HomeMy WebLinkAboutItem 28 - OC Grand Jury's Report, Findings, Recs. Regarding Santa Ana's Cannabis Program Planning and Building Agency
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Item # 28
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
September 7, 2021
TOPIC: Orange County Grand Jury’s Investigative Report, Findings, and
Recommendations Regarding Santa Ana’s Licensed Retail Adult-Use Cannabis Program
AGENDA TITLE:
Receive and File the Orange County Grand Jury’s Investigative Report, Findings, and
Recommendations Regarding Santa Ana’s Licensed Retail Adult-Use Cannabis Program
and Authorize the City Manager to Deliver the City’s Response to the Findings and
Recommendations to the Presiding Judge of the Superior Court
RECOMMENDED ACTION
Receive and file the Orange County Grand Jury’s investigative report, findings, and
recommendations regarding Santa Ana’s licensed retail adult-use cannabis program and
authorize the City Manager to deliver the City’s response to the findings and
recommendations to the Presiding Judge of the Superior Court.
DISCUSSION
On June 3, 2021, the Orange County Grand Jury (OCGJ) issued an investigative report
with findings and recommendations regarding the City of Santa Ana’s licensed retail adult-
use cannabis program and regulatory framework. The Orange County Grand Jury
(OCGJ) was interested in investigating how the decision to move forward with adult-use
cannabis retail permitting impacted Santa Ana and any resulting significant issues. The
OCGJ investigated this matter to make the public and other communities aware of the
potential “gains or pitfalls,” should other jurisdictions move forward with retail adult-use
cannabis permitting. The report focuses only on the permitting and sale of retail adult-
use cannabis in the City and does not address medicinal sales, and/or medicinal and
adult-use cultivation, distribution, manufacturing, testing, or any issues related to the use
of cannabis products.
Exhibit 1 is the complete OCGJ’s June 3, 2021 report. In summary, the OCGJ finds that
City’s program added significant and much needed revenue to the City with no reported
increase in criminal activity. In addition, the report finds that funds have not only increased
the City’s general fund account, but have also been used for enhanced police services
Orange County Grand Jury’s Investigative Report, Findings, and Recommendations
Regarding Santa Ana’s Licensed Retail Adult-Use Cannabis Program
September 7, 2021
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and code enforcement efforts, and additional youth programs through the Parks,
Recreation, and Community Services Agency.
As a result of the investigation, OCGJ issued six findings and three recommendations. In
accordance with California Penal Code Sections 933 and 933.05, OCGJ requires
responses from the City regarding the findings and recommendations presented in the
report. Exhibit 2 outlines the OCGJ findings, recommendations, and the City’s
responses. Upon authorization by the City Council, the responses in Exhibit 2 will be
submitted to the Presiding Judge of the Superior Court.
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
There is no fiscal impact associated with this action.
EXHIBIT(S)
1. County of Orange Grand Jury Investigative Report, Findings and Recommendations
Regarding Santa Ana’s Licensed Retail Adult-Use Cannabis Program entitled “Pot
Luck”
2. City Response to County of Orange Grand Jury Findings and Recommendations
Regarding Santa Ana’s Licensed Retail Adult-Use Cannabis
Submitted By: Minh Thai, Executive Director of Planning and Building Agency
Approved By: Kristine Ridge, City Manager
“Pot Luck”
Santa Ana’s Monopoly on Licensed
Retail Adult-Use Cannabis
in Orange County
GRAND JURY 2020-2021
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TABLE OF CONTENTS
SUMMARY ................................................................................................................................... 1
BACKGROUND ........................................................................................................................... 1
Federal Cannabis Laws ............................................................................................................ 1
Legislation in California ........................................................................................................... 1
REASON FOR STUDY ................................................................................................................ 2
METHOD OF STUDY ................................................................................................................. 3
INVESTIGATION AND ANALYSIS ......................................................................................... 3
Santa Ana City Council Says “Yes” ........................................................................................ 3
Dispensary Application and Licensing Process ...................................................................... 3
Cannabis Community Benefits Program ................................................................................. 4
Community Safety ..................................................................................................................... 4
Site Visits ................................................................................................................................. 5
Financial Impact ........................................................................................................................ 6
Communication ......................................................................................................................... 7
COMMENDATIONS ................................................................................................................... 7
FINDINGS ..................................................................................................................................... 7
RECOMMENDATIONS .............................................................................................................. 8
RESPONSES ................................................................................................................................. 9
RESPONSES REQUIRED ..................................................................................................... 10
APPENDIX .................................................................................................................................. 11
APPENDIX 1 – Approved and Operating Adult-Use Cannabis Dispensaries .................. 11
APPENDIX 2 – Commercial Cannabis Application Process .............................................. 12
APPENDIX 3 – Phase 1 and Phase 2 Application and Permit Process .............................. 13
APPENDIX 4 – Commerical Cannabis Application Information ...................................... 14
APPENDIX 5 – Santa Ana Ordinance No. NS-2959 ............................................................ 16
GLOSSARY................................................................................................................................. 20
BIBLIOGRAPHY ....................................................................................................................... 21
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SUMMARY
Santa Ana was the first city in Orange County, California to approve the retail sale of Adult-Use
Cannabis. This action has added significant revenue to the city with no reported increase in
criminal activity. Through interviews and investigation, the Orange County Grand Jury has
discovered that the revenue generated by the Retail Adult-Use Cannabis business has provided
much needed funds to the City of Santa Ana. These funds have not only increased the city’s
general fund account but have also been used for enhanced police services and code enforcement
efforts as well as funding for additional youth programs through the Parks, Recreation, and
Community Services Agency.
