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Home My WebLink AboutItem 3AFrom:Steven Wijatyk To:City Clerk; Cassandra Edney; Brenda Pree Cc:Jeffrey Bernstein; Ron deHarte; Grace Garner; Christy Holstege; Lisa Middleton Subject:Fwd: Reefer Madness response to City Council agenda item 1EE Date:Thursday, February 29, 2024 1:58:42 PM Attachments:SW Response to Feb 29 Council Meeting Item 1EE_Rev4.pdf Pueblo City Council Suspends Excise Tax on Cannabis.pdf Berkeley Retroacts Cannabis Tax Relief for 2 years.pdf NOTICE: This message originated outside of The City of Palm Springs -- DO NOT CLICK on links or open attachments unless you are sure the content is safe. Dear office of the City Clerk, Can you please share my email and attachments with the City Council and retain it as part of the official record, under Item 3A, Feb 29th council meeting. I just noticed that Item 1EE was removed and replaced by item 3A, which may cause some confusion. Thank you, Steven Wijatyk ---------- Forwarded message --------- From: Steven Wijatyk <steven.j.wijatyk@gmail.com> Date: Tue, Feb 27, 2024 at 6:06 PM Subject: Reefer Madness response to City Council agenda item 1EE To: Jeffrey.Bernstein@palmspringsca.gov <jeffrey.bernstein@palmspringsca.gov>, Ron.deHarte@palmspringsca.gov <ron.deharte@palmspringsca.gov>, Grace.Garner@palmspringsca.gov <grace.garner@palmspringsca.gov>, Christy.Holstege@palmspringsca.gov <christy.holstege@palmspringsca.gov>, Lisa.Middleton@palmspringsca.gov <lisa.middleton@palmspringsca.gov> Cc: <brenda.pree@palmspringsca.gov>, City Clerk <CityClerk@palmspringsca.gov> Dear Honorable City Council, Attached is my detailed response to Item 1EE. It outlines a few very important facts that are missing since the Feb 8 meeting. Most importantly, I provided real gross receipts calculations, and a comparison from 2022 to 2023. I approximated $92,000 more tax paid by the average cannabis retailer last year, directly as a result of Assembly Bill 195, which transferred the excise tax collection from the distributor to the retailer starting January 1, 2023. This is why Palm Springs should have reduced the local cannabis tax last year, when other cities reduced it, to offset the effects of the bill. Assembly Bill 195 "amended the Cannabis Tax Law, which provides that the cannabis excise tax is based on gross receipts from the retail sale of cannabis or cannabis products effective January 1, 2023." AB 195 effectively increased the total tax amount for cannabis retailers. Here is a link to an article describing how Berkeley CA enacted a retroactive tax credit back to January 1, 2023, when the problem started. I hope that Palm Springs can do something 02/29/2024 Public Comment Item 3A similar, because the current proposal to retroact by only 1 month, is just not enough: Berkeley approves tax relief for legal cannabis businesses for next 2 years - CBS San Francisco (cbsnews.com) Here is a link to an article about how a city in Colorado recently suspended the local cannabis tax: Pueblo City Council votes to suspend excise tax on recreational Marijuana | KRDO I understand the immense amount of time that City Council puts into making this city great, and I truly hope that each of you can take the time to study the information I've provided in my report. Respectfully, Steven Wijatyk Owner (602) 618-8127 www.reefermadnesslounge.com Facebook - Instagram 02/29/2024 Public Comment Item 3A 1 2/27/24 Rev 4 Response to the February 29, 2024 Staff Report Prepared for City Council Item 1EE Steven Wijatyk Reefer Madness 2/27/2024 02/29/2024 Public Comment Item 3A 2 2/27/24 Rev 4 1) Since the passing of Assembly Bill 195 the total tax increased January 1, 2023, not January 1, 2024. I would like to respec�ully request that the 1-month retroac�ve tax credit be upgraded to a 12-month credit or 6-month suspension. This s�mulus would help retailers pump up sales and make up for last year’s losses. There is a correc�on to the statements made at the Feb 8 council mee�ng about SB512. It is noted in a footnote on Page 2 of the Feb 29 staff report that SB512 did not pass. Furthermore, SB512 does not change the fact that on January 1, 2023, the excise tax collec�on shi�ed from the distributor to the retailer, at an increased amount. Please refer to the atached Appendix A for actual Gross Receipt tax calcula�ons and how they changed from 2022 to 2023 as a direct result of Assembly Bill 195. For the average dispensary compe�ng in Palm Springs, this increase in taxes was about $92,000 for the 2023 year. Please also refer to Appendix B for CDTFA’s tax computa�on requirements and historical Cannabis Excise Tax rates, as well as a link describing how Berkeley CA retroac�vely applied tax relief for cannabis back to January 1, 2023, and a link describing how a city in Colorado enacted a cannabis tax suspension. The footnote on Page 2 of the Feb 29 staff report reads: “There was some discussion, at the February 8 Council meeting, regarding Senate Bill 512. That bill, if adopted, and beginning January 1, 2024, would prohibit a city from including in the definition of ‘gross receipts,’ the amount of any cannabis excise tax imposed under the State Cannabis Tax Law or any sales and use taxes. However, SB 512 was never adopted by the State Legislature or signed by the Governor.” 2) I would like to request clarifica�on on how the January retroac�ve credit will be applied. The deadline for filing and paying the January Palm Springs Cannabis Tax return is Thursday Feb 29, at 5pm. If the proposed ordinance is adopted this coming Thursday night, I will have already paid 10% for January. Please refer to Appendix C for the City’s Cannabis Tax Form. Page 18, paragraph 4 of the Feb 29 staff report reads: “B. The tax rate established by subsection (A) above shall apply to the gross receipts received by each cannabis retail business from and after January 1, 2024.” It is stated on Page 2 of the City’s Cannabis Tax Return that: “PER PSMC 3.42.100 PAYMENT OF TAX ON CANNABIS BUSINESS OR ACTIVITY FROM ANY ONE CALENDAR MONTH IS DUE TO THE TAX ADMINISTRATOR ON OR BEFORE THE LAST BUSINESS DAY OF THE FOLLOWING MONTH; OTHERWISE, PENALTY OF TWENTY-FIVE 25 PERCENT (25%) PLUS INTEREST WILL APPLY.” 02/29/2024 Public Comment Item 3A 3 2/27/24 Rev 4 3) The last paragraph on page 3 of the Feb 29th staff report may not be accurate, as it implies the prior moratorium will remain in effect a�er this adop�on. However, as was discussed at the prior council mee�ngs, this adop�on would supersede the October moratorium. The prior moratorium paused transfers and new retail applica�ons for 10 months and 15 days. Its purpose was to allow staff sufficient �me to conduct studies on the state of the cannabis industry. Studies are now complete, ending the prior moratorium when the new adop�on goes into effect. The last paragraph on page 3 of the Feb 29 staff report reads: “It should be noted that this ordinance establishes a moratorium only on the acceptance, processing and granting of cannabis dispensary business permits. It does not affect the City’s processing of land use entitlements for such businesses, such as conditional use permits, variances, etc. The City currently has a moratorium on cannabis dispensary land use entitlements, which is in effect until approximately September 24, 2024. While theoretically one could, after that date, apply for the land use entitlements with hope that the business permit will one day be granted, it is not anticipated that many entities would assume that sort of risk.” The November 9th, 2023, staff report page 2 reads: “The City Council adopted Urgency Ordinance No. 2085 on October 26, 2023, allowing for an immediate pause on all new cannabis applications and transfers for business activity. The purpose of that moratorium is to allow City staff sufficient time to conduct studies on the state of the cannabis industry and the potential over-saturation of certain markets of the cannabis industry. Under Urgency Ordinance No. 2085, the moratorium period lasts for 45 days, thereby ending on Sunday, December 10, 2023.” 4) At 2:07:25 of the recorded Feb 8 council mee�ng, staff said they would add a sentence explicitly sta�ng that card fees would not be included as taxable. However, I do not see the amendment in the Feb 29 staff report. It needs to clarify “credit and debit card fees shall be excluded.” Page 8, paragraph 3 of the Feb 29 staff report reads: “SECTION 2. Code Amendment. Section 3.42.020 (M) of the Palm Springs Municipal Code is hereby amended to read as follows: M. Except as otherwise specifically provided in this code or by regulation authorized by this code, “gross receipts” means the total amount actually received or receivable from all sales; the total amount or compensation actually received or receivable for the performance of any act or service, of whatever nature, for which a charge is made or credit allowed, whether or not such act or service is done as a part of or in connection with the sale of materials, goods, wares or merchandise; discounts, rents, royalties, fees, commissions, dividends, and gains realized from trading in stocks or bonds, however designated. Included in “gross receipts” shall be all receipts, cash, credits and property of any kind or nature, without any deduction or set off therefrom on account of the cost of the property sold, the cost of materials used, labor or 02/29/2024 Public Comment Item 3A 4 2/27/24 Rev 4 service costs, interest paid or payable, or losses or other expenses whatsoever. Collection of any State excise tax shall be excluded from ‘gross receipts.’” 5) At 2:41:25 in the recorded Feb 8 council mee�ng, the council majority agreed that businesses should be able to hire and start their employee while wai�ng for live scan results. However, this is not added in the Feb 29 staff report. Can we please confirm this new policy? 6) Code Compliance Warnings. The enforcement ac�on data presented at the Feb 8th Council Mee�ng in the slides recorded at 1:28:00 show (8) cita�ons without warning, and only (4) courtesy no�ces. It was stated that there is o�en a correc�on period, and the laws are new and o�en changing. Why are there twice as many cita�ons as warnings? A solid enforcement by educa�on policy would result in more warnings and fewer cita�ons. I would ask that moving forward cannabis businesses be treated like every other business, and not like they are undeserving of warnings just because they are cannabis. To effec�vely work together, there should be warnings for first-�me issues. Please see Appendix D for the prior city managers authoriza�on to issue cannabis cita�ons without warning, which was issued on 9/28/21. It is important to note that the "authoriza�on" to issue cannabis cita�ons without courtesy no�ce, is described in its third paragraph as follows: "This administrative regulation is issued as an interim matter. The issue addressed pursuant to this regulation will be the subject of an amendment to PSMC Chapter 5.55 (Adult-Use Cannabis Related Business and Activities), at the next available opportunity." Since PSMC 5.55 is being updated now, it is �me to drop this policy and replace it with a new policy that includes warnings. The fine schedule would also need to be updated to include warnings. See Appendix E for the current fine schedule. 