I. RECOMMENDATION:
Staff recommends that the City Council waive the full reading and adopt Ordinance No. 880, amending Coalinga Municipal Code Sections 9-5.128 and 9-5.129 relating to commercial cannabis operations, including provisions for regulatory permits, employee permits, operational standards, and other related regulatory requirements.
II. BACKGROUND:
City Cannabis Regulation History
The City of Coalinga has authorized commercial cannabis operations within its jurisdiction since 2016. On November 3, 2016, the City Council adopted Ordinance No. 797 establishing Section 9-5.128 of the Coalinga Municipal Code, establishing the City's initial regulatory framework for commercial cannabis operations, including cultivation, manufacturing, testing, and distribution activities. On January 4, 2017, the City Council adopted Ordinance No. 804 establishing Section 9-5.129 to address retail cannabis operations, extending local permitting requirements to retail businesses operating within the City.
Evolution of State Cannabis Law
Since the City's initial adoption of its cannabis regulations, the State of California has substantially restructured its cannabis regulatory framework. In June 2017, the Legislature enacted the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), which consolidated the regulatory programs for medicinal and adult-use cannabis under a unified licensing structure. The Department of Cannabis Control (DCC) was subsequently established in 2021 as the single State agency responsible for cannabis licensing and enforcement. Subsequent legislative and regulatory amendments have further refined licensing categories and compliance obligations for commercial cannabis businesses.
As State law has evolved, the City's existing cannabis code provisions, adopted incrementally and at different points in time, have become increasingly difficult to administer in a cohesive manner. Certain provisions have become duplicative of State law requirements, others have been superseded by subsequent legislative changes, and portions of the existing code contain internal inconsistencies that create ambiguity for operators and City staff responsible for day-to-day administration and enforcement.
Staff Analysis
The proposed ordinance is intended to consolidate, update, and restate the City's commercial cannabis regulations into a single, comprehensive chapter of the Coalinga Municipal Code. The consolidation effort is not intended to materially expand or contract the types of cannabis activities currently authorized within the City, but rather to modernize the regulatory framework, improve internal consistency, and align local requirements with current State law where appropriate.
Key updates incorporated into the proposed ordinance include, among other provisions:
Consolidation and Reorganization
The proposed ordinance consolidates Sections 9-5.128 and 9-5.129 of the Coalinga Municipal Code, along with all related commercial cannabis provisions, into a single, unified cannabis permitting chapter. This consolidation eliminates the fragmented, incrementally adopted structure of the existing code and replaces it with a logically organized regulatory framework structured as follows:
· Application and Permit Procedures — governing the submission, review, issuance, renewal, suspension, and revocation of local cannabis regulatory permits;
· General Operational Requirements — establishing baseline operating standards applicable to all permitted cannabis business types;
· Security Requirements — establishing physical security, surveillance, and access control standards applicable to all permitted cannabis business types; and
· Activity-Specific Requirements — establishing regulatory standards tailored to the unique operational characteristics of each of the following license categories:
o Cultivation
o Manufacturing
o Testing Laboratory
o Distributer
o Nursery
o Microbusinesses
o Retail
Consolidated and Updated Definitions
The proposed ordinance consolidates and restates all cannabis-related defined terms into a single definitions section, eliminating redundant and duplicative definitions that currently appear across Sections 9-5.128 and 9-5.129. Definitions have been updated to align with current terminology used by the Department of Cannabis Control and applicable State statutes, ensuring consistency between local and State regulatory frameworks.
Removal of Outdated and Duplicative Provisions
Provisions that replicate, conflict with, or have been superseded by current State cannabis law and Department of Cannabis Control regulations have been removed. Where the City's prior ordinances imposed requirements that are now comprehensively addressed at the State level, the proposed ordinance defers to State regulation rather than maintaining parallel local requirements that may create confusion or impose inconsistent obligations on operators.
Strengthened Financial Assurance Requirements.