The Orange County Grand Jury does not express an opinion on the use of Cannabis.
BACKGROUND
Cannabis use has long been a subject of controversy in the United States. Once commonly grown
for hemp, made from fibers from the plant and used in a variety of products such as rope and
paper, cannabis was later discovered to have medicinal purposes and subsequently became a
criminalized product. Over the last six decades there has been much debate and many
propositions introduced to decriminalize and/or regulate cannabis and allow it to be legally sold
and used for medicinal as well as recreational purposes.
Federal Cannabis Laws
Despite a cannabis legalization trend sweeping the country, the federal government still classifies
cannabis as a Schedule 1 drug. The federal government considers drugs in this class to be some
of the most dangerous.
A Schedule 1 classification puts cannabis in the same class as heroin, which means the federal
government considers cannabis more dangerous than Schedule 2 drugs like cocaine and
methamphetamine.
At the present time, the Unites States Department of Justice (“DOJ”) is not prosecuting most
cannabis users and businesses that follow state and local cannabis laws, as long as those laws do
not conflict with certain federal requirements. These requirements include preventing minors
from using cannabis and preventing cannabis from being transported across state lines.
Legislation in California
Proposition 19 (1972) also known as “The California Marijuana Initiative” was a ballot
initiative on the November 7, 1972 California Statewide Ballot. California became the first state
to vote on a ballot measure seeking to legalize cannabis. If it had passed, the measure would
have removed penalties in the State of California for persons 18 years of age or older for using,
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possessing, growing, processing, or transporting marijuana for personal use. The initiative was
defeated by the voters with 66.5% No votes to 33.5% Yes votes.
Proposition 215 (1996) also known as “The Compassionate Use Act of 1996” made it legal
under California law for individuals of any age to use cannabis for medicinal purposes.
Individuals must have a recommendation from a doctor to use medical cannabis. The act passed
by a vote of 55.58% Yes votes to 44.42% No votes.
Proposition 19 (2010) also known as “The Regulate, Control, and Tax Cannabis Act of 2010”
was defeated by the voters with 53.5% No votes to 46.5% Yes votes. If it had passed,
Proposition 19 would have legalized various cannabis-related activities in California and
authorized local governments to control these activities. In addition, the Proposition would have
granted local governments the right to impose and collect cannabis-related fees & taxes, and
authorized various criminal and civil penalties.
Proposition 64 (2016) also known as “The Adult-Use of Marijuana Act” passed by a vote of
57.13% to 42.87%. The measure:
• Legalized adult use of cannabis for recreational, non-medical purposes
• Created a system for regulating Retail Adult-Use Cannabis businesses
• Imposed taxes on Retail Adult-Use Cannabis sales
• Changed penalties for cannabis-related crimes
Once Proposition 64 was passed, cities in California were granted the opportunity to approve
Retail Adult-Use Cannabis and begin the process of granting licenses to shops within their city
limits.
REASON FOR STUDY
The selling of cannabis for “Adult-Use” or “recreational” purposes has been legal in the State of
California since January 1, 2018 and yet, until July 2020, Santa Ana was the only city in Orange
County that had approved licensing for this type of business. The Orange County Grand Jury
(OCGJ) was interested in investigating how the decision to move forward with this licensing
impacted Santa Ana and if there were any significant issues.
The Grand Jury felt it was important to investigate this matter in order to make the public aware
of the potential gains or pitfalls other cities in the county might encounter should they move
forward with Retail Adult-Use Cannabis licensing.
This report focuses only on the licensing and selling of Retail Adult-Use Cannabis in the City of
Santa Ana and does not address medicinal sales, cultivation, distribution, or any issues related to
the use of cannabis products.
