Millions headed to city as cannabis license awarded

After months of presentations, applications and evaluations, Culture Cannabis Club of Canyon Lake was chosen Monday by the City of Canyon Lake as the first to be approved to open a cannabis business within the city.

Five bidders attempted to win the first and only permit, but scoring highest on the city’s scoring system was Culture CC.

Not only has Culture Cannabis Club won the big prize, so has the City of Canyon Lake. When the business opens in the Canyon Lake Town Center in the far-right corner of the same building in which the city and the Canyon Lake POA have their offices, the city will begin receiving 15.1% of the gross revenues of the cannabis store. Culture CC projects its first year revenues to be more than $15 million, resulting in a payment to the city of $2,265,000.

Culture CC will be required to pay quarterly payments to the city. After an upfront payment of $205,000 due immediately, the new cannabis business will pay either a minimum of $305,000 after each quarter or 15.1% of gross revenues, whichever is greater.

Culture CC will also be required to give annual contributions totaling $155,000 to city civic/non-profit organizations.

The license will be issued to Culture CC when it signs both a Community Benefits Agreement and a Neighborhood Compatibility Agreement. The agreements contain all of the conditions the city will impose on Culture CC.

“Then they must perform,” Chris Mann, City of Canyon Lake city manager, said. “ If they refuse to agree to the conditions, or if they fail to perform, the permit will be offered to the next highest ranked applicant, and so on.”

The various applicants were all aware of these agreements, Chris said. The conditions in the agreements though have been modified after citizens gave input at a May 25 public meeting.

“Between the requirements already outlined in Ordinance 215 and the comments made at the public meeting, none of the conditions sought by the city should come as a surprise to the applicant,” Chris said.

The city council, when it first reversed itself in September to approve the sale of cannabis products within the city, allocated just one license, for now, and set up the process for choosing a single applicant to earn that single license.

As part of the application process, applicants needed to show the location of where they would open their stores. Culture CC will move into the store currently occupied by the newly-opened Real Deals at 31524 Railroad Canyon Road in the Canyon Lake Town Center. It is anticipated that the store will open the first part of next year.

“We will be meeting with the applicant in the next couple of weeks to finalize the agreements, which will include conditions of approval,” Chris said. “A timeline for opening will be one of those conditions. The exact timeline will have to be negotiated, but I would expect a deadline sometime in the first quarter of 2023.”

Choosing the winner of the sole cannabis license was based on a point system. After making presentations to the city council, the five applicants submitted financial proposals in four categories. The business with the largest contribution in each category was given the maximum points for that category and the others received a proportionate number of points based on each of their proposed contributions.

Culture Cannabis Club received a total of 953.06 points out of a potential 1,000. The Syndicate received 784.80 points, Inland Empire Gardens, 677.46 points, Element 7, 613.02 points and SIPKOI, 509.42 points.

Culture Cannabis Club owners include Devon Julian, Chris Francy, Julie Le and Paul Tossonian.

Devon, the Chief Executive Officer, has more than 10 years in the cannabis business and is responsible for the company’s regulatory compliance. Chris, the company president, has been a licensed cannabis retail owner and operator since 2015.

Julie, the director of administration, has more than six years in cannabis business ownership and administration. She will focus on financial viability, team building and community benefits. Paul is the director of community relations and has been in the cannabis business for three years. He has lived in Riverside County for 39 years and is a cannabis microbusiness owner.

In its presentation to the city, Cannabis CC outlined its business model. It plans on being open in the Town Center every day from 9:00 a.m. to 9:00 p.m. and anticipates receiving 450 customers a day with an average sale of just under $100.00.

The new business said it will have an ID verification and check in process for each customer. The store will have an Advanced Online Ordering option where customers can pick up their orders at designated locations in the store.

Mobile delivery of cannabis products will also be part of the services that Culture CC said it would provide to its customers, including the elderly and disabled customers and to those who live beyond Canyon Lake.

After its first year, Culture CC projects its annual gross revenue, of which the city receives 15.1%, will grow to $17 million in its second year and nearly $20 million in its third year.

Culture CC said it will be hiring entirely from the local community and will provide wages starting at $19 per hour and will include a health benefits program as well as other benefits. Background checks will be conducted on all employees and each will go through an intensive four-week training program.