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AGENDA REPORT
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| | | | | | | | DATE:
| July 7, 2020
| TO:
| Mayor and City Council
| FROM:
| Stefan T. Chatwin, City Manager 
| | SUBJECT: | Public Hearing; and
Resolution 2020-136 of the City Council of the City of Fairfield Establishing Procedures to Govern the Application Process and by Which Decisions Shall be Made Regarding the Issuance of Commercial Cannabis Business Permits; and
Resolution 2020-137 of the City Council of the City of Fairfield Approving an Application for Authorization to Access State and Federal Level Summary Criminal History Information for Cannabis Employment, Contractors, Licensing or Certification Purposes
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| | | | | | | | | RECOMMENDED ACTION | | Hold public hearing and adopt resolutions. |
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| | | | | | | | | STATEMENT OF ISSUE | | In order to begin accepting and processing applications for commercial cannabis businesses, the City must establish the procedures which govern the application process and the procedures by which decisions shall be made regarding the issuance of a commercial cannabis business permit. Authorization from the Department of Justice is also required to conduct live scan background checks on successful applicants. |
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| | | | | | | | | DISCUSSION | At the City Council meeting of June 16, 2020, the City Council adopted Ordinance 2020-07 adding Chapter 10E, Commercial Cannabis Businesses, to the Fairfield Municipal Code (FMC). The chapter implements the provisions of the Medicinal and Adult Use Cannabis Regulation and Safety Act (“MAUCRSA”) and Proposition 64, while imposing appropriate regulations to protect the health, safety, and welfare of the residents of the City of Fairfield and to enforce rules and regulations consistent with state law.
At any time, the City may choose to open the application period to issue up to two retail, one manufacturing, and an unlimited number of commercial cannabis business permits. FMC Chapter 10E outlines and codifies the process for obtaining a permit to operate a commercial cannabis business. This includes the initial application procedure, permittee selection process, renewal, revocation, and transfer of a commercial cannabis permit. It also requires the City Council adopt by resolution the procedures to govern the application process, the procedures by which decisions shall be made regarding the issuance of any commercial cannabis business permit, and application renewals for a commercial cannabis business permit.
The proposed resolution contains a document entitled “Application Procedures and Guidelines for a Commercial Cannabis Business Permit” (guidelines). This document establishes the application submittal requirements, application review, scoring, and selection process, and review criteria upon which an application will be evaluated. The City Manager’s Office, or its designee, will administer the commercial cannabis business permit program. The discretionary permit process proposed is a time intensive process and will require significant staff time. Therefore, staff recommends the City Manager’s Office designate a consultant to process the applications. Expenses for processing will be built into the application fee.
Proposed Application Process:
To open the application period, staff recommends that the City Council declare a 45-day commercial cannabis business permit application period (Application Period) during a regularly scheduled meeting. The declared Application Period shall be published in a newspaper of general circulation at least 10 days prior to the beginning of the Application Period. Unless exempt from Commercial Cannabis Business Permit limits (Testing Labs), the City shall only accept Commercial Cannabis Business Permit applications during the application period.
FMC Section 10E.8 details the minimum application requirements for any applicant. Additionally, applicants will be required to submit a formal application form, including:
• Preliminary background check documentation;
• Proof of capitalization;
• Indemnification and liability agreement;
• A zoning verification letter for any proposed operating location;
• Proof of property owner consent; and
• Responses to review criteria.
Responses to review criteria will be limited to 200 pages and the required contents are broken down by each criterion in Appendix A of the attached guidelines.
The proposed application review, scoring, and selection process will be comprised of five phases. Absent any appeals, the process is estimated to take four months to complete. A flow chart of this process has been attached for your reference.
Phase 1 – Determination of Eligibility
Upon receiving a completed application, the City will conduct an initial screening of applications to determine whether they meet the minimum eligibility requirements to receive a commercial cannabis business permit. Applications that meet the minimum eligibility requirements will be forwarded to the Consultant for Phase II.
