Tracy Municipal Code Art. 2 Cannabis Business Permits

Except as specifically authorized in this chapter, the commercial cultivation, manufacturing, processing, storing, laboratory testing, labeling, retail sale, delivery, distribution or transportation (other than as provided under California Business and Professions Code section 26090(e)), of cannabis or cannabis product is expressly prohibited in the City of Tracy.

(Ord. No. 1277, § 2(Exh. A), 12-3-2019)

No person may engage in any commercial cannabis activity within the City of Tracy unless the person (1) has a valid Cannabis Business Permit from the City of Tracy; (2) has a valid State License; and (3) is currently in compliance with all applicable state and local laws and regulations pertaining to the cannabis business and the commercial cannabis activities and land use and zoning requirements, including obtaining a valid conditional use permit pursuant to title 10 of this Code.

(Ord. No. 1277, § 2(Exh. A), 12-3-2019)

(a) Maximum Number and Type of Authorized Cannabis Businesses Permitted. The number of each type of cannabis business that shall be permitted to operate in the City at any one given time shall be as follows:

i. Cultivation (indoor only) - no maximum number.

ii. Distribution no maximum number.

iii. Manufacturing no maximum number.

iv. Microbusiness no maximum number.

v. Retailer non-storefront (delivery only) - no maximum number.

vi. Retailer storefront (dispensary) - a maximum number as set forth in subsection 6.36.040(b).

vii. Testing laboratory - no maximum number.

This section 6.36.040 is only intended to create a maximum number of cannabis businesses that may be issued permits to operate in the City under each category. Nothing in this chapter creates a mandate that the City Council must issue any or all of the cannabis business permits if it is determined that the applicants do not meet the standards which are established in the application requirements or further amendments to the application process.

(b) i.

Subsequent to the issuance of any permits occurring prior to April 2022, a maximum of one retailer - storefront (dispensary) permit may be issued for every ten thousand (10,000) individuals living within the City of Tracy. For the purposes of this subsection, the total population of the City shall be determined by the most current published total available from the U.S. Census Bureau or the California State Department of Finance, whichever has been more recently updated, as of the date the cannabis business permit is issued. No new permit may be issued to authorize a retailer - storefront (dispensary) use if the number of such permits already issued equals or exceeds the total number authorized pursuant to this subsection.

ii. Notwithstanding section (b)(i), a maximum of eleven (11) retailer - storefront (dispensary) permits may be issued to entities that submitted applications for commercial cannabis business permits on or before October 15, 2020. Any business awarded a commercial cannabis business permit prior to December 31, 2021 shall not be subject to the limitation established in section (b)(i), above, as long as such commercial cannabis business permit is renewed annually as required by this chapter and is not revoked.

(c) Each year following the Police Chief's initial award of cannabis business permits, if any, or at any time in the City Council's discretion, the City Council may reassess the number of cannabis business permits which are authorized for issuance. The City Council, in its discretion, may determine by ordinance whether the number of commercial cannabis permits should change.

(Ord. No. 1277, § 2(Exh. A), 12-3-2019; Ord. No. 1318, § 2, 10-19-2021; Ord. No. 1338, § 2, 6-6-2023)

(a) The City Council shall adopt by resolution the procedures to govern the application process, and the manner in which the decision to issue a cannabis business permit(s) is made. Said resolution shall authorize City staff and/or consultants to provide detailed objective review criteria to be evaluated on a point system or equivalent quantitative evaluation scale tied to each set of review criteria ("Review Criteria") and to prepare the necessary forms, solicit applications, and review and evaluate the applicants. Applications for a cannabis business permit shall include, but not be limited to, the following information:

i. Applicant Background Information.

A. A description of the statutory entity or business form that will serve as the legal structure for the applicant and a copy of its formation and organizing documents, including, but not limited to, articles of incorporation, certificate of amendment, statement of information, articles of association, bylaws, partnership agreement, operating agreement, and fictitious business name statement.

