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APPEAL OF THE PLANNING COMMISSION’S DENIAL OF A COMMISSION USE PERMIT TO ESTABLISH A RETAIL STOREFRONT CANNABIS BUSINESS AND AN ADMINISTRATIVE USE PERMIT TO ESTABLISH A RETAIL NON-STOREFRONT (DELIVERY ONLY) CANNABIS BUSINESS - ALL CONCERNING A 6,500 SQUARE FOOT COMMERCIAL SPACE AT 7616 PACIFIC AVENUE, UNIT A5 (APPLICATION NO. P20-0693)
recommended action
RECOMMENDATION
Staff recommends that the City Council adopt a resolution to:
1. Reverse the Planning Commission’s denial of a Commission Use Permit to allow the establishment of a proposed retail storefront cannabis business, in accordance with the findings and subject to the conditions contained in the attached resolution; and
2. Reverse the Planning Commission’s denial of an Administrative Use Permit to allow a retail non-storefront (delivery only) cannabis business, in accordance with the findings and subject to the conditions contained in the attached resolution.
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Summary
The applicant, Heng Heung, submitted a Commission Use Permit (CUP) and Administrative Use Permit (AUP) application to establish a 6,500-square foot retailer storefront cannabis business and a retail non-storefront (delivery only) cannabis business in a Commercial General (CG) zoned parcel, located at 7616 Pacific Avenue, Unit A5. The site is currently a multi-tenant commercial building within the Hammer Ranch Shopping Center. The shopping center includes restaurants, a supermarket, a US Postal Service location, and various retail stores, including an existing, previously approved cannabis retail storefront (Attachment A - Location Map).
On July 8, 2021, the Planning Commission held a public hearing and considered Staff’s presentation and recommendation for approval of the project. Additionally, the Applicant spoke on behalf of the project. A number of public comments were submitted, and members of the public were in attendance to speak on the project. After discussion, the Planning Commission denied the Commission Use Permit and Administrative Use Permit request (by a 4-2 vote, with Commissioners Rizvi and Mallett dissenting and Commissioner Sanguinetti absent).
The project applicant filed an appeal of the Plannining Commission decision on July 19, 2020, for City Council’s consideration (Attachment B - Appeal Request). The appeal contests the Planning Commission’s findings supporting denial of the application, and the applicant requests that City Council reverse the Planning Commission’s denial and approve the Commission Use Permit and Administrative Use Permit.
Staff finds that the proposed project aligns with the General Plan 2040 goals and complies with all technical Code requirements. Staff recommends that the City Council reverse the Planning Commission’s denial of the proposed project.
DISCUSSION
Background
On March 5, 2019, City Council approved changes to the City’s cannabis regulatory program to (a) align state/local regulation; (b) allow additional business types; (c) establish a method to control the pace of new business openings, and (d) establish a method to address historic racial inequities.
New business types were introduced, including manufacturing, distribution, testing laboratories, delivery-only non-storefront retailers, and microbusinesses. The program also included additional cultivators and storefront retailers (dispensaries) as well as an equity program. The changes were instituted to align local regulation with the Medical Cannabis Regulation and Safety Act and the Adult-Use of Marijuana Act of 2016 (Proposition 64). In addition to achieving regulatory consistency, the program was changed to eliminate the limit (i.e., caps) on the total number of Operator Permits regulated by the Stockton Police Department under Stockton Municipal Code (SMC) Chapter 5.100.
Since concern was expressed about the potential impact on public safety, public health, or community character, a controlled roll-out program was established for certain permit types. The controlled expansion program allows the City and the existing industry to adapt to an evolving market and gives the City ongoing flexibility to accelerate or decelerate industry expansion over time. The controlled expansion also has the benefit of allowing the City to give preference to equity applicants.
The controlled expansion is accomplished on an annual basis through a lottery process for the following business types:
• storefront retailer
• cultivation
• volatile manufacturing
• microbusinesses, which includes storefront retail and/or cultivation business types.
