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CC Resolution 15042 (Cannabis Program - State Regulatory Updates)Cannabis Business Operator License Resolution 1 | Page RESOLUTION NO. 15042 RESOLUTION OF THE SAN RAFAEL CITY COUNCIL AMENDING THE SAN RAFAEL “CANNABIS BUSINESS OPERATOR LICENSE PROGRAM” AND RESTATING IT IN ITS ENTIRETY WHEREAS, in 2015, the State Legislature adopted the “Medical Marijuana [now “Cannabis”] Regulation and Safety Act” (MCRSA) establishing a state licensing process for “commercial cannabis activity,” defined as including “cultivation, possession, manufacture, processing, storing, laboratory testing, labeling, transporting, distribution, or sale of medical cannabis or a medical cannabis product, except as permitted for qualifying patients and primary caregivers;” and WHEREAS, on November 8, 2016, the voters of the State of California enacted Proposition 64, the “Control, Regulate and Tax Adult Use of Marijuana Act” (AUMA), to allow for nonmedical adult use of cannabis, and implementing regulations were subsequently developed by the state agencies for this act as well; and WHEREAS, in July 2017, the Governor signed Senate Bill 94, entitled the “Medical and Adult-Use Cannabis Regulation and Safety Act” (MAUCRSA), which took effect immediately. The MAUCRSA directed that the MCRSA’s medical cannabis regulations be coordinated with AUMA’s nonmedical cannabis regulations; and WHEREAS, on December 4, 2017, the City Council enacted Ordinance No. 1949, an urgency ordinance adding new Chapter 10.96 to the San Rafael Municipal Code to limit the commercial cannabis activities that will be allowed in the City of San Rafael starting on January 1, 2018, to those determined by the City Council to be beneficial rather than detrimental to the residents, workers and visitors in the City; and WHEREAS, San Rafael Municipal Code section 10.96.050 provides that the City Council shall, by resolution, adopt reasonable regulations for a licensing process for commercial medical cannabis activities permitted within the City, and for the number of each license type to be issued; and WHEREAS, on January 16, 2018, the City Council adopted Resolution No. 14455 approving a Medical Cannabis Business Operator License Pilot Program and policies, practices and procedures for administering and enforcing the program, including the number of each license type to be issued; and WHEREAS, on May 21, 2018, the City Council adopted Resolution No. 14508 amending and restating the Medical Cannabis Business Operator License Pilot Program policies, practices, and procedures; and WHEREAS, on March 18, 2019, the City Council adopted Ordinance No. 1968 to amend San Rafael Municipal Code Chapter 10.96 to expand its provisions to authorize, by license, both medical and adult-use commercial cannabis activities in San Rafael; and Cannabis Business Operator License Resolution 2 | Page WHEREAS, on March 4, 2019, the City Council expanded and amended the Medical Cannabis Business Operator License Pilot Program to also apply to the commercial adult-use licenses authorized by Ordinance No. 1968, and renaming it as the “Cannabis Business Operator License Pilot Program”; and WHEREAS, on November 16, 2020, the City Council adopted Resolution No. 14877 amending the Cannabis Business Operator License Program to make policy adjustments to (1) allow licensed manufacturers and delivery companies access to a secondary wholesale distribution license; to successfully execute their business and manage their product with more autonomy, (2) incorporate new state manufacturer license Type S and “Shared-use” manufacturing facilities; and WHEREAS, in the July 2021 Budget Trailer Bill, Governor Newsom consolidated three state cannabis programs to form a single new state department called the Department of Cannabis Control (DCC), all references to the former Bureau of Cannabis Control (BCC) and the Department of Public Health—Cal Cannabis, will now be amended and restated to reflect the new state regulatory Department of Cannabis Control (DCC)”; and WHEREAS, for ease of reference the City Council wishes to restate herein the entirety of the program and its policies, practices and procedures as so amended; NOW, THEREFORE, BE IT RESOLVED, that the City Council hereby amends and restates the Cannabis Business Operator License Program in its entirety as follows: SECTION 1. PURPOSE AND INTENT It is the purpose and intent of this resolution to regulate commercial cannabis activity within San Rafael city limits, to promote the health, safety, and general welfare of residents and businesses within the City. This resolution governs the establishment and operation of cannabis testing laboratories, cannabis manufacturers, cannabis delivery, and cannabis distribution. SECTION 2. DEFINITIONS For the purposes of this Program, the definitions below shall apply: (a) “Applicant” person applying for a City of San Rafael Cannabis Business Operator License (CBOL). (b) “City License” means owner of a City Cannabis Business Operator License (CBOL). (c) “Cannabis” means all parts of the plant Cannabis sativa Linnaeus, Cannabis Indica, or Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. “Cannabis” also means the separated resin, whether