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HomeMy WebLinkAbout2019-08-20 PC Regular Meeting Agenda Packet CITY OF PALM DESERT REGULAR PALM DESERT PLANNING COMMISSION MEETING AGENDA Yf TUESDAY, AUGUST 20, 2019 — 6:00 P.M. ADMINISTRATIVE CONFERENCE ROOM 73-510 FRED WARING DRIVE, PALM DESERT, CA 92260 I. CALL TO ORDER II. ROLL CALL III. PLEDGE OF ALLEGIANCE IV. SUMMARY OF CITY COUNCIL ACTIONS V. ORAL COMMUNICATIONS Any person wishing to discuss any item not appearing on the agenda may address the Planning Commission at this point by stepping to the lectern and giving his/her name and address for the record. Remarks shall be limited to a maximum of three (3) minutes unless additional time is authorized by the Planning Commission. Because the Brown Act does not allow the Planning Commission to take action on items not on the Agenda, members will not enter into discussion with speakers but may briefly respond or instead refer the matter to staff for report and recommendation at a future Planning Commission meeting. Reports and documents relating to each of the following items listed on the agenda, including those received following posting/distribution, are on file in the Office of the Department of Community Development and are available for public inspection during normal business hours, Monday-Friday, 8:00 a.m.-5:00 p.m., 73-510 Fred Waring Drive, Palm Desert, CA 92260, telephone (760) 346- 0611, Extension 484. VI. CONSENT CALENDAR ALL MATTERS LISTED ON THE CONSENT CALENDAR ARE CONSIDERED TO BE ROUTINE AND WILL BE ENACTED BY ONE ROLL CALL VOTE. THERE WILL BE NO SEPARATE DISCUSSION OF THESE ITEMS UNLESS MEMBERS OF THE PLANNING COMMISSION OR AUDIENCE REQUEST SPECIFIC ITEMS BE REMOVED FROM THE CONSENT CALENDAR FOR SEPARATE DISCUSSION AND ACTION UNDER SECTION VII, CONSENT ITEMS HELD OVER, OF THE AGENDA. AGENDA REGULAR PLANNING COMMISSION MEETING AUGUST 20, 2019 A. MINUTES of the Regular Planning Commission meeting of July 16, 2019. Rec: By Minute Motion, approve as presented. Action: B. REQUEST FOR CONSIDERATION to approve a one-year time extension for Tentative Parcel Map 36502 for the subdivision of a 2.09-acre parcel into four parcels (three single-family lots and one retention basin lot) located at 49-425 JFK Trail. Case No. TPM 36502 (DRRS Holdings, LLC and Ross, Johnson and Associates, Victoria, British Columbia, Applicant). Rec: By Minute Motion, approve a one-year time extension for Tentative Parcel Map 36502, until May 21 , 2020. Action.- C. REQUEST FOR CONSIDERATION to approve a one-year time extension for Tentative Tract Map 37339 and Precise Plan 17-035 for the subdivision of a 7.74- acre parcel into 80 condominium units, common area amenities, and a future 1 .3- acre commercial parcel located at the northwest corner of Frank Sinatra Drive and Cook Street. Case No. TTM 37339 (Wes Lind, Arcadia, California, Applicant). Rec: By Minute Motion, approve a one-year time extension for Tentative Tract Map 37339 and Precise Plan 17-035, until September 19, 2020. Action: VII. CONSENT ITEMS HELD OVER Vlll. NEW BUSINESS None IX. CONTINUED BUSINESS None X. PUBLIC HEARINGS Anyone who challenges any hearing matter in court may be limited to raising only those issues he or she raised at the public hearing described herein, or in written correspondence delivered to the Planning Commission at, or prior to, the public hearing. Remarks shall be limited to a maximum of three minutes unless additional time is authorized by the Planning Commission. 2 AGENDA REGULAR PLANNING COMMISSION MEETING AUGUST 20, 2019 A. REQUEST FOR CONSIDERATION of a request to approve a 7,370-square-foot cannabis analytical testing laboratory for Evio Labs located at 72-895 Fred Waring Drive; and adopt of a Notice of Exemption in accordance with the California Environmental Quality Act (CEQA). Case No. CUP 18-0009 (Evio Labs, Costa Mesa, California, Applicant). Rec: Waive further reading and adopt Planning Commission Resolution No. 2760 approving Case No. CUP 18-0009, subject to the conditions of approval; and adoption of a Notice of Exemption in accordance with CEQA. Action: Xl. MISCELLANEOUS None XII. COMMITTEE MEETING UPDATES A. ART IN PUBLIC PLACES B. PARKS & RECREATION XIII. REPORTS AND REMARKS XIV. ADJOURNMENT I hereby certify under penalty of perjury under the laws of the State of California that the foregoing agenda for the Planning Commission was posted on the City Hall bulletin board not less than 72 hours prior to the meeting. Dated this 15t" day of August 2019. Monica O'Reilly, Recording See tary 3 CITY OF PALM DESERT PALM DESERT PLANNING COMMISSION PRELIMINARY MINUTES TUESDAY, JULY 16, 2019 — 6:00 P.M. COUNCIL CHAMBER 73-510 FRED WARING DRIVE, PALM SERT, CA 92260 I. CALL TO ORDER Commissioner Nancy DeLuna called the meeting to at m. II. ROLL CALL Present: sent: Commissioner Joseph Pradetto r regory Commissioner John Greenwood Vi - r Lindsay Holt Commissioner Nancy DeLuna Also Present: Craig Hayes, Assista torney Ryan Stendell, Dir o unity ment Eric Ceja, Princ' anner Nick Melloni, tant Plann Monica O'Reilly,' gem list II III. PLE •LEG issioner De led ledge of Allegiance. IV. SU RY OF COU ACT Director mmunity elopment Ryan Stendell summarized pertinent City Council actions. V. ORAL COMMU TIONS None PRELIMINARY MINUTES PALM DESERT PLANNING COMMISSION JULY 16, 2019 VI. CONSENT CALENDAR A. MINUTES of the Regular Planning Commission meeting of June 18, 2019. Rec: Approve as presented. Upon a motion by Commissioner Greenwood, second by Commissioner Pradetto, and a 3-0 vote of the Planning Commission the Consent Calendar was approved as presented (AYES: DeLuna, Greenwood, and Pradetto; NOES: None; ABSENT: Gregory and Holt). VII. CONSENT ITEMS HELD OVER None Vill. NEW BUSINESS None IX. CONTINUED BUSINESS None X. PUBLIC HEARINGS A. REQUEST FOR CONSIDERATION of Precise Plan 19-0004 to construct a 14,525- square-foot fitness center, modification of existing'`parking areas, and remodel of an existing 61,450-square-foot clubhouse;building located within The Lakes Country Club at 161 Old Ranch Road; and adoptio ", of a Notice of Exemption in accordance with the California Environmental Quality ACt (CEQA). Case No. PP 19-0004 (The Lakes Country Club Association PalmQesert, California Applicant). Assistant Planner Nick Melloni presented"the staff report (staff report(s) are available at ,iJacityofpalmdQse__rl . Staff recommended approval and offered to answer any questions. He noted that the applicant is also present to answer any questions. Commissioner DeLuna declared the public hearing open and invited public testimony FAVORING or OPPOSING this matter. MR. STEPHEN FRAZIER, Applicant/Architect, San Diego, California, stated that they are proposing to expand the existing clubhouse and replace the fitness center to meet the evolving needs of the club's membership. They designed the project to be compatible and consistent with the existing architecture. He said the entire project was within the interior of the club property, and they do not foresee any issues that would raise objections from the community. He requested that the Commission approve the project, and he offered to answer any questions. With no further testimony offered, Commissioner DeLuna declared the public hearing closed. 2 PRELIMINARY MINUTES PALM DESERT PLANNING COMMISSION JULY 16, 2019 Commissioner Greenwood moved to waive further reading and adopt Planning Commission Resolution No. 2759, approving Case No. PP 19-0004 and adopting a Notice of Exemption in accordance with the CEQA, subject to the conditions of approval. The motion was seconded by Commissioner Pradetto and carried by a 3-0 vote (AYES: DeLuna, Greenwood, and Pradetto; NOES: None; ABSENT: Gregory and Holt). XI. MISCELLANEOUS None XII. COMMITTEE MEETING UPDATES A. ART IN PUBLIC PLACES None B. PARKS & RECREATION None XIII. COMMENTS Mr. Stendell welcomed Craig Hayes with t Best ger. He will be attending the Planning Commission meetings and,workir lanni aff. XIV. ADJOURNMENT With the Planniill� ommissiorjyncurrene. Commissioner DeLuna adjourned the meeting at 6 12. ` NANCY DE LUNA, COMMISSIONER ATTES �n 1 . RYAN STENDELL, SECRETARY MONICA O'REILLY, RECORDING SECRETARY 3 PLANNING COMMISSION STAFF REPORT CITY OF PALM DESERT DEPARTMENT OF COMMUNITY DEVELOPMENT MEETING DATE: August 20, 2019 PREPARED BY: Kevin Swartz, Associate Planner REQUEST: Consideration of a request to approve a one-year time extension for Tentative Parcel Map 36502 for the subdivision of a 2.09-acre parcel into four parcels (three single-family lots and one retention basin lot) located at 49-425 JFK Trail. Recommendation By Minute Motion, approve a one-year time extension for Tentative Parcel Map (TPM) 36502, until May 21, 2020. Property Description On March 18, 2014, the Planning Commission adopted Resolution No. 2621 approving TPM 36502 to subdivide a 2.09-acre parcel into four (4) parcels. The breakdown is as follows: • Parcel 1 - 20,787 square-foot single-family lot • Parcel 2 - 23,272 square-foot single-family lot • Parcel 3 - 34,206 square-foot single-family lot • Lot B - 8,146 square-foot retention basin The subdivision will create a flag lot extending west of JFK Trail, which will serve as access to the residential lots. The access road is 16 feet in width. The applicant will also widen JFK Trail to 25 feet in width, and install new curb and gutter. Each proposed single-family home would have to meet the R-1 , 20,000 development standards, as well as receive approval from Ironwood's Homeowners' Association. On August 7, 2013, the Planning Commission ratified an extension granted by AB 116 for tentative tract and parcel maps approved after January 1, 2000, and unexpired as of July 11, 2013. AB 116 extended TT 36502 until May 6, 2018. Time Extension The applicant received a one-year time extension last year and is still in the process of working with the Department of Public Works on the final map. The final map must go before the City Council for approval, and the one-year extension will allow them to continue to work on the map. August 20, 2019 — Planning Commission Staff Report Case No. TPM 36502 Time Extension No. 2 Page 2 of 2 Staff has stated to the applicant that this will be the last recommendation for a time extension, as the applicant has had an ample amount of time to finalize the map. Generally, as conditioned, the map conforms to the goals and policies of the General Plan, Zoning Ordinance, and the Subdivision Map Act. The property is zoned R-1, 20,000, and the project complies with the minimum lot square footage of 20,000 square feet. Staff is recommending a one-year time extension as allowed by Palm Desert Municipal Code Section 26.20.140 "Extensions of Time"and the Subdivision Map Act. If approved, the tentative map will remain in effect until May 21, 2020. LEGAL REVIEW DEPT. REVIEW FINANCIAL REVIEW CITY MANAGER N/A - N/A N/A Ryan Stendell Robert W. Hargreaves Director of Janet Moore Lauri Aylaian City Attorney Community Director of Finance City Manager Development APPLICANT: DRRS Holdings, LLC and Ross, Johnson and Associates 888 Fort Street, 4th Floor Victoria, BC V8WIH8 ATTACHMENTS: 1. Tentative Parcel Map 36502 GAPlanning\Kevin Swartz\Word\TPM 36502\PC Staff Report Time Extension 2 JFK Map.docx o IN THE CITY OF PALM DESERT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA I I I I x < < ><N i u[a>wauT OWNER/APPLICANT. ASS;JONSON S ASSOC. TENTATIVE PARCEL MAP N0. 36502 ; I II a° GfUNDSAYROSS VIC fOA, .Ct.!TN£LOOK A PORTION OF THE SOUTHWEST QUARTER OF SECT/ON 32, TOWNSHIP 5 SOUTH, RANGE 6 EAST, S.B.M. I I _ VSW?H,B.C.CANADA 11L FRED WAKING DRIVE ��-j V8W iH8 STATE HIGHWAY II I I I ENGINEER: f£lRO ENGINEERING,INC. FEIRO ENGINEERING, INC. OCTOBER, 2012 L W P.a BOX 12980 FMRMY DR L 7 (EXISTING HOME) J (EXISTING HOME) �� PALM DESERT,CA.92255 (633.90 IF) I I (628.00 IF) I I I I (760)3l6-8015 PHONE FAX 1 (633.4 PAD) I I (627.5 PAD) I I I APN:655-300-012 I(EXBnNG AIM) luc>alero6nd�E MAtt 74 1 r—1 J I I I I (621.5 IF) — APN: 655-300-017 a M11`t� T .rW,s APPROXIMATE AREA. 2.09 ACRES �.� tiM16ti; III i i —— ��` ` -`� UTILITIES., �5 IC SO CA GAS(THE CAS CO.) N "�z r� ` / /��� 1 J O� e9`M1� ELECTRIC 50. CA.EDl50N 9 {. '�'4`1�,e91 �lil M1y� O _ —— — ——— —L I _sL ' ——- TELEPHONE VERIZON ( WATER CVWD wdv ure x oao6eiAxuH6i - III'' n\Iri� ...-� i - _ n 1T� �gI n1/�\ \n i/�_\ 1 ( p SEWER COO 9 —1 uN6 - - x�ti ._ 1 APN:655-3oo-ale CABLE TIME WARNER SITE C.C. — rl ls,; al i """"'(" SCHOOL DISTRICT DESERT SANDS UN/fl£0 SCHOOL DISTRICT I 1Y� PROPOSED LAND USE:SINGLE FAMILY RCSIDENTUL VICINITY MAP �� i �� t ` I / I, ! 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TOP OF FOOTING II I YK � (6?-0 (aM e)\ C` n1 y� :'{ (6m r) (szs.J • 8.F BOTTOM of FOOMx' _ 1 t fi Z ROTT-OF-WAY 0/W ORNEMY PROPOSED 6.719E 1 — ; CURB CUT. PI VE 1 al TC. TOP OF CURB y VV�� �3GG v o I F.L. FLOW LINE CURB AND CUM 7� nmosm s LI J '7A1 Qi� Q scW[x E.P. EDGE OF EX/SRNG PAYELfN7 VFW, .__1 H IV n 1 — — 1 —-j� ry I Nwac T.P. TOP OF MP OF CRATE TYPICAL SECTION A-A \ ————-—-r— —— e} = NV NWRT EZ mN c�' r LGJ t'cMScuo ON CURB JFK TRAIL \ oO _ °"1„ (sJ 5•CHISELED ON CURB Iq7 TO SCALE 1J [E] Y"CHISELED ON CURB PROPOSED �\ 51t s (99.9) DOSUNG EIEVAnON { `gyp\� ' - ' •�) r. ADD/ L R/W TO IWMYA PROPOSED ELEVAiroN EXISTING /STING_ 15.50' EXISTINGy'(Q� / I -—�,- .-}. -- ' -,,- 2al.3R .Il c. - i JI - _ I 911 SO F( —gig— PROPERTY LINE RIG-Hr-OF-wAr Yrz-� -- - 0.0209 AC —-— EXMING C ADDIIIONLL R/W TO BE R/W , (ee{0) (e3sA) i ` I/ _(99). �l5„NGON�OUR DEEDED i0 IRONW000 Y _ 12 50) __ ___ 12 50' __ \ 1 [ 'N ` I I — ORNN4CE SWAIE MASTER MNNrEwwcE -�- 1 - �\ i �� I s — — o — �( —� rw� _ sag•I's9 �. .. ASSaunON EP p, ! I - ..� _ I .7,I.dI,zM.L v EXISnNG SLoPf G 15 .1—''�� nwSHROPE VARIES y ' ( i •••"'••'•••••••• EX6nNG CURB AND GUTTER VaSTING a .. PRCPoSED _ IXISTiNG RIALL ^WALL PAVEMENT I' I/ cy'�cazJ 1� 1 (`�, esA >® aETaMNc wuL r 3 I GV?p"M1�0 —�—$- EXISnNG BLOCK WALL PROPOSED IiM:MEe e' 1 I I ' ' \ \ I 7 �A��Rgo169 : PROPOS'ED BLOCX WALL of.) C J I i ( ,' PA ` , 1' , g° >J .wEEr FLOW CM AWi 1 1R PROPOSED f I 34,1 n EOCF I'l O CONCRETE wA1ERLa1E 0,7853 A / I I ' J.9r_ ro7S.S PAD dD`'k syA� - -��g{� ®Y WATER METER �//��Jjj AA�WEERXYYEE I� `I Q rp2• 33' ` / `b FIRE HYO¢wr ' ¢§ / PP POwEk POLE TYPICAL SECTION B—B °a & I' ' - %'I gfpy�' rE1 +e Iv I o WATER VALW NZU ,.W I n xlx�' OLUME=11,756 CU. JFK TRAIL � IJ) ® �-;�.5'DEEP: q 1 ` m IRRFC.I71ON CONTROL VAL OF I NOT ID SCAt£ I `� ` / /V j M i tY OM=619.5 - ow 0 s 7 ® TE BHGf BOX m3tl / \ .FUR IPE I ® TEIEPHORE 60X 11`11 x •ga POOL r/ AND LANDS TO 1 ) I Ls'°- - �t-1 S •I�fw q � ' r6M r1�1— I� �fAUy 0�g�:• — / -- "�> i l ® �`�\ - -$r eNca- .a T' _�:T - _ snsr r•w szzm rs .ter x '� _w3p _ rArt , a ti�-- r / � .. AG9.rtR�OJ, � =r" tAcv�tEK-,- .. - = r2•AFP rrzs--- GRAPHIC SCALE W. 6* � y 1— GATE AL'C'fS5 .. 1 HT ` $ Taaronr / IX.T6PF GATE BOX 7 -1m 68sr 1 (EXISTING HOME) -- -- J (632.45 FT) I a 3 S 5 S PLANNING COMMISSION STAFF REPORT CITY OF PALM DESERT DEPARTMENT OF COMMUNITY DEVELOPMENT MEETING DATE: August 20, 2019 PREPARED BY: Kevin Swartz, Associate Planner REQUEST: Consideration of a request to approve a one-year time extension for Tentative Tract Map 37339 and Precise Plan 17-035 for the subdivision of a 7.74-acre parcel into 80 condominium units, common area amenities, and a future 1.3- acre commercial parcel located at the northwest corner of Frank Sinatra Drive and Cook Street. Recommendation By Minute Motion, approve a one-year time extension for Tentative Tract Map (TTM) 37339 and Precise Plan (PP) 17-035, until September 19, 2020. Property Description On September 19, 2017, the Planning Commission adopted Resolution No. 2708 approving TTM 37339 and Precise Plan 17-035 known as "The Villas at Cook Street." The project is a gated community located on 7.74 acres and created 80 two-story condominium units, common area amenities, and a future 1.3-acre commercial parcel. Time Extension The property owner is trying to sell the parcel with the entitlements and is requesting an additional year to do so. Generally, as conditioned, the project meets the vision of the General Plan of a Neighborhood Center, which includes residential and commercial uses. The project also meets the Planned Residential zone and density of 17 units per acre by providing 12 units per acre. The project also complies with all development standards, including building height. The map conforms, with the Subdivision Map Act. Staff is recommending a one-year time extension as allowed by Palm Desert Municipal Code Section 26.20.140 "Extensions of Time" and the Subdivision Map Act. If approved, the tentative map will remain in effect until September 19, 2020. LEGAL REVIEW DEPT. REVIEW FINANCIAL REVIEW CITY MANAGER NIA N/A N/A Ryan Stendell Robert W. Hargreaves Director of Community Janet Moore Lauri Aylaian City Attorney Development Director of Finance City Manager APPLICANT: Wes Lind, 285 West Foothill Blvd, Arcadia, CA 92629 ATTACHMENTS: 1. Tentative Tract Map 37339 and Site Plan Aps 319 ti PROJECT�• � `! � � � � �� ' �- ■ ENTRY •• e — • ♦ _ • _� ------------ � � .. � � �► * y. �' SITE SUMMARY P3X P3 ,Y" g -•y i GROSS AREA 7.74 AC 1 P2 Pt P2 P3 r • �`w� , `.• RESIDENTIAL AREA 6.44 AC �' • ` + ■'� ' ' FUTURE RETAIL AREA .3 AC 4 • '•.'t TVPI(/1L WET • 3•" \'7 r 1 r VEmcuLAR� PARlpNG � ,: RESIDENTIAL UNITS 80 DU PRNATE DRIVE � GATE .. �2 •i•'t'3'�CAL9ACk'� � 1434 SF PLAN 1 (21x47) 36D/2.5 20 DU 1492 SF PLAN 2(21x47) 3BD/2 5+TECH 19 DU 1663 SF PLAN 3(2047) 4BD/2.5 23 DU ) 6j as ' •� t 41 1663 SF PLAN 3X(24x47) 4BD/2.5 18 DU P3 P2 Pt P2 P1 P:x ®P3 '` i PCbI � 'i /� �,,'\ • i, ` DENSITY 12A DU/AC COMMON OPEN SPACE 58,395 SF(1.34 AC) Pax Pt PZ P, P2 Pa ..100678E . s •'� . EXISTING •i oP3 ' . A EXISTING PRIVATE OPEN SPACE 49,931 SF 0.15 AC) _ _ o 3+. .'.n, ,.- _ �_, c� 3 v PARKING GARAGE 160 SPACES PRIVATE DRNE OPEN 43SPACES VARL9LESE'r Gt _ _ - - -/- QP3 _ AT PR,VMTE - / TOTAL 203 SPACES(2.5/UNIT) ,�• 0 a is C � fl fl 0 fl C Sp P3 P2 P1 P2 Pt Pax i F P3 P3x P3 P3X r pu P1 P2 Pt P2 P3 P3X P7 P2 Pt P2 P, P2 t P3 t ''1 � 3 - tq --I t ��� •-�--PRIVATE 6R11t£ p• ,9, � � E Q P � •f` _` f FUTUREArCESS _ f - P N% OP37 TORETAR i FUTURE RETAIL I , } 1.3 AC y. �2 p. n 1 N.A.P. 1 �� :�-I t Pze i P1 OPEN SPACE OL 12256 SF 3X 'r oP- -:,COOK STREET i 0 2U .0 80 CSU SAN BERNARDINO, PALM DESERT CAMPUS Archttettute•Planning P'ac Ca- ct .e Seembe•13 2C•' •, ' 6ee4s6s FRANK F_•V SINATRA & COOK CONCEPTUAL SITE PLAN A .0 kt2y car. _v_c=P' CA x:—• -0.90 •-•• , • T I TEN TA TI VE TRACT MAP NO. 37339 I tD Cl TY OF PALM DESERT i CQUMYOFRIVERS/QE a I t,t,0/C6k►.poaa/w o+rrtcnra lNfAM,faam.i 4ti f srcf ��, G / 0.+1Ra•••MrD•Yv M KMMW r cup" up.47out.inv r�OCf 6 r is' ,� ]I'•TI' Pal/ � �� pss/afrAm-eruv.asArss/ooau.>,unavtrs.+ar.--__ e 1 1\ Rrsolt tG•a o- I trmnc f.s'IyT a / -------- --- w• v. ;" c- 2f �*- o <=SITE , Jr1H °-'T,.�•- ■..ra�_ =t.a.oa r- •Yy- ''3_' r>eM.f�su rf. { i ; 7.----aeY1riY'Jil0'.s.at�—_ -�'.�^_ t• Was o¢ra zwa+ T f+aa •,era D "M"T .•Its turps trl7es� i t>rfrse a►!tw•rrDr ! �om earw�er 1 1 �`+•-r^-�-- /�- r tR•csJ AtT !a' 1J•1 Si'dp' d of I�r pufrx,•csas QIF„6¢B•WP�/ l•r iM wsmers<ao fRAW • s �TC1NT rY AUP nMII lrl•IUa tliiJ Y �¢¢er�algrr•non,r raa a Rr.S -- �? . _ f�l_ ' _ ------���_ _--- �a a- }� 1 I I; l- nmr c s aryl Duvet ma,o*a amrc a of►mrrrt tJ1 a_ srzR (} R/4R�1 VILE R S 6/g ''-riail t. 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TENTATIVE TRACT "° •' w COOK STREET MAP NO. 37339 lbY nwvlo• NP r� w�r•� nr'• ••• RCvrYO"S CA Suit Li••10ar• a.r1 w••,r•I f>r 1f10'=Mu W1 1 of 1 PLANNING COMMISSION STAFF REPORT CITY OF PALM DESERT COMMUNITY DEVELOPMENT DEPARTMENT MEETING DATE: August 20, 2019 PREPARED BY: Kevin Swartz, Associate Planner REQUEST: Consideration of a request to approve a 7,370-square-foot cannabis analytical testing laboratory for Evio Labs located at 72-895 Fred Waring Drive; and adopt a Notice of Exemption in accordance with the California Environmental Quality Act (CEQA). Recommendation Waive further reading and adopt Planning Commission Resolution No. 2760 approving Conditional Use Permit 18-0009, subject to the conditions of approval; and adoption of a Notice of Exemption in accordance with CEQA. Background Analysis A. Property Description: The property is located on the southwest corner of Fred Waring Drive and Acacia Drive. On January 15, 1991, the Planning Commission approved the two-story 7,370-square-foot office building with 26 parking spaces, and access off Acacia Drive. The building was constructed and completed in 1992, and has operated as an office professional use since its construction. B. Zoning and General Plan Designation: Zone: Office Professional (OP) General Plan: Neighborhood Center C. Adjacent Zoning and Land Use: North: OP — Office Building South: Residential Mixed Family (R-2) — Single Family Homes East: OP — Office Building West: OP — Office Building August 20, 2019 — Planning Commission Staff Report Case No. CUP 18-0009 — Evio Labs Page 2 of 5 Proiect Description The project includes minor tenant improvements for a new cannabis analytical testing laboratory business within an existing office professional building. The applicant, Evio Labs, is pursuing city and state permits for the operation of a cannabis-testing laboratory. Tenant improvements include an extraction prep room for testing, a microbiological room, a security room, an intake lab, a walk-in cooler, offices, storage rooms, and restrooms. The improvements also include several security features and improvements to the air handling system to mitigate any odors. There is no on-site retail of cannabis products at this site. The operation proposes to be open seven (7) days a week between the hours of 6:00 a.m. and 7:00 p.m. The business expects to employ five (5) to eight (8) people consisting of laboratory technicians, technical directors, and managers. Vehicle parking is available within the existing parking lot consisting of 26 parking spaces. The business will specialize in analytical testing in cannabinoid potency, including THC, THCA, CBD, CBDA, CBN, CBC, and CBG. This also includes the THC:CBD ratio of immature plants. The business will also specialize in terpene analysis, water activity and moisture content, microbiological testing (yeast/mold/bacteria), pesticide/chemical screening, residual solvent screening, immature plant inspections, foreign matter inspections, and heavy metals screening. The business will also provide critical information about the quality and content of cannabis flower, concentrates, extracts, and infused edibles. It provides this information by gathering samples of the product from the consumer and testing the samples at the laboratory. Once the analysis is completed, the samples are destroyed in accordance with waste disposal guidelines. Sometimes the samples will be returned to the testing client, as allowed by law. The business anticipates that the most amount of cannabis they would have on-site is approximately two pounds. Evio Labs will primarily serve the compliance testing needs for licensed distributors in the Coachella Valley and throughout Southern California. Analysis The Bureau of Cannabis Control developed testing procedures to ensure that all cannabis goods are tested by a licensed testing laboratory for a variety of attributes for the protection of the public. The applicant, Evio Labs, was founded in August 2014 and has labs in Oregon, Denver, Massachusetts, Florida, and California (Los Angeles and Berkley). G\Planning\Kevin Swartz\Word\CUP'S\CUP 18-0009 Evio Labs\PC Staff Report-Evio Labs.doc August 20, 2019 — Planning Commission Staff Report Case No. CUP 18-0009 — Evio Labs Page 3 of 5 A. Commercial Cannabis Businesses: In October 2017, the City Council adopted Ordinance No. 1329, establishing a comprehensive set of regulations for commercial cannabis businesses. Those regulations are in Section 25.34.120 of the Palm Desert Municipal Code (PDMC). The Cannabis Ordinance limits the location for cannabis testing and research laboratories to the OP and Service Industrial (SI) zones. The ordinance does not limit the number of testing laboratories and does not require a separation from other cannabis businesses, schools, daycares, and youth centers. All commercial cannabis businesses are required to submit a Conditional Use Permit (CUP) and Cannabis Regulatory Permit. The applicant has submitted all information requested