City Council
Report
City Council Meeting: September 9, 2025
Agenda Item: 12.A
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To: Mayor and City Council
From: Arminé Chaparyan, Director, Administration
Subject: Introduction and First Reading of an Ordinance Amending Article 6 of the Santa Monica Municipal Code to Establish a Permitting Process and Operational Conditions for Commercial Cannabis Uses; Introduction and First Reading of an Ordinance Amending Article 9 of the Santa Monica Municipal Code to Authorize Commercial Cannabis Uses within Certain Zoning Districts; Authorization for City Manager to Execute All Necessary Associated Documents to Accept the Cannabis Equity Assessment; Adoption of a Resolution Establishing a Cannabis Equity Program; and Adoption of a Fee Resolution Establishing a Non-City-Based Cannabis Delivery Permit Fee and Cannabis Retailer Permit Fees
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines.
2. Adopt the attached Ordinance amending the text of Article 6 of the Municipal Code to establish a permitting process and operational conditions for commercial cannabis uses.
3. Adopt the attached Ordinance amending the text of Article 9 of the Municipal Code to authorize commercial cannabis uses within certain zoning districts.
4. Authorize the City Manager to execute all necessary documents to accept the Cannabis Equity Assessment.
5. Adopt the attached Resolution establishing a cannabis equity program.
6. Adopt the attached Resolution establishing Cannabis Retailer Permit fees and a Non-City-Based Cannabis Delivery Permit fee.
Summary
On June 13, 2023, City Council held a study session on adult-use cannabis and directed staff to prepare an ordinance to allow adult-use cannabis businesses of all types within the City, to follow State guidelines for locating adult-use cannabis 2 of 30
businesses and directed a preference that adult-use cannabis not be required to go through a discretionary permit process. As part of that overall direction, Council also directed the creation of a social equity component in the adult-use cannabis program to help ensure that communities most impacted by federal and state cannabis enforcement are provided an opportunity to benefit from the cannabis industry.
After the June 2023 study session, staff initiated work on drafting the amendments to the Zoning Ordinance and prepared a cannabis equity assessment to help inform a potential cannabis equity program. In addition, Council adopted an Interim Zoning Ordinance to permit the two existing Medicinal Cannabis Retailers that received permits to sell adult-use cannabis or adult-use cannabis products to persons 21 years of age and over.
This report outlines the proposed changes to the Zoning Ordinance to allow cannabis retailer uses in the City’s non-residential districts and location requirements for cannabis retailers within the allowable zoning districts. It also outlines the proposed changes to Article 6 of the Santa Monica Municipal Code to provide definitions, operating requirements and conditions, permitting regulations and fees, and other regulatory standards. In addition, a summary of the cannabis equity assessment is presented along with a proposed cannabis equity program consistent with prior Council direction for a “standard equity” program that would be administrative and rely on existing staff considering available resources, time, and desired outcomes The cannabis program presented for Council consideration is responsive to Council’s prior direction to incorporate social equity into a new adult use cannabis program. Staff also obtained a cannabis equity grant from the Governor’s Office of Business and Economic Development State of California (GO-Biz) to offset staff time for preparation of the equity program. A condition of the grant is Council’s adoption of the equity program, which would provide benefits to qualified equity applicants – largely in the form of zoning relief and priority processing.
In the course of developing this new program, staff also received feedback from the 3 of 30
Planning Commission expressing interest in supporting equity applicants to participate or open a business in any industry, not just cannabis. Further, the City is limited in both budget and staff resources to administer the cannabis program, and there are also relatively fewer opportunities in the cannabis industry compared to several years ago.
As a result, staff has also developed other options for future consideration that could be designed as regulations or incentives to augment the core equity program including cannabis retailers in Santa Monica carrying products manufactured by equity applicants certified by the State of California or employing best practices to hiring people impacted by past criminalization of cannabis. Taxes generated from cannabis businesses can also be reinvested into entrepreneurship programs to support equity applicants. These will be subject to future budget decisions by the City Council.
Discussion
The City of Santa Monica first adopted regulations for medical marijuana (medicinal cannabis) in June 2015 as a part of the City’s comprehensive Zoning Ordinance update (Article 9 of the Santa Monica Municipal Code) which enabled up to two medicinal cannabis retailers within the City subject to a regulatory permit and selection process.
All other cannabis-related uses were prohibited. The dispensaries were allowed only along limited sections of Wilshire Boulevard and Santa Monica Boulevard within the Mixed-Use Boulevard Low (MUBL), Mixed-Use Boulevard (MUB) or General Commercial (GC) zones subject to a Conditional Use Permit.
On March 7, 2017, the City Council directed staff to prohibit adult-use commercial cannabis activities within the city, to draft an ordinance creating a regulatory permit and selection process for medicinal cannabis retailers, to amend the City’s Municipal Code to address changes in State law, and to consider options for allowing non-volatile medicinal cannabis light manufacturing uses. On October 24, 2017, the City Council adopted an Interim Zoning Ordinance (IZO) and adopted a separate ordinance adding Chapters to Article 6, Business, Professions, and Trades, which established general regulations and definitions for commercial cannabis activities, including a regulatory permit process for medicinal cannabis retailers and light (non-volatile) manufacturing, and making other changes as needed to conform with State law. The ordinances 4 of 30
prohibited all adult-use commercial cannabis activities including retail, cultivation, testing, distribution, and manufacturing. The IZO subsequently expired, but the additions to Article 6 remained in place. After a prolonged selection process, two medicinal cannabis retailers were selected. The two retailers, located at 925 Wilshire Boulevard and 1418 Wilshire Boulevard, began operations recently.