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METHOD OF STUDY
The OCGJ conducted extensive internet research on the legal status of Retail Adult-Use
Cannabis, both nationwide and in California, by reviewing and analyzing relevant legislation as
well as the numerous California propositions that culminated in the passage of Proposition 64. In
addition, the OCGJ reviewed City of Santa Ana documents including staff reports, commission
reports, Requests for City Council Actions, and ordinances that authorized and established
conditions for the sale of cannabis products for Adult-Use.
The OCGJ also interviewed current and former Santa Ana City Council members and City
employees who work in agencies directly involved with or impacted by the licensing and sale of
Retail Adult-Use Cannabis products in Santa Ana. In addition, OCGJ interviewed professional
experts not employed by the City, including licensed Retail Adult-Use Cannabis dispensary
proprietors and employees. The OCGJ visited several licensed Retail Adult-Use Cannabis
dispensaries in Santa Ana to observe the facilities, amenities, staff, clientele, and operations.
INVESTIGATION AND ANALYSIS
Santa Ana City Council Says “Yes”
In response to the November 2016 passage of Proposition 64 in California, the Santa Ana City
Council began to consider licensing and regulating the retail sale of cannabis for adults. After
multiple meetings and discussions and after thorough staff analysis, on October 17, 2017, the
City Council introduced ordinance number NS-2929 for a first reading. The ordinance was
identified as “An Ordinance of the City Council of the City of Santa Ana creating Chapter 40 of
the Santa Ana Municipal Code, ‘Regulation of Commercial Cannabis’, to Regulate Commercial
Cannabis Activities, excepting Medicinal Retail.”
On November 9, 2017, the ordinance was introduced for a second reading and approved with
amendments by a vote of 5-0 (two City Council members were absent). Santa Ana has remained
the only city in Orange County issuing business licenses and regulating the retail sale of Adult-
Use Cannabis for the years 2018, 2019, and 2020.
Dispensary Application and Licensing Process
Santa Ana Ordinance number NS-2929 allows up to 30 Retail Adult-Use Cannabis stores within
the City. As of April 15, 2021, there were 23 dispensaries open and operating in the City of
Santa Ana (see Appendix 1). The ordinance sets forth operational standards, permit procedures,
and an operating agreement to address collection of operating fees.
To ensure fairness and impartiality in the selection process, the City devised a system of “Retail
Adult-Use Cannabis merit-based criteria and possible points” (see Appendix 2) to evaluate
applicants who sought to operate a dispensary offering Adult-Use Cannabis products. This led to
the Commercial Cannabis Application (Phase I and Phase II) and Permit Process (see Appendix
3), a comprehensive evaluation process that each Retail Adult-Use Cannabis dispensary
applicant had to follow and pass before being allowed to open for business.
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After completion of the application process, each applicant was required to obtain a Regulatory
Safety Permit (RSP) which is a permit issued by the City of Santa Ana pursuant to Chapter 40 of
its municipal code. The RSPs issued for Phase I and Phase II had fees associated with each phase
of the process. The fees charged were based on city processing costs as follows: Phase I, initially
$1,690, was subsequently raised to $1,752; Phase II, initially $12,086, was later raised to
$12,530.
The City’s Planning and Building Agency drafted a two-page Phase I and Phase II applicants’
information form advising interested parties of the steps in the application process (see Appendix
4).
Cannabis Community Benefits Program
All parties seeking a license to operate a cannabis dispensary in Santa Ana must submit a written
operating agreement titled “Operating Agreement for Adult use (Non-Medicinal) Cannabis
Retail Business.” One section of the agreement is entitled “Public Benefit.” In this section, the
applicant for the proposed dispensary is encouraged to submit a “Community Benefit and
Sustainable Business Practices Plan” (PLAN). The plan serves as a goodwill program sponsored
by the dispensary for the benefit of the Santa Ana community.
A review of the PLANs submitted by the applicants revealed a wide variety of current
community service projects such as sponsoring a local debate team, supporting a community
garden, organizing and/or funding toy/clothing/food drives, diversion or prevention educational
programs, and neighborhood clean-up efforts.
While these programs are a step towards goodwill in the community, there is no oversight or
confirmation by the City that the dispensary operator is participating in the plan. It is up to each
dispensary owner to decide how and to whom they will provide a “benefit.” There are no specific
requirements in terms of money or volunteer hours that a dispensary must donate, and there is no
obligation to provide proof of participation in the plan to the City.
The OCGJ has concluded that there should be some process in place to set standards for and
document participation in the Community Benefits Program. In addition, the benefits provided
by the Retail Adult-Use Cannabis dispensaries should be reported to the City Council and made
available to the general public.
