COUNTY ADMINISTRATION OFFICE - R. ESPINOSA

1) PUBLIC HEARING - Conduct public hearing regarding the schedule of proposed fees and fee deposits related to the cannabis business regulatory program as authorized by Ordinance No. 974, specifically with regard to the cannabis business permit application; and

2) Consider adoption of a resolution setting forth a new Cannabis Business Permit Application Fee, Zoning Verification Fee, Background Check Fee, Appeal Fee, and the applicable fee deposits for the San Benito County Cannabis Business Regulatory Program; and

3) Consider adoption of a resolution designating the Agricultural Commissioner to serve as the County Administrative Officer's designee, who shall be authorized to build and manage the Cannabis Business Regulatory Program, including, but not limited to, preparing the necessary forms, promulgating any necessary rules, regulations, and standards governing application requirements and processes, soliciting applications, conducting evaluations of the cannabis business applicants, as well as, the cannabis employee-applicants, and otherwise implementing the Cannabis Business Permit and Cannabis Employee Work Permit processes and requirements.  

SBC FILE NUMBER: 425

RESOLUTION NO: 2019-13

RESOLUTION NO: 2019-14

Introduction

On June 6, 2018 voters approved Measure C creating a tax on cannabis businesses and the Board of Supervisors directed staff to establish the necessary ordinances to allow certain commercial cannabis activity within the unincorporated area of San Benito County. As directed by the Board of Supervisors, staff contracted with HdL Companies to develop a framework for regulating and permitting certain commercial cannabis activities, such as cultivation, manufacturing, testing laboratories, and distribution.

On December 12, 2018, the Board of Supervisors adopted a series of ordinances to regulate cannabis businesses. As relevant here, the Board adopted Ordinance No. 974 (Cannabis Business) which provides, in pertinent part, the regulatory framework and permitting process for cannabis businesses in the unincorporated area of San Benito County. As part of the Cannabis Business Regulatory Program, an applicant is required to pay an application fee as established by resolution and/or ordinance of the Board. (See SBCC §7.02.051, subd. (B).) This fee is intended to cover all costs incurred by the County in the application process, including the cost of conducting a background investigation. (See also, SBCC §7.02.110, subd. (L).)

As part of their contracted services, HdL Companies conducted a fiscal analysis to determine the estimated cost of processing a Cannabis Business Permit application, zoning verification request, background check, and/or appeal. The resulting proposed fees are based on actual costs and a fee deposit will be collected upon submission of each cannabis business permit application, zoning verification request, background check, or notice of appeal.

The proposed cannabis business permit application fees will be based on the actual cost of reviewing the application, based on established hourly rates of staff time, inclusive of the A-87 costs, actual hourly rates of consultants (which range from $250-300/hour), and actual DOJ/FBI fee.  The proposed fee deposit reflects the estimated actual cost of the labor, materials, and overhead involved in review of each application for all phases of review (based on an estimated 35 applicants) as follows:

The estimated costs of Phase 1 include conducting only one background check and one zoning verification. If additional background checks or zoning verification is necessary, additional costs will be charged against the full fee deposit.

The proposed verification letter fee deposit is $279.16. The proposed background check fee deposit is $354.49. The proposed appeal fee deposit is $3,453.99.

For all the foregoing proposed fee deposits, the actual hours worked by staff and any actual costs of consultant, the DOJ, and/or FBI will be charged against the applicable fee deposit. Applicants will be invoiced for additional hours; Applicants will be refunded any excess funds.

Pursuant to Title 14, Section 15273, subd. (a)(1) of the California Code of Regulations, said fees are exempt from the California Environmental Quality Act (CEQA).

Resolution: Adopting Fee Schedule

The proposed cannabis business regulatory program fee schedule includes the establishment of new fees for processing cannabis business permit applications (4 phases of review), zoning verification fees, background/LiveScan fees, and appeal fees.

The proposed fees are based on actual cost (minimum charge/deposit), which means each applicant will be charged actual staff time (to be charged against the deposit). For example, an applicant will be charged actual staff time spent processing a cannabis business application (4 phases of review), as well as, actual costs of consultants and/or any applicable DOJ/FBI costs.