B. The phone number and address to which any notices and correspondence regarding the application is to be mailed.

C. Owners. The name, address, telephone number, title, respective percentage of ownership, and function of each of the owners.

D. Background checks. For each of the interested parties:

1. A legible copy of one valid government-issued form of photo identification, such as a state driver's license, a passport issued by the United States, or a permanent resident card.

2. A list of their misdemeanor and felony convictions, if any. For each conviction, the list must set forth the date of arrest, the offense charged, the offense convicted, the sentence, the jurisdiction of the court, and whether the conviction was by verdict, plea of guilty, or plea of nolo contendere.

3. Consent to fingerprinting and a criminal background investigation.

E. Evidence of a conviction of any of the offenses enumerated in California Business and Professions Code Section 26057(b)(4), absent a Certificate of Rehabilitation, shall be grounds for immediate disqualification of the applicant.

ii. Business operations.

A. Business plan. A plan describing how the cannabis business will operate in accordance with this code, state law, and other applicable regulations. The business plan must include proof of sufficient capital to start the business and sustain it through the first three months of operation, plans for handling cash and transporting cannabis and cannabis products to and from the site.

B. Community relations plan. A plan describing who is designated as being responsible for outreach and communication with the surrounding community, including the neighborhood and businesses, and how the designee can be contacted.

C. Document(s) demonstrating property owner acknowledgement. Document(s) demonstrating that the property owner is fully aware that the applicant intends to use the property for cannabis business purposes. Document(s) must include name, address, and contact information for the property owner.

D. State licenses. Copies of any state licenses relating to cannabis that the applicant holds.

E. Tax compliance. A current copy of the applicant's city business operations tax certificate pursuant to Chapter 6.04. A copy of the applicant's state sales tax seller's permit, if applicable. If the applicant has not yet received a sales tax seller's permit, then the applicant shall attest that the applicant is currently applying for a seller's permit. A copy of the applicant's most recent year's financial statement and tax returns, if applicable.

F. Insurance. The applicant's certificate of commercial general liability insurance and endorsements and certificates of all other insurance related to the operation of the cannabis business.

G. Budget. A copy of the applicant's most recent annual budget for operations.

H. Price list. A list of the most recent prices for all products and services provided by the applicant.

iii. City authorization. Authorization and consent for the City to seek verification of the information contained within the application.

iv. Applicant's certification. A statement dated and signed by the applicant, under penalty of perjury, that the applicant has personal knowledge of the information contained in the application, that the information contained therein is true and correct, and that the application has been completed under the applicant's supervision.

v. Indemnification. An agreement, in a form approved by the City Attorney, whereby the applicant: (1) releases the City, and its agents, officers, elected officials, and employees from any and all claims, injuries, damages, or liabilities of any kind arising from: (a) any repeal or amendment of this chapter or any provision of Title 10 of the Zoning Code relating to cannabis, and (b) any arrest or prosecution of the applicant or its managers, employees, or members for violation of state or federal laws; and (2) defends, indemnifies, and holds harmless the City and its agents, officers, elected officials, and employees from and against any and all claims or actions: (a) brought by adjacent or nearby property owners or any other parties for any damages, injuries, or other liabilities of any kind arising from operations at the commercial cannabis business, and (b) brought by any party for any problems, injuries, damages, or other liabilities of any kind arising out of the distribution of cannabis produced or processed at the site or by the business.

(b) Non-Refundable Application Fee. At the time of filing, each applicant shall pay a non- refundable application fee established by resolution of the City Council, to cover all costs incurred by the City in the application process.

(c) Review of Applications. The Development Services Director or designee, Finance Director or designee, and Fire Chief or designee ("Review Committee") shall conduct an initial review of the applications and rank and score the applications utilizing the Review Criteria. The Review Committee shall then make a recommendation to the Police Chief or designee, who shall make a final selection in accordance with section 6.36.060.

