DATE: August 5, 2026
TO: Honorable Mayor and City Councilmembers
FROM: Development Services Department
TITLE: APPEAL OF A STOREFRONT RETAIL CANNABIS LOCAL LICENSE DENIAL - APPELLANT: TAT OCEANSIDE, LLC
RECOMMENDATION
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Staff recommends that the City Council adopt a resolution denying the appeal of TAT Oceanside, LLC dba The Artist Tree and affirming the denial of a storefront retail cannabis local license.
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BACKGROUND AND ANALYSIS
On August 6, 2025, the City Council introduced an ordinance to allow four (4) local licenses for storefront retail cannabis and approved the related administrative procedures and application process. More information about the storefront retail cannabis licensing program can be found in Attachment 1, but it generally provided for a multi-phase process. Phase 1 consisted of the acceptance of applications and screening for application completeness by an external consultant. Phase 2 included scoring of all complete applications and reviewed by staff. Two of the available licenses were designated for existing qualified local cannabis operators if they scored sufficiently in Phase 2. Phase 3 then consisted of a panel interview of the top eight (8) scoring applicants competing for the remaining licenses. The top scoring applicants, following a blind ranked choice vote by the interview panel, would be awarded the final available licenses.
Following the effective date of the ordinance, an application submittal window was opened in Fall 2025. Seventeen applications for a storefront license were deemed complete at the end of Phase 1 and advanced to Phase 2 scoring, including two from the City’s existing cannabis business operators, MedLeaf and Left Coast.
At the conclusion of Phase 2 in February 2026, all applicants were notified of their scores and posted publicly on the City’s website. Of the four available licenses, two were issued to the City’s existing operators in February 2026 consistent with the streamlined process previously authorized by City Council. The remaining two licenses were to be awarded via staff interviews of the top scoring applications. Because there was a tie among the top scoring applications, nine of the fifteen remaining applicants advanced to Phase 3 interviews.
Phase 3 panel interviews were then scheduled and held in June 2026. Pursuant to the adopted Storefront Cannabis Retail License Application Procedure Guidelines and Review Criteria, the interview panel was comprised of the City Manager, Assistant City Manager, Deputy City Manager, Chief of Police, and Director of Financial Services. All interviews were scheduled and held across two consecutive days. The panelists were not provided the application and scoring materials in advance and were instructed to independently rank each applicant without collective deliberation or evaluation of the rankings. No panelist’s ranking was disclosed to any other panelist. The panelists were provided a uniform set of questions to guide the interviews so that each applicant team was evaluated on the same set of issues. The panelists used a forced ranking sheet that had them comparatively rate the merit of each applicant from first to last as the interview process proceeded.
During the interview of TAT Oceanside, LLC (Appellant), the Chief of Police first learned that a majority owner had a close familial relationship with an Oceanside Police Department employee with whom he has a direct working relationship. The Chief of Police did not have prior access to the application materials and came to this understanding during the interview. He flagged the potential conflict at the conclusion of the interview and completed the remaining interview panels while the potential conflict was evaluated by the City Attorney’s Office.
Because there is no direct or indirect financial benefit to the Chief of Police based on the participation of the family member of a department employee in a public licensing process, it was determined there is no financial conflict of interest under the Political Reform Act or other statute that mandated disqualification. However, the Chief of Police is a position that requires utmost integrity and concerns about potential common law bias in favor of an applicant that had a close familial relationship with an employee remained. In particular, concerns over public perception of bias, of fairness and impartiality, or the perception of other applicants in the process resulted in the Chief abstaining from the final ranking process. In cases where disqualification is not required, abstention is an appropriate remedy. Accordingly, the Chief of Police was removed from the scoring process for all applicants. All applicants were advised of this decision on July 1, 2026.
As described above, the final step of Phase 3 was a blind (i.e., anonymous) ranked-choice vote process. The panelists were instructed not to discuss their respective positions or their individual merit rankings. The voting process ranked applicants in order of preference and each individual ranking sheet was provided to the City Clerk’s office. A point value was assigned to each ranking 1 through 9. The total number of points for each applicant based on the specific ranking of each panelist (excluding the Chief) was tallied for a net score. The top two net scores would be granted the final two licenses. At the conclusion of the Phase 3 voting, the City Clerk tabulated the results as follows:
1st Rank - March and Ash
2nd Rank (Tied) - Embarc
2nd Rank (Tied) - Green Venture Farms
2nd Rank (Tied) - Oceanside Retail OPCO
5th Rank - STIIIZY
6th Rank - The Artist Tree (Appellant)
7th Rank - Buzz
8th Rank - 5 Star Greens
9th Rank - Viva Verde
The score sheets and the City Clerk’s tabulation are available under Attachment 3. The Phase 3 score results were communicated to the applicants on July 7, 2026 and published on the City’s website. All applicants ranked fifth or lower were considered to have been denied a local license. Pursuant to Section 7.129 of the Oceanside City Code, any decision regarding the denial, suspension, or revocation of a cannabis local license may be appealed to the City Council within 20 days of the action.
