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Home My WebLink AboutC-20-43 - DD559 LLC RedactedApplicant (Entity) Information Application Type Proposed Location Commercial Cannabis Business Permit Application C-20-43 Submitted On: Dec 04, 2020 Applicant Lisa Bugrova lisa@questplanning.net Applicant (Entity) Name: DD559 LLC DBA: -- Physical Address: 2759 E. Braly Ave City: Fresno State: Ca Zip Code: 93727 Primary Contact Same as Above? Yes Primary Contact Name: Matt Garza Primary Contact Title: Owner Primary Contact Phone: Primary Contact Email:HAS ANY INDIVIDUAL IN THIS APPLICATION APPLIED FOR ANY OTHER CANNABIS PERMIT IN THE CITY OF FRESNO?: Yes Select one or more of the following categories. For each category, indicate whether you are applying for Adult-Use (“A”) or/and Medicinal (“M”) or both Both Please make one selection for permit type. If making multiple applications, please submit a new application for each permit type and proposed location. Permit Type Microbusiness (Non-Retail) Business Formation Documentation: Limited Liability Company Property Owner Name: G7 Commercial, LLC Proposed Location Address: 2759 E. Braly Ave City: Fresno State: Ca Zip Code: 93727 Property Owner Phone: Property Owner Email:Assessor's Parcel Number (APN): 46831315-17 Proposed Location Square Footage: Supporting Information Application Certification Owner Information 23647 List all fictitious business names the applicant is operating under including the address where each business is located: -- Has the Applicant or any of its owners been the subject of any administrative action, including but not limited to suspension, denial, or revocation of a cannabis business license at any time during the past three (3) years? No Is the Applicant or any of its owners currently involved in an application process in any other jurisdiction? Yes If so, please list and explain: Mendocino County cultivation and distribution I hereby certify, under penalty of perjury, on behalf of myself and all owners, managers and supervisors identified in this application that the statements and information furnished in this application and the attached exhibits present the data and information required for this initial evaluation to the best of my ability, and that the facts, statements, and information presented are true and correct to the best of my knowledge and belief. I understand that a misrepresentation of fact is cause for rejection of this application, denial of the permit, or revocation of a permit issued. In addition, I understand that the filing of this application grants the City of Fresno permission to reproduce submitted materials for distribution to staff, Commission, Board and City Council Members, and other Agencies to process the application. Nothing in this consent, however, shall entitle any person to make use of the intellectual property in plans, exhibits, and photographs for any purpose unrelated to the City's consideration of this application. Furthermore, by submitting this application, I understand and agree that any business resulting from an approval shall be maintained and operated in accordance with requirements of the City of Fresno Municipal Code and State law. Under penalty of perjury, I hereby declare that the information contained in within and submitted with the application is true, complete, and accurate. Iunderstand that a misrepresentation of the facts is cause for rejection of this application, denial of a permit or revocation of an issued permit. A denial or revocation on these grounds shall not be appealable (FMC 9-3319(d)). Name and Digital Signature true Title Agent Please note: the issuance of a permit will be determined based on the application you submit and any major changes to your business or proposal (i.e. ownership, location, etc.) after your application is submitted may result in a denial. All applications submitted are considered public documents for Public Records Act request purposes. For details about the information required as part of the application process, see the Application Procedures & Guidelines, City of Fresno Municipal Code Article 33 and any additional requirements to complete the application process. All documents can be found online via this link. For questions please contact the City Manager’s Office at 559.621.5555. Owner Name: Matt Garza Owner Title: Chief Operations Officer 40504883v1 OPERATING AGREEMENT OF DD559, LLC, a California limited liability company THIS OPERATING AGREEMENT (this “Agreement”) of DD559, LLC (the “Company”), a limited liability company organized pursuant to the laws of the State of California, is entered into effective as of September 3, 2019 (the “Effective Date”), by GF8 Holdings, LLC, a California limited liability company, as the sole member of the Company (the “Member”). PRELIMINARY STATEMENTS A. The Member has formed a limited liability company pursuant to the Revised Uniform Limited Liability Company Act (the “Act”) by causing Articles of Organization (the “Articles”) of the Company to be filed with the Secretary of State of the State of California (the “Secretary of State”) on June 19, 2019. B. The Member desires to organize and operate the Company in accordance with the terms and subject to the conditions set forth in this Agreement pursuant to the Act. AGREEMENT In consideration of the foregoing, the mutual promises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: ARTICLE 1 FORMATION AND PURPOSE Section 1.1. Formation. The Company was formed pursuant to the provisions of the Act. The Company shall be governed by the provisions of the Act and this Agreement. Except as provided in this Agreement, all rights, liabilities, and obligations between the Member, the Company and other persons, shall be as provided in the Act, and this Agreement shall be construed in accordance with the provisions of the Act. To the extent that the rights and obligations of the Member are different by reason of any provision of this Agreement than they would be in the