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(a) A Permittee that holds a Cannabis Testing Facility permit shall be ineligible for and may not be issued a permit to operate any other type of Commercial Cannabis Activity permitted by the City. A Permittee that holds a Cannabis Business Permit other than a Cannabis Testing Facility permit, shall be ineligible for and may not be issued a permit to operate a Cannabis Testing Facility.
(b) No permit to operate as a Storefront Cannabis Retailer shall be granted if any individual holding a legal or beneficial interest in the proposed Storefront Cannabis Retailer already holds a legal or beneficial interest in four or more existing Storefront Cannabis Retailers that hold permits under this Article 16, except that an interest held in a Storefront Cannabis Retailer shall not be counted towards this limit if the Storefront Cannabis Retailer has received approval from the Planning Commission, following a discretionary review hearing, as of the effective date of the ordinance in Board File No. 180912. If an application for a permit, under this Article 16, to operate as a Storefront Cannabis Retailer is pending for approval before the Planning Commission, and if the approval of that permit would cause an individual to hold a legal or beneficial interest in four or more existing Storefront Cannabis Retailers (other than Storefront Cannabis Retailers that, as of the effective date of the ordinance in Board File No. 180912, have received approval from the Planning Commission following a discretionary review hearing), the Office of Cannabis shall place on hold any additional applications for a permit on behalf of a Storefront Cannabis Retailer in which that individual would hold a legal or beneficial interest in a proposed Storefront Cannabis Retailer. For purposes of this subsection (b), the circumstances in which an individual holds a legal or beneficial interest in a Storefront Cannabis Retailer shall include (but need not be limited to) any circumstance in which an individual holds a legal or beneficial interest in any Person holding a legal or beneficial interest in the Storefront Cannabis Retailer.
(c) The Controller shall track the number of permits that are awarded pursuant to this Article 16. No later than September 30, 2019, the Controller shall submit to the Board of Supervisors a report that makes recommendations as to whether the issuance of Cannabis Business Permits should be subject to any numerical, geographical, or other limits.
(Added by Ord. 230-17, File No. 171042, App. 12/6/2017, Eff. 1/5/2018; amended by Ord. 302-18, File No. 180912, App. 12/21/2018, Eff. 1/21/2019)
The Director shall send the application to all appropriate Referring Departments. Those departments shall complete all necessary review and inspections and report their determinations to the Office of Cannabis.
(Added by Ord. 230-17, File No. 171042, App. 12/6/2017, Eff. 1/5/2018)
(a) At any time after receiving an Applicant’s application, the Director may notify the Applicant in writing that the Applicant must submit further specified information or documentation needed to process or evaluate the application within 45 days. If the Applicant fails to provide the required information or documentation within 45 days of receiving such notice, the application will be deemed abandoned and will not receive further consideration, unless the Director finds that the Applicant has demonstrated, prior to the expiration of the 45 days, that good cause exists to extend the Applicant’s deadline to provide required information or documentation. Applicants that abandon an application may submit a new one, subject to payment of a new application fee. Applicants that submit an application following the abandonment of an earlier application shall not receive priority review, as set forth in subsection (c) of Section 1606. The Director may issue multiple 45-day notices to a single Applicant, as needed, at any time after receiving an Applicant’s application and prior to issuing the Article 16 permit sought by that application. After the Director has determined that no further information or documentation is required from an Applicant for evaluation of the application, the Director shall notify the Applicant in writing that the application is complete.
(b) Upon review of a complete application and consideration of information provided by the Referring Departments, the Director shall either grant or deny a permit, as specified in more detail in subsections (c) and (d).
(c) Approvals. In granting a permit, the Director may impose conditions as are, in his or her judgment, necessary to protect the health and safety of the Permittee’s employees, neighbors, and Customers, prevent access to Cannabis and Cannabis Products by underage persons, and reduce any potential adverse impacts of the Cannabis Business on the immediate neighborhood. Such conditions may include, but are not limited to, conditions relating to the hours of operation.
