Planning commission recommends reduced community benefit fees for six Lake Elsinore cannabis businesses

The Lake Elsinore Planning Commission unanimously recommended that the City Council approve amendments to development agreements for six cannabis businesses that would revise the community benefit fee (CBF) structure.

Under the proposal described by staff, retail floor area would be subject to a capped CBF of $25 per square foot (no further annual 4% escalation) and non‑retail uses (cultivation, distribution, manufacturing, testing) would be assigned a reduced CBF of $5 per square foot (also without the 4% annual increase). Staff said CBF payments could be made monthly under the amended agreements. Staff told the commission the new rates would become effective this year but would not be applied retroactively to payments already made for 2025.

Staff explained the current CBF framework began at $18 per square foot and increases by 4% each year; the proposed amendments create separate definitions for retail and non‑retail floor area to support the two rates. The item applies to six existing businesses located in the city's industrial zoning districts (M1 and M2); staff identified the locations generally as three near Corydon Road in the East Lake District, two near Pasadena Street in the business district, and one in the Mindthorn/Collier Avenue triangle.

Applicants and industry representatives who attended thanked the commission for considering the changes. Gilbert Alba, identified as with Alba, said he appreciated the commission and staff "for considering adjustment and looking at this." Javier Montes of The Healing Tree said the changes "come at a crucial time in our industry" and thanked the commission. Darren Hagen of The Healing Tree and Jason McGee, who described taking over a failing business, also addressed the commission, asking whether the new terms would apply to them and about the process for amending existing development agreements.

Staff advised that development agreements are negotiated per business; businesses seeking to adopt the new fee structure must submit amendments to their individual agreements. Staff also recommended the commission find the proposed DA amendments exempt from CEQA under a Class 1 exemption for existing facilities and adopt a resolution recommending City Council approval.

Commissioner questions focused on the definition of retail versus non‑retail floor area and on the potential fiscal impact to city revenue. Staff said it could not provide a comprehensive revenue comparison at the hearing because some businesses may later reconfigure floor plans or seek amendments; staff noted the revised CBF rates would likely produce reduced revenue relative to current terms for the six businesses under discussion.

Commissioner Devore moved to approve the DA amendments as a group; Commissioner Pease seconded. The motion carried unanimously. The planning commission record shows the vote was unanimous and that staff will prepare the package for City Council consideration.

Why it matters: The change alters the annual fee structure that contributes to city revenue from cannabis businesses and lowers the recurring fee obligations for the six businesses named at the hearing. It also clarifies how floor area will be measured for fee purposes and changes payment frequency options, which could affect cash flow for operators and long‑term revenue projections for the city.

Background and next steps: Staff recommended a CEQA Class 1 exemption and asked the planning commission to adopt a resolution recommending council approval; the commission approved that recommendation. The amendments will next be forwarded to the City Council for final action; the effective date for businesses that have not yet paid 2025 CBF would be this year, but the amendments were not made retroactive to payments already submitted.