Agenda Item Wording:
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Ordinance Adoption - First reading and public hearing for Ordinance No. 2026-05, adding Chapter 4.04, “Commercial Cannabis Activity” to the Visalia Municipal Code, rescinding Chapter 5.66, amending Chapter 8.64, and approving Zoning Text Amendment No. 2026-01, and adoption of Resolution No. 2026-42, establishing the application and selection process for both storefront and non-storefront retail cannabis business license applications.
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Agenda Date: 07/20/2026
Prepared by:
Devon Jones, Economic Development Manager, devon.jones@visalia.city, (559) 713-4190
Paul Bernal, Planning and Community Preservation Director, paul.bernal@visalia.city, (559) 713-4025
Department Recommendation: Staff recommends that the City Council hold a public hearing and introduce the first reading of Ordinance No. 2026-05, adding Chapter 4.04, “Commercial Cannabis Activity” to the Visalia Municipal Code, rescinding Chapter 5.66, amending Chapter 8.64, and approving Zoning Text Amendment No. 2026-01, and adopt Resolution No. 2026-42 establishing the application and selection process for both storefront and non-storefront retail cannabis business license applications.
Summary:
The consultant, HdL, along with staff and the City Attorney’s office, have prepared the Cannabis Ordinance, Ordinance No. 2026-05 (primarily Chapter 4.04), based on input and feedback provided by City Council and Planning Commission in several past work session meetings. The Cannabis Ordinance is currently worded to establish the number of businesses permitted to operate in the City of Visalia at zero; however, the ordinance effectively establishes the regulatory framework for such businesses to operate when Council elects to proceed with permitting such businesses to operate within the City of Visalia at a future date. This is based on prior direction from Council during work session discussions.
Furthermore, the storefront and non-storefront retail cannabis business application and selection processes are detailed in separate Resolution No. 2026-42 for potential adoption as well. Similarly, this has been drafted per prior input received from Council. These processes are unique from the other cannabis business application processes (distributor, manufacturer, microbusiness, processor, delivery only medical marijuana retail, and testing laboratory) because these are the only two business license types that are proposed to have restricted amounts. In both cases, City Council input thus far has suggested three licenses eventually per type but that is to be determined at a future date, if applicable.
Adding Chapter 4.40 “Commercial Cannabis Activity” to the Visalia Municipal Code:
The Cannabis Business Ordinance (see Attachment 1, Chapter 4.40) establishes the regulatory framework for commercial cannabis activities within the City of Visalia. The ordinance is crafted based on input from City Council and recommendations from staff and the consultant, HdL. Highlights of language included in the Cannabis Business Ordinance are as follows:
Chapter 4.04.410
- Hour restrictions of 9:00 A.M. to 9:00 P.M. for retail storefront and non-storefront and delivery services but no stated restrictions on other types of uses beyond retail. Hour restrictions for delivery only medical marijuana retail would follow state law only, which currently restricts from 6:00 A.M. to 10:00 P.M.
Chapter 4.04.170
- Annual terms to expire June 30th to align with the City’s regular business tax term.
Chapter 4.04.100
- Limit number of cannabis business licenses at this time to zero. Council may change this at any time after ordinance adoption by resolution.
Chapter 4.04.340
- Sensitive uses and buffer sizes for retail storefront buffer:
o 600 foot buffer from existing:
§ Churches
§ Parks - not to include open space land use, trails or conservation easements
§ Schools - K-12, public and private
§ State licensed day care facilities
§ Youth centers (as defined in Section 4.04.060 subsection HH of the Commercial Cannabis Activity Ordinance, which is attached per Attachment 1).
o 100 foot buffer from all residential zoning
Chapter 4.04.130
- Application and selection process to be codified by separate resolution.
Chapter 4.04.180
- The City Manager is authorized to make all decisions concerning the issuance of renewal licenses.
Chapter 4.04.250
- Similarly, appeals will be heard by an appointee designated by the City Manager.
Rescind Chapter 5.66 “Regulations and Requirements for Cannabis Businesses to Operate under California State Law (SB 1186):
Chapter 5.66, which pertains to a state mandate to permit delivery only medical marijuana retail businesses as a result of SB 1186, would effectively be outdated, and no longer valid with the creation of a new Cannabis Business Ordinance. To reduce confusion and be efficient and simplified for both staff and potential businesses, provisions in Chapter 5.66 are now incorporated into Chapter 4.04. This will also require some minor edits to Chapter 8.64 to be consistent as well.
