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HomeMy WebLinkAbout3242 ENTERPRISES, INC dba "THE SPOT"DocuSign Envelope ID: 9015E073-FFIE-4A21-A9CB-86E8A72D8939 A-2017-369-62 N O s INSURANCE NOT ON FILE WORK MAY NOT PROCEED OPERATING AGREEMENT FOR ADULT -USE RETAIL ti CLERK OF COUNCIL- COMMERCIAL CANNABIS BUSINESSES DATE: e o P47AA(A This Operating Agreement ("AGREEMENT") is dated February 7, 2022 between the City of Santa Ana, a charter city and municipal corporation ("CITY') and 3242 Enterprises, Inc dba "The Spot" ("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 AND MEDICINAL RETAIL services in whole or in part of its operations transacted and carried -on by OPERATOR at the following subject property location, 3242 South Halladay Street, #101, 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 DocuSlgn Envelope ID: 9015E073-FF1E-4A21-A9C8-86E8A72D8939 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. DocuSign Envelope ID: 9016E073-FF1E-4A21-A9C8-86E8A72D8939 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 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; 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; DocuSlgn Envelope ID: 9015E073-FF1E-4A21-A9C8-86E8A72D8939 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. DocuSign Envelope ID: 9016E073-FF1 E-4A21-A9C8-86E8A72D8939 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 Docu5lgn Envelope ID: 9015E073-FF1E-4A21-A9C8-86E8A72D8939 To OPERATOR: Francis Knuettel II 3242 Enterprises, Inc dba The Spot 3242 S Halladay #101, SANTA ANA, CA 92705 Tel (949) 200-1661 Email businesscontact@unrivaledbrands.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. 16. 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. 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 DocuSign Envelope ID: 9015E073-FF1E-4A21-A9C8-86E8A72D8939 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- DocuSign Envelope ID. 9015E073-FF1E-4A21-A9C8-86E8A72D8939 A-2017-369-62 IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT the date and year first above written. ATTEST: DAISY GOMEZ t Clerk of the Council APPROVED AS TO CARVALHO City Attorney m FORM: SONIA R. p.,. m. w Jose Montoya Assistant City Attorney RECOMMENDED FOR APPROVAL: Minh Thai, Executive Director Planning & Building Agency CITY OF SANTA ANA KRISTINE RIDGE City Manager OPERATOR LEGAL NAME: 3242 Enterprises, Inc. SIGNATORY NAME: Francis Knuettel II TITLE: CEO TAXPAYER ID: 47-3880708 CDocuSigned bly: fFraytis �A�n.ut.f{t.l, E�fraft 6 DocuSlgn Envelope ID: 9016E073-FF1E-4A21-A9C8-86E8A72D8939 EXHIBIT A COMMUNITY BENEFIT AND SUSTAINABLE BUSINESS PRACTICES PLAN PO DocuSign Envelope ID: 9016E073-FF1E-4A21-A9C8-86E8A72DB939 EXHIBIT A COMMUNITY BENEFIT AND SUSTAINABLE BUSINESS PRACTICES PLAN I. THE SPOT COMMUNITY BENEFIT AND SUSTAINABLE PRACTICES PLAN The Spot is passionately dedicated to serving the communities in which we operate. We place a very high value on local hiring, support a variety of youth programs, and have a proven track record of "greening" our facilities and business practices. In Santa Ana, we will focus on hiring potentially disadvantaged community members, especially those with no prior skills training and veterans. The Spot looks forward to strengthening its roots in the Santa Ana community though civic engagements, collaboration with the city on community improvement efforts, financial assistance to youth outreach programs, and green initiatives. A. Local Hiring Plan & Labor Experience The Spot's principals hold an unwavering commitment to providing more than just jobs; our labor and employment mission is to spring -board careers, offer competitive wages and benefits, promote and facilitate employee education, and generally shepherd the wellbeing, long-term growth, and prosperity of our employees, their families, and the greater communities in which we operate. The Spot intends to continue its practice of hiring locally as it recognizes that sourcing from its community serve both its business and community benefit goals. Hiring locally has an obvious net positive effect on the community's local economy, and reduces unemployment and potentially crime rates. We commit to continuing to hire locally and will make it our goal to hire 80% of our employees from the City of Santa Ana. Moreover, The Spot offers an array of positions from managerial and buyer roles to entry level roles requiring no prior experience. E%] DocuSign Envelope ID: 9015E073-FF1E-4A21-A9C8-86E8A72D8939 B. Wages and Benefits Part of our commitment to fostering a culture that allows employees to thrive personally and professionally is our belief that every employee deserves a living wage, appropriate to the economy of the region. Benefits that keep people healthy and financially solvent, such as health insurance, are also part of this philosophy, and will continue to be offered to all full-time employees. The Spot will continue to offer its employees pay exceeding minimum wage (not including periodic financial incentives), in addition to benefits like health care coverage and paid time off. We recognize that entry level positions that provide personal and financial stability are badly needed in a community like Santa Ana, where 17% of the population lives below the poverty line. The Spot will provide needed community benefits as a local employer by offering competitive wages and benefits at all employment levels. C. Training and Continuing Education It is in The Spot's and the community's interest to offer employee education opportunities. We will invest heavily in our staff by offering mentorship and job -related training in general business practices, cannabis retail regulatory compliance, cannabis products, and other aspects specific to the cannabis industry. Well -trained staff keep our business running optimally and educate our employees on compliance while fostering their professional development. D. Novice Manager Training Program: General Manager, Buyer, and Compliance Tracks For employees who show interest and aptitude in cannabis business management, The Spot will offer a Novice Manager Training Program. Divided into three tracks (Novice General Manger Training, Novice Buyer, and Novice Compliance Manager), our trainees will be trained and expected to learn and execute on a highly professional level. Participants in the program will become familiar with operations such as product sourcing and quality assurance; inventory control; employee management; licensing requirements and regulatory compliance; safety and security; and sales and merchandising. 