By Chris Frost
Oxnard—The Oxnard City Council approved cannabis fees for retail dispensaries, July 30, and offered staff input about a social equity program moving forward.
Retail cannabis locations are being looked at by staff and should move forward when the city council returns from its hiatus in Sept.
Planning and Sustainability Director Kathleen Malloy presented the item to the city council and said the permit fee it collects are for program development costs and allocates the cost across all the applicants.
The fee structure is broken down into program development, $2,218, Application Review (Phase 1) $2,921, Application Interview (Phase 2) $2,704, and Application Interviews (Phase 4) $6,977.
Mallory said that each fee is based on how many hours it takes to work on each phase.
“You have to pay in advance for each next phase,” she said. “Phase 3 ($2,752) is an appeal that is purposely on the bottom, and that would be in the instance that an applicant gets rejected and kicked out during the process because they don’t meet the criteria.”
The total cost for the process without an appeal is $14,820.
The applicant will go through a business application review, Mallory said, followed by a ranking.
“HDL will review and provide a ranking to the city,” she said. “The second phase is going through the interview and the second-ranking system. The evaluation criteria, we’ve provided it to the council in draft form. The city manager’s office will provide it in final form.”
The third step involves approval and permission to submit an application for a commercial cannabis business permit.
“That would be a ranking, as well,” she said. “Then you would follow up the submittal of the special use permit and development design review,” she said.
The city anticipates having more applicants than availability.
“The ranking would be kept in-hand,” she said. “If we have 10 dispensaries, the evaluation and ranking would have more than 10 on that list. Then you would be going through the review process and then we would be categorizing and allowing what applicant can apply. In the yearly report, there would be a requirement that the business would submit the documentation to stay in compliance with the conditions. Should they go out of business, then they would be out, and the next would be allowed to apply for the application.”
During public hearings on social equity, the community raised questions about hiring local people and business development opportunities. Mallory said although the community describes it as social equity, it is not genuinely social equity.
Typically, social equity programs look at arrest and conviction rates for targeted populations for prior cannabis infractions in places like Oakland or Long Beach.
“It also looks at census and demographics in different percentages of low-income and very-low-income by census tract,” she said. “Typically, social equity focuses on income limits, arrest and conviction history, as well as census tracts.”
Conversely, residents are interested in social equity for hiring purposes.
“Social equity is not the same thing as a hiring preference,” Mallory said. “The city’s application guidelines already provide for additional points and evaluation criteria based upon giving additional an additional bump-up in your ranking if you hire locally. That’s currently in our application guidelines.”
She introduced the Oxnard Cannabis Equity Program, which has a few different steps.
The first requirement calls for a community benefits agreement, which allows the current number of dispensaries, six, along with five manufacturers to proceed in the first year.
“That would be Oct. Nov. and Dec. to allow those number of permits for dispensaries and manufacturing,” she said. “Then we’ll hold back certain applications. Within those applications for dispensaries and manufacturers, there will be a stipulation that there will be a hiring preference. We are suggesting a minimum of 50 percent for local residents.”
The city will also require an application workshop for local residents, which would be a tutorial about the cannabis business and how to get into the business and run a cannabis operation.
“I look at it as almost a mentorship program,” she said. “That would be a condition of approval and a requirement. We could work through the terms once a year or multiple times a year. That would be the council’s preference. This would all be memorialized in a community benefits agreement.”
Additionally, Mallory proposed a yearly fund donation to assist local non-profit groups, equal to one percent of gross revenue on cannabis products. That matches what Port Hueneme currently does.
“That donation needs to be approved by the city manager and the police department, but it will be directly executed by the business owner,” she said. “That’s in addition to a community benefit.”
The program also includes a $25,000 one-time donation per manufacturer and dispensary to the Cannabis Community Reinvestment Fund which will be incubator money.
She proposes starting on the Oxnard Cannabis Equity Program in years one and two. The city will work on the program while they work on processing applications for manufacturing, testing, and distribution.
“We will develop that residency income requirement for the number of additional dispensaries and manufacturers that we want to give priority permitting to,” she said. “We would develop a program for how we would roll out or implement the community reinvestment fund. These are additional components that need to be worked out.”
Over the next three to five years, the city will look at long-term goals for dispensaries in Oxnard, which could go up to 16 units. The city will also look at the one percent annual donation.
The city plans to issue two retail dispensary permits in year two, along with three manufacturing licenses to local residents.
During public comments, Peggy Rivera said she is happy the council is moving forward with cannabis but also said going slow is a good thing.
“We want to get this right,” she said. “We all have concerns about working in the community. We hear everybody speaking. Who is going to own this? Are we going to have an oversight committee?”
Pat Brown said because of the sensitive nature of the matter; the retail dispensaries should not be located downtown for the first few years.
“There’s drug dealing going on at Oxnard Boulevard from Fourth Street south in the middle of the day,” she said. “It’s not even at night.”
Making that rule, she feels, allows the city to get its feet wet and become better prepared.
“We’re going to need more police officers,” she said. “The downtown area is sensitive right now. As soon as we get some new development and old stuff torn down, then people might want to spend money on things other than marijuana. Then it might be okay to add it in.”