for the review of both applications and meets all of the requirements, including the background check. B. Land Use Compatibility: The site has an existing two-story office professional building located in the City's OP zoning district, and has operated as an office professional use since its construction. The OP zoning district is intended for various levels of intensities for business, office, medical, administrative, research and development, and service of products intended for use within Palm Desert and surrounding communities. As such, cannabis testing and researching laboratories are permitted within the OP zone, subject to review and approval of a CUP and Cannabis Regulatory Permit. The surrounding area contains several professional office uses along with residential uses to the south. The use of a cannabis testing and research laboratory is similar to other medical laboratories and research facilities that are allowed in the OP zone. The proposed use is consistent with the zone and with other uses within the surrounding area. The use is also compatible with the City's General Plan. C. Security: The business will have relatively small quantities of cannabis. However, the applicant is proposing several security measures to ensure that no cannabis products are diverted from the facility, along with the safety of their employees and the surrounding businesses. The business will employ a security manager for 24 hours, seven days a week. The business security will also monitor the exterior portions of the building and surrounding parking areas. In compliance with the City's cannabis regulations, the applicant will install security cameras throughout the facility, including the entry and exit, and in each separate room and office. The applicant is further conditioned to maintain security surveillance footage per the City's cannabis regulations. The applicant will also install motion sensors, fire alarms, and panic alarm buttons throughout the facility. GAPlanning\Kevin Swartz\Word\CUFs\CUP 18-0009 Evio Labs\PC Staff Report-Evio Labs.doc August 20, 2019 — Planning Commission Staff Report Case No. CUP 18-0009 — Evio Labs Page 4 of 5 D. Odor Control: Cannabis odors are mostly present during the "flowering" phase of cultivation operations, and there is no cultivation at this location. All cannabis samples that enter the lab are kept in sealed, odor-proof Mylar bags within sealed coolers. They will remain in the bags until the lab technicians' start their process. They will also use a carbon filtration air and purification system that will be maintained regularly to ensure quality air filtration. Additionally, the building is a stand-alone building and does not share an HVAC system. The business keeps a small amount of cannabis at any given time, within the sealed bags and sealed coolers; therefore, staff does not see an issue regarding odors. If odor becomes an issue, City staff is proposing a condition requiring that the applicant takes additional measures to mitigate odors or have the regulatory permit revoked. Public Input A public hearing notice was mailed to all property owners within 300 feet of the proposed use and published in The Desert Sun on August 10, 2019. To date, the Planning Department has not received any comments in opposition or in favor of the proposed operations. Conclusion The applicant has gone through an extensive review process with City staff for compliance with the newly adopted city and state cannabis regulations. Staff believes that the applicant has demonstrated that their operation can be successful in this location, the use is compatible with the existing and surrounding businesses, and the odor and security issues meet the intent of the ordinance and can continuously be improved should nuisances arise. Additionally, the OP zoning district is intended to allow for testing and research businesses. Since the cannabis industry is new to the City of Palm Desert, staff foresees heavy oversight of the business. Should any issues arise, such as a blatant disregard for nuisance issues, the CUP can be revoked and the business suspended from continued operations. Environmental Review For the purposes of the CEQA, the Director of Community Development has determined that the proposal is categorically exempt under Section 15301, Class 1 (Existing Facilities) of the State CEQA Guidelines and a Notice of Exemption can be adopted. GAPIanningWevin Swartz\Word\CUP's\CUP 18-0009 Evio Labs\PC Staff Report-Evio Labs.doc August 20, 2019 — Planning Commission Staff Report Case No. CUP 18-0009 —Evio Labs Page 5 of 5 Findings of Approval Findings can be made in support of the project and in accordance with the City's Municipal Code. Findings in support of this project are contained in Planning Commission Resolution No. 2760, attached to this staff report. LEGAL REVIEW DEPT. REVIEW FINANCIAL REVIEW CITY MANAGER N/A � N/A N/A Robert W. Ryan Stendell Janet Moore Lauri Aylaian Hargreaves Director of Community Director of Finance City Manager City Attorney Development APPLICANT: Evio Labs 3505 Cadillac Avenue, Suite F1 Costa Mesa, CA 92626 ATTACHMENTS: 1. Draft Planning Commission Resolution No. 2760 2. Public Hearing Notice 3. Notice of Exemption 4. Exhibits Provided by the Applicant GAPlanning\Kevin Swartz\Word\CUFs\CUP 18-0009 Evio Labs\PC Staff Report-Evio Labs.doc PLANNING COMMISSION RESOLUTION NO. 2760 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF PALM DESERT, CALIFORNIA, APPROVING A CONDITIONAL USE PERMIT FOR A 7,370-SQUARE-FOOT CANNABIS ANALYTICAL TESTING LABORATORY FOR EVIO LABS LOCATED AT 72-895 FRED WARING DRIVE; AND ADOPTING A NOTICE OF EXEMPTION IN ACCORDANCE WITH THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) CASE NO: CUP 18-0009 WHEREAS, the City Council of the City of Palm Desert adopted Ordinance No. 1329, allowing commercial cannabis businesses, including analytical testing laboratories, within the City; and WHEREAS, Ordinance No. 1329 established comprehensive regulations for commercial cannabis businesses, including standards for business operations, and permit requirements; and WHEREAS, the applicant has submitted a Conditional Use Permit (CUP) and Cannabis Regulatory Permit to operate an analytical testing laboratory business, and provided all required information, including a business plan, security plan, and background information, in accordance with the City's commercial cannabis business requirements; and WHEREAS, the location of the cannabis testing laboratory business is located in the City's Office Professional (OP) zoning district and is permitted subject to the approval of a CUP and Cannabis Regulatory Permit; and WHEREAS, nuisance issues, including, but not limited to, odor and security, are mitigated in accordance with the City's cannabis regulations, and the project is conditioned to respond to any issues immediately or be subject to revocation of said cannabis regulatory permit; and WHEREAS, the project complies with the goals and policies contained in the City's General Plan that promote a diverse, growing, and resilient local economy; and WHEREAS, pursuant to section 21067 of the Public Resources Code, Section 15367 of the State CEQA Guidelines (California Code Regulations, Title 14, § 15000 et seq.), and the City of Palm Desert's ("City's") Local CEQA Guidelines, the City is the lead agency for the proposed project; and WHEREAS, as the lead agency, the City has reviewed the proposed project and determined that, as the business is locating in an existing developed building and site, that the project is exempt under Section 15301 , Class 1 "existing facilities" of the CEQA and that the Planning Commission can adopt a Notice of Exemption of environmental review; and WHEREAS, the Planning Commission of the City of Palm Desert, California, did on the 201h day of August 2019, hold a duly noticed public hearing to consider the request by the applicant for the operation of an analytical testing laboratory facility; and PLANNING COMMISSION RESOLUTION NO. 2760 WHEREAS, as contained herein, the City has endeavored in good faith to set forth the basis for its decision on the proposed analytical testing laboratory cannabis business; WHEREAS, all of the findings and conclusions made by the City pursuant to this Resolution are based upon the oral and written evidence before it as a whole; and WHEREAS, at the said public hearing, upon hearing and considering all testimony and arguments, if any, of all interested persons desiring to be heard, the Planning Commission did make the following findings to justify the approval of said request: WHEREAS, all other legal prerequisites to the adoption of this Resolution have occurred. NOW, THEREFORE, BE IT RESOLVED BY THE PLANNING COMMISSION OF THE CITY OF PALM DESERT, CALIFORNIA, AS FOLLOWS: SECTION 1. Recitals. The Planning Commission of the City of Palm Desert hereby finds that the foregoing recitals are true and correct and are incorporated herein as substantive findings of this Resolution. SECTION 2. Compliance with the CEQA. As the approving authority for the project, the Planning Commission has reviewed and considered the information contained in the application and administrative record on file with the City and available for review at 73-510 Fred Waring Drive, Palm Desert, California. The Planning Commission finds that a Notice of Exemption can be adopted in compliance with the CEQA (Pub. Res. Code § 21000 et seq.: "CEQA") and the State CEQA Guidelines. SECTION 3. Findings on Conditional Use Permit. In approving this project, the Planning Commission makes the following findings in accordance with Palm Desert Municipal Code (PDMC) Section 25.72.050 '' 1 . That the proposed location of the conditional use is in accordance with the objectives of this title and the purpose of the district in which the site is located. ,,objectives purpose of the OP zoning district is intended for various levels of intensities for business, office, medical, administrative, research and development, and service of products intended for use within Palm Desert and surrounding communities. The proposal to establish a cannabis analytical testing laboratory facility at this location complies with the City's goals and the objectives of the zoning designation, and the City's "Commercial Cannabis Business" and the "Commercial Cannabis Business Regulatory Permit" ordinances by providing a detailed business plan, security plan, odor control plan, and background check information. The conditional allowance of this use at this site complies with the objectives and purpose of the Office Professional zoning district. 2 PLANNING COMMISSION RESOLUTION NO. 2760 2. That the proposed location of the conditional use and the conditions under which it would be operated or maintained will not be detrimental to the public health, safety, or welfare, or be materially injurious to properties or improvements in the vicinity. Voters of the State of California did in November 2016, vote and approve Proposition 64 — the Control, Regulate and Tax Adult-Use of Marijuana Act (AUMA), to allow the adult use of cannabis subject to local ordinances. The City of Palm Desert, in response to the voter-approved law, established a committee to evaluate cannabis business potential in the City and found that cannabis businesses are compatible with other general industrial uses subject to conditions to mitigate nuisances, such as odor and security. As designed, and as conditioned, the establishment of a cannabis analytical testing laboratory facility at this location will not be detrimental to the public health, safety, or welfare, as the use is designed to include on-site video surveillance, negative air pressure, and charcoal air filters, to mitigate security and odor nuisance concerns. 3. That the proposed conditional use will comply with each of the applicable provisions of this title, except for approved variances or adjustments. The proposed use complies with the development and use standards of the OP zoning district, and the requirements listed in the City's comprehensive cannabis regulation. No adjustments of variances are proposed for this use. 4. That the proposed conditional use complies with the goals, objectives, and policies of the City's General Plan. The proposed analytical testing laboratory cannabis use complies with goals and objectives of the City's General Plan, including Goals listed in Chapter 3 of the Land Use and Community Character chapter, including Goals: 5.3 and B. 1. In providing a testing laboratory space, will aid with the other type of cannabis businesses, therefore, the applicant is complying with the goals and objectives of the City's General Plan. SECTION 4. Approval. The Planning Commission hereby approves the applied CUP and Cannabis Regulatory Permit applications for the project. SECTION 5. Custodian of Records. The documents and materials that constitute the record of proceedings on which these findings are based are located at the City's office at 73- 510 Fred Waring Drive, Palm Desert, CA 92260. SECTION 6. Notice of Exemption. The Planning Commission approves the Project and directs Staff to file a Notice of Determination with the County of Riverside and the State Clearinghouse within five (5) working days of any Project approval. 3 PLANNING COMMISSION RESOLUTION NO. 2760 PASSED, APPROVED, AND ADOPTED by the Planning Commission of the City of Palm Desert, California, at its regular meeting held on the 20t' day of August 2019, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: 1 RON GREGORY, CHAIRMAN ATTEST: RYAN STENDELL, SECRETARY PALM DESERT PLANNING COMMISSION �. r ti qs z t 4 PLANNING COMMISSION RESOLUTION NO. 2760 CONDITIONS OF APPROVAL CASE NO. CUP 18-0009 DEPARTMENT OF COMMUNITY DEVELOPMENT: 1 . The development of the property shall conform substantially with exhibits on file with the Department of Community Development, as modified by the following conditions. 2. The applicant agrees that in the event of any administrative, legal or equitable action instituted by a third party challenging the validity of any of the procedures leading to the adoption of these project approvals for the retail use, or the project approvals themselves, the applicant and City each shall have the right, in their sole discretion, to elect whether or not to defend such action. The applicant, at its sole expense shall defend, indemnify, and hold harmless the City (including its agents, officers, and employees) from any such action, claim, or proceeding with counsel chosen by the City, subject to applicant's approval of counsel, which shall not be unreasonably denied, and at the applicant's sole expense. If the City is aware of such an action or proceeding, it shall promptly notify the applicant and cooperate in the defense. The applicant, upon such notification, shall deposit sufficient funds in the judgment of City's Finance Director to cover the expense of defending such action without any offset or claim against said deposit to assure that the City expends no City funds. If both Parties elect to defend, the Parties hereby agree to affirmatively cooperate in defending the said action and to execute a joint defense and confidentiality agreement in order to share and protect information, under the joint defense privilege recognized under the applicable law. As part of the cooperation in defending an action, City and the applicant shall coordinate their defense in order to make the most efficient use ofegal counsel and to share and protect the information. Applicant and City shall each fi'ave sole discretion to terminate its defense at any time. The City shall not settle any third party litigation of project approvals without applicant's consent, which consent shall not be unreasonably withheld, conditioned or delayed unless applicant materially breaches this indemnification requirement:- 3. In accepting this CUP and operating a business pursuant thereto, the applicant acknowledges that the regulation of the testing and use of cannabis remains in flux due to the relative novelty of these uses and conflicts with federal law. The applicant agrees that the applicant remains at risk and subject to all changes in federal, state, and Palm Desert regulations, including the possibility of the discontinuance of such uses or the imposition of additional requirementsthat render continuing operations infeasible, and does not gain a vested right to continue to operate in any particular manner, in any particular place, or at all. 4. The cannabis testing laboratory use is limited to this location and the use described herein shall be subject to the restrictions and limitations set forth herein which are in addition to the approved use standards listed in the PDMC, and state statutes now in force, or which hereafter may be in force. 5 PLANNING COMMISSION RESOLUTION NO. 2760 5. Prior to issuance of a building permit for improvements and use contemplated by this approval, the applicant shall first obtain permits and/or clearance from the following agencies: Coachella Valley Water District (CVWD) Burrtec Waste Management Fire Department Evidence of said permit or clearance from the above agencies shall be presented to the Department of Building & Safety at the time of issuance of a building permit for the use contemplated herewith. 6. The cannabis testing laboratory use of this property shall not commence until the applicant can provide the City's Community Development Department with proof of a license issued by the State Bureau of Cannabis Control. Continued use of the property for cannabis purposes is subject to the applicant maintaining a valid license from the State Bureau and demonstrating on-going compliance with the City's cannabis regulatory permit. 7. The premises shall be equipped with an odor-absorbing ventilation and exhaust system so that odors generated inside the cannabis business is not detected outside of the business, anywhere on adjacent properties, public right-of-way, or in any exterior or interior common areas or tenant spaces. As such, the applicant shall install odor mitigation equipment in accordance with the plans on file as part of this application, and to the satisfaction of the Building Official. Should odor issues arise, the Community Development Department may require additional odor control measures to be employed. At a minimum the applicant shall install the following: A. Air filtration system with odor control that prevents internal odors from being emitted externally. x; B. Air systems that create negative air pressure between the cannabis business and the exterior. 8. Security features shall be installed within the tenant lease spaces in accordance with the plans on file as part of this application. All security features shall be installed and maintained as specified in the City's Cannabis Regulatory Permit regulations. 9. The applicant shall comply with all applicable provisions of the PDMC Sections 5.101 (Commercial Cannabis Business Regulatory Permits), 8.38 (Personal Use of Cannabis), and 25.34.120 (Commercial Cannabis Business and Personal Cultivation). 10. Exterior building signs are not a part of this approval. All exterior building signs shall be submitted to the Community Development Department along with a Sign Application for staff review. 11 . From the public right-of-way, no exterior evidence, other than a building sign to identify the operations, of cannabis products is permitted. 6 PLANNING COMMISSION RESOLUTION NO. 2760 12. All mechanical equipment, either roof or ground-mounted, shall be screened from public view. All such equipment shall be fully screened by the roof structure, parapet wall, ground mounted walls, berming and/or landscape. 13. Any window and door security devices such as metal bars, gates, and shutters, shall be installed within the interior of the building and screened from public view. 14. Operation of the cannabis business outside of these approvals and conditions shall constitute a violation of the PDMC and shall be enforced pursuant to the provisions in the PDMC. On-going violations which are not remedied within a timeframe established by the Community Development Director may result in revocation of the CUP and Cannabis Regulatory Permit. BUILDING AND SAFETY DEPARTMENT: 15. This project shall comply with the latest adopted edition of the following codes: A. 2016 California Building Code and its appendices and standards."' B. 2016 California Residential Code its appendices and standards. C. 2016 California Plumbing Code and its appendices and standards. D. 2016 California Mechanical Code and its appendices and standards. E. 2016 California Electrical Code. F. 2016 California Energy Code. .. G. 2016 California Green Building Standards Code. '' H. 2016 California Administrative Code. I. 2016 California Fire Code and its appendices and standards. 16. The applicant shall provide a building area analysis to determine compliance with CBC Section 503. Justify any area increases to the area as permitted per CBC Section 506. ,. 17. Any approved automotive firesprinkler system shall be installed as required per the City's of Palm Desert Code Adoption Ordinance 1310. 18. Submit an exit plan that labels and clearly will show compliance with all required egress features such as, but not limited to, common path of travel, the required number of exits and separation, occupant load, required width, continuity, travel distance, elevators, etc. CBC 1001.1. I * A 19. All exits must provide`an accessible path of travel to the public way. (CBC 1027.5 & 11 B-206). 20. Provide an accessible path of travel to the trash enclosure. The trash enclosure is required to be accessible. Please obtain a detail from the Department of Building and Safety. 21 . All contractors and subcontractors shall have a current City of Palm Desert Business License prior to permit issuance per PDMC, Title 5. 7 PLANNING COMMISSION RESOLUTION NO. 2760 22.All contractors and/or owner-builders must submit a valid Certificate of Workers' Compensation Insurance coverage prior to the issuance of a building permit per California Labor Code, Section 3700. 23. Address numerals shall comply with Palm Desert Ordinance No. 1265 (PDMC 15.28. Compliance with Ordinance 1265 regarding street address location, dimension, a stroke of line, distance from the street, height from grade, height from the street, etc. shall be shown on all architectural building elevations in detail. Any possible obstructions, shadows, lighting, landscaping, backgrounds or other reasons that may render the building address unreadable shall be addressed during the plan review process. You may request a copy of Ordinance 1265 or Municipal Code Section 15.28 from the Department of Building and Safety counter staff. 24. Please contact the Department of Building & Safety Building at (760) 776-6420 regarding the addressing of all buildings and/or suites. 