Part 14 — COMMERCIAL MEDICAL AND ADULT USE CANNABIS REGULATIONS

• Prior ordinance history: This Part 14 was originally derived from Ords. 2000-12, 2010-08, 2010-15 and 2016-12. This part was amended in its entirety by Ord. 2017-21.

The state of California decriminalized the use of medical marijuana under the Compassionate Use Act of 1996. The adult use of nonmedical marijuana was approved by the voters in the state in 2016 through the passage of the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), modified and updated in 2017 by Senate Bill No. 94 and Assembly Bill No. 133. The regulations contained in this chapter are established to provide direction and to protect the community from negative impacts related to commercial cannabis uses, both medical (medicinal) and adult use (recreational), consistent with state law and the will of the voters of the city. These regulations shall apply to all commercial cannabis businesses, including both for-profit and nonprofit. (Ord. 2017-21 § 7 (part), 2017).

(a) All commercial cannabis uses allowed within the city must be authorized pursuant to the procedures described in Section 24.08.030 for administrative use permits with the excep-

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tion of testing laboratories, which are principal permitted uses in IG and IG/PER-2 Districts. So long as state law and/or regulation requires the city to permit delivery by businesses located anywhere within the state, delivery services performed by businesses located outside the county of Santa Cruz are also exempted from this requirement; otherwise, delivery by businesses located outside Santa Cruz County is not permitted within the city, with or without a permit. Legal retail delivery businesses located within any jurisdiction within Santa Cruz County may deliver within the city if they are licensed to do so by the state and the jurisdiction in which they are located. Such businesses may be required to obtain a city of Santa Cruz business license per Chapter 5.04, Business Licenses and Fees, and, if located within the city of Santa Cruz, must also have a valid cannabis retailer license.

(b) Each commercial cannabis business shall meet the siting criteria and performance standards described in other sections of this chapter in addition to: (1) the other requirements of the zoning districts in which they are located; (2) the licensing requirements set forth in Chapter 6.91; and (3) other state and local laws and regulations. For properties with multiple tenant spaces, separate use permits are required for each separate business unless a master use permit is approved per Section 24.08.027.

(c) Each and every provision made in this section shall be deemed independent and severable, and the invalidity or partial invalidity or unenforceability of any one provision or portion thereof shall not affect the validity or enforceability of any other provision thereof. (Ord. 2022-17 § 1, 2022; Ord. 2019-07 § 1, 2019: Ord. 2017-21 § 7 (part), 2017).

1. Cultivation. Commercial cultivation of cannabis is allowed in General Industrial (I-G) and General Industrial Performance (IG/PER-

2. Districts subject to the approval of an administrative use permit and the obtaining of an appropriate state license for indoor cultivation of less than ten thousand square feet. Such cultivation within the city shall not be subject to the state’s locational restrictions per the state of California Business and Professions Code Section 26054(b); however, the premises of any cultivation facility shall be kept locked and secured at all times. Cannabis cultivation is limited to no more than ten thousand square feet and must be contained within a permanent building.

2. Distribution and Warehousing. Cannabis distribution and warehousing uses are allowed in General Industrial (I-G) and General Industrial Performance (IG/PER-2) Districts subject to the approval of an administrative use permit and the obtaining of a distribution license from the state of California. Distribution and warehousing within the city shall not be subject to the state’s locational restrictions per the state of California Business and Professions Code Section 26054(b); however, the premises of any distribution and warehousing facility shall be kept locked and secured at all times.

3. Testing Laboratories. Cannabis testing laboratories are allowed in the General Industrial (I-G) and General Industrial Performance (IG/PER-2) Districts subject to obtaining a state license for testing laboratories. Testing laboratories shall not be combined with any other cannabis use and no proprietor, partner, or employee of a testing laboratory may own, work for, or be a partner in any other licensed cannabis business. Testing laboratories are not subject to the state’s locational restrictions per the state of California Business and Professions Code Section 26054(b); however, the premises of any cannabis testing facility shall be kept locked and secured at all times.

