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Public Hearings
Item No. 1.
| MEETING DATE: 04/20/2026 |
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| TO: | HONORABLE MAYOR AND COUNCILMEMBERS |
| FROM: | JIM SADRO, CITY MANAGER By: Susan Kim, Director of Community & Economic Development |
| SUBJECT: | DULY NOTICED PUBLIC HEARING TO CONSIDER TERMINATION OF DEVELOPMENT AGREEMENT NO. 22-03 WITH JP420, LLC, FOR A NON-STOREFRONT RETAIL CANNABIS BUSINESS THAT NEVER COMMENCED OPERATIONS AT 536 WEST MOUNTAIN VIEW AVENUE, SUITE B
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RECOMMENDATION:
That the City Council: CONSIDER, APPROVE AND ADOPT THE FIRST READING OF ORDINANCE NO. CC 2026-___ ENTITLED: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LA HABRA, CALIFORNIA, FINDING THAT THIS ORDINANCE IS EXEMPT FROM REVIEW UNDER THE CALIFORNIA ENVIRONMENTAL QUALITY ACT AND TERMINATING DEVELOPMENT AGREEMENT 22-03 BETWEEN THE CITY OF LA HABRA AND JP420, LLC FOR A NON-STOREFRONT RETAIL CANNABIS BUSINESS THAT NEVER COMMENCED OPERATIONS AT 536 WEST MOUNTAIN VIEW AVENUE, SUITE B.
DISCUSSION:
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”), to be codified in various sections of the California Health and Safety Code and California Business and Professions Code. The AUMA allows adults ages 21 and over to use, possess, and cultivate limited amounts of marijuana, and establishes a state licensing and regulatory framework for marijuana businesses serving the recreational market. The AUMA 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 non-medical and recreational marijuana businesses from locating and operating within their jurisdictions.
In compliance with State law, between April 2, 2018, and December 21, 2020, the City Council adopted a series of ordinances repealing Section 18.08.140 (Cultivation of Marijuana Prohibited) of Chapter 18.08 (General Regulations) of Title 18 (Zoning) of the La Habra Muncipal Code (LHMC or Code), and adding and amending Zoning Code Chapter 18.22 (Commercial Cannabis Activity) to provide regulations for commercial cannabis distribution businesses (warehouse operations), cannabis testing laboratories and non-storefront retail cannabis businesses (direct to customer delivery). Each type of cannabis business is limited to a maximum of four licenses to operate in the City, subject to successfully navigating the application/background review process and receiving City Council approval of a Development Agreement (DA). Zoning Code Chapter 18.22 (Commercial Cannabis Activity) is provided as Attachment 2.
The City Council has approved DAs for the operation of three distribution businesses and four non-storefront retail businesses. However, two of the DAs for distribution (River Distribution Company and Pinnacle Wellness Group, LLC) have been terminated, leaving only one currently in operation (Canna America). Of the four DAs approved for non-storefront retail operations only one, On Deck Delivery, is currently operational; Essential Roots is revising plans to complete the plan check process, Shryne Group has a separate public hearing for its termination scheduled for this City Council meeting, and JP420, LLC is the subject of this staff report. More detailed information about these licenses is provided in Attachment 3.
On August 15, 2022, the City Council adopted Ordinance No. 1845, approving DA 22-03 between the City and JP420, LLC for the operation of a Non-Storefront Retail cannabis facility at 536 West Mountain View Avenue, Suite B (see Attachment 4). This DA was approved for a five-year term, scheduled to expire on August 15, 2027.
The rules for amending or terminating DAs are governed by state law. California Government Code section 65868 provides that an agreement may be amended or canceled by mutual consent, or through the City's periodic review process. Government Code section 65867 requires that a public hearing be held, and an ordinance be adopted to formally terminate a DA.
JP420, LLC has failed to comply with the terms of DA 22-03 and Chapter 18.22 of the Municipal Code as follows:
In compliance with State law, between April 2, 2018, and December 21, 2020, the City Council adopted a series of ordinances repealing Section 18.08.140 (Cultivation of Marijuana Prohibited) of Chapter 18.08 (General Regulations) of Title 18 (Zoning) of the La Habra Muncipal Code (LHMC or Code), and adding and amending Zoning Code Chapter 18.22 (Commercial Cannabis Activity) to provide regulations for commercial cannabis distribution businesses (warehouse operations), cannabis testing laboratories and non-storefront retail cannabis businesses (direct to customer delivery). Each type of cannabis business is limited to a maximum of four licenses to operate in the City, subject to successfully navigating the application/background review process and receiving City Council approval of a Development Agreement (DA). Zoning Code Chapter 18.22 (Commercial Cannabis Activity) is provided as Attachment 2.