8 13 T Y 0 0 M 0 E 5 E R T 73-510 FRED WARING DRIVE PALM DESERT, CALIFORNIA 92 2 6 0--2 5 79 TEL: 760 346—o6i x info,@4cityofpahvidesert.org CITY OF PALM DESERT LEGAL NOTICE CASE NO. CUP 18-0009 NOTICE OF A PUBLIC HEARING BEFORE THE PALM DESERT PLANNING COMMISSION TO CONSIDER A REQUEST BY EVIO LABS PALM DESERT, LLC FOR A CONDITIONAL USE PERMIT FOR A CANNABIS ANALYTICAL TESTING LABORATORY BUSINESS LOCATED AT 72-895 FRED WARING DRIVE The City of Palm Desert (City), in its capacity as the Lead Agency for this project under the California Environmental Quality Act (CEQA), finds that the proposed project is exempt per Section 15301, Class 1 "Existing Facilities" of the CEQA and that a Notice of Exemption can be adopted as part of this project. Project Location/ Description: Protect Location: 72-895 Fred Waring Drive Project Description: A Conditional Use Permit and Cannabis Regulatory Permit have been submitted for the operation of a 7,370-square-foot cannabis analytical testing laboratory. A detailed security plan and odor control plan are provided as part of these applications. The business is located in a freestanding two-story office professional building located at the southwest corner of Fred Waring Drive and Acacia Drive. Recommendation: Staff is recommending that the Planning Commission adopt a resolution approving the proposed Conditional Use Permit, subject to conditions. Public Hearing: The public hearing will be held before the Planning Commission on August 20, 2019, at 6:00 p.m. in the Council Chamber of the Palm Desert Civic Center, 73-510 Fred Waring Drive, Palm Desert, California. Comment Period: The public comment period for this project is from August 10, 2019, to August 20, 2019. Public Review: The Conditional Use Permit and Cannabis Regulatory Permit applications are available for public review daily at City Hall. Please submit written comments to the Planning Department. If any group challenges the action in court, the issues raised may be limited to only those issues raised at the public hearing described in this notice or in written correspondence at, or prior to the Planning Commission hearing. All comments and any questions should be directed to: Kevin Swartz, Associate Planner City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 (760) 346-0611 kswartz@cityofpalmdesert.org PUBLISH: DESERT SUN RYAN STENDELL, August 10, 2019 PLANNING COMMISSION SECRETARY NOTICE OF EXEMPTION TO: FROM: City of Palm Desert ❑ Office of Planning and Research 73-510 Fred Waring Drive Palm P. O.Box 3044,Room 113 Desert,CA 92260 Sacramento,CA 95812-3044 ® Clerk of the Board of Supervisors 2724 Gateway Dr,Riverside, or CA 92507 County Clerk County of Riverside 1. Project Title: i Evio Labs 2. Project Applicant: ; Evio Labs 3505 Cadillac Avenue,Suite F1 Costa Mesa,CA 92626 3. Project Location—Identify street address and 72-895 Fred Waring Drive cross streets or attach a map showing project site (preferably a USGS 15' or 7 1/2'topographical map identified by quadrangle name): 4. (a)Project Location—City: Palm Desert T (b) Project Location—County: Riverside 5. Description of nature,purpose,and beneficiaries I The project includes minor tenant improvements for a new of Project: ! cannabis analytical testing laboratory business within an existing office professional building. The applicant, Evio Labs, is pursuing city and state permits for the operation of a cannabis-testing laboratory. Tenant improvements include an extraction prep room for testing, a microbiological room, a security room, an intake lab, a walk-in cooler, offices, storage rooms,and restrooms. ' 6. Name of Public Agency approving project: City of Palm Desert 7. Name of Person or Agency undertaking the Evio Labs project, including any person undertaking an activity that receives financial assistance from the Public Agency as part of the activity or the person receiving a lease,permit,license,certificate,or other entitlement of use from the Public Agency as part of the activity: 8. Exempt status: (check one) (a) ❑ Ministerial project. (Pub. Res. Code §21080(b)(1); State CEQA Guidelines § 15268) (b) ❑ Not a project. (c) ❑ Emergency Project. (Pub. Res. Code§21080(b)(4); State CEQA Guidelines § 15269(b),(c)) (d) ® Categorical Exemption. Class 1 "Existing Facility"a State type and section number: 15301 (e) ❑ Declared Emergency. (Pub. Res. Code §21080(b)(3); State CEQA Guidelines § 15269(a)) (f) ❑ Statutory Exemption. j Notice of Exemption FORM`B" State Code section number: i (g) ❑ Other. Explanation: 9. Reason why project was exempt: Project is consistent with the City's general plan and applicable zoning regulations. The site is surrounded by existing office professional uses and only interior building in are proposed. The site has no value as habitat, is served by existing utilities,and does not result in significant effects on traffic,noise,air quality,or water quality. 10. Lead Agency Contact Person: I Kevin Swartz,Associate Planner Telephone: 1 (760)346-0611 11. If filed by applicant:Attach Preliminary Exemption Assessment(Form"A")before filing. 12. Has a Notice of Exemption been filed by the public agency approving the project? Yes ® No ❑ 13. Was a public hearing held by the lead agency to consider the exemption? Yes® No ❑ If yes,the date of the public hearing was:July 17,2018 Signature: Date: Title: ® Signed by Lead Agency ❑ Signed by Applicant Date Received for Filing: (Clerk Stamp Here) Authority cited: Sections 21083 and 21100,Public Resources Code. Reference: Sections 21108,21152,and 21152.1,Public Resources Code. Notice of Exemption FORM"B" EVIO LABti Eric Ceja City of Palm Desert—Planning Department 73-510 Fred Waring Drive Palm Desert,CA 92260 September 9, 2018 Dear Mr. Ceja: EVIO Labs is pleased to submit for the city's consideration this Regulatory Permit and Conditional Use Permit for a testing laboratory located at 73-510 Fred Waring Drive Palm Desert, CA. EVIO, Inc. provides analytical testing,compliance consulting, and research and development services for the cannabis industry. We currently operate from eleven locations in five states and the province of Alberta, Canada. We anticipate this lab will result in approximately 16 new highly skilled professional jobs, and will provide additional assurance of safety and compliance for the local emerging cannabis industry. We look forward to continuing to work with the City of Palm desert through the licensing process. Sincerely, Lori Glauser Chief Operating Officer EVIO Labs, Inc. 62930 0.6 Riley Rd. Bend OR 97703 OREGON I CALIFORNIA I MASSACHUSETTS I FLORIDA I ALBERTA I COLORADO EVIO , LABS Cannabis Regulatory Permit and Conditional Use Permit Application Tab 0: Cannabis Regulatory Permit Checklist Responses Tab 1: Articles of Organization and Operating Agreement Tab 2: Premises Diagrams Tab 3: Security Plan Tab 4: Business Plan Tab S: Conditional Use Permit Application City Of Palm Desert / Department of Community Development CANNABIS REGULATORY PERMIT 73-510 Fred Waring Drive • Palm Desert•California •92260 •(760) 346-0611 • Fax (760) 776-6417 Applicant: EVIO Labs Palm Desert LLC Telephone: 888-544-3846 Mailing Address: 3505 Cadillac Ave. Suite F1 Fax number: NA City: Costa Mesa State: CA Zip: 92626 Email: lori(a)eviolabs com Representative: Telephone: 888-544-3846 x1111 Lori Glauser Mailing Address: 3505 Cadillac Ave. Suite F1 Fax number: City: Costa Mesa State: CA Zip: 92626 Email: lori(c�eviolabs com 24-Hr Emergency Contact Manager: Steve Brown Primary Telephone: 541-904-5504 Email: steve@eviolabs.com Secondary Telephone: Community Relations Manager: Lori Glauser Primary Telephone: 888-544-3846 x1111 Fax Number: Email Address: lori(aa�eviolabs com Email: Type of Business Entity (as described in Section 5.101.D.1): LLC Type of Cannabis Business (Dispensary, Cultivation,etc...): Testing Laboratory Type of State License obtained/pursuing: Testing Laboratory Project Address(s): 72-895 Fred Waring Dr. Palm Desert, CA Assessor Parcel Number(s): 640-122-011 Zoning Designation: General Plan Designation: Property Owner Authorization: The undersigned states that they are the owner(s) of the property described and h In ive authorization for the filing of the application. jlvjt (lac:. TA.,,e;IkK.N..r, '"a., A�...nr►rJ /�c7M7i 1 r1 , r�14 / Signature Print Name Date Applicant/ Representative Signature: By signing this application I certify that the information provided is accurate. I understand that the City might not approve what I am applying for and/or might require conditions of approval. Sig*rnu e Print Name Date OFFICE USE ONLY Permit submitted with CUP PURPOSE: In coordination with review of a Conditional Use Permit application, and as a continued requisite to operate a commercial cannabis business, all cannabis business operators are required to apply annually for the Cannabis Regulatory Permit. This permit will be issued to the applicant of the cannabis business only, and is required to remain valid during business operations. Any lapse in activity of the permit will result in revocation of the permit and cessation of the cannabis business. II. SUBMITTAL REQUIREMENTS: 1. Regulatory Permit Form completed with required signatures. 2. Required documents, exhibits and plans as described in P.D.M.0 Chapter 5.101 and below. III. PROCEDURE: Initially, a Cannabis Regulatory Permit must be applied for along with the Conditional Use Permit (CUP) application for all commercial cannabis businesses. Once a CUP is approved by the City's Planning Commission, the Business License Division of the Community Development Department will issue a Cannabis Regulatory Permit. The permit is issued to the business owner or operator only. Any changes in the business's ownership will require a new or amended Cannabis Regulatory Permit. In addition, a Cannabis Regulatory Permit is valid for one (1) year and must be applied for annually along with a Business License. IV. APPLICATION CHECKLIST: Applicants are required to provide the following information when applying for a Cannabis Regulatory Permit: 1. A description of the statutory entity or business form that will serve as the legal structure for the applicant and a copy of its formation and organizing documents, including, but not limited to, articles of incorporation, certificate of amendment, statement of information, articles of association, bylaws, partnership agreement operating agreement, and fictitious business name statement. 2. A legible copy of each applicant's photo identification, such as a state driver's license, a passport issued by the United States, or a permanent resident card. 3. A list of the license or permit types (including license or permit numbers) held by the applicant that involve the operation of a commercial cannabis business, including the date the license or permit was issued and the jurisdiction or State license authority that issued the license or permit. 4. Whether the applicant has been denied a license or permit by the City, any other jurisdiction, and/or the State that involves the operation of a commercial cannabis business. The applicant shall provide a description of the license or permit applied for, the name of the jurisdiction or State license authority that reviewed the license or permit application, and the date of denial. 5. The proposed commercial cannabis business's physical address, telephone number, website address, and e-mail address. 6. A list of every fictitious business name the applicant is operating under including the address where the business is located. 7. Financial information including the following: a. A list of funds belonging to the commercial cannabis business held in savings, checking, or other accounts maintained by a financial institution. The applicant shall provide for each account, the financial institution's name, the financial institution's address, account type, account number, and the amount of money in the account. b. A list of loans made to the commercial cannabis business. For each loan, the applicant shall provide the amount of the loan, the date of the loan, term(s) of the loan, security provided for the loan, and the name, address, and phone number of the lender. c. A list of investments made into the commercial cannabis business. For each investment, the applicant shall provide the amount of the investment, the date of the investment, term(s) of the investment, and the name, address, and phone number of the investor. d. A list of all gifts of any kind given to the applicant for its use in conducting commercial cannabis business. For each gift the applicant shall provide the value of the gift or description of the gift, and the name, address, and phone number of the provider of the gift. 8. A list of each applicant's misdemeanor and felony convictions, if any. For each conviction, the list must set forth the date of arrest, the offense charged, the offense convicted, the jurisdiction of the court, and whether the conviction was by verdict, plea of guilty, or plea of polo contendre. 9. A complete and detailed diagram of the proposed premises showing the boundaries of the property and the proposed premises to be permitted, showing all boundaries, dimensions, entrances and exits, interior partitions, walls, rooms, windows, doorways, and common or shared entryways, storage areas and exterior lighting. The diagram must show the areas in which all commercial cannabis business will take place, including but not limited to, limited-access areas. 10. A security plan, as a separate document, outlining the proposed security arrangements to deter and prevent unauthorized entrance into limited access areas and theft of cannabis, in accordance with minimum security measures required by state law and measures identified in Section 5.101 M.5 of the Palm Desert Municipal Code. The security plan shall be reviewed by the Palm Desert Police Department and the City Manager and shall be exempt from disclosure as a public record pursuant to Government Code Section 6255(a). 11. A comprehensive business operations plan that includes the following: a. Business plan. A plan describing how the commercial cannabis business will operate in accordance with this code, state law, and other applicable regulations. The plan shall include operational, banking, and personnel procedures to ensure adequate business knowledge, modeling and support. b. Community relations plan. A plan describing who is designated as being responsible for outreach and communication with the surrounding community, including the neighborhood and businesses, and how the designee can be contacted. e� Neighborhood responsibility plan. A plan addressing any adverse impacts of the proposed commercial cannabis business on the surrounding area. a� Odor control plan. A plan identifying odor control methods, including, but not limited to, use of odor absorbing ventilation and exhaust systems, negative air pressure, and other treatments. Insurance. The applicant's certificate of commercial general liability insurance and endorsements and certificates of all other insurance related to the operation of the commercial cannabis business. f. Budget. A copy of the applicant's most recent annual budget for operations. 12. The name and address of the owner and lessor of the real property upon which the commercial cannabis business is to be operated. In the event the applicant is not the legal owner of the property, the application must be accompanied with a notarized acknowledgement from the owner of the property that a commercial cannabis business will be operated on his or her property. 13. Authorization for the city manager to seek verification of the information contained within the application. 14. A statement in writing by the applicant that he or she certifies under penalty of perjury that all the information contained in the application is true and correct. 15. A full and complete copy of the applicant's most current application submitted to and approved by the applicable State licensing authority (only applicable on a renewal basis). 16. The name, address, telephone number, title, and function of each of the interested parties described below: a. A permittee shall provide the city with names and addresses of all of the following interested parties: i. Persons with at least a 10% interest in the commercial cannabis business; ii. Partners, officers, directors, and stockholders of every corporation, limited liability company, or general or limited partnership that owns at least 10% of the stock, capital, profits, voting rights, or membership interest of the commercial cannabis business or that is one of the partners in the commercial cannabis business; iii. The managers of the commercial cannabis business; and the staff of the commercial cannabis business. b. All interested parties, as described in the subsections listed above, must submit to fingerprinting and a criminal background check by the city. c. No person shall be an interested party, as described in subsection A of this Chapter 5.101 of the P.D.M.C., if he or she is charged with or convicted of a felony; has been charged with or convicted of a violation of California Penal Code section 186.22 (participation in a criminal street gang); or is currently on parole or probation for an offense relating to the sale or distribution of a controlled substance. "Convicted" within the meaning of this section means a plea or verdict of guilty or a conviction following a plea of nolo contendere was entered, but does not include any plea, verdict, or conviction that is expunged pursuant to California law or a similar federal or state law where the expungement was granted. "Charged" within the meaning of this section means (1) an indictment was issued by a grand jury, or an information, complaint, or similar pleading was issued by the United States Attorney, district attorney, city attorney, or other governmental official or agency authorized to prosecute crimes., and (2) the criminal proceedings are currently pending. OWNER AND/OR OWNER'S AUTHORIZED AGENT AFFIDAVIT STATE OF CALIFORNIA) COUNTY OF RIVERSIDE) CITY OF PALM DESERT) I, (we), L,12 �7LA�' S� - _being duly sworn depose and declare to the best of M _knowledge that the (my/our) foregoing is true and correct under the penalty of perjury: EXECUTED AT: �f)[G '1 06st er (' r (CITY) (STATE) DATE: Q /9 (MONTH) (DAY) (YEAR) APPLICANT, OWNER AND/OR OWNER'S AUTHORIZED AGENT: (Print Name) ( ignature) (Mailing Address) (City, State end Zip) yam?-=?cz s (Area Code)Te►&phone Number Co uuxm,a ___pages, and dated w Notarial--event—detailed—notary~journal—on: ' � ®� Limited Access Area Boundary Camera ae-o• Secure Door u Motion Sensor b 4w o A0Secure • k d Intakel-aalb Au ( orage k si S j Instrument St /DVR Microbiological � b Cold Storage w 1 Supplies Fume Hood ` 77"x 30" o Z R iq g 4 Q4 Office ii 81 0 ,a I Extraction Bench u < • { k N 1 3 5'x 18' �. a°Office Instrument Room 0 �t$ Solvent Testing Pesticide Testing 5'x 12' 202— G nk =21wo—— —————————————— ——— -LI V d a d . IN I .6 j s �_® Al ( $ fie$ 4 — — £R` 4 �o .. _........ .. POP,CONSTRUCTION Permit No. SFF z R € T A NEW OFFICE BUILDING FOR: #�j �'ON—^"'' y- �' Prudential HOLM# JOHNSMARCHITWT5 Q' -FRED WARING DRIVE PALM DESERT GA.92260 —_ ._.._._......... IF 41 : j' L 4 � � a r p I I I jl @ i bS ' 3 � A .a... I -�4 T is II FOR CONSTRUCTION Permit No. a SFF x 3iA A NEW OFFICE 6VILDING FOR:Prudential ' �o HOLM; /�'+1�� ( s i��� -FRED WARINC,DRIVE f i€tt .w�etraneer srtn ,...., nue xoya>a PALM DESERT _A.92260 o"+H��•�+ �•*•m om+ ............. l;Nla-llrQ 9JI"O M2N IV L L 4,J #'ON I!uJ-Jvci N0l-L2(Z!Ul5NC'-) ce z DR -4WD--- SCALf 1*.fO' -P A-- A CA --------------�Jl CA L 1�04 41r� POR. OF LOT 19 or L 0 T 2z'----------- --------- -------- ------ ---------- LOT 55 & A PORRON OF LO ..16 ii !OT 34 EVIO ', ',,,,_ LABS Security Plan EVIO Labs Palm Desert, LLC EVIO Labs Palm Desert is the newest lab among EVIO's portfolio of eleven labs across the nation that provides cannabis testing. Corporate-wide, we operate facilities in several states that require high level of security standards including Oregon, California, Massachusetts, Colorado,Alberta, and Florida. Our labs share a common goal of ensuring we operate a high quality lab that meets or exceeds all security requirements, as would be expected of any business that works with Schedule I substances. While the lab stores relatively small quantities of usable cannabis, we are required to comply with the security requirements of the Bureau of Cannabis Control for cannabis licensees. EVIO Labs is committed to ensuring that no cannabis products are diverted from our facility at any point of our supply chain. We take particular measures to ensure that that unauthorized personnel, including minors, do not enter the laboratory, or obtain or attempt to obtain cannabis items from our laboratory, and we ensure that all inventory is properly tracked,from sample intake to waste disposal. Highlights of our security plan include: - EVIO Labs corporate maintains comprehensive security policies and procedures and training. - We ensure video surveillance covers all areas where cannabis is present. - We ensure that our labs have motion sensors and alarms. - We provide our employees access to panic buttons. The provisions outlined herein include security measures to deter and prevent the unauthorized entrance into our labs, and to deter and prevent the theft or diversion of cannabis and cannabis products. EVIO Labs Palm Desert shall comply with all security and safety requirement imposed by EVIO, Inc. and the Rules from the Bureau of Cannabis Control (BCC)Title 16 Division 42 and Palm Desert Municipal Code 5.101M.5 General Security Policies EVIO Labs implements comprehensive policies and procedures to be implemented by management in order to ensure the prevention of diversion of cannabis. All cannabis in the process of transport and storage shall be housed and stored in such a manner as to prevent diversion. Confidential and Proprietary O 2018 EVIO, Inc. Security Plan Page 1 of 11 The provisions outlined herein include strict security measures to prevent employee or third-party theft or transfer of cannabis products by an authorized customer to an unqualified individual. Supply-chain security is designated as a primary job duty of all managers, reinforcing a company-wide culture of responsibility. The general manager will be responsible for the implementation and oversight of Security Policies and Procedures. Only employees, officials in the course of their duties, and approved/vetted outside vendors, contractors, and escorted visitors are allowed access to the facility. Employees are required to display identification at all times while working. Employees must immediately report a lost identification badge to their supervisor. lost employee identification and/or access card will result in immediate deactivation of the lost card and issuance of a new identification and/or access card.All doors without biometric or electronic access control systems must be re-coded or re-keyed following any involuntary termination. The General Manager,Security Manager, or his or her assignee shall notify the Bureau and other interested parties such as local law enforcement within twenty-four hours after discovering any discrepancy identified during inventory; diversion,theft, loss or any criminal activity involving the facility or any of its staff; loss or unauthorized alteration of records related to cannabis,the staff, or any of its customers; or any other breach of security. Facility Security The proposed facility is located at 72-895 Fred Waring Dr. It is a standalone building, surrounded by a parking lot and roads.The facility will have a front area for offices, and a limited access area (accessible only to authorized laboratory personnel and escorted visitors)that comprises the the laboratory, and an interior secure room that will house the security system and provide secure storage for cannabis samples. Access into the laboratory is restricted and secured. Cannabis product brought into the lab is first brought through into the reception area by a customer or employee for intake processing,then moved directly into the secured lab space. Video surveillance and an alarm system will be installed to cover all points of ingress and egress, including the reception area and in all limited access areas, as required by the BCC and Los Angeles Municipal Code, and as described below. Alarm System The permitted premises will engage the services of a third party security company to install, maintain, and monitor an alarm system that is activated at all times that the business is closed. The system will detect unauthorized entrance at all entry or exit points, and all exterior windows of the premises. It will also detect movement within any indoor area on the licensed premise when the premises is vacant of employees. The alarm system will be programmed to notify a third party security provider that will notify the General Manager and Security Director, or its authorized assignee, in the event of a breach. If unavailable, law enforcement will be contacted. Confidential and Proprietary 0 2018 EVIO, Inc. Security Plan Page 2 of 11 Motion, window, and door sensors will provide alarm coverage of all facility entrances and exits and limited access areas. Also panic buttons and alarm systems may be located near workstations easily available for employees to access. All employees will be trained on the operation of the alarms, and uses for the different types of alarms. Upon request, licensees shall make all information related to security alarm systems, monitoring and alarm activity available to Federal, State, and Local law enforcement or the Department. Surveillance System The licensed facility will be equipped with cameras that provide full, 