Article 1 — General Provisions

(a) This chapter is intended to implement the Medicinal and Adult Use Cannabis Regulation and Safety Act (Senate Bill 94, approved by the Governor on June 27, 2017, filed with the California Secretary of State on June 27, 2017, hereafter “MAUCRSA”) to accommodate the needs of medically ill persons in need of cannabis for medicinal

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purposes as recommended by their health care provider(s), and to provide access to same.

(b) This chapter is intended to provide access to adult-use cannabis for persons aged twenty-one (21) and over as authorized by the Control, Tax and Regulate the Adult Use Cannabis Act (“AUMA” or “Proposition 64” approved by California voters in 2016), while imposing sensible regulations on the use of land to protect the City’s residents, neighborhoods, and businesses from disproportionately negative impacts.

(c) It is the further purpose and intent of this chapter to regulate the cultivation, processing, manufacturing, testing, sale, delivery, distribution and transportation of cannabis and cannabis products in a responsible manner to protect the health, safety, and welfare of the residents of the City of Watsonville and to enforce rules and regulations consistent with State law.

(d) It is, in addition, the purpose and intent of this chapter to require all commercial cannabis operators to obtain and renew annually a permit to operate within the City of Watsonville.

(e) Nothing in this chapter is intended to authorize the possession, use, or provision of cannabis for purposes that violate State law.

(f) This chapter is in addition to any other permits, licenses and approvals which may be required to conduct business in the City. (§ 2, Ord. 1465-24 (CM), eff. June 11, 2024)

Pursuant to Sections 5 and 7 of Article XI of the California Constitution, the provisions of MAUCRSA and any subsequent State legislation and/or regulations regarding same, the City may adopt standards, requirements and regulations for the licensing and permitting of commercial cannabis activity. Any standards, requirements, and regulations regarding health and safety, security, and worker protections established by the State of California, or any of its departments or divisions, shall be the minimum standards applicable in the City to all commercial cannabis activity. (§ 2, Ord. 1465-24 (CM), eff. June 11, 2024)

The following definitions shall apply to this chap-

ter:

The definitions promulgated for the California Cannabis Cultivation Program in Division 8 (Cannabis Cultivation) of Title 3 (Food and Agriculture) of the California Code of Regulations, Section 8000 et seq.

The definitions promulgated for the California Bureau of Cannabis Control in Division 42 (Bureau of Cannabis Control) of Title 16 (Professional and Vocational Regulations) of the California Code of Regulations, Section 5000 et seq.

(a) “Cannabis processing” shall mean the drying, curing, grading, or trimming of cannabis within a permitted cannabis cultivation facility or as part of a standalone cannabis processing facility.

(b) “Discrepancy” shall mean a five (5%) percent difference between the licensee’s physical inventory and the inventory recorded in the track and trace system.

(c) “Facility” shall mean any building or structure used for or related to the cultivation, processing, testing, retail sales, delivery or manufacturing of cannabis.

(d) “Manager” shall mean a person who participates in the direction, control, or supervision of a permittee.

(e) “Owner” shall mean a person with an aggregate ownership interest of twenty (20%) percent or more in the commercial cannabis business, unless the interest is solely a security, lien, or encumbrance. For purposes of this section, “aggregate” means the total ownership interest held by a single person through any combination of individually held ownership interests in a commercial cannabis business and ownership interests in an entity that has an ownership interest in the same commercial cannabis business. For example, a person who owns ten (10%) percent of the stock in a commercial cannabis business as an individual shareholder and one hundred (100%) percent of the stock in an entity that owns ten (10%) percent of the stock in the same commercial cannabis business has a twenty (20%) percent aggre-

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gate ownership interest in the commercial cannabis business.

(1) An individual who manages, directs, or controls the operations of the commercial cannabis business, including but not limited to:

(i) A member of the board of directors of a nonprofit.

(ii) A general partner of a commercial cannabis business that is organized as a partnership.

(iii) A nonmember manager or managing member of a commercial cannabis business that is organized as a limited liability company.

