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8.A. - Page 3 of 15 ANALYSIS On August 15, 2019, the City Council Finance/Audit Sub -Committee (FAC) discussed options for increasing General Fund revenues as part of a strategy to address projected operating budget deficits over the next decade. On October 14, 2019, City staff presented the FAC with initial research on the potential new City revenue generation from permitting retail cannabis storefront businesses. The Sub -Committee recommended further analysis of this option and staff reconvened the City's cannabis inter -departmental staff team to explore options for allowing cannabis retail storefront businesses. To analyze options and understand the experience of other communities, the City engaged the services of HdL, a recognized local government consulting firm with expertise in cannabis permitting policy. HdL has assessed the revenue potential, industry trends, best practices, and regional developments for the City's exploration of establishing retail cannabis storefronts in Redwood City. The company represents over 175 cities and counties in California for cannabis related services. HdL's Cannabis Management Team of professionals has over 46 years of direct experience establishing and implementing cannabis regulatory and taxation programs, including establishing land -use regulations, permit processes, staffing plans, cost recovery fees, regulatory compliance, financial audits and staff training. Furthermore, their staff has conducted over 16,000 cannabis compliance inspections and investigations in California, Colorado, and Nevada. In addition, HdL staff has reviewed, scored and processed over 2,200 cannabis business applications for California cities and counties in the last five years, which included reviewing pro -formas and other financial documents. Most recently, HDL assisted City staff with drafting the City's 2018 cannabis tax measure. On December 9, 2019, with the assistance of HdL, staff presented a fiscal analysis report to the Finance and Audit Committee (FAC). The FAC members recommended staff undertake further public outreach to determine public opinion about allowing cannabis retail storefronts in the City. The Committee also asked staff to present a report to the City Council that identified potential impacts, policy issues, and the merits of allowing cannabis storefront retail operations. This report provides that information and seeks City Council feedback on whether staff should develop zoning and Cannabis Ordinance amendments required to allow cannabis storefront retail sales. Cannabis Retail Stores in San Mateo County As of June 5, 2020, nine cannabis retail stores (non -storefront and storefront) have been licensed by the state to operate in San Mateo County. Non -Storefront (Delivery) Cannabis Retail in San Mateo County Storefront Cannabis Retail in San Mateo County City Number of Stores City Number of Stores Brisbane 3 Pacifica 2 Redwood City 3 South San Francisco 1 The limited number of storefront retailers within a 20 -minute radius of Redwood City suggests that a storefront retailer located in Redwood City would very likely capture a significant amount of sales from Page 3 of 11 City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org 156