HomeMy WebLinkAbout01 - SS - Receive and File Update on the Staffing - 2/23/2021
NOTICE AND CALL OF A SPECIAL STUDY SESSION OF
THE COSTA MESA CITY COUNCIL
Tuesday, February 23, 2021
5:00 p.m.
NOTICE IS HEREBY GIVEN that a Special Study Session of the Costa Mesa City
Council will be held on Tuesday, February 23, 2021 at 5:00 p.m., Via Zoom Webinar.
The purpose of the Special Study Session is to discuss the following item:
1. RECEIVE AND FILE UPDATE ON THE STAFFING PLAN FOR THE
IMPLEMENTATION OF THE RETAIL CANNABIS TAX AND REGULATION
MEASURE (MEASURE Q ) - Finance Department
RECOMMENDATION:
Staff recommends that the City Council receive and file this update on the
staffing plan being developed by the City for the successful implementation of
the Retail Cannabis Tax and Regulation Measure (Measure Q) allowing for
cannabis retail storefront (dispensaries) and retail non-storefront (delivery) uses
in specified areas of the City subject to limitations.
DATED this 18th day of February, 2021.
/s/ Katrina Foley________________
Katrina Foley, Mayor
ATTEST:
/s/ Brenda Green_______________
Brenda Green, City Clerk
1
CITY COUNCIL AGENDA REPORT
MEETING DATE: February 23, 2021 ITEM NUMBER: 1
SUBJECT: RECEIVE AND FILE UPDATE ON THE STAFFING PLAN FOR THE
IMPLEMENTATION OF THE RETAIL CANNABIS TAX AND REGULATION
MEASURE (MEASURE Q )
DATE: January 6, 2021
FROM: FINANCE DEPARTMENT
PRESENTATION BY: CAROL MOLINA, FINANCE DIRECTOR
FOR FURTHER INFORMATION CONTACT: Carol Molina, Finance Director, (714) 754-5243
RECOMMENDATION:
Staff recommends that the City Council receive and file this update on the staffing plan
being developed by the City for the successful implementation of the Retail Cannabis Tax
and Regulation Measure (Measure Q) allowing for cannabis retail storefront
(dispensaries) and retail non-storefront (delivery) uses in specified areas of the City
subject to limitations.
BACKGROUND:
Measure X
On November 8, 2016, concurrent with the passage of State Proposition 64, voters
approved the “City of Costa Mesa Medical Marijuana Measure”, also known as
“Measure X.” Measure X, as subsequently amended allows the following medical and
recreational cannabis-related uses in the City: distributors, manufacturers, processors,
research and development laboratories, as well as testing laboratories and transporters,
subject to the approval of a Marijuana Business Permit and a Conditional Use Permit
(CUP). These uses may only be located in specific Industrial Park (MP) and Planned
Development Industrial (PDI) zoned properties north of South Coast Drive, west of
Harbor Boulevard, excluding the South Coast Collection (SOCO) property located at
3303 Hyland Avenue. This area is now known as the “Green Zone.” To date, the City
has approved 25 CUPs for manufacturing and distribution uses; of that, nine
businesses have received a state license and are currently in operation.
Measure Q
At the May 19, 2020 regular City Council meeting, the City Council directed staff to hire
a professional consultant to conduct a community survey to help assess community
interest and potential support for allowing cannabis retail and delivery uses in the City
2
An independent third-party polling firm, Fairbank, Maslin, Maullin, Metz & Associates
(FM3), was retained to assist with the effort and conducted the surveys. The community
surveys were conducted via phone calls and online from June 29, 2020 to July 2, 2020
and July 6 to July 8, 2020; a total of 427 responses were received.
In addition to community surveys, outreach with the local cannabis industry (made up of
manufacturers, distributors, and dispensary owners) was also conducted by the City
Council’s Cannabis Ad Hoc Committee and City staff. The Committee held three
outreach meetings via Zoom to obtain feedback from the local cannabis industry on the
potential ballot Measure and to obtain information regarding industry best practices
related to retail cannabis in other cities.
The community polling revealed that over 60 percent of those polled were supportive of
a regulated means for the provision of retail cannabis and delivery services.
