§ 1608. TRANSFER OF PERMIT; PORTABILITY OF PERMIT; SALE OF CANNABIS BUSINESS; CHANGE IN OWNERSHIP; INTERIM CANNABIS BUSINESS PERMITS.

(a) Permits Nontransferable. No permit issued under this Article 16 shall be transferable under any circumstances, including but not limited to the sale of the Cannabis Business.

(b) Permits Portable. A Cannabis Business Permittee that closes its Cannabis Business may retain its Cannabis Business Permit for up to 18 months from the date of closure, and may conduct Commercial Cannabis Activities under that permit at a different Premises provided:

(1) There is no change in ownership;

(2) The Referring Departments complete all necessary review and inspections of the new Premises, and report their determinations to the Office of Cannabis;

(3) The Permittee demonstrates that the new Premises complies with the requirements of this Article 16 and the Planning Code; and

(4) The Director finds that there are no grounds for denial of a Cannabis Business Permit, as set forth in subsections (d)-(e) of Section 1615 of this Article 16.

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

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

(2) Any change affecting any ownership interest of a Cannabis Business that results in a Person holding an aggregate ownership interest of 20% or more of a Cannabis Business, when that Person did not previously hold an aggregate ownership interest of 20% or more in the Cannabis Business, shall require the Permittee to promptly obtain a permit amendment. Such permit amendment shall be reviewed by the Director in a manner consistent with subsection (c)(5), and shall not be granted unless the Director determines that, if the relevant Person (i.e., the Person who newly holds an aggregate ownership interest of 20% or more in the Cannabis Business) had been an Owner at the time the Permittee applied for a permit awarded under this Article 16, that permit would have been granted.

(3) Any change in the direction, control, or management of a Cannabis Business must be promptly disclosed, in writing, to the Director, and such change shall require the Permittee to promptly apply for and obtain a permit amendment. An application for such a permit amendment shall be reviewed by the Director consistent with subsection (c)(4), and shall not be granted unless the Director determines that, if the relevant Person (i.e., the Person newly exercising direction, control, or management with respect to the Cannabis Business) had been an Owner at the time the Permittee applied for a permit awarded under this Article 16, that permit would have been granted.

(4) A Permittee seeking a permit amendment as required under this subsection (c) shall pay the required filing fee for a permit amendment and provide such information, from the categories of information described in Section 1609, as may be required by the Director. 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 permit as set forth in Section 1615.

(5) Notwithstanding any other provision of this subsection (c), prior to the award of a permanent Cannabis Business Permit and for a ten-year period thereafter, an aggregate ownership interest of 50% or more in a Permittee may not be transferred to any Person or combination of Persons who were not Owners of the Permittee at the time that a Cannabis Business Permit was awarded under this Article 16. This restriction shall be cumulative, as to each Permittee, across any permits (whether temporary or permanent) issued under this Article 16. In the event that, prior to the award of a permanent Cannabis Business Permit or within ten years thereafter, an aggregate ownership interest of 50% or more in a Permittee is transferred to any Person or combination of Persons who were not Owners of the Permittee at the time that a Cannabis Business 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 on the sale of the Cannabis Business. 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.

(6) A change in the form or structure of a Permittee shall not be considered a change affecting an ownership interest in a Cannabis Business for purposes of this subsection (c). Notwithstanding any other provision of this subsection (c), a Permittee may undertake any change in its form or structure, as long as the change in form or structure does not cause any change affecting an ownership interest. 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 (c)(4).

(7) Whenever, under this Article 16, an Owner is anything other than an individual, every individual who exercises direction, control, or management of that Owner shall also be treated as an Owner for purposes of this Article 16.

(8) Notwithstanding any other provision of this subsection (c), it shall not be considered a change affecting an ownership interest in a Cannabis Business if an individual transfers an ownership interest in a Cannabis Business 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 Cannabis Business. All transfers described in this subsection (c)(8) must be promptly disclosed, in writing, to the Director.

(9) Notwithstanding any other provision of this subsection (c), a Permittee must obtain a permit amendment if a change in ownership results in a decrease in an Equity Applicant’s Ownership Interest in the Cannabis Business, a change in the Equity Applicant’s role as Chief Executive Officer or member of the Board of Directors, or a material change in the degree of the Equity Applicant’s participation in the direction, control, or management of the Cannabis Business. Applications for a permit amendment in accordance with this Subsection 1608(c)(9) must include the terms of the change in ownership.

(d) Interim Cannabis Business Permits. Once the Director receives a surrendered Cannabis Business Permit to Operate, as set forth in subsection (b) of this Section 1608, the new Owner of the business may apply to the Director for an Interim Cannabis Business Permit, subject to any required Planning Department approvals, for a period not to exceed 90 days from the date of surrender (an “Interim Permit”). An Interim Permit may not be renewed. The Director may grant an Interim Permit provided that:

(1) The new Owner has submitted a completed application for a Cannabis Business Permit to the Office of Cannabis, and a completed application for a State Cannabis License to the appropriate State Licensing Authority;

(2) The new Owner applies for the same type of Cannabis Business Permit as was held by the prior Owner;

(3) The Premises to which the Cannabis Permit applies complies with all existing health, safety, and fire ordinances, and applicable state laws governing Cannabis Businesses; and

(4) An Interim Permit is necessary to ensure uninterrupted operations of a Cannabis Business at the Premises, or to minimize interruption of its operations.

(Added by Ord. , File No. 171042, App. 12/6/2017, Eff. 1/5/2018; amended by Ord. , File No. 180912, App. 12/21/2018, Eff. 1/21/2019)