Totals -$
Percentage Spent:

Other Financing Sources
- CLD, LLC
Budget Receipts
#5.
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Line Item Amount Amount Date
1 City of Modesto Commercial Cannabis Permit Application Fee $ 6,380.00 $ 6,380.00 2 Annual Commercial Cannabis Permit Fee for Non-Operational Businesses $ 4,307.00 $ 2,940.24 2/2/25 3 State Application Fee $ 1,000.00
4 State Microbusiness License-<$1,000,000 $ 5,000.00
5 Buildout $ 5,200.00 $ 600.00 1/12/25
6 Security Equipment $ 6,300.00
7 Administration Supplies $ 200.00
8 Cultivation Equipment $ 7,800.00
9 Distribution Equipment $ 1,300.00
10 Manufacturing Equipment $ 1,450.00
11 Operational Overhead $ 24,700.00 $ 36,500.00 9/1/24 - 3/1/25 12 Contingency $ 6,363.00
Totals $ 70,000.00 $ 46,420.24
66%
Line Item Amount
1 2
3 4
5 6
7 8
9 10
Totals -$
Percentage Spent:

Other Financing Sources
Grantee: Modesto's Finest, LLC
Budget Receipts
#5.
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Line Item Amount Amount Date
1 City of Modesto Commercial Cannabis Permit Application Fee $ 6,380.00 $ 6,380.00 2 Annual Commercial Cannabis Permit Fee for Non-Operational Businesses $ 4,307.00 $ 2,871.33 1/17/25 3 State Application Fee $ 1,000.00 $ 1,000.00
4 State Specialty Cottage Indoor License $ 1,830.00
5 Buildout $ 10,080.00 $ 1/10/25 - 3/14/25 26,824.59
6 Security Upgrades & Installation $ 3,300.00 $ 5,620.38 8/12/24 7 Administration Supplies $ 1,620.00 $ 1/15/25 - 3/6/25 2,202.95 8 Cultivation Equipment $ 8,975.00
9 Operational Overhead $ 26,145.00 $ 8/12/24 - 2/20/25 9,199.00 10 Contingency $ 6,363.00 $ 1,500.00 2/28/25
Totals $ 70,000.00 $ 55,598.25
79%
Line Item Amount
1 NA
2 3
4 5
6 7
8 9
10 Totals -$
Percentage Spent:

Other Financing Sources
Grantee: Power High 99, LLC
Budget Receipts
#5.
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Line Item Amount Amount Date
1 City of Modesto Commercial Cannabis Permit Application Fee $ 6,380.00 $ 6,380.00 2 Annual Commercial Cannabis Permit Fee for Non-Operational Businesses $ 4,307.00 $ 2,871.33 1/22/25 3 State Application Fee $ 1,000.00 $ 1,029.90 2/3/25
4 State Distribution License-<$1,000,000 $ 1,500.00
5 Buildout $ 4,000.00 $ 1/16/25-1/31/25 682.92
6 Security $ 2,599.00 $ 165.99 2/18/25
7 Overhead $ 19,160.00 $ 12/25/24-2/28/25 7,777.92
8 Administration $ 1,970.00
9 Distribution $ 22,720.00 $ 1/14/25-2/12/25 6,526.65
10 Contingency $ 6,364.00 $ 1,332.00
Totals $ 70,000.00 $ 26,766.71
38%
Line Item Amount
1 2
3 4
5 6
7 8
9 10
Totals -$
Percentage Spent:

Other Financing Sources
Grantee: Que Tees, LLC
Budget Receipts
#5.
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

April 28, 2025
Date: April 1, 2025
TO: Cannabis Program and Permit Review Committee
Sue Zwahlen, Chair
Chris Ricci, Vice-Chair
David Wright, 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 approval. (Funding Source: Cannabis Application Fee)
STRATEGIC PLAN ELEMENT:

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.
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As a result of the RFP process, the City received twenty (20) cannabis dispensary proposals.

