§ 3311. TRANSFER OF PERMIT; CHANGE IN OWNERSHIP; RELOCATION OF PERMIT.

(a) Permits Nontransferable. No permit issued under this Article 33 shall be transferable under any circumstances, including but not limited to the sale of the medical cannabis dispensary.

(b) Ownership; Changes in Ownership; Changes in Form or Structure.

(1) Any change affecting any ownership interest of a medical cannabis dispensary, including, but not limited to, any change in ownership that affects an ownership interest of less than 20% of the medical cannabis dispensary, must be promptly disclosed, in writing, to the Director.

(2) Any change affecting any ownership interest of a medical cannabis dispensary that results in a person holding an aggregate ownership interest of 20% or more of a medical cannabis dispensary, when that person did not previously hold an aggregate ownership interest of 20% or more in the medical cannabis dispensary, shall require the permittee to promptly obtain a permit amendment. For purposes of this Section 3311, a “person” shall be defined to include any individual, firm, partnership, joint venture, association, corporation, limited liability company, estate, trust, business trust, receiver, syndicate, or any other entity, or other group or combination acting as a unit. The decision to grant or deny a permit amendment shall be entrusted to the Director’s discretion in the same manner, and subject to the same criteria, as the decision to grant or deny a provisional permit as set forth in Section 3307, provided however that the permit amendment shall not be granted unless the permittee has provided, and the Director has approved, an actionable Cannabis Equity Incubator Agreement, as set forth in subsection (b)(3)(B), where such an agreement is required because the permittee seeks to implement a change affecting an ownership interest in a medical cannabis dispensary.

(3) A permittee seeking a permit amendment as required under this subsection (b) shall provide to the Director and the Director of the Office of Cannabis for review and approval the following information:

(A) Such information, from the categories of information described in Section 3304, as may be required by the Director; and

(B) Where a permittee seeks a permit amendment to implement a change affecting an ownership interest in a medical cannabis dispensary, a Cannabis Equity Incubator Agreement in which it identifies no less than one Equity Applicant, as that term is defined in subsection (b) of Section 1604 of the Police Code, and commits to comply with one of the following operating requirements for 18 months from the date that the permit amendment is approved:

(i) Submit to the Director and the Director of the Office of Cannabis for review and approval a written, an actionable “Equity Incubator Plan” describing how the permittee will encourage and support the establishment and growth of at least one of the identified Equity Applicants by, among other things, providing business plan guidance, operations consulting, personnel, or technical assistance. The services listed in the Equity Incubator Plan must be enumerated, and include an estimated dollar value of those services. The aggregate dollar value of the services must equal or exceed the sum of 10% of the rent for, or, if the permittee owns the permittee’s premises, 10% of the rental market value of, the permittee’s premises, and the annual total costs of security services at the permittee’s premises; or

(ii) Provide at least one of the identified Equity Applicants with rent-free commercial space owned or leased by the permittee, either adjacent to the permittee’s premises or off-site, in which the Equity Applicant may prepare to conduct, and upon award of a Cannabis Business permit under Article 16 of the Police Code may in fact conduct, its Cannabis Business. If such rent-free commercial space is provided off-site, the permittee must provide the greater of 800 square feet or the equivalent of at least 10% of the square footage of the permittee’s premises. If such rent-free commercial space is provided adjacent to the permittee’s premises, the permittee must provide either 800 square feet or the equivalent of at least 10% of the square footage of the permittee’s premises.

(4) Notwithstanding any other provision of this subsection (b), an aggregate ownership interest of 50% or more in a medical cannabis dispensary may not be transferred to any person or combination of persons who were not owners of the medical cannabis dispensary at the time that a medical cannabis dispensary permit was awarded under this Article 33. In the event that an aggregate ownership interest of 50% or more in a medical cannabis dispensary is transferred to any person or combination of persons who were not owners of the medical cannabis dispensary at the time that a medical cannabis dispensary permit was awarded, the permittee shall promptly surrender the permit to the Director. This obligation is not dependent on the Director’s requesting the surrender, but arises by operation of law upon the transfer of an ownership interest of 50% or more in the medical cannabis dispensary. If the permittee fails to surrender the permit to the Director, the Director may, after giving the permittee notice by mail and electronically of the proposed action and an opportunity to respond, revoke the permit.

