CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
11/14/2022
1 SUBJECT:
Council call-up and consideration of an appeal of the Planning Commission’s revocation of Cannabis Activity Permit CAP-8-18 which authorizes the operation of a cannabis retail operation known as Seaweed Holistics, LLC at 450 Dondee Way, Suite 2 (APN 022-021-640), for the sale of medicinal and adult use cannabis.
RECOMMENDED ACTION:
Move to adopt the attached Resolution to DENY the appeal and UPHOLD the Planning Commission’s revocation of Cannabis Activity Permit CAP-8-18 (File Nos. 2018-029 and 2020- 020), which authorizes operation of a cannabis retail operation known as Seaweed Holistics at 450 Dondee Way, Suite 2 (APN 022-021-640), and finding the project exempt from the California Environmental Quality Act (CEQA) by adopting the resolution included as Attachment A.
STAFF CONTACT:
Bonny O’Connor, AICP, Senior Planner
(650) 738-7341
[email protected]
BACKGROUND:
The City of Pacifica’s “Cannabis Regulations” are contained in Article 48 of Chapter 4 of Title 9 of the
Pacifica Municipal Code (PMC)1. The Cannabis Public Safety License (CPSL) requirements are contained in Chapter 16 of Title 4 of the PMC.2 As the City processed applications for cannabis retail operations, all operators have been required to comply with the standards set forth in those Cannabis Regulations.
A. INITIAL APPROVAL OF CAP-8-18
On September 16, 2019, the Planning Commission approved Cannabis Activity Permit CAP-8- 18 with the adoption of Planning Commission Resolution No. 2019-031 (Attachment B) to authorize Seaweed Holistics, LLC (“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.
1 City of Pacifica Cannabis Regulations:
https://library.municode.com/ca/pacifica/codes/code_of_ordinances?nodeId=TIT9PLZO_CH4ZO_ART48CARE 2 City of Pacifica Cannabis Public Safety License Requirements:
https://library.municode.com/ca/pacifica/codes/code_of_ordinances?nodeId=TIT4PUSA_CH16CAPUSALI 10 Packet Pg. 163
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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.
B. DEFERRAL AGREEMENT AND AMENDMENT TO CAP-8-18
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 C), to allow the Permittee to commence operations to generate the revenue necessary to satisfy COA No. 9 and COA No. 18 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. 2021-001 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 (Attachment D).
C. ANNUAL REPORT TO PLANNING COMMISSION
In accordance with PMC Sec 9-4.4806(e) and COA No. 19 of Resolution No. 2019-031 (Attachment B), 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 has not complied with COA No. 9 which requires the modification of the storefront window. Therefore, the development is out of compliance 10 Packet Pg. 164
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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 has not complied with these conditions imposed by the Planning Commission and therefore is 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 is in violation of provision of Article 48 as demonstrated in this annual report because there are Conditions of Approval that have not been complied with and, as a result, the cannabis retail operation is considered a public nuisance, as defined in the PMC. Therefore, the Permittee is not in compliance with COA No. 6.
After receiving a report prepared by staff and testimony, the Planning Commission adopted Resolution No. 2022-016, finding that operation of Seaweed Holistics is being conducted in a manner that is not in compliance the requirements of Article 48 of Title 9, Chapter 4 of the PMC and the requirements of Planning Commission Resolution Nos. 2019-031 and 2021-001 and therefore constitutes a public nuisance in accordance with PMC sec. 9-4.4806 and PMC sec. 9-
4.4807 (Attachment E). 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 F3.
D. PLANNING COMMISSION CONSIDERATION OF REVOCATION OR SUSPENSION 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.
PMC sec. 9-4.4806 provides that the Planning Commission may suspend or revoke a Cannabis Activity Permit. Although there are no specific requirements regarding when a suspension should be utilized rather than revocation, staff explained to the Planning Commission that generally suspensions are used when a suspension is likely to allow the permittee time to achieve compliance in a particular case.