Accordingly, staff drafted Measure Q to allow the City to adopt an ordinance to regulate
and tax such uses. On the July 21, 2020 regular City Council meeting, the City Council
approved a Resolution to place Measure Q on the ballot for the November 3, 2020
election. The uncodified ordinance provide the City Council the authority to adopt an
ordinance at a later time and allow the most time to identify best practices, and
information regarding the advantages and disadvantages of retail operations in other
cities, as well as ensuring compliance with State law and regulations from the State
Bureau of Cannabis Control.
On November 3, 2020, city voters approved the “City of Costa Mesa Retail Cannabis
Tax and Regulation Measure” (Measure Q). The passage of Measure Q does not allow
the retail sale of cannabis products, rather it allows the Costa Mesa City Council to
adopt regulations permitting cannabis retail and delivery uses within the City subject to
specific requirements. These requirements include:
retail store-front uses may only be permitted in the commercial zone;
retail non-storefront uses may be permitted in both the commercial zone and in
the Green Zone;
retail storefront uses must be located a minimum of 1,000 feet as determined by
the City from
child daycare locations,
K-12 schools,
playgrounds, and
homeless shelters;
security measures must include exterior lighting, video monitoring and security
guards;
a labor peace agreement would be required for retail cannabis businesses with
two or more employees;
the gross receipts tax imposed must be a minimum of four-percent and a
maximum of seven-percent; and
the proceeds of the tax are subject to an annual audit by certified public
accountants that is reported to the City Council and available on the City’s
website for public inspection.
Based on discussions with HdL and analyzing retail cannabis tax collections, staff
estimates that the City of Costa Mesa can generate up to $3 million annually based on
a seven-percent tax rate and six retail establishments.
3
ANALYSIS:
Similar to Measure X, Measure Q requires businesses to obtain a Retail Cannabis
Business Permit, a Conditional Use Permit, and a Business License before they may
conduct business in the City. In addition, Measure Q sets forth operational
requirements for these businesses, and requires the City Manager to develop
Administrative Regulations to establish the procedures by which this measure shall be
implemented and enforced. The City has retained the services of HdL Consulting to
assist in developing permitting requirements. HdL has significant experience
implementing marijuana business regulations in Colorado and other communities that
have allowed marijuana businesses within their jurisdictions. Additionally, HdL will also
be assisting the City in reviewing applications for retail cannabis businesses. City staff
will be working closely with HdL Consulting in drafting the ordinance, review application
processes, site plan review, and auditing tax receipts of cannabis businesses.
For the implementation of the first cannabis measure, Measure X, no additional City
staff were hired or brought on by the City to assist with the initial implementation or
ongoing monitoring of applications, issuance of permits, issuance of business licenses,
inspections of facilities and tenant improvement, and the review of security measures,
to name a few. While the City was able to bring on numerous businesses without
additional staffing, this will not be feasible with the additional retail cannabis businesses
in the City given existing workloads.
In an effort to help ensure a more effective implementation of the Measure Q program,
staff recommends to increase the Citywide Table of Organization consistent with
neighboring cities with similar cannabis retail and delivery programs (Attachment 1).
This is in response to concerns related to potential delays in permitting due to the lack
of staffing resources generally Citywide and in an effort to facilitate revenue attainment.
As a result, staff analyzed the personnel increases implemented in other cities with
retail cannabis businesses to understand the potential workload impacts. The
recommendations currently developed by staff will be brought to the City Council for a
future action when the finalized Cannabis Ordinance is brought to the City Council as a
full package.
A total of 7.25 positions have been identified as being necessary to address the myriad
workload requirements resulting from the implementation of Measure Q and the
ongoing impacts of this new line of business in the City of Costa Mesa. The positions
identified will assist the Development Services (3.0 FTEs), Finance (1.0 FTEs), Police
(2.0 FTEs), and Fire (1.25 FTEs) Departments with the resources necessary for the
ongoing management of the Measure Q program (Attachment 2). These positions will
perform various functions including: process permit and business license applications,
perform inspections, ensure tenant improvements are compliant with requirements,
review onsite safety plans and measures, and provide enforcement against illegal
dispensaries that may locate in Costa Mesa posing as legitimately licensed businesses.