absence of such provision, this Agreement shall, to the extent permitted by the Act, control, except that the Member shall not be personally liable for obligations of the Company beyond the liability provided in the Act. Section 1.2. Name. The name of the Company shall be DD559, LLC. Section 1.3. Registered Office and Principal Place of Business. The registered office of the Company shall be 10960 Wilshire Blvd., 5th Floor, Los Angeles, CA 90024, or at such other place in the State of California as the Member may from time to time determine. The Company shall maintain such other offices as the Member shall determine. The resident agent of DocuSign Envelope ID: 78D883E0-F6B1-40E5-8AF5-8A51652C5DF1 2 40504883v1 the Company shall be Corporation Service Company which does business in California as CSC - Lawyers Incorporating Service, or such other resident agent as the Member may from time to time choose. The registered office and resident agent may be changed from time to time by filing the address of the new registered office and/or the name of the resident agent with the Secretary of State as required by the Act. Section 1.4. Purposes. The Company shall exist under the laws of the State of California and is organized for any legal and lawful purpose permitted under the Articles and the Act. The Company shall have all the powers granted to a limited liability company under the laws of the State of California. If the Company qualifies to do business in a foreign jurisdiction, the Company may transact all business permitted in that jurisdiction. There is no jurisdictional restriction upon the Company’s assets or activities. Section 1.5. Execution and Filing of the Certificate of Formation. The Member has caused the preparation and filing of the Articles of the Company with the Secretary of State. Whenever necessary or appropriate to amend or restate the Articles, the Member may file amended Articles of Organization and the Member shall do and continue to do all other things as may be required or advisable to maintain the Company as a limited liability company existing pursuant to California law and as provided herein. Section 1.6. Other Qualifications. The Company shall exist under the laws of the State of California and, to the extent that the business of the Company is conducted in any jurisdiction other than California, under the laws of such other jurisdiction to the extent necessary or desirable to do business in such jurisdiction, as determined by the Member. ARTICLE 2 CAPITAL CONTRIBUTIONS Section 2.1. Capital Contributions of Member. As the Member’s initial capital contribution to the Company, the Member has contributed such amount of cash or the agreed value of property or services as reflected in the books and records of the Company. The Member shall contribute additional capital to the Company in such amounts as shall be determined by the Member from time to time. Section 2.2. Ownership Interests. The interests of the Member in the Company shall be personal property for all purposes. The ownership interests of the Company shall be evidenced by the provisions of this Agreement and shall not be certificated, or evidenced in any way by certificates of ownership. ARTICLE 3 DISTRIBUTIONS TO MEMBERS AND ALLOCATIONS OF PROFITS AND LOSSES Section 3.1. Profits and Losses. Profits and losses for any fiscal year shall be allocated to the Member. DocuSign Envelope ID: 78D883E0-F6B1-40E5-8AF5-8A51652C5DF1 3 40504883v1 Section 3.2. Distributions. Distributions of available cash shall be distributed to the Member at such times and in such amounts as the manager of the Company (the “Manager”) shall determine. ARTICLE 4 MANAGEMENT Section 4.1. Management of the Company. The business, property and affairs of the Company shall be managed exclusively by the Manager. Except for situations in which the approval of the Member is expressly required by the provisions of this Agreement or applicable law, the Manager shall have full, complete and exclusive authority, power, and discretion to manage and control the business, property and affairs of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Company’s business, property and affairs. Section 4.2. Initial and Successor Manager. The Company shall have one Manager who shall initially be Matthew Garza, an individual. The initial Manager and each subsequent Manager shall serve in such capacity until he or she ceases to be a Manager of the Company due to any of the following reasons, in which event a replacement Manager may be designated and appointed by the Member: (a) Death or incapacity of such Manager (as determined by a court of competent jurisdiction); (b) The voluntary resignation of a Manager, it being agreed that a Manager may voluntarily resign as a Manager at any time; or (c) The removal of a Manager, it being agreed that a Manager may be removed at the written election of the Member at any time. Section 4.3. Devotion of Time. The Manager shall be required to devote to the conduct of the business of the Company only such time and attention as he or she may from time to time deem necessary or desirable. Section 4.4. Costs and Expenses. The Company shall pay all reasonable costs and expenses of the Company and shall reimburse the Manager or anyone acting on behalf of the Manager, for all reasonable out-of-pocket costs incurred in furtherance of the business of the Company. Section 4.5. Indemnification of the Manager. The Company shall indemnify, defend and hold harmless the Manager, and each of his or her respective employees and agents, against all claims, damages, losses, fines, costs and expenses (including attorneys’ fees and disbursements) incurred by the Manager by reason of any act or omission performed or omitted by the Manager in good faith on behalf of the Company and in a manner reasonably believed to be (i) within the scope of the authority conferred on the Manager, and (ii) in, or not opposed to, the best interests of the Company; provided, that the Manager’s