Community Safety
The OCGJ learned through interviews with City officials and staff that there had been more than
120 unlicensed dispensaries operating illegally in Santa Ana before ordinance NS-2929 went into
effect. That number has since been reduced to “less than a handful,” due to enforcement efforts
by the City, especially the Planning and Building Agency, including Code Enforcement, and the
Santa Ana Police Department.
One third of the taxes and fees that the City receives from Retail Adult-Use Cannabis
dispensaries is dedicated to Police and Code Enforcement. This money provides funding for a
vice unit, including a sergeant and four officers. Other City agencies, such as Planning and
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Building and the City Attorney’s Office, also receive funding because of their role in ensuring
Retail Adult-Use Cannabis compliance with regulations.
The reality is that shutting down the unlicensed, illegally operating dispensaries will increase
business for the licensed facilities, thereby increasing the City’s tax revenues. Closing unlicensed
facilities is a win-win for both the licensed dispensaries and the City of Santa Ana.
It should be noted that the licensed Retail Adult-Use Cannabis dispensaries must meet the quality
standards for their merchandise that comply with requirements set forth by the State of
California’s Bureau of Cannabis Control (BCC). Consumers have no such protections when
products are purchased from unlicensed shops.
Ordinance number NS-2929, Section 1, subparagraph K, states: “The City of Santa Ana has a
compelling interest in ensuring that cannabis is not sold in an illicit manner, in protecting the
public health, safety, and welfare of its residents and businesses, in preserving the peace and
quiet of the neighborhoods in which these businesses may operate, and in providing access of
cannabis to residents.”
The OCGJ further learned through interviews with both Police Department and Code
Enforcement staff that there has been no apparent increase in criminal activity in the areas
surrounding the Retail Adult-Use Cannabis dispensaries. It should be noted that all licensed
dispensaries are required to have security guards in place during hours of operations, and 24/7
video surveillance protecting their facilities, employees, and customers. Additionally, all
dispensaries are required to secure all inventory in a locked safe, unless open for business.
Site Visits
During its investigation, the OCGJ interviewed cannabis dispensary owners and visited Retail
Adult-Use dispensary sites. The OCGJ would like to note that it received full cooperation from
the dispensary owners and staff while touring their locations.
The dispensary sites the OCGJ visited appeared to be well managed, with clean public areas that
were adequately illuminated and well-appointed. The shelves were fully stocked with products.
All products were marked with California approval code stamps, indicating that the products
conformed to quality control standards approved by the BCC.
Sites visited had the required security guards; the OCGJ noted that there were two security
guards at each site visited. Each store had 24-hour video surveillance cameras covering the
interior and exterior. One of the store owners mentioned that their external video surveillance is
so extensive and of such high quality that they were able to assist law enforcement with
investigations into criminal activities at nearby properties. Inside, stores were well furnished, had
appropriate security doors, and all products were locked up at night in secured structures, vaults,
or safes.
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Financial Impact
In November 2018, residents of the City of Santa Ana approved Measure Y by a vote of 71%
Yes to 29% No. Measure Y is a tax on Retail Adult-Use Cannabis businesses operating in the
City that provides for a tax of 25 cents to 35 dollars based on the gross square footage of the
business and a sales tax of up to 10% for retail sales. The City estimates that Measure Y will
generate $11-14 million a year to fund city services.
On December 4, 2018, the Santa Ana City Council adopted Ordinance NS-2959 (see Appendix
5), establishing a “Cannabis Public Benefit Fund”. The fund derives almost all of its money from
Measure Y and requires that the city allocate all money received from the sale of Retail Adult-
Use Cannabis as follows: one third to the General Fund, one third to Enforcement Services, and
the final third to Youth Services.
Some of the City of Santa Ana Council members and staff interviewed by OCGJ informed the
OCGJ that there is no true, viable oversight regarding disbursement and use of cannabis money
received. The OCGJ learned that there is no clearly identifiable accounting for residents to see
how this money is spent. Furthermore, the COVID pandemic has caused a shifting of money
from previously planned programs to others.
Money received by the Retail Adult-Use Cannabis businesses for the last two years from the
Measure Y tax has been in excess of $20 million. The General Fund money can be allocated to
projects or programs in any City department, and expenditures from this fund cannot be
specifically attributed to the Cannabis Public Benefit Fund. It has also been difficult to secure
specific information about how the money for Enforcement Services has been used. Interviews
with City staff indicated that various departments rely on Measure Y funds for their enforcement
efforts. For example, the Police Department has funded the Vice Unit with Measure Y proceeds
and the Planning and Building Agency, especially the Code Enforcement Division, also relies on
Cannabis Public Benefit Fund money to staff some positions. However, the OCGJ has not
received a clear breakdown of how the Enforcement Services money has been used by the
various city agencies.