City staff, along with the cannabis program consultant HdL1, reviewed the applications against technical requirements and assigned each a score, up to a maximum of fifty-five (55) points.

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 (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 Committee considered the technical and community benefit scores, as well as issues related to the collective impact of having up to ten (10) retail dispensaries Citywide.

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 qualified equity applicants are eligible for direct technical assistance courses as well as grants. Five (5) equity-verified individuals have been assisted through the Provide Local Equity Development Grants and Education (PLEDGE) program to date.

The Cannabis Program and Permit Review Committee (CPPRC) met on April 22, 2024, and provided a recommendation to issue one (1) of the two (2) remaining unissued commercial cannabis retail permits to businesses owned by verified PLEDGE program participants and to forward the recommendation to Council for approval with a vote of two (2) in favor and one (1) opposed. The issuance of an RFP was not approved by the City Council during meetings on May 14, 2024, due to a three (3) to three (3) vote causing the motion to fail. 1 HdL Companies serves at the City’s Cannabis Program Consulting Firm – http://www.hdlcompanies.com #6.
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DISCUSSION:

The City continues to receive requests for the issuance of additional retail permits, from the general public and PLEDGE stakeholders, following the Council’s initial consideration of the retail RFP in 2024. Factors that will impact the future disposition of the two (2) remaining retail permits range from fiscal considerations, market saturation, and added opportunities for equity eligible individuals.

Cannabis retail revenue and sales peaked from January 2019 – May 2021 at $5,379,403.

Following this time, sales have consistently declined from 1-7% on a monthly basis with an average decline of 37% annually over the last three (3) fiscal years since the peak. Given the continued decline in revenues, the likelihood of new retail businesses gaining market share and becoming competitively successful will be slim. A general rule of thumb to determine dispensary market saturation is a ratio of one (1) retail business to every twenty thousand (20,000) citizens.

As of April 1, 2025, there were approximately twenty-six (26) active cannabis retail licenses serving an approximate population of 552,878 within Stanislaus County resulting in a current ratio of one (1) dispensary to 21,000 residents. Other Cities have seen a similar trend across the State including the City of Oakland which was the first municipality in the nation to tax cannabis sales. Oakland, from 2021 through 2024, saw an increase of 55% in total cannabis businesses while also seeing a decrease in revenue of 58% in that same period of time.2 Should the Council approve the issuance of an RFP, staff will require direction on whether to issue the RFP to the general public or to verified PLEDGE program participants. As of April 3, 2025, there are currently 195 active equity retail licensees in California according to data reported by the California Department of Cannabis Control (DCC).3 Approximately 59% of these equity retail businesses are in Los Angeles County. A permitted Modesto dispensary, CR & D Inc., is identified as an equity business; however, the owner qualified as equity eligible in Sacramento and is ineligible to participate within the Modesto PLEDGE program due to the program’s residency requirements. Should the Council approve issuing an RFP through the PLEDGE program, a determination will be required on whether to open the program up to confirm additional equity eligible individuals or work with the five (5) individuals that have been verified as equity eligible to date. There is precedent for issuing a new RFP to equity only businesses across other cannabis programs in California. For example, in November of 2020, The City of Sacramento approved 10 dispensary permits exclusively for participants in their Cannabis Opportunity Reinvestment and Equity (CORE) program.

On May 14, 2024, the City Council considered a recommendation to prepare an RFP to issue one (1) of the two (2) remaining cannabis retail permits to a PLEDGE program participant owned business. A motion to approve failed on a three (3) to three (3) vote of the Council.

Concerns raised at the time were related to hitting a market cap on retail dispensaries in the City with the issuance of new permits simply shifting the sales around the local industry which would set up new businesses for immediate failure in a struggling market, the prevalent illegal market impacting compliant storefront dispensaries, and close proximity between retail locations due to availability of commercial spaces that are willing to be leased to a cannabis operation.