conduct did not constitute recklessness, gross negligence or willful misconduct. DocuSign Envelope ID: 78D883E0-F6B1-40E5-8AF5-8A51652C5DF1 4 40504883v1 Section 4.6. Officers. The Manager may, from time to time as the Manager deems advisable, appoint one or more persons as officers of the Company and assign titles (including, without limitation, Chief Executive Officer, President, Vice President, Secretary and Treasurer) to any such persons. Unless the Manager decides otherwise, if the title is one commonly used for officers of a business corporation formed under the California General Corporation Law, the assignment of that title shall constitute the delegation to that Person of the authority and duties that are normally associated with that office. Any delegation pursuant to this Section 4.6 may be revoked or modified at any time by the Manager. Section 4.7. Holding of Property. Property owned by the Company shall be held in the name of the Company. ARTICLE 5 TERM AND DISSOLUTION Section 5.1. Term. The term of the Company commenced as of the date of the filing of the Articles and shall continue in perpetuity. Section 5.2. Dissolution. The Company shall be dissolved and its affairs wound up in accordance with the Act upon the occurrence of any of the following events: (i) Election of Member. The written election of the Member to dissolve the Company, made at any time and for any reason. (ii) Death, Withdrawal or Dissolution of Member. The death, withdrawal or dissolution of the Member or the occurrence of any other event which terminates the continued membership of the Member in the Company, unless the business of the Company is continued in a manner permitted by the Act. (iii) Judicial Dissolution. The entry of a decree of judicial dissolution under Section 17707.03 of the Act. ARTICLE 6 GENERAL PROVISIONS Section 6.1. Binding Effect and Benefit of This Agreement. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns, as the case may be. Section 6.2. Filings, etc.. At the expense of the Company, the Member shall promptly have prepared, executed and filed or recorded all legally required fictitious name or other applications, registrations, publications, certificates and affidavits for filing with the proper governmental authorities and have arranged for the proper advertisement, publication and filin g of record thereof. Section 6.3. Integration; Termination. This Agreement represents the entire understanding of the parties with respect to the subject matter hereof, and supersedes and cancels any other agreement, representation or communication, whether oral or written, with respect to DocuSign Envelope ID: 78D883E0-F6B1-40E5-8AF5-8A51652C5DF1 5 40504883v1 the subject matter of this Agreement. No termination, revocation or waiver of this Agreement shall be binding unless in writing and signed by the Member. Section 6.4. Interpretation. This Agreement shall be interpreted and construed in accordance with the laws of the State of California without regard to its conflicts of laws provisions, but shall not be construed against the drafter of this Agreement. The titles of the Articles and Sections herein have been inserted as a matter of convenience of reference only and shall not control or affect the meaning or construction of any of the terms or provisions hereof. Section 6.5. Severability of Provisions. Each provision of this Agreement shall be considered severable. If for any reason any provision or provisions hereof are determined to be illegal or invalid, such illegality or invalidity shall not impair the operation of or affect those portions of this Agreement that are valid and this Agreement shall be construed in all respects as if such invalid or illegal provision was omitted. [Signature Page to follow] DocuSign Envelope ID: 78D883E0-F6B1-40E5-8AF5-8A51652C5DF1 [Signature Page of Operating Agreement of DD559, LLC] 40504883v1 IN WITNESS WHEREOF, the undersigned Member has executed this Agreement, effective as of the Effective Date first written above. MEMBER: GF8 Holdings, LLC, a California limited liability company By Matthew Garza, Manager ACCEPTED AND AGREED: _________________________________ Matthew Garza, Manager DocuSign Envelope ID: 78D883E0-F6B1-40E5-8AF5-8A51652C5DF1 l,DocuSigned by: L~ INDEMNIFICATION AND HOLD HARMLESS AGREEMENT FOR COMMERCIAL CANNABIS BUSINESS PERMIT APPLICATION To the fullest extent permitted by law, the City of Fresno (City) shall not assume any liability whatsoever with respect to having issued a commercial cannabis business permit pursuant to Fresno Municipal Code Section. 9-3333 or otherwise approving the operation of any commercial cannabis business or cannabis retail business. In consideration for the submittal of an application for a commercial cannabis business permit application and/or issuance of a cannabis business permit, and to the furthest extent allowed by law, Applicant does hereby agree to indemnify, hold harmless and defend the City and each of its officers, officials, employees, agents and volunteers from any and all loss, liability, fines, penalties, forfeitures, costs and damages (whether in contract, tort or strict liability, including but not limited to personal injury, death at any time and property damage) incurred by City, Applicant or any other person, and from any and all claims, demands and actions in law or equity (including reasonable attorney's fees and litigation expenses), arising or alleged to have arisen directly or indirectly out of the issuance of a cannabis business permit. Applicant’s obligations under the preceding sentence shall not apply to any loss, liability, fines, penalties, forfeitures, costs or damages caused solely by the gross negligence, or caused by the willful misconduct, of City or any of its officers, officials, employees, agents or volunteers. Applicant must, at the time of permit issuance, maintain insurance at coverage limits and with conditions thereon determined necessary and appropriate from time to time by the City