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Report regarding an application to renew a Conditional Use Permit to operate a cannabis delivery-only operation at 500 S. Airport Boulevard, Suite H, in the Business Technology Park-High (BTP-H) Zoning District in accordance with Title 20 of the South San Francisco Municipal Code and determination that the project is categorically exempt from CEQA, per CEQA Guidelines Section 15301, Class 1, Existing Facilities. (Megan Wooley-Ousdahl, Principal Planner)
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RECOMMENDATION
Recommendation
Staff recommends that the Planning Commission conduct a public hearing and take the following actions:
1. Determine that the project is categorically exempt under the provisions of CEQA per CEQA Guidelines Section 15301, Class 1, Existing Facilities; and
2. Approve the Conditional Use Permit renewal application to operate a cannabis delivery-only operation at 500 S. Airport Boulevard, Suite H, for a five-year term to expire on May 1, 2030, subject to the attached findings and conditions of approval.
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BACKGROUND/DISCUSSION
Process Overview
On April 11, 2018, the City Council adopted regulations permitting certain commercial cannabis operations within city limits, specifically in areas east of Highway 101. Pursuant to South San Francisco Municipal Code (SSFMC) Section 20.410.009, the following businesses are permitted in certain districts, with approval of a Conditional Use Permit (CUP) and Cannabis Operator Permit:
1. Indoor Commercial Cannabis Cultivation
2. Commercial Cannabis Manufacturing
3. Cannabis Testing Operations
4. Cannabis Distribution Operations
5. Cannabis Delivery-Only Operations
The following cannabis business types are prohibited under SSFMC Sections 20.410.003 and 20.410.011: Storefront cannabis retail establishments (medical or recreational), microbusinesses (integrated cultivation, distribution and retail businesses), and outdoor cultivation.
Cannabis Conditional Use Permit and Operator Permit Processes
All commercial cannabis businesses must obtain and maintain both a CUP and an Operator Permit in order to begin and continue operations. To start, any applicant for a commercial cannabis operation must initially apply for pre-clearance to ensure the business owners and employees meet minimum qualifications. Once City staff issues the pre-clearance, the applicant may apply for a CUP approval from the Planning Commission. Unlike other CUPs, which are attached to the land, the approval of a CUP for a cannabis use is valid for a maximum of five years, per SSFMC Chapter 20.410. After the five-year term, and applicant may apply for renewal of a CUP for a cannabis use.
If an applicant satisfies all necessary conditions and successfully obtains a CUP from the Planning Commission, the City’s Finance Department will issue the applicant an Operator Permit. The approval for an Operator Permit is valid for one year and may be renewed annually by paying the required fee. In the event that a business fails to comply with the requirements of SSFMC Chapter 20.410, their Operator Permit may be subject to suspension and/or revocation procedures by the Finance Director, or designee.
Measure LL - Cannabis Business License Tax
On November 6, 2018, a majority of voters in South San Francisco approved Measure LL, which authorized the City Council to set a cannabis business license tax for the privilege of operating within the City. The business license tax applies to all types of commercial cannabis operations within South San Francisco and authorizes a minimum rate of 1% of gross receipts with a maximum rate of 5% of gross receipts for delivery-only cannabis operations. The rate is currently 3% of gross receipts, based on the business’ annual tax return. Funds collected through this business license tax are unrestricted, and the Council may choose to spend them at its discretion, for the benefit of the City.
The Loaded Bowl’s 2018 Conditional Use Permit Application
In 2018, The Loaded Bowl, LLC (“applicant”) applied for, and was granted by the Planning Commission, a CUP to operate a cannabis delivery-only operation at 500 S. Airport Boulevard, Suite H (UP18-0010; CAN18-0001). The CUP was valid for a term of five years, until November 15, 2023. While there has been a lapse since the expiration of the original CUP in late 2023, and the submittal of a complete CUP renewal application in early 2025, staff has been working closely with the applicant during this timeframe to ensure that they remain in good standing with the City and are eligible for CUP renewal.
Since receiving their initial CUP in 2018, The Loaded Bowl, LLC has been in good standing with the City of South San Francisco in that:
1. The business is current on all permits, licenses, fees, and taxes, including:
(a) Annual Community Benefit fee;
(b) Annual Operator Permit and related fees;
(c) South San Francisco business license and related fees;
(d) Measure LL compliance (SSFMC Section 6.16.037);
2. The business is not a public nuisance, as defined under the South San Francisco Municipal Code;
3. The business is operating as authorized under the originally issued CUP and has no changed circumstances from the initial issuance of the CUP;
4. The business is operating in accordance with a current operating agreement executed with the City;
5. The business is in compliance with all applicable state and local laws and regulations;
6. The City has not found any grounds for rejection of the application or revocation of operator permit, as established under SSFMC Section 20.410.009(E)(3);
7. The business’ operations do not create an adverse impact upon public health or safety.
DISCUSSION
The applicant, The Loaded Bowl LLC, is proposing to renew their CUP for a cannabis delivery-only business at 500 S. Airport Boulevard, Suite H, for another five-year term, with an expiration date of May 1, 2030 (see Attachment 3). The applicant would operate out of their existing 132-square foot office space. The applicant proposes the following business operations:
• Operation between 9:00AM and 9:00PM, seven days a week.
• Accepting online orders only with delivery to a fixed address only, and no storefront access for walk-in customers.
• Office staff of three persons, with possible hiring of additional drivers in the future.
• Office will receive pre-packaged cannabis products only for delivery.
• Office will keep delivery and inventory logs.
• Cannabis product will be locked in a concealed safe at all times when in office or out for delivery.
The applicant will continue to provide video surveillance, access control, a delivery and inventory log, and a safe to store the product in the office, as detailed in their Security Plan which has been reviewed by the Police Department (see Attachment 4). Delivery vehicles will include locked safes during transit for product and any payment.