Councilmembers in favor of the RFP pointed to the benefit of providing an opportunity to underprivileged individuals through the cannabis equity program despite the yearly decreases in sales.
2 2024 City of Oakland Cannabis Business Tax Report-https://cao-94612.s3.us-west-2.amazonaws.com/documents/RMB-CRC-Report-September-2024-Updated-9.30.2024_2025-01-10-232511_dvys.pdf 3 DCC cannabis unified license database- https://search.cannabis.ca.gov/ #6.
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A final consideration will need to be made on whether to seek additional PLEDGE program funding through the Governor’s Office of Business and Economic Development (GO-Biz) to provide start up support to any potential equity business that would reply to an RFP. An additional funding opportunity is expected in October of 2025 with more details to come as the year progresses.

FISCAL IMPACT:

On November 9, 2021, by Resolution 2021-441, Council approved a nonrefundable application fee which currently is in the amount of $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 the Cannabis Fund – 1820 and 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 with historic trends noted in the table below:

Fiscal Year Retail Excise Tax Revenue
2018/19 $ 352,208
2019/20 $ 3,201,365
2020/21 $ 5,379,403
2021/22 $ 3,934,324
2022/23 $ 3,065,052
2023/24 $ 3,186,434
2024/25 (To Date) $ 1,796,129
2024/25 (Projected Year End) $ 2,394,839
RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion providing a recommendation regarding the two (2) remaining unissued Commercial Cannabis Retail Permits and forwarding to Council for approval.

Approved by:

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

1. December 19, 2018 Council Agenda Report-retail permit approval

2. October 22, 2024 Agenda Report-PLEDGE Grants
#6.
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

December 19, 2018
TO: Mayor and City Council Members
THROUGH: Joseph P. Lopez, City Manager
FROM: Jaylen French, Director of Community and Economic Development Adam Lindgren, City Attorney
SUBJECT: Commercial Cannabis Dispensary Permit Selections CONTACT: Steve Mitchell, Acting Planning Manager
[email protected], 577-5267
DESCRIPTION:

Consider approving the issuance of up to ten (10) commercial cannabis dispensary permits at various locations in the City with appropriate conditions. (Funding Source: Cannabis Permit Fees)
STRATEGIC PLAN ELEMENT:

The item serves to implement the Healthy Economy and Great Quality of Life Strategic Commitment by providing for new business and revenue opportunities in Modesto while providing safeguards to ensure that the City’s neighborhoods are adequately protected from any potential negative impacts.

BACKGROUND:

Commercial Cannabis Businesses:

In January 2018, the City Council adopted Ordinance 3684-C.S. legalizing certain commercial cannabis businesses, both medical and recreational, in particular zones of the City. Under the Ordinance, the Council approved Resolution 2017-525, setting the maximum number of retail cannabis dispensaries in the City at ten (10) and establishing a competitive request for proposal process for the dispensary permits.

The competitive application process consisted of the following:
• Phase 1: Submission of forms related to the individual applicants, business location, landowner permission, and background checks.
• Phase 2: Submission of responses to the City’s Phase 2 Application, including applicant team information and company history, business plan, site and operating plans, security -1-
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Commercial Cannabis Dispensary Permit Selections

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information and plan, financial information/proof of capitalization, hiring and employment practices, facility and design information, and community benefit and impact summaries. • Initial technical scoring was done by City staff and the City’s cannabis consultant, HdL Companies (HdL), followed by an interview of each applicant team by the City Council Ad Hoc Cannabis Committee, consisting of Mayor Brandvold and Council Members Grewal and Kenoyer, along with City staff and HdL, to score community benefit. • The Council Ad Hoc Cannabis Committee then met and made its recommendations for permits after considering the scores, issues related to the collective impact of up to ten dispensaries, and diversity in operation size and location.

State Law Relating to Commercial Cannabis:

California’s Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”) sets up a comprehensive regulatory and licensing system for all commercial cannabis uses (both medical cannabis and recreational cannabis). The state licensing authorities may not approve an application for a state cannabis license if approval will violate the provisions of any local ordinance or regulation. A local jurisdiction may also impose standards and regulations on a commercial cannabis business or may completely prohibit commercial cannabis activity.