(d) THE CITY'S RESERVATION OF RIGHTS:

The City reserves the right to reject any or all applications. Prior to cannabis business permit issuance, the City may also modify, postpone, or cancel any request for applications, or the entire program under this chapter, at any time without liability, obligation, or commitment to any party, firm, or organization, to the extent permitted under California law. Persons submitting applications assume the risk that all or any part of the program, or any particular category of permit potentially authorized under this chapter, may be cancelled at any time prior to cannabis business permit issuance. The City further reserves the right to request and obtain additional information from any candidate submitting an application.

(Ord. No. 1277, § 2(Exh. A), 12-3-2019; Ord. No. 1287, § 2, 6-2-2020)

(a) The Police Chief or designee shall determine which applicants will be granted a cannabis business permit in accordance with the procedures established referenced in section 6.36.050, subsection (a). The Police Chief's or designee's decision as to the selection of permittees shall be appealable to the City Manager. Such appeals shall comply with Chapter 1.12 of this Code.

(b) Upon issuance of a conditional use permit, a cannabis business permit is valid at only the location granted under the conditional use permit and State License.

(c) Issuance of a cannabis business permit does not constitute a land use permit. Following the Police Chief's selection, the prevailing candidates(s) shall apply to the City's Development Services Department to obtain a conditional use permit pursuant to Section 10.08.4250 and any other required land use approvals or permits for the permittee's premises. Land use approvals shall include compliance with all applicable provisions of California Environmental Quality Act.

(d) Furthermore, no permittee shall begin operations, notwithstanding the issuance of a cannabis business permit, unless all of the state and local laws and regulations have been complied with, including but not limited to the requirements of this chapter and Section 10.08.3196 of this Code.

(e) Notwithstanding anything in this chapter to the contrary, the City reserves the right to reject any or all applications if it determines it would be in the best interest of the City, taking into account any health, safety and welfare impacts on the community. Applicants shall have no right to a cannabis business permit until a permit is issued, and then only for the duration of the term specified in the permit. Each applicant assumes the risk that, at any time prior to the issuance of a cannabis business permit, the City Council may terminate or delay the program created under this chapter.

(f) If an application is denied for a cannabis business permit, a new application may not be filed for one year from the date of the denial.

(g) Permit Fee. Each person granted a Cannabis Business Permit shall pay the permit fee established by resolution of the City Council, to cover the costs of administering the cannabis business permit regulatory program created in this chapter.

(Ord. No. 1277, § 2(Exh. A), 12-3-2019; Ord. No. 1287, § 2, 6-2-2020)

(a) The City may deny a cannabis business permit if the Police Chief or designee(s) determines that one or more of the following circumstances exist:

i. The application received is incomplete, filed late, or not responsive to the requirements of this article;

ii. The application contains a false or misleading statement or omission of a material fact;

iii. The operation of a cannabis business described in the application fails to comply with any of the requirements in this code, state law, or any other regulation;

iv. The applicant or any of its owners has any unpaid and overdue administrative penalties imposed for violations of this chapter;

v. The applicant has not paid the applicable business operations tax pursuant to Chapter 6.04 or subsequent Chapter(s) or taxes which may be amended from time to time by the voters.

vi. Within tweleve (12) months of the date of application, either the applicant has had its cannabis business permit revoked; or any of its owners were associated with another business that had its cannabis business permit revoked; or

vii. Operation of the cannabis business is a threat to the public health, safety, or welfare.

(Ord. No. 1277, § 2(Exh. A), 12-3-2019)

Each cannabis business permit issued pursuant to this chapter shall expire twelve (12) months after the date of its issuance, except that the expiration date of any cannabis business permit issued prior to May 2022 shall be tolled for an additional twelve (12) months from the date of issuance of any such permit, and further toll cannabis business permits that are expiring on June 21, 2023, to March 3, 2024. Cannabis business permits may be renewed as provided in section 6.36.100.

