BLUE FOLDER ITEM
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CITY COUNCIL MEETING
OCTOBER 15, 2024
N.3 DISCUSSION AND POSSIBLE ACTION ON THE CITY’S DRAFT CANNABIS REGULATORY
ORDINANCE
DIRECTION ON THE APPLICATION SCORING AND SELECTION PROCESS SECTIONS OF
THE ORDINANCE
CONTACT: ELIZABETH HAUSE, COMMUNITY SERVICES DIRECTOR
• COMMUNICATIONS FROM CANNABIS RETAILERS
-----Original Message-----
From: Myles Peck
Sent: Sunday, October 13, 2024 9:21 PM
To: James Light <[email protected]>; Nils Nehrenheim <[email protected]>; Todd Loewenstein <[email protected]>; Paige Kaluderovic <[email protected]>; Zein Obagi <[email protected]>; Scott Behrendt <[email protected]>; Michael Webb <[email protected]>; Eleanor Manzano <[email protected]>; Elizabeth Hause <[email protected]>; City Clerk Records <[email protected]> Cc: Robin Eisenberg David Rosenfeld
Subject: Suggestions for Cannabis Guidelines
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Dear Mayor, Council, City Manager, Staff, City Attorney, and City Clerk, I have attached a letter from Supreme Retail addressing concerns regarding the current cannabis retail application guidelines. We have outlined proposed revisions aimed at creating a more equitable and inclusive process for all applicants.
Thank you for your time and attention to this matter. Please feel free to reach out to me if you have any questions or need more information.
Best regards,
Myles Peck
Founder/CEO
Supreme Retail
October 13, 2024
Dear Council, City Manager and Staff, City Attorney and City Clerk, Per the Mayors request at the last council meeting, I am writing to address the proposed guidelines, specifically regarding the experience and qualifications of applicants for cannabis retail licenses.
Our company, Supreme Retail, is a newly formed partnership comprised primarily of principals with extensive experience in the cannabis retail industry. We have successfully owned and operated nine retail locations across California, eight of which were acquired by a publicly traded company in 2022. Additionally, one of our principals currently serves as the Founder and Chairman of the Board for Native Roots, one of Colorado's largest retail chains, overseeing 20 high-revenue stores. I myself was a partner and the Chief Operating Officer of our former California chain.
Our A team (our A-team) consists of operational experts with strong personal and business roots in and around Redondo Beach. My wife’s family, also partners in our new entity, has owned the property (our proposed location) at 1002 South Pacific Coast Highway for over 50 years and operated Supreme Paints, a family-owned business, for decades. Furthermore, we have partnered with other local community members, including the iconic Dennis Jarvis of Spyder Surfboards in Hermosa Beach, to ensure we meet the needs of Redondo Beach and the surrounding area.
These factors uniquely position us to contribute to the cannabis market and deeply understand the local community in Redondo Beach. However, the current application guidelines— specifically Section 1, Number 1 of Qualifications of Applicants’ Owners and Managers—and several other criteria effectively allow only larger chains with currently operating stores to compete. These guidelines present barriers to small entities and favor larger, established retail chains over newly formed independent operators like ourselves, who possess the same, if not more, experience and access to capital as larger chains. Supreme Retail is not the only company facing this issue.
SUGGESTED REVISIONS TO GUIDELINES
To create a more equitable application process that accommodates both established large retail chains and independent operators, we propose the following adjustments to the guidelines. We respectfully request the removal or revision of the following points to better reflect the capabilities of independent operators:
1. Section 1, Criteria 1
o Original: Applicant must demonstrate cannabis retailer operations and ownership in California, with taxable gross sales of $3,000,000/year generated by at least one retail, storefront location.
o Proposed Revision: Applicant must demonstrate principals’ cannabis retailer operations and ownership within the past four years in California, and/or other states, with taxable gross sales of $3,000,000/year generated by at least one retail storefront location.
2. Section 1, Criteria 4
o Original: Applicant must provide the total taxable gross sales for their highest-grossing retail location in California. Scale of taxable gross sales for this single location will be scored progressively ($3,000,000 and above), with additional points awarded for every $1 million demonstrated, up to a maximum of 20 points.
o Proposed Revision: Remove this criterion, as revenue is not a sole indicator of a successful operator. Revenue is dependent on market conditions, including the size of the store, the number of licenses held, location, and demographics. There are operators who generate high gross revenue but may not manage their stores effectively. This criterion disadvantages smaller and emerging businesses, who qualify under your Criteria 3, and unfairly favors large operating chains.
3. Section 1, Criteria 5
o Original: Applicant must provide a description of their local experience and community involvement, highlighting their connections to the local community and any prior civic engagement. This shall include evidence of how the applicant has fulfilled the commitments outlined in Community Benefit Plans submitted to other cities. o Proposed Revision: The description should reflect past or present involvement of company’s principals’ stores in California or other states as well as demonstrate any recent or current community engagement within the City of Redondo Beach.
4. Section 1, Criteria 6
o Original: Applicant shall provide the total taxable gross sales and net profit for their first three years of operation at their highest revenue location. o Proposed Revision: Remove this criterion or revise it to: Applicant shall demonstrate principals ability to manage high-revenue locations through the submission of letters or testimonials, tax documentation, and/or sales reports from past or present stores of principals in California and/or or other states. Combining multiple forms of evidence will provide a robust and credible representation of the company's capabilities while allowing new entities with principals who met the criteria in other cannabis entities, past or present.