Modesto Cannabis Regulations
The City’s Ordinance regulates all commercial cannabis businesses operating in the City of Modesto in a way that mitigates potential negative impacts. The Ordinance added Article 7, entitled “Commercial Cannabis Uses,” to Chapter 3 of Title 10 of the Municipal Code. The Ordinance permits the City Council to limit the number of retail cannabis dispensaries in the City. It also establishes the City Council as the approval authority for all commercial cannabis permits.

Some highlights of the Ordinance are as follows:

Zoning/Land Use:
• Allows commercial cannabis cultivation (indoor and mixed light), manufacturing, distribution, microbusinesses, testing, and retail uses. • Retail (storefronts) allowed in:
- C-2 (General Commercial)
- C-3 (Highway Commercial)
- C-M (Commercial-Industrial)
- M-1 (Light Industrial)
- M-2 (Heavy Industrial)
• Downtown:
- Prohibits all commercial cannabis uses, including dispensaries, in the Downtown Overlay:
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Commercial Cannabis Dispensary Permit Selections

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• Business Parks (Kiernan Business Park and Village One Business Park):
- Allows commercial cannabis cultivation (indoor and mixed light), manufacturing, distribution, microbusinesses, and testing uses; no retail uses. • Distance/proximity requirements from sensitive uses:
- 600 feet from schools, daycares, youth centers (measured property line to property line)
- 200 feet from parks and libraries (measured property line to property line) - 100 feet from residential uses (measured from building to building) - Language allowing for Council to waive distance requirements: “The proximity requirements above may be waived by the decision-maker when the applicant can show that an actual impassible physical separation exists between land uses or parcels, such as a building, sound wall, major street or highway, such that no negative off-site impacts could occur that would result in harm or likely harm to the public health, safety, or welfare of nearby resident or tenant, unless otherwise prohibited under state law.”
Permit Holder/Operator Requirements:
• Clear background/fingerprint (allows for background check by P.D.) • At least 21 years
• Must meet state license requirements
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Commercial Cannabis Dispensary Permit Selections

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Commercial Cannabis Permits:
• Permits good for two (2) years; but annual fee permitted. • Stringent suspension and revocation section. Permit may be immediately suspended if:
- Any requirements of Ordinance not met,
- False information provided on application,
- Not current on City taxes or fees, or
- State suspends or revokes the operator’s state license. • Permit may be revoked after notice and hearing.

Operational and Security Requirements for Cannabis Businesses:
• Very detailed and specific surveillance/camera/sensors requirements (location, type of equipment, who has access, retention of footage, police access, etc.). • Security and Operational plans must be approved by City Manager, in consultation with the Police Department. Requires details on product storage, site access, transportation of products and currency as well as theft prevention information. • Security personnel shall be on site 24 hours a day, unless an alternate security plan is approved by the Police Chief. State regulations require retail businesses to have security personnel on site while open to the public.
• Random inspections allowed by Police Department.
• All employees must pass background/fingerprinting. Police Chief has authority to establish an employee I.D. card, so employees are easily identifiable when conducting business in the City (on roads, etc.).
• Lighting, screening, signage, emissions control, etc. also covered in Ordinance.

DISCUSSION:

The City’s cannabis regulations, along with a previously approved City Council Resolution, call for a competitive process for the City’s cannabis dispensary permits. Up to ten (10) permits may be awarded by a majority vote of the City Council following a noticed public meeting. The Council may consider, but is not bound by, the application scores as well as the Ad Hoc Cannabis Committee recommendations.

Technical Review and Scoring Process
The City received 20 cannabis dispensary proposals. City staff, along with consultant HdL, reviewed the applications against technical requirements and assigned each a score, up to a maximum of 55 points. 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.