(d) Mandatory Grounds for Denial. No Cannabis Business Permit shall be issued if the Director finds that:
(1) The Applicant, any Owner, or anyone holding a financial interest in the proposed Cannabis Business, has provided materially false information or documents in connection with the application.
(2) The Applicant or any Owner failed to provide all information required by this Article 16 and by the Director, in implementing this Article 16.
(3) The Applicant has violated a provision of Article 16, and has failed to come into compliance with Article 16 within a reasonable time, as determined by the Director of the Office of Cannabis, after receiving notice of the violation from the Director.
(4) Any Owner, or anyone holding any financial interest in the proposed Cannabis Business, has otherwise willfully or knowingly failed to comply, or caused a failure to comply, with this Article 16.
(5) The Applicant has not demonstrated eligibility for a permit under this Article 16.
((6))1
The Premises are materially different from the diagram of the Premises submitted by the Applicant.
(7) The City has revoked a permit for the operation of a business in the City which permit had been issued to the Applicant or to any other Person who will be engaged in the management of the Cannabis Business unless more than five years have passed between the date of the application and the date of revocation of the other permit.
(8) The operation of the Cannabis Business as proposed by the Applicant, if permitted, would not comply with all applicable laws, including but not limited to, the Building, Planning, Housing, Police, Fire, and Health Codes of the City, the provisions of this Article 16 and any regulations promulgated thereto, and the Medicinal and Adult Use Cannabis Regulation and Safety Act, 2017 Cal. Legis. Serv. Ch. 27 (S.B. 94), and its implementing regulations, as may be amended from time to time.
(9) The Applicant is employed by any local or state agency responsible for the regulation of Commercial Cannabis Activities.
(10) The Applicant denied access to the Premises to the Office and/or to any Referring Department.
(11) The Director finds that the Premises or the Cannabis Business will be or is being managed, conducted, or maintained in such a manner as to endanger the health and safety of the employees, Customers or neighbors, or to coerce any employee to engage in illegal conduct.
(12) The Planning Department or Planning Commission determines that the Applicant engaged in Commercial Cannabis Activities in a location that was not authorized by or consistent with the Planning Code.
(e) Discretionary Grounds for Denial. The Director may deny an application for a Cannabis Business Permit if the Director finds that:
(1) The Applicant or Owner has been convicted of an offense that is substantially related to the qualifications, functions, or duties of the business or profession for which the application is made, except that if the Director determines that the Applicant or Owner is otherwise suitable to be issued a permit, and granting the permit would not compromise public safety, the Director shall conduct a thorough review of the nature of the crime, conviction, circumstances, and evidence of rehabilitation of the Applicant or Owner, and shall evaluate the suitability of the Applicant or Owner, to be issued a permit based on the evidence found through the review. For purposes of this subsection (e)(1), “offenses that are substantially related to the qualifications, functions, or duties of the business or profession for which the application is made” include, but are not limited to, the following:
(A) A violent felony conviction, as specified in subdivision (c) of Section 667.5 of the California Penal Code;
(B) A serious felony conviction, as specified in subdivision (c) of Section 1192.7 of the California Penal Code;
(C) A felony conviction involving fraud, deceit, or embezzlement;
(D) A felony conviction for hiring, employing, or using a minor in transporting, carrying, selling, giving away, preparing for sale, or peddling, any controlled substance to a minor; or selling, offering to sell, furnishing, offering to furnish, administering, or giving any controlled substance to a minor; and,
(E) A felony conviction for drug trafficking with enhancements pursuant to Section 11370.4 or 11379.8 of the California Health and Safety Code.
(2) Except as provided in subsections (e)(1)(D)-(E) of this Section 1615, a prior conviction, where the sentence, including any term of probation, incarceration, or supervised release, is completed, for possession of, possession for sale, sale, manufacture, transportation, or cultivation of a controlled substance is not considered substantially related, and shall not be the sole ground for denial of a permit.
