Santa Ana City Council
May 3, 2022

school, or one of the partners is pregnant. However, there is still no minimum age for children to marry, if these conditions are met.

Recent Efforts to Change the Law in California
In 2018, in an attempt to set the course for banning child marriages in California, state legislature passed Senate Bill No. 273 (SB 273), which requires Family Court Services to separately interview the parties intending to marry or establish a domestic partnership and to prepare and submit to the court a written report containing recommendations for either granting or denying the parties permission to marry or establish a domestic partnership.

In 2021, Assembly Bill No. 1286 (AB 1286) was introduced to require local registrars to submit a report four times per year that included information concerning issued and denied marriage certificates involving minors. Existing law requires a local registrar of marriages to submit to the State Registrar, at least annually, all information concerning marriage certificates accepted during the calendar year in which one of both of the parties were minors at the time of solemnization of the marriage, but authorizes the local registrar to dispose of information like number of certificates, age of each party, and gender of each party after only two years. This information is available upon request through the California Department of Public Health the Office of Vital Records with an estimated wait time of five to seven weeks. This law restricts local registrars from submitting such information if the registrar did not accept any marriage certificates in the same calendar year. California stopped tracking ages on marriage certificates in the 1980s, making statewide data less accessible. According to a study by the Pew Research Center, almost

5.5 of every 1,000 15-to 17-year-olds are married in California based on census data from 2014. AB 1286, however, died in January 2022.

Potential Effects of Child Marriages
Studies show that early marriages carry significant and long-term risk for children by increasing the risk of domestic and sexual violence, a negative impact on mental health and social life, lack of independence, and lack of education. A 2013 study by the Human Rights Watch indicated that approximately 14 million girls are married each year worldwide, and one in seven girls in developing countries is married before her 15th birthday.

According to Tahirih Justice Center’s publication, “Child Marriage Poses Serious Risks to Children”, child marriage has negative physical, economic, social, and mental impacts on children, especially girls. Teen girls who marry tend to have more children earlier and more closely spaced. They are more likely to have their first child before the age of 18 and 40 percent more likely to have a second within two years of their first. Young women and girls aged 16 to 19 face intimate partner violence victimization rates at almost three times the national level.

Child brides tend to come from poverty and remain in poverty. Girls who marry under the City Council 29 – 2 5/3/2022
Child Marriage Laws
May 3, 2022

age of 19 are 50 percent more likely to drop out of high school and four times less likely to graduate from college.

Women who marry before the age of 18 are more likely to report stressful life events, as well as present significantly more psychiatric disorders such as mood and anxiety disorders, including major depression and antisocial personality disorder.

Resolution
Attached for consideration by the City Council is a resolution (Exhibit 1) calling upon our state legislators to introduce and pass a bill that would end child marriage.

ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.

FISCAL IMPACT
There is no fiscal impact associated with this action.

EXHIBIT(S)

1. Resolution
Submitted By: Kristine Ridge, City Manager
Approved By: Kristine Ridge, City Manager
City Council 29 – 3 5/3/2022
Resolution No. 2022-XXX

RESOLUTION 2022-XXX

A RESOLUTION OF THE SANTA ANA CITY COUNCIL

CALLING UPON OUR STATE LEGISLATORS TO INTRODUCE AND PASS A BILL ENDING

CHILD MARRIAGE IN CALIFORNIA
WHEREAS, California is one of nine states that has no minimum age for child marriage when all exemptions are taken into account; and
WHEREAS, current California law requires the parents and partners of minors wishing to marry to meet with court officials separately, to determine if there is any coercion and wait 30 days to get married, unless they are 17 and have completed high school, or one of the partners is pregnant; and
WHEREAS, recent efforts to change California law with Senate Bill No. 273 and Assembly Bill No. 1286 failed; and
WHEREAS, existing law requires local registrar of marriages to submit personal information regarding certificates to the State Registrar, at least annually, but authorizes the local registrar to dispose of information like number of certificates, age of each party, and gender of each party after only two years; and
WHEREAS, child marriage has negative physical, economic, social, and mental impacts on children, especially girls; and
WHEREAS, teen girls who marry tend to have more children earlier, more closely spaced, more likely to have their first child before the age of 18, and 40 percent more likely to have a second within two years of their first; and
WHEREAS, young women and girls aged 16 to 19 face intimate partner violence victimization rates at almost three times the national level; and WHEREAS, women who marry before the age of 18 are more likely to report stressful life events, present significantly more psychiatric disorders such as mood and anxiety disorders, including major depression and antisocial personality disorder.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Santa Ana, that:

Section 1. The City of Santa Ana calls upon our State legislators to introduce and pass a bill that would end child marriage in California.

Section 2. This Resolution shall take effect immediately upon its adoption by the City Council, and the Clerk of Council shall attest to and certify the vote adopting this Resolution.

City Council 29 – 4 5/3/2022
Resolution No. 2022-XXX

ADOPTED this ____ day of May, 2022.

Vicente Sarmiento
Mayor
APPROVED AS TO FORM:

Sonia R. Carvalho
City Attorney
By:

Laura A. Rossini
Chief Assistant City Attorney
AYES: Councilmembers
NOES: Councilmembers
ABSTAIN: Councilmembers
NOT PRESENT: Councilmembers

CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, DAISY GOMEZ, Clerk of the Council, do hereby attest to and certify the attached Resolution No. 2022 -XXX to be the original resolution adopted by the City Council of the City of Santa Ana on _____________________, 2022.

Date:

Clerk of the Council
City of Santa Ana
City Council 29 – 5 5/3/2022
Finance and Management Services
www.santa-ana.org/finance
Item # 30
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
May 3, 2022
TOPIC: Fiscal Year 2021-22: Third Quarter Budget Update AGENDA TITLE:

Fiscal Year 2021-22: Third Quarter Budget Update

RECOMMENDED ACTION
Receive and file the Fiscal Year 2021-22: Third Quarter Budget Update, including increasing sales tax and plan checks revenue estimates.

EXECUTIVE SUMMARY
The Third Quarter Budget Update (Exhibit 1) provides a General Fund snapshot of the first nine months of the fiscal year and is the last update to City Council in regards to the 2021-22 Fiscal Year budget. This report includes recommendation for an additional increase to the sales tax (Bradley-Burns and Measure X) and plan checks revenue estimates (Exhibit 1), a summary of General Fund revenues and expenditures, an update on the FY 21-2022 Capital Improvement Program (CIP) budget, and a staff vacancy report as of March 31, 2022.

A summary of the General Fund is detailed below:

City Council 30 – 1 5/3/2022
Receive and file the FY 2021-22 – Third Quarter Budget Update May 3, 2022

DISCUSSION
The Third Quarter Budget Update includes General Fund activity posted during July 2021 through March 2022 and the vacancy report for funded staff positions as of March 31, 2022. The Third Quarter Budget Update is the final update to City Council for the FY 2021-22 budget.

The last budget update to City Council was presented during the Mid-Year Budget Update on March 1, 2022. At the time, the City Council approved significant proposed revenue and expenditure adjustments, including several workforce changes. For the Third Quarter Budget Update, staff is proposing a few revenue adjustments (i.e., sales tax and plan checks) and anticipates no further adjustments to expenditures for the remainder of the fiscal year. Staff has reviewed the other funds and there are no proposed adjustments.

In addition to the above, staff will provide a brief update on the next steps for the FY 2022- 23 budget process.

General Fund Revenues
During the FY 2021-22 third quarter, the City received approximately $240.2 million in General Fund revenues, which is 63.1 percent of the annual estimate.

After analyzing revenue through March 2022, staff recommends adjustments to the sales tax and plan checks estimates with a net increase of approximately $10.9 million as summarized below.

Sales Tax (Bradley-Burns & Measure X): Total sales tax collected for the third quarter is approximately $35.2 million for Bradley-Burns and $48.7 million for Measure X, for a combined total of $83.9 million. The First Quarter Budget Report and the Mid-Year Budget Report approved on January 18, 2022 and March 1, 2022, respectively, included adjustments for sales tax estimates. In a recent March update, the City’s sales tax consultant has noted strong performance from the General Retail (i.e., Apparel Stores, City Council 30 – 2 5/3/2022
Receive and file the FY 2021-22 – Third Quarter Budget Update May 3, 2022

Online Retailers), Transportation (i.e., New Auto Sales, Service Stations), and Food Products (i.e., Restaurants) sectors. Therefore, a revised estimate will include an increase of both the Bradley-Burns and Measure X revenue estimates by about $3.7 million and $5.2 million, respectively.

The sales tax consultant’s assumptions for the robust growth in sales tax revenues include growth at a higher rate than pre-pandemic levels in the following areas:

Employment, Disposable Income, Gross Domestic Product (GDP), Domestic Tourism, Consumption of and Relative Prices of Taxable Goods. Furthermore, sharp increases in energy prices in 2021 have increased the prices of many taxable goods and the sanctions on Russia as a result of the Russia-Ukraine war is preventing it from exporting oil to the West. It is expected that oil prices will remain high through the second quarter of the 2022 calendar year (April to June 2022). Similarly, as a result of the war, California gas prices have soared in mid-March, which also contributed to the strong performance seen from the Service Stations segment of the Transportation sector. With more people returning to the workforce, price increases to taxable goods and a gradual decrease in inflation, sales tax performance should continue to remain strong through FY 2021-22.

Plan Checks: Total plan check revenues collected for the third quarter is $5.2 million, which exceeded the annual budget estimates of $3.4 million by nearly $1.9 million or over 55 percent. The Mid-Year Budget Report approved on March 1, 2022 included adjustments for building plan check estimates. However, due to a one-time spike in plan check activity related to large construction projects for residential and mix-use development on 3rd & Broadway, Rafferty, Warner & Red Hill, 2727 Main Place, and Lacy Crossing, staff has increased the revenue estimates by $1,982,700, accordingly. Staff does not anticipate any new large construction project activity in the forecast for the fourth quarter.

General Fund Expenditures
As of March 31 2022, General Fund expenditures are at 72.2 percent of budget. Each department is within the expected range of spending for the third quarter. It should be noted that the City pays one-month in advance for contracted fire services.

FY 2021-22 Capital Improvement Program (CIP)
Staff expects significant carryovers for the Capital Improvement Program (CIP) FY 2021- 22 capital budget to FY 2022-23 as many capital projects require multiple years to construct. Large, unspent appropriations are anticipated to be carried over from the current fiscal year to the next fiscal year in excess of over $228 million and is expected to come before the City Council for approval in September 2022.

Full-Time Employee Position Vacancy Report
The staff vacancy report as of March 31, 2022 reflects all staffing changes authorized to date, including the Mid-Year Budget Report workforce changes approved on March 1, 2022.

City Council 30 – 3 5/3/2022
Receive and file the FY 2021-22 – Third Quarter Budget Update May 3, 2022

As of March 31, there is a total of 179 total vacancies, of which, 153 are funded vacant positions and 26 are subject to the hiring freeze. Positions subject to the hiring freeze provided $2.5 million in savings in the current year budget. The vacancy report as of March 31 does not reflect the entire $0.4 million approved during the First Quarter Budget Update on January 18, 2022 to partially restore hiring freeze positions.

ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.

FISCAL IMPACT
The summary of General Fund fiscal impact appears at the beginning of this report and staff has listed the recommended revenue adjustments (i.e., sales tax and plan checks) in Exhibit 1.

EXHIBIT(S)

1. FY 2021-22 Third Quarter General Fund Revenue Adjustments Submitted By: Kathryn Downs, FMSA Executive Director
Approved By: Kristine Ridge, City Manager
City Council 30 – 4 5/3/2022
General Fund Revenue Adjustments
Description
FY 21-22
Revised
Budget
FY 21-22
3rd Quarter
Update
3rd Quarter
Adjustment
Increase
Sales Tax 57,600,000 61,252,000 3,652,000
Sales Tax - Measure X 79,000,000 84,221,000 5,221,000
Building Plan Check 2,700,000 4,030,000 1,330,000
Electrical Plan Check 312,600 600,000 287,400
Plumbing Plan Check 141,300 230,000 88,700
Mechanical Plan Check 210,400 487,000 276,600
Other Revenue - No Adjustments Needed 240,483,036 240,483,036 0 Total General Fund Revenue Adjustments 380,447,336 391,303,036 10,855,700 EXHIBIT 1
City Council 30 – 5 5/3/2022
Police Department
www.santa-ana.org/pd
Item # 31
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
May 3, 2022
TOPIC: Use of Military Equipment by the Santa Ana Police Department AGENDA TITLE:

Consider an Ordinance Amending Section 2-809 of Article VII.II of Chapter 2 of the Santa Ana Municipal Code Adopting a Policy Pursuant for the Use of Military Equipment by the Santa Ana Police Department Pursuant to California Assembly Bill 481 (Government Code § 7070 et. seq.)

RECOMMENDED ACTION
Approve first reading of an ordinance adopting a policy for the use of military equipment by the Santa Ana Police Department pursuant to California Assembly Bill 481 (Government Code § 7070 et. seq.).

DISCUSSION
Assembly Bill 481 (AB 481 or the Bill), codified at Government Code sections 7070 through 7075 requires a law enforcement agency (LEA) to obtain approval from the applicable governing body, via adoption of a “military equipment” use policy (the Policy) by ordinance (the Ordinance), prior to the LEA funding, acquiring, or using military equipment. The Police Department seeks City Council adoption of the attached Military Equipment Use Policy – Department Policy 707 (Exhibit 2), in order to allow the Department to continue to use the vital equipment specified therein, as well as acquire new equipment.

Items deemed “military equipment” by AB 481 are used as a component of overall best practices for LEAs throughout the country. These tools have been tested in the field, and are used by LEAs to enhance community and officer safety. Loss of these items would reduce the Department’s ability to safely resolve critical incidents, jeopardizing the welfare of community members and Department personnel.

The term “military equipment”, as used in AB 481, in fact, does not necessarily indicate equipment that has been used by the military. Pursuant to AB 481, items deemed to be “military equipment” include, but are not limited to, unmanned aerial or ground vehicles, armored rescue vehicles, command and control vehicles, pepper balls, less lethal City Council 31 – 1 5/3/2022
Use of Military Equipment by the Santa Ana Police Department May 3, 2022

shotguns, less lethal 40mm projectile launchers, long range acoustic devices, and noise flash diversionary devices (NFDDs).

The Police Department is committed to using the most up-to-date tools and equipment, in support of our de-escalation strategy, to safeguard the Santa Ana community. Many of items deemed “military equipment” by AB 481 are in fact employed by the Department, and LEAs across the country, to specifically reduce risk to community members. These items provide peace officers with the ability to safely de-escalate volatile situations which otherwise might rise to the level of a lethal force encounter. To that end, the items at issue in this report, and accompanying Military Equipment Policy, also provide Department personnel with vital tools that facilitate compliance with its stringent use of force policy and best practice training techniques.

Other items deemed “military equipment” via AB 481 include foundational equipment such as rifles. These rifles allow peace officers to address lethal threats from a greater distance and with greater precision.

Along with seeking authorization to use preexisting equipment, the Police Department also seeks authorization to research, test, and possibly acquire Unmanned Aerial Systems (UASs) in the future. UAS can provide personnel with the ability to view into high-risk areas without physically entering the area, increasing the safety of community members and Department personnel. UAS are not intended to replace the police helicopter, but rather supplement the helicopter’s capabilities. Additionally, the UAS can be utilized to diagram crime scenes from an elevated view, providing valuable evidence to investigating personnel. If, upon completing the necessary research, the Department elects to proceed with a UAS acquisition, the Department will seek further City Council approval.

There is significant interest in ensuring that law enforcement continues to have access to equipment that will provide peace officers as many options as possible to safeguard lives, ensure safety, and protect civil liberties. The use of the tools identified in the Military Equipment Policy (Exhibit 2) are vital to the Department’s mission and will continue to be strictly regulated through internal processes and oversight.

The proposed Military Equipment Policy safeguards the public’s welfare, safety, civil rights, and civil liberties. The Policy ensures there are safeguards, including transparency, oversight, and accountability measures in place. For instance, the Policy requires the Department to produce and annual Military Equipment Use Report, host an annual community meeting regarding the use of “military equipment,” and publish the annual report on the Department’s website. Members of the public will also be provided direction, per the policy, on how to register complaints for violations. All item use resulting in a use of force will be investigated, as is already required by existing Department policy.

ENVIRONMENTAL IMPACT
City Council 31 – 2 5/3/2022
Use of Military Equipment by the Santa Ana Police Department May 3, 2022

There is no environmental impact associated with this action.

FISCAL IMPACT
There is no fiscal impact associated with this action.

EXHIBIT(S)

1. Proposed Ordinance

2. Military Equipment Policy (Department Policy 707)
Submitted By: David Valentin, Police Chief
Approved By: Kristine Ridge, City Manager
City Council 31 – 3 5/3/2022
TB ___.__.2022
ORDINANCE NO. NS-XXX

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF

SANTA ANA ADOPTING A POLICY FOR THE USE OF

MILITARY EQUIPMENT BY THE SANTA ANA POLICE

DEPARTMENT
WHEREAS, the mission of the Santa Ana Police Department (Department) is to provide the highest quality police services to the communities it serves; and WHEREAS, the Department values transparency and public input, and welcomes open dialogue about its practices and operations; and
WHEREAS, the preservation and sustainability of public safety, civil rights, and officer safety is paramount; and
WHEREAS, each situation is evaluated by incident commanders or supervisors who, based on circumstances and Department directives, determine which equipment should be used; and
WHEREAS, the Department’s diverse catalogue of military equipment, as defined in state law, and associated training gives police officers the confidence and capability to de-escalate volatile situations, enhance the safety of the public and officers, and bring critical incidents to a safe resolution; and
WHEREAS, from time to time, the Department may be asked to assist or need to be assisted by other law enforcement agencies, which may include use of military equipment, as defined in state law; and
WHEREAS, partnerships with other law enforcement agencies are an integral part of maintaining the continuity of public safety within the region; and WHEREAS, On September 30, 2021, Governor Gavin Newsom signed into law Assembly Bill 481, relating to the use of military equipment by law enforcement agencies; and
WHEREAS, Assembly Bill 481, codified as California Government Code sections 7070 through 7075, requires law enforcement agencies to obtain approval of the applicable governing body, by an ordinance adopting a “military equipment” use policy, at a regular meeting held pursuant to open meeting laws, prior to taking certain actions relating to the funding, acquisition, or use of military equipment. The term “military equipment” is defined in California Government Code section 7070; and EXHIBIT 1
City Council 31 – 4 5/3/2022
TB ___.__.2022
WHEREAS, Assembly Bill 481 allows the governing body of a city to approve the funding, acquisition, or use of military equipment within its jurisdiction only if it makes specified determinations; and
WHEREAS, the federal government allows local law enforcement agencies to obtain certain types of military equipment through a program authorized by Section 2576a of Title 10 of the United States Code, commonly known as the “1033 Program” or “LESO Program”; and
WHEREAS, the Department has not participated in this program since 2020, and does not intend to participate in the future; and
WHEREAS, the proposed military equipment use policy is attached hereto as Exhibit “A” and incorporated herein by this reference (the “Military Equipment Use Policy”); and
WHEREAS, the Military Equipment Use Policy was published on the Santa Ana Police Department’s internet website on March 30, 2022, more than 30 days before the Military Equipment Use Policy was first considered at a public hearing before the City Council on May 3, 2022; and
WHEREAS, the Military Equipment policy meets the requirements of California Government Code section 7070(d).

NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA ANA DOES ORDAIN AS FOLLOWS:

Section 1. The above recitals are hereby declared to be true and correct and represent the findings the City Council made in exercise of its independent judgment.

Section 2. Based on the findings above, in addition to information provided to the City Council at the public meeting, the City Council approves and adopts the Military Equipment Use Policy, based on the following:

1. The military equipment identified in Santa Ana Police Department Policy 707 is necessary, because there are no reasonable alternatives that can achieve the same objectives of officer and civilian safety.

2. The Military Equipment Use Policy will safeguard the public’s welfare, safety, civil rights, and civil liberties.

3. The military equipment identified in the Military Equipment Use Policy is reasonably cost effective compared to available alternatives that can achieve the same objective of officer and civilian safety.

4. All prior military equipment use complied with the City’s policies that were in effect at the time.

City Council 31 – 5 5/3/2022
TB ___.__.2022
Section 3. Section 2-809 of Article VII.II (Purchasing Rules and Regulations) of Chapter 2 (Administration) of the Santa Ana Municipal Code is hereby amended to read in its entirety as follow:

Sec. 2-809 – Reserved Military Equipment Policy
(a) The City Council for the City of Santa Ana has made the following determinations:
(1) The military equipment identified in Santa Ana Police Department Policy 707 is necessary, because there are no reasonable alternatives that can achieve the same objectives of officer and civilian safety. (2) The Military Equipment Use Policy will safeguard the public’s welfare, safety, civil rights, and civil liberties.
(3) The military equipment identified in the Military Equipment Use Policy is reasonably cost effective compared to available alternatives that can achieve the same objective of officer and civilian safety. (4) All prior military equipment use complied with the City’s policies that were in effect at the time.
(b) The Santa Ana Police Department shall submit an annual military equipment report to the City Council, containing the information required in Government Code Section 7072, and the City Council shall determine whether each type of military equipment identified in that report has complied with the standards for approval set forth in (a)(1)-(4) above.
(c) The City Council approves the use of the Santa Ana Police Department Policy 707, and finds that it satisfies the requirements of Government Code Section 7070.

Section 4. The City Council finds and determines that this Ordinance is not a project within the meaning of Section 15378 of the California Environmental Quality Act (CEQA) Guidelines because it has no potential to result in physical change in the environment, directly or indirectly. This Ordinance is exempt under CEQA Guideline 15061(b)(3) because it can be seen with certainty that there is no possibility that the Ordinance may have a significant effect on the environment.

Section 5. If any section, subsection, subdivision, paragraph, sentence, clause, or phrase of this Ordinance or any part thereof is for any reason held to be unconstitutional, such decision shall not affect the validity of the remaining portion of this Ordinance or any part thereof. The City Council hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause, or phrase thereof, irrespective of the fact that any one or more sections, subsections, subdivisions, paragraphs, sentences, clauses, or phrases be declared unconstitutional.

City Council 31 – 6 5/3/2022
TB ___.__.2022
Section 6. The City Council shall review this Ordinance annually and vote whether to renew the Ordinance, consistent with the requirements of state law.

Section 7. This Ordinance shall become effective thirty (30) days after its adoption.

Section 8. The Clerk of the Council shall certify the adoption of this ordinance and shall cause the same to be published in the manner prescribed by law.

APPROVED AND ADOPTED this ___ day of May, 2022.
_______________________
Vicente Sarmiento
Mayor
APPROVED AS TO FORM:

Sonia Carvalho, City Attorney
___________________________
By: Tamara Bogosian
Senior Assistant City Attorney
AYES: Councilmembers:

NOES: Councilmembers:

ABSTAIN: Councilmembers:

ABSENT: Councilmembers:

CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, _______________, Clerk of the Council, do hereby attest to and certify that the attached Ordinance No. NS-XXXX to be the original ordinance adopted by the City Council of the City of Santa Ana on _______________, and that said ordinance was published in accordance with the Charter of the City of Santa Ana.

Date: ________________ _________________________
Daisy Gomez
Clerk of the Council
City of Santa Ana
City Council 31 – 7 5/3/2022
Policy
707
Santa Ana Police Department
Santa Ana PD Policy Manual
Copyright Lexipol, LLC 2022/04/13, All Rights Reserved.

Published with permission by Santa Ana Police Department ***DRAFT*** Military Equipment - 1 Military Equipment
707.1 PURPOSE AND SCOPE
This policy provides guidelines for the approval, acquisition, and reporting requirements of military equipment (Government Code § 7070; Government Code § 7071; Government Code § 7072). The equipment described in this policy is in direct support of the Department's de-escalation strategy and associated training. Additionally, while the equipment described herein has been deemed to be, "military equipment" by the legislature, the Department does not participate in the acquisition of military surplus equipment pursuant to the Department of Defense's 1033 Program. 707.1.1 DEFINITIONS
Definitions related to this policy include (Government Code § 7070):

Governing body – The elected or appointed body that oversees the Department.

Military equipment – Includes but is not limited to the following:
• Unmanned, remotely piloted, powered aerial or ground vehicles. • Mine-resistant ambush-protected (MRAP) vehicles or armored personnel carriers. • High mobility multipurpose wheeled vehicles (HMMWV), two-and-one-half-ton trucks, five-ton trucks, or wheeled vehicles that have a breaching or entry apparatus attached. • Tracked armored vehicles that provide ballistic protection to their occupants. • Command and control vehicles that are either built or modified to facilitate the operational control and direction of public safety units. • Weaponized aircraft, vessels, or vehicles of any kind. • Battering rams, slugs, and breaching apparatuses that are explosive in nature. This does not include a handheld, one-person ram.
• Firearms and ammunition of_.50 caliber or greater, excluding standard-issue shotguns and standard-issue shotgun ammunition.
• Specialized firearms and ammunition of less than_.50 caliber, including firearms and accessories identified as assault weapons in Penal Code § 30510 and Penal Code § 30515, with the exception of standard-issue firearms.
• Any firearm or firearm accessory that is designed to launch explosive projectiles. • Noise-flash diversionary devices and explosive breaching tools. • Munitions containing tear gas or OC, excluding standard, service-issued handheld pepper spray.
• TASER® Shockwave, microwave weapons, water cannons, and long-range acoustic devices (LRADs).
• Kinetic energy weapons and munitions.

EXHIBIT 2
City Council 31 – 8 5/3/2022
Santa Ana Police Department
Santa Ana PD Policy Manual
Military Equipment
Copyright Lexipol, LLC 2022/04/13, All Rights Reserved.

Published with permission by Santa Ana Police Department ***DRAFT*** Military Equipment - 2 • Any other equipment as determined by a governing body or a state agency to require additional oversight.
707.2 POLICY
It is the policy of the Santa Ana Police Department that members of this department comply with the provisions of Government Code § 7071 with respect to military equipment. 707.3 MILITARY EQUIPMENT COORDINATOR
The Chief of Police should designate a member of this department to act as the military equipment coordinator. The responsibilities of the military equipment coordinator include but are not limited to:
(a) Acting as liaison to the governing body for matters related to the requirements of this policy.
(b) Identifying department equipment that qualifies as military equipment in the current possession of the Department, or the equipment the Department intends to acquire that requires approval by the governing body.
(c) Conducting an inventory of all military equipment at least annually. (d) Collaborating with any allied agency that may use military equipment within the jurisdiction of Santa Ana Police Department (Government Code § 7071). (e) Preparing for, scheduling, and coordinating the annual community engagement meeting to include:

1. Publicizing the details of the meeting.

2. Preparing for public questions regarding the department’s funding, acquisition, and use of equipment.
(f) Preparing the annual military equipment report for submission to the Chief of Police and ensuring that the report is made available on the department website (Government Code § 7072).
(g) Establishing the procedure for a person to register a complaint or concern, or how that person may submit a question about the use of a type of military equipment, and how the Department will respond in a timely manner.
707.4 MILITARY EQUIPMENT USE CONSIDERATIONS
(a) The military equipment acquired and authorized by the Department is:

1. Necessary because there is no reasonable alternative that can achieve the same objective of officer and civilian safety.

2. Reasonably cost-effective compared to available alternatives that can achieve the same objective of officer and civilian safety.
(b) Military equipment shall only be used by a Department employee only after applicable training, including any course required by the Commission on Peace Officer Standards and Training, has been completed unless exigent circumstances arise.

City Council 31 – 9 5/3/2022
Santa Ana Police Department
Santa Ana PD Policy Manual
Military Equipment
Copyright Lexipol, LLC 2022/04/13, All Rights Reserved.

Published with permission by Santa Ana Police Department ***DRAFT*** Military Equipment - 3 707.5 MILITARY EQUIPMENT INVENTORY
The inventory below is a complete list of qualifying equipment for the Department:

VEHICLES
(a) Mobile Command Vehicle (MCV): A vehicle used during critical incidents as a fieldbased command post, providing Incident Commanders with access to Department computer systems and dispatch center

1. Description, cost, quantity, and capabilities: Freightliner Chassis (custom built) vehicle, cost: $480,952.90, quantity: 1. The MCV can also be utilized for SWAT/CNT and other critical incidents, significant, preplanned events, searching for missing persons, natural disasters, and community events.

2. Purpose: Used for critical incidents based on the circumstances of a specific event, large event, or natural disaster to effectively and efficiently serve the community.

3. Authorized Use: Only officers trained in the use and deployment of the MCV, who have obtained a California Class B Commercial Driver's License, shall drive the vehicle under the direction of the Homeland Security Commander or their designee. Situations, where the MCV may be deployed, include but are not limited to critical incidents, natural disasters, and emergencies.