Interview and Community Benefit Scoring Process
The Council Ad Hoc Cannabis Committee conducted interviews of each applicant team regarding the “community benefits” of each proposal. The specific community benefits explored in the interviews were 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. -4-
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Commercial Cannabis Dispensary Permit Selections

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Final Scores
At the conclusion of this process, the applicants scored as follows:

Committee Recommendations
*Proximity Waiver Required
Council Ad Hoc Cannabis Committee Recommendations
In making its recommendations, the Council 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 dispensaries Citywide. Issues 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 is recommending that the eight (8) applicant teams highlighted above in yellow be awarded cannabis dispensary permits.

Proximity Waiver Analysis
Six applicant teams require a proximity waiver from the City Council in order to obtain a cannabis dispensary permit of which five are being recommended for approval. Should the Company Name Address Technical
Score
Community
Benefit Score
Total
Score
Black Diamond 209, LLC 1982 Crow Landing 35.5 21.3 56.8 California Wellness Centers 1320 La Loma 49.5 33.7 83.2 CR & D, Inc.* 439 Maze 46 33.0 79.0
CV Wellness 426 McHenry Avenue 42.5 39.7 82.2
Delta Association, LLC 1133 N. Carpenter Road 40.5 21.0 61.5 Doctor's Choice* 2039 Yosemite 31 41.7 72.7
DVBE Partners 939 McHenry 33.5 35.3 68.8
Endsley Properties LP/Greenhouse 209 901 E. Whitmore 32 36.3 68.3 High Grade Ventures 2711 McHenry 48.25 30.3 78.6
JDI Farms/Green Catalyst 3113 McHenry 34 26.0 60.0
Medallion Wellness* 1313 McHenry 43 39.7 82.7
Medical Highway/Modesto Roots* 1944 W. Orangeburg 42.5 41.3 83.8 Modesto Cannabis Company 2711 McHenry 50.5 32.3 82.8
Modesto Meds 1914 Crows Landing 43 32.3 75.3
MWC Partners, Inc. 945 McHenry 45.75 31.7 77.4
People's Remedy - Crows Landing 1982 Crows Landing 36.75 40.7 77.4 People's Remedy - McHenry 2308 McHenry 40.5 37.0 77.5
Phenos Cooperative* 1234 McHenry 46 42.7 88.7
Rosegold Dispensary, LLC 509 Winmore Avenue 37.5 24.7 62.2 VIP* 727 McHenry 41.5 37.7 79.2
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Commercial Cannabis Dispensary Permit Selections

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Council desire to award a permit to any of these six applicants, staff recommends approving the proximity waivers requests based on the following analysis:

As noted above, the City’s cannabis ordinance allows the Council to grant a waiver to the ordinance’s proximity requirements if an impassible physical separation exists between land uses or parcels, such as a building, sound wall, major street or highway. All six of the dispensaries that need a proximity waiver meet this criteria: they either have a solid masonry wall or building separating them from the sensitive use (residences, schools, and daycares), that results in significantly greater walking or driving distances between the dispensary and sensitive use, or the sensitive use is located on the other side and some distance from a major street or highway, which presents a practical barrier to interaction between the two uses.

Conditions of Approval
City staff recommends that conditions of approval be required for any commercial cannabis permit awarded, and that the authority to impose conditions be delegated to the City Manager.

Conditions should fall under two categories: general conditions to be applied to all dispensary permits, and specific conditions unique to individual sites and/or operators. Examples of general conditions would be related to compliance with State law and the City’s cannabis regulations. Examples of site-specific conditions might be requirements for formalized parking agreements where a site is short on parking, or a requirement to seek a Development Plan Review approval if involving a new building. Staff is currently drafting conditions for each dispensary, and following Council approval, staff will finalize and issue an approval letter with conditions.

FISCAL IMPACT:

The application fees for Phase 2 retail cannabis businesses (based on time and materials, with a $20,000 deposit), which were paid by all dispensary applications, have funded staff time and consultant costs associated with the processing, scoring and selection of permit applications.