Expenditures related to Youth Services are much more transparent. The following programs and
projects are anticipated to be funded from the Cannabis Public Benefit Fund and undertaken in
the following year for the benefit of Santa Ana youth:
• Library Services
Book/Techmobile
Digital Collection for Teens
Laptop Dispenser Kiosks
Wireless Hotspots
• Library Improvements at the Newhope Branch Library
• Library Playground at the Main Branch
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• Parks and Recreation
Anti-Drug Education Program
Fitness Courts
Goat Encounter at Santa Ana Zoo
Santa Anita Park Soccer Field Renovation
Splash pads for six City parks
Third Party youth programs
Traveling Zoo Exhibit
Year-Round Aquatics
Youth and Teen Excursion
Youth Programs and Services
Zoo and You Program
• Community Development Agency youth paid internships
• Contribution to the Deferred Action for Childhood Arrival Defense Fund
The OCGJ, through its investigation of the use of Cannabis Public Benefit funds, concluded that
the youth of Santa Ana have benefited greatly and will continue to benefit as a result of the
decision to license Retail Adult-Use Cannabis dispensaries in the City.
Communication
During the investigation of the Retail Adult-Use sale of cannabis in Santa Ana, the OCGJ noted
that there are several independent City departments involved in the licensing and regulation
process. While the expertise of each department may be required to ensure compliance with all
City ordinances and to process all necessary documents and fees, multiple points of contact can
make it difficult to obtain information when needed.
COMMENDATIONS
The City of Santa Ana received more than $20 million in revenue during the first three years of
licensed Retail Adult-Use Cannabis sales. Santa Ana was the first city in Orange County to begin
licensing for these dispensaries and has remained the only city for several years, giving it a
“monopoly” on Retail Adult-Use Cannabis business in Orange County.
The City of Santa Ana saw a significant drop in the number of illegal/unlicensed cannabis shops
as the number of licensed dispensaries increased. This reduction in illegal/unlicensed shops has
improved community safety for both consumers and residents.
FINDINGS
In accordance with California Penal Code Sections 933 and 933.05, the 2020-21 Grand Jury
requires responses from each agency affected by the findings presented in this section. The
responses are to be submitted to the Presiding Judge of the Superior Court.
Based on its investigation described here, the 2020-21 Orange County Grand Jury has arrived at
the following principal findings:
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F1. There is no clearly identifiable accounting of where all the Enforcement Services money
received from Retail Adult-Use Cannabis licensing in accordance with Santa Ana
Municipal Ordinance number NS-2959, section 13-203 was spent.
F2. The legalization of Retail Adult-Use Cannabis by the City of Santa Ana and the resulting
increase in city revenue have allowed the city to significantly expand its youth services
programs.
F3. There are multiple departments within the City of Santa Ana responsible for various aspects
of Retail Adult-Use Cannabis oversight. The decentralized nature of the oversight within
the City makes information difficult to obtain.
F4. The number of unlicensed cannabis dispensaries in Santa Ana has significantly declined
since the business licensing of Retail Adult-Use Cannabis dispensaries.
F5. The Orange County Grand Jury did not receive evidence of an increase in crime as a result
of the licensing of Retail Adult-Use Cannabis dispensaries.
F6. The Cannabis Community Benefits Program motivates local dispensaries to contribute
funds and/or staff volunteer hours for the benefit of the City of Santa Ana.
RECOMMENDATIONS
In accordance with California Penal Code Sections 933 and 933.05, the 2020-21 Grand Jury
requires responses from each agency affected by the recommendations presented in this section.
The responses are to be submitted to the Presiding Judge of the Superior Court.
