The Ceres Planning Commission received its second glimpse of a proposed overhaul of the city’s cannabis business regulations Monday. The move is designed to strengthen the city’s enforcement authority and provide tools for taking decisive action against cannabis operators who fail to pay the city fees that are owed and who violate city regulations or state law.
Currently the city uses developer agreements and cannabis business permits whereby the dealer or manufacturer pays the city a “public benefit” fee. Over the years those businesses have struggled to make payments. The enforcement provisions of the proposed cannabis CUP framework are centered on the city’s ability to revoke a permit when necessary or enact fines.
The city has also found some cannabis related businesses in violation of local and state laws.
Currently, the Ceres Municipal Code calls for any cannabis business wishing to operate in Ceres to sign a development agreement, essentially a contract with the city that spells out the obligations and duties and responsibilities, and pay a “public benefit” fee to the city to offset their impact to the community. In some cases, businesses are in arrears in making payments to the city as required in their developer agreements.
Sales at licensed cannabis dealers are down due to the competition resulting from a proliferation of outlets. Also hurting legitimate cannabis shops is the black market – including some smoke shops illegally selling marijuana products – which sell product at cheaper prices.
In September the Ceres City Council signaled it is open to a flat tax on cannabis instead of developer agreement fees which have been steep to pay. Members appeared open to a four percent tax rate for retailers but smaller tax rates on manufacturing, distribution and testing.
Under the provisions of the proposed Chapter 5.22, the city is authorized to inspect all cannabis business premises to verify compliance with the Municipal Code, applicable state laws, and any conditions of approval imposed through the cannabis Condition Use Permit (CUP) or development agreement. This inspection authority enhances the city’s ability to proactively monitor operations, ensure ongoing compliance, and take prompt corrective action when violations are identified.
Changes mean the cannabis business will have to apply for a cannabis conditional use permit (CUP) to fill the current void of not have to seek a CUP which the Planning Commission can review and either reject or approve. Commissioners will have access to background checks, indemnification agreements, and the fee agreements.
The city will be requiring cannabis businesses to:
• Maintain all state and local licenses;
• Comply with state law;
• Pay taxes that are due.
City Attorney Thomas Reminger said the city will have the right to revoke those permits when there are violations.
“That’s what we’ve been working on – an eye towards is enforcement and really being able to bring enforcement actions in all situations because it can be pretty difficult if you have ambiguity in the code,” said Reminger.
The new ordinance will create two steps before the city revokes a permit and shuts down a cannabis business. The first is administrative citations, such as a monetary fine to attempt to get compliance and the second step would be a temporary suspension.
Cannabis businesses are currently restricted to industrial or Planned Community (PC) zones. Meanwhile the City Council may determine a limit on cannabis type of businesses this year.
Citizen John Warren said he is supportive of the ordinance changes, saying, “I think it’s something that is needed. I know the cannabis folks in this community owe the city well over a million dollars that hasn’t been collected in the fees that they’re supposed to be paying and enforcement is difficult. And so I think this is the type of thing that will strengthen that.”
Warren wanted to know if residential uses are in some PC zones and when told they can be, asked that cannabis businesses be excluded from operating there.
He also took issue with the requirement that surveillance video recordings be maintained for a minimum 90 days, saying they should be retained for years. Reminger noted that 90 days seems reasonable given that is the state minimum and little enforcement action has involved those surveillance videos.
Chairman Gary M. Condit also expressed concerns about allowing cannabis operations in PC zones. He was told if they were excluded then the two existing cannabis businesses would be non-conforming uses and grandfathered in. Both existing cannabis businesses meet the state requirement of being at least 600 feet from a residential building and 1,000 feet away from schools and playgrounds, said Reminger.
“The issue with the Planned Community,” said Reminger, “is that there’s a lot of appropriate areas and there’s also some inappropriate areas. So with the conditional use permit, the Planning Commission will be able to site those and will be able to use its discretion in permitting it in a specific location within.”
The commission passed the ordinance changes in a 4-0 vote. Absent was Commissioner R.J. Jammu.
The meeting was the first for new commissioners Francisco Mireles and Robert Gobble.
