MCA Questions & Considerations

Prepared for the 12/16/2020 Cannabis Town Hall 

MCA strongly believes that the county has an obligation to continue to pursue ALL potential pathways to Annual Licenses for Phase 1 operators. We disagree with the idea that the current system is a lost cause, and we reject the simplistic view that there is only one solution. The county has a responsibility to the whole Phase 1 cohort. These folks gambled on the county’s program when many of their neighbors didn’t, and in order to solve the CEQA issue and prevent these businesses from going under, the county needs to acknowledge that different solutions will be better for different projects due to their unique circumstances.

  1. Explore All Possible Options

In a recent discussion directly with CDFA, we learned that unless the County continues to demonstrate progress on CEQA requirements, applicants may be subject to non-renewal of current state licenses. As a result, it is imperative that we fire on all cylinders:

  • SSHRs for Everyone. Continue to process SSHRs, including for those files that need to be referred to CDFW beyond those that are up for renewal in case those files are still appropriate for Appendix G and in case the SSHR also can serve as a preliminary basis of an alternate CEQA process that file might be more appropriately using AND because it is a prerequisite for our local ordinance.
  • Efficient Processing into Appropriate Pathways.  Ensure an efficient process for review of all files, not just for completeness, but for the appropriate Pathway to achieve an annual license at the State level.
  • Stay the Course with Appendix G. Verify that Appendix G might still be appropriate for certain types of projects.
  • Solidify Alternate Avenues. Nail down the following:
    • project specific exemptions to CEQA, including opportunities to define projects to include more than one site, which is allowed if appropriate and if it sufficient describes all activities
    • How re-designation of cannabis as an Ag Activity may help with the utilization of some CEQA exemptions, in addition to assisting with other issues that create further barriers
    • whether the County’s prior programmatic NOE is valid to fulfill CEQA for purposes of the state annual license, much the way CDFW uses the Ministerial exemption for its LSAs under the General Order.,
    • the pros and cons regarding applicants preparing and submitting CEQA analysis for their site directly to CDFA

Our goal is to establish an appropriate prioritized pathway to Annual Licensure for every existing Provisionally Licensed operator  based on their specific site and project scope. 

 

  1. Continue Preliminary Work That Is Needed
    • The county has an obligation to continue to pursue ALL potential pathways to Annual Licenses for cultivators who signed up for Phase 1 permitting with the belief that it was a legitimate opportunity.
    • In order to demonstrate to the state that there is forward movement on CEQA, we propose that the County stay the course on the following four preliminary steps
      1. Evaluate and Report on Each Pathway. Perform a complete evaluation of each potential CEQA option and the pros and cons of the use of each Pathway and report to the Board;
      2. Assess and Categorize the Applicants. Review the newly updated files and assess which Applicants might be best suited for each pathway and what might specifically need to happen for each category of applications to proceed with the appropriate Pathway for them;
      3. Keep Getting Organized. Continuing the preliminary organizational work, whether through requiring complete resubmission of all current docs, or digitizing files, or whatever is needed to be able to determine items 1 & 2 and to effectively and efficiently reduce the time before people can know where they stand and to reduce the overall staff time to review files;
      4. Prioritize Permittees without SSHRs. Prioritizing Applicants who have been issued local Annual Permits without the County having done the SSHR required by the ordinance.

Q: Have sufficient staff and other resources been allocated to these or other steps that will demonstrate the active progress that the state needs to see?

  • If provisionals aren’t renewed, the County could lose 6M in taxes.
  • New tax revenue from Phase 3 operators won’t come any time soon if those operators can’t cultivate until after their entire use permit process has completed.

 

  1. Concerns Regarding Direct Submission of CEQA to CDFA
  • Again, we feel strongly that the county must pursue all potential solutions, but we have A LOT of questions about the so-called “Nuclear Option” that Supervisor Williams has mentioned on Facebook and various radio programs.
  • We understand the concept: that applicants can “do their own CEQA” and submit directly to CDFA. But we’ve heard very few details about how this would actually work for Phase 1 folks like me, and Supervisor Williams usually follows this with the caveat that CDFA considers this the ‘nuclear option’ because they don’t have the staff and resources allocated to process even a tiny fraction of the 800+ provisionally licensed cultivation businesses in operation in Mendocino County.
  • Naturally, this leads us to question if this is actually a reasonable pathway for Applicants at this time.
    • Our specific questions are:
      1. Q: What are the implications to applicants considering this route in terms of timeline and cost?
      2. Q: Would this require initial studies and potentially full Environmental Impact Reports by each applicant?
      3. Q: Can you explain the exact process for an applicant to do CEQA themselves?
        • Will a current Provisional still be valid in this scenario?
        • Will we have to file a new license application and will CDFA issue us new provisionals or will we have to wait possibly years to be authorized to cultivate?
        • Will current Provisional Licensees have to cease their current operations while their new application is in process?
      4. Q: Have other places successfully used this pathway?  
      5. Q: And for how many annual licenses was CDFA able to conduct and process full CEQA reviews in a year?  

Until we understand this pathway fully, it seems really premature for the county to be suggesting that people should start spending money ‘doing their own CEQA’ when it’s likely to be just as much of a bottle neck or dead end as the county program.

