CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
4/14/2025
1 SUBJECT:
Consideration of an appeal of the City’s Notice of Expiration of Cannabis Public Safety License/Termination of Cannabis Activity Permit and Cessation of Operations dated March 19, 2025, issued to Seaweed Holistics, LLC., located at 450 Dondee Street, Unit #2, Pacifica, CA 94044 (APN 022-021-640)
RECOMMENDED ACTION:
Move to adopt the attached Resolution to DENY the appeal submitted by Ana Leaňo-Williams (Appellant) and UPHOLD the City’s Notice of Expiration of Cannabis Public Safety License/Termination of Cannabis Activity Permit and Cessation of Operations dated March 19, 2025, issued to Seaweed Holistics, LLC., located at 450 Dondee Street, Unit #2, Pacifica, CA 94044 (APN 022-021-640).
STAFF CONTACT:
Brianne Harkousha, AICP, Deputy Director
(650) 738-7443
[email protected]
Maria Sarasua, Chief of Police
(650) 738-7314
[email protected]
BACKGROUND:
Cannabis operators are required to comply with the general provisions, standards, and regulations set forth in Article 48 (Cannabis Regulations), Chapter 4 (Zoning) of Title 9 (Planning and Zoning) and Chapter 16 (Cannabis Public Safety Licenses) of Title 4 (Public Safety) of the Pacifica Municipal Code to operate a cannabis retail business in the City of Pacifica.
This report outlines the history of Cannabis Activity Permit CAP-8-18 for Seaweed Holistics, LLC ("Permittee" or “Seaweed”), originally approved in 2019 for a cannabis retail operation at 450 Dondee Way.
On October 16, 2019, the Police Chief issued the Permittee their first CPSL with a one-year expiration of October, 16, 2020. The business commenced operations a month after expiration in September 2020.
Data from the City’s Finance Department shows that subsequent to the issuance of the first Cannabis Public Safety License (“CPSL”) in 2019, that the City agreed to work with the appellant and allow them to pay its first CPSL renewal fee under a payment plan for the period of October 16, 2020 to October 16, 2021. The appellant has since paid three successive CPSL renewal fees in full (without payment plans) for the periods of October 16, 2021 through October 16, 2022 ($22,415.00), October 16, 2022 through October 16, 2023 ($23,577.00) and from October 16, 2023 through October 16, 2024 ($24,732.00).
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Pursuant to Pacifica Municipal Code (“PMC”) section 4-16.06 (d), cannabis operators must renew the license and pay the annual renewal fee at least thirty (30) days prior the expiration of the CPSL. An amount for the Permittee’s CPSL for the current license fee of $25,375.00 was due on or before October 16, 2024 for the period of October 16, 2024 - October 16, 2025. The Permittee’s CPSL expired by its own terms on October 16, 2024. The Permittee failed to renew its CPSL by the October 16, 2024 deadline and therefore the CPSL expired triggering automatic termination of the Cannabis Activity Permit (”CAP”). This lapse in renewal of a CPSL results in automatic expiration of the CPSL. (PMC section 4-16.06). The expiration of the CPSL also results in automatic termination of the right to operate a cannabis operation under a CAP. (PMC sections 9-4.4803(b) and (d) and 9-4.4806(d)).
The Permittee also owes significant unpaid cannabis taxes and audit-related fees. On March 25, 2025 Ana Leaňo-Williams, on behalf of the Permittee, filed an appeal claiming extreme hardship due to gross reduction in business over the last year and a half as the basis for not paying the CPSL renewal fee. Pursuant to PMC Section 9-4.3208, the City Council must now consider the appeal of the CPSL expiration and CAP termination. Staff recommends denial of the appeal, which would immediately revoke the Permittee’s authorization to operate and allow the City to continue pursuing outstanding payments.
A. INITIAL APPROVAL OF CAP-8-18 (September 16, 2019)
On September 16, 2019, the Planning Commission approved CAP-8-18 with the adoption of Planning Commission Resolution No. 2019-0311to authorize the Permittee to establish and operate a Cannabis Retail Operation ("CRO") with adult use and medicinal cannabis sales at 450 Dondee Way, Suite 2 (File No. 2018-029). Exhibit A to Resolution No. 2019-031 included conditions of the approval ("COAs") applicable to CAP-8-18. Many of these COAs were required to be met prior to the commencement of operations. The Permittee did not contest or appeal any of the COAs imposed as part of CAP-8-18.