If the City determines in the initial screening that an application does not meet minimum eligibility requirements, the applicant shall be notified in writing that the application has been denied. Within five (5) business of the date of the decision, an applicant may file a request for immediate reconsideration. This immediate reconsideration process is to allow applicants the ability to resolve clerical errors, technology errors or similar. It does not permit the applicant to amend the application or allow for other substantive changes. The decision of the City on a request for reconsideration is final and not subject to appeal to the City Council.
Phase 2 – Criteria Evaluation and Scoring
The consultant will evaluate, score, and rank applications based on the review criteria below:
• Business Plan (300 points)
• Labor and Local Enterprise Plan (300 points)
• Neighborhood Compatibility Plan (200 points)
• Safety Plan (400 points)
• Security Plan (400 points)
The Phase 2 evaluation focuses on applicants’ business and operation plans to narrow down the applicant pool. Using their expertise in the field of cannabis and knowledge of what business traits lead to a successful cannabis business, the consultant will evaluate each application based on the five above criteria. Appendix A of the attached guidelines expands upon the requirements of each criteria upon which scores will be based. For example, within the Business Plan there are six different components, but not all will be given the same weight. An applicant’s proposed budget, proof of capitalization, or Pro Forma will be weighed more heavily than their explanation of day-to-day operations, or owner qualifications. The substance of these items will determine an applicant’s score.
The points awarded to each criterion have been chosen based on areas of particular concern to the City Council. The Council may choose to weight each criterion differently than what is proposed. If so, it is important to ensure that no one criteria are weighted too heavily or scores may become skewed and would no longer be an accurate predictor of a successful operator. Following Council’s direction for criteria weights, staff will work with the consultant to prepare a rubric outlining how each component of the application is scored.
Applicants will not be allowed to resubmit information that is determined to be missing or deficient during the Phase 2 review. Those applications which score a minimum of 80% (1,280 points) in Phase 2 will move on to Phase 3 of the application process. Applications for testing labs which score a minimum of 80% (1,280 points) in Phase 2 are exempt from the requirements of Phase 3 and will move directly on to Phase 4 of the application process as they are permitted in unlimited numbers.
Phase 3 – Interviews and Second Ranking
Applications that receive a passing score under Phase 2 will be interviewed and evaluated by the City’s Selection Committee. Interviews will be administered by the consultant. The selection committee will be comprised of one staff representative each from the Police Department, Community Development Department, and Finance Department. Selection committee participants will remain constant for the duration of the application process for each commercial cannabis business permit. Applicants will be interviewed and evaluated based upon the criteria below:
• Business Plan (300 points)
• Labor & Local Enterprise Plan (400 points)
• Neighborhood Compatibility Plan (300 points)
• Safety Plan (400 points)
• Security Plan (400 points)
• Location (200 points)
• Community Relations Plan (400 points)
The Phase 3 evaluation places more emphasis on criteria that is City specific including labor & local enterprise plan, neighborhood compatibility plan, location, and community relations plan. As City employees, members of the Selection Committee are the experts on local matters and best suited to take a more critical look at City specific criteria.
Interviews are an important tool to help narrow down the pool of applicants. It is important that the committee has the ability to interview the applicants on all components of the application. An applicant may be great on paper but not in person or may reveal things not easily expressed on paper. Therefore, applicants in this phase will be evaluated on all criteria but the scoring has been chosen to give more weight to City specific criteria. Again, the points awarded to each criterion have been chosen based on areas of concern expressed by the City Council and the Council may choose to weight each criterion differently than what is proposed.
Phase 3 scores will be tabulated and combined with Phase 2 scores to establish an overall ranking of the applications. The Top five (5) Applicants which maintain an aggregate score of at least 80% (3,200 points) will advance to Phase 4 of the selection process. With this metric, following the completion of the remaining phases, a maximum of five (5) applicants for a retail or manufacturing permit will be referred to the Council for final decision. The Council may choose to increase or reduce this number or use a different metric such as aggregate score.