 

  1. 30 Day Notices and Application Paperwork Organization
  • In order to assess the Phase 1 Cohort and identify which pathway works best for each case, the County obviously needs the applications to be updated, complete, and organized.
  • More and more of the 30-Day notices have been going out requesting updated site plans, missing documents, and some documents never previously requested. 
  • The hope, of course, is that this process will lead to the County having all the documents necessary to make a determination for each Applicant about which pathways might be appropriate options for their project.  
  • Electronic submission of these files should cut down on Staff review time. Now that the submissions are electronic, and contain up-to-date information, what is the new projection of file review time (it was 5 hours per file because the County’s filing system was ineffective)?

Q: Are the 30-day notices working to get applications updated and organized and if so can you begin categorizing and informing applicants where they stand?

Q: Can the County begin to use this information to point to what Pathway could be right for each Applicant:

  • Continued processing through Phase 1 using Appendix G,
  • Using Categorical Exemptions to issue Notices of Exemption,
  • Discretionary use permit, 
  • Direct submission to CDFA

Operators NEED clarity sooner than later. Many are paused completely waiting for answers before they spend any more money continuing down the road to full compliance.  They need to know where they stand.

 

  1. Phase 3
  • When the CEQA issues started coming to light, the first alternative pathway that was proposed was to develop a Discretionary Use Permit process that Phase 1 operators could be processed through, and incorporate that into “Phase 3” which was originally designed to be for New Cultivation Sites.
  • We’re skeptical that Use Permits will provide a viable pathway for many of the Phase 1 cohort without them having to shut down their operation for one or more seasons, but again, we believe that efforts to make this pathway an option should be pursued, as certainly some existing and all new cultivation will need it.
  • Q: What is the status of Phase 3 Discretionary Use Permit Ordinance and what is the projected start date? 
      • Currently scheduled to begin in April of 2021, but it has not yet even gone to the Planning Commission and then has to go back to the BOS.  And then when you factor in the use permit timeframe and the bottleneck that will happen if Phase 1 operators must essentially start over in phase 3, cultivation businesses currently in operation are very unlikely to be unable to cultivate for at least 1-2 growing seasons.
    • There’s currently a massive effort underway by both the county and the Phase 1 applicants to process these 30-day notices and get more applications complete, updated, accurate, and organized. 
      • Q: If Phase 1 truly turns out to be a dead end for some of these folks, can the results of this process be utilized to fast-track their discretionary use permit process?
    • Specifically, we’d like to request that the county revisit the idea of an expedited Administrative Permit.  
      • Q: Can the county offer an expedited Administrative Permit for, at a minimum, Phase 1 operators who hit a dead end, using their Phase 1 application materials as the basis for their Administrative Permit Application?
      • Q: And can this be done in a way that allows them to continue cultivating, without having a gap in their county authorization or their state provisional licensure, until their county permit is finaled and their state annual license is granted?
    • For the businesses who can’t get through Phase 1 and now have to try again for Phase 3, we don’t know what the real impact of those shuttered businesses will be on our local economy.  
    • We propose that all existing applicants be given priority for any Phase 3 program.
  • Note: Humboldt has adopted this model, and with a staff of 14 planners they are getting through about 70 permits a year.  In the past, we were told that Humboldt County has had 14 Planners that processed about 70 discretionary review permits per year. Out of a little over 1500 licenses issued in Humboldt, a little more than 400 are Annual State licenses. Note: that has been in the years since State licenses have been issued and also remember, that a decent number of those licenses might be held on the same property/project, so while it looks like maybe 125-150 /year of state licenses, the reality is that there might be 2-5 licenses per project that the County approved, so comparing state licenses overall in  jurisdiction to those that have gotten through the annual process does not tell the whole story. Of how many discretionary review permits were issued in that County. As a comparison, Mendocino County has about 820 state licenses and only about 9 are Annual state licenses. 

 

  • Q: How is it going to be determined what will be prioritized in Phase 3?
  • Q: What is the plan to process applicants?
  • Q: What kind of staff and time would it take? 
  • Q: What is the County’s plan if there’s a gap for many businesses?

 

  1. Financial Considerations
    • This conversation always comes back to: “How can the county afford to pay for this? It was roughly estimated the cost might be 5-8 million to conduct the SSHR and the Appendix G review and Project Description preparation if prepared by the County.
    • Cannabis brought in 6M in tax revenue to the county and could bring in a lot more if our permitting program wasn’t stuck in the mud.  If this were reinvested for one year to solve the problem, the cannabis operators would have a chance to thrive and generate far more in Tax Revenue in subsequent years.  
    • We’re not suggesting that cannabis taxes be used to pay for ALL CEQA reviews for EVERYONE.
    • There should be a clear distinction made between PROCESSING of the files and conducting the foundational work, such as the SSHR, sorting files for the most efficient pathway, and verification with adherence to program parameters (which the county has to do) vs. the underlying CEQA work (which the applicant may be responsible for paying for). 
    • We believe that the actual CEQA processing could be handled on a cost recovery basis AFTER the County has properly conducted the foundational work necessary for a specific CEQA path to be undertaken (Appendix G, NOE, DIscretionary Permit, direct applicant submission) .
    • We suggest that you separate out the discussion of ‘who pays for CEQA work’ and first figure out ‘How can it be done?’ (staffing, timelines, process, SSHR contract, etc.)
      • Q: Don’t you agree that it is appropriate for the County to do SSHR and whatever other preliminary work is needed to be done to figure out all the viable options and identify which pathway each of our Phase 1 operators’ projects is best suited for? 
      • Q: Won’t the current electronic submissions of up-to-date and more complete information dramatically reduce the amount of time to conduct those foundational efforts?

CLICK HERE to see the video of the Town Hall from 12/16/2020