This project was reviewed pursuant to the guidelines of the California Environmental Quality Act (CEQA) and determined to be Categorically Exempt pursuant to 14 CCR Section 15060(c)(2) and 15061(b)(3) because it can be seen with certainty that there is no possibility that the project will have a significant impact on the environment.

That the Planning Commission approve:

Conditional Use Permit
A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF LA HABRA APPROVING CONDITIONAL USE PERMIT 22-05 FOR A NON-STOREFRONT RETAIL CANNABIS BUSINESS AT 441 EAST IMPERIAL HIGHWAY, SUITE E, MAKING THE APPROPRIATE FINDINGS, AS PER THE APPROVED PLANS AND SUBJECT TO CONDITIONS.

Development Agreement
A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF LA HABRA RECOMMENDING THAT THE CITY COUNCIL ADOPT AN ORDINANCE APPROVING DEVELOPMENT AGREEMENT 22-01 BETWEEN THE CITY OF LA HABRA AND ESSENTIAL ROOTS LA HABRA, LLC, FOR A NON-STOREFRONT RETAIL CANNABIS BUSINESS AT 441 EAST IMPERIAL HIGHWAY, SUITE E, AS PER ATTACHMENT “A”.

The Applicant, Essential Roots La Habra LLC, is requesting approval of a Conditional Use Permit (CUP) and a Development Agreement (DA) to operate a non-storefront retail cannabis business within an existing commercial/industrial site, which primarily consists of automotive related uses.  The item was originally scheduled for public hearing on May 23, 2022, however, was continued to June 13, 2022, to enable staff additional time to prepare this report. On May 23, 2022, the Commission approved a continuance of the item to June 13, 2022. Subsequently, the applicant informed staff that they would be unavailable on June 13, 2022, and requested for Commission to continue the item to June 27, 2022. On June 13, 2022, the Commission approved a subsequent continuance of the item to June 27, 2022.

The property is located along the north side of Imperial Highway, west of Leslie Street as shown on Exhibit 1.  The General Plan land use designation for the site is Commercial Industrial.  The property is within the Planned Commercial Industrial (PC-I) Zone, which implements the General Plan Commercial Industrial land use designation, and is within a Planned Unit Development (PUD) Overlay Zone.
 

EXHIBIT 1


 



As indicated on Exhibit 2 below, the proposed business will be located at the rear of the site in a space currently occupied by an auto repair business.

EXHIBIT 2

Business operations will take place within a 2,988 square-foot suite as shown on Exhibit 3. Upon entering the suite, there will be a secured lobby with access to a break area and unisex bathroom. There will be restricted access to the remaining portion of the suite, which includes an order fulfillment area and secured product storage. An enclosed loading area will be provided within the west side of the building, which will allow up to two delivery vehicles to be driven into the building for secured loading and unloading. This floor plan was intentionally designed for safety and security, similar to other sensitive facilities such as police stations, detention facilities, or power plants. No changes are proposed to the building exterior. Since the existing front and rear building facades consists of multiple roll-up doors, a condition of approval has been added that requires the roll-up doors (except for the two doors approved for delivery) to be locked and non-operable at all times. The applicant informed staff that they would like to fill in the spaces containing the non-operable doors with permanent walls. It is anticipated that the these facade changes will be minor and therefore, staff expects to be able to handle the review administratively. Staff will ensure that said facade changes are compatible with the surrounding commercial/industrial center. 

EXHIBIT 3

Essential Roots La Habra, LLC will offer home delivery of over 500 different cannabis goods (both commercial adult-use cannabis and medicinal cannabis) from licensed manufacturers and cultivators. Licensed distributors will deliver cannabis goods to Essential Roots La Habra's business site. Once the cannabis goods are received and thoroughly inspected, on-site business operations during the first year will involve: 1) receiving orders via the internet and/or phone; 2) fulfilling and packaging orders by trained dispatchers and inventory employees and 3) making about 164 deliveries per day or a maximum capacity of 210 deliveries per day. All products will be stored in a secured storage area. The facility will be initially staffed with 27 employees working in various shifts. It is anticipated that the total number of employees will increase over time as customer demands increase.  Such staff will include an armed guard, dispatchers, drivers, inventory control and handling personnel, and managers. All cannabis products that enter the building will arrive pre-packaged and delivered to consumers in an enclosed container. All loading and unloading of vehicles will occur in the secured loading area within the building and all delivery vehicles will be outfitted with secure lock boxes and GPS tracking devices. The delivery vehicles will be the personal vehicles of the delivery staff and will be covered by the business' insurance and safety requirements. No vehicles will be stored on-site overnight.  The armed guard will be required to be on-site at all times when cannabis products are stored in the facility.  The applicant has requested to operate the business from 6:00 a.m. to 10:00 p.m., seven days a week.