Manager. Applicant shall conduct all defense at his/her/its sole cost. The fact that insurance is obtained by Applicant shall not be deemed to release or diminish the liability of Applicant, including, without limitation, liability assum ed under this Agreement. The duty to indemnify shall apply to all claims regardless of whether any insurance policies are applicable. The duty to defend hereunder is wholly independent of and separate from the duty to indemnify and such duty to defend exists regardless of any ultimate liability of Applicant. The policy limits do not act as a limitation upon the amount of defense and/or indemnification to be provided by Applicant. Approval or purchase of any insurance contracts or policies shall in no way relieve from liability nor limit the liability of Applicant, its officials, officers, employees, agents, volunteers or invitees. City shall be reimbursed for all costs and expenses, including but not limited to legal fees and costs and court costs, which the city may be required to pay as a result of any legal challenge related to the city's approval of the applicant's commercial cannabis business permit. The City may, at its sole discretion, participate at its own expense in the defense of any such action, but such participation shall not relieve any of the obligations imposed hereunder. This Indemnification and Hold Harmless Agreement shall survive the expiration or termination of the Application and/or Permit. The undersigned acknowledges that he/she (i) has read and fully understands the content of this Indemnification and Hold Harmless Agreement; (ii) is aware that this is a contract between the City and Applicant; (iii) has had the opportunity to consult with his/her attorney, in his/her discretion; (iv) is fully aware of the legal consequences of signing this document; and (v) is the Applicant or his/her/its authorized signatory. Signed on this day of 2020. Applicant Signature City Employee Signature Print Name and Company Name Print Name Address Title Telephone Number OWNERSHIP ACKNOWLEDGEMENT FORM FOR COMMERCIAL CANNABIS BUSINESS PERMIT APPLICATION It is the intent of the City of Fresno to promote equitable ownership and employment opportunities in the cannabis industry to decrease the disparities in life outcomes for marginalized communities and to provide opportunities for local residents to compete for cannabis business permits. Therefore, this notice is to clarify the eligibility requirements in order to receive qualification as a Social Equity Applicant or points for Local Preference by establishing this acknowledgement to provide additional protections to mitigate against potential predatory practices. In order to qualify as a social equity applicant, or for the full points relating to the local preference criteria, the business entity must have ownership that meets the respective eligibility factors and hold at least 51% ownership interest. The social equity eligibility requirements are identified in FMC section 9-3316(b)(6), while the local preference criteria is identified in FMC 9- 3317(a) and the application evaluation criteria 2.5 (Appendix A). This majority interest can be made up of a single individual that meets this criteria, or any combination of individuals that hold at least 20% interest individually and meet the definition of an owner in FMC 9-3304(j). The cannabis social equity permits, and the local preference criteria are intended for the benefit of the Social Equity or Local Preference Individual Applicants related to business profits, proceeds of the sale of business assets, voting rights and additional protections. This also requires the Social Equity or Local Preference Owner to receive the Equity Share percent of the retained earnings and 100 percent of the unencumbered value of each share of stock, member interest or partnership interest owned in the event of the dissolution of the entity to their equity share, or 100 percent of the value of each of stock, member interest or partnership interest in the event that the stock, member interest or partnership interest is sold. Chief among the concepts of equity share, is unconditional ownership which means such individual(s) will receive equal profits, and distributions or other payments proportionate to their ownership interests. This is intended to ensure true ownership by the Social Equity or Local Preference Individual Applicant and as such, prohibits the divestment or relinquishment of any part of their ownership under any circumstance. In addition, the Equity Share is also expanded to address voting rights on fundamental decisions relating to the business and control of at least the equity share percent of the voting rights on all decisions involving the operation of the business. Furthermore, it requires the Social Equity or Local Preference Individual owner be the highest officer position of the business or that another individual is appointed to that position by mutual agreement of the parties. This requirement is also subject to being audited to assess compliance and the Social Equity or Local Preference Owner can initiate legal action due to a breach of contract agreement, and the City may suspend and/or revoke a license if any provision in an operating agreement violates any of the Equity Share or Local Preference requirements. Lastly, all applicants will be required to incorporate an addendum into their operating agreements that makes any provision ineffective, unenforceable, null and void, if it is inconsistent with, or in violation of, the Equity Share requirements. As proposed, Social Equity Applicants or Local Preference Applicants will be required to verify under Section 9-3316(b)(6), 9-3317(a), and Criteria 2.5 of appendix A that they meet the definition of a Social Equity or Local Preference Owner at the time of applying for a permit or permit renewal. The City shall have the sole and absolute discretion to determine whether the Applicant qualifies as a Social Equity Applicant