Amending Chapter 8.64:
Similar to Chapter 5.66, changes were made to Visalia Municipal Code (VMC) Chapter 8.64 as a result of SB 1186 that, with this new Cannabis Business Ordinance, would need to be further updated to reduce confusion and properly reference the new Cannabis Ordinance.
Acceptance of Zoning Text Amendment No. 2026-01:
In addition to the ordinance changes as noted above, updates to Chapter 17 (Zoning) are required and were reviewed by Planning Commission at the July 13, 2026 meeting, with a recommendation to support zoning ordinances changes to Chapter 17. As identified in Attachment 4, the proposed edits that have been reviewed by Planning Commission include:
Chapter 17.04 Definitions
- Adding the appropriate Cannabis related business definitions previously discussed with Council.
o Retail storefront and non-storefront.
o Cultivation: Only the ‘Processor’ sub license type which consists of businesses “that only trim, sift, cure, dry, grade, package or label cannabis.” Given Visalia could offer a competitive location to conduct such activities without the potential concerns of the other cultivation use types (water consumption), this type will be considered.
o Manufacturing.
o Distribution.
o Testing laboratory.
o Microbusiness: Only to include ‘Processor’ Cultivation sub license type and only non-storefront Retail use type. Only zoning to consider for Microbusiness use type will be Light Industrial or Industrial.
o Delivery only medical marijuana retail per state mandate.
Chapter 17.25 Zone Use Matrix
- Specific zones where cannabis businesses will be conditionally permitted to operate (all based on prior direction from Council):
o Retail storefront:
§ Conditionally Permitted in Regional Commercial (C-R), Commercial Mixed Use (CMU), and Service Commercial (C-S)
§ However, retail storefronts will not be allowed in the Microbrewery/Microwinery Overlay District (i.e., East Downtown area)
o Non-storefront retail will be conditionally permitted in Light Industrial (I-L) and Industrial (I) zones and specifically in the Visalia Industrial Park Overlay area only. This overlay area will encompass the appropriately zoned property mainly found west of Shirk Street but including the properties along Shirk between Doe Avenue and Grove Avenue.
o All other use types that may be allowed in I-L or I zones shall also be restricted to this Visalia Industrial Park Overlay.
§ Distributors, Manufacturers, Microbusiness, and Processors
o Testing Laboratories will be conditionally permitted in Commercial Mixed Use (C-MU), Professional/Administrative Office (O-PA), Business Research Park (BRP), and I-L and I zones.
o Delivery Only Medical Marijuana Retail will remain permitted by right in the I-L and I zones in order to be in compliance with SB 1186.
Chapter 17.32
- Update being made to properly reference new Chapter 4.04.
Resolution No. 2026-42 Application and Selection Process:
The following structure and required information materials for retail storefront and retail non-storefront cannabis business applications are as follows (see Attachment 2):
- Commercial Cannabis Business Application
- Financial Responsibility, Indemnity and Consent to Inspection Terms Agreement
- Agreement on Limitations of City’s Liability, and Certifications, Assurances, Warranties, and Indemnification to City
- Property Owner Consent/Landlord Affidavit
- Proof Property Ownership or Lease Agreement/Letter of Intent to Lease
- Proof of insurability from an Insurance Company
- Zoning Verification Application
- Application Zoning Verification Letter
- Application fee
- Require background checks
Application Evaluation and Review:
Business Plan
- Includes various elements of typical business plans, including in this case, items such as owner qualifications, past performance, budgets and pro forma, proof of capitalization, description of operations.
- Requires demonstration of proof of capitalization in the form of documentation of cash or other liquid assets on hand, letters of credit, or other equivalent assets along with full budget for construction and operation.
Location and Neighborhood Compatibility Plan
- Should include elements typical for the City’s site plan review submittals but also how the potential business will proactively address and respond to any neighborhood complaints or concerns (odor control plan, managing traffic, waste management plan, etc.) in order to address neighborhood compatibility.