 

The proposed cannabis business will be situated on an existing commercial site. Other surrounding uses include an automotive repair, carwash, industrial supply shops, taqueria, tire store, motorcycle dealer and a sandwich shop. These existing businesses tend to see high vehicular traffic and also receive regular deliveries. Since the proposed non-storefront cannabis business will share similar operating characteristics, it is anticipated that any cannabis business activities will not have a noticeable presence. As part of the Essential Roots La Habra business plan, the applicant will also implement "Good Neighbor Guidelines" to ensure that their business operations provides good site maintenance, on-going safety and procedures for addressing site concerns including, but not limited to, noise, odor, light, loitering, vehicle and pedestrian traffic, etc.

BACKGROUND 
Non-storefront retail cannabis businesses are permitted in La Habra, subject to the approval of a CUP and a DA, as a result of the following:

To ensure the enforcement of zoning requirements and all permit regulations, the City established a cannabis review board consisting of the City Manager, Director of Community and Economic Development, Police Chief, Finance Director, and Director of Public Works, or their respective designee, to review the credentials of all the businesses requesting to establish commercial cannabis activities. The Police Chief or designee is also tasked with conducting a background check of any applicant seeking a conditional use permit, including the applicant’s agents and those who have an interest in the marijuana business. Once the cannabis review board determines that a prospective applicant has met the minimum criteria, the applicant can formally apply for a CUP and DA.

In keeping with the City's requirements, the City opened an application period of 45-days. The application period began on May 14, 2021, and ended on June 30, 2021. A professional consultant with cannabis expertise was hired by the City to evaluate all applications and forward to the cannabis review board those applications that met the minimum scoring requirements. The cannabis review board determined which applicants would be allowed to apply for a CUP and DA. In this case, the cannabis review board determined that the business known as Essential Roots La Habra, LLC met the minimum criteria and therefore, allowed them to submit their request for approval of CUP 22-05 and DA 22-01.
 

Pursuant to Section 18.22.080C (LHMC), prior to commencing operation of a commercial cannabis activity, all persons shall obtain a CUP from the City for all parcels of real property (or portion thereof) upon which the commercial cannabis activity will operate. Approval of a CUP enables specific conditions to be added which will help ensure the proposed cannabis business will be compatible with the surrounding area. The subject CUP shall also be in compliance with Section 18.22.060 (LHMC), which requires the applicant to enter into a negotiated DA with the City. 
 

The Conditional Use Permit (CUP) process and requirements are located in Section 18.66.070C (LHMC). In order to approve a CUP, the Planning Commission must make the following findings:
 

1. The granting of the CUP will not be detrimental to the public welfare and will not unreasonably interfere with the use, possession and enjoyment of surrounding and adjacent properties and will not impair the character of the zone in which it is to be located.

 

On April 2, 2018, the City Council of La Habra adopted Chapter 18.22 “Commercial Cannabis Activity” (LHMC) with regulations that permit cannabis distribution facilities subject to a CUP within the M-1, M-1 PUD, and PCI zones.  On December 21, 2020, the City Council adopted Ordinance No. 1827 amending Chapter 18.22 (LHMC) allowing cannabis non-storefront retail facilities, to be operated in strict compliance with the Cannabis Laws allowed by the California Bureau of Cannabis Control per a Type 9 Non-Storefront Retailer (Delivery Only) License under certain conditions and provisions. The subject property is developed with a mix of commercial uses and is surrounded by light industrial uses on the north and a Kaiser medical building to the east. The properties to the south are developed with single family homes that are separated from the site by Imperial Highway and a 20-foot tall sound wall. Commercial uses are located to the west of the subject site.

 

During the first year, at peak operation, the proposed business will have 27 employees that work varying shifts. It is expected that the maximum parking demand by general staff will be 16 spaces. The maximum parking demand by delivery drivers will be nine spaces. However, it should be noted that delivery drivers will seldom reach the maximum parking demand because the majority of drivers will be traveling and making deliveries. As required under Chapter 18.22 (LHMC), conditions of approval have been incorporated to ensure that the use would not cause any detriment to existing uses within the surrounding area. Conditions include the installation and maintenance of a high-quality security system, implementation of specified security measures, implementation of adequate inventory control, the use of an odor-controlling ventilation system, and the prohibition of consumption of cannabis products on-site.  Therefore, the approval of the use will not be detrimental to the public welfare and will not impair the character of the zone where the proposed cannabis business is located.  

2. The subject site is physically suitable for the type of land use being proposed.

 

No physical changes are proposed to the site. The proposed improvements include interior tenant improvements only. The proposed use is basically a delivery service. The only additional traffic is generated by the delivery drivers coming and going throughout the day, which is equivalent to a retail use with customers coming to the site at different times throughout the day. Therefore, the site is physically suitable for the type of land use proposed.
 