Applicants for the above business types are evenly selected by the lottery process from two pools for a total of eight (8) applications per year, as described below:
Equity Pool
a. One (1) storefront retailer permit
b. One (1) cultivation permit
c. One (1) volatile-manufacturing permit
d. One (1) microbusinesses
General Pool
a. One (1) storefront retailer permit
b. One (1) cultivation permit
c. One (1) volatile-manufacturing permit
d. One (1) microbusinesses
Equity pool applicants must meet certain criteria and are also eligible to be a part of the general pool. To qualify as an equity applicant, an applicant must own more than 50 percent of the business, be a resident of Stockton, and meet one of the following: be a Minority Business Enterprise (MBE)/Women-Owned Business Enterprise (WBE), live in an opportunity zone, live in the Senate Bill 535 disadvantaged area, or live in a Housing and Urban Department (HUD) designated area.
Heng Heung, the applicant of the proposed project, is a successful equity pool applicant for a storefront retailer business. The Non-storefront Retail (delivery only) use applicability is not granted through the Commercial Cannabis Lottery program. There are no limits or “caps” to the number of applications that may be approved.
Stockton Municipal Code (SMC) Section 16.80.195 provides a land-use process for permitting cannabis business types and standards for development, which includes location restrictions. The SMC imposes a limit on the total number of permits allowed citywide for storefront retailers but not for a non-storefront retailer (delivery only). The Code provides limitations through a Commercial lottery program described above. In addition, market availability of retail space in the allowable zones provides some natural limitations.
The SMC contains location requirements for both Retail Storefront and Retailer Non-Storefront (Delivery Only) uses, which are the same. A minimum 300-foot separation is required from any residential zone, which is technically met. The Code also requires a minimum 600-foot separation from any park, K-12 school, daycare/youth/childcare center, childcare, in-home (family daycare home), religious facilities, and/or drug abuse, or alcohol recovery/treatment facility that is in existence at the time the land use permit is issued. Both distances are measured in a straight line from the closest point between property lines. The proposed business meets all codified location requirements.
The primary issue raised by the Planning Commission relates to the proposed location being in the vicinity of another Cannabis Retailer Storefront (approximately 150 feet between the two suites). Despite not violating Municipal Code standards, the Planning Commission raised concerns that the proposed location did not meet Use Permit Findings 2, 5, and 6 due to potential impacts resulting from the proximity of the two cannabis businesses.
Substantial public comment has been received regarding the project. To-Date, fifty-eight (58) written communications and ten (10) verbal comments (during the public hearing) have been submitted:
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Support |
Oppose |
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Verbal |
3 |
7 |
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Written |
20 |
38 |
Public Outreach
Although not required by the Stockton Municipal Code, a virtual community meeting was held in advance of the Planning Commission meeting on May 10, 2021, at 4:30 pm. All property owners within a 300-foot radius of the subject property were invited to the meeting. The applicant representative, property manager, and City staff attended said virtual community meeting; no community members attended. The applicant recorded the presentation and made it available to community members by request.
Present Situation
The applicant, Heng Heung, requests approval to operate a 6,500-square-foot retailer storefront and non-storefront retail (delivery only) commercial cannabis business in a Commercial, General (CG) Zone located at 7616 Pacific Avenue, Unit A5.
The proposed project is located in the Hammer Ranch Shopping center. The shopping center includes restaurants, a supermarket, a US Postal Service location, and various retail stores, including an existing, previously approved cannabis retail storefront.
The retailer storefront and the non-storefront retail (delivery only) businesses will operate between 8:00 a.m. and 8:00 p.m. Monday through Sunday. The proposed project will employ 12-15 full-time employees within the first year.
The Stockton Police Department has reviewed the application and indicated no concerns with the proposed project. If approved, a formal security plan and lighting plan will be submitted and reviewed by the Police Department as part of an Operators Permit application.
The existing commercial center has 33 shared parking spaces, of which 15 spaces are required for the proposed project. The number of parking stalls is consistent with the requirements for proposed cannabis businesses and, therefore, is adequate to service the business.
Staff Analysis
To permit the proposed project, the City Council is asked to consider reversing the Planning Commission’s denial, thereby approving a Commission Use Permit (CUP) and an Administrative Use Permit (AUP) for the proposed retail storefront and retail non-storefront (delivery) cannabis business.
The City Council may uphold the Commission’s action and deny the appeal or reverse the Commission’s action with four concurring votes (a majority vote), in accordance with SMC Section 16.100.040.G.1. Each request and staff’s analysis are provided below.