7) I applaud the city for alloca�ng a por�on of taxes to “social good,” thank you. A possible “social good” program would be assis�ng medical pa�ents who cannot afford their cannabis medicine. Perhaps the program could assist pa�ents in purchasing cannabis at a lesser price from the retailer. The program could also assist pa�ents in ge�ng their MMIC card, which is more challenging to get than the third-party doctors’ medical recommenda�on. An MMIC is a state issued card and 02/29/2024 Public Comment Item 3A 5 2/27/24 Rev 4 would exempt the pa�ent from the 9.25% sales tax and poten�ally exempt them from the 5% city tax as well. As a requirement, the pa�ents would need to demonstrate financial hardship and medical need. Also, since the council decided to require educa�onal materials at the dispensary, informa�on about this financial hardship program could be included as part of the educa�onal flyer posted at dispensaries. When customers ask how we can help with their medical-financial hardships, my staff would direct them to the educa�onal materials. Page 1, paragraph 6: “SECTION 4. Social Good Funding. The City Council directs that one percent (1%) of the total cannabis tax revenue received by the City following the effective date of this resolution directed to the general fund shall be used for the City’s social good programs, as adopted and amended from time to time by the City Council or the City Manager.” 02/29/2024 Public Comment Item 3A 6 2/27/24 Rev 4 Appendix A Gross Receipts Tax Calcula�ons 02/29/2024 Public Comment Item 3A 7 2/27/24 Rev 4 Cannabis businesses have a much higher overhead than other retail businesses. Rent, insurance, security, banking, and licensing are just a few examples which are tremendously higher for Cannabis. Also because of IRS 280e, cannabis retailers cannot make federal income tax deduc�ons for normal things like adver�sing and employee payroll. To survive this overhead, cannabis businesses will markup items between 100% and 150%. On January 1, 2023, with the passing of Assembly Bill 195, the CDTFA transferred the excise tax collec�on from the distributor to the retailer. Prior to January 1, 2023, the excise tax rate was 26.25% of the wholesale Cost. Since January 1, 2023, the excise tax rate is 15% of (Sale Price + Local Cannabis Tax). The “Sale Price” is the same as “Gross Receipts” for the purpose of the example on the following charts, which looks at one item. In the charts below I have provided an example of a $100 item that I sell at 98% markup since 2022. I demonstrate how that shi� in collec�on from distributor to retailer on January 1, 2023, reduced my profits by 5.11%, and increased customer price by 2.90%. Here is the example item showing how markup rate and profit were calculated up to December 31, 2022: Cost $40.00 excise tax paid to distributor ($40.00 x 26.25%) $10.50 cost with excise ($40.00 + $10.50) $50.50 Sale Price $99.85 Profit ($99.85 - $50.50) $49.35 Markup rate ($49.35 / $50.50) 97.72% Here are how gross receipt taxes for this item were computed up to December 31, 2022: Sale Price $99.85 Local Cannabis Tax (10% x $99.85) $9.99 Subtotal subject to Sales Tax ($99.85 + $9.99) $109.84 Sales Tax ($109.84 x 9.25%) $10.16 Total ($109.84 + $10.16) $120.00 Here is the same example item showing profit and taxes a�er January 1, 2023. I reduced the Sale Price so that the customer’s total a�er tax remains unchanged from the year 2022 to 2023. Cost $40.00 Sale Price $86.83 Profit ($86.83 - $40.00) $46.83 02/29/2024 Public Comment Item 3A 8 2/27/24 Rev 4 Sale Price $86.83 Local Cannabis Tax ($86.83 x 10%) $8.68 Subtotal Subject to Excise Tax at the Register ($86.83 + $8.68) $95.51 Cannabis Excise Tax ($95.51 x 15%) $14.33 Subtotal subject to Sales Tax ($95.51 + $14.33) $109.84 Sales Tax ($109.84 x 9.25%) $10.16 Total ($109.84 + $10.16) $120.00 No�ce that even though I reduced the Sale Price to keep the customers Total the same, my Profit went down $2.52 on this item, which is 5.11%. Profit Reduction ($49.35 - $46.83) $2.52 % Profit Reduction ($2.52 / $49.35) 5.11% In the following two charts, I will show how the customers’ total would increase, if I were to increase the Sale Price to keep the Profit the same as it was in 2022, effec�vely passing off the tax increase to the customer. Cost $40.00 Sale Price $89.35 Profit ($89.35 - $40.00) $49.35 Cost $40.00 Sale Price $89.35 Local Cannabis Tax ($89.35 x 10%) $8.94 Subtotal Subject to Excise Tax at the Register ($89.35+$8.94) $98.29 Cannabis Excise Tax ($98.29 x 15%) $14.74 Subtotal subject to Sales Tax ($98.29 + $14.74) $113.03 Sales Tax ($113.03 x 9.25%) $10.46 Total ($113.03 + $10.46) $123.49 No�ce that to keep profit the same as it were in 2022, we increased the customers’ Total Price by 2.9% Total Increase ($123.49 - $120.00) $3.49 % Total Price Increase ($3.49 / $120.00) 2.9% This 5.11% reduc�on in profit adds up to thousands of dollars lost each month, due to the new tax formula. If the average operator does $300,000 in total sales each month with a 98% markup, that is approximately $150,000 each month in profit before all overhead and expenses. If we take 5.11% of the $150,000 which is the effect of the January 2023 tax increase, that is $7665 that an operator lost each month, or $91,980 for the year. That leaves litle to no profit margin for the dispensary. If Palm Springs 02/29/2024 Public Comment Item 3A 9 2/27/24 Rev 4 reduced the Local Cannabis Tax last year by 5% like other ci�es, it would have offset these overall increases. This is why I respec�ully ask for a 12-month retroac�ve tax credit, or a 6-month suspension. Lastly, I will show how if an operator today erroneously charges the Excise Tax before the Local Cannabis Tax, (in other words, includes it in the “gross receipts” computa�on) the City gets 15% more. Cost $40.00 Sale Price $86.83 Cannabis Excise Tax ($86.83 x 15%) $13.02 Subtotal Subject to Excise Tax at the Register ($86.83 + $13.02) $99.85 Local Cannabis Tax ($99.85 x 10%) $9.99 Subtotal subject to Sales Tax ($99.85 + $9.99) $109.84 Sales Tax ($109.84 x 9.25%) $10.16 Total ($109.84 + $10.16) $120.00 Increase in Local Cannabis Tax ($9.99 - $8.68) $1.31 % increase in Local Cannabis Tax ($1.31 / $8.68) 15% 02/29/2024 Public Comment Item 3A 10 2/27/24 Rev 4 Appendix B CDTFA’s tax computa�on requirements and historical Cannabis Excise Tax rates, as well as links to (2) ci�es that enacted retroac�ve and sepended tax measures. 02/29/2024 Public Comment Item 3A 11 2/27/24 Rev 4 02/29/2024 Public Comment Item 3A 12 2/27/24 Rev 4 Note: from July 1, 2022, to Dec 31, 2022, distributors collected 26.25% from the retailer on the products’ wholesale cost. The 26.25% comes from the chart above by mul�plying the 15% by the es�mated 75% markup. In other words, 0.15 x 1.75 = 0.2625, or 26.25%. Note: As stated in Assembly Bill 195, in paragraph 28 “The bill, beginning on January 1, 2023, would impose the cannabis excise tax on purchasers of cannabis or cannabis products sold in this state at the rate of 15% of the gross receipts of any retail sale by a cannabis retailer.” Here is the link to Assembly Bill 195: htps://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB195 Here is an example of a city suspending the cannabis tax: https://krdo.com/news/2023/12/27/pueblo-city-council-votes-down-excise-tax-on-recreational-marijuana/ Here is an example of a city enac�ng a retroac�ve tax credit back to January 1, 2023: https://www.cbsnews.com/sanfrancisco/news/berkeley-cannabis-business-tax-holiday-through-2025/ 02/29/2024 Public Comment Item 3A 13 2/27/24 Rev 4 Appendix C City’s Cannabis Tax Form 02/29/2024 Public Comment Item 3A City of Palm Springs Department of Finance and Treasury P.O. Box 2743 • Palm Springs, California 92263-2743Tel: (760) 323-8229 • Fax: (760) 322-8320 • Web: www.palmspringsca.gov GROSS RECEIPTS TAX REMITTANCE FORM -CANNABIS BUSINESS OR ACTIVITY (FOR BUSINESSES OPERATING WITH A VALID CITY-ISSUED PERMIT}-SECTION 3.42.030 PSMC ONE REMITTANCE FORM PER LOCATION •THE CITY'S TAX ON CANNABIS BUSINESS OR ACTIVITY, ORDINANCE 1946, IS IMPOSED ON EVERY PERSON ENGAGED IN OPERATING OR OTHERWISE CONDUCTING A CANNABIS BUSINESS OR ACTIVITY, AND REGARDLESS OF WHETHER SUCH CANNABIS BUSINESS OR ACTIVITY HAS A PERMIT PURSUANT TO SECTION 5.35, 5.45 AND/OR 5.55 OF THE CITY'S MUNICIPAL CODE, SHALL PAY A CANNABIS TAX UP TO A MAXIMUM OF 15 CENTS FOR EACH $1.00 OF PROCEEDS OR FRACTIONAL PART THEREOF, AND $10.00 PER SQUARE FOOT OF CULTIVATION AREA OR FRACTION THEREOF. •PURSUANT TO SECTION 3.42.125.E OF THE CITY'S MUNICIPAL CODE THE CITY ATTORNEY SHALL HAVE THE DISCRETION TO ISSUE AN ADMINISTRATIVE CITATION, AND IMPOSE AN ADMINISTRATIVE FINE IN THE AMOUNT OF $5,000 FOR EACH MONTH THAT ANY PAYMENT OF TAX IS OVERDUE. ■IF THE CITY MANAGER DETERMINES NONPAYMENT OF ANY AMOUNT DUE UNDER THIS CHAPTER OR DIVISION II OF TITLE 3 IS DUE TO FRAUD, A PENALTY OF 25 PERCENT OF THE AMOUNT OF OTHERWISE DUE SHALL BE ADDED THERETO IN ADDITION TO PENALTIES AND INTEREST OTHERWISE STATED IN THIS CHAPTER. •PURSUANT TO SECTION 3.42.045 OF THE CITY'S MUNICIPAL CODE, REGISTRATION OF CANNABIS BUSINESS OR ACTIVITY IS REQUIRED. ■RETURNS ARE DUE MONTHLY -PLEASE CONTACT OUR OFFCE TO SCHEDULE YOUR APPOINTMENT PRIOR TO COMING IN. BUSINESS NAME: _________________ FEIN OR SSN: ____________________ OWNER NAME: _____________________________________________________________ ADDRESS: ___________________________________ _ PHONE NUMBER: ____________________________________ FAX NUMBER: ________ EMAIL:. PERMIT NUMBER (APPLICATION CASE NUMBER): BUSINESS LICENSE NUMBER: □CHECK BOX IF ANY OF THE ABOVE INFORMATION HAS CHANGED. IF YES, PLEASE COMPLETE A CHANGE OF ADDRESS FORM REPORTING PERIOD (MONTH/YEAR): __________________ _ □CHECK BOX IF THIS IS A LATE RETURN □CHECK BOX IF THIS IS AN AMENDED RETURN REMIT TO: CITY OF PALM SPRINGS - FINANCE DEPARTMENT P.O. BOX 2743 PALM SPRINGS, CA 92263-2743 PLEASE CONTACT OUR OFFICE TO SCHEDULE AN APPOINTMENT I DECLARE UNDER PENALTY OF PERJURY THAT THE ABOVE RETURN IS TRUE, CORRECT AND COMPLETE TO THE BEST OF MY KNOWLEDGE AND BELIEF. AUTHORIZED SIGNATURE: _______________________________ DATE: ___________________ NAME AND TITLE OF AUTHORIZED PERSON: ____________________________________________ CANNABIS BUSINESS OR ACTIVITY - GROSS RECEIPTS TAX REMITTANCE FORM WITH VALID PERMIT- REV. 12-15-2021- PAGE 1 OF 2 02/29/2024 Public Comment Item 3A BUSINESS NAME: ____________________ FEIN OR SSN: ________ _ PERMIT NUMBER (APPLICATION CASE NUMBER): _______________________ REPORTING PERIOD (MONTH/YEAR): ___________________ _ *PER PSMC 3.42.100 PAYMENT OF TAX ON CANNABIS BUSINESS OR ACTIVITY FROM ANY ONE CALENDAR MONTH IS DUE TO THE TAX ADMINISTRATOR ON OR BEFORE THE LAST BUSINESS DAY OF THE FOLLOWING MONTH; OTHERWISE, PENALTY OF TWENTY-FIVE 25 PERCENT (25%) PLUS INTEREST WILL APPLY. 