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HomeMy WebLinkAboutWCW ORGANIZATION INC., DBA: TROPICANNAA-2017-379 0 URIANCE NOT REQUIRED WORK MAY PROCEED CLERK OF COUNCIL "1 2 2019 OPERATING AGREEMENT FOR NON -MEDICINAL COMMERCIAL CANNABIS BUSINESSES This Operating Agreement ("AGREEMENT") is dated May 30, 2019, between the City of Santa Ana, a charter city and municipal corporation ("CITY") and WCW Organization Inc, DBA Tropicanna ("OPERATOR"), collectively referred to as "the Parties". This AGREEMENT shall become effective on the date that OPERATOR is issued a Regulatory Safety Permit by CITY for the operation of a commercial cannabis business conducting ADULT -USE RETAIL services in whole or in part of its operations transacted and carried -on by OPERATOR at the following subject property location, 1628 S Grand Ave, Santa Ana, CA 92705. 1. Public Benefit. A. Intent, The purpose of this Operating AGREEMENT is to ensure positive community impacts from commercial cannabis business operations through local hiring and local sourcing, community benefit and sustainable business practices, and the collection of required fees and taxes as applicable for the operation of a commercial cannabis business and to provide mitigation options to be used by CITY to compensate for impacts to CITY services, residents, and/or businesses as set forth in Santa Ana Municipal Code Chapter 40. The Parties agree that this AGREEMENT confers substantial private benefits on OPERATOR which should be balanced by commensurate public benefits. As part of the cannabis Regulatory Safety Permit process, OPERATOR agrees to enter into this AGREEMENT. OPERATOR acknowledges that CITY and OPERATOR have had extensive negotiations and proceedings prior to entering into this AGREEMENT. OPERATOR has elected to execute this AGREEMENT as it provides OPERATOR with important economic benefits. Accordingly, the Parties intend to provide consideration to the public to balance the private benefits conferred on OPERATOR by providing mitigation measures to the public and to pay for CITY services. B. Local Hiring and Sourcing. OPERATOR agrees to use its reasonable efforts to hire qualified City of Santa Ana residents living in Santa Ana to work at its commercial cannabis businesses. OPERATOR shall also use reasonable efforts to retain the services of qualified contractors and suppliers who are located in the City of Santa Ana or who employ a significant number of City of Santa Ana residents. OPERATOR shall make a good faith effort to advertise on various social media sites, at local job fairs, and through public agencies and organizations. C. Community Benefit and Sustainable Business Practices Plan. OPERATOR agrees to submit a Community Benefit and Sustainable Business Practices Plan ("Plan") to CITY that is hereby attached and incorporated into this AGREEMENT as ("EXHIBIT A"). Said Plan shall detail OPERATOR's experience working with community -based groups such as school districts, college districts, city or county agencies, non-profit organizations, artist or downtown groups. The Plan shall also include a description of OPERATOR's efforts for recruiting and hiring local persons and businesses. Said Plan must also outline commitments by OPERATOR to engage its staff in community service events or programs in the City of Santa Ana. Plan must also outline and address sustainable business practices. OPERATOR shall adequately document that it has met the Plan's obligations and commitments as a condition of renewal/extension of this AGREEMENT upon expiration of the initial term and any extensions. 2. Records Inspection. Examination and Audit. OPERATOR acknowledges and agrees that CITY is empowered under this Agreement to inspect, examine and audit OPERATOR's books and records (including tax filings and returns), to ascertain the amount of operating fees due and owing. CITY or its authorized agents shall have the power and authority to conduct a full inspection, examination and audit of such books and records (including tax filings and returns) at any reasonable time, including but not limited to, during normal business hours. In the event any such books, records, tax filings and returns cannot be made fully available within the City of Santa Ana, OPERATOR acknowledges and agrees that it shall reimburse CITY for the cost of all transportation, lodging, meals, portal-to-portal travel time, and other incidental costs reasonably incurred by CITY or its authorized agents in obtaining said full inspection, examination and audit. In the event that said records inspection, examination and audit determines that a net operating agreement fee payment deficiency of greater than Five Percent (5%) exists; OPERATOR acknowledges and agrees that it shall reimburse CITY for the full cost of said records inspection, examination and audit reasonably incurred by CITY or its authorized agents. 3. Term. This AGREEMENT shall start on the date indicated above and shall terminate on December 31, 2020 regardless of starting date unless terminated earlier in accordance with Section 9 or 10 of this AGREEMENT. The AGREEMENT will have one (1) two-year extension period until December 31, 2022 exercisable by a writing executed by the City Manager and City Attorney's Office with the approval of OPERATOR. 4. Business License Required. A valid City of Santa Ana Business License is required for all persons engaged in transacting and carrying on any commercial cannabis business activity in the City of Santa Ana. It is unlawful for any person or legal entity to commence, transact or carry -on cannabis business activity in the City of Santa Ana without first having procured a City of Santa Ana cannabis business license. 