(iv) The trustee(s) and all persons who have control of the trust and/or the commercial cannabis business that is held in trust.

(v) The chief executive officer, president or their equivalent, or an officer, director, vice president, general manager or their equivalent.

(2) If the commercial cannabis business is owned in whole or in part by an entity and the entity includes individuals who manage, direct, or control the operations of the commercial cannabis business, as described in subsection (e)(1) of this section, those individuals shall also be disclosed as owners.

(3) If available evidence indicates that an individual qualifies as an owner, the Department may notify the applicant or licensee that they must either disclose the individual as an owner and submit the information required by 4 CCR Section 15002 or demonstrate that the individual does not qualify as an owner.

(f) “Permittee” shall mean a person issued a cannabis use permit under this chapter to engage in commercial cannabis activity.

(g) “Youth center” shall mean any public or private facility that is exclusively used to host recreational or social activities for minors (under eighteen (18) years of age), such as private youth membership organizations or clubs, social service teenage club facilities, or amusement facilities. “Youth center” does not include any building, location, or facility where any programs, activities, or services: (1) are offered at private residences, (2) involve martial arts/combat sports, cultural or similar education, or physical fitness, or (3) are offered for fewer than five

(5) hours per day each day the building, location, or facility is open. Notwithstanding the foregoing,

“youth centers” shall also mean any facility determined by the City of Watsonville Parks Department to be a recreation center in a City park.

(§ 2, Ord. 1465-24 (CM), eff. June 11, 2024)

(a) A cannabis use permit shall be required before engaging in commercial cannabis activity in the City.

(b) An application for a cannabis use permit shall include the information and completed and verified documents as may be prescribed by the Zoning Administrator.

(c) The Zoning Administrator shall determine and provide submittal requirements and instructions for cannabis use permit applications.

(d) All application fees shall be paid when the application is submitted.

(e) No application shall be complete until the Zoning Administrator notifies an applicant in writing that the Zoning Administrator deems the application complete.

(§ 2, Ord. 1465-24 (CM), eff. June 11, 2024)

No cannabis delivery business located outside the City shall deliver cannabis and/or cannabis products to a customer located inside the City unless all the following requirements are met:

(a) The business for delivery is properly licensed by the State of California and by any California city or county.

(b) The delivery business has first obtained, paid for and maintains in full force and effect a City business license under Chapter 3-4.

(c) The delivery business has registered with the Police Department using forms approved by the Chief of Police and provided a copy of its State license and local government approval permitting it to engage in commercial cannabis delivery.

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(d) The delivery business has obtained and continues to maintain in full force and effect the required

State license or licenses for the commercial cannabis activities in which they are engaged. (§ 2, Ord. 1465-24 (CM), eff. June 11, 2024)

(a) Cannabis use permit classifications are:

Watsonville Cannabis Use Permit Classifications

(b) Any cannabis use permit shall automatically expire if cannabis business activity ceases for ninety (90) calendar days or more.

(c) The number of cannabis facilities in the City shall not exceed:

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• Distribution shall be allowed in conjunction with a valid permit for cultivation, manufacturing, and/or processing license with approval of an administrative use permit.

A permittee may have only one (1) of each of the following classes of cannabis use permits:

(d) Type 1A, 2A, or 3A (cultivation) cannabis use permits shall be limited to two (2) parcels.

(e) More than one (1) cannabis facility may be located on a single parcel. A separate permit is required for each cannabis facility.

Separation Requirements[1]

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Separation Requirements[1] (Continued)

1 Separation distance from K-12 schools, daycares and youth centers shall be measured from property line to property line. Separation distance for cultivation facilities shall be measured from parcel line of sensitive use to nearest wall of cultivation facility.

(§ 2, Ord. 1465-24 (CM), eff. June 11, 2024; as amended by § 2, Ord. 1471-24 (CM), eff. December 12, 2024)

(a) For those deemed eligible to participate in the Cannabis Equity Program under Chapter 5-49 by the Cannabis Equity Officer, such equity applications shall be processed in conformance with the provisions of this chapter with the following exceptions:

(1) Entitlement permit fees for eligible equity applicants shall be waived.

