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File Number: 15-463 <br />of San Leandro's dispensary permit. <br />Future Analysis <br />Presuming the dispensary that is selected by the City Council demonstrates a positive track <br />record by fully integrating itself into the surrounding neighborhood and contributing in a <br />positive manner to the broader San Leandro community, staff recommends that the City <br />Council consider revisiting the provision of the ordinance allowing only one dispensary. As in <br />any industry, competition serves to incentivize best practices and responsiveness to <br />consumer demands. San Leandro community residents could see similar benefits from <br />healthy competition by a second dispensary operator. <br />Overview of Dispensary Permit Annual Fee Recommendation <br />The adopted dispensary ordinance states that the City Council must approve an annual <br />medical cannabis dispensary permit fee. The purpose of this annual permit is to fully recover <br />the costs borne by the City in order to regulate and inspect the dispensary's operations. <br />Because the City has never previously authorized a medical cannabis dispensary, staff <br />crafted an assessment of the various steps and staff resources that are anticipated over the <br />course of the year ahead, including ensuring that all permit requirements are complied with, <br />and to allow for regular inspections and oversight. As part of this analysis, staff also <br />examined the fees charged by neighboring jurisdictions for similar operating permits. <br />It is expected that regulation of the dispensary will require the work of staff from a range of <br />City departments, including but not limited to: the City Manager's Office, Finance Department, <br />City Attorney's Office, Community Development Department, Police Department, Alameda <br />County Fire Department, as well as administrative support to each Department. <br />Anticipated work will include the need to monitor, audit, and inspect the dispensary. Since <br />current agency staffing has never before regulated such a facility, it is expected that some of <br />this work may need to be completed by third -party consultants (such as forensic audit and <br />investigation services, industry and product handling experts, etc.). Staff estimates that an <br />extensive amount of staff time will be required to ensure that there is no diversion, that the <br />facility operates as permitted, abides by building, construction, and electrical requirements, <br />and adequately reports and pays its fees and taxes. Since this is an emerging industry, <br />coupled with ongoing efforts at the state level to develop new statewide regulations, it is <br />anticipated that staff will need to work extensively with the City's state -level advocate, <br />representatives from the industry, and state officials as new regulations are developed and <br />implemented. <br />Based upon that analysis, staff recommends that the annual fee be set at $60,000, which is <br />the same fee that is presently charged by the City of Oakland for a similar permit. If the <br />operator so chooses, the annual fee may be paid in quarterly installments throughout the <br />year. The first installment would be due 30 days after the facility commences operations. <br />Over the year ahead, staff intends to closely monitor staff time and other costs associated <br />with regulating the dispensary and may recommend to the City Council an adjustment to that <br />fee based upon actual costs. <br />Fiscal Impacts <br />The proposed $60,000 annual dispensary permit fee has been designed to fully off -set the <br />City's costs in regulating the dispensary's operations. In addition, it is estimated that the <br />City of San Leandro Page 9 Printed on 9/212015 <br />