5. Section 3
o Original: Applicant must provide audited financial statements for at least three (3) years of operation.
o Proposed Revision: Eliminate the requirement for audited financial statements for the past three years of operation, as this criterion does not enhance the evaluation of owner qualifications and imposes unnecessary barriers on smaller, experienced operators.
6. Section 4, Criteria
o Original: Applicant must provide proof of General Liability Coverage with a minimum coverage of $2,000,000 and Workers' Compensation Insurance with a minimum coverage of $1,000,000.
o Proposed Revision: Applicants with new entities having no assets or employees yet cannot provide policies and coverage; allow applicant to submit a letter from a licensed insurance broker confirming that the necessary policies with this coverage amount will be obtained once assets and employees are in place.
By implementing these revisions, the application process will become more inclusive, allowing experienced independent operators to compete on a level playing field with established large retail chains.
The application process is competitive, every criterion is pivotal. Therefore, it is crucial that the guidelines uphold fairness and equity for all participants. We appreciate your consideration of these suggestions and look forward to contributing to the successful cannabis community in Redondo Beach.
Sincerely,
Myles Peck
Founder/CEO
Supreme Retail
From: Tak Sato
To: CityClerk; Eleanor Manzano
Cc: Stephanie L. Uy
Subject: Comment For 10/15 City Council Meeting
Date: Thursday, October 10, 2024 3:29:52 PM
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Dear Redondo Beach City Clerk,
Please see public comment below regarding City Council’s 10/15 discussion on the Cannabis Dispensary License Process to be included in the records:
Dear City of Redondo Beach,
Stiiizy has been actively engaged with the City of Redondo Beach and its constituents regarding cannabis the past 2 years. During the last City Council meeting discussion about cannabis, a few speakers expressed the opinion that an operator’s historical revenue numbers should not be taken into account in the scoring of an applicant. One speaker noted that high revenues could be from luck or having the right location.
I strongly disagree. While location does influence a cannabis store’s revenue, the key driver of a store’s revenue is its ability to attract and manage a large number of customers. Similar to any other industry, cannabis customers are more comfortable purchasing at brand stores that they trust and are familiar with. Second, customers also are more likely to shop at stores that are prepared to have a large number of customers with the proper amount of employees and large inventory levels so that customers can quickly complete their purchases for their desired products. At Stiiizy, our Downtown Los Angeles store and our Pomona store each exceeded $30 million dollars in sales the last two years. This is despite Downtown Los Angeles being the most saturated cannabis market in California with 11 licensed dispensaries and dozens of unlicensed dispensaries within 5 square miles.
I believe our brand’s popularity and our ability to provide the best customer experience even during the busiest periods are the two main reasons for the high revenue of our stores. Much like a Trader Joe’s or a Starbuck’s, customers come to our store because they trust our products and the customer experience they have become familiar with. In order to ensure Redondo Beach receives substantial amounts of cannabis tax revenue, picking operators with a history of operating high revenue stores is paramount. A company cannot be expected to have high revenue in Redondo Beach if they have not proven the ability to do so in other cities. I therefore respectfully encourage the City to retain a scoring system where applicants are awarded points based on already operating high revenue stores.
Respectfully,
Tak Sato
President of STIIIZY
Tak Sato
President
(310) 488-5707
STIIIZY Inc.
You don't often get email from [email protected]. Learn why this is important Cc: Samuel Jurist <[email protected]>; Rob Merkelbach <[email protected]> Subject: Hashery LLC Recommendations of Redondo Beach Cannabis Application CAUTION: Email is from an external source; Stop, Look, and Think before opening attachments or links.
Dear City Council of Redondo,
Hashery LLC appreciates the opportunity to make a few comments about the ongoing retail cannabis application process. Between our various companies, most notably Hashery LLC and SHO Companies, we think we may be able to provide some helpfulness with our experience in many aspects of the cannabis industry. With business operations that include retail, manufacturing, distribution, and an ancillary business, we have been able to observe various questions that are more relevant than others during many application processes.
There are a few points we would like to bring to the City Council’s attention.
It is not specific in the application, but it should be understood that likely all applicants will need to create a new entity for their retail operation within Redondo. This separates liability, investors, cannabis operations etc. from existing businesses under the same management/ownership umbrella. This new entity clearly would not have any history of operation. Section (1) does refer to Applicant’s Owners and Managers, and we would assume all questions in other sections about financials, experience, etc. would extend to our current businesses we own and manage.
Section (1)a. Up to 100 points - demonstrates cannabis retailer operations and ownership in California, that has taxable gross sales of $10,000,000/year per store.
Hashery LLC finds this qualification as well as the points attached to it to be out of line with the intention of the City Council. The City Council is certainly trying to find qualified individuals who run a profitable retail cannabis business. They are also trying to find individuals that have experience running cannabis operations within the State of California.
