ACTION:
____________________________
Clerk/Secretary
Department: City Clerk Item No: D1
Prepared by: Kathy Valdez, City Clerk Meeting Date: June 25, 2024 Approved by: John Conley, City Manager Agenda Location: Discussion SUBJECT: COMMERCIAL CANNABIS EQUITY PROGRAM
RECOMMENDATION: Adopt City Council Resolution No. 2024- , establishing the City of Vista Cannabis Equity Program pursuant to the California Cannabis Equity Act of 2018.
CORRELATION TO CITY COUNCIL GOALS: Economic Development PRIOR ACTION: On February 27, 2024, adopted City Council Resolution No. 2024-25, accepting the City of Vista Cannabis Equity Assessment (Vote: 5-0).
On June 27, 2023, adopted City Council Resolution No. 2023-123, awarding a contract to SCI Consulting Group for Cannabis Equity Assessment Services (Vote: 5-0).
See Exhibit 2 for a complete list of prior actions.
STATEMENT ON THE SUBJECT: The City received a grant from the California Governor's Office of Business and Economic Development’s (GO-Biz) Cannabis Equity Grants Program for Local Jurisdictions to complete an assessment to support the development of a local cannabis equity program. SCI Consulting Group (SCI) was selected by the City through a competitive request for proposals (RFP) process to conduct the assessment, which was accepted by the City Council on February 27, 2024.
Based on direction from the City Council and input from staff, SCI drafted a Cannabis Equity Program Manual. The draft manual was posted on the City’s website and input was sought through a virtual public meeting and a survey. A total of 22 individuals participated in the June 5 virtual meeting, providing valuable comments and suggestions from a variety of perspectives. Many of the suggestions made have been incorporated into the draft program manual (Exhibit 3). A total of 20 survey responses were received as of June 7, 2024. Many of the survey responders were opposed to cannabis businesses and a cannabis equity program overall; those that did include suggestions for the program mirrored the input received during the virtual meeting.
The Cannabis Equity Program Manual establishes the framework and guidelines for the City’s cannabis equity program; detailed operating procedures and forms will be developed by staff at the direction of the City Manager. The manual identifies eligibility, general application requirements, program services, and program administration.
AGENDA
REPORT
CITY COUNCIL
COMMUNITY DEVELOPMENT COMMISSION
SUCCESSOR AGENCY
BUENA SANITATION DISTRICT
JOINT POWERS FINANCING AUTHORITY
Approved above recommendation, adopted City Council Resolution No. 2024-127. Vote: 3-1 (Franklin opposed, Green absent). Directed staff to bring back further discussion scholarships for higher education and the possibility of developing an equity policy to guide excess cannabis revenue funding decisions.
MEETING DATE: June 25, 2024 PAGE 2
SUBJECT: COMMERCIAL CANNABIS EQUITY PROGRAM
Equity Program Eligibility
To be eligible for the Cannabis Equity Program, applicants must either be low-income or have had a previous cannabis arrest or conviction; and have a connection to Vista.
An applicant may qualify if they have a household income below 80% of the Area Median Income (AMI) in San Diego County in either the preceding year or current year and a net worth of less than $250,000.
An applicant may qualify if they, or an immediate family member, had a cannabis arrest or conviction or adjudication to be a ward of the juvenile court in California for any crime under the laws of the State of California or the United States relating to the sale, possession, use, manufacture, or cultivation of cannabis that occurred during the period from 1971 to 2016.
All applicants must demonstrate a connection to Vista which may be met if any of the following criteria apply:
1.Be a current or former resident of the City of Vista who has lived in the City for at least five (5) years cumulative residency.
2.Own, or previously owned, a business within the City of Vista for at least five (5) years cumulative ownership.
3.Worked, or previously worked, within the City of Vista for at least five (5) years cumulative employment.
4.Have lost housing in the City of Vista through eviction, foreclosure, or subsidy cancellation any time after 1994.
5.Have attended school in the Vista Unified School District or the City of Vista for at least five years between 1971 and 2016.
An applicant may also qualify if they have been placed in the foster care system in San Diego County between 1971 and 2016.
