Obtaining a Cannabis Business PERMIT in Oakland
Oakland is now accepting applications for cannabis business permits for cultivation, manufacturing, distribution, laboratory testing, and delivery services. Below is an overview of the permit process, as well as details on how to obtain a permit.
OVERVIEW OF THE OAKLAND CANNABIS BUSINESS PERMIT PROCESS
There are four main steps to receiving a cannabis business license from Oakland.
- The business must identify a location suitable for the business, including documentation of a "right to occupy."
- The business must submit a cannabis permit application to the City of Oakland and, with some exceptions, pay fees of approximately $2500.
- The business must obtain approval from six City departments and, in some cases, the Oakland Port Authority, a department of Alameda County, and East Bay Mud.
- The business must satisfy Oakland's equity permit program or wait until the program's permit restrictions are lifted.
Those steps are detailed below. In addition, the text of Oakland's ordinances, as approved, are now available for Oakland Municipal Code Section 5.80 (for dispensaries and delivery services) and for Oakland Municipal Code Section 5.81 (for other cannabis businesses). The City Administrator's office has also published an FAQ based on the program, and Oakland recently held a permitting workshop where more details about the process and additional resources can be found.
STEP ONE: FINDING A SUITABLE LOCATION FOR A CANNABIS BUSINESS IN OAKLAND
Oakland places zoning limits on each type of license, and Oakland has published a map showing zoning for each license type. The Oakland "Green Zone" map is available from Oakland's city web site. Since the publication of that map, the relevant zoning has changed in a few ways. First, all licensed locations must be at least 600 feet away from a K-12 school, but Oakland measure's the distance by door-to-door, path-of travel. In addition, Oakland requires dispensaries to be 600 feet away from youth centers and other dispensaries. All of these distance limits are subject to a waiver by the City Administrator. Second, the Oakland ordinance now allows manufacturing for edibles and topical in any commercial zone where a commercial kitchen is allowed.
In addition to Oakland's requirements, businesses should be aware of the requirements of state law. Under the newly-enacted Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), no state license is allowed to any commercial cannabis business that is "located within a 600-foot radius of a school providing instruction in kindergarten or any grades 1 through 12, day care center, or youth center that is in existence at the time the license is issued, unless a licensing authority or a local jurisdiction specifies a different radius." Business & Professions Code 26054(b). Under state law, these distances are measured by the shortest distance between the parcel containing the school and the parcel containing the cannabis business. Health and Safety Code Section 11362.768. The shortest-distance method is more restrictive than the path-of-travel method used by Oakland. While state regulators might accept Oakland's zoning requirements, the state regulators have not yet issued regulations applying this provision in the MAUCRSA. Ultimately, a state license will be required in addition to an Oakland permit. As a result, the safest location for any cannabis business in Oakland is more than 600 feet away from any school, day care center, or youth center, measured by the shortest-distance method, even if the City does not require that distance.
Once a location is identified by a business, it needs to document its right to occupy the property. For Oakland, acceptable forms of documentation are (1) a deed; (2) a lease agreement; or (3) a letter of intent to buy or lease the property.
It is worth noting that Oakland allows a cannabis business to start the application program without identifying a location. However, a business can only obtain a permit for a particular location. Ordinarily, there is little reason to submit an application and pay the fee to the City unless the business has identified a suitable location. However, equity-eligible applicants, who are not required to pay the application fee, may apply without an identified location and look for a general applicant incubator to assist them in finding a suitable location. Oakland plans to launch a website this month to help connect equity applicants with general applicant incubators.
STEP TWO: SUBMIT THE OAKLAND CANNABIS PERMIT AND PAY THE FEE
The next step is to submit a permit application to the City of Oakland. In addition to filling out the permit application form, the business is required to submit the following items:
- documentation of right to occupy (dead/lease/letter of intent);
- a copy of state registration for any corporation, LLC, or other corporate entity;
- a floor plan with certain security details;
- a security plan;
- a community beautification plan;
- an odor mitigation plan; and
- EnergyStar information provided through PG&E.
In addition, each person "directly or indirectly interested in the permit sought, including all officers, directors, general partners, managing members, stockholders, and partners," is required to submit a Livescan fingerprinting form.
Additional information is also required to support applications taking advantage of Oakland's equity program, either by submitting as an equity-eligible businesses or as an equity incubator. These issues are discussed further in Step Four.