The specifications of requiring cannabis retail experience, the monetary sum, and that same business to be conducted in California, would exclude many businesses from the pool of applicants you are trying to reward. For example, we are currently a cannabis manufacturer, distributor, and ancillary company within the State of California. We previously have owned a cultivation business in California. Currently, our retail dispensary Hashery in Hackensack, NJ has well over $10,000,000 in taxable gross sales a year. Our qualifications operating a retail dispensary and our involvement in the California cannabis industry our second to none. The fact that we can prove success as a retail operator, as well as our cannabis experience in California, should more than qualify us for all the points this section should offer. The way this is currently is written does not, retail experience in any state should qualify the intent.
Another pertinent point Section (1) does not address is length of ownership in the cannabis industry. Many people have come and gone, obviously some being more successful than others. Being able to show staying power within the industry should be of importance. You want to partner with someone that you know will be invested in the community/business for the long-haul.
Section (2)e. Up to 10 points – A conceptual landscape plan with the percentage of landscaping in the parking lot, setback areas, and tree size and species.
We find this qualification to be unneeded and not in the control of actual businesses. If leasing, this is something that the business cannot do anything about. One should not be docked points for whatever landscaping plan their landlord may have in place, or what they may have planned for the future.
Section (3)c. Up to 15 points – A budget for construction, operation, maintenance, compensation of employees, equipment costs, utility costs, and other operating costs.
There should be more points awarded to this. This is a great way to understand who has a real concept of what this project will entail. Groups that put time and effort into this point should stand out as people realistic and capable of completing this project.
Section (3)d. Up to 10 points – A description of the sources(s) of capital and use(s) of capital.
Companies should have to provide proof through banking means such as, letter of credit, bank statements from their operating businesses, private accounts. You do not want a capital raise holding up the opening of the Redondo retail business. Businesses should be able to prove funds that were set out in their budget/pro forma.
Section (3)e. Up to 10 points – Pro forma financial statements for at least three (3) years of operation.
This should be granted more points. Individuals who have experience in this field have thoughtful and realistic projections. They have a basis of which to plan around, and understand the cash flow needs to get through a couple of years in a new cannabis retail business. We would hope the City Council would add more points to thoughtful consideration of the business’s finances. Simply putting together a proforma with unrealistic projections should not qualify applying businesses.
Section (6)a. Up to 75 points – A “Good Neighbor Policy” that (1) includes policies and measures in place to protect adjacent uses from any potential impacts (e.g., noise, light, odor, traffic, etc.) related to the proposed cannabis retailer, including addressing parking and traffic impacts These are a lot of points for a traffic plan. Being involved in many applications, this is at times duplicated and redundant. We do find that no available parking, either public or a private lot, can be a detriment to certain individuals within a town. The plan should address this need, but a full traffic survey is usually not needed and the points given seem out of proportion with the rest of the application.
Thank you for taking the time to read some of our thoughts and insights. As individuals who have been in the cannabis business in California for a long time, we greatly look forward to the opportunity to apply for a retail operation in Redondo. We have been very selective about the projects and businesses we launch, and can’t be more excited about the community of Redondo and the individuals in it.
Thanks,
Hashery
Leonard Coleman
Sam Jurist
Dear Mayor Light, Honorable City Council members and City Clerk Ms.
Manzano:
Please see attached comments from Sweet Flower in connection with the legal cannabis retail selection process in Redondo Beach. We wish to commend City staff on their diligence and excellent work, and the City Council on progressing the legal cannabis store-front retail ordinance.
We look forward to further dialogue on this important topic.
My best,
Tim
Timothy Dodd
CEO/Co-Founder
SweetFlower
10000 Culver Blvd
Culver City, CA 90232
Cell: 3109952299
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Sweet Flower
10000 Culver Blvd.
Culver City, CA 90232
October 10, 2024
Redondo Beach City Council
415 Diamond Street
Redondo Beach, CA 90277
Setting the Standards for Cannabis Retail in Redondo Beach Dear Members of the Redondo Beach City Council:
Sweet Flower commends the City of Redondo Beach for establishing the City’s legal cannabis retail program and for the diligence of City staff and council members in pursuing an optimal process.
We understand the City is committed to a program and process that reflects Redondo Beach’s values of trust, transparency, and community well-being, and provides meaningful revenue generation for the City, creating opportunities for local employment, local business partnerships and local development.
Well-run legal cannabis retailers provide significant community benefits, deepen community engagement in the communities they serve, force out illegal or grey-market cannabis and hemp operators, and improve security, public safety, neighborhood awareness and quality of life in the localities in which they operate.
As a deeply involved and engaged owner, operator and developer in the Southern California legal cannabis retail industry since the advent of legal cannabis, I have witnessed and helped create these positive community impacts firsthand.
As CEO and owner of Sweet Flower, I am proud of the work that Sweet Flower has done in the communities we serve across California, the trust we have established as a partner with the cities, communities and regulators with whom we work daily, at both a state and local level, and of our reputation for operational excellence and deep community engagement. And I have personally attended and participated in multiple community events in Redondo Beach and several council hearings on this matter. I have also provided public comment on this topic on multiple occasions in the past and welcome the Mayor’s invitation to provide deeper feedback on the process today.