On November 8, 2022, Measure HMP was approved by the voters by a margin of 66% to 34% to impose a tax on all commercial cannabis activities at initial rates of 3% of gross receipts for adult-use cannabis retailers, 2% for medicinal cannabis retailers and 1% on other cannabis business types. These rates could be increased up to 10% of gross receipts at the discretion of the City Council.
On June 13, 2023, City Council held a study session on adult-use cannabis and directed staff to prepare an ordinance to allow adult-use cannabis businesses of all types within the City, to follow State guidelines for locating adult-use cannabis businesses and directed a preference that adult-use cannabis not be required to go through a discretionary permit process. As part of that overall direction, Council also directed the creation of a process to allow two existing medicinal cannabis retailers to sell adult-use cannabis and the creation of a social equity component to help ensure that communities most impacted by federal and state cannabis enforcement are provided an opportunity to benefit from the cannabis industry.
On November 14, 2023, pursuant to prior Council direction, Council adopted Interim Ordinance Number 2764 (CCS) (IZO 2764) which adopted interim zoning regulations to permit the City’s two existing Medicinal Cannabis Retailers to sell adult-use cannabis or adult-use cannabis products to persons 21 years of age and over. On December 19, 2023, Council adopted Interim Ordinance Number 2770 (CCS) (IZO 2770) which extended the interim zoning regulations until February 12, 2026. On December 17, 2024, Council extended Interim Ordinance 2764 to expand the operating hours to 8am to 10pm for the two existing cannabis retailers.
On April 23, 2024, the City Council held another study session to provide direction on 5 of 30
the level and complexity of a cannabis equity program. Council also discussed options and provided direction on location restrictions for the adult-use cannabis ordinance. The following summarizes their discussion and direction on key policy questions:
1. Should the City develop a standard equity option or an enhanced equity option? • Council direction: Pursue a standard equity program that would prioritize individuals who qualify for the equity program and not require additional staffing.
2. Should there be an additional buffer around specific sensitive uses in the City? • Council direction: Approve 600-foot buffer between sensitive site uses as established by State guidelines.
3. For distances between operators, would Council prefer a small (300’), medium (600’), or large (900’) buffer?
• Council direction: Approve 300-foot buffer between facilities.
4. In addition to a distance between operators, should there be an additional restriction that states that in no case should there be more than one cannabis business per block?
• Council direction: Only one location per city block.
Cannabis Social Equity
Cannabis social equity recognizes the long-term negative impacts of cannabis criminalization on minority communities and provides equitable opportunities to enter the regulated cannabis industry. The spectrum of equitable cannabis policy may include simple measures such as fee waivers to more ambitious efforts of a comprehensive program development. Whatever form it takes, the objective of social equity is to make a positive impact on those that have been the most disproportionately affected by cannabis criminalization.
During the April 23, 2024, Council study session, staff presented two framework options for the Council’s consideration. The options were informed by staff’s comparative analysis of existing equity programs and lessons learned. A “standard equity” option would be administrative, rely on existing staff, and take approximately one year to develop. It could include standard practices such as fee waivers and expedited 6 of 30
application review. An “enhanced equity” option would include tailored components developed from the equity assessment findings and take approximately two years to develop with dedicated staff. Council directed staff to develop a standard equity program that could include areas such as community reinvestment, support for direct technical assistance to businesses, and substance abuse prevention programs.
Allocation of funds would ultimately be a future Council budget decision.
Details of the cannabis equity assessment and proposed cannabis equity program are provided later in this report.
Proposed Article 9 Text Amendments
The proposed Zoning Ordinance text amendments would accomplish the following:
• Allow Cannabis Retailers, which may sell both adult-use and medicinal cannabis and cannabis products, as a permitted use in the City’s non-residential districts; • Establish location requirements for cannabis retailers within the allowable zoning districts; and
• Define a Cannabis Retailer use.
The proposed text amendments would initially only allow cannabis retail sales with other cannabis-related uses, such as consumption lounges, to potentially follow in phases through subsequent text amendments based on the performance of the retail uses, demand for other cannabis uses, industry trends, and other factors. Besides the location requirements, the Zoning Ordinance text amendments would reference definitions, operating requirements and conditions, and other regulatory standards in various sections of SMMC Article 6 where these types of regulations and conditions are typically located.
As detailed in the amendments included in the Ordinance (Attachment B), the proposed text amendments include adding Cannabis Retailers as permitted uses under the Retail Sales land use classification in the land use tables of the City’s non-residential zoning districts as previously directed by Council. These districts include the following:
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• Downtown Districts
• Mixed-Use and Commercial Districts
• Bergamot Districts
• Employment Districts
• Oceanfront District
Within the Mixed-Use and Commercial Districts, an amendment is also proposed to add cannabis retailers to the list of uses that are required to meet the active use requirements of SMMC Section 9.11.030.
The existing Medicinal Cannabis Retailers section of the Zoning Ordinance found in SMMC Section 9.31.185 would be removed and replaced with a new Cannabis Retailers section in SMMC Section 9.31.095. The new section would primarily reference definitions, operating requirements and conditions, and other regulatory standards in various sections of SMMC Article 6 where these types of regulations and conditions are more appropriately located.
