HomeMy WebLinkAboutCC 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
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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
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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
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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.
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(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
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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
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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
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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.
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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
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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.
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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