4. Lifespan: The MCV has an estimated lifespan of 25-years; However, upgrades are required in 5-year intervals to maintain communications and IT systems.

5. Fiscal Impact: The MCV was purchased in 2005 using UASI grant funding.

Annual maintenance cost: $5,500

6. Training: Drivers/Operators shall receive safe handling and maneuvering training on a closed training course. Once the operator has shown competence in vehicle handling, the driver/operator will drive the vehicle with an experienced driver throughout the city. Driver/operators shall also undergo commercial vehicle testing and certification from the California Department of Motor Vehicles.

7. Legal and Procedural Rules: It is the policy of the Department to use the MCV only for official law enforcement purposes and in accordance with California State law regarding the operation of motor vehicles. Incident Command Team Procedure.
(b) Armored Rescue Vehicles (ARVs): Commercially-produced, ballistically protected, wheeled vehicles designed for law enforcement purposes.

1. Description, cost, quantity, and capabilities:
(a) Lenco BEAR, cost: $293,745, quantity: 1. The Lenco BEAR is an armored rescue vehicle that provides its occupants with ballistic protection beyond ballistic shields or personal body armor. It offers greater safety to community members and officers during high-risk incidents. It is capable of seating a driver and 10-12 passengers.

City Council 31 – 10 5/3/2022
Santa Ana Police Department
Santa Ana PD Policy Manual
Military Equipment
Copyright Lexipol, LLC 2022/04/13, All Rights Reserved.

Published with permission by Santa Ana Police Department ***DRAFT*** Military Equipment - 4 (b) Terradyne Guhrka, cost: $353,652.88, quantity: 1. The Terradyne Guhrkas is an armored rescue vehicle that provides its occupants with ballistic protection beyond ballistic shields or personal body armor, offering greater safety to community members and officers during high-risk incidents. The Terradyne is smaller than the BEAR, providing greater mobility in tight city streets. It is capable of seating a driver and seven (7) passengers.

2. Purpose: Used in response to critical incidents to enhance officers and community safety, improve scene containment and stabilization, and assist in resolving critical incidents. Additionally, the ARVs may be deployed as displays for community outreach events.

3. Authorized Use: The ARVs' use shall only be authorized by a Watch Commander or SWAT Commander based on the specific circumstances of a given critical incident. ARVs shall only be used by personnel trained in their deployment and in a manner consistent with Department policies/procedures.

4. Lifespan: Both ARVs have an estimated lifespan of 25 years.

5. Fiscal Impact:
(a) Lenco BEAR: The Lenco BEAR was purchased in 2005 using UASI grant funding. Annual maintenance cost: $6,600
(b) Terradyne Guhrka: The Terradyne Guhrka was purchased in 2021 using UASI grant funding. Annual maintenance cost: $6000

6. Training: All drivers/operators shall attend formalized instruction in vehicle operations, practical driving instruction, and deployment procedures.

7. Legal and Procedural Rules: SWAT Procedure Manual and Armored Vehicle Deployment for Patrol Procedure.

SPECIALIZED TACTICAL EQUIPMENT
(a) Long Range Acoustic Device (LRAD): The LRAD is a high-intensity directional acoustical array for long-range, crystal clear hailing, notification, and an unmistakable warning tone. The LRAD is primarily used as a communication device.

1. Description, cost, quantity, and capabilities:
(a) LRAD 500x, cost: $42,776, quantity: 1. A compact, lightweight LRAD designed for applications ranging from fixed security installations to mid-sized vehicles and vessels, the LRAD 500X-RE easily mounts and transports to provide law enforcement personnel unparalleled long-range communication and safe, scalable non-kinetic escalation of force. (b) LRAD 100x, cost: $10,703.56, quantity: 1. Self-contained, portable, and featuring an extended voice broadcast range out to 600 meters, the LRAD 100X ensures voice messages are clearly heard and understood. LRAD's optimized driver, waveguide, and power efficiency technologies enable the LRAD 100X to provide several hours of clear, continuous communication from a single battery charge.

City Council 31 – 11 5/3/2022
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2. Purpose: To be used to issue dispersal orders during crowd and riot control situations or to address the public in the event of civil emergencies, natural disasters, evacuations, and police incidents (e.g., missing persons, perimeters for wanted suspects/K9 deployments, etc.). The LRAD may also be used to issue a warning tone.

3. Authorized Use: LRADs shall only be used by personnel trained in its deployment and used in a manner consistent with State and Federal law and training.

4. Lifespan: Both LRADs have an estimated lifespan of 25 years.

5. Fiscal Impact: The LRADs were purchased in 2007 and 2014, respectively, using UASI grant funding. Annual maintenance cost of approximately $300.

6. Training: All operators receive training before operating any LRADs in the field.

7. Legal and Procedural Rules: The Department shall only utilize the LRAD for official law enforcement purposes and pursuant to State and Federal law. (b) Tactical Robot: A remotely controlled, tracked, robot equipped with cameras and two-way audio communication capabilities.

1. Description, cost, quantity, and capabilities: Transcend Vantage tactical robot, cost: $10,000, quantity: 1. A remotely operated tactical robot providing officers with the ability to observe the interior of a structure without entering.

This capability increases the safety of community members, officers, and suspects by providing the operator with the ability to observe and locate subjects without the risk of a face-to-face confrontation. Additionally, the remote, twoway, communication capability allows operators to de-escalate situations by negotiating the surrender of barricaded subjects.

2. Purpose: To be used during tactical incidents to safely search a structure without exposing officers and/or community members to the risk of a face-toface confrontation.

3. Authorized Use: The tactical robot shall only be deployed by Department personnel trained in its use, and with the approval of the SWAT Commander, Watch Commander, or their designee.

4. Lifespan: The robot's lifespan is approximately 10 years.

5. Fiscal Impact: Annual maintenance cost of approximately $500.

6. Training: All operators shall receive initial training before deploying the robot in the field.

7. Legal and Procedural Rules: The Department shall only utilize the robot for official law enforcement purposes and pursuant to State and Federal Law. (c) Unmanned Aerial System (UAS): An unmanned aircraft and the associated equipment necessary to control it remotely.

1. Description, cost, quantity, and capabilities:

City Council 31 – 12 5/3/2022
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Published with permission by Santa Ana Police Department ***DRAFT*** Military Equipment - 6 (a) DJI M300 with HT20, cost: $45,000, quantity: 1. UAS that has 45 minutes of flight time, in all weather, has an IR camera, zoom camera, and light.

Has video recording capabilities.
(b) LOKI MK2 Dual UAV, cost: $9,750, quantity: 1. LOKI is the world's first purpose-built tactical sUAS. Designed and built in conjunction with several of the world's top counter-terror units, LOKI Mk2 solves virtually all of the problems associated with the tactical use of commercial UAS systems. LOKI is intended for close-quarter, indoor, and outdoor tactical scouting missions, and features a highly sensitive Night-Day + IR sensor camera giving it the ability to fly and see in complete darkness. (c) DJI Mavic 3 Enterprise Advanced, cost: $6,900 each, quantity: 2. A highly versatile yet compact tool that packs a whole lot of performance upgrades.

With high-resolution thermal and visual cameras, the M2EA supports up to 32× digital zoom and is capable of centimeter-level positioning accuracy with the RTK module.
(d) Autel EVO II PRO, cost: $2,000, quantity: 1. The EVO II Pro features a 6K 1" sensor camera which enables the ability to capture stunning detail, not previously possible on an aerial drone of this size. Aperture can be adjusted from f/2.8 to f/11 which provides the light control that you need, while ISO ranges up to 6,400 for video and 12,800 for stills. (e) DJI AIR 2S, cost: $1,000 each, quantity: 4. DJI Air 2S has the ability to perceive its environment in four directions: up, down, forward, and backward. The algorithms for Advanced Pilot Assistance Systems (APAS

4.0) have been further improved, allowing DJI Air 2S to actively avoid obstacles in more complex scenarios and at high speeds. (f) DJI Mavic Mini 2, cost: $650 each, quantity: 5. Utilizing DJI's OcuSync 2.0

2.4/5.8 GHz wireless transmission technology, the Mini 2 can be operated from up to 6.2 miles away while still providing you with video of what the drone sees. The Mini 2 can also be flown as high as 2.5 miles and withstand 19 to 24 mph winds.

2. Purpose: To be deployed when its view would assist officers or incident commanders with the following situations, which include but are not limited to:
(a) Major collision investigations.
(b) Search for missing persons.
(c) Natural disaster management.
(d) Crime scene photography.
(e) SWAT, tactical, or other public safety and life preservation missions. (f) In response to specific requests from local, State, or Federal fire authorities for fire response and/or prevention.

3. Authorized Use: Only assigned operators who have completed the required training shall be permitted to operate any UAS during approved missions.

City Council 31 – 13 5/3/2022
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4. Lifespan: All UAS equipment has an estimated lifespan of 3-5 years.

5. Fiscal Impact: The Department is in the process of identifying a funding source for the UAS program, including an application for grant funding. The estimated annual cost of the UAS program maintenance is $15,000.

6. Training: All Department UAS operators will be licensed by the Federal Aviation Administration for UAS operation. In addition, each operator must attend ongoing monthly training.

7. Legal and Procedural Rules: The Department will only deploy the UAS for official law enforcement purposes, and in a manner that respects the privacy of our community, pursuant to State and Federal law. Unmanned Aerial System (UAS) Operations Policy.

LESS-LETHAL DEVICES
(a) 40MM Launchers and Munitions: 40MM Launchers are utilized by Department personnel as a less-lethal tool to deploy less-lethal impact munitions.

1. Description, cost, quantity, and capabilities:
(a) LMT Tactical Single Shot Launcher, #1425, cost: $1,000, quantity: 85. The 40MM Single Launcher is a tactical single-shot launcher that features an expandable ROGERS Super Stoc and an adjustable Integrated Front Grip (IFG) with a light rail. It will fire standard 40mm less-lethal ammunition, up to 4.8 inches in cartridge length. It will launch a 40MM less-lethal round up to 131 feet.
(b) DEFENSE TECHNOLOGY, 40MM EXACT IMPACT SPONGE, #6325, cost: $20, quantity: 750. A less lethal 40mm lightweight plastic and foam projectile fired from a single or multi-round purpose-built 40mm launcher with a rifled barrel at 325 FPS. The 30-gram foam projectile delivers 120 ft/ lbs. of energy on impact. The 40mm Exact Impact Sponge Round provides accurate and effective performance when fired from the approved distance of not less than ten (10) feet and as far as 131 feet from the target. (c) DEFENSE TECHNOLOGY, 4OMM DIRECT IMPACT CS CRUSHABLE FOAM ROUND, #6322, cost: $18, quantity: 96. A less lethal 40MM lightweight plastic and crushable foam projectile fired from a single or multi-round purpose-built 40mm launcher with a rifled barrel at 295 FPS.

The 39-gram crushable foam projectile delivers 120 ft/lbs of energy upon impact in addition to the dispersion of 5 grams of CS irritant. The 40mm Direct Impact CS Round provides accurate and effective performance when fired from the approved distance of not less than ten (10) feet and as far as 120 feet from the target. Only trained members of the Department's SWAT Team are authorized to deploy the 40mm Direct Impact CS round. (d) DEFENSE TECHNOLOGY, SPEDE-HEAT 40MM LONG-RANGE, CS, #6282, cost: $21, quantity: 56. The SPEDE-HEAT CS Long-Range Munitions delivers one chemical canister of CS agent from a 40 mm launcher at a range of up to 150 yards. The Spede-Heat is a pyrotechnic City Council 31 – 14 5/3/2022
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Published with permission by Santa Ana Police Department ***DRAFT*** Military Equipment - 8 round designed specifically for outdoor use in violent crowd control situations. It is a high-volume continuous burn that expels its payload in approximately 20-40 seconds from a single source. The Spede-Heat family may be used to conceal tactical movement or to disburse a violent/ riotous crowd. Only trained members of the Department's SWAT Team are authorized to deploy the 40mm Spede-Heat round.
(e) DEFENSE TECHNOLOGY, POWDER CS FERRETT 40MM ROUND,
#2292, cost: $19, quantity: 60. A less lethal 40MM round used to penetrate barriers, such as windows, hollow core doors, wallboard, and thin plywood.

Upon impacting the barrier, the nose cone ruptures and instantaneously delivers a small chemical payload inside a structure or vehicle. The 40mm Ferret is primarily used to dislodge barricaded subjects from confined areas in a tactical deployment situation. Its purpose is to minimize the risks to all parties through pain compliance, temporary discomfort, and/or incapacitation of potentially violent or dangerous subjects. Only trained members of the Department's SWAT Team are authorized to deploy the 40mm Direct Barricade Penetrator round.
(f) DEFENSE TECHNOLOGY, 40MM ROUND MUZZLE BLAST, with CS, #6042, cost: $20, quantity: 52. The 40 mm Muzzle Blast CS Round is widely used as a crowd management tool for the immediate and close deployment of chemical agents. It can also be employed in tactical operations such as barricaded subjects for area denial, area contamination, and a means of contaminating crawl spaces and attics. In addition, it is an excellent device for deploying chemical-laden CS powder at close ranges for indoor or outdoor operations as a pain compliance round. It has a maximum effective range of 30 feet /9.1 meters. Only trained members of the Department's SWAT Team are authorized to deploy the 40mm Muzzle Blast round.
(g) DEFENSE TECHNOLOGY, 40MM SKAT SHELL, MULTIPLE
PROJECTILE ROUND CS, #6172, cost: $28, quantity: 56. The Skat Shell 40mm multiple chemical projectile round delivers multiple CS canisters from a 40mm launcher. It is designed for outdoor use and has a maximum effective range of 80-100 yards. It is designed as a less-lethal option for disbursing violent crowds actively engaging in criminal behavior. Only trained members of the Department's SWAT Team are authorized to deploy the 40mm Skat Shell round.

2. Purpose: To limit the escalation of conflict where the employment of lethal force is prohibited or undesirable.

3. Authorized Use: Situations where the deployment of less-lethal impact or chemical munitions are authorized include but are not limited to:
(a) Self-destructive, dangerous, and/or combative individuals (b) Riot/crowd control and civil unrest incidents where the criminal behavior involved exceeds a failure to disburse or curfew violation. (c) Circumstances where a tactical advantage can be obtained City Council 31 – 15 5/3/2022
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Published with permission by Santa Ana Police Department ***DRAFT*** Military Equipment - 9 (d) Vicious animals
(e) Training exercised or approved demonstrations
(f) Tactical situations involving the deployment of the Department's SWAT Team

4. Lifespan:
(a) LMT Single Shot Launcher: 25 years
(b) All munitions listed above: 5 years

5. Fiscal Impact: Annual maintenance for the single-shot launchers is approximately $50 each.

6. Training: Personnel deploying less-lethal or chemical agents will be trained in their use and deployment before using them in the field. All training will be conducted by a POST-certified less-lethal or chemical agent instructor.

7. Legal and Procedural Rules: Use of Force Policy, Control Devices and Techniques Policy, First Amendment Assemblies Policy, 40MM Less Lethal Launcher Guidelines Procedure, and SWAT Procedure Manual. (b) 12 Gauge Less-Lethal Impact Munitions

1. Description, cost, quantity, and capabilities: DEFENSE TECHNOLOGY, 12- GAUGE BEAN BAG ROUND, cost: $5, quantity: 650. The Drag Stabilized 12- gauge round is a 12-gauge shell loaded with a 40-gram tear-shaped bag made from cotton and ballistic material blended and filled with #9 shot. The design utilizes four stabilizing tails and smokeless powder as the propellant. It has a maximum effective range of 75 feet. Only trained members of the Department's SWAT Team are authorized to deploy the 12-gauge bean bag round.

2. Purpose: To limit the escalation of conflict where the employment of lethal force is prohibited or undesirable.

3. Authorized Use: The round shall only be deployed by trained members of the Department's SWAT Team in situations that include, but are not limited to the following:
(a) Self-destructive, dangerous, and/or combative individuals (b) Riot/crowd control and civil unrest incidents where the criminal behavior involved exceeds a failure to disburse or curfew violation. (c) Circumstances where a tactical advantage can be obtained (d) Vicious animals
(e) Training exercised or approved demonstrations
(f) Tactical situations involving the deployment of the Department's SWAT Team

4. Lifespan: 5 years

5. Fiscal Impact: Annual reordering of 100 rounds: $500 City Council 31 – 16 5/3/2022
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6. Training: Personnel deploying 12-gauge bean bags will be trained in their use and deployment before using them in the field. A POST-certified less-lethal instructor will conduct all training.

7. Legal and Procedural Rules: Use of Force Policy, Control Devices and Techniques Policy, First Amendment Assemblies Policy, 40MM Less Lethal Launcher Guidelines Procedure, and SWAT Procedure Manual. (c) PepperBall Launcher and Munitions: A less-lethal device that discharges projectiles designed to breach glass or projectiles containing chemical agents

1. Description, cost, quantity, and capabilities:
(a) PepperBall TAC-SF Launcher, cost: $799 each, quantity: 2. Semiautomatic, 3-round burst shots or full auto action. Select-fire electronic firing system with a firing rate of 10-12 RPS. Compact lightweight modular design. Ambidextrous rotational safety switch. 30 Cubic inch high capacity high-pressure air system. Designed for use with high-pressure air. (b) PepperBall INERT Powder Projectiles, cost: $375 for a case of 375, quantity: 2 cases. Inert projectiles used for training purposes. (c) PepperBAll LIVE PAVA (OC), cost: $853 for a case of 375, quantity:
2 cases. The basic PepperBall projectile, it contains 2% PAVA, and is excellent for direct impact and area saturation, especially in confined, interior spaces.
(d) PepperBall LIVE-X PAVA (OC), cost: $1,123 for a case of 375, quantity:
1 case. Our most potent and powerful concentration of PAVA pepper powder. One round of LIVE-X™ contains the equivalent to 10 regular PepperBall rounds.

2. Purpose: To limit the escalation of conflict where employment of lethal force is prohibited or undesirable. Situations for the use of PepperBall may include, but are not limited to:
(a) Tactical situations involving the deployment of the Department's SWAT Team
(b) Training exercises or approved demonstrations.
(c) Potentially vicious animals.
(d) Circumstances where a tactical advantage can be obtained. (e) Riot/crowd control and civil unrest incidents where the criminal behavior involved exceeds a failure to disburse or curfew violation. (f) Self-destructive, dangerous, and/or combative individuals.

3. Authorized Use: Only SWAT officers who have received certification in the use of chemical agents, less-lethal, and PepperBall are authorized to use PepperBall.

4. Lifespan:

City Council 31 – 17 5/3/2022
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Published with permission by Santa Ana Police Department ***DRAFT*** Military Equipment - 11 (a) PepperBall TAC-SF Launcher: 20 years
(b) All PepperBall projectiles have a lifespan of 3 years.

5. Fiscal Impact: Annual maintenance for the PepperBall launchers is approximately $50.

6. Training: SWAT Team members are training in the use and deployment of chemical agents, less-lethal, and the PepperBall launcher.

7. Legal and Procedural Rules: The Department will only deploy PepperBall for law enforcement purposes and in accordance with State and Federal law. Use of Force Policy, Control Devices and Techniques Policy, and SWAT Procedure Manual.
(d) Chemical Agent and Smoke Canisters: Canisters that disburse chemical agents and/or smoke when deployed.

1. Description, cost, quantity, and capabilities:
(a) DEFENSE TECHNOLOGY, TRIPLE-CHASER SEPARATING
CANISTER, CS, #1026, cost: $41, quantity: 46. The Triple-Chaser CS consists of three separate canisters pressed together with separating charges between each. When deployed, the canisters separate and land approximately 20 feet apart, allowing increased area coverage in a short period. This canister can be hand thrown or launched from a fired delivery system. The canister is 6.5 in. by 2.7 in. and holds an approximately 3.2 oz. of active agent payload. It has an approximate burn time of 20-30 seconds.
(b) DEFENSE TECHNOLOGY, SPEDE-HEAT CONTINUOUS DISCHARGE CANISTER, CS, #1072, cost: $26, quantity: 60. The Spede-Heat™ CS canister is a high volume, continuous burn. It expels its payload in approximately 20-40 seconds. The payload is discharged through four gas ports on top of the canister, three on the side, and one on the bottom.

This launchable canister is 6.12 in. by 2.62 in. and holds approximately

2.9 oz. of active agent.
(c) DEFENSE TECHNOLOGY, FLAMELESS TRI-CHAMBER CS
CANISTER, #1032, cost $32, quantity: 60. The Tri-Chamber Flameless CS canister design allows the contents to burn within an internal can and disperse the agent safely with reduced risk of fire. The canister is designed primarily for indoor tactical situations to detect and/or dislodge a barricaded subject. This canister will deliver approximately.70 oz. of agent during its 20-25 seconds burn time. The Tri-Chamber Flameless canister can be used in crowd control and tactical deployment situations by Law Enforcement and Corrections but was designed with the barricade situation in mind. Its applications in tactical situations are primarily to detect and/or dislodge barricaded subjects. The purpose of the TriChamber Flameless canister is to minimize the risks to all parties through pain compliance, temporary discomfort, and/or incapacitation of potentially violent or dangerous subjects. The Tri-Chamber Flameless canister City Council 31 – 18 5/3/2022
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Published with permission by Santa Ana Police Department ***DRAFT*** Military Equipment - 12 provides the option of delivering a pyrotechnic chemical device indoors, maximizing the chemicals' effectiveness via heat and vaporization while minimizing or negating the chance of fire to the structure. (d) DEFENSE TECHNOLOGY, POCKET TACTICAL CANISTER, CS, #1016, cost: $23, quantity: 48. The Pocket Tactical CS Canister is small and lightweight. The 0.9 oz. of active agent will burn approximately 20-40 seconds. At 4.75 in. by 1.4 inches in size, it easily fits in most tactical pouches. Though this device is slightly over four inches in length, it produces a smoke cloud so fast it appears to be an enveloping screen produced by a full-size tactical canister.
(e) DEFENSE TECHNOLOGY, INSTANTANEOUS BLAST CS CANISTER, #1042, cost: $42, quantity: 30. The Instantaneous Blast CS Canister is designed for indoor or outdoor use; this canister's powder is expelled upon initiation of a small internal detonator that has sufficient force to split the canister at six machined grooves on the outside surface. This 6.12 in. by

2.62 in. grenade will deliver approximately 1.5 oz. of active agent. (f) DEFENSE TECHNOLOGY, HAN-BALL CANISTER, CS, #1092, cost:
$32, quantity: 45. The Han-Ball™ CS Canister is an outdoor use canister, expelling its payload in approximately 15-20 seconds. This launchable canister holds approximately 1.6 oz. of active agent, which is expelled through three ports around the ball's equator.
(g) DEFENSE TECHNOLOGY, FLAMELESS TRI-CHAMBER SAF-SMOKE CANISTER, #1033, cost: $31, quantity: 34. The Tri-Chamber Flameless Saf-Smoke™ Canister design allows the contents to burn within an internal can and disperse the agent safely with reduced risk of fire. The grenade is designed primarily for indoor tactical situations to detect and/or dislodge a barricaded subject.
(h) DEFENSE TECHNOLOGY, POCKET TACTICAL SAF-SMOKE
CANISTER, #1017, cost: $22,quantity: 34. The Pocket Tactical SafSmoke™ Canister is small and lightweight. The Saf-Smoke™ will burn for approximately 20-40 seconds. At 4.75 in. by 1.4 inches in size, it easily fits in most tactical pouches. This canister is normally used as a signaling or covering device.

2. Purpose: To limit the escalation of conflict where employment of lethal force is prohibited or undesirable. Situations for the use of the less-lethal canisters may include, but are not limited to:
(a) Self-destructive, dangerous, and/or combative individuals. (b) Riot/crowd control and civil unrest incidents where the criminal behavior involved exceeds a failure to disburse or curfew violation. (c) Circumstances where a tactical advantage can be obtained. (d) Potentially vicious animals.
(e) Training exercises or approved demonstrations.

City Council 31 – 19 5/3/2022
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Published with permission by Santa Ana Police Department ***DRAFT*** Military Equipment - 13 (f) Tactical situations involving the deployment of the Department's SWAT Team

3. Authorized Use: Only SWAT officers who have received POST certified training in the use of chemical agents are authorized to use chemical agents.

4. Lifespan: 5 years from manufacturing date.

5. Fiscal Impact: No annual maintenance costs

6. Training: SWAT Team members utilizing chemical agent canisters are certified by POST less lethal and chemical agents instructors.

7. Legal and Procedural Rules: The Department will only deploy chemical agents for law enforcement purposes and in accordance with State and Federal law. Use of Force Policy, Control Devices and Techniques Policy, and SWAT Procedure Manual.

SPECIALTY MUNITIONS
(a) Breaching Shotguns and Munitions: Shotguns and specialty munitions utilized to access secured structures when no other means have proven successful.

1. Description, cost, quantity, and capabilities:
(a) Remmington 870 Shotgun Modified for Breaching, cost: $500, quantity:

5. The breaching shotgun is a standard patrol issue shotgun that is shortened to improve maneuverability in a tactical environment. (b) DEFENSE TECHNOLOGY, TKO 12-GAUGE BREACHING ROUND, cost:
$7, quantity: 100. The 12-Gauge TKO Breaching Round is a 12-Gauge shell loaded with a compressed zinc slug, utilizing smokeless powder as a propellant. It is a widely used method to breach door locks or hinges for entry during tactical operations. When properly deployed, the TKO can defeat door lock mechanisms, doorknobs, hinges, deadbolts, safety chains, and padlocks on both wooden or hollow core doors. Upon impact with the target, the zinc slug disintegrates into a fine powder eliminating fragmentation.

2. Purpose: Used to defeat locking mechanisms on doors or gates when mechanical breaching is ineffective or not feasible due to environmental factors.

3. Authorized Use: Breaching shotguns and munitions shall only be utilized by trained members of the Department's SWAT Team and only with the approval of the Incident Commander, SWAT Commander, or their designee during tactical incidents or training exercises.

4. Lifespan:
(a) Remmington Breaching Shotguns: 25 years
(b) TKO 12-Gauge Breaching Rounds: 5 years

5. Fiscal Impact: Annual maintenance of shotguns, approximately $300 City Council 31 – 20 5/3/2022
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6. Training: All SWAT Team members deploying breaching shotguns and munitions shall receive initial training before utilizing them in the field.

7. Legal and Procedural Rules: The Department will only utilize breaching shotguns and munitions for official law enforcement purposes in accordance with State and Federal law. SWAT Procedure Manual
(b) Explosive Breaching Capabilities: Resources capable of providing explosive breaching.

1. Description, cost, quantity, and capabilities: Currently the Department's SWAT Team trains with the Orange County Sheriff's Department (OCSD)Bomb Squad, providing the Department's SWAT Team with an explosive breaching capability. All explosives and associated equipment are purchased and maintained by the OCSD Bomb Squad and their designated Bomb Technicians.

2. Purpose: To gain access/entry into hardened structures where manual breaching is not possible/practical due to the circumstances present at the critical incident.

3. Authorized Use: Explosive breaching shall only be authorized by the Incident Commander or SWAT Commander, in conjunction with OCSD Bomb Squad personnel. Additionally, explosive breaching shall only be utilized during critical incidents when all other breaching means have been exhausted or when other breaching means would likely result in a failure to gain access into the structure and the failure to gain access would likely result in the loss of a community member or officer's life. Additionally, the use of explosive breaching is authorized for training purposes.

4. Lifespan: Not applicable

5. Fiscal Impact: There is no fiscal impact on the City or Department.

6. Training: The Department's SWAT Team members will train the deployment of explosive breaching with the OCSD Bomb Squad annually.

7. Legal and Procedural Rules: The Department shall only utilize explosive breaching for official law enforcement purposes and pursuant to State and Federal law.
(c) Noise Flash Diversionary Devices (NFDD): A device used to distract or divert a dangerous person's attention.

1. Description, cost, quantity, and capabilities: COMBINED TACTICAL SYSTEMS, 7290M MINI FLASH-BANG, cost: $38, quantity: 33. A non-bursting, non-fragmenting multi-bang device that produces a thunderous bang with intense bright light. Ideal for distracting dangerous suspects during assaults, hostage rescue, room entry, or other high-risk arrest situations.

2. Purpose: A diversionary device is ideal for distracting dangerous suspects during assaults, hostage rescue, room entry, or other high-risk arrest situations.

To produce atmospheric overpressure and brilliant white light and, as a result, City Council 31 – 21 5/3/2022
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Published with permission by Santa Ana Police Department ***DRAFT*** Military Equipment - 15 can cause short-term (6 - 8 seconds) physiological/psychological, sensory deprivation to give officers a tactical advantage.