(Ord. No. 1277, § 2(Exh. A), 12-3-2019; Ord. No. 1328, § 2, 7-5-2022; Ord. No. 1338, § 3, 6-6-2023)

(a) The Police Chief or designee may suspend, modify, or revoke a cannabis business permit issued pursuant to the provisions of this chapter for any of the following reasons:

i. One or more of the circumstances upon which a cannabis business permit could be denied, as described in section 6.36.070, exists or has occurred;

ii. One or more conditions of the cannabis business permit has been violated;

iii. The Permittee, its owners, officers, directors, partners, agents, or other persons vested with the authority to manage or direct the affairs of the business have violated any provision of this chapter; or

iv. One or more of the conditions placed on the conditional use permit issued under Title 10 of this Code has been violated.

(b) The Police Chief's or designee's decision as to the suspension, modification, or revocation of a cannabis business permit shall be appealable to the City Manager. Such appeals shall comply with Chapter 1.12 of this Code.

(Ord. No. 1277, § 2(Exh. A), 12-3-2019; Ord. No. 1287, § 2, 6-2-2020)

(a) An application for renewal of a cannabis business permit shall be filed at least sixty (60) calendar days prior to the expiration date of the current permit. The renewal application shall provide the information required under sections 6.36.050(a)(i) and (ii)(D)—(F), updated from any prior information provided to the City.

(b) The applicant shall pay a fee in an amount set by the City Council to cover the costs of processing the renewal permit application, together with any costs incurred by the City to administer the program created under this chapter.

(c) An application for renewal of a cannabis business permit shall be denied if any of the following exists:

i. One or more of the circumstances upon which a cannabis business permit could be denied, as described in section 6.36.070, exists or has occurred;

ii. The application is filed less than sixty (60) days before its expiration.

iii. The cannabis business permit is suspended or revoked at the time of the application.

iv. The cannabis business has not been in regular and continuous operation in the four (4) months prior to the renewal application, unless the applicant has been granted a conditional use permit and is diligently pursuing either a discretionary permit or building permit, or is in construction.

v. The permittee fails to or is unable to renew its State License.

(d) The Police Chief or designee(s) is authorized to make all decisions concerning the issuance of a renewal permit. In making the decision, the Police Chief or designee(s) is authorized to impose additional conditions to a renewal permit, if it is determined to be necessary to ensure compliance with state or local laws and regulations or to preserve the public health, safety or welfare. Appeals from the decision of the Police Chief or designee(s) shall be directed to the City Manager and shall be handled pursuant to Chapter 1.12.

(e) If a renewal application is denied, a person may file a new application pursuant to this chapter no sooner than one year from the date of the rejection.

(f) If an existing cannabis business permit holder fails to renew their permit, the City may, in its discretion, solicit and consider permit applications from other applicants pursuant to sections 6.36.050 and 6.36.060.

(Ord. No. 1277, § 2(Exh. A), 12-3-2019; Ord. No. 1287, § 2, 6-2-2020; Ord. No. 1338, § 4, 6-6-2023)

(a) Suspension of a license issued by the State of California, or by any of its departments or divisions, shall immediately suspend the ability of a cannabis business to operate within the City, until the State of California, or its respective department or division, reinstates or reissues the State license. Should the State of California, or any of its departments or divisions, revoke or terminate the license of a cannabis business, such revocation or termination shall constitute grounds for revoking a City cannabis business permit.

(b) Permittee shall inform the Police Chief or designee of any suspension, revocation or termination of their State license within one business day of receiving notice from the State. Failure to do so shall constitute grounds for revoking a City cannabis business permit.

(Ord. No. 1277, § 2(Exh. A), 12-3-2019)

(a) Any time the contact information listed on a cannabis business permit has changed, the business shall re-register with the Police Chief or designee(s). The process and the fees for re-registration shall be the same as the process and fees set forth in section 6.36.100.

(b) Within fifteen (15) calendar days of any other change in the information provided in the application or any change in status of compliance with the provisions of this chapter, including any change in the cannabis business ownership or management members, the applicant shall file an updated registration form with the Police Chief or designee(s) for review along with a registration amendment fee, as set forth in section 6.36.100.

