Item Coversheet

Agenda Item No: 11.






AGENDA REPORT

DATE:

June 15, 2021 

TO:

Mayor and City Council

FROM:

Stefan T. Chatwin, City Manager


SUBJECT:Resolution 2021-139 of the City Council of the City of Fairfield Approving Issuance of a Commercial Cannabis Retail Business Permit to J.J.V.I. Enterprises Inc. Subject to Conditions and in Accordance with the Requirements and Procedures of Fairfield Municipal Code Chapter 10E; and 

Resolution 2021-140 of the City Council of the City of Fairfield Approving Issuance of a Commercial Cannabis Retail Business Permit to Responsible and Compliant Retail Fairfield LLC Subject to Conditions and in Accordance with the Requirements and Procedures of Fairfield Municipal Code Chapter 10E; and

Resolution 2021-141 of the City Council of the City of Fairfield Approving Issuance of a Commercial Cannabis Manufacturing Business Permit to 3Bros Fairfield Subject to Conditions and in Accordance with the Requirements and Procedures of Fairfield Municipal Code Chapter 10E
 

RECOMMENDED ACTION 
Adopt resolutions.
STATEMENT OF ISSUE 
The City Council awarded preliminary approval to operate a commercial cannabis business to three applicants, J.J.V.I. Enterprises Inc., Responsible and Compliant Retail Fairfield LLC., and 3Bros Fairfield. A commercial cannabis business permit is required in order to begin operations. Council must now authorize the city manager to issue a commercial cannabis business permit to the selected applicants upon successful completion of conditions and in accordance with the requirements and procedures of Fairfield Municipal Code Chapter 10E.
DISCUSSION
On June 16, 2020, the council adopted Ordinance 2020-07, adding Chapter 10E (Commercial Cannabis Business) to the Fairfield Municipal Code (FMC) to permit commercial cannabis businesses within the city and establish a regulatory program requiring all commercial cannabis uses to obtain a commercial cannabis business permit issued by the City prior to commencing operation. 

As required by FMC Sections 10E.8 and 10E.9, the council approved Resolution 2020-136 on July 7, 2020, establishing the procedures to govern the application process by which decisions shall be made regarding the issuance of commercial cannabis business permits in a document known as “Application Procedures & Guidelines for a Commercial Cannabis Business Permit”. The council amended these procedures with the adoption of Resolution 2021-68, allowing all applicants to advance to the final phase of the selection process and make presentations the council.

During the application period conducted from September 8, 2020 to October 23, 2020, the City received fourteen applications for retail permits and one application for a manufacturing permit. Since the close of the application period on October 23, 2020, the City has conducted the application review process as set forth in the adopted Application Procedures, as amended.  

All applicants for retail cannabis permits made presentations to the council on April 28, 2021 and April 29, 2021. At the May 4, 2021 council meeting, the council heard public testimony and discussed which retail cannabis applicants should be awarded a permit to operate in the city. To aid in this decision, the council took a straw poll where each councilmember provided the names of their top four applicants. The results of the poll were:
 

Cannabis Retail Operators Straw Poll Results*

Responsible and Compliant Retail Fairfield LLC

6 Named

J.J.V.I. Enterprises Inc.

6 Named

The Showcase LLC

4 Named

CCC Associates of Fairfield

3 Named

Authentic Fairfield LLC

3 Named

 

*Mayor Harry Price recused himself from the item.

 

 

The council chose to award preliminary approval to the two applicants who received unanimous support, Responsible and Compliant Retail Fairfield LLC (dba Embarc) and J.J.V.I. Enterprises Inc. (dba The Bright Spot). Council directed staff to return to the council with resolutions for approval to award a commercial cannabis retail permit to operate for these two selected applicants.

At the May 18, 2021 council meeting, the applicant for a manufacturing permit made their presentation to the council. Following council discussion, the council chose to award preliminary approval to 3Bros Fairfield and directed staff to return to the council with a resolution for approval to award 3Bros Fairfield a commercial cannabis manufacturing permit to operate.

At council’s direction, staff prepared resolutions that set forth findings of the council and the final conditions of approval for the selected applicants. The resolutions authorize the city manager to issue a commercial cannabis business permit to each of the three applicants upon successful completion and satisfaction of the remaining requirements of FMC Chapter 10E and the conditions of approval. FMC Chapter 10E outlines additional requirements that a successful applicant must satisfy prior to the issuance of the permit and start of operations which includes obtaining LiveScans (fingerprinting and background checks) of all owners, passing building inspections, entering into a community relations agreement with the City, and other similar requirements included in FMC Chapter 10E.