(2) Eligibility as an equity applicant shall be determined at any time.

(b) Renewal. In order to renew a cannabis equity use permit, an equity applicant must provide proof that it continues to satisfy the equity criteria at the time of its annual permit renewal.

An equity applicant that no longer satisfies the equity criteria but is compliant with all other requirements of Chapter 5-49 will be entitled to renew the cannabis use permit but will not be eligible for any other benefits of an equity assistance program.

When the Zoning Administrator determines that the number of active Type 10 retail permits in the City is less than the number of cannabis Type 10 retail permits allowed, the Zoning Administrator shall advertise in at least one (1) newspaper of general circulation and post on the City’s website an announcement that the City will accept applications for additional cannabis Type 10 retail permits. The notice shall identify the City’s application web page, requirements, application deadline(s), and contact information for questions.

(a) The Zoning Administrator shall determine an appropriate period within which to allow submittal of preapplications.

(b) The Zoning Administrator shall determine the form and requirements for a cannabis Type 10 retail preapplication.

(c) Cannabis equity use permits are nontransferable.

(d) The ownership structure of the cannabis equity business shall not be modified for five (5) years after the cannabis equity permittee has commenced business, unless such modification maintains eligibility in the cannabis equity program as determined by the Cannabis Equity Officer. (§ 2, Ord. 1465-24 (CM), eff. June 11, 2024; as amended by § 2, Ord. 1471-24 (CM), eff. December 12, 2024)

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(c) Applicants shall submit cannabis Type 10 retail preapplications to the Zoning Administrator.

(d) Cannabis Type 10 retail preapplicants shall be subject to a competitive, merit-based review to determine eligibility to apply for a cannabis use permit.

(e) Staff shall then schedule interviews with three (3) more applicants than the number of cannabis Type 10 retail permits available.

(f) City staff shall review and score all preapplications after expiration of the preapplication period. A Type 10 retail preapplication selection committee shall consist of representatives of the Police Chief, Fire Chief, Community Development Director, and City Manager and an independent third-party cannabis consultant selected by the Zoning Administrator, and shall convene to review applications and interview applicants. The Type 10 retail preapplicants determined to best meet the community’s needs shall then be asked to submit an application for a cannabis use permit.

(g) If the cannabis Type 10 retail preapplicant interview panel approves any cannabis retail preapplication, the applicant shall have six (6) months to submit a cannabis use permit application to the Community Development Department for consideration. (§ 2, Ord. 1465-24 (CM), eff. June 11, 2024)

(a) All applicants for a cannabis use permit must be legally authorized for cannabis activity under State law.

(b) All applicants shall provide the Zoning Administrator with evidence of submittal of a LiveScan criminal background check for all owners of the business.

(c) The criminal background checks completed for business owners must at a minimum disclose:

(1) Whether any owner has ever plead guilty or no contest or been convicted of a violent felony as defined by California Penal Code Section 667.5(c), or equivalent offenses in other states or under the laws of the United States;

(2) Whether any owner has ever plead guilty or no contest or been convicted of a felony involving dishonesty, fraud or deceit, including but not limited to fraud, forgery, theft, or embezzlement as those offenses are defined in California Penal Code Sections 186.11, 470, 484, and 504a, respectively; or equivalent offenses in other states or under the laws of the United States; or

(3) Whether any owner has ever plead guilty or no contest or been convicted of a felony involving possession, transportation, distribution or similar activities related to controlled substances, as defined in the Federal Controlled Substances Act, not including cannabis-related offenses for which the conviction occurred before the passage of MAUCRSA.

(d) Evidence that any owner has plead guilty or no contest or been convicted of any of the offenses enumerated in this section may be grounds for denial of a cannabis use permit.