It should be noted that the requirement to have a connection to Vista may be challenged. Lawsuits have been filed in multiple states claiming a residency requirement (whether it is State or local residency) violates the Dormant Commerce Clause. While the results remain pending in many of the cases, some have settled out of court (with the awarding of a cannabis license) and some were lost after judges ruled that the Dormant Commerce clause does not apply to cannabis businesses because cannabis remains federally illegal. In many cases these lawsuits have resulted in a delay in initiating an equity program and in some cases in the licensing of any new businesses.
Protecting Equity Applicants
To help protect equity applicants from predatory business partners, the program requires that a majority ownership interest of the business (a minimum of fifty-one percent) must be held by equity applicant(s) and that majority ownership be held for a minimum of three years.
Licenses held for Equity Applicants
Twenty-five percent of licenses for new (or expanded) business types will be held for equity applicants.
This in no way limits the number of licenses that may be issued to qualifying equity applicants.
Program Services
The following program benefits and services have been identified based on the experience of other equity programs and due to the limited resources needed to offer them:
a.Fee waivers
b.Assistance in applying to the City for various permits c.Application Priority Processing
d.Provisional approval (when needed)
e.Ongoing support from staff (a minimum of quarterly check-ins for a three-year period) 06/25/2024 D1 Page 2 of 14
MEETING DATE: June 25, 2024 PAGE 3
SUBJECT: COMMERCIAL CANNABIS EQUITY PROGRAM
f.Promotion of the Public Defender Office’s Fresh Start Program for Record Expungement Depending on the need of applicants and the availability of funds from grants or other sources, the program may also provide:
a.Direct grants
b.Direct Technical Assistance
c.Legal Assistance
d.Workforce and/or Small Business Development
e.Regulatory Compliance training
Program Funding
Once the City adopts a Social Equity program, the City will become eligible to seek Type 2 grant funding through the Cannabis Equity Grants Program for Local Jurisdictions. The Cannabis Equity Grants Program for Local Jurisdictions application period is available from early November through mid- December on an annual basis. The City can seek financial support of up to $3,000,000 through the Type 2 grant, to fund and administer its equity program. Grant awards exceeding $500,000 require a 1:1 matching funds contribution from the City during the grant term. The guidelines specify that no more than 10 percent of the grant award can be allocated for administration, and no more than 10 percent can be used for direct technical assistance.
Community Reinvestment
A community reinvestment component has been included in the program. Staff recommends committing to the continuation of the scholarship program by including that the City Council will strive to allocate a minimum of ten (10) percent of cannabis tax revenue to the program annually. The scholarship program provides opportunities for youth and young adults to participate in programs and activities that they may otherwise be unable to do, including but not limited to recreation, art, music, tutoring, and job training.
FISCAL IMPACT: The fiscal impact associated with the adoption of the cannabis equity program is estimated to be $4,000 in staff time and $30,000 in lost revenue for fee waivers per business. These numbers may vary considerably depending on the type of business and complexity of the project. As part of the City Council’s annual allocation of excess cannabis tax revenue, staff will provide proposed budgets for community reinvestment and to support additional program activities (potentially including grant matching funds).
EXHIBITS:
1.City Council Resolution No. 2024- , establishing the City of Vista Cannabis Equity Program pursuant to the California Cannabis Equity Act of 2018
2.Prior Actions
3.Cannabis Equity Program Manual
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RESOLUTION NO. 2024-
A RESOLUTION OF THE CITY COUNCIL OF THE CHARTERED CITY OF
VISTA, CALIFORNIA, ESTABLISHING THE CITY OF VISTA CANNABIS
EQUITY PROGRAM PURSUANT TO THE CALIFORNIA CANNABIS EQUITY ACT OF 2018
The City Council the City of Vista does resolve as follows:
1. Findings. The City Council hereby finds and declares the following:
A. The City of Vista supports the development of a local cannabis equity program that is designed to assist individuals who have been negatively impacted by the disproportionate enforcement of cannabis-related crimes by providing them assistance and opportunity to participate in the cannabis industry.
B. The California Cannabis Equity Act of 2018 (“Equity Act”) established by Senate Bill 1294 allows for direct assistance to local jurisdictions’ cannabis equity programs that can, in turn, provide assistance to local equity applicants.
