Title
Consideration of a Resolution Recommending that the City Council Adopt an Ordinance Amending San Leandro Zoning Code to Allow Cannabis Dispensaries, Subject to a Conditional Use Permit, in Commercial and Industrial Zoning Districts Outside the Downtown Area Zoning Districts.
Staffreport
SUMMARY AND RECOMMENDATION
Staff recommends that the Planning Commission adopt a Resolution recommending that the City Council adopt an Ordinance amending the Zoning Code to allow Cannabis Dispensaries, subject to a Conditional Use Permit, in the City’s commercial and industrial zoning districts, excluding the Downtown (DA) zoning districts. On September 14, 2026, the City Council directed staff to prepare the proposed Zoning Code amendments.
BACKGROUND
Cannabis Ordinance
San Leandro adopted a Medical Cannabis Dispensary Ordinance (Ordinance No. 2013-020) in December 2013 to establish a regulatory framework that allowed up to two Medical Cannabis Dispensaries to operate within the City. The Ordinance required the issuance of both a Dispensary Permit and a Conditional Use Permit, established numerous performance standards, and required minimum separations of 1,000 feet from schools, libraries, youth centers, parks, houses of worship, and 500 feet from residential zones.
The Ordinance has since expanded in steps. The cap rose to three Dispensary Permits in 2016. Ordinance No. 2019-004 authorized adult-use sales beginning in January 2020. The cap rose to four Dispensary Permits in 2025. All four Dispensary Permits have been issued. Three dispensaries operate today, all in industrial districts: NUG Wellness at 3089 Teagarden Street and at 1911 Fairway Drive, and Harborside San Leandro at 1965 Marina Boulevard.
Policy Development
Since 2025, the Rules Committee and City Council have met multiple times to discuss potential changes to the City’s cannabis regulations. One of the central discussion topics was whether to expand the number of zoning districts where a Cannabis Dispensary could be permitted and whether to reduce the distancing requirement between Cannabis Dispensaries and sensitive uses. This discussion was informed by feedback from San Leandro’s dispensary operators that the currently codified distancing and zoning district requirements have made it exceedingly difficult to identify available sites that meet all of the required siting criteria.
Council Direction
On September 14, 2026, the City Council directed staff to prepare Municipal Code and Zoning Code amendments that would:
1. Increase the maximum number of dispensary Operating Permits from four to six;
2. Reduce the separation requirement between dispensaries and sensitive uses (require 600 foot separation from schools, parks and playgrounds, youth centers, and childcare facilities, consistent with the State standard, and account for physical barriers);
3. Refine the definition of “youth center”; and
4. Expand the zoning districts in which dispensaries may locate to include all commercial and industrial districts, excluding the Downtown Area (DA) zones, subject to a Conditional Use Permit.
Only item 4 requires a Zoning Code amendment and is before the Planning Commission. Items 1 through 3 are Municipal Code amendments that will go directly to the City Council and are outside the purview of the Planning Commission.
DETAILS OF THE PROPOSAL
The Municipal Code amendments described above (items 1 through 3) will be presented separately to the City Council and are not before the Planning Commission.
The Planning Commission is being asked to consider the City Council’s direction to implement Zoning Code amendments that would allow Cannabis Dispensaries in all commercial and industrial zoning districts except the Downtown Area districts (DA-1, DA-2, DA-3, DA-4, and DA-6). In each newly eligible district, a dispensary would require a Conditional Use Permit, as is currently required in the Community Commercial and certain specified industrial districts. The amendments would not rezone any property. Cannabis Dispensaries would be permitted with a Conditional Use Permit in the following districts:
• IL (Industrial Limited) *
• IL(AU) (Industrial Limited-Assembly Overlay) *
• IG (Industrial General)
• IG(AU) (Industrial General-Assembly Overlay)
• IP (Industrial Park)
• IP(AU) (Industrial Park-Assembly Overlay) *
• IT (Industrial Transition)
• CC (Commercial Community)
• CN (Commercial Neighborhood) *
• CR (Commercial Recreation) *
• NA-1 (North Area-1) *
• NA-2 (North Area-2) *
• P (Professional Office) *
• SA-1 (South Area-1) *
• SA-2 (South Area-2) *
• SA-3 (South Area-3) *
• B-TOD (Bay Fair TOD) *
* not currently permitted
STAFF ANALYSIS
San Leandro was among the first jurisdictions in the region to adopt an Ordinance that allowed Cannabis Dispensaries. The local regulations established were very restrictive because there was no track record by which to evaluate the potential for dispensaries to be disruptive to the community and due to the absence of statewide regulations at that time. The separation requirements and the limited number of eligible zoning districts were intended to protect sensitive uses from potential impacts.