Safety and Security Plan
- Should consider all possible fire, medical and hazardous situations, as well as all access control, inventory control, cash handling procedures. Complete policy/procedures manuals are not required at this point in the application process however, a great deal of review of the eventual requirements will need to be evident and detail will need to be provided at this stage.
Community Benefits Plan
- Based on prior input from Council and similar forms of development agreement requirements in the area, staff is recommending a minimum cash value of $50,000 or 1% of annual gross receipts, whichever is greater, annually. Here are some examples of what other jurisdictions have required in the area:
o City of Tulare and Valley Pure: One-time payment of $100,000 and annual payments of $50,000 for various projects, plus the annual tax rate.
o City of Tulare and Token Farms: 2% of its sales annually to a local nonprofit plus annual tax rate.
o City of Porterville and City Culture Cannabis Club: yearly sum of $30,000.00 or 1% of Owner’s annual gross receipts, whichever amount is greater.
o City of Porterville and Haven: yearly sum of $30,000.00 or 1% of Owner’s annual gross receipts, whichever amount is greater.
o City of Lemoore and NHC Lemoore: Initial licensing fee of $200,000 (unless skate park and splash pad required relocation, in which it was $350,000), annual license fee of $12,860, $24,000 annually in charitable donations in the city, plus annual tax rate.
o City of Lemoore and Valley Pure: any business license fees as part of cannabis program, 5% annual tax rate (“Revenue Raising Fee”) to be renegotiated every 3 years, and their fair share of skate park and splash pad relocation project (50%).
- Staff is recommending disqualifying applicants if they have had a local cannabis business license suspended or revoked.
Lottery Selection (Merit based selection versus Lottery based selection):
Staff and the consultant, HdL, recommend the selection processes for any such Cannabis related business/use that may require limiting the number of licenses issued (e.g., retail storefront) should ultimately be done via a lottery draw method. This process is recommended in an effort to reduce exposure and risk to potential litigation and to best streamline the lengthy appeals process common with unselected applicants. Although Council expressed support for the “lottery” selection method, but noted their interest in measures to ensure quality applicants for the lottery process resulted in quality cannabis business operators, staff is confident the application and selection process and cannabis business ordinance guidelines presented will best result in quality operators being eligible for selection while also mitigating risk of lengthy appeal processing and litigation.
As drafted, the process includes thorough application requirements and thorough quality assurance review for submitted applications. Doing so establishes a rigorous up-front process to identify qualified firms for the lottery draw method while also keeping the process open to all qualified applicants. In addition, there are requirements applicable during the post selection process, or business establishment stage, to help ensure qualified firms are selected. Some of those requirements for retail storefront licensees include:
- All licensees will need to go through Site Plan Review.
- Public hearing will occur with the Conditional Use Permit hearing with planning commission.
- Selected applicants will have 12 months to acquire Conditional Use Permit, any other entitlements (if applicable), and any necessary building permits and begin construction.
o Cannabis business renewal licenses will not be provided to licensees who do not meet this timeframe.
- Selected applicants will also have 24 months to acquire their Certificate of Occupancy for their cannabis business or risk license revocation.
- Additionally, a Cannabis Business License cannot be transferred or otherwise sold within the first 5 years of the date of issuance of the License.
o Further, the owner of a Cannabis Business License shall not transfer ownership or control of the license to another person or entity unless and until the transferee obtains an amendment to the license from the City Manager stating that the transferee is now the licensee. Such an amendment may be obtained only if the transferee files an application with the City Manager in accordance with the provisions of the ordinance as though the transferee were applying for an original Cannabis Business License. The proposed transferee’s application shall be accompanied by a transfer fee to be determined and the transferee’s application will be treated as a new application.
Fiscal Impact including annual maintenance and operating costs: None at this time. Staff is currently working with HdL to prepare a fee nexus study to determine all applicable fees for cannabis business program that will be brought to Council for consideration in a separate resolution process.
Prior Council Action:
• On March 16, 2026, Council provided additional input re: the establishment of a cannabis business ordinance and corresponding business application and selection review process and authorized amending the existing sole source contract with HdL to provide assistance with the preparation of a fee nexus study to determine all applicable fee amounts in the City’s cannabis business program and appropriated $12,000 from the General Fund for this contract amendment.