Sweet Flower has successfully navigated complex merit-based applications across California, in Pasadena, Culver City, Chico, and Fresno, in addition to directly owning and operating multiple retail licenses in the City of Los Angeles, without incident or complaint. Sweet Flower hires locally and we give back to our communities meaningfully. Since our inception, we have contributed over $300,000 to over two dozen local charities in the communities we serve, supporting causes related to under housing, food insecurity, and improving local quality of life, in addition to tens of millions of sales, excise and local tax dollars.
Having been successful in the most competitive, stringent and complex merit based processes in the state, and now being a valued partner to cities and regulators across the state, we are happy to share for your consideration some perspectives and recommendations on how best to build a merit-based application process to further the goals and objectives of the City of Redondo Beach.
We concur with Councilmember Loewenstein’s comment last Tuesday night – “Past is Prologue.” 2 To achieve these goals, we believe it is critical to evaluate applicants based on their track record of actual ownership and hands-on operations (and not aspirations) in other cities where they operate, on demonstrable accountability, both corporate and personal, and on their ability to uphold the City’s values and operate as responsible, engaged members of the community.
Accordingly, the recommendations below are split into three sections: (1) a restatement of key values that we believe the City of Redondo Beach should look towards, (2) a detailed proposed scoring matrix, including proposed weightings, and (3) a section of other considerations and comments, for review.
This is provided for your consideration with one objective in mind - to ensure that selected operators demonstrate the highest standards of integrity, operational excellence, compliance, financial responsibility, community alignment and neighborhood compatibility to the City and broader community of Redondo Beach.
Section 1 - Key Values Redondo Beach Should Prioritize:
1. Trust and Transparency in Operations
The cannabis industry is one of the most highly regulated industry sectors in California. Operators who prioritize trust and transparency are more likely to conduct business in a manner that upholds public confidence and promotes safe, compliant operations. Trust and transparency manifest through open communication with local and state regulators, accurate record-keeping, adherence to all applicable regulations, and honest interactions with the community.
Why This Matters:
Trustworthy operators minimize the risk of violations, support public safety, and build positive relationships with the community and regulatory authorities. A transparent business is better equipped to address concerns and operate in a manner that is consistent with the expectations of Redondo Beach residents and stakeholders.
What to Look For:
• A proven track record of compliance with local and state regulations. • Detailed and transparent operational plans that outline procedures for ensuring compliance, risk management, and ethical business practices.
• A history of proactive communication and engagement with regulators, demonstrating a commitment to operating openly and honestly.
2. Accountability at the Ownership Level
The ultimate responsibility for the business’s operations, compliance, and impact on the community rests with its individual Owners. When Owners are directly involved in the business, they can be held accountable for decisions, operations, and community relations. Accountability means having individuals at the ownership level who are responsible, engaged, and committed to ensuring the business’s success aligns with the community’s values and expectations. Legal cannabis retail is the type of business that requires active Owners who are hands-on, who live or work close to the business, and who are accountable to all the constituents they serve (neighbors, customers, city staff, and regulators); legal cannabis retail does not work well when Owners are passive, are geographically remote, or are not accountable or accessible.
Why This Matters:
3 Direct involvement from Owners reduces the likelihood of absentee management or passive investment strategies that can lead to non-compliance or unethical business practices. When Owners are actively engaged, they can respond swiftly to any issues, ensuring that the business remains a positive force in the community.
What to Look For:
• Owners who are named on the licenses they claim to hold and for the businesses they claim to be engaged in, and who are actively involved in the business and in day-to-day operations. • Ownership structures that are straightforward, clear, transparent and non-opaque, and reflect a commitment to long-term investment in the business.
• Owners with a history of positive engagement in their own business’s operations, regulatory adherence, and community involvement.
• Owners who are geographically proximate to the location, are personally committed to the success of the business, and have a track record of accountability.
3. A History of Strong and Compliant Operations
Compliance with regulations starts “at the top,” and is not just about avoiding penalties—it is a direct reflection of the Owners’ and the business’s commitment to operating ethically and responsibly. A strong compliance record indicates that the Owners and the business have the personal and institutional knowledge and systems in place to adhere to complex regulatory requirements, ensuring that they operate safely and within the bounds of the law.
Why This Matters:
A business with a demonstrated history of compliance reduces the likelihood of enforcement actions that could disrupt operations and negatively impact the community. Redondo Beach should prioritize applicants who have demonstrated their ability to operate under current legal frameworks, showing a consistent commitment to high standards and ethical practices.
What to Look For:
• A compliance record free of serious violations, infractions, or unresolved issues. • Evidence of corrective actions taken promptly in response to any compliance issues. • A commitment to maintaining high standards of compliance through regular training, participation in industry best practices, thorough and detailed Standard Operating Procedures and proactive risk management.
4. A Shared Commitment to the Community of Redondo Beach Cannabis businesses should not only comply with regulations but also actively contribute to the communities in which they operate. A shared commitment to the community means engaging with local residents and businesses, supporting local initiatives, and contributing to the social and economic fabric of the City of Redondo Beach. A positive presence in the community helps build trust, reduce stigma, and create a mutually beneficial relationship between the business and its neighbors.
Why This Matters:
A business that prioritizes community engagement is more likely to be viewed as a positive addition to the neighborhood, supporting local needs and addressing concerns proactively. This type of engagement fosters a sense of partnership between the business and the community, leading to a more harmonious relationship and reducing the risk of community opposition. 4 What to Look For:
• Active participation in local events, charitable contributions, and support for community programs.
