C I T Y O F R E D O N D O B E A C H
C I T Y C O U N C I L M E E T I N G
Cannabis Regulatory Ordinance Review
D I S C U S S I O N A G E N D A
1. Review direction from May 14, 2024 Council Meeting
2. Review the following sections of the draft ordinance:
• Application Scoring Method
• Appeals Process
• Appeals Timeline
3. Direction on any other sections of the regulatory
ordinances or CCB application process criteria the Council wishes to add, affirm, or remove
D I R E C T I O N F R O M M A Y 1 4 , 2 0 2 4 M E E T I N G Item Ordinance Language Options TWA Recommendation Council Decision Cannabis business types
included in ordinance
Included the cultivation,
possession, manufacture,
distribution, processing,
storing, laboratory testing,
transportation, distribution,
delivery or sale of cannabis
and cannabis products
i. Keep current language; or
ii. Craft the Ordinance to only
allow retail storefront and retail
delivery, specifically excluding all
other types of cannabis
businesses
ii. craft the Ordinance to only allow
retail storefront and retail delivery,
specifically excluding all other types
of cannabis business
Agreed with TWA
Recommendation
Length of CCB Permit None i. 5-year term with option to renew; or
ii. Any other term length
i. 5-year term, option to renew for
an additional two 2-year terms
(done by the Permit Administrator);
permittees may then request an
extension of up to five (5) years by
application to the City Council
Agreed with TWA
Recommendation
Requiring property as
part of application
Whether or not Applicants
have obtained a property
for the purposes of their
commercial cannabis
business prior to their
selection, shall have no
bearing on their selection.
i. Maintain current language, with
property attainment NOT
required, or
ii. Require a property be attained
as part of the permit application
process
ii. Require a property be attained as
part of the permit application
process
Agreed with TWA
Recommendation
D I R E C T I O N F R O M M A Y 1 4 , 2 0 2 4 M E E T I N G Item Ordinance
Language
Options TWA Recommendation Council Decision
Community
Benefit Plan
Required Community
Benefit Plan
i. Keep current language; or
ii. Include it in the scoring rubric with the purpose
of capturing intent of the applicant to contribute
to the community, while also including a
percentage or minimum contribution amount
atop the sales tax, or
iii. Eliminate this item from the scoring rubric
altogether and fold the percentage into the tax
rate (i.e. instead of 7% sales tax rate plus 1% or
$XX it would just be an 8% sales tax rate)
iii. Eliminate this item from
the scoring rubric altogether
and fold the percentage into
the tax rate
Did NOT agree with TWA
recommendation.
Community Benefit Plan
remains in scoring rubric
with new parameters.
Directed City Attorney to
review.
CA’s opinion is that
although we can keep CBP
in and possibly enforce it
contractually, it is VERY
difficult to score and will
almost certainly lead to
litigation.
D I R E C T I O N F R O M M A Y 1 4 , 2 0 2 4 M E E T I N G Item Ordinance
Language
Options TWA Recommendation Council Decision
Community
Benefit Plan
Required Community
Benefit Plan
i. Keep current language; or
ii. Include it in the scoring rubric with the purpose
of capturing intent of the applicant to contribute
to the community, while also including a
percentage or minimum contribution amount
atop the sales tax, or
iii. Eliminate this item from the scoring rubric
altogether and fold the percentage into the tax
rate (i.e. instead of 7% sales tax rate plus 1% or
$XX it would just be an 8% sales tax rate)
iii. Eliminate this item from
the scoring rubric altogether
and fold the percentage into
the tax rate
Did NOT agree with TWA
recommendation.
Community Benefit Plan
remains in scoring rubric
with new parameters.
Directed City Attorney to
review.
CA’s opinion is that
although we can keep CBP
in and possibly enforce it
contractually, it is VERY
difficult to score and will
almost certainly lead to
litigation.
R I S K O F L I T I G A T I O N
• Potential Value of License/Incentive to Appeal and Litigate : The potential value of each commercial cannabis retail permit could in excess of $100 million over the life of the permit (including extensions). Thus the incentive for any unsuccessful to appeal and litigate the process is very high. • Litigation can Arise from Many different Steps in the Process:
⚬ The language of the Ordinance
⚬ Failure to follow the process as written
⚬ Bias of the City staff or the City Council
⚬ Mistake in the grading of unsuccessful applicants
⚬ Mistake in the grading successful applicants
⚬ Improper and unfair appeal process
⚬ Delay in allowing the successful applicants to move forward R I S K O F L I T I G A T I O N - C o m m u n i t y B e n e f i t P l a n • Community Benefit Plan: Although we can keep CBP in the scoring rubric, and possibly enforce it contractually, it is VERY difficult to score and will almost certainly lead to litigation. • Current Litigation - FEAH, LLC vs. The City of El Monte: The City won but it is currently on appeal (case #B334407) and the Respondent’s Brief (City) is not due until October. Thus, we will not know the ultimate outcome before the Council adopts our Ordinance. The Judge although ruling in favor of the City had criticism for how the City scored the process. The city staff member who handled the scoring of the CBP said the applicants’ submittals were “apples and oranges” especially in the Community Benefits Plan. • TWA is not aware of cities that have enforced the provisions of their CBP and attempts to do so may well be challenged as “pay for play”.
