(a) Permits Nontransferable. No permit issued under this Article 16 shall be transferable under any circumstances, including but not limited to the sale of the Cannabis Business.
(b) Permits Portable. A Cannabis Business Permittee that closes its Cannabis Business may retain its Cannabis Business Permit for up to 18 months from the date of closure, and may conduct Commercial Cannabis Activities under that permit at a different Premises provided:
(1) There is no change in ownership;
(2) The Referring Departments complete all necessary review and inspections of the new Premises, and report their determinations to the Office of Cannabis;
(3) The Permittee demonstrates that the new Premises complies with the requirements of this Article 16 and the Planning Code; and
(4) The Director finds that there are no grounds for denial of a Cannabis Business Permit, as set forth in subsections (d)-(e) of Section 1615 of this Article 16.
(c) Ownership; Changes in Ownership; Changes in Form or Structure.
(1) Any change affecting any ownership interest of a Cannabis Business, including, but not limited to, any change in ownership that affects an ownership interest of less than 20% of the Cannabis Business, must be promptly disclosed, in writing, to the Director.
(2) Any change affecting any ownership interest of a Cannabis Business that results in a Person holding an aggregate ownership interest of 20% or more of a Cannabis Business, when that Person did not previously hold an aggregate ownership interest of 20% or more in the Cannabis Business, shall require the Permittee to promptly obtain a permit amendment. Such permit amendment shall be reviewed by the Director in a manner consistent with subsection (c)(5), and shall not be granted unless the Director determines that, if the relevant Person (i.e., the Person who newly holds an aggregate ownership interest of 20% or more in the Cannabis Business) had been an Owner at the time the Permittee applied for a permit awarded under this Article 16, that permit would have been granted.
(3) Any change in the direction, control, or management of a Cannabis Business must be promptly disclosed, in writing, to the Director, and such change shall require the Permittee to promptly apply for and obtain a permit amendment. An application for such a permit amendment shall be reviewed by the Director consistent with subsection (c)(4), and shall not be granted unless the Director determines that, if the relevant Person (i.e., the Person newly exercising direction, control, or management with respect to the Cannabis Business) had been an Owner at the time the Permittee applied for a permit awarded under this Article 16, that permit would have been granted.
(4) A Permittee seeking a permit amendment as required under this subsection (c) shall pay the required filing fee for a permit amendment and provide such information, from the categories of information described in Section 1609, as may be required by the Director. The decision to grant or deny a permit amendment shall be entrusted to the Director’s discretion in the same manner, and subject to the same criteria, as the decision to grant or deny a permit as set forth in Section 1615, except as set forth in subsection (c)(9), below.
(5) Notwithstanding any other provision of this subsection (c), prior to the award of any Cannabis Business Permit, permanent or temporary, and for five years following the date on which the Director has acknowledged receipt of an application for a Cannabis Business Permit from a particular Applicant or Permittee, an aggregate ownership interest of 50% or more in that Applicant or Permittee may not be transferred to any Person or combination of Persons who were not Owners of the Permittee at the time that a Cannabis Business Permit was first awarded to that Applicant or Permittee under this Article 16. Nothing in this subsection (c)(5) shall prohibit a holder of a Temporary Cannabis Business Permit from transferring an aggregate ownership interest of 50% or more in the Permittee prior to the award of a permanent Cannabis Business Permit to that Permittee after five years have passed from the earliest date on which the Director acknowledged receipt of an application for a Cannabis Business Permit, whether temporary or permanent, from that Permittee. In the event that, prior to the award of a Cannabis Business Permit or prior to five years after the date on which the Director acknowledged receipt of the application for a Cannabis Business Permit from that Permittee, an aggregate ownership interest of 50% or more in a Permittee is transferred to any Person or combination of Persons who were not Owners of the Permittee at the time that a Cannabis Business Permit was awarded, in violation of this subsection (c)(5), and the Permittee fails to undo the prohibited ownership transfer within six months of receiving notification of such violation from the Director, the Permittee shall promptly surrender the permit to the Director. This restriction shall not apply to any testamentary or intestate transfer of ownership triggered by an Owner’s death. This obligation is not dependent on the Director’s requesting the surrender, but arises by operation of law six months following notice from the Director that the sale of the Cannabis Business has violated the transfer restriction in this subsection (c)(5). If the Permittee fails to surrender the permit to the Director, the Director may, after giving the Permittee notice by mail and electronically of the proposed action and an opportunity to respond, revoke the permit.
(6) A change in the form or structure of a Permittee shall not be considered a change affecting an ownership interest in a Cannabis Business for purposes of this subsection (c). Notwithstanding any other provision of this subsection (c), a Permittee may undertake any change in its form or structure, as long as the change in form or structure does not cause any change affecting an ownership interest. The Permittee must promptly disclose its change in form or structure, in writing, to the Director, and such change shall require the Permittee to promptly apply for and obtain a permit amendment as set forth in subsection (c)(4).
