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Item No. 3. 
MEETING DATE: June 27, 2022
 
TO: PLANNING COMMISSION
 
FROM: SUSAN KIM, DIRECTOR OF COMMUNITY & ECONOMIC DEVELOPMENT
By: Sonya Lui, Planning Manager
 
SUBJECT:
DULY NOTICED PUBLIC HEARING TO CONSIDER A REQUEST FOR CONDITIONAL USE PERMIT 22-11 FOR A NON-STOREFRONT RETAIL CANNABIS BUSINESS AT 536 WEST MOUNTAIN VIEW AVENUE, SUITE B, AND MAKE A RECOMMENDATION TO THE CITY COUNCIL OF THE CITY OF LA HABRA REGARDING THE RELATED DEVELOPMENT AGREEMENT 22-03

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):

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.

RECOMMENDATION:

That the Planning Commission approve:

Conditional Use Permit
A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF LA HABRA APPROVING CONDITIONAL USE PERMIT 22-11 FOR A NON-STOREFRONT RETAIL CANNABIS BUSINESS AT 536 WEST MOUNTAIN VIEW AVENUE, SUITE B, MAKING THE APPROPRIATE FINDINGS, PER THE APPROVED PLANS AND SUBJECT TO THE 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 22-03 BETWEEN THE CITY OF LA HABRA AND JP420, LLC, FOR A NON-STOREFRONT RETAIL CANNABIS BUSINESS AT 536 WEST MOUNTAIN AVENUE, SUITE B, AS PER ATTACHMENT "A".

DISCUSSION:

The Applicant, JP420, LLC, is requesting approval of a Conditional Use Permit (CUP) and a Development Agreement (DA) to operate a non-storefront retail cannabis business on a property that has also been approved an active cannabis distribution business.  

The property is located on west Mountain View Avenue, west of South Walnut Street. The General Plan land use designation for the site is Light Industrial.  The property is within the Light Manufacturing (M-1) Zone, which implements the General Plan Light Industrial land use designation, and is within a Planned Unit Development (PUD) Overlay Zone.

 






















EXHIBIT 1
 
As indicated on Exhibit 2 below, the existing cannabis distribution business and proposed non-storefront retail cannabis business are located in the same building. The existing cannabis distribution business currently occupies Suite A and the proposed non-storefront retail cannabis business will occupy Suite B. 
 
 

EXHIBIT 2
The business will occupy approximately 997 square feet of space as shown on Exhibit 3 below. Floor area is reserved for a limited access reception area, management/security room, employee break room, unisex restroom, product packaging area, product storage vault, and hazardous waste storage area. A sally port will be constructed to allow delivery vehicles access into the building while enabling certain areas to maintain restricted access. This floor plan was intentionally designed for safety and security which is similar to other sensitive facilities such as police stations, detention facilities, or power plants. According to the project plans, the applicant would like to replace the non-operable roll-up doors along the north elevation with permanent walls. As these facade changes will be minor, staff expects to be able to handle the review administratively. Staff will ensure that said facade changes are compatible with the existing building and surrounding area. 
 

EXHIBIT 3

 
JP420, LLC will offer home delivery of dried cannabis flower and concentrates, cannabis infused edibles, topicals and CBD products. JP420 will also engage in the sale of accessories and supplies related to concentrate delivery methods, as permitted by State law. All cannabis products will be stored in a secured storage area. The facility will be staffed with up to seven employees. Staff will include a general manager, technology/operational manager, inventory manager, marketing director, receptionist/dispatch, order/dispatch and a delivery driver.  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 applicant will have a guard service conduct roving patrols to ensure on-going site security. Additionally, the applicant will install an electronic security system to regularly monitor the entire site and facility. The applicant has requested to operate the business from 8:00 a.m. to 10:00 p.m., seven days a week.   
 
The proposed non-storefront cannabis business will be situated on a property that is completely surrounded by various manufacturing and industrial uses. Since the proposed business will have similar operating characteristics of other manufacturing and industrial uses and the fact that this business will not be open to the public, it is anticipated that there will be minimal disruption to the overall area. As part of the JP420 business plan, the business operator will hire security staff that will follow safety and security protocols as needed. The business operator also intends to take proactive measures to reduce or eliminate nuisances including, but not limited to noise, odor, lighting, 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:
  • On November 8, 2016, the electorate of the State of California approved Proposition 64 (“Prop 64”) which enacted the Adult Use of Marijuana Act (“AUMA”) which allows adults 21 and over to use, possess, and cultivate limited amounts of marijuana, and creates a state licensing and regulatory scheme for marijuana businesses serving the recreational market. It also allows local jurisdictions to prohibit outdoor cultivation of marijuana for personal use, to regulate indoor cultivation of marijuana for personal use, and to prohibit all nonmedical and recreational marijuana businesses from locating and operating within their jurisdictions.
  • On April 16, 2018, the City added new regulations to the zoning code that allow for the establishment of commercial cannabis activity.
  • On November 3, 2020, Measure W was approved by the La Habra voters, which allowed a maximum of four non-storefront retail cannabis operations.
  • On December 21, 2020, the City Council adopted the zoning requirements in Chapter 18.22 of the LHMC (see Attachment 8) that are necessary to regulate cannabis non-storefront retail facilities, in compliance with the Cannabis Laws allowed by the California Bureau of Cannabis Control per a Type 9 Non-Storefront Retailer (Delivery Only) License. Chapter 18.22 permits the use, subject to the approval of a CUP and DA.
     
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 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 JP420, LLC met the minimum criteria and therefore, allowed them to submit their request for approval of CUP 22-11 and DA 22-03.
 
ANALYSIS
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 Development Agreement (DA) with the City. 

Conditional Use Permit
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 situated within an area designated for manufacturing and industrial uses. The proposed cannabis business will be pre-dominantly surrounded by existing manufacturing and light industrial uses to the north, east, south and west.  
 
On a routine business day, the proposed business will have about 10 employees. The applicant expects that up to seven employees will need to utilize seven on-site parking spaces. It is also expected that delivery drivers will utilize an additional three on-site parking spaces. Conditions of approval have been placed on the use pursuant to the standards set forth in Chapter 18.22 (LHMC). These conditions were created 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 comparable to the existing surrounding industrial activity whereby vehicles are already 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 M-1 Zone with the approval of a Conditional Use Permit, granted by the Planning Commission. After reviewing CUP 22-11, staff determined that the proposed non-storefront retail cannabis business operations conforms with the development standards and requirements of the M-1 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 use 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 Light Industrial, which envisions business park or industrial uses.  The property is within the M-1 Zone with a Planned Unit Development (PUD) Overlay Zone, which is consistent with the General Plan. These zoning standards were utilized when the current site 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 by 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 15 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 completely surrounded by other various manufacturing and industrial uses.  The operation itself, is consistent with industrial type businesses, which are typical for the M-1 zone.  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 22-11 for a non-storefront retail cannabis business and that it recommend that the City Council adopt an ordinance approving Development Agreement 22-03 for the property at 536 West Mountain View Avenue, subject to the findings and conditions in the attached resolutions.

FISCAL IMPACT/SOURCE OF FUNDING:

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.

NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM (NPDES):

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.                             

GENERAL PLAN RELEVANCE:

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

Attachments