5. Operating Commercial Cannabis Business. OPERATOR shall not operate a commercial cannabis business authorized under the Santa Ana Municipal Code unless: A. It is the holder of a valid Regulatory Safety Permit issued by CITY in accordance with the procedures and requirements of Article 1 of Chapter 40, of the Santa Ana Municipal Code; and B. At such time as the State of California requires cannabis business facilities and businesses to hold a valid license or permit issued by the State of California, it also holds such license or permit; unless, however, such permit or license is subsequently 2 not required by the State of California for the type of cannabis facility or business operation that is the subject of this AGREEMENT. C. OPERATOR remains in compliance with any and all other laws and regulations pertaining to commercial cannabis businesses. D. OPERATOR shall remain in compliance with the operating requirements applicable to commercial cannabis businesses contained in the City's Municipal Code. 6. OPERATOR Indemnification of CITY. A. OPERATOR will indemnify CITY from any claims, damages, injuries, or liabilities of any kind whatsoever sustained or incurred by CITY resulting from entering into this AGREEMENT, and OPERATOR's performance and/or breach of this AGREEMENT. B. OPERATOR agrees to defend, at its sole expense, any action against CITY, its agents, officers, and employees related to this AGREEMENT. OPERATOR agrees to indemnify and reimburse CITY for any court costs and attorney fees that CITY may be required to pay as a result of any legal challenge related to this AGREEMENT and/or CITY's approval of a Regulatory Safety Permit. CITY may, at its sole discretion, participate at its own expense in the defense of any such action, but such participation shall not relieve the OPERATOR of its obligation hereunder. OPERATOR Compliance with Laws. OPERATOR agrees to comply with the City of Santa Ana Charter and Municipal Code, including but not limited to Chapters 18, 21 and 40, and the laws and regulations of the State of California. 8. Default and Termination for Cause. This AGREEMENT may be terminated by CITY for cause with thirty (30) days' written notice to OPERATOR. Cause as used in this section, is defined as: A. Failure to comply with the terms of the City of Santa Ana Cannabis Regulatory Safety Permit issued to OPERATOR by CITY; B. Failure of OPERATOR to maintain a valid active City of Santa Ana Business License as the commercial cannabis business approved by the Regulatory Safety Permit and as operating; C. Failure of OPERATOR to comply with the requirements of the Community Benefits and Sustainable Business Practices Plan; D. Unauthorized transfer by OPERATOR of the City of Santa Ana cannabis business Regulatory Safety Permit issued by CITY; Failure by OPERATOR to accurately report gross receipts information or other data necessary for CITY to calculate/confirm operating agreement fees; F. Failure by OPERATOR to pay operating agreement fees and related reimbursement costs within thirty (30) days of the date those fees are due; G. Failure by OPERATOR to cooperate with CITY or CITY's authorized agents in any inspection, examination and audit of OPERATOR's commercial cannabis business books and records (including tax filings and returns). H. OPERATOR shall cure the default resulting from the cause for termination within thirty (30) days of the date of the notice of termination. If OPERATOR fails to cure the default within thirty (30) days of the date of the notice of termination for cause, this AGREEMENT will be terminated. I. This AGREEMENT will automatically terminate if: i. OPERATOR's Regulatory Safety Permit is revoked by CITY or is not renewed by CITY, or ii. OPERATOR transfers its Regulatory Safety Permit pursuant to Santa Ana Municipal Code section 40-12. 9. Termination Without Cause. Upon mutual written agreement of the Parties, this AGREEMENT may be terminated with thirty (30) days' notice. 10. Termination - Effect on Prior Obligations. Upon any termination of this AGREEMENT, OPERATOR's obligation to report and remit operating agreement fees due and payable under the terms of this AGREEMENT for each month or fraction of a month of a cannabis business operation engaged in within the City of Santa Ana prior to termination of this AGREEMENT shall continue to be in effect. Past due penalties and late interest charges shall continue to accrue and be applicable until all operating fees due under this AGREEMENT are paid in full. OPERATOR's liability for any remaining unpaid past due penalties and/or late interest charges shall continue until fully satisfied. 11. Remedies. A. It is acknowledged by the parties that CITY would not have entered into this AGREEMENT if it were to be liable in damages under this AGREEMENT, or with respect to this AGREEMENT or the application thereof, except as hereinafter expressly provided. B. Each of the parties hereto may pursue any remedy at law or equitable relief available for the breach of any provision of this AGREEMENT, except that CITY shall not be liable in monetary damages, unless expressly provided for in this AGREEMENT. C. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in Orange County California before three arbitrators. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures pursuant to JAMS' Streamlined Arbitration Rules and Procedures. Judgment on the Award may be entered in any court having jurisdiction. rd This clause shall not preclude parties from seeking provisional remedies in aid of arbitration from a court of appropriate jurisdiction. 