(Ord. No. 1277, § 2(Exh. A), 12-3-2019)

(a) No permittee shall assign, sell, or transfer any or all ownership interests or control of the permit to another person or entity and any attempt to assign, sell, or transfer a cannabis business permit or ownership interest in a cannabis business permit, either directly or indirectly in violation of this section, is hereby declared void, and such a purported transfer shall be deemed a ground for revocation of the permit.

(b) Notwithstanding subsection (a) above, a permittee wishing to transfer any or all ownership interests or control of the permit to another person or entity may do so provided that the transferee obtains an amendment to their State License, if required, and an amendment to the permit from the Police Chief stating that the transferee is now the permittee. Such an amendment may be obtained only if the transferee files an application with the Police Chief or designee(s) in accordance with all provisions of this chapter (as though the transferee were applying for an original cannabis business permit) accompanied by a transfer fee in an amount set by resolution of the City Council, and the Police Chief or designee(s) determines that the transferee passed the background check required under subsection (a) of section 6.36.050 and meets all other requirements of this chapter.

(c) Cannabis business permits issued through the grant of a transfer by the Police Chief shall be valid for a period of one year beginning on the day the Police Chief approves the transfer of the permit. Before the transferee's permit expires, the transferee shall apply for a renewal permit in the manner required by this chapter.

(d) Changes in ownership of a permittee's business structure or a substantial change in the ownership of a permittee business entity (changes that result in a change of more than fifty-one (51) percent of the original ownership), must be approved by the Police Chief or designee(s) through the transfer process contained in this subsection (b). Failure to comply with this provision is grounds for revocation.

(e) No cannabis business permit may be transferred when the Police Chief or designee has notified the permittee that the permit has been or may be suspended or revoked.

(Ord. No. 1277, § 2(Exh. A), 12-3-2019; Ord. No. 1287, § 2, 6-2-2020)

To the fullest extent permitted by law, the City of Tracy shall not assume any liability whatsoever with respect to having issued a cannabis business permit pursuant to this chapter or otherwise approving the operation of any commercial cannabis business. As a condition to the approval of any cannabis business permit, the applicant shall be required to meet all of the following conditions before receipt of the permit:

(a) The applicant must execute an agreement, in a form approved by the City Attorney, agreeing to indemnify, defend (at applicant's sole cost and expense), and hold the City of Tracy, and its officers, officials, employees, representatives, and agents, harmless, from any and all claims, losses, damages, injuries, liabilities or losses which arise out of, or which are in any way related to, the City's issuance of the cannabis business permit, the City's decision to approve the operation of the commercial cannabis business or activity, the process used by the City in making its decision, or the alleged violation of any state or local laws by the cannabis business or any of its officers, employees or agents.

(b) Maintain insurance at coverage limits, and with conditions thereon determined necessary and appropriate from time to time by the City Attorney and/or Risk Manager.

(c) Reimburse the City of Tracy for all costs and expenses, including but not limited to attorney fees and costs and court costs, which the City of Tracy may be required to pay as a result of any legal challenge related to the City's approval of the applicant's cannabis business permit, or related to the City's approval of a commercial cannabis activity. The City of Tracy may, at its sole discretion, participate at its own expense in the defense of any such action, but such participation shall not relieve any of the obligations imposed hereunder.

(Ord. No. 1277, § 2(Exh. A), 12-3-2019)

(a) Any person who is an employee or who otherwise works within a cannabis business must be legally authorized to do so under applicable state law.

(b) Any person who is an employee or who otherwise works within a cannabis business must obtain a cannabis employee permit from the City prior to performing any work at any cannabis business.