(7) Whenever, under this Article 16, an Owner is anything other than an individual, every individual who exercises direction, control, or management of that Owner shall also be treated as an Owner for purposes of this Article 16.
(8) Notwithstanding any other provision of this subsection (c), it shall not be considered a change affecting an ownership interest in a Cannabis Business if an individual transfers an ownership interest in a Cannabis Business to a Person that is entirely owned and controlled by that same individual, but any subsequent transfer of an ownership interest in that Person shall be considered a change affecting an ownership interest in the Cannabis Business. All transfers described in this subsection (c)(8) must be promptly disclosed, in writing, to the Director.
(9) Notwithstanding any other provision of this subsection (c), a Permittee must obtain a permit amendment if a change in ownership results in a decrease in an Equity Applicant’s ownership interest, as defined in Section 1604(b), in the Cannabis Business, a change in the Equity Applicant’s role as Chief Executive Officer or member of the Board of Directors, or a material change in the degree of the Equity Applicant’s participation in the direction, control, or management of the Cannabis Business. Applications for a permit amendment in accordance with this subsection (c)(9) must include the terms of the change in ownership. The Director shall require, as a condition of granting a permit amendment under this subsection where the combined ownership interest in the Cannabis Business by all verified Equity Applicants following the amendment would total less than 20%, that the Cannabis Business commit to take one or more specific actions to support the City’s equity goals as described in Section 1604(a) on an ongoing basis through the life of the Cannabis Business Permit. Applications for such a permit amendment shall include a detailed written description of the proposed equity action(s), the dates by which the Cannabis Business will take the action(s), an estimated dollar value for each action, and the dollar amount of gross sales of cannabis by the Cannabis Business during the most recently completed fiscal year. The Director shall not approve such permit amendment unless the Director finds that that proposed action(s) represent a substantial commitment to equity by the Cannabis Business for the life of the Cannabis Business Permit, taking into consideration the dollar amount of gross sales of cannabis by the Cannabis Business during the most recently completed fiscal year, and the Director’s assessment of the likely impact of the proposed action(s) in support of the City’s equity goals. In approving such permit amendment, the Director shall include as conditions of the amended permit specified equity action(s), and a further requirement that the Cannabis Business provide annual reports to the Director on or before February 1 of each year for the life of the Cannabis Business Permit, documenting the Cannabis Business’s action(s) taken during the prior calendar year to satisfy all permit conditions. Actions a Cannabis Business may propose in its permit application to satisfy the equity commitment required upon a reduction in the combined ownership interest in the Cannabis Business by all verified Equity Applicants below 20% include but are not limited to the following:
(A) Contributing, on an annual basis, an amount of cash, in-kind goods, services, and/or technical assistance equivalent to 1% of the gross sales of cannabis by the Cannabis Business during the most recently completed fiscal year prior to the submission of the application for permit amendment to one or more community organizations that serve equity goals, as described in Section 1604(a), and in which the Cannabis Business has no ownership or other financial interest;
(B) Providing training, mentorship, and employment opportunities to workers who meet at least three of the criteria set forth in Section 1604(b)(4);
(C) Ensuring that a substantial portion of Cannabis-related products promoted and/or sold by the Cannabis Business are sourced from businesses that are one of the following: (i) Equity Applicants that have been awarded Cannabis Business Permits (“Equity Operators”); or (ii) Cannabis Businesses that have been verified as the local equivalent of Equity Applicants or Equity Operators in jurisdictions outside San Francisco with a local equity program, as defined in Section 26240(e) of the California Business and Professions Code, as may be amended from time to time;
(D) Providing financial support, technical assistance, rent-free commercial space, and/or other support to one or more Equity Operators or Equity Applicants in which, or in whose Cannabis Businesses, no Owner of the Cannabis Business seeking a permit amendment has any ownership interest or other financial interest.
(d) Interim Cannabis Business Permits. Once the Director receives a surrendered Cannabis Business Permit to Operate, as set forth in subsection (b) of this Section 1608, the new Owner of the business may apply to the Director for an Interim Cannabis Business Permit, subject to any required Planning Department approvals, for a period not to exceed 90 days from the date of surrender (an “Interim Permit”). An Interim Permit may not be renewed. The Director may grant an Interim Permit provided that:
(1) The new Owner has submitted a completed application for a Cannabis Business Permit to the Office of Cannabis, and a completed application for a State Cannabis License to the appropriate State Licensing Authority;
(2) The new Owner applies for the same type of Cannabis Business Permit as was held by the prior Owner;
(3) The Premises to which the Cannabis Permit applies complies with all existing health, safety, and fire ordinances, and applicable state laws governing Cannabis Businesses; and
(4) An Interim Permit is necessary to ensure uninterrupted operations of a Cannabis Business at the Premises, or to minimize interruption of its operations.