The City Council has approved DAs for the operation of three distribution businesses and four non-storefront retail businesses. However, two of the DAs for distribution (River Distribution Company and Pinnacle Wellness Group, LLC) have been terminated, leaving only one currently in operation (Canna America). Of the four DAs approved for non-storefront retail operations only one, On Deck Delivery, is currently operational; Essential Roots is revising plans to complete the plan check process, Shryne Group has a separate public hearing for its termination scheduled for this City Council meeting, and JP420, LLC is the subject of this staff report. More detailed information about these licenses is provided in Attachment 3.
On August 15, 2022, the City Council adopted Ordinance No. 1845, approving DA 22-03 between the City and JP420, LLC for the operation of a Non-Storefront Retail cannabis facility at 536 West Mountain View Avenue, Suite B (see Attachment 4). This DA was approved for a five-year term, scheduled to expire on August 15, 2027.
The rules for amending or terminating DAs are governed by state law. California Government Code section 65868 provides that an agreement may be amended or canceled by mutual consent, or through the City's periodic review process. Government Code section 65867 requires that a public hearing be held, and an ordinance be adopted to formally terminate a DA.
JP420, LLC has failed to comply with the terms of DA 22-03 and Chapter 18.22 of the Municipal Code as follows:
- Failure to Commence Operations: JP420, LLC failed to pay the required permit fees, resulting in the plan check for the tenant improvements expiring. JP420, LLC has stated that the business is not operational, and despite being notified in July 2023 that the permit was ready to issue, no further action has been taken to move forward with the buildout or commence business operations.
- Sale of the Property and New Use: Staff has determined that the property located at 536 West Mountain View Avenue has been sold to a new owner, German Ramirez, who is currently operating a non-cannabis business, National Offset Warehouse (a printing equipment and parts supplier), from the site.
- Violation of Agreement: Section 8.3 of Development Agreement 22-03 explicitly states: "If Developer changes the location of the non-storefront retail facility to a location other than the Site, this Agreement shall become null and void." The sale of the property and commencement of a new, non-cannabis commercial use by the new owner confirms that JP420, LLC can no longer perform the required activities at the Site, rendering the Agreement null and void.
Therefore, staff recommends that the City Council, following a duly noticed public hearing, introduce an ordinance to officially terminate DA 22-03 due to the Developer's lack of good faith compliance and the subsequent sale and change of use of the subject property.
FISCAL IMPACT/SOURCE OF FUNDING:
Section 14.1 of Development Agreement 22-03 requires JP420, LLC to pay the City a Community Benefit Payment of 0.5% on all gross receipts attributable to the Site, commencing within fifteen (15) days after the facility begins operations. Since the facility never commenced operations, the City has not received any Community Benefit Payments.
Furthermore, there is no fee adopted for the termination of a Development Agreement. Therefore, the associated costs for processing this termination are absorbed by the Community and Economic Development Department's General Fund budget.
Furthermore, there is no fee adopted for the termination of a Development Agreement. Therefore, the associated costs for processing this termination are absorbed by the Community and Economic Development Department's General Fund budget.
GENERAL PLAN RELEVANCE/CITY COUNCIL GOALS & OBJECTIVES:
The recommended action is consistent with the following goals of the La Habra General Plan:
- LU 11.1: Diversity of Uses. Provide for and encourage the development of a broad range of uses in La Habra's commercial centers and corridors that reduce the need to travel to adjoining communities, and capture a greater share of local spending.
- ED 1.1: Consumer Demand. Explore opportunities to increase the competitive role of the City's retail sector to serve both the community and larger base of consumers in surrounding communities.
- Goal 5: Development Activity and Business Assistance
- Objective D: Continue to improve the City's business retention and expansion program.
- Objective E: Continue to evaluate and improve the City's development review process and continue to foster a "business friendly" environment within all City departments.
Attachments
- Draft Ordinance
- Chapter 18.22 (Commercial Cannabis Activity)
- Cannabis License Status
- Development Agreement 22-03 (JP420, LLC)
- Legal Notice