3. Authorized Use: Diversionary Devices shall only be used by trained members of the Department's SWAT Team during situations that include but are not limited to the following:
(a) By officers who have been trained in their proper use. (b) In hostage and barricaded subject situations.
(c) In high-risk warrant (search/arrest) services where there may be extreme hazards to officers.
(d) During other high-risk situations where their use would enhance officer safety.
(e) During training exercises.

4. Lifespan: Until deployed

5. Fiscal Impact: No annual maintenance

6. Training: Prior to use, officers must attend diversionary device training conducted by Post certified instructors.

7. Legal and Procedural Rules: The Department will only utilize NFDDs for official law enforcement purposes and pursuant to State and Federal law. SWAT Procedure Manual, Use of Force Policy.

FIREARMS AND AMMUNITION
(a) Rifles: Shoulder-fired firearms, with long spirally grooved barrels, intended to cause projectiles to spin, improving accuracy over a long distance.

1. Description, cost, quantity, and capabilities:
(a) DANIEL DEFENSE DDM4 V7 223/5.56 PATROL RIFLE equipped with an Aimpoint optic, tactical light, and sling, cost: $1,810, quantity: 107. The DDM4 V7 AR15 style firearm features M-LOK attachment technology with the Daniel Defense MFR 15.0 rail. Built around a Cold Hammer Forged, 16-inch barrel, the V7 has a DD improved Flash Suppressor to reduce flash signature. The mid-length gas system provides smooth and reliable cycling under any condition and reduces both perceived recoil and wear on moving parts. With the M-LOK attachment points that run along 7 positions and an uninterrupted 1913 Picatinny rail on top, the V7 has plenty of room for the sights, optics, and accessories the user may require. (b) DANIEL DEFENSE DDM4 V7 S 223/5.56 SWAT RIFLE equipped with a holographic sight, tactical light, and sling, cost: $1,300, quantity: 35. The DDM4 V7S AR15 style firearm features the MFR 10.0 M-LOK rail and is built around a free-floating, Cold Hammer Forged 11.5-inch barrel. The V7S delivers optimal maneuverability, reliability, accuracy, and terminal ballistics using a wide variety of ammunition. Its carbine length gas system provides smooth and reliable cycling under harsh conditions and reduces City Council 31 – 22 5/3/2022
Santa Ana Police Department
Santa Ana PD Policy Manual
Military Equipment
Copyright Lexipol, LLC 2022/04/13, All Rights Reserved.

Published with permission by Santa Ana Police Department ***DRAFT*** Military Equipment - 16 perceived recoil. With the M-LOK attachment points that run along 7 positions and an uninterrupted 1913 Picatinny rail on top, the V7S has plenty of room for sights, optics, and accessories the user may require.

Pairing an 11.5-inch barrel and the MFR Rail also ensures compatibility with a wide variety of muzzle devices and sound suppressors. The independently ambi GRIP-N-RIP Charging Handle accommodates leftand right-handed shooters. This rifle also comes with the ergonomic Daniel Defense Buttstock and Pistol Grip.
(c) REMINGTON 700 XCR COMPACT TACTICAL RIFLE.308, cost: $2,000, quantity: 6. Remington's Model 700 XCR Compact Tactical Rifle features a 416 stainless steel barreled action with Black TriNyte PVD coating that provides a diamond-hard layer of defense against the elements. The 700 XCR Compact Tactical has an X-Mark Pro externally adjustable trigger, OD Green stock with black webbing, wide tactical-style barrel fluting for rapid cooling, hinged floorplate magazine, and dual front swivel studs and rear stud.

2. Purpose: Used as precision weapons to address threats that exceed the capability of the Department's standard-issue handgun.

3. Authorized Use: Only members POST certified in the use of the rifle are authorized to deploy them in the field.

4. Lifespan:
(a) DDM4 7 Patrol Rifle: 15 years
(b) DDM4 7 S SWAT Rifle: 10 years
(c) Remington 700 XCR: 15 years

5. Fiscal Impact: Annual maintenance for each rifle is approximately $50

6. Training: Prior to using a rifle, officers must be certified by POST instructors in the operation of the rifle. Additionally, all members that operate any rifle are required to pass a range qualification two times a year.

7. Legal and Procedural Rules: Use of Force Policy, Firearms Policy, Officer Involved Shootings and Deaths Policy, Firearms Procedures, and SWAT Procedure Manual
(b) Rifle Ammunition: Ammunition specifically designed for use in Department rifles.

1. Description, cost, quantity, and capabilities:
(a) SPEER GOLD DOT.223 CALIBER 62 GRAIN RIFLE ROUND, cost: $260 per case of 500, quantity: 70 cases. Remington ammo made by Speer is reloadable, features nickel-plated brass cases and Boxer primers and this is a non-corrosive round. The Gold Dot LE ammunition goes through a process of joining the jacket and core one molecule at a time, thanks to this Speer eradicates the potential for the leading cause of bullet failure (jacket/core separation). This process will guarantee extraordinary weight retention through barriers as strong as auto-glass. In addition to City Council 31 – 23 5/3/2022
Santa Ana Police Department
Santa Ana PD Policy Manual
Military Equipment
Copyright Lexipol, LLC 2022/04/13, All Rights Reserved.

Published with permission by Santa Ana Police Department ***DRAFT*** Military Equipment - 17 its remarkable strength, Gold Dot rifle ammunition asserts remarkable accuracy. With exact tolerances and unparalleled bullet uniformity of jacket thickness.
(b) FEDERAL / WINCHESTER.223/5.56 TRAINING AMMUNITION, cost:
$170 per case of 500, quantity; 130 cases. Federal and Winchester ammunition features a lead core 55-grain full metal, non-magnetic, jacket.

Non-corrosive boxer primer and new virgin brass casings can be reloaded up to seven times.
(c) FEDERAL / WINCHESTER.223/5.56 FRANGIBLE TRAINING
AMMUNITION, cost: $290 per case of 500, quantity; 60 cases. Federal and Winchester Frangible 223 Remington ammunition is loaded with a 55 grain Reduced Hazard Training (RHT) bullet. BallistiClean features frangible Reduced Hazard Training bullets that break-up immediately on contact with metal targets, significantly reducing ricochet and backlash danger. BallistiClean loads feature a copper-plated primer and a "NT" (non-toxic) headstamp to clearly identify BallistiClean as a training round at a glance, eliminating confusion with duty rounds. With this Federal ammunition range operators have no hazardous waste disposal problems and it meets or exceeds all OSHA and EPA standards.
(d) FEDERAL GOLD MEDAL.308 168GR RIFLE ROUND, cost: $398 per case of 500, quantity: 24 cases. The Federal Gold Medal.308 Winchester ammunition is new production ammo that features a 168 Grain Sierra MatchKing Hollow Point Boat Tail bullet, a non-corrosive boxer primer, and the.308 Winchester ammunition is brand new never fired virgin brass casing that can be reloaded up to seven times for those shooters that reload their.308 Winchester ammunition. Sierra MatchKing Boat-tail bullet with Federal's proprietary delivery system. Federal's Gold Medal.308 Winchester ammo offers a muzzle speed of 2650 feet per second and muzzle energy of 2619 foot pounds.

2. Purpose: To be used in Department rifles to address lethal threats to the community and Department personnel with greater accuracy, enhancing community safety.

3. Authorized Use: Only members who have received POST certified training in the use of the rifle are authorized to utilize rifle ammunition.

4. Fiscal Impact: The Department budgets $70,000 annually for all Department firearm ammunition.

5. Lifespan: The ammunition listed above does not have an expiration date.

6. Training: Prior to using a rifle, officers must be certified by POST instructors in the operation of the rifle. Additionally, all members that operate any rifle are required to pass a range qualification two times a year.

7. Legal and Procedural Rules: Use of Force Policy, Firearms Policy, Officer Involved Shootings and Deaths Policy, Firearms Procedures, and SWAT Procedure Manual
City Council 31 – 24 5/3/2022
Santa Ana Police Department
Santa Ana PD Policy Manual
Military Equipment
Copyright Lexipol, LLC 2022/04/13, All Rights Reserved.

Published with permission by Santa Ana Police Department ***DRAFT*** Military Equipment - 18 707.6 MAINTENANCE OF SUPPLY LEVELS
When stocks of military equipment have reached significantly low levels or have been exhausted, the Department may order up to 10% of stock in a calendar year without city council approval to maintain essential availability for the Department’s needs. The Department is authorized to acquire additional stock of items listed here from other law enforcement agencies or CalOES in the event of an emergency when approved by the Chief of Police or designee. 707.7 APPROVAL
The Chief of Police or the authorized designee shall obtain approval from the governing body by way of an ordinance adopting the military equipment policy. As part of the approval process, the Chief of Police or the authorized designee shall ensure the proposed military equipment policy is submitted to the governing body and is available on the department website at least 30 days prior to any public hearing concerning the military equipment at issue (Government Code § 7071). The military equipment policy must be approved by the governing body prior to engaging in any of the following (Government Code § 7071):
(a) Requesting military equipment made available pursuant to 10 USC § 2576a. (b) Seeking funds for military equipment, including but not limited to applying for a grant, soliciting or accepting private, local, state, or federal funds, in-kind donations, or other donations or transfers.
(c) Acquiring military equipment either permanently or temporarily, including by borrowing or leasing.
(d) Collaborating with another law enforcement agency in the deployment or other use of military equipment within the jurisdiction of this department. (e) Using any new or existing military equipment for a purpose, in a manner, or by a person not previously approved by the governing body.
(f) Soliciting or responding to a proposal for, or entering into an agreement with, any other person or entity to seek funds for, apply to receive, acquire, use, or collaborate in the use of military equipment.
(g) Acquiring military equipment through any means not provided above. 707.8 COORDINATION WITH OTHER JURISDICTIONS
Military equipment used by any member of this jurisdiction shall be approved for use and in accordance with this policy. Military equipment used by other jurisdictions that are providing mutual aid to this jurisdiction shall comply with their respective military equipment use policies in rendering mutual aid.
707.9 ANNUAL REPORT
Upon approval of a military equipment policy, the Chief of Police or the authorized designee should submit a military equipment report to the governing body for each type of military equipment City Council 31 – 25 5/3/2022
Santa Ana Police Department
Santa Ana PD Policy Manual
Military Equipment
Copyright Lexipol, LLC 2022/04/13, All Rights Reserved.

Published with permission by Santa Ana Police Department ***DRAFT*** Military Equipment - 19 approved within one year of approval, and annually thereafter for as long as the military equipment is available for use (Government Code § 7072).

The Chief of Police or the authorized designee should also make each annual military equipment report publicly available on the department website for as long as the military equipment is available for use. The report shall include all of the following information:
(a) A summary of how the military equipment was used and the purpose of its use. (b) A summary of any complaints or concerns received concerning the military equipment. (c) The results of any internal audits, any information about violations of the military equipment use policy, and any actions taken in response. (d) The total annual cost for each type of military equipment, including acquisition, personnel, training, transportation, maintenance, storage, upgrade, and other ongoing costs, and from what source funds will be provided for the military equipment in the calendar year following submission of the annual military equipment report. (e) The quantity possessed for each type of military equipment. (f) If the Department intends to acquire additional military equipment in the next year, the quantity sought for each type of military equipment.
707.10 COMMUNITY ENGAGEMENT
Within 30 days of submitting and publicly releasing the annual report, the Department shall hold at least one well-publicized and conveniently located community engagement meeting, at which the Department should discuss the report and respond to public questions regarding the funding, acquisition, or use of military equipment.

City Council 31 – 26 5/3/2022
Planning and Building Agency
santa-ana.org/pb
Item # 32
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
May 3, 2022
TOPIC: Outdoor Dining
AGENDA TITLE:

Request for Direction Related to Outdoor Dining

RECOMMENDED ACTION
Accept informational report and direct staff to prepare an ordinance allowing and regulating outdoor dining citywide.

BACKGROUND AND OVERVIEW
To assist Santa Ana businesses with maintaining economic viability and public health safety measures during the COVID-19 pandemic, on May 28, 2020, the City of Santa Ana approved Executive Order No. 5-2020, authorizing restaurants and retail businesses to expand dining and retail operations onto public sidewalks and public and private parking spaces. This included the installation of food islands/parklets on City streets within Downtown Santa Ana. The City also identified certain roadways for full road closures to establish Café & Retail Zones on a temporary basis and further made available for expanded dining and retail activity. To that end, Santa Ana Municipal Code (“SAMC”) requirements for these type of activities were provisionally suspended. To assist Santa Ana merchants, the City also developed the City of Santa Ana: A Guide for Outdoor Business Operations “Take it Outside” to guide businesses through the process in how to obtain a permit for outdoor dining.

Since the adoption of Executive Order No. 5-2020, the City facilitated over 29 permits, including nine parklets, for expanded outdoor dining areas. With the desire to create an attractive, high quality, and efficient combined dining experience, the City worked in tandem with contractors Choura and VX Design to design, construct, and install nine parklets in Downtown. The effort included the design and construction of wood-finished decks, shade sails, solar-powered bistro lights, outdoor furniture, and hand sanitizing stations.

To further compliment this effort, with a $500,000 grant from the County of Orange’s First Supervisorial District, the City of Santa Ana created the Safe Outdoor Dining Program.

Utilizing the same approved contractors, over 20 restaurants along 1st and 17th Streets and outside of the downtown district were eligible to receive outdoor dining patios. As with City Council 32 – 1 5/3/2022
Outdoor Dining
May 3, 2022

the custom parklets, the City built the outdoor dining patios to meet the highest City expectations and standards. These outdoor dining patios were completed with woodfinished decks, umbrellas, bistro lights, outdoor furniture, and commercial planters.

To date, businesses continue to utilize the City’s provisions allowing the parklets and outdoor dining patios. More importantly, the City sustained its commitment to the merchant community to deliver a high quality outdoor dining program that promotes economic development to businesses and reassure safety for residents and visitors during the pandemic. Undertaking the effort to rethink outdoor dining on and on-street dining opportunities with an emphasis on design and placemaking would activate our local downtown streets and would create an enhanced dining atmosphere citywide.

DISCUSSION
As COVID-19 restrictions are being lifted and local businesses have begun returning to normal operations, the City has an opportunity to consider making outdoor dining permanent and develop standards for an outdoor dining that is beneficial for all businesses. Accordingly, staff recommends that City Council direct staff to review and prepare for consideration an ordinance amending the SAMC to establish expanded outdoor dining standards.

The direction to modify the SAMC will allow staff the opportunity to work in coordination with other agencies involved in the reviewing and approving of outdoor dining spaces to analyze how the current program worked during the pandemic. Based on lessons learned and feedback from community members, business owners, and industry stakeholders, staff can develop a program that continues to promote economic viability of the food and beverage industry, which verifying its appropriateness of its use of private and public property areas. The public outreach would ensure evaluation of potential impacts and support by businesses citywide.

Transitioning to a permit program would simplify the application process for those businesses that are eligible and interested in participating. In addition, it would create a path for those outdoor dining areas installed using grant funds during the pandemic, the ability to remain in place.

FISCAL IMPACT
There is no fiscal impact associated with this action.

Submitted By: Minh Thai, Executive Director of Planning and Building Agency Approved By: Kristine Ridge, City Manager
City Council 32 – 2 5/3/2022
Parks, Recreation, and Community Services
www.santa-ana.org/parks
Item # 33
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
May 3, 2022
TOPIC: Joint School Collaboration Standing Subcommittee with the Santa Ana Unified School District
AGENDA TITLE:

Appoint Two to Three Members of the City Council to the Joint School Collaboration City Council Standing Subcommittee with the Santa Ana Unified School District

RECOMMENDED ACTION
Appoint two to three members of the City Council to the Joint School Collaboration City Council Standing Subcommittee with the Santa Ana Unified School District for terms expiring on December 15, 2022.

DISCUSSION
At the April 19, 2022 meeting, the City Council adopted a resolution to establish a standing subcommittee, the Joint School Collaboration City Council Subcommittee with the Santa Ana Unified School District (“SAUSD”). The purpose of the Joint School Collaboration City Council Standing Subcommittee is to discuss issues of mutual interest between the City and SAUSD, focusing on youth services. Topics include joint use of SAUSD and City facilities, library facilities, and educational programs, among others.

The Subcommittee will create and approve its own by-laws that will provide further detail relating to its scope of work of advising the City Council. Provisions of these by-laws will include, among other parameters, a recurring meeting schedule.

Make-Up of the Subcommittee
The Joint School Collaboration City Council Standing Subcommittee will consist of representatives from the City Council and the SAUSD Governing Board as follows:
 Two or three members of the City Council will be appointed by a majority of the entire City Council at a public meeting.
 Up to two members of the SAUSD Governing Board will be appointed by a majority of the entire SAUSD Governing Board at a public meeting.

City Council 33 – 1 5/3/2022
Joint School Collaboration Standing Subcommittee with the Santa Ana Unified School District
May 3, 2022

Additionally, each member of the subcommittee will serve for a two-year term commencing with the first meeting of the newly installed City Council following a general election. Since this subcommittee was established on April 19, 2022, the terms of each selected subcommittee member will expire on December 15, 2022 to coincide with the upcoming election.

Standing committees are subject to the various meeting requirements of the Brown Act.

Agendas for standing committees must be posted, minutes must be taken, and the meetings must be open and accessible to the public, among other requirements.

Action Required
At this time, staff is requesting that the City Council, by a majority vote, appoint two to three councilmembers to serve on the Joint School Collaboration City Council Standing Subcommittee. Once members are appointed to the subcommittee, staff will schedule the first subcommittee meeting.

ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.

FISCAL IMPACT
There is no fiscal impact associated with this action.

Submitted By: Lisa Rudloff, Executive Dir. of Parks, Recreation and Community Services
Approved By: Kristine Ridge, City Manager
City Council 33 – 2 5/3/2022
Community Development Agency
santa-ana.org/cd
Item # 34
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
May 3, 2022
TOPIC: Fiscal Year 2022-2023 Annual Action Plan and Budgets for CDBG, HOME and ESG Programs
AGENDA TITLE:

Public Hearing – Approve the Fiscal Year 2022-2023 Annual Action Plan and budgets for the Community Development Block Grant, HOME Investment Partnerships Grant, and Emergency Solutions Grant, and authorize submission to the United States Department of Housing and Urban Development

RECOMMENDED ACTION

1. Hold a public hearing to receive resident and stakeholder comments on funding priorities and needs for activities funded with the Community Development Block Grant, HOME Investment Partnerships Grant, and Emergency Solutions Grant programs for the Fiscal Year 2022-23 Annual Action Plan.

2. Approve the Fiscal Year 2022 - 2023 Annual Action Plan and authorize the submission of the Fiscal Year 2022 - 2023 Annual Action Plan to the United States Department of Housing and Urban Development.

3. Approve the Fiscal Year 2022-2023 budgets for the Community Development Block Grant Program in the total amount of $8,294,360 that includes $5,640,635 from Grant Year 2022 allocation and a re-allocation of $2,653,725 in prior year program funds and program income; HOME Investment Partnerships grant in the amount of $1,706,231 from the Grant Year 2022 allocation and a re-allocation of $9,428,513 in prior year program funds; and Emergency Solutions Grant in the amount of $489,141 from the Grant Year 2022 allocation. All proposed activities’ budgets will be proportionally increased or decreased from the estimated funding levels to match actual allocation amounts.

4. Direct the City Attorney to finalize and authorize the City Manager to execute memorandums of understanding with various city departments and agreements with non-profit public service providers awarded funds as part of the approved Community Development Block Grant program budget for a two-year term beginning July 1, 2022 through June 30, 2024, subject to non-substantive changes approved by the City Manager and City Attorney, and direct the Risk Manager or designee to determine the necessary insurance requirements applicable for each project.

City Council 34 – 1 5/3/2022
Fiscal Year 2022-2023 Annual Action Plan and Budgets for CDBG, HOME and ESG Programs
May 3, 2022

5. Direct the City Attorney to finalize and authorize the City Manager to execute a memorandum of understanding with the Santa Ana Police Department and agreements with non-profit homeless service providers awarded funds as part of the approved Emergency Solutions Grant program budget for a term beginning July 1, 2022 through June 30, 2023, subject to non-substantive changes approved by the City Manager and City Attorney, and direct the Risk Manager or designee to determine the necessary insurance requirements applicable for each project.

DISCUSSION
On Tuesday, April 19, 2022, the City Council requested to continue these recommended actions to the next meeting to allow for further discussion, specifically on the CDBG public service awards recommended by the Community Development Commission.

As previously discussed, representatives from each organization were invited to present their proposed public service programs for funding consideration at two Community Development Commission public hearings held on January 25 and 27, 2022 from 3:00 p.m. to 7:00 p.m. on both days. The Commission recommended the following funding awards summarized below:

Public Service Organizations
Commission
Recommended
2022-2024 Award
AIDS Services Foundation of OC dba Radiant Health
Centers – HIV Care Services $60,000
America on Track – Brighter Futures for Children of
Prisoners $60,000
Boys & Girls Club of Santa Ana – College Bound $60,000
Casa de la Familia – Santa Ana Family Justice Center $60,000 Community Action Partnerships of OC – Economic
Empowerment - Your Money Your Goals $60,000
Community Health Initiative Orange County – Provides
outreach, education, enrollment, and case management
services to vulnerable populations
$60,000
Community Legal Aid SoCal – Provides free, holistic legal assistance to survivors of domestic violence $60,000
Delhi Center/Public Law Center – Family Economic
Success Initiative Program $80,000
Delhi Center – Teens Engaged in Learning and Leadership Program $80,000
Fristers – Wraparound Programming for Adolescent Parents and Children $60,000
Girl’s Inc. of Orange County – Literacy Lab $60,000
Human Options – Assisting Domestic Violence Victims $60,000 City Council 34 – 2 5/3/2022
Fiscal Year 2022-2023 Annual Action Plan and Budgets for CDBG, HOME and ESG Programs
May 3, 2022

Hurtt Family Clinic – Santa Ana Mental Health Program $60,000 Lutheran Social Services of So. Cal. – Victims Intervention Program $60,000
MOMs of OC – Healthy Beginnings and Brighter Futures for Expecting Mothers $80,000
Nati's House (dba Neutral Ground) – Gang Prevention $100,000 Nati's House (dba Neutral Ground) – Summer Night Lights $60,000 OC Human Relations Council – Community - Based
Alternative Dispute Resolution $60,000
OC Children's Therapeutic Arts Center – WILLARD
Neighborhood Crime Prevention and Intervention $70,000
Public Law Center – Affordable Housing & Homelessness
Prevention $80,000
StandUp for Kids – On Campus Mentoring for Homeless
Youth $60,000
Taller San Jose Hope Builders – Business Applications $80,000 The Cambodian Family – Plan Ahead Youth Program $100,000 WISEPlace – Steps to Independence $60,000
Working Wardrobes – Jobs for Santa Ana Seniors $60,000
TOTAL $1,690,000
On April 21 and April 25, 2022, staff reached out to the City Council to receive input on the CDBG public service awards recommended by the Community Development Commission:

Councilmember Penaloza provided the following request:
 Accept the awards recommended by the Community Development Commission.

Councilmember Hernandez provided the following request:

1. Replace $220,000 of CDBG funding with General Funds for the following nonprofits:
 Natis’ House Gang Prevention program - $100,000.
 Nati’s House Summer Night Lights program - $60,000.
 Casa De La Familia - $60,000.

2. Increase funding to:
 America on Track by $40,000 for a new total of $100,000.  Orange County Therapeutic Arts Center by $30,000 for a new total of $100,000.  Hurtt Family Clinic by $40,000 for a new total of $100,000.  Public Law Center by $10,000 for a new total of $90,000.  WISEPlace by $40,000 for a new total of $100,000.

City Council 34 – 3 5/3/2022
Fiscal Year 2022-2023 Annual Action Plan and Budgets for CDBG, HOME and ESG Programs
May 3, 2022

Councilmember Lopez provided the following request:

1. Replace $160,000 of CDBG funding with General Funds for the following nonprofits:
 Natis’ House Gang Prevention program - $100,000.
 Nati’s House Summer Night Lights program - $60,000.

2. Increase funding to:
 Orange County Therapeutic Arts Center by $10,000 for a new total of $80,000.  Public Law Center by $20,000 for a new total of $100,000.

Once the City receives the actual CDBG allocations for FY 2022-2023 and FY 2023- 2024 from HUD, the approved CDBG public service allocation will be increased or decreased in proportion to the actual grant allocation. Should the increase in funding be enough to fund additional nonprofits at the minimum funding level, funds will be allocated to the next highest scoring organization(s). Any remainder will be distributed to already high-performing organizations in proportion to their actual grant allocation.

FISCAL IMPACT
See the April 19, 2022 staff report.

EXHIBIT(S)

1. Staff Report from April 19, 2022
Submitted By: Steven Mendoza, Assistant City Manager
Approved By: Kristine Ridge, City Manager
City Council 34 – 4 5/3/2022
Planning and Building & Finance and Management Services Agencies santa-ana.org/pb
Item # 35
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
May 3, 2022
TOPIC: Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax Updates
AGENDA TITLE:

Public Hearing - Ordinance Amendment No. 2022-01 to Update Chapters 18, 21, And 40 of the Santa Ana Municipal Code Addressing Medicinal Cannabis Retail, Consumption Lounges and Temporary Events, Measure BB Waitlist Termination, Retail Facility Relocation, Commercial Cannabis Eligible Areas, Commercial Cannabis Tax Rate Reductions for Commercial Cannabis Cultivation, Distribution, and Manufacturing, and Adopt Language Addressing Proposed Tax Treatment of Microbusinesses and Shared Manufacturing, and Make Other Administrative Amendments of a Complimentary Nature

RECOMMENDED ACTION

1. Approve first reading of an ordinance amending Chapters 18, 21, and 40 of the Santa Ana Municipal Code addressing medicinal cannabis retail, consumption lounges and temporary events, Measure BB Waitlist termination, retail facility relocation, commercial cannabis eligible areas, commercial cannabis tax rate reductions for commercial cannabis cultivation, distribution, and manufacturing, and adopt language addressing proposed tax treatment of microbusinesses and shared manufacturing, and make other administrative amendments of a complimentary nature.

2. Adopt a resolution modifying various non-retail commercial cannabis tax rates.

3. Adopt a resolution establishing a map of commercial cannabis eligible areas in the City.

DISCUSSION
Background
The City of Santa Ana permits a variety of types of cannabis business activity, which include retail sales of medicinal and adult-use cannabis, and cannabis cultivation, distribution, manufacturing, and testing. These cannabis business activities were permitted through adoption of multiple ordinances beginning with Measure BB (Ordinance City Council 35 – 1 5/3/2022
Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax Updates
May 3, 2022

NS-2684) in November 2014 ending with Ordinance NS-2944 in May 2018. In November 2018, Santa Ana voters approved Measure Y (Ordinance NS-2962), which established commercial cannabis business license taxes for adult-use cannabis retail sales, cannabis cultivation, distribution, manufacturing, and testing. The most recent commercial cannabis ordinance updates were adopted by the City Council in September 2019 (Ordinance NS-2973). These updates amended various sections of Chapters 18, 21, and 40 of the Santa Ana Municipal Code (SAMC) to address horizontal and vertical integration of cannabis businesses, to streamline and modernize regulations in response to State changes allowing microbusinesses and shared manufacturing, and to establish consistency among various SAMC sections addressing employee badge requirements and minimum purchasing age.

Ongoing changes to State cannabis laws and evolving market demands prompt the City to regularly revisit its ordinances and tax collection to ensure that Santa Ana: (1) maintain its competitive position in the region; (2) remain compliant with applicable State laws; and (3) streamline and equalize its implementation of non-retail commercial cannabis taxation.

In response to these changes, the City is proposing to update the SAMC in various chapters and sections to address medicinal cannabis retail, consumption lounges and temporary events, Measure BB Waitlist termination, retail facility relocation, commercial cannabis eligible areas, commercial cannabis tax rate reductions for commercial cannabis cultivation, distribution, and manufacturing, and adopt language addressing proposed tax treatment of microbusinesses and share. These updates are intended to foster an environment in which commercial cannabis businesses continue to operate safely and in accordance with all applicable local and State regulations while maintaining Santa Ana’s top position in the regional cannabis industry.

Proposed Amendments – Financial (SAMC Chapter 21)
Table 1 (Proposed Amendments to Chapter 21) describes the finance-related ordinance amendments. Additional details are provided in the subsections that follow.