While the Permittee made progress towards completion of some of the COAs, the Permittee indicated that two COAs were infeasible to satisfy prior to commencement of operations. Those two COAs primarily at issue are the following:
• COA No. 9 - "Prior to commencement of operations, the Permittee shall obtain a building permit to modify the first floor storefront to increase the horizontal and overall measurements of the glass on the first floor storefront to meet or exceed the requirements of PMC Section 4-16.03(c)(1)(ii), to the satisfaction of the Planning Director. New windows or doors proposed on the storefront shall be architectural compatible with the remainder of the building, to the satisfaction of the Planning Director."
• COA No. 18 - "All outstanding and applicable fees associated with the processing of this project shall be paid within 30 days of the approval of Cannabis Use Permit CAP-8-18.
The Cannabis Retail Operation shall not commence operations until such fees are paid." The Permittee explained that they had to commence operations in order to generate revenue through cannabis retail sales to be able to satisfy COA No. 9 (requirement to implement storefront window modification to meet Pacifica Municipal Code ("PMC") sec. 4-16.03(c)(1)(ii)) and COA No. 18 (payment of outstanding fees) and requested that those COAs be modified to allow commencement of operations before compliance with COA No. 9 and COA No. 18. 1 PC Resolution 2019-031
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B. DEFERRAL AGREEMENT AND AMENDMENT TO CAP-8-18 (September 21, 2020)
Given the Permittee's request, the City temporarily deferred compliance with COA No. 9 and COA No. 18 through the Agreement Regarding Deferral of Specified Conditions of Approval Relating to the Operation of Seaweed Holistics ("Deferral Agreement") executed on September 21, 2020 (Attachment B), to allow the Permittee to commence operations to generate the revenue necessary to satisfy COA No. 9 and COA No. 18 (Conditions are detailed in Section A, above), provided that the Permittee expeditiously process an application to modify these COAs.
The Agreement also provided that the Permittee was responsible for paying for City costs associated with preparing and processing the Deferral Agreement and modifying the COAs. The Permittee agreed to the terms of the Deferral Agreement.
On February 16, 2021, the Planning Commission approved Resolution No. 2021-0012 which amended COA No. 9 and COA No. 18 of CAP-8-18 to defer the timing of compliance with those conditions until after commencement of operations (File No. 2020-020), consistent with the aforementioned Deferral Agreement.
C. ANNUAL REPORT TO PLANNING COMMISSION (August 15, 2022) In accordance with PMC Sec 9-4.4806(e) and COA No. 19 of Resolution No. 2019-031, the Planning Commission conducted an annual review of the CRO at its meeting on August 15, 2022. As part of the annual review, staff reported that the Permittee was still not in compliance with COA No. 9 and No. 18. Additionally, because the Permittee had not complied with the COAs imposed by the Planning Commission, the Permittee was also out of compliance with PMC sec. 9-4.4803(d)(5) and Conditions of Approval No. 1, No. 5, and No. 6, which are summarized as follows:
• COA No. 1 - This condition requires the development to be substantially in accordance with the approved plans modified by the conditions of approval. As further discussed below for COA No. 9, the Permittee had not complied with COA No. 9 which requires the modification of the storefront window. Therefore, the development was out of compliance with COA No. 1.
• COA No. 5 - This condition incorporates all the requirements of Article 48 of Chapter 4 of Title 9 of the PMC applicable to the cannabis retail operation. PMC Section 9-
4.4803(d)(5) states, "The Planning Commission may impose additional conditions which it deems necessary to ensure that operation of the cannabis operation will be in accordance with the findings provided in Section 9-4.4805(a) and with the standards and regulations provided in this article and applicable state laws." As further discussed below for COA No. 9, and No. 18, the Permittee had not complied with these conditions imposed by the Planning Commission and therefore was out of compliance with PMC Section 9-4.4803(d)(5) and, therefore, COA No. 5.
• COA No. 6 - This condition prohibits the operation of the cannabis retail operation from creating a public nuisance. As established in PMC sec 9-4.4807, "[a]ny use or condition caused or permitted to exist in violation of any provision of this article shall be and hereby is declared a public nuisance and may be summarily abated by the City pursuant to Code of Civil Procedure, section 731 or any other remedy available to the City." The cannabis retail operation was in violation of provision of Article 48 as demonstrated in the annual report because there are Conditions of Approval that had not been complied 2 PC Resolution 2022-001
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with and, as a result, the cannabis retail operation was considered a public nuisance, as defined in the PMC. Therefore, the Permittee was not in compliance with COA No. 6.