(§ 2, Ord. 1465-24 (CM), eff. June 11, 2024)

Cannabis use permits shall be processed in accordance with the procedures described in Part 5 of Chapter 14-12.

Approval of a Type 10 retail cannabis use permit shall be contingent on the following:

(a) Type 10 cannabis retail applicant must have been identified as a potential candidate in the preapplication process; and

(b) The applicant must obtain approval of a cannabis use permit within six (6) months of selection as a potential Type 10 retail cannabis use permit holder; and

(c) Obtaining all necessary State license(s) within six (6) months of positive recommendation through the preapplication process.

If any one (1) or more of the above items have not been satisfied, the Type 10 retail cannabis use permit shall not be approved.

(§ 2, Ord. 1465-24 (CM), eff. June 11, 2024)

An applicant, permittee, owner, manager and employee shall timely and fully pay required fees

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when due. The amount of the following required fees shall be established by Council resolution:

(a) A Type 10 cannabis retail preapplication fee is due and payable in full when a cannabis preapplication is submitted;

(b) A Type 10 cannabis retail preapplication interview fee is due and payable in full within ten (10) days of notice that a preapplication interview has been granted;

(c) A cannabis use permit application fee is due and payable in full when a qualified applicant submits a cannabis use permit application;

(d) A cannabis use permit renewal fee is due and payable for each location when a cannabis use permit renewal application is submitted to the City;

(e) Any other fees for inspection, auditing or investigation not included within the other fees associated with a cannabis use permit application or a cannabis use permit renewal application. (§ 2, Ord. 1465-24 (CM), eff. June 11, 2024)

(a) A cannabis use permit does not run with the land. It is personal to the permittee. A permittee may apply to relocate contingent upon first obtaining a new cannabis use permit for the new location, and approval from the State licensing agency for the new location. The process and the fees for relocation shall be the same as the process and fees in Sections 14-53.108 through 14-53.111.

(b) Prior to any change in information provided in the application for a cannabis use permit or any change in status of compliance with the provisions of this chapter, including any change in the applicant’s ownership or control (maintenance of a minimum twenty (20%) percent ownership), the permittee shall file an application for a new cannabis use permit with the Zoning Administrator and pay the applicable cannabis use permit fee. No change in ownership shall be effective prior to approval of a new cannabis use permit.

(c) A permittee may change the form of its business entity upon application to the Zoning Adminis-

trator and presentation of a new business license application under Chapter 3-4, provided that either:

(1) Membership of the new business entity is substantially similar to the original permittee, owner, and managers; or

(2) The original permittee is an unincorporated association, mutual or public benefit corporation, agricultural or consumer cooperative and transitions to or forms a new business entity as allowed under MAUCRSA; provided, that the board of directors (or, in the case of an unincorporated association, the owners and managers) are substantially the same as the original permittee.

(d) Although an application for a new cannabis use permit is not required in subsections (c)(1) and (c)(2) of this section, the permittee shall notify the Zoning Administrator in writing of the change prior to the change becoming effective by filing a new business license application with a written explanation of the change. Failure to comply with this provision is grounds for cannabis use permit revocation.

(e) Any attempt to transfer a cannabis use permit directly or indirectly in violation of this section is void and is ground for revocation of the cannabis use permit.

(§ 2, Ord. 1465-24 (CM), eff. June 11, 2024)

(a) Each cannabis use permit shall be valid for a period not exceeding one (1) year and require renewal each year on or before June 30th. Renewal of cannabis use permit shall be as provided for in this section.

(b) No cannabis use permit issued under this chapter may be renewed unless:

(1) A new application has been filed as set forth in Section 14-53.108 no later than March 30th or ninety (90) days before expiration date of the use permit, whichever first occurs;

(2) The cannabis use permit renewal application fee in Section 14-53.111 has been paid; and

(3) The applicant satisfies all requirements of this chapter.

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(c) Cannabis Use Permit Renewal Application.

