Cudahy Municipal Code Ch. 5.20 Cannabis Production Permitting and Regulation

The intent and purpose of this chapter is to regulate commercial cannabis production activity (as defined in CMC 5.20.020)in accordance with state law (as defined in CMC 5.20.020) to promote the health, safety, morals, and general welfare of the residents and businesses within the city. The city is authorized to regulate this activity pursuant to state law, including, but not limited to, MAUCRSA. The goals of this regulation for commercial cannabis production activity include:

(1) To comply with the goals and guidance set forth in the Cole Memo.

(2) To minimize the size of the illegal market for cannabis in the city and the surrounding regions.

(3) To create jobs, revenue, and economic growth for the city and its residents.

(4) To enable law enforcement and regulators to have sufficient rights to inspect and audit cannabis permittees and take expeditious action against cannabis permittees who violate the requirements of this chapter.

(5) To minimize social harms which may arise from cannabis including youth consumption or intoxicated driving.

(6) To regulate the manner of advertising and location of cannabis permittees such that public nuisance is minimized. (Ord. 730 § 8, 2022).

For purposes of this chapter, the following definitions shall apply, unless the context clearly indicates otherwise:

(1) “Applicant” means an owner seeking a cannabis permit pursuant to this chapter.

(2) “Cannabis” means all parts of the plant Cannabis sativa Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. “Cannabis” also means the separated resin, whether crude or purified, obtained from cannabis. “Cannabis” also means marijuana as defined by Section 11018 of the California Health and Safety Code, as enacted by Chapter 14017 of the Statutes of 1972. “Cannabis” does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of the plant which is incapable of germination. For the purpose of this chapter, “cannabis” does not mean industrial hemp as that term is defined by Section 81000 of the California Food and Agricultural Code or Section 11018.5 of the California Health and Safety Code.

(3) “Cannabis permit” means a permit issued by the city to conduct a commercial cannabis production activity, including, but not limited to, a cultivation permit, distribution permit, manufacturing permit, microbusiness permit, or testing.

(4) “Cannabis permittee” means a person who holds a cannabis permit.

(5) “Cannabis product” means cannabis that has undergone a process whereby the plant material has been transformed into a concentrate, or other cannabis derivative, including, but not limited to, concentrated cannabis, or an edible or topical product containing cannabis or concentrated cannabis and other ingredients.

(6) “City” shall mean the city of Cudahy.

(7) “City code” means the city of Cudahy Municipal Code.

(8) “City manager” means the city manager of the city of Cudahy.

(9) “Cole Memo” means the August 29, 2013, United States Department of Justice memorandum offering guidance on federal enforcement priorities regarding cannabis.

(10) “Commercial cannabis activity(ies)” means the cultivation, possession, manufacture, distribution, processing, storing, laboratory testing, packaging, labeling, transportation, delivery or sale of cannabis and/or cannabis products.

(11) “Commercial cannabis production activity” means all forms of commercial cannabis activity except delivery, dispensing, and retail sale(s). “Delivery,” “dispensing,” and “retail sale(s)” are defined in the C definitions section of CMC 20.88.040.

(12) “Cultivation” means any activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of cannabis.

(13) “Cultivation permit” means a cannabis permit for the indoor cultivation of cannabis in accordance with the terms and conditions of this chapter and the development agreement for the applicable cannabis permit issued to the particular cultivation permittee.

(14) “Cultivation permittee” means an applicant who has applied for and has been issued a cultivation permit by the city pursuant to the terms and conditions of this chapter.

(15) “Day care center” means any child day care facility other than a family day care home, and includes infant centers, preschools, extended day care facilities, and school-age child care centers.

(16) “Development agreement” means an agreement adopted pursuant to the Development Agreement Law (Government Code Section 65864 et seq.) and Chapter 20.28 CMC (Development Agreements), which provides agreed-upon community benefits to the city.

(17) “Distribution” means the procurement, sale, and transport of cannabis and cannabis products between persons authorized to engage in permitted commercial cannabis activities.

(18) “Distribution permit” means, with respect to a distribution permittee, a cannabis permit for distribution in accordance with the terms and conditions of this chapter and the development agreement for the applicable cannabis permit issued to such distribution permittee.

(19) “Distribution permittee” means a person that has been issued a distribution permit by the city pursuant to the terms and conditions of this chapter.

(20) “Fully enclosed and secure structure” means a space within a building or other structure which has a complete roof enclosure supported by connecting walls extending from the ground to the roof, which is reasonably secure against unauthorized entry, provides complete visual screening or is behind fencing or other features providing complete visual screening, and which is accessible only through one or more lockable doors and is inaccessible to minors.

(21) “Good cause,” for purposes of refusing or denying a cannabis permit, for revoking a cannabis permit, or for refusing or denying a cannabis permit renewal or reinstatement, means: (a) the applicant has not obtained approval by the city council of a development agreement setting forth the general terms for the operation of commercial cannabis production activity or breaches a term or terms of a development agreement approved by the city council pursuant to this chapter; (b) the applicant or cannabis permittee has violated the terms, conditions, or provisions of this chapter, of state law, of any regulations or rules promulgated pursuant to state law or this chapter, any applicable local rules, regulations, or conditions placed upon its state license or cannabis permit; (c) the licensed premises have been operated in a manner that adversely affects the public health, safety, or welfare or the safety of the immediate neighborhood in which the commercial cannabis production activity is being conducted; (d) the applicant or cannabis permittee has knowingly made false statements, misrepresentations, or material omissions on an application form, renewal form, or other document submitted to the city; (e) the applicant or cannabis permittee’s criminal history does not indicate that the applicant or cannabis permittee is of good moral character or the applicant or cannabis permittee has been convicted of an offense that is substantially related to the qualifications, functions, or duties of the applicant or cannabis permittee. However, if the city has issued a cannabis permit to the applicant or cannabis permittee, the city shall not consider any criminal history of the applicant or cannabis permittee that was disclosed to or discovered by the city prior to issuance of the cannabis permit and is confirmed by the applicant or cannabis permittee. For any criminal history that was not disclosed to or discovered by the city prior to issuance of a cannabis permit, or that arose after the issuance of the cannabis permit, the city shall conduct a thorough review of the nature of the crime, conviction, circumstances, and evidence of rehabilitation of the applicant or cannabis permittee, and shall evaluate the suitability of the applicant or cannabis permittee based upon such review. In determining which offenses are substantially related to the qualifications, functions, or duties of the applicant or cannabis permittee, the city shall consider factors set forth in Business and Professions Code Section 26057; (f) the applicant or cannabis permittee is employing or allowing to volunteer any person whose criminal history indicates that such person is not of good moral character; (g) the applicant or cannabis permittee fails to allow inspection by city officials of the security recordings, activity logs, business records, or other accessible records pertaining to the activities conducted on the applicable premises; or (h) the applicant or cannabis permittee allows for physician services to be conducted on the applicable premises.

