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HomeMy WebLinkAboutItem 7 - Reefer Madness ADMINISTRATIVE APPEALS BOARD STAFF REPORT DATE: November 30, 2022 SUBJECT: APPEAL OF THE ADMINISTRATIVE FINE OF $5,000 TO REEFER MADNESS, LLC FOR VIOLATION OF 5.55.205(A)(2) and 5.55.110 OF THE PALM SPRINGS MUNICIPAL CODE BY: Office of Special Programs Compliance Department SUMMARY Steven Wijatyk, on behalf of Reefer Madness, LLC has requested an appeal of the administrative citation and fine of $5,000.00 for failure to keep stored cannabis products in a secured and locked safe room, safe, or vault and failure to comply with all State and Local laws. RECOMMENDATION: 1) Open the Appeal Hearing and accept public testimony. 2) Adopt Resolution No. ______, A RESOLUTION OF THE ADMINISTRATIVE APPEALS BOARD OF THE CITY OF PALM SPRINGS, CALIFORNIA, ON THE APPEAL OF THE ADMINISTRATIVE FINE OF $5,000 TO REEFER MADNESS, LLC FOR VIOLATION OF 5.55.205 (A)(2) and 5.55.200.110 OF THE PALM SPRINGS MUNICIPAL CODE BACKGROUND: On November 6, 2019, City Council adopted Ordinance 2005 amending Palm Springs Municipal Code (“PSMC”) 5.55, Cannabis Related Business and Activities. Prior to the amendment Chapter 5.55 did not establish penalties and enforcement for violations of the municipal code. The intent of the amendment was to establish significant penalties and provisions for enforcement. On October 14, 2021, City Council adopted a Resolution updating the City of Palm Springs Administrative Fine Schedule, establishing fine amounts for violations of the cannabis regulations contained in PSMC Chapter 5.55. The City provided outreach materials to cannabis businesses and stakeholders informing them of these changes. Additionally, in October 2021, the Department of Special Program Compliance monthly newsletter provided a copy of the administrative fee schedule to all business owners and stakeholders and in February 2022 introduced the implementation Administrative Appeals Board Staff Report November 30, 2022 - Page 2 Cannabis Related Business and Activities Appeal – Reefer Madness, LLC of code enforcement for cannabis. Prior to the issuance of citations, code enforcement staff provided in-person outreach and warnings to cannabis businesses advising of violations. On February 2, 2022, the code compliance officer assigned to cannabis enforcement conducted an on-site cannabis compliance inspection accompanied by the business owner, Steven Wijatyk, that included a full audit of the business operating practices to check for compliance with all applicable state and local adult-use cannabis-related business operating requirements. During this inspection, it was noted that there were items found to be out of compliance related to the business's limited access areas, inventory storage, and video surveillance system (ATTACHMENT “4”). All the non- compliant items were discussed with the business owner, and a timeline for correction and reinspection was established. On February 3, 2022, the code compliance officer assigned to cannabis enforcement sent a follow-up email to the business owner, Steven Wijatyk, providing guidance and references to applicable state and local regulations related to questions that came up from the business during our post-inspection discussion from the previous day. The email also included specific guidance and references related to the inventory storage area that was found to be out of compliance (ATTACHMENT “5”). On March 15, 2022, the code compliance officer assigned to cannabis enforcement conducted a follow-up on-site inspection to check for compliance for the items that were identified as needing to be corrected from the previous operational audit. The business owner, Steven Wijatyk, detailed the corrections made to the video surveillance system and the installation of a locking mechanism to secure the limited access area. He also stated that he had procured materials to create a locked safe room for inventory storage but was awaiting a part that was left out of the original shipment of the materials so that item remained out of compliance but was expected to be corrected not long after. On July 20, 2022, the code compliance officer assigned to cannabis enforcement conducted an on-site cannabis compliance inspection accompanied by a supervisor at the business, Gustavo Flores, that included an audit of the business operating practices to check for compliance with all applicable state and local adult-use cannabis-related business operating requirements. During this inspection, it was noted that the corrections needed to the inventory storage area, as detailed in prior visits, remained outstanding and the limited access areas were being left unsecured (ATTACHMENT “6”). STAFF ANALYSIS: Reefer Madness, located at 4693 Ramon Road operates as a dispensary and lounge. They commenced