1.GROSS RECEIPTS FOR THIS PERIOD -FOR THIS LOCATION: 1.A. RETAIL SALES: $ LOCATION NAME:1.B. MANUFACTURING: $ MULTIPLE LOCATIONS*1.C. DISTRIBUTION: $ *COMPLETE AND SUBMIT ONE REMITTANCE FOR PER LOCATION 1.D. TESTING: $ 1.E. TOTAL AMOUNT $ 2.TAX DUE FOR THIS PERIOD -• MULTIPLY RETAIL SALES LINE 1.A. BY .10 2.A. RETAIL SALES: $ • MULTIPLY MANUFACTURING LINE 1.B. BY .02 2.B. MANUFACTURING: $ • MULTIPLY DISTRIBUTION LINE 1.C. BY Q 2.C. DISTRIBUTION: $ •MULTIPLY TESTING LINE 1.D. BY Q 2.D. TESTING: $ 2.E. TOTAL AMOUNT $ 3.LATE PAYMENT PENALTY: 25% OF TAX DUE on LINE 2.E $ 4.TOTAL (ADD LINE 2.E. + LINE 3):$ s.ADDITIONAL LATE PAYMENT PENALTY FOR THE SECOND MONTH OF DELIQUENCY:$ 25% ofTAX DUE on LINE 2.E. 6.TOTAL (ADD LINE 4 + LINE 5):$ 7.INTEREST (1% PER MONTH) ON TAX, FEES & PENALTIES:$ MULTIPLY LINE 6 BY .01 8.ADDITIONAL FEES (IF APPLICABLE):$ 9.TOTAL AMOUNT DUE (ADD LINE 6 + LINE 7 + LINE 8):$ INCLUDES TAX, FEES, AND PENALTIES* ADDITIONAL COMMENTS / ATTACHMENTS: _______________________ _ OFFICE USE ONLY REMITTANCE RECEIVED BY (1) _______ (2) _______ DATE _________ _ COMMENTS/NOTES: _____________________________ CANNABIS BUSINESS OR ACTIVITY - GROSS RECEIPTS TAX REMITTANCE FORM WITH VALID PERMIT- REV. 12-15-2021- PAGE 2 OF 2 02/29/2024 Public Comment Item 3A 16 2/27/24 Rev 4 Appendix D City Managers Authoriza�on to Issue Cannabis Cita�ons Without Warning star�ng 9/28/21 02/29/2024 Public Comment Item 3A 02/29/2024 Public Comment Item 3A 02/29/2024 Public Comment Item 3A 19 2/27/24 Rev 4 Appendix E Current Fine Schedule which needs to be updated with Warnings. This has not been updated since April 2021. 02/29/2024 Public Comment Item 3A 10.04.2021 1 | P a g e RULES AND REGULATIONS FOR CANNABIS PROCEDURES Any violation that is not explicitly listed in the table below shall be considered a minor violation subject to the following fine amounts: 1st Violation $500; 2nd Violation $1,000; and 3rd Violation $5,000. If any action or inaction qualifies under multiple fine amounts (i.e., could be categorized as a moderate violation or a seri ous violation, etc.) then whatever higher fine amount is applicable shall be assessed. Definitions. The definitions set forth in the Palm Springs Municipal Code Section 5.55 apply to these Rules and Regulations. Application Procedure The Department of Special Program Compliance shall provide a master Permit Application form. Any application, pre-licensing inspection, and any outstanding fees are due prior to issuance of local permit. Requirement Penalty General A Permittee may not commence operations until they have obtained any required building permit(s), fire department approvals, and other zoning and land use permit(s) and approvals. (PSMC 5.55.090 (C) (2)) Operations may not commence until approved A Permittee may not commence operations until they have obtained a City of Palm Springs business license. (PSMC 5.55.140 A) Operations may not commence until approved A Permittee may not commence operations until that Permittee secures and provides a proper License of the State of California authorized by State Law to engage in the specific business as locally permitted. (PSMC 5.55.140 F) Operations may not commence until approved A Permittee must maintain insurance, the insurance required aggregate less than $2 million dollars and no less than $1 million dollars for each loss. (PSMC 5.55.140 E (2)) Operations may not commence until approved Each Permittee shall maintain an inventory control and reporting system that accurately documents the present location, amounts and descriptions of all cannabis goods for all stages of the growing and production or manufacturing, laboratory testing and distribution processes. (PSMC 5.55.200 A (5)) Operations may not commence until approved A permitted adult-use cannabis business shall implement sufficient security measure to deter and prevent the unauthorized entrance into areas containing cannabis goods, and to deter and prevent the theft of cannabis goods at the adult-use cannabis. (Violation Type – Serious) (PSMC 5.55.210 A). Operations may not commence until approved No person who is less than twenty-one (21) years of age may be employed or otherwise engaged in the operation of the Permittee (PSMC 5.55.200 A (15)). Permittees must provide to the Department of Special Program Compliance a list of all employees, including their address, date of birth and date Live Scan completed (PSMC 5.55.200 (A)(21). Operations may not commence until approved Prior to commencing operations, Applicants shall provide sufficient evidence that they have complied with all Required Findings and Conditions for their proposed cannabis business. (Dispensaries 5.55 Operations may not commence until approved. 02/29/2024 Public Comment Item 3A 10.04.2021 2 | P a g e Requirement Penalty 095; Cultivation 5.55.096, Manufacturing 5.55.097, Testing 5.55.098, Transportation and Distribution 5.55.099) 02/29/2024 Public Comment Item 3A 10.04.2021 3 | P a g e INSPECTIONS Applicants will submit to an inspection prior to approval of local permit. Inspection may include, but is not limited to, employees or agents of the following City Departments: Building and Safety, Police Department and Fire Department. Permittees shall be subject to inspection, investigation or audit by the Department of Special Program Compliance or other City Departments to determine compliance. An inspection, investigation or audit is a review of any books, records, accounts, inventory, or on-site operations. Specific to the business. Inspections, investigations, or audit may include, but are limited to employees of the following departments: Department of S pecial Program Compliance, Building and Safety, Police Department, Fire Department, and Finance Department. Requirement/Violation Violation Type Penalty General Point-of-Sale Inventory Control and Reporting System. Adult-Use Cannabis Businesses shall employ the use of track-and-trace software. All transactions, business expenses, and operations must be tracked in compliance with State Track-and-Trace regulations. The software must provide documentation and information that meets State compliance requirements and have the ability to integrate with the California Cannabis Authority (CCA) track-and-trace system. Specific Requirements: a. Retail. Ability to provide inventory management and Point of Sale documentation and records to manage cannabis retails from seed to sale. Generate monthly sales report that provide total gross monthly sales and tax liabilities. Reports must be submitted with monthly tax remittance. b. Cultivation. Ability to track and control operations from planting through harvesting, to curing and packaging. c. Manufacturing. Ability to manage each stage of the manufacturing process from extraction and refinement to finished product. Inventory management, electronic batch records, specification management, equipment control and document management for compliance with state cannabis regulation should be provided. Generate monthly report that demonstrates all gross monthly sales and tax liabilities. Reports must be submitted with monthly tax remittance. d. Distribution. Ability to manage vendor, facilities and wholesaler partner. Ability to automatically generate purchase orders, invoices, and manifests. Generate monthly report that demonstrates all gross monthly sales and tax liabilities. Reports must be submitted with monthly tax remittance. (PSMC 5.55.102 E) Moderate 1st 2,500 2nd 5,000 3rd 10,000 02/29/2024 Public Comment Item 3A 10.04.2021 4 | P a g e Requirement/Violation Violation Type Penalty Permittee shall keep the City and law enforcement updated with the names, addresses, and relevant criminal histories of all employees, supervisors, and other relevant parties for the Adult- Use Cannabis Business at all times. Relevant criminal histories shall include any drug-related or felony convictions, the nature of such offenses, and the sentences received for such convictions. (PSMC 5.55.140 E (4)). Moderate 1st 2,500 2nd 5,000 3rd 10,000 Security Inspection The Business Premises shall have a digital video surveillance system with a minimum camera resolution of 1280 × 720 pixels. The video surveillance system shall at all times be able to effectively and clearly record images of the area under surveillance. Each camera shall be permanently mounted and in a fixed location. Each camera shall be placed in a location that allows the camera to clearly record activity occurring within 20-feet of all points of entry and exits on the Business Premises, and allows for the clear and certain identification of any person and activities in all areas required to be filmed. Areas that shall be recorded on the video surveillance system include, but are not limited to, the following: (a) Areas where cannabis goods are weighed, packed, stored, loaded and unloaded for transportation, prepared, or moved within the Business Premises; (b) Limited-access areas; (c) Security rooms; (d) Areas storing a surveillance-system storage device with at least one camera recording the access points to the secured surveillance recording area; and (e) Entrances and exits to the Business Premises, which shall be recorded from both indoor and outdoor vantage points. Retailers shall also record point-of-sale areas and areas where cannabis goods are displayed for sale on the video surveillance system. At each point of sale location, camera placement must allow for the recording of the facial features of any person purchasing or selling cannabis goods, or any person in the retail area, with sufficient clarity to determine identity. Cameras shall record continuously 24 hours per day and at a minimum of 15 frames per second (FPS). The physical media or storage device on which surveillance recordings are stored shall be secured in a manner to protect the recording from tampering or theft. Surveillance recordings shall be kept for a minimum of 90 days. Surveillance recordings are subject to inspection by the City and shall be copied and sent to or otherwise provided to the City or shall be kept in a manner that allows the City to view and obtain copies of the recordings at the Business Premises immediately upon request. The Permittee shall also send otherwise provide copies of the recordings to the City upon request within the time specified by the City. Recorded images shall clearly and accurately display the time and date. Time is to be measured in accordance with the United States National Institute Standards and Technology standards. The video surveillance system shall be equipped with a failure notification system that provides notification to the Permittee of any interruption or Serious 1st 5,000 2nd 10,000 3rd 25,000 02/29/2024 Public