4. Manufacturing. Cannabis manufacturing facilities are allowed in General Industrial (I-G) and General Industrial Performance (IG/ PER-2) Districts subject to the approval of an

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administrative use permit and the obtaining of a state cannabis manufacturing license. Manufacturing facilities with Level 1 state licenses (using only nonvolatile or no solvents) within the city shall not be subject to the state’s locational restrictions per the state of California Business and Professions Code Section 26054(b); however, the premises of any cannabis manufacturing facility shall be kept locked and secured at all times. Manufacturing facilities with Level 2 state licenses (those that use volatile solvents) shall not be located within six hundred feet, as measured from the property lines, from any school providing instruction in kindergarten or any grades one through twelve, day care center, or youth center (as defined in the state of California Health and Safety Code Section 11353.1) that is in existence at the time the state license for the facility is issued.

es (those that use volatile solvents) shall not be located within six hundred feet, as measured from the property lines, from any school providing instruction in kindergarten or any grades one through twelve, day care center, or youth center (as defined in the state of California Health and Safety Code Section 11353.1) that is in existence at the time the state license for the facility is issued.

5. Cannabis Retail Sales. Cannabis retail sales, including both medical (medicinal) and adult use (recreational) cannabis, for-profit or nonprofit, are allowed in Community Commercial (C-C), Thoroughfare Commercial (C-T), General Industrial (I-G), and General Industrial Performance (IG/PER-2) Districts with approval of an administrative use permit and city cannabis retailer license per Chapter 6.91, and the obtaining of a state cannabis retailer or nonprofit license. Cultivation, manufacturing, and distribution functions of cannabis businesses holding state microbusiness licenses are allowed in General Industrial (I-G) and General Industrial Performance (IG/PER-2) Districts only with an administrative use permit. Retail sales for cannabis businesses holding state microbusiness licenses shall follow all zoning district use and locational criteria and shall obtain both an administrative use permit and a city cannabis retailer license.

Cannabis retail sales facilities, including nonprofit and microbusiness, shall not be located within six hundred feet, as measured from the property lines, from any school providing instruction in kindergarten or any grades one through twelve, day care center, or youth

center (as defined in the state of California Health and Safety Code Section 11353.1) that is in existence at the time the state license for the facility is issued. In addition, no new retail sales facility, including a business holding a nonprofit or state microbusiness license, shall be located within six hundred feet from an existing cannabis retail sales facility. (Ord. 2019-07 § 2, 2019: Ord. 2017-21 § 7 (part), 2017).

The zoning administrator, or planning commission or the city council on appeal, may grant an exception to the six-hundred-foot distance requirement between a cannabis retail sales facility or a manufacturing facility with a Level 2 state license and other uses as noted above only if findings are made that the general public benefit that could be served by the issuance of the administrative use permit would outweigh concerns regarding intensity of use, land use compatibility, and public health and safety. The burden of proof is on the applicant to demonstrate that the overall effect would be positive. (Ord. 2017-21 § 7 (part), 2017).

Commercial cannabis businesses, once permitted, shall meet the following operating procedures and performance standards for the duration of the use:

1. The business shall meet all the operating criteria, including security procedures, for the cultivation, distribution and warehousing, manufacturing, testing, and retail sales of cannabis and cannabis products as may be required by the state of California, the Santa Cruz city council and police department, and/or the county health department or their designee.

2. No product shall be smoked, ingested, or otherwise consumed on the premises.

3. The hours of operation shall be limited to no more than 7:00 a.m. to 10:00 p.m., dependent upon the specific site characteristics and conditions of approval of the administrative use

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permit issued for the site. All cannabis retailer businesses holding an administrative use permit prior to October 13, 2020, are allowed to operate and be open to the public until 10:00 p.m. despite the operating hours stated in their original administrative use permit conditions of

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approval that limit the business to an earlier closure. In general, no cannabis retail business shall open earlier or close later than the other businesses in the vicinity.