Ultimately, a majority of the Planning Commission supported revocation rather than suspension.
The Planning Commission adopted Resolution No. 2022-021, 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 3 A recording of the August 15, 2022 Planning Commission Meeting is available online here:
https://youtu.be/fI5mI-4fv0Q?t=704
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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 (Attachment G). The Planning Commission staff report for October 3, 2022, is included as Attachment H 4.
DISCUSSION:
A. CITY COUNCIL CALL-UP
On October 10, 2022, the City Clerk received a written request from 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.
B. APPEAL BY ANA LEAÑO-WILLIAMS OF SEAWEED HOLISTICS
On October 13, 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 (Attachment I). The Appellant cited two reasons for the appeal in the appeal form, which are summarized and addressed below.
Basis 1. “[D]ecision to revoke the Cannabis Activity Permit was based on a misapplication of the City’s storefront window glazing ordinance/requirements.
The project’s existing window glazing is compliant with the ordinance.” Staff Response: Staff disagrees with this basis. PMC Section 4-16.03(c)(1)(ii) details a quantitative standard CPSL condition for cannabis operations, which states, “Windows and window coverings. Storefronts (front facade of the cannabis operation) shall be primarily glass with glass occupying at least forty-five (45%) percent of the entire store front and sixty (60%) percent of the horizontal length of the store. Window and door areas shall not be covered, tinted, or made opaque in any way, or obscured in any way by landscaping, floor displays, equipment, or the like.” This window provision of the CPSL is a provision that was included in the initial adoption of the CPSL ordinance in 2017 5. This requirement was included in the Conditions of Operation for requirements for cannabis operations to address the Police Department’s concerns at the time that CROs are largely a cash-based business and are a high potential target for robbery. The window provisions ensure a consistent means of visibility into a CRO from the front exterior. This provision was also in effect when the Appellant submitted an application for a CAP for this commercial space in 2018.
In the September 16, 2019 Planning Commission staff report for the initial consideration of the approval of CAP-8-18, the storefront elevation was analyzed based on the Appellant’s provided project plans and dimensions (see Figure 1).
4 A recording of the October 3, 2022 Planning Commission Meeting is available online here:
https://youtu.be/5tAlcBy_Vo8?t=499
5 City of Pacifica Ordinance No. 818-C.S., adopted July 2017. Initially adopted with the title “Marijuana Public Safety Licenses”, which was subsequently changed to “Cannabis Public Safety Licenses” in City of Pacifica Ordinance No. 843-C.S., adopted in May 2019.
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Figure 1. Excerpt of Attachment C – Project Plans from the September 16, 2019 Planning Commission Staff Report
Staff identified that the existing windows along the front facade did not meet the window requirements of PMC sec. 4-16.03(c)(1)(ii). Furthermore, staff’s recommended findings for approval of CAP-8-18 identified the use of the second floor as only for employee access and therefore recommended that the second-story portion of the front elevation not be calculated as part of the storefront for the purposes of calculating the window requirements of PMC sec. 4-
16.03(c)(1)(ii). While “storefront” is not defined in the PMC, staff recognized a reasonable interpretation of storefront to include only the retail space along the front facade as “office” or “employee only” space is not typically located along the storefront. Staff also recognized that this interpretation would be beneficial to the Appellant as it would reduce the scale of window modifications that would be necessary to meet PMC sec. 4-16.03(c)(1)(ii).
The recommended Planning Commission findings for Resolution No. 2019-031 found that the existing windows along the first floor of the storefront did not meet PMC sec. 4-16.03(c)(1)(ii).