and the number of points for Local Preference. The undersigned acknowledges that he/she has read and fully understands the content of this Agreement and is the Applicant or his/her/its authorized signatory. __________________________________________________ __________________________________________________ Applicant Signature Date Signed __________________________________________________ __________________________________________________ Print Name Title __________________________________________________ ____________________________________ Company Name Address/Telephone 12/4/2020 OwnerMatt Garza DD559 PLANNING AND DEVELOPMENT DEPARTMENT 2600 Fresno Street • Third Floor Jennifer K. Clark, AICP, Director Fresno, California 93721-3604 (559) 621-8277 FAX (559) 498-1026 December 4, 2020 Please reply to: Rob Holt (559) 621-8056 Matt Garza DD559 LLC 10960 Wilshire Blvd Los Angeles, CA 90024 Dear Applicant: SUBJECT: ZONING INQUIRY NUMBER P20-04265 REQUESTING INFORMATION REGARDING COMMERCIAL CANNABIS USES (DISTRIBUTION, CULTIVATION, OR MANUFACTURING AS PART OF A MICROBUSINESS) FOR PROPERTY LOCATED AT 2759 EAST BRALY AVENUE (APN 468-313-15) Thank you for your inquiry regarding the allowance of commercial cannabis uses. The requested information about a cannabis microbusiness for cultivation was analyzed using Article 27, Chapter 15 of the Fresno Municipal Code (FMC) of the City of Fresno. Please note, all research for this inquiry is based on existing land development of the subject property. If there are multiple buildings on the subject property, this research was based on the address provided in the request. This research does not take into effect of future development unless provided in your application request. With that, research of a proposed commercial cannabis business on the subject property conveys the following: 1. All cannabis cultivators, distributors, or manufacturers must be located on property within the Cannabis Innovation Zone, inside a Cannabis Innovation Hub, or within one-half (½) mile of State Route 99 between Shaw Avenue and Clinton Avenue, one (1) mile of State Route 99 north of Shaw Avenue, or south of Clinton Avenue, or within one (1) mile of State Route 180 west of State Route 99, must be zoned IL (Light Industrial) or IH (Heavy Industrial), and must meet all of the requirements for development in these zones. If not located within the Cannabis Innovation Zone, any building in which a cultivator, distributor, or manufacturer is located shall be no closer than 1,000 feet from any property boundary containing any of the following: (a) Any residentially zoned parcel in the city, including any legal non-conforming residential uses as of the date a complete commercial cannabis business permit application is submitted; (b) A school providing instruction for any grades pre-school through 12 (whether public, private, or charter, including pre-school, transitional kindergarten, and K-12); (c) A day care center licensed by the state Department of Social Services that is in existence at the time a complete commercial cannabis business permit application is submitted; or, Zoning Inquiry P20-04265 2759 East Braly Avenue Page 2 December 4, 2020 (d) A youth center that is in existence at the time a complete commercial cannabis business permit application is submitted. The subject property located at 2759 East Braly Avenue (vacant property; see conceptual site location plan attached below) is located within the Cannabis Innovation Zone, and is zoned IH, which is one of the allowable zone districts for commercial cannabis businesses. Development standards of the IH zone district are available in Sections 15-1303, 15-1304, and 15-1305 of the FMC. The subject location meets the location restriction requirements, per Section 15-2739.C.1.b of the FMC, for a commercial cannabis business. 2. Prior to commencing operations, a commercial cannabis business must obtain a Cannabis Conditional Use Permit from the Planning and Development Department per Section 15-2739.N of the FMC. 3. There shall be permitted 8 cultivators, distributors, or manufacturers located within the Cannabis Innovation Zone, and there shall be permitted 8 cultivators, distributors, or manufacturers located inside a Cannabis Innovation Hub or within ½ mile of State Route 99 between Shaw Avenue and Clinton Avenue, one mile of State Route 99 north of Shaw Avenue or south of Clinton Avenue, or within one mile of State Route 180 west of State Route 99. Currently, there are 0 cultivators, distributors, or manufacturers located in the City of Fresno. This location requirement is satisfied for a commercial cannabis business. Please review the entirety of Article 33, Chapter 9 (Cannabis Retail Business and Commercial Cannabis), and Section 15-2739 (Adult Use and Medicinal Cannabis Retail Business and Commercial Cannabis Business) of the FMC to understand other requirements of commercial cannabis businesses, including but not limited to, application requirements, façade design, signage, etc. This information was researched by the undersigned per the zoning request. The undersigned certifies that the above information contained herein is believed to be accurate and is based upon, or relates to, the information supplied by the requestor. The City of Fresno assumes no liability for errors and omissions. All information was obtained from public records held by the Planning and Development Department. A copy of the Fresno Municipal Code may be obtained by contacting the City Clerk’s office at 559-621-7650. The Fresno Municipal Code may also be searched on the Internet, free of charge, by going to www.fresno.gov. If you have questions regarding this matter, please contact me by telephone at 559-621-8056 or at Robert.Holt@fresno.gov. Cordially, Rob Holt, Planner III Development Services Division Planning and Development Department Enclosure: conceptual site plan Preliminary Report Top Sheet ♦ HELP US STAY ON TOP OF YOUR TRANSACTION ♦ IF ANY OF THESE QUESTIONS ARE