After receiving a report prepared by staff and testimony, the Planning Commission adopted Resolution No. 2022-0163, finding that operation of Seaweed Holistics was being conducted in a manner that was not in compliance with the requirements of Article 48, Chapter 4, Title 9 of the PMC and the requirements of Planning Commission Resolution Nos. 2019-031 and 2021-001 and therefore constituted a public nuisance in accordance with PMC sec. 9-4.4806 and PMC sec. 9-4.4807. The Planning Commission also directed staff to schedule a public hearing within 60 days to consider suspension or revocation of Cannabis Activity Permit CAP-8-18 in accordance with PMC sec. 9-4.4806. The Planning Commission staff report for August 15, 2022, is included in this staff report as Attachment C.
D. PLANNING COMMISSION CONSIDERATION OF REVOCATION OR SUSPENSION (October 3, 2022)
During the Planning Commission's regular meeting on October 3, 2022, the Planning Commission reviewed the compliance status of the operation of Seaweed Holistics and considered the criteria for suspension or revocation pursuant to PMC sec. 9-4.4806. Ultimately, a majority of the Planning Commission supported revocation rather than suspension.
The Planning Commission adopted Resolution No. 2022-0214, finding the cannabis retail operation authorized by CAP-8-18 was out of compliance with COA No. 9 (requirement to implement storefront window modification) and COA No. 18 (payment of outstanding fees), as well as COA No. 1 (requiring development to be substantially in accordance with approved plans modified by the conditions of approval), COA No. 5 (requiring compliance with all conditions of approval and all standards), and COA No. 6 (prohibits the operation of the CRO from creating a public nuisance) and approved revocation of Cannabis Activity Permit CAP-8-18 by a vote of 3 to 2 with two absences. The Planning Commission staff report for October 3, 2022, is included as Attachment D.
E. 2022 COUNCILMEMBER CALL-UP AND APPEAL BY ANA LEAÑO-WILLIAMS OF SEAWEED HOLISTICS (October 13, 2022)
On October 10, 2022, the City Clerk received a written request from former Councilmember O'Neill to call up the Planning Commission's action on the subject item for City Council review pursuant to PMC sec. 2-1.105, which does not require a Councilmember to cite the basis for the call-up.
On October 13, 2022, Ana Leaño-Williams of Seaweed Holistics (hereafter "Appellant") timely submitted a City of Pacifica Appeal form and applicable fee to the City Clerk's office to appeal the Planning Commission's revocation of the CAP for the Project. The Appellant cited two reasons for the appeal:1) that the decision to revoke the CAP was based on a misapplication of the City’s store front window glazing ordinance/requirements; and 2) that the assessed fees were largely inappropriate in that they were based on the inappropriate window glazing ordinance/requirements.
On November 14, 20225, the City Council adopted resolution No. 79-2022, that denied the appeal and upheld the Planning Commission’s action to revoke Cannabis Activity Permit CAP8-18 which was to take effect 14 months after November 15, 2022, unless 6 “revocation 3 PC Resolution 2022-016
4 PC Resolution 2022-021
5 CC November 14, 2022 Meeting Minutes
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conditions” were satisfied before the aforementioned revocation date. (See Staff Report as Attachment E). Those revocation conditions were:
1. Permittee shall pay $4,080.56 for all outstanding and applicable fees and costs associated with the processing of the application for approval of CAP 8-18, by end of business day, December 15, 2022. Failure to make the required payment of $4,080.56 by December 15, 2022, shall warrant immediate revocation.
2. Permittee shall pay a $5,000 deposit by end of business day on January 17, 2023 for estimated fees and costs associated with the processing of ordinance amendments and processing of amendments to CAP-8-18 to incorporate any revision the Pacifica Municipal Code adopted by the City Council. Any unused portion of the deposit shall be refunded and any additional costs beyond the deposit shall be borne by the City of Pacifica. Failure to make the required deposit of $5,000 by January 17, 2023 shall warrant immediate revocation.
3. Permittee shall pay $21,872.33 for all outstanding and applicable fees and costs associated with processing the amendment to CAP-8-18, and all outstanding and applicable fees and costs associated with the preparation and execution of the Deferral Agreement in 12 equal monthly payments of $1,822.69 by end of business day the 15'h day of each month beginning February 15, 2023, or on the next business day when the 15" day of the month is not a business day. Failure to make any required monthly payment by the last day of the subject month in which the payment is due shall warrant immediate revocation.