12. Reimbursement Clause. In consideration of the time and costs incurred by CITY in the drafting and implementation of this AGREEMENT, OPERATOR agrees to pay $2,500 to CITY within thirty (30) days of execution of this AGREEMENT. 13. Attorney Fees and Costs. In any action or proceeding between CITY and OPERATOR brought to interpret or enforce this AGREEMENT, or which in any way arises out of the existence of this AGREEMENT or is based upon any term or provision contained herein, the "prevailing party" in such action or proceeding shall be entitled to recover from the non -prevailing party, in addition to all other relief to which the prevailing party may be entitled pursuant to this AGREEMENT, the prevailing party's reasonable attorneys' fees and litigation costs, in an amount to be determined by the court. The prevailing party shall be determined by the court in accordance with California Code of Civil Procedure Section 1032. Fees and costs recoverable pursuant to this Section 17 include those incurred during any appeal from an underlying judgment and in the enforcement of any judgment rendered in any such action or proceeding. 14. Notice. Any notice, tender, demand, delivery, or other communication pursuant to this AGREEMENT shall be in writing and shall be deemed to be properly given if delivered in person or mailed by first class or certified mail, postage prepaid, or sent by fax or other telegraphic communication in the manner provided in this section, to the following persons: To CITY: Clerk of the City Council City of Santa Ana 20 Civic Center Plaza (M-30) P.O. Box 1988 Santa Ana, CA 92702-1988 Fax 714-647-6956 Copies to: Executive Director — Planning and Building Agency City of Santa Ana 20 Civic Center Plaza (M-20) P.O. Box 1988 Santa Ana, California 92702-1988 Fax 714-973-1461 City Attorney City of Santa Ana 20 Civic Center Plaza (M-29) P.O. Box 1988 Santa Ana, California 92702-1988 Fax 714-647-6515 5 To OPERATOR: Rouzbeh Vandatpour WCW Organization Inc, DBA Tropicanna 1628 S Grand Ave SANTA ANA, CA 92705 Tel (310) 845-5117 Email rooz51@gmail.com A party may change its address by giving signed notice in writing to the other party. Thereafter, any communication shall be addressed and transmitted to the new address. If sent by mail, communication shall be effective or deemed to have been given three (3) days after it has been deposited in the United States mail, duly registered or certified, with postage prepaid, and addressed as set forth above. If sent by fax or email document attachment, communication shall be effective or deemed to have been given twenty-four (24) hours after the time set forth on the transmission report issued by the transmitting facsimile machine, addressed as set forth above. For purposes of calculating these time frames, weekends, federal, state, County or City holidays, or City Hall closure dates shall be excluded. 15. Exclusivity and Amendment. This AGREEMENT represents the complete and exclusive statement between CITY and OPERATOR, and supersedes any and all other agreements, oral or written, between the parties. This AGREEMENT may not be modified except by written instrument signed by CITY and by an authorized representative of OPERATOR. Each party to this AGREEMENT acknowledges that no representations, inducements, promises or agreements, orally or otherwise, have been made by any party, or anyone acting on behalf of any party, which are not embodied herein. 16. Assignment. OPERATOR may not assign or transfer any interest herein without the prior written consent of CITY and any such assignment or transfer without CITY's prior written consent shall be considered null and void. 17. Discrimination. OPERATOR shall not discriminate because of race, color, creed, religion, sex, marital status, sexual orientation, age, national origin, ancestry, or disability, as defined and prohibited by applicable law, in the recruitment, selection, training, utilization, promotion, termination or other employment related activities. OPERATOR affirms that it is an equal opportunity employer and shall comply with all applicable federal, state and local labor laws and regulations. 18. Jurisdiction -Venue. This AGREEMENT has been executed and delivered in the State of California and the validity, interpretation, performance, and enforcement of any of the clauses of this AGREEMENT shall be determined and governed by the laws of the State of California. Both parties further agree that Orange County, California, shall be the venue for any action or proceeding that may be brought or arise out of, in connection with or by reason of this AGREEMENT. 19. Severability. If any part of this AGREEMENT is found to conflict with applicable local or state laws or regulations, such part shall be inoperative, null and void insofar as it conflict with said laws or regulations, or may be modified or suspended as may be necessary to comply with any local or state law or regulation but the remainder of the AGREEMENT shall continue in full force and effect. 20. Counterparts. This AGREEMENT may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this AGREEMENT may be by actual, facsimile or electronic signature. 