ANSWERED “YES”, OR IF YOU HAVE QUESTIONS ABOUT THE BELOW, PLEASE CONTACT YOUR ESCROW OFFICER IMMEDIATELY Have any of the principals recently filed bankruptcy? Do any of the principals plan to use a power of attorney? Are any of the principals going through a divorce? (if so, is there an attorney involved?) Is anyone currently vested in title deceased? Has a new Tax I.D. Number been established? Do any of the principals NOT have a valid photo identification? Is there construction work in progress or incomplete construction? o Any construction completed in the last year? o Any construction completed in the last 4 months? Is there a mobile or manufactured home on the property? Are the sellers a non-resident alien or a foreign out of country seller? Is the property an investment property or not considered seller’s principal residence? Will a new entity be formed? (i.e. Partnership, LLC, Corporation) If your principals are currently vested or are taking title in their trust, have bank accounts been established in the name of the Trust? Will any of the principals be participating in a 1031 Exchange? Are any of the principals not able to sign with a Placer Title Company? If so, an approved notary will be required. THANK YOU FOR CHOOSING Placer Title Company CLTA Preliminary Report (11-17-06) Page 1 of 19 Placer Title Company 7643 North Ingram Avenue, Suite 101 Fresno, CA 93711 Phone: (559)261-2910 Fax: (559) 261-2963 Order No.:P-316430 Reference: Escrow Officer:Darryl Evans Email:devans@placertitle.com Email Loan Docs To:2101edocsB@placertitle.com Proposed Insured: Proposed Loan Amount: Proposed Sales Price: Proposed Buyer(s):G7 Commercial, LLC, or assignee Proposed Underwriter:Old Republic National Title Insurance Company Property Address:Vacant Land, Fresno, CA 93721 PRELIMINARY REPORT In response to the above referenced application for a policy of title insurance, Placer Title Company hereby reports that it is prepared to issue, or cause to be issued, as of the date hereof, a Policy or Policies of Title Insurance describing the land and the estate or interest therein hereinafter set forth, insuring against loss which may be sustained by reason of any defect, lien or encumbrance not shown or referred to as an Exception below or not excluded from coverage pursuant to the printed Schedules, Conditions and Stipulations of said Policy forms. The printed Exceptions and Exclusions from the coverage and Limitations on Covered Risks of said Policy or Policies are set forth in Attachment One. The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than that set forth in the arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. Limitations on Covered Risks applicable to the CLTA and ALTA Homeowner's Policies of Title Insurance which establish a Deductible Amount and a Maximum Dollar Limit of Liability for certain coverages are also set forth in Attachment One. Copies of the policy forms should be read. They are available from the office which issued this report. Please read the exceptions shown or referred to below and the exceptions and exclusions set forth in Attachment One of this report carefully. The exceptions and exclusions are meant to provide you with notice of matters which are not covered under the terms of the title insurance policy and should be carefully considered. It is important to note that this preliminary report is not a written representation as to the condition of title and may not list all liens, defects, and encumbrances affecting title to the land. This report (and any supplements or amendments hereto) is issued solely for the purpose of facilitating the issuance of a policy of title insurance and no liability is assumed hereby. If it is desired that liability be assumed prior to the issuance of a policy of title insurance, a Binder or Commitment should be requested. Dated:February 1, 2019 at 7:30AM Title Officer:David James CLTA Preliminary Report (11-17-06) Page 2 of 19 Order Number: P-316430 The form of policy of title insurance contemplated by this report is: 2006 ALTA Standard Owners Policy 2006 ALTA Extended Loan Policy The estate or interest in the land hereinafter described or referred to covered by this report is: Fee Simple Title to said estate or interest at the date hereof is vested in: Horizon Enterprises, LP, a California Limited Partnership which acquired title as Horizon Enterprises, a California General Partnership The land referred to in this report is described as follows: See Exhibit “A” Attached for Legal Description CLTA Preliminary Report (11-17-06) Page 3 of 19 Order Number: P-316430 Exhibit “A” Legal Description The land described herein is situated in the State of California, County of Fresno, City of Fresno, described as follows: Parcel 1: Lots 6 to 14, inclusive, in Block 3 of Woodward’s Addition to the City of Fresno, according to the map thereof recorded in Book 1 Page 20 of Plats, Fresno County Records. APN: 468-313-15 Parcel 2: Lots 3 to 5, inclusive, in Block 3 of Woodward’s Addition to the City of Fresno, according to the map thereof recorded in Book 1 Page 20 of Plats, Fresno County Records. APN: 468-313-17 CLTA Preliminary Report (11-17-06) Page 4 of 19 Order Number: P-316430 EXCEPTIONS At the date hereof, exceptions to coverage in addition to the printed Exceptions and Exclusions in said policy form would be as follows: 1. Taxes, special and general, assessment districts and service areas for the fiscal year 2019-2020, a lien not yet due or payable. 2. Taxes, special and general, assessment districts and service areas for the Fiscal Year 2018-2019: 1st Installment: $835.74 Paid 2nd Installment: $835.74 Due Parcel Number: 468-313-15 Code Area:005-995 Land Value: Imp. Value:$0.00 Total Value: Exemption Amount: $0.00 Note: First Installment is due November 1 and delinquent December 10. Second Installment is due February 1 and delinquent April 10. 