crude or purified, obtained from cannabis. “Cannabis” does not include the mature stalks of Cannabis Business Operator License Resolution 3 | Page the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of the plant which is incapable of germination. For the purpose of this division, “cannabis” does not mean “industrial hemp” as defined by Section 11018.5 of the Health and Safety Code. (d) “Cannabis Delivery” means “Type 9 State License” as defined by Business and Professions Code section 26001(o), and in accordance with the State’s Department of Cannabis Control (DCC) licensing regulations. Type 9 licenses can transfer commercial cannabis or cannabis products to a customer. “Delivery” also includes the use by a retailer of any technology platform. Type 9 non-storefront retailers shall be authorized to conduct retail sales exclusively by delivery as defined by Business and Professions Code section 26001(o). The licensed premises of a non-storefront retailer licensee shall be closed to the public. (e) “Cannabis Distribution Transport” means “Type 13 State License” distributors can move cannabis and cannabis products between cultivation, manufacturing or distribution premises in accordance with the State’s Department of Cannabis Control (DCC) regulations. (f) “Cannabis Manufacturing Type 6” means a “Type 6 State License” may: (1) conduct extractions using mechanical methods or nonvolatile solvents as defined by the Department of Cannabis Control (DCC) regulations, (2) conduct infusion operations on the licensed premises, (3) conduct packaging and labeling of cannabis products on the licensed premises; and (4) register and operate the licensed premises as a shared-use facility in accordance with Department of Cannabis Control (DCC) regulations. (g) “Cannabis Manufacturing Type N” means a “Type N State license” may: (1) Make cannabis products through infusion (2) Conduct packaging and labeling of cannabis products on the licensed premises; and (3) Register and operate the licensed premises as a shared-use facility in accordance with Department of Cannabis Control (DCC) regulations. (h) “Cannabis Manufacturing Type S” means a “Type S State License” may: (1) Extract cannabis using butter or cooking oils (2) Make cannabis products through infusion (3) Package and label cannabis in accordance with Department of Cannabis Control (DCC) regulations in a licensed shared-use facility. (i) “Cannabis Testing Laboratory” means “Type 8 State License” as defined by Business and Professions Code 26000(av), and in accordance with the State’s Department of Cannabis Control (DCC) licensing regulations. (j) “Cannabis Wholesale Distribution” means a “Type 11 State License” as defined by Business and Professions Code section 26001(r)(s) for the procurement, sale, and Cannabis Business Operator License Resolution 4 | Page transport of cannabis and cannabis products between entities licensed in accordance with the State’s Department of Cannabis Control (DCC) regulations. (k) “DCC” means the State of California’s Department of Cannabis Control (l) “Mechanical extraction” uses pressure, heat or cold to extract cannabinoids instead of using chemicals. Examples include: rosin presses or dry ice in accordance with the Department of Cannabis (DCC) regulations. (m) “Medicinal Cannabis Patient” includes both a qualified patient as defined in the Health and Safety Code section 11362.7 and a person in possession of a valid identification card issued under Health and Safety Code section 11362.71“Licensee” means any person holding a City Cannabis Business Operator License (CBOL). (n) “Operator License” means a City of San Rafael Cannabis Business Operator License. (o) “Owner” means any of the following, as defined in Section 26001 of the Business and Professions Code: 1) A person with an aggregate ownership interest of 20 percent or more in the person applying for a license or a licensee, unless the interest is solely a security, lien, or encumbrance. 2) The chief executive officer of a nonprofit or other entity 3) A member of the board of directors of a nonprofit 4) An individual who will be participating in the direction, control, or management of the person applying for a license. (p) “Person” includes any individual, firm, partnership, joint venture, association, corporation, Limited Liability Company, estate, trust, business trust, receiver, syndicate, or any other group or combination acting as a unit, and the plural as well as the singular in accordance with the Department of Cannabis (DCC) regulations. (q) “Purchaser” means the customer who is engaged in a transaction with a licensee for purposes of obtaining cannabis or cannabis products. (r) “Sell”, “sale,” and “to sell” include any transaction whereby, for any consideration, title to cannabis or cannabis products is transferred from one person to another and includes the delivery of cannabis or cannabis products pursuant to an order placed for the purchase of the same and soliciting or receiving an order for the same. (s) “Shared Use Facility” means a Shared-use facility/place where multiple Type S manufacturers rotate on a schedule and share space and equipment, similar to a commercial kitchen in accordance with the Department of