DATE: January 8, 2025
TO: Honorable Mayor and City Councilmembers
FROM: Development Services Department
TITLE: RESOLUTION APPROVING TWO CONDITIONAL USE PERMITS (CUP22-00011 & CUP22-00012) AND WAIVER OF LOCATIONAL REQUIREMENTS ADDING CANNABIS MANUFACTURING AND DISTRIBUTION OPERATIONS TO AN EXISTING CANNABIS DELIVERY BUSINESS LOCATED AT 2935 SAN LUIS REY ROAD - MEDLEAF MICROBUSINESS - APPLICANT: MEDLEAF, LLC.
RECOMMENDATION
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Staff and the Planning Commission recommend that the City Council confirm issuance of a Class 1 “Existing Facilities” Categorical Exemption per the California Environmental Quality Act (CEQA); and adopt a resolution approving Conditional Use Permits (CUP22-00011 & CUP22-00012) and a Waiver of Locational Requirements allowing cannabis manufacturing and distribution at an existing cannabis non-storefront retail establishment at 2935 San Luis Rey Road.
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PROJECT DESCRIPTION
The proposed project consists of a request for two Conditional Use Permits (CUPs) (CUP22-00011& CUP22-00012) and a waiver of locational requirements to operate a cannabis microbusiness (Type 12) facility. Microbusinesses, as defined by the California Department of Cannabis Control (DCC), are cannabis businesses that conduct at least three of the following activities at one location: small-scale cultivation, manufacturing, distribution, and retail. Manufacturing typically involves the extraction or processing of cannabis products. Distribution entails transporting goods from business to business between cultivators, manufacturers, and retailers, as well as laboratories for state-mandated testing. Retail involves the sale of the end product to the consumer; non-storefront retail restricts sales to offsite deliveries only.
The applicant, Medleaf, currently operates a non-storefront retail business at the proposed project location and is requesting City Council approval of Conditional Use Permits that would allow manufacturing and distribution services to also be conducted within its existing building. The applicant does not intend to install extraction equipment at this time and primarily seeks the ability to infuse cannabis extract or plant material with other ingredients to make branded end-products. However, the requested use permit would allow for non-volatile extraction and processing should that be desired in the future. No physical expansions to the building are proposed. As currently operated, no part of the business would be open to the public.
Cannabis facilities are classified as regulated uses under the City’s Zoning Ordinance, which requires CUPs to be approved by the City Council prior to operation. Sites not meeting the prescribed separation requirements for regulated uses must also request a waiver of locational requirements in accordance with Section 3605 of the Zoning Ordinance.
BACKGROUND AND ANALYSIS
The proposed project site is a 17,391 square-foot lot developed with a 4,800 square-foot industrial building within Oceanside Industrial Park. The property has a General Plan land use designation of Light Industrial (LI) and is zoned Limited Industrial (IL). Surrounding zoning is IL to the north, west, and south, with a residential district to the east across Mission Avenue.
On April 11, 2018, the City Council adopted an ordinance amending the City Code and Zoning Ordinance to allow cannabis cultivation in the Agricultural District, as well as manufacturing and distribution in the Limited or General Industrial Districts. Shortly thereafter, on September 5, 2018, the City Council revised the City Code to allow up to two non-storefront cannabis retail establishments. Medleaf was one of two businesses awarded non-storefront retail local licenses on May 29, 2019. One year later, the City Council approved issuance of a CUP (CUP19-00014), enabling Medleaf to commence operations in June 2020. Medleaf then proceeded to apply for non-volatile manufacturing and distribution local licenses in March 2022. After securing those licenses in August 2022, Medleaf applied for the subject CUPs which are required to be approved prior to commencement of the manufacturing and distribution activity.
The proposed project is subject to review for consistency with the following plans, policies, and ordinances:
1. General Plan
2. Zoning Ordinance
3. City Code
4. California Environmental Quality Act (CEQA)
Staff has analyzed the proposed project’s conformance with the General Plan, Zoning Ordinance, and City Code and determined it is consistent with said policies. The request would be consistent with the adopted General Plan and its policies regarding land use compatibility as the facility would not generate noise, glare, heat, vibration, odors, or other emissions outside of the existing building, and the use would not generate additional customer traffic or loitering in the surrounding industrial park. The Zoning Ordinance allows cannabis manufacturing and cannabis distribution uses provided that any potential impacts to the community be mitigated so as to not reduce quality of life. Therefore, staff placed conditions of approval on the project to limit hours of operation from 9 a.m. to 9 p.m., with a provision giving the City Planner the ability call the CUPs for review should any valid complaint arise. Compliance with the Chapter 7 Article XIII of the City Code was evaluated in the local license process and continual compliance would be verified through annual audits, customary for all cannabis businesses. Additional analysis is provided in the Planning Commission staff report (Attachment 4).
