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HomeMy WebLinkAboutDELTA HEALTH, INC., DBA DELTA DISTRIBUTIONINSURANCE NOT REQUIRED WORK d,1AY PROCEED CLERK OF COUNCIL c JEf 0 9 2019 OPERATING AGREEMENT FOR NON -MEDICINAL RETAIL Q<zt P t COMMERCIAL CANNABIS BUSINESSES This Operating Agreement ("AGREEMENT") is dated June 28, 2019, between the City of Santa Ana, a charter city and municipal corporation ("CITY") and DELTA HEALTH, INC., dba DELTA DISTRIBUTION ("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 DISTRIBUTION services in whole or in part of its operations transacted and carried -on by OPERATOR at the following subject property location, 1900 E. Warner Ave., Suite E, 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 A-2017-389 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. 7. OPERATOR Compilance 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 SustainableBusiness Practices Plan; D. Unauthorized transfer by OPERATOR of the City of Santa Ana cannabis business Regulatory Safety Permit issued by CITY; E. 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; 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 12m 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 mall, 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 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. Counter arts, 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 facilitynaboratory 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 at. 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- EXHIBIT A COMMUNITY BENEFIT AND SUSTAINABLE BUSINESS PRACTICES PLAN Introduction Delta Health, Inc. ("Delta") is pleased to submit this Community Benefit and Sustainable Business Practices Plan ("Plan") to the City of Santa Ana as part of Delta's application for a Regulatory Safety Permit for commercial cannabis distribution activities. The owner and manager of Delta, Jamie Chisick and Jesse Ortega, both Orange County natives, bring years of community involvement and public service to this new enterprise and hope to enhance the lives of Santa Ana residents through their continued service. As the father of three children, Jamie has spent a considerable amount of time, energy and money supporting their pursuits over the past twenty years, including little league, volleyball, and volunteering with the Ronald McDonald House throughout Orange County. Jesse is a veteran of the U.S. Army who served in Iraq and Afghanistan before returning to Southern California to pursue careers in security and the cannabis industry. Jesse regularly volunteers with the local VFW, especially on holidays and national occasions, and tries to spend time helping out at animal shelters whenever possible. II. Community Hiring As part of its commitment to the quality of life of Santa Ana residents and businesses, Delta shall use all reasonable efforts to hire qualified residents of the City of Santa Ana when seeking employees for its commercial cannabis activities, In order to find qualified local residents, we will use a variety of methods to advertise job openings in ways that will enable us to reach our goal of having at least 50% of our employees be residents of the City of Santa Ana. First, Delta is establishing social media accounts on Instagram, Linkedln, Leaflink, and other platforms that it can use to help find employees. When a job opening arises, Delta will announce the opening on social media platforms with a specific notice stating that we would prefer to hire a local candidate. Second, Delta will partner with the Santa Ana WORK Center to target City residents who are interested in finding local employment. In addition to posting jobs directly through the WORK Center/on CalJobs, we will attend local job fairs to try to meet candidates in - person as early in the process as possible so that we can hire local candidates more quickly. Third; Delta will provide employee rosters, copies of job advertisements and social media postings to the City as part of our RSP renewal. V. Sustainable Business Practices Delta plans to employ several sustainable business practices from the commencement of its operations, and hopes to expand to some additional practices in the future. First, Delta will train all of its employees to conserve energy by turning off lights, electronics, air conditioning and other utilities after-hours (orwhen not in use) in areas where cannabis goods are not stored. We understand and appreciate the effects of overuse of the electronic grid on the climate and economy, and would like to do our part to make Santa Ana a greener city in our own small way. Second, as the light bulbs currently in use on the premises burn out, we plan to replace a minimum of 75% of the bulbs with Energy Star certified compact fluorescent lamps ("CFL") and/or LED lights. According to the US Department of Energy, an Energy Star certified CFL uses approximately one quarter of the energy of a traditional incandescent lightbulb and lasts up to ten times longer as well. LED bulbs use about twenty to twenty- five percent of the energy of traditional incandescent bulbs and last fifteen to twenty-five times as long. To ensure that Delta is replacing non-functioning bulbs with CFL/LED lighting, we will only purchase CFL/LED bulbs unless there is no suitable CFL/LED replacement for an existing light bulb. As bulbs are replaced, we will make a record of the type, location, and whether or not it is replaced with a CFL/LED bulb. All of these records will be available to the City at its request. Third, we have equipped the entire premises with Nest thermostats and split the warehouse and office into separate zones for heating and cooling. Nest thermostats learn the temperature preferences for the zones and then automatically ensures that each zone is kept at the desired temperature at the desired time. Since the office will not always be staffed, the Nest thermostat will keep the office at a comfortable temperature during business hours and then allow the temperature to change when nobody is there. At the same time, the Nest thermostat for the warehouse zone will ensure that a consistent temperature is maintained so that there is no degradation in cannabis goods. Studies have shown that Nest thermometers save 10-12% on heating costs and 15% on cooling. Fourth, at least sixty-five percent of the paper, cardboard, glass, and other packing and transport materials that we purchase will be made of recycled materials. We have set up large, clearly marked trash bins in order to collect recyclable materials and separate them from non -recyclable materials. All employees will be trained on how to dispose of materials, and taught to always separate and recycle when using materials that are suitable for recycling. Once we begin doing business, Delta will appoint a monitor who will be responsible for auditing the trash bins on a monthly basis to ensure that we are reaching our recycling goals. Fifth, when purchasing packaging or other materials, we will give purchasing preference to local businesses that sell recycled materials, and we will minimize purchasing of new materials by reusing boxes, crates, containers and other media that can be safely be reused. Delta will notify all of its regular suppliers that we prefer to use recycled materials,