(3) There is good cause to deny the permit in accordance with Section 26 of the Business and Tax Regulations Code.
(4) The Applicant has not made a good faith effort to comply with its Equity Plan, as submitted under Section 3322 of the Health Code.
(f) In determining whether an Application should be denied on grounds articulated in subsections (d)(1) and (2) of this Section 1615, the Director shall use his or her best efforts to coordinate his or her review of evidence and decision with the State Licensing Authority charged with the review of the Applicant’s application for a State Cannabis License.
CODIFICATION NOTE
The license fee for a Cannabis Business Permit shall be paid annually on or before March 31, in accordance with the provisions of Section 76.1 of the Business and Tax Regulations Code. Upon the failure of the Permittee to pay such fees, the permit shall be considered null and void, and therefore inactive as a matter of law, until the Permittee pays the fees and any penalties that might be assessed by the Director.
(Added by Ord. 230-17, File No. 171042, App. 12/6/2017, Eff. 1/5/2018)
(a) No Permittee shall operate a Cannabis Business in a manner inconsistent with any permit condition imposed by the Director or by a Referring Department.
(b) A Permittee may request a permit amendment to remove or change a condition imposed by the Director by filing a request with the Office of Cannabis and paying such permit amendment application fee as may be required.
(c) The Director shall consider whether the amendment of the permit condition sought by the Permittee would jeopardize the health and safety of the Permittee’s employees, neighbors, or Customers, increase access to Cannabis and Cannabis Products by underage persons, or increase any potential adverse impacts of the Cannabis Business on the immediate neighborhood, and shall render a decision to remove, change, or maintain the permit condition(s) on the basis of that evaluation or for any good cause.
(d) A decision of the Director to impose a permit condition, or to refuse to remove or amend a permit condition, may be appealed to the Board of Appeals in the manner prescribed in Article 1 of the Business and Tax Regulations Code.
(Added by Ord. 230-17, File No. 171042, App. 12/6/2017, Eff. 1/5/2018)
(a) Every Cannabis Business is required to obtain a business license from the City in compliance with Article 2 of the Business and Tax Regulations Code.
(b) Every Cannabis Business is required to have paid all outstanding taxes and fees, including any related penalties and interest, owed to the City, and is required to have obtained a business registration certificate from the City in compliance with Article 12 of the Business and Tax Regulations Code.
(c) Every Cannabis Business is required to obtain a State Cannabis License prior to engaging in any Commercial Cannabis Activities.
(d) Every Cannabis Business is required to prominently display on its Premises its Cannabis Business Permit, State Cannabis License, Business Registration, and Seller’s Permit, if required to hold a Seller’s Permit.
(e) Every Cannabis Business shall operate within fully enclosed and secure structures that are inaccessible to underage persons.
(f) It shall be a violation of this Article 16 for a Cannabis Business to sell or maintain alcoholic beverages and/or Tobacco Products on the Premises of the Cannabis Business.
(h) Every Cannabis Business is required to submit a “modification request” to the Office of Cannabis prior to making any change that would materially or substantially alter the Premises from the diagram of the Premises on file with the Office of Cannabis, and shall not make the proposed change absent approval from the Director.
(i) Every Cannabis Business is required to use the business name listed on its Cannabis Business Permit when applying for any other permits or licenses relating to the operation of the Cannabis Business, and when applying for a State Cannabis license.
(j) Every Cannabis Business is required to provide identification badges to all employees that display: (1) the name of the Cannabis Business; (2) the number of the Cannabis Business’ Cannabis Business Permit; and (3) a photo of the employee’s face. Such identification badges must be worn by employees at all times when they are on the Premises of the Cannabis Business, and when acting in the scope of their employment.
(k) Every Cannabis Business, other than a Cannabis Testing Facility, is required to maintain on the Premises a fire proof safe.