Cannabis (DCC) regulations. Cannabis Business Operator License Resolution 5 | Page (t) “State License” means a state issued license under the Department of Cannabis Control (DCC). SECTION 3. LICENSING PROCESS (a) Any person seeking to sell and or distribute, deliver, manufacture, or provide laboratory testing services located in San Rafael city limits must first obtain a Cannabis Business Operator License (CBOL) prior to operating. (b) The CBOL Program will make the following limited license allotment: • Cannabis Testing Laboratory State License Type 8 (4 licenses) • Cannabis Manufacturing State License Type 6, Type N, and/or State License Type S (10 licenses) • Non-retail Storefront Cannabis Delivery State License Type 9 (8 licenses) • Standalone Cannabis Wholesale Distribution State License Type 11, and/or Type 13 Distribution/Transport (4 licenses) SECTION 4. REVIEW AND ACTION ON APPLICATIONS; APPEAL (a) The CBOL Application Review Committee includes the Police Chief, Fire Chief, Community Development Director and Economic Development Director, and/or their designees, to review and rank applications. (b) The CBOL application ranking process shall consist of the following areas of evaluation: • Business Plan (25 POINTS -MAXIMUM) • Safety & Security Plan (25 POINTS - MAXIMUM) • Gross Receipts Activity (25 POINTS - MAXIMUM) • Qualifications of Principals (25 POINTS - MAXIMUM) An application is required to receive a total of 80 points to move forward. The Committee shall rank all the applications and shall issue a written decision setting forth the ranking for each application, the ranking of each application in each of the ranking categories, and an explanation of the facts and reasoning supporting the rankings. The Committee shall serve a copy of its written decision on each applicant by email. (c) Appeal. An applicant who has received a ranking of less than 80 points may appeal that decision to the City Manager or his or her designee, by filing a written appeal with the City Manager’s office within five (5) business days after the date of service of the written ranking decision on the applicant. The appeal shall not be accepted for filing unless accompanied by an appeal fee in an amount determined by resolution of the City Council. In determining the appeal, the City Manager/designee will review the Committee’s written decision on the appellant’s application and the application itself. In addition, within five (5) business days after the filing of the appeal, the City Manager/designee shall set a time for a hearing, not to exceed two hours in length, at which the appellant may appear to review the Committee’s Cannabis Business Operator License Resolution 6 | Page decision and to present evidence or argument why the Committee’s ranking should be modified. The hearing shall occur no later than thirty (30) days following the filing of the appeal unless another time is agreed to by the appellant. The hearing may be recorded by audiotape or written minutes. Within ten (10) business days after completion of the hearing on the appeal, the City Manager/designee shall issue a written decision on the appeal shall either confirming or modifying the ranking given by the Committee. The decision shall be in served upon the appellant by email, or regular mail through the United States Post Office. The City Manager’s decision will be final, with no appeal to the City Council, and shall be subject to judicial review according to the provisions and time limits set forth in Code of Civil Procedure Section 1094.6; however, the filing of any such action shall not stay any lottery or subsequent award of operator licenses as provided herein. After the appeal period has run without the filing of any appeals, or after the final decision by the City Manager on any and all appeals, if the Committee determines that the number of pre-screened and ranked applicants exceeds 100% of the maximum number of licenses available, then a lottery will be conducted after the ranking round. (d) Operator Selection. Within 120 days of written and e-mail notification, operators will have the ability to look for sites within permitted zoning districts and return with an identified site to apply for zoning clearance, San Rafael cannabis industry tax registration, and operator license issuance. Failure to secure a San Rafael location within 120 days shall be grounds for the City to revoke the award of a San Rafael cannabis business operating license. (e) Zoning Clearance, Background Check, Cannabis Industry Tax Registration, and Operator permit issued. Once the operator has found a business location, and has an executed lease agreement, or signed application by the property owner, planning staff will confirm zoning clearance, and the City will conduct a background check for circumstances requiring disqualification under Business and Professions Code section 26057. Upon successful completion of those steps, the applicant can then proceed with registering for the Cannabis Industry Tax pursuant to San Rafael Municipal Code Chapter 3.40, and the operator license will be issued. SECTION 5. FEES The Cannabis Business Operator License application and renewal fees are based on a cost- recovery model for application