City Council
Report
City Council Meeting: January 13, 2026
Agenda Item: 4.E
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To: Mayor and City Council
From: Jing Yeo, Director, City Planning
Subject: Adoption of a Resolution Updating the Santa Monica Cannabis Equity Program
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, and
2. Adopt the attached Resolution updating the Santa Monica Cannabis Equity Program.
Summary
On September 9, 2025, City Council reviewed and adopted amendments to the Zoning Ordinance to 1) allow cannabis retailer uses in the City’s non-residential districts, and 2) add Article 6 to provide definitions, operating requirements and conditions, permitting regulations and fees, and other regulatory standards. Council also adopted a cannabis equity program consistent with prior Council direction for a “standard equity” program that would be administrative and rely on existing staff, available resources, time, and desired outcomes.
Following the Council’s adoption of the cannabis equity program, staff received guidance from the Governor’s Office of Business and Economic Development (GO-Biz) to assist in the City’s implementation of the program and to better align the City’s eligibility criteria with criteria required by the Department of Cannabis Control (DCC).
This alignment is an eligibility requirement for potential future cannabis equity State 2 of 6
grant funding. The proposed updates to the cannabis equity program eligibility criteria are consistent with the guidance provided by GO-Biz and also include minor revisions in other sections of the program to reflect the Council’s actions and direction from September 9, 2025. Additionally, the updates to the eligibility criteria address concerns raised in recent challenges to cannabis equity programs in other jurisdictions, such as Los Angeles County.
Discussion
Through detailed discussions with GO-Biz, the select eligibility criteria have been updated to match language and thresholds consistent with the DCC. Cannabis retailer and equity permit applications will be accepted by the City starting at the end of January 2026. Adoption of these updates prior to the program implementation will ensure all eligible applicants have the opportunity to qualify for direct assistance and grants under future State cannabis equity funding in the future.
Proposed updates relate to definitions, program eligibility, and program benefits and services.
Definitions
The City’s program does not differentiate between Business Equity Applicants and Individual Applicants whereas the DCC does make this distinction by applying different criteria thresholds for each. For clarity, Staff added definitions for both types of applicants. Staff also defined “Qualifying Census Tract” as the term is referenced in the State’s residency criteria. In addition, the order of definitions has been re-organized alphabetically.
Program Eligibility Criteria for Equity Applicants
The City’s adopted program eligibility criteria were organized into one set of criteria.
DCC guidance is to divide the criteria into two categories to clearly describe the proposed thresholds required to qualify as either an Individual Applicant or Business Applicant. Additionally, in consultation with the Los Angeles County Office of Cannabis Management, the number of criteria that must be met was reduced from all criteria (cannabis conviction or arrest, household income, and neighborhood criteria) to two out of the three criteria which is supported by GO-Biz.
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Requiring two of the three criteria to be met allows some flexibility for potential equity applicants and addresses recent challenges regarding residency requirements for cannabis equity programs in other jurisdictions. Staff continues consultation with Los Angeles County regarding this issue and has added a disclaimer to the eligibility criteria indicating that the criteria may be amended from time-to-time based upon developments in the law. The updates required for the individual and business eligibility criteria are described below:
Individual Eligibility
• Conviction History. Santa Monica requires individuals or their immediate family members who have been arrested or convicted of a cannabis offense at any point in time.
o The State requires cannabis arrests or convictions to have happened before November 8, 2016. This date was added to be consistent with the DCC’s criteria.
• Low-Income Status. Santa Monica requires income levels at or below 80% Area Median Income (AMI).
o The State requires an income level at or below 60% of AMI. The AMI was revised to 60% to be consistent with the DCC’s criteria. • Community Ties. Santa Monica requires a cumulative of three non-overlapping years in any of the following at any point in time: 1) current or previous residency in Santa Monica; 2) current or previous school attendance in Santa MonicaMalibu Unified School District; or 3) current or previous business ownership in Santa Monica. Additionally, Santa Monica classifies this criteria under the title “Community Ties” which has been updated to “Neighborhood Criteria” to be consistent with State terminology. In addition, the criteria has been updated to reflect the following:
o The State requires residency of at least five years between 1980 and 2016 in a qualifying county and requires applicants to meet one of the two following criteria: 1) resided in a qualifying census tract; or 2) has an immediate family 4 of 6
member who was arrested or convicted of a cannabis-related offense prior to November 8, 2016.
Business Eligibility
• Ownership. Santa Monica requires equity individuals and businesses to have a majority ownership but does not specify a percentage.
o The State requires equity businesses only to consist of individuals or in combination with the other owners who meet the equity criteria, to own 50% or more of the business. The language was revised and the 50% threshold was added for ownership requirements to be consistent with the DCC’s criteria.
Program Benefits and Services
On September 9, 2025, Council directed Staff to remove the minimum distance requirement between cannabis businesses of 300 feet, resulting in two application and licensing benefits to no longer apply. Accordingly, these have been removed from the program:
• Exemption from minimum distance requirement from other cannabis uses and limits to number of cannabis uses per block.
• Allow provisional approval of licenses before securing a business location to help equity applicants attract investors and secure financing, with a limited window to finalize site selection and obtain full approval.
Past Council Actions
Meeting Date Description
04/23/24 Cannabis Social Equity Study Session
09/09/25 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
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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
Environmental Analysis
The proposed amendments to the cannabis equity program are 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 updates to the cannabis equity program may have a significant physical effect on the environment. The updates to the cannabis equity program do not affect the Council’s prior approval of the sale of adult-use cannabis or adult-use cannabis products at cannabis retailers which 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]. The changs are administrative in nature, and 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.
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Prepared By: Ana Fernandez, Associate Planner
Approved Forwarded to Council
Attachments:
A. Web link - City Council Meeting 04/23/24
B. Web link - City Council Meeting 09/09/25
C. Resolution