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HomeMy WebLinkAboutPEOPLE'S FIRST CHOICE, A LIMITED LIABILITY COMPANY - 2017A-2017-369-13 IiJ;?,Uf�AE'�Lp N(T'l� RE:i?UlHPf? it c W01 -1K i;u1Y PHOCEED ' WURK OF COUNCIL % DEC 21 2017 DEC, 2 H 2O17OPERATING AGREEMENT FOR ADULT USE (NON -MEDICINAL) B CANNABIS RETAIL BUSINESS city Of Sa la e ev"tw o N 0 This Operating Agreement ("AGREEMENT") is dated DtCy.M0r(Z. ca() 2011 between the City of Santa Ana, a charter city and municipal corporation ("CITY") and o tVii' { bs (Aiacf,, a t sr "(Av corAtA y("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 an adult -use cannabis retail business transacted and carried -on by OPERATOR at the following subject property location, (9}a>, _. �v FlNl_)`c, , Santa Ana, Californial P05_,__. 1. Public Benefit. A. Intent. The purpose of this Operating AGREEMENT is to collect fees for the operation of an adult -use cannabis retail business and to provide fees for 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 section 40-2(22). The Parties agree that this AGREEMENT confers substantial private benefits on OPERATOR which should be balanced by commensurate public benefits. As part of the adult -use cannabis retail business 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 as a result of the operating agreement fees collected. 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 adult -use cannabis retail business. 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 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. 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. 1 distribution, testing, or provision of adult -use (non -medicinal) cannabis or any transaction related thereto; • Anything else of value obtained by an adult -use cannabis retail business; • The total amount of the sale price of all sales; • The total amount charged or received for the performance of any act, service or employment of whatever nature it may be, whether or not such service, act or employment is done as a part of or in connection with the sale of goods, wares, merchandise, for which a charge is made or credit allowed, including all refunds, cash credits and properties of any amount or nature; • Any amount for which credit is allowed by the seller to the purchaser without any deduction therefrom, on account of the cost of the property sold, the cost of materials used, the labor or service cost, interest paid or payable, losses, or any other expense whatsoever; provided that cash discounts allowed or payment on sales shall not be included; • The amount of any federal, manufacturer's or importer's excise tax included in the price of property sold, even though the manufacturer or importer is also the retailer thereof and whether or not the amount of such tax is stated as a separate charge. C. "Gross receipts" shall not include the following: The amount of any federal tax imposed on or with respect to retail sales whether imposed upon the retailer or the consumer and regardless of whether or not the amount of federal tax is stated to customers as a separate charge. The amount of any California state excise tax or state cultivation tax regardless of whether or not the amount of such excise tax or cultivation tax is stated to customers as a separate charge, or any California state, city or city and county sales or use tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser, or such part of the sales price of any property previously sold and returned by the purchaser to the seller which is refunded by the seller by way of cash or credit allowances given or taken as part payment on any property so accepted for resale; or The amount of medicinal cannabis (medical marijuana) sales and related services generated or otherwise received in the event that OPERATOR is both a permitted medical marijuana collective/cooperative business as well as a permitted, co -located adult -use (non -medicinal) cannabis retail business operating at the same property location. • The amount of the sale price of all medical marijuana goods, wares, merchandise, and other related services sold or otherwise generated in connection with operation of a co -located medical marijuana collective/cooperative business. • The amount of the sale price of business personal property (all property owned or leased by OPERATOR used in the operation of the adult -use cannabis retail business, including but not limited to: furniture, fixtures, and business equipment); real property, including land, buildings and other improvements. 6. Past due date — Past due penalty; Late interest. A. Any OPERATOR entity or individual who fails to pay the operating agreement fees required by this AGREEMENT when due shall be subject to past due penalties and interest as set forth herein. i. OPERATOR shall be considered past due if the required monthly operating agreement fee is not paid by the last day of the month following the month for which it is due. ii. For failure to fully pay any monthly fee when due, the following past due penalty and late interest charges shall be added to the unpaid balance amount owing: 1) A past due penalty of Twenty -Five Percent (25%) per month; 2) A late interest charge of One and One Half Percent (1.5%) per month added to the unpaid balance amount owing, inclusive of any prior past due penalty or late interest charges accrued. B. CITY is not required to send a past due notice or other bill or invoice to OPERATOR, or any other person subject to the provisions of this AGREEMENT and failure to send such notice, bill or invoice shall not affect the validity of any operating fee, late penalty or late interest charge due under the provisions of this AGREEMENT. 7. Term. This AGREEMENT shall start on the date indicated above and shall terminate on December 31, 2020 regardless of starting date unless terminated earlier in accordance with Section 12 or 13 of this AGREEMENT. The AGREEMENT will have one (1) two-year extension period until December 31, 2022 exercisable by a writing executed by the City Manager and City Attorney's Office with the approval of OPERATOR. 