10 DocuSign Envelope ID: 9015E073-FF1E-4A21-A9C8-86E8A72D8939 The Novice Manager Training Program will strive to produce individuals who are able to handle day-to-day operations, problem solve, and set the bar for the industry for operational excellence and legal compliance. We believe that individuals who complete our Novice Manager Training Program will become invaluable assets to us, the cannabis industry, and the Santa Ana community at large as upholders of the law and examples of business excellence. The Spot is committed to providing a healthy work environment for all of its staff in which they can flourish and create careers. Part of our commitment to our staff and the city/state regulations is shown through the executed labor peace agreement we have signed with UFCW. We are committed to providing our staff the opportunity to fully explore whether they wish to unionize by committing to neutrality and allowing open and free conversation around the matter. While The Spot's employees have not yet elected to join a union, The Spot is committed to abiding by the terms of its labor peace agreement. E. Community Benefit, Public Engagement & Youth Programs The Spot has a strong track record of community involvement in Santa Ana and is committed to donating its time and resources to improving the community around it. The Spot's Board Members regularly donate their time and money to causes such as Habitat for Humanity. F. Community Partnerships The Spot has long believed that supporting the community can only be a benefit for the business and its customers. For that reason, The Spot will be partnering with the community to promote good will, education, community revitalization, and economic growth. The Spot will hold free educational events and partner with local charities to promote causes that directly impact the surrounding community. 11 DocuSign Envelope ID: 9015E073-FF1E-4A21-A9C8-8(3E8A7208939 Youth Programs Part of The Spot's philosophy is that the longest -term investments pay out the best dividends, not only financially, but in terms of human capital. For this reason, we plan to partner with and make donations to these and other local Santa Ana community organizations supporting youth education and development: a) Child Creativity Lab The Spot will partner with the Child Creativity Lab, an organization whose mission is to use reclaimed materials to empower the next generation of critical thinkers and innovators. They offer a variety of STEM -based workshops for children, teens, and educators that are hands-on and engaging. They also provide STEM -based outreach programs to schools, libraries, places of worship, and more via the CCL Museum -on -Wheels. The Spot is excited to join the ranks of other local businesses by donating much needed classroom materials to the Child Creativity Lab, aiding them in their mission to foster hands-on creativity, education, and exploration among the citizens of Santa Ana. b) Santa Ana Promise Program at Santa Ana College The mission of Santa Ana Promise is to promote academic achievement and college attendance for Students who attend high schools in the city of Santa Ana. The organization's primary focus is removing barriers between Santa Ana students and college matriculation. Students participating in the program receive guaranteed financial support for pre -transfer study at Santa Ana College; the opportunity to enroll in academic learning communities at Santa Ana College; and guaranteed access to college English and Math courses, including the college's Early Assessment Program for placement in college level Math and English classes. The Spot pledges to provide financial and scholarship support to Santa Ana Promise. 2. Residents Having a positive, continual touch points with the residents of the communities where we operate is a cornerstone of our operations. The Spot will assist a variety of local non-profit 12 DocuSign Envelope ID: 9015E073-FFIE-4A21-A9C8-86E8A72D8939 organizations focused on improving he lives of Santa Ana residents, especially disadvantaged residents like those living below the poverty line, underserved youth, victims of domestic violence, veterans, and the homeless. a) Mercy House The Spot will be partnering with the Mercy House, a faith -based organization dedicated to providing a safe, peaceful place for single pregnant women to get the support and shelter they need. Each woman is provided with complete prenatal, labor and delivery, and postpartum care from their midwives and doctors, as well as counseling to navigate any family issues or spiritual concerns. The Mercy House also offers life skills training courses so that these women can provide a stable, wellness -focused home for their infants going forward. The Spot will provide volunteer time and financial support in order to invest in the women and families of Santa Ana. b) Strategic Alliance for Veteran Integration (SA VI) We at The Spot will be fighting homelessness in Santa Ana by assisting SAVI, a non-profit organization dedicated to providing integration services to the veterans of Orange County. Our veterans are our heroes, and we are honored to do our part to mitigate the disproportionate rate at which they suffer from homelessness and unemployment. 