The application should be submitted by email to the City. After it is submitted, an application fee of $2,474 is required, along with a $32 per person Livescan processing fee is paid to the City Administrator's office. Equity-eligible business, as discussed below, are not required to pay the $2,474 application fee, though the Livescan fees are still required.
STEP THREE: OBTAIN CITY DEPARTMENT AND, AS NEEDED, PORT AUTHORITY, COUNTY, and EBMUD SIGN-OFF
After the business submits the permit application and pays the application fee, the City Manager's office will provide the business a Medical Cannabis Permit Application Inspection Card, with the name of the business, the proposed location address, and the type of permit application (such as cultivation, delivery, manufacturing, etc.) The Card requires sign-off for up to ten departments:
- Oakland Zoning/Planning;
- Port of Oakland, which is required only if the property is on Port of Oakland land;
- Oakland Building Services: Plumbing;
- Oakland Building Services: Electrical:
- Oakland Building Services: Building;
- Fire Prevention Bureau;
- Revenue Management Bureau;
- Alameda County Environmental Health, which is required only for edible manufacturers; and
- Alameda County Agriculture, which is required only for cultivators using pesticides.
- East Bay Municipal Utility District (East Bay Mud), which is required for food production, cannabis extraction, and cultivation businesses.
The simplest approval is from Oakland Zoning/Planning. It merely requires a visit to the Zoning desk, where they will confirm the zoning of the address and other location factors.
Oakland Building Services sign-off requires approved construction plans, completed construction, and physical inspection. Fire Prevention Bureau sign-off likewise requires physical inspection after construction, though consultation with Fire and review of plans is advisable if the business wants to avoid any expensive surprises during that inspection. The Fire Prevention Bureau has published guidelines for cannabis businesses. If the Fire Prevention Bureau determines a business uses, handles, or stores certain quantities of hazardous waste, the business will also be referred to the Alameda County Environment Health Hazardous Materials Division.
Revenue Management Bureau sign-off requires a valid Oakland Business Tax Certificate. To obtain a certificate, a business must submit a Zoning Clearance Form and a New Business Application, as well as payment of the registration fee ($91).
Although East Bay Mud is not listed on early versions of Inspection Cards, some businesses will require East Bay Muds sign-off, which may take as long as 4 months. Manufacturing (food production and cannabis extraction) and cultivation businesses will be required to get either pollution prevention (P2) permits or wastewater discharge permits. If an applicant is in a location that has a water meter, the permit process can take roughly 4 to 6 weeks, but if a location requires a meter installation, the process can take 3 to 4 months.
Smaller cultivators (with a cultivated are of less than 10,000 square feet and producing less than 25,000 gallons of wastewater discharge a day) require only a P2 permit; all other cultivators will need a wastewater discharge permit. Cannabis extraction businesses may require either a wastewater discharge permit or a P2 permit depending on the flow and strength of pollutants and wastewater discharge. Food production businesses require only a P2 permit.
Wastewater discharge permits contain specific requirements and pollutant limits and require monitoring and testing, while P2 permits require only best management practices and may require monitoring and testing. Wastewater discharge permits have an annual fee ($2,580) in addition to costs for monitoring and testing. Wastewater treatment fees apply to both permit types and vary by business classification. The fee schedule can be found here.
After the Inspection Card is submitted to and reviewed by the City, the City Administrators Office and Oakland Police Department will conduct an on-site inspection of security and odor mitigation plans before issuing the permit.
STEP FOUR: SATISFY THE CITY'S EQUITY PERMIT PROGRAM OR WAIT UNTIL THE PROGRAM RESTRICTIONS ARE LIFTED
The most controversial and confusing part of Oakland's permit process is the equity program. The final program, in sum, identifies a limited pool of equity-eligible applicants, gives them certain benefits and opportunities, and limits the number of licenses that non-equity applicants during the initial phase of the program. Specifically, the City will issue general (non-equity) permits on a 1:1 ratio with equity permits until the equity program is fully funded and implemented, which will be some time in the future. As a practical matter, a business seeking an Oakland permit at this time has three options:
- Apply as an equity-eligible business, which requires that at least 50% of the business is owned by an equity-eligible individual.
- Apply as an equity incubator, which requires providing space or rent for at least 1,000 square feet of space, to an equity-eligible applicant.
- Wait until the equity permit restrictions are lifted to receive its permit
Equity Option 1: Qualify as an Equity-Eligible Business.