However, with the inclusion of COA No. 9, which required modification of the front window to comply with PMC Section 4-16.03(c)(1)(ii), staff recommended approval of the CAP-8-18 6. The 6 Planning Commission’s findings in Resolution No. 2019-031 (Attachment B) state: “The first floor of the proposed storefront is 24’ wide and 8‘ high for a total of 192 sf. The first floor of the existing storefront currently has a 10’ by 6’ window and a door with a 2’ by 5’-6” glass panel for a total of 71 sf of glass. Therefore, the existing glass along the first story storefront does not occupy at least 45 percent (86.4 sf minimum) of the storefront nor does the 10’ wide window plus the 2’ wide glass panel door meet the 60 percent of horizontal length of the store (14’-3” minimum). A COA would require modification of the front window to comply with the Security Plan standards of PMC Section 4-16.03(c)(1)(ii).”
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Planning Commission adopted the staff’s recommended findings in Resolution No. 2019-031.
No appeal was filed to challenge this action.
During execution of the Deferral Agreement to defer COA No. 9 and the processing of the amendment of CAP-8-18 to incorporate the deferral amendments to COA No. 9 (File No. 2020- 020, Resolution No. 2021-001), the Appellant did not present any position that there was a misapplication of the City’s storefront window glazing ordinance or requirements and no timely appeal was filed on Planning Commission’s action.
Since no window modifications have been made to the first-story storefront, staff and the Planning Commission 7finds that Seaweed Holistics storefront remains out of compliance with PMC sec. 4-16.03(c)(1)(ii) and with COA No. 9 as revised by Resolution No. 2021-001, which sets a schedule to defer the installation of the window modification after commencement of operation of the CRO in accordance with the Deferral Agreement. Table 1 in Attachment H details the Appellant’s progress with this condition.
Finally, the Appellant did not provide additional details supporting their claim that the project’s existing window glazing is compliant with the ordinance in their appeal materials. However, as part of the Appellant’s presentation to Planning Commission at the October 3, 2022 public hearing, the Appellant claimed that the City miscalculated the storefront area. The Appellant’s presentation suggested that a portion of the first-story storefront should not be counted as storefront because the stairs that lead to the second floor are not a part of the customer area.
Additionally, the Appellant claimed that the width of the perpendicular walls against the front façade should also be removed from the storefront area calculation. Staff would not be supportive of this new and different interpretation of the calculation of the “storefront” area for the following reasons:
1. Based on August 1, 2022 staff site visit, staff understands that there is an ATM for customer use in front of the stairs as well as an area at the stairway landing that is accessible to customers. Therefore, the claim that first-story storefront area in front of the stairs is an employee only area is not accurate as it may be accessed by customers who wish to use the ATM.
2. The reduction of the storefront based on perpendicular wall area is also not consistent with the Code nor is it consistent with the plain meaning of the words in the Code. PMC sec. 4-16.03(c)(1)(ii) clarifies the term “Storefronts” by including in parenthesis “front facade of the cannabis operation”; therefore it is appropriate to use measurements from the exterior side of the wall which is considered the front façade rather than the interior area along the storefront. Furthermore, The City has not reduced the storefront area in any CAP application instance due to wall width as the front. Additionally, based on the figures provided by the Appellant the northern wall width is not counted as part of the current storefront as that wall continues past the storefront as part of the project perpendicular wall.
3. The interpretation that was suggested by the Appellant is not consistent with the manner that staff interpreted the requirement for other cannabis operations. Other cannabis operations have made modifications to their storefront to meet this requirement in the manner interpreted by staff. Furthermore, the only other two-story cannabis retailer (403 Dondee) has included areas where stairs/elevators occur along their front elevation as part of their storefront even though the second story is non-customer area as well as included the second story of the front elevation as “storefront.” For all the reasons provided above, staff recommends that the Council deny this basis of the appeal.
7 See Planning Commission Resolution Nos. 2022-016 and 2022-021 (Attachments E and G, respectively) 10 Packet Pg. 168
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Basis 2. “Disputes the $25,962.89 in assessed fees largely and inappropriately incurred by the City to address the window glazing non-issue” Staff Response: As discussed above, Seaweed Holistics storefront remains out of compliance with PMC sec. 4-16.03(c)(1)(ii) and with COA No. 9 as revised by Resolution No. 2021-001.