intake, processing, and compliance monitoring. All fees are non- refundable. Cannabis Operator License Application Fee shall be as follows, or as modified from time to time by resolution of the City Council: Process Steps Staff Coordination Per Applicant Cost Application Intake Economic Development Director/Senior Management Analyst Review Time: 1-2 hours $200 Cannabis Business Operator License Resolution 7 | Page Criminal Background Check Police Review Time: 1 hour $100 Application Review and Ranking Econ. Development Director, Police Chief, Fire Chief, Community Development Director Review Time: 3-4 hours $2000 Operator Notification Econ. Development Senior Management Analyst/Director Review Time: 1 hour $100 Zoning Clearance, Business Tax Certificate, Operator License Issuance Senior Planner, Economic Development Senior Management Analyst Economic Development Director Review Time: 2-3 hours $300 Compliance Inspections Senior Code Enforcement Officer Review Time: 3-4 hours $500 Gross Receipts Audits Contract with Outside Agency Review Time 3-4 hours $900 Total License Fee $4100 Cannabis Business Operator License Renewal Fee: Process Steps Staff Coordination Per Applicant Cost Application Intake & Review Economic Development Senior Management Analyst, Economic Development Director Review Time: 1-2 hours $500 Cannabis Business Operator License Appeal Fee: Process Steps Staff Coordination Per Applicant Cost Appeal Intake & Review, Staff Preparation Review City Manager Review Time: 4 hours $836 Appeal Hearing & Written Decision Review City Manager Review Time: 4 hours $836 Total Appeal Fee $1,672 Cannabis Business Operator License Resolution 8 | Page SECTION 6. OPERATING REQUIREMENTS All cannabis business operator licensees shall comply with all the following operating requirements: (a) The licensee shall meet all operating requirements of the Medicinal and Adult-use Cannabis Regulation and Safety Act (MAUCRSA), and requirements set forth by the Department of Cannabis Control (DCC). (b) The licensee shall obtain and maintain the State of California license for the equivalent State cannabis license type and maintain all other required State and local licensees, permits, or approvals. (c) Odor Control. No cannabis odors shall be detectable outside the commercial facility. (d) Advertising and Marketing Restrictions. All signage shall meet the sign requirements of Title 14 of the San Rafael Municipal Code and shall not advertise any activity related to cannabis. (e) Operating Hours. A licensee may operate between the hours of: 1) Cannabis Delivery: 9AM to 9PM up to seven days a week, unless modified as condition of license to address site specific conditions. 2) Cannabis Testing Labs: 7AM – 7PM up to seven days a week, unless modified as condition of license to address site specific conditions. 3) Cannabis Manufacturing: 7 AM – 7PM, evenings available as a condition of the license; up to seven days a week, unless modified as condition of license to address site specific conditions. 4) Cannabis Distribution: 7AM – 7PM, up to seven days a week, unless modified as condition of license to address site specific conditions. (f) Contact Person. A licensee shall provide the City with the name and phone number of an on-site community relations staff person or designee to whom one can provide notice if there are operating concerns. The licensee shall make a good faith effort to encourage residents to call this person to try to solve operating concerns before any calls or complaints are made to the City. SECTION 7. TERMS OF LICENSE (a) Licenses issued under this resolution shall be valid for 12 months from the date of issuance. (b) Licensees may submit a license renewal form no sooner than 60 and no later than 30 calendar days before the license expires. Cannabis Business Operator License Resolution 9 | Page SECTION 8. WITHDRAWAL OF APPLICATION (a) An applicant may withdraw an application at any time prior to the City’s issuance of a license or denial of a license. (b) Requests to withdraw an application must be submitted to the City in writing, dated and signed by the applicant. (c) The City will not refund application fees for a withdrawn application after application intake window closes. SECTION 9. GROUNDS FOR LICENSE DENIAL OR RENEWAL (a) The City may deny an application for license or for renewal of a license for any reason specified in Business and Professions Code section 26057, as amended from time to time. (b) Written Notice Required. Upon denial of a license or denial of renewal of a license pursuant to subsection (a) of this section, the Economic Development Director, or designee, shall notify the applicant of the reasons for denial in the manner provided Section 10(b) of this Resolution. (c) Appeal. Upon denial of a license of denial of renewal of a license, the applicant may file a written appeal of that decision with the Economic Development Director within ten (10) business days after the date of service of the written decision. The appeal shall not be accepted for filing unless accompanied by an appeal fee in an amount determined by resolution of the City Council. (d) Hearing. The Economic Development Director, or designee, shall appoint a hearing officer and