• On July 21, 2025, Council provided additional input re: the establishment of a cannabis business ordinance and corresponding business application and selection review process.
• On May 5, 2025, Council provided initial input on draft cannabis business ordinance and corresponding business application and selection review process.
• On March 3, 2025, Council authorized staff to proceed with drafting a cannabis business ordinance for adoption but during the adoption process, set the number of businesses permitted to operate in the City to zero effectively establishing the regulatory framework for such businesses but not yet permitting such businesses to operate and amend the existing contract with HdL to include the additional scope of work totaling $24,600 and appropriate an additional $5,000 from the General Fund.
• On July 15, 2024, Council adopted an amended Resolution 2024-24 to place a cannabis tax measure on the November 2024 general election ballot.
• On June 17, 2024, Council conducted the second reading and adoption of Ordinance No. 2024-06, adding Chapter 3.14 (Cannabis Business Tax) to Title 3 of the Visalia Municipal Code to establish a tax on cannabis business activities within the city.
• On June 3, 2024, Council conducted the first reading of Ordinance No. 2024-06, adding Chapter 3.14 (Cannabis Business Tax) to Title 3 of the Visalia Municipal Code to establish a tax on cannabis business activities within the city and adopted Resolution 2024-24 to place a cannabis tax measure on the November 2024 general election ballot.
• On May 20, 2024, Council authorized staff to present an ordinance to include a local cannabis tax measure for voter consideration on the Tulare County November 2024 General Election ballot.
• On May 6, 2024, Council authorized staff to continue working with HdL to develop a local cannabis tax measure and ballot language to be included on the November 2024 ballot and appropriated $20,000 from the general fund for the development of tax measure informational materials.
• On November 20, 2023, Council conducted the second reading and adoption of Ordinance No. 2023-13 for Zoning Text Amendment No. 2023-02, a request by the City of Visalia to amend Visalia Municipal Code Chapter 17.25, add Section 17.32.167, amend Chapter 8.64, and add Chapter 5.66 in order to address upcoming state mandated changes as a result of the passage of SB 1186, and to establish objective standards for permitting delivery only medical marijuana retail establishments within the City of Visalia.
• On November 11, 2023, Council authorized the City Manager to award a contract to HdL Companies for an amount not to exceed $35,000, with a total budget of $40,000.
• On November 6, 2023, the City Council authorized the City Manager to award a contract to FM3 Research for an amount not to exceed $39,500, with a total budget of $45,000.
• On July 17, 2023, Council directed staff to initiate a zoning ordinance update to implement reasonable zoning regulations in response to SB 1186 and hire a consultant, via a sole source contract, to assist staff with the preparation of a potential tax measure specifically for cannabis sales for the 2024 general election and to identify potential revisions to cannabis regulations in Visalia.
Alternatives: Per Council direction.
Recommended Motion (and Alternative Motions if expected):
recommendation
I move to introduce for the first reading of Ordinance No. 2026-05, adding Chapter 4.04, “Commercial Cannabis Activity” to the Visalia Municipal Code, rescinding Chapter 5.66, amending Chapter 8.64, and approving Zoning Text Amendment No. 2026-01, and adopt Resolution No. 2026-42, establishing the application and selection process for both storefront and non-storefront retail cannabis business license applications.
Environmental Assessment Status: Exempt from further review under the California Environmental Quality Act (CEQA) Guidelines section 15061(b)(3) (common sense exemption).
CEQA Review: The project is exempt from further environmental review under the CEQA Guidelines section 15061(b)(3), which states that the project is exempted from CEQA if the activity is covered by the common sense exemption that CEQA applies only to projects that have the potential for causing 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.
Deadline for Action: 07/20/2026
Attachments:
1. Attachment 1: Ordinance No. 2026-05
2. Attachment 2: Resolution No. 2026-42
3. Attachment 3: July 13, 2026, Planning Commission staff report for ZTA No. 2026-01
4. Attachment 4: Planning Commission Resolution 2026-32
5. Attachment 5: Staff presentation
6. Map 1: Final buffer map
7. Map 2: Visalia Industrial Park Overlay
Strategic Goal:
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☒ Economic Vitality |
☐  Organizational Excellence |
☐ Fiscal Strength |
☐  Infrastructure & Growth |
☐  Quality of Life |