C. On February 28, 2023, the Governor of the State of California’s Office of Business and Economic Development (Go-Biz) awarded grant funds to the City of Vista to conduct a cannabis equity assessment.
D. On February 27, 2024, the City Council adopted Resolution No. 2024-25 accepting the City of Vista Cannabis Equity Assessment and directed staff to prepare a Cannabis Equity Program for Council adoption.
E. Staff developed the attached Cannabis Equity Program (“Program”) Manual, set forth in (Exhibit A). The Program is designed to assist individuals who have been negatively impacted by the disproportionate enforcement of cannabis-related crimes by providing them assistance and opportunity to participate in the cannabis industry; and F. The proposed Program will assist individuals and businesses to participate in the cannabis industry by removing barriers to entry and facilitating business opportunities for those who otherwise do not have access due to lack of capital or criminal history; and G. The City Council has determined that grant funds from the Governor’s Office of Business and Economic Development are available and can be used to assist local equity applicants and licensees through our local equity program for commercial cannabis activity as described in its application for grant funds.
2. Action.
A. The City Council adopts the City of Vista Cannabis Equity Program Manual establishing the City of Vista Cannabis Equity Program, as set forth in Exhibit A.
B. The City will continue to evaluate the Program to address any disparate, negative impacts of cannabis-related regulation and enforcement in the City of Vista. 06/25/2024 D1 Page 4 of 14
EXHIBIT 1
RESOLUTION NO. 2024-
CITY COUNCIL OF THE CHARTERED CITY OF VISTA
PAGE 2
C. The City Manager, or the City Manager’s designee, is authorized to make amendments that are not substantive to the Program. Substantive amendments must be approved by resolution of the City Council.
3. Adoption. PASSED AND ADOPTED at a meeting of the City Council of the City of Vista held on June 25, 2024, by the following vote:
AYES:
NOES:
ABSTAIN:
APPROVED AS TO FORM:
WALTER CHUNG, CITY ATTORNEY
By:
JOHN FRANKLIN, MAYOR
ATTEST:
KATHY VALDEZ, CITY CLERK
By:
APPROVED
Walter C. Chung
20240613154102
06/25/2024 D1 Page 5 of 14
PRIOR ACTIONS
On February 27, 2024, adopted City Council Resolution No. 2024-25, accepting the City of Vista Cannabis Equity Assessment (Vote: 5-0).
On June 27, 2023, adopted City Council Resolution No. 2023-123, awarding a contract to SCI Consulting Group for Cannabis Equity Assessment Services (Vote: 5-0).
On February 28, 2023, adopted City Council Resolution No. 2023-19, authorizing State of California Cannabis Equity Act grant funding (Vote: 5-0).
On November 15, 2022, City Council Resolutions No. 2022-166, authorizing the submittal of an application for the State of California Cannabis Equity Act Grant funding (Vote: 4-1, Ritter opposed).
On August 9, 2022, City Council discussed a commercial cannabis cultivation social equity program and accepted Option One (delaying the implementation of cannabis cultivation until a study is completed to develop a social equity component to the application process) and directed staff to return with information on the scope and cost of a study (Vote: 5-0). 06/25/2024 D1 Page 6 of 14
EXHIBIT 2
City of Vista
Cannabis Equity Program Manual V1.0 (2024)
1.Program Purpose.
The City of Vista has a longstanding commitment to identifying and addressing social, economic, and health disparities. Furthermore, the City recognizes that certain populations and communities within Vista have been adversely affected by both the criminalization of cannabis and poverty, as demonstrated in the City of Vista Cannabis Equity Assessment. As such, the City has adopted the Cannabis Equity Program Manual (“Program”) described herein.
The City of Vista Cannabis Equity Program Manual is specifically designed to promote fair and inclusive access to the cannabis industry. It seeks to reduce the obstacles faced by individuals and communities who have been disproportionately impacted by the enforcement of cannabis- related offenses in Vista. The Program manual outlines the eligibility criteria for participation in the Vista Cannabis Equity Program, as well as the range of services it offers. All services and factors listed in this manual are and continue to be at the discretion of the City of Vista and are subject to updates and revisions in accordance with the Program, as approved by the City Council.
