Frequently Asked Questions Related to Cannabis Businesses
1. As part of the application process must a cannabis business demonstrate that the business will be conducted on a property that does not have a federal loan?
- No, the application does not require that the cannabis business demonstrate that the business will be conducted on a property that does not have a federal loan. Whether a cannabis business will be permitted to operate on a property with a federal loan is a private matter between the property owner and its lender(s). It is the responsibility of the applicant and the property owner to ensure that once a regulatory permit and conditional use permit are issued that the operation of the cannabis business complies with the terms of any mortgage or deed of trust encumbering the property including, without limitation, any requirement that all activities on the property comply with federal law.
2. Cannabis businesses are prohibited from being located within a 600-foot radius of a school providing instruction in kindergarten or any grades 1 through 12, day care center, or youth center that is in existence at the time the license is issued. Does the 600-foot distancing requirement apply to both large family day care centers or small family day care centers?
- No, the distancing requirement from day care centers does not apply to either large family day care centers or small family day care centers. Under State law, a day care center is defined to mean any child day care facility other than a family day care home, and includes infant centers, preschools, extended day care facilities, and school age child care centers. Family day care home means a home that regularly provides care, protection, and supervision for 14 or fewer children, in the provider's own home, for periods of less than 24 hours per day, while the parents or guardians are away, and is either a large family day care home or a small family day care home.
3. Can a cannabis business be owned by a living trust? Can the living trust convey the cannabis business from the trust to the son or daughter of the trustor?
- A cannabis business can be owned by a trust. An owner of a cannabis business is defined to include a person with an aggregate ownership interest of 20 percent or more in the person applying for a permit or a permittee, unless the interest is solely a security lien or encumbrance. A person is defined to include any individual, firm, partnership, joint venture, association, corporation, limited liability company, estate, trust, business trust, receiver, syndicate, non-profit, or any other group or combination acting as a unit, and the plural as well as the singular.
- If a cannabis regulatory permit is issued to the living trust as the owner of the business, when the business is conveyed by the trustees to the beneficiary, the beneficiary would need to apply for a new cannabis regulatory permit because that individual is not the same as the trust. Please consult with an attorney regarding the transfer of living trusts.
4. Can a cannabis regulatory permit be transferred?
- No, cannabis regulatory permits are nontransferable and will only be issued to the business entity that will own and operate the cannabis business.
5. Can the property owner be the applicant and then hire a company to come in and run a cannabis business for him under his or her permit?
- No, the applicant must be the cannabis business itself. The cannabis business will be the entity that is issued the cannabis regulatory permit. If the ownership of the cannabis business changes, a new cannabis regulatory permit will need to be obtained. Please see the question below that addresses changes in ownership.
6. What happens to the cannabis regulatory permit in the event that one of the business owners dies?
- If one of the owners of a cannabis business dies and that person’s ownership interest transfers to the other existing owners, then this is not considered a change in ownership of the cannabis business. The cannabis regulatory permit would remain in place unaffected.
- If one of the owners of a cannabis business dies and that person’s ownership interest is transferred to a person who is not identified as an owner of the cannabis business in the original application, a new cannabis regulatory permit application must be submitted to the City within ten business days of the effective date of the ownership change. A change in ownership occurs when a person receiving an interest in the cannabis business meets the definition of an owner. An owner is defined as:
- A. A person with an aggregate ownership interest of 20 percent or more in the person applying for a permit or a permittee, unless the interest is solely a security, lien, or encumbrance.
- B. The chief executive officer of a nonprofit or other entity.
- C. A member of the board of directors of a nonprofit.
- D. An individual who will be participating in the direction, control, or management of the person applying for a permit. An owner who is an individual participating in the direction, control, or management of the commercial or retail cannabis business includes any of the following:
- i. A partner of a cannabis business that is organized as a partnership.
- ii. A member of a limited liability company of a cannabis business that is organized as a limited liability company.
- iii. An officer or director of a cannabis business that is organized as a corporation.
- In no event may a person gain a financial interest in the cannabis business if that person is determined to have a disqualifying conviction within the meaning of Business and Professions Code section 26057 or is otherwise barred by other provisions of the code (i.e., this person must also pass a background check and meet all other qualifications of being an owner of a cannabis business).
7. Is a full site plan prepared by an architect needed for the cannabis regulatory permit?
- Cannabis businesses applying for a cannabis retailer, manufacturing, or testing laboratory regulatory permit are not required to prepare a full site plan of the premises prepared by an architect. For a cannabis cultivation facility, a site plan and floor plan prepared by a registered civil engineer clearly identifying that the proposed canopy space is a minimum of 10,001 square feet in size, and a maximum of 22,000 square feet in size, and that the cultivation activities will occur indoors only is required.
8. Can a manufacturing and cultivation business be located on the same property?
- Yes, if permitted by the State. The City’s ordinance does not prohibit a cannabis manufacturing business, cultivation business, or testing laboratory from being locating on the same property so long as the businesses meet all of the Code requirements including obtaining separate permits and meeting all the State regulations.
9. Does the City allow microbusinesses to operate in the City?
- No, microbusinesses are not allowed to operate in the City. A microbusiness is defined as business that allows for the cultivation of cannabis on an area less than 10,000 square feet and acts as a licensed distributor, Level 1 manufacturer, and retailer.