The proposed ordinance replaces the existing flat surety bond requirement of $25,000 with a revised bond structure calibrated to each permittee's actual cannabis business tax obligation. The revised requirement establishes bond amounts equivalent to one calendar quarter of the permittee's annual tax liability, calculated based on gross receipts for retail operators and facility square footage for non-retail operators. This approach ensures that bond coverage bears a meaningful relationship to each operator's financial exposure to the City and significantly strengthens the City's ability to recover delinquent cannabis business taxes, enforcement costs, and abatement expenses from a solvent third-party surety rather than a potentially distressed operator.
Removal of Employee Permitting Requirements
The proposed ordinance removes the City's existing individual employee permit and local background check requirements applicable to cannabis business employees. This change aligns the City's regulatory framework with current State law, which does not impose background check requirements on cannabis business employees at the State licensing level.
Importantly, this change does not eliminate background check requirements altogether. The City will continue to require and conduct background checks on all cannabis regulatory permit applicants and owners as a condition of local permit issuance. This ensures that the City retains meaningful oversight over the individuals ultimately responsible for the ownership, control, and operation of cannabis businesses within its jurisdiction, while eliminating the duplicative and administratively burdensome requirement to screen all individual employees.
Environmental Review
The City is the Lead Agency for this Project pursuant to CEQA Guidelines (Public Resources Code [PRC] Section 15000 et seq.). This update is subject to CEQA Guidelines section 15061(b)(3), which states that “The activity is covered by the common sense exemption that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.” The proposed ordinance includes changes to the zoning code, but nothing in the proposed changes would alter the existing development potential of the City as expressed in the General Plan.
III. DISCUSSION:
The proposed ordinance modernizes the City's commercial cannabis regulatory framework by consolidating a decade of incrementally adopted provisions into a single, clearly organized chapter that improves clarity, consistency, and enforceability for operators, the public, and City staff. The ordinance removes outdated and duplicative provisions that have been superseded by the State's mature cannabis regulatory framework while preserving the City's full local permitting authority and strengthening financial protections through a revised surety bond structure calibrated to each operator's actual tax obligation.
At their April 28th, 2026, meeting, the City of Coalinga Planning Commission passed a resolution recommending that the Coalinga City Council consider and approve the Zoning Text Amendment to Coalinga Municipal Code Sections 9-5.128 and 9-5.12 relating to Commercial Cannabis Operations, including provisions for regulatory permits, employee permits, operational standards, and other related regulatory requirements.
IV. ALTERNATIVES:
MOVE TO WAIVE FULL READING AND ADOPT ORDINANCE NO. 880 AMENDING SECTION 9-5.128 OF TITLE 9, CHAPTER 5 OF THE COALINGA MUNICIPAL CODE PERTAINING TO THE STANDARDS FOR COMMERICAL CANNABIS OPERATION IN THE CITY; (2) AMENDING TITLE 9, CHAPTER 5, ARTICLE 1 OF THE COALINGA MUNICIPAL CODE TO REPEAL SECTION 9-5.129 PERTAINING TO THE STANDARDS FOR RETAIL CANNABIS OPERATIONS; AND FIND THAT THE PROJECT IS EXEMPT FROM THE REQUIREMENTS OF THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) AS SET FORTH IN SECTION 15061(B)(3) OF THE CEQA GUIDELINES
or
MOVE TO DENY ADOPTION OF ORDINANCE NO. 880 AMENDING SECTION 9-5.128 OF TITLE 9, CHAPTER 5 OF THE COALINGA MUNICIPAL CODE PERTAINING TO THE STANDARDS FOR COMMERICAL CANNABIS OPERATION IN THE CITY; (2) AMENDING TITLE 9, CHAPTER 5, ARTICLE 1 OF THE COALINGA MUNICIPAL CODE TO REPEAL SECTION 9-5.129 PERTAINING TO THE STANDARDS FOR RETAIL CANNABIS OPERATIONS; AND FIND THAT THE PROJECT IS EXEMPT FROM THE REQUIREMENTS OF THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) AS SET FORTH IN SECTION 15061(B)(3) OF THE CEQA GUIDELINES
V. FISCAL IMPACT:
There will be no fiscal impact. |