Commission Use Permit/Administrative Use Permit
When located in a CG Zone, a Commission Use Permit is required for a Cannabis Retailer Storefront, and an Administrative Use Permit is required for a Non-storefront cannabis retail (delivery only). The operations of each use would be combined within a single business and within the same building area. As a result, and since the findings required to address each permit type are the same, the following analysis addresses both land uses.
SMC Section 16.168.050(A) requires seven (7) findings of fact to grant approval. Each finding and staff’s analysis are as follows:
1. Finding: The proposed use is allowed within the subject zoning district with the approval of a use permit and complies with all other applicable provisions of this Development Code and the Municipal Code;
Staff Analysis: The proposed cannabis business types (i.e., uses) are both allowed in the CG Zone. The subject uses would be located within an existing commercial building and, therefore, do not raise a question of conformance with Title 16 development standards. As noted below, adequate off-street parking spaces are provided for both the existing and proposed uses.
The proposed project is subject to location requirements set forth in SMC 16.80.195.A(6) and 16.80.195.B(4). The project meets the location requirements. The project is not located within 300-feet of any existing residential zone. The project is not located within 600-feet of any park, school providing instruction in kindergarten or any grades 1 through 12, daycare center, or youth center, childcare center, child care, in-home (family daycare home), religious facilities, or drug abuse or alcohol recovery/treatment facility.
2. Finding: The proposed use would maintain or strengthen the integrity and character of the neighborhood and zoning district in which it is to be located;
Staff Analysis: The proposed cannabis business would be situated in a shopping center with several other commercial land uses. It would be aligned with the intent of the shopping center to provide retail options to the community. The proposed use would fill a vacant, unoccupied suite which would help strengthen the integrity of the surrounding area by lowering the shopping center’s vacancy rate, creating a secured use of the site, which will discourage vandalism, graffiti, and crime due to the increased level of security required for this business type.
3. Finding: The proposed use would be consistent with the general land uses, objectives, policies, and programs of the General Plan and any applicable specific plan or master development plan;
Staff Analysis: The General Plan Land Use Map designates the subject site as Commercial. The Commercial designation is intended to accommodate a wide variety of commercial uses, including, but not limited to, service uses. SMC Section 16.20.020 Table, 2-2 classifies the Cannabis Retailer Storefront and the Non-storefront Cannabis Retail Operator Permit (Delivery Only) use within a service use category. Therefore, the proposed use is consistent with the Commercial designation.
Additionally, the project is consistent with General Plan Policy LU-4.2, which states, “Attract employment- and tax-generating businesses that support the economic diversity of the city.” The proposed use furthers this policy since it would provide for a business type that generates tax revenue for the City of Stockton’s general fund.
Finally, land uses are determined by the General Plan and regulated by Title 16 of the Stockton Municipal Code (Development Code). The proposed use meets all Development Code requirements and thus meets General Plan land uses objectives, policies, and programs.
4. Finding: The subject site would be physically suitable for the type and density/intensity of use being proposed, including the provision of services (e.g., sanitation and water), public access, and the absence of physical constraints (e.g., earth movement, flooding, etc.);
Staff Analysis: The proposed project would occupy a portion of an existing commercial building within a shopping center. The project has been analyzed by all departments, and it has been determined all streets and public accessways are adequate to serve the proposed project. Further, The proposed project was reviewed for compliance with all applicable and current Building Code guidelines and found to be in compliance given the nature of the proposed project. No expansion of the building is proposed. The site will have access to City utility services.
5. Finding: The establishment, maintenance, or operation of the proposed use at the location proposed and for the time period(s) identified, if applicable, would not endanger, jeopardize, or otherwise constitute a hazard to the public convenience, health, interest, safety, peace, or general welfare of persons residing or working in the neighborhood of the proposed use;
Staff Analysis: The proposed land use will require the applicant to adhere to all applicable building codes, fire codes, and requirements established by the State of California, Bureau of Cannabis Control (BCC). The BCC issues annual licenses and monitors Retailer Storefronts and Non-Storefront Retail (delivery only) to ensure the safety of business practices. The applicant will also be required to obtain and maintain a City of Stockton, Operator’s Permit that requires the business owner to develop and maintain a security and lighting plan reviewed annually by the City of Stockton Police Department.
The proposed operations will be carried out indoors, in a commercial zone; appropriate security provisions will be incorporated into the project operations plan, including electronic surveillance and on-site security personnel procedures.