The annual permit fee ($21,740) adopted by the City Council on December 4, 2018, covers costs related to the administration and monitoring of the cannabis dispensary permits. The City Council on December 4, 2018, also approved the implementation of the cannabis excise tax at a rate of 8% of gross receipts on dispensary businesses, which will provide revenue for the City.

COMMITTEE RECOMMENDATION:

The City Council Ad Hoc Cannabis Committee, consisting of Mayor Brandvold and Council Members Grewal and Kenoyer, met numerous times with City staff on this topic and conducted thorough interviews of each applicant team related to the community benefits of each dispensary proposal. The Committee’s recommendation is summarized in the section above outlining the applicant scores.

CEQA/NEPA:

All of the proposed project applications are exempt from further analysis under the California Environmental Quality Act (CEQA) under the in-fill streamlining process found in CEQA Regulation 15183.3 and/or the existing facilities exemption in Regulation 15301 and/or the exemption for new construction or conversion of small structures under Regulation 15303.

Furthermore, the proposed businesses are exempt from CEQA under the general rule in CEQA Guidelines section 15061(b) (3), that CEQA only applies to projects that have the potential for causing a significant effect on the environment. The businesses are retail uses and are permitted under the current zoning code.
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City Council Meeting December 19, 2018
Commercial Cannabis Dispensary Permit Selections

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RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution awarding commercial cannabis permits for retail cannabis dispensaries in the City of Modesto.

Approved by:

Jaylen French
Director of Community and Economic Development

Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. https://cityofmodesto.box.com/v/DIS-applications Cannabis Dispensary Applications (Redacted)

3. Map of applicant locations
3085752.1
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

October 22, 2024
Date: September 27, 2024
TO: Mayor and City Council
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 four (4) Grant Agreements awarding funding to verified City of Modesto Cannabis Program Providing Local Equity Development Grants and Education (PLEDGE) participant owned businesses in an amount of $70,000 each. (Funding Source: Cannabis Equity Grant)
STRATEGIC PLAN ELEMENT:

BACKGROUND:

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 a Type 2 grant1 to aid local equity program participants in the form of grants for eligible startup expenses as well as direct technical assistance. On January 31, 2023, 1 GO-Biz Cannabis Equity Grants Program for Local Jurisdictions Webpage-https://business.ca.gov/cannabis-equity-grants-program-for-local-jurisdictions/ #7..
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City Council, October 22, 2024
Cannabis Equity Program Grants

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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 in the amount of $35,000.

3. No more than ten (10) percent may be used for administrative expenses related to the operation of the cannabis equity program in the amount of $35,000.

On April 22, 2024, The Cannabis Program and Permit Review Committee approved utilizing the $280,000 allocation for grants to issue $70,000 to up to four (4) commercial cannabis businesses owned by PLEDGE program participants. This amount is comparable to grants 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.

Following the receipt of program funding, and the determination of grant amounts, Staff worked towards implementing the PLEDGE program and accepting applications from potential program participants. To qualify for the program each applicant was required to confirm their eligibility based on having resided in an eligible zip code2 for at least five (5) years prior to November 8, 2016, having a total household income below 80% of the area median income for Modesto in the year prior to the submission of their application, and the applicant was required to prove that they or an immediate family member was arrested or convicted of a cannabis related crime prior to November 8, 2016.

Applications to participate in the PLEDGE program were accepted and reviewed by staff in April of 2024. Twelve (12) applications were received in total with five (5) deemed eligible based on the program criteria. The verified PLEDGE participants were required to complete a technical assistance workshop to qualify for grant funding for any business venture they may be interested in pursuing. The City of Modesto partnered with Tulip & Oak Consulting to provide this six (6) week direct technical assistance workshop. Topics ranged from an overview of general business skills as well as the knowledge needed to operate a cannabis business within the legal California market. The participants completed the educational workshops on August 10, 2024, and they were also provided the opportunity for one-on-one business mentorship sessions. During these sessions, Tulip and Oak Consulting assisted the participants in developing their grant application which included the completion of a cannabis permit application.
2 Eligible zip codes include 95350, 95351, 95355, 95354, #7..
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City Council, October 22, 2024
Cannabis Equity Program Grants