Comment Item 3A 10.04.2021 5 | P a g e Requirement/Violation Violation Type Penalty failure of the video surveillance system or video surveillance-system storage device. (PSMC 5.55.210 A (4)) Alarmed with an alarm system that is operated, maintained, and operated by a reputable security company. (PSMC 5.55.210 A (6)). Serious 1st 5,000 2nd 10,000 3rd 25,000 All cannabis goods shall be stored in a secured and locked safe room, safe or vault, and in a manner to prevent diversion, theft and loss, except for limited amounts of cannabis used for display purposes, samples, or immediate sale. (PSMC 5.45.200 A (18)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Retail Facilities: 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: a. Prevent individuals from loitering on the premises of the dispensary if they are not engaging in activity expressly related to the operations of the dispensary; 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 for limited amounts of Cannabis goods used for display purposes, samples, or immediate sale; d. Install security cameras on site; and e. Provide for on-site security personnel meeting the requirements and standards contained within applicable State regulations and applicable City requirements. (PSMC 5.55.205 A (2)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Cultivation Facilities: Security measures sufficient to restrict access only to authorized personnel and to deter trespass and theft of Cannabis goods shall be provided and maintained. (PSMC 5.55.205 B (2) (b)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Manufacturing Facilities: Security measures sufficient to restrict access to only authorized personnel and to deter trespass and theft of Cannabis goods shall be provided and maintained. Security measures shall include, but are not limited to, the following: i. Prevent individuals from loitering on the premises of the manufacturing facility if they are not engaging in activity expressly related to the operations of the manufacturing facility; ii. 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; iii. Install security cameras on site; and Serious 1st 5,000 2nd 10,000 3rd 25,000 02/29/2024 Public Comment Item 3A 10.04.2021 6 | P a g e Requirement/Violation Violation Type Penalty iv. Provide for on-site security personnel meeting the requirements and standards contained within applicable State regulations and applicable City requirements. (PSMC 5.55.205 C (e)). Testing Facilities: Security measures sufficient to restrict access to only authorized personnel and to deter trespass and theft of Cannabis goods shall be provided and maintained. Security measures shall include, but are not limited to, the following: i. Prevent individuals from loitering on the premises of the testing facility if they are not engaging in activity expressly related to the operations of the testing facility; ii. 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; iii. Install security cameras on site; and iv. Provide for on-site security personnel meeting the requirements and standards contained within applicable State regulations and applicable City requirements. PSMC 5.55.205 D (b)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Distribution Facilities: Security measures sufficient to restrict access to only authorized personnel and to deter trespass and theft of Cannabis goods shall be provided and maintained. Security measures at distribution facilities shall include, but are not limited to, the following: i. Prevent individuals from loitering on the premises of the distribution facility if they are not engaging in activity expressly related to the operations of the distribution facility; ii. 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; iii. Install security cameras on site; and iv. Provide for on-site security personnel meeting the requirements and standards contained within applicable State regulations and applicable City requirements. (PSMC 5.55.205 E (e)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Operational Audit General A Permittee must maintain insurance, the insurance required aggregate less than $2 million dollars and no less than $1 million dollars for each loss. (PSMC 5.55.140 E (2)) Serious 1st 5,000 2nd 10,000 3rd 25,000 Each Permittee shall maintain an inventory control and reporting system that accurately documents the present location, amounts and descriptions of all cannabis goods for all stages of the growing and production or manufacturing, laboratory testing and distribution processes. (PSMC 5.55.200 A (5)) Serious 1st 5,000 2nd 10,000 3rd 25,000 02/29/2024 Public Comment Item 3A 10.04.2021 7 | P a g e Requirement/Violation Violation Type Penalty All Adult-Use cannabis businesses must pay all applicable sales taxes and fees pursuant to all federal, State, and local law and the owner and/or operator shall not be delinquent in the payment of such taxes and fees. (PSMC 5.55.200 A (9)) Moderate 1st 2,500 2nd 5,000 3rd 10,000 All cannabis goods shall be tested. Upon request, Permittee to provide Certificate of Analysis within 48 hours to City Staff. (PSMC 5.55.205 C (2) (g)). Serious 1st 5,000 2nd 10,000 3rd 25,000 A Permittee shall ensure that the City is notified in writing of a criminal conviction rendered against the Permittee, employee, supervisor or any other relevant party, either by mail or electronic mail, within 48 hours of the conviction. A Permittee shall ensure that the City is notified in writing of a civil penalty or judgment rendered against the Permittee, either by mail or electronic mail. A Permittee shall ensure that the City is notified in writing of the revocation of a state license, permit, or other local authorization, either by mail or electronic mail within 48 hours of receiving notice of the revocation. (PSMC 5.55.140 E (4)). Moderate 1st 2,500 2nd 7,500 3rd 25,000 A Permittee shall notify the City within 24 hours of discovery of any of the following situations: (a) The Permittee discovers a significant discrepancy in its inventory; (b) The Permittee becomes aware of or has reason to suspect diversion, theft, loss, or any other criminal activity pertaining to the operation of the Permittee’s business; (c) The Permittee becomes aware of or has reason to suspect diversion, theft, loss, or any other criminal activity by an agent or employee pertaining to the operation of the Permittee’s business; (d) The Permittee becomes aware of or has reason to suspect the loss or unauthorized alteration of records related to cannabis goods, registered medical cannabis patients or primary caregivers, or dispensary employees or agents; or (e) The Permittee becomes aware of or has reason to suspect any other breach of security. (PSMC 5.55.210 E). Serious 1st 5,000 2nd 10,000 3rd 25,000 Applicants and Permittees Shall Cooperate with City Manager Employees. 1. Applicants and Permittees must cooperate with employees and investigators of the City Manager who are conducting inspections or investigations relevant to the enforcement of laws and regulations related to this Chapter. 2. No Applicant or Permittee shall by any means interfere with, obstruct, or impede the City Manager or employee or investigator of the City Manager from exercising their duties under the provisions of this Chapter and all rules promulgated pursuant to it. This would include, but is not limited to: a. Threatening force or violence against an employee or investigator of the City Manager, or otherwise endeavoring to intimidate, obstruct, or impede employees or investigators of the City Manager, their supervisors, or any peace officers from Serious 1st 5,000 2nd 10,000 3rd 25,000 02/29/2024 Public Comment Item 3A 10.04.2021 8 | P a g e Requirement/Violation Violation Type Penalty exercising their duties. The term “threatening force” includes the threat of bodily harm to such individual or to a member of their family; b. Denying employees or investigators of the City Manager access to an Adult- Use Cannabis Business during business hours or times of apparent activity; c. Providing false or misleading statements; d. Providing false or misleading documents and records; e. Failing to timely produce requested books and records required to be maintained by the Permittee; or f. Failing to timely respond to any other request for information made by the City Manager in connection with an investigation of the qualifications, conduct or compliance of an Applicant or permittee. (PSMC 5.55.400 (C)) A Permittee, its employees, agents, and officers must obey all applicable labor laws of the State of California and the City of Palm Springs. (PSMC 5.55.200 (27)). Moderate 1st 2,500 2nd 5,000 3rd 10,000 No person who is less than twenty-one (21) years of age may be employed or otherwise engaged in the operation of the Permittee (PSMC 5.55.200 A (15)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Each Permittee shall keep and maintain the following records for at least seven years: (a) Financial records including, but not limited to, bank statements, sales invoices, receipts, tax records, and all records required by the California State Board of Equalization, other State of California agencies, the Office of Finance, or the City; (b) Personnel records, including each employee’s full name, social security, or individual tax payer identification number, date of beginning employment, and date of termination of employment if applicable; (c) Training records, including, but not limited to, the content of the training provided and the names of the employees that received the training; contracts with other Permittees; (d) Permits, licenses, and other local or state authorizations to conduct Adult-Use Cannabis Activity. (PSMC 5.55.102 C). Serious 1st 5,000 2nd 10,000 3rd 25,000 The Permittee shall maintain clear and adequate records and documentation demonstrating that all Cannabis goods have been obtained from and are provided to other permitted and licensed Cannabis operations. The City shall have the right to examine, monitor, and audit such records and documentation, which shall be made available to the City upon request. (PSMC 5.55.200 A (7). Serious 1st 5,000 2nd 10,000 3rd 25,000 02/29/2024 Public Comment Item 3A 10.04.2021 9 | P a g e Requirement/Violation Violation Type Penalty A Permittee must maintain adequate records of all activities and transactions that involve financial implications for seven years. Such Permittees are required to utilize electronic Track and Trace Systems and point of sale terminals (if applicable). The equipment must be capable of recording and monitoring business activities, inventories, transportation, sales transactions, and generating reports on demand. The equipment must be fully integrated to process and maintain data that includes information about any business from whom the goods were received, the type and amount of goods received, the party who holds title to the goods, and the unique identifiers or lot number of the