2. Definitions.
a.“Cannabis Arrest or Conviction” means an arrest, conviction, or adjudication to be a ward of the juvenile court in California for any crime under the laws of the State of California or the United States relating to the sale, possession, use, manufacture, or cultivation of cannabis that occurred during the period from 1971 to 2016. b.“Cannabis Equity Program Manual” means the City’s Cannabis Equity Program Manual. c.“Cannabis Equity Program” means the Cannabis Equity Program created by this Program Manual.
d.“Direct Technical Assistance” means support provided to equity applicants to acquire the knowledge and/or skills necessary in order to gain entry to, and to successfully operate in, the regulated cannabis marketplace.
e.“Equity Applicant” means an individual who meets the criteria in Section 4. f.“Equity Business” means a cannabis business where a minimum of fifty-one percent (51%) ownership in the cannabis business is held by one equity applicant or, if the cannabis business will be held by a group of applicants in the Equity Program, the aggregate ownership held by equity applicants must total fifty-one percent (51%) or more for a minimum or three years.
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EXHIBIT 3
g. “Immediate family member” means child, parent, sibling, spouse, legal guardian, or grandparent.
h. “Individual” means a person twenty-one (21) years of age or older.
i. “Ownership interest” means a right, proportionate to the interest held, to share in the business’s profits, including dividends, distributions, or other payments; a right, proportionate to the interest held, to the proceeds of a sale of the business’s assets, liquidation of the business, merger of the business into another business, or another transaction that would signify the end of the original business; and a right, proportionate to the interest held, to vote on fundamental decisions relating to the business.
j. “Priority processing” means the City will review and consider for approval applications of Program participants for cannabis related business and conditional use permits, if any, before any other cannabis related business or conditional use permit application received by the City that would otherwise be processed on a first come, first served basis.
k. “Program Participant” or “participant” means an individual that has been admitted to participate in the Cannabis Equity Program.
3. Applicability of Vista Municipal Code Chapter 5.98 Cannabis.
All Program participants are subject to the provisions of Chapter 5.98 of the Vista Municipal Code.
4. Equity Program Eligibility.
a. To be eligible for the Equity Program as an Equity Applicant, an individual shall satisfy the following criteria:
i. During the period from 1971 to 2016, had, or have an immediate family member who had, a cannabis arrest or conviction; or
ii. Have a household income below 80% of the Area Median Income in San Diego County, as defined by the U.S. Department of Housing and Urban Development, in either the preceding year or current year of submitting an equity verification application or is eligible to get financial aid through a program like CalFresh, MediCal, CalWORKS, Supplemental security income, or Social Security disability; and has a net worth of less than $250,000; and
b. In addition to meeting the criteria under subsection 4(a), an individual shall also satisfy at least one (1) of the following criteria:
i. Be a current or former resident of the City of Vista who has lived in the City for at least five (5) years cumulative residency.
ii. Own, or previously owned, a business within the City of Vista for at least five (5) years cumulative ownership.
06/25/2024 D1 Page 8 of 14
iii. Worked, or previously worked, within the City of Vista for at least five (5) years cumulative employment.
iv. Have lost housing in the City of Vista through eviction, foreclosure, or subsidy cancellation any time after 1994.
v. Have attended school in the Vista Unified School District or the City of Vista for at least five years between 1971 and 2016.
vi. Have been placed in the foster care system in San Diego County between 1971 and 2016.
c. To be eligible for the Equity Program as an Equity Business, majority ownership interest of the business must be held by equity applicant(s). If the cannabis business has one equity applicant listed as an owner, a minimum of fifty-one percent (51%) ownership in the cannabis business must be held by the equity applicant for a minimum of three years.
If the cannabis business will have multiple equity applicants listed as owners of the cannabis business, the aggregate ownership held by equity business partners must total fifty-one percent (51%) or more for a minimum or three years.
5. Application required.
a. Any person seeking to be qualified as a Verified Equity Applicant shall submit a written application to the City, signed under penalty of perjury, using the form approved by the City for that purpose and in the manner required by the City Manager or their designee.