Based on its investigation described herein, the 2020-21 Orange County Grand Jury makes the
following recommendations:
R1. The Orange County Grand Jury recommends that the Santa Ana City Council require an
annual report specifically detailing all Retail Adult-Use Cannabis money spent each
fiscal year. This report should be presented to the Santa Ana City Council and made
public. This should be completed by December 31, 2021, for fiscal year 2020-21, and by
September 30 following each fiscal year thereafter. (F1)
R2. The Orange County Grand Jury recommends that the City of Santa Ana designate an
individual to oversee and provide centralized coordination of Retail Adult-Use Cannabis
activity commencing January 1, 2022. (F3)
R3. The Orange County Grand Jury recommends that the City of Santa Ana create a process
to report to the Santa Ana City Council and the residents of Santa Ana detailed
information about the participation of Retail Adult-Use Cannabis dispensaries in the
Community Benefits Program by December 31, 2021 and yearly thereafter. (F6)
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RESPONSES
The following excerpts from the California Penal Code provide the requirements for public
agencies to respond to the Findings and Recommendations of this Grand Jury report:
§933
(c) No later than 90 days after the grand jury submits a final report on the operations of any
public agency subject to its reviewing authority, the governing body of the public agency shall
comment to the presiding judge of the superior court on the findings and recommendations
pertaining to matters under the control of the governing body, and every elected county officer or
agency head for which the grand jury has responsibility pursuant to Section 914.1 shall comment
within 60 days to the presiding judge of the superior court, with an information copy sent to the
board of supervisors, on the findings and recommendations pertaining to matters under the
control of that county officer or agency head and any agency or agencies which that officer or
agency head supervises or controls. In any city and county, the mayor shall also comment on the
findings and recommendations. All these comments and reports shall forthwith be submitted to
the presiding judge of the superior court who impaneled the grand jury. A copy of all responses
to grand jury reports shall be placed on file with the clerk of the public agency and the office of
the county clerk, or the mayor when applicable, and shall remain on file in those offices. One
copy shall be placed on file with the applicable grand jury final report by, and in the control of
the currently impaneled grand jury, where it shall be maintained for a minimum of five years.
§933.05.
(a) For purposes of subdivision (b) of Section 933, as to each grand jury finding, the responding
person or entity shall indicate one of the following:
(1) The respondent agrees with the finding.
(2) The respondent disagrees wholly or partially with the finding in which case, the response
shall specify the portion of the finding that is disputed and shall include an explanation of the
reasons therefor.
(b) For purposes of subdivision (b) of Section 933, as to each grand jury recommendation, the
responding person or entity shall report one of the following actions:
(1) The recommendation has been implemented, with a summary regarding the implemented
action.
(2) The recommendation has not yet been implemented, but will be implemented in the future,
with a timeframe for implementation.
(3) The recommendation requires further analysis, with an explanation and the scope and
parameters of an analysis or study, and a timeframe for the matter to be prepared for discussion
by the officer or head of the agency or department being investigated or reviewed, including the
governing body of the public agency when applicable. This timeframe shall not exceed six
months from the date of publication of the grand jury report.
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(4) The recommendation will not be implemented because it is not warranted or is not
reasonable, with an explanation therefor.
(c) However, if a finding or recommendation of the grand jury addresses budgetary or personnel
matters of a county agency or department headed by an elected officer, both the agency or
department head and the board of supervisors shall respond if requested by the grand jury, but
the response of the board of supervisors shall address only those budgetary or personnel matters
over which it has some decision-making authority. The response of the elected agency or
department head shall address all aspects of the findings or recommendations affecting his or her
agency or department.
(d) A grand jury may request a subject person or entity to come before the grand jury for the
purpose of reading and discussing the findings of the grand jury report that relates to that person
or entity in order to verify the accuracy of the findings prior to their release.
(e) During an investigation, the grand jury shall meet with the subject of that investigation
regarding the investigation, unless the court, either on its own determination or upon request of
the foreperson of the grand jury, determines that such a meeting would be detrimental.
(f) A grand jury shall provide to the affected agency a copy of the portion of the grand jury
report relating to that person or entity two working days prior to its public release and after the
approval of the presiding judge. No officer, agency, department, or governing body of a public
agency shall disclose any contents of the report prior to the public release of the final report.
RESPONSES REQUIRED
Comments to the Presiding Judge of the Superior Court in compliance with Penal Code Section
933.05 are required from:
Responses are required from the following governing body within 90 days of the date of
the publication of this report:
90 Day Required Responses F1 F2 F3 F4 F5 F6
Santa Ana City Council x x x x x x
90 Day Required Responses R1 R2 R3
Santa Ana City Council x x x
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APPENDIX
APPENDIX 1 – Approved and Operating Adult-Use Cannabis Dispensaries
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APPENDIX 2 – Commercial Cannabis Application Process
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APPENDIX 3 – Phase 1 and Phase 2 Application and Permit Process
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APPENDIX 4 – Commercial Cannabis Application Information
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APPENDIX 5 – Santa Ana Ordinance No. NS-2959
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GLOSSARY
Adult-Use Terminology used for “recreational” use to distinguish from “medicinal”
use.
BCC California Bureau of Cannabis Control
Cannabis Cannabis refers to a group of three plants with psychoactive properties,
known as cannabis sativa, cannabis indica, and cannabis ruderalis.
When the flowers of these plants are harvested and dried, it becomes one
of the most common drugs in the world. It is also referred to as weed, pot,
or marijuana.