(c) Applications for a cannabis employee permit shall be developed, made available, and processed by the Police Chief or designee(s), and shall include, but not be limited to, the following information:

i. Name, address, and phone number of the applicant;

ii. Verification of the applicant's age and identity. A copy of a birth certificate, driver's license, government issued identification card, passport or other proof that the applicant is at twenty-one (21) years of age must be submitted with the application;

iii. Name, address of the cannabis business where the person will be employed, and the name and phone number of the primary manager of that business. This subsection (c)iii. shall not be construed to restrict the holder of a valid cannabis employee permit from seeking employment with a different cannabis business;

iv. A list of any crimes enumerated in California Business and Professions Code Section 26057(b)(4) of which the applicant has been convicted;

v. Name, address, and contact person for any previous employers from which the applicant was fired, resigned, or asked to leave and the reasons for such dismissal or firing;

vi. The application shall be accompanied by fingerprints and a recent photograph of the applicant in a form and manner as required by the Police Chief or designee(s).

vii. A fee paid in an amount set by resolution of the City Council in an amount necessary to cover the costs of administering the cannabis employee permit program. The fee is non-refundable and shall not be returned in the event the employee permit is denied or revoked.

(d) The Police Chief or designee(s) shall review the application for completeness, shall conduct a background check to determine whether the applicant was convicted of a crime or left a previous employer for reasons that show the applicant has ever been convicted of any of the offenses enumerated in California Business and Professions Code Section 26057(b)(4).

Employers who wish to hire an individual notwithstanding this rule shall apply to the Police Chief, who at his/her sole discretion may issue a written waiver. The employer or employee shall submit a statement of rehabilitation for each conviction. The statement of rehabilitation may contain evidence that the employer or employee would like the Police Chief to consider that demonstrates the employee's fitness for a cannabis employee permit. Supporting evidence may be attached to the statement of rehabilitation and may include, but is not limited to, dated letters of reference from employers, instructors, or professional counselors that contain valid contact information for the individual providing the reference. The Police Chief's or designee's decision as to the selection of an employee shall be appealable to the City Manager. Such appeals shall comply with Chapter 1.12 of this Code.

Discovery of facts showing that the applicant has either failed to disclose or has been convicted of any of the offenses enumerated in California Business and Professions Code Section 26057(b)(4) are grounds for denial of the permit. Where the applicant's sentence (including any term of probation, incarceration, or supervised release) for possession of, possession for sale, sale, manufacture, transportation, or cultivation of a controlled substance is completed, such underlying conviction shall not be the sole ground for denial of a commercial cannabis employee permit.

(e) The Police Chief or designee shall implement the cannabis employee permit process in accordance with the procedures and rules established by resolution adopted by the City Council.

(f) A cannabis employee permit shall be valid for a twelve (12) month period from date of issuance and must be renewed on an annual basis. Renewal applications shall contain all the information required in section 6.36.150, subsection (c) above including the payment of a renewal application fee in an amount to be set by resolution of the City Council.

(g) The City may immediately revoke the cannabis employee permit should the permit holder be convicted of a crime listed California Business and Professions Code Section 26057(b)(4). The following are additional grounds for revoking a cannabis employee permit based on the specific role and function of that employee:

i. A cannabis employee permit shall be revoked if the employee permit holder:

A. Sells or provides cannabis or cannabis products to a minor;

B. Attempts to give away cannabis or cannabis products while working, unless as authorized pursuant to Section 5411 of Chapter 3, Division 42, Title 16 of the California Code of Regulations;

C. Acts to illegally divert cannabis or cannabis products to the black market, including stealing cash; stealing the licensee's product for personal consumption; or selling the licensee's product and keeping the proceeds of the sale; or

D. Is cited for driving under the influence of alcohol, cannabis or another illicit drug while on- or off-duty.

(h) The applicant may appeal the denial or revocation of a cannabis employee permit to the City Manager by filing a notice of appeal with the City Clerk within ten (10) working days of the date the applicant received the notice of denial or revocation, which appeal shall be conducted as set forth in Chapter 1.12 of this Code.

(Ord. No. 1277, § 2(Exh. A), 12-3-2019; Ord. No. 1287, § 2, 6-2-2020)