The new section would also provide location requirements for Cannabis Retailers consistent with prior Council direction and existing State regulations. While a strict cap on the number of cannabis uses is not proposed as part of the text amendments consistent with prior Council direction, the location requirements would ultimately limit the overall number of potential cannabis uses within the city. These location requirements would prohibit cannabis uses within 600 feet from schools, youth centers in existence at the time a complete commercial cannabis business permit application is submitted, and day care centers licensed by the State Department of Social Services in existence at the time a complete commercial cannabis business permit application is submitted. Cannabis uses would also be prohibited within 300 feet of another cannabis use and on the same block as another cannabis use.
However, as staff has further examined the potential procedures for implementing a minimum distance requirement between cannabis uses, a number of issues have arisen 8 of 30
that could create uncertainty for cannabis retailer applicants and staff as well as potentially delay the program and open the City to litigation risk. The timing of a cannabis retailer permit application submittal and payment of the application fee could signify when a particular location for a cannabis retailer is secured and a 300-foot buffer is established. The City’s Business License division with the Finance Department is envisioned to process these applications. Regulatory permit applications handled by the Business License division are typically submitted through a variety of ways including online, in person, and by mail. Given that the order of permit application submittals received would be critical to establishing the locations and subsequent buffers around cannabis retailers, these various methods of submitting permit applications could lead to uncertainty in determining the order of applications received. For valid applications received for eligible locations, questions have arisen as to the time period the applications should remain valid before other applicants could proceed with their permit applications for locations within the 300-foot buffer or on the same block. The ability of the City’s current software to track these potential varying time periods and deadlines is also uncertain. In order to provide more certainty for cannabis retailer applicants and to minimize risk of potential confusion, delays, and litigation, Council may wish to consider removing the prohibition of cannabis uses being located within 300 feet of another cannabis use or on the same block as another cannabis use.
The land use classification for Cannabis Retailer would also be amended in SMMC Section 9.51.030(B) to encompass adult-use cannabis and adult-use cannabis products in general as well as medicinal cannabis and medicinal cannabis products to state:
Cannabis Retailer. A licensed premises which is a physical location from which retail cannabis or cannabis products are intended to be sold. The premises may be closed to the public; sales may be made exclusively by delivery. Subject to the provisions of SMMC Section 9.31.095, cannabis retailers that are licensed and regulated by Business and Professions Code Section 26000 et seq and as amended from time to time shall be permitted to deliver or sell adult-use cannabis or adult-use cannabis products to persons 21 years of age and over or medicinal cannabis or cannabis products to persons 18 years of age and over with a physician’s recommendation.
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Planning Commission Recommendation
On June 4, 2025, the Planning Commission adopted a Resolution recommending that the City Council amend the text of the Zoning Ordinance to authorize Cannabis Retailers, which may sell both adult-use and medicinal cannabis and cannabis products, within certain zoning districts. With regards to the cannabis equity program, the Commission expressed a desire for Council to consider a broader equity program and elements that would also benefit non-cannabis related local businesses and budding entrepreneurs and not just those seeking to enter the cannabis industry. The Commission also expressed that a cannabis equity program, while striving to be inclusive and expansive, should not result in processes and barriers that delay the commencement of the adult-use cannabis program and opening of businesses.
Zoning Text Amendment Findings
1. The proposed amendments to the text of the Zoning Ordinance are consistent with the General Plan and any applicable Specific Plans in that cannabis retailers are an active, pedestrian-oriented use that is appropriate in non-residential zoning districts supporting the goal of the General Plan Land Use and Circulation Element (LUCE) to create complete neighborhoods with amenities that serve residents, workers, and visitors in the area.
2. The proposed amendments to the text of the Zoning Ordinance are consistent with the purpose of the Zoning Ordinance to promote the growth of the City in an orderly manner and to promote and protect the public health, safety, and general welfare in that the amendments create the opportunity for an enhanced retail land use with location and operating requirements that ensure compatibility with surrounding uses while maintaining appropriate health and safety measures.
Proposed Article 6 Text Amendments
Definitions, operating requirements and conditions, references to administrative regulations, and other regulatory standards related to medicinal cannabis are currently provided in various sections of SMMC Article 6 - Business, Professions, and Trades.
The proposed revisions to Article 6 Chapter 6.200 (Attachment C) related to cannabis 10 of 30
address streamlining the application process by providing clarity for permit approval for both cannabis retail and delivery operations. Furthermore, the ordinance will be updated to ensure consistency in definitions and terminology, eliminate provisions no longer deemed applicable, and align internal code section references for improved accuracy and ease of interpretation. Most of the proposed regulations in Article 6 are also intended to align with existing State cannabis regulations. The primary proposed changes are outlined below:
• Application and Permit Process: Eliminate the Cannabis Permit application selection process including the Request for Application process, the evaluation and selection committee, and the maximum of two permits. • Addition of the Cannabis Delivery Permit: New operational requirements for Non-City-Based Cannabis Delivery Retailers are proposed which include the requirement of a State license, proof of compliance and licensure in the city the retail store is located and vehicle and insurance requirements. • Restrictions on Transfers, Change or Alterations: Specifies that the permits are generally not transferable except as outlined and certain changes must be reported to the City for review.
• Annual Renewal and Compliance: Reiterates that the permits are issued in conjunction with the business license certificate and annual renewal is required for retailers and non-city-based cannabis deliveries.