goods. Electronic equipment may include, but is not limited to: (a) Radio-Frequency Identification Devices; (b) Bar code identifiers; (c) Scanning equipment and software; (d) Cash registers; (e) Desktop computers; (f) Mobile devices; and (g) Cloud-based technologies that can manage all aspects of the cannabis life cycle from "seed to sale." Data storage and reporting features must incorporate all aspects of revenue transactions inclusive of accurate inventory levels, transactional history, sales receipts and entry of all point of sales data inclusive of wholesale and retail sales. The data must also allow for the City or its authorized agents to clearly distinguish the activities of medical Cannabis from non-medical Cannabis. For Permittees engaging in Retailer Adult-Use Cannabis Activity, information required to be tracked includes the sale the Cannabis Goods, such as the date of sale, type of goods purchased and quantity of each good, and related sale prices. For Permittees engaging in Distributor Adult-Use Cannabis Activity, the Permittee must disclose when it uses its own Distributor License to transport the Cannabis Goods to one or more Permittees conducting Retailer Adult-Use Cannabis Activity and enter that transport event into the Track and Trace System database. This information includes the distributor state license number, amount of goods transported, vehicle information, and date of transport. (PSMC 5.55.102 E). Serious 1st 5,000 2nd 10,000 3rd 25,000 The City shall utilize the State of California Track and Trace System for unique identifiers of cannabis and cannabis products, which all Permittees conducting Adult-Use Cannabis Activity shall use. Permittees shall meet all Track and Trace System requirements of the State of California at all times. (PSMC 5.55.102 E). Serious 1st 5,000 2nd 10,000 3rd 25,000 Retail 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 Serious 1st 5,000 2nd 10,000 3rd 25,000 02/29/2024 Public Comment Item 3A 10.04.2021 10 | P a g e Requirement/Violation Violation Type Penalty by the State licensing authority. Security measures shall include, but are not limited to, the following: a. Prevent individuals from loitering on the premises of the dispensary if they are not engaging in activity expressly related to the operations of the dispensary; 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 for limited amounts of Cannabis goods used for display purposes, samples, or immediate sale; d. Install security cameras on site; and e. Provide for on-site security personnel meeting the requirements and standards contained within applicable State regulations and applicable City requirements. (PSMC 5.55.205 (A)(2)) Retail Delivery: If the dispensary operations are proposed to include transportation and distribution, all employees of a dispensary delivering Cannabis goods shall carry a copy of the documentation listed below when making deliveries. This information shall be provided upon request to law enforcement officers and to employees of state and local agencies enforcing this Chapter. a. A copy of the dispensary’s current permits, licenses, and entitlements authorizing them to provide transportation and distribution services; b. The employee’s government-issued identification; c. A copy of the transportation and distribution request; and d. Chain of custody records for all goods being delivered. (PSMC 5.55.205 (A)(3)) Serious 1st 5,000 2nd 10,000 3rd 25,000 Dispensaries shall ensure that all Cannabis goods at the dispensary are cultivated, manufactured, transported, distributed, and tested by licensed and permitted facilities that maintain operations in full conformance with state and local regulations. (PSMC 5.55.205 (4)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Dispensaries shall not distribute any Cannabis goods unless the Cannabis goods are labeled and in a tamper-evident package in compliance with Section 26120 (a) of the California Business and Professions Code and any additional rules promulgated by the licensing authority and such label shall include the name and contact information of the dispensary that dispensed the Adult- Use Cannabis.(PSMC 5.55.205 (A)(5)) Serious 1st 5,000 2nd 10,000 3rd 25,000 Possession or transportation and distribution of any other form of illegal drugs without proper legal authorization shall be grounds for revocation of permits. (PSMC 5.55.205 (A) (6). Serious 1st 5,000 2nd 10,000 3rd 25,000 02/29/2024 Public Comment Item 3A 10.04.2021 11 | P a g e Requirement/Violation Violation Type Penalty Dispensary shall facilitate the dispensing, making available, sale, and delivery of cannabis goods with a technology platform that uses point-of-sale technology to track, and database technology to record and store, the following information for each transaction involving the exchange of cannabis goods between the Dispensary and customer: a. The first name and employee number of the Dispensary employee who processed the sale of cannabis goods on behalf of the Dispensary. b. A list of all the cannabis goods purchased, including the quantity purchased. c. The total amount paid for the sale, including the individual prices paid for the Cannabis goods, and any amounts paid for tax. (PSMC 5.55.205 (A) (7)). Moderate 1st 2,500 2nd 5,000 3rd 10,000 Cultivation Adult-Use Cannabis Cultivation shall comply with all of the following regulations: a. All Cultivation activities permitted under this Chapter shall comply with the state requirements for unique identifiers and the trace and track program. b. Security measures sufficient to restrict access only to authorized personnel and to deter trespass and theft of Cannabis goods shall be provided and maintained. c. Pesticides and fertilizers shall be properly labeled and stored to avoid contamination through erosion, leakage, or inadvertent damage from rodents, pests, or wildlife. d. Water conservation measures, water capture systems, or grey water systems shall be incorporated in Adult-Use Cannabis Cultivation operations in order to minimize use of water where feasible. e. On-site renewable energy generation shall be required for all indoor Adult-Use Cannabis Cultivation activities, if feasible. Renewable energy systems shall be designed to have a generation potential equal to or greater than one-half of the anticipated energy demand. f. Cannabis plants shall not be visible from offsite. No visual markers indicating that Cannabis is cultivated on the site shall be visible from offsite. g. The Permittee shall ensure that the total canopy size of Adult-Use Cannabis cultivated at the site does not exceed the cumulative canopy size authorized by State Law or regulation. (PSMC 5.55.205 (B)(2)) Serious 1st 5,000 2nd 10,000 3rd 25,000 Manufacture Adult-Use Cannabis manufacturing shall comply with all of the following regulations: a. The manufacturing of food or other products infused with or which otherwise contain Cannabis may be manufactured within the appropriate manufacturing zoning districts Serious 1st 5,000 2nd 10,000 3rd 25,000 02/29/2024 Public Comment Item 3A 10.04.2021 12 | P a g e Requirement/Violation Violation Type Penalty subject to the regulations set forth in this Chapter, and subject to whatever additional regulations may be promulgated hereunder by an ordinance or resolution of the City Council. Except as otherwise provided in this Chapter, all Cannabis manufacturing within the City is prohibited. b. Adult-Use Cannabis manufacturing facilities may be located within the same building or structure as an indoor Adult-Use Cannabis Cultivation facility only if the Adult-Use Cannabis manufacturing facility is located in separate rooms of the building or structure. c. Subject to the further requirements of this Section, only State manufacturer license classification type 6 or type 7 will be allowed to operate in the City using nonvolatile solvents in accordance with MAUCRSA and Business and Professions Code Sections 26130(a) and (b). d. All Cannabis manufacturing operations shall ensure that Cannabis is obtained from permitted and licensed Cultivation sources and shall implement best practices to ensure that all manufactured Cannabis is properly stored, labeled, transported, and inspected prior to distribution at a legally permitted and licensed dispensary. e. Security measures sufficient to restrict access to only authorized personnel and to deter trespass and theft of Cannabis goods shall be provided and maintained. Security measures shall include, but are not limited to, the following: (i) Prevent individuals from loitering on the premises of the manufacturing facility if they are not engaging in activity expressly related to the operations of the manufacturing facility; (ii) 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; (iii) Install security cameras on site; and (iv) Provide for on-site security personnel meeting the requirements and standards contained within applicable State regulations and applicable City requirements. f. Any employees of an Adult-Use Cannabis manufacturing facility operating potentially hazardous equipment shall be trained on the proper use of equipment and on the proper hazard response protocols in the event of equipment failure. In addition, employees handling Edible Cannabis Products or ingredients shall be trained on proper food safety practices. g. Adult-Use Cannabis manufacturing is allowed only within Fully Enclosed and Secure Structures that are inaccessible to minors. 