Table 1: Proposed Financial Amendments
Item Impact
Amend (SAMC
Sections 21-127, 21-
133, and 21-135)
Amendment:
(1) Amend SAMC Chapter 21 (Licenses) provisions relating to Article XII (Medical Marijuana) - Section 21-127- to reflect definitional changes, and Article XIII (Commercial Cannabis) - Section 21-133 – to adopt a separate business license tax rate category for consumption lounges and temporary consumption/ special events and to reduce cannabis tax rates for commercial cannabis cultivation, distribution, and manufacturing activities; (2) by further amendment of Section 21-133 to administratively simplify the taxation of shared manufacturing activities to City Council 35 – 2 5/3/2022
Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax Updates
May 3, 2022

Table 1: Proposed Financial Amendments
Item Impact
maintain Santa Ana’s competitive advantage visa via these commercial cannabis business activities, and to also relax and equalize square footage assessment treatment as between colocated cannabis distribution and manufacturing businesses who are not horizontally/vertically integrated and those that are; and (3) also amend Section 21-135 to equalize the tax treatment of microbusinesses to insure fair treatment.

The recommended Commercial Cannabis Tax Rate
Adjustments, including a $2,000 basic tax rate per license, are described in detail in Exhibit 4.

Impacts:
 Reduction of commercial cannabis business license tax rates for commercial cannabis cultivation, distribution, and
manufacturing activities is estimated to result in a reduction of non-retail commercial cannabis business tax revenue in the range of approximately $730,000 to $920,000.

Current
FY 2022-23
Revenue
Projections
Potential
Revenue
Reduction
(Lower Range)
Potential
Revenue
Reduction
(Upper Range)
CULTIVATION $1,250,000 $312,500 $387,000
DISTRIBUTION $1,150,000 $287,500 $371,000
MANUFACTURING $130,000 $129,750 $159,000
Total $2,530,000 $729,750 $917,000
 The foregoing non-retail commercial cannabis figures do not include potential offsetting revenues which may be anticipated from future shared manufacturing and microbusiness revenues and from the enhanced natural growth of Santa Ana’s nonretail commercial cannabis business community which will be encouraged by the rate reductions, and the simplification and equalization of tax treatments for cultivation, distribution, manufacturing, shared manufacturing, and microbusinesses.

At present, however, the City is lacking in sufficient information to reasonably project such additional revenues.
 Likewise, the City may anticipate future increased revenues from primary manufacturers and participating shared
City Council 35 – 3 5/3/2022
Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax Updates
May 3, 2022

Table 1: Proposed Financial Amendments
Item Impact
manufacturers taking advantages of Santa Ana’s proposed favorable and administratively streamlined treatment of shared manufacturers and the proposed relaxation and equalization of the tax treatment as between manufactures and distributors who are co-located, regardless of whether they are horizontally or vertically integrated or not.
 Similarly, there will be an increased likelihood of formation of microbusinesses based on Santa Ana’s going-forward
equalization of microbusiness tax treatment, so that
microbusinesses will not have to include the annual $2,000 basic tax rate assessment for each licensed category of commercial cannabis business they choice to engage in, but instead they will be liable to only pay once for the primary commercial cannabis activity they choose to engage in. This effectively affords microbusinesses the same net administrative tax treatment as other categories of commercial cannabis business.

Consumption Lounges & Temporary Consumption/Special Events and Shared-Use Manufacturing – Elimination of Alternate Square Footage Tax Assessment Consumption Lounges & Temporary Consumption/Special Events are locations where an underlying retail cannabis business licensee is already subject to a square footage assessment. Likewise, Shared Manufacturing premises are places where multiple shared manufacturers (also known as sub-manufacturers) rotate on a variable schedule and share space and equipment provided by a primary commercial cannabis manufacturing business, the alternate square footage method of assessment is made too cumbersome to apply and the need to impose it is mitigated by the fact that the primary manufacturing business owning and controlling the manufacturing premises is already subject to the assessment. Therefore, staff recommends that the City Council establish both the Consumption Lounge & Temporary Consumption/Special Events and Shared Use Manufacturing square footage tax rates at zero ($0) dollars, effectively eliminating the Alternate Square Footage Tax Assessment method as a component in computing taxes owed by shared manufacturers operating at primary manufacturing locations within the City. Effective elimination of the alternate tax will remove the principle administrative tax impediment to facilitating consumption and shared manufacturing within the City.

Microbusinesses – Elimination of De facto Assessment of Multiple Basic Tax Rate Assessments
City Council 35 – 4 5/3/2022
Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax Updates
May 3, 2022

The City’s Business License Tax Code dealing with cannabis businesses establishes an annual Basic Tax Rate assessment of $2,000 per each licensed commercial cannabis activity engaged in at a single location in the City. This requirement poses a challenge for microbusinesses, which were not contemplated as a commercial cannabis category to be authorized to do business in the City at the time the Basic Tax Rate assessment was adopted for commercial cannabis businesses pursuant to Voter Ballot Measure Y. The Basic Tax Rate assessment was primarily intended as the means - together with the Alternate Square Footage Tax - of assuring a minimum level of City revenue from commercial cannabis businesses. Microbusinesses are required by the state to engage in a minimum of three commercial cannabis activities, and thus are required by the City to obtain business license for each of these activities. (No administratively reasonable methodology exists or is likely to become available for combining all categories of commercial cannabis assessment into one business license account.) However, the requirement for multiple Basic Tax Rate assessments can be seen to have a negative impact on the formation of microbusinesses within the City. To address this issue, staff recommends that the City Council adopt a special proviso for microbusinesses allowing them to pay the annual Basic Tax Rate only upon their predominate commercial cannabis activity, and thus allow them to be exempted from the requirement on all of their other licensed activities engaged in at a single location within the City.

Proposed Amendments – Regulatory (SAMC Chapters 18 and 40) In addition to the proposed changes listed in Table 1, the City is proposing to update and streamline certain sections of Chapter 18 (Medicinal Marijuana) and Chapter 40 (Commercial Cannabis Business Activities Other Than Medicinal Marijuana). Table 2 (Proposed Amendments to Chapters 18 and 40) describes the regulatory-framework ordinance amendments.

Table 2: Proposed Regulatory Amendments
Item Amendment and Impact
Repeal and Readopt
Medicinal Cannabis
Retail Regulations
(SAMC Article XIII of
Chapter 18)
Amendment:

Removes medicinal cannabis retail regulations from Chapter 18 by deleting Article XIII and readopting as Article II of Chapter 40.

Impacts:
 Creates a single SAMC chapter addressing all commercial cannabis (medicinal and adult-use) business activities, including retail, cultivation, distribution, manufacturing, and testing.
 Enhances internal consistency of commercial cannabis regulations by consolidating all regulations into a single chapter within the SAMC.

City Council 35 – 5 5/3/2022
Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax Updates
May 3, 2022

Table 2: Proposed Regulatory Amendments
Item Amendment and Impact
Community Benefits
and Sustainable
Business Practices
(SAMC Sec. 40-1)
Amendment:

Updates community benefit and sustainable business practices requirement by codifying requirements and providing options to satisfy.

Impacts:
 Addresses the termination date of existing commercial cannabis operating agreements, which are set to expire December 31, 2022.  Codifies requirement for all commercial cannabis businesses to submit and have a Community Benefit and Sustainable Business Practices Plan on file with the City.
 Allows the City to require proof of satisfaction of the community benefit and sustainable business practices plan.
 Provides businesses an option to allow the City to provide community benefits by executing an operating agreement and paying additional operating fees to the City based on gross receipts.

Commercial Cannabis
Eligible Areas (SAMC
Secs. 40-5, 40-6, and
40-105)
Amendment:

Establishes an updated commercial cannabis eligible areas map to maintain a buffer between commercial cannabis businesses and sensitive land uses, such as schools, parks, and residential zones.

Impacts:
 Updates the existing map of commercial cannabis eligible areas adopted March 18, 2020, and requires adoption of the new map by resolution of the City Council.
 Maintains a buffer between commercial cannabis businesses and sensitive land uses.
 Creates consistency between ordinance and adopted map.

Relocation of
Commercial Cannabis
Retail Facilities
(SAMC Secs. 40-7 and
40-106)
Amendment:

Allows relocation of pending/selected and existing commercial cannabis retail locations within Santa Ana.

Impacts:
 Addresses facilities impacted by changes in market conditions and/or impacted by projects such as the Costa Mesa (SR-55) Freeway widening.
 Facilitates the opening of final and remaining retailer “slots.”  Allows the City to achieve its full revenue-generating potential of the commercial cannabis ordinance.
 Requires new locations to be separated from any other pending/selected or waitlisted location by 500 feet so as to not negatively impact any other location, subject to full compliance with all zoning, buffer, and separation requirements.

City Council 35 – 6 5/3/2022
Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax Updates
May 3, 2022

Table 2: Proposed Regulatory Amendments
Item Amendment and Impact
Consumption
Lounges as an
Ancillary Component
of Retail (SAMC Secs.
40-5 and 40-8)
Amendment:

Establishes a means by which cannabis retailers may apply to construct and operate a consumption lounge.

Impacts:
 Consistent with State law, allows cannabis consumption lounges as an ancillary component to retail activities subject to full compliance with State licensing, local permitting, environmental and public health, and building and fire safety regulations.
 Allows the City to achieve its full revenue-generating potential of the commercial cannabis ordinance.
 Maintains Santa Ana’s competitive edge and leadership position within the regional cannabis industry.

Temporary Cannabis
Special Events (SAMC
Sec. 40-8)
Amendment:

Establishes a means by which cannabis retailers may apply to conduct special events that include cannabis sales and consumption.

Impacts:
 Allows up to a total of six (6) special events per year annually total among all operators in the City.
 No more than two (2) events could be permitted in a single month, and a single operator could be permitted to conduct a maximum of one (1) independent event per calendar year, except that multiple operators may form a single event and file a single application.
 Activities would be required to satisfy all applicable State licensing, local permitting, environmental and public health, and building and fire safety regulations.
 Allows the City to achieve its full revenue-generating potential of the commercial cannabis ordinance.
 Maintains Santa Ana’s competitive edge and leadership position within the regional cannabis industry.

Various
Administrative
Amendments for
Internal Consistency
(SAMC Secs. 40-2, 40-
9, 40-9.2, 40-10, 40-
101, 40-103, 40-110,
40-111, and 21-127)
Amendments:

Updates various sections of Chapters 21 and 40 to establish internal consistency in terminology and regulations, update background check requirements, and require plan submittal and opening for all remaining pending cannabis retail businesses.

Impacts:
 Edits title of Chapter 40 and updates definitions to address amendments described above.

City Council 35 – 7 5/3/2022
Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax Updates
May 3, 2022

Table 2: Proposed Regulatory Amendments
Item Amendment and Impact
 Updates application selection process for commercial cannabis businesses and addresses consumption lounges.
 Modifies various sections to remove references to now-defunct Article XIII of Chapter 18.
 Clarifies and enhances background check requirements for those involved in commercial cannabis businesses in Santa Ana  Requires all pending medicinal and adult-use retail locations to submit construction plans by December 31, 2022 and open within 180 days of permit issuance.

Among the proposed amendments, the number of permitted retail locations and relocation of pending/selected and existing retailers, termination of the Measure BB Waitlist, changes to the buffer requirements from sensitive land uses, and consumption lounges and temporary events represent substantive changes that are described in further detail in the subsections below. These amendments are intended to address evolution in market conditions for cannabis businesses in Santa Ana and maintain the City’s competitive position in the regional cannabis industry.

Number of Permitted Retail Locations, Retail Relocation, and Termination of the Measure BB Waitlist
Existing ordinance regulations permit up to 20 medicinal and 30 adult-use cannabis retail locations; however, such facilities may be co-located in a single facility. The proposed amendments would allow an additional five (5) retail locations, for a total of 35 storefronts in the City. If approved, the amendments would allow all 35 retail licenses to sell both medicinal and adult-use cannabis.

There are currently 27 operating storefront retailers in the City. Of these, 20 sell medicinal and adult-use cannabis, and 7 sell adult-use only cannabis. In addition, there are 1 pending/selected medicinal-only and 2 pending/selected adult-use retailers. The amendment would incentivize the pending/unopened retailers to open sooner and provide the retailers greater revenue-generating potential through both medicinal and adult-use retail cannabis sales.

The amendments would also allow existing and pending/selected retailers to relocate subject to full compliance with all zoning, buffer, and separation requirements from other existing or pending/selected locations. This amendment is intended to address the SR55 widening project, which will result in physical impacts to at least one retailer, as well as evolving market conditions as the industry matures in Santa Ana. Currently, relocation is prohibited, and those businesses that have relocated have done so pursuant to various agreements with the City. The amendments would standardize the process for all entities City Council 35 – 8 5/3/2022
Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax Updates
May 3, 2022

and further incentivize the pending/selected businesses that have not yet opened to properly locate and open.

Lastly, the amendments would terminate the Measure BB Waitlist, which has consistently shrunk since 2015 from 575 entities to its current five (5). Pursuant to Measure BB, each year waitlisted entities must notify the City of their desire to remain on the Waitlist, and the City updates the Waitlist annually between April and May. The amendments would set forth a process by which the City may notify the waitlisted entities of the intended termination and allow them to apply for the five (5) new retail locations under the proposed ordinance. In addition, as with the 2018 process for new adult-use retailers, those waitlisted entities would be subject to a merit-based scoring of their application and would receive “bonus” points for having been on the Measure BB Waitlist. This method will ensure consistency with prior processes and create a fair opportunity for those waitlisted entities to submit competitive applications to operate new retail locations in the City.

Buffer Requirement Modification
All commercial cannabis businesses were initially subject to specific, codified regulations for separation from sensitive land uses (schools, parks, and residential zones) under Measure BB for medicinal cannabis retail sales, and subsequently by Ordinance No. NS2929, which created Chapter 40 of the Santa Ana Municipal Code for all other commercial cannabis business activities. The regulations allowed commercial cannabis business activity in the City’s light and heavy (M1 and M2) industrial zoning districts and required a 1,000-foot separation from these sensitive land uses; no accompanying map was officially adopted to illustrate these parameters.

Following redevelopment of industrial properties east of the Costa Mesa (SR-55) Freeway, the City Council adopted a map of commercial cannabis eligible areas on March 20, 2018 in which commercial cannabis business activities could locate subject to full compliance with applicable local, County, and State regulations. The map, however, is currently in conflict with existing ordinance language requiring the 1,000-foot buffer from residential zones.

Among the actions proposed for City Council consideration to address this conflict is adoption of a resolution establishing new map largely based on a new 600-foot buffer from schools, parks, or properties zoned for residential purposes. The new map would expand the available properties for commercial cannabis businesses east and west of SR-55 and in the industrial areas near Harbor Boulevard and the San Diego (I-405) Freeway. The proposed ordinance would also be modified to reflect the map, rather than specify the buffer in text. Modification to the map could take place with future resolutions as needed, without requiring an amendment to the overall ordinance.

City Council 35 – 9 5/3/2022
Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax Updates
May 3, 2022

Original State regulations did not specify exact zoning requirements but had set a default buffer of 600 feet from sensitive land uses such as schools, parks, or properties zoned for residential purposes. However, local agencies were permitted to reduce that buffer to zero through adoption of local ordinances. In 2021, the State revised its regulations to completely eliminate the default 600-foot buffer. Table 3 below illustrates how the proposed modification would increase the availability of industrial properties and buildings in cannabis eligible areas.

Table 3: Analysis of Buffer Modification*
Buffer Approx. Cannabis
Eligible Building
Square Footage
Approx. Cannabis
Eligible Zone
Acreage
Approx. Cannabis
Eligible Number of
Buildings
1,000 feet (current) 41,695,434 957 762
600 feet (proposed) 57,893,609 1,329 1,147
Difference +16,198,175 +372 +385
Approx. Change +18% +18% +34%
*Analysis based on available GIS data in 2021
Consumption Lounges and Temporary Events
State law was modified in 2019 to create a framework allowing cannabis consumption lounges and temporary (special) events with cannabis consumption. Cannabis consumption lounges are permitted to be opened and operated by businesses holding a retailer license. The proposed amendments would allow the City’s commercial cannabis retail businesses to submit applications to operate consumption lounges on the same site as and physically contiguous to a cannabis retailer. In addition, standards would be in place to allow up to a total of six temporary consumption special events per year in the City, with regulations paralleling those for consumption lounges to minimize community impacts.

Several development and operating standards are included to ensure the health and safety of visitors to retailers and to minimize impacts onto surrounding properties. Among these, lounges will need to be designed so that a patron need not enter a consumption lounge in order to access a retail-only portion of the facility, and the lounges may only be accessible to those aged 21 or older. Lounges and special events may also offer food and non-alcoholic beverages, but the sale or consumption of alcohol or tobacco products will be prohibited.

In addition, smoking cannabis will be prohibited in open-air areas, and consumption or smoking of cannabis products shall not be visible from any public place, public right-ofway, or area where minors may be present. If the consumption lounge or event contains an outdoor area, the outdoor area shall be oriented so as to eliminate visibility from any adjacent public place, public right-of-way, area where minors may be present, or adjacent business, tenant space, or building. As with all other commercial cannabis businesses, City Council 35 – 10 5/3/2022
Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax Updates
May 3, 2022

odor control and ventilation systems must be in place to eliminate any odors. Lastly, all facilities or event operators must abide by odor control response measures specified in the ordinance.

Orange County Grand Jury and Orange County Advocacy Alliance On June 3, 2021, the Orange County Grand Jury (OCGJ) issued an investigate report with findings and recommendations regarding the City’s licensed retail adult-use cannabis program and regulatory framework. Subsequent staff reports were presented on the matter to the City Council, most recently on September 7, 2021. Following the September 7 meeting, the City issued a letter on September 13, 2021 to the Honorable Erick Larsh, Presiding Judge, with the City’ responses to six findings and three recommendations. The proposed ordinance will maintain the City’s commercial cannabis regulatory framework in keeping with these findings and response. Moreover, the proposed amendments to community benefit and sustainable business practice requirements reflect the OCGJ’s recommendation to further streamline and unify such obligations by the licensed commercial cannabis businesses operating in Santa Ana, and enable more routine and accurate reporting of such engagements.

Most recently, the Orange County Advocacy Alliance (OCAA) issued a letter to the City Council urging a modification to commercial cannabis tax rates as “the number one priority to create a sustainable, competitive, and profitable cannabis business marketplace.” The proposed tax code amendments to reduce certain non-retail commercial cannabis tax rates reflect not just OCAA’s sentiments, but also feedback received by dozens of business operators and research that the Planning and Building and Finance and Management Services agencies’ staff performed between 2020 and 2022 into competitive jurisdictions’ commercial cannabis tax rates.

Community Benefits and Sustainable Business Practices
In response to recommendations from the OCGJ investigative report and industry feedback, the City is also proposing modifications to its community benefit and sustainable business practice requirements that would clarify and streamline obligations, options, and reporting. The proposed amendments would sunset the requirement for individual operating agreements but would require all commercial cannabis businesses to maintain a community benefit and sustainable business practices plan on file with the City.

Staff met with a focused group of industry representatives on April 21, 2022 to obtain insight on the proposed code amendments. Representatives recommended modifications to the required community benefits and sustainable business practices to reflect current labor trends and industry practices. In addition, representatives expressed a desire to City Council 35 – 11 5/3/2022
Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax Updates
May 3, 2022

standardize reporting to the City. Following this engagement, staff crafted more tailored community benefit and sustainable business practice options in the proposed ordinance.

All commercial cannabis businesses will be required to report community benefit and sustainable business practice obligations on a twice-yearly basis as a condition of maintaining the regulatory safety permit in good standing and as a condition of annual renewal. The annual reporting will require descriptions of the following components:

1. Action – a thorough breakdown of all stated commitments/obligations and the actions taken by the business to satisfy those commitments/obligations.

2. Value – A detailed, quantitative description of the value of the commitments/obligations, either as money spent or time/resources committed by the business and its staff.

3. Community Benefit Value – A qualitative description of the resulting value of the commitments/obligations’ quantitative impacts, otherwise known as the “local multiplier effect” when one dollar is spent locally.

4. Local Engagement – A detailed narrative of engagement by business owners with local organizations, community groups, and civic/government organizations.

Examples include coordination with the City’s Economic Development Division, the Santa Ana WORK Center, job fairs, local educational institutions’ skills training, and local community and not-for-profit organizations.

A final component of the ordinance (Section 11) requires that the City return with recommendations to the City Council to revisit any staff recommendations for adoption of social equity policies or a social equity program. These policies or programs would consider measures to assist or prioritize applications submitted by individuals with previous cannabis-related criminal histories, members of disadvantaged communities, local applicants, and/or other individuals or entities identified at the time requiring assistance with application processes and/or filing fees, local tax payments, and other related components of the commercial cannabis application and buildout process in the City. The tax revenues generated by commercial cannabis consumption lounges would be utilized to further these goals and for the development and maintenance of social equity programs administered by the City. Programs may include workforce training, education, and development within the Santa Ana community in the cannabis industry.

ENVIRONMENTAL IMPACT
In accordance with the California Environmental Quality Act (CEQA), these actions are exempt from further CEQA analysis pursuant to CEQA Guidelines Section 15061(b)(3), as the proposed amendments address business activities already permitted in the City and will not result in any significant physical effect on the environment. A Notice of Exemption, Environmental Review (ER) No. 2022-15, will be filed for these actions.

FISCAL IMPACT
City Council 35 – 12 5/3/2022
Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax Updates
May 3, 2022

There is a projected fiscal impact associated with approval of the recommended actions as they will reduce the projected commercial cannabis revenues for cultivation, distribution, and manufacturing already incorporated within the City’s 2022-23 budget by between approximately $730,000 and $920,000. However, other elements of the staff recommendations contained within this Staff Report relating to shared manufacturing, microbusinesses, notably consumption lounges and temporary events, and allowing all retailers to sell both medicinal and adult-use cannabis, will likely provide some degree of offsetting revenues. Staff, however, lacks reasonable data on which to make reliable revenue projections. Likewise, the addition of five (5) potential added retail sales locations, while encouraging in terms of future revenue, cannot as yet be counted as a reliable projected revenue for the approaching 2022-23 fiscal year due to the lead times involved in bringing such locations into operation.

Failure to adopt the above recommended action items, however, would have a negative impact on a significant number of established cannabis businesses as well as pending commercial cannabis applicants awaiting adoption of those recommended items before committing to entering the approval, permitting, and licensing process and who will defer or cancel their decision to enter the Santa Ana market, thus causing the hoped for revenues to not be realized.

EXHIBIT(S)

1. Ordinance

2. Resolution modifying various commercial cannabis tax rates

3. Resolution establishing a map of commercial cannabis eligible areas in the City

4. Recommended Commercial Cannabis Tax Rate Adjustments table Submitted By: Minh Thai, Executive Director of Planning and Building Agency and Kathryn Downs, Executive Director of Finance and Management Services Agency Approved By: Kristine Ridge, City Manager
City Council 35 – 13 5/3/2022
Ordinance No. NS-XXX

ORDINANCE NO. NS-XXX

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF

SANTA ANA READOPTING AND AMENDING CERTAIN
SECTIONS OF ARTICLE XIII OF CHAPTER 18 OF THE

SANTA ANA MUNICIPAL CODE PERTAINING TO
MEDICINAL MARIJUANA RETAIL AND CHAPTER 40 OF

THE MUNICIPAL CODE PERTAINING TO COMMERCIAL

CANNABIS RETAIL BUSINESSES TO MODIFY THE

MAXIMUM NUMBER OF RETAIL BUSINESSES,
SEPARATION, AND ZONING REQUIREMENTS;
TERMINATE THE MEDICINAL RETAIL WAITLIST; ALLOW

AND REGULATE RETAIL FACILITY RELOCATION,

CANNABIS CONSUMPTION LOUNGES, AND
TEMPORARY CONSUMPTION/SPECIAL EVENTS; AND

AMEND BACKGROUND CHECK AND BADGE
REQUIREMENTS; AND AMENDING CERTAIN SECTIONS
OF ARTICLES XII AND XIII OF CHAPTER 21 OF THE

SANTA ANA MUNICIPAL CODE PERTAINING TO THE TAX

TREATMENT OF COMMERCIAL CANNABIS

MICROBUSINESSES AND SHARED MANUFACTURING

BUSINESSES TO REDUCE THE TAX RATES FOR

COMMERCIAL CANNABIS CULTIVATION, DISTRIBUTION,

AND MANUFACTURING / SHARED MANUFACTURING

AND TO ADOPT A SEPARATE TAX RATE CATEGORY FOR

CANNABIS CONSUMPTION LOUNGES, AND

TEMPORARY CONSUMPTION/SPECIAL EVENTS

THE CITY COUNCIL OF THE CITY OF SANTA ANA HEREBY ORDAINS AS FOLLOWS:

Section 1. The City Council of the City of Santa Ana hereby finds, determines and declares as follows:

A. On November 4, 2014, Santa Ana voters approved Santa Ana’s Medical Marijuana Regulatory Program ordinance (“Measure BB”) which was codified in Chapters 18 and 21 of the Santa Ana Municipal Code. Such regulations govern medicinal marijuana and the retail sale thereof.

B. In 2015, the Governor signed into law Senate Bill 643, Assembly Bill 266, and Assembly Bill 243, collectively referred to as the Medical Marijuana Regulation and Safety Act, further amended in 2016 as the Medical Cannabis Regulation and Exhibit 1
City Council 35 – 14 5/3/2022
Ordinance No. NS-XXX

Safety Act, which established regulations and a state licensing system for medical cannabis cultivation, manufacturing, delivery, and dispensing.

C. In November 2016, the voters of the State of California approved Proposition 64, the California Marijuana Legalization Initiative, also known as the Adult Use of Marijuana Act.

D. In 2017, the Governor signed into law Senate Bill 94 also known as Medicinal and Adult-Use Cannabis Regulation and Safety Act.

E. On November 9, 2017, the City Council created Chapter 40 of the Santa Ana Municipal Code (Ordinance No. NS-2929), allowing adult-use commercial cannabis retail businesses in the city, and amended certain sections of Chapters 18 and 21 of the Santa Ana Municipal Code to ensure consistency with State law and Chapter 40.

F. Since November 2014, the City of Santa Ana has permitted the retail sale of cannabis for medicinal purposes and since January 2018 for adult-use purposes.

On March 20, 2018, the City Council adopted Ordinance NS-2941 and NS-2942, allowing and regulating commercial cannabis testing laboratories.

G. On April 17, 2018, the City Council adopted Ordinance NS-2944 allowing and regulating commercial cannabis cultivation, distribution, and manufacturing activities.

H. On November 6, 2018, the voters of the City of Santa Ana approved Measure Y (Ordinance NS-2962), establishing a tax on commercial cannabis business activities except medicinal cannabis retail sales, which continue to be subject to taxes under Measure BB.

I. On September 3, 2019, the City Council adopted Ordinances NS-2972 and NS-2973 amending certain sections of chapters 18, 21, and 40 of the Santa Ana Municipal Code allowing vertical and horizontal integration of cannabis businesses; updating ownership transfers procedural standards and requirements, security deposits, and various administrative processes; updating and streamlining regulatory components; reducing cannabis testing taxes to two percent of gross receipts; and adopting a canopy measurement and square footage allocation service fee.

J. The State of California continues to update its regulations on commercial cannabis business licensing, resulting in the need for local jurisdictions to update and amend local commercial cannabis ordinances from time to time.

K. It is the desire of the City Council to combine and unify the regulations for medicinal cannabis retail and all other types of commercial cannabis business Exhibit 1
City Council 35 – 15 5/3/2022
Ordinance No. NS-XXX

activities, currently contained in Chapters 18 and 40 of the Santa Ana Municipal Code, respectively, for clarity and cohesion.

L. The City Council recognizes those entities that have remained on the Medicinal Cannabis Waitlist pursuant to Santa Ana Municipal Code Section 18-617.1 (d), (e), and (f), and those entities that were scored as part of the merit-based selection process in Section 40-9.

M. Commercial cannabis businesses form an integral part of the Santa Ana economy, contributing revenues and community benefits through business engagement with the Santa Ana community.

N. The City Council of the City of Santa Ana intends that nothing in this article shall be deemed to conflict with federal law as contained in the Controlled Substances Act, nor to otherwise permit any activity that is prohibited under that Act or other applicable law.

O. The City of Santa Ana has a compelling interest in ensuring that cannabis is not sold, cultivated, manufactured, tested, consumed, or distributed in an illicit manner, in protecting the public health, safety and welfare of its residents and businesses, in preserving the peace and quiet of the neighborhoods in which these uses may operate, and in providing access of cannabis to residents.

P. The City Council has held a duly noticed public hearing on April 19, 2022 in connection with consideration and adoption of this ordinance.

Section 2. This Ordinance is adopted pursuant to the authority granted by the California Constitution and State law, including but not limited to: Article XI, Section 7 of the California Constitution, the Compassionate Use Act of 1996 (California Health and Safety Code Section 11362.5), the Medical Marijuana Program (California Health and Safety Code Section 11362.7 et seq.), the Medical Marijuana Regulation and Safety Act (AB 266, AB 243, and SB 643; hereafter “MMRSA”), the Adult Use of Marijuana Act (Proposition 64), and the Medical and Adult Use Cannabis Regulation and Safety Act (SB 94; hereafter “MAUCRSA”).