To qualify as an equity applicant, a business must be owned at least 50% by one or more equity-eligible individuals. For non-profits, equity-eligible individuals must constitute the majority of the board of directors.
Equity-eligible business applicants have a number of opportunities and advantages. Most significantly, equity applicants are eligible for a permit immediately upon meeting all the requirements, and need not wait for the equity program restrictions to be lifted. In addition, equity applicants pay no application fee. Eventually, once the Equity Assistance Program is funded, equity-eligible applicants also will be eligible for no-interest startup loans and technical assistance, provided through one or more City consultants.
Individuals are equity eligible in one of two ways. First, an eligible person may have resided for 10 out of the last 20 years in a specific list of qualified Oakland police beats: 2X, 2Y, 5X, 6X, 7X, 8X, 19X, 21X, 21Y, 23X, 26Y, 27X, 27Y, 29X, 30X, 30Y, 31Y, 32X, 33X, 34X, or 35X. A map of those beats, searchable by address, is available on the Oakland city website. Proof of residency requires two of the following items: (1) California drivers license; (2) California identification card records; (3) property tax billing and statements; (4) state or federal tax returns; and (5) utility billing and payment.
Second, alternatively, an eligible persons may have been arrested after November 5, 1996 and convicted of a cannabis crime committed in Oakland.
Whether qualifying by residency or by a cannabis conviction, in order to be equity-eligible, a person's annual income must be at or below 80% of the average median income (AMI) in Oakland, adjusted for household size. That is about $52,560 for a single-person household, and $75,150 for a family of four.
Equity Option 2: Incubate an Equity Applicant
A second option for businesses is to participate in the equity incubator program. Under this program, a general (non-equity) applicant can obtain priority permitting by agreeing to provide "free real estate or rent" of at least 1,000 square feet to an equity-eligible business. The general applicant must also provide "any City required security measures, including camera systems, safes, and alarm systems for the space utilized by the" equity-eligible business.
An applicant serving as an equity incubator, and otherwise meeting all of the requirements for a permit, "will receive the next available General Applicant permit." As a result, if the general applicant and equity applicant go through the program together, the general applicant should receive its permit as soon as both it and its equity incubee meet all the other City requirements.
If the equity incubee ceases business operations, then the general applicant must notify the City and reapply for a license. As a result, a general applicant incubator and an equity incubee are mutually dependent on each other's continued success.
Should equity-eligible individual(s) of an equity business, after receiving their permit, make an annual income above 80% of Oakland's AMI, the equity business's permit and the incubator's permit would not be affected, although the equity business would no longer be eligible for start-up loans through Oakland's program.
Equity Option 3: Wait Until the Equity Program Permit Restrictions Are Lifted
Instead of participating in the equity program, a business could choose to simply apply for a permit and wait until the program's restrictions are lifted. The 1:1 ratio between general and equity licenses will be lifted when the Equity Assistance Program is "established, funded and implement[ed]." The City Council has allocated the first $3.4 million in cannabis tax is collected from cannabis businesses to the Program, excluding the existing 8 permitted dispensaries. After other cannabis businesses pay $3.4 million in cannabis tax, and the Equity Assistance Program's loans and technical assistance is implemented, then Oakland's cannabis permitting will be fully opened, and there will be no limits on the number of general applicants granted (except for dispensaries).
Of course, everyone wants to know when that day will come. No one knows for sure, but since the Oakland business taxes are collected annually and due on March 1, it stands to reason that the second phase of licensing is unlikely to start until at least March 2018, and may well be later. However, Oakland's Municipal Code Section 5.81.110(b) does specify that, except for dispensaries and delivery services, "no enforcement [of the City's ban on unpermitted commercial cannabis businesses] shall take place against a permit applicant while their application is pending." It is worth emphasizing that the City's non-enforcement commitment is limited to Oakland enforcement, not enforcement by state (or federal) officials, particularly since Oakland permitting is required for state licensing of an Oakland-based business. The City has expressed its intention to inform the state that Oakland-based businesses seeking state licensure are in compliance with local laws, so long as those businesses are moving through Oakland's permitting process in good faith. It is not yet clear how the City will determine which applicants are moving through the process in good faith and which are not, but Oakland may try and use this as a way to push applicants waiting things out to participate in the equity program.
Oakland is also now accepting dispensary applications. Under Oakland's ordinance, the City will only grant eight dispensary licenses per year, and applicants will be selected through a competitive RFPA process. The deadline to submit applications is November 20, 2017 by 2:00 p.m.