3. The use is conditionally permitted within the subject zone and complies with the intent of all applicable provisions.

 

Chapter 18.22 of the La Habra Municipal Code allows for non-storefront retail cannabis businesses within the PC-I Zone with the approval of a Conditional Use Permit, granted by the Planning Commission. After reviewing CUP 22-05, staff determined that the proposed non-storefront retail cannabis business operations conforms with the development standards and requirements of the PC-I Zone.

4. The granting of the CUP is consistent with the General Plan.

 

The projects implement Policies LU 11.1 (Diversity of Uses) and ED 1.1 (Consumer Demand) of the General Plan 2035.

The General Plan establishes land uses designations for properties throughout the City. Zoning is utilized as a tool to implement the General Plan. The General Plan Land Use Designation for this site is Commercial Industrial, which envisions business park, industrial uses or commercial uses.  The property is zoned Planned Commercial Industrial (PC-I) with a Planned Unit Development (PUD) overlay, which is consistent with the General Plan. These zoning standards were utilized when the current commercials center was developed. Additionally, this zone allows for the proposed use with approval of a Conditional Use Permit. Therefore, the use will be consistent with the General Plan if the Commission approved the CUP.
 

Development Agreement
Pursuant to Section 18.22.060 (LHMC), qualified applicants for a commercial non-storefront cannabis facility permitted by this chapter must enter into a negotiated DA with the city. The purpose of the DA is to provide the applicant with surety that their entitlements will remain as approved in the event that the city requirements change in the future. In exchange for this surety, the applicant agrees to provide community benefits.

A DA is considered a binding contract once executed. California Government Code Section 65864 through 65869.5 established the regulations for development agreements. This includes the requirement that the DA is approved by Ordinance. Ordinances can only be approved the City Council. However, the Government code requires the Planning Commission to review the proposed DA and make a recommendation to the City Council.  

The proposed DA requires an annual payment to the City for reimbursement of the cost of anticipated City services needed to manage the proposed cannabis business which may include public safety, fire and rescue, public works, engineering, and code enforcement services.  Also, the agreement requires the business to provide community benefits by way of contributions to local charitable organizations. 

In this case, the business is required to contribute to the City 0.5% on all gross receipts attributable to the site from that quarter (the “Community Benefit Payment”) for the term of the DA.  The Community Benefits Payment shall be placed within an account held by the City and distributed to the Community through a grant process as established and administered by the Director of Community Services. The Community Benefit Payments shall be paid to the City no later than within fifteen days after the end of each quarter (March 31, June 30, September 30, and December 31) beginning on the date the facility begins operations.  The first quarter payment will be made within 15 days after the end of the quarter following the date the facility begins operations and each quarter thereafter for the term of this DA.

The DA also has provisions requiring City approval of any changes to the business operations.  Again, as noted above, an approved DA is required before the CUP becomes valid.  The DA and CUP are only valid for this specific operator. Should a new business entity request to take over the operations at this location, they would need to go through the application process described earlier in this report.  The attached draft DA has been reviewed by the City Attorney’s Office for compliance with applicable laws and has also been reviewed by the applicant's legal council. The terms and conditions have been agreed to by the applicant.

Summary
The operation of a non-storefront cannabis retail business will occur within an existing building.  The operation itself, is consistent with commercial and light industrial type businesses, which are typical for the M-1 and PC-I zones.  The business operator will be required to obtain a Type 9 Non-storefront Retailer (Delivery Only) Cannabis License from the State and comply with all of their requirements.  In addition, the City and State of California have implemented extensive requirements to ensure that the business will be operated in an acceptable manner.

Therefore, based on these facts, it is recommended that the Planning Commission approve Conditional Use Permit 22-05 for a non-storefront retail cannabis business and that it recommend that the City Council adopt an ordinance approving Development Agreement 22-01 for the property at 441 East Imperial Highway, Suite E, subject to the findings and conditions in the attached resolutions.
 

The Applicant provided a $30,000.00 deposit to cover the staff time and application fees associated with this request.  Any unused money will be returned to the applicant at the completion of the process.

The Applicant’s proposal has been reviewed pursuant to the requirements of the City’s National Pollutant Discharge Elimination System (NPDES) Municipal Permit, the Local Implementation Plan (LIP), and the Model Water Quality Management Plan (WQMP), Section 7.2.  Since no disturbance of soil will occur, this project is exempted by the Water Quality Ordinance from the preparation of a WQMP.

The project implements Policies LU 11.1 (Diversity of Uses), ED 1.1 Consumer Demand of the General Plan 2035.