Additionally, as further discussed below, the outstanding fees are not associated with the “window glazing non-issue,” but are associated with the City’s cost processing the Appellant’s CAP-8-18. As the Appellant was made aware of the requirement to pay for all costs associated with processing its CAP application and agreed to such by signing an Agreement for Reimbursement of City Costs (“Reimbursement Agreement”) as part of her initial application submittal. Because the City operates on a deposit system, an initial deposit is required with the submittal of an application, in this case $10,000 was provided and staff, including legal counsel, against which the actual costs to cover the time and expenses associated with processing the application are billed. By signing the Application 8 and the Reimbursement Agreement, the Appellant understood that the initial deposit may not be sufficient to cover the City’s costs processing the application and agreed to make one or more additional deposits within 30 days of being notified that additional funds are required. Additionally, staff included COA No. 18 in Resolution No. 2019-031 (Attachment B), which is a standard condition of approval for all development permits, to require the Appellant to pay all outstanding fees associated with the processing of the project within 30 days of the approval of the permit and prior to commencement of operation.
In January 2020, the City sent the Appellant a letter to inform her that City costs to process CAP-8-18 had exceeded the initial deposit and that an additional $4,080.56 was requested. At the Appellant’s request, staff began working on the Deferral Agreement to defer COA No. 9 and COA No. 18. As captured in the Deferral Agreement, the Appellant had indicated that she needed to commence operation of the cannabis retail to generate revenue to satisfy COA No.
18. The Appellant voluntarily entered the Deferral Agreement, which in addition to establishing a payment deadline for outstanding fees until after commencement of operation, included a provision that the Appellant would pay the outstanding $4,080.56, as well as, “all costs, including but not limited to, staff time, administrative costs, legal fees and any other cost incurred by the City (“City Costs”) associated with preparing this Agreement and all City Costs and associated fees relating to the Planning Commission hearing to consider the Application for Amendments and appeal(s) of the Planning Commission decision, if any.” The Planning Commission adopted Resolution No. 2021-001 on February 16, 2021 to incorporate the deferral amendments to COA No. 18. The revised condition required the Appellant to pay all outstanding fees within 60 days of Planning Commission approval of the revised conditions (i.e., April 17, 2021). By March 10, 2021 staff calculated costs known at the time and informed the Appellant of the outstanding fees. No payment for the outstanding fees was made. On June 10, 2021 the City provided written notice to the Appellant that the final invoices for the processing of the amendment were received and the final total outstanding costs for the processing of the CAP, preparation and execution of the Deferral Agreement, and processing the amendments of the CAP was $25,952.899. This amount remains outstanding.
For all the reasons provided above, staff recommends that the Council deny this basis of the 8 Subsection B of Section II. Acknowledgement and Agreement by Applicant and Owner of the signed Marijuana Use Permit Application (subsequently retitled Cannabis Activity Permit) states, in summary, that the undersigned agrees to pay any and all City costs incurred in connection with the application, enter into a reimbursement agreement with the City for the payment of such fees, and satisfy requests for further deposit of funds within 30 days of a City request.
9 This amount is the sum of the outstanding $4,080.56 for the original processing of CAP-8-18 and the outstanding $21,872.33 for the processing of the Deferral Agreement and the amendment to CAP-8-18. 10 Packet Pg. 169
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appeal.
C. CITY COUNCIL’S ROLE
Pursuant to PMC Section 2-1.105 and PMC Section 9-4.3208, the Council may approve, deny or modify the Planning Commission’s decision on Cannabis Activity Permit CAP-8-18, after considering the call-up and appeal. With respect to the appeal specifically, the City Council may also refer the matter back to the Planning Commission pursuant to PMC Section 9-4.3208(b)(2).
In the event that the Council determines that there is substantial evidence in the record to support the Planning Commission’s revocation of the Cannabis Activity Permit CAP-8-18, the Council should deny the appeal by adopting the attached Resolution.