(22) “Good moral character” means having a personal history that demonstrates the propensity to serve the public in a manner that reflects openness, honesty, fairness, and respect for the law and rights and well-being of others. In determining good moral character, the following standards shall apply: (a) a judgment of guilt in a criminal prosecution or a judgment in a civil action shall not be used, in and of itself, as proof of an individual’s lack of good moral character. Such judgment, however, may be used as evidence in the determination and, when so used, the individual shall be notified and shall be permitted to rebut the evidence by showing that, at the current time, he or she has the ability to, and is likely to, serve the public, in a fair, honest, and open manner, that he or she is rehabilitated, and/or that the substance of the former offense is not substantially related to the applicable commercial cannabis production activity; and (b) a prior conviction where the sentence, including any term of probation, incarceration, or supervised release is completed for the possession, possession for sale, sale, manufacture, transportation, or cultivation of a controlled substance, is not considered substantially related, and shall not be the sole ground for denial of a cannabis permit, except that any of the convictions set forth in Business and Professions Code Section 26057(b)(4)), as may be amended, shall be deemed substantially related to applicable commercial cannabis production activity.

(23) “Health and Safety Code” means the California Health and Safety Code, as amended from time to time.

(24) “Indoor” means within a fully enclosed and secure structure.

(25) “Manufacture” or “manufacturing” means to compound, blend, extract, infuse, or otherwise make or prepare a cannabis product from such blends, extractions, or infusions.

(26) “Manufacturing permit” means a cannabis permit to manufacture in accordance with the terms and conditions of this chapter and the conditions of approval for the applicable cannabis permit issued to the particular manufacturing permittee.

(27) “Manufacturing permittee” means a person that has been issued a manufacturing permit by the city pursuant to the terms and conditions of this chapter.

(28) “Medicinal permittee” means a person who is issued a cannabis permit to engage in commercial cannabis production activity with respect to medicinal cannabis in accordance with applicable city law and state law, including MAUCRSA.

(29) “Microbusiness” means a commercial medicinal cannabis business facility of cultivation of medicinal cannabis on areas less than 10,000 square feet and also acts as a licensed distributor, manufacturer, and delivery-only retailer, pursuant to state law, including MAUCRSA. Microbusinesses shall not be open to the public for point-of-sale retail cannabis sales.

(30) “Microbusiness permit” means a cannabis permit to establish and conduct a microbusiness in accordance with the terms and conditions of this chapter and the conditions of the development agreement for the applicable cannabis permit issued to the particular microbusiness permittee.

(31) “Microbusiness permittee” means a person who has been issued a microbusiness permit by the city pursuant to the terms and conditions of this chapter.

(32) “Outdoors” means any location within the city that is not within a fully enclosed and secure structure.

(33) “Owner” means any of the following: (a) a person with an aggregate ownership interest of 20 percent or more in the person applying for a cannabis permit, unless the interest is solely a security, lien, or encumbrance; (b) the chief executive officer of a nonprofit or other entity; (c) a member of the boards of directors of a nonprofit; (d) an individual who will be participating in the direction, control, or management of the person applying for a cannabis permit.

(34) “Permit zone” means, with respect to a person holding a cannabis permit, the overlay zone described in Chapter 20.12 CMC where such cannabis permit type is permitted to operate pursuant to a development agreement with the city.

(35) “Person” includes any individual, entity, firm, copartnership, joint venture, association, corporation, limited liability company, estate, trust, business trust, receiver, syndicate, or any other group or combination acting as a unit, and the plural as well as the singular.

(36) “Physician services” means the consultation by a state-licensed physician of a patient with the possible recommendation by such physician of medicinal cannabis for such patient.

(37) “Premises” means the designated structure or structures and land specified in the application that is owned, leased, or otherwise held under the control of the cannabis permittee applicant or cannabis permittee where the commercial cannabis production activity will be or is conducted. The premises shall be a contiguous area and shall only be occupied by one cannabis permittee.

(38) “Retail delivery” means the commercial transfer or delivery of cannabis or cannabis products to a customer, patient, primary caregiver or cannabis permittee.

(39) “Retail delivery establishment” means a location where cannabis or cannabis products are, either individually or in any combination, delivered pursuant to state law, including MAUCRSA.

(40) “Retail delivery permit” means a cannabis permit to deliver cannabis and cannabis products to customers, patients, and primary caregivers in accordance with the terms and conditions of this chapter and the conditions of the development agreement for the applicable cannabis permit issued to the particular retail delivery permittee.

(41) “Retail delivery permittee” means a person that has been issued a retail delivery permit by the city pursuant to the terms and conditions of this chapter.

(42) “State” means the state of California.

(43) “State law” means all laws of the state of California, including, but not limited to, all rules and regulations adopted by state agencies and state regulatory entities, including subsequent amendments to such laws, rules, and regulations.

(44) “State medicinal license” means a state license for medicinal commercial cannabis production activities issued pursuant to state law.

(45) “Testing” means the activities conducted by a testing laboratory.

(46) “Testing laboratory” means an accredited laboratory, facility, or entity in the city that offers or performs tests of medicinal cannabis or medicinal cannabis products in accordance with state law and city law.

(47) “Testing permit” means a cannabis permit for testing the quality and makeup of cannabis and cannabis products pursuant to the terms and conditions of this chapter and the conditions of the development agreement for the applicable cannabis permit issued to the particular testing permittee.

(48) “Testing permittee” means a person who has been issued a testing permit by the city pursuant to the terms and conditions of this chapter.

(49) “Volatile solvent” means a Class I flammable liquid as defined by the National Fire Protection Association, including butane and propane.