• City Oversight and Enforcement: Clarifies the City’s ability to conduct regular inspections which are aimed to ensure that retailers are adhering to the applicable regulations intended to protect the community. • Indemnification Agreement: Similar to other regulatory permits, these agreements are intended to minimize the City’s financial exposure to claims, losses and damages.
• Elimination of Chapters 6.201 - 6.203: Chapters 6.201, 6.202, and 6.203 are being deleted because these chapters will be largely unnecessary or duplicative following the proposed adoption of Chapter 6.200, as amended. • Chapter 6.201 was specific to Medicinal Cannabis Retailers and the proposed Chapter 6.200 now addresses both Medicinal and Non-medicinal cannabis 11 of 30
operations in one comprehensive chapter.
• Chapter 6.202, which permitted Medicinal Cannabis Light Manufacturing, is being deleted because the Interim Zoning Ordinance that permitted light cannabis manufacturing is no longer in effect.
• Chapter 6.203 prohibited commercial nonmedicinal cannabis uses except for the two medical cannabis retailers permitted prior to October 10, 2023. The adoption of Chapter 6.200, as amended, would make Chapter 6.203 unnecessary.
Retailer Permitting Process
The Cannabis application submittal process would be similar to other business operations with regulatory permit requirements with the addition of a pre-application submittal phase (Phase I) as depicted in the flow chart below. Phase I would be necessary as a preliminary step due to the proposed cannabis retailer location prohibition of not being located within 300 feet and not on the same block as another cannabis business. In order to map and track the locations of potential cannabis retailers, applicants would need to submit a pre-application which would include the business license tax application form, the zoning review form, and the payment of the zoning conformance review fee. If the location is compliant with the 300-foot buffer requirement, the applicant would be notified that their location has been accepted, and the 300-foot buffer would then be established and prevent any other applications within that buffer to be processed. Staff is proposing that applicants be allowed up to six months to complete Phase I.
Phase II would include the remaining application submission requirements for the business license and Retail Cannabis permit. This includes the Cannabis Retailer license and copies of the applicable policies and procedures as required by the Department of Cannabis Control, the sellers permit issued by the CDTFA, insurance and indemnification requirements, the Industrial Waste Water application, and payment of the remaining tax and fees. The application process would not be linear, and the applicable City staff reviews would be completed as the documents are submitted. 12 of 30
Phase III would involve the City’s internal review process to ensure compliance with the proposed ordinance. Staff recommends that applicants be given a maximum of two years to complete both Phase II and III of the process. This would allow the applicant to complete any potential improvements, receive all necessary permits, and complete all necessary inspections. After all of the requirements have been met and the applicable City department reviews have been completed and approved, the business license certificate, the cannabis permit, and any additional conditions would be issued. The flow chart below illustrates this proposed cannabis retailer application process.
Retailer Permitting Process
The Cannabis application submittal process would be similar to other business operations with regulatory permit requirements with the addition of a pre-application submittal phase (Phase I) as depicted in the flow chart below. Phase I would be necessary as a preliminary step due to the proposed cannabis retailer location prohibition of not being located within 300 feet and not on the same block as another cannabis business. In order to map and track the locations of potential cannabis retailers, applicants would need to submit a pre-application which would include the business license tax application form, the zoning review form, and the payment of the zoning conformance review fee. If the location is compliant with the 300-foot buffer requirement, the applicant would be notified that their location has been accepted, and the 300-foot buffer would then be established and prevent any other applications within that buffer to be processed. Staff is proposing that applicants be allowed up to six months to complete Phase I.
Phase II would include the remaining application submission requirements for the business license and Retail Cannabis permit. This includes the Cannabis Retailer license and copies of the applicable policies and procedures as required by the Department of Cannabis Control, the sellers permit issued by the CDTFA, insurance and indemnification requirements, the Industrial Waste Water application, and payment of the remaining tax and fees. The application process would not be linear, and the applicable City staff reviews would be completed as the documents are submitted.
Phase III would involve the City’s internal review process to ensure compliance with the 13 of 30
proposed ordinance. Staff recommends that applicants be given a maximum of two years to complete both Phase II and III of the process. This would allow the applicant to complete any potential improvements, receive all necessary permits, and complete all necessary inspections. After all of the requirements have been met and the applicable City department reviews have been completed and approved, the business license certificate, the cannabis permit, and any additional conditions would be issued. The flow chart below illustrates this proposed cannabis retailer application process.
Cannabis application process if a buffer is required between cannabis uses 14 of 30
Should Council choose not to require the 300-foot buffer between cannabis uses and limitation of one cannabis use per block, the pre-application phase (Phase I) would not be required as illustrated below.
Cannabis application process if a buffer is not required between cannabis uses.
Cannabis Permit Fees
Cannabis Retailer Permit fees are not uniform and vary significantly based on the requirements set by the local permitting agency. The Cannabis Retailer Permit fees in California vary from $2,600 to as high as $51,000 with some jurisdictions requiring multiple payments throughout the application process. The City’s current Cannabis Retailer Permit fee is based on the cost associated with City staff’s time which includes the time to process the permit application, the cost of four Code Enforcement inspections, and the cost of City Attorney review time. The applicant would also be required to pay fees including the existing Cannabis Retailer Permit fee and a minimal 15 of 30
fee for out-of-city delivery operations. Staff recommends that Council defer in raising these fees until the adult-use Cannabis Permit Program is fully operational. This delay would allow for a more comprehensive understanding of the time required to process cannabis permit applications and enable the establishment of fees based on a more informed assessment of associated costs to streamline the entry into compliant operations.