24 hour per day 7 day per week coverage of the facility including all interior spaces where cannabis items will be present. These include, but are not limited to: • Areas where cannabis goods are weighed, packed, stored, loaded, and unloaded for transportation, prepared, or moved within the premises; • Limited-access areas; • Security rooms; • Areas storing a surveillance-system storage device with at least one camera recording the access points to the secured surveillance recording area; and • Entrances and exits to the premises, which shall be recorded from both indoor and outdoor vantage points. The video coverage shall be audited on a periodic basis to ensure that all cameras are in good working condition, and coverage areas are covered at all times, both before and after inventory, equipment, and furnishings are in place. Each camera shall be permanently mounted and in a fixed location. Camera placement is annotated in EVIO Labs'Site Plans and in the security plan. Note that the facility is in pre-construction, and modifications to the camera placement may be necessary at time of surveillance system testing. The video surveillance system shall at all times be able to effectively and clearly record images of the area under surveillance. The system shall have a minimum camera resolution of 1280 x 720 pixels and shall be transmission control protocol (TCP) capable of being accessed through the Internet. Cameras shall record continuously 24 hours per day and at a minimum of 15 frames per second (FPS). Recorded images shall clearly and accurately display the time and date.Time is to be measured in accordance with the United States National Institute Standards and Technology standards. Each camera shall be placed in a location that allows the camera to clearly record activity occurring within 20 feet of all points of entry and exit on the licensed premises, and allows for the clear and certain identification of any person and activities in all areas required to be filmed. Areas that shall be recorded on the video surveillance system include the following: (1)Areas where cannabis goods are weighed, packed, stored, loaded, and unloaded for transportation, prepared, or moved within the premises; (2) Limited-access areas; (3)Security rooms; Confidential and Proprietary O 2018 EVIO, Inc. Security Plan Page 3 of 11 (4)Areas storing a surveillance-system storage device with at least one camera recording the access points to the secured surveillance recording area; and (5) Entrances and exits to the premises,which shall be recorded from both indoor and outdoor vantage points. The video surveillance system shall be equipped with a failure notification system that provides notification to the licensee of any interruption or failure of the video surveillance system or video surveillance-system storage device. Any disruption in the security system will be cured expeditiously and in good faith. Prior to opening, EVIO Labs will ensure that all video and surveillance equipment is properly installed, functioning, and maintained regularly during operations. Surveillance and video equipment will be maintained regularly to ensure that each point of sale location is captured, camera coverage will enable recording of the patient(s) and employee's facial features with sufficient clarity to determine identity, and video will be recorded with such clarity and resolution that all transactions are clearly recorded. Location and Maintenance of Monitoring Equipment The premises will have a surveillance area in an office that may be accessed only by the General Manager,the Security Manager, or their licensed assignees as needed. Assignees include state or local law enforcement agencies, Bureau employees, and authorized service personnel or contractors. Entrance to the office shall be locked whenever the office is not in use, and accessible by a key or electronic keying system. Recording equipment will be stored in the office, in a separate locked cabinet or room. All recordings, including current and archival,will be easily accessed for viewing and easily reproduced. The General Manager will maintain a log of all authorized employees and service personnel who have access to the surveillance system and room on the licensed premises.The Manager will also keep a surveillance equipment maintenance activity log on the licensed premises to record all service activity including the identity of any individual performing the service,the service date and time and the reason for service to the surveillance system. Transactional Security EVIO Labs will encourage use of credit and debit cards when possible in an effort to automate the process, and reduce and mitigate problems associated with cash, including theft and fraud. Any cash that is accepted will be deposited into our bank account on a very frequent basis (typically daily). Any cash that remains onsite after business hours shall be stored in a secure location in the limited access area. Cash transactions shall be performed while under video surveillance wither at the licensee site or at the . Visitor Security Visitors, including outside vendors and consultants must sign in via a visitor log, and obtain a visitor identification badge before entering a limited access area, and will be escorted at all times.The visitor identification badge must be visibly displayed at all times while the visitor is in any limited access area. All visitors must be logged in and out, and the log will be available for inspection by the City at all times. All visitor identification badges will be returned to EVIO Labs upon exit. Confidential and Proprietary 0 2018 EVIO, Inc. Security Plan Page 4 of 11 Transport Security EVIO Labs has a transportation plan and protocols that describe policies and procedures for products in compliance with California State laws and regulations. EVIO Labs will perform samplings at our client's respective sites, and will transport laboratory samples from our client sites to our labs for testing. EVIO Labs will ensure that an approved shipping manifest that accompanies every transport of cannabis item. The manifest shall be compliant with BCC§5314. A copy of the transport manifest will be provided to each licensed premises receiving the inventory described in the transport manifest. If requested by law enforcement, driver will provide a copy of the transport manifest. If a vehicle transporting cannabis items is involved in any accident that involves product loss we will report the loss as required the Bureau and local law enforcement as soon as possible under the circumstances. Upon receipt of samples, a lab employee will ensure that the cannabis items received are as described in the transport manifest. A representative will separately document any differences between the quantity specified in the transport manifest and the quantities received. Such documentation shall be made in CTS and in any relevant business records. When transporting, delivery vehicles will travel directly to the receiving licensee and not make any unnecessary stops in between except to other licensed premises receiving inventory. Only an employee who possesses a current and valid driver's license may transport cannabis products on behalf of EVIO Labs, and will transport the samples only in compliance with BCC rules and state and local laws and regulations. Access Control Policy: Ingress and Egress Access During all hours when the facility is not operating, all entrances to and exits from licensed premises are securely locked and any keys or key codes to the enclosed area remain in the possession of the licensee, licensee representative, or authorized personnel. Access to secure areas will be given only to areas where need can be demonstrated.The General Manager and Security Manager have ultimate responsibility for issuing access. Issuance must be recorded by the issuing individual, including documentation of any facility keys, alarm codes, electronic access codes, passwords, or combination codes. Keys and electronic access codes must be protected.They may not be loaned and should not be left unattended. All keys, access cards, passwords issued to employees should be retained in the possession of the employee to whom issued and may not be transferred directly from one employee to another. Employees must report any lost keys or access cards to his or her manager immediately.The general manager along with the security manager will make a determination as to whether the system has been compromised and whether re-keying will be necessary. It is against company policy to duplicate keys, share passwords, or share access codes. Confidential and Proprietary O 2018 EV1O, Inc. Security Plan Page 5 of 11 Key Issuance Procedures Permanent keys and access card keys are issued to employees for the purpose of allowing the employee to access the areas in which they are regularly assigned duties. A log of all issuance must be maintained by General Manager or Security Director.The record shall include: Employee name and identifier; date issued;term of issuance if applicable; date to be returned; if applicable, and signature of the key holder and key issuer. Authorized individuals including employees and authorized vendors may be permitted to check out a key on a temporary basis,given explicit authorization from the General Manager or Security Manager.The authorization will be for a specified period of time, not to exceed seven (7) days, at which time, access must be reauthorized. Any employee,vendor or contractor must return all keys upon termination of work. When employment with EVIO Labs has been terminated, all keys will be returned and recorded by the General Manager or Security Manager or assignee. Failure on the part of a manager to collect keys or access cards from terminating employees may require a key core change. If keys are not returned within five days of project completion by a vendor or contractor, and it is determined a re-core is necessary, it shall be at the vendor/contractor's expense. Cannabis Sample and Sample Waste Security Whenever not in use for testing, all cannabis samples and retention samples will be stored within the limited access area. Cannabis waste will be maintained in hazardous waste bins in the limited access area, and combined with other laboratory waste rendering it unusable, in accordance with BCC rules. Also, any cash kept on the premises after hours will be secured in the limited access area with access only by authorized personnel. Also, any cash that is in excess of what is required to perform day to day business will also be stored in a safe or vault. Any video recordings and archived records not stored electronically will also be stored either in a locked cabinet in a secured office, or in the vault or safe within a limited access area.These video recordings will be stored for no less than 90 days. Any cannabis items that require refrigeration will be securely enclosed in a refrigerator or freezer capable of being locked. Security During Power Outage The facility will be equipped with backup power supply to ensure continuous operation of the security system through short-term outages. The cardkey system will default to "locked" upon entry in case of a power outage situation, and can be accessed via a key to override the lock. CyberSecurity EVIO Labs recognizes the cyber threats that may impact the facility. EVIO Labs will take precautions to ensure consumer privacy, protection of sensitive financial records, and minimize the potential of Confidential and Proprietary 0 2018 EVIO, Inc. Security Plan Page 6 of 11 unauthorized access or intrusion.As appropriate,the facility's network infrastructure will be encrypted and password protected. Only authorized personnel who have been trained in secure records management procedures will have access to customer data. Users of our system will have role-based authentication, and sharing of logins is prohibited. Software will require security measures such as password lockouts, login timeouts, use of strong passwords, periodic required password changes, and ability for administrators to disable users. Records Retention All electronic records will be stored both onsite in short-term storage, and off-site, in long term backup storage. Onsite backup records storage may include electronic media that is backed up on a daily basis on a secure server. The secure server will be physically located in a secure room on the premises. Offsite secure data storage will be managed by a third party data storage provider. In general, onsite backup storage will include at least one year of historical data. Remote data storage will include all data records that are at least 7 days and older, and will be stored in perpetuity. Business records shall be stored for at least 7 years. All archived required records not stored electronically will be stored in a locked storage area. Current records may be kept in a locked cupboard or desk outside the locked storage area during hours when the licensed business is open. Sensitive files may be password protected, or stored in a password protected file storage system. No EVIO Labs files shall ever be stored in public internet spaces, including un-secured file storage sites. Emailing sensitive data files to anyone outside EVIO Labs is strictly prohibited without the permission of the General Manager. Customer-specific transaction data and contact information, including email addresses,will not be shared with any third party without permission of the customer. Signage EVIO Labs will post a signage, as required by state and local rules, indicating limited access areas, and other prohibitions, in conspicuous locations in the lab. No Loitering For any individual, including a minor, who is suspicious of not engaging in activity expressly related to the operations of the business, is not a third-party contractor accompanied by a permitted employee, member of staff, or visitor or patient waiting to enter the premises,that individual will be asked to leave the premises upon suspicion. For those that do not comply, further action will be taken, and local law enforcement may be notified. Fire/Smoke Detectors Fire and smoke detectors will be placed throughout the facility to meet both local fire code and to ensure the facility is safe. Detectors will be tested at least annually by the General Manager. Confidential and Proprietary 0 2018 EV1O, Inc. Security Plan Page 7 of 11 Exterior Lighting Exterior lighting will provide adequate light on the exterior of the establishment to ensure proper video coverage of all persons and activities entering or exiting the property.Any required monitoring area will have sufficient lighting to ensure the recording of the monitored areas is sufficient in capturing any and all events necessary to be used as evidence in the event of a crime being committed. Security Training All lab employees will receive security training. The curriculum includes: applicable federal, state and local laws, observation and reporting, loitering and trespass, and ensuring unauthorized persons including minors do not access product. Authorized employees including the General Manager shall be trained to retrieve surveillance video, manage the surveillance and alarm systems, and be primary contact with law enforcement and security monitoring company. The general staff will be provided with phone numbers with nearest police precinct,fire station and hospital. Roles and Responsibilities The General Manager has ultimate responsibility for security of the premises. The General Manager will delegate security duties to the Security Manager. Refer to employee qualifications and training plan for more information. The Security Manager,which is a role that may be shared with the General Manager, is responsible for all aspects of EVIO Labs' security plan, including managing all security technology, overseeing all transportation security, managing access to facilities,training EVIO Labs personnel in risk management, and hiring and supervising security officers.The Security Manager will be responsible for anti-theft oversight, ensuring minors do not enter the premises, and training. General Manager Duties Refer to Staffing section for detailed description of General Manager duties. Security Manager Duties • Reports to General Manager(or is a co-responsibility of the GM) • Maintain and implement security training procedures. • Manage a protection system that includes both personal and technical physical security including monitor intrusion detection sensors,video surveillance, alarm systems, random patrols, and/or visual observation. • Establish controls to detect, assess, deter, and (in certain cases) prevent unauthorized access to limited areas. • Ensure that access is controlled to limit entry to appropriately cleared and/or authorized and escorted individuals. • Maintain a personnel identification system (e.g. security badge system)to control access into designated limited areas with automated access control systems for safeguards and security. • Assess alarms and threats. • Ensure signage reflects information appropriate notification of limited access areas,video surveillance equipment, prohibitions, etc. • Ensure that trespassing signage, if applicable,shall be posted. • Ensure that exits are alarmed or controlled at all times. • Identify and report suspicious persons or objects which may cause a security concern to the local Confidential and Proprietary O 2018 EVIO, Inc. Security Plan Page 8 of 11 law enforcement agency. • Responsible for minimizing risk of the premises. • Primary point of contact with any Security Vendor. • Ensure compliance at all times with all security procedures. • Responsible for all security standard operating procedures and training. • Master security technology such as video surveillance, passwords, and point-of-sale applications. • Provide training to personnel in risk and anti-diversion matters. • Oversee security of cannabis samples and cash both onsite and in transit. Security Training Policy All employees will receive security training. These include training that will: 1. Ensure all usable cannabis and cash is secured whenever the laboratory is closed. 2. Prevent the diversion of cannabis to minors. 3. The proper use of security measures and controls to prevent diversion, theft or loss of cannabis. 4. Emergency Response Procedures. 5. Training to report any suspicious activity or security concerns to their supervisor. 6. All employees will be required to be trained on EVIO Labs' "Maintaining client confidentiality" and "Privacy Policy"as a condition of employment. Applicable Rulemaking - California Bureau of Cannabis Control, Article 5. Security § 5036. Notification of Theft, Loss, and Criminal Activity (a) A licensee shall notify the Bureau and local law enforcement within 24 hours of discovery of any of the following situations: (1)The licensee discovers a significant discrepancy, as defined in section 5034 of this division, in its inventory. (2)The licensee discovers diversion,theft, loss, or any other criminal activity pertaining to the operations of the licensee. (3)The licensee discovers diversion,theft, loss, or any other criminal activity by an agent or employee of the licensee pertaining to the operations of the licensee. (4)The licensee discovers loss or unauthorized alteration of records related to cannabis goods, customers, or the licensee's employees or agents. (5)The licensee discovers any other breach of security. (b)The notification to the Bureau pursuant to subsection (a) of this section shall be in writing and include the date and time of occurrence of the theft, loss, or criminal activity,the name of the local law enforcement agency that was notified, and a description of the incident including,where applicable,the item(s)that were taken or lost. §5042. Access to Limited-Access Areas Licensees shall ensure that any person on the licensed premises, except for employees and contractors of the licensee, are escorted at all times by the licensee or at least one employee of the licensee when in the limited-access areas of the premises. § 5043. Licensee Employee Badge Requirement All agents, officers, or other persons acting for or employed by a licensee shall display a laminated or plastic-coated identification badge issued by the Confidential and Proprietary O 2018 EVIO, Inc. Security Plan Page 9 of 11 licensee at all times while engaging in commercial cannabis activity.The identification badge shall, at a minimum, include the licensee's "doing business as" name and license number,the employee's first name, an employee number exclusively assigned to that employee for identification purposes, and a color photograph of the employee that clearly shows the full front of the employee's face and that is at least 1 inch in width and,1.5 inches in height, § 5044.Video Surveillance System (a) Each licensed premises shall have a digital video surveillance system with a minimum camera resolution of 1280 x 720 pixels. (b)The surveillance-system storage device or the cameras shall be transmission control protocol (TCP) capable of being accessed through the Internet. (c)The video surveillance system shall at all times be able to effectively and clearly record images of the area under surveillance. (d) Each camera shall be permanently mounted and in a fixed location. Each camera shall be placed in a location that allows the camera to clearly record activity occurring within 20 feet of all points of entry and exit on the licensed premises, and allows for the clear and certain identification of any person and activities in all areas required to be filmed under subsection (e). (e)Areas that shall be recorded on the video surveillance system include the following: (1)Areas where cannabis goods are weighed, packed,stored, loaded, and unloaded for transportation, prepared, or moved within the premises; (2) Limited-access areas; (3) Security rooms; (4)Areas storing a surveillance-system storage device with at least one camera recording the access points to the secured surveillance recording area; and (5) Entrances and exits to the premises,which shall be recorded from both indoor and outdoor vantage points. (f) Not Applicable (g) Cameras shall record continuously 24 hours per day and at a minimum of 15 frames per second (FPS). (h)The physical media or storage device on which surveillance recordings are stored shall be secured in a manner to protect the recording from tampering ar theft. (i) Surveillance recordings shall be kept for a minimum of 90 days. (j) Surveillance recordings are subject to inspection by the Bureau, and shall be kept in a manner that allows the Bureau to view and obtain copies of the recordings at the licensed premises immediately upon request.The licensee shall also send or otherwise provide copies of the recordings to the Bureau upon request within the time specified by the Bureau. (k) Recorded images shall clearly and accurately display the time and date.Time is to be measured in accordance with the United States National Institute Standards and Technology standards. (1)The video surveillance system shall be equipped with a failure notification system that provides notification to the licensee of any interruption or failure of the video surveillance system or video surveillance-system storage device. § 5046. Locks A licensee shall ensure that the limited-access areas described in section 5042 of this division can be securely locked using commercial-grade, nonresidential door locks. A licensee shall also use commercial-grade, nonresidential door locks on all points of entry and exit to the licensed premises. § 5047. Alarm System Confidential and Proprietary 0 2018 EVIO, Inc. Security Plan Page 10 of 11 (a)A licensee shall maintain an alarm system as defined in Business and Professions Code section 7590.1(n) at the licensed premises. (b)A licensee shall ensure a licensed alarm company operator ar one or more of its registered alarm agents installs, maintains, monitors, and responds to the alarm system. (c) Upon request, a licensee shall make available to the Bureau all information related to the alann system, monitoring, and alarm activity. § 5048.Track and Trace System (a)A licensee shall create and maintain an active and functional account within the track and trace system prior to engaging in any commercial cannabis activity, including the purchase, sale,test, packaging,transfer,transport, return, destruction, or disposal, of any cannabis goods. (b)A licensee shall designate one individual owner as the track and trace system account manager.The account manager may authorize additional owners or employees as track and trace system users and shall ensure that each user is trained on the track and trace system prior to its access or use. (1)The account manager shall attend and successfully complete all required track and trace system training, including any orientation and continuing education. (2) If the account manager did not complete the required track and trace system training prior to receiving their annual license,the account manager shall sign up for and complete state mandated training, as prescribed by the Bureau, within five business days of license issuance. (c)The account manager and each user shall be assigned a unique log-on, consisting of a username and password. The account manager or each user accessing the track and trace system shall only do so under his or her assigned log-on, and shall not use or access a log-on of any other individual. No account manager or user shall share or transfer his or her log-on, username, or password,to be used by any other individual for any reason. (d)The account manager shall maintain a complete, accurate, and up-to-date list of all track and trace system users, consisting of their full names and usernames. (e)A licensee shall monitor all compliance notifications from the track and trace system, and timely resolve the issues detailed in the compliance notification. Palm Desert Municipal Code 5.101M.5 5. As part of the security plan, permittees shall: a. Install and maintain security cameras that shall cover, but not be limited to covering sale, cultivation, manufacturing, processing,transportation, distribution areas, all doors and windows, and any other areas as reasonably determined by the Planning Commission. b. Operate cameras 24 hours per day, seven days per week. c. Maintain at least 120 concurrent hours of digitally recorded documentation. d. Cure any disruption in security camera images expeditiously and in good faith. e. Install alarm systems that are operated and monitored by an independent third party security company. f. Shall lock all storage areas and give access to such storage areas only to permittee and permittee's staff. No cannabis products shall be accessible to the general public. Confidential and Proprietary O 2018 EVIO, Inc. Security Plan Page 11 of 11 EVIL LABS Business Operations Plan EVIO Labs Palm Desert, LLC Revised September 4. 