8. Business License Required. A valid City of Santa Ana Business License is required for all persons engaged in transacting and carrying on any adult -use cannabis retail business activity in the City of Santa Ana. It is unlawful for any person or legal entity to commence, transact or carry -on adult -use cannabis retail business activity in the City of Santa Ana without first having procured a City of Santa Ana adult -use cannabis retail business license. 9. Operating Adult -use Cannabis Retail Business. OPERATOR shall not operate an adult -use cannabis retail 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 9 F. Failure by OPERATOR to cooperate with CITY or CITY's authorized agents in any inspection, examination and audit of OPERATOR's adult -use cannabis retail business books and records (including tax filings and returns). G. 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. H. This AGREEMENT will automatically terminate if: L 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. 13. Termination Without Cause. Upon mutual written agreement of the parties this AGREEMENT may be terminated with thirty (30) days notice. 14. 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 adult -use cannabis retail 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. 15. 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 binding arbitration of 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. Such matter shall be determined by binding arbitration in Orange County California before three (3) arbitrators. The binding 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. This clause shall not preclude parties from seeking provisional remedies to aid arbitration from a court of appropriate jurisdiction. To OPERATOR: 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. 19. 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. 20. 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. 21. Discrimination. OPERATOR shall not discriminate because of race, color, creed, religion, sex, marital status, sexual orientation, age, national origin, ancestry, or disability, as defined and prohibited by applicable law, in the recruitment, selection, training, utilization, promotion, termination or other employment related activities. OPERATOR affirms that it is an equal opportunity employer and shall comply with all applicable federal, state and local labor laws and regulations. 22. Jurisdiction -Venue. This AGREEMENT has been executed and delivered in the State of California and the validity, interpretation, performance, and enforcement of any of the clauses of this AGREEMENT shall be determined and governed by the laws of the State of California. Both parties further agree that Orange County, California, shall be the venue for any action or proceeding that may be brought or arise out of, in connection with or by reason of this AGREEMENT. E IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT the date and year first above written. APPROVED AS TO FORM: SONIA R. CARVALHO City Attorney By: ^ Lisa S clk Assis t City Attorney OIL RECOMMENDED FOR APPROVAL: Candida Neal, Interim ExecuiNbcWector Planning & Building Agency See Attached Dacumen 11 CITY OF SANTA ANA *T . RAUL GODINEZ I City Manager OPERATOR LEGAL NAME: 9Z?3yL `�5� �q5'r uAta.rs p.c SIGNAT�O.RY NAME TITLE: Q TAXPAYER ID: 13-'3Nomol CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CIVIL CODE 1189 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, orvalidity of that document. State of California County of orange on T)a'u+hY 15, z°ice Before me, h^ }`- S^ Notary Public personallyappearedlviU Name,( cfSigner).. Who proved to me on the basis of satisfactory evidence to be the p,er+s�o'n(69 whose namex is re-- Subscribed to the within instrument and acknowledged to me tha 'rshefdT2p executed the some in Is%f t4eir authorized capocity,(i�s, and that by04@4; ttir *signatureKfon the instrument the person(r)' or the entity upon behalf of which the persorik) acted, executed the instrument. _ I certify under PENALTY OF PERJURY under the ERIK SANCHEZ Laws of the State of California that the w � foregoing paragraph is true and correct. F- 1' "" � �" NOTARY PUBLIC�CALiPORNIA -i � " (J � �' 6RANGEf,OUN'fY 'a' My Torm Exp. Navemi?er 8, 2020 Signature Gey Signature of Notary P is Exhibit A — Community Benefit and Sustainable Business Practices Plan Peoples' First Choice, LLC is very committed to engaging in community benefit and sustainable business practices. To date, Peoples' First Choice, LLC has worked with various local non-profit groups. On our own initiative, we have led multiple fundraising efforts and have raised over $10,000 toward supporting various local groups. Some of these efforts include, but are not limited to: Susan G. Koman of Orange County; Fundraising drive for epilepsy awareness for Children's Hospital of Orange County; Canned food drive during the last two holiday seasons for Second Harvest Food Bank of Orange County. In addition, through our security personnel presence, we have helped minimize crime and loitering for neighboring businesses. While Peoples' is proud of its efforts to date, the Company has plans to significantly increase the scale and impact of its local community efforts in Santa Ana. As a founding member of the Santa Ana Cannabis Association (SAGA), we are committed to leveraging the power of the group to undergo larger, sustained community involvement initiatives. SACA is currently in talks to help fund youth diversion programs and other after school programs with the Santa Ana Unified School District. Peoples' First Choice, LLC will engage its staff in community service events and/or programs in the City of Santa Ana by requiring each employee participate in a minimum of 10 community service hours per year. The abovementioned community benefit and sustainable business practices plan outlined will be met by having human resources protocols in place to track employee involvement and properly document Peoples' First Choice, LLC's level of involvement in local community efforts. These protocols will be logged and properly stored to be shareable to respective city departments if need be.