Phase 4 – Public Comment Period
Following the conclusion of any appeals, a minimum 15-day public comment period will be provided concerning the remaining applications. Notice of the public comment period will be sent to all property owners located within five hundred (500) feet of the proposed business location of each applicant. The public comment period is to allow adjacent property owners to submit substantive comments on items that staff otherwise would not have known regarding the proposed cannabis business that may inhibit the successful operation of the business. Examples of such items may include CC&R regulations or easement requirements. It is not an opportunity to voice opposition to the proposed location of a cannabis business or other items reviewed and verified during the application process. Substantive comments received will be evaluated and included in the candidate report referred to City Council in Phase 5.
Phase 5 – City Council Determination and Issuance of Permit
Only those applicants that proceed through Phase 4 will be eligible to receive a permit in Phase 5. A report will be prepared for the City Council summarizing the final applicants, any concerns or support voiced by the community during the public comment period, and the results of the evaluation process. Final applicants will be referred, without recommendation, to the City Council to approve or deny based on the best interests of the City. The City Council will conduct a public hearing and determine whether to approve or deny each application and the Council’s decision will be final. Prior to making a final decision, the City Council may request and obtain additional information from any candidate who submitted an application.
A successful applicant will be required to complete a live scan background check prior to final permit issuance. In order to conduct live scan background checks, the City must obtain approval from the Department of Justice. A resolution has been prepared which authorizes the City of Fairfield Police Department to access state and federal level summary criminal history information for employment, including contract employees, licensing, and certification of commercial cannabis operations including retail, cultivation, distribution, testing, and manufacturing purposes and may not disseminate the information to a private entity.
The attached resolution also includes provisions for renewing a cannabis business permit each year, transfers of ownership, and transfers of location. The renewal of a cannabis permit will require a compliance review and will be approved or denied by the City Manager’s office, or its designee, without going before the City Council. Substantial transfers of ownership (more than 51%) will require the same application process and will be treated as a new application. No commercial cannabis permit may be revoked or terminated without the approval of the City Council with one exception, if the State of California revokes or terminates the license of a commercial cannabis business, such action will also revoke or terminate the ability of the commercial cannabis business to operate within the City of Fairfield.
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| | | | | | | | | FINANCIAL IMPACT | | Expenses associated with the operation and administration of the cannabis regulatory program will be built into commercial cannabis permit fees. To determine the appropriate application fees, an analysis determining the extent of the fiscal impact is being conducted by staff. A resolution establishing cannabis regulatory program fees will be brought before the Council for review at a subsequent meeting. |
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| | | | | | | | | CITY COUNCIL WORKPLAN | Community Safety
| Community Infrastructure | Quality of Life | | Financial and Operational Sustainability | Economic Development | Travis Air Force Base |
| City Council Goal this item supports:
Economic Development, Not Applicable |
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| | | | | | | | | PUBLIC CONTACT/ADVISORY BODY RECOMMENDATION | Various parties have expressed interest to staff in operating a commercial cannabis business within the City and have been added to an email notification list for cannabis related items. Public Hearing Notice was published in the Daily Republic, emailed to all persons on the noticing list, and posted on site for City Council meeting on July 7, 2020. The City has received no comments regarding the proposed cannabis regulatory ordinance at the time of this writing.
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| | | | | | | | | ALTERNATIVE ACTION | | The City Council may choose to modify the proposed terms for the guidelines. At Council’s direction staff would return with revised guidelines and a resolution for approval at a subsequent meeting. Council may also choose to deny the request and not adopt the proposed resolutions. Should this occur, the City would be unable to accept or approve applications for a commercial cannabis business permit. |
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| | | | | | | | | STAFF CONTACT | Amy Kreimeier, Senior Planner
(707) 428-7450
akreimeier@fairfield.ca.gov
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| | | | | | | | | COORDINATED WITH | City Attorney's Office, Fire Department, Police Department
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| REVIEWERS: | | Reviewer | Action | Date | | Feinstein, David | Rejected | 6/26/2020 - 6:34 PM | | Answerer | Approved | 6/26/2020 - 3:37 PM | | Feinstein, David | Approved | 6/26/2020 - 6:40 PM | | Gassaway, David | Approved | 6/26/2020 - 6:57 PM | | Ballard, Kelly | Approved | 6/29/2020 - 4:47 PM | | Ballard, Kelly | Approved | 6/29/2020 - 6:05 PM |
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