All applications shall contain, at a minimum, the following information and documents:
i. Applicant Information.
1. The legal name of the applicant.
2. The applicant's mailing address, e-mail address, and telephone number. ii. Social Equity Qualification Documents
1. Proof of Cannabis Criminalization: Proof of cannabis arrest or conviction should be demonstrated through court documents, probation documents, Department of Corrections or Federal Bureau of Prisons documentation. Documentation needs to include the following:
a. Date of the offense or arrest.
b. Charges filed.
c. Name of defendant.
iii. Proof of income.
1. Proof of income to demonstrate a household income below 80% of the Area Median Income in San Diego County, shall be supported with federal tax returns and at least one of the following documents:
a. Two months of pay stubs,
b. Current profit and loss statement if Sole Proprietor, c. Previous Federal tax year's 1099-Miscellaneous Income Form showing proof of income,
d. Medical/CALWORKs, or
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e. Proof of current eligibility for General Relief (GR), CalFresh (Food Stamps), Medical/CalWORKs, Supplemental Security
Income (SSI), or Social Security Disability (SSDI).
iv. One of the following criteria:
1. Proof of Residency.
a. A minimum of two (2) of the supporting documents listed below, evidencing a minimum of five (5) years of residency, whether consecutive or in total, shall be considered acceptable proof of residency. All residency documents must list the first and last name of the equity applicant and the Vista residence address:
i. California Driver's record or permanent Driver's License or AB 60 Driver's License,
ii. California identification card record,
iii. Property tax billing and payments from the San Diego County Assessor,
iv. Verified copies of State or Federal income tax returns where a Vista address within is listed as a primary
address,
v. School records,
vi. Medical records,
vii. Banking records,
viii. Vista Housing Authority records, or
ix. Utility, cable, or internet company billing and payment covering any month in each of the five (5) years.
2. Proof of Business Ownership.
a. Proof of business ownership shall be supported by:
i. Copies of business licenses issued by the City of Vista for the relevant years.
ii. Federal and state tax returns that list the business for the relevant years.
iii. Articles of incorporation (for corporations) or articles of organization (for LLCs) filed with the California Secretary of State, including the original filing and any
amendments.
iv. Copies of property lease agreements for business
premises in Vista, showing the duration of the lease or Deeds or property tax records for properties owned by
the business in Vista.
3. Proof of Employment.
a. Proof of employment shall be supported by:
i. Copies of pay stubs from the relevant years that show the employer's name and address in Vista.
ii. Copies of W-2 forms issued by employers in Vista for the relevant years.
06/25/2024 D1 Page 10 of 14
iii. Copies of federal and state tax returns, particularly the sections that list employment information (such as W-2
forms).
4. Proof of Loss of housing.
a. Proof of loss housing shall be supported by:
i. A letter of foreclosure,
ii. A notice of eviction, or
iii. A notice of revocation of a housing subsidy.
5. Proof of school attendance in Vista or Vista Unified School District a. A transcript from a Vista Unified School District School for at least five years between 1971 and 2016.
6. Proof of placement in the foster care system in San Diego County between 1971 and 2016
a. SD County foster care system placement paperwork between 1971 and 2016
6. Incomplete applications.
a. Upon review of an application, if an application is determined to be incomplete, the City shall provide notice to the applicant, who shall have thirty (30) calendar days to correct all deficiencies in the application.
b. If the applicant fails to correct said deficiencies within the thirty (30) day period, the application shall be deemed abandoned, void, and of no further force and effect. The applicant may reapply at any time following an abandoned application.
c. The City Manager or their designee may extend the deadline upon showing of good cause by the applicant for the inability to provide all required information by the deadline, if a written request for an extension is received no later than ten (10) calendar days prior to the deadline. For purposes of this subsection, the term "good cause" shall mean the applicant's failure to complete the application process occurred due to circumstances outside of the applicant's control.
7. Application rejection.
Upon review of an application, if an application is determined to not meet the criteria to be verified as an equity applicant, the City shall have the right to reject said application. All rejections are final and may not be appealed. An equity applicant may reapply at any time after having an application rejected.
