Title
Presentation on Proposed Draft Code Amendments Related to Retail Cannabis Dispensaries
Staffreport
SUMMARY & RECOMMENDATIONS
Staff recommends that the City Council receive and review the attached presentation and provide relevant direction.
BACKGROUND
In December 2013, the City Council approved a medical cannabis regulatory ordinance to facilitate the approval, regulation, and operation of one cannabis dispensary in San Leandro. That ordinance, in conjunction with the subsequently codified California Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), implements strict zoning, security, and other requirements on the operations of cannabis businesses.
In December 2014, a request for applications from parties interested in serving as San Leandro’s first dispensary operator was publicly released and 15 teams ultimately applied for the first dispensary permit. Following a robust review of the 15 applicant proposals, the following three teams (in alphabetical order) were identified as having demonstrated the optimal combination of knowledge, expertise, experience, and alignment with the City Council’s adopted selection criteria:
• Blum San Leandro
• Davis Street Wellness Center (now known as NUG Wellness)
• Harborside San Leandro
On September 8, 2015, the City Council unanimously voted to award the first dispensary permit to Harborside San Leandro.
Based upon City Council direction provided at subsequent Council meetings in 2015 and 2016, the City Council later adopted various amendments to the dispensary ordinance, including provisions that allowed for the issuance of up to three total dispensary permits, the latter two of which were ultimately awarded by the City Council to Davis Street Wellness Center (now known as NUG) and Blum San Leandro. All three businesses identified locations for their proposed dispensaries and ultimately received approval of separate Conditional Use Permits from the City of San Leandro Board of Zoning Adjustments and commenced operations at the following locations:
• NUG Wellness, 3089 Teagarden Street
• Harborside San Leandro, 1965 Marina Blvd.
• Blum San Leandro, 1911 Fairway Drive
On May 19, 2025, the City Council awarded a fourth cannabis operating permit to NUG Wellness following their securing an additional lease at 1911 Fairway Drive (i.e. the former location of Blum San Leandro). As part of its action, the Council also directed staff to present to the Rules Committee options for potentially expanding the number of available permits and establishing a related process for future awards. The Council further directed staff to ensure that all dispensary operators are treated comparably throughout this review.
Between June and December 2025, the Rules Committee deliberated on potential amendments to the Municipal Code and/or Zoning Code regarding cannabis permitting.
On December 10, 2025, following these deliberations, the Rules Committee directed staff to advance the project to the full City Council for consideration. As part of its direction, the Committee elevated to the City Council the following recommendations:
• Allow for issuance of two additional cannabis operating permits (for a total of 6)
• Allow setback modifications to account for physical barriers, such as freeways or waterways
• Codify a clearer youth center definition, mirroring the City of Alameda’s definition
The Committee also elevated for Council consideration the following potential code changes for which the Committee was unable to reach consensus:
• Potential changes to sensitive use distancing requirements, including aligning local standards with the 600-foot statewide and regional standards
• An expansion of zoning districts in which cannabis retail should be allowed
• Whether to allow cannabis retail downtown
On March 9, 2026, the City Council reviewed the above items that were referred by the Rules Committee. Ultimately, the City Council concurred with the Committee recommendation on the following areas:
• Allow for issuance of two additional cannabis operating permits (for a total of 6)
• Allow setback modifications to account for physical barriers, such as freeways or waterways
However, the City Council was unable to achieve consensus on the other matters highlighted above and referred the topic back to the Rules Committee.
Per that City Council direction, the topic was subsequently included on the agenda at the following Rules Committee meetings:
• April 22, 2026
• May 27, 2026
• July 22, 2026
The following represents a synopsis of the take-aways that emerged from these Rules Committee meetings in 2026.
Areas of Committee Consensus that remain unchanged since 3/9/26 Council meeting:
• Allow for issuance of two additional cannabis operating permits (for a total of 6)
• Allow setback modifications to account for physical barriers, such as freeways or waterways
Areas of Committee Consensus that changed since 3/9/26 Council meeting:
• Some committee members expressed concerns related to the youth center definition
• All committee members supported excluding DA zoning (downtown area)
Areas where there remains a lack of consensus among Rules Committee members:
• Aligning distancing requirements with 600-foot statewide standards and regional context
• Expanded zoning districts that would allow cannabis uses
Direction needed from City Council
Given that there remain several areas where there remains a lack of consensus at both the Rules Committee and City Council level, staff developed the following three Potential Options for consideration by the City Council:
Option A (minimal change) - Direct staff to return to Council with ordinance amendments to memorialize the following:
• Allow for the issuance of two additional cannabis operating permits (for a total of 6)
• Allow setback modifications to account for physical barriers, such as freeways or waterways
Option B (middle path) - In addition to bullet points in Option A, return to Council with Ordinance amendments to memorialize the following:
• Align sensitive use distancing setbacks with 600 foot statewide standard, shown on slide 8
• Incorporate youth center definition as shown on slide 5
Option C (most expansive) - In addition to bullet points in Option B:
• Bring forward to Planning Commission review and then City Council adoption modified zoning code provisions to allow cannabis uses in all commercial and industrial zoning districts, except for DA (Downtown Area)
It is also important to note that without four affirmative votes from the City Council for any action, staff will cease all further efforts on this topic.
ATTACHMENT(S)
• Attachment A: Presentation
PREPARED BY: Eric Engelbart, Deputy City Manager, City Manager’s Office