(5) A change in the form or structure of a medical cannabis dispensary shall not be considered a change affecting an ownership interest in a medical cannabis dispensary for purposes of this subsection (b). Notwithstanding any other provision of this subsection (b), a permittee may undertake a change in its form or structure, as long as the change in form or structure does not cause any change affecting an ownership interest, and so long as the change in form is otherwise authorized under this Article 33. The Permittee must promptly disclose its change in form or structure, in writing, to the Director, and such change shall require the permittee to promptly apply for and obtain a permit amendment as set forth in subsection (b)(3).

(6) Notwithstanding any other provision of this subsection (b), it shall not be considered a change affecting an ownership interest in a medical cannabis dispensary if an individual transfers an ownership interest in a medical cannabis dispensary to a person that is entirely owned and controlled by that same individual, but any subsequent transfer of an ownership interest in that person shall be considered a change affecting an ownership interest in the medical cannabis dispensary. All transfers described in this subsection (b)(6) must be promptly disclosed, in writing, to the Director.

(c) Permits Portable.

(1) The Director shall amend an Article 33 permit to allow an Article 33 permittee operating as a Grandfathered MCD pursuant to Planning Code Section 190 (“Grandfathered MCD Permittee”) to operate as a Medical Cannabis Dispensary under that permit at a different location, provided all the following criteria are met:

(A) The Grandfathered MCD Permittee submits a written request to the Director seeking a change in location for the permit and identifying the new proposed location (the “New Location”).

(B) The Grandfathered MCD Permittee has been verified by the Office of Cannabis as an Equity Applicant under the criteria set forth in Police Code Section 1604(b). If the Grandfathered MCD Permittee is a corporation or other non-natural person, it must establish that a natural person who has been verified by the Office of Cannabis as an Equity Applicant exercises ownership and/or control with respect to the Grandfathered MCD Permittee in accordance with one of the criteria enumerated in Section 1604(b)(3) of the Police Code.

(C) The Grandfathered MCD Permittee, if a natural person, or a natural person verified as an Equity Applicant by the Office of Cannabis and exercising ownership and/or control with respect to the Grandfathered MCD Permittee in accordance with at least one of the criteria in Section 1604(b)(3) of the Police Code, was listed in the Grandfathered MCD Permittee’s Article 33 permit application submitted on or before January 5, 2018, as either an applicant or as a person who would be “engaged in the management of the medical cannabis dispensary,” in accordance with Section 3304(c)(2) of the Health Code.

(D) The Grandfathered MCD Permittee was evicted from the location associated with the permit (the “Permitted Location”), or was notified by the landlord that the lease at the Permitted Location has been or will be terminated or not renewed.

(E) The New Location has an existing authorization for Medical Cannabis Dispensary Use, as defined in Sections 102 and 202.2 of the Planning Code.

(F) The Director has not been notified of any court judgment finding that the owner of the New Location has wrongfully evicted another Grandfathered MCD Permittee from the New Location.

(G) The Grandfathered MCD Permittee has complied with all applicable requirements of this Article 33, the Planning Code, and the Police Code, with respect to the New Location, including but not limited to the “Good Neighbor Policy” and “Security Plan” requirements set forth in Section 3322(d)(5) of this Article 33 and in Section 1602 of the Police Code.

(H) The Planning Department, Department of Building Inspection, Mayor’s Office

on Disability, Fire Department, and Office of Cannabis (together, the “Referring Agencies”), as applicable, complete all required review and inspection of the New Location and report their determinations to the Department of Public Health.

(I) The Director determines that the Grandfathered MCD Permittee satisfies all provisions of Section 3322 of this Article 33.

(2) Upon receiving a written request from a Grandfathered MCD Permitee to amend a permit to relocate to a New Location, if the Director upon preliminary review of the request determines that it meets the criteria set forth in Section 3311(c)(1)(B), (C), (D), (E), (F), and (G) above, the Director shall refer the Grandfathered MCD Permittee to the Referring Agencies for their review and inspection, as applicable, of the New Location.

(3) Upon receipt of the reports from the Referring Agencies in accordance with Section 3311(c)(1)(H), the Director shall consider such reports; shall determine, in accordance with Section 3311(c)(1)(I), whether the Grandfathered MCD Permittee satisfies all provisions of Section 3322; and shall determine whether the Grandfathered MCD Permittee satisfies all requirements set forth in Section 3311(c)(1)(A)-(G).

(Added by Ord. 275-05, File No. 051250, App. 11/30/2005; amended by Ord. , File No. 180912, App. 12/21/2018, Eff. 1/21/2019; Ord. , File No. 190973, App. 3/13/2020, Eff. 4/13/2020)