02/29/2024 Public Comment Item 3A 10.04.2021 13 | P a g e Requirement/Violation Violation Type Penalty h. Adult-Use Cannabis manufacturing shall not exceed the square footage authorized pursuant to any applicable land uses entitlement. i. From any public right-of-way, there shall be no visible exterior evidence of any Adult- Use Cannabis manufacturing activity. j. Adult-Use Cannabis manufacturing shall not adversely affect the health or safety of the nearby residents by creating dust, glare, heat, noise, smoke, traffic, vibration, or other impacts, and shall not be hazardous due to use or storage of materials, processes, products, or wastes. k. All Adult-Use Cannabis manufacturing facilities shall fully comply with all of the applicable restrictions and mandates set forth in State Law. All Adult-Use Cannabis manufacturing facilities shall comply with all size requirements for such facilities as imposed by State Law. Adult-Use Cannabis manufacturing facilities shall not engage in any activities not allowed by Adult-Use Cannabis manufacturing facilities pursuant to State Law. All Adult-Use Cannabis manufacturing facilities shall comply with all horticultural, labeling, processing, and other standards required by State Law. l. There is no set restriction on the hours of operation of Adult-Use Cannabis manufacturing facilities; however, restricted hours of operation may be established as a condition of approval of the manufacturing permit or the applicable land use entitlement. m. Adult-Use Cannabis manufacturing facilities shall not distribute, sell, dispense, or administer Cannabis from the facility to the public. Adult-Use Cannabis manufacturing facilities shall not be operated as Adult-Use Cannabis dispensaries. n. The Permittee of all Adult-Use Cannabis manufacturing facilities shall provide the City Manager with the name, phone number, and email address of an on-site representative to whom the City and the public can provide notice if there are any operational problems associated with the Adult-Use Cannabis manufacturing facility. All Adult-Use Cannabis manufacturing facilities shall make every good faith effort 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. o. All finished products produced by an Adult-Use Cannabis manufacturing facility must be labeled in compliance with MAUCRSA, Business and Profession Code Section 26120, and the labeling requirements outlined by the State Department of Public Health. p. All finished products produced by an Adult-Use Cannabis manufacturing facility must be packaged in child resistant containers prior to leaving the facility or becoming commercially available in accordance with MAUCRSA, Business and Profession Code 02/29/2024 Public Comment Item 3A 10.04.2021 14 | P a g e Requirement/Violation Violation Type Penalty Section 26120, the State Department of Public Health regulations, and other applicable State Laws. q. All batches of final Cannabis goods must be tested by a qualified third-party testing facility prior to distribution to a dispensary as required by MAUCRSA, Business and Professions Code Sections 26101, 26102, and 26104, and the State Department of Public Health regulations. r. Adult-Use Cannabis manufacturing facilities shall only use nonvolatile solvents that have been approved by the State Department of Public Health for Adult-Use Cannabis level 1 manufacturing. Until such time as any such nonvolatile solvents are approved by the State Department of Public Health for Adult-Use Cannabis level 1 manufacturing, Adult-Use Cannabis manufacturing facilities shall only use nonvolatile solvents that have been approved by the Food and Drug Administration for the processing and preparation of botanical dietary supplements or food grade products. s. All processing and analytical testing devises used for Adult-Use Cannabis manufacturing facilities must be UL listed, or otherwise approved for the intended use by the City’s Building Official or the Fire Department. Any processing devices using only non-pressurized water are exempt from such approval. t. Unless otherwise prohibited, all processing devices used by an Adult-Use Cannabis manufacturing facility that utilize hydrocarbons or otherwise flammable solvents must operate in a closed loop, or in such a way that all solvent material is recovered in the process. All hazardous material must be disposed of in a manner which is compliant with all local, State, and federal guidelines for the disposal of hazardous materials. (PSMC 5.55.205 (C)(2)) Testing Labs Adult-Use Cannabis testing facilities shall comply with all of the following regulations: a. Adult-Use Cannabis testing facilities shall be independent from all other persons and entities involved in the Adult-Use Cannabis industry. b. Security measures sufficient to restrict access to only authorized personnel and to deter trespass and theft of Cannabis goods shall be provided and maintained. Security measures shall include, but are not limited to, the following: (i) Prevent individuals from loitering on the premises of the testing facility if they are not engaging in activity expressly related to the operations of the testing facility; Serious 1st 5,000 2nd 10,000 3rd 25,000 02/29/2024 Public Comment Item 3A 10.04.2021 15 | P a g e Requirement/Violation Violation Type Penalty (ii) 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; (iii) Install security cameras on site; and (iv) Provide for on-site security personnel meeting the requirements and standards contained within applicable State regulations and applicable City requirements. c. Adult-Use Cannabis testing facilities shall adopt standard operating procedures using methods consistent with general requirements for the competence of testing and calibration activities, including sampling, using standard methods established by the International Organization for Standardization, specifically ISO/IEC 17020 and ISO/IEC 17025 to test Cannabis goods that are approved by an accrediting body that is a signatory to the International Laboratory Accreditation Cooperation Mutual Recognition Arrangement. d. Adult-Use Cannabis testing facilities shall obtain samples for testing according to a statistically valid sampling method. e. If a test result falls outside the specifications authorized by law or regulation, the Adult- Use Cannabis testing facility shall follow a standard operating procedure to confirm or refute the original result. f. Adult-Use Cannabis testing facilities shall destroy the remains of any samples of Cannabis goods tested upon completion of the analysis. g. A licensed Cannabis Testing Facility shall issue a certificate of analysis for each lot, with supporting data, in compliance with State laws and regulations. (PSMC 5.55.205 (D)(2)) Distribution Adult-Use Cannabis transportation and distribution facilities shall comply with all of the following requirements. a. Cannabis goods shall only be transported between permitted and licensed Adult-Use Cannabis Businesses. b. Prior to transporting Cannabis goods, the transporter shall complete an electronic shipping manifest. The shipping manifest shall include the unique identifier information from the Cultivation source. c. A physical copy of the shipping manifest shall be maintained during transportation and shall be made available upon request to law enforcement or any agents of the State or City charged with enforcement of this Chapter. Serious 1st 5,000 2nd 10,000 3rd 25,000 02/29/2024 Public Comment Item 3A 10.04.2021 16 | P a g e Requirement/Violation Violation Type Penalty d. Distribution facilities shall maintain appropriate records of transactions and shipping manifests. An organized and clean method of storing and transporting Cannabis goods shall be provided to maintain a clear chain of custody. e. Security measures sufficient to restrict access to only authorized personnel and to deter trespass and theft of Cannabis goods shall be provided and maintained. Security measures at distribution facilities shall include, but are not limited to, the following: (i) Prevent individuals from loitering on the premises of the distribution facility if they are not engaging in activity expressly related to the operations of the distribution facility; (ii) 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; (iii) Install security cameras on site; and (iv) Provide for on-site security personnel meeting the requirements and standards contained within applicable State regulations and applicable City requirements. f. Distributors shall ensure that appropriate samples of Cannabis goods are tested by a licensed testing facility prior to distribution. g. Prior to distribution, the distributor shall inspect Cannabis goods for quality assurance. h. Cannabis goods shall be packaged and labeled in accordance with the requirements of State Law. (PSMC 5.55.205 (E)(2)) 02/29/2024 Public Comment Item 3A 10.04.2021 17 | P a g e CODE ENFORCEMENT All Permittees must adhere to the requirements listed below. The indicated characterization of the violations are suggestions only and may vary depending on the circumstances of the violation. Violation: Violation Type Penalty General The Permittee shall post or cause to be posted on site all required city and state permits and licenses required to operate. Such posting shall be in a central location, visible to the patrons, at the operating site, and in all vehicles that deliver or transport Cannabis goods (PSMC 5.55.200 A (4)). Moderate 1st 2,500 2nd 5,000 3rd 10,000 The entrances and all window areas shall be illuminated during evening hours. The facility shall comply with the City’s lighting standards regarding fixture type, wattage, illumination levels, shielding, etcetera, and shall secure the necessary lighting approvals and permits as needed. (PSMC 5.55.210 A (10)). Minor 1st 500 2nd 1,000 3rd 5,000 An Adult-Use Cannabis Business shall notify the City Manager or his/her designee(s) within twenty-four (24) hours after discovering any of the following: 1. Significant discrepancies identified during inventory. The level of significance shall be determined by the regulations promulgated by the City Manager or his/her designee. 2. Diversion, theft, loss, or any criminal activity involving the Adult-Use Cannabis Business or any agent or employee of the Adult-Use Cannabis Business. 3. The loss or unauthorized alteration of records related to the Adult-Use Cannabis Business. 4. Any other breach of security. (PSMC 5.55.210 E). Serious 1st 5,000 2nd 10,000 3rd 25,000 Any adult-use cannabis business with the word “organic” in its name must place signage no smaller than 8 ½ inches by 11 inches with a font no smaller than 72 pt. in its place of business visible upon entry and at the point-of-sale that reads, “Product Being Sold Is Not Organic Unless Explicitly Labeled”. (PSMC 5.55.220 B). Minor 1st 500 2nd 1,000 3rd 5,000 No cannabis goods, or graphics depicting cannabis goods shall be visible from the exterior of the premises. (PSMC 5.55.200 A (17)). With the exception of storefront retail dispensary Moderate 1st 2,500 2nd 5,000 3rd 10,000 No person who is less than twenty-one (21) years of age may be employed or otherwise engaged in the operation of the Permittee (PSMC 5.55.200 A (15)). Serious 1st 1,000 2nd 5,000 3rd 25,000 02/29/2024 Public Comment Item 3A 10.04.2021 18 | P a g e Retail (Dispensary) The sale or consumption of alcohol or tobacco products is not allowed on the premises. (PSMC 5.55.095(B)(6)(b)) Moderate 1st 2,500 2nd 5,000 3rd 10,000 It shall be a violation of this Chapter for a permittee to cultivate, process, manufacture, test, distribute, transport, deliver, provide, or allow to be provided Cannabis to any person under twenty-one years of age except for Cannabis Medical Use Dispensaries which may permit qualified patients, or primary caregivers of qualified patients pursuant to applicable State law. (PSMC 5.55.200 (1)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Each Permittee shall maintain a current register of the names and the contact information (including the name, address, and telephone number) of anyone owning or holding an financial interest in the Adult-Use Cannabis Business, and separately of all the officers, managers, supervisors, employees and volunteers currently employed or otherwise engaged by the Adult- Use Cannabis Business. The register required by this paragraph shall be provided to the City Manager or his/her designee(s) upon