2018 EVIL LABS EVIO Labs Palm Desert, LLC Table of Contents Table of Contents 2 11a. Business Plan 4 About EVIO Labs 4 The EVIO Corporate Structure 5 Products and Services 5 Analytical Testing 5 Technical Consulting and R&D Services 6 Advisory Services 6 Our Target Consumer 7 Construction to Startup Project Schedule 7 Compliance with Local and State Laws 9 Possession Guidelines 10 Security 10 Applicable Rulemaking 11 Operational Plan 12 Background 12 The EVIO Labs Quality Policies 12 Quality System 13 The EVIO Labs "Playbook" and Standard Operating Procedures 13 Testing Requirements 16 Sampling 16 Method Validation 16 Quality Assurance 17 Personnel 17 Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 2 of 32 EVIO LABS "-;EVIO Labs Palm Desert, LLC Laboratory Director 18 Technical Director of Chemistry 19 Technical Director of Microbiology 20 Laboratory Technician 20 Laboratory QA Officer 21 Laboratory Administrator 22 Sampler 23 Sales Representative 23 Third Party Vendors and Consultants 24 Inventory Management and Tracking 24 Cannabis Track&Trace 25 Details of Production Capacity 25 Storage, Distribution &Transportation 26 Transportation Procedures 26 Onsite Storage Capacity 27 Banking and Cash Handling Procedures 28 Waste Management Plan 28 11b. Community Relations Plan 29 11c. Neighborhood Responsibility Plan 29 Maintain Beautiful Exterior 30 Minimal Traffic Impact 30 Community Participation 30 11d. Odor Control Plan 30 11e. Certificate of Insurance 30 11f. Startup Operating Cost Summary and and Annual Operating Budget 31 Startup Costs 31 Operating Budget 31 Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 3 of 32 EVIO LABS EVIO Labs Palm Desert, LLC 11a. Business Plan A plan describing how the commercial cannabis business will operate in accordance with Palm Desert Code, California State Law, and other applicable regulations. The plan includes operational, banking, and personnel procedures to ensure adequate business knowledge, modeling and support. About EVIO Labs EVIO Labs is a subsidiary of EVIO, Inc., an Oregon-based corporation that has been providing analytical testing and advisory services to the cannabis industry since 2014. EVIO Labs is a life sciences company dedicated to providing agricultural, medical, and biotechnology industries with high quality analytical and consulting services. EVIO Labs was formed in 2016 and grew through the acquisition of five operating test labs including CannAlytical Research in Bend, OR; Oregon Analytical Services in Eugene, OR; and Kenevir Research in Medford/Central Point. Later in 2016, GreenHaus Analytical in Portland, GreenStyle Analytics in Yuba City, CA, C3 Labs, LLC in Berkeley, CA,Viridis Analytics in Southborough, MA were added. We also license EVIO technologies to Phytatech, LLC in Denver Colorado, and EVIO Labs Florida in Davie, FL. All four of our Oregon labs are accredited by Oregon Environmental Lab Accreditation Program (ORELAP),which bases its accreditation requirements on The National Institute (TNI)Standard 2009, which adheres to ISO 17025 guidelines. Our Florida and Colorado licensees have attained ISO accreditation, and our Berkeley and Massachusetts locations are in the process of obtaining accreditation. We currently test approximately 25%of Oregon's cannabis supply, and we currently provide testing services in California from our lab in Berkeley. We have plans to open labs throughout California to serve a significant share of California's future cannabis testing needs. EVIO is already one of the fastest growing cannabis product testing services in the nation. Our labs include: • EVIO Labs Bend-ORELAP/TNI Accredited • EVIO Labs Eugene-ORELAP/TNI Accredited • EVIO Labs Medford -ORELAP/TNI Accredited • EVIO Labs Portland -ORELAP/TNI Accredited • EVIO Labs Berkeley- ISO 17025 Accreditation in progress • EVIO Labs Denver- Licensing Agreement- ISO 17025 Accredited • EVIO Labs Massachusetts- ISO 17025 Approved, Licensing in progress • EVIO Labs South Florida- Licensing Agreement- ISO 17025 Accredited • EVIO Labs North Florida - Licensing Agreement in development • EVIO Labs Los Angeles-Seeking Licensing We are accomplishing our goals by developing a standardized business model and operating framework that will allow us to quickly deploy new labs, and enforce a company-wide, high-quality standard that will allow us to grow. Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 4 of 32 E111 LABS EVIO Labs Palm Desert, LLC EVIO values: - Producing accurate and precise data supported by quality control measures - Honest communication with clients and shareholders - Continuous improvement of products and services - Upholding scientific integrity - Operate in compliance with and in cooperation with all state and local regulatory bodies The EVIO Corporate Structure EVIO, Inc.was founded in August, 2014, by Lori Glauser and William Waldrop as Signal Bay, Inc.. The company trades on the OTC:QB stock exchange under ticker symbol EVIO. The company is governed by a board of directors include Will Waldrop, MBA, Chairman and Chief Executive Officer and Lori Glauser,MBA Chief Operating Officer. Each of these founders have over 25 years of diverse experience ranging from technology, business development, corporate development and strategy experience. Each of the regional labs employ 5 -8 people, with unique or, sometimes, shared roles. Variations in regulatory requirements state to state may affect necessary personnel. General managers are responsible for the overall management of the location, and are the primary customer interface. Technical directors are responsible for the production of lab results and coordinate activities with laboratory technicians. CIA officers are responsible for ensuring service and product quality and compliance with applicable rules and regulations. Office managers manage the lab's recordkeeping and much of the customer communications.Account executives manage customer accounts and oversee the customer experience, ensuring that client needs are recognized and addressed. Field technicians are responsible for sampling activities and sample pick-up. Products and Services Analytical Testing - Cannabinoid Potency 0 Inmost labs,we detect 7 cannabinoids including THC,THCA, CBD, CBDA, CBN, CBC and CBG. This also includes THC:CBD ratio for immature plants. - Terpene Analysis - Water Activity and Moisture Content - Microbiological Testing 0 Yeast/Mold Enumeration 0 Bacterial Testing(E. coli, Salmonella) - Pesticide/Chemical Screening - Residual Solvent Screening Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 5 of 32 EVIO n LABS EVIO Labs Palm Desert, LLC - Immature Plant Inspection - Foreign Matter Inspections - Heavy Metals Screening Technical Consulting and R&D Services - Product and Dose Formulation - Product Research and Development - Quality Assurance Development - Cultivation and Processing Operations Improvement - Custom Projects Advisory Services - Business Planning and Forecasting - Licensing and Permitting Support - Business Process Optimization - Market and Industry Research - Cannabis Science Education and Training Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 6 of 32 EVIOT" LABS EVIO Labs Palm Desert, LLC Our Target Consumer EVIO Labs Palm Desert will primarily serve the compliance testing needs for licensed cannabis distributors in Palm Desert and throughout Southern California, in accordance with CCR Title 16 Division 42 Chapter 5 and the CA CFR Title 16 (Bureau of Cannabis Control Emergency Rules). EVIO Labs may also provide informational testing services for industrial hemp clients, medical patients and, as allowed consumers in legal possession of cannabis or hemp who seek information about their cannabis. EVIO Labs Palm Desert will provide critical information about the quality and content of cannabis flower, concentrates, extracts, and infused edibles ("product"). It provides this information by gathering samples of product from the consumer, typically at their place of business, and bringing those samples to the lab for analysis. Once the analysis is complete,the samples are destroyed, and the test results transmitted to the consumer electronically. Initial lab customer targets, by priority: a. Licensed and permitted distributors in Palm Desert b. Licensed and permitted distributors, throughout Inland Empire (i.e. Desert Hot Springs, Coachella, Cathedral City) c. Other customers in legal possession of cannabis seeking lab testing services. In addition, we will provide consulting and R&D services to individuals and groups seeking cannabis industry expertise including startup and established businesses, universities, and governments. Construction to Startup Project Schedule The chart below describes the schedule of tasks required to begin operation, including proposed construction and improvements. Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 7 of 32 0 EVIL) LABS EVIO Labs Palm Desert, LLC Week I Week 2 Week 3 Week4 Week 5 Week6 Week 7 Week 8 Week Week 10 Week 11 Week 12 Week 13 Week 14 Week 15 Week 16 Week 17 Week 19 Week 19 WCCk 20 Week21 Week 22 WeeK 23 Appkemk—and Ilcanaing Costa Mesa APPIkMion Submission Condit.nal U:e Permit.Submission CUP Ravi—/Approval --- AreltiterW,e)Engi,*,df1g Attprovel &tslnrss Lkensa Apidical7on7 I]eaign and and L� F;H:iluy laeugn and txPlanning ructural ltnµrnvernenlx Electrical Improvefnents Ruilding Inspections(fire,Structural) Occupancy Penmt Approved? Install F—.M'ngs Prepare for Lab Opemtkms RccruR/Hire;frain Staff Procure fquipment Install Equipment Configure.esf Lquipment Attain 6017025 Aared<tation California Applicatlon Submission Begin Commercial Tesung I_ Our operating schedule has three categories: permitting and licensing, design and construction, and preparation for lab operations. The permitting and licensing phase begins with the submission of the Cannabis Regulatory Permit and Conditional Use Permit Application to the City of Palm Desert and completion of background checks.Then, principals proceed with the Conditional Use Permitting process,which will include all final building and fire permits, public hearing, and final conditional use permit and certificate of occupancy. Then we will apply for a business license. As soon as we attain permission to operate in Palm Desert, we will apply with the state to get a temporary license. Meanwhile,we will prepare the space for testing by installing necessary furnishings, and installing testing and security equipment. We will attain all needed building inspections including fire at that time. Preparations for lab operations include recruiting, hiring, and training staff, which will be performed from one of our existing lab locations. We have also already begun procuring test equipment, and as soon as furnishings are installed, install, configure and test the equipment. We will in parallel begin seeking ISO 17025 accreditation and apply for permanent state licensing. Our goal is to begin testing by January 1, and begin testing to full compliance with state rules as soon as the State issues its license. No cannabis will be allowed onsite until we have been fully permitted to handle cannabis. Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 8 of 32 EVIC3 LABS EVIO Labs Palm Desert, LLC Compliance with Local and State Laws EVIO Labs submits an application to the City of Palm Desert in compliance with Municipal Code, and California Bureau of Cannabis Control (BCC) rules for cannabis licensees. It shall also remain in compliance with all the rules specified in the current, and any revisions to the rules, as applicable.The plans submitted with the application demonstrate the company's commitment to adhering to the rules, and EVIO Labs will continue to work closely with City of Palm Desert to provide feedback to new rules as they develop in order to ensure a thriving cannabis industry while protecting public health and safety. EVIO Labs shall also operate in compliance with any State's Attorney General's Guidelines for the Security and Non-Diversion of cannabis. As the State rolls out its new rules EVIO Labs shall adhere to all State rules as they are expected to develop over the coming year, in accordance with MCRSA, including those for recreational cannabis testing. At a federal level, EVIO Labs intends to operate to the spirit of the now defunct Cole Memo, which is enveloped by California State rules. We also operate in compliance with applicable rules set forth by EPA and OSHA. We also look to the FDA for guidance on certain methods. This facility will operate in compliance with all applicable rules including Compassionate Use Act(Health and Safety Code § 11362.5, et seq.),the Cannabis Program Act (Health and Safety Code § 11362.7 et seq.), the cannabis Regulation and Safety Act, (Business and Professions Code § 19300 et seq.). EVIO Labs Palm Springs, LLC is a California limited liability company duly organized and in good standing with the California Secretary of State. EVIO Labs will not take any action that may cause any violation of California's cannabis laws or otherwise jeopardize the ability of this facility to operate in the City of Palm Desert. In order to meet this compliance, EVIO Labs shall only acquire, receive, produce, prepare, or compound cannabis or cannabis products from a company or individual who has the lawful right to possess and test cannabis. EVIO Labs will maintain and take reasonable steps to assure this compliance with state and local laws and the California Attorney General's Guidelines for the Security and Non-Diversion of cannabis Grown for Medical Use, by prohibiting: 1. Diversion of cannabis to anyone who is not a licensed and permitted facility; 2. Transporting or otherwise sending or directing cannabis outside the state of California; 3. Access to the facility and products to persons under the age of 21; 4. Any activities or associating with any criminal enterprises,gangs, or cartels; 5. The use of its status as a cannabis facility in California as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; and 6. The use of violence or firearms in the manufacturing and/or distribution of marijuana. Additionally, EVIO Labs hereby represents and warrants that the following rules shall be enforced to meet this compliance, such as: 1. Advising Members, employees and/or agents to never engage in the Prohibited Activities; 2. Prohibiting the use or consumption of cannabis on the property; Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 9 of 32 EVIL) WW LABS EVIO Labs Palm Desert, LLC 3. Advising Members, employees and/or agents to refrain from driving and/or operating heavy machinery while under the influence of medical marijuana; 4. Properly ensuring that each cannabis product is tested for quality assurance and meets required labeling, packaging in order to keep products out of reach of children and animals; 5. Maintaining proper security measures to prevent the potential for illicit activity and crime; and 6. Maintaining compliance with all local and state laws applicable to the licensing and permitting of this manufacturing facility. EVIO Labs through its counsel and consultants will continuously monitor updates to federal, state, and local cannabis laws and regulations to ensure all operations are compliant with applicable laws. EVIO shall adhere to the following guidelines as it relates to physician-recommended marijuana: Labs Should Test Only Lawfully Cultivated Marijuana EVIO Labs should acquire cannabis only from licensed distributors, or as allowed, collectives, or individuals such as cannabis patients who are otherwise lawfully permitted to possess cannabis. To help prevent diversion of cannabis EVIO Labs will carefully track and record the source and destination of all cannabis that comes to the lab for testing or research. Cannabis Sales are Prohibited EVIO Labs strictly prohibits the transaction of any cannabis product. EVIO Labs is a service provider only, and will test samples of product given to the lab as a part of the service. Cannabis samples or cannabis waste product shall not be sold from in any form. Possession Guidelines EVIO Labs shall be in possession of cannabis samples only for the purpose of testing. Remaining cannabis will be destroyed in accordance with waste disposal guidelines, or returned to the testing client, as allowed by law. Security EVIO Labs shall provide adequate security to ensure that employees and customers are safe and that the surrounding homes or businesses are not negatively impacted by nuisance activity such as loitering or crime. Further,to maintain security, prevent fraud, and deter robberies, EVIO Labs shall keep accurate records and follow accepted cash handling practices, including regular bank runs and cash drops, and maintain a general ledger of cash transactions. Refer to the security plan for details. Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 10 of 32 EVIO LABS EVIO Labs Palm Desert, LLC Applicable Rulemaking Refer to Bureau of Cannabis Control, Chapter 6.TESTING LABORATORIES for complete regulatory requirements. Rules may and probably will change frequently, so EVIO staff are trained to ensure they are working to the most current version of tules. State Rulemaking: http://bcc.ca.gov/law_regs/bcc_notice_emerg.pdf City Ordinances and applicable rule: http://www.cityofpalmdesert.org/our-city/departments/planning/marijuana-cannabis Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 11 of 32 EVlt LAB0 EVIO Labs Palm Desert,LLC Operational Plan Background The Bureau of Cannabis Control provides a statutory framework for the licensing of commercial cannabis testing labs within the State of California.The MCRSA established the Bureau of cannabis Regulation,which through the passage of proposition 64,was renamed the Bureau of Cannabis Control (Bureau) within the Department of Consumer Affairs (DCA). The bureau was created to license and regulate dispensaries, distributors,transporters, and testing laboratories under the MCRSA. Until now,the state has not comprehensively regulated the cannabis industry.The bureau's proposed regulations address the specific implementation for testing laboratories to be regulated by the bureau pursuant to the MCRSA. General licensing regulations as well as distributor, transporter, and dispensary regulations have been proposed in another rulemaking package.Additionally, manufacturer licenses will be issued and regulated by the California Department of Public Health (CDPH) and cultivator licenses will be issued and regulated by the California Department of Food and Agriculture (CDFA). While developing all cannabis regulations,the three licensing authorities worked cooperatively to strive for consistency in areas of overlap and to create a system that allows for reasonable regulation of the industry as a whole.The bureau and the Department of Public Health worked very closely to develop the proposed testing laboratory regulations. The EVIO Labs Quality Policies EVIO Labs maintains a Quality Manual and associated policies that enforce the Laboratory's objective to produce technically defensible laboratory test results that accurately and precisely describe the sample for the purpose of reporting to the client. The Laboratory is committed to routinely performing laboratory work in conformance to ISO 17025 and the TNI Standard (2003 and 2009), resulting in the overall improvement in laboratory quality over time. Demonstration of the laboratory's commitment to reach its objective will result in the following: - Adequately staffed and equipped laboratory facilities. - Successful participation in the proficiency testing program operated by an accredited provider. - Successful implementation of a NELAP compliant quality system. - Annual internal audits with management review. - Successful biennial assessments by the Accreditation Program. - Timely reporting of laboratory test results to appropriate regulating authorities/clients. - Laboratory test results that are supported by quality control data and documented laboratory testing procedures. - Continual improvement of the quality system through program monitoring and assessment. The quality policy is communicated to employees during the training of new hires. It is understood, implemented, and maintained by employees at all levels.This is documented by management through the employee evaluation process,the training procedure,the internal audit process, and the document control process.The technical director shall ensure that the lab's policies and objectives for quality of testing services are documented in the Quality Manual.The technical director shall assure that the Quality Manual is communicated to, understood, and implemented by all personnel concerned. Documentation includes signed statements in each analyst's training file. Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 12 of 32 EVIL LAB: EVIO Labs Palm Desert, LLC Quality System The quality system defined in the quality manual applies to all personnel who perform activities affecting quality. All employees are responsible for the quality system. The quality system applies to all activities affecting data realization whether at permanent facilities, sites away from permanent facilities, or any mobile or temporary facilities. Through a formal documented system of planned activities, the quality system meets the relevant requirements of ISO guide 17025. EVIO also goes above and beyond the ISO requirements by implementing requirements from the NELAC TNI 2009 Standard for Laboratories.The quality manual is maintained current and up-to-date by the Quality Manager (QAO)to reflect changes to the system. The laboratory defines it's policy for each applicable standard element in the quality manual. For each element, as appropriate,the laboratory has documented procedures that further describe how the specific policy objectives and goals are met. The quality manual references these documented procedures. Where applicable, work instructions are referenced in the documented procedures and the quality manual. Quality procedures and instructions are implemented as written. The procedures explain how the laboratory implements the standard requirements in accordance with its quality policy. They are revised, as necessary, to reflect the actual objectives, flow of tasks, and staff responsibilities. Work instructions are maintained in the laboratory methods manual.They specify the equipment, resources and skills required, what tests and verifications will be performed to measure process and product quality, the records and written documentation used by personnel, and standards of acceptability. Work instructions are approved by the affected managerial staff and are maintained in the document control system. The EVIO Labs "Playbook" and Standard Operating Procedures EVIO Labs has developed a guide to EVIO Labs operations that we call our "Playbook". This is a governing document that includes reference to our extensive set of policies and operating procedures. The policies and procedures below have been implemented in all our labs, and have been prepared to be compliant to ISO 1702S and TNI 2009. Document Type ID Document Description Process Sub Process Policy POL.100.010 Client Privacy Policy Quality Assurance Policy Maintaining Confidentiality of Client Policy POL.100.020 Information Quality Assurance Policy Policy POL.200.020 Sample Acceptance Policy Quality Assurance Policy Policy POL.300.010 Electronic Signature Policy Quality Assurance Policy Policy POL.400.010 Code of Ethics Quality Assurance Policy Lab Safety Training Manual and Policy POL.500.010 Chemical Hygiene Plan Quality Assurance Policy QMS QMS.100.010 Quality Manual Quality Assurance QMS Document SOP SOP.H.30.010 Project Management Human Resources Management Workforce Development Facilities and Materials Facilities Upkeep and SOP SOP.M.10.010 Ovening Procedures Management Maintenance Prevention of Laboratory Cross Facilities and Materials Facilities Upkeep and SOP SOP.M.10.020 Contamination Management Maintenance Facilities and Materials Facilities Upkeep and JWP SOP.M.10.030 Washing Labware Management Maintenance Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 13 of 32 EV10 ,4010 LABS EVIO Labs Palm Desert, LLC Facilities and Materials Facilities Upkeep and SOP SOP.M.10.040 Solvent Bottle Top Dispenser Management Maintenance Operation and Maintenance of Fume Facilities and Materials Facilities Upkeep and SOP SOP.M.10.050 Hoods Management Maintenance Facilities and Materials Facilities Upkeep and SOP SOP.M.10.060 Operation of Scale Management Maintenance Operation of Restek Q-Sep Facilities and Materials Facilities Upkeep and SOP SOP.M.10.070 Centrifuge Management Maintenance Facilities and Materials Equipment/Materials SOP SOP.M.20.010 Approval of Suppliers Management Procurement Ordering and Receiving Laboratory Facilities and Materials Equipment/Materials SOP SOP.M.20.020-Equipment and Supplies Management Procurement Receipt and Storage of Equipment Facilities and Materials Equipment/Materials SOP SOP.M.20.030 and Consumables Management Procurement Facilities and Materials Equipment Calibration and SOP SOP.M.30.010 Changing the GC Column(BND) Management Maintenance Facilities and Materials Equipment Calibration and SOP SOP.M.30.020 HPLC Maintenance Management Maintenance Operation and Calibration of HP Facilities and Materials Equipment Calibration and SOP SOP.M.30.021 1050 HPLC DAD Management Maintenance Operation and Calibration of Facilities and Materials Equipment Calibration and SOP SOP.M.30.030 Micro i ettors Management Maintenance Traceability of Samples,Reagents, Facilities and Materials Materials Handling and -� SOP.M.50.010 Standards and Supplies Management Disposal Facilities and Materials Materials Handling and SOP SOP.M.50.020 Use of Secondary Containers Management Disposal Facilities and Materials Materials Handling and SOP SOP.M.S0.080 Waste Disposal Procedures Management Disposal Facilities and Materials SOP SOP.M.70.010 Security Procedures Management Security Corrective and Preventive SOP SOP.QA.100.010 Corrective and Preventive Actions Quality Assurance Action SOP SOP.QA.400.010 Writing an SOP Quality Assurance Document Control SOP SOP.QA.400.020 Use of Laboratory Notebooks Quality Assurance Document Control SOP SOP.QA.500.010 Data Integrity Management Quality Assurance Data Integrity SOP SOP.S.10.010 MarComm Procedures Sales and Marketing Marketing Communications Customer Engagement- SOP SOP.T.10.010 Appointment Scheduling Testing Scheduling Customer Engagement- SOP SOP.T.10.020 Sample Intake Testing Intake Sample Control- SOP SOP.T.20.020 Sample Handling and Storage Testing Handling/Storage Documenting and Storing Retention Sample Control- SOP SOP.T.20.030 Samples Testing Handling/Storage SOP SOP.T.20.010 Procedures for Sampling Testing Sample Control-Sampling SOP SOP.T.30.010 Photographing Samples Testing Sample Prep SOP.T.30.020 Sample Homogenization Testing Sample Prep SOP.T.30.030 Sample Weighing Testing Sample Prep SOP SOP.T.30.040 Sample Drying Testing Sample Prep Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 14 of 32 EVIO `0a LABS EVIO Labs Palm Desert, LLC Sample Preparation for Cannabinoid SOP SOP.T.30.050 Quantitation via HPLC Testing Sample Prep SOP SOP.T.30.051 Unique Matrix Validation Procedures Testing Sample Prep SOP SOP.T.30.060 Sample Prep for Pesticide Analysis Testing Sample Prep SOP SOP.T.30.061 Pesticide Prep and Shipment MFR Testing Sample Prep Loss on Drying and Moisture Content SOP SOP.T.40.010 Determination Method Testing Analysis-Chemistry-Water General Water Activity SOP SOP.T.40.011 Measurement Procedures Testing Analysis-Chemistry-Water Moisture Sorption Isotherm Characterization for Cannabis SOP SOP.T.40.012 Inflorescence Testing Analysis-Chemistry-Water Cannabinoid Quantitation via Analysis-Chemistry- SOP SOP.T.40.020 HPLC-UV Testing Cannabinoids HPLC Batch Run Initiation Analysis-Chemistry- SOP SOP.T.40.021 LabSolutions Testing Cannabinoids Analysis-Chemistry- SOP SOP.T.40.022 HPLC Mobile Phase Preparation Testing Cannabinoids Cannabinoid Content Analysis by Analysis-Chemistry- SOP SOP.T.40.023 HPLC-DAD Testing Cannabinoids Analysis-Chemistry- SOP SOP.T.40.024 Cannabinoid Quantitation via GC-FID Testing Cannabinoids Qualitative CBD:THC Cannabinoid Analysis-Chemistry- SOP SOP.T.40.025 Ratio Determination via GC-FID Testing Cannabinoids Residual Solvent Analysis via Analysis-Chemistry- lip SOP.T.40.030 HS-GC MS Testing Solvents Rapid Yeast and Mold Enumeration SOP SOP.T.40.040 via Petrifilm Testing Analysis-Microbiology E.coli and Coliforms Enumeration SOP SOP.T.40.041 via Petrifilm Testing Analysis-Microbiology SOP SOP.T.40.042 Salmonella Determination Testing Analysis-Microbiology gPCR Setup and Analysis for SOP TBD Microbiological Testing Testing Analysis-Microbiology Analysis-Chemistry- SOP SOP.T.40.051 Pesticide Analysis via LC-MSMS Testing Pesticides Analysis-Chemistry- SOP SOP.T.40.051 Pesticide Analysis via GC-MSMS Testing Pesticides erpenoid Analysis via HS-GC-FID Analysis-Chemistry- SOP SOP.T.40.090 and HS-GC-MS Testing Terpenes General Procedures of SOP SOP.T.40.100 Subcontracted Analyses Testing Analysis Cannabinoid Matrix Spike Analysis-Chemistry- SOP SOP.T.40.026 Procedures Testing Cannabinoids Cannabinoid LCS/LCS Duplicate Analysis-Chemistry- SOP SOP.T.40.027 Procedures Testing Cannabinoids Validation Protocol for Analytical QC-Method SOP SOP.T.80.010 Chromatographic Methods Testing Validation SOP SOP.T.80.020 Estimating Uncertainty Testing Analytical QC-Monitoring Use of Control Charts for LCS )P SOP.T.80.021 Monitoring Testing Analytical QC-Monitoring Data Review and Reporting SOP SOP.T.90.010 Procedures Testing Data Review and Reporting Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 15 of 32 EV1 LABS EVIO Labs Palm Desert, LLC Testing Requirements The Bureau of Cannabis Control makes clear that the protection of the public is paramount. In keeping with that,the bureau developed procedures for ensuring that all cannabis goods are tested prior to delivery to a dispensary for retail sale.All cannabis goods be tested by testing laboratories licensed by the bureau for a variety of attributes for the protection of the public.Through the proposed testing Bureau of Cannabis Control,Testing Laboratories Initial Statement of Reasons laboratory regulations,the bureau aims to ensure the cannabis goods offered for sale are safe for human consumption.The bureau also aims to ensure cannabis patients receive accurate information regarding the cannabis goods they consume. First,the MCRSA requires the bureau, with assistance from the CDPH,to develop health protective levels for moisture content, contaminants, residual solvents, microbiological impurities, and foreign material. Consumable cannabis goods are at risk of contamination similar to other consumable products. Contamination may occur during various stages of the cultivation, harvest, extraction, processing, and packaging processes. Some of the types of contamination that can make a cannabis good unsafe involves pesticides, residual solvents and processing chemicals, microbiological impurities, heavy metals, and foreign material.These proposed regulations aim to set forth action levels that the bureau considers are both protective of public health and achievable by industry.The proposed exposure limits are necessary to ensure,to the extent feasible,that no cannabis patient will suffer material impairment of health from exposure to contaminants in cannabis goods.As such,these contaminants include Chemicals, Microbiological impurities, Mycotoxins, Foreign Materials & Heavy Metals. Sampling Proper sampling collection may be far more consequential than laboratory measurement errors. If a sample of something is improperly obtained,the measurement data that is gathered through analyzing the sample puts the measurement data it produces into question. Proper sampling is therefore critical to obtaining relevant and valid data. In these regulations,the Bureau proposes fairly detailed minimum sampling requirements.These requirements include what must go into a testing laboratory's sampling protocol,training requirements for laboratory agents who will be obtaining samples ("samplers"), and how samples are to be stored.The proposed sampling regulations also make specific the MCRSA provision that requires the laboratory agent collecting the sample to use a "statistically valid sampling method."A statically valid sampling method is necessary to ensure that the cannabis goods samples accurately and precisely represent the characteristics of the batches from which they were taken. Method Validation An analytical procedure is developed to test a defined characteristic of a substance against established acceptance criteria for that characteristic.This is called a "method," or a "test."To ensure the method used results in reliable, valid data,the method must be "validated" before it is used to produce usable results. Method validation is a process by which a method is tested to ensure it is producing valid results. Because it is only fairly recently that cannabis has been a substance that is tested for impurities by laboratories, and because the federal government does not regulate this industry,there are few validated methods for the testing of cannabis.Therefore laboratories will have to validate their own methods for the testing of cannabis. Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 16 of 32 EVIL? LABS EVIO Labs Palm Desert, LLC The laboratory's analytical instrumentation and methodology is selected based on the intended purpose and scope of the analytical method. Parameters that may be evaluated during method development are specificity, linearity, limits of detection (LODs) and limits of quantitation (LOQs), range, accuracy, and precision. These proposed regulations set out what the bureau considers to be acceptable ways to validate a "nonstandard" method,which will be used for testing cannabis goods. In developing these proposed method-validation regulations,the bureau looked to guidelines and other resources used in other industries. Quality Assurance Quality assurance is a set of operating principles that enable laboratories to produce defensible data of known accuracy and precision.These operating principles form a laboratory quality system and are documented in a laboratory's quality-assurance manual. These regulations propose the minimum components of a quality-assurance program and what must be contained in the quality-assurance manual. The Bureau's proposed quality-assurance program includes requirements for quality control samples.The bureau proposes to require the use of method blank samples,field duplicate samples, and matrix spike samples (or laboratory control samples).The proposed regulations also set out how to calculate the limit of detection and limit of quantitation. They also spell out recordkeeping requirements and require an annual internal audit.Together these proposed regulations will assist in providing accurate testing and guidance for how to ensure accurate testing. The Bureau is also proposing required proficiency testing. Proficiency testing is a blind testing of a laboratory's ability to perform analyses.The bureau proposes requiring testing laboratory licensees participate in a proficiency testing carried out by an ISO 17025 accredited laboratory so that every analyst and every method used by the laboratory is eventually tested.This is an important check on the ability of laboratories to provide accurate data. Personnel The education and experience level of the personnel of a testing laboratory is very important. Many of the required tests in these proposed regulations are complex and must be done by persons with specialized training.Therefore,the bureau proposes in these regulations to require testing laboratories licensed by the bureau to have a laboratory director. It is also proposed that analysts and supervisory analysts meet some minimum qualifications. This is done to ensure laboratories are run by competent and trained persons, to ensure accurate testing, and to ensure public safety. EVIO Labs Palm Desert expects to employ from 7-16 people,with the initial staffing plan described below. In addition, certain executives from EVIO, Inc. will work in the non limited-access area offices adjacent to the laboratory. EVIO Labs is organized with Executive Management overseeing all 11 of our labs across North America. Each lab has its own staff, overseen by a Lab Director. On a day to day basis,the lab will be managed by a Lab Director, who will be hired as we get closer to licensing. By the end of year 1,we anticipate having 12 employees at the lab A staffing projection is shown below: Startup Staffing Model: ant tenth 1 ,Mp!tt 7 Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 17 of 32 EVIO LAB; EVIO Labs Palm Desert, LLC Lab Director 1 1 1 1 1 1 1 QA Manager 1 1 1 1 1 1 1 Lab Tech - Potency 1 1 1 1 1 1 1 Lab Tech - Pesticide 0 0 0 0 0 0 1 Lab Tech - Micro 0 0 0 1 1 1 1 Lab Tech - Metals 0 0 0 0 0 0 1 Administrative 1 1 1 1 1 1 1 Samplers 1 2 3 3 3 3 3 Sales 1 1 1 1 1 1 1 1 1 1 Total Personnel 6 7 8 9 9 9 11 The job descriptions of the day to day lab staff are below: Laboratory Director The Laboratory Director administers and coordinate the technical activities of the group in relation to the operation of specialized laboratories. Acts as an advisor to subordinates to meet schedules and/or resolve technical problems. Frequently interacts with other labs and coordinates the program activities with responsibility for results in terms of costs, methods, and employees. Insure Standard Operating Procedures and protocols are maintained and applied. Work Performed • Administer and coordinate the technical activities and infrastructure related to the operation of the specialized laboratories. In coordination with Quality Assurance, develop and implement Laboratory(s) policies and procedures. Manage and coordinate operational policies and procedures; coordinate with staff on issues which impact laboratory services. • Maintain liaison with company personnel and staff to solve specific operating problems and improve technical activities.Advise on technical procedures,techniques and equipment, and maintain conformance with specific operational standards. • Maintain quality checks on safety of laboratories, including biohazards and ensure maintenance of the facilities according to Good Laboratory Practices. • Assist in formulating and implementing the short and long-range goals for the operation of the laboratories; set priorities, assign responsibilities, and establish timetables. Project future needs and formulate strategies consistent with projections. • Plan and schedule work for the group to ensure proper distribution of assignments as well as adequate manning, space, and facilities for subsequent performance of duties. Manages and coordinates the activities of a project(s) with responsibility for results in terms of costs, methods, and employees; coordinate and supervise the performance of routine and specialized technical procedures in multiple laboratories. • Evaluate and recommend new techniques and technologies. Install and maintain laboratory equipment in compliance with federal regulations. Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 18 of 32 11 EV LABS EVIO Labs Palm Desert, LLC • Prepare technical reports reflecting volume of work, procedures utilized and test results; coordinate the preparation of reports and analyses setting forth progress, adverse trends, and appropriate recommendations or conclusions. • Plan and conduct meetings with subordinates to ensure compliance with established practices,to implement new policies and to keep employees abreast of current changes and standards. • Represent the laboratory in technical interactions with the customer base. • Assure that the laboratory technicians are properly trained in Standard Operating Procedures (SOP's) and equipment specific requirements. • Assist in the determination of fiscal requirements and in the preparation of budgetary recommendations. Compile and prepare reports and analyses setting forth progress, adverse trends, and appropriate recommendations or conclusions. Recommend and approve purchases of major capital equipment. • Provide assistance to QA department to develop and implement quality assurance programs relating to calibration and maintenance of equipment. Develop, implement, monitor, and evaluate systems to evaluate current and projected laboratory services and productivity of the laboratories. Coordinate the functions and operations of the laboratories with peer laboratories each other. • Provide guidance as requested regarding hiring, training, promotions, and disciplinary issues for technical personnel. • Facilitate facility renovations and new construction projects, including review of architectural design and building requirements. Identify areas where facility upgrades are necessary and obtain cost estimates for implementing improvements. • Perform other related duties incidental to the work described herein. • The above statements describe the general nature and level of work being performed by individuals assigned to this classification.This is not intended to be an exhaustive list of all responsibilities and duties required of personnel so classified. Requirements Must have PhD in the chemical or biological sciences with at least one year experience working in an accredited lab, or Master's Degree with at least four years experience working in an accredited lab, or in accordance with state accreditation requirements. A Regional Laboratory Director may oversee multiple labs, and has at least one year experience as a laboratory director. Technical Director of Chemistry • Prepare samples for analysis in accordance with EVIO SOPS • Perform analysis of samples for potency, pesticide residues, residual solvents, and/or heavy metals, in accordance with state testing rules. • Provide day to day oversight of lab operations. • Perform Post-intake Sample Management. • Monitor samples from intake through retention and disposal. • Oversee subsampling tasks and check that it is being performed properly. Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 19 of 32 EVICT LABS EVIO Labs Palm Desert, LLC • Continuously improve analysis and reporting functions. • Perform data review, analysis, and reporting. Technical Director of Microbiology • Prepare samples for analysis for mold,yeast, mildew, e. coli, salmonella, mycotoxins, or other microbiological contaminants, in accordance with EVIO SOPS and state testing rules. • Provide day to day oversight of microbiological lab operations. • Perform Post-intake Sample Management. • Monitor samples from intake through retention and disposal. • Oversee subsampling tasks and check that it is being performed properly. • Continuously improve analysis and reporting functions. • Perform data review, analysis, and reporting. Any technical manager engaged in microbiological or biological analysis shall be a person with a bachelor's degree in microbiology, biology, chemistry, environmental sciences, physical sciences or engineering with a minimum of sixteen college semester credit hours in general microbiology and biology and at least two years of experience in the environmental analysis of representative analytes for which the laboratory seeks or maintains accreditation. A master's or doctoral degree in one of the above disciplines may be substituted for one year of experience. A person with an associate's degree in an appropriate field of the sciences or applied sciences,with a minimum of four college semester credit hours in general microbiology may be the technical manager(s) of a laboratory engaged in microbiological analysis limited to fecal coliform,total coliform, E. coli, and standard plate count.Two years of equivalent and successful college education, including the microbiology requirement, may be substituted for the associate's degree. In addition,each person shall have one year of experience in microbiological analyses. Laboratory Technician Reporting to the Laboratory Director, Laboratory Testing Technicians prepare samples of plant, concentrate, and edible products for analysis. Lab work involves measuring and tracking samples, preparing sample dilutions, completing logs, maintaining hygienic lab conditions including washing labware. Technicians may also be required to interpret analytical data, prepare and review reports, work with the Laboratory Director to perform experiments and method validations.The lab technician will use software systems including Laboratory Information Management Systems (LIMS), as well as office tools. Duties and responsibilities include: Sample Intake: • Receive samples and confirm appropriate receipt conditions Enter the samples into the LIMS • Complete all necessary intake documentation Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 20 of 32 E V 10 LABS EVIO Labs Palm Desert, LLC Sample Preparation for Analysis: • The technician prepares samples in accordance with the associated method SOPs. The following are tasks necessary for sample preparation: • Homogenizations • Weighing • Extractions • Dilutions Daily Opening Procedures: • Temperature logs for refrigerators, freezers, and incubators(as applicable) • Scale calibration verifications • Stocking consumables • Cleaning labware • General tidiness throughout the lab space Laboratory QA Officer The quality assurance officer has responsibility for the quality system and its implementation. The QAO has direct access to the highest level of management at which decisions are taken on lab policy and/or resources, and to the technical director. When the CIAO is not present, a deputy shall be appointed. In accordance with TNI,The laboratory's quality manager and/or his/her designee(s)shall: a) Serve as the focal point for QA/QC and be responsible for the oversight and/or review of quality control data; b) Have functions independent from laboratory operations for which they have quality assurance oversight; c) Be able to evaluate data objectively and perform assessments without outside (e.g., managerial) influence; d) Have documented training and/or experience in QA/QC procedures and the laboratory's quality system; e) Have a general knowledge of the analytical methods for which data review is performed; f) Arrange for or conduct internal audits as per Section 4.14 annually; g) Notify laboratory management of deficiencies in the quality system; and h) Monitor corrective actions. NOTE: Where staffing is limited,the quality manager may also be the technical manager. Reporting to Director of Operations • Report/file any corrective actions/preventive actions and customer feedback. • Report failed samples to OHA with help of lab director. • Maintain employee training files. Ensure staff is completely trained on SOPS, maintain DOC documents. • Enter document change requests to the online "personnel resources" section of eviolabs.com for any SOPS that do not reflect the methods used in the lab. • Complete corrective action reports and preventive action reports(also submit online via "personnel resources"). • Review all outbound transfer manifests and shipments. Ensure that the manifest matches samples in the outbound batch. Make a copy of the transfer manifest and file. • Perform data review for solvents and terpenes as directed. Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 21 of 32 E V 10 sx L A B S EVIO Labs Palm Desert, LLC • Review completed certificates prior to release. Review reported data vs. instrument sheets,final certificate vs. subcontracted certs. • Report test fails in accordance with rules simultaneously with customer report delivery. • Maintain data packages for samples. • Ensure that all sample intake forms,transfer manifests, and lab data packages are complete and organized in a manner that anyone in the lab can easily access data for any sample. • Maintain Quartzy and order supplies. Ensure equipment IDs have been entered into quartzy. • Enter test results into METRC for client reporting. • Maintain lab logs such as fridge temp, scale calibrations, etc. • Respond to regulatory data requests. • Ensure all documents are properly backed up and retained in accordance with TNI document retention requirements. • Monitor QMS and training slack channels. • As needed, arrange for hazwaste pickup,gas supply,water delivery. • Ensure the office area you work in is organized and tidy so people can find archival documents,SOPS and regulations. • Perform any micro analyses if requested. Laboratory Administrator Provide front office support including working as receptionist, offer support to sales and samplers, and assist with product intake: • Communicate with clients throughout the testing process to minimize the number of calls going to the lab. • Notify clients proactively of known issues such as testing delays or reported fails. • Communicate sampling schedule to team so the lab can schedule resources and be prepared for intakes. • Answer phones/check voicemail Ensure every client is responded to/followed up on by referring to appropriate party. • Handle and properly distribute mail. • Scan any bills, invoices and receipts to accounting@eviolabs.com . File packing slips • Make bank deposits. • Ensure that visitors to the lab complete visitor log. • Ensure the intake area where customers will be present is tidy and free of other client information and forms. • Track and handle office expenses and receipts. Send petty cash receipt purchases to accounting. • Ensure that orders are properly entered into laboratory information systems and accounting systems.. Ensure that the entries are consistent. • Handle in-lab transactions, (cash, check, credit card). • Use METRC including accepting samples, creating transport manifests. (more training requested). • Perform first phase of intake: o Take orders, print order form and have client sign it. • Create payment receipt, or invoice if the client is on terms. • Ensure all inbound samples have been verified in CC and photographed. Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 22 of 32 EVIO ,tol%i LABS EVIO Labs Palm Desert, LLC • Organize samples prior to analysis. • Complete transfer manifests. • Collect receivables. • As training and accreditation allows, perform basic tests such as water activity. • Perform duties of sampler(in-house) once trained. Sampler Reporting to the Sales Manager: • Perform field sampling in accordance with EVIO SOPs and state rule • Create and maintain sampling schedules with distributors. Communicate planned departure/arrival times with the labs. • Complete all required sampling paperwork • Receive transport manifests, prepare transport container. • Ensure shipments have a METRC or other transport manifests manifest. • Prior to leaving any site,verify transport manifests for completeness (look at actual samples and cross reference to manifest) • Take and record temperature of the samples prior to leaving. • Ensure that the subsample containers are completely labeled with sample number,test type, and weight of contents. • Provide lab completed and fully signed transport manifests. Ensure copies are left with lab and bring documents with shipment. • Assist staff with entering data to order entry system • Receive payments from customers. Sales Representative Reporting to the President of sales, responsible for engaging in customer relationships and maximizing revenue. • Develop and grow customer relationships. • Develop plans and strategies for developing business and achieving the company's sales goals. • Create a culture of success and ongoing business and goal achievement. • Manage the sales teams, operations and resources to deliver profitable growth. • Manage the use of budgets. • Define optimal sales force structure. • Hire and develop sales staff. • Define and oversee sales staff compensation and incentive programs that motivate the sales team to achieve their sales targets. • Define and coordinate sales training programs that enable staff to achieve their potential and support company sales objectives. • Manage customer expectations and contribute to a high level of customer satisfaction. • Define sales processes that drive desired sales outcomes and identify improvements where and when required. Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 23 of 32 EVI L0 LABS n EVIO Labs Palm Desert, LLC • Put in place infrastructure and systems to support the success of the sales function. • Provide detailed and accurate sales forecasting. • Compile information and data related to customer and prospect interactions. • Monitor customer, market and competitor activity and provide feedback to company leadership team and other company functions. • Work closely with the marketing function to establish successful support, channel and partner programs. • Manage key customer relationships and participate in closing strategic opportunities. • Travel for in-person meetings with customers and partners and to develop key relationships. • Communicate with clients throughout the testing process to minimize the number of calls going to the lab. • Notify clients proactively of known issues such as testing delays or reported fails. • Communicate sampling schedule to team so the lab can schedule resources and be prepared for intakes. Third Party Vendors and Consultants As a general rule, EVIO does not employ contractors,vendors, or consultants to work in our labs. EVIO Labs vendors include suppliers of equipment and consumable products, security vendors, and software vendors. We use a number of equipment suppliers including Shimadzu and Agilent to provide our primary instrumentation. We have a long list of vendors who provide supplies, standards, and chemicals including Emerald Scientific, Restek, Cerilient, VWR, and others.All vendors for our equipment and chemistry supplies are accredited and validated for provision of supplies to ISO 17025 standards. Software vendors include Microsoft, Promium,for our laboratory information management system, Confident Cannabis for our reporting system. Security vendors include ADT and other local security companies. From time to time,we may engage the services of a consultant in the areas of chemistry, compliance, microbiology, in order to establish or develop methods or processes. At this time, we do not expect to have any consultants employed by the lab. Inventory Management and Tracking Cannabis samples are tracked from seed to sale, including through the cannabis testing lab. The state has selected Franwell METRC as its seed to sale tracking provider. Until this system is in place, we perform tracking through the following mechanisms. All of our cannabis tracking is based on creating unique identifiers of each sample, and the weight of each sample. The unique identifiers are traceable to the source batch of product. - Chain of custody forms to track samples from the point of origin (the distributor),to the lab. - Any cannabis that is transported to our site is tracked on a Transport Manifest. - Once in the lab, or If R&D samples are dropped in the lab,we track samples via chain of custody form within the lab. - Retention samples are tracked on retention sample logs. This allows us to identify all samples that remain in storage after testing. - Waste disposal log is used to track the destruction of cannabis waste. Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 24 of 32 EVIO 0, LABS EVIO Labs Palm Desert, LLC EVIO Labs is a service provider to the industry, and therefore does not perform transactions of goods. EVIO Labs performs analytical testing on samples of cannabis product, primarily from distributors. Our product is information. Any samples provided to EVIO Labs are destroyed in the testing process. As allowed,we may return surplus cannabis product to the tester. We maintain chain of custody and full product traceability for every gram of cannabis product in our labs through a track and trace system as described below. Cannabis Track&. Trace The State of California has selected Franwell METRC inventory tracking system for inventory tracking. EVIO Labs uses METRC at its four labs in Oregon, which allows us to adapt to the system directly. As required by state rule, each sample that arrives at our lab shall be identified with a unique code that is associated with a batch of cannabis product. Our customer will logically transmit the samples to our lab through the METRC system upon transport. Once the samples arrive at our lab,we inspect the samples, and accept the samples into the system, and verify the weight of the samples. Once we are completed testing, and the end of the required retention period is complete, we will dispose of any remaining sample. Used or destroyed samples are then indicated as such in the METRC system. If there are instances where material leaves the lab and is returned to the provider, lab personnel will update METRC accordingly, and the recipient receives the transported material. More detail about our Track and Trace methodology is provided in our standard operating procedures SORT.20.020 Sample Handling and SOPM.50.080 Waste Management. Until METRC is in place,the lab will use a log-based tracking system as described above. Details of Production Capacity EVIO Labs anticipates that full compliance testing will commence on or before July 1, 2018. We will ramp up operations to serve the needs by installing and implementing the needed instruments and staff to meet the local and regional demand for testing. Full compliance testing means that one test references a test of one batch of product. One "test" as described below may include a panel of tests including tests for potency, pesticides, microbiological or residual solvent screening, heavy metals, and foreign matter. The table below presents our projection for the number of tests initially performed from our Palm Desert location: (Note projections to begin after licensing-addendum 6111118) •y Jan-18 Feb-18 Mar-18 Apr.18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Number of Large Clients 3 4 5 6 7 8 9 10 11 12 13 14 Number of Medium Clients 5 7 9 11 13 15 17 19 21 23 25 27 Number of Small Clients 5 9 13 11 21 25 29 33 37 41 45 49 Tests Per Month per Large Client 20 20 20 20 20 20 20 20 20 20 20 20 Tests Per Month per Medium Client 5 5 5 5 5 5 5 5 5 5 5 5 Tests Per Month per Small Client 1 1 - 1 - 1 - 1 1 1 1 Total Tests per Month(Full Compliance) 90 115 158 175 226 235 294 295 362 398 430 464 Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 25 of 32 N IEVIO► y , LABS EVIO Labs Palm Desert, LLC To meet the needs of full testing, we will initially require one high-capacity instrument for each test type and sufficient trained staff to operate each process. Initial installed capacity will be for 20 samples per day, or approximately 460 samples per month. When we exceed these projections,we will add additional equipment and personnel to support the added test volume. In general, each test represents approximately one batch of cannabis flower, extract, concentrate or infused edible product. Storage, Distribution & Transportation EVIO Labs will not distribute cannabis products to third parties. Any samples that are delivered to the lab will be consumed during the testing process, and ultimately destroyed via our waste management procedures. EVIO Labs has developed extensive storage, distribution, and transportation procedures for cannabis samples. Refer to SOP T.20.020-Sample Handling and Storage, and SOP.T.20.30- Documenting and Storing Retention Samples. Sec 9-495 (b)(1)(ii) requires: all cannabis and cannabis products shall be stored in a secured and locked room, safe, or vault, and shall be kept in a manner as to prevent diversion,theft, and loss. EVIO Labs intends to store all usable cannabis that is in its possession onsite in refrigerators located in a locked room, which is central to the lab. The locked room will be accessible only from within the limited access area, and have its own secure entrance.We anticipate having two storage refrigerators, and storage freezer. The first refrigerator will be a staging location for incoming samples. The second refrigerator will be storage for samples that are in progress, and for laboratory standards that require refrigeration. We will also have a freezer where we will store the remains of completely tested samples for retention of 90 days or longer. After the required retention time is complete, any remaining sample material will be destroyed and disposed of in accordance with state and local rule. Transportation Procedures Prior to beginning any trip, a trip plan that is indicated with transport manifest shall be developed. Notwithstanding the foregoing, a transport vehicle may make stops at multiple facilities or laboratories, as appropriate,to deliver medical marijuana. • EVIO Labs will have at least one delivery vehicle for use by our sampling staff to pick up samples. As the demand grows,we may have up to three transport vehicles assigned to the Palm Desert lab.The vehicles will be unmarked. • The company shall generate a printed or electronic transport manifest that accompanies every transport vehicle. The transport manifest shall be completed in compliance with BCC requirements. • When transporting relatively small quantities of cannabis samples,for instance less than two pounds of product, the dispensary will use discreet company vehicles that have a secure locked container for storing product during transport. • In the unlikely event we will need to transport larger quantities of cannabis samples or cash in excess of$10,000, we plan to use the services of a third-party secure transportation company that is licensed for such deliveries. • The vehicles shall have no markings that would identify or indicate that the vehicle is being used to transport Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 26 of 32 E V 10 LABS EVIO Labs Palm Desert,LLC marijuana, and will be equipped with a secure lockbox or locking cargo area. Cannabis stored inside the transport vehicle may not be visible from the outside of the transport vehicle. • The vehicles shall be capable of being temperature-controlled for perishable marijuana products. • The vehicles shall at all times display current State inspection and registration stickers.Transport vehicles shall also be at all times insured by an amount that is commercially reasonable and appropriate. • Our team members will adhere to the highest standards of safety. Our company will verify driving records upon hire, and ensure that transport personnel have a history of safe driving. • Drivers shall have access to a cellular telephone at all times while on route. • Drivers shall have a valid driver's license, plus any additional identification required to indicate they are an employee of a licensed cannabis testing lab. • If an employee or contractor finds evidence of, or reasonably suspects, a theft or diversion of cannabis during transport, the employee or contractor shall immediately report its findings or suspicions to the general manager, who will immediately report the incident to authorities, as appropriate. • If an employee or contractor discovers a discrepancy in any transport manifest,the employee shall: 1. Notify the General Manager. 2. The General Manager will direct an investigation. Such an investigation may involve the following actions: a. Interview the delivery team and any other employees involved in the transfer to determine if there was an error made during the preparation of the Transport Manifest. b. Notify the counterparty to the Transport Manifest(for instance the grower/processor) of the discrepancy. Interview the counterparty to establish route cause of the discrepancy. c. Prepare any corrective actions if necessary. 2. If it is deemed that an employee or contractor was negligent, disciplinary action up to and including termination will be considered. 3. The General Manager or his assignee may amend the transportation standard plan of operation, if necessary,to prevent future discrepancies between the quantity or description of inventory listed in the transport manifest and the quantity or description of inventory delivered. A transport vehicle is subject to inspection by law enforcement, or other Federal,State or local government officials if necessary to perform the government officials'functions and duties.A transport vehicle may be stopped and inspected along its delivery route or at any cannabis organization. Onsite Storage Capacity We anticipate that our total onsite storage of usable cannabis will rarely exceed 2 pounds of cannabis samples at any given time, although we will ensure we have sufficient capacity to store up to ten pounds of product if needed. There will be no offsite warehousing. It should be noted that once samples arrive at the lab,they are removed from retail packaging and homogenized (ground up). Samples bound for testing will typically be introduced to a chemical solution. Remaining sample material is Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 27 of 32 EVIO !F0 LABS EVIO Labs Palm Desert, LLC retained in sample packages in our secure refrigerators. In this state,the product is generally unappealing or unusable, so risk of diversion is low. Banking and Cash Handling Procedures At the time of writing, EVIO Labs Palm Desert, LLC has access to business bank accounts. However, until such time that Federal banking rules are relaxed, and all cannabis establishments have affordable access to banking, it is also likely that some of the company's clients may not have a bank account, and could make testing payments in cash. The company take the similar precautions for transporting, handling, and storing cash as we do cannabis samples. EVIO encourages our clients to make payments electronically,via check, credit card or wire whenever possible. When cash payments are made, our general manager or his or her representative are responsible for depositing payments into our account as soon as practical. This may involve making daily bank deposits. The company will also make every effort to ensure that cash that is transported, for instance to a bank or to make payments to vendors, shall be transported separately from cannabis samples. Transports of cash in excess of$10,000 should be done so under escort of a security guard, or armored services company such as Loomis or Brinks. The company will also make every effort to minimize the amount of cash in transport at any given time. Waste Management Plan Cannabis Test Labs will have nominal amounts of cannabis waste. However for the small amount of waste generated will be handled in accordance with all state and local cannabis waste disposal laws and as described herein, and in accordance with EVIO Standard Operating Procedures, including all track and trace of waste. Refer to EVIO General Waste Disposal Procedures SOP.M.50.080 Rev 2.0, which is included in this application. Note that our procedures may change as regulations evolve. Applicable rulemaking for waste disposal: § 5055. Cannabis Waste Management (a)A licensee may not sell cannabis waste. (b) Licensees shall comply with all applicable waste management laws including, but not limited to, Division 30 of the Public Resources Code. (c) A licensee shall dispose of cannabis waste in a secured waste receptacle or in a secured area on the licensed premises. For the purposes of this section, "secure waste receptacle" or"secured area" means that physical access to the Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 28 of 32 EVIO LABS EVIO Labs Palm Desert, LLC receptacle or area is restricted to the licensee and its employees and the local agency, or waste hauler franchised or contracted by a local agency. Public access to the designated receptacle or uea is prohibited. (e) If a local agency, or waste hauler permitted by a local agency, is being used to collect and process cannabis waste, a licensee shall do all the following: (1) Provide the Bureau with the following information for the local agency,or waste hauler franchised or contracted by a local agency, who will collect and process the licensee's cannabis waste; (a) Name of local agency providing waste hauling services, if applicable; (b) Company name of the local agency franchised or contracted or permitted waste hauler, if applicable; (c) Company business address; and (d) Name of the primary contact person at the company and contact person's phone number (2) Obtain documentation from the entity hauling the waste that indicates the date and time of each collection of cannabis waste at the licensed premises; and (3) Obtain a copy of the certified weight ticket or other documentation prepared by the entity hauling the waste confirming receipt of the cannabis waste at one, or more, of the following solid waste facilities: (a)A manned, fully permitted. solid waste landfill or transformation facility; (b)A manned,fully permitted composting facility or manned composting operation; (c)A manned,fully permitted in-vessel digestion facility or manned in-vessel digestion operation; (d) A manned, fully permitted transfer/processing facility or manned transfer/processing operation; ar (e)A manned, fully permitted chip and grind operation. (f) If a licensee is self-hauling cannabis waste to one; or more, of the solid waste facilities in subsection (e) (3) of this section, a licensee shall obtain for each delivery of cannabis waste by the licensee a copy of a certified weight ticket or receipt documenting delivery from the solid waste facility. Only the licensee or its employees may transport self-hauled cannabis waste. 11b. Community Relations Plan Lori Glauser will initially be the designated person responsible for outreach and communication with the surrounding community, including the neighborhood and businesses. Her contact information is: Iori(@eviolabs.com and can be reached at 541-633-4133 x1111. 