3. Taxes, special and general, assessment districts and service areas for the Fiscal Year 2018-2019: 1st Installment: $211.76 Paid 2nd Installment: $211.76 Due Parcel Number: 468-313-17 Code Area:005-995 Land Value: Imp. Value:$0.00 Total Value: Exemption Amount: $0.00 Note: First Installment is due November 1 and delinquent December 10. Second Installment is due February 1 and delinquent April 10. 4. The lien of supplemental taxes, if any, assessed pursuant to the provisions of Chapter 3.5, (commencing with Section 75) of the Revenue and Taxation Code, of the State of California. 5. Said land lies within the boundaries of the Fresno Metropolitan Flood Control District and is subject to the potential payment of drainage fees and/or the requirement of construction of drainage facilities as a condition of development, reconstruction, additions or alterations associated with said land. If the parties involved in this transaction desire further information as to the effect this resolution may have on said land, they may contact Fresno Metropolitan Flood Control District at (559) 456-3292. 6. The fact that said land is included within a project area of the South Van Ness Redevlopment Project, and that proceedings for the redevelopment of said project have been instituted under the redevelopment law, such redevelopment to proceed only after the adoption of the redevelopment (Plan) as disclosed by a CLTA Preliminary Report (11-17-06) Page 5 of 19 document recorded July 23, 1998, as (instrument) 98102553, Official Records. Document Link Said redevelopment plan was amended by document recorded September 20, 2010, as (instrument) 2010- 0123143, Official Records. Document Link 7. Covenants, conditions and restrictions as contained in the deed from Horizon Enterprises, to the City of Fresno, recorded June 26, 2008, as (instrument) 2008-92476, Official Records, whcih recites as follows: The property shall be used for Public Park and Recreation purposes only. Note: Section 12956.1 of the Government Code provides the following: "If this document contains any restriction based on race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, familial status, marital status, disability, genetic information, national origin, source of income as defined in subdivision (p) of Section 12955, or ancestry, that restriction violates state and federal fair housing laws and is void, and may be removed pursuant to Section 12956.2 of the Government Code. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status." Document Link 8. An easement over said land for the migration of light, noise and pollution and incidental purposes, as granted to City of Fresno, in deed recorded June 26, 2008, (instrument) 2008-0092477, Official Records. Affects: Parcel 1 No representation is made as to the current ownership of said easement. Document Link 9. An easement over said land for the migration of light, noise and pollution and incidental purposes, as granted to Horizon Enterprises, in deed recorded June 26, 2008, (instrument) 2008-92478, Official Records. Affects: Lots 1 through 5 in Block 3 (Parcel 2 and other property) No representation is made as to the current ownership of said easement. Document Link By deed recorded February 14, 2012, as Instrument No. 2012-0022571 the City of Fresno conveyed to Horizon Enterprises, Parcel 2 herein described. Document Link 10. Rights of tenants in possession, including any unrecorded leases and/or subleases affecting the herein described property. 11. The requirement that Placer Title Company be provided with a Free and Clear Affidavit-Verification of Unencumbered Property executed by the vestee(s) herein. 12. The requirement that a full copy of the partnership agreement and any amendments thereto be submitted for Horizon Enterprises, LP, a California Limited Partnership. CLTA Preliminary Report (11-17-06) Page 6 of 19 ************************* SPECIAL INFORMATION ************************* *** CHAIN OF TITLE REPORT: According to the public records, no deeds conveying the property described in this report have been recorded within a period of 2 years prior to the date of this report, except as shown herein: NONE *** LENDER'S SUPPLEMENTAL ADDRESS REPORT: The above numbered report is hereby modified and/or supplemented to reflect the following additional items relating to the issuance of an American Land Title Association Loan Form Policy: Placer Title Company states that the herein described property is Vacant Land and that the property address is: Vacant Land, Fresno, CA 93721 ***NOTICE REGARDING MAPS Any maps provided herewith are for reference only. The property and/or easements shown are but approximations, and no assurances are given as to accuracy, reliability, dimensions or acreage. This will not limit the coverage provided by a CLTA 116, 116.1 or 116.03 endorsement if issued to the policy. *** NOTICE REGARDING FUNDS DEPOSITED IN ESCROW: IMPORTANT NOTICE- ACCEPTABLE TYPE OF FUNDS Please be advised that in accordance with the provisions of the California Insurance Code, Section 12413.1, any funds deposited for the closing must be deposited into the escrow depository and cleared prior to disbursement. Funds deposited by wire transfer may be disbursed upon receipt. Funds deposit via cashier’s checks drawn on a California based bank may be disbursed the next business day. If funds are deposited with the Company by other methods, recording and/or disbursement may be delayed. IMPORTANT NOTE: PLEASE BE ADVISED THAT ESCROW HOLDER DOES NOT ACCEPT CASH, MONEY ORDERS, ACH TRANSFERS, OR FOREIGN CHECKS. PLEASE CONTACT ESCROW REGARDING QUESTIONS ON TYPE OF FUNDS REQUIRED IN ORDER TO FACILITATE THE PROMPT CLOSING OF THIS TRANSACTION. NOTE: If you intend to remit multiple cashier's checks to close your escrow (which may or may not include gift funds or third party funds) IRS cash reporting under IRS Code 8300 may be required. For this reason, you may wish to consider wiring funds in lieu of remitting cashier's checks. CLTA Preliminary Report (11-17-06) Page 7 of 19 *** DISCLOSURE OF DISCOUNTS *** You may be entitled to a discount on your title premiums