(50) “Youth center” means any public or private facility that is primarily used to host recreational or social activities for minors, including, but not limited to, private youth membership organizations or clubs, social service teenage club facilities, video arcades, or similar amusement park facilities. (Ord. 730 § 9-15, 23, 24, 2022; Ord. 673 § 9, 2017).

All commercial cannabis production activity within the city is prohibited except as permitted by this chapter. (Ord. 730 § 16, 2022).

Medicinal commercial cannabis production activities shall be allowed within the area set forth in the overlay zone/permit area, illustrated in Exhibit “A” of the ordinance codified in this chapter, pursuant to a development agreement adopted in accordance with the Development Agreement Law (Government Code Section 65864 et seq.) and Chapter 20.28 CMC (Mixed Use Zones). No such activities shall be permitted without a development agreement within or outside of the boundaries of such overlay zone. The city may approve or deny such a development agreement in its sole and absolute discretion. The city manager is authorized to develop and promulgate policies and procedures consistent with the intent and spirit of this chapter concerning the applications and application process, including, but not limited to, the information required of applicants, and application review procedures, which shall inform the administration and protocols to be used and followed by the city in the application and hearing processes. (Ord. 730 § 17, 2022).

Commercial cannabis production activity within the city shall be in conformance with the standards set forth in this section, in addition to those additional standards that may be imposed through a negotiated development agreement. The city manager is hereby authorized to formulate and impose additional business requirements applicable to cannabis permittees in furtherance of the public health, safety, and/or welfare.

(1) Commercial cannabis production activity shall only be allowed upon application and issuance of a cannabis permit and a development agreement by the city in accordance with the criteria and process set forth in this chapter and city code.

(2) Zoning and Land Use.

(a) Operation Near Schools, Day Cares, Youth Centers, and Places of Religious Assembly. Following the enactment of this chapter, no new premises shall be established, developed, or operated within 600 feet of a day care center, youth center, or public or private school providing instruction in kindergarten or any grades one through 12 that is in existence at the time the cannabis permit is issued. All distances shall be measured in a straight line, without regard to intervening structures, from the nearest point of the building or structure in which the premises are, or will be, located to the nearest property line of those uses described in this subsection. The restrictions set forth in this subsection shall not apply to premises which operate within 600 feet of any day care center, youth center, place of religious assembly, or public or private school providing instruction in kindergarten or any grades one through 12, if such premises existed prior to the establishment of the applicable day care center, youth center, or school that is located within 600 feet of such premises.

(b) Co-Location. All commercial cannabis production activity shall fully comply with all mandates set forth in state law. To the extent not prohibited under state law, a cannabis permittee may be located within the same unit of the same premises or building, facility or real property parcel as another cannabis permittee.

(c) Development Agreement.

(i) Prior to commencing operations, all cannabis permittees shall enter into a development agreement with the city.

(ii) All premises shall be operated in accordance with the terms of the applicable development agreement for the specified parcel of real property (or subportion thereof) upon which the premises is located.

(iii) Except as specified, commercial cannabis production activities shall not exceed the square footage authorized pursuant to the applicable development agreement.

(iv) All premises shall be located in the permit zone pursuant to the applicable development agreement.

(3) Commercial cannabis production activity is allowed only within fully enclosed and secure structures that are inaccessible to minors.

(4) Signage for any business must be applied for through the city’s planning division, which shall require review and approval prior to installation. Business identification signage shall be limited to that needed for identification only, and shall not contain any logos or information that identifies, advertises, or lists the services or the products offered. No cannabis permittee shall advertise by having a person holding a sign and advertising the business to passersby, whether such person is on the premises of the cannabis permittee or elsewhere, including, but not limited to, the public right-of-way.

(5) From any public right-of-way, there shall be no visible evidence of the consumption of any cannabis products. Commercial cannabis production activity shall not adversely affect the health or safety of the nearby residents by creating dust, glare, heat, noise, smoke, traffic, vibration, odor or other impacts, and shall not be hazardous due to use or storage of materials, processes, products, or wastes.

(6) Hours of operation limits, if any, shall be specified in terms mutually agreed upon in a development agreement.

(7) All cannabis and cannabis products shall be kept in a secured manner during all business and nonbusiness hours.

(8) All commercial cannabis production activities shall operate within premises that are compliant with all applicable state laws and local laws.

(9) Cannabis permittees must pay all applicable taxes pursuant to all federal, state, and local laws, including, but not limited to, fees relating to infrastructure improvements within the permit zone.

(10) Cannabis permittees shall provide sufficient odor-absorbing ventilation and exhaust systems so that odors outside the applicable premises are not a nuisance on any adjacent property or public right-of-way. Any violation of this section shall be remedied within 30 days of the cannabis permittee receiving notice of such violation.

(11) Cannabis permittees shall utilize product and inventory tracking software and accounting software that is consistent with reasonable business practices within the industry and the seed-to-sale tracking software being developed by the state.

(12) Except permitted in this chapter, on-site smoking, ingestion, or consumption of cannabis or cannabis products shall be prohibited on premises. Except to the extent otherwise permitted pursuant to this chapter, the entrance of the premises shall be clearly and legibly posted with a notice indicating that smoking, ingesting, or consuming cannabis, cannabis products or alcohol on such premises is prohibited.

(13) Signage for all premises shall be in compliance with the city’s sign code and application for all signs must be submitted to the city’s planning division and comply with its sign-permitting protocol.

(14) Alcoholic beverages and tobacco shall not be sold, stored, distributed, or consumed on the premises. Cannabis permittees shall not hold or maintain a license from the State Department of Alcohol Beverage Control to sell alcoholic beverages, or operate a business that sells alcoholic beverages or tobacco with respect to the premises. In addition, alcohol shall not be provided, stored, kept, located, sold, dispensed, or used on the premises.

(15) Physician services shall not be provided at any premises.

(16) The premises shall fully comply with all applicable rules, regulations, and laws, including, but not limited to, zoning and building city codes, the city’s business license ordinances, the Revenue and Taxation Code, the Americans with Disabilities Act, and MAUCRSA.