Regarding fees, the applicant will contribute a Community Benefit Fee of $5,000 per year to the City for the five-year term of the CUP. This is in addition to the one-time CUP application fee; the annual Operator Permit fee; the annual business license fee; and the annual Measure LL compliance fee.
ZONING CONSISTENCY ANALYSIS
In 2018, when the City Council adopted regulations permitting certain commercial cannabis operations within city limits, cannabis delivery-only operations were permitted in the following zoning districts: Business Commercial (BC), Business Technology Park (BTP), and Mixed Industrial (MI). When the applicant was granted a CUP on November 15, 2018, the 500 S. Airport Boulevard was zoned as Business Commercial (BC).
In 2022, the City Council updated the Zoning Map and Zoning Code as a part of the General Plan update, and this site was rezoned to Business Technology Park-High (BTP-H). Currently, cannabis delivery-only operations are not permitted within the Business Technology Park-High (BTP-H) zoning district. However, since the applicant already received a CUP for a cannabis delivery-only operation at this site prior to the rezoning to BTP-H, this use is now considered a legal non-conforming use at 500 S. Airport Boulevard. Per the requirements of SSFMC Section 20.320.002 (B) (Non-Conforming Uses and Structures - Right to Continue), if the Planning Commission grants the CUP renewal, the applicant is permitted to continue the cannabis delivery-only operation at 500 S. Airport Boulevard, Suite H, provided that the business operations do not expand.
Delivery-only cannabis operations are subject to the following requirements in SSFMC Section 20.410.008. These requirements are included in the Findings of Approval (Attachment 1) and Conditions of Approval (Attachment 2):
1. Commercial delivery to a fixed address only, excluding schools, day care centers, youth centers, public parks and open space, public buildings and eating or drinking establishments.
2. Fixed delivery-only cannabis businesses shall be a minimum of 600 feet from residential uses, schools, day care centers and youth centers.
3. Must obtain and maintain a valid Operator Permit issued by the City.
4. Must comply with all applicable state and local laws and regulations.
5. All cannabis products shall not be visible from public right of way, exterior of a structure and or vehicle.
6. Security in vehicles shall include lockbox, video and audio monitoring equipment, emergency alert devices, and GPS locators.
7. Vehicles shall be plainly marked and not include indication of products being distributed and comply with in-transit requirements including:
a. Delivery vehicle maintenance records
b. Delivery vehicle ownership records
c. Shipping manifests for completed and in-transit deliveries
d. Contemporaneous inventory log
e. Delivery log including location, time and delivery driver
f. Quality assurance details for products stored, destruction or loss of any product
8. Business location shall implement a security and surveillance plan complying with SSFMC Section 20.410.010.
9. Operating Agreement with the City, pursuant to Section SSFMC 20.410.009.
Staff recommends the project for approval with the proposed Conditions of Approval based on review by the Planning Division, Building Division, Engineering Division, Police Department, Fire Department, and Water Quality Division of all submitted materials attached to this report with minor redactions for security purposes.
Staff finds that:
• The location is appropriate for the continued cannabis delivery-only operation;
• The delivery-only office has an approved security plan with a very small footprint and presence;
• All current employees have passed background checks by the Police Department;
• There are no expected air quality impacts, greenhouse gas emissions, or hazardous materials on site due to the nature of the delivery-only business; and
• The Loaded Bowl, LLC has been operating at the same location with the same operating plan since 2018 with no incident, is considered in good standing with the City, and is current on all fees.
GENERAL PLAN CONSISTENCY ANALYSIS
Staff has conducted an analysis of the 2040 General Plan and finds that this use is consistent with the following General Plan goals:
• Goal LU-7: A diverse economy and range of businesses by maintaining, beautifying, and expanding spaces for neighborhood commercial, including retail, restaurants, and small offices. Intent: To nurture and provide opportunity for businesses to succeed in South San Francisco.
• Goal PE-7: South San Francisco provides a business climate that supports the success of local entrepreneurs and existing small, local, minority-owned, and culturally diverse businesses. Intent: To ensure South San Francisco’s small local, minority-owned, and culturally diverse businesses can achieve success by removing barriers to opportunity and providing culturally appropriate technical resources and training for entrepreneurs.
ENVIRONMENTAL REVIEW
The project proposes renewal of a previously granted CUP for an existing cannabis delivery-only operation within an existing structure, involving negligible or no expansion of use beyond the existing office use on-site. As such, the proposal can be exempted from further environmental review per Section 15301, Class 1 Existing Facilities per the California Environmental Quality Act.
CONCLUSION
With approval of regulations for commercial cannabis operations, the City has set clear operating procedures and expectations. The applicant, The Loaded Bowl, LLC, received its original CUP for a cannabis delivery-only operation at 500 S. Airport Boulevard in 2018, and since that time has successfully operated the business with no incident and in compliance with the City’s regulations. The applicant has submitted an application to renew the CUP for the same use at the same location with the same operating plan.
Successful operation will be grounds for approval of a Conditional Use Permit renewal in 2030. Alternatively, if the proposed business fails to comply with the requirements of SSFMC Chapter 20.410, the Operator Permit and/or Conditional Use Permit may be subject to suspension or revocation.
As such, staff recommends that the Planning Commission approve the Conditional Use Permit renewal request for a term of five years and expiring on May 1, 2030, to operate a cannabis delivery-only operation at 500 S. Airport Boulevard, Suite H, subject to the Findings of Approval and Conditions of Approval attached to this staff report and determine that the project is exempt under CEQA, Section 15301, Class 1 Existing Facilities.
Attachments
1. Findings of Approval
2. Conditions of Approval
3. Conditional Use Permit Application
4. Security Plan