Commercial Cannabis Business Licensing

Over the past two years, laws related to commercial cannabis activities and personal use have changed dramatically in California. In light of these changes, at its October 10, 2017 meeting, the Santa Monica City Council updated local law to allow for the operation of certain cannabis business activities.

The updated ordinances became effective November 24, 2017 and established the following:

  1. Selection process for the two Medicinal Cannabis retailers previously authorized by the Zoning Ordinance.
  2. Updates to the Zoning Ordinance to allow for light manufacturing of medicinal cannabis products.
  3. Permits and permit fees for medicinal cannabis retailers and light manufacturers.
  4. A prohibition, as a temporary measure, of commercial activities related to Non-Medicinal Adult Use (what is commonly referred to as “recreational”). It is important to note that this is not related to personal use or personal cultivation. The City has not established regulations related to personal cultivation; however, cannabis personal consumption by smoking or vaping is prohibited wherever cigarette/tobacco smoking or vaping is prohibited.  

A copy of the staff report is available here.

A copy of the Santa Monica Cannabis Ordinance is available here.

The zoning regulations are governed primarily by Sections 9.31.185 and 9.51.030 (B) (22) (e) of the Santa Monica Municipal Code, as amended in the Interim Zoning Ordinance, which is available here. The municipal code is available online at qcode.us/codes/santamonica/.  

Questions concerning cannabis regulations in Santa Monica can be sent to Salvador Valles at salvador.valles@smgov.net.

Note: In order to ensure an equitable selection process, City staff will not be meeting with individual prospective medicinal cannabis retailers. Questions should be sent by email. As part of the selection process, a general meeting may be scheduled and the evaluation committee may elect to meet with applicants.


Medicinal Cannabis Retailers

If you are interested in being considered for one of the two retailer licenses that will be issued in Santa Monica, please review the information below carefully.

Note: State law requires that Medicinal Cannabis Retailers also obtain a state license prior to operating. Please visit the Bureau of Cannabis Control website for more information.

City staff is currently assembling an evaluation committee, drafting administrative regulations, and establishing an application process. Staff expects to release the applications with instructions by mid-December. Applicants do not need to have a state permit or location to submit an application. However, a state permit is required prior to operating.

Selection Process

The selection process will include the following steps:

  • Request for Applications Issued (30-45 day application period)
  • Applications Reviewed by Evaluation Committee
  • Applicants Ranked based on Objective Criteria
  • Selections Announced

Once selected, the two retailers will be provided with a Preliminary Selection Letter. The City expects that this will provide verification for applicants’ state permit applications confirming that they are approved by the City to operate in Santa Monica. The retailers will also be able to secure a location (if not already secured) and begin the land use and construction permitting processes.

Location

Medicinal Cannabis Retailers are limited to the following areas and may not exceed 2,500 square feet:

  • Mixed Use Boulevard (MUB) District along Wilshire Boulevard between Lincoln Boulevard and Centinela Avenue.
  • General Commercial (GC) District along Santa Monica Boulevard between Lincoln Boulevard and 20th Street; and
  • Mixed-Use Boulevard Low (MUBL) District along Santa Monica Boulevard between 23rd Street and Centinela Avenue.

Note: Medicinal Cannabis Retailers are required to obtain a Conditional Use Permit (CUP). Depending on the location identified and improvements proposed for the location, additional reviews may be necessary, such as Landmarks Commission and/or Architectural Review Board, prior to submitting for a construction permit.

Construction Permits

Medicinal Cannabis Retailers will be required to comply with all construction and life safety permitting requirements, as any other business would. This includes Building Code, Electrical Code, Fire Code, Water Resources, etc.

Cultivation

Retailers are allowed to have up to 15% of the total square footage of the retail space for cultivation of cannabis. For example, if the total square footage of the retail location is 1,000 square feet, 150 square feet may be used for cultivation with the remaining 850 square feet used for retail and office use.  

Permit Fees

Annual Medicinal Cannabis Retailer Permit Fee: $1,822.10

The City operates on a fiscal year from July 1 to June 30. Annual renewal fees are due June of each year. The fee includes four administrative compliance inspections. The first permit application fee will be prorated depending on the month the application is submitted. For example, if an application is submitted in February 2018, the fee would be $960.84. This would include the initial compliance inspection prior to initiating operations and one additional compliance inspection prior to July. A renewal fee of $1,822.10 would be due in June for the 2018-19 fiscal year at the same time as Business License taxes and any other general fees or assessments that may be due.