4. The business shall prevent loitering by persons outside the establishment, either on the premises or within fifty feet of the premises.

5. A cannabis retail business shall provide litter removal services each day of operation on and in front of the premises and, if necessary, on public sidewalks within fifty feet of the premises.

6. Cannabis businesses shall contain an air filtration system to regulate odor.

7. All exhaust fans directing air outside shall be secured to prevent forced entry to the facility.

8. The business shall provide adequate security on the premises to ensure the safety of persons and to protect the premises from theft. All security shall, at a minimum, meet the requirements of state law for cannabis businesses as well as any additional requirements included as conditions of approval for the site use permit. Minimum city security requirements include:

a. Security alarms for the building that include motion activation and manual activation capabilities;

b. Exterior security lights that provide three-hundred-sixty-degree coverage around the perimeter of all buildings while meeting the performance standards in the zoning ordinance;

c. Exterior security cameras that provide three-hundred-sixty-degree coverage around the perimeter of all egress and ingress into the building. The security camera system shall have the capability to provide the recordings to police within twenty-four hours;

d. Interior cameras within the business itself that cover the doors, windows, and the sales counter area of the business;

e. Doors leading into the vestibules and all rooms used for growing and processing (drying) cannabis must be steel and have a bolt lock or key pad lock;

f. All rooms used for growing and processing shall be fire-rated, with solid-core doors, and shall remain locked;

g. All doors and windows shall be fortified and levered windows replaced with solid windows that have a security coating to prevent illegal entry; and

h. Cannabis retail businesses that are open to the public shall provide an on-site security guard during business hours and adequate security on the premises, including lighting and alarms, to ensure the safety of persons and to protect the premises from theft. All security procedures and systems shall be reviewed and approved by the police department.

9. Exterior lighting of the parking area shall be kept at a sufficient intensity so as to provide adequate lighting for patrons and employees, while not disturbing surrounding residential or commercial areas.

10. All signage and advertising shall comply with the state of California Business and Professions Code Sections 26150 through 26155 and any modifications or relocations of these code sections. In addition, any form of advertisement or signage that includes pricing of cannabis and cannabis products, details related to specific cannabis products, or photography or graphics of the cannabis plant or cannabis products is prohibited except on a dedicated business website accessible only through an age gate portal. Other than the above-noted restrictions related to pricing, specific cannabis products, photography, and graphics, signage shall be regulated by Part 4, Advertising Devices, Signs and Billboards, of this chapter, Community Design. The abovenoted restrictions related to pricing, specific cannabis products, photography, and graphics apply to consumer advertising and signage and do not apply to direct, business-to-business advertising that is not available to the general public.

11. The business shall provide the zoning administrator, the chief of police, and all neigh-

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bors located within fifty feet of the establishment with the name, phone number, and facsimile number of an on-site community relations staff person to whom notice can be provided if there are operating problems associated with the establishment. The business shall make every good faith effort to encourage neighbors to call this person to try to solve operating problems, if any, before any calls or complaints are made to the police department or the zoning administrator.

12. The business shall post a copy of the conditions of approval for the administrative use permit on the premises in a place where it may be readily viewed by any member of the general public. A copy of the city cannabis retailer license (for retail businesses) and the state cannabis license (for all cannabis businesses) shall also be posted in a prominent position on the premises.

13. The business shall meet any specific additional operating procedures and measures as may be imposed as conditions of approval by the zoning administrator at the time of issuance of the administrative use permit in order to ensure that the business will be a good neighbor.

14. In addition to the required application materials, the business shall submit an operations manual to describe the operation of the facility in conformance with these performance standards and the requirements of state law. The operations manual shall be consistent with the operations plan submitted to the state in the business’s state license application.

15. To offset power consumption, the business shall install solar panels to provide as much power as possible for the indoor cultivation and manufacturing of cannabis and cannabis products. Businesses that can demonstrate low power usage or that use power from clean energy sources may be excused from this requirement. Commercial cannabis businesses shall meet the city’s green building requirements.