(17) Each cannabis permittee shall provide the city manager, or the city manager’s designee, with the name, phone number, facsimile number, and email address of an on-site representative of such cannabis permittee to whom the city and the public can provide notice if there are any operational problems associated with such cannabis permittee’s premises. Each cannabis permittee shall make reasonable and good faith efforts to encourage residents and the public to call this representative to resolve any operational problems before any calls or complaints are made to the city or law enforcement.

(18) All cannabis permittees must comply with the following security requirements:

(a) General Security Requirements.

(i) Security cameras shall be installed and maintained in good working condition and used in a format approved by the city manager. The cameras shall be in use 24 hours per day, seven days per week. The areas to be covered by the security cameras include areas as determined by the city manager, including, but not limited to, the area in which the primary commercial cannabis production activity occurs (e.g., the cultivation area for a cultivator).

(ii) The premises shall be armed with a reliable commercial alarm system that is operated and monitored by a security company or alarm business in a manner satisfactory to the city manager.

(iii) Entrance to any storage areas shall be locked at all times and under the control of staff of the cannabis permittee.

(iv) The business entrance(s) and all window areas shall be illuminated during evening hours. The applicant shall comply with the city’s lighting standards regarding fixture type, wattage, illumination levels, shielding, etc., and secure the necessary approvals and permits, as necessary.

(v) All windows on the premises shall be appropriately secured with all cannabis and cannabis products securely stored.

(vi) Each cannabis permittee shall implement track and trace protocols, as noted above in this section, in order to prevent diversion of cannabis or cannabis products.

(vii) All waste and disposal containers shall be locked at all times and stored in a secure area and, at all times, under the control of the cannabis permittee.

(b) Security Alarm Systems – Minimum Requirements.

(i) Each premises shall have a security alarm system installed by a licensed alarm company on all perimeter entry points and perimeter windows.

(ii) Each premises must ensure that its location is continuously monitored. Premises may engage the services of outside vendors to fulfill this requirement, such as a private security firm.

(iii) Each premises shall maintain up-to-date and current records and existing contracts on the premises that describe the location and operation of each security alarm system, a schematic of security zones, the name of the licensed alarm company, and the name of any vendor monitoring the premises.

(c) Lock Standards. At a minimum, all points of ingress and egress shall be secured with commercial-grade, nonresidential door locks.

(d) Video Surveillance Requirements.

(i) Prior to exercising the privileges of a cannabis permit issued under this chapter, an applicant must install fully operational video surveillance and camera recording system. The recording system must record in digital format and meet the requirements outlined herein.

(ii) All video surveillance records and recordings must be stored in a secure area that is only accessible to the management staff of the cannabis permittee.

(iii) Video surveillance records and recordings must be made available upon request to the city manager or designee for a purpose authorized by this chapter or for any other state or local law enforcement purpose.

(iv) Video surveillance shall be held in confidence by all employees and representatives of the city manager, except that the city manager may provide such records and recordings to any state or local law enforcement agency for any purpose authorized under this chapter for any state or local law enforcement purpose.

(v) A sign shall be posted in a conspicuous place near each point of public access, which shall not be less than 12 inches wide and 12 inches long, composed of letters not less than one inch in height, stating “All Activities Monitored by Video Camera” or “These Premises Are Being Digitally Recorded” or otherwise advising all persons entering the premises that a video surveillance and camera recording system is in operation and recording all activity as provided in this section.

(vi) The premises shall utilize video surveillance equipment and a camera system that shall be remotely accessible by the city and Los Angeles County sheriff’s department.

(e) Video Surveillance Equipment.

(i) Video surveillance equipment shall, at a minimum, consist of digital or network video recorders, cameras capable of meeting the recording requirements described in this section, video monitors, digital archiving devices, and a color printer capable of delivering still photos.

(ii) All video surveillance systems must be equipped with a failure notification system that provides prompt notification to a cannabis permittee of any prolonged surveillance equipment interruption and/or the complete failure of the surveillance.

(iii) Cannabis permittees are responsible for ensuring that all surveillance equipment is properly functioning and maintained so that the playback quality is suitable for viewing and the surveillance equipment is capturing the identity of all individuals and activities in the monitored premises.

(iv) All video surveillance equipment shall have sufficient battery backup to support a minimum of four hours of recording in the event of a power outage.

(f) Placement of Cameras and Required Camera Coverage.

(i) Camera placement shall be capable of identifying activity occurring within 20 feet of all points of ingress and egress and shall allow for the clear and certain identification of any individual and activities on the premises.

(ii) All entrances and exits to the premises shall be recorded from both indoor and outdoor vantage points.

(iii) The system shall be capable of recording all predetermined surveillance areas in any lighting conditions. If the premises has a medicinal cannabis cultivation area, a rotating schedule of lighted conditions and zero-illumination can occur as long as ingress and egress points to those areas remain constantly illuminated for recording purposes.

(iv) Areas where medicinal cannabis is grown, tested, cured, manufactured, or stored shall have a camera placed in the room facing the primary entry door at a height that will provide a clear, unobstructed view of activity without sight blockage from lighting hoods, fixtures, or other equipment.

(v) Cameras shall also be placed at each location where weighing, packaging, preparation, tagging activities or other distribution preparation activities occur.

(vi) At least one camera must be dedicated to record the access points to the secured surveillance recording area.

(g) Location and Maintenance of Surveillance Equipment.

(i) Surveillance recording equipment must be housed in a designated, locked, and secured room or other enclosure with access limited to authorized employees, the city manager or designee, Los Angeles County sheriff’s department, as authorized by this chapter, other state or local law enforcement purpose, and service personnel or contractors.

(ii) Premises must keep a current list of all authorized employees and service personnel who have access to the surveillance system and/or surveillance system room on the premises. Premises must keep a surveillance equipment activity log on the premises to record all service activity, including the identity of all individuals performing services on system service, the service date and time, and the reason for such service to the surveillance system.

(iii) Off-site monitoring and video recording storage of the premises by an independent third party may be authorized so long as standards exercised at the remote location meet or exceed all of the standards applicable to on-site monitoring.

(iv) Each premises located in a common or shared building must have a separate surveillance room/area that is dedicated to that specific premises. The facility that does not house the central surveillance room is required to have a review station, printer, and map of camera placement on the premises. All minimum requirements for equipment and security standards as set forth in this section apply to such review station.

(h) Video Recording Retention Requirements.