11c. Neighborhood Responsibility Plan Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 29 of 32 EVIO , LABS EVIO Labs Palm Desert, LLC Maintain Beautiful Exterior EVIO Labs Palm Desert shall be located in a modern, stand-alone office building on Fred Waring Drive. The building suits the appearance of the high-end neighborhood. Management is responsible for ensuring the ongoing upkeep and maintenance of the building including exterior finishes and landscaping. EVIO has a strict no-loitering policy, and will ensure the perimeter is appropriately lit. Minimal Traffic Impact With a maximum of 16 employees,traffic and parking impacts are minimal. The building has sufficient private parking for employees, customers, and guests.The traffic impact to the community is the increase of up to 16 jobs, plus an additional 3-4 car visits from employees who are going to customer sites, and visits from vendors and customers. The lab will not have a regular flow of customer visits, as our business requires that lab employees go to our customer sites to pick up samples. The lab is not open to the general public or general retail traffic. Community Participation EVIO Labs is a proactive participant in the communities in which it works. EVIO representatives will join local chambers' of commerce, and also participate in relevant community and council meetings. Should any complaints arise from community members,those complaints will be escalated to management immediately and if necessary, resolved in the most expeditious means possible. 11d. Odor Control Plan Cannabis testing labs maintain a relatively small amount of cannabis at any given time,therefore do not cause substantial cannabis odors. EVIO Labs Palm Desert is located in a standalone building, so any odors are contained to the property. In general, EVIO takes the following odor control measures as necessary of minimize the risk of cannabis odor escaping the lab: 1. Cannabis samples enter the lab contained in sealed odor-proof mylar bags within sealed coolers. Unless we are working wiht samples (i.e. extracting a sample for weighing, grinding, or photography),the samples remain in the mylar sample bag. 2. Any cannabis waste is rendered unusable and removed from the property in sealed waste bins. 3. Odors that may emanate from the lab during certain testing processes, or when removing product during weighing or sample preparation process are managed through exhaust fume hoods, and a standard commercial HVAC system. 4. Management will monitor odors and in the unlikely event that any odor is detected from outside of the building, management will take prompt action to identify and rectify the source of the odor causing process. This may include installing additional carbon filters in the HVAC system to minimize any odor. 11e. Certificate of Insurance See included certificate of commercial general liability insurance and associated endorsements from Acord. Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 30 of 32 EVIO LABS EVIO Labs Palm Desert, LLC I ff Startup Operating Cost Summary and and Annual Operating Budget EVIO Labs has developed a detailed financial model that describes all costs including construction, operation, maintenance, compensation of employees, equipment costs, utility costs, and other operation costs. EVIO Labs is basing our budgets on opening multiple other locations in multiple states. EVIO Labs has invested a significant budget to procure sufficient equipment including instrumentation required to meet the needs of California testing rules. EVIO has sufficient capital available to cover startup costs and more than three months of operating costs, as described below: Startup Costs Business Planning and Consulting 25,500 Building Lease Deposit Plus Three Months Pre-Op Rent 47,400 Building Tenant Improvements (Design and Construction) 30,000 Equipment and Vehicle Lease Deposits 200,000 Furnishings, Lab Benches, Fume Hoods, Safety Equipment 50,000 Security System 20,000 Computers, hardware, networking 16,500 Permits and Fees 50,000 Initial Lab Labor(up to 7) 120,000 Pre-Opening Operating Costs (Utilities, Overhead) 30,000 Contingency 23,690 Total Startup Costs 590,590 Total Startup Capital Required$590,590 Operating Budget EVIO labs has developed its three-year forecast based on anticipated lab revenue from the Palm Desert location. We also estimate that revenue will ramp up, reflecting a conservative estimate of average of 13 complete tests per day. We anticipate increasing our throughput to 47 tests per day in 2020. Average price per test is expected to be$292 in 2019, increasing to$370 in 2020, and reducing to$346 in 2021 when the market is expected to be more competitive. EVIO Labs operating budget is approximately$1.5 to$2 million per year, as described below. We calculate our cost of goods sold based on gross margins that we have seen in other markets, although labor costs in Palm Desert, and considering the stringent labor qualifications requirements set forth by California,will be much higher Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 31 of 32 EVIL � LABS EVIO Labs Palm Desert, LLC than in other markets. Our projections for COGS factors in testing equipment,testing supplies, and direct labor of laboratory technicians and samplers. Other operating expenses include expenses for licensing and registration, rent, insurance, security monitoring, office supplies, and indirect labor. We anticipate operating at a loss for the first year, and breaking even during the second year. Below is EVIO Labs Palm Desert summary three-year pro forma. Test Lab Statement of Operations Pro Forma (Dollars in Thousands,) Year 1 Year 2 Year 3 Income Statement Num Tests 3,240 T847 11,646 TestslDay 13 31 47 Revenues Testing Revenue S 946 S 2,903 S 4,031 Avg Pricef Test S 292 5 370 S 346 Other S S S - Gross Revenue S 1,238 S 3,273 S 4,378 Cast of Goods Sold Testing S 162 S 392 S 584, Equipment Leasing S 364 S 366 5 360 Total COGS 5 522 S 752 S 942 Gross Profit 5 716 S 2.521 5 3,435 Gross Net Income Margin 58° ,T7% 786 Operating Expenses Licenses and Registration $ 27 5 27 5 27 Insurance S 19 5 19 S 20 Legal Govt Affairs and Consulting Feet S 64 S 64 S 66 Rent 5 110 S 142 S 142 Software(Inventory Mgmt and Security; 5 16 5 16 S 16 Supplies-Retail Packaging&Office S 19 S 19 S 20 Utilities S 23 S 23 S 23 Wages(indirect) S 686 S 909 S 1,046 Employee Taxes and Benefits S 182 S 273 S 314 Total Operating Expenses $ 1,065 S 1,491 S 1,674 EBITDA S (349) S 1.039 S 1,761 Other Income(expense) - Depreciation;and Amortization S (24 S (24) S (24,t Interest Income(expense)net - - - Earnings Before Taxes S (372) S 1'ON S 1,737 Confidential and Proprietary © 2018 EVIO, Inc. Business Operations Plan Page 32 of 32 1 ® DATE(MMIDDIYYYY) ACOREP CERTIFICATE OF LIABILITY INSURANCE 06/08/201 a THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER.THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND,EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S),AUTHORIZED REPRESENTATIVE OR PRODUCER,AND THE CERTIFICATE HOLDER. IMPORTANT. If the certificate holder is an ADDITIONAL INSURED,the policy(ies)must have ADDITIONAL INSURED provisions or be endorsed. If SUBROGATION IS WAIVED,subject to the terms and conditions of the policy,certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsements). PRODUCER CONTACT Stacy Gulnac NAME: Century Ins Group LLC HE Ext: (541)382-4211 rA C No): (541)382-7468 572 SW Bluff Dr. E-MAIL stacy@centuryins.com ADDRESS: Suite 100 INSURER(S)AFFORDING COVERAGE NAIC N Bend OR 97702 INSURERA: Canopius US Insurance Inc INSURED INSURER B: Cannasure Evio CA Inc,DBA:Green Style Analytics INSURER C: 1000 Lincoln Rd H213 INSURER D: INSURER E: Yuba City CA 95991 INSURER F: COVERAGES CERTIFICATE NUMBER: CL1811846892 REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT,TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN,THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES.LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. ILA TYPE OF INSURANCE INSD WVD POLICY NUMBER MM/DD AIJUL YIYYYY MM DD/YYYY LIMITS X COMMERCIAL GENERAL LIABILITY EACH OCCURRENCE $ 1,000,000 CLAIMS-MADE Fx_]OCCUR PREMISES Ea occurrence $ 100,000 MED EXP(Any one person) $ 1,000 A SCPPI1530006301 01/13/2018 01/13/2019 PERSONAL&ADV INJURY $ 1,000,000 GEN'L AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $ 2,000,000 X JECT ❑LOC PRODUCTS-COMP/OPAGG $POLICY PRO Excluded OTHER: I I $ AUTOMOBILE LIABILITY COMBINED SINGLE LIMIT $ Ea accident ANYAUTO BODILY INJURY(Per person) $ OWNED SCHEDULED BODILY INJURY(Per accident) $ AUTOS ONLY AUTOS HIRED NON-OWNED PROPERTY DAMAGE $ AUTOS ONLY AUTOS ONLY Per accident UMBRELLA LIAB OCCUR EACH OCCURRENCE $ EXCESS LIAR HCLAIMS-MADE AGGREGATE $ DED I I RETENTION$ $ WORKERS COMPENSATION PER OTH- AND EMPLOYERS'LIABILITY y/N STATUTE ER ANY PROPRIETOR/PARTNER/EXECUTIVE ❑ NIA E.L.EACH ACCIDENT $ OFFICER/MEMBER EXCLUDED? (Mandatory in NH) E.L.DISEASE-EA EMPLOYEE $ If yes,describe under DESCRIPTION OF OPERATIONS below E.L.DISEASE-POLICY LIMIT $ Each Claim $1,000,000 Professional Liability B E0865953 01l13I2018 01/13/2019 Aggregate $1,000,000 Deductible Each Claim $2,500 DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES(ACORD 101,Additional Remarks Schedule,may be attached if more space is required) RE:72-895 Fred Waring Drive,Palm Desert CA,92260 CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF,NOTICE WILL BE DELIVERED IN MC CRE Investments LLC,Owner ACCORDANCE WITH THE POLICY PROVISIONS. PO Box 1144 AUTHORIZED REPRESENTATIVE La Quinta CA 92247 ©1988-2015 ACORD CORPORATION. All rights reserved. ACORD 25(2016/03) The ACORD name and logo are registered marks of ACORD City Of Palm Desert I Department of Community Development CONDITIONAL USE PERMIT APPLICATION 73-510 Fred Waring Drive • Palm Desert• California •92260 • (760) 346-0611 • Fax(760) 776-6417 Applicant: Telephone: 888-544-3846 EVIO Labs Palm Desert LLC Fax number: NA Mailing Address: 3505 Cadillac Ave. Suite F1 Zip: 92626 Email: {ori eviolabs.com City: Costa MEsa State: CA Property Owner: 0 eva� C—Telephone: 4ey_ tF-Oh number: Mailing Address: -70 City: Glendale State: CA Zip: 91201 Email: contracts(d�alrcrecom Representative: Telephone: 888-544-3846 x1111 Lori Glauser _ Mailing Address: 3505 Cadillac Ave. Suite F1 Fax number: NA City: Costa Mesa State: CA Zip: 92626 Email: lori(a-)eviolabs com Please send correspondence to(check one): X Applicant Property Owner Representative Project Address(s): 72-895 Fred Waring Dr. Palm Desert. CA Assessor Parcel Number(s): 640-122-011 Existing Zoning: General Plan Designation: Project Request(describe specific nature of approval requested): Request CUP for Cannabis Analytical Testing Laboratory Property Owner Authorization: The undersigned states that they are the owner(s) of the property described and ive authorization for the filing of the application. Signature Print Name Date Applicant/ Represe tative Signature: By signing this application I certify that the information provided is accurate. I understand that the City might not approve what I am applying for and/or might require conditions of approval. ZZ& Sign ture Print Name Date OFFICE USE ONLY PROJECT NO: CUP DATE: ACCEPTED BY: I. PURPOSE: In order to give the use regulations the flexibility necessary to achieve the objectives of the Zoning Ordinance in certain districts, conditional uses are permitted subject to the granting of a conditional use permit. Because of their unusual characteristics, conditional uses require special consideration so that they may be located properly with respect to the objectives of the zoning regulations and with respect to their effects on surrounding properties. In order to achieve these purposes, the Planning Commission is empowered to grant or deny applications for conditional use permits for such conditional uses as are prescribed in the district regulations and to impose reasonable conditions upon the granting of conditional use permits; subject to the right of appeal to the City Council. II. SUBMITTAL REQUIREMENTS: 1. Application Form completed with required signatures. 2. Required exhibits and plans as described in the application. III. PROCEDURE: Prior to the submittal of the official application, the applicant should review the proposal with the Director of Community Development. After preliminary review, the applicant files the official request for approval of the conditional use permit. Staff will investigate the request, prepare a written report to the Planning Commission, publish legal notices, and notify adjacent property owners of the public hearing. The Planning Commission hearing usually occurs six to eight weeks after the official filing date, at which time they will review the conditional use request along with related preliminary architecture, site design, and landscaping. Once the conditional use permit is approved, the applicant then submits detailed construction plans for review. If the request is denied, the applicant may file an appeal within 15 days for a hearing before the City Council. A. Applicant to submit complete application to the Department of Community Development for staff review. B. Project goes before the Planning Commission for public hearing on use permit. Once the project is approved or denied there is a 15-day appeal period. If the project is appealed, then it will be noticed and a hearing will take place before the City Council. C. If the project presented to the Architectural Review Commission then it will return to the Commission for final approval of construction drawings. IV. APPLICATION CHECKLIST: APPLICATIONS WILL NOT BE ACCEPTED IF ANY EXHIBITS ARE NOT INCLUDED All plans and exhibits must be full size set of plans (typically 24"x36") to scale, folded to a maximum size of 8'/2"x13." All plans must be designed to meet all applicable requirements as described in this application. 10 Complete sets of preliminary plans (typically 24"x36") as described in Section V of this application, folded to a maximum size of 8'h"x13" (scaled 11"x17" size plans may be substituted, if appropriate). A complete set of drawings include the following: Site Plan Floor Plans 1 Statement of Use 1 CD or other electronic format of digital files (PDF) for all plans 3 Sets of typed, self-adhesive mailing labels for adjacent property owners within 300' of the project 3 Copies of a typed listing of surrounding property owners 1 Set of Assessor's Parcel Map(s) illustrating the subject property and the surrounding properties within 300 feet. Draw boundary of subject property and 300 foot radius in red. EXHIBIT REQUIREMENTS CHECKLIST: APPLICATIONS MAY BE REJECTED IF PLANS DO NOT INCLUDE AT LEAST THE FOLLOWING INFORMATION. APPLICANTS ARE STRONGLY URGED TO CONTACT STAFF IN THE PLANNING DEPARTMENT PRIOR TO SUBMITTING AN APPLICATION. A. SITE PLAN: APPLICANTS ARE STRONGLY URGED TO CONTACT STAFF IN THE PLANNING DEPARTMENT VERY EARLY IN THE PLANNING PROCESS AND PRIOR TO SUBMITTING AN APPLICATION. Name, address, and phone number of property owner, applicant, engineer and architect Scale, not less than 1"=30' North Arrow Vicinity map including project address/location Fully dimensioned subject parcel boundaries Abutting streets and right-of-ways, dimensioned (consult with Department of Public Works) Existing/proposed street(s) and width(s) including: centerline, median islands, parkway width, and sidewalk(s) dimensions Access and driveway dimensions Location and dimensions of all existing and proposed easements All utility line locations (gas, electric, cable, water and sewer) ADA ramps, paths and path of travel All existing and proposed structures All building setbacks from property lines Building dimensions (include roof overhangs) Location, elevations and height of proposed walls and fences Location of trash enclosures Parking layout with dimensions of stalls, aisle widths, walkways and surfacetype Map Legend including: Gross and net acreage of parcels) Gross and net floor area of structure(s) and type of use Required and proposed number of parking spaces (including handicap) Lot coverage (percentage of land covered by building(s)) Landscape percentage in and adjacent to the parking area B. FLOOR PLANS: Dimensions of interior rooms Label all rooms Dimensions of all exterior components C. EXPANDED_STATEMENT OF USE: The applicant shall provide a full description of the activity/use being proposed, giving a detailed explanation of the use and/or facilities involved and the objectives of the applicant. Example: If proposing a new massage establishment, the statement of use should include hours of operations, number of employees, number of clients per hour, are the appointments walk-in customers or appointments only, and so on. D. PROPERTY OWNER INFORMATION: The applicant shall provide the Department of Community Development with three (3) copies of property owners and their addresses for all parcels within 300 feet of the proposed conditional use. The three (3) lists shall be typed on self-adhesive mailing address labels. The lists shall also include the owner of the property under consideration.These property owner names may be obtained in one of the two following manners: o Contact a title company and request that they furnish you with a list of names and mailing labels, for which there will probably be a fee, for the list. o You may obtain them yourself in the following manner: ■ Secure from the County Assessor's Office parcel maps covering your application and all lands within at least 300 feet. • Indicate the area of your request by a red outline on the parcel maps. ■ Delineate, in red, all property within 300 feet of the area of your request. ■ From the parcel map, make a list of book, page, block number, and parcel number within the above 300-foot area. ■ Using the Visual Numerical Index File, which is to be found in the County Assessor's Office, place the name and address for each parcel opposite the number described in No. 4 above. • Sign affidavit attesting to name list. ■ Return this list with your application to the Department of Community Development. OWNER AND/OR OWNER'S AUTHORIZED AGENT AFFIDAVIT STATE OF CALIFORNIA) COUNTY OF RIVERSIDE ) CITY OF PALM DESERT ) I, (we), _being duly sworn depose and declare to the best of M knowledge that the (my/our) foregoing is true and correct under the penalty of perjury: EXECUTED AT: Qfz�YYA D1�'e t 0 A.- (CITY) (STATE) DATE: 4 C) J0 i (MONT (DAY) (YEAR) APPLICANT, OWNER AND/OR OWNER'S AUTHORIZED AGENT: ! I-z-A 12 (Print Name) (Signature) floc' All&5VT AL F (Mailing Address) (City, State and Zip) (Area Code) elephone Number California All-Purpose Certificate of Acknowledgment i A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 5 State of of I v Calif niia S.S. County izR—S ibt On a, before me, I-LA—,�eher' crdR AY Pvjkl C_ P61GQ-ST .2L a0 51i, person ily appeared C F_L... 2 7,� who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the f instrument. I certify under PENALTY OF PERJURY under the laws 2 s. of the State of California that the foregoing paragraph is GALLAGHERi L1, Comm.#2100180 true and correct. Notary > .Y Public-Calif0mia Riverside county. my commission Expires�_ March 14 20`191l.s.: WITNESS m hand and official seal. r. OPTIONAL INFORMATION k:' Description of Attached Document The preceding Certificate of Acknowledgment is attached to a 1 Method of Signer Identification document titled/for the purpose Proved to me on the basis of satisfactory evidence: C3 form(s)of identification 7.credible witness(es) containing pages, and date rl-s Notarial event is detailed in notary journal on: The signer(s)capacity or authority istare as: Page# Entry# 4�Indhiidual(s) Notary coma A- Attomey-in fact Corporate Officers) 44C qther_7�o - 2� 7/_ J L' Additional Signer 7_1 Signer(s)Thumbprints(s) N S Guardian]Conservator 5 Partner-Limited/General Trustee(s) Other. representing: tittit Z AJ EVIL) LABS EVIO Labs Palm Desert-Statement of Use EVIO Labs Palm Desert, LLC intends to use the property at 72895 Fred Waring Drive for the purpose of operating a licensed cannabis testing laboratory. The lab will operate under the regulatory requirements of both the California Bureau of Cannabis Control and in compliance with the Palm Desert Municipal Code. The lab will operate during ordinary business hours(such as 8 am -6 pm, or less)on weekdays. We anticipate employing up to 16 employees during the first to years of operation. Employees will primarily be full-time chemists, biologists, sampling technicians, and management and administrative employees. Our customers are licensed cannabis distributors. They request our services to test cannabis product which is required prior to sale. Sampling technicians will perform sampling and testing of cannabis products from licensed distributors throughout the Inland Empire."Walk-in" customers are uncommon. Samples discretely arrive at the lab in odor-proof bags stored in closed coolers. Testing is performed to determine potency and identify any potential contaminants including pesticides, residual solvents, or microbiological contaminants.Lab employees perform analysis in the lab using state-of-the art chromatography and DNA identification methodologies. Lab employees report results to clients and to the State Bureau of Cannabis Control electronically. Any cannabis that remains after the testing process will be retained for approximately 45 days,then it is rendered unusable and securely disposed in accordance with BCC rules. As a licensed cannabis establishment,the facility is required to be highly secure, and maintain detailed product inventory. The site will be secured with surveillance and alarm systems. Any visitors and vendors coming to the lab will be escorted while onsite. Refer to the Business Operations Plan and Security Plan of the Regulatory Permit Application for a more detailed explanation of the business. Conditional Use Permit Application - Expanded Statement of Use Proposed Tenant Improvements: Improvements to the facility will be nominal, and will include the following: - A new secure door will be installed to separate the lobby area from the limited access area to the lab. - 2-4 Additional 220V electrical outlets may be added in the laboratory to support certain testing equipment, as required. - A new dedicated exhaust fan and ducting may be required to support a fume hood. EVIO has retained the following architect/engineer: Donatella Cusma Claret-Cup, Inc. 600 Moulton Ave. Suite 405 Los Angeles, CA 90031 Conditional Use Permit Application - Expanded Statement of Use Page 2 of 2 PROPERTY OWNERS CERTIFICATION FORM I, VINNIE NGUYEN certify that on August 10, 2018 , The attached property owners list was prepared by Riverside County GIS , APN (s)or case numbers 640-122-011 for Company or Individual's Name RCIT - GIS , Distance buffered 300' Pursuant to application requirements furnished by the Riverside County Planning Department. Said list is a complete and true compilation of the owners of the subject property and all other property owners within 600 feet of the property involved, or if that area yields less than 25 different owners, all property owners within a notification area expanded to yield a minimum of 25 different owners, to a maximum notification area of 2,400 feet from the project boundaries, based upon the latest equalized assessment rolls. If the project is a subdivision with identified off-site access/improvements, said list includes a complete and true compilation of the names and mailing addresses of the owners of all property that is adjacent to the proposed off-site improvement/alignment. I further certify that the information filed is true and correct to the best of my knowledge. I understand that incorrect or incomplete information may be grounds for rejection or denial of the application. TITLE: GIS Analyst ADDRESS: 4080 Lemon Street 9Tx Floor Riverside Ca. 92502 TELEPHONE NUMBER(8 a.m.—5 p.m.): (951) 955-8158 Riverside County GIS Mailing Labels APN: 640-122-011 ( 300 feet buffer) Glorian5a Dr < FT Fred Waring Dr Sin Luigi e nUr3 Dr Legend j County Boundary Cities Parcels World Street Map Notes 'IMPORTANT'Maps and data are to be used for reference purposes only.Map features are approximate, RCI T and are not necessarily accurate to surveying or engineering standards.The County of Riverside makes no _ warranty or guarantee as to the content(the source is often third party),accuracy,timeliness,or completeness of any of the data provided,and assumes no legal responsibility for the information contained on this map.Any use of this product with respect to accuracy and precision shall be the sole responsibility of 0 188 376 Feet the user. 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