21. Disclaimer. Despite California's commercial cannabis laws and the terms and conditions of this AGREEMENT or any Regulatory Safety Permit issued pertaining to OPERATOR or the hereinabove specified property location, California commercial cannabis cultivators, transporters, distributors, cannabis testing facility/laboratory businesses or possessors may still be subject to arrest by state or federal officers and prosecuted under state or federal law. The Federal Controlled Substances Act, 21 USC § 801 et. seq., prohibits the manufacture, manufacturing, and possession of cannabis without any exemptions for medical or non -medicinal use. 22. Authority to Bind. Each undersigned represents and warrants that its signature hereinbelow has the power, authority and right to bind their respective parties to each of the terms of this AGREEMENT, and shall indemnify CITY fully, including reasonable costs and attorney's fees, for any injuries or damages to CITY in the event that such authority or power is not, in fact, held by the signatory or is withdrawn. -Signature Page Below- 7 IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT the date and year first above written. NActing Clerk of the Council ORMA MITRE APPROVED AS TO FORM: SONIA R. CARVALHO City Attorney By: �L Lisa Storck Assistant City Attorney RECOMMENDED FOR APPROVAL: Minh Thai, Executive Director Planning & Building Agency OF SANTA ANA KR TId� IDGE� City Manager OPERATOR LEGAL NAME: WCW Organization Inc, DBA Tropicanna SIGNATORY NAME: Rouzbeh Vandatpour TITLE: CEO TAXPAYER ID: 811924436 SIGNATURE: EXHIBIT A COMMUNITY BENEFIT AND SUSTAINABLE BUSINESS PRACTICES PLAN 1.1 Past Experience and Commitment to Local Hiring and Sourcing Practices: WCW recognizes that economic development is a prime driver of Santa Ana's Adult Use Cannabis Licensing legislation. This economic stimulus should reach beyond the tax revenue generated by Adult Use Cannabis retail businesses. Therefore, WCW is committed to a strong local hiring policy that provides jobs, at a living wage, to local residents. Local employees spend wages locally, helping local businesses, and further increasing Sant Ana's tax revenue and economic development. 1.1.1 Past Experience in Local Hiring and Sourcing: The WCW Team has past experience in "Local Hiring and Sourcing Practices" in their Long Beach cultivation and distribution projects. They have retained the local firm PacDesign to design their Long Beach facilities and are presently negotiating equipment purchases from the local supplier Green Coast Hydro, Long Beach. To accomplish "Local Hiring" objectives in Santa Ana, the WCW Team has a policy based on local referrals and searches local recruitment resources to offer employment to local workers. It may also utilize staffing agencies and reputable recruiters such as Vangst Talent and/or Viridian Staffing to source local employees. 1.1.2 Commitment to Local Hiring and Sourcing Practices: The WCW Team has already commenced local hiring in Santa Ana by retaining local counsel Christopher Glew as our Director of Legal Affairs. WCW will further this commitment by following the template established in Long Beach: We will hire local architects, local contractors, and source materials/equipment from local vendors for site design and construction. (See section 3.2 regarding 'Sustainable Business or Building Practices" for further detail). Moreover, the WCW Team will continue these practices to achieve the highest possible local hire result. In addition to these commitments, Mr. Vandatpour has demonstrated experience and a commitment to fair labor and employment practices by signing a labor peace agreement with the UFCW for his Long Beach and Santa Ana projects. While many operators have resisted the Union contract, Mr. Vandatpour's experience as a member of the Teamsters compel him to embrace a union hire policy. In fact, he has met with UFCW's Executive Vice President Matt Bell and the UFCW's cannabis 10 policy team to help them to develop practical policies and procedures for cannabis industry employment. A letter of recommendation from Mr. Bell that confirms WCW has signed the labor peace agreement is attached to this document in Section A-3 of the Appendix. 1.2 Past Experience and Commitment to Sustainable Business or Building Practices: While many businesses and corporations limit their focus to profit and increasing shareholder value, WCW takes a broad, progressive view of business that perfectly aligns with Santa Ana's broad objectives in opening the City to cannabis businesses. Generally, sustainability can be defined as meeting the needs of the present generation without compromising the ability of future generations to meet their needs. However, applying and measuring "Sustainable Business and Building Practices" to WCW's specific enterprise requires a more disciplined framework. WCW will use the accounting framework Triple Bottom Line (TBL) to guide and measure Sustainable Business or Building Practices beyond the metrics of profit, return on investment, and shareholder value to include the environmental and social metrics necessary to be truly sustainable. While profits remain important, people and the planet are equally important. Profits. People. Planet. The three P's are the framework WCW will apply to achieve maximum effectiveness in their "Sustainable Business and Building Practices". We will apply these criteria for sustainability consistent with the community priorities set forth in Santa Ana's Merit Based Criteria. 