Section 3. Pursuant to the California Environmental Quality Act (“CEQA”) and the State CEQA Guidelines, the adoption of this ordinance is exempt from CEQA review pursuant to California Code of Regulations section 15061(b)(3), which is applicable if it can be seen with certainty that there is no possibility that the project may have a significant effect on the environment. As a result, a Notice of Exemption will be filed upon the adoption of this ordinance.

Section 4. All provisions of the Santa Ana Municipal Code which are repeated herein are repeated solely in order to comply with the provisions of Section 418 of the City Charter. Any such restatement of existing provisions of the Code is not intended, Exhibit 1
City Council 35 – 16 5/3/2022
Ordinance No. NS-XXX

nor shall it be interpreted, as constituting a new action or decision of the City Council, but rather such provisions are repeated for tracking purposes only in conformance with the Charter.

Section 5. The title of Chapter 40 of the Santa Ana Municipal Code is hereby amended to read in its entirety as follows:

Chapter 40 - REGULATION OF COMMERCIAL CANNABIS BUSINESS

ACTIVITIES OTHER THAN MEDICINAL CANNABIS RETAIL ACTIVITIES Section 6. Article I of Chapter 40 of the Santa Ana Municipal Code is hereby amended to read in its entirety as follows:

Sec. 40-1. Purpose and intent, intent, and community benefits required.

A. The purpose and intent of this article is to regulate commercial cannabis business activities, as defined in this article, in order to ensure the health, safety and welfare of the residents of the City of Santa Ana by establishing regulations necessary for commercial cannabis business operating in the City of Santa Ana to obtain and maintain a Regulatory Safety Permit ("RSP"). Any commercial cannabis businesses operating in the City of Santa Ana shall at all times be in compliance with current State Law and this article. All commercial cannabis facilities shall operate in accordance with the regulations in this article and with the conditions of approval associated with the applicable zone for the parcel of real property upon which the commercial cannabis activities are conducted. Any commercial cannabis business shall qualify for and receive a Regulatory Safety Permit from the City of Santa Ana as provided by this article and operate only in a zone in compliance with Santa Ana Municipal Code before commencing with any commercial cannabis business activity. Any commercial cannabis business without a Regulatory Safety Permit is in violation of this article. The regulations in this article, in compliance with the Compassionate Use Act, the Medicinal Marijuana Program Act, SB 94, AB 133, Proposition 64, and the California Health and Safety Code (collectively referred to as "State Law") do not interfere with the right to use adult-use cannabis or medicinal cannabis as authorized under State Law, nor do they criminalize the possession of cannabis as authorized under State Law.

B. Any person operating a medicinal marijuana collective/cooperative (as defined in Chapter 18 Article II of this Code Chapter) as of December 14, 2017, or who has a RSP application pending to operate a medicinal collective/cooperative, and has met all of the requirements of Chapter 18 Article II, shall be allowed to apply for a Regulatory Safety Permit for the sale of Adult-Use cannabis provided that they enter into the Commercial Cannabis Operating Agreement with the City.

C. The Commercial Cannabis Operating Agreement shall be a legally binding written agreement between each commercial cannabis business operator and the City, executed by the City Manager, or his or her designee, and in a form and substance Exhibit 1
City Council 35 – 17 5/3/2022
Ordinance No. NS-XXX

satisfactory to the Executive Director of Planning and Building and the City Attorney, and containing those provisions necessary to ensure that the requirements of this article are satisfied. A distinct Commercial Cannabis Operating Agreement shall be required for each location of a commercial cannabis business activity taking place at an approved Commercial Cannabis Business Community Benefits Required.

1. Effective January 1, 2023, all commercial cannabis businesses operating in the City shall be required to provide community benefits through a Community Benefits and Sustainable Business Practices Plan in a format acceptable by the City as reviewed and verified from time to time as a component of issuance of a regulatory safety permit (RSP). Each commercial cannabis business operating in the City shall commit to:
a) Hiring a minimum percentage of staff from the Santa Ana community, including volunteers, employees, and managers;
b) Local sourcing of construction materials and cannabis products from within Santa Ana;
c) Pay prevailing industry wages;
d) Other community benefit commitments that promote health and sustainability of the community, including, but not limited to:
a. Transit incentives to reduce individual/private automobile use; b. Healthy living incentives, including but not limited to health club memberships, nutritional counseling, adequate break times, onsite physical health and ergonomic trainings, and other measures intended to promote healthy living of staff;
c. Constructing the facility with “green” technologies intended to reduce waste, electricity use, and water use;
d. Engaging the local artist community; and
e. Any other measures designed to promote the community benefits principles outlined in this subsection.

2. Documentation of the aforementioned community benefits shall be submitted to the Code Enforcement Division on an annual basis, including as part of a renewal application for an RSP during the annual renewal process. Said documentation shall detail said business’s community benefits obligations as mandated by this Chapter and shall be evaluated for satisfaction by the Executive Director of the Planning and Building Agency or his or her designee. Failure to provide the requested documentation shall result in a suspension or revocation of an RSP, or delay or denial of an RSP renewal application, as applicable.

Exhibit 1
City Council 35 – 18 5/3/2022
Ordinance No. NS-XXX

3. City Option to Satisfy Community Benefits and Sustainable Business Practices. a) A commercial cannabis business may opt to allow the City to satisfy community benefits obligations through execution of an operating agreement in a form to the satisfaction of the City Manager, City Attorney, and Executive Directors of the Planning and Building and Community Development agencies. b) Said operating agreement shall detail the City’s program to provide community benefits supported by the commercial cannabis business’ opting in to reimburse the City through reimbursement of expenses based on a percentage of gross receipts established by the City.
c) The operating agreement shall be binding and enforceable, and fully executed prior to issuance of the RSP. All terms shall be satisfied and reviewed on an annual basis as part of the annual RSP renewal process.

Sec. 40-2. Definitions.

The definitions are incorporated herein as fully set forth and are applicable to this article.

All definitions are intended to comply with those set forth by the State of California for all commercial cannabis business activities.

1. "Applicant" means a person who is required to file an application for a permit under this article, including an individual owner, managing partner, officer of a corporation, or any other operator, manager, employee, or agent of a commercial cannabis business.

2. "Adult-Use" means cannabis or cannabis products that are intended to be used for non-medicinal purposes by a person twenty-one (21) years of age or older.

3. "Adult-Use Cannabis Retailer Operating Agreement" or "Operating Agreement" means the agreement entered into by and between the City and the commercial cannabis business operator which will specify terms for local hiring and sourcing, community benefit plans, and fees to compensate for authorized impacts on City services.

4. "Adult-Use cannabis retail business" means an Adult-Use retail business that obtains a Regulatory Safety Permit and engages in the delivery or sale of Adult-Use cannabis, or an Adult-Use cannabis product, except as related Business and Professions Code Section 19319, or Health and Safety Code Sections 11362.1 through 11362.45, as amended from time to time, excepting medicinal cannabis retail.

5. "Authorized City of Santa Ana representative" means any police officer, city employee, contractor or agent of the city designated by the director of any city department which has the authority and responsibility to enforce provisions as set forth in this article.

6. "Business owner" means any of the following:

Exhibit 1
City Council 35 – 19 5/3/2022
Ordinance No. NS-XXX

a) A person with an aggregate ownership interest of twenty (20) percent or more in the person applying for a license or a licensee, unless the interest is solely a security, lien, or encumbrance.
b) The chief executive officer of a nonprofit or other entity. c) A member of the board of directors of a nonprofit.
d) An individual who will be participating in the direction, control, or management of the person applying for a license.

7. "Cannabis" or "cannabis product" means all parts of the Cannabis sativa Linnaeus, Cannabis Indica, or Cannabis Ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. "Cannabis" also means the separated resin, whether crude or purified, obtained from marijuana. "Cannabis" also means marijuana as defined by Section 11018 of the California Health and Safety Code as enacted by Chapter 14017 of the Statutes of 1972. "Cannabis" does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of the plant which is incapable of germination. For the purpose of this chapter, "cannabis" does not mean industrial hemp as that term is defined by Section 81000 of the California Food and Agricultural Code or Section 11018.5 of the California Health and Safety Code.

8. "City" means the City of Santa Ana, a charter city and municipal corporation.

9. "Commercial cannabis activity" means the cultivation, possession, manufacture, distribution, processing, storing, laboratory testing, packaging, labeling, transportation, delivery or sale of cannabis and cannabis products as provided for this Chapter. Permitted commercial cannabis activities are listed in Land Use Table 40-5 of this Chapter and are allowed in the Commercial Cannabis Eligible Areas Map as adopted and modified from time to time by resolution of the City Council.

10."Commercial cannabis business" means a business that obtains a Regulatory Safety Permit and engages in the cultivation, possession, manufacture, processing, storing, laboratory testing, labeling, distribution, delivery, or sale of adult-use cannabis, medicinal cannabis or an adult-use cannabis or medicinal cannabis product, except as related Business and Professions Code Section 19319, or Health and Safety Code Sections 11362.1 through 11362.45, as amended from time to time.

11."Cultivation" means to plant, grow, harvest, dry, cure, grade or trim cannabis, as defined by California Business and Professional Code Section 26001, as amended from time to time.

Exhibit 1
City Council 35 – 20 5/3/2022
Ordinance No. NS-XXX

12."Customer" means a natural person twenty-one (21) years of age or over.

13."Delivery" means the commercial transfer of cannabis or cannabis products from a retail cannabis business to a customer up to an amount determined to be authorized by the State of California, or any of its departments or divisions. "Delivery" also includes the use by a retail cannabis business of any technology platform owned, controlled, and/or licensed by the retail cannabis business, or independently licensed by the State of California under the State law (as amended from time to time), that enables anyone to arrange for or facilitate the commercial transfer by a licensed retail cannabis business of cannabis or cannabis products. For the purposes of this article, "delivery" does not include distribution or purchase of cannabis from a licensed cultivator, and cannabis products from a licensed manufacturer, for sale to a licensed cannabis retail business.

14."Delivery employee" means an individual employed by a licensed retail cannabis business who delivers cannabis goods from the permitted retail premises to a customer at a physical address.

15."Display" means cannabis goods that are stored in the licensed retail business during the hours of operation.

16."Distribution" means the procurement, sale, and transport of cannabis or cannabis products between Licensees.

17."Edible cannabis product" means manufactured cannabis that is intended to be used, in whole or in part, for consumption. An edible cannabis product is not considered food as defined by Section 109935 of the California Health and Safety Code or a drug as defined by Section 109925 of the California Health and Safety Code.

18."Free sample" means any amount of commercial cannabis goods provided to a purchaser of cannabis without cost or payment or exchange of any other thing of value.

19."Labor Peace Agreement" means a legally binding agreement between an employer and a labor organization in which the employer agrees to remain neutral in the event its employees wish to unionize, as described more fully in Business and Professions Code 26001(x), as amended from time to time.

20."License/Licensee" means a license issued by the State and includes both an Alicense (Adult-Use) and an M-license (Medicinal), and the holder of such license.

21."Manufacturer" means a Licensee that conducts the production, preparation, propagation, or compounding of cannabis or cannabis products either directly or indirectly or by extraction methods, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis at a fixed location that packages or repackages cannabis or cannabis products or labels or relabels its container.

Exhibit 1
City Council 35 – 21 5/3/2022
Ordinance No. NS-XXX

22."Manufacturing" means all aspects of the extraction and/or infusion processes, including processing, preparing, holding, storing, packaging, or labeling of cannabis products. Manufacturing also includes any processing, preparing, propagating, holding, or storing of components and ingredients.

22.5. “Shared Manufacturing” means manufacturers who work in a shared-use facility.

Shared-use facilities are places where multiple shared manufacturers engaging in cannabis extraction using butter or cooking oils, infusion, and/or packaging and labeling rotate on a schedule and share space and equipment. All or part of manufacturing premises may be registered as a shared-use facility. 23 "Medicinal cannabis patient" is a person whose physician has recommended the use of cannabis to treat a serious illness, including cancer, anorexia, AIDS, chronic pain, spasticity, glaucoma, arthritis, migraine, or any other illness for which cannabis provides relief.

24. "Microbusiness" means a commercial cannabis business that cultivates cannabis on an area less than ten thousand (10,000) square feet and acts as a licensed distributor, Level 1 manufacturer, and retailer.

25. "Nursery" means a commercial cannabis Licensee that produces only clones, immature plants, seeds, and other agricultural products used specifically for the planting, propagation, and cultivation of cannabis.

26. "Medicinal/medical cannabis" or "Medicinal cannabis product," means cannabis or a product containing cannabis, including, but not limited to, concentrates, and extractions, intended to be sold for use by medicinal cannabis patients in California pursuant to the Compassionate Use Act of 1996, found at Section 11362.5 of the California Health and Safety Code. Medicinal cannabis retail is regulated by this Chapter 18 and Chapter 21 of the Santa Ana Municipal Code.

27. "Outdoor cultivation" means the cultivation of cannabis outside a permanent enclosed building. Outdoor cultivation is prohibited within the City of Santa Ana.

28. "Ownership interest" means an interest held by a person who is an owner as defined by State of California commercial cannabis regulations or who has a financial interest in the commercial cannabis business of twenty (20) percent or more.

29. "Package" and "Packaging" means any container or wrapper that may be used for enclosing or containing any cannabis goods for final retail sale. "Package" and "packaging" does not include a shipping container or outer wrapping used solely for the transport of cannabis goods in bulk quantity to a Licensee.

30."Person" includes any individual, firm, partnership, joint venture, association, corporation, limited liability company, estate, trust, business trust, receiver, syndicate, or any other group or combination acting as a unit, and the plural as well as the singular.

Exhibit 1
City Council 35 – 22 5/3/2022
Ordinance No. NS-XXX

31."Premises" means the designated structure(s) and land specified in the application that are in possession of and used by the applicant or Licensee to conduct the commercial cannabis activity.

32."Primary Caregiver" has the same meaning as that term is defined in Section 11362.7 of the Health and Safety Code, as amended from time to time.

33."Private Residence" shall have the same definition as that contained in Health and Safety Code section 11362.2(5) and also means a lawfully established structure, suitable for human occupancy as required by section 17922 and 17958 of the California Health and Safety Code. A recreational vehicle does not constitute a lawfully established structure for the purposes of this article.

34."Private security officer" has the same meaning as that term as defined in the State of California Business and Professions Code section 7574.01.

35."Purchase" means obtaining cannabis goods in exchange for consideration.

36."Purchaser" means a person who is engaged in a transaction with a Licensee for purposes of obtaining cannabis goods.

37."Qualified patient" has the same meaning as such term is defined in California Health and Safety Code section 11362.5, as amended from time to time, and means a person whose physician has recommended the use of cannabis to treat a serious illness, including cancer, anorexia, AIDS, chronic pain, spasticity, glaucoma, arthritis, migraine, or any other illness for which cannabis provides relief.

38."Responsible person" means any of the following:
a) A person who causes a Code violation to occur.
b) A person who maintains or allows a Code violation to continue by way of his or her action or failure to act.
c) A person whose agent, employee, or independent contractor causes a Code violation by its failure to act.
d) A person who is the owner of, and/or a person who is a lessee or sub lessee with the current right of possession of, real property where property-related Code violation occurs.
e) A person who is the on-site manager of a business who normally works daily at the site when the business is open and is responsible for the activities of such premises.

39."Retail business" means a premises where cannabis, cannabis products, or devices for the use of cannabis or cannabis products are offered, either individually or in any Exhibit 1
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Ordinance No. NS-XXX

combination for retail sale, including an establishment that delivers cannabis or cannabis products as part of a retail sale.

39.1 For the purposes of this Chapter, “Consumption lounge” means a facility for the onsite retail sale and consumption or smoking of cannabis or cannabis products that is a licensed premises that is a physical location from which commercial cannabis activities are conducted, as defined by Business and Professions Code Section 26070 as amended from time to time. For the purposes of this definition, “consumption” and “smoking” shall also include inhalation, vaping, and/or ingestion.

39.2 For the purposes of this Chapter, “Temporary Consumption” and “Special Event” shall mean an event that may be single- or multi-day where people can sell and consume cannabis subject to full compliance with local, County, and State licensing requirements.

40."Regulatory Safety Permit (RSP)" means a permit issued by the City pursuant to this article to a commercial cannabis business.

41."Sell," "sale," and "to sell" include any transaction whereby, for any consideration, title to cannabis is transferred from one (1) person to another, and includes the delivery of cannabis goods pursuant to an order placed for the purchase of the same and soliciting or receiving an order for the same, but does not include the return of cannabis goods by a Licensee to the Licensee from whom such cannabis goods were purchased.

42."State" means the State of California.

43."Testing Facility" or "Testing Laboratory" defined in the Business and Professions Code section 26001, as amended from time to time, means a laboratory, facility, or entity in the State that offers or performs tests of cannabis or cannabis products and that is both of the following:
a) Accredited by an accrediting body that is independent from all other persons involved in commercial cannabis activity in the State; and, b) Licensed by the Bureau of Cannabis Control.

44."Wholesale" means the sale of cannabis goods to a distributor for resale to one (1) or more retail cannabis businesses.

Sec. 40-3. Compliance with state and local licensing requirements.

A. Any commercial cannabis business as defined by the State of California and the City of Santa Ana shall operate in conformance with all regulations and standards set forth in this article to assure that the operations of any commercial cannabis business as defined by the State of California and allowed by the City of Santa Ana are in Exhibit 1
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Ordinance No. NS-XXX

compliance with local and State law and are established to mitigate any adverse secondary effects from its operations.

B. Commercial cannabis businesses shall be required to obtain a Regulatory Safety Permit (RSP) from the City of Santa Ana and a State license, and shall comply with any applicable State licensing requirements, such as operational standards and locational criteria.

C. Co-location of commercial cannabis businesses proposed on any one (1) site shall occur only if authorized by the State and the City of Santa Ana and only if allowed pursuant to the City's Zoning Code. Any commercial cannabis activity not specifically permitted by this article is prohibited.

Sec. 40-4. Maximum number of regulatory safety permits for commercial cannabis retail businesses.

A. The total number of cannabis retail businesses in operation shall be determined based on the number of locations which have been issued a Regulatory Safety Permit by the City of Santa Ana. In no case shall the City of Santa Ana allow more than thirty-five (35) the than the following commercial cannabis retail businesses to operate within City limits, regardless of the location's compliance with any other Section specified in this article:.

B. Until the Waitlist, as specified in Section 40-107.1, is terminated, the maximum number of medicinal cannabis retail businesses, including collectives or cooperatives, is twenty (20).

A. Twenty (20) total medicinal cannabis retail businesses (as regulated by Article XIII of Chapter 18);
Thirty (30) total adult-use cannabis retail businesses (which could include any or all of the medicinal cannabis retail businesses)
Sec. 40-5. Zoning compliance and regulatory safety permit requirements.

Commercial cannabis activities are expressly prohibited in all zones in the City of Santa Ana; however, specific commercial cannabis businesses are allowed in the Industrial zoning districts (M-1, M-2), as specified on the adopted Commercial Cannabis Eligible Areas Map. The allowed current permit types are described in Table 40-5 and the City of Santa Ana's zoning ordinance as a requisite for obtaining a Regulatory Safety Permit. No commercial cannabis business may operate in the City of Santa Ana without a Regulatory Safety Permit.

This Land Use Table 40-5 shall be used to determine whether a commercial cannabis business is permitted — "P," or not permitted — "X." Any commercial cannabis business in the City of Santa Ana shall also operate in compliance with the City's zoning ordinance.

Exhibit 1
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Ordinance No. NS-XXX

If a Zoning District is not listed in the Land Use Table in this section then the use is expressly not permitted.

City of Santa Ana Municipal Code Table 40-5
Commercial
Cannabis
Business
Activities Use
Type
Land Use
Classification
Light and Heavy
(M1 and M2)
Zoning Districts,
as Indicated on
the Commercial
Cannabis Eligible
Areas Map
Zone
M-2
Zone
Regulatory
Safety
Permit
Required
Cultivator/Nursery Indoor only P P Yes
Cultivator/Nursery Outdoor or mixedlight X X NA
Cultivator/Nursery
Indoor/Outdoor —
Type 5A
(Cultivation;
Indoor; Large)
Grows, as defined
and amended by
the State,
permitted
beginning
January 1, 2023)
X P X P NA Yes
Manufacturing
(including “shared
manufacturing”)
Manufacturing P P Yes
Retail
Medicinal Retail
(SAMC Chapter
18)
P P Yes
Retail Adult-Use Retail P P Yes
Testing Laboratory
Adult-Use and/or
Medicinal
Industrial
P P Yes
Exhibit 1
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Ordinance No. NS-XXX

Distribution Freight/Transport P P Yes
Microbusiness
Cultivation/Retail/
Manufacturing/
Distribution
P – only as part of
a verticallyintegrated/colocated business
in full
conformance
with the
requirements of
this and Chapter

18. P – only as part
of a verticallyintegrated/colocated
business in full
conformance
with the
requirements of
this article and
Chapter 18.

Yes
Consumption
Lounge
Consumption
Lounge, as an
ancillary
component to
Retail
P P Yes
Sec. 40-6. Location and Separation requirements for all commercial cannabis retail businesses.

A. Commercial cannabis businesses may only operate within an Industrial zoning district (M-1, M-2) in accordance with the Commercial Cannabis Areas Map as adopted by resolution of the City Council.

B. No commercial cannabis retail business shall be located within five hundred (500) feet of another retail cannabis business, except for permitted co-location. (a) No commercial cannabis retail business shall be located within one thousand (1,000) feet of any:
(1) School (K-12) as defined by Section 11362.768 of the Health and Safety Code; or (2) Park; or
(3) Existing Residential zones in place on November 4, 2014. (b) No commercial cannabis retail business shall be located within five hundred (500) feet of another retail cannabis business, except for permitted co-location.

Sec. 40-7. Separation requirements for non-retail (cultivation, manufacturing, testing laboratory, and distribution) commercial cannabis businesses Relocation of commercial cannabis retail businesses (medicinal and/or adult-use).

Exhibit 1
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Ordinance No. NS-XXX

(a) Relocation of an existing or pending medical marijuana collective, medical marijuana cooperative, and/or adult-use cannabis retail business as defined in this Chapter is permitted within the City of Santa Ana subject to the following:
(1) The medical marijuana collective, medical marijuana cooperative, and/or adult-use cannabis retail business must hold a valid RSP, business license, and the appropriate State commercial cannabis license, or be on a selected or eligible list with a pending RSP;
(2) The existing RSP holder and existing location must be in good standing, including but not limited to full compliance with all requirements of the Santa Ana Municipal Code, no active code enforcement and/or building safety violations, violations of regulations imposed by the State of California and County of Orange, and have no outstanding business license fees and taxes, except those subject to and performing under a Finance and Management Services Agency approved payment plan agreement.
(3) The proposed new location of the medical marijuana collective, medical marijuana cooperative, and/or adult-use cannabis retail business is in full compliance with the zoning and separation requirements for commercial cannabis retail businesses as outlined in Sections 40-5 and 40-6 of the Santa Ana Municipal Code. (4) The proposed new location of the medical marijuana collective, medical marijuana cooperative, and/or adult-use cannabis retail business must comply with separation requirements of this Chapter except that the proposed new location must also satisfy said separation requirements from any location identified on the Qualified Registration Applicant List (“Waitlist”), as defined in Section 40-107.1 . (b) Every medical marijuana collective, medical marijuana cooperative, and/or adult-use cannabis retail business wishing to relocate shall be required to concurrently: (1) File an application for an RSP and (2) Submit all required construction plans for plan check by the City, subject to the requirements of this Chapter and other applicable chapters of the Santa Ana Municipal Code, and open within 180 days of construction permit issuance. An extension may be issued for a period of time as may be reasonably required to affect upgrades, modifications, repairs, or other property issue mitigations as approved by the Director of Planning and Building or his or her designee. (c) Upon issuance of the RSP for the new location, the previous location’s RSP and certificate of occupancy immediately becomes null and void and the location must cease to operate.
(d) Within 60 days of issuance of the RSP for the new location, the applicant must provide the City documentation demonstrating that any State-issued commercial cannabis retailer license associated with the previous location has been cancelled, rescinded, or updated to reflect the new location.

Exhibit 1
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Ordinance No. NS-XXX

(a) No non-retail commercial cannabis business shall be located within one thousand (1,000) feet of any:
(1) School (K-12) as defined by Section 11362.768 of the Health and Safety Code; or (2) Park; or
(3) Existing Residential zones in place on November 4, 2014.

Sec. 40-8. General provisions for commercial cannabis activities in the City of Santa Ana.

1. Regulatory Safety Permit Required.
(a) Each commercial cannabis business shall obtain a Regulatory Safety Permit (RSP) specific to the business activity or activities defined by the State pertaining to that activity. The only allowed current activity types pursuant to this article are for commercial cannabis retail sales and cultivation, distribution, manufacturing, and testing laboratories/facilities. Co-location is permitted pursuant to Section 40-9. (b) It shall be unlawful for any person, as defined by this ordinance, to engage in, conduct or carry on, in or upon any premises within the City of Santa Ana any commercial cannabis business without a RSP. A commercial cannabis business shall register and obtain a RSP from the City of Santa Ana prior to operation. The RSP applicant shall pay an annual non-refundable application fee in an amount established by the City Council.
(c) A copy of the RSP shall be displayed at all times in a place visible to the public. (d) A RSP shall be valid for a period of one (1) year from the date of issuance, unless sooner revoked. No permit granted herein shall confer any vested right to any person or business for more than the above-referenced period.

2. Maintenance of Records and Reporting. All records shall be maintained by the commercial cannabis business for a period of five (5) years and shall be made available by the commercial cannabis business to an authorized City of Santa Ana representative upon request. If they are not produced as requested, the City may seek a search warrant, subpoena, or court order. In addition to all other formats that the commercial cannabis business may maintain, these records shall be stored by the business at the location in a printed format in a fireproof safe or filing cabinet. Any loss, damage or destruction of the records shall be reported to the Police Department within twenty-four (24) hours of the loss, destruction or damage. (a) The business shall obtain and maintain a valid Seller's Permit from the California Department of Tax and Fee Administration (CDTFA).

Exhibit 1
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Ordinance No. NS-XXX

(b) Financial records include, but are not limited to: bank statements, sales invoices, receipts, tax records, and all records required by the CDTFA under Title 18 California Code of Regulations section 1968.
(c) Personnel records, including each employee's full name, address, phone number, social security, or individual tax payer identification number, date of beginning employment, and date of termination of employment if applicable. (d) Training records, including, but not limited to, the content of the training provided and the names of the employees that received the training. (e) Contracts with other businesses regarding commercial cannabis business activity. (f) Permits, licenses, and other local authorizations to conduct the commercial cannabis business activity.
(g) Security records, as outlined in the Operational Standards for All Commercial Cannabis Business Activities.
(h) Proof of building ownership or landlord letter acknowledging business type. (i) Proof of insurance.

3. Operational Standards for All Commercial Cannabis Business Activities. (a) The location, interior and exterior, shall be monitored at all times by web-based closed circuit television for security purposes. The camera and recording system must be of adequate quality, color rendition and resolution to allow the ready identification of any individual committing a crime anywhere on or adjacent to the location. The recordings shall be maintained unaltered in a secure location for a period of not less than ninety (90) days. The Police Department may request the recordings in connection with an investigation.
(b) All controlled access areas, security rooms and all points of ingress/egress to limited access areas and all point of sale (POS) areas shall have fixed camera coverage capable of identifying activity occurring within a minimum of twenty (20) feet.
(c) The surveillance system storage device or cameras shall be transmission control protocol/TCP capable of being accessed through the internet by the police department or their designee on request.
(d) If applicable, the applicant shall conduct and pay for any required CEQA reviews and analyses, and pay for all costs, including those of the City, associated with project review under CEQA.
(e) Commercial cannabis businesses shall create and maintain an active account within the State's track and trace system prior to commencing any commercial Exhibit 1
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Ordinance No. NS-XXX

cannabis retail activity. In the event of system failure, the business shall keep a hard copy record and transfer the information to the track and trace system within twenty-four (24) hours of the system being available.
(f) No physical modification of the licensed premises is allowed without written prior permission by the City of Santa Ana and payment of any additional fees required by the City.
(g) Commercial cannabis business businesses shall provide adequate off-street parking and comply with the City of Santa Ana Municipal Code parking requirements in order to service customers without causing negative impact. (h) The commercial cannabis business shall provide adequate disabled access parking per the requirements in the California Building Code. (i) The commercial cannabis business shall minimize nuisances such as trash, litter, and graffiti.
(j) Any and all signage, packaging, and facilities shall not be "attractive," as it is defined by the State, to minors.
(k) Commercial cannabis business facilities shall be required to provide an air treatment system that ensures off-site odors shall not result from its operations.