Cannabis Retailers would be required to pay the City the following fees and taxes (these do not include fees related to construction or tenant improvements):
Cannabis Retailer
Permit/Tax Fee
Cannabis Retailer Permit* $1,991.84
Cannabis Tax 2% Medicinal Cannabis Retailers 4% Adult
Use Retailers
State Mandated Fee CASp $4.00
Business License Planning Review
Fee
$109.23
Business License Processing Fee $40.00
*The Cannabis Retailer Permit fee for new applicants will vary depending on the quarter in which they commence operations.
Non-City-Based Cannabis Delivery Retailer
Permit/Tax Fee
Cannabis Delivery Retailer Permit $65.74
Cannabis Tax 2% Medicinal Cannabis Retailers 4% Adult
Use Retailers
State Mandated Fee CASp $4.00
Business License Processing Fee $40.00
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A proposed resolution establishing a Non-City-Based Cannabis Delivery Permit and renaming certain existing medicinal cannabis retailers fees as cannabis retailer permit fees is attached as Attachment D.
Cannabis Equity Assessment
On January 19, 2024, the City was awarded a $40,000 grant from the Governor’s Office of Business and Economic Development (GO-Biz) to conduct an equity assessment.
With those grant funds, the City contracted with SCI Consulting Group to conduct the analysis and to prepare the assessment. The assessment is attached to this report as Attachment E.
The equity assessment walks through data analysis that ultimately identifies which populations and communities within the City have been most disproportionately impacted by the War on Drugs; an overview of cannabis-related businesses and activities; barriers to entry; summary of community outreach conducted and the feedback provided; best practices from other California cities; findings formed at the intersections of all of the research and analysis; and recommendations for Santa Monica’s equity program. The City’s DEI team has reviewed the proposed equity program and is willing to assist in marketing and implementation should the program be adopted by Council.
Process
The purpose of this equity assessment is to establish a foundation with data-driven analysis to document the impact of cannabis criminalization in Santa Monica and the systemic barriers that have prevented affected communities and individuals from accessing opportunities within the legal cannabis industry. With the equity assessment, the City was able to develop an informed cannabis equity program to give charge to implementing the findings and recommendations in the assessment.
Outreach
To better understand the felt impacts of cannabis convictions, an array of opportunities including an online survey, community workshops, stakeholder interviews, and 17 of 30
community-led discussions, were provided to hear directly from the community and those impacted directly by cannabis convictions. Outreach efforts yielded key themes of significant financial, regulatory, and societal barriers that inhibit the entry and success of those impacted in the legal cannabis industry and emphasized the need for a cannabis equity program.
Throughout the outreach phase of this assessment, community members shared recommendations for a future equity program that are incorporated into the potential program options and Santa Monica recommendations section of this report. To highlight a few, participants recommended investing in outreach and education campaigns focused on licensing, record expungement, and financial empowerment; support services (e.g. business training, legal assistance, grants or low-interest loans); and reinvestment of cannabis tax revenue back into impacted communities. Participants requested ongoing community engagement and transparency in program development and designing a program that centers around the voices of and empowers those directly harmed by cannabis prohibition.
All opportunities to provide insight and feedback were provided in both English and Spanish. A more detailed summary of the outreach opportunities is provided in the assessment.
Findings
The findings support the conclusion that historically cannabis prohibition has not been enforced uniformly across the City but has instead been found to burden areas that show clear signs of socio-economic disadvantage, particularly the census tracts that encompass the Pico neighborhood. In addition to Santa Monica’s specific data community feedback, best practices from peer cities provide context to inform the following eleven (11) findings:
1. Unrestricted Permitting and Licensing May Have Consequences Other jurisdictions have shown the risks associated with rapid unstructured cannabis market expansion. Allowing unrestricted adult-use cannabis licensing 18 of 30
can often lead to market oversaturation, dominance by large corporations, and the displacement of small operators rooted in the community. This is most hard hitting to equity applicants who lack the resources to compete and have a high risk of being pushed out of the marketplace without protective measures and intentional policy design.
2. Program Eligibility Criteria Should Prioritize Those Most Harmed by Cannabis Enforcement
An effective equity program must prioritize those most impacted by historical cannabis criminalization, which includes individuals with past cannabis-related convictions or arrests, with low income, and those living in communities disproportionately targeted by enforcement. Considerations for Santa Monica’s equity program should include:
• Documented cannabis arrest or conviction (self or immediate family). • Household income below 80% of Area Median Income (AMI). • Residency in a disproportionately impacted area or in the City. • Ownership and control of the applying business.
• Tiered eligibility to support varying levels of need.
3. Application and Permitting Processes Present Barriers to Entry Complex and costly application processes can exclude those that may be eligible including equity applicants due to high permit fees, extensive documentation requirements, and lengthy timelines that favor well-capitalized applications. A streamlined and simple process will help reduce barriers to entry and encourage greater participation in the equity program.
4. Systemic Barriers Limit Access to the Regulated Marketplace Equity applicants face systemic challenges, including lack of start-up capital, limited access to legal and technical assistance, and lingering consequences of cannabis convictions or arrests. These barriers must be actively addressed through financial and technical assistance and targeted interventions. 19 of 30
5. Equity Applicants are Vulnerable to Exploitative Partnerships Many equity applicants have limited business experience and few financial resources, making them vulnerable to exploitative arrangements. Strong safeguards and vetting procedures are needed so that equity applicants can’t be used to meet program requirements while holding no real power or long-term stake in their business, diluting the intent of the equity program.