1.2.1 Sustainable Business or Building Practices - Profits: Santa Ana has shown a commitment to profitability with their base requirement that applicants possess "Permitted or Licensed Commercial Cannabis Experience". The WCW Team's unmatched experience and strong track record of success are simply the best possible guarantor for WCW's profitability in Santa Ana. Another key to sustained profitability is people. People are the lifeblood of any successful business. Employee turnover creates a lack of stability, wastes time and money, and impedes efficient, professional, compliant operations. Therefore, retaining properly trained, highly competent staff will be the cornerstone of WCW's Santa Ana business. To meet this objective, the WCW Team will abide by all labor laws and employment regulations while maintaining adequate documentation to 11 manage the burden of proof. Beyond this baseline, HR Policy is a vital component to employee retention. The WCW Team's experience has established that a focus on HR policy, practice, and compliance will distinguish our Santa Ana dispensary from the average employer and help to attract and retain the strongest team members. As a whole, the WCW Team will focus on creating a positive culture to help ensure fair and consistent treatment of all employees. We will place a strong emphasis on policies that don't sap employee spirits and steal their lives and private time. The WCW Team's experienced management personnel are trained in the proper protocols to improve culture, reduce liability, limit exposure, and curtail employee turnover. Present HR practices include new -hire onboarding, progressive discipline, performance evaluations, and standard leaves of absence and separation/termination procedures. All present policies are consistent with Department of Labor (DOL) and Equal Employment Opportunity Commission (EEOC) standards. Implementation of these highly compliant HR policies and procedures are key to a positive work environment and allows management to focus on business growth. Proactive HR policy compliance ultimately serves to protect the entire industry. It is critical for any business to view HR policy compliance as a priority for "Sustainable Business Practices" and profitability. Individuals will not be considered Employees until the required documentation has been collected and confirmed to be on file using the following checklist: • Offer Letter • Confidentiality Agreement • At -will Statement • Contract + Background Check Agreement • Background Check Report s PW4 12 • 19 with copies of necessary documents copies of SS Card, and State issued ID/DL) • HR Policy Agreement • Resume or CV • Job Description • Completed & signed document checklist Similarly, Individuals acting as Contractors will not be allowed to begin work until the required documentation has been collected and confirmed to be on file using the following checklist: • Offer Letter • Confidentiality Agreement • Contract • Background Check Agreement • Background Check Report • FW9 • 19 with copies of necessary documents • Independent Contractor Code of Conduct Agreement • Resume/CV/Licenses • Job Description • Completed & signed document checklist Beyond these HR protocols, WCW has implemented numerous other "Sustainable Business Practices" to ensure continued viability. While many of these are part of The WCW Teams SOP's and beyond the scope of this document due to page count limitations, some of them include: 13 • Accounting Practices: The WCW Team utilizes the Indica Online Cannabis POS system to track sales. It is secure, paperless, and HIPAA compliant. • Maintaining P&L's: The WCW Team performs monthly P&L's to track revenue, expenses, and how revenue is transformed into net income. • Budgets for Build -Out and Operations: The WCW Team budgets build out and operational expenses with a local analytic that matches those costs with expected revenue from a particular location. • Marketing: The WCW Team engages in grass roots marketing with an emphasis on local media, community outreach, specials, promotions, and by maintaining the best possible menu to drive traffic to the location. • Brand Relationships: The WCW team has exclusive relationships with premier brands including Dosis, Raw Garden, and Maxie. These exclusive relationships drive traffic to retail locations. • Vertical Integration: The WCW Team was the first vertically integrated cannabis company in Southern California. This enables us to provide the best products at the best prices and to maintain control of the production and distribution pipeline. • Energy Consumption: (See section 3.2.2 regarding "Sustainable Building Practices") • Lease Terms: The WCW Team believes that paying high premiums for a cannabis related lease burdens the business with unwarranted expense and that the practice, while widespread, is not sustainable. WCW negotiates leases at 30% below market value for cannabis businesses. Parking: A minimum of 10-12 dedicated parking spaces are necessary to ensure optimal consumer access. WCW has secured 24 customer parking spots at the Santa Ana Site. • Good Neighbor: The WCW Team contracts with Cleaning and Landscaping services to maintain the building and surrounding area. Facilities also feature exterior video surveillance which improves neighborhood safety. A community outreach hotline and dedicated community outreach personnel ensure that any community 14 complaints regarding WCW's operations are addressed in a timely and professional manner. • Compliance/Timely Tax Payment: The WCW Team will use an experienced cannabis accounting firm, bookkeeper, and state of the art the software to ensure their retail location remains compliant and pays taxes in a timely manner. Their software will track and notify the end user of regulation changes and assigns tasks down the chain of command to hold employees accountable and create a culture of regulatory compliance. 