HomeMy WebLinkAbout1815 CARNEGIE SANTA ANA CORPINSURANCE NOT ON FILE
WORK MAY Ndf PROCEED A-2017-369-54
JUL 1 3 2021 CLERK OF COUNCIL.
DATE;
. Pepf CO )CAI'i P.) f;k OPERATING AGREEMENT FOR NON -RETAIL
COMMERCIAL CANNABIS BUSINESSES
This Operating Agreement ("AGREEMENT") is dated June 29, 2021, between the City of
Santa Ana, a charter city and municipal corporation ("CITY") 1815 Carnegie Santa Ana Corp, a
California corporation ("OPERATOR" or "1815"), 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
cannabis retail services in whole or in part of its operations transacted and carried -on by
OPERATOR at the following subject property location, 2840 S. Croddy Way, Suite A, Santa
Ana, CA 92704.
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, 2022 regardless of starting date unless terminated earlier in accordance with
Section 9 or 10 of this AGREEMENT.
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
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.
7. OPERATOR Compliance with Laws.
OPERATOR agrees to comply with the
including but not limited to Chapters 18, 21
of California.
8. Default and Termination for Cause.
City of Santa Ana Charter and Municipal Code,
and 40, and the laws and regulations of the State
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;
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;
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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:
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.
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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 broughtto 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
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To OPERATOR: Jeffrey DaPra
1815 Carnegie Santa Ana Corp.
2840 S. Croddy Way, Suite A
Santa Ana, CA 92704
Tel (949) 294-2125
Email: leff(a)flyghtbrands.com
Copies to: Dana Leigh Cisneros, Esq.
The Cisneros Firm
505 S. Villa Real Drive, Suite 100
Anaheim Hills, CA 92807
(714)660-9045
dana@cisnerosfirm.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, disability, gender identity, gender
expression, medical condition, genetic information, military or veteran status. 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.
M
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-
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A-2017-369-54
IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT the date and year
first above written.
ATTEST:
C�
AISY GOMEZ
Clerk of the Council
APPROVED AS TO FORM:
SONIA R. CARVALHO
City Attorney
Jose Montoya
Deputy City Attorney
ED FOR APPROVAL:
Minh Thai, Executive Director
Planning & Building Agency
CITY OF SANTA ANA
K IS'tINE RIDGE
City Manager
OPERATOR:
1815 Santa Ana Corp.
NAME: Jeffrey DaPra
TITLE: Secretary and Authorized Signatory
TAXPAYER ID: 83-2775415
EXHIBIT A
COMMUNITY BENEFIT AND SUSTAINABLE BUSINESS PRACTICES PLAN
Community Benefit and Sustainable Business Practices Plan
1815 Carnegie Santa Ana Corp. (1815") deeply values Santa Ana community, especially its
residents. As such, 1815 is committed to supporting the City and its events and programs,
community -based groups, Schools and non -profits as well as prioritizing local hiring and
business partnership practices.
Likewise, 1815 has adopted clean, green business practices and seeks to partner with
cannabis businesses who also value sustainability.
Commitment to Support Community -Based Groups
Without community service, we would not have a strong quality of life. It's important to the
person who serves as well as the recipient. It's the way in which we ourselves grow and,
develop. Dorothy Height, Civil Rights Activist, Presidential Medal of Freedom Recipient
(1994) and Congressional Gold Medal (2004).
Schools
1815 knows that children are the future and highly values quality public education.
Accordingly, we are committed to donating $15,000.00 annually to the Santa Ana Public
School Foundation, which develops financial resources for programs and activities that will
maximize student achievement, including support for preforming arts, technology, sciences,
athletics, scholarships and educators. To the extent the Santa Ana School District permits us
to take a more active role in supporting their needs, 1815 will continue to explore these options
with the School District directly.
Orange County Rescue Mission
1815 is dedicated to supporting those who need it most. To that end, we have selected the
Orange County Rescue Mission to support on an annual basis by donating at least $15,000.00
in cash and items on the Mission's "Urgent Needs" list on a quarterly basis, to support the
Mission's efforts to rehome, educate and train vulnerable individuals in the community.
Additionally, we will donate at least 10 hours of community service time per employee per
year to the Orange County Rescue Mission and compensate our staff during their volunteer
time. We believe that community service enhances character, and so, we are committed to
helping our employees grow into the best version of themselves.
N
Communitv Support: Local Hirina and Local Business
Local Hiring
Presently, all owners are Orange County residents. When we commence staffing, we will
work to hire 50% Santa Ana residents to work in our retail facility. To achieve this goal, 1815
will utilize the City of Santa Ana WORK Center, which offers a one -stop solution to enhance
our workforce development. Through the WORK Center, we hope to be able to attract and
retain employees who live in the City of Santa Ana and the surrounding communities. The
WORK Center has immediate access to work -ready candidates to assist with meeting our
local recruitment goals. While being cognizant to avoid discriminatory hiring practices, we will
do our best to hire Santa Ana residents. This is why working with the City's WORK program
is imperative. We will do our best to hire as many Santa Ana residents as possible.
We will also work with the City's Veterans Resource Center to provide job opportunities to
those who have dedicated their lives to protecting and ensuring our freedom.
Finally, to the extent we are able, we will also attempt to aid the Orange County Rescue
Mission in hiring individuals who are prepared to go into permanent housing and need jobs to
support themselves.
Local Business Partnerships
The 1815 intends to integrate with the surrounding business community. If we host office
lunches, we will order from local small businesses like Paragon Cafe around the corner at
3313 Hyland or The Sun Vegan in the other direction at 11743 Edinger or Chidori Sushi across
the riverbed at 17870 Newhope. For celebrations, we will take a short ride to Downtown Santa
Ana to experience all the entertainment and dining experiences it has to offer.