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DISCUSSION:

The City has received four (4) grant applications, from businesses owned by PLEDGE participants that completed the direct technical assistance workshops, to request funding to enter the legal cannabis market in the City of Modesto. The grant application form collects general applicant and business information which includes addresses, business type, permit status, and an overall initial budget for the amount requested. Each applicant is also required to have a commercial cannabis permit application submitted and in process. Applications were processed through a pass or fail methodology based on:
 Whether the new business would be in a properly zoned location based on the type of cannabis business activity proposed and
 If they met the minimum application requirements pursuant to section 10-3.704 (g)(4) of the Modesto Municipal Code which requires the submission of necessary information related to the business, written and notarized permission from the property owner to operate a cannabis business at the site, an operating plan, a security plan, a site plan, and environmental plans as needed.

Staff reviewed the grant and permit applications and found them to be complete and eligible to receive funding through the program. Each business’ proposed location was also verified to be in a location authorized for the commercial cannabis use indicated on the corresponding permit application in conformance with section 10-3.703 of the Modesto Municipal Code.

The businesses being proposed are:

Owner: Joshua
Burrow
Jacob
and
Modesto
Resendez
Eric
Washington
LaPrice
Reynolds
Business
Name:

CLD, LLC Modesto’s
Finest, LLC
Que Tees, LLC Power High 99,
Inc.

Business
Type:

Distribution Microbusiness
(Cultivation,
Manufacturing,
Distribution)
Distribution Cultivation
Address: 903
Kansas Avenue
1006 Lone Palm
Ave
1127
Kansas Avenue
Suite 47
1127
Kansas Avenue
Suite 52
Zoning: M-2
Heavy Industrial
M-1
Light Industrial
M-1
Light Industrial
M-1
Light Industrial
Grant Amount: $70,000 $70,000 $70,000 $70,000
Each applicant will be required to enter into a grant agreement with the City of Modesto. The agreement requires that PLEDGE grant program funds may only be used for reasonable expenses incurred to launch and operate a licensed commercial cannabis business. Should the grantee utilize funds for non-eligible expenses then the City will have the following remedies available through the terms of the agreement where the City may:

1. Terminate this Agreement, in whole or in part;

2. Deny Grantee’s Application and/or revoke Grantee’s cannabis permit or local authorization for a State license to conduct the commercial cannabis activity;

3. Demand immediate reimbursement of any funds disbursed under this Agreement; #7..
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City Council, October 22, 2024
Cannabis Equity Program Grants

Page 4 of 4 ends

5. Bar Grantee from future funding by the City; and/or

6. Pursue any other remedy allowed at law or in equity.

The approval of the cannabis permit applications will be taken as a separate item on a future agenda of the Cannabis Program and Permit Review Committee. 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, resulting in bringing this item forward for consideration and approval by the Cannabis Program and Permit Review Committee and the Modesto City Council to meet the program timeline.

FISCAL IMPACT:

The direct grants to program participants are funded through the GO-Biz cannabis equity grant award budgeted in Project 101328.

COMMITTEE RECOMMENDATION:

The PLEDGE grant applications and agreements were presented to the Cannabis Program and Permit Review Committee on September 30, 2024, and a motion was passed recommending forwarding this item to Council for approval.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution approving four (4) Grant Agreements to provide funding to verified City of Modesto Cannabis Program Providing Local Equity Development Grants and Education (PLEDGE) participant owned businesses in an amount of $70,000 each, and authorizing the City Manager, or his designee, to execute the Agreements.

Approved by:

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

1. Resolution

2. PLEDGE Grant Agreement

3. PLEDGE Grant Application-Admin Review Checklist
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Cannabis Program and Permit Review CommitteeApril 28, 2025

Cannabis Program and Permit Review Committee
April 28, 2025