(i) All camera views of all recorded areas must be continuously recorded 24 hours a day.

(ii) All surveillance recordings must be kept for a minimum of 30 days and be in a format that can be easily accessed for viewing. Video recordings must be archived in a format that ensures authentication of the recording as legitimately captured video and guarantees that no alteration of the recorded image has taken place.

(iii) The surveillance system or equipment must have the capabilities to produce a color still photograph from any camera image, live or recorded, of the premises.

(iv) The date and time must be embedded on all surveillance recordings without significantly obscuring the picture.

(v) Time is to be measured in accordance with the official United States time established by the National Institute of Standards and Technology and the U.S. Naval Observatory at www.time.gov.

(vi) After the 30-day surveillance retention schedule has lapsed, surveillance video recordings must be erased or destroyed prior to being discarded or disposed of for any other purpose. Surveillance video recordings shall not be destroyed if the cannabis permittee knows or should have known of a pending criminal, civil, or administrative investigation or any other proceedings for which the recording may contain relevant information.

(i) Other Records. All records applicable to the surveillance system and cannabis tracking system shall be maintained on the premises. At a minimum, premises shall maintain a map of the camera locations, directions of coverage, camera numbers, surveillance equipment maintenance activity log, user authorization list and operating instructions for the surveillance equipment.

(19) Audit. Each cannabis permittee shall maintain accurate books and records, in an electronic format, which detail all revenues and expenses of the business, including, but not limited to, all assets and liabilities. On no less than an annual basis, or at any time upon reasonable request of the city, each cannabis permittee shall file a sworn statement detailing business activity during the previous 12-month period (or shorter period based upon the timing of the request). The statement shall include gross sales for each month and all applicable taxes and fees paid or due to be paid. On an annual basis, each owner and operator shall submit to the city a financial audit of the business’s operations conducted by an independent certified public accountant. Each cannabis permittee shall be subject to a regulatory compliance review and financial audit as determined by the city manager or designee.

(20) Inspections. The city manager, or designee, or Los Angeles County sheriff’s department shall have the right to enter all premises from time to time unannounced during a cannabis permittee’s hours of operation for the purpose of making reasonable inspections to observe and enforce compliance with this chapter, to inspect and copy records required to be maintained under this chapter, or to inspect, view, and copy recordings made by security cameras, all without requirement of a search warrant, subpoena, or court order, and subject to appropriate fees, as specified in the development agreement, or adopted by the city. (Ord. 730 § 18, 2022).

(1) All applicants wishing to obtain a cannabis permit from the city shall file an application with the city upon a form approved by the city manager and shall pay a permit application fee as established by the city. The fee may vary depending on the type of cannabis permit. The city manager or designee may require and conduct background checks, as necessary, to process and evaluate cannabis permit applications.

(2) Prior to operating in the city, each cannabis permittee shall timely and fully pay all fees associated with the establishment of commercial cannabis production activity. The fees shall be as set forth in the schedule and fees and charges established by the city council, including, but not limited to, the following:

(a) Application fee for accepting a registration application, due and payable in full at the time an application is submitted;

(b) Processing fee for the cost to the city of processing an application and reviewing, investigating, and scoring each application in accordance with any evaluation system to determine eligibility for issuance of a cannabis permit, due and payable in full at the time a registration application is submitted;

(c) Permit issuance fee for the cost to the city of preparing a development agreement, planning commission and city council review of the development agreement and the cannabis permit, and preparation and issuance of the cannabis permit, as authorized by the cannabis permit;

(d) Amended registration fee for the cost to the city of reviewing amendments or changes to the registration form previously filed on behalf of an applicant, due and payable in full at the time amendments or changes to any cannabis permit form are submitted to the city;

(e) Permit renewal fee for the cost to the city of processing an application to renew a cannabis permit, due and payable in full at the time application is made to renew a cannabis permit; and

(f) Any fees set forth in the applicable development agreement. (Ord. 730 § 19, 2022).

(1) A cannabis permit application may be denied and not awarded by the city if:

(a) The applicant or the applicant’s agent(s) has made one or more false or misleading statements or omissions in the application or during the application process.

(b) The proposed premises or commercial cannabis production activity at the premises is not allowed by state law or city law.

(c) The applicant is not a legal representative of the proposed cannabis permittee.

(d) The applicant or any of its officers, directors, owners, managers, or employees is under 21 years of age.

(e) The applicant’s facility or its location is in violation of any building, zoning, health, safety, or other provision of this chapter or of any state or local law that substantially affects the public health, welfare, safety, or morals, or the facility or its location is not permitted in the proposed area, or the issuing or continuation of a cannabis permit would be contrary to the public health, welfare, safety, or morals.

(f) The applicant or any of its officers, directors, owners, managers, or employees has been sanctioned by the city, state, or any county for unauthorized cannabis activities or has had a registration revoked under this chapter in the previous three years.

(g) The applicant or the applicant’s agent(s) has engaged in unlawful, fraudulent, unfair, or deceptive business acts or practices.

(h) The applicant has not been or is not in good standing with the city related to other or previous business activities operated in the city.

(i) The applicant has not satisfied all requirements of this chapter.

(j) For good cause, as defined in this chapter.

(2) A cannabis permit shall be awarded by the city to applicants in accordance with the process established by the city manager.

(3) Before a cannabis permit can be issued to an applicant, a cannabis permit fee must be paid to offset all related costs to the city, and the proposed premises must pass all applicable inspections.

(4) Each cannabis permit is subject to the conditions of approval in the applicable development agreement for the parcel of real property upon which the premises are located.

(5) Each cannabis permit is subject to any additional conditions that may be applied by the city at the time of issuance or renewal as necessary to properly regulate the applicable commercial cannabis production activities and to protect the public.

(6) Each cannabis permittee shall execute a development agreement with the city to, among other things, fully reimburse the city for all fiscal impacts, costs, expenses, fees, and attorneys’ fees incurred by the city related to the cannabis permit and the related commercial cannabis production activity of such cannabis permittee.

(7) Each cannabis permittee shall:

(a) Carry liability insurance in the amounts and types set by the city manager or the city manager’s designee, and name the city as an additional insured on all such insurance policies.