Cannabis Public
Benefit Fund The fund created by ordinance NS-2959 for revenue received in
accordance with Measure Y.
Community
Benefits Program A voluntary, good-will program for dispensary owners and employees to
provide donations or volunteer hours to the City of Santa Ana.
DOJ United States Department of Justice
Dispensary A retail store or business that sells Cannabis products.
Medicinal Use specifically for medical purposes such as treating PTSD or for
relieving nausea caused by chemotherapy.
OCGJ Orange County Grand Jury
PLAN Community Benefit and Sustainable Business Practices Plan
Regulatory Safety
Permit (RSP) A permit used by the City of Santa Ana pursuant to Chapter 40 of its
Municipal Code.
Unlicensed Also known as “illegal” or “black market.” Dispensaries not licensed or
legally authorized to sell Cannabis products to the public.
“Pot Luck”: Santa Ana’s Monopoly on Licensed Retail Adult-Use Cannabis in Orange County
2020-2021 Orange County Grand Jury Page 21
BIBLIOGRAPHY
California Marijuana Legalization, Proposition 19 (1972). (1972, Nov 7). Retrieved 2021, from
BALLOTPEDIA:
https://ballotpedia.org/California_Marijuana_Legalization,_Proposition_19_(1972)
California Proposition 215, the Medical Marijuana Initiative (1996). (1996, Nov 5). Retrieved
2021, from BALLOTPEDIA:
https://ballotpedia.org/California_Proposition_215,_the_Medical_Marijuana_Initiative_(
1996)
ORDINANCE NO. NS -2929. (2017, Oct 17). Retrieved 2021, from SantaAna Granicus:
http://santaana.granicus.com/MetaViewer.php?view_id=2&clip_id=1414&meta_id=5450
9
Ordinance NS- 2959, Establishing a Cannabis Public Benefit Fund. (2018, Dec). Retrieved
2021, from SantaAna Granicus:
https://santaana.granicus.com/MetaViewer.php?view_id=2&event_id=8261&meta_id=12
2354
Proposition 64: The Adult Use of Marijuana Act. (2016, Nov). Retrieved 2012, from California
Courts The Judicial Branch of California: https://www.courts.ca.gov/prop64.htm
Santa Ana, California, Measure Y, Recreational Marijuana Business Tax (November 2018).
(2018, Nov 6). Retrieved 2021, from BALLOTPEDIA:
https://ballotpedia.org/Santa_Ana,_California,_Measure_Y,_Recreational_Marijuana_Bu
siness_Tax_(November_2018)
Text of Proposition 19, the "Regulate, Control and Tax Cannabis Act of 2010" (California).
(2010). Retrieved 2021, from BALLOTPEDIA:
https://ballotpedia.org/Text_of_Proposition_19,_the_%22Regulate,_Control_and_Tax_C
annabis_Act_of_2010%22_(California)
Exhibit 2
Grand Jury Findings and City Responses
Finding Response to Finding
F1 There is no clearly identifiable accounting of where all the
Enforcement Services money received from Retail Adult-Use
Cannabis licensing in accordance with Santa Ana Municipal
Ordinance number NS-2959, section 13-203 was spent.
The City disagrees with this finding. The Budget Documents on the City’s website include the planned spending as well as
historical spending. FY19-20 pages 2-1 through 2-12, FY20-21 pages 2-4 through 2-18, and FY21-22 pages 5-14, 7-21, 10-41, and
12-22. In addition, actual and budget spending data can be found in the City’s OpenBook portal. The specific link for the Cannabis
Public Benefit fund is https://santaana.openbook.questica.com/#/visualization/78ea955f-018b-4bb4-b163-
dd46b21f004c?ID110_ID2534_ID591_FundDisplayName=012%20-%20CANNABIS%20PUBLIC%20BENEFIT&h=Fund&hl=2
F2 The legalization of Retail Adult-Use Cannabis by the City of Santa
Ana and the resulting increase in city revenue have allowed the
city to significantly expand its youth services programs.
The City agrees with the Grand Jury’s finding.
F3 There are multiple departments within the City of Santa Ana
responsible for various aspects of Retail Adult-Use Cannabis
oversight. The decentralized nature of the oversight within the
City makes information difficult to obtain.
The City disagrees with this finding. The City Council has funded key staff positions in the Planning and Building Agency, Police
Department, Finance and Management Services, and the City Attorney’s Office for commercial cannabis program administration;
the oversight of this industry is performed by key personnel that provides expertise in their area of public administration. As
such, the City of Santa Ana has developed its approach to address cannabis commerce no different than any other approved
industry or business operating within the City.