• A well-developed Neighborhood Compatibility Plan that outlines how the business will engage with and support Redondo Beach residents and businesses. • A commitment to maintaining open communication and being responsive to community concerns and needs.
• A detailed Community Benefits Plan, demonstrating effective integration into the local community and awareness of the issues and concerns of that community. • A prior track record of “doing,” over aspirational statements or just “saying.” To that end, has the business followed through on its commitments to the communities it serves elsewhere, or were past commitments made with qualifiers? For example, when an operator pledges to give back a percentage of its sales to the communities it serves, was that pledge satisfied by actual dollars donated, or merely by “in kind” contributions of employee volunteer hours?
5. Effective Business Operations and Revenue Generation A cannabis business that incorporates trust, transparency, accountability, and community engagement is not just a good community partner—it is also a successful financial enterprise. Effective business operations and revenue generation are indicators that the business is well-managed, stable, and capable of contributing positively to the local economy. Financial success, when coupled with responsible business practices, supports long-term sustainability and provides economic benefits to the community.
Why This Matters:
Financially successful businesses are better able to contribute to the community, support their employees, and invest in compliance and operational excellence. Redondo Beach should select businesses that have a track record of operational success, the wherewithal to launch and sustain their business in Redondo Beach, and a well-defined plan for achieving sustained growth and profitability.
What to Look For:
• A history of operational success that complies with regulatory requirements. • Financial stability and resources to support long-term business operations and investments in community initiatives.
• A clear, well-developed business plan that prioritizes both profitability and community engagement.
Section 2. Proposed Scoring Rubric
We set out below a proposed scoring rubric enumerating ten specific areas of review and assessment for potential cannabis retail operators in the City of Redondo Beach.
We believe this is tailored to the specific values, goals and objectives of the program as expressed directly to us by the many Redondo Beach residents we have meet with in numerous community meetings we have held in the City, and by the City of Redondo Beach council in the public discussions we have participated in since deliberations on this matter commenced.
For ease, the total scoring matrix is 1000 points, and we have focused each section on what we believe are the most important aspects of each section for review; we have tried to avoid being prescriptive in each section, leaving room for executive judgement and administrative discretion. 5 Section 1: Owner Qualifications and Experience (150 points) Description:
The individual Owners of a cannabis business bear the primary responsibility for ensuring compliance, fostering community engagement, and overseeing operations. This section evaluates the Owner-level experience in California’s regulated cannabis market, the number of successfully managed licensed locations, and the compliance history and track record of the business under these Owners.
The emphasis is on Owner applicants with a proven record of compliance, hands-on operations, accountability, demonstrated success and an understanding of the unique regulatory landscape since January 1, 2018, with the inception of legal cannabis retail in California under Medicinal and Adult Use Cannabis Regulation and Safety Act (MAUCRSA)1.
Criteria for Scoring:
1. Qualifications of Owners
Points are awarded based on Owner-level qualifications, including experience in cannabis retail operations since January 1, 2018, and in launching new cannabis retail or general retail stores, or in relevant professional fields, such as general management and operations, finance, retail marketing, retail operations, business, strategy, law, compliance or human resources. Points awarded also consider professional qualifications, degrees, and, where relevant, awards and recognition at a community or industry level.
2. Prior Experience as an Owner in the Legal Cannabis Retail Industry (Post-2018) Points are awarded based on the total years of Owner-level experience in the legal cannabis industry since January 1, 2018 AND on the level of engagement and depth of experience demonstrated during those years, with extra points for active and hands-on engagement in retail operations, compliance and business. Experience prior to this date should be disregarded or discounted (under prior pseudo-regulatory schemes no longer relevant). Experience in other fields, such as cannabis distribution, cultivation or manufacturing should also be discounted (not directly applicable to cannabis retail). Experience as a non-Owner (i.e. consultant, advisor or lobbyist) is either irrelevant or discounted – depending on circumstances, may be relevant in Section 2 – Non-Owner Management (next), but this Section is focused on the proposed Owner’s experience as an Owner.
3. Number of Licensed Retail Locations Operated (Including Past and Present) Points are awarded for the total number of licensed retail cannabis locations currently owned and operated by the Owner in California. California retail licenses where a proposed Owner claims an interest or a level of involvement but is not listed as an Owner by the Department of Cannabis Control, or as a director or officer of the direct ownership entity of the license, should be disregarded. Again, experience as a non-Owner (i.e. consultant, advisor or lobbyist) is either irrelevant or discounted.
4. Compliance Record of the Owner
1 “Owner” is defined in the Ordinance as: "Owner" means any of the following:
(a) All persons identified as an "owner" on any permit, license, or other authorization issued by a state agency or local government which authorizes the persons to establish and operate the cannabis facility.
(b) Any person identified or required to be identified as an "owner" on an application filed with any state agency and any local government, wherein the application requests the privilege to operate the cannabis facility.
(c) An Owner is further defined as follows:
(1) A person who has any ownership interest in the corporate entity, partnership, or other business entity applying for a permit or a permittee, regardless of percentage of ownership; unless the interest is solely a security, lien, or encumbrance.