(l) A Cannabis Business shall not enter into a sublease for use of any part of the Premises by another entity without the prior approval of the Director.
(m) A Physician’s Recommendation for Medicinal Cannabis may not be sought, issued, provided, or procured on the Premises of a Cannabis Business.
(n) At any time a Cannabis Business is open for operation, there shall be at least one person on the Premises who is responsible for the operation of the Cannabis Business and who is readily available to respond to and interact with all inspecting departments and agencies, the Director, or any other City employee or official.
(o) No Cannabis Business may employ an individual who is not at least 21 years of age, unless authorized by state law.
(p) Every Cannabis Business is required to comply with all aspects of the state’s “Track and Trace” program, as set forth in Section 26067 of the California Business and Professions Code, as may be amended from time to time.
(q) Every Cannabis Business is required to maintain records demonstrating that all Cannabis and Cannabis Products have been obtained from Cannabis Businesses holding a valid State Cannabis License. The Director shall have the right to examine, monitor and audit such records and documentation, which shall be made available immediately upon request of the Office of Cannabis.
(r) None of the following items shall be allowed on the Premises or parking lot of a permitted Cannabis Business:
(1) Controlled substances other than Cannabis, except when in the possession or under the control of an individual for whom the controlled substance was prescribed by a licensed physician; and
(2) Alcoholic beverages.
(s) Every Cannabis Business shall comply with the terms of its Good Neighbor Policy and Security Plan.
(t) Every Cannabis Business is required to keep all garbage, recycling, and compost containers on the Premises and hidden from public view, and placed outside only when being serviced by the disposal company. Trash shall be contained and disposed of pursuant to garbage and recycling receptacle guidelines set forth by the Department of Public Works.
(u) The Premises of every Cannabis Business shall be adequately soundproofed or insulated for noise, as may be required by the Planning and/or Building Codes, or by permits issued pursuant to those Codes. Noise generated by fixed-source equipment shall not exceed the decibel levels specified in Article 29 of the Police Code, as may be amended from time to time. Violations of this subsection (u), including noise that exceeds the decibel levels specified in Article 29 of the Police Code, are subject to the penalties set forth in this Article 16.
(v) Appropriate odor control equipment shall be installed in conformance with the approved odor plan and maintained to prevent any significant noxious or offensive odors from escaping the Premises.
(w) Every Cannabis Business shall maintain the main entrance to the Premises and all sidewalks abutting the subject property in a clean and sanitary condition in compliance with the Department of Public Works’ Street and Sidewalk Maintenance Standards.
(x) Every Cannabis Business shall comply with signage controls as established in accordance with the Planning Code.
(y) Every Cannabis Business shall register with the Office each location within the City where Cannabis and Cannabis Products will be stored.
(z) Every Cannabis Business shall protect personally identifiable information and protected health information from unauthorized disclosure, to the extent required by the Health Insurance Portability and Accountability Act, the California Medical Information Act, Article 1 of the California Constitution, the California Health and Safety Code and regulations promulgated thereunder, and any other applicable provision of federal or state law.
(aa) It shall be a violation of this Article 16 for any Cannabis Business to engage in the nonsale distribution of Cannabis or Cannabis Products, or to permit the nonsale distribution of Cannabis or Cannabis Products by any Person on the Premises of the Cannabis Business, except as authorized by state law. Notwithstanding the forgoing,1
and as authorized by state law, a Storefront Cannabis Retailer may operate a Compassion Program in which it provides Medicinal Cannabis and/or Medicinal Cannabis Products at no or nominal cost to low-income individuals who are qualified under California Health and Safety Code Sections 11362.7 et seq. to use Medicinal Cannabis. In addition, Cannabis Cultivation Facilities and Cannabis Manufacturing Facilities may provide Medicinal Cannabis and/or Medicinal Cannabis Products at no or nominal cost to Storefront Cannabis Retailers, for distribution through a Compassion Program. The Director shall adopt rules, regulations and guidelines applicable to Compassion Programs, including, but not limited to: eligibility criteria applicable to persons who may receive Cannabis at no or low cost; and recordkeeping requirements. For purposes of this subsection (aa), “nonsale distribution” means to give Cannabis or Cannabis Products to the general public or some segment thereof at no cost, or at nominal cost, or to give coupons, coupon offers, or rebate offers for Cannabis or Cannabis Products to the general public or some segment thereof at no cost or at nominal cost.