6. Stakeholder Engagement and Education are Crucial to Program Success Public outreach and education are essential for fostering program participation and reducing stigma associated with the cannabis industry. Proactive communication strategies are needed to build trust in government processes, particularly in historically over-policed communities, and to foster a more inclusive local cannabis economy.
7. Past Convictions Have Long-Term Consequences
Many individuals continue to experience the consequences of cannabis-related convictions, including barriers to employment, housing, and financial aid.
Statewide reforms, such as AB 1793 (Bonta, 2018) have mandated automatic record sealing for eligible convictions, however, implementation gaps remain an issue. The City should explore ways to partner with legal aid providers, the District Attorney’s Office, and community groups to assist individuals with finding resources and access to expungement services.
8. Lack of Workforce Development Limits Equitable Participation Many disproportionately impacted individuals lack access to industry-specific training programs that could prepare them to enter the legal cannabis market.
This shortage of educational and workforce development opportunities limits their ability to be successful. Expanding access to vocational training, mentorship, and apprenticeship programs is key to building a sustainable equity-centered cannabis workforce.
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9. Sustainable Program Funding is Critical to Success and Long-Term Effectiveness of the Program
Long-term implementation and success of a cannabis equity program depends on sustained investment. Cities across California have struggled to operate equity programs due to inconsistent funding and inadequate staffing. Without sufficient resources, support services cannot be delivered at the scale needed to maintain an impactful equity program. The City should explore diverse funding streams including cannabis tax revenues, state grants, and philanthropic partnerships to ensure the program’s viability.
10.Community Reinvestment is Key to Providing Communitywide Equity Program Benefits
Cannabis legalization presents a unique opportunity to reinvestment in communities harmed by prohibition. Dedicating a portion of cannabis tax revenues to community-driven initiatives, such as youth programs and job training, can begin to repair the harms of past enforcement while fostering economic resilience. Reinvestment strategies should be guided by input from impacted communities and aligned with broader equity goals.
11.Ongoing Data Collection and Program Evaluation are Essential to Program Success
Effective implementation of an equity program requires robust data collection and evaluation to monitor key performance indications (e.g. licensing outcomes, ownership patterns, service utilization, etc.) to track progress, identify gaps, and make informed adjustments to the program. Transparency and accountability are essential to maintaining community trust and ensuring that the program evolves to meet changing needs.
Potential Program Elements and Recommendations for Equity Program In reviewing best practices from equity programs of other California cities, analysis of Santa Monica’s most impacted communities, and community voices, a menu of all potential program elements that could be included in Santa Monica’s equity program to 21 of 30
address the findings noted above was included in the Cannabis Equity Assessment.
The menu is intended to be a full list of options and does not take into consideration issues such as staffing capacity and resources, market conditions, or size of the impacted communities.
Based on the Council’s prior direction to have an administrative process, to use zoning limitations to naturally cap licensing, and to have a have an equity program that balances both resources and staffing with high impact results, certain core program elements and services were recommended for Santa Monica’s cannabis equity program. The full menu of typical program elements and list of recommendations for Santa Monica can be found in the attached Cannabis Equity Assessment with several of the recommendations included in the proposed equity program described below.
Proposed Cannabis Equity Program
As a relatively small city of only 8.5 square miles, Santa Monica faces different constraints and opportunities than larger cities like Los Angeles, Oakland, or Long Beach. While many cannabis equity policy frameworks draw from statewide best practices and lessons from other jurisdictions, it was appropriate for Santa Monica to implement a more tailored approach to cannabis equity. Other neighboring cities, including Culver City and West Hollywood, do not incorporate cannabis equity programs, and some jurisdictions, including San Diego, conducted cannabis equity assessments but ultimately did not create cannabis equity programs.
The proposed program elements below reflect considerations of the City’s scale, declining market conditions for the cannabis industry, and existing budget and staff resources while aligning with the broader goals of social equity, community reinvestment, and local economic inclusion.
Purpose
The Cannabis Equity Program (“Program”) seeks to reduce the barriers of entry and participation for individuals that have been negatively impacted by the disproportionate enforcement of cannabis-related crimes by providing access into the legal cannabis 22 of 30
industry. At the direction of City Council, this Program implements a focused and equitable program that balances access, oversight, and community benefit. The overarching goal is to create a lean, high-impact equity program that delivers meaningful benefits to those disproportionately affected by cannabis enforcement while remaining practical and sustainable.
Program Eligibility
The City’s eligibility standards are based on cannabis-related conviction history, lowincome status, and community ties, as these qualifiers aim to address those who have been historically shown to be the most impacted as described in Santa Monica’s Cannabis Equity Assessment (July 2025).
• Conviction History. Individuals who have been or have immediate family members who have been arrested or convicted for a cannabis-related offenses.
Rationale: Research confirms that Black/African American and Hispanic/Latino communities have been disproportionately criminalized. Restricting eligibility to Santa Monica arrests would exclude many individuals who were impacted but later moved due to displacement, gentrification, or economic hardship. Data and research on cannabis-related arrests, and criminal arrests more broadly, show that the impacts are often generational. Families of those who were arrested or convicted, particularly children and immediate relatives, frequently face long-term consequences such as housing instability, reduced economic opportunities, and barriers to education and employment. Expanding eligibility to include applicants with immediate family members who were arrested or convicted for cannabisrelated offenses would recognize these generational impacts and more accurately capture the full scope of harm experienced within communities. • Low-Income Status. Applicants at or below 80% of the Area Median Income (AMI).