(1) An application to renew a cannabis use permit shall be on forms provided by the Zoning Administrator. The forms shall be signed under penalty of perjury, and shall include, but not be limited to, the following information:

(i) The names of the applicant’s owners and managers;

(ii) The street address; (iii) The Santa Cruz County Tax Assessor’s parcel number of the existing cannabis facility;

(iv) A copy of the applicant’s State-issued license to engage in a cannabis business;

(v) The applicant’s and owner’s waiver and release of the City from any and all liability arising from the application for a cannabis use permit, the issuance of the cannabis use permit, the denial of the cannabis use permit, or the enforcement of the conditions of the cannabis use permit;

(vi) For retail cannabis businesses, provide proof that at least fifteen (15%) percent of product inventory is sourced from cannabis businesses located in the City of Watsonville, the County of Santa Cruz, and/or the County of Monterey;

(vii) Proof of compliance with workers’ compensation State insurance requirements;

(viii) Identification of any changes to the information the applicant submitted on the original cannabis use permit renewal application;

(ix) Any law enforcement or enforcement activity related to the permittee’s operations during the past calendar year;

(x) A representation that the applicant continues to hold in good standing any license required by the State of California to operate a cannabis facility; and

(xi) Such other information as the Zoning Administrator deems reasonably necessary to conduct a thorough review of the cannabis use permit renewal application.

(d) Review of the Use Permit Renewal Application.

(1) Upon receipt of an application for renewal of a cannabis use permit, the Zoning Administrator shall update the permittee’s file and perform what-

ever investigation the Zoning Administrator deems necessary to determine whether to grant or deny the cannabis use permit. The investigation may include a physical inspection of the facility and any delivery vehicles, at the discretion of the Zoning Administration.

(2) Issuance of a renewal cannabis use permit is a discretionary act. No applicant shall be automatically entitled to receive a use permit renewal based solely on meeting the basic requirements of this chapter. It is not necessary for the Zoning Administrator to issue findings before granting a use permit renewal to an applicant who is requesting to maintain already-approved business operations.

(e) The Zoning Administrator or designee may revoke or elect not to renew a cannabis use permit issued under this chapter if:

(1) The applicant or permittee and its owners and managers have not complied at all times with this chapter.

(2) Any failure to comply with the cannabis use permit conditions of approval or the Municipal Code.

(3) Any other facts, circumstances or conditions which indicate that renewal of the cannabis use permit will be detrimental to the health, safety, or welfare of the residents of the City.

(4) The Zoning Administrator or designee is aware of any law enforcement or State license enforcement activity related to the permittee’s operations either with the locally permitted facility or any other facility owned and/or operated by the permittee in any other jurisdiction during the past calendar year that led to a documented, material violation of one (1) or more conditions of the facility’s cannabis use permit.

(§ 2, Ord. 1465-24 (CM), eff. June 11, 2024)

(a) To the fullest extent permitted by law, the City shall not be liable whatsoever with respect to approving any permit pursuant to this chapter or the operation of any facility approved pursuant to this chapter. As a condition of approval of a cannabis use

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permit as provided in this chapter, the applicant or its legal representative shall:

(1) 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, its officers, elected and appointed officials, employees, representatives, and agents, harmless and defend from any and all claims, losses, damages, injuries, or liabilities of any kind arising out of, or in any way related to, the City’s issuance or denial of a cannabis use permit, the registration or operation of a cannabis facility, the process used by the City in making any decision, the alleged violation of any Federal, State, or local laws by the applicant, or the prosecution of the applicant or permittee or its owners or managers for violation of Federal or State laws;

(2) Maintain insurance at the coverage limits and of the types required by the City’s risk manager in compliance with State law;

(3) Name the City as an additional insured on all liability policies;

(4) Agree to reimburse the City for all costs and expenses, including any court costs and attorney fees that the City may be required to pay as a result of any legal challenge related to the City’s approval of a cannabis use permit. The City may, at its sole discretion, participate at its own expense in the defense of any such action, but such participation shall not relieve the permittee of its obligation hereunder. (§ 2, Ord. 1465-24 (CM), eff. June 11, 2024)