(bb) A Cannabis Business shall conduct an Energy Efficiency Audit Reporting, as may be required by Chapter 20 of the Environment Code.
(cc) Every Cannabis Business shall ensure that the electrical power used for Commercial Cannabis Activities shall be procured from or produced by renewable sources, consistent with Renewable Energy Requirements to be adopted by the Director, in consultation with the Director of the Department of the Environment. In adopting Renewable Energy Requirements, the Director shall establish minimum renewable energy requirements that are consistent with the amount of renewable energy contained in CleanPowerSF’s Green Service. A Cannabis Businesses1
shall also provide to the Director and the Department of the Environment an annual report documenting the amount and source of energy consumed by the Business in the prior 12 months.
(dd) Every Cannabis Business shall advise the Director and the applicable State Licensing Authority in writing of the following events within 48 hours of:
(1) Receiving a criminal penalty or civil judgment rendered against the Permittee; or
(2) Receiving notification of the revocation of a local license, permit or other authorization from any Referring Department.
(ee) Every Cannabis Business shall notify the Director, the Police Department, and the applicable State Licensing Authority within 24 hours after discovering any of the following:
(1) Significant discrepancies identified during inventory;
(2) Diversion, theft, loss, or any criminal activity pertaining to the operation of the Cannabis Business;
(3) The loss or unauthorized alteration of records related to Cannabis or Cannabis Products, registered qualifying patients, primary caregivers, or the employees or agents of the Cannabis Business; and
(4) Any other breach of security.
(ff) Every Cannabis Business shall ensure that at least 50% of all Business Work Hours are performed by Local Residents, unless one of the following exceptions applies:
(1) Cannabis Businesses that previously held a Medical Cannabis Dispensary permit under Article 33 of the Health Code shall ensure that at least 35% of all Business Work Hours are performed by Local Residents. This exception shall expire by operation of law on January 1, 2019.
(2) If a Cannabis Business is subject to, and complies with, the hiring requirement imposed by subsection (gg), that Cannabis Business shall be exempt from the requirements of this subsection (ff).
Business Work Hours performed by residents of states other than California shall not be considered in calculation of the number of Business Work Hours to which the requirements of this subsection (ff) apply. The Director of the Office of Cannabis may approve a time-limited waiver or reduction of the requirements of this subsection, upon a showing by the Cannabis Business that it was unable to locate a sufficient number of qualified Local Residents.
(gg) To encourage the existence of a stable, well-trained workforce in the cannabis industry, each Cannabis Business shall comply with the following hiring requirement:
(1) Each Cannabis Business shall ensure that 35% of its new hires shall be registered apprentices enrolled in a relevant apprenticeship program approved by the State that has a memorandum of understanding with one or more pre-apprenticeship programs certified by the City, if:
(A) There exists a State-approved apprenticeship program that is relevant to the type (as set forth in Section 1607) of Cannabis Business in question;
(B) The State-approved apprenticeship program described in subsection (gg)(1)(A) has a memorandum of understanding with one or more City-certified pre-apprenticeship programs; and
(C) Sufficient numbers of registered apprentices enrolled in a State-approved apprenticeship program described in subsections (gg)(1)(A)-(B) are available to satisfy 35% of the Cannabis Business’s new hiring needs.