(2) The chief executive officer of a nonprofit or other entity. (3) A member of the board of directors of a nonprofit.
(4) An individual who will be participating in the direction, control, or management of the person applying for a permit. 6 Evaluation based on the demonstrated compliance history of the businesses that the Owner owns/operates across all currently and previously operated cannabis businesses, including the number and severity of any violations and the promptness of corrective actions.
5. Community Engagement and Contributions
Assessed based on the Owner’s involvement in past local community initiatives, participation in social equity programs and in the cannabis industry as a whole and contributions to community well-being across the Owner’s other legal cannabis retail businesses in other cities and communities.
6. Owner’s level of accountability and engagement
Assessed based on the Owner’s operational commitment to the business, and their accountability and responsibility to the business. Level of involvement to date in Redondo Beach, geographic proximity to the business, and commitment to involvement at an operational level going forward.
Section 2: Management Team and Non-Owner Experience (100 points) Description:
Established cannabis retailers will have a non-Owner management team that contribute significantly to the business’s success; the management team’s qualifications and experience play a critical role in executing the Owner’s vision and maintaining the operational integrity of the business. This section evaluates the professional background and expertise of key non-Owner managers, such as compliance officers, buyers, marketing heads, controllers and HR leads. A strong management team should have a mix of industry-specific experience, professional certifications, and a history of successfully managing cannabis retail and other highly regulated and complex operations.
Criteria for Scoring:
1. Relevant Industry Experience and Expertise
Points are awarded based on the years of experience in relevant roles, such as compliance management, buying, inventory management, marketing, or other key operational areas within the legal cannabis industry.
2. Track Record of Success in Current and Previous Roles Evaluation of the management team’s record in successfully running cannabis businesses or other regulated enterprises.
3. Professional Qualifications and Certifications
Consideration of professional certifications (e.g., compliance certification, security training, or business management credentials) that demonstrate the management team’s capability to run a compliant and effective cannabis business.
4. Involvement in Community and Local Engagement
Consideration of the management team’s involvement in the legal cannabis industry, community engagement, and support for local programs and businesses.
Section 3: Community Engagement and Community Benefits (100 points) Description:
Cannabis retail operators should be active participants in the local community, fostering positive relationships and supporting local initiatives. This section evaluates the applicant’s history of supporting local initiatives, engaging with Redondo Beach residents and businesses, and their proposed plans for ongoing community contributions. Special consideration is given to applicants who 7 demonstrate a deep understanding of neighborhood and community dynamics and a proactive approach to being a good neighbor.
Criteria for Scoring:
1. Engagement with Redondo Beach Residents and Businesses Evaluate the applicant’s history of working with local stakeholders, support for local events, and contributions to civic initiatives.
2. Community Benefit Plans
Assess the applicant’s proposed contributions to the local economy, such as job creation, charitable donations, and support for other local businesses.
3. Neighborhood Compatibility Plan
Consider how the applicant plans to integrate into the neighborhood, including measures to minimize disruptions and ensure a positive relationship with nearby residents and businesses.
Section 4: Labor Plan (50 points)
Description:
A robust labor plan reflects the applicant’s commitment to providing quality employment opportunities and maintaining positive labor relations. Applicants with strong commitments to labor relations, employee benefits and local hiring, demonstrated by collective bargaining agreements (CBAs) in place, or by local hiring preferences in other cities should be awarded additional points, as these agreements and preferences indicate a higher level of employee support than applicants without.
Criteria for Scoring:
1. Labor Relations
Evidence that the applicant has a labor peace agreement in place, as required by state law for its proposed business in the City of Redondo Beach with more than 10 employees.
Award extra points for applicants who have established CBAs with recognized unions, demonstrating a higher level of commitment to fair labor practices.
2. Employee Benefits and Training Programs
Evaluate the applicant’s approach to employee benefits, including health insurance, professional development opportunities, retention and promotion, and training programs.
3. Employee Support and Engagement
Consider how the applicant supports their employees, addresses workplace concerns, and maintains a positive and productive work environment.
4. Local Hiring/Social Plan
Points awarded for commitment to a local hiring preference in the City of Redondo Beach, and for retaining and promoting from within. Further, points to be awarded based on the commitment to hire from socially or economically disadvantaged areas, and to hire veterans, long-term unemployed, seniors and from other disadvantaged groups traditionally overlooked by other employers.
5. Employee Screening and Safety
Points awarded for employee screening, background checks, for policies aimed at maintaining a drug-free workplace, and a safe working environment for all employees in accordance with applicable laws.
8 Section 5: Operational Plan and Business Strategy (150 points) Description:
A comprehensive operational plan is critical for the smooth operation of any cannabis retail business.
This section evaluates the applicant’s proposed day-to-day operations, compliance strategy, and business sustainability planning. An effective operational plan should detail how the business will manage key areas such as staffing, inventory control, cash handling, access protocols, and customer service. The plan should also demonstrate the business’s capacity to achieve the plan, and adapt to changes in regulations and market conditions, ensuring long-term stability and success.
Criteria for Scoring:
1. Detailed Description of Day-to-Day Operations
Assess the clarity and comprehensiveness of the applicant’s proposed daily operations, including opening and closing procedures, staff management, security protocols, youth access prevention, check in and check out, and customer service protocols.