(b) Execute an indemnification agreement prepared by the city that fully indemnifies the city for all liabilities associated with the cannabis permit, the cannabis permittee’s commercial cannabis production activities, and any action taken by the cannabis permittee pursuant to this chapter. Such indemnification may be set forth in the applicable development agreement.

(c) Defend the city, at the cannabis permittee’s sole expense, in any action against the city or its agents, officers, officials, or employees associated with the cannabis permit, the cannabis permittee’s commercial cannabis production activities, or any action taken by the cannabis permittee pursuant to this chapter. The city may, at its sole discretion, participate in the defense of any such action, but such participation shall not relieve the cannabis permittee of its indemnification and reimbursement obligations.

(d) Reimburse the city for all costs, expenses, fees, and attorney’s fees incurred by the city related to any action against the city or its agents, officers, or employees associated with the cannabis permit, the cannabis permittee’s commercial cannabis production activity, or any action taken by the cannabis permittee pursuant to this chapter.

(8) A cannabis permittee shall keep the city and law enforcement updated with the names, addresses, and relevant criminal histories of the applicant’s agents. Relevant criminal histories shall include any drug-related or felony convictions, the nature of such offenses, and the sentences received for such convictions.

(9) Transfer.

(a) Any cannabis permittee may not sell, transfer, pledge, assign, grant an option, or otherwise dispose of his or her ownership interest in the commercial cannabis production business authorized pursuant to the cannabis permit.

(b) In order for a cannabis permittee to transfer its cannabis permit to any person, such cannabis permittee must submit a transfer application to the city manager or city manager’s designee. The city manager or designee may create a transfer application and reasonable transfer application process, including mandatory fee, that cannabis permittees and the city must follow and pay for cannabis permit transfer requests. Each transfer request of a cannabis permit and the related transfer application is subject to the prior approval of the city manager or designee.

(c) Applicants for cannabis permits must show proof of lawful possession of the applicable location. Evidence of lawful possession consists of properly executed deeds of trust, leases, and other written instruments, as may be accepted by the city.

(d) The location shall only be the geographical area that is specifically and accurately described in executed documents verifying lawful possession. No cannabis permittee is authorized to relocate to other areas or units within a building structure without first filing a change of location application and obtaining approval from the city, regardless of any possessory interest or right to possession to such additional space. No cannabis permittee shall add additional contiguous units or areas, thereby altering initially approved premises, without filing an application to modify the location on forms prepared by the city manager, including any applicable processing fee.

(e) No cannabis permittee is authorized to sublet any portion of any premises for any purpose unless all necessary forms and applications to modify the existing location to accomplish any subletting have been approved by the city.

(f) The city manager shall develop and promulgate a process for the renewal of cannabis permits and the establishment of related fees, in accordance with applicable laws.

(10) To the fullest extent permitted by law, the city does not assume any liability, and expressly does not waive sovereign immunity, with respect to any commercial cannabis production activities, or for the other activities of any cannabis permittee or for any other activities taking place at the premises.

(11) Changing, Altering, or Modifying Location.

(a) After issuance of a cannabis permit, the cannabis permittee shall not make any physical change, alteration, or modification to the premises that materially or substantially alters the location, production estimates, and/or usage of the location from the plans originally approved under the applicable development agreement, without the prior written approval of the city council or designee. The cannabis permittee whose premises are to be materially or substantially changed is responsible for filing an application with the city in order to obtain requisite approval.

(b) Material or substantial changes, alterations, or modifications requiring approval include, but are not limited to, the following: (i) an increase or decrease in the total physical size or capacity of the location; (ii) the sealing off, creation or relocation of a common entryway, doorway, passage, or other such means of public ingress and/or egress, when such common entryway, doorway, or passage alters or changes limited access areas; or (iii) the installation or replacement of electric fixtures or equipment, the lowering of a ceiling, or electrical modifications made for the purpose of increasing power usage.

(c) The city council or designee may grant approval for the types of changes, alterations, or modifications described herein upon the filing of an application by the cannabis permittee and payment of any applicable fee, subject to any requisite amendments to the applicable development agreement. The cannabis permittee must submit all information requested by the city council or designee including, but not limited to, documents that verify the following: (i) the cannabis permittee will continue to have the exclusive possession of the premises, as changed, by ownership, lease, rental agreement, or other means, and sole control over all activities; and (ii) the proposed change conforms to any and all city restrictions related to the time, manner, and place of regulation of the applicable commercial cannabis production activity. (Ord. 730 § 20, 2022).

(1) Any commercial cannabis production activity within the city in violation of this chapter is hereby declared to be unlawful and a public nuisance.

(2) Any person who willfully or knowingly (a) engages in a violation of this chapter or (b) owns, possesses, controls, or has charge of any parcel of real property in the city upon which a violation of this chapter is maintained and who has actual knowledge of such violation (or would have actual knowledge of such violation after a reasonable inquiry), shall be subject to the penalties and remedies provided by this chapter.

(3) Any violation of this chapter shall constitute a separate offense for each and every day the violation occurs or persists.

(4) Any person in violation of any provision of this chapter or who causes another person to be in violation of this chapter shall have committed a misdemeanor. In addition to which shall be punishable by a fine of up to $1,000 for each violation and for each day the applicable violation continues to persist.

(5) Any person in violation of any provision of this chapter shall be punishable by an administrative fine of up to $1,000 per offense.

(6) Any material violation of this chapter or any other relevant city law or state law by a cannabis permittee, or a cannabis permittee’s agent, is grounds for suspending or revoking the relevant cannabis permit. In addition, the city manager or the city manager’s designee may suspend or revoke a cannabis permit, disqualify an applicant from the application process, or elect not to renew a cannabis permit if any of the following occur:

(a) The city manager or the city manager’s designee determines that the cannabis permittee has failed to comply with this chapter, any condition of approval, or any agreement or covenant as required pursuant to this chapter.

(b) The cannabis permittee’s commercial cannabis production activities cease for more than 90 calendar days.

(c) Ownership of the cannabis permittee is changed without approval from the city.

(d) The licensed commercial cannabis production activity moves from the licensed premises to a different, unauthorized location.

(e) The cannabis permittee fails to provide remote access to the security cameras to the city manager, the city manager’s designee, or Los Angeles County sheriff’s department, or fails to allow inspection of the security recordings, the activity logs, or of the premises by authorized city officials.