16. Trash containing cannabis and cannabis products or byproducts shall be disposed of securely. The business owner shall work with the police department and the city’s waste/recycling program to create a process for safe and secure disposal of waste materials. 17. A cannabis business is not allowed as an accessory use to any other principal, special, or conditional use. All cannabis businesses are subject to the applicable administrative use permit and cannabis retailer license requirements.

17. A cannabis business shall not be operated as a home occupation. (Ord. 2020-23 § 7, 2020; Ord. 2018-15 § 1, 2018; Ord. 2017-21 § 7 (part), 2017).

In approving an administrative use permit, it shall be determined by the hearing body that all of the following apply:

1. The proposed use complies with all of the mandatory requirements of this section and other applicable sections of this code and applicable policies of the General Plan and local coastal program if located within the Coastal Zone;

2. The proposed use will not adversely affect the health, safety, or welfare of area residents, businesses, or uses; will not result in an undue concentration of cannabis businesses in any one neighborhood or district; and will not be located within proximity of an incompatible use, such as a children’s school, daycare facility, or youth center;

3. The operational characteristics of the proposed use, including but not limited to hours of operation, noise, odor, amount and location of parking, signage, loitering, and litter, will not have a negative impact upon the surrounding area;

4. The proposed use is compatible with the sizes and types of other neighboring uses in the surrounding area, particularly those used primarily by persons under the age of eighteen; 5. The proposed use is not located in what has been determined by the Santa Cruz police

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department to be a high-crime area, where a disproportionate number of police service calls occur, or where there is currently parking congestion; and

6. The proposed use shall meet all the building, electrical, and fire code requirements for such occupancy.

(Ord. 2017-21 § 7 (part), 2017).

The zoning administrator, or planning commission or city council on appeal, may deny any application which is inconsistent with the above-noted findings, or may impose any additional conditions on the applicant or proposed location reasonably related thereto, or to the health, safety, or welfare of the community, in addition to the specific requirements set forth in this section. No use permit shall be approved for any individual or business that owes back taxes to the city unless those taxes are paid prior to the approval of the use permit.

(Ord. 2017-21 § 7 (part), 2017).

The zoning administrator may issue a cease and desist order or “stop order” for all activities subject to the administrative use permit for any establishment deemed by the zoning administrator to be in violation of any condition of approval of the administrative use permit or to otherwise constitute a public nuisance. The stop order shall be in effect immediately, pursuant to the procedures of Section 24.04.221. Upon issuance of the stop order, the zoning administrator shall schedule a public hearing to consider the revocation of the administrative use permit pursuant to Section 24.04.225. (Ord. 2017-21 § 7 (part), 2017).

below) or modified, but shall expire and become void where the use has ceased for a period of six consecutive months, whether or not it is the intent of the business and/or property owner to abandon the use. Should a business operating with an approved use permit continue to operate after losing or failing to renew a state or city license, the business shall be considered to have ceased operating upon the date that the state or city license is lost or expires even if the business operator continues operations without the license. If the business fails to obtain or renew the necessary license(s) within six months of the date the license(s) is (are) lost or expire, the use permit shall expire and become void.

(Ord. 2017-21 § 7 (part), 2017).

At the time that these regulations are adopted, the city has two existing use permits for medical marijuana provider association dispensaries, formed under the prior regulations to meet state law at the time those regulations were adopted and the dispensaries established. To prevent the existing dispensaries from operating at a disadvantage to businesses established under the new regulations, the city shall automatically expand the existing use permits for those two businesses to allow the retail sale of adult use (recreational) cannabis. All other state and local laws, regulations, and ordinances apply to these businesses and they must apply for and receive city cannabis retailer licenses and state retail licenses prior to selling adult use (recreational) cannabis and cannabis products.

(Ord. 2017-21 § 7 (part), 2017).

An administrative use permit for a cannabis business shall expire if not exercised within one year of approval. Once a permit has been exercised, it remains effective unless terminated (including through expiration as discussed

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