2. Compliance Strategy and Regulatory Adherence
Consider the applicant’s approach to maintaining compliance with local and state regulations, managing risk, and preventing non-compliance issues. Points awarded for product selection strategy reflecting knowledge of Redondo Beach market, inventory management, cash management and METRC compliance.
3. Business Integrity and Continuity
Evaluate the applicant’s plan for managing unforeseen challenges, adapting to regulatory changes, and ensuring business continuity. Points should be awarded for transparent banking and insurance practices (i.e. where the bank or insurer is aware they are working with a cannabis operation), and for having secure cash processes and non-cash payment solutions available for both customers and other businesses (minimizing cash on hand).
Section 6: Financial Plan and Business Model (150 points) Description:
Financial stability is crucial for the successful launch and ongoing operations of a cannabis retail business. This section evaluates the applicant’s business model, and financial capacity to support capital expenditures for build-out, TI, initial staffing and inventory and initial operational expenditures per the business model. Applicants must show availability of funds to support either 24 months of total expenses or $2 million, whichever is greater. This ensures that the business has the resources needed to successfully launch and maintain operations. A track record of quickly opening stores is beneficial (some operators collect licenses without opening).
Criteria for Scoring:
1. Business Model - pre-launch through Year 3 Full
Detailed 3 year business model outlining dispensary construction, launch and operations from pre-build out (including license pursuit costs) to store launch, plus 3 years post-launch.
2. Availability of Funds for Initial Launch and Operations Applicants must demonstrate financial readiness by showing availability of funds to support either 24 months of TI, CapEx, build-out, and OpEx, or $2 million, whichever is greater.
3. Financial Statements and Documentation
Submission of financial statements, letters of credit, or other documentation that demonstrates the financial capacity to sustain ongoing operations and overall financial resources and 9 credibility. Documentation could come from corporate parent (balance sheet). Points awarded for completeness, transparency and indication of appropriate financial resources.
4. Business Plan Detailing Fund Allocation
The business plan should outline how funds will be allocated for the build-out, operational expenses, and ongoing business activities, demonstrating a clear strategy for managing financial resources.
5. Contingency Planning for Financial Challenges
Consider the applicant’s plans for managing unforeseen financial challenges or delays, ensuring that they have a clear strategy for maintaining operations even in the face of unexpected setbacks.
6. Track Record of Opening Retail Locations, Quickly
Points awarded for applicants with a proven track record of opening stores swiftly after being awarded a Conditional Use Permit (CUP). Applicants should submit their average time to opening after receiving a CUP to demonstrate their ability to meet project timelines and begin operations promptly, along with a deduction of points for prior licenses granted to the Owner group but not yet launched, unless adequately explained in each case (points awarded to encourage operators to open, not just collect and sit on licenses awarded).
Section 7: Building Plans and Site Improvements (100 points) Description:
The design and functionality of the proposed cannabis retail location play a significant role in community perception and overall business success. This section evaluates the applicant’s building plans, architectural design, and proposed site improvements. Plans and renderings should include details on interior and exterior design, accessibility, and integration with the surrounding environment.
High-quality, aesthetically pleasing design and thoughtful site improvements can enhance neighborhood compatibility and minimize any negative impacts.
Criteria for Scoring:
1. Architectural Design and Building Plans
Consider the quality of the proposed architectural design and building plans, focusing on how the location will fit within the existing neighborhood and contribute positively to the community’s aesthetic. Award extra points for lack of identifiable cannabis logos and motifs (eg.
Green crosses), other descriptive cannabis/dispensary terms, and lack of visibility from the street into the shopping area, and lack of product visibility and related signage from the street.
2. Site Improvements
Evaluate the applicant’s proposed site improvements, such as parking, landscaping, traffic flow, and accessibility, ensuring that the business is functional, accessible, and visually appealing.
Consider extra points for sites that upgrade or replace existing blight or nuisances (e.g. blighted buildings or “nuisance” businesses in Redondo Beach).
3. Integration with the Surrounding Environment
Assess the applicant’s plans for integrating and improving the retail location with the neighborhood, including measures to minimize disruptions, enhance visual appeal, and ensure compatibility with surrounding properties. Include renderings that demonstrate how the store will blend with the neighborhood, enhance local aesthetics, and contribute positively to the community through site maintenance and cleanliness.
4. Compliance with Local Building Codes and Community Standards Ensure that the building plans meet all local building codes and align with Redondo Beach’s community standards and expectations.
10 Section 8: Security Plan (100 points)
Description:
Given the sensitive nature of cannabis retail operations, a robust security plan is crucial for ensuring the safety of employees, customers, and the surrounding community. This section evaluates the applicant’s approach to premises security, surveillance, personnel training, and emergency response. The plan should outline measures to prevent theft, protect assets, and respond effectively to security incidents.
Criteria for Scoring:
1. Premises Security Measures
Assess the quality and comprehensiveness of the security plan, including surveillance camera placement, alarm systems, and access control. Points awarded for use of a security expert to prepare the security plan, and a consideration of the security expert’s qualifications, experience and credentials.