If the Council decides to modify Planning Commission’s action to a suspension, the Council should provide staff with conditions and criteria for the suspension which would be inserted into a Resolution upholding the appeal, and modifying the decision of the Planning Commission to reflect a suspension, which would be brought back to Council at a later date. In the event that the Council decides to uphold the appeal and deny the revocation, 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 upholding the appeal by staff and brought back to Council at a later date.
D. STAFF SUMMARY
As detailed in this staff report, the claims of the Appellant’s appeal are unfounded and inaccurate. The Appellant has been aware of her requirement to bring her storefront window into compliance with PMC sec. 4-16.03(c)(1)(ii) and her requirements to pay all outstanding fees to the City since at least the initial approval of CAP-8-18 on September 16, 2019. These appeal claims are untimely efforts by the Appellant to delay or avoid the responsibilities that are codified in the Pacifica Municipal Code for cannabis retail operations and which the Appellant has agreed to and that have been consistently applied to all other cannabis retail operators. The City has provided the Appellant more than generous support, accommodations, and time to address these continuing compliance issues, without receiving any notable response from the Appellant. Some of these accommodations include establishment of a payment plan, an agreement to defer conditions, providing additional time due to personal matters, and scheduling the annual report at the latest meeting opportunity to confirm compliance status.
These accommodations are in addition to the several email reminders and extra guidance that staff has provided the Appellant. Staff has provided this assistance with the intention of helping the Appellant succeed and to be a business-friendly resource.
Despite these significant efforts by staff, the Appellant has failed to satisfy COA Nos. 9 and 18 and is therefore also not in compliance with COA Nos. 1, 5 and 6. The Planning Commission agreed with staff that the Appellant’s lack of progress on COA Nos. 9 and 18 has provided no indication that further extensions for compliance through a temporary suspension of their permit would result in completion of the applicable requirements by the Appellant.
For all the reasons provided in this staff report, staff recommends that the City Council deny the appeal and uphold the Planning Commission’s revocation of CAP-8-18 to be effective immediately. Revocation of CAP-8-18 would remove the Appellant’s ability to operate, engage in, conduct or carry out any cannabis operation at 450 Dondee Way, Suite 2, and prevent the Appellant from dispensing, selling, and/or delivering cannabis and/or cannabis products.
Additionally, staff will continue to work to obtain the outstanding fees owed to the City of Pacifica.
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Staff notes that the Appellant timely paid the $23,577 CPSL yearly license renewal fee before its due date on October 16, 2022. Should Council support revocation of CAP-8-18, staff will prepare a reimbursement of the Appellant’s recent payment for the CPSL.
ALTERNATIVE ACTIONS:
The City Council may move to continue the appeal hearing in order to allow staff to prepare a resolution and associated findings to uphold the appeal and deny the Planning Commission revocation of the Coastal Development Permit, or to modify the revocation to be a temporary suspension. The City Council may also refer the matter back to the Planning Commission for reconsideration.
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 of Planning Commission actions under the PMC.
FISCAL IMPACT:
The revocation of CAP-8-18 could result in reduced cannabis tax revenues collected by the City in the near term. However, purchases could shift to another existing or future permitted cannabis retail operation in the Rockaway Beach district or to another permitted cannabis retail operation elsewhere in Pacifica. Therefore, the potential fiscal impact of this permit revocation is unknown but has the potential to be negligible. Individual cannabis tax payment amounts are confidential.
ORIGINATED BY:
Planning Department
Police
ATTACHMENT LIST:
Attachment A - Draft Resolution (DOCX)
Attachment B - Planning Commission Resolution 2019-031(PDF) Attachment C - Agreement re: Deferral of Specified Conditions (PDF) Attachment D - Planning Commission Resolution 2021-001(PDF) Attachment E - Planning Commission Resolution 2022-016(PDF) Attachment F - August 15, 2022 Planning Commission (PDF) Attachment G - Planning Commission Resolution 2022-021(PDF) Attachment H - October 3, 2022 Planning Commission Staff Report (PDF) Attachment I - Appeal Form (PDF)
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