3. Law Enforcement The Spot hopes to develop a close working relationship with the Santa Ana Police Department. The SAPD is an essential resource in keeping businesses and customers like ours safe in Santa Ana and assisting such businesses in understanding compliance issues. We hope for a partnership between the SAPD and The Spot that will ensure the safety of not only our business and customers, but help develop programs that will ensure the safety of the Santa Ana 13 DocuSlgn Envelope ID: 9015E073-FF1E-4A21-A9C8-86E8A72D8939 community and help support initiatives that educate about and enforce cannabis retail laws and regulations. Additionally, we plan to take advantage of opportunities to help the City's youth available through the SAPD, such as sponsoring scholarships awarded through the Department. II. SUSTAINABLE BUSINESS & BUILDING PRACTICES The Spot is committed to ongoing environmental stewardship as part of our overall commitment to healthier customers and communities. Our commitment to sustainable business practices is evidenced by our green facilities efforts, sponsorship of community green spaces, and cutting -edge cannabis industry sustainability practices both in our own operations and in our partners and associates who provide the products we sell. We work with organically grown and sourced products, and will focus considerable resources on the sustainability and strength of our local community environment. A. Environmental Groups The Spot will partner with California Greenworks, Inc., a registered 501 non-profit organization that promotes environmental protection and community revitalization throughout the urban centers of southern California. Their mission is to protect and improve the environment through environmental clean-up, community education and revitalization, and environmentally sustainable economic growth. The environmental impact of cannabis business is a concern for our organization, and we hope to help offset some of our carbon footprint from transportation of product to our facility through this partnership to protect local watersheds, develop Earth -friendly educational programs throughout Santa Ana, and support a variety of local green initiatives. We would also like to leverage this partnership directly to execute green- 14 DocuSign Envelope ID: 9015E073-FF1E-4A21-A9C8-86E8A72D8939 space projects in Santa Ana, providing long-term environmental benefits and immediate opportunities for enjoyment of healthy spaces for many Santa Ana residents. Green revitalization efforts not only create green jobs, but create spaces around which other community initiatives can be organized and initiated. Inviting green spaces also promote foot traffic, which offers a direct benefit to local business, and has the potential to reduce vehicle use and therefore carbon emissions. Santa Ana is one of the earliest adopters of adult -use recreational cannabis retail in the State, and it is therefore a proving ground for the potential benefits of such businesses to the environment and to communities as a whole. We look forward to demonstrating the best results Of community collaborations with retail cannabis business, and to modeling a way of operating that supports sustainability and environmental stewardship at both the local and global levels. B. Other Environmental and Sustainability Efforts The cannabis industry is still in the early phases in the court of public opinion. One way in which The Spot will demonstrate goodwill and community benefits to the public is by creating a sustainable operation and working to obtain LEED certification. LEED is the gold standard by which commercial facilities are evaluated for environmental stewardship. but still working to establish a reputation for itself. By obtaining LEED certification, supporting the Santa Ana City Council's green initiatives through donations and volunteer efforts, and strictly adhering to all federal, state, and local sustainability and environmental protection regulations, we contribute to a positive reputation for our industry as upholders of the highest standards and stewards for the environment. In our third -party relationships, we have a proven track record of working with cultivators, manufacturers, and distributors that actively work to minimize their carbon footprint and other environmental impacts. The same will be true for building materials and construction contractors that we use at our Santa Ana facility. We will buy materials locally and use local Santa Ana 15 DocuSign Envelope ID: 9016E073-FFIE-4A21-A9C8-86E8A72D8939 vendors whenever possible for everything from construction materials to office supplies. This not only serves the direct economic interest of the community, but also minimizes the carbon emissions associated with transporting goods over long distances. The Spot will take a leadership role in the retail cannabis sector on a city-wide level by being an active member in and helping to expand the local cannabis retailers' association, Santa Ana Cannabis Association (SAGA). SACA will function in part as a local thinktank for the industry, where information, techniques and solutions can be devised and shared to reduce environmental impact from the industry and create positive impacts in general. Environmental and community improvements and initiatives can be significantly enhanced and expedited by pooling knowledge of respected and experienced members of the local industry. The Spot welcomes the opportunity to work closely with the City of Santa Ana and its organizations and community members to establish sustainable environmental practices and overall practices that benefit the communities in which we operate for the entire industry. 16