4. Prior to the Revocation Date, PMC sec. 4-16.03(c)(1)(ii) relating to window coverings is amended in a manner which allows Permittee to retain its current window configuration.
5. Prior to the Revocation Date, Conditions of Approval Nos. 9 and 18 are modified by the Planning Commission to conform to any revisions made to PMC sec. 4-
16.03(c)(1)(ii) as described in paragraph 2 above and reflect satisfaction of outstanding fees as described in paragraph 1.
6. Prior to the Revocation Date, City and Permittee execute an amendment to the Deferral Agreement to conform to revisions to PMC sec. 4-16.03(c)(1)(ii) and reflect satisfaction of outstanding fees and provide reimbursement to City for all costs, including but not limited to staff time, administrative costs, legal fees and any other costs incurred by the City in processing amendments to Conditions of Approval Nos. 9 and 18 and Amendment to Deferral Agreement, subject to the $5,000 limit above.
F. PLANNING COMMISSION APPROVAL OF MODIFICATIONS TO THE CAP-8-018 RELATING TO CONDITIONS OF APPROVAL NO.’S 9 AND 18.
The Permittee made all of the necessary payments on time as required above and the Planning Commission approved Resolution No. 2023-0146 on September 16, 2023, which amended Cannabis Activity Permit CAP-8-018 to modify the requirements of Resolution No. 2019-031 of the Planning Commission relating to the modified requirements related to storefront window size (Condition of Approval No. 9) and payment of outstanding and applicable fees and costs associated with the processing of the application (Condition of Approval No. 18) G. NOTICE OF EXPIRATION OF THE CPSL AND TERMINATION OF CAP-8-18, DATED MARCH 19, 2025.
6 PC Resolution 2023-014
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Subsequent to the action taken by the Planning Commission on September 16, 2023, the appellant, due to reasons provided below, did not make the payment (fee) for renewal of its Cannabis Public Safety License (CPSL) on or prior to October 16, 2024, and thus the nonpayment of the fee ($25,375.00) caused the CPSL to expire resulting in the Cannabis Activity Permit (CAP) automatically terminating.
On March 19, 2025, the Police Chief sent a Notice of Expiration of Cannabis Public Safety (CPSL) and Termination of Cannabis Activity Permit (CAP) to the Appellant, advising her that the CPSL expired on October 16, 2024, and that Seaweed was operating without a valid CPSL and a CAP and demanded that Seaweed immediately cease cannabis retail operations (See Attachment F). And on March 25, 2025, Appellant timely submitted an Appeal form and applicable fee to the City Clerk's office to appeal city’s action to issue the Notice of Expiration of the CPSL and Termination of CAP-8-18, (Attachment G).
Unrelated to the status of the CPSL or CAP, Seaweed Holistics, LLC., also owes approximately $32,221.67 to the City for the Cannabis Operator Tax and approximately $6,828.13 for FY 2022-2023 audit findings, which are summarized below.
1. Cannabis Operator Tax and License Status Update
As outlined in Title 3, Chapter 18, Section 3-18.14, all cannabis operations in the City are subject to a 6% cannabis operations tax on gross receipts. Seaweed remained current on local tax payments through September 2023 but has since failed to remit payments, except for $1,476.65 in November 2024. Cannabis operators are required to self-report their gross receipts and corresponding tax liability monthly. Initially, Seaweed reported $40,539.90 in unpaid taxes for October 2023 – October 2024, excluding reporting for December 2024 and January 2025.
However, they recently notified the Finance Department of discrepancies in their initial reporting and adjusted their reported tax liability down to $32,221.67, now covering through December 2024.
2. Annual Audit Findings
The City conducts annual audits of cannabis businesses. Seaweed was first audited last year due to the timing of their license issuance. The FY 2022-23 audit identified $20,696.27 in underreported taxes. Seaweed requested a payment plan, with the final installment of $6,828.13 due on December 15, 2024, which remains unpaid.
Regardless of the status of the CPSL or CAP, the City will continue to pursue the foregoing outstanding amounts.
H. CITY COUNCIL'S ROLE
Pursuant to PMC Section 9-4.3208, the City Council may approve, deny or modify the City’s action to issue a Notice of Expiration of the CPSL and Termination of CAP-8-18, after considering the appeal.
In the event that the Council determines that there is substantial evidence in the record to support the City’s action to issue the Notice of Expiration of the CPSL and Termination of CAP8-18, the Council should deny the appeal by adopting the attached Resolution.