The City now has more than a decade of experience regulating dispensaries, and the existing dispensaries have operated with minimal documented impact on surrounding properties or public safety. With City Council’s direction to increase the number of dispensary operating permits, operators seeking to open new dispensaries will have difficulty finding eligible sites unless the Zoning Code and Municipal Code restrictions are eased. The proposed amendments have been drafted to address this issue while also retaining regulatory safeguards. For example, as the decision-maker for proposed Conditional Use Permits, the Planning Commission retains the authority to review site-specific compatibility of any proposed new dispensaries at a public hearing, may impose conditions of approval, and may deny an application if the required findings cannot be made. Dispensaries would also remain subject to the Municipal Code’s permit cap, sensitive use separation requirements, and security and operating standards, as well as a robust set of State licensing requirements.
GENERAL PLAN POLICIES
The proposed Zoning Code amendments support the following General Plan goals and policies:
• GOAL ED-1. Attract jobs and investment across all economic sectors.
• Policy ED-1.4 Emerging Industries. Promote and support the growth of new and emerging industries, especially industries requiring work space that is consistent with San Leandro’s building stock and industries with the potential to provide quality jobs at all skill levels and wage levels for San Leandro residents.
• Policy ED-1.10 Tax Revenues. Encourage development that generates sales tax, property tax, and other revenues that sustain municipal services.
• Policy ED-2.1 Business-Friendly City. Maintain a collaborative and supportive relationship between the City and the private sector that emphasizes the ease of doing business in San Leandro.
FINDINGS
In order to approve the Draft Planning Commission Resolution, the Planning Commission must make the following findings pursuant to Section 5.16.116.B of the Zoning Code:
• That the proposed Zoning Code Amendments are necessary and desirable to achieve the purposes of the Zoning Code because the proposed amendments protect the public health, safety, morals, comfort, convenience, and the general welfare of the people.
The proposed amendments would allow cannabis dispensaries to operate
in commercial and industrial zoning districts outside the Downtown Area, subject to a Conditional Use Permit. Each new dispensary would remain subject to discretionary review, the Municipal Code’s permit cap, sensitive use separation and security requirements, and State licensing. Together, these protect the public health, safety, and general welfare.
• That the proposed Zoning Code Amendments are consistent with the General Plan because they support the goals and policies in the General Plan to support new industries and enhance City revenues.
The purpose of the proposed Zoning Code amendments is to increase the number of properties potentially available for cannabis dispensary locations. This supports Policy ED-1.4 (Emerging Industries) and Policy ED-2.1 (Business-Friendly City) by facilitating the establishment of new local businesses, and Policy ED-1.10 (Tax Revenues) by expanding a source of local tax revenue.
ENVIRONMENTAL REVIEW
The proposed Zoning Code amendments are exempt from CEQA pursuant to Section 15061(b)(3), referred to as the “common sense exemption” wherein a project is exempt because it can be seen with certainty that there is no possibility that the project may have a significant effect on the environment.
The amendments would allow a retail use that functions similarly to other specialty retailers already permitted in the same zoning districts. The amendments do not authorize any physical development, the total number of dispensaries remains capped by the Municipal Code, and each proposed dispensary would require a Conditional Use Permit and project-specific environmental review when an application is submitted.
PUBLIC OUTREACH
This item has been noticed to the public in accordance with new State regulations governing amendments to the Zoning Code, which require a 20-day public notice. The public hearing notice appeared in the East Bay Times Daily Review newspaper on October 9, 2026. The City has engaged with stakeholders in development of the Ordinance.
RECOMMENDATION
Staff recommends that the Planning Commission approve the attached Resolution recommending that the City Council adopt an Ordinance amending various sections of the Zoning Code to allow Cannabis Dispensaries, subject to a Conditional Use Permit, in the City’s commercial and industrial zoning districts, excluding the Downtown Area (DA) zoning districts.
ATTACHMENTS
Attachment 1: Draft Planning Commission Resolution 2026-XX
Exhibit A: Proposed Zoning Code Amendments
Attachment 2: Presentation from September 14, 2026 City Council Meeting
PREPARED BY: Cindy Lemaire, AICP CNU-A, Senior Planner
Planning Services Division