1.2.2 Sustainable Business or Building Practices - Planet: Globally, buildings consume large shares of energy, electricity, water, and materials. They account for 18% of global emissions. If new technologies and construction practices are not adopted, these emissions could double by 2050. WCW's commitment to 'Sustainable Building Practices" will focus both on the site itself and the application of processes that are environmentally responsible and resource efficient throughout the life cycle of the business. These criteria shall be applied from planning to design, through construction and renovation, and in operations and maintenance as follows: (a) Life Cycle Assessment: WCW will assess the full range of impacts for their site with a "cradle to the grave" methodology that considers the extraction of raw materials, materials processing, manufacture, distribution, use, repair and maintenance, and disposal and recycling. Impacts that will be evaluated include embodied energy, global warming potential, resource use, air pollution, water pollution, and waste. (b) Site Structure/Design Efficiency: WCW's site is located in a building that is already constructed. Therefore, WCW is limited in what it can achieve with 'Sustainable Building Practices" from a site structure standpoint. However, WCW is committed to sustainable building practices from a site design perspective and will employ a design that minimizes the total environmental impact associated with all life -cycle stages of the building/business. (c) Energy Efficiency: 15 Measures to reduce energy consumption include both the embodied energy required to extract, process, and transport, and install building materials as well as the operating energy to provide light, heat, HVAC, and power for equipment. To maximize efficiency in embodied energy use, WCW shall endeavor to use recycled or repurposed materials wherever practicable. These materials have no environmental impact from an extraction standpoint, and less environmental impact from a process standpoint. Additionally, WCW shall source those materials from local suppliers consistent with our commitment to 'Local Sourcing". This will reduce the environmental impact from transportation. In the event recycled or repurposed materials are not practicable, wood has a lower embodied energy impact than brick, concrete, or steel. Therefore, WCW will use locally sourced lumber in the event recycled or repurposed materials are not available (More on this in "Materials Efficiency"). To reduce operating energy use and odor, WCW shall employ design features that eliminates air leakage through the building envelope (the barrier between the conditioned and unconditioned space). WCW will also utilize high performance windows and high efficiency, environmentally sound insulation in the walls and ceiling of the site. WCW will also engage in passive solar site design techniques by orienting their windows, walls, awnings, and landscaping to shade windows and roofs when temperatures are high, while maximizing solar gain when temperatures are low. Additionally, effective window placement or "daylighting" will provide more natural light and lessen the need for electric lighting throughout the day. Further, WCW shall use LED lighting throughout the facility, which is more energy efficient than standard lighting solutions, and all appliances shall be energy efficient. Finally, WCW shall use renewable solar energy for water heating and power generation to the extent it is viable for the site. 16 (d) Water Efficiency: Reducing water consumption and protecting water quality are key objectives in "Sustainable Building Practices". Unfortunately, Santa Ana's water conscious purple pipe system does not connect to WCW's site and is therefore not a viable option. However, there are number of water efficient strategies WCW can use to meet sustainability objectives. WCW may employ a dual plumbing system which can be used to recycle water used by the site. Wastewater will be minimized by utilizing water conserving fixtures such as ultra -low flush toilets and grey water can be collected to irrigate site landscaping. Finally, point of use water treatment and heating will improve both water quality and energy efficiency. This will also reduce the amount of water in circulation. (e) Materials Efficiency: Pursuant to Section 2 (c) regarding energy efficiency, lumber from forests that have been certified to a third -party forest standard is a sustainable construction material. Rapidly renewable plant materials such as bamboo and straw, dimension stone, recycled stone, and recycled metal also meet materials efficiency standards and will be considered in WCW's site plan. In the event concrete is required, high performance or Roman self - healing concrete is WCW's preferred solution for sustainability. Further, the EPA also suggests that recycled industrial goods, such as coal combustion products, foundry sand, and demolition debris are also potential building materials that meet sustainability criteria. (f) Indoor Environnemental Quality Enhancement: Indoor Environmental Quality (IEQ) is one of the five environmental categories in the Leadership in Energy and Environmental Design (LEED) standards. It was created to provide comfort, well-being, and productivity for occupants and/or workers. The WCW Team will strive to achieve optimal indoor air quality through reducing Volatile Organic Compounds (VOC's) and other air impurities such as microbial contaminants and cannabis odor. This objective will be met with properly designed system that will provide adequate 17 ventilation, pull clean air from outdoors, and provide recirculated, filtered air that eliminates VOC's and cannabis odor. Utilizing materials and interior finish products with zero or low VOC emissions will also improve IEQ. In addition, many cleaning products emit gases that can have a detrimental impact on worker health, comfort, and productivity. WCW shall use only those products that do not impact IAQ as per Green Star, LEED and BREEAM guidelines. Another vital component of IEQ is the control of moisture that can lead to mold growth, bacteria, viruses, dust mites, and