(2) If registered apprentices enrolled in a State-approved apprenticeship program described in subsections (gg)(1)(A)-(B) are not available in sufficient numbers to satisfy 35% of the Cannabis Business’s new hiring needs, the Cannabis Business shall hire such registered apprentices to the extent feasible.
(3) If no State-approved apprenticeship program is relevant to a particular type (as set forth in Section 1607) of Cannabis Business, or if no relevant State-approved apprenticeship program has a memorandum of understanding with any City-certified pre-apprenticeship program, that type of Cannabis Business shall not be subject to any hiring requirement under this subsection (gg).
(4) To facilitate compliance with this subsection (gg), the Office of Economic and Workforce Development (OEWD) shall maintain and publicize a list of State-approved apprenticeship programs that have a memorandum of understanding with one or more City-certified pre-apprenticeship programs. This list shall specify types (as set forth in Section 1607) of Cannabis Businesses to which each such State-approved apprenticeship program is relevant, as determined by OEWD.
(5) For purposes of this subsection (gg), OEWD shall establish standards governing certification of pre-apprenticeship programs, and shall be responsible for certifying, on behalf of the City, pre-apprenticeship programs that meet those standards. The standards established by OEWD shall ensure that any pre-apprenticeship program certified by the City under this subsection operates in partnership with one or more community-based organizations. These standards may include provisions that relate to social equity training, license incubation processes, underserved community outreach programs, and business plan development training.
(hh) Every Cannabis Business must comply with all applicable laws, regulations, rules, and permit conditions, during the entire permit period, whether or not the Cannabis Business currently engages in Commercial Cannabis Activity.
CODIFICATION NOTE
(a) Entry to Premises Prohibited. It shall be a violation of this Article 16 for a Permittee to allow on the Premises any person under 21 years of age, provided however that a Medicinal Cannabis Retailer may allow entry to a person 18 years of age or older who possesses a valid Physician’s Recommendation.
(b) Prohibited Sales.
(1) It shall be a violation of this Article 16 for any Storefront Cannabis Retailer, Cannabis Microbusiness, or Delivery-Only Cannabis Retailer to Sell, furnish, give, or cause to be Sold, any Adult Use Cannabis or Adult Use Cannabis Products to any person under the age of 21.
(2) It shall be a violation of this Article 16 for any Storefront Cannabis Retailer, Cannabis Microbusiness, or Delivery-Only Cannabis Retailer to Sell, furnish, give, or cause to be Sold, any Medicinal Cannabis or Medicinal Cannabis Products to any person who is under the age of 18 and/or who does not possess a valid Physician’s Recommendation.
(c) Misleading Business Names Prohibited. It shall be a violation of this Article 16 for a Permittee to assign any name to a Cannabis Retailer or Medicinal Cannabis Retailer, or to use any name in connection with a Cannabis Retailer or Medicinal Cannabis Retailer, if the name is likely to mislead members of the public into believing that the business is legally permitted to sell products to minors, or is likely to entice minors to patronize the business.
(d) Positive Bona Fide Proof of Identity Required. No Storefront Cannabis Retailer, Cannabis Microbusiness, or Delivery-Only Cannabis Retailer may Sell Cannabis or Cannabis Products to any Customer without first examining the Customer’s Bona Fide Proof of Age and Identity to confirm that the Customer is at least the minimum age under state law to purchase and possess the Cannabis or Cannabis Product. Review of a Customer’s Bona Fide Proof of Age must be performed by an employee of the Permittee, in the presence of the prospective Customer.
(e) Proof of Physician’s Recommendation Required. No Storefront Cannabis Retailer, Cannabis Microbusiness, or Delivery-Only Cannabis Retailer may Sell Medicinal Cannabis or Medicinal Cannabis Products to any Customer without first examining verification that the Customer possesses a valid Physician’s Recommendation. Review of a Customer’s verification of Physician’s Recommendation must be performed by an employee of the Permittee, in the presence of the prospective Customer.
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