set an appeal hearing, to be held no less than ten (10) days and no more than sixty (60) days after the service of the written notice required in subsection (b). The hearing and notice of decision shall be as provided in Sections 10(c) and (d) of this Resolution. SECTION 10. LICENSE SUSPENSION, MODIFICATION AND REVOCATION (a) Any license issued under the terms of this resolution may be suspended, modified, or revoked by the Economic Development Director, or his or her designee, for cause including but not limited to violation of any the requirements or provisions of this resolution, loss of licensure with the State’s Department of Cannabis Control, or conflicts with State law. (b) Written Notice Required. The Economic Development Director, or designee, before revoking or suspending any Cannabis Business operator license shall serve the licensee Cannabis Business Operator License Resolution 10 | Page with written notice of revocation or suspension, provided in the manner set forth in Section 1.08.060 of the San Rafael Municipal Code, of the alleged grounds for revocation or suspension and the date for a hearing, to be held no less than ten (10) days and no more than sixty (60) days after the service of the written notice, to consider whether the Cannabis Business operator license shall be revoked or suspended. (c) Hearing. The Economic Development Director, or designee, shall appoint a hearing officer to hear and consider all evidence at the hearing. The hearing may, after being commenced within the time specified pursuant to subsection (b) of this section, be continued for good cause by the hearing officer from time-to-time. The hearing officer may require such legal briefing as may be required to address any issues raised at the hearing. (d) Notice of Decision; Judicial Review. Within a reasonable time, but not more than thirty (30) days following the conclusion of the hearing, the hearing officer shall issue a written decision as to whether the Cannabis Business operator license shall be revoked or suspended, supported by factual findings and determinations referenced by supporting evidence. The written decision shall be served on the operator licensee as provided in Code of Civil Procedure Section 1094.6, with a copy submitted to the city clerk and the city attorney. The written decision of the hearing officer shall be final and shall be subject to judicial review according to the provisions and time limits set forth in Code of Civil Procedure Section 1094.6. SECTION 11. TRANSFER OF LICENSE (a) A licensee shall not operate under the authority of a Cannabis Business Operator License at any location other than the address stated in the application for the license. (b) The Cannabis Business Operator Licenses are not transferrable or assignable to another person or owner. In the event of the sale or transfer of the business or operations covered by the licensee, changes in ownership shall be made in accordance with the following: 1) If one or more of the owners of a license change, but at least one existing owner is not transferring their ownership interest, and will remain as an owner under the new ownership structure, then the new owners shall submit a new application to the City for review of qualifications, background checks and to determine whether the change would constitute grounds for denial of the license. 2) If all owners will be transferring ownership interest, the business shall not operate under the new ownership structure until a new license application has been submitted and approved by the City, and all application and licensing fees have been paid. Cannabis Business Operator License Resolution 11 | Page SECTION 12. ENFORCEMENT (a) It is unlawful for any person to violate any provision or fail to comply with any of the requirements of this resolution, and any such violation shall be enforceable in accordance with the provisions of Chapters 1.40, 1.42, 1.44, and 1.46 of the San Rafael Municipal Code. (b) In accordance with Section 26013, Business and Professions Code. The City, and its authorized representative, shall have full and immediate access to inspect and: 1) Enter onto any premises license by the City. 2) Any inspection, investigation or review, or audit of a licensed premises shall be conducted anytime the licensee is exercising privileges under the license, or as otherwise agreed to by the City and licensee or its agents, employees, or representatives. 3) Prior notice of an inspection, investigation, review or audit is not required. BE IT FURTHER RESOLVED that any amendments to the Cannabis Business Operator Licensing Program Policies, Practices and Procedures as deemed necessary from time-to-time shall require an amendment to this resolution by City Council action. BE IT FURTHER RESOLVED that the amendments made in this Resolution shall take effect immediately upon its adoption. I, LINDSAY LARA, City Clerk of the City of San Rafael, hereby certify that the foregoing resolution was adopted at a regular meeting of the City Council on the 7th day of March 2022, by the following vote to wit: AYES: Councilmembers: Bushey, Hill, Kertz, Llorens Gulati & Mayor Kate NOES: Councilmembers: None ABSENT: Councilmembers: None Lindsay Lara, City Clerk