This requirement at a minimum means that the facility shall be designed to provide sufficient odor absorbing ventilation and exhaust systems so that any odor generated inside the location is not detected outside the building, in any adjacent tenant suites, on adjacent properties or public rights-of-way, or within any other unit located within the same building as the facility if the use occupies only a portion of a building.
(l) The commercial cannabis business shall comply with all State regulations regarding:
i. Testing, labeling and storage of all cannabis products. ii. Use of appropriate weighing devices.
iii. Electrical and plumbing regulations subject to periodic and unannounced inspections to ensure compliance.
iv. State deadlines for applying for a State license and receiving a State license within six (6) months after the date the State begins issuing licenses. This may be waived if the State has longer delays in issuing licenses of the type the commercial cannabis business seeks.
(m)The commercial cannabis business shall maintain a comprehensive general liability combined single occurrence insurance policy issued by an "A" rated Exhibit 1
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Ordinance No. NS-XXX

insurance carrier in an amount no less than two million dollars ($2,000,000.00), with primary coverage, naming the City of Santa Ana as additional insured. (n) No free samples of any cannabis or cannabis product may be distributed at any time.
(o) All agents, private security officers or other persons acting for or employed by a collective shall display a laminated an identification badge at least two (2) inches by two (2) inches in size, issued by the City. The badge, at a minimum, shall include the employee's first and last name, date of most recent Live Scan, expiration date of Live Scan results after the one-year period, and a color photo of the employee that shows the full front of the employee's face.
(p) All private security officers acting for or employed by a commercial cannabis business shall be licensed by the State and issued a security/patrol services business license from the City of Santa Ana.
(q) The commercial cannabis business shall have a centrally monitored fire and burglar alarm system which shall include all perimeter entry points and perimeter windows and the building or portion of the building where the business is located shall contain a fireproof safe or fireproof filing cabinet and include a safety and security plan.
(r) The commercial cannabis business shall ensure a licensed alarm company operator or one (1) or more of its registered alarm agents installs, maintains, monitors and responds to the alarm system. The alarm company shall obtain a City of Santa Ana business license.
(s) The commercial cannabis business shall provide the name and phone number of an on-site staff person to the police department and the Code Enforcement Division of the Planning and Building Agency for notification if there are operational problems with the establishment.
(t) The commercial cannabis business must obtain and maintain a valid City business license at all times as a condition for receiving, renewing, and maintaining its regulatory safety permit.
(u) Occupancy shall not exceed that required under the Uniform Building Code and Uniform Fire Code, and the maximum occupancy load shall be posted at the main entrance.
(v) For any commercial cannabis business with two (2) or more employees, the business owner shall attest that he/she has entered into a labor peace agreement and provide a copy of the agreement to the City.
(w)Each commercial cannabis business owner, operator(s) and employees shall complete a criminal background check and wear a visible photo ID at all times Exhibit 1
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Ordinance No. NS-XXX

during operating hours. Owners, operator(s), employees, managers or volunteers may not have been:
i. convicted of, or pleaded guilty/no-contest to a felony within the past four (4) years or currently on formal probation or parole;
ii. convicted of an infraction or misdemeanor drug charge within the past four (4) years or required to registered as a controlled substance offender pursuant to Health and Safety Code section 1590 as part of their sentence for any other charge(s);
iii. an owner or operator of property or a business in which the applicant knew, or should have known, that an unlicensed cannabis location was present within the past four (4) years.

If a collective owner(s), operator(s) or employees has a pending criminal infraction, misdemeanor or felony case involving a drug charge, the applicant must provide written documentation from the prosecuting entity of their intent to either prosecute or dismiss the matter. If the prosecuting entity indicates that a pending criminal case involving the applicant is actively being prosecuted, the applicant will not be disqualified; however, their application will be put on hold pending final adjudication of that case.
(x) All signage for the commercial cannabis business must comply with Article XI of Chapter 41 of the Santa Ana Municipal Code.
(y) Inspections by an authorized City of Santa Ana representative may be conducted anytime during the business's regular business hours.

4. Additional Operational Standards for Adult-Use Cannabis Retail Business. (a) At all times the Adult-Use cannabis retail business is open, it shall provide at least one (1) private security guard who is licensed, possesses a valid Department of Consumer Affairs "security guard card," and has a valid business license from the City of Santa Ana as a security/private patrol service. (b) The private security guard and adult-use retail cannabis business personnel shall monitor the site and the immediate vicinity of the site to ensure that patrons immediately leave the site and do not consume cannabis in the vicinity of the retail business or on the property or in the parking lot.
(c) Exterior signage shall comply with Article XI of Chapter 41 of the Santa Ana Municipal Code. Interior signage or advertising may not be visible from the exterior.

Retail cannabis businesses must comply with the advertising and marketing provisions of Business and Professions Code §§ 26150—26155. (d) There shall be no on-site sales of alcohol or tobacco products, (excluding rolling papers and lighters) and no on-site consumption of alcohol or tobacco by patrons.

Exhibit 1
City Council 35 – 33 5/3/2022
Ordinance No. NS-XXX

Food may not be consumed on site, except as permitted by Section 40-8 (10) of this chapter.
(e) Hours of operation shall be limited to: 7:00 a.m. to 10:00 11:00 p.m. daily. No licensed retail business shall be open to the public between the hours of 10:01 11:01 p.m. and 6:59 a.m. of any day.
(f) The Adult-Use cannabis retail business shall notify patrons of the following both verbally and through posting of a sign in a conspicuous location:
i. Secondary sale, barter or distribution of adult-use cannabis is a crime and can lead to arrest.
ii. That loitering on and around the retail site is prohibited by California Penal Code § 647(e) and that patrons must immediately leave the site and not consume cannabis in the vicinity of the retail site or on the property or in the parking lot.
iii. A warning that patrons and/or employees may be subject to prosecution under federal cannabis laws.
iv. That the use of cannabis may impair a person's ability to drive a motor vehicle or operate machinery.
(g) No one under the age of twenty-one (21) shall be allowed to enter an Adult-Use cannabis facility unless the licensed Adult-Use cannabis facility holds a medicinal use cannabis RSP issued by the City and retail license issued by the State, and the licensed premises for the adult-use cannabis license and medicinal cannabis license are the same in accordance with Business and Professions Code section 26140.
(h) If non-cannabis food is distributed, the retail business shall comply with all relevant State laws, County and City ordinances pertaining to the preparation, distribution and sale of food.
(i) All Adult-Use cannabis retail businesses shall establish and implement a program to incentivize the recycling of used containers. Failure to establish and implement a program to incentivize the recycling of used containers will result in a violation of the terms of the required commercial cannabis Operating Agreement requiring sustainable building or business practices.
(j) Adult-Use cannabis retail businesses shall also record on the video surveillance system point-of-sale areas and areas where cannabis goods are displayed for sale.
(k) Adequate signage shall clearly state who has inspected any cannabis product for pesticides, or other regulated contaminants, distributed at this location.

Exhibit 1
City Council 35 – 34 5/3/2022
Ordinance No. NS-XXX

(l) Shipments of cannabis goods may only be accepted during regular business hours.
(m)Inventory shall be secured using a lockable storage system during non-business hours.
(n) No cannabis product shall be visible from the exterior of the business. (o) All required labelling shall be maintained on all product, as required by State law, at all times.
(p) Educational tours of adult-use retail cannabis businesses shall be allowed. (q) A permitted commercial cannabis retail business shall have one hundred eighty (180) days after construction permit issuance by the City of Santa Ana to operate.

A permitted commercial cannabis retail business that ceases to operate for more than ninety (90) calendar days shall be deemed "abandoned" and the permit shall be forfeited. A permitted commercial cannabis business may temporarily suspend operations for a period of time as may be reasonably required to affect upgrades, modifications, repairs, or other property issue mitigations as approved by the Director of Planning and Building or his or her designee. For the purposes of this section, "operate" shall mean that the gross receipts fees charged for the business exceed the fee per square foot calculations by the end of the one hundred eighty (180) day period. A pending commercial cannabis retail business shall be required to concurrently: (1) File an application for an RSP and (2) Submit all required construction plans for plan check by the City by December 31, 2022, subject to the requirements of this Chapter and other applicable chapters of the Santa Ana Municipal Code, and open within 180 days of construction permit issuance. An extension may be issued for a period of time as may be reasonably required to affect upgrades, modifications, repairs, or other property issue mitigations as approved by the Director of Planning and Building or his or her designee. Failure to submit a completed RSP application satisfy these requirements by that deadline will disqualify the applicant from the RSP Eligibility List and the Waitlist described in subsection (d). Relocation is permitted pursuant to Section 40-7 of this Chapter. (r) A licensee that is authorized to make retail sales may donate cannabis or cannabis products and the use of equipment in compliance with any State compassionate use, equity, or other similar program in accordance with Section 26071 to the Business and Professions Code.

5. Additional Operational Standards for Commercial Cannabis Retail Delivery Services. (a) Commercial cannabis retail deliveries may be made only from a commercial cannabis retail business permitted by the City in compliance with this article, and in compliance with all State regulations.

Exhibit 1
City Council 35 – 35 5/3/2022
Ordinance No. NS-XXX

(b) All employees who deliver cannabis shall have valid identification and a copy of the commercial cannabis retail business' Regulatory Safety Permit and State license at all times while making deliveries.
(c) All commercial cannabis retail businesses shall maintain proof of vehicle insurance for any and all vehicles being used to transport cannabis goods as required by State law.
(d) Deliveries may only take place during normal business hours of the commercial cannabis retail business.
(e) During delivery, the delivery employee shall maintain a physical or electronic copy of the delivery request and shall make it available upon request by the licensing authority and law enforcement officers. The delivery request documentation shall comply with State law.
(f) A licensed delivery employee shall not leave the State of California while possessing cannabis products.
(g) A commercial cannabis retail business shall maintain a list of all deliveries, including the address delivered to, the amount and type of product delivered, and any other information required by the State.
(h) A manifest with all information required in this section shall accompany any delivery person at all times during the delivery process and delivery hours. (i) Any delivery method shall be made in compliance with State law, as amended, including use of a vehicle that has a dedicated GPS device for identifying the location of the vehicle (cell phones and tablets are not sufficient). (j) Each delivery request shall have a receipt prepared by the commercial cannabis retail business with the following information:
i. Name and address of the commercial cannabis retail business. ii. The name of the employee who delivered the order.
iii. The date and time the delivery request was made.
iv. The complete delivery addresses.
v. A detailed description of the cannabis goods requested for delivery including the weight or volume, or any accurate measure of the amount of cannabis goods requested.
vi. The total amount paid for the delivery including any fees or taxes. (k) At the time of the delivery, the date and time delivery was made, and the signature of the person who received the delivery.

Exhibit 1
City Council 35 – 36 5/3/2022
Ordinance No. NS-XXX

(l) No cannabis delivery vehicle shall display signs, decals or any other form of advertisement with the exception of a maximum four-inch by four-inch decal. (m) Inspections by an authorized City of Santa Ana representative may be conducted anytime during regular business hours.

6. Additional Operational Standards for Commercial Cannabis Testing Facilities or Laboratories.
(a) A licensed cannabis testing facility or laboratory business, its owners and employees may not hold an interest in any other cannabis business except another testing laboratory business.
(b) Inspections by an authorized City of Santa Ana representative may be conducted anytime during the business's regular business hours.
(c) Educational tours of cannabis testing facility/laboratory businesses shall be allowed.

7. Additional Operational Standards for Commercial Cannabis Manufacturing Facilities. (a) A licensed commercial cannabis manufacturing facility may conduct all activities permitted by the State. This includes, but is not limited to: extractions, repackaging and relabeling, infusions and extractions.
(b) Any manufacturing that will be conducted by the commercial cannabis business shall be included on the application. No additional manufacturing activity can be conducted without notifying the Executive Director of the Planning and Building Agency or his or her designee, after which a determination will be made if the new activity may commence with or without modification to the RSP or if a new RSP is required.
(c) At all times, the commercial cannabis manufacturing facility will be compliant with all State regulations for cannabis manufacturing including Health and Safety Code § 11362.775, as amended from time to time. Signage shall be posted regarding the type(s) of chemicals being used at the manufacturing facility. (d) Cannabis manufacturing facilities shall not contain an exhibition or product sales area or allow for retail distribution of products at that location unless the facility is co-located with an approved commercial cannabis retail business with a RSP. (e) Extraction equipment and extraction process utilizing hydrocarbon solvents shall be located in a room or area dedicated to extraction.
(f) All commercial cannabis manufacturing/processing facilities shall comply with any and all applicable safety guidelines adopted by the Orange County Fire Authority, the State of California, and/or the City of Santa Ana for cannabis plant processing and extraction.

Exhibit 1
City Council 35 – 37 5/3/2022
Ordinance No. NS-XXX

8. Additional Operational Standards for Indoor Commercial Cannabis Cultivation Facilities.
(a) There shall be no exterior evidence of cannabis cultivation from a public right-ofway. (b) The Building Official may require additional specific standards to meet the California Building Code and Fire Code, including, but not limited to, installation of fire suppression sprinklers.
(c) Compliance with Section 13149 of Water Code as enforced by the State Water Resources Control Board is required.
(d) All commercial cannabis cultivation facilities shall comply with any and all applicable safety guidelines adopted by the Orange County Fire Authority, the State of California, and/or the City of Santa Ana for cannabis carbon dioxide enrichment systems.
(e) Cannabis cultivation facilities shall not contain an exhibition or product sales area or allow for retail distribution of products at that location unless the facility is colocated with an approved commercial cannabis retail business with a RSP.

9. Additional Operational Standards for Commercial Cannabis Distribution Facilities. (a) Inspections by an authorized City of Santa Ana representative may be conducted anytime during the business's regular business hours.
(b) A distributor shall ensure that all cannabis goods stored in compliance with all applicable State regulations to ensure conformance to any and all applicable Track and Trace systems required by the State.
(c) Employee breakrooms, eating areas, changing facilities, locker rooms and bathrooms shall be completely separated from the storage areas.

10.Additional Operational Standards for Commercial Cannabis Consumption Lounges. (a) Inspections by an authorized City of Santa Ana representative may be conducted anytime during the business's regular business hours. (b) Consumption lounges are permitted as an ancillary use to a commercial cannabis medicinal or adult-use retail business.
(c) Consumption lounges must be on the same site as and physically contiguous to a commercial cannabis retail business.
(d) Two (2) parking spaces per 1,000 square feet of gross building square footage shall be provided for any building expansion constructed for a consumption lounge.

Exhibit 1
City Council 35 – 38 5/3/2022
Ordinance No. NS-XXX

(e) Consumption lounges shall be designed such that a patron need not enter a consumption lounge in order to access a retail-only portion of the facility. There shall be no connection between a consumption lounge and another tenant suite.
(f) Medicinal or adult-use cannabis and cannabis products may be sold on the premises of a consumption lounge, subject to the following:
i. The operator must hold a valid adult-use and/or medicinal retail business RSP.
ii. Products shall be sold for on-site consumption only. Products may not be sold for off-site consumption. All cannabis products purchased and opened at the facility must be smoked or consumed on site and shall not be permitted to leave the facility unless in a resealed package that meets all State guidelines.
iii. All products consumed or smoked on premises shall be sold at the consumption lounge. Operators shall not permit patrons to bring their own personal cannabis or cannabis products to the consumption lounge. (g) Cannabis may only be smoked within the indoor portion(s) of a consumption lounge as may be allowable under state law. Outdoor smoking is prohibited. (h) Food may be consumed in the consumption lounge; however, the sale or consumption of alcohol or tobacco products is prohibited. (i) Access to the consumption lounge shall be restricted to persons twenty-one (21) years of age or older, or as allowed by State law. (j) The consumption or smoking of cannabis products shall not be visible from any public place, public right-of-way, or area where minors may be present. If the consumption lounge contains an outdoor area, the outdoor area shall be oriented so as to eliminate visibility from any adjacent public place, public rightof-way, area where minors may be present, or adjacent business, tenant space, or building.
(k) Commercial cannabis consumption lounges shall be required to provide an air treatment system that ensures off-site odors shall not result from its operations.

The facility shall be designed to provide sufficient odor absorbing ventilation and exhaust systems so that any odor generated inside the location is not detected outside the building, in any adjacent tenant suites, on adjacent properties or public rights-of-way, or within any other unit located within the same building as the facility if the use occupies only a portion of a building. (l) Odor control response.

Exhibit 1
City Council 35 – 39 5/3/2022
Ordinance No. NS-XXX

i. Within twenty-four (24) hours of any complaint concerning odors emanating from or originating at the facility, the operator shall respond to the complaint in question and shall timely file a written disclosure to the Planning and Building Agency documenting any and all actions taken and planned to address the odor complaint(s). The City, upon determination of the continued existing of detectable odor from the facility may require an operator to submit an implementation plan and/or a performance schedule, above and beyond this written disclosure filed within twenty-four (24) hours, to ensure the employment of measures to control the odor. ii. The Executive Director of the Planning and Building Agency shall have the authority to require an operator of a consumption lounge to amend any implementation plan and/or performance schedule submitted pursuant to this sub-section to cause compliance herewith.
iii. Any failure to timely submit a written disclosure, a more detailed implementation plan and/or performance schedule or amendment thereto, to timely adhere to terms of either, or to complete any required improvements within the timeframe specified by the Executive Director of the Planning and Building Agency shall be grounds for revocation of the RSP.
iv. Odors from a consumption lounge are identified as a public nuisance pursuant to the Santa Ana Municipal Code. The City may pursue all administrative, civil, and criminal remedies available in relation to any nuisance determined to exist with respect to the operation of a consumption lounge in violation of this sub-section.
v. All consumption lounges shall be equipped with point-of-sale or similar equipment to distinguish sales of products made for onsite consumption from sales of retail products for offsite consumption.

11.Additional Operational Standards for Temporary Consumption and/or Special Events. (a) Inspections by an authorized City of Santa Ana representative may be conducted anytime during the event.
(b) Up to six (6) temporary consumption and/or special events are permitted per calendar year as an ancillary use to a commercial cannabis medicinal or adultuse retail business subject to review and approval of a Land Use Certificate (LUC), pursuant to Section 41-675 through 41-677 of the Santa Ana Municipal Code, and verification of any applicable required valid business licenses required pursuant to Chapter 21, Articles XII and XIII of this Code. (c) Once the sixth (6th) LUC application for a temporary consumption and/or special event is received per calendar year, the City shall stop accepting Exhibit 1
City Council 35 – 40 5/3/2022
Ordinance No. NS-XXX

additional applications unless an LUC application for a temporary consumption and/or special event is withdrawn or determined by the City to be incomplete.

Once six (6) complete LUC applications are accepted, no new LUC applications for a temporary consumption and/or special event may be accepted for the remainder of the calendar year.
(d) Applications for temporary consumption and/or special event LUCs must be submitted at least 30 days and no more than 60 days prior to the event date. (e) A single operator shall be permitted to conduct one (1) independent temporary consumption and/or special event LUC approved per calendar year, except that multiple operators may form a single event and file a single application. (f) No more than two (2) temporary consumption and/or special event LUCs shall be approved for any single month.
(g) The event shall last no longer than 48 hours and in all cases shall begin no earlier than 8:00 a.m. and end no later than 10:00 p.m. (h) Location. Temporary consumption and/or special events:
i. May be on the same site as a commercial cannabis medicinal or adult-use retail business.
ii. May be offsite at a private or City-owned facility subject to approval by the operator of a valid adult-use and/or medicinal retail business RSP and by third-party landlord approval, if applicable.
(i) Medicinal or adult-use cannabis and cannabis products may be sold on the premises during temporary consumption and/or special events, subject to the following:
i. The operator must hold a valid adult-use and/or medicinal retail business RSP.
ii. Products shall be sold for on-site consumption only. All cannabis products purchased and opened at the facility must be smoked or consumed on site and shall not be permitted to leave the facility.
iii. All products consumed or smoked on premises shall be sold at the facility.

Operators shall not permit patrons to bring their own personal cannabis or cannabis products to the event.
(j) Cannabis may only be smoked within the enclosed portion(s) of a temporary consumption site as may be allowable under state law, subject to sufficient odor control and ventilation equipment. Open-air smoking is prohibited.

Exhibit 1
City Council 35 – 41 5/3/2022
Ordinance No. NS-XXX

(k) Food may be consumed; however, the sale or consumption of alcohol or tobacco products is prohibited.
(l) Access to the temporary consumption and/or special event shall be restricted to persons twenty-one (21) years of age or older.
(m)The consumption or smoking of cannabis products shall not be visible from any public right-of-way or area where minors may be present. If the temporary consumption and/or special event takes place in an outdoor area, the outdoor area shall be oriented to eliminate visibility from any adjacent public place, public right-of-way, area where minors may be present, or adjacent business, tenant space, or building, and shall be oriented to minimize odor intrusion onto adjacent tenant spaces and properties.
(n) All events shall be required to provide an air treatment system that ensures offsite odors shall not result from its operations. The site shall be designed to provide sufficient odor absorbing ventilation and exhaust systems so that any odor generated inside the location is not detected outside the building, in any adjacent tenant suites, on adjacent properties or public rights-of-way, or within any other unit located within the same building as the facility if the use occupies only a portion of a building. Outdoor smoking, including vaping and the use of other electronic inhalation devices, must take place within ventilated enclosures subject to the satisfaction of the Planning and Building Agency and Orange County Fire Authority.
(o) Odor control response.
i. Odors from a temporary consumption or special events are identified as a public nuisance pursuant to the Santa Ana Municipal Code. The City may pursue all administrative, civil, and criminal remedies available in relation to any nuisance determined to exist with respect to the operation of a consumption lounge in violation of this Chapter.
ii. Upon receipt of any complaint concerning odors emanating from or originating at the temporary consumption and/or special event, the Planning and Building Agency may suspend or revoke the LUC.
(p) All temporary consumption or special events shall be equipped with point-ofsale or similar equipment to distinguish sales of products made for onsite consumption from sales of retail products for offsite consumption.

Sec. 40-9. Commercial cannabis selection process.

1. Commercial Cannabis — Registration Application and Regulatory Safety Permit Required.

Exhibit 1
City Council 35 – 42 5/3/2022
Ordinance No. NS-XXX

a. Existing medicinal cannabis business operators, or those with pending applications for a medicinal RSP, who desire to operate an adult cannabis retail business shall apply for the cannabis Regulatory Safety Permit ("RSP") on or before December 14, 2017. The Director of Planning and Building shall review such application and issue the RSP, without consideration of the merit based point system, so long as they satisfy all other requirements of this Chapter article and Chapter 18.
b. The Regulatory Safety Permit ("RSP") selection process will be conducted in two (2) phases, Phase 1 (Registration Application) and Phase 2 (Regulatory Safety Permit Application). Registration Applications will be reviewed by the Director of Planning and Building or designees(s) for completeness and compliance, and if eligible, will be notified in writing to enter placed on the "Regulatory Safety Permit ("RSP") Eligibility List" and entered into the Phase 2 Regulatory Safety Permit Application process. In Phase 2, the City of Santa Ana has established a merit based point system for adult-use commercial cannabis retail businesses to objectively award permits as described in the Regulatory Safety Permit Application.

2. Phase 1 — Registration Application.
a. Following the adoption of this article, the Director of Planning and Building shall prepare commercial cannabis business registration application forms and a related administrative policy. Each commercial cannabis business interested in operating pursuant to this article may submit an application together with a non-refundable processing fee in an amount established by the City Council. b. The Registration Application period shall be thirty (30) calendar days from the date the applications are released. Following the application period, the Director of Planning and Building or designee(s) shall stop accepting applications and review all applications received in Phase 1. Each application that is complete and in compliance with the application requirements in Phase 1 shall be placed on the "RSP Eligibility List" and shall be notified in writing whether they are a "RSP Eligible Applicant" or not. Each complete and compliant applicant on the RSP Eligibility List may then choose to file an application for a RSP in Phase 2. c. The requirements for Phase 1 include, but are not limited to:
i. All application documents required in the City's Phase 1 Registration Application package.
ii. Application was submitted during the application period. iii. Application forms are filled out completely.
iv. Phase 1 application fee is paid.

Exhibit 1
City Council 35 – 43 5/3/2022
Ordinance No. NS-XXX

v. A signed statement that the proposed location of the commercial cannabis business on the application meets the zoning criteria established in this article including, but not limited to, any and all sensitive use separation criteria required by this article.
vi. Proof of site control for commercial cannabis retail businesses submitting Phase 1 applications on or after July 1, 2018.
d. The Director of Planning and Building or his or her designee(s) shall determine whether each application demonstrates compliance with the minimum requirements (above) and be placed on the RSP Eligibility List and entered into the Phase 2 application and review process.
(e) (d) The Director of Planning and Building or his or her designee(s) shall review each application upon submission and ensure that the application is complete.

Incomplete applications will be promptly rejected and the applicant shall be notified in writing of the deficiencies. The applicant shall be given an opportunity to cure any incomplete or deficient application prior to the conclusion of the application processing term, if such time period is applicable.

3. Phase 2 — Regulatory Safety Permit Application.
(a) Each complete and compliant applicant identified on the RSP Eligibility List may choose to complete and file a RSP application to the Director of Planning and Building. The application shall be filed together with a nonrefundable fee as established by resolution of the City Council, to defray the cost of investigation required by this article.
(b) The RSP application period shall be open for thirty (30) calendar days and may run concurrently with the Phase 1 review period. Following the RSP application period, the Director of Planning and Building or designee(s) shall stop accepting applications and review all applications received in Phase 2. (c) The Director of Planning and Building or designee(s) will review all application documents required in the City's Phase 2 application package plus the additional requirements in subsection (d) below. The Director of Planning and Building or his or her designee(s) will use a merit based point system to review and rank each of applications from the most to the least points and objectively award the top applicants a RSP. A complete description of the merit based point system and all merit based point considerations shall be included with the application forms. (d) Phase 2 requirements include, but are not limited to:
i. All application documents required in the City's Phase 2 RSP application package.

Exhibit 1
City Council 35 – 44 5/3/2022
Ordinance No. NS-XXX

ii. Phase 2 application fee is paid and a comprehensive background check is completed on all owners, employees, volunteers, managers, security guards, and/or agents.
iii. The Building Official or designee has inspected all structures in which the use is located to determine that all applicable standards and requirements are met.

If a building permit is required for site improvements, Permit issuance will be deferred until a certificate of occupancy or other building permit approval is issued. Additionally, the Building Official has determined that there are no notices of nuisance or other code compliance issues recorded or on the property.
iv. The Planning Manager or designee has issued zoning clearance documenting compliance with the following:
a. The use is permitted;
b. All land use permits, if any, have been approved and all conditions of approval have been met or are in good standing; and,
c. No zoning violations exist on the property.
(e) The Director of the Planning and Building Agency or his or her designee(s) shall review each application upon submission and ensure that the application is complete. Incomplete applications will be promptly rejected and the applicant shall be notified that business day of the deficiencies. The applicant shall be given an opportunity to cure any incomplete or deficient application prior to the conclusion of the application processing term, if such time period is applicable.

3.1 Commercial Cannabis — Registration Application and Regulatory Safety Permit for Additional Commercial Cannabis Business Activities on the Same Premises (CoLocation). (a) An existing commercial cannabis business with an RSP may co-locate additional non-retail commercial cannabis business activities (cultivation, distribution, and/or manufacturing) by applying for a new RSP for the additional use(s). The new RSP must meet the all requirements of the Santa Ana Municipal Code except that background checks (live scans) shall only be required for any new staff as outlined in Section 40-8. A single RSP that lists any and all approved cannabis business activity/activities may be renewed annually thereafter. (b) New or pending RSP applicants wishing to co-locate additional non-retail (cultivation, distribution, and/or manufacturing) uses may submit a new RSP for any of the non-retail commercial cannabis business activities. The additional RSP must meet the all requirements of the RSP except that background checks (live scans) shall only be required for any new staff as outlined in Section 40-8. A single Exhibit 1
City Council 35 – 45 5/3/2022
Ordinance No. NS-XXX

RSP that lists any and all approved cannabis business activity/activities may be renewed annually thereafter.
(c) New commercial cannabis business applicants — co-location.

1. New commercial cannabis retail applicants wishing to co-locate additional nonretail (cultivation, distribution, and/or manufacturing) uses shall submit separate RSPs for the proposed retail activity and another RSP for any of the non-retail (cultivation, distribution, and/or manufacturing) commercial cannabis business activities. Each RSP application will be evaluated independently and must meet any applicable requirements of the RSP as outlined in Sections 40- 8 and 40-9, including, but not limited to, merit evaluation and additional separation requirements for the retail RSP. A single RSP that lists any and all approved cannabis business activity/activities may be renewed annually thereafter.