This staffing plan was reviewed by the City Council’s Ad Hoc Committee on Cannabis
and is being brought forward to the City Council for education and discussion purposes
at this Study Session. Given the ability to generate considerable revenue from Measure
Q, it is imperative that there are sufficient staff available to conduct as smooth a
transition into this new line of business for the City as possible.
4
ENVIRONMENTAL DETERMINATION
Pursuant to the provisions of the California Environmental Quality Act (“CEQA”)
(California Public Resources Code Sections 21000 et seq.) and State CEQA guidelines
(Sections 15000 et seq.) the Measure Q is exempt from CEQA pursuant to CEQA
Guidelines Section 15061(b) (3), because it can be seen with certainty that there is no
possibility that these actions may have a significant effect on the environment.
ALTERNATIVES CONSIDERED:
The City Council may choose to reject all or part of the recommendations presented.
The reports are for receive and file actions.
FISCAL REVIEW:
There is no fiscal impact associated with receiving and filing this update on the proposed
staffing plan. However, it is estimated that Measure Q will generate in excess of $3 million
annually at the 7 percent tax rate. The preliminary, draft staffing plan is estimated to cost
$1.2 million fully loaded.
LEGAL REVIEW:
The City Attorney has reviewed and approved this form.
CONCLUSION:
Staff recommends that the City Council receive and file this update on the proposed
staffing plan to implement Measure Q.
CAROL MOLINA LORI ANN FARRELL HARRISON
Finance Director City Manager
ATTACHMENTS:
Attachment 1: Proposed Measure Q Staffing Plan Comparison with Other Cities
Attachment 2: Proposed Measure Q Staffing Plan
Attachment 1
Proposed Measure Q Staffing Plan Comparison with Other Cities
Costa Mesa Santa Ana Long Beach
City Attorney
Assistant City Attorney 1.50 1.00
City Prosecutor 0.50
City Manager
Assistant to the City Manager 1.00
Program Specialist 0.50
Development Services
Assistant Planner 1.00
Code Enforcement Officer 2.00 2.00 0.50
Finance
Admin Analyst (Business License)1.00
Business Tax Collector 1.00
License Inspector (Business License)1.00
Permit Processing Specialist 1.00
Fire
Fire Protection Specialist 1.00
Fire Inspector 1.00
Office Specialist II 0.25
Plan Check Inspector 1.00
Health
Health Inspector 1.00
Police
Police Officer 2.00 5.00
Police Sergeant 1.00
Total 7.25 10.50 8.50
Dept.Position Title
Full Time Equivalent (FTE)
Attachment 2
Proposed Measure Q Staffing Plan
Development Services
2.00 Code Enforcement Officer 265,612 Responsible for proactively identifying cannabis businesses' facilities that
have not obtained the proper building permits and responding to requests
for service, including site visits; coordination with other City departments
and property owners; issuance of citations; and court appearance and
materials and supplies.
1.00 Assistant Planner 129,598 Perform review of cannabis businesses' facilities building permits and
responding to requests for plan review; and coordination with other City
departments and property owners.
Finance
1.00 Permit Processing Specialist 107,183 Processes new and renewed business licenses, tracks businesses,
process license revocations, and manage general administrative duties,
participate in the unlicensed enforcement approach and receive and
account for taxes paid by cannabis businesses.
Fire
1.00 Fire Protection Specialist 135,334 Perform inspections, issue citations, and red tag facilities when appropriate,
review, inspect and certify legal cannabis facilities to ensure that
businesses will open safely and in timely manner, and develop policies.
1.00 Office Specialist II 107,522 Perform scheduling inspections, and processing citations.
(0.75) Office Specialist II (58,881) Convert an existing part time Office Specialist II to a full time position.
Police
2.00 Police Officer 498,203 To address quality of life issues, calls for service, regulation, and potential
criminal investigations resulting from cannabis dispensaries. Resources will
be added to patrol services and community policing efforts, as necessary
Total 7.25 1,184,572
Dept.Position Title Est Cost Retail Cannabis Administration and ProcessesFTE