Title
Public Hearing to Conduct a First Reading of Two Ordinances: A) Ordinance Amending San Leandro Zoning Code to Allow Cannabis Dispensaries, Subject to a Conditional Use Permit, in All Commercial and Industrial Zoning Districts Outside the Downtown Area Zoning Districts; and B) Ordinance to Amend Various Sections of Chapter 4-33 of the San Leandro Municipal Code pertaining to Cannabis Dispensaries
Staffreport
SUMMARY & RECOMMENDATIONS
Consistent with direction provided by the City Council at the September 14, 2026 City Council meeting, this item is presented for the City Council to conduct a first reading of two proposed ordinances that would amend the City of San Leandro Zoning Code and Municipal Code, respectively. If adopted, the proposed amendments would achieve the following:
• Allow for the issuance of two additional cannabis dispensary operating permits (for a total of six)
• Allow setback modifications to account for physical barriers, such as freeways or waterways
• Update the definitions of sensitive uses including youth centers, and modify distancing requirements from such uses to 600 feet
• Allow retail cannabis uses in all commercial and industrial zoning districts, except for DA (Downtown Area)
• Incorporate other miscellaneous changes to align the Municipal Code with current State laws and regulations
BACKGROUND
In December 2013, the City Council approved a medical cannabis dispensary 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 a 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 issuing such permits. The Council further directed that all dispensary operators were to be treated comparably throughout this review.
Between June and December 2025, the City Council 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.
On March 9, 2026, the City Council reviewed the items that were referred by the Rules Committee and referred the topic back to the Rules Committee for further consideration.
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
On September 14, 2026, the City Council reviewed the outcome of the Rules Committee meetings in 2026 and directed staff to proceed forward with developing draft code amendments to achieve the following:
• Allow for the issuance of two additional cannabis dispensary operating permits (for a total of 6)
• Allow setback modifications to account for physical barriers, such as freeways or waterways
• Modify the list of sensitive uses and establish 600 foot distancing requirements from them
• Incorporate a youth center definition
• 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)
On October 29, 2026 the Planning Commission held a special meeting. Four Commissioners were present: Chair Anthony Tejada (District 4), Vice Chair Luis Mendoza (District 2), Commissioner Jennifer Nay (District 6), and Commissioner Robert Rich (District 5). The Planning Commission’s role in this matter was limited to reviewing the proposed Zoning Code amendments that would expand the zoning districts where a cannabis dispensary may be permitted with a Conditional Use Permit (CUP).
Three Commissioners supported the proposal to allow dispensaries with a CUP in all commercial and industrial districts, consistent with the adopted motion at the September 14, 2026 City Council meeting. Commissioner Rich stated that he was persuaded to support the proposal by the layered review any new dispensary would face, including a CUP heard by the Planning Commission, a Dispensary Permit approved by the City Council, and State licensing requirements.
Chair Tejada expressed concern about the number of new districts where dispensaries could be allowed. He suggested a more measured approach that would first allow dispensaries only in industrial districts, then evaluate whether those districts could accommodate the six dispensaries the proposed Municipal Code amendments would allow. He also said that analysis was needed to show why all commercial districts are needed, particularly commercial areas with heavy foot traffic from high school students.
The Planning Commission ultimately considered three motions:
1. A motion to adopt the resolution recommending approval of the Zoning Code amendments as presented was made and seconded. This motion received three votes in support and one in opposition. However, because four votes were needed for a majority, it failed.
2. A motion to modify the resolution to exclude all commercial districts except the CC, NA, and SA districts failed for lack of any commissioners seconding the motion.
3. A motion to adopt the resolution as submitted but add the CN District to the commercial exception was withdrawn after discussion.
Commissioners also discussed whether a compromise motion could achieve a four vote majority but were unable to identify one, and the Planning Commission did not adopt a recommendation. With the Planning Commission’s failure to act, the Zoning Code amendments advance to the City Council without a recommendation for or against the proposal, and the Council retains its authority to approve, modify, or reject them per Zoning Code Section 5.16.124.C.
Conclusion
The City Council may adopt the entire package of recommended code amendments that have been incorporated into the attached two draft Ordinances. Staff also incorporated various miscellaneous amendments intended to modernize outdated code provisions and to align the Municipal Code with current State laws and regulations.
Fiscal Impacts
None. Adoption of the proposed code amendments would have no direct impact to the City Council adopted annual budget.
ATTACHMENTS
• Attachment A: Ordinance to Amend San Leandro Municipal Code (redline showing changes)
• Attachment B: Ordinance to Amend San Leandro Municipal Code (clean version)
• Attachment C: Ordinance to Amend San Leandro Zoning Code
• Attachment D: Presentation
PREPARED BY: Eric Engelbart, Deputy City Manager, City Manager’s Office