Administrative
Report
H.7., File # 23-6161 Meeting Date: 6/13/2023
To: MAYOR AND CITY COUNCIL
From: BRANDY FORBES, COMMUNITY DEVELOPMENT DIRECTOR
TITLE
APPROVE AN AMENDMENT TO THE AGREEMENT WITH HINDERLITER, DE LLAMAS, AND
ASSOCIATES, DBA HDL COMPANIES, FOR CONSULTING SERVICES TO ASSIST WITH THE CITY’S PREPARATION OF A CANNABIS ORDINANCE, TAX MEASURE, AND PERMIT SELECTION PROCESS TO EXTEND THE TERM OF THE AGREEMENT TO DECEMBER 31, 2023
WITH NO CHANGE IN THE SCOPE OF WORK OR THE CONTRACT NOT TO EXCEED AMOUNT OF $37,250
EXECUTIVE SUMMARY
The City of Redondo Beach has prepared a draft ordinance regulating commercial cannabis. Per City Council direction, the Planning Commission reviewed the draft cannabis Ordinance at a public hearing held on March 3, 2022. The Planning Commission provided several recommendations at the hearing including that the City engage a consultant with experience evaluating the cannabis industry to help review the City’s Ordinance.
On May 10, 2022 the City Council considered the Planning Commission recommendations and provided direction to staff on the final preparation of ordinances. The Council, as part of that direction, asked staff to prepare an agreement with Hinderliter, De Llamas, and Associates (HdL) to review the City’s draft cannabis regulatory Ordinance and provide any suggestions for improvement, develop a draft cannabis tax ordinance for City Council consideration, assist in the establishment of an application process for future cannabis permits and provide support at public meetings as subject matter experts.
On June 21, 2022, the City Council approved an agreement with HdL for the consulting services related to cannabis management. The Agreement is set to expire on June 30, 2023, and needs to be extended an additional 6 months to complete the work. There is no additional cost or change of scope associated with the proposed amendment.
BACKGROUND
California’s history of cannabis law spans nearly 25 years. The Medical Marijuana Regulation and Safety Act became effective January 2016. In response, Redondo Beach adopted an ordinance for local regulations regarding medical marijuana. Proposition 64 regarding the Adult Use of Marijuana Act was approved in November 2016. Redondo Beach adopted Ordinances to regulate the personal use and cultivation of cannabis, as well as restrict commercial cannabis activities in the City. This was an interim measure to prohibit cannabis businesses until the City could better evaluate what
H.7., File # 23-6161 Meeting Date: 6/13/2023
types of businesses were desired, and what regulations to put in place.
In 2018, Council developed a strategic planning objective that made way for a Cannabis Steering Committee to evaluate best practices, research potential regulations and report back to the City Council. The Cannabis Steering Committee diligently reviewed options and concluded with recommendations to City Council at the October 5, 2021 meeting that prioritize public health and safety, consider a wealth of challenges experienced by other jurisdictions and mitigate/limit potential liabilities against the City implementing a local ordinance. The Steering Committee found that the most responsible approach to local regulations address the immediate concerns and needs of the community, allow the greatest flexibility and local control in regulating and are only expanded after success in the initial implementation.
City Council considered the Steering Committee recommendations at their October 5, 2021 meeting and directed staff to prepare ordinances in line with those recommendations. At the January 18, 2021 meeting, Council finalized the parameters to be evaluated and established the buffers to be included in the Ordinance.
Staff prepared the Ordinances and presented those at a public hearing of the Planning Commission on March 3, 2022. The Planning Commission made recommendations, which City Council reviewed and considered at the May 5, 2022 meeting.
After considering the Cannabis Steering Committee background, City Council direction and the ordinances themselves, the Planning Commission did provide several recommendations in their Resolution. One of the Planning Commission recommendations was to, “Consider engaging a thoroughly vetted and referenced consultant with experience evaluating the cannabis industry to evaluate the Ordinance in its entirety.”
The Agreement includes services for the City to move forward quickly in finalizing the cannabis ordinances and preparing a cannabis tax ordinance. Staff discussed various services with HdL, including:
◦ Review of cannabis ordinances
◦ Preparation of tax ordinance/initiative
◦ Comparatively analyze ordinances and the separate initiative ◦ Develop solicitation and selection procedures
◦ Incorporate cost recovery in process to fund the potential services At the May 10, 2022 meeting, City Council provided direction to engage HdL on their proposed scope of work to include the following:
· Objective 1: Review the City’s Draft Cannabis Regulatory Ordinance · Objective 2: Develop Draft Cannabis Tax Ordinance
· Objective 3: Application Process Development
· Objective 4: Cost Recovery Fee Analysis
· Objective 5: Attendance, Support or Presentations at Meetings or Workshops · Objective 6: Technical Assistance and Subject Matter Expertise
H.7., File # 23-6161 Meeting Date: 6/13/2023
At the request of City Council, staff conducted extensive research on HdL’s history and background and determined that their expertise was of great utility to other municipalities engaging them for similar services (see attached proposal and letter). HdL has worked with over 175 cities and counties on cannabis policies and revenue strategies. In the last seven years alone, HdL has prepared or assisted in the development of 84 out of the 121 cannabis measures in California. They are also currently working on cannabis tax measures for 4 counties and 7 cities, including Los Angeles County and the City of El Segundo. HdL works solely with public agencies and has no private sector clients in the cannabis industry.
The initial draft cannabis license application process was presented to City Council on May 16, 2023.
Additional work to revise the process, per Council direction, is underway. HDL’s approved scope of work with the City is therefor still in progress and requires an extension in term to complete.
COORDINATION
The proposed amendment was coordinated with the City Attorney’s Office and the City Manager’s Office.
FISCAL IMPACT
Funding for the additional services is immediately available in the annual operating budget for Community Development under contracts and professional services. It is anticipated that a majority of the expenses will be reimbursed through future cannabis permit processing fees.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Agmt - First Amendment Hinderliter, De Llamas, and Associates for Cannabis Management · Agmt - Original Agreement Hinderliter, De Llamas, and Associates, June 21, 2022