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8. Cannabis Equity Licenses
A minimum of twenty-five (25) percent of licenses for new (or expanded) cannabis business types issued by the City shall be issued to Equity Applicants. This excludes the licenses issued for cannabis dispensaries under VMC Chapter 5.94 and 5.95.
9. Program Services and Benefit
General program benefits and services provided by the Program will include:
a. Fee waivers
b. Assistance in applying to the City for various permits c. Application Priority Processing
d. Provisional approval (when needed)
e. Ongoing support from staff (a minimum of quarterly check-ins for a three-year period) f. Promotion of the Public Defender Office’s Fresh Start Program for Record Expungement
Depending on need and availability of funds from grants or other sources, the program may also provide:
a. Direct grants
b. Direct Technical Assistance
c. Legal Assistance
d. Workforce and/or Small Business Development
e. Regulatory Compliance training
10. Program Administration.
a. The City Manager or their designee is authorized to make reasonable rules, policies, and procedures consistent with the intent and spirit of this Manual to develop and implement an administrative program for this Equity Program. Regulations promulgated by the City Manager become effective upon date of publication, unless specified otherwise.
b. The principal administration and coordination of services shall primarily be performed by City Manager staff.
c. When possible, City staff will provide services to applicants and participants with the intent to have the program reimburse the City for the cost of those services. If City staff are unable to provide services, refer to Section 10, Provision of Services.
d. City Manager staff shall monitor and report on all program services provided through the Program, at least annually and more frequently as directed by the City Council, state law, or regulation.
11. Provision of Services.
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a. City Manager staff serve as the liaison between program participants and the agency(ies) and firm(s) providing eligible services. Agencies and firms may include, but are not limited to:
i. City of Vista’s Planning and Economic Development Departments ii. Business development organizations and firms
iii. Workforce development agencies and firms
iv. Banking and financial institutions
v. Commercial real estate brokerages and associations
b. The City Manager or their designee may enter into an agreement, on behalf of the City through the City’s competitive selection process in accordance with the City Municipal Code, with qualifying internal or external agencies or firms capable of providing the services described in this Program Manual. These services may include, but are not limited to:
i. Business Development
ii. Technical Assistance
iii. Legal Assistance
iv. Workforce Development
v. Grant Administration
vi. Record Expungement Services
12. Program Monitoring and Reporting.
For the purposes of understanding the impact, success, and measurable outcomes and outputs of the Program and to inform future development, the City of Vista will collect qualitative and quantitative data on an ongoing basis. The City Manager or their designee shall provide annual updates to the City Council on the status of the Program. The update to Council shall include an evaluation of any ongoing barriers to entry and participation, any reevaluations of the Program, and recommended solutions as needed.
Completion of an annual demographic questionnaire will be voluntary and will be aligned with the demographic questionnaire developed by the State of California. Applicants and licensees will be encouraged to participate so that the City can ensure that equity funding is being awarded to populations of highest need. Recommended metrics are as follows:
a. Number of equity applicants to apply:
i. Types of drug related offenses.
ii. Income status.
iii. Race Ethnicity.
iv. Gender.
v. Sexual identity.
vi. Residency status.
vii. Ownership structure.
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b. Workforce characteristics:
i. Total number of employees.
ii. Number of local employees.
iii. Employment Status (full-time, part-time, etc.).
c. Equity program-specific data:
i. Number of applicants eligible for equity program.
ii. Number and types of services provided to equity applicants. iii. Number of new equity program applicants to receive licenses. iv. Total number of equity businesses operating
13. Program Funding
a. City staff shall seek grant funding for the program, including but not limited to the GO- Biz’s Cannabis Equity Grants Program for Local Jurisdictions. In addition, staff will work to establish partnerships with other agencies to provide services and/or financial support and may utilize cannabis tax revenue at the discretion of the City Council.
14. Community Reinvestment
a. The City Council will strive to allocate a minimum of ten (10) percent of cannabis tax revenue to a scholarship program for youth and young adults. The program provides opportunities for young people to participate in programs and activities that they may otherwise be unable to do, including but not limited to recreation, art, music, tutoring, and job training.
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