For the above reasons, the establishment, maintenance, or operation of the proposed land use activity would not endanger, jeopardize, or otherwise constitute a hazard to the public convenience, health interest, safety, or general welfare of persons residing or working in the neighborhood of the proposed use.
6. Finding: The design, location, size, and operating characteristics of the proposed use would be compatible with the existing and future land uses on-site and in the vicinity of the subject property; and
Staff Analysis: The proposed Retailer Storefront and Non-Storefront Retail (delivery only) is located in an existing commercial building, and no changes have been proposed to the exterior characteristics of the project site. The proposed use is commercial in nature, and modest floor area raises no potential issues related to compatibility with the existing and future land uses on-site and in the vicinity of the subject property.
7. Finding: The proposed action would be in compliance with the provisions of the California Environmental Quality Act (CEQA) and the City’s CEQA Guidelines.
Staff Analysis: The proposed uses would occur within a portion of an existing commercial building with negligible alterations within the structure. No expansion of the existing building is proposed. Therefore, the project is categorically exempt from the CEQA, pursuant to CEQA Guidelines Section 15301 (Existing Facilities). Categorical Exemption under section 15301, Class 1 consists of the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of existing or former use.
Planning Commission Action
The proposed project was considered by the Planning Commission on July 8, 2021 (see Attachment C - July 8, 2021, Planning Commission PowerPoint). During the discussion, some members of the Planning Commission expressed concerns about the proposed cannabis business being located too close to an existing cannabis storefront retailer in the same shopping center.
The Planning Commission also expressed concern about the proposed business increasing criminal activity in the area. Crime statistics were provided by the Police Department, indicating that the area had not experienced elevated calls for service as a result of the existing cannabis storefront retailer being in business. The Police Department did not express opposition to the proposed project at this location.
Other concerns expressed by some Commissioners included possible issues with traffic and congestion, availability of parking, oversaturation of cannabis businesses in the area, impacts to the vitality of existing businesses, and potential jeopardization of jobs at the existing cannabis retailer.
During the discussion, staff responded to the Commission’s questions and confirmed that the proposal met all requirements specified in the SMC.
During the public comment period of the hearing, the applicant, applicant’s representative, and applicant’s legal counsel spoke in support of the project, outlining the business model, company background, and experience. They also refuted some statements received via public comment. Community members were in attendance, and the Clerk received four (4) WebEx comments, six (6) in-person comments, and two (2) eComments during the hearing (in addition to fifty-right (58) written comments provided in advance of the hearing).
The Planning Commission denied the project by a vote of 4-2, with Commissioners Rizvi and Mallett dissenting and Commissioner Sanguinetti absent (Attachment D - Resolution 2021-09-09-0301).
Applicant Appeal
On July 19, 2021, the applicant filed an appeal of the Planning Commission’s decision. The applicant alleges that the Commission’s majority decision to deny the application was not justified by the record of the proceedings and that the basis for said decision was the protection of a single existing business. The applicant contends that the grounds for the decision are outside of the parameters of the Planning Commission’s land use determination and necessary findings. They further assert that the Potential for a public safety risk is contrary to testimony provided by the Stockton Police Department.
The applicant states that the Commission’s justifications for the decision were not based in fact but instead on testimony from a single business owner and its constituents and contrary to factual circumstances concerning similarly situated cannabis businesses.
For the City Council’s review and consideration, the applicant (via legal counsel) has submitted a letter that includes a transcript of the July 8, 2021 Planning Commission meeting (Attachment E).
PUBLIC COMMENT
Notice for the City Council public hearing for this request was published in The Record on September 18, 2021, and mailed notice was sent to all property owners within a 300-foot radius at least ten days prior. As of the writing of this staff report, no written comments have been submitted.
FINANCIAL SUMMARY
Approval of the project would provide the City’s General Fund with additional revenue collected through the Cannabis Business Tax, which is currently 5% of the revenue earned by the business (rate applies to both Retail Storefront and Retail Non-storefront (delivery)).
Attachment A - Location Map
Attachment B - Appeal Request
Attachment C - July 8, 2021, Planning Commission PowerPoint
Attachment D - Resolution 2021-09-09-0301
Attachment E - Letter from D. Lanferman to Honorable Mayor and Council