Conduct second reading and adopt Ordinance No. 269 - An Ordinance of the City Council of the City of Canyon Lake, California, Amending Chapter 4.20 (Commercial Cannabis Businesses) of the Canyon Lake Municipal Code to a Vacancy-Based Best Value Permitting Process.

At the December 1, 2025, City Council meeting, the City Council approved the first reading of Ordinance No. 269, amending the City’s commercial cannabis ordinance to a vacancy-based “best value” permitting system administered by the City Manager. The City Council also adopted Resolution No. 2025-50 reducing the maximum number of authorized commercial cannabis retail permits from two to one.

In 2021, the City Council adopted Ordinance No. 215, adding Chapter 4.20 (Commercial Cannabis Businesses) to the Canyon Lake Municipal Code to regulate commercial cannabis activities within the City. Chapter 4.20 established, among other things, a competitive application and selection process for commercial cannabis business permits that relied on objective scoring, ranking, and a comparison of proposed community benefits under Sections 4.20.100 and 4.20.110. Those provisions were subsequently amended by Ordinance No. 246 but retained the basic competitive framework.

Separately, on April 10, 2024, the City Council adopted Resolution No. 2024-13 authorizing up to two commercial cannabis retailers to operate within the City at any given time. Together, these actions created a regulatory structure that both capped the number of retail permits and required a formal, competitive process to award them.

The amended ordinance modernizes and streamlines the permitting procedures in Chapter 4.20 by removing the outdated formal scoring and ranking system and replacing it with a vacancy-based, “best value” permitting process administered by the City Manager or designee. The ordinance clarifies that the numerical caps in Section 4.20.090 establish the maximum number of permits that may be issued, but do not require issuance of all available permits. The City Council retains its legislative authority to amend those caps by ordinance or resolution, while individual permit decisions are treated as administrative determinations made by the City Manager.

Revised Section 4.20.100 authorizes the City Manager to adopt administrative procedures governing the form, content, and timing of commercial cannabis business permit applications, and allows applications to be accepted on a rolling basis or during defined application periods. The City Manager or designee is required to conduct an initial completeness and eligibility review to ensure that the proposed business and location can comply with Chapter 4.20, the Municipal Code, and applicable state law. The City’s existing reservation of rights is preserved, making clear that the City may reject any or all applications and may modify, postpone, or cancel the program at any time prior to permit issuance, to the extent allowed by law.

The ordinance expressly states that the City Manager is not required to conduct a competitive, point-based, or ranked evaluation among all pending applications, nor to consider all applications simultaneously. The City Manager may issue a permit to an applicant who provides best value at the time a vacancy exists, may defer action on one or more applications, or may decline to issue any permit if doing so would not provide best value or would not be in the City’s best interests. The ordinance also continues to require that all land use approvals and CEQA compliance be obtained before a permit is issued, confirms that a commercial cannabis business permit is not a land use entitlement, and maintains the 12-month permit term subject to renewal.

The ordinance further clarifies how transfers are handled by amending Section 4.20.200(b). Proposed transferees are reviewed under the same eligibility and best-value considerations that apply to new applicants, with flexibility for the City Manager to limit the scope of review to matters related to the change in ownership or control, and to impose reasonable conditions on the transfer consistent with the Chapter and the underlying permit.

Finally, the ordinance amends Section 4.20.160 to confirm that appeals from decisions of the City Manager or designee are conducted as prescribed in Chapter 4.20 and that no appeal lies to the City Council. This makes explicit that the City Council does not act as the appellate body for cannabis permitting decisions and that these decisions are administrative in nature. The ordinance includes standard provisions for clerical corrections, severability, effective date, and publication.

Resolution No. 2025-50, adopted by the City Council on December 1, 2025, addresses the permitted number of commercial cannabis retailers. Under Resolution No. 2024-13, up to two retail permits are currently authorized. The proposed resolution reduces that maximum to one. The resolution finds that limiting the number of commercial cannabis retailers to one will better protect the public health, safety, and welfare and is consistent with the City’s policy objectives and police power authority. The resolution further provides that, to the extent it conflicts with Resolution No. 2024-13 or any prior resolution on this subject, this new limitation controls, and directs staff to update implementing procedures and application materials to reflect a single retail permit cap. The resolution does not itself approve any particular permit holder, location, or project; instead, individual permits will continue to be issued under Chapter 4.20 as amended by the ordinance.