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Rationale: Establishing clear financial criteria prevents the program from being exploited by individuals who do not face significant economic barriers. A welldefined low-income threshold ensures resources are allocated to those who need them most. A threshold of 80% of the Area Median Income (AMI) is a standard used by other cannabis equity programs across the state. • Community Ties. Applicants should be current or previous residents, students, or business owners in Santa Monica, for at least three years, cumulatively.
Rationale: Prioritizing applicants who have lived in the most impacted neighborhoods may limit the program’s effectiveness and reach. Requirements should consider both current and former Santa Monica residents who lived in disproportionately affected areas and should be measured cumulatively rather than consecutively to avoid penalizing those displaced due to gentrification or economic instability. Including students in the eligibility criteria would expand the pool of potential equity applicants, particularly those who may have meaningful community ties through their education in Santa Monica. Limiting eligibility strictly to individuals who currently live or previously lived in Santa Monica could inadvertently exclude people who may have strong ties to the community but do not meet the residency standard alone. If students are included, focus should be on individuals who attended K-12 school in Santa Monica. This group is more likely to reflect longer-term residency and stronger community connections. By contrast, Santa Monica College students often represent a more transient population, many of whom reside in other cities during or after their enrollment which may not align as closely with the program’s intent of addressing local impacts.
• Ownership. An equity ownership majority which allows flexibility while ensuring equity applicants maintain decision-making power. 24 of 30
Rationale: Setting a majority ownership requirement ensures equity applicants benefit from the program while allowing flexibility in investment structures. Many California equity programs require at least 51% equity ownership to ensure that social equity partnerships retain control over their businesses and are not exploited by outside investors. However, requiring a strict 51% threshold may also discourage or limit opportunity for outside investors who provide essential funding. Legal assistance will protect applicants from predatory investors seeking to take advantage of the program.
Program Benefits and Services
Core Program Elements and Services. These are the minimum essential program elements and services the City should implement immediately. They focus on lowering barriers to entry for equity applicants while having a streamlined and efficient administrative process.
Financial.
• Application and permit fee waivers or deferrals for qualified equity applicants.
Implementation Consideration:
Offering application and/or permit fee waivers has financial implications that could result in loss of revenue to the City.
Application and Licensing.
• Provide equity applicants with expedited application processing and review.
• Exemption from minimum distance requirement from other cannabis uses and limits to number of cannabis uses per block.
• Provisional approval of licenses prior to securing a business location to help equity applicants attract investors and secure financing, with a time- 25 of 30
limited window to finalize site selection and obtain full approval. • Disclosure of ownership and profit-sharing agreements are required during licensing review to ensure equity applicants are protected.
Administrative, Legal and Technical Assistance.
• Connect equity applicants with existing business development and cannabis industry resources.
• Refer equity applicants to pre-vetted legal aid groups and small business assistance providers, and workforce development organizations to administer direct services to equity applicants.
• Collaborate with the County District Attorney’s Office and Public Defender for expungement workshops.
Outreach and Program Information.
• Continue to update and utilize the City’s cannabis equity webpage on the City’s website to provide clear program information online in multiple languages.
• Targeted outreach to historically impacted communities using digital platforms, flyers, and community-based partnerships.
Expanded Program Services with State Grant Funding. Subject to the availability of State funding, if the City receives Type 2 funding from the California Cannabis Equity Grants Program for Local Jurisdictions administered by GO-Biz, the City could significantly expand its equity program beyond baseline services above. Under current grant program guidelines, which are subject to change, the City may apply for up to $500,000 in grant funds without providing a local one-to-one funding match.
Up to 10% of the grant may be used for city administrative costs and an additional 10% may be allocated to consultant services, such as providing technical assistance or grant 26 of 30
support. The remaining 80% must be distributed directly to equity applicants in the form of grants or other eligible direct financial assistance. The following are potential program enhancements that may be feasible with this funding.
Direct Financial Assistance.
• Start-up Grants or Fee Waivers: Provide micro-grants ($5,000-$25,000 range) to equity applicants to cover local or state licensing fees, professional services, or first-year operating expenses. • Lease Assistance or Rent Subsidies: Offer limited-term subsidies to help equity applicants secure compliant locations in Santa Monica.
Expanded Legal and Technical Support.
• One-on-One Professional Services Vouchers: Offer subsidized access to vetted legal, financial, and technical consultants (e.g., for corporate formation, tax planning, or security planning).
• Compliance Readiness Checks: Fund pre-inspection walkthroughs to help applicants meet local code and Department of Cannabis Control (DCC) requirements before final inspections.
Program Administration, Monitoring, and Evaluation
The Equity Program would be executed administratively in compliance with administrative guidelines to be developed and would be monitored for key performance indicators to track progress, identify gaps, and make informed adjustments to the program.
Other Ways to Support Equity-Eligible Populations
The City is limited in both budget and staff resources to administer the cannabis program, and there are also relatively fewer opportunities in the cannabis industry compared to several years ago. As a result, in addition to the proposed equity program outlined above, staff recommends future considerations of additional regulations or incentives that could also support equity-eligible populations:
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1. Employment and Product Inclusion.
