Cannabis Licensing and Enforcement Commission

COMMISSIONERS Nelson Miller, Chair MASSACHUSETTS Ronald B. Hogan Glenn Cronin www.cityofmalden.org Diana Jeong Gary Christenson, Mayor Deano Summers CANNABIS LICENSING AND ENFORCEMENT COMMISSION City Hall, 215 Pleasant Street, Boardroom #105 Tuesday, August 23, 2022 at 5 PM This meeting was recorded. Committee Members in Attendance √ Nelson Miller, Chair Bldg. Commissioner √ Ron Hogan Finance √ Glenn Cronin Chief of Police √ Diana Jeong Mayor’s Appt. √ Deano Summers Council Appt. √ Kathleen Manning Hall Clerk Non-voting mem. Several applicants also in attendance. MINUTES ` 1. Roll Call of Committee members. Meeting was called to order at 5:02 PM and there was a quorum sufficient to conduct business. 2. Financial Clarification of CLEC applicant Center Harvest Corporation. Co-owner Leah Piantidosi introduced Treasurer Maria Cacciola to present the financial report, she has over 35 years of commercial banking and lending experience; experience in compliance as well. Building Purchase Price $3,000,000.00 Build Out Construction $1,401,350.00 Opening Expenses $519,754.00 Total $4,921,104.00 Funding strategy – they have a line of credit for $5M from QS Private Lending who is well known in the area. They showed slides of the interior of designed space, including GSA secure vault, and IT room. The owner of QS is an investor of Center Harvest. Richard of QS Lending has his own money that he is loaning from his fund privately. Outstanding line of credit is extendable and renewable, one-year revolving loan. QS was involved with funding Center Harvest’s other locations. They have two other locations and are experienced about how to move this business forward. Expected sales – hard to tell that, have goals, cannot predict actual sales. 1|Page  3. Financial Clarification of CLEC Applicant Faded LLC d/b/a Dris. Co-Owner Chris Fevry, co- founder Dharry Pauyo, and two investors were present as well. They have raised $320,000 and have $1.65M committed. Buildout - $540,000-$1.08M Security System - $60,000-$100,000 Product Purchase - $200,000, they purchase product on consignment. Mass market is declining, pricing is getting creative they get social equity discount. Hiring Staff Costs - $50,000 Marketing $200,000 – advertising, strategic partnerships Insurance Deposits (worker’s comp., 4 vehicles) - $50,000-$100,000 Delivery - $50,000 Cash reserve - $200,000 They estimate it will cost between $1.35M to $2M to get up and operated. Dris currently has four licenses - courier, transport, delivery operator, product manufacturing (methanol and butanol extraction – they have a team of executive chefs) and want to have retail in Malden. They are currently generating revenue from the courier business but not enough to pay for the buildout. Investors: • Danny Le, Vietnamese, former Malden resident, Disabled Veteran founded real estate capital firm - F80 Capital LLC is committing $1.5M to the project. Strictly an equity stake – he will own 10% of the company. • John Muise, Grow Global Investments invested $200,000 owns 6.6% of the company. • Arcview, Cannabis VC Fund investor – another option. • Khadijah Adams CEO – another option • Also have access to social equity loan fund that gives grants and interest free loans to social equity applicants. Potential to generate $5M-$7.5M in revenue which will result in $150K-$225K of tax revenue. They are social equity owned with local ties. 4. Discussion of Candidates. Nelson Miller opened discussion of candidates. Ron Hogan believes both candidates have a good understanding of what needs to be done to be successful and provided clear funding avenues. Nelson agrees that both candidates have a lot of experience in the industry. Chief Cronin asked Center Harvest if their location has the geographic equity needed for the community given there are two others cannabis shops in proximity – Center Harvest believes the building is a perfect location in terms of size and parking. Chief asked Dris about the traffic impact on their location as it is a busy area with a lot of area businesses. Dris will conduct a traffic study in order not to be a nuisance; they will provide delivery which will lessen traffic. Each candidate was discussed separately: • Center Harvest – CLEC Members commented: great location, big building, lots of parking, are a much stronger team than in the first two rounds when they came before the CLEC and they take a serious approach to security. Main concern is the competition with three stores in the same area. They will also need a variance from the buffer zone which can be difficult to obtain and has been discussed in the city for a long time although variances have been 2|Page  obtained in the city. Being near the MBTA will help with sales. They have a strong financial situation. • Faded LLC Dris – CLEC Members commented: Dris has also persevered and will be successful in this business and have a proven track record of opening and running a business. Consignment agreement shows creativity about lessening cash flow expenses; members prefer the location being close to Everett which has no licensed areas, and this is on the outskirts of the city. However, buffer zone issue against a residential area with an apartment building will be the main drawback. CLEC needs to move candidates forward who are prepared to succeed. Delivery component is something that will assist their success. They are social equity certified currently which is a plus for them. The thought is that both candidates would be successful. Ron believes that Dris is a better location on the border of the city and would like to give an opportunity to a certified social equity candidate who has gone the delivery route to get into the retail side of the business. They have been able to break down the barrier of getting into the business and the delivery experience is a plus. Motion by Ron Hogan to move DRIS forward with the full knowledge that they have a variance to overcome to apply for a special permit; and seconded by Diana Jeong. Clerk called the roll, and all are in favor, Motion passes unanimously. 5. Approval of August 9, 2022 Minutes. Motion by Diana Jeong to approve the minutes of August 9, 2022; seconded by Ron Hogan. All in favor, Motion passes unanimously. 6. New Business. a. Update on Cannabis Ordinance papers – they have moved to Ordinance Committee - two papers were not heard at the last meeting. Heard were the papers that clean up items on ordinance, process when you get licensed, permit, occupancy and principal use regulations all moved forward out of Planning Board and now go back to the City Council. b. Working to schedule a joint hearing before Planning and Ordinance Committee to be addressed in September: i. If Planning Board or the City Council will be the special permit granting authority; and ii. removal of the necessity of obtaining a variance if there is a buffer zone issue. c. Currently applicants cannot go before the City Council without a variance, and this will eliminate the need to go before the Board of Appeal. If that passes, a proposal will not be dead if a variance is needed - the City Council or Planning Board would decide. d. Charles Street location is required to hold another neighborhood meeting because their meeting was not held in a timely manner. 7. Next Meeting: Tentatively scheduled for Tuesday, September 20, 2022 Motion to adjourn at 6:30 PM by Ron Hogan and seconded by Chief Cronin. All in favor, meeting is adjourned. 3|Page