and/or escrow fees if you meet any of the following conditions: 1.You are an employee of the title insurer or Placer Title Company and the property is your primary residence; or 2.The transaction is a loan, the purpose of which is to rebuild the improvements on the property as a result of a governmentally declared disaster; or 3.The property is being purchased or encumbered by a religious, charitable or nonprofit organization for its use within the normal activities for which such entity was intended. Please advise the company if you believe any of the above discounts apply. *** LENDER'S NOTE *** In accordance with Executive Order 13224, and the USA Patriot Act, PLACER TITLE COMPANY compares the names of parties to the proposed transaction to the Specially Designated Nationals and Blocked Persons (SDN List) maintained by the United States Office of Foreign Asset Control. *** BUYER'S NOTE *** If an ALTA Residential Owner's Policy is requested and if the property described herein is determined to be eligible for this policy, the following Exceptions From Coverage will appear in the policy: 1.Taxes or assessments which are not shown as liens by the public records or by the records of any taxing authority. 2.(a) Water rights, claims or title to water; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) unpatented mining claims; whether or not the matters exception under (a), (b) or (c) are shown by the public records. 3.Any rights, interest or claims of parties in possession of the land which are not shown by the public records. 4.Any easements or liens not shown by the public records. This exception does not limit the lien coverage in Item 8 of the Covered Title Risks. 5.Any facts about the land which a correct survey would disclose and which are not shown by the public records. This exception does not limit the forced removal coverage in Item 12 of the Covered Title Risks. CLTA Preliminary Report (11-17-06) Page 8 of 19 CLTA PRELIMINARY REPORT FORM Attachment One (Rev 06-05-14) CALIFORNIA LAND TITLE ASSOCIATION STANDARD COVERAGE POLICY - 1990 EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1.(a) Any law, ordinance or governmental regulation (including but not limited to building or zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien, or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. 2.Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3.Defects, liens, encumbrances, adverse claims or other matters: (a) whether or not recorded in the public records at Date of Policy, but created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage or for the estate or interest insured by this policy. 4.Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with the applicable doing business laws of the state in which the land is situated. 5.Invalidity or unenforceability of the lien of the insured mortgage, or claim thereof, which arises out of the transaction evidenced by the insured mortgage and is based upon usury or any consumer credit protection or truth in lending law. 6.Any claim, which arises out of the transaction vesting in the insured the estate of interest insured by this policy or the transaction creating the interest of the insured lender, by reason of the operation of federal bankruptcy, state insolvency or similar creditors' rights laws. EXCEPTIONS FROM COVERAGE - SCHEDULE B, PART I This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: 1.Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. Proceedings by a public agency which may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the public records. CLTA Preliminary Report (11-17-06) Page 9 of 19 EXCEPTIONS FROM COVERAGE - SCHEDULE B, PART I (continued) 2.Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of the land or which may be asserted by persons in possession thereof. 3.Easements, liens or encumbrances, or claims thereof, not shown by the public records. 4.Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by the public records. 5.(a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b) or (c) are shown by the public records. 6.Any lien or right to a lien for services, labor or material not shown by the public records. CLTA/ALTA HOMEOWNER'S POLICY OF TITLE INSURANCE (12-02-13) EXCLUSIONS In addition to the Exceptions in Schedule B, You are not insured against loss, costs, attorneys' fees, and expenses resulting from: 1. Governmental police power, and the existence or violation of those portions of any law or government regulation concerning: a) building; b) zoning; c) land use; d) improvements on the Land; e) land division; and f) environmental protection. This Exclusion does not limit the coverage described in Covered Risk 8.a., 14, 15, 16, 18, 19, 20, 23 or 27. 2. The failure of Your existing structures, or any part of them, to be constructed in accordance with applicable building codes. This Exclusion does not limit the coverage described in Covered Risk 14 or 15. 3.The right to take the Land by condemning it. This Exclusion does not limit the coverage described in Covered Risk 17. 4. Risks: a) that are created, allowed, or agreed to by You, whether or not they are recorded in the Public Records; b) that are Known to You at the Policy Date, but not to Us, unless they are recorded in the Public Records at the Policy Date; c) that result in no loss to You; or d) that first occur after the Policy Date - this does not limit the coverage described in Covered Risk 7, 8.e., 25, 26, 27 or 28. 5.Failure to pay value for Your Title. 6.Lack of a right: a) to any land outside the area specifically described and referred to in paragraph 3 of Schedule A; and b) in streets, alleys, or waterways that touch the Land. This Exclusion does not limit the coverage described in Covered Risk 11 or 21. 7.The transfer of the Title to You is invalid as a preferential transfer or as a fraudulent transfer or conveyance under federal bankruptcy, state insolvency, or similar creditors' rights laws. 8.Contamination, explosion, fire, flooding, vibration