The following is a summary of one of the four sections of the ordinance authorizing commercial cannabis activities in El Dorado County, specifically addressing permitting and enforcement.
On Monday, June 3, 2019, the stakeholders attending the El Dorado County Ad-Hoc Committee, for commercial cannabis activity, received 4 documents that comprised the first draft of the commercial cannabis ordinance for the unincorporated county. For Part 1 we will focus on the language of the Permitting and Enforcement section of the ordinance.
Like the other sections, and all of the state regulations pertaining to commercial cannabis, there is a recognizable format to this document. Beginning with Applicability, indicating the purpose of this section and determining that the “Board of Supervisors retains discretion to amend the ordinance in any way” and Definitions, defining terms such as “Cannabis Products”, “Gross Receipts”, “Legal Parcel” and “Owner”. By the way, an “Owner” is defined as “(1) any person with ANY ownership interest, however small, in the person applying for a permit, 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 entity; (4) a person who will be participating in the direction, control, or management of the person applying for a permit, including but not limited to a general partner of a partnership, a non-member manager or managing member of a limited liability company, and an officer or director of a corporation; (5) a person who will share in any amount of the profits of the person applying for a permit or has a financial interest, as defined by the regulations promulgated by the Bureau of Cannabis Control, in the person applying for the permit.”
Moving on we find language, under Permits Required, advising of the requirement of a valid Commercial Cannabis Use Permit and Commercial Cannabis Annual Operating Permit. Not stated, in this particular section, but still a piece to this puzzle is that both the local level (El Dorado County) permits and the state license(s) are required to legally operate within the California commercial cannabis supply chain AND that operating outside of that legal supply chain will put your permits and license at risk.
Commercial Cannabis Conditional Use Permit
Next we get to the language that addresses the Commercial Cannabis Use Permit (CUP). Here are the highlights of this language:
Subject to the public hearing procedures and recommendation from the Planning and Building Director and decision by the Planning Commission.
Prior to the Planning Commission hearing, notice shall be provided to the property owners immediately adjacent to the subject property. Additionally, if the property is one-half mile from an incorporated city or county, notice and an opportunity to comment on the application shall be provided.
Applicant shall demonstrate compliance with all standards in the county code and state regulations for the license type applied for, including the required setbacks unless the applicant can demonstrate that the setback will achieve the purpose of the requirement and the parcel was owned or leased prior to VOTER APPROVAL on November 6, 2018.
Compliance with California Environmental Quality Act (CEQA) and applicant shall be responsible for all costs associated with CEQA compliance, including but not limited to environmental analysis and studies, preparation of the appropriate CEQA document, and all County staff time, including attorney time spent reviewing and pursuing final adoption of the appropriate environmental document.
Application fees (yet to be determined)
Commercial Cannabis Use Permit Application with:
Name, contact address, phone number of applicant and all owners as well as documents establishing ownership such as operating agreements and stock agreements.
LiveScan (background checks) of applicant, all owners, spouses of owners and the designated local contact.
Written consent by owner of parcel (if not owner)
Name and contact information of the Designated Local Contact
Detailed explanation of how applicant will prevent theft and access to those under age 21
Proof that operations with comply with county rules (Standard Operating Procedures)
Proof that operations will comply with state regulations (Standard Operating Procedures)
Overall Operating Plan
Description of how applicant will meet and maintain organic certification standards (if applicable)
Written acknowledgement that the County has the right to reduce the size of premise in the event that environmental conditions (such as drought, odor control) merit reduction.
Complete copy of state license documents, including exhibits.
Detailed Premise Diagram
Certification of Accuracy
Concentration and proximity to an existing or proposed commercial cannabis activity shall be considered in determining whether to grant a CUP.
Authorization may not be provided to the appropriate state licensing agency unless the County has issued a Commercial Cannabis Use Permit and Commercial Cannabis Annual Operating Permit.
Commercial Cannabis Annual Operating Permit
In addition to the CUP, the county will be requiring an Annual Operating Permit (BOP) with requirements as follows:
Commercial Cannabis Annual Operating Permit is valid for one year from the date of issuance.
Requires all of the information required for a CUP and will require continued compliance with local rules and state commercial cannabis regulations.
A notarized annual updated written consent from parcel owner will be required within 30 days of the date that the annual BOP application is submitted.
Annual BOP shall NOT be issued if the applicant owes delinquent taxes, fines, fees or costs.
If taxes, on square footage, are assessed they shall be calculated on the maximum square footage stated in the BOP given. However, a request for reduction of square footage can be made if the applicant is planning to stagger growth up to the maximum allowable. Failure to request a reduction will result in the taxes for full square footage being assessed.
The Annual BOP is not transferable and automatically expires upon change of ownership
It is important to note that any out-of-County delivery and distributors will be required to obtain a valid business license for El Dorado County. Additionally, the Commercial Cannabis Activities Tax shall be paid for the sale of all cannabis or cannabis products delivered or distributed within the county regardless of where the business is located. Finally, all outside deliver services are held to the county’s delivery hours of 8:00am - 8:00pm and all deliveries must be initiated by the customer, before 7:00pm in order to comply.
Additionally, upon receipt of three (3) administrative citations, verified violations or hearing officer determinations within a two-year period the BOP will be nullified, voided or revoked subject to appeal.
The following is true about the enforcement of commercial cannabis activities:
Any person who attempts to engage in commercial cannabis activity without valid permits can be charged with a misdemeanor or infraction at the discretion of the district attorney.
Misdemeanor violation shall be punishable by a fine, not to exceed, $1,000 or county jail not to exceed 6 months.
If charged as an infraction:
1st violation fine shall not exceed $100
2nd violation fine shall not exceed $250
Each additional violation shall not exceed $500
Administrative Enforcement & Abatement for those with CUP & BOP
Notice to abate shall provide responsible person 72 hours to correct
After Notice to Abate is issued, and during the 72-hour period, a $1,000 fine (per violation) will accrue for each day of violation.
After the 72 hour period has expired the fines will increase to $2,500 per day per violation until corrected.
For a second violation, within a 12 month period, the administrative fine increases to $5,000 per day per violation until corrected.
For the third violation, within a 12 month period, the administrative fine increases to $10,000 per day per violation.
Administrative Enforcement & Abatement for those operating before CUP & BOP are approved
Notice to abate shall provide responsible person 72 hours to correct
After 72-hour period an administrative fine of $5,000 per day and per violation will accrue.
Once the 72 hours has expired the administrative fine will increase to $10,000 per day per violation.
For the second violation, within a 12-month period, the fine will increase to $25,000 per day per violation.
For the third violation, within a 12-month period, the fine will increase to $50,000 per day per violation.
Each plant cultivated outside of the permitted square footage shall constitute a violation.
Finally, the Planning and Building Department shall have applications available no later than September 30, 2019. However, the Board of Supervisors may grant an extension based upon unforeseen circumstances.
Here is the takeaway:
GET EDUCATED - Know the rules and set your operating procedures up so that you are in the best position to not violate them.
GET STARTED - The list of required documents, to submit, is fairly extensive and it will take some time to get everything together.
Need Help? It all starts with a consultation with Attorney Dale Schafer and you can schedule that consultation at 916-740-2141 or email@example.com