2. New non-retail commercial cannabis applicants wishing to co-locate additional non-retail (cultivation, distribution, and/or manufacturing) uses may submit a single RSP for the proposed activity or activities. The RSP application must meet any applicable requirements of the RSP as outlined in Sections 40-8 and 40-9. A single RSP that lists any and all approved cannabis business activity/activities may be renewed annually thereafter.

4. Regulatory Safety Permit Annual Renewal.
(a) Applications for the renewal of a permit shall be filed with the Director of Planning and Building or designee(s) at least sixty (60) calendar days before the expiration of the current permit. Temporary permits will not be issued. Any permittee allowing their permit to lapse or which permit expired during a suspension shall be required to submit a new application, pay the corresponding original application fees and be subject to all aspects of the selection process.
(b) Any person desiring to obtain a renewal of their respective permit shall file a written application under penalty of perjury on the required form with the Director of Planning and Building or his or her designee(s) who will conduct a review. The application shall be accompanied by a nonrefundable filing fee established by the City Council to defray the cost of the review required by this article. An applicant shall be required to update the information contained in their original permit application and provide any new and/or additional information as may be reasonably required by the Director of Planning and Building or designee(s) in order to determine whether said permit should be renewed based on compliance with all applicable provisions of the Santa Ana Municipal Code. (c) Compliance with Section 40-1 (C) to provide for community benefits is required for all commercial cannabis businesses seeking renewal of the RSP.

Exhibit 1
City Council 35 – 46 5/3/2022
Ordinance No. NS-XXX

5. Appeal of Denial of Regulatory Safety Permit/Denial of RSP Renewal. The Executive Director of the Planning and Building Agency City Manager or his or her designee(s) will review all Regulatory Safety Permit applications and renewal requests, along with all other relevant information, and determine if a RSP should be granted and/or renewed based on compliance with all applicable provisions of the Santa Ana Municipal Code. If the Executive Director of the Planning and Building Agency City Manager determines that the permit shall not be granted and/or renewed, the reasons for denial shall be provided in writing to the applicant. No such denial shall become effective until the applicant for the regulatory safety permit and/or renewal has been notified in writing by certified mail of the right to appeal the denial decision pursuant to the provisions of Chapter 3 of this Code. If a timely appeal is filed, the denial shall be effective only upon decision of a hearing officer as provided for in Chapter 3 of the Santa Ana Municipal Code. Otherwise, the denial shall become effective after the timely appeal period has passed. The matter may be subject to judicial review under the provisions of California Code of Civil Procedure Sections 1094.5 and 1094.6.

Sec. 40-9.1. Non-retail commercial cannabis business (cultivation, manufacturing, distribution, and testing facility/laboratory) selection process.

1. Non-Retail Commercial Cannabis Businesses — Registration Application (Phase 1) and Regulatory Safety Permit (Phase 2) Required.
a. Every Non-Retail Commercial Cannabis Business shall apply for the Phase 1 (Registration Application) and Phase 2 (Regulatory Safety Permit Application) in the manner described in Section 40-9, except that the Director of the Planning and Building Agency or his or her designee may accept Phase 1 and Phase 2 applications for a Non-Retail Commercial Cannabis Business concurrently, and shall review such applications and issue the Regulatory Safety Permit Application without consideration of the merit based point system, insofar as the applications satisfy all other requirements of this article and Chapter 18. b. Applications for a Non-Retail Commercial Cannabis Business shall be accepted during normal City Hall business hours and are not subject to the thirty (30) day Phase 1 or Phase 2 application periods.

Sec. 40-9.2. Commercial cannabis consumption lounge selection process. (a) After the adoption of this Ordinance, the Executive Director of the Planning and Building Agency shall prepare application forms and a related administrative policy.

Each commercial cannabis retail business interested in operating a consumption lounge pursuant to this article may submit an RSP application together with a nonrefundable processing fee in an amount established by the City Council. (b) The Director or his or her designee shall determine whether each RSP application demonstrates compliance with this article as prescribed by Section 40-9 of this Chapter. Each RSP application that is in compliance with this article shall be placed Exhibit 1
City Council 35 – 47 5/3/2022
Ordinance No. NS-XXX

on the "Qualified Consumption Lounge Applicant List" and the Director shall notify the applicant in writing that it is a "Qualified Consumption Lounge Applicant." (c) Qualified Consumption Lounge Applicants shall be notified by the City that they may submit any/all required documentation and plan drawings to complete the City’s plan check and permitting process to construct a consumption lounge. (d) Upon notification of placement on the Qualified Consumption Lounge Applicant List, applicants shall have 180 days to complete the plan check and construction process, and be issued a certificate of occupancy, unless an extension is granted by the Executive Director of the Planning and Building Agency to resolve required building or site upgrades, modifications, repairs, or other property issue mitigations tied directly to construction of the lounge.

Sec. 40-10. Audits - Commercial Cannabis Businesses.

Annual audits. No later than September 30 of every year, each licensed commercial cannabis business, except commercial cannabis businesses licensed and operating solely as shared manufacturers, shall be liable to file with the City an independent audit or financial review of its operations of the previous calendar year. Provided, however, that licensed commercial cannabis businesses which operate as microbusiness, or that operate on a vertically or horizontally integrated basis as established in Chapter 21, Article XIII of this Code, or that are co-located on shared premises may file a consolidated independent audit or financial review. The form and contents of the document shall be specified by the Executive Director of Finance and Management Services, or his or her designee(s). The Executive Director of Finance and Management Services, or his or her designee(s) may waive this requirement for certain licensed commercial cannabis businesses in accordance with guidelines established by the Finance and Management Services Agency.

Sec. 40-11. Inspection and enforcement responsibilities.

The Code Enforcement Division of the Planning and Building Agency may enter and inspect the location of any commercial cannabis business between the hours of 7:00 a.m. and 10:00 p.m., or at any reasonable time, to ensure compliance with this article. In addition, any police officer may enter and inspect the location of any commercial cannabis business and the recordings and records maintained as required by this article, except that the inspection and copying of private medical records shall be made available to the police department only pursuant to a properly executed search warrant, subpoena, or court order. It is unlawful for any owner, responsible person, landlord, lessee, member including, but not limited to, a member engaged in the management), or any other person having any responsibility over the operation of the commercial cannabis business to refuse to allow, impede, obstruct or interfere with an inspection, review or copying of records and closed-circuit monitoring authorized and required under this article, including, Exhibit 1
City Council 35 – 48 5/3/2022
Ordinance No. NS-XXX

but not limited to, the concealment, destruction, and falsification of any recordings, records, or monitoring.

Sec. 40-12. Violation and enforcement.

1. Violation/enforcement. Each and every violation of this article shall constitute a separate violation and shall be subject to all remedies and enforcement measures authorized by this Code. Additionally, as a nuisance per se, any violation of this article shall be subject to injunctive relief, revocation of the commercial cannabis business Regulatory Safety Permit, revocation of the certificate of occupancy for the location, disgorgement and payment to the City of any and all monies unlawfully obtained, costs of abatement, costs of investigation, attorney fees, and any other relief or remedy available at law or equity. The City may also pursue any and all remedies and actions available and applicable under local and State laws for any violations committed by the commercial cannabis business and persons related or associated with the business.

2. Suspension or revocation. When an authorized City of Santa Ana representative finds that any person holding a Regulatory Safety Permit under the provisions of Chapter 40 has violated the provisions of this chapter or is found guilty of conduct which would form the basis of denial of the Regulatory Safety Permit as set forth in Article XIII of this Chapter 18, s/he may revoke or suspend the permit. No such revocation shall become effective until the Regulatory Safety Permit holder has been notified in writing by certified mail of the right to appeal the revocation decision pursuant to the provisions or Chapter 3 of this Code. If a timely appeal is filed, the revocation shall be effective only upon decision of a hearing officer as provided for in Chapter 3 of the Santa Ana Municipal Code. Otherwise, the revocation shall become effective after the timely appeal period has passed.

3. State License Suspension/Revocation. Revocation or suspension of a Licensee's State issued commercial cannabis business permit or license by the State shall constitute a violation of this article and result in revocation of the Licensee's RSP.

Sec. 40-13. Transfer of ownership.

1. Upon the transfer of any interest in a commercial cannabis business, the Regulatory Safety Permit shall be null and void. Any person, firm or entity desiring to own and operate the commercial cannabis business shall make a new Regulatory Safety Permit application. Prior to or concurrent with the submission of said application the transferee shall obtain all required business licenses, post all required security deposits, acquire all necessary, certificates, permits or other licenses allowing the doing of any act which the person paying or holding the same would not otherwise be entitled to do; and any permit, license, variance or other instrument of approval or evidence that any conditions exist as required by any other section of this Code or by any statute or code provisions of the state must first be obtained or complied with Exhibit 1
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before the doing of any act or thing for which it is required. A fee as established by resolution of the City Council shall be payable for each such application involving transfer of any interest in an existing commercial cannabis retail business. The provisions of this section shall apply to any person, firm, or entity applying for a Regulatory Safety Permit for premises previously used as such establishment.

2. Any such transfer of any interest in an existing commercial cannabis business or any application for an extension or expansion of the building or other place of business of the commercial cannabis retail business shall require inspection and compliance with section 40-11 of this article.

3. The owner or operator of a commercial cannabis business shall be responsible for notifying the City of any intention to rename, change management, or convey the business to another person/entity. Notification to the City must be made a minimum of sixty (60) days prior to such transfer.

Sec. 40-14. Limitations on the city's liability.

To the fullest extent permitted by law, the City shall not assume any liability whatsoever, with respect to approving any Regulatory Safety Permits pursuant to this article or the operation of any commercial cannabis business approved pursuant to this chapter. As a condition of approval of a Regulatory Safety Permit as provided in this chapter, the applicant or its legal representative shall:

1. Execute an agreement indemnifying the City from any claims, damages, injuries or liabilities of any kind associated with the registration or operation of the commercial cannabis business or the prosecution of the applicant or business or its members for violation of federal or State laws;

2. Maintain insurance in the amounts and types that are acceptable to the City Attorney or his or her designee;

3. Name the City as an additionally insured on all City required insurance policies;

4. Agree to defend, at its sole expense, any action against the City, its agents, officers, and employees related to the approval of a Regulatory Safety Permit; and,

5. Agree to indemnify and reimburse the City for any court costs and attorney fees that the City may be required to pay as a result of any legal challenge related to this ordinance and/or the City's approval of a Regulatory Safety Permit. The City may, at its sole discretion, participate at its own expense in the defense of any such action, but such participation shall not relieve the operator of its obligation hereunder.

Sec. 40-15. Fees and taxes.

All commercial cannabis businesses shall pay applicable fees and taxes, which shall include one (1) or more of the following:

Exhibit 1
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Ordinance No. NS-XXX

1. Application Fees. The business owner shall submit a non-refundable fee to cover the cost of processing an application for the commercial cannabis business. These fees may be divided into two (2) fees according to Registration Application Fee (Phase 1) and RSP Application Fee (Phase 2).

2. Regulatory Safety Permit Renewal Fees. The business owner shall submit a nonrefundable fee to cover the cost of processing an application renewal annually.

3. Business License Taxes. The business owner shall at all times maintain a current and valid City of Santa Ana business license and shall pay all business license taxes, deposits, charges, fees, deficiencies, penalties, interest, and other associated assessments as may be required pursuant to ordinances of the City of Santa Ana and/or the Santa Ana Municipal Code.

4. Operating Agreement Fees.

5. Additional cannabis-specific gross receipts, excise taxes, or other municipal tax approved by the voters of the City of Santa Ana.

6. All required state taxes including sales and use taxes, business/franchise or income taxes, payroll taxes, etc.

7. All required federal taxes.

Section 7. Article XIII of Chapter 18 of the Santa Ana Municipal Code (Medicinal Marijuana Collectives/Cooperatives) is hereby deleted in its entirety, renamed “Reserved,” and re-adopted and amended as Article II of Chapter 40 of the Santa Ana Municipal Code to read as “Regulation of Commercial Cannabis Medicinal Retail Activities” as follows:

ARTICLE II. – REGULATION OF COMMERCIAL CANNABIS MEDICINAL RETAIL

ACTIVITIES
Sec. 40-100. Purposes and intent.

It is the purpose and intent of this article to regulate the collective distribution of medical marijuana in order to ensure the health, safety and welfare of the residents of the City of Santa Ana. The regulations in this article, in compliance with the Compassionate Use Act, the Medical Marijuana Program Act, and the California Health and Safety Code (collectively referred to as "State Law") do not interfere with a patient's right to use medical marijuana as authorized under State Law, nor do they criminalize the possession or cultivation of medical marijuana by specifically defined classifications of persons, as authorized under State Law. Under State Law, only qualified patients, persons with identification cards, and primary caregivers may cultivate medical marijuana collectively.

Medical marijuana collectives shall comply with all provisions of the Santa Ana Municipal Code ("Code"), State Law, the 2008 California Attorney General Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use, and all other applicable Exhibit 1
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local and state laws. Nothing in this article purports to permit activities that are otherwise illegal under state or local law.

Sec. 40-101. Definitions.
(a) "Cultivation" and/or "Cultivate" shall mean the planting, growing, harvesting, drying, curing, grading or trimming of one (1) or more marijuana plants or any part thereof, as set forth in Business and Professions Code § 26001(l) as amended from time to time.
(b) "Medical marijuana collective" or "cooperative" or "collective" means any facility otherwise known as a commercial cannabis medicinal retail or retailer, or location where medical marijuana is made available and/or distributed by or to one (1) or more of the following: a primary caregiver, a qualified patient or a person with an identification card in strict accordance with California Health and Safety Code § 11362.5 et seq., as sometimes amended. This term shall include any legal form of business recognized in the State of California. A "medical marijuana collective" shall not include the following uses, as long as the location of such uses are otherwise regulated by this Code or applicable law: a clinic licensed pursuant to Chapter 1 of Division 2 of the Health and Safety Code, a health care facility licensed pursuant to Chapter 2 of Division 2 of the Health and Safety Code, a residential care facility for persons with chronic life-threatening illness licensed pursuant to Chapter 3.01 of Division 2 of the Health and Safety Code, a residential care facility for the elderly licensed pursuant to Chapter 3.2 of Division 2 of the Health and Safety Code, a residential hospice or a home health agency licensed pursuant to Chapter 8 of Division 2 of the Health and Safety Code, as long as such use complies strictly with applicable law including, but not limited to, Health and Safety Code Section 11362.5 et seq.
(c) "Identification card" shall have the same definition as that contained in Health and Safety Code § 11362.7 et seq., as sometimes amended.
(d) "Manager" means any person responsible for the establishment, organization, supervision, or oversight of the operation of a Collective, including, but not limited to, members who perform the functions of president, vice-president, director, operating officer, financial officer, secretary, or treasurer. Ability to control one (1) or more of the following functions shall be prima facie evidence that such person is a manager:
(1) To hire, select, or separate employees or staff, including volunteers; (2) To acquire facilities, furniture, equipment or supplies other than occasional replenishment of stock;
(3) To disburse funds of the business other than occasional expenditures for replenishment of stock; or
Exhibit 1
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Ordinance No. NS-XXX

(4) To make, or participate in making, policy decisions relative to the operations of the business.
(e) "Marijuana" shall have the same definition as that contained in Health and Safety Code § 11018 as sometimes amended.
(f) "Medical marijuana" shall have the same definition as that contained in Health and Safety Code § 11362.5 et seq., as sometimes amended.
(g) "Primary caregiver" shall have the same definition as that contained in Health and Safety Code §§ 11362.5 and 11362.7, as sometimes amended. (h) "Qualified patient" shall have the same definition as that contained in Health and Safety Code § 11362.5 as sometimes amended.
(i) "Private Residence" shall have the same definition as that contained in Health and Safety Code §§ 11362.2(5) and 17922. A recreational vehicle does not constitute a lawfully established structure for the purposes of this article. (j) "Premises" means a single, legal parcel of property. Where contiguous legal parcels under common ownership or control, such contiguous legal parcels shall constitute a single "premises" for purposes of this chapter. (k) "Parcel" means property assigned a separate parcel number by the Orange County Assessor.
(l) "Marijuana Products" shall have the same definition as that contained in Health and Safety Code § 11018.1.
(m)"Marijuana Accessories" shall have the same definition as that contained in Health and Safety Code § 11018.2.
(n) "Personal Cultivation" shall mean the planting, growing, harvesting, drying, curing, grading or trimming of marijuana plants for personal use within a private residence or accessory structure to a private residence.
(o) "Commercial Cultivation" shall mean the planting, growing, harvesting, drying, curing, grading or trimming of marijuana plants in any structure other than a private residence.
(p) "Outdoor Cultivation" shall mean the planting, cultivating, growing, harvesting, drying, curing, grading or trimming of marijuana plants in any location within the City of Santa Ana that is not within a fully enclosed and secure structure. (q) "Fully enclosed and secure structure" means a space within a building, greenhouse or other structure which has a complete roof enclosure supported by connecting walls extending from the ground to the roof, which is secure against Exhibit 1
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Ordinance No. NS-XXX

unauthorized entry, provides complete visual screening, and which is accessible only through one (1) or more lockable doors.
(r) "Delivery" means the commercial transfer of medical cannabis or medical cannabis products from a dispensary, up to an amount determined to be authorized by the State of California, or any of its departments or divisions, to qualified patients and their caregivers. "Delivery" also includes the use by a dispensary of any technology platform owned, controlled, and/or licensed by the dispensary, or independently licensed by the State of California under the State law (as amended from time to time), that enables anyone to arrange for or facilitate the commercial transfer by a licensed dispensary of medical cannabis or medical cannabis products. For the purposes of this article, "delivery" does not include distribution or purchase of cannabis from a licensed cultivator, and cannabis products from a licensed manufacturer, for sale to a licensed dispensary or a wholesale establishment.
(s) "Dispensary" means a premises where medical cannabis or medical cannabis products, or devices for the use of medical cannabis or medical cannabis products are offered, either individually or in any combination, for retail sale, including an establishment that delivers, pursuant to Business and Professions Code § 19340, medical cannabis and medical cannabis products as part of a retail sale. (t) "Responsible person" means any of the following:
(1) A person who causes a Code violation to occur.
(2) A person who maintains or allows a Code violation to continue, by his or her action or failure to act.
(3) A person whose agent, employee, or independent contractor causes a Code violation by its action or failure to act.
(4) A person who is the owner of, and/or a person who is a lessee or sub lessee with the current right of possession of, real property where a property-related Code violation occurs.
(5) A person who is the on-site manager of a business who normally works daily at the site when the business is open and is responsible for the activities of such premises.

For the purposes of this section "person" includes a natural person or legal entity, and the owners, majority stockholders, corporate officers, trustees, and general partners of a legal entity.
(u) "Distribution" means the procurement, sale and transport of cannabis and cannabis products between entities licensed pursuant to the Medicinal and AdultExhibit 1 City Council 35 – 54 5/3/2022
Ordinance No. NS-XXX

Use of Cannabis Regulation and Safety Act, and any subsequent State of California legislation regarding the same.
(v) "Testing Facility" or "Testing Laboratory" defined in the Business and Professions Code § 26001, as amended from time to time, means a laboratory, facility, or entity in the State that offers or performs tests of cannabis or cannabis products and that is both of the following:
(1) Accredited by an accrediting body that is independent from all other persons involved in commercial cannabis activity in the State; and, (2) Licensed by the Bureau of Cannabis Control.

Sec. 40-102. Scope of article.

The operating standards established in this article apply to any site, facility, location, use, cooperative or business currently operating in the City of Santa Ana, or which commences operations after the effective date of this article, that distributes, dispenses, stores, sells, exchanges, processes, delivers, or gives away, medical marijuana to qualified patients, health care providers, patients' primary caregivers, or physicians, pursuant to Health & Safety Code § 11362.5 (adopted as Proposition 215, the "Compassionate Use Act of 1996") or any state regulations adopted in furtherance thereof. Any collective in the City of Santa Ana shall operate in conformance with the operating standards set forth in section 18-613 40-103 of this Code to assure that the operations of the collective are in compliance with California law and to mitigate the adverse secondary effects from operations of dispensaries.

Sec. 40-103. Operating Standards.
(a) At all times the collective is open, a collective shall provide at least one (1) security guard who is licensed as a security/private patrol service, possesses a valid department of consumer affairs "security guard card", and has a valid Santa Ana Business License. In the event that the security guard is employed by an outside security guard company; such security guard company shall maintain a valid Santa Ana Business License as a security/private patrol service. (b) The security guard and collective personnel shall monitor the site and the immediate vicinity of the site to assure that patrons immediately leave the site and not consume medical marijuana in the vicinity of the collective or on the property or in the parking lot., except as permitted by Section 40-8 (10) of the Santa Ana Municipal Code. (c) Exterior signage shall comply with Article XI of Chapter 41. Interior signage or advertising may not be visible from the exterior. Collectives and dispensaries must comply with the advertising and marketing provisions of Business and Professions Code §§ 26150—26155.
(d) No recommendations from a doctor for medical marijuana shall be issued on-site.

Exhibit 1
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Ordinance No. NS-XXX

(e) There shall be no on-site sales of alcohol or tobacco products, and no on-site consumption of alcohol, tobacco or marijuana by patrons. Food may not be consumed on site, except as permitted by Section 40-8 (10) of the Santa Ana Municipal Code.
(f) Hours of operation shall be limited to: 7:00 a.m. to 11:00 p.m. daily. No licensed dispensary/collective shall be open to the public between the hours of 11:01 p.m. and 6:59 a.m. of any day.
(g) The property shall provide an air treatment system with sufficient odor absorbing ventilation and exhaust systems so that odor generated inside the location is not detected outside the building, anywhere on adjacent property or public rights-of-way, or within any other unit located within the same building as the collective if the use only occupies a portion of a building.
(h) A collective shall only dispense medical marijuana to qualified patients and their caregivers as defined by California Health and Safety Code § 11362.5 (Proposition 215). This shall include possession of an original valid doctor's recommendation, not more than one (1) year old, for medical marijuana use by the patient. (i) A collective shall notify patrons of the following through posting of a sign in a conspicuous location:
(1) Use of medical marijuana shall be limited to the patient identified on the doctor's recommendation. Secondary sale, barter or distribution of medical marijuana is a crime and can lead to arrest.
(2) That loitering on and around the collective site is prohibited by California Penal Code § 647(e) and that patrons must immediately leave the site and not consume medical marijuana in the vicinity of the collective or on the property or in the parking lot.
(3) Forgery of medical documents is a felony crime.
(4) A warning that patrons may be subject to prosecution under federal marijuana laws.
(5) That the use of medical marijuana may impair a person's ability to drive a motor vehicle or operate machinery.
(j) A collective shall not provide marijuana to any individual in an amount not consistent with personal medical use.
(k) All agents, private security officers or other persons acting for or employed by a collective shall display a laminated an identification badge at least two (2) inches by two (2) inches in size, issued by the City. The badge, at a minimum, shall include the employee's first and last name, date of most recent Live Scan, expiration date Exhibit 1
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of Live Scan results after the one-year period, and a color photo of the employee that shows the full front of the employee's face.
(l) No one under eighteen (18) years of age shall be permitted to enter establishment, unless such person is a qualified patient and is accompanied by his or her primary caregiver, licensed attending physician, parent(s) or documented legal guardian. (m) A collective shall provide the name and phone number of an on-site staff person to the police department and the code enforcement division of the planning and building agency for notification if there are operational problems with the establishment.
(n) Each collective/cooperative owner, operator(s) and employees shall complete a criminal background check and wear a visible photo ID at all times during operating hours. Owners, operator(s), employees, managers or volunteers may not have been:
i. convicted of, or pleaded guilty/no-contest to a felony within the past four (4) years or currently on formal probation or parole;
ii. convicted of an infraction or misdemeanor drug charge within the past four (4) years or required to registered as a controlled substance offender pursuant to Health and Safety Code section 1590 as part of their sentence for any other charge(s);
iii. an owner or operator of property or a business in which the applicant knew, or should have known, that an unlicensed cannabis location was present within the past four (4) years.

If a collective owner(s), operator(s) or employees has a pending criminal infraction, misdemeanor or felony case involving a drug charge, the applicant must provide written documentation from the prosecuting entity of their intent to either prosecute or dismiss the matter. If the prosecuting entity indicates that a pending criminal case involving the applicant is actively being prosecuted, the applicant will not be disqualified, however, their application will be put on hold pending final adjudication of that case.
(o) Marijuana shall not be grown or cultivated at collective sites, except that cuttings of the marijuana plant may be kept or maintained on-site for distribution to qualified patients and primary caregivers as follows:
(1) The cuttings shall not be utilized by a collective as a source for the provision of marijuana for consumption on-site, however, upon provision to a qualified patient or primary caregiver, that person may use the cuttings to cultivate marijuana plants off-site for their own use and they may also return marijuana from the resulting mature plant for distribution by the collective.

Exhibit 1
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Ordinance No. NS-XXX

(2) For the purposes of this paragraph, the term "cutting" shall mean a rootless piece cut from a marijuana plant, which is no more than six (6) inches in length, and which can be used to grow another plant in a different location. (p) A collective shall comply with applicable provisions of the California Health and Safety Code §§ 11362.5 through 11362.83, inclusive.
(q) If food is distributed, the collective shall comply with all relevant state laws and city and/or county ordinances pertaining to the preparation, distribution and sale of food. (r) The location, interior and exterior, shall be monitored at all times by web-based closed-circuit television for security purposes. The camera and recording system must be of adequate quality, color rendition and resolution to allow the ready identification of any individual committing a crime anywhere on or adjacent to the location. The recordings shall be maintained for a period of not less than ninety (90) days. The police department may request the recordings in connection with an investigation.
(s) The location shall have a centrally monitored fire and burglar alarm system which shall include all perimeter entry points and perimeter windows and the building or the portion of the building where the collective is located shall contain a fireproof safe or fireproof filing cabinet and include a safety and security plan. (t) Reserved.
(u) Reserved.
(v) If the collective operator is not the owner of the property where the collective is to operate, the operator shall provide evidence that the property owner(s) consent to the operation of a collective on the property.
(w) Collectives must obtain and maintain a valid city business license at all times as a condition for receiving, renewing, and maintaining their regulatory safety permit. (x) Occupancy shall not exceed that required under the Uniform Building Code and Uniform Fire Code, and the maximum occupancy load shall be posted at the main entrance.

Sec. 40-104. Reserved.

Sec. 40-105. Zones permitted.

Collectives Medicinal cannabis retail business permitted zones. No collective shall operate within a residential (R-1, R-2, R-3, R-4, RE, CR) zone, Professional (P) zone, Arterial Commercial (C-5) zone, Planned Shopping Center (C-4) zone, Specific Development (SD), Specific Plan (SP) or Agricultural (A-1) zone. A Collective Medicinal Exhibit 1
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cannabis retail business may only operate in an Industrial zone (M-1, M-2) in accordance with this article Section 40-6 in Article I of this Chapter.

Sec. 40-106. Separation requirements between medicinal cannabis retailers. (a) No collective medicinal cannabis retailer shall be located within five hundred (500) feet of another medicinal cannabis retailer/medical marijuana collective or cooperative or within one thousand (1,000) feet of any:
(1) School.
(2) Park.
(3) Residential zone.