other organisms and microbiological concerns. Water intrusion through the building's envelope or water condensation on cold surfaces in the building's interior can also enhance and sustain microbial growth. When used in conjunction with adequate ventilation and climate control, a properly insulated and tightly sealed envelope will reduce moisture problems. To maintain personal temperature and airflow control, WCW will employ high efficiency HVAC and heating elements with the highest possible SEER rating. This will increase the site's thermal qualities. Moreover, WCW shall use flooring within the guidelines established by the Asthma and Allergy Foundation of America which recommends hardwood, vinyl, linoleum tile, or slate flooring to limit the emission of dust or particulates from the floor. WCW shall also consider the interactions of all the indoor components and occupants together to determine how all of the foregoing components of IEQ can be used to create the optimum IEQ. (g) Operations and Maintenance Optimization: Regardless of the "Sustainable Business or Building Practices" employed by WCW, the site will only remain sustainable if it is operated responsibly and maintained properly. WCW's operations and maintenance SOP's will be a part of the site's planning and development process to ensure that the sustainability objectives are maintained. Proper training is also critical to the implementation of sustainable strategies for Operations and Maintenance (O&M) personnel. WCW's O&M personnel will be trained in SOP's that detail the best practices for energy efficiency, resource conservation, ecologically sensitive products, and other sustainable practices. m (h) Waste Reduction: Previous sections have covered waste reduction in terms of operational energy and water usage. Another key aspect of "Sustainable Business or Building Practices" is to reduce the amount of energy, water and materials used in construction. In California, 60% of the state's waste comes from commercial buildings. The use of local contractors and local material sourcing will reduce the amount of energy used in construction. Professional designs executed by experienced contractors will reduce the amount of waste going to landfills. A strong recycling program will also be priority for WCW with customer incentives to help us recycle used cannabis packaging. (i) Cost and Payoff: Cost will always be an issue in a sustainable building practices. The implementation of these practices can cost a premium of <2%. However, they have potential to yield 10 times a much over the life a building. Over a 20-year period, the financial payback typically exceeds the additional cost by a factor of 4-6 times. In this way, WCW views 'Sustainable Building Practices" to be 'Sustainable Businesses Practices" and is committed to creating a site that set the sustainability standard for all Santa Ana operators. 1.2.3 Sustainable Business or Building Practices - People: While we detailed the importance of employees in the section on Profitability, it is equally important to address when evaluating how a business treats their employees. To summarize, WCW has signed the Labor Peace Agreement with UFCW, is committed to paying employees a living wage, will provide a positive, rewarding work environment with time for a robust personal life, and will provide opportunities for advancement and education within our organization, the industry, and beyond. Workplace Diversity is also critical to the People component of WCW's TBL framework for "Sustainable Business Practices". Diversity refers to the existence of many unique individuals in the workplace and in the community. This includes men and women from different countries, cultures, ethnic groups, generations, backgrounds, skills, abilities, and other characteristics that make them who they are. In order to capitalize on the value of the skills, experience, and unique perspectives of individual employees, WCW will ensure that the 19 workplace provides opportunities to develop their potential and contribute to the success of the business. WCW also has a deep respect for the extraordinary sacrifice of our Veterans and the unique challenges they face. Therefore, WCW will endeavor to include Veterans as part of their workplace diversity mandate. Finally, WCW recognizes that the decades long war on drugs has exacted a heavy economic, social, and political toll on some of Santa Ana's most vulnerable communities. This toll includes erecting barriers to capital access/wealth creation, job opportunities, affordable housing, education and political engagement, as well as worsened disparities in health and life outcomes. These targeted communities are often heavily comprised of marginalized, low income people of color. Moreover, many of those who helped build the industry and develop cannabis for medical and recreational use have been pushed farthest from the starting line. Consistent with principles of Social Equity, and WCW's Triple Bottom Line framework that places people on par with profits, WCW believes the benefits of the cannabis industry should be widely distributed, that any disadvantages or costs do not unfairly burden communities or groups, and that the industry should reflect society as a whole. WCW is committed to a hiring policy that reflects these core values. Moving beyond the People aspects of WCW's TBL framework as they relate to employees, the social capital aspects of the People component must also be measured in terms of improved social welfare or community benefit gained. This aspect is detailed in the following section regarding "Community Benefit and/or Youth Programs" in Santa Ana. 1.3 Past Experience