Medicinal Cannabis Light Manufacturing (MCLM)

Following the effective date of the new cannabis regulations, light cannabis manufacturing businesses may be issued a Santa Monica Medicinal Cannabis Light Manufacturing permit once they have obtained their state permit. A preliminary approval letter may be issued by City Planning once all land use approvals have been obtained that can be submitted with an applicant’s state permit.

Key points:

  • MCLM does not allow for the use of volatile solvents, or the extraction of cannabis to create concentrated products such as oils.
  • MCLM does allow for assembly of medicinal cannabis products such as edibles or creams.
  • MCLMs may only operate in the Office Campus (OC) and Industrial Conservation (IC) zones. For the OC zone, a Conditional Use Permit (CUP) is also required, uses must be conducted with an enclosed building or an open enclosure screened from public view, and the Planning Commission must determine that the proposed uses are compatible with office and advanced technological uses.
  • No caps on the number of permits that can be issued are currently established for cannabis light manufacturers.
  • No selection process is currently established for cannabis light manufacturers.

Construction Permits

MCLMs will be required to comply with all construction and life safety permitting requirements, as any other business would. This includes Building Code, Electrical Code, Fire Code, Water Resources, etc. County permits may also be required depending on the proposed activities (e.g. County Health Department Permit).

For additional information on the OC and IC zones, please visit the following page for an interactive zoning map: www.smgov.net/Departments/PCD/Zoning/ 


Frequently Asked Questions

Can I apply to operate a cannabis business in Santa Monica?

No. Applications for cannabis related businesses are not currently being accepted until further notice.

Now that Proposition 64 passed, can I sell non-medicinal cannabis in Santa Monica?

No. Although Proposition 64 took effect November 9, 2016, the day after the election, it requires a state license to engage in commercial non-medicinal adult use cannabis activity (i.e. recreational). Meaning any non-medicinal cannabis establishments must receive state and local permits before operating; however, neither the state nor the City of Santa Monica are ready to issue such permits. State agencies will begin issuing licenses by January 1, 2018.

Is cannabis legal in California? 

Under the Adult Use of Marijuana Act (AUMA), a person 21 years of age or older may now possess, process, transport, purchase or give away to persons 21 years of age or older not more than 28.5 grams of cannabis in the non-concentrated form and not more than 8 grams of cannabis in a concentrated form including cannabis products (like edibles and extracts).  

A person 21 years or older may cultivate non-medicinal cannabis within a private residence for personal use. AUMA provides that local governments can reasonably regulate, but cannot ban the personal indoor cultivation of up to six non-medicinal cannabis plants per private residence. A “residence” is defined as a house, an apartment unit, a mobile home, or other similar residential dwelling. No matter how many persons over 21 years of age are living in a “residence,” only six living plants may be cultivated at one time.

This includes cultivation in a greenhouse that is on the property of the residence but not physically part of the home, as long as it is fully enclosed, secure, and not visible from a public space. Because this activity is not subject to state licensing requirements, individuals may engage in personal indoor cultivation beginning November 9, 2016, unless a city enacts an ordinance imposing a reasonable regulatory scheme that would preclude them from doing so before complying with the city’s regulatory requirements. At this time, Santa Monica has not imposed any regulations on personal cultivation.

When will Santa Monica begin accepting applications for cannabis related businesses? 

For medicinal cannabis retailers: Mid-December 2017 (estimated).

For medicinal light manufacturing: Once the state begins issuing licenses in 2018.


Additional Resources

California Cannabis Portal
www.cannabis.ca.gov
 

Department of Consumer Affairs 
Bureau of Cannabis Control (BCC)
www.bcc.ca.gov
Primary regulatory agency. Licenses distributors, dispensaries, testing laboratories, and microbusinesses. 

 

Department of Food and Agriculture
CalCannabis Cultivation Licensing
www.cdfa.ca.gov
Licenses cultivators and will also be responsible for implementing the track and trace program for plants from cultivation to sale.

 

Department of Public Health
Manufactured Cannabis Safety Branch (MCSB)
www.cdfa.ca.gov/is/mccp
Licenses manufacturers of cannabis products.