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Cannabis Business Licensing Opportunities in Southern California

By Emily Hackman, Ashley Davies

Sep 12, 2023

Cannabis storefront retail and microbusiness license opportunities in Southern California have largely been few and far between. However, the City of Redondo Beach, the coastal jurisdiction along the southern end of Santa Monica Bay, and the City of Santee, a rapidly growing city in San Diego County that boasts major commercial centers and a diverse business community, are two great opportunities to expand or establish a foothold in the Southern California cannabis retail market. Both cities are quickly progressing to complete their implementation of a competitive and advantageous commercial cannabis business application process. Read on for a summary of the current status of each jurisdiction's application and licensing process.

City of Redondo Beach Cannabis Business Licensing

The City of Redondo Beach is in the final stages of establishing a competitive commercial cannabis storefront retail application process.

In the fall of 2022, the City adopted inland and coastal zoning ordinances along with a cannabis regulatory ordinance, and in March 2023, the voters passed a tax measure permitting the City to collect annual taxes from cannabis businesses ranging from 3% to 9% on retail sales. In May and September 2023, the City Council reviewed the draft cannabis application procedures and provided feedback on the same. The retail application procedures and guidelines will be coming back to the City Council for additional consideration.

Based on the adopted ordinance, the City will not issue more than 2 retail licenses and there cannot be more than 1 retailer license in a City Council District. The draft application procedures make it clear that applicants must have already identified a property as part of the competitive, merit application process as a Zoning Verification Letter will be required. The City will not be issuing any Zoning Verification Letters until the application process has begun.

Per the draft procedures, no more than 2 applicants will be permitted to apply from a given property, though the City Council is still debating this. The written application is expected to have a 125-page limitation and require a business plan, labor and employment plan, a security plan, qualifications of owners, neighborhood compatibility, community benefits and investments plan, and a proposed site plan.

The selection process is set to also include an interview process with a staff selection committee and, separately, top applicants will present to the City Council. The decision as to how many applicants will be interviewed will be determined by the City Manager or designee, based upon the overall quantity and quality of applications the City receives.

The City Council is set to have full discretion over what criteria to consider when evaluating applicants and the City Council will ultimately determine what applicants are awarded a commercial cannabis business permit. The ranking and scoring from a prior phase will not be considered in the subsequent phase. Each phase of the application process will be scored and considered independently.

City of Santee Cannabis Business Licensing

On August 10, 2022, the Santee City Council approved the amendment to the Santee Municipal Code to incorporate the Ordinance to regulate medical and adult-use cannabis businesses. This Ordinance went into effect on September 9, 2022 (Certified Copy of Ordinance No. 602) and governs the City's application process and issuance of retail (may include storefront and/or delivery-only retail), testing, and microbusiness licenses for cannabis businesses as well as preliminary regulations for cannabis operations.

Since the Ordinance went into effect, City Staff have been actively preparing the draft application process for applicants to apply for a Cannabis Business Permit, which is expected to undergo public review as early as the upcoming September 27 City Council Meeting. Please keep in mind that the upcoming City Council meeting will only review the application process and no Council action will be taken. Nonetheless, City Council will hear public comments from in-person attendees only.

The City is expected to confirm the date of the City Council meeting to discuss cannabis businesses shortly, and you may sign up via the City's website to receive updates regarding City Council meetings and the cannabis program. Per the City, City Council meetings are held every 2nd and 4th Wednesday at 6:30 p.m. at Santee City Hall (10601 Magnolia Ave. Santee CA, 92071) and are also viewable online on SanteeTV via the City of Santee website, AT&T channel 99, Cox channel 117 or Facebook Live @CityofSantee.

The forthcoming draft application process will recommend the maximum number of cannabis licenses that may be issued a Cannabis Business Permit and outline the review criteria, detailed instructions, and the methodology to be used to evaluate and rank applications. Once the City Council adopts the procedures and review criteria, an applicant is then required to submit a Cannabis Business Permit application (including an interview process) and, thereafter, request approval of any land use entitlement, business license or other City authorizations.

Based on the information provided during the City's most recent cannabis workshop held on October 13, 2021, Santee's initial policy position is to allow a maximum of three retailers/microbusinesses, subject to increase by resolution, and no cap on testing laboratories. Although the City's initial policy considerations are subject to change, the anticipated application process will be a merit-based process focusing on the City's review of the overall quality of application materials and interview rankings. The City Manager is authorized to prepare and adopt any necessary forms and rules to implement the procedures, guidelines, and review criteria for applicants.

The City Council retains the authority to establish the maximum number of cannabis businesses that may be issued a Cannabis Business Permit, as well as to determine the candidates who will proceed to the final selection process based on the City Council's scoring of the applications and interviews in accordance with the application review criteria, forms, and rules.

While we anxiously await the City's release and eventual implementation of the draft application process and guidelines, applicants should begin planning their prospective business operations and search for and secure property that is located within the correct zone per the City's zoning criteria as outlined in Ordinance No. 602 and on the City's website (updated as of 11/10/2022 the website contains an interactive map of sensitive uses, zoning, and 900' buffers).

Lastly, if you are interested in participating in the City of Santee's meetings or providing public comment, you may attend City Council meetings in person.

Please let us know if you are interested in applying in Redondo Beach and/or the City of Santee by contacting Vicente’s California Licensing team at CALicensing@vicentellp.com. We can provide support and services for all aspects of the application process to satisfy all of your real estate, corporate, licensing, compliance, and any other areas, requirements, and needs! These exciting opportunities are quickly approaching, and we want you to be in the best position possible to rank as a top applicant. 

Additionally, if you’re interested in other emerging cannabis markets, our team offers a detailed memo summarizing all of the exciting and upcoming license opportunities nationwide. If you would like to receive this memo, please contact us.

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