Rodney Medina applauds the council for taking social equity steps.
“There are so many layers of social equity,” he said. “We’ve touched two or three of what can be incorporated into the legal framework. What it comes down to is what went on during the war on drugs in this community many years ago and being conscious of that.”
He said the city needs a social equity report on what areas of the city was affected by the war on drugs.
“That way, when the money does come in, the people of this community know where the money needs to go to make the reparations,” he said. “Otherwise, social equity has failed.”
Los Angeles resident Myra Delgado is a social equity applicant and said it’s tough, but a doable process.
She asked the council about the process, and she wanted more details about the background check.
“If there is an arrest, what about expungements,” she asked. “There are programs out there. In the City of Los Angeles, we have the DPA (Drug Policy Alliance) that are supporting us on that. They are waiving the fees for the arrests and the expungement process.”
She pointed out the difference between community equity and social equity.
“Workshops need to be put together,” she said. “Workshops about business assistance and ownership is important. A lot of the applicants you will get for social equity will need technical assistance for application processing. We’re going through that right now at the state level too. The city has to put it together, but the state is doing it too, and you can catch up.”
Fee deferments, she said, are a big deal is social equity programs.
“Currently, the State of California has a $10 million budget to develop these social equity programs,” she said. “That is something you want to look into. If it is going to be costly, it doesn’t have to go to the consulting firm. The state department can pay for that.”
Councilman Oscar Madrigal asked about the 50 percent requirement for employment, and Mallory said it means residents that have lived in the city for more than three years.
Madrigal asked why it will take so long for people to acquire their own business based on the social equity model.
“It will take around a year to develop the social equity program,” Mallory said. “We’ll do it as quickly as possible.”
Councilwoman Gabriela Basua about when the businesses will be permitted in Oxnard, and Mallory said manufacturing, testing and distribution could be permitted in the next six months. From there, the business will go through the tenant improvement process, which can take up to six months.
“I think it’s safe to say that you’ll see two businesses by the end of this fiscal year,” she said. “We can develop the social equity program in the next year. At the same time, cannabis manufacturing, testing, and distribution uses are going through the review process.
Basua also wants to know where the money goes that gets sent to a committee, and the council needs to be in the loop through the process, so they have a say where it’s allocated.
Councilman Bryan MacDonald doesn’t have a problem with local preference and social equity for Oxnard residents.
“I started in law enforcement in the early ’70s, and at that time a single joint would put you in prison for a fair amount of time,” he said. “I remember working on an investigative team in the mid-90s, and we found a duffle bag with 70 pounds of marijuana in someone’s house. The judge ultimately determined it was personal use, and not for sale. I’ve seen the pendulum swing drastically in both directions.”
He doesn’t have a problem with people who use marijuana, but he does not use it.
Councilman Bert Perello wants everyone to succeed who enters the cannabis industry. With a limited number of permits, he doesn’t want to see any impingements in the process where people can come back and claim discrimination.
“I want there to be no front person, or shill to front an enterprise backed by people who can’t pass the background test,” he said. “I want the people who are going to come and get these permits; they are going to be the ones who are playing in this game. I want them to be the primary person. I don’t want a shadow behind these guys.”
He wants the city to require that anyone awarded the permit stays in the city for three years. If someone sells for an unforeseen reason, the license then goes back to the city that can reassign the license, instead of allowing the business to sell it to someone else.
“I do believe completely in the comment about a citizen’s oversight committee,” he said. “I think there should be something with a citizen’s oversight. We don’t have oversight on liquor stores, and tobacco things, but this is a new thing, and there is an opportunity to put a citizen’s oversight. I don’t know what it would look like and how much teeth it would have. I do believe there should be something where a group of interested parties to the attention.”
Council Member Vianey Lopez asked about the permit costs.
She wanted to know if the cost is a processing fee that leads to a permit, or if there is an additional fee for the actual license.
“Each step of the way, there is a fee to be paid,” Mallory said. “The fee is for the collection of all the prior work, as well as the contract for HDL.”
City Manager Alex Nguyen jumped in and added that if an applicant gets through the process, will there be an annual fee.
“There will be an annual renewal for that be through the zone verification process,” Mallory said.
“I think a social equity program that helps residents become local business owners is something that we might have to develop further,” she said. “In the meantime, what we can focus on is hiring the residents who can then build up to that. There was a concern brought up about the fees. Perhaps looking at these fees and what it’s going to cost the investment of these businesses in the city, perhaps some of those monies can be reinvested in helping provide some loans to someone who lives here in the city.”
Mayor Pro Tem Carmen Ramirez asked if Port Hueneme has an oversight committee, and she was told they do not.
“We do screen the employee, and we do it very well, and our police chief determines whether or not they get an identification card,” Basua said. “That scares me that we’re not going to be doing that.”
Assistant Police Chief Eric Sonstegard said the police would not be involved in hiring employees at the cannabis facilities, but the item is open for further discussion.
Ramirez appreciates comments about council members being part of the committee but reminded everyone that those members have relationships with lots of people in the city.
“They could also be subject to influence or conflict of interest,” she said. “Several people are interested in doing this. I don’t think it would be appropriate for me to be involved.”