In order to grant a CUP for a regulated use, the City Council must find that the proposed location either meets the prescribed separation requirements of Section 3604 of the Zoning Ordinance or grant a waiver of those requirements. Because the proposed business location is less than 1,000 feet away from a residential district (approximately 130 feet to the southeast), and less than 1,000 feet from another regulated use (approximately 180 feet to the northeast-cannabis manufacturing and distribution), the applicant is required to request and secure a waiver of locational requirements per Section 3605. The waiver of locational requirements requires the following findings be made for approval:
(a) The proposed use will not be contrary to the public interest.
(b) The proposed use will not be contrary to the spirit or intent of Article 36.
(c) The proposed use will not impair nearby property or the integrity of the underlying district.
(d) The proposed use will not encourage the development of an adult entertainment area or otherwise promote community blight.
(e) The proposed use will not negatively impact any governmental programs of redevelopment, revitalization, or neighborhood preservation.
When Medleaf ownership requested their CUP for non-storefront retail in 2020, the City Council approved the waiver of locational requirements on the basis that the establishment would not be open to the public and thus would not have detrimental impacts to the surrounding community beyond what is typical for an industrial use. The proposed addition of manufacturing and distribution would not result in the business being open to the public, and therefore the premise for granting a waiver remains the same. Although the existing building is approximately 130 feet to the nearest residential district, Mission Avenue, a four-lane major arterial, provides an adequate buffer between the industrial park and nearby residences. The perimeter of the industrial park is also fenced with the nearest sanctioned pedestrian access located approximately 1,500 feet to the north at Airport Road.
After granting Medleaf’s request for a CUP to operate a non-storefront retail facility, the City Council granted CUPs for Buddiez, a separate cannabis business consisting of manufacturing and distribution, approximately 180 feet to the northeast. Buddiez is on track to become operational in the coming months. A waiver of locational requirements was awarded to that site with the same reasoning; that because both businesses would be closed to the public, no negative impacts to the community would be realized. Staff finds that the inclusion of manufacturing and distribution operations within the existing non-storefront facility would not have any additional impacts.
Due to the reasons explained above, staff recommends approval of another waiver of locational requirements as findings could be made in accordance with Section 3605 of the Zoning Ordinance. In addition, the request would not compromise the integrity of the IL District, result in quality of life impacts to sensitive land uses, encourage the development of an adult district, or promote community blight.
ENVIRONMENTAL DETERMINATION
The proposed project is Categorically Exempt from review pursuant to the California Environmental Quality Act (CEQA) because it qualifies for issuance of a Class 1, “Existing Facilities” exemption (CEQA Guidelines, Section 15301). The use is proposed in an existing building, with no new additional square footage and only minor tenant improvements are proposed.
FISCAL IMPACT
This project will generate revenue to the City from Measure M, the City’s voter approved cannabis tax measure. Potential revenue estimates from this business are unknown at this time. The applicant has paid all fees required for the consideration of this application.
COMMISSION OR COMMITTEE REPORT
On October 28, 2024, the Planning Commission conducted a public hearing on the proposed project, and after due consideration, adopted a resolution by a 4-0 vote recommending City Council approval of the project.
PUBLIC NOTIFICATION
Legal notice was published in the newspaper and mailed notices were sent to property owners of record within 1,500 feet and tenants within 100 feet of the subject property and interested parties. The applicant was also required to conduct community outreach per City Council Policy 300-14 (Enhanced Notification Program) by providing additional opportunities for public outreach. After providing mailed notice to all property owners within 1,500 feet and tenants within 100 feet of the project site, the applicant held an open house on September 10, 2024 at the project site to which no one from the public attended. To date, staff has not received any correspondence from the public regarding this project.
CITY ATTORNEY’S ANALYSIS
The City Council is authorized to hold a public hearing in this matter. Consideration of the matter should be based on the testimony and evidence presented at the hearing. The supporting documents have been reviewed and approved as to form by the City Attorney.
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Prepared by: Dane Thompson, Associate Planner
Reviewed by: Darlene Nicandro, Development Services Director
Submitted by: Jonathan Borrego, City Manager
ATTACHMENTS:
1. Staff Report
2. City Council Resolution
3. Planset
4. Planning Commission Staff Report