(7) Any decision regarding the suspension or revocation of a cannabis permit, disqualification of an applicant from the application process, or election not to renew a cannabis permit may be appealed to an independent neutral third-party administrative hearing officer appointed by the city manager or the city manager’s designee (the hearing officer). Said appeal shall be made by a notice of appeal from the person appealing within 30 days from the date of the city’s decision. The appeal shall be accompanied by a written verified declaration setting forth the basis for the claim that the city’s decision was improper. The hearing officer’s decision shall be final and binding upon the city and the appellant cannabis permittee or applicant. Alternatively, the city manager may provide for the appeal to be made to the city council, in lieu of a hearing officer. In such case, the city council’s decision shall be final and binding upon the city and the appellant.

(8) These penalties and remedies are cumulative, and in addition to any other penalties and remedies available to the city. (Ord. 730 § 21, 2022).

(1) Cannabis permittees must obtain a state medicinal license in accordance with state law, including, but not limited to, the temporary and permanent state medicinal licenses provided for in MAUCRSA.

(2) Each cannabis permittee must expeditiously provide proof of receipt of the applicable state medicinal license by such cannabis permittee to the city manager or designee. (Ord. 673 § 9, 2017).

(1) Purpose. The purpose and intent of this section is to permit and regulate the medicinal cannabis cultivation in order to promote the health, safety, morals, and general welfare of the residents and businesses within the city. The city is authorized to regulate this activity pursuant to state law.

(2) Scope – Medicinal Cannabis. This section permits and regulates the medicinal cannabis cultivation pursuant to state law, including MAUCRSA. Subject to the terms of this chapter, cultivation permits may be issued by the city for medicinal cannabis cultivation pursuant to and in accordance with state law, including MAUCRSA.

(3) Outdoor cultivation is prohibited within the city.

(4) Indoor cultivation is permitted only on properties within the applicable permit zone with a valid cultivation permit and other requisite permits and entitlements.

(5) Indoor cultivation may include growing cannabis plants, harvesting cannabis plants, and drying cannabis flowers but shall not include the manufacturing of cannabis products, unless otherwise authorized pursuant to this chapter.

(6) Entrance to the cultivation area, and all storage areas, of the applicable premises shall be locked at all times and under the control of the staff of such premises. (Ord. 673 § 9, 2017).

(1) Purpose. The purpose and intent of this section is to permit and regulate the medicinal cannabis products manufacturing to promote the health, safety, morals, and general welfare of the residents and businesses within the city. The city is authorized to regulate this activity pursuant to state law.

(2) Scope – Medicinal Cannabis. This section permits and regulates medicinal cannabis products manufacturing pursuant to state law, including MAUCRSA. Subject to the terms of this chapter, manufacturing permits may be issued by the city for medicinal cannabis products manufacturing, pursuant to and in accordance with state law, including MAUCRSA.

(3) Medicinal cannabis products manufacturing is a permitted use only on properties within the applicable permit zone with a valid cultivation permit and other requisite permits and entitlements.

(4) A manufacturing permittee must employ at least one member of its personnel dedicated full time to quality control.

(5) The manufacturing permittee must establish standard operating procedures and batch records that comply with current good manufacturing practices and applicable state law, including MAUCRSA.

(6) All cannabis products produced by a manufacturing permittee must be labeled in compliance with applicable state law, including MAUCRSA.

(7) All cannabis products produced by a manufacturing permittee must be packaged in child-resistant containers prior to leaving the premises of such manufacturing permittee in accordance with applicable state law, including MAUCRSA.

(8) Manufacturing permittees may conduct manufacturing using any type of solvents, including volatile solvents, or manufacturing processes if such manufacturing complies with the requirements of this chapter and state or local law, including but not limited to Health and Safety Code Section 11362.775 (or any successive state law), all applicable fire and building codes in the city and any other laws of the city designed to ensure the safety of such operation.

(9) Manufacturing permittees using volatile solvents for manufacturing cannabis products must operate in a manner to reduce the risk of explosion or danger to public health, including through the use of a closed-loop or solvent dispersion system consistent with the requirements of Health and Safety Code Section 11362.775 (or any successive state law).

(10) If hazardous materials, flammable gas, flammable liquefied gas, flammable and combustible liquids, or other flammable material, as those terms are defined in California Fire Code Section 202, are to be used in the processing of medicinal cannabis, then the provisions of California Fire Code Section 407 shall be applicable where hazardous materials are subject to permits under California Fire Code Section 50 (Hazardous Materials), are located on the premises, or where required by the applicable building or fire official.

(11) Storage, use, and handling of compressed gases in compressed gas containers, cylinders, tanks, and systems shall comply with California Fire Code Chapter 53. Partially full compressed gas containers, cylinders, or tanks containing residual gases shall be considered as full for the purposes of the controls required. Compressed gases classified as hazardous materials shall also comply with California Fire Code Chapter 50 for general requirements and California Fire Code Chapter 53 addressing specific hazards, including California Fire Code Chapter 58 (Flammable Gases), California Fire Code Chapter 60 (Highly Toxic and Toxic Materials), California Fire Code Chapter 63 (Oxidizers, Oxidizing Gases and Oxidizing Cryogenic Fluids), and California Fire Code Chapter 64 (Pyrophoric Materials). Prevention, control, and mitigation of dangerous conditions related to storage, use, dispensing, mixing, and handling of flammable and combustible liquids shall be in accordance with California Fire Code Chapters 50 and 57.

(12) Labeling Requirements – Edibles.

(a) Before a manufacturing permittee prepares any edible cannabis or edible cannabis product for retail sale, it shall be labeled and placed in tamper-evident packaging which at least meets the requirements of state law, including, but not limited to, MAUCRSA.

(b) All items to be sold or distributed shall be individually wrapped at the original point of preparation by the cannabis permittee.

(c) Labeling must include a warning if nuts or other known allergens are used, and must include the total weight (in ounces or grams) of cannabis in the package, not to exceed 10 milligrams of tetrahydrocannabinol (THC) per serving.

(d) A warning that the item is a medication and not a food must be clearly legible on the front of the package and/or must comply with state packing requirements.

(e) The package must have a label warning that the product is to be kept away from children.

