Planning Commission denies changes to planned cannabis microbusiness in South Lake Tahoe

SOUTH LAKE TAHOE, Calif. - There is now an open license for a South Lake Tahoe cannabis microbusiness after one of those approved in 2019 will not finish up the process of opening. On January 14, 2021, the City Planning Commission denied a request from James Street LLC to change the name of the approved operator and extend their deadline to open by six months.

After a rigorous process for interested parties to apply for one of the available cannabis business licenses in South Lake Tahoe, six businesses were selected based on the merits of their applications in June 2019.

At the time, the City invited those top applicants are invited to apply for a special public safety license and negotiate a formal development agreement with the City. By fall, three retail permits, two microbusiness permits, and one cultivation permit will be awarded.

To date, three retail businesses have opened-Embarc Tahoe, Cannablue and Tahoe Green. Redefining Organics is moving towards completing its cultivation and microbusiness, and the second microbusiness, Perfect Union, was to be opening retail sales and cultivation on James Avenue.

Points were awarded on the applications based on expertise, local representation in the business, financing, and community benefits, among other topics.

On Thursday, the South Lake Tahoe Planning Commission denied a request for a six month extension on the required opening date and denied an amendment to the Cannabis Use Permit to permit transfer from Perfect Union SLT, LLC to James Tahoe LLC.

Perfect Union SLT was awarded the original license. They had five others listed as partners and one of those partners, Melissa Sanchez, asked for the changes. According to Perfect Union SLT there has been a wholesale and material change of the approved operator, operating procedures, history, and experience of the
individuals who will be in control of the facility.

James Tahoe LLC entered into a lease on the property with the landlord without participation from the permit awardee, Perfect Union SLT.

"It was the City's intention in regards to cannabis businesses in South Lake Tahoe to be very transparent and competitive," said former Council member Brooke Laine who called into the meeting. She was also part of the ordinance process and cannabis subcommittee. "Although Perfect Union met all the criteria we were looking for, at the moment their wanting to change the structure and financing requires they repeat the process."

Laine suggested they deny Sanchez's requests and put out the license for a competitive bid.

A fellow task force and subcommittee member, South Lake Tahoe businessman David Orr, also called in with similar concerns. He credited the spirit of the blind ranking process as coming up with the best candidates for operating the first cannabis businesses in the City.

"The City sought the best and brightest to bring the business to the community. Perfect Union is no longer involved and the legitimacy of the entire process at risk – violates the criteria the city put together," said Orr.

Sanchez said that the original application has her name along with Scott Peters and Leon Abravanel, Rick Lobley, David Spradin, and Mark Pelter, and MWG Holdings Group, the parent company of Perfect Union.

"This is just a name change, we will still the same members and nothing changed," said Sanchez. "We just can’t use Perfect Union intellectual property so changing the name. There is no change to underlying ownership, just a name change. Didn’t like the loan agreement with Perfect Union. We are David versus Goliath.:

She said they will bring in an unnamed private lender.

"MWG Holdings Group, Inc. requests that you deny the petition to extend the Development Agreement and instead recommend that the permit be put out for a competitive process. Under the current scenario the petitioners are being allowed to submit application materials after the application period has closed," said MWG Holdings Vice President of Legal Arturo Sanchez in a letter to the commission.
"If the Commission and the City do not affirmatively assert their rights to prevent unlawful nontransparent transfers, the City will be approving of a new operator outside of a public process. This scenario, if allowed to continue will, result in setting precedent whereby any existing permittee could change the “operator” or management company without prior approval of the City."

The commissioners listened to several public comments and voted 4-0 to deny Sanchez's request.

When asked if James Street LLC had any comment to the decision, Sanchez said they did not.

It is unknown when the City will accept new applications for a microbusiness or if James Street LLC will file an appeal to the City Council. Perfect Union and Redefining Organics were the only two applicants for the two available microbusiness licenses. A third retail operation was only allowed because Redefining Organics chose to not offer retail.