2. Security Training
Consider the qualifications and training protocols for security personnel and all staff, including their ability to respond to incidents and prevent unauthorized access.
3. Emergency Response Planning
Evaluate the applicant’s preparedness for emergency situations, such as power outages, security breaches, or natural disasters.
4. Use of Security Technology and Best Practices
Ensure that the security plan incorporates up-to-date technology and best practices in the cannabis industry, ensuring a high level of protection and incident prevention.
Section 9: Safety Plan (50 points)
Description:
The safety of employees, customers, and the public is paramount. A well-developed safety plan should cover everything from fire prevention and suppression to emergency evacuation procedures. This section evaluates the applicant’s approach to maintaining a safe environment, compliance with health and safety standards, and training programs for staff.
Criteria for Scoring:
1. Safety Procedures and Protocols
Assess the applicant’s procedures for maintaining a safe working environment, handling hazardous materials, and ensuring customer safety.
2. Training and Emergency Preparedness
Evaluate the comprehensiveness of training provided to staff, covering emergency response, fire safety, and health protocols.
3. Ongoing Safety Management
Consider the applicant’s plan for regularly reviewing and updating safety procedures to remain compliant and ensure continuous improvement.
4. Compliance with Health and Safety Regulations
Ensure that the safety plan meets all relevant health and safety regulations, including fire codes and occupational safety standards.
Section 10: Good Neighbor Policy and Community Engagement (50 points) 11 The Neighborhood Compatibility Plan assesses how well the business aligns with the expectations of the local Redondo Beach community in the site’s neighborhood. This section should include:
1. Good Neighbor Policy:
Assess commitment to positive relationships with neighbors, ongoing communication, and a clear feedback process. Establish a designated point of contact to handle concerns, and provide timely resolution of issues. Consider the applicant’s outreach efforts and outcomes
2. No Loitering, No Consumption Policy:
Evaluate effectiveness of measures prohibiting loitering and on-site cannabis consumption, supported by signage, trained personnel, and security measures to enforce compliance.
3. Light, Noise, and Odor Management:
Assess measures to prevent light spillover, reduce operational noise, and control odors using advanced HVAC systems. Regular maintenance and monitoring should be in place to ensure adherence to city standards.
4. Location Enforcement:
Evaluate security personnel or staff roles in monitoring and enforcing policies, preventing youth access, and managing on-site safety, including process for handling violations.
Section 3 – Other Considerations
This section outlines some other items for consideration in the consummation of the process, and discussion of other items that have arisen over the course of the last several council meetings.
1. Selection process – the current process states:
“The Permit Administrator, as a ministerial duty, shall have all applications rated 16 using the included standardized criteria to be used on each application. 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.”
However, we would request adding an interim review step to the existing Commercial Cannabis Retail Permit selection process to ensure a more robust and balanced evaluation.
This step would involve a panel of three (3) City staff or outside experts interviewing the Owners and key team members from the top ten (10) applicants, or any applicant scoring above 90%, before a smaller group is then selected by the interview panel to advance to the City Council presentation. This additional layer of evaluation is in keeping with established best practices and offers enhanced scrutiny; review in an interview setting can provide specialized insights and reduce any potential biases in the initial scoring, ensuring that only the most qualified applicants are considered, and affords additional transparency, reinforcing the fairness and credibility of the process.
2. Revenue Tests – Revenue as an Unreliable Indicator of Success:
Revenue alone is not a comprehensive indicator of a cannabis business’s success or operational excellence. Several factors undermine the validity of revenue as a reliable metric:
12 Location and Market Dynamics: Revenue can be influenced by factors such as location, foot traffic, scarcity, encroachment by illegal operators, and general market conditions—factors that are often beyond an operator’s control and may not reflect the quality of operations or be repeatable.
Sustainability Concerns: High revenue does not always equate to sustainability. Many businesses have driven up revenue through aggressive pricing strategies, deep discounting, or excessive promotions, essentially “buying” revenue, often leading to short-term gains at the cost of long-term stability. This approach has led several cannabis operators into insolvency in the last 12 months.
Luck and Timing: Revenue can be as much a function of timing and market entry as it is of business acumen. Operators who launched earlier or secured prime locations may see higher revenue numbers, not because of operational excellence, but due to fortunate circumstances.
Given these limitations, as is indicated in our proposed scoring matrix, we recommend shifting the focus away from revenue as an indication of “good operations.” Instead, we submit evaluation should prioritize compliance, operational transparency, store longevity, community engagement, and a proven ability to navigate complex regulatory environments—factors that are more indicative of an operator’s capability and long-term viability.
Summary
The City of Redondo Beach’s foray into legal cannabis retail represents a monumental undertaking and commitment from the City, for which we are thankful. Having developed and burnished our local roots, Sweet Flower understands the community will be watching closely to see if the implementation is successful. Choosing an established, reputable operator with a strong track record ensures that the city is partnering with a business that can responsibly navigate this transition, minimize risks, and contribute positively to the community, and we hope the recommendations above will assist the City in that process.
We thank the City of Redondo Beach council, staff and the broader Redondo Beach community for its careful and diligent review and consideration, and we are happy to address these recommendations at the City’s convenience.
Sincerely,
Tim Dodd
CEO/Co-Founder
Sweet Flower