If the Council decides to modify City staff’s action, the City Council should provide staff with conditions and criteria which would be inserted into a Resolution modifying the action of staff, which would be brought back to Council at a later date. In the event that the Council decides to Pacifica City Council 7
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grant the appeal and rescind the Notice of Expiration of the CPSL and Termination of CAP-8-18, the City Council will need to provide staff with the basis for those findings that are supported by substantial evidence which would be inserted into a Resolution granting the appeal and brought back to the City Council at a later date.
DISCUSSION:
A. 2025 APPEAL BY ANA LEAÑO-WILLIAMS OF SEAWEED HOLISTICS Appellant cited one reason for the appeal in the appeal form, which is summarized and addressed below.
Basis 1. "Extreme hardship due to gross reduction in business over the last year and a half”
Staff Response:
While the City acknowledges the challenging economic climate and recognizes that many businesses have experienced financial hardship, the appeal lacks sufficient justification to warrant reversal of the City’s action. The cannabis permitting and licensing framework – adopted through PMC Chapter 16, Title 4 and Article 48, Chapter 4, Title 9 – establishes clear requirements for the maintenance of a valid permit, including the timely payment of annual fees.
These fees are critical to ensuring adequate oversight, enforcement, and public safety in the regulation of cannabis operations.
PMC section 4-16.06 (d) requires that cannabis operators renew the CPSL and pay the annual renewal fee at least thirty (30) days prior the expiration of the CPSL. The Permittee’s CPSL expired by its own terms on October 16, 2024. The Permittee failed to renew its CPSL by the October 16, 2024 deadline and therefore the CPSL expired triggering automatic termination of the CAP. (PMC sections 9-4.4803(b) and (d) and 9-4.4806(d)).
Non-payment of the CPSL fee is a clear violation and results in automatic expiration under the City Municipal Code and there are no exceptions provided in the Code or the CPSL renewal fee for non-payment. The City does not offer hardship exemptions or payment plans for renewals of the CPSL beyond the first year. Granting this appeal would require a change to the CPSL fee and the Municipal Code and sets a precedent that weakens the integrity of the permitting system and could lead to unequal treatment of other operators who comply with the rules.
ALTERNATIVE ACTIONS:
If the Council decides to modify City staff’s action, the City Council should provide staff with conditions and criteria which would be inserted into a Resolution and modifying the action of staff, which would be brought back to Council at a later date. In the event that the Council decides to grant the appeal and rescind the Notice of Expiration of the CPSL and Termination of CAP-8-18, the City Council will need to provide staff with the basis for those findings that are supported by substantial evidence which would be inserted into a Resolution granting the appeal and brought back to the City Council at a later date.
The City Council may also refer the matter back to staff for reconsideration given new evidence provided at the hearing should there be any provided.
ENVIRONMENTAL REVIEW:
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This action to deny the appeal submitted by the Appellant and uphold the City’s Notice of Expiration of Cannabis Public Safety License/Termination of Cannabis Activity Permit is not subject to review under the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21000, et seq. and the CEQA Guidelines (14 Cal. Code Regs. §§ 15000 et. seq.), including without limitation, Public Resources Code section 21065 and California Code of Regulations 15378 as this is not a “project” that may cause a direct, or reasonably foreseeable indirect, physical change in the environment.
RELATION TO CITY COUNCIL GOALS AND WORK PLAN:
The proposed project is not directly associated with an item on the City Council's Work Plan. It is the City Council's normal governance process to hear and determine appeals under the PMC.
FISCAL IMPACT:
The expiration of CPSL, termination of CAP-8-18, and the cessation of the business would result in reduced cannabis tax revenues collected by the City. Individual cannabis tax payment amounts are confidential. However, the reduction of one business would allow for another business to submit a CPSL and CAP proposal and operate with similar tax revenue collections.
ORIGINATED BY:
Community Development Department
ATTACHMENT LIST:
ATT A. CC Reso xx-2025_Seaweed Hollistics Appeal (DOCX) ATT B. Agreement re Deferral of Specified Conditions_Redacted (PDF) ATT C. Planning Commission Staff Report_August 15, 2022 (PDF) ATT D. Planning Commission Staff Report_October 3, 2022 (PDF) ATT E. City Council Staff Report_November 14, 2022 (PDF) ATT F. Seaweed Holistics-Permit Termination 3.19.2025 (PDF) ATT G. Appeal_20250325_Leano-Williams_SeaweedHolistics_CPSL_CAP (PDF)