operations in March 2020. In July 2022, during an on-site drop in inspection it was found that Reefer Madness did not have their cannabis product kept in a secured and locked safe room, safe, or vault, and that their limited access areas were Administrative Appeals Board Staff Report November 30, 2022 - Page 3 Cannabis Related Business and Activities Appeal – Reefer Madness, LLC not properly secured. Both the State and Local regulations require that all inventory stored on the licensed premises shall be secured in a limited-access area: Palm Springs Municipal Code 5.55.110 Compliance with Laws.1 It is the responsibility of each Adult-Use Cannabis Business to ensure that it is, at all times, operating in a manner compliant with all applicable state and local laws, and any regulations promulgated thereunder. Nothing in this Chapter shall be construed as authorizing any actions which violate state law or local law with respect to the operation of an Adult-Use Cannabis Business. It shall be the responsibility of the owners and the operators of the Adult-Use Cannabis Business to ensure that the Adult- Use Cannabis Business is, at all times, operating in a manner compliant with MAUCRSA, all applicable state and local laws, regulations and guidelines, any subsequently enacted State Law or regulatory, licensing, or certification requirements, and any specific, additional operating procedures or requirements which may be imposed as conditions of approval of the Adult-Use Cannabis Permit. Nothing in this Chapter shall be construed as authorizing any actions which violate State Law with regard to the operation of an Adult-Use Cannabis Business. Palm Springs Municipal Code 5.55.205 (A)(2) Miscellaneous Operating Requirements. Additional Requirements for Dispensaries. 2. Dispensaries shall implement and maintain sufficient security measures to both deter and prevent unauthorized entrance into areas containing Cannabis good in compliance with Section 26070(j) of the California Business and Professions Code and any rules promulgated by the State licensing authority. Security measures shall include, but are not limited to, the following: b. Establish limited access areas accessible only to authorized dispensary personnel. c. Store all Cannabis goods in a secured and locked safe room, safe, or vault, and in a manner as to prevent diversion, theft, and loss, except 1 In November 2022 the Department of Cannabis Control adopted a consolidated regulatory package. These regulations maintained several provisions of prior regulations; however, changes related to Storage of Inventory were made. At the time of citation, the requirement for storage of inventory required all inventory stored on the licensed premises shall be secured in a limited-access area. The newly adopted regulations now state, “All cannabis and cannabis products must be stored within the license premises.”. The changes to State regulations do not impact the local regulatory requirements which supersede the State. Administrative Appeals Board Staff Report November 30, 2022 - Page 4 Cannabis Related Business and Activities Appeal – Reefer Madness, LLC for limited amounts of Cannabis goods used for display purposes, samples, or immediate sale.2 Staff finds that despite multiple attempts to gain compliance via education the business is in violation of §5.55.205(A)(2) and proceeded to issue Administrative Citation AB6003, in the amount of $5,000, to Reefer Madness LLC. The Administrative Citation and Notice of Violation Letter (ATTACHMENT “7”) was delivered in person at the cannabis dispensary to the business owner, Steven Wijatyk, by the code compliance officer assigned to cannabis enforcement. Veronica Goedhart, Director Special Program Compliance Attachments: Resolution no. _____ Decision of the Administrative Appeals Board 1 Notice of Appeal Hearing 2 Administrative Citation Appeal Letter 3 Cannabis Retail Inspection – February 2022 Findings 4 February 2022 Emails re Inspection Follow-Up 5 Cannabis Retail Inspection – July 2022 Findings 6 Notice of Violation and Citation AB 6003 7 2 State law provides local jurisdictions with Local Control, providing the ability to enact rules and regulations that are stricter than State laws. Business and Professions Code Section 26200 Division 10- Cannabis Chapter 20 Local Control. 26200. (a) (1) This division shall not be interpreted to supersede or limit the authority of a local jurisdiction to adopt and enforce local ordinances to regulate businesses licensed under this division, including, but not limited to, local zoning and land use requirements, business license requirements, and requirements related to reducing exposure to secondhand smoke, or to completely prohibit the establishment or operation of one or more types of businesses licensed under this division within the local jurisdiction.