The following fee deposits are a minimum base fee for the actual time and costs associated with the requested service:

*Costs are based on an estimated 35 applications submitted

**Rounded to nearest $150.00

The cannabis business permit application processing fee deposit will be $10,650 and is a minimum base fee for the actual time and costs associated with processing, reviewing, and ranking of applications. This deposit includes one Background/LiveScan and the zoning verification. Because the background investigation and live scanning fees are a per person charge, an application in which more than one (1) person are required to undergo a background investigation and LiveScan will result in additional charges which may be charged against the deposit or the applicant may submit additional deposits for each additional background investigation and LiveScan.

The Background/LiveScan fee is applicable for all business owners and property owners associated with the cannabis business permit application. For instance if there are two business owner and one property owner, then the total fee would be $1,063.47 to cover three individuals ($354.49 per person). Because Phase 1 already includes the estimated cost to conduct one (1) Background/LiveScan, the cost of conducting two additional Background/LiveScan would increase the estimated cost of Phase 1 by $708.98, resulting in an estimated Phase 1 cost of $4,066.74 to be charged against the $10,650 cannabis business permit application fee deposit. Alternatively, the applicant could simply pay two additional fee deposits for the Background/LiveScan for a total of $11,358.98 tendered to the County ($10,650.00 cannabis business permit application fee deposit, inclusive of one Background/LiveScan + (2 x $354.49 Background/LiveScan fee deposit).

The actual cost is based on the department weighted labor rate of those involved, which include staff from the Chief Administrative Office, County Counsel, Sheriff, Resources Management Agency, and others as needed.

Request:

Staff respectfully requests the Board adopt the resolution establishing the fees and corresponding fee deposits applicable to the Cannabis Business Regulatory Program.

Resolution: Designating Agricultural Commissioner as CAO's Designee

Chapter 7.02 (Cannabis Businesses) authorizes, in pertinent part, the County Administrative Officer or his/her designee(s) to:

• build and manage the Cannabis Business Regulatory Program, including, but not limited to, preparing the necessary forms, promulgating any necessary rules, regulations, and standards governing application requirements and processes, soliciting applications, conducting evaluations of the cannabis business applicants, as well as, the cannabis employee-applicants, and otherwise implementing the Cannabis Business Permit and Cannabis Employee Work Permit processes and requirements. (SBCC §7.02.040, subd. (C).)

• establish any additional rules, regulations and/or standards governing the same, including, but not limited to, the ongoing operation and County’s oversight of cannabis businesses, and/or concerning any other subject determined to be necessary to carry out the purposes of this Chapter and shall become effective upon publication on the County’s website. (SBCC §7.02.040, subd. (D).)

• designate application periods to receive Cannabis Business Permit applications. (SBCC §7.02.051, subd. (C).)

• determine whether a Cannabis Business Permit application meets the requirements of the Cannabis Business Regulatory Program. (SBCC §7.02.051, subd. (D).)

• deny or approve candidates in each category of cannabis business for establishment of operating conditions. (SBCC §7.02.051, subd. (E).)

• issue the Cannabis Business Permit(s) once all the requirements have been met. (SBCC §7.02.053, subd. (B).)

• make all decisions concerning the issuance of a renewal permit. (SBCC §7.02.054, subd. (E).)

The County Administrative Officer would like to designate the Agricultural Commissioner as their designee under Chapter 7.02.

Request:

Staff respectfully requests the Board adopt a resolution designating the County Agricultural Commissioner as the County Administrative Officer’s designee under Chapter 7.02.

REQUEST:

1) PUBLIC HEARING - Conduct public hearing regarding the schedule of proposed fees and fee deposits related to the cannabis business regulatory program as authorized by Ordinance No. 974, specifically with regard to the cannabis business permit application; and

2) Consider adoption of a resolution setting forth a new Cannabis Business Permit Application Fee, Zoning Verification Fee, Background Check Fee, Appeal Fee, and the applicable fee deposits for the San Benito County Cannabis Business Regulatory Program; and

3) Consider adoption of a resolution designating the Agricultural Commissioner to serve as the County Administrative Officer's designee, who shall be authorized to build and manage the Cannabis Business Regulatory Program, including, but not limited to, preparing the necessary forms, promulgating any necessary rules, regulations, and standards governing application requirements and processes, soliciting applications, conducting evaluations of the cannabis business applicants, as well as, the cannabis employee-applicants, and otherwise implementing the Cannabis Business Permit and Cannabis Employee Work Permit processes and requirements.