STAFF REPORT - CITY COUNCIL/SUCCESSOR AGENCY/PUBLIC FINANCE AUTHORITY

That the City Council provide direction to staff to prepare and process an amendment to the City’s commercial cannabis ordinance (Coalinga Municipal Code Section 9-5.128) to:

• Allow a streamlined employee permitting process for seasonal cultivation employees, including the use of Live Scan fingerprinting in lieu of a full City-conducted background investigation, with the employer responsible for conducting and certifying its own background review; and

•  Reduce the employee permit fee for seasonal cultivation employees so that the fee reflects only the actual Live Scan fingerprinting and City administrative issuance costs, rather than the full employee permit fee currently required.

The City of Coalinga regulates commercial cannabis operations through Title 9, Chapter 5 of the Coalinga Municipal Code. Section 9-5.128 currently requires that all employees working in commercial cannabis operations obtain an individual employee permit issued by the City, which includes a background investigation conducted through the Police Department.

This process was intentionally designed to provide strong public safety oversight during the initial implementation of the City’s cannabis program. However, as the industry has matured, licensed cannabis cultivators have identified operational challenges associated with the current employee permit requirements, particularly for seasonal or temporary cultivation employees who may only be employed for short, defined periods during planting, harvesting, or processing cycles.

Seasonal Workforce Challenges

Cannabis cultivation operations often rely on a large seasonal workforce during peak operational periods. Under the current ordinance:

• Each seasonal employee must complete the same full employee permit process as permanent staff.
• The process includes a comprehensive background review conducted by the City, regardless of employment duration.
• Employers and City staff incur administrative costs and processing delays that may be disproportionate to the temporary nature of the employment.
• This has resulted in concerns related to efficiency, staffing timelines, and overall program cost for both the City and licensed operators.

Proposed Ordinance Flexibility

Staff is seeking Council direction to draft an ordinance amendment that would allow:

• Seasonal cultivation employees to complete a Live Scan fingerprint check only;
• Employers to conduct their own background screening, consistent with state law and City standards, and certify compliance to the City;
• The City to retain oversight authority, including the ability to deny or revoke eligibility if disqualifying information is identified.
• This approach maintains public safety safeguards while recognizing the operational realities of seasonal employment.

Proposed Reduction in Employee Permit Fees

In addition to procedural flexibility, staff is proposing that the ordinance amendment include reduced employee permit fees for seasonal cultivation employees.

Under the proposed framework:

• The employee permit fee would be reduced to cover only the direct costs associated with Live Scan fingerprinting and administrative issuance, rather than the full employee permit fee currently charged.
• This would align fees with the actual level of City review and staff time required for seasonal employees.
• Permanent employees would continue to be subject to the full employee permit requirements and associated fees.
• Reducing the fee structure in this manner is intended to ensure the City’s program remains cost-recovery based, while avoiding unnecessary financial burdens on seasonal hiring that could discourage compliance or delay staffing.

Policy Considerations

Key considerations for Council include:

Public Safety: Ensuring individuals prohibited under state or local law are not employed in cannabis operations.

Administrative Efficiency: Reducing Police Department workload and processing time during peak hiring periods.

Cost Recovery: Aligning permit fees with actual City costs while maintaining fiscal responsibility.

Economic Development: Supporting the viability of licensed cannabis operators operating within the City.

• Do not make the recommended adjustments and keep the ordinance unchanged. 

The proposed changes may result in:

• A reduction in employee permit fee revenue for seasonal employees; however,
• This reduction would be offset by decreased staff time and administrative workload, particularly within the Police Department.
• Staff will evaluate fee adjustments to ensure continued compliance with cost-recovery principles.