a reasonable request. (PSMC 5.55.200 (3)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Signage for any Adult-Use Cannabis Business facility and/or location shall include the name of the business and shall be in compliance with the City’s sign ordinance and any applicable City design standards. (PSMC 5.55.200 A (11). Minor 1st 500 2nd 2,500 3rd 10,000 Dispensaries shall ensure that all Cannabis goods at the dispensary are cultivated, manufactured, transported, distributed, and tested by licensed and permitted facilities that maintain operations in full conformance with state and local regulations. (PSMC 5.55.205 A (4)). Serious 1st 1,000 2nd 5,000 3rd 25,000 All Cannabis goods shall be stored in a secured and locked safe room, safe or vault, and in a manner to prevent diversion, theft, and loss, except for limited amounts of Cannabis used for display purposes, samples, or immediate sale. (PSMC 5.55.200 A (18)). Serious 1st 1,000 2nd 5,000 3rd 25,000 Each permittee shall be responsible and liable for safety and security in and around the Adult- Use Cannabis Business, and shall provide adequate security on the premises, including lighting and alarms, to ensure the safety of persons and to protect the premises from theft and other crimes. Each permittee shall install and maintain in proper working order, video monitoring equipment capable of providing surveillance of both interior and exterior areas of the permitted establishment. Each permittee shall maintain such surveillance video tapes for a period of at least thirty (30) days and shall make such videotapes available to the City upon demand. (PSMC 5.55.200 A (19)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Dispensaries shall not distribute any Cannabis goods unless the Cannabis goods are labeled and in a tamper-evident package in compliance with Section 26120 (a) of the California Business and Professions Code and any additional rules promulgated by the licensing authority and such label shall include the name and contact information of the dispensary that dispensed the Adult-Use Cannabis. (PSMC 5.55.205 A (5)). Serious 1st 1,000 2nd 5,000 3rd 25,000 02/29/2024 Public Comment Item 3A 10.04.2021 19 | P a g e The Permittee shall maintain clear and adequate records and documentation demonstrating that all Cannabis goods have been obtained from and are provided to other permitted and licensed Cannabis operations. The City shall have the right to examine, monitor, and audit such records and documentation, which shall be made available to the City upon request. (PSMC 5.55.200 A (7)). Serious 1st 1,000 2nd 5,000 3rd 25,000 Physician services shall not be provided on the premises. “Physician services” includes without limitation the evaluation of patients for the issuance of a medical Cannabis recommendation or card. “Physician services” does not include social services, including counseling, help with housing and meals, hospice, and other care referrals which may be provided on site. (PSMC 5.55.200 A (12)). Moderate 1st 2,500 2nd 5,000 3rd 10,000 Consumption Lounge Sale of Cannabis Goods. Cannabis goods may be sold on the premises of a Cannabis Lounge, subject to the following: (i) The Permittee must hold an Adult-Use Dispensary permit. (ii) Permittees shall not permit patrons to bring their own personal cannabis or cannabis goods to the Cannabis Lounge Facility. (iii) All cannabis or cannabis goods purchased and opened at the facility must be smoked, inhaled, consumed or ingested on site, and shall not be permitted to leave the facility unless repackaged in a container that is compliant with all applicable state law and regulation. (iv) Permittees shall only permit patrons to leave the Cannabis Lounge Facility with cannabis and cannabis goods that remain in originally sealed and unopened packaging or have been transferred by the Operator for repackaging in a container that is compliant with all applicable state law and regulation. (PSMC 5.55.095 (6) (c)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Minors. Access to the Cannabis Lounge Facility shall be restricted to persons twenty-one (21) years of age and older (PSMC 5.55.095 (6) (f)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Visibility. The smoking, inhalation, consumption or ingestion of cannabis or cannabis goods shall not be visible from any public place or any area where minors may be present. The Cannabis Lounge shall be located within a completely enclosed building. (PSMC 5.55.095 B (6) (g)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Alcohol and Tobacco Products. The sale or consumption of alcohol or tobacco products is not allowed on the premises. (PSMC 5.55.095 B (6) (e)). Serious 1st 1,000 2nd 5,000 3rd 25,000 Permittee shall place and properly maintain solid waste receptacles and recycling bins, in sufficient numbers and locations to service the needs of the proposed use at peak business Moderate 1st 2,500 2nd 5,000 02/29/2024 Public Comment Item 3A 10.04.2021 20 | P a g e periods and shall ensure all areas at least one hundred feet from the consumption area are free of any waste or litter generated by the use. (PSMC 5.55.095 (6) (l)). 3rd 10,000 Retail Delivery If the dispensary operations are proposed to include delivery, all employees of a dispensary delivering Cannabis goods shall carry a copy of the documentation listed below when making deliveries. This information shall be provided upon request to law enforcement officers and to employees of state and local agencies enforcing this Chapter. a. A copy of the dispensary’s current permits, licenses, and entitlements authorizing them to provide transportation and distribution services; b. The employee’s government-issued identification; c. A copy of the transportation and distribution request; and d. Chain of custody records for all goods being delivered. (PSMC 5.55.205 A (3)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Dispensaries shall not distribute any Cannabis goods unless the Cannabis goods are labeled and in a tamper-evident package in compliance with Section 26120 (a) of the California Business and Professions Code and any additional rules promulgated by the licensing authority and such label shall include the name and contact information of the dispensary that dispensed the Adult- Use Cannabis.(PSMC 5.55.205 A (5)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Dispensary shall facilitate the dispensing, making available, sale, and delivery of cannabis goods with a technology platform that uses point-of-sale technology to track, and database technology to record and store, the following information for each transaction involving the exchange of cannabis goods between the Dispensary and customer: a. The first name and employee number of the Dispensary employee who processed the sale of cannabis goods on behalf of the Dispensary. b. A list of all the cannabis goods purchased, including the quantity purchased. c. The total amount paid for the sale, including the individual prices paid for the Cannabis goods, and any amounts paid for tax. (PSMC 5.55.205 A (7)). Serious 1st 5,000 2nd 10,000 3rd 25,000 02/29/2024 Public Comment Item 3A 10.04.2021 21 | P a g e Cultivation All Cultivation activities permitted under this Chapter shall comply with the state requirements for unique identifiers and the trace and track program. (PSMC 5.55.205 B (2) (a). Serious 1st 5,000 2nd 10,000 3rd 25,000 Security measures sufficient to restrict access only to authorized personnel and to deter trespass and theft of Cannabis goods shall be provided and maintained. (PSMC 5.55.205 B (2) (b)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Pesticides and fertilizers shall be properly labeled and stored to avoid contamination through erosion, leakage, or inadvertent damage from rodents, pests, or wildlife. (PSMC 5.55.205 B (2) (c)). Moderate 1st 2,500 2nd 5,000 3rd 10,000 Water conservation measures, water capture systems, or grey water systems shall be incorporated in Adult-Use Cannabis Cultivation operations in order to minimize use of water where feasible. (PSMC 5.55.205 B (2) (d)). Serious 1st 5,000 2nd 10,000 3rd 25,000 On-site renewable energy generation shall be required for all indoor Adult-Use Cannabis Cultivation activities, if feasible. Renewable energy systems shall be designed to have a generation potential equal to or greater than one-half of the anticipated energy demand. (PSMC 5.55.205 B (2) (e)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Cannabis plants shall not be visible from offsite. No visual markers indicating that Cannabis is cultivated on the site shall be visible from offsite. (PSMC 5.55.205 B (2) (f)). Serious 1st 5,000 2nd 10,000 3rd 25,000 The Permittee shall ensure that the total canopy size of Adult-Use Cannabis cultivated at the site does not exceed the cumulative canopy size authorized by State Law or regulation. (PSMC 5.55.205 B (2) (f)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Manufacturing The manufacturing of food or other products infused with or which otherwise contain Cannabis may be manufactured within the appropriate manufacturing zoning districts subject to the regulations set forth in this Chapter, and subject to whatever additional regulations may be promulgated hereunder by an ordinance or resolution of the City Council. Except as otherwise provided in this Chapter, all Cannabis manufacturing within the City is prohibited. (PSMC 5.55.205 C (2) (a)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Adult-Use Cannabis manufacturing facilities may be located within the same building or structure as an indoor Adult-Use Cannabis Cultivation facility only if the Adult-Use Cannabis manufacturing facility is located in separate rooms of the building or structure. (PSMC 5.55.205 C (2) (b)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Subject to the further requirements of this Section, only State manufacturer license classification type 6 or type 7 will be allowed to operate in the City using nonvolatile solvents in accordance with MAUCRSA and Business and Professions Code Sections 26130(a) and (b). (PSMC 5.55.205 (2) (c)). Serious 1st 5,000 2nd 10,000 3rd 25,000 02/29/2024 Public Comment Item 3A 10.04.2021 22 | P a g e All Cannabis manufacturing operations shall ensure that Cannabis is obtained from permitted and licensed Cultivation sources and shall implement best practices to ensure that all manufactured Cannabis is properly stored, labeled, transported, and inspected prior to distribution at a legally permitted and licensed dispensary. (PSMC 5.55.205 (2) (d). Serious 1st 5,000 2nd 10,000 3rd 25,000 Any employees of an Adult-Use Cannabis manufacturing facility operating potentially hazardous equipment shall be trained on the proper use of equipment and on the proper hazard response protocols in the event of equipment failure. In addition, employees handling Edible Cannabis Products or ingredients shall be trained on proper food