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Port Hueneme council finds five cannabis development agreements in default, gives 30 days to cure
Summary
The City Council voted unanimously to find five cannabis development agreement holders out of compliance and directed staff to issue notices and begin revocation if defaults are not cured within 30 days. One site has a court-appointed receiver who said he expects to make a principal payment.
Port Hueneme City Council voted unanimously on Oct. 20 to find five cannabis development agreement holders out of compliance and directed city staff to provide written notice and begin the process to revoke the agreements and associated conditional use permits if the defaults are not cured within 30 days.
The council action followed a staff presentation listing the five development agreements under review: Hueneme Patient Consumer Co-op (HPC); Port Hueneme Organic Team Inc.; Red Mule Group LLC; PH Investment Group LLC (Element 7); and Fire Garden LLC. Staff said failures included permanent closure (HPC), failure to begin operations after extended deadlines (Port Hueneme Organic Team and Red Mule), and missed contractual payments equal to 5% of gross revenues (Element 7 and Fire Garden). Where payments were missed, staff presented itemized amounts that included contractual payments, late fees and audit/review costs.
Deputy City Manager Charles Peretz presented the staff report and told council that the development agreements require businesses to provide public benefits including employment, sales tax revenues and contractual payments to the city, and that the agreements contain material terms and deadlines. He recommended the council find the identified developers out of compliance and provide 30 days to cure. The council approved that recommendation without recorded dissent.
Kevin Singer, a court-appointed receiver for Element 7, addressed the council during the public hearing. Singer said a senior secured creditor had petitioned a Santa Monica court to appoint a receiver for multiple Element 7 locations statewide; he said his office has arranged for the creditor to pay the principal portion of Element 7’s outstanding city fees (about $27,000) and requested flexibility on late fees to facilitate curing the account and reopening the business. Singer said his office intends to operate the store and seek a sale to a prospective operator once municipal and court approvals are in place.
City staff said ongoing collection efforts will continue regardless of these actions, and that any developer who cures the default within the 30-day period can request restoration. Council also directed staff to meet with the receiver and to return to the council if a credible cure plan is presented during the 30-day window.
Staff additionally asked the council to consider reducing the city’s cap on the number of cannabis businesses in Port Hueneme (current municipal code section 39.87.1 lists numerical caps by license type); the council asked staff to prepare code revision options for a future meeting.
Votes at a glance: The council approved staff’s recommendation to find the five development agreements in default and provide 30 days to cure. The motion passed unanimously.
Why it matters: The action preserves the council’s contractual enforcement options while leaving room for operators or receivers to cure defaults; it also signals the city’s intent to assess whether its cap and permitting framework remain appropriate given regional competition and market conditions.