Sec. 40-107.1 Cooperative/collective registration required. (a) Within 30 days after the adoption of this Chapter, the The Director of Planning and Building shall prepare Cooperative/Collective registration application forms and a related administrative policy. Each collective interested in operating pursuant to this article may submit an application together with a non-refundable processing fee in an amount established by the City Council. Within 60 days after the adoption of this article, the Director shall stop accepting applications and process all applications received.
(b) The Director or his or her designee shall determine whether each application demonstrates compliance with this article. Each application that is in compliance with this article shall be placed on the "Qualified Registration Applicant List" and the Director shall notify the applicant in writing that it is a "Qualified Registration Applicant."
(c) Once all applications are processed, the Director shall hold an independent selection process ("lottery") in an open and public location and select 20 applications. The 20 applications chosen through the independent selection process (lottery) will be placed on the "Regulatory Safety Permit ("RSP") Eligibility List." Each applicant on the RSP Eligibility List may then choose to file an application for a RSP pursuant to section 40- 107.2. All Aapplicants identified on the RSP Eligibility List following the February 5, 2015 independent selection process (lottery) must submit a completed RSP application and construction plans within four (4) months of April 5, 2016 and no later than August 5, 2016 shall be required to concurrently: (1) File an application for an RSP and (2) Submit all required construction plans for plan check by the City by December 31, 2022, subject to the requirements of this Chapter and other applicable chapters of the Santa Ana Municipal Code, and open within 180 days of construction permit issuance. An extension may be issued for a period of time as may be reasonably required to affect upgrades, modifications, repairs, or other property issue mitigations as approved by the Director of Planning and Building or his or her designee. Failure to submit a completed RSP application satisfy these requirements Exhibit 1
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by that deadline will disqualify the applicant from the RSP Eligibility List and the Waitlist described in subsection (d). Relocation is permitted pursuant to Section 40-7 of this Chapter.
(d) Qualified Registration Applicants will appear on the "Qualified Registration Applicant List" in the order that they are selected during the independent selection process (lottery). This list is the Waitlist. The Waitlist will become active if (1) an applicant on the RSP Eligibility List is disqualified from that List; (2) a location appearing on the RSP Eligibility List becomes available; or (3) a location not appearing on the RSP eligibility list becomes available. A Qualified Registration Applicant's ability to move from the Waitlist to the RSP Eligibility List is determined by the applicant's proposed medical marijuana collective location and the applicant's position on the Waitlist. (e) A Qualified Registration Applicant that moves from the Waitlist to the RSP Eligibility List must submit a completed RSP application within three (3) months following issuance of a written notice advising the applicant of that opportunity. Failure to submit a completed RSP application by that deadline will disqualify the applicant from the RSP Eligibility List and the Waitlist.
(f) The Director shall maintain the Waitlist and update it on an annual basis. A Qualified Registration Applicant on that Waitlist must submit a written request each year to maintain its status on the waitlist. The Director may place new applicants on the Waitlist in the order in which the new registration applications are received. (g) Upon the effective date of this Ordinance on July 1, 2022, the City shall terminate the Waitlist by providing written notice to all individuals and/or entities on the Waitlist at least 180 calendar days in advance of the Waitlist’s termination. The notice shall contain details about each individual’s and/or entity’s position on the Waitlist and information about any upcoming applications being accepted for new commercial cannabis adult-use or medicinal retail selection processes as per the process outlined in Section 40-9, subject to the processes and procedures promulgated in Article I of this Chapter. No new medicinal retail applications shall be accepted following termination of the Waitlist.
(h) In no event shall the City begin accepting applications for new commercial cannabis retail businesses before the 180-day written notification to all affected individuals and/or entities on the Waitlist.
(i) Upon termination of the Waitlist, any operating adult-use commercial cannabis retailer with a valid RSP may also sell medicinal retail cannabis in full accordance with any State licensing requirements.
(j) Relocation of an existing and licensed medical marijuana collective or medical marijuana cooperative as defined in Article II of this Chapter that is operating in full compliance with the provisions of this Article is permitted subject to Section 40-7 in Article I of Chapter 40 of the Santa Ana Municipal Code.

Exhibit 1
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Ordinance No. NS-XXX

Sec. 40-107.2. Medical marijuana collective—Regulatory permit application process.
(a) Any medical marijuana collective desiring a regulatory safety permit required by this article shall, prior to initiating operations and after receiving notice of its successful registration under section 40-107.1 as being on the RSP eligibility list, must complete and file a regulatory safety permit application to the director of the planning and building agency or designee on a form supplied by the planning and building agency.

The application shall be filed together with a nonrefundable fee as established by resolution of the city council, to defray the cost of investigation required by this article.

The application shall contain all of the following:
(1) The address of the property where the proposed medical marijuana collective(s) will operate;
(2) A site plan describing the property with fully dimensioned interior and exterior floor plans including electrical, mechanical, plumbing, and disabled access compliance pursuant to Title 24 of the State of California Code of Regulations and the federally mandated Americans with Disabilities Act;
(3) Exterior photographs of the entrance(s), exits(s), street frontage(s), parking, front, rear and side(s) of the proposed property;
(4) Photographs depicting the entire interior of the proposed property; (5) If the property is being rented or leased or is being purchased under contract, a copy of such lease or contract;
(6) If the property is being rented or leased, written proof that the property owner, and landlord if applicable, were given notice that the property will be used as a medical marijuana collective, and that the property owner, and landlord if applicable, agree(s) to said operations;
(7) The name, address, telephone number, title and function(s) of each manager, employee, volunteer, etc.;
(8) For each manager, employee, volunteer, a fully legible copy of one (1) valid government issued form of photo identification, such as state driver's license or identification card;
(9) If the medical marijuana collective is a corporation, a certified copy of the collective's secretary of state articles of incorporation, certificate(s) of amendment, statement(s) of information and a copy of the collective's bylaws; (10) If the medical marijuana collective is an unincorporated association, a copy of the articles of association;
Exhibit 1
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(11) The name and address of the applicant's current agent for service of process;
(12) A copy of the applicant's board of equalization seller's permit; (13) A copy of the medical marijuana collective operating standards, listed in section 40-103, containing a statement dated and signed by the responsible party on-site stating under penalty of perjury, that they read, understand and shall ensure compliance with the aforementioned operating standards. (b) The director of the planning and building agency or designee shall have sixty (60) calendar days in which to investigate the application and background of the applicant.

The department of building safety and housing, the fire department and the Orange County Health Department shall inspect the premises proposed to be devoted to the collective establishment and shall make separate recommendations to the director of the planning and building agency or designee or designee concerning compliance with the foregoing provisions.
(c) The director of the planning and building agency or designee, after receiving the application and aforementioned recommendations, shall grant the permit if s/he finds:
(1) The required fee has been paid.
(2) The application conforms in all respects to the provisions of this article. (3) The applicant has not knowingly made a material misrepresentation in the application.
(4) The applicant has fully cooperated in the investigation of the application. (5) The applicant has not had a regulatory safety permit or other similar license or permit denied or revoked for cause by this city or any other city located in or out of this state within the five (5) years prior to the date of application. (6) The collective as proposed by the applicant would comply with all applicable laws including, but not limited to, health, zoning, fire and safety requirements. (7) The applicant has demonstrated compliance with the California Department of Justice, Office of the Attorney General, "Guidelines for the Security and NonDiversion of Marijuana Grown for Medical Use" standards. (d) Failure of an applicant listed on the RSP eligibility list to obtain a certificate of occupancy within six (6) months of submitting a completed RSP application will result in disqualification from the RSP eligibility list and waitlist. This sub-section applies to RSP applications submitted after April 5, 2016.

Sec. 40-107.3. Medical marijuana collective—Regulatory permit annual renewal.

Exhibit 1
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Ordinance No. NS-XXX

(a) Applications for the renewal of a permit shall be filed with the director of the planning and building agency or designee at least sixty (60) calendar days before the expiration of the current permit. Temporary permits will not be issued. Any permittee allowing his or her permit to lapse or which permit expired during a suspension shall be required to submit a new registration application and pay the corresponding original application fees.
(b) Any person desiring to obtain a renewal of his/her respective permit shall file a written application under penalty of perjury on the required form with the chief of police who shall conduct an investigation. The application shall be accompanied by a nonrefundable filing fee established by separate resolution of the city council to help defray the cost of the investigation required by this article. An applicant shall be required to update the information contained in his/her original permit application and provide any new and/or additional information as may be reasonably required by the director of the planning and building agency or designee in order to determine whether said permit should be renewed.

Sec. 40-107.4. Maintenance of records.

A medical marijuana collective shall maintain records at the location accurately and truthfully documenting:
(1) The full name, address, and telephone number(s) of the owner, landlord and/or lessee of the location;
(2) The full name, address, and telephone number(s) of all members who are engaged in the management of the collective and the exact nature of each member's participation in the management of the collective;
(3) The full name, address, and telephone number(s) of all patient members to whom the collective provides medical marijuana, a copy of a government-issued identification card for all patient members;
(4) The full name, address, and telephone number(s) of all primary caregiver members to whom the collective provides medical;
(5) All receipts of the collective, including but not limited to all contributions, reimbursements, and reasonable compensation, whether in cash or in kind, and all expenditures incurred by the collective for the cultivation of medical marijuana; and (6) Proof of compliance with the California Attorney General Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use.

These records shall be maintained by the collective for a period of five (5) years and shall be made available by the collective to the police department and/or community preservation division upon request. If they are not produced as requested the city may seek a search warrant, subpoena, or court order. In addition to all other formats that the Exhibit 1
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collective may maintain, these records shall be stored by the collective at the location in a printed format in its fireproof safe. Any loss, damage or destruction of the records shall be reported to the police department within twenty-four (24) hours of the loss, destruction or damage.

Sec. 40-107.5. Audits – Cooperatives/Collectives.

Annual audits. No later than September 30 of every year, each licensed medical marijuana collective shall be liable to file with the city an independent audit or financial review of its operations of the previous calendar year. Provided, however, that licensed collectives which operate on a vertically or horizontally integrated basis as established in Chapter 21, Article XII of this Code, or that are co-located on shared premises may file a consolidated audit or independent financial review. The form and contents of the document shall be specified by the executive director of finance and management services, or his/her designee(s). The Executive Director of Finance and Management Services, or his or her designee(s) may waive this requirement for certain licensed collectives in accordance with guidelines established by the Finance and Management Services Agency.

Sec. 40-107.11. Cooperative/Collective regulatory safety permit. (a) Every medical marijuana collective shall obtain a regulatory safety permit from the police department. The applicant shall pay a non-refundable fee in an amount established by the city council. It shall be unlawful for any person, association, partnership or corporation to engage in, conduct or carry on, in or upon any premises within the city a medical marijuana collective without the required permit. (b) A copy of the regulatory safety permit shall be displayed at all times in a place visible to the public.
(c) A regulatory safety permit shall be valid for a period of one (1) year, unless sooner revoked. No permit granted herein shall confer any vested right to any person or business for more than the above-referenced period.
(d) A Regulatory Safety Permit shall not be issued to an individual or a business entity associated with an individual who must comply with California Health & Safety Code Section 11590. This subsection is applicable to all new registration applications received after April 5, 2016.

Sec. 40-108. Inspection and enforcement responsibilities.

The code enforcement division of the planning and building agency may enter and inspect the location of any collective between the hours of 7:00 a.m. and 11:00 p.m., or at any reasonable time, to ensure compliance with this article. In addition, a designated unit within the police department may enter and inspect the location of any collective and the recordings and records maintained as required by this article, except that the inspection Exhibit 1
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and copying of private medical records shall be made available to the police department only pursuant to a properly executed search warrant, subpoena, or court order. It is unlawful for any owner, responsible person, landlord, lessee, member (including but not limited to a member engaged in the management), or any other person having any responsibility over the operation of the collective to refuse to allow, impede, obstruct or interfere with an inspection, review or copying of records and closed-circuit monitoring authorized and required under this article, including but not limited to, the concealment, destruction, and falsification of any recordings, records, or monitoring.

Sec. 40-109. Applicability to existing medical marijuana operations.

Any existing medical marijuana collective, dispensary, operator, establishment, or provider that does not comply with the requirements of this article must immediately cease operation until such time, if any, when it complies fully with the requirements of this article.

No medical marijuana collective, dispensary, operator, establishment, or provider that existed prior to the enactment of this article shall be deemed to be a legally established use under the provisions of this article, and such medical marijuana collective, dispensary, operator, establishment, or provider shall not be entitled to claim legal nonconforming status.

Sec. 40-110. Compliance with this article and state law. (a) It is unlawful for any person to:
i. Cause, permit or engage in the giving away of marijuana, or ii. Own, establish, operate, use or permit the establishment or operation of a medical marijuana collective or cooperative, or to participate as an employee, contractor, agent, responsible person or volunteer of a collective or cooperative, except as provided in this article, and pursuant to any and all other applicable local and state laws.
iii. The prohibition in subsection (ii) above includes, renting, leasing, or otherwise permitting a medical marijuana business to occupy or use a location, vehicle, or other mode of transportation.
(b) It is unlawful for any person to cause, permit or engage in any activity related to medical marijuana except as provided in Health and Safety Code § 11362.5 et seq., and pursuant to any and all other applicable local and state laws. (c) It is unlawful for any person to knowingly make any false, misleading or inaccurate statements or representations in any forms, records, filings or documentation required to be maintained, filed or provided to the City under this article, or to any other local, state or federal government agency having jurisdiction over any of the activities of collectives.

Exhibit 1
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(d) It shall be the sole responsibility of the members engaged in the management of the collective to ensure that the collective is at all times operating in a manner compliant with all applicable state laws and this article. Nothing in this article shall be construed as authorizing any actions which violate state law with regard to the cultivation, transportation, provision, and sale of medical marijuana. (e) Cultivation of Marijuana.
(1) Personal Cultivation. Individuals twenty-one (21) years of age or older may plant, cultivate, harvest, dry, or process up to six (6) living marijuana plants for personal (non-commercial) use in a private residence or accessory structure to a single private residence in the City of Santa Ana and must comply with the following requirements:
i. The marijuana cultivation area shall be located indoors within a private residence or accessory structure on a single parcel of property; ii. No more than six (6) living marijuana plants is permitted for indoor personal cultivation;
iii. Marijuana in excess of twenty-eight and one-half (28.5) grams produced by plants kept for indoor personal cultivation must be kept in a locked space on the grounds of the private residence not visible from the public right-of way. iv. There shall be no exterior visibility or evidence of marijuana cultivation outside the private residence from the public right-of-way, including but not limited to any marijuana plants, equipment used in the growing and cultivation operation, or any light emanating from the cultivation; or
v. The cultivation may not violate any California Building, Electrical or Fire Codes or any other health and safety standards.
(2) Commercial Cultivation. Commercial cultivation of marijuana or cannabis is prohibited anywhere in the City except as allowed and regulated in Article I of Chapter 40 of the Santa Ana Municipal Code.
(3) Outdoor Cultivation. Outdoor cultivation of marijuana or medical marijuana is prohibited anywhere in the City. No person, including a qualified patient or primary caregiver, shall engage, permit, or participate in the outdoor cultivation of marijuana in the City.
(4) Reserved.
(5) Public Nuisance Prohibited.
(i) It is hereby declared to be unlawful and a public nuisance for any person owning, leasing, occupying, or having charge or possession of any parcel within the City to create a public nuisance in the course of cultivating marijuana plants Exhibit 1
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or any part thereof in any location, indoor or outdoor, except as allowed and regulated in Chapter 40 of the Santa Ana Municipal Code. A public nuisance may be deemed to exist, if such activity produces:
(1) Odors which are disturbing to people of reasonable sensitivity residing or present on adjacent or nearby property or areas open to the public; (2) Repeated responses to the parcel by law enforcement personnel; (3) A repeated disruption to the free passage of persons or vehicles in the neighborhood, excessive noise which is disturbing to people of normal sensitivity on adjacent or nearby property or areas open to the public; (4) Any other impacts on the neighborhood which are disruptive of normal activity in the area including, but not limited to, grow lighting visible outside the dwelling, excessive vehicular traffic or parking occurring at or near the dwelling, and excessive noise emanating from the dwelling. (5) Outdoor and Commercial growing and cultivation of marijuana, except as allowed and regulated in Chapter 40 of the Santa Ana Municipal Code. (f) A permitted medical marijuana dispensary may deliver medical marijuana only to a qualified patient or caregiver. Medical marijuana delivery services by dispensaries possessing regulatory safety permits must comply with Business and Professions Code §19340. Delivery of cannabis from a dispensary permitted pursuant to this Chapter can only be made in a city or county that does not expressly prohibit it by ordinance. Delivery services by dispensaries not in possession of regulatory safety permits is expressly prohibited.
(g) Non-Retail Commercial Cannabis Businesses for Medicinal and Adult-Use Cannabis as defined in Chapters 18 and 40 of the Article I of Chapter 40 of the Santa Ana Municipal Code (SAMC) are permitted subject to the regulations and standards contained within Chapter 40 of the SAMC.

Sec. 40-111. Violation and enforcement.

A. Violation/enforcement. Each and every violation of this article shall constitute a separate violation and shall be subject to all remedies and enforcement measures authorized by this Code. Additionally, as a nuisance per se, any violation of this article shall be subject to injunctive relief, revocation of the collective's registration, revocation of the certificate of occupancy for the location, disgorgement and payment to the city of any and all monies unlawfully obtained, costs of abatement, costs of investigation, attorney fees, and any other relief or remedy available at law or equity.

The city may also pursue any and all remedies and actions available and applicable under local and state laws for any violations committed by the collective and persons related or associated with the collective.

Exhibit 1
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B. Suspension or revocation. When the chief of police finds that any person holding a regulatory safety permit under the provisions of this chapter 18 has violated the provisions of this chapter or is found guilty of conduct which would form the basis of denial of the regulatory safety permit as set forth in article XIII of this chapter 18, s/he may revoke or suspend the permit. No such revocation shall become effective until the regulatory safety permit holder has been notified in writing by certified mail of the right to appeal the revocation decision pursuant to the provisions or of Chapter 3. If a timely appeal is filed, the revocation shall be effective only upon decision of the city council. Otherwise, the revocation shall become effective after the timely appeal period has passed.

Sec. 40-112. Transfer of ownership.

A. Upon the transfer of any interest in a collective/cooperative, the regulatory safety permit shall be null and void. Any person, firm or entity desiring to own or operate the collective/cooperative shall make a new application. Prior to or concurrent with the submission of said application the transferee shall obtain all required business licenses, post all required security deposits, acquire all necessary, certificates, permits or other licenses allowing the doing of any act which the person paying or holding the same would not otherwise be entitled to do; and any permit, license, variance or other instrument of approval or evidence that any conditions exist as required by any other section of this Code or by any statute or code provisions of the state must first be obtained or complied with before the doing of any act or thing for which it is required.

A fee as established by resolution of the city council shall be payable for each such application involving transfer of any interest in an existing collective/cooperative. The provisions of section 18-617.1 and 18-617.2 shall apply to any person, firm, or entity applying for a regulatory safety permit for premises previously used as such establishment.

B. Any such transfer of any interest in an existing collective/cooperative or any application for an extension or expansion of the building or other place of business of the collective/cooperative shall require inspection and compliance with section 18- 618.

C. The owner or operator of a collective/cooperative shall be responsible for notifying the city of any intention to rename, change management, or convey the business to another person/entity. Notification to the city must be made a minimum of sixty (60) days prior to such transfer.

Section 8. Section 21-127 of Article XII of Chapter 21 of the Santa Ana Municipal Code is hereby amended to read in full as follows:

Sec. 21-127. - Marijuana collectives/cooperatives—Annual business license tax assessment.
(a) Annual business license tax assessment for marijuana collectives/cooperatives.

Exhibit 1
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(1) Every collective/cooperative whether it is organized or conducted as a "not for profit" business, a "non-profit" business, or a "for-profit" business, shall pay an annual business license tax in accordance with Chapter 21 and the sections and subsections hereunder.
(2) For the purposes of this article, a marijuana collective/cooperative is defined in section 40-101(b) and is considered to be a business as that term is defined in section 21-3.
(3) For the purposes of this article, a collective/cooperative is not considered to be a religious or charitable organization.
(4) "Medical marijuana collective/cooperative" or "collective/cooperative" shall mean any activity regulated or permitted by chapter 18 40. (5) For the purposes of this article, a marijuana collective/cooperative is not considered to be a business or person having a "specified exemption" or "specified exclusion" from business license taxation as set forth in sections 21-48 and 21-49.
(6) For the purposes of this article, a "nonprofit organization" shall mean any institution or organization that is exempted from taxes measured by income or gross receipts pursuant to Article XIII, Section 26 of the California Constitution as codified under Chapter 4 (commencing with Section 23701) of Part 11 of Division 2 of the Revenue and Taxation Code and Section 37101 (c) of the Government Code or Sub-Chapter F (commencing with Section 501) of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986. An institution or organization operating as a collective/cooperative and claiming a gross receipts assessment business license tax exemption under this section shall have the burden of furnishing to the collector such information as the collector may require to validate the claim of exemption including but not limited to such a determination by the California Franchise Tax Board or any other information requested by the collector. (7) For the purposes of this article, "gross receipts" shall mean any transfer of title or possession, exchange or barter, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property for a consideration including any monetary consideration for marijuana whatsoever, including, but not limited to, membership dues, reimbursements provided by members, regardless of form, or the total amount of cash or in-kind contributions, including all operating costs related to the growth, cultivation or provision of marijuana or any transaction related thereto. "Gross receipts" shall also include without limitation anything else of value obtained by a collective/cooperative. The term "gross receipts" shall also include the total amount of the sale price of all sales, the total Exhibit 1
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amount charged or received for the performance of any act, service or employment of whatever nature it may be, whether or not such service, act or employment is done as a part of or in connection with the sale of goods, wares, merchandise, for which a charge is made or credit allowed, including all refunds, cash credits and properties of any amount or nature, any amount for which credit is allowed by the seller to the purchaser without any deduction therefrom, on account of the cost of the property sold, the cost of materials used, the labor or service cost, interest paid or payable, losses, or any other expense whatsoever; provided that cash discounts allowed or payment on sales shall not be included. "Gross receipts" shall also include the amount of any federal, manufacturer's or importer's excise tax included in the price of property sold, even though the manufacturer or importer is also the retailer thereof and whether or not the amount of such tax is stated as a separate charge. "Gross receipts" shall not include the amount of any federal tax imposed on or with respect to retail sales whether or not the amount of such tax is stated as a separate charge. "Gross receipts" shall not include the amount of any federal tax imposed on or with respect to retail sales whether imposed upon the retailer or the consumer and regardless of whether or not the amount of federal tax is stated to customers as a separate charge, or any California state, city or city and county sales or use tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser, or such part of the sales price of any property previously sold and returned by the purchaser to the seller which is refunded by the seller by way of cash or credit allowances given or taken as part payment on any property so accepted for resale. "Gross receipts" shall be calculated without any deduction on account of any of the following:
(i) The cost of tangible property sold or bartered;
(ii) The cost of materials or products used, labor or service cost, interest paid, losses, or other expense; or
(iii) The cost of transportation of the marijuana, or other property or product.
(b) Business license tax rates for marijuana collectives/cooperatives. (1) Every collective/cooperative, excepting a qualified "nonprofit organization," whether it is organized or conducted as a "not for profit" business, a "nonprofit" business, or a "for-profit" business, shall pay a separate business license tax at a rate of up to ten (10) percent of the gross receipts generated or otherwise received for each branch establishment or separate property location of the business. The gross receipts tax shall be initially set at a rate of five (5) percent. The maximum tax rate shall not exceed ten (10) percent Exhibit 1
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of gross receipts. This tax shall not be adjusted for inflation pursuant to section 21-121.
(2) Notwithstanding the maximum tax rate of ten (10) percent of gross receipts imposed under subsection (b)(1), the city council may in its discretion at any time by ordinance implement a lower gross receipts tax rate for all marijuana collectives/cooperatives, as defined in such ordinance, subject to the maximum rate of ten (10) percent of gross receipts. The city council may by ordinance increase any such gross receipts tax rate from time to time, not to exceed the maximum gross receipts tax rate established under subsection (b)(1).
(3) Effective January 1, 2018, the gross receipts tax initially set at a rate of five (5) percent pursuant to subsection (b)(1), shall be increased to a rate of six (6) percent. The maximum tax rate shall not exceed ten (10) percent of gross receipts. This tax rate shall not be adjusted for inflation pursuant to section 21-121.
(4) As part of the gross receipts tax imposed by this article, each collective/cooperative shall pay a minimum basic rate of two thousand dollars ($2,000.00) annually for each separate branch location or separate property location of the business.
(c) Modification, repeal or amendment. The city council may repeal the ordinance codified in this article, or amend it in a manner which does not result in an increase in the tax or taxes imposed herein, without further voter approval. The city council may likewise by ordinance adopt and add additional provisions to any other article of this chapter and relate them to this article, or amend any existing provisions of any article of this chapter as they may already relate to this article in any manner which does not result in an increase in the tax or taxes imposed herein, without further voter approval. If the city council repeals said ordinance or any provision of this article, it may subsequently reenact it without voter approval, as long as the reenacted ordinance or section does not result in an increase in the tax or taxes imposed herein. (d) Administration—Rules, regulations, and guidelines; interpretation/clarification. In order to aid in the city's collection of taxes due under this article and to ensure that all marijuana collectives/cooperatives are taxed consistently to the best of the city's ability, the collector, with the concurrence of the city attorney, may promulgate rules, regulations, and guidelines, to implement and administer this article including, but not limited to rules, regulations, and guidelines harmonizing other provisions of this chapter with the provisions of this article in any manner not inconsistent with the intent of this article and which does not result in an increase in the tax or taxes imposed herein. The collector may also, with the concurrence of the city attorney, interpret or clarify the methodology of the tax, or any definition applicable to the tax, so long as Exhibit 1
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such interpretation or clarification (even if contrary to some prior interpretation or clarification) is not inconsistent with the language of this article. (e) Occasional transactions—Exemptions.
(1) The provisions of this article shall not apply to persons having no fixed place of business within the city who come into the city for the purpose of transacting a specific item of marijuana collective/cooperative business at the request of a specific patient, client or customer, provided that such person does not come into the city for the purpose of transacting business on more than five (5) days during any calendar year.
(2) For any person not having a fixed place of business within the city who comes into the city for the purpose of transacting collective/cooperative activities, the business tax payable by such person may be apportioned by the collector in accordance with this chapter.
(f) Reporting and remittance. Beginning as set forth in subsection (k) below, and monthly thereafter, each marijuana collective/cooperative (except qualified nonprofit organizations exempt from taxes measured by income or gross receipts) required to pay a tax based on gross receipts under this article, shall report to the city any gross receipts received during the preceding monthly reporting period and shall likewise remit to the city the taxes due and owing during said period. For purposes of this section, month shall mean calendar month, and taxes shall begin to accrue on the date that a person or entity first receives a business license or other permit to operate as a collective/cooperative.

The payment of the two thousand dollars ($2,000.00) minimum basic rate gross receipts tax required annually for each separate branch location or separate property location of the business in accordance subsection (b)(3), shall be made annually prior to the beginning of the fiscal year beginning April first of the current year and expiring on the 31st day of March of the following year. In the case of a new collective/cooperative the minimum basic rate gross receipts tax shall be paid in advance prior to any new business activity being undertaken. Every new licensee shall pay in advance an amount equal to one-quarter (¼) of the annual minimum basic rate gross receipts tax, for each quarter and fraction of a quarter remaining during the period for which the new license is issued. (g) Delinquent date—Penalty. Any individual or entity who fails to pay the taxes required by this article when due shall be subject to penalties and interest as set forth in accordance with this chapter. The collector is not required to send a delinquency or other notice or bill to any person subject to the provisions of this chapter and failure to send such notice or bill shall not affect the validity of any tax or penalty due under the provisions of this chapter.
(h) Payment of tax does not authorize unlawful business.

Exhibit 1
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(1) The payment of a business tax required by this article, and its acceptance by the city, shall not entitle any person to carry on any collective/cooperative unless the person has complied with all of the requirements of this Code and all other applicable laws, nor to carry on any collective/cooperative in any building or on any premises in the event that such building or premises are situated in a zone or locality in which the conduct of such collective/cooperative is in violation of any law.
(2) No tax paid under the provisions of this article shall be construed as authorizing the conduct or continuance of any illegal or unlawful business, or any legal business in an illegal manner, or any business in violation of any ordinance of the city. Nothing in this article implies or authorizes that any activity connected with the distribution or possession of marijuana is legal unless otherwise authorized and allowed by California and federal law. Nothing in this section shall be applied or construed as authorizing the sale of marijuana. (i) Business license tax certificate—Required. There are imposed upon all persons engaged in transacting and carrying on any collective/cooperative business activity in the city taxes in the amounts prescribed in this article. It shall be unlawful for any person, either for him or herself or for any other person, to commence, transact or carry on any business in the city without first having procured a business license from the city under this chapter and having paid the taxes set forth in this article, and without complying with any and all applicable provisions contained in this chapter. The carrying on of any collective/cooperative without complying with all the provisions of this article shall constitute a separate violation of this chapter for each and every day that such collective/cooperative is so carried on.
(j) Classification of business license assessment type—Term and renewal. The business license issued to marijuana collectives/cooperatives shall be classed as a gross receipts assessment type, issued for the same term of license as set forth in subsection 21-71(c) and shall be subject to renewal in accordance with sections 21- 72(c), 21-73(c), and 21-77.
(k) Operative date. Upon the approval by the majority of the voters of the city at the November 4, 2014 general election, the taxes imposed by this article shall become operative and shall be applied by the collector upon all marijuana collectives/cooperatives.
(l) Operative date of increased gross receipts tax rate. The gross receipts tax set initially at a rate of five (5) percent pursuant to subsection (b)(1) shall be increased to a rate of six (6) percent effective January 1, 2018, pursuant to subsection (b)(3).

Section 9. Section 21-133 of Article XIII of Chapter 21 of the Santa Ana Municipal Code is hereby amended to read in full as follows:

Exhibit 1
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