safety practices. (PSMC 5.55.205 (2) (f)). Moderate 1st 2,500 2nd 5,000 3rd 10,000 Adult-Use Cannabis manufacturing is allowed only within Fully Enclosed and Secure Structures that are inaccessible to minors. (PSMC 5.55.205 (2) (g). Serious 1st 5,000 2nd 10,000 3rd 25,000 From any public right-of-way, there shall be no visible exterior evidence of any Adult-Use Cannabis manufacturing activity. (PSMC 5.55.205 (2) (i)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Adult-Use Cannabis manufacturing facilities shall not distribute, sell, dispense, or administer Cannabis from the facility to the public. Adult-Use Cannabis manufacturing facilities shall not be operated as Adult-Use Cannabis dispensaries. (PSMC 5.55.205 (2) (m)). Serious 1st 5,000 2nd 10,000 3rd 25,000 All finished products produced by an Adult-Use Cannabis manufacturing facility must be labeled in compliance with MAUCRSA, Business and Profession Code Section 26120, and the labeling requirements outlined by the State Department of Public Health. (PSMC 5.55.205 (2) (o). Serious 1st 5,000 2nd 10,000 3rd 25,000 All finished products produced by an Adult-Use Cannabis manufacturing facility must be packaged in child resistant containers prior to leaving the facility or becoming commercially available in accordance with MAUCRSA, Business and Profession Code Section 26120, the State Department of Public Health regulations, and other applicable State Laws. (PSMC 5.55.205 (2) (p)). Serious 1st 5,000 2nd 10,000 3rd 25,000 All batches of final Cannabis goods must be tested by a qualified third-party testing facility prior to distribution to a dispensary as required by MAUCRSA, Business and Professions Code Sections 26101, 26102, and 26104, and the State Department of Public Health regulations. (PSMC 5.55.205 (2) (q)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Adult-Use Cannabis manufacturing facilities shall only use nonvolatile solvents that have been approved by the State Department of Public Health for Adult-Use Cannabis level 1 manufacturing. Until such time as any such nonvolatile solvents are approved by the State Department of Public Health for Adult-Use Cannabis level 1 manufacturing, Adult-Use Cannabis manufacturing facilities shall only use nonvolatile solvents that have been approved by the Food and Drug Administration for the processing and preparation of botanical dietary supplements or food grade products. (PSMC 5.55.205 (2) (r)). Serious 1st 5,000 2nd 10,000 3rd 25,000 02/29/2024 Public Comment Item 3A 10.04.2021 23 | P a g e All processing and analytical testing devises used for Adult-Use Cannabis manufacturing facilities must be UL listed, or otherwise approved for the intended use by the City’s Building Official or the Fire Department. Any processing devices using only non-pressurized water are exempt from such approval. (PSMC 5.55.205 (2) (s)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Unless otherwise prohibited, all processing devices used by an Adult-Use Cannabis manufacturing facility that utilize hydrocarbons or otherwise flammable solvents must operate in a closed loop, or in such a way that all solvent material is recovered in the process. All hazardous material must be disposed of in a manner which is compliant with all local, State, and federal guidelines for the disposal of hazardous materials. (PSMC 5.55.205 (2) (t)). Serious 1st 5,000 2nd 10,000 3rd 25,000 Transportation and Distribution Cannabis goods shall only be transported between permitted and licensed adult-use cannabis businesses. (PSMC 5.55.205 E (2) (a)). Serious 1st 1,000 2nd 5,000 3rd 25,000 Prior to transporting cannabis goods, the transporter shall complete an electronic shipping manifest. The shipping manifest shall include the unique identifier information and cultivation source. (PSMC 5.55.205. E (2) (b)). Serious 1st 1,000 2nd 5,000 3rd 25,000 A physical copy of the shipping manifest shall be maintained during transportation and shall be made available upon request to law enforcement or any agents of the State or City. (PSMC 5.55.205 E (2) (c)). Serious 1st 1,000 2nd 5,000 3rd 25,000 Distribution facilities shall maintain appropriate records of transactions and shipping manifests. An organized and clean method of storing and transporting cannabis goods shall be provided to maintain a clear chain of custody. (PSMC 5.55.205 E (2) (d)). Serious 1st 1,000 2nd 5,000 3rd 25,000 Distributors shall ensure that appropriate samples of cannabis goods are tested by a licensed testing facility prior to distribution. (PSMC 5.55.205 E (2) (f)). Serious 1st 1,000 2nd 5,000 3rd 25,000 Cannabis goods shall be packaged and labeled in accordance with the requirements of State law. (PSMC 5.55.205 E (2) (h)). Serious 1st 1,000 2nd 5,000 3rd 25,000 Alternative fuel vehicles shall be provided as part of an Adult-Use Cannabis transportation fleet. (PSMC 5.55.205 E (2) (i)). Moderate 1st 2,500 2nd 5,000 3rd 10,000 02/29/2024 Public Comment Item 3A 10.04.2021 24 | P a g e Odor Violations Notwithstanding any other provision of this Chapter, in the event any adult-use cannabis activity surpasses the odor detection threshold while complying with an approved Odor Protection Plan, the permittee will be issued a written warning and the permittee shall work with the City to modify any existing odor control plan to mitigate odor issues within seven (7) days. If the permittee cannot mitigate the odor issues within seven (7) days, then Adult-Use Cannabis Activity causing the odor issues must cease until effective odor control measures are in place. (PSMC 5.55.435 A). In the event any Adult-Use Cannabis Activity surpasses the odor detection threshold while not complying with an approved Odor Protection Plan, the permittee shall be issued an administrative citation for ten thousand dollars ($10,000.00). The permittee shall have thirty (30) days to remedy any odor issues. The permittee shall be issued an administrative citation for ten thousand dollars ($10,000.00) for each subsequent month the permittee fails to remedy the odor issue and comply with the approved Odor Control Plan. If a permittee receives three (3) administrative citations pursuant to this subsection, the permit shall automatically be revoked upon issuance of the third citation. (PSMC 5.55.435 B). In the event an Adult-Use Cannabis Businesses with an Adult-Use Cannabis Permit is confirmed to have a verified odor complaint based on Adult-Use Cannabis Activity that it is not permitted for, the permittee shall be issued an administrative citation for twenty five thousand dollars ($25,000.00) and all permits issued to permittee shall automatically be revoked. (PSMC 5.55.435 C). 02/29/2024 Public Comment Item 3A Pueblo City Council votes to suspend excise tax on recreational Marijuana 0:00/ 0:00 By Emily Coffey FOLLOWFOLLOW "" TO RECEIVE NOTIFICATIONS ABOUT NEW PAGES ON "". December 27, 2023 11:24 PM Published December 27, 2023 11:18 PM PUEBLO, Colo. (KRDO) - Tuesday night, the Pueblo City Council voted to temporarily suspend the city's excise tax for recreational Marijuana cultivated within city limits. It's an extra eight percent fee charged to those businesses, a fee that is often passed along to consumers during a time when business is slowing overall for Marijuana growers, according to the Director of Dispensary Operations for Apothecary Farms. City Council's decision was contended, both sides well-supported. Ultimately, the decision was made to drive more revenue into these businesses and create jobs. "Ultimately, absolutely, as an industry, it's been impacted," Marshall Marquardt, director of dispensary operations said. But the growers and distributors aren't the only ones impacted by the decision. According to the President of Pueblo City Council Heather Graham, the tax revenue drove hundreds of thousands of dollars into the city budget. "I think that this tax was put in place for a reason. I think that saying that we are going to lose a minimal amount of $500,000 over the next three years is -- I don't think that we can afford to lose that tax revenue that's coming in," Graham said. She was overruled in an effort to keep Pueblo competitive with the rest of the market. "There's been a contraction within the marketplace in cannabis and in particular cultivation has seen some of the hardest hit businesses and it is a commodity," Salvatore Pace, Chair of the Marijuana Policy Project Board said. Pace was behind the initial tax for the City of Pueblo and said that he regretted the policy in hindsight. 02/29/2024 Public Comment Item 3A Now, with the tax removed, it is hoped that growers return and that dispensaries can even pass some of the savings onto consumers. "We understand that cannabis has to be taxed. And ultimately a lot of times, unfortunately, it gets passed on to the consumers," Marquardt said. 02/29/2024 Public Comment Item 3A Berkeley approves tax relief for legal cannabis businesses for next 2 years July 20, 2023 / 10:54 AM PDT / CBS/Bay City News Service • • • BERKELEY – It's now cheaper to buy legal cannabis in Berkeley. In a unanimous vote last week, the City Council passed legislation that temporarily exempts the city's medical and recreational cannabis businesses from the collection of cannabis industry- designated taxes. The exemption, which will be retroactive to January 2023 and last until July 2025, is an attempt to keep legal cannabis businesses alive in Berkeley and curb illicit activity. Cannabis is legal in California for individuals older than 18 for medical purposes or 21 and older for recreational use. Instead of paying the previous tax rate—which was $25 per $1,000 of gross receipts for the calendar year—both medical and recreational cannabis businesses will instead pay the business license tax rate that most closely represents the nature of its operations, such as retail or manufacturing. This means that cannabis businesses will not pay more in taxes than non- cannabis businesses of the same type. "Berkeley is the home of legal cannabis; we need to make sure the industry survives," said Berkeley Vice Mayor Ben Bartlett, who introduced the tax exemption. "Let's not tax it to death." Top Videos00:1701:30Studies show e-cigarette health risk is slightly lower thanconventional cigarettes Some cities in Alameda County have set high tax rates for the cannabis industry, leading to an exodus of businesses to jurisdictions with lower taxes, according to a press release from Bartlett. Other cannabis businesses have been forced to close, driven out by the illegal market. 02/29/2024 Public Comment Item 3A Currently, over two-thirds of cannabis purchased in California is in the unlicensed market because it's less expensive, according to the press release. By making legal cannabis more affordable, the tax exemption aims to increase access to "safe, tested cannabis for Berkeley's residents and visitors," the press release read. More from CBS News 02/29/2024 Public Comment Item 3A