• Litigation over a CBP may well delay the process of opening dispensaries. ⚬ Therefore TWA. City Staff, and the City Attorney all recommend eliminating this item from the scoring rubric altogether and fold the percentage into the tax rate Improper and unfair appeal process D I R E C T I O N F R O M M A Y 1 4 , 2 0 2 4 M E E T I N G Item Ordinance
Language
Options TWA Recommendation Council Decision
Final Selection
of Permittees
CM or designee
present to the City
Council the top
Applicants (no set
number of
applicants).
Council then
interviews all the top
applicants and makes
the final
determination on who
receives the permit(s).
i. Keep current language and process; or
ii. Shift final permittee selection to the Permit
Administrator (City Manager or designee), or
iii. Update current process to limit the top
Applicants to only five (5) applicants, with Council
interviewing and selecting the Permittee(s).
iii. Update current process to
limit the top applicants to
only five (5), with Council
interviewing and selecting the
Permittee(s).
Agreed with TWA
Recommendation.
City Attorney is concerned
with the current complete
lack of judging standards
for the City Council to
make its selection.
D I R E C T I O N F R O M M A Y 1 4 , 2 0 2 4 M E E T I N G Item Ordinance
Language
Options TWA Recommendation Council Decision
Final Selection
of Permittees
CM or designee
present to the City
Council the top
Applicants (no set
number of
applicants).
Council then
interviews all the top
applicants and makes
the final
determination on who
receives the permit(s).
i. Keep current language and process; or
ii. Shift final permittee selection to the Permit
Administrator (City Manager or designee), or
iii. Update current process to limit the top
Applicants to only five (5) applicants, with Council
interviewing and selecting the Permittee(s).
iii. Update current process to
limit the top applicants to
only five (5), with Council
interviewing and selecting the
Permittee(s).
Agreed with TWA
Recommendation.
City Attorney is concerned
with the current complete
lack of judging standards
for the City Council to
make its selection.
D I R E C T I O N F R O M M A Y 1 4 , 2 0 2 4 M E E T I N G Item Ordinance
Language
Options TWA Recommendation Council Decision
Setting tax rate None yet selected,
though Council has ability
to choose from range of
3%-9%
i. Any tax rate between 3-9%, or
ii. A sales tax rate that incorporates the
community benefit aspect of the cannabis
business program
ii. A sales tax rate that
incorporates the community
benefit aspect of the cannabis
business program; TWA
recommends a sales tax rate of
8% (7% sales tax, 1% dedicated to
Community Benefit Fund)
Set the rate at 3%
Allowing
permittees to
relocate after
permit
reissuance
Allows relocation with
application to Council
i. Keep current language; or
ii. Expand and better define how approval for
relocation is attained, and have approval of the
new location to be at the discretion of the
Permit Administrator, given compliance with
location and zoning requirements; or
iii. Expand and better define how approval for
relocation is attained, and have approval of the
new location to be at the discretion of the City
Council, given compliance with location and
zoning requirements
ii. Expand and better define how
approval for relocation is attained,
and have approval of the new
location to be at the discretion of
the Permit Administrator, given
compliance with location and
zoning requirements
iii. Expand and better
define how approval
for relocation is
attained, and have
approval of the new
location to be at the
discretion of the City
Council, given
compliance with
location and zoning
requirements
A P P L I C A T I O N S C O R I N G M E T H O D
• Current Language : “An application evaluation committee composed of at a minimum three individuals with demonstrated experience in city government with no business interests in the City of Redondo Beach shall be appointed by the Permit Administrator to review and score any complete applications pursuant to the following objective review criteria, according to the following quantitative evaluation scale that holds a total criteria value of 1,000 points. Each application will be independently scored by the evaluation committee members.” “The top five (5) rated applicants will be invited to give a ten (10) -minute presentation before the City Council for consideration of award of Commercial Cannabis Retail Permit. The City Council will select up to two (2) of the top five (5) rated applicants for the award of a Commercial Cannabis Retail Permit. • Options available to Council:
⚬ i. Keep current language; or
⚬ ii. Consider making the application scoring ministerial, with applicants either passing or failing each question; once it reaches Council, the same categories will be expanded to capture the value of each category and Council will use that as a scoring matrix.
*also to consider, increasing presentation time from minutes.
A P P E A L S P R O C E S S
• Current Language : Requires clarification
• "Hearing officer" means the Permit Administrator or designee, who shall preside over administrative hearings. • “An Appointed Hearing Officer, as set forth by City Council Resolution, will hear appeals….” • Options available to Council:
⚬ i. Have a Hearing Officer, appointed by the Permit Administrator; or ⚬ ii. Have an Appointed Hearing Officer, appointed by the City Council.
A P P E A L S T I M E L I N E
• Current Language : “Upon receipt of a timely filed appeal, the City Clerk shall set the matter for hearing before the Permit Administrator. The hearing shall be held not fewer than 15 calendar days and not more than 30 calendar days from the date of the appeal request. The hearing may be continued from time to time upon the mutual consent of the parties.
The appellant shall be provided with notice of the time and place of the appeal hearing, as well as a copy of all relevant materials at least 15 calendar days prior to the hearing.” • Options available to Council:
⚬ i. Keep current language; or
⚬ ii. Adjust timeframe to allow additional time to process appeals.
3. Direction on any other sections of the
regulatory ordinances or CCB application
process criteria the Council wishes to add,
affirm, or remove.
C I T Y O F R E D O N D O B E A C H
C I T Y C O U N C I L M E E T I N G
Commercial Cannabis Ordinance Review