Administrative
Report
N.1., File # 24-1534 Meeting Date: 9/17/2024
To: MAYOR AND CITY COUNCIL
From: ELIZABETH HAUSE, COMMUNITY SERVICES DIRECTOR
TITLE
DISCUSSION AND POSSIBLE ACTION ON THE DRAFT CANNABIS REGULATORY ORDINANCE
AND APPLICATION GUIDELINES
EXECUTIVE SUMMARY
On September 6, 2022, the City Council adopted cannabis regulatory ordinances for both inland and coastal areas of Redondo Beach, permitting no more than two storefront commercial cannabis retailers to operate within the City. The Inland Ordinance became effective 30 days after adoption, while the Coastal Ordinance took effect upon certification by the California Coastal Commission on March 9, 2023.
At its December 19, 2023 meeting, the City Council directed staff to engage Tierra West Advisors, Inc. (TWA) to review the final cannabis regulatory ordinances, draft Commercial Cannabis Business (CCB) permitting guidelines, and assist with application processing. TWA’s recommended revisions to the City’s regulatory ordinances were presented at the May 14, 2024 Council meeting, at which time Council provided guidance on several key aspects of the Ordinance.
Attached to this report is an updated draft Ordinance, which reflects Council's direction and incorporates best management practices, as recommended by TWA.
This item offers the City Council an opportunity to review the draft Ordinance and direct staff to make modifications, if desired, and/or prepare the Ordinance for introduction and first reading at a future meeting.
BACKGROUND
The analysis and identification of cannabis regulations most appropriate for Redondo Beach began in 2018 with the appointment of a Cannabis Steering Committee, whose recommendations are attached for Council’s review. Following review by the Planning Commission, and several City Council discussions on this topic, the current Cannabis Regulatory Ordinances were adopted on September 6, 2022. The current Ordinances allow no more than two storefront commercial cannabis retailers to operate in the City.
At the December 19, 2023 Council meeting, portions of the regulatory ordinances and the permit application process were identified as needing further review. At that time, the City Council provided direction to engage TWA to review the City’s existing cannabis regulatory Ordinances and assist with development and review of the cannabis permit application process.
N.1., File # 24-1534 Meeting Date: 9/17/2024
At the May 14, 2024 City Council meeting, TWA presented its recommended changes to the Ordinances, and the Council provided direction in the following areas:
1. Business Types Permitted by Ordinance
· The Ordinance will allow only retail storefront and delivery services, excluding all other types of cannabis businesses
2. Business Relocation After Permit Issuance
· Business relocation will require City Council approval, contingent upon compliance with location and zoning requirements
3. Permit Selection and Appeals Process
· Update current process to limit the top applicants to only five, with Council interviewing and selecting the Permittee(s). Applicants not selected to present to the City Council may appeal the preliminary application rating to the Permit Administrator. Any appeal to the City Council’s selection of Permittee(s) will go through judicial review and remedies
4. Permit Term Length
· A 5-year permit term will be established with the option to renew for an additional two 2- year terms (done by the Permit Administrator); permits that are extended twice administratively may request an extension of up to five years by application to the City Council.
5. Community Benefit Plan in the Application Process
· A Community Benefit Plan will be required, and will include:
a. A description of a social responsibility plan to include identification of a community liaison and plans to aide and participate in the work of local nonprofits, community-based organizations, civic organizations, or social service organizations
b. A description of a plan to develop a public health outreach and educational program that outlines the risks of youth use of cannabis and that identifies resources available to youth related to drugs and drug addiction · The City Council also directed the City Attorney to review these parameters to determine potential risks in including them as part of the application process
6. Retail Cannabis Sales Tax Rate
· The sales tax rate will be 3%
7. Site Selection Requirement
· Applicants must secure a property as part of the permit application process Attached is the draft Ordinance reflecting the Council's direction and incorporating TWA’s recommendations for best management practices. At the December 2023 Council meeting, staff identified several areas of concern with the existing Ordinances, which the attached draft addresses:
1. Alignment of Regulations and Application Process
· The revised Ordinance integrates both cannabis program regulations and application process guidelines, creating a comprehensive framework that minimizes risks of litigation arising from discrepancies between separate documents
2. Appeals Process
· The revised Ordinance includes a clear administrative process for handling appeals
3. Removal of Development Agreement References
N.1., File # 24-1534 Meeting Date: 9/17/2024
· All references to a Development Agreement have been removed Over the past several months, TWA and City staff conducted extensive outreach to other cities to identify best practices and the challenges in cannabis application processing. This information informed the development of the draft Ordinance and was shared with the City Attorney for review.
This item offers the City Council an opportunity to review the draft Ordinance and consider the City Attorney’s feedback on its various provisions. It is recommended that the Council identify any desired revisions and direct staff to prepare the Ordinance for introduction and first reading.
COORDINATION
This agenda item was prepared by the Community Services Department in coordination with the City Attorney’s Office. The Ordinance was drafted by TWA and will be prepared by the City Attorney’s Office in final formatting for adoption.
FISCAL IMPACT
The fiscal impact to the City for CCB application processing and management is unknown at this time, though a fee study in this area will be completed soon. The application fees are expected to provide full City cost recovery for the processing of all license applications, including any related consulting services costs. Preliminary estimates indicate an application fee between $12,000 and $16,000 per applicant, and an annual regulatory fee within the same range for each CCB permittee.
These estimates are expected to change depending on final staff resource allocation.
Notwithstanding the above, staff’s estimate is that each licensed site in Redondo Beach could provide $150,000 to $300,000 in additional annual General Fund cannabis business tax revenue, provided the City moves forward with the adoption of a regulatory ordinance and the tax rate of 3%.
It is difficult to determine at this time what impact taxing cannabis delivery will have on General Fund revenue.
The preparation of the Ordinances, staff report, and community input survey are within the workplan and annual budgets of the Community Services Department, Community Development Department, City Manager’s Office, and the City Attorney’s Office.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Ord - Draft Cannabis Regulatory Ordinance