Staff prepared conditions of approval for each of the selected applicants to ensure compliance with FMC Chapter 10E, state and federal law, and the contents of their applications. The community benefits offered in each of the applicant’s application as part of their community relations plan are included as a condition of approval. The details and obligations, and the way each chosen applicant verifies discharging said obligations shall be memorialized in a community relations agreement with the City.  

Either within their application or during their presentation to council, each of the chosen applicants committed to providing community benefits that are more detailed than, and in excess of, city code requirements. For example, applicants committed to providing a percentage of sales or income to support community outreach and educational efforts, to providing certain employee benefits, and to creating compassionate care programs. In the instances where an applicant has made such a commitment, staff included that commitment as a condition of approval to be included in the required community relations agreement. This ensures that all chosen applicants operate their business in the manner presented to and approved by the council. The council may seek to modify the conditions of approval or request additional conditions of approval, including community benefits, as they see fit.  

The Cannabis Operators Community Benefits Matrix (attached hereto) highlights a selection of the most significant community benefits proposed by each of the chosen applicants. The specifics of these community benefits and the manner in which each applicant proposes to provide them vary across all applicants. They are unique to each applicant’s business plan, abilities, backgrounds, and interests; therefore, staff does not believe it would be appropriate to apply a single set of uniform conditions to all applicants, with one exception. The selected applicants are conditioned to hire a minimum of 75% local employees. All applicants stressed the importance of local hiring and both Responsible and Compliant Retail and 3Bros Fairfield committed to 100% local hires in their applications. However, after consultation with the city attorney, staff proposed a local hire minimum of 75% as requirements for 100% local hires have a history of legal challenges.

Upon satisfying the conditions of approval and remaining requirements of FMC Chapter 10E, the city manager may issue a permit to the chosen applicants. Staff anticipates this to occur as early as Fall 2021. However, the speed at which this occurs is entirely dependent upon the applicants.


FINANCIAL IMPACT
Once fully operational and open for business, the selected applicants will be required to pay taxes on the sale of cannabis products at annual rates not to exceed 6% of gross receipts for retail cannabis businesses and 4% for manufacturers. The estimated sales tax revenue to be generated for the first year of operations is $1,189,422.68. Each of the chosen applicants has provided estimates on the amount of sale tax revenue they expect to generate. Responsible and Compliant Retail Fairfield LLC estimates $366,502.00, J.J.V.I. Enterprises estimates $464,400.00, and 3Bros Fairfield estimates $358,520.68. 
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. A public comment period was provided for all applicants in accordance with the requirements of the “Application Procedures and Guidelines for a Commercial Cannabis Business Permit”. Notice of the public comment period was sent to all property owners located within 600 feet of the proposed business location for each applicant.  

The council held public hearings on May 4, 2021 and May 18, 2021. Public hearing notices were published in the Daily Republic newspaper, emailed to all persons on the noticing list, and posted on site at City Hall.
 

ALTERNATIVE ACTION 
The council may choose not to approve the resolutions or to modify the resolutions. If the council chooses not to approve the resolutions, the city manager would be unable to issue the required commercial cannabis business permits and the selected applicants would be unable to operate within the city. This would result in a loss of tax revenue. If the council chooses to modify one or all the resolutions, staff will return at a subsequent council meeting with resolutions incorporating the modifications requested by the council.
STAFF CONTACT 

Amy Kreimeier, Senior Planner

(707) 428-7450

akreimeier@fairfield.ca.gov 


COORDINATED WITH 
City Attorney's Office
ATTACHMENTS:
Description
Attachment 1: Proposed Resolution - JJVI Enterprises Inc.
Attachment 2: Exhibit A JJVI Conditions of Approval
Attachment 3: Proposed Resolution - Responsible and Compliant Retail Fairfield LLC
Attachment 4: Exhibit A Responsible and Compliant Conditions of Approval
Attachment 5: Proposed Resolution - 3Bros
Attachment 6: Exhibit A - 3Bros Conditions of Approval
Attachment 7: Cannabis Operators Community Benefits Matrix
REVIEWERS:
ReviewerActionDate
Feinstein, DavidApproved6/2/2021 - 6:41 PM
Gassaway, DavidApproved6/2/2021 - 9:00 PM
Alexander, AmberApproved6/7/2021 - 11:19 AM
Alexander, AmberApproved6/7/2021 - 11:19 AM