We will also work closely with the distributors, cultivators, manufacturers and retailers in Santa
Ana. Additionally, we will be joining the Santa Ana Chamber of Commerce to make even
greater and deeper connections with other business owners in Santa Ana as well as the Santa
Ana Cannabis Association. To the extent we need goods or services to support our business,
we will seek out Santa Ana businesses or with the assistance of the Santa Ana Chamber of
Commerce, who provides referrals to local businesses.
Sustainable Business Practices
The cannabis industry is built on respect for the plant and for the environment generally and
we intend to honor the planet accordingly. While constructing our facility, we were cognizant
of our obligations to take care of the environment. To that end, we installed low -flow toilets
for enhanced water efficiency, LED lights to reduce energy consumption.
To the extent we have control over the packaging and labeling used for our cannabis and co -
packing transactions, we will endeavor to source sustainable, biodegradable, hemp plastic or
recycled ocean packaging.
10
Additionally, we will promote a healthy environment by providing a monthly gym membership
to our employees and encouraging them to use public transportation to work at our cost.
11
EXHIBIT A
COMMUNITY BENEFIT AND SUSTAINABLE BUSINESS PRACTICES PLAN
Community Benefit and Sustainable Business Practices Plan
1815 Carnegie Santa Ana Corp. (" 1815") deeply values Santa Ana community, especially its
residents. As such, 1815 is committed to supporting the City and its events and programs,
community -based groups, schools and non -profits as well as prioritizing local hiring and
business partnership practices.
Likewise, 1815 has adopted clean, green business practices and seeks to partner with
cannabis businesses who also value sustainability.
Commitment to Support Community -Based Groups
Without community service, we would not have a strong quality of life. It's important to the
person who serves as well as the recipient. It's the way in which we ourselves grow and,
develop. Dorothy Height, Civil Rights Activist, Presidential Medal of Freedom Recipient
(1994) and Congressional Gold Medal (2004).
Schools
1815 knows that children are the future and highly values quality public education.
Accordingly, we are committed to donating $15,000.00 annually to the Santa Ana Public
School Foundation, which develops financial resources for programs and activities that will
maximize student achievement, including support for preforming arts, technology, sciences,
athletics, scholarships and educators. To the extent the Santa Ana School District permits us
to take a more active role in supporting their needs, 1815 will continue to explore these options
with the School District directly.
Orange County Rescue Mission
1815 is dedicated to supporting those who need it most. To that end, we have selected the
Orange County Rescue Mission to support on an annual basis by donating at least $15,000.00
in cash and items on the Mission's "Urgent Needs" list on a quarterly basis, to support the
Mission's efforts to rehome, educate and train vulnerable individuals in the community.
Additionally, we will donate at least 10 hours of community service time per employee per
year to the Orange County Rescue Mission and compensate our staff during their volunteer
time. We believe that community service enhances character, and so, we are committed to
helping our employees grow into the best version of themselves.
Community Support: Local Hiring and Local Business
Local Hiring
Presently, all owners are Orange County residents. When we commence staffing, we will
work to hire 50% Santa Ana residents to work in our retail facility. To achieve this goal, 1815
will utilize the City of Santa Ana WORK Center, which offers a one -stop solution to enhance
our workforce development. Through the WORK Center, we hope to be able to attract and
retain employees who live in the City of Santa Ana and the surrounding communities. The
WORK Center has immediate access to work -ready candidates to assist with meeting our
local recruitment goals. While being cognizant to avoid discriminatory hiring practices, we will
do our best to hire Santa Ana residents. This is why working with the City's WORK program
is imperative. We will do our best to hire as many Santa Ana residents as possible.
We will also work with the City's Veterans Resource Center to provide job opportunities to
those who have dedicated their lives to protecting and ensuring our freedom.
Finally, to the extent we are able, we will also attempt to aid the Orange County Rescue
Mission in hiring individuals who are prepared to go into permanent housing and need jobs to
support themselves.
Local Business Partnerships
The 1815 intends to integrate with the surrounding business community. If we host office
lunches, we will order from local small businesses like Paragon Cafe around the corner at
3313 Hyland or The Sun Vegan in the other direction at 11743 Edinger or Chidori Sushi across
the riverbed at 17870 Newhope. For celebrations, we will take a short ride to Downtown Santa
Ana to experience all the entertainment and dining experiences it has to offer.
We will also work closely with the distributors, cultivators, manufacturers and retailers in Santa
Ana. Additionally, we will be joining the Santa Ana Chamber of Commerce to make even
greater and deeper connections with other business owners in Santa Ana as well as the Santa
Ana Cannabis Association. To the extent we need goods or services to support our business,
we will seek out Santa Ana businesses or with the assistance of the Santa Ana Chamber of
Commerce, who provides referrals to local businesses.
Sustainable Business Practices
The cannabis industry is built on respect for the plant and for the environment generally and
we intend to honor the planet accordingly. While constructing our facility, we were cognizant
of our obligations to take care of the environment. To that end, we installed low -flow toilets
for enhanced water efficiency, LED lights to reduce energy consumption.
To the extent we have control over the packaging and labeling used for our cannabis and co -
packing transactions, we will endeavor to source sustainable, biodegradable, hemp plastic or
recycled ocean packaging.
10
Additionally, we will promote a healthy environment by providing a monthly gym membership
to our employees and encouraging them to use public transportation to work at our cost.
11