• Encourage cannabis retailers to employ best practices in hiring equityeligible populations (conviction history, low-income status, and community ties eligibility criteria) to promote economic inclusion. • Offer incentives to cannabis businesses that meet or exceed hiring a certain percentage of employees from equity eligible populations. • Encourage cannabis retail businesses to sell cannabis products from licensed cannabis equity businesses.
2. Community Reinvestment.
• Dedicate a percentage of local cannabis tax revenue specifically for community reinvestment in disproportionally impacted areas. • Establish a Community Reinvestment Fund to finance long-term social equity initiatives and economic empowerment programs.
• Explore other state and federal grant opportunities which would allow for an expansion of services making the program more impactful in support of economic development and social equity initiatives.
• These would be subject to future budget decisions by the City Council.
Past Council Actions
Meeting Date Description
10/24/17 Adoption of Interim Ordinance Replacing the Term "Medical Marijuana Dispensary" with "Medicinal Cannabis Retailer" Throughout the City's Zoning Ordinance, Chapter 9.01
Through Chapter 9.52 of Article 9 of the Santa Monica
Municipal Code; Creating a Definition for "Medicinal
Cannabis Retailer" to Replace the Definition for "Medical Marijuana Dispensary" to Conform With State Law;
Removing Certain Requirements for Medicinal Cannabis
Retailers for Consistency with State Law and to Allow for Separate Regulation and Rulemaking; and Modifying the
Definition of "Industry, Limited" to Allow for Medicinal Cannabis Light Manufacturing
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Meeting Date Description
02/25/20 Adoption of Interim Zoning Ordinance Extending Interim Zoning Ordinances Number 2557 (CCS) and 2566 (CCS),
Which Replaced the Term "Medical Marijuana Dispensary"
with "Medicinal Cannabis Retailer" Throughout the City's Zoning Ordinance, Chapter 9.01 Through Chapter 9.52 of
Article 9 of the Santa Monica Municipal Code; Created a Definition for "Medicinal Cannabis Retailer" to Replace the Definition for "Medical Marijuana Dispensary" to Conform with State Law; Removed Certain Requirements for
Medicinal Cannabis Retailers for Consistency with State Law and to Allow for Separate Regulation and Rulemaking; and Modified the Definition of "Industry, Limited" to Allow for Medicinal Cannabis Light Manufacturing
06/13/23 Adult-Use Cannabis Study Session
11/14/23 Adoption of an Interim Zoning Ordinance amending the text of the Zoning Ordinance to replace the term “Medical
Marijuana Dispensary” with “Medicinal Cannabis Retailer”, to remove certain requirements for Medicinal Cannabis
Retailers for consistency with State law, and to permit Medicinal Cannabis Retailers to deliver, cultivate, and sell adult-use cannabis or adult-use cannabis products to
persons 21 Years of Age and Over
12/19/23 Adoption of an Interim Zoning Ordinance Extending Interim Zoning Regulations Adopted by Interim Zoning Ordinance
2764 (CCS) Amending the Text of the Zoning Ordinance to Replace the Term “Medical Marijuana Dispensary” with
“Medicinal Cannabis Retailer”, to Remove Certain
Requirements for Medicinal Cannabis Retailers for
Consistency with State law, and to Permit Medicinal
Cannabis Retailers to Sell Adult-Use Cannabis or Adult-Use Cannabis Products to Persons 21 Years of Age and Over
03/19/24 Adoption of Resolution Authorizing Receipt of State of California Cannabis Equity Grant Funding for $40,000 for Preparation of a Cannabis Equity Assessment and
Authorization for City Manager to Execute All Necessary Associated Documents
04/23/24 Cannabis Social Equity Study Session
03/11/25 Adoption of Resolution Authorizing Receipt of State of California Cannabis Equity Grant Funding for $35,000 for Development of a Cannabis Equity Program and
Authorization for City Manager to Execute All Necessary Associated Documents
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Environmental Analysis
The proposed ordinance is categorically exempt from the provisions of California Environmental Quality Act (CEQA) pursuant to Section 15061(b)(3) of the State Implementation Guidelines (common sense exemption). Based on the evidence in the record, it can be seen with certainty that there is no possibility that the proposed ordinance may have a significant effect on the environment. The allowance of additional cannabis retailers in the City’s non-residential zoning districts is consistent with existing State law. The sale of adult-use cannabis or adult-use cannabis products at cannabis retailers is consistent with existing commercial retail land uses. [See e.g., Lucas v. City of Pomona (2023) 92 Cal.App.5th 508 (holding that substantial evidence supported city’s determination that proposed commercial cannabis activities were exempt from CEQA as consistent with existing retail land uses and density covered by previous EIR].
Therefore, no further environmental review under CEQA is required Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the recommended action. Analysis of cannabis business tax data is currently limited. The number of potential future permit applications remains uncertain at this time. Staff will actively track the issuance of Cannabis Retailer permits and adjust revenue forecasts as needed based on permit volume and tax revenue.
Prepared By: Tony Kim, Principal Planner
Approved Forwarded to Council
Attachments:
A. CDD-ORD-Cannabis Retailers Updates (Article 6) 09.09.25 B. Ordinance - Article 9 Amendments
C. Resolution - Cannabis Equity Assessment and Program
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D. Resolution - Cannabis Retailer Permit Fees
E. PowerPoint Presentation