and Commitment to Community Benefit and/or Youth Programs in Santa Ana: The WCW Team has substantial experience in a wide range of "Community Benefit and/or Youth Programs". This experience will enable WCW to hit the ground running with their commitments to "Community Benefit and/or Youth Programs" that will make a positive, lasting impact on Santa Ana. 1.3.1. Past Experience in Community Benefit and/or Youth Programs: • Volunteer at West Side VA • Community Outreach/Education for Mental Health/Addiction WE • Beach Cleanup • Holliday Food Drives • Holliday Toy Drives • Donation drives for Goodwill/Salvation Army • Salvation Army Volunteer Work/Transportation • Anti -Bully Self Defense Training/Kids Program 1.3.2. Commitment to Community Benefit and/or Youth Programs: Over the last few months, the WCW Team has met with members of Santa Ana City Council, United States Congressman Lou Correa, members of the Santa Ana Community, and engaged in independent research to determine what "Community Benefit and/or Youth Programs" will have the greatest positive impact on the social welfare of Santa Ana. We take this commitment seriously, as demonstrated by the WCW Team's experience, and want to ensure that resources are channeled to the right projects. (a) The Santa Ana Unified Debate Team: In our meeting with Congressman Correa, he suggested that the Santa Ana Unified Debate Team was an extraordinary "Youth Program" and one in need sponsors. 2017 was a particularly strong one for the Team. They competed in their first national tournament and placed in quarter finals, semi-finals, and had their first ever district finalist. The WCW Team is committed to help this outstanding Team build on this momentum by providing the resources to build an even stronger program. (b) Santa Ana Unidos: While the Santa Ana Unified Debate Team has excelled, many Santa Ana youth are still being left behind as California continues to struggle with gang violence and high youth incarceration rates. Since 1980, California has built 22 prisons but just one UC Campus. Spending on prisons and jails has increased 3 times faster than spending on K-12 Schools in California, according to the U.S. Department of Education. 21 The statistics raise the question: "How can you critique a rose with damaged petals when it had to grow up from the concrete?'. This question references "Roses in Concrete", the motto behind the non-profit Santa Ana Unidos (SAU). SAU is an intervention and prevention program that utilizes alternative forms of rehabilitation to combat youth gang violence and incarceration. SAU is responsible for improving the lives of countless Santa Ana youth with programs that range from boxing, to gardening, to poetry, and music. Last year, SAU was joined by organizations like Faces of Santa Ana, Inspyr Arts Studio, and Resilience OC to support the fight for Schools Not Prisons, calling for an end to overspending on prisons and new vision of community safety centered on education, health, and investing in youth. The WCW Team has a deep respect for the work done by SAU, and share their vision of a path to a better life for at -risk Santa Ana youth. We are committed to helping this program expand its reach by providing them with resources to do so. (c) Community Garden: WCW is committed to provide sponsorship and resources to an existing Community Garden and/or to establish a new Community Garden in Santa Ana. The WCW Team is uniquely suited to this "Community Benefit Program" as they have extensive experience with cannabis cultivation and those skills directly correlate to food production. Community Gardens are one of the most impactful "Community Benefit programs" as they provide a broad range of benefits that improve the environment and nearly every aspect of urban life in areas where improvement is most needed: • Reduction of carbon footprint by reducing travel from farm to fork and reducing transit spoilage. • Provide economic benefit by increasing property values in their immediate vicinity and by attracting small business. • Provide a retreat from urban noise and commotion. Natural spaces have been shown to foster recovery from mental fatigue, improve outlook and life satisfaction, help in coping 22 and recovering from stress, improve recovery from injury and illness, and increase productivity. Simply viewing plants has been shown to reduce fear, anger, blood pressure, and muscle tension. • Provide employment, education, and entrepreneurship opportunities for a wide range of people including students, immigrants, and the homeless — a serious issue Santa Ana has recently formed a Task Force address. • Transform vacant lots that are magnets for litter and criminal activity into clean, green space with a more active local community. • Provide residents without land of their own the opportunity to produce food. • Provide access to fresh produce and nutritionally rich foods to low-income areas where it is less available. • Provide an area for recreation and exercise. • Foster community interaction to establish relationships within and across physical and social barriers. • Decrease crime. • Even the distribution of urban greenspaces to low-income areas. • Reduce soil erosion and restore oxygen to the air. • Serve as an outdoor classroom where youth can learn valuable skills involving practical math, communication, responsibility, and cooperation. (d) General Community Benefit and/or Youth Programs: In addition to these Tentpole "Youth and Community Benefit Programs", the WCW Team will continue with the toy, clothing, food drives, and charitable fundraising that they have engaged in for over a decade to assist those less fortunate. 23