(f) The label must also state that the product contains cannabis and must specify the date of manufacture and the manufacturing permittee’s information, including, but not limited to, address and phone number.

(g) Distributions must be in a properly labeled opaque package when distributed.

(h) The city manager, or designee, may impose additional packaging and labeling requirements on cannabis or cannabis products. (Ord. 673 § 9, 2017).

Effective immediately, the city shall cease issuing or renewing retail delivery permits pursuant to this chapter. The retail delivery of medicinal cannabis and cannabis products in compliance with state law, including MAUCRSA, pursuant to a retail delivery permit issued under this chapter may continue as a legal nonconforming use pursuant to Chapter 20.80 CMC so long as such retail delivery is limited to medicinal cannabis and cannabis products and otherwise in compliance with this chapter and CMC 5.30.200. (Ord. 730 §§ 25, 26, 2022).

(1) Purpose. The purpose and intent of this section is to permit and regulate the distribution of cannabis and cannabis products between cannabis permittees in order to promote the health, safety, morals, and general welfare of the residents and businesses within the city. The city is authorized to regulate this activity pursuant to state law.

(2) Scope – Medicinal Cannabis Only. This section permits and regulates the commercial cannabis production activity of distribution of medicinal cannabis and cannabis products based within the city pursuant to state law, including MAUCRSA. Subject to the terms of this chapter, distribution permits may be issued by the city for the distribution of medicinal cannabis and cannabis products based within the city pursuant to and in accordance with state law, including MAUCRSA. Distribution of cannabis and cannabis products based within the city requires a development agreement with the city and must be located within the applicable permit zone.

(3) “Distribution activities” includes the receiving and releasing of cannabis and cannabis products for inspection, testing, and quality assurance, as required under applicable state law and such other activities as are permitted pursuant to state law.

(4) A distribution permittee shall only distribute cannabis and cannabis products between cannabis permittees or to facilities or portions of facilities wholly controlled by such distribution permittee to the extent permitted by state law.

(5) A distribution permittee shall inspect all cannabis and cannabis products received by it for quality assurance prior to distributing to any cannabis permittee, as required under applicable state law.

(6) In addition to the application requirements in CMC 5.20.060, a distribution permittee shall register with the city each location within the city where cannabis and cannabis products are stored for purposes of distribution activities within the city.

(7) A distribution permittee shall distribute cannabis and cannabis products to cannabis permittees only after such cannabis and cannabis products have been inspected and quality tested in accordance with applicable state law, including MAUCRSA.

(8) A distribution permittee may also hold any other permit type to the extent permitted by state law. To the extent permitted by state law, a distribution permittee that also holds another permit type may self-distribute its cannabis products. (Ord. 730 § 22, 2022).

(1) Purpose. The purpose and intent of this section is to permit and regulate the medicinal cannabis and cannabis products microbusiness in order to promote the health, safety, morals, and general welfare of the residents and businesses within the city. The city is authorized to regulate this activity pursuant to state law, including MAUCRSA.

(2) Scope – Medicinal Cannabis Only. This section permits and regulates microbusinesses, pursuant to state law, including MAUCRSA. Subject to the terms of this chapter, microbusiness permits may be issued by the city pursuant to and in accordance with state law, including MAUCRSA.

(3) All microbusinesses shall require a development agreement with the city and must be located within the applicable permit zone.

(4) All components of a microbusiness (i.e., cultivation, manufacturing, etc.) must be in compliance with the provisions of this chapter and state law, including MAUCRSA.

(5) The city may authorize the smoking, vaporizing, and ingestion of cannabis or cannabis products on the premises of a microbusiness if all of the following are met:

(a) Access to the area where cannabis consumption is allowed is restricted to persons 21 years of age and older.

(b) Cannabis consumption is not visible from any public place or non-age-restricted area.

(c) Sale or consumption of alcohol or tobacco is not allowed on the premises. (Ord. 673 § 9, 2017).

(1) Purpose. The purpose and intent of this section is to permit and regulate the testing of medicinal cannabis and cannabis products in order to promote the health, safety, morals, and general welfare of the residents and businesses within the city. The city intends to be on the forefront of medicinal cannabis research and testing. The city is authorized to regulate this activity pursuant to state law.

(2) Scope – Medicinal Cannabis Only. This section permits and regulates cannabis and cannabis products testing, pursuant to state law, including MAUCRSA. Subject to the terms of this chapter, testing permits may be issued by the city for the testing of medicinal cannabis and cannabis products pursuant to and in accordance with state law, including MAUCRSA.

(3) Testing of cannabis and cannabis products requires a development agreement with the city and must be located within the applicable permit zone.

(4) Each testing permittee must employ at least one full-time quality control personnel employee.

(5) Testing permittees must operate, and all cannabis and cannabis products must be properly tested by testing permittees, in accordance with applicable state law.

(6) All testing devices used by a testing permittee must be “UL listed,” and/or otherwise approved for the intended use by the city’s building official, the fire department or other person designated by the city manager or designee.

(7) Each testing permittee must notify the State Department of Public Health and the city manager, or the city manager’s designee, within one business day after the receipt of notice of any kind that its accreditation has been denied, suspended, or revoked. (Ord. 673 § 9, 2017).

* Code reviser’s note: Ord. 673 adds this section as 5.20.140. It has been editorially renumbered to prevent duplication of numbering.

Provisions of this chapter adopted by a vote of the people of the city shall not be construed to supersede, repeal, nullify, or otherwise render inapplicable or unenforceable any other provision of this code not in conflict with such, including but not limited to nonconflicting provisions of Titles 15, 16, 19 and 20 CMC. In the event of any conflict or inconsistency between provisions of this chapter that have been adopted by a vote of the people of the city and any provisions of this code adopted by the city council, the provisions of this chapter shall govern and control but only to the limited extent of the conflict or inconsistency and no further. All such conflicts or inconsistencies shall be construed narrowly so as to allow for the broadest application of all other provisions of this code adopted by the city council. The city council further reserves and retains the right to amend or modify, in its sole and absolute discretion, any and all provisions of this code, excluding the provisions approved by a vote of the people of the city, to the extent any such amendments or modifications are not in conflict with the provisions of this chapter that have been approved by a vote of the people of the city. (Ord. 730 § 27, 2022).