This multi-agency organizational approach allows for checks and balances, ensures accuracy in the information provided, and
further enhances efficiency protocols to provide essential customer service. More importantly, it limits bureaucratic delays and
provides direct departmental-related expertise in the assistance of any query while also providing the capability for quick
remedial action in the resolution of any concern. As an example, Planning and Building personnel understandably address zoning
and tenant improvement inquiries, while business license related concerns are promptly addressed by the Finance and
Management Services Agency.
This approach in developing and governing of the cannabis regulatory program has placed Santa Ana at the forefront of the
cannabis growth industry in Orange County and in the State, allowing the City to efficiently administer the program.
F4 The number of unlicensed cannabis dispensaries in Santa Ana
has significantly declined since the business licensing of Retail
Adult-Use Cannabis dispensaries.
The City agrees with the Grand Jury’s finding.
F5 The Orange County Grand Jury did not receive evidence of an
increase in crime as a result of the licensing of Retail Adult-Use
Cannabis dispensaries.
The City agrees with the Grand Jury’s finding.
F6 The Cannabis Community Benefits Program motivates local
dispensaries to contribute funds and/or staff volunteer hours
for the benefit of the City of Santa Ana.
The City agrees with the Grand Jury’s finding.
Exhibit 2
Grand Jury Recommendations and City Responses
Recommendation City response
R1 The Orange County Grand Jury recommends that the Santa Ana
City Council require an annual report specifically detailing all Retail
Adult-Use Cannabis money spent each fiscal year. This report
should be presented to the Santa Ana City Council and made
public. This should be completed by December 31, 2021, for fiscal
year 2020-21, and by September 30 following each fiscal year
thereafter. (F1)
The City can prepare a detailed spending report as recommended by the Grand Jury. Detailed spending information for
FY19-20 and FY20-21 was presented to City Council with the August 17, 2021 agenda. A detailed spending report can be
presented to City Council by December 31 each year. However, the City cannot commit to a detailed spending report by
September 30 for future years, as the general ledger is not fully reconciled and audited by each September 30.
R2 The Orange County Grand Jury recommends that the City of Santa
Ana designate an individual to oversee and provide centralized
coordination of Retail Adult-Use Cannabis activity commencing
January 1, 2022. (F3)
This recommendation has already been implemented by the City since 2020. The City created the Cannabis Office &
Operations Logistics unit with trained staff within the Planning and Building Agency to serve as the central repository for
cannabis information and inquiries. This Office functions as a “one-stop shop” to administer the commercial cannabis
regulatory program.
With a concierge-approach mindset, the Office tailors its approach to match the unique circumstances of this new
industry and specifically addresses and coordinates applications for commercial cannabis permits in the City of Santa Ana.
As the central resource for the City, this Office works directly with State of California cannabis regulatory agency,
pertinent City and external agencies, and cannabis business stakeholders in the implementation of the city’s cannabis
program to ensure adherence to the city’s municipal code and prompt openings of new businesses.
As part of its task, the Office also works with City Attorney’s Office and the Police Department on background checks and
coordinates enforcement and compliance with applicable regulations.
R3 The Orange County Grand Jury recommends that the City of Santa
Ana create a process to report to the Santa Ana City Council and
the residents of Santa Ana detailed information about the
participation of Retail Adult-Use Cannabis dispensaries in the
Community Benefits Program by December 31, 2021 and yearly
thereafter. (F6)
Upon adopting an ordinance to allow and regulate adult-use retail cannabis businesses in Santa Ana, the City required all
adult-use cannabis retailers to enter into an Operating Agreement to accomplish several goals: 1. Require full compliance
with all ordinance requirements to operate a cannabis business in Santa Ana; 2. Commit to payment of operating fees
based on business activities; and 3. Engage businesses with the Santa Ana community through local hiring, local sourcing,
volunteer events, charitable contributions, and sustainable business practices for the environment and for employees.
Upon the adoption of subsequent ordinances and voter-approved taxes in Measure Y, many of the goals of the Operating
Agreement were replaced by ordinance but the community benefits component remained.
All cannabis businesses continue to commit to various forms of community benefits, and results have been successful,
with cannabis businesses providing various forms of charitable contributions, volunteer hours, toy drives, participation in
Covid-19 relief programs like CARES Act measures, and food drives. The City recognizes the opportunity to continue
building upon the program drawing from City’s experience with the Operating Agreement process, as community benefit
commitments may take many different forms and functions. Staff are currently drafting measures to replace the
Operating Agreement in its entirety and to develop measurable community benefit and commitment requirements.
These changes are will be presented for City Council consideration in early 2022.