I. RECOMMENDATION:
This is a continuation of a future agenda item requested by Councilman Adkisson and requested to be brought back at the November 5, 2020 City Council meeting by Councilwoman Stolz. Staff is seeking direction from the Council on this item.
II. BACKGROUND:
The City of Coalinga currently contracts with SCI consulting group to provide monthly inspection services at all of the City's cannabis facilities to ensure both state and local regulatory compliance. SCI operates on a task order basis, billed monthly for each facility they inspect. The City Council has expressed interest in discontinuing service with SCI and utilize the staff that have been funded by cannabis licensing fees to perform the administrative tasks needed to facilitate the City's cannabis program including inspection services and video surveillance.
III. DISCUSSION:
The City of Coalinga charges an annual licensing fee and revenue raising fee (tax) to all commercial cannabis businesses operating in the City. Specifically, the license fees paid by the cannabis operators are made up of a City direct cost which includes costs associated with the new RIMS (records management) system to manage the operations and employees, (1) officer position and (2) cannabis clerk positions. The other part of the license fee is the direct consultant (SCI) cost for providing inspection services. Below is the following breakdown per license class:
| License Category |
SCI Annual Fee |
City of Coalinga |
Total |
| Cultivation Up to 10K* |
$17,227.00 |
$27,975.00 |
$45,202.00 |
| Type 6 (Manufacturing – nonvolatile) |
$33,772.00 |
$32,338.00 |
$66,110.00 |
| Type 7 (Manufacturing – volatile) |
$33,772.00 |
$34,996.00 |
$68,768.00 |
| Type 8 (Testing) |
$9,562.00 |
$3,067.00 |
$12,629.00 |
| Type 11 (Distribution) |
$6,866.00 |
$4,921.00 |
$11,787.00 |
| Type 4 (Nursery) |
$17,547.00 |
$31,194.00 |
$48,741.00 |
| Retailer |
$25,782.00 |
$31,522.00 |
$57,304.00 |
| Microbusiness |
$44,178.00 |
$29,750.00 |
$73,928.00 |
| Cultivation Additional 10K Canopy |
$4,306.75 |
$0.00 |
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If the City Council decides to cancel the contract with SCI it would reduce the City's cannabis licensing fees by the amount SCI is charging for compliance checks. In addition, staff recommends that there be a three (3) month transition period where the officer who will be performing the inspections would have the opportunity to shadow and train with an SCI member in order to fully understand the inspection checklist and what to look for at each inspection. It was also recently brought to our attention and recommended by SCI that the City could reduce the frequency of inspections due to continued compliance of the operators. They recommended that quarterly inspections would be reasonable. Therefore, if Council chooses to discontinue services with SCI, staff recommends moving to quarterly inspections to reduce the burden on City staff.
IV. ALTERNATIVES:
- Do not cancel services with SCI and remain status quo.
- Continue Services with SCI and reduce inspection frequency to quarterly and reduce licenses fees accordingly.
- Cancel Services with SCI with 90 day transition to allow for staff training and adjust to quarterly inspections.
V. FISCAL IMPACT:
If the City discontinues its contract with SCI, license fees would be reduce but there will be no savings to the City since SCI's costs are directly passed on to the cannabis operators. The result would be lower license fees for operators. If the City chooses to continue services with SCI and reduce inspection frequency to quarterly SCI's fee would be reduced by 75%. | | |