The city of National City held a public hearing and adopted a resolution establishing cannabis business permit fees during the Dec. 7 city council meeting, intended to recover costs involved with developing the commercial cannabis business regulatory program, and for future costs to review and process cannabis business applications.
Five different fees were proposed, based in part on guidance from SCI, an outside agency that provides consulting services in support of local medicinal and adult-use cannabis policy.
The first three proposed fees correspond to the application review period, broken down into three phases.
Anyone wanting to apply for the program must pay $1,859 in the first phase to determine if they meet the minimum eligibility requirements.
Those who meet requirements may move on to phase two at a cost of $3,765, where they will be scored and ranked as business applicants. The top six ranked applicants who score a minimum of 90% will advance to phase three.
The phase three fee of $5,000 is structured as a deposit toward time and services provided by the City Manager and other others involved with a development agreement, as well as final approval by City Council. The final cost is based on actual time and services provided so applicants could end up spending more than their initial $5,000 deposit, National City Administrative Services Director Molly Brennan said.
A fourth fee of $350 for a background check was also proposed, as well as a fifth fee of $3,586 for an appeal process.
“If adopted tonight, the five new cannabis fees will become effective in 60 days, which is on Monday February 7, 2022 and this is the first set of cannabis fees. In the future, staff intend to return to City Council to add an annual business permit fee for applicants who make it through the whole process” Brennan said.
That annual fee would be subject to change based on staff and city costs to administer the program.
When Mayor Alejandra Sotelo-Solis asked how the proposed fees line up with peer municipalities, National City Economic Development Specialist Megan Gamwell said staff looked at what neighboring cities charge and the average cost is about $10,000.
Gamwell also said she pulled data on non-neighboring cities of similar population size and they run between $5-8,000 although Chula Vista is “a bit of an outlier” with fees on the higher end of upward of $16,000.
A loose total of the proposed fees along with zoning inspection fees and other background fees comes to about $11,000 and puts the city “right on par”.
Sotelo-Solis also asked what the city would need to do to raise those fees.
“We would need to justify that we have the actual costs that high of providing the service. These rates were based on estimated time it will take staff to review the applications, and based on our current, fully burdened rates,” Brennan said.
City Council Ron Morrison asked what is included in the appeal process fee and whether applicants would be reimbursed if they win an appeal.
“The city’s cannabis ordinance outlines the appeal process and how that takes place so this fee is established to recover and recoup the cost of conducting the appeal process,” SCI Senior Consultant Kyle Tankard said, even if an appeal is ultimately ruled in favor of the applicant.
During time for public comments, California State Parent Teachers Association president and local resident Carol Green asked officials to consider budgeting for compliance checks.
Resident Peggy Walker asked the city to consider whether the fees are high enough to cover city costs of ensuring safety in the areas surrounding consumption lounges, based on researching air quality near where people smoke, vape and dab. Another resident, Kathleen Lippett cautioned against health risks to children and “attempting to permit and regulate an industry that profits from drug abuse and addiction should be seriously considered” in her comment to city officials.
Similarly, Becky Rapp asked officials to consider the cost of law enforcement surrounding illegal sales and enforcement while establishing a fee schedule.
Sotelo-Solis called for a vote to adopt the resolution. It passed with four members in favor and City Council member Jose Rodriguez absent for the vote.