TAT Oceanside LLC (DBA The Artist Tree) ranked sixth in the Phase 3 interviews and was thus denied a license. They submitted a timely appeal of their license denial on July 13, 2026 claiming that the decision to remove the Chief of Police from scoring the applicants’ interview rankings was improper. The specific appeal points are summarized below. The full appeal can be found in Attachment 2.
Appeal Point 1: The removal of the Police Chief’s ballot directly compromised the mathematical integrity of the evaluation and materially altered the final outcome.
Whether the Chief of Police is counted or not does not compromise the mathematical integrity of the outcome as Appellant contends. The issue is only whether the Chief appropriately abstained from final scoring of the applicants under the conflict-of-interest evaluation. Where a subordinate public official has determined that abstention is the appropriate course of action to avoid a potential common law conflict of interest, the City Council should accept that determination.
Moreover, even if Appellant would have received a top rating from the Chief of Police and each remaining applicant is assumed to have received the lowest possible score from the Chief of Police, the maximum net ranking score for Appellant would have been 23 points (9 points above their existing 14-point score), which is still below the unadjusted scores of five other applicants. Therefore, the Chief’s abstention from ranking the applicants did not mathematically or materially affect the outcome for the appellant, who would not have been awarded a local license in either case. The City Council should affirm the license denial on this basis.
Appeal Point 2: The City’s claim that the familial relationship in question was unknown prior to the interview is false.
The Chief of Police did not learn of Appellant’s direct relationship to a Police Department employee until the time of the interview and raised the potential conflict at that time. While on review it is clear that Appellant did disclose the relationship with a member of the Oceanside Police Officer Association in its formal application for a storefront retail cannabis license, the application was not reviewed or vetted by the Chief of Police prior to the interview. City staff worked with an external consultant, Rincon Consulting, for the review and scoring of applications. Following the scoring of applications, City Planning staff worked with the consultant to compile their review and clarify information. Neither the external consultant nor Planning staff pre-identified this relationship as a concern as it was described mainly as support for the Oceanside Police Officer’s Association. Because the Chief of Police did not become aware of the issue until the interview, and because it was not a direct or indirect financial conflict as discussed above, there was not an opportunity for the Chief to identify potential common law bias in advance such that staff could seek to have the administrative guidelines modified regarding the Phase 3 interview panel make-up. Staff and legal counsel appropriately addressed the Chief’s potential conflict concerns at the time he first raised them. Regardless, as noted above, the abstention of the Chief of Police did not affect the outcome of the interview process given the scores assigned by other interviewers. Accordingly, that the potential conflict was not identified or raised earlier does not change the conflict analysis or change the Appellant’s score with the remaining panelists. The City Council should affirm the license denial on this basis.
Appeal Point 3: The removal of a panelist’s rankings due to an indirect relationship is inequitable as multiple other applicants maintain various professional, political, or personal relationships with other panelists.
The above-mentioned relationship between the Chief of Police and an Oceanside Police Department employee who is closely related to an applicant is the only potentially significant relationship between a panelist and an applicant that has been identified. The nexus between unspecified “professional, political, or personal relationships” is not evidence of unfairness in the process. Nor is this the same as the close nexus between a department head and one of the employees under his/her direct chain of command. As well, as was set forth above, the City Council should not overrule the determination of a subordinate officer regarding a potential conflict of interest concern. Staff is unaware of any further direct or indirect relationships between panelists and applicants of a similar nature that would warrant other recusal considerations. The City Council should affirm the license denial.
DISCUSSION
Staff finds the decision to remove the Chief of Police from the ranked-choice vote was the best course of action given the circumstances. The decision sought to alleviate concerns of a potential conflict of interest while maintaining the integrity of the interview and scoring process. The Appellant’s claims are found to be unsubstantiated and the modification of the panel did not materially affect the outcome of their application. Therefore, staff recommends that the City Council adopt a resolution affirming staff’s decision and rejecting the appeal.
ENVIRONMENTAL DETERMINATION
The subject appeal would not occasion land development or any other material change to the environment and is therefore exempt from CEQA in accordance with the provisions of CEQA Guidelines Section 15061(b)(3), the common-sense exemption that CEQA applies only to projects which have the potential for causing a significant effect on the environment.
FISCAL IMPACT
The decision concerning the validity of a denial of a local license would not result in any new fiscal impacts.
COMMISSION OR COMMITTEE REPORT
Not applicable.
CITY ATTORNEY’S ANALYSIS
An appeal of a storefront cannabis license denial under Oceanside City Code section 7.129 is conducted in the same manner as a business license denial pursuant to Section 15.5(3). The City Council shall conduct a public hearing on based on the issues raised in the appeal. At the hearing, any person may present evidence in opposition to or in support of the applicant's case. At the conclusion of the hearing, the City Council shall either affirm or overrule the appealed action and the decision of the City Council shall be final. The reference documents have been reviewed by the City Attorney and approved as to form.
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Prepared by: Dane Thompson Senior Planner
Reviewed by: Brian Thomas, Acting Development Services Director
Submitted by: Jonathan Borrego, City Manager
ATTACHMENTS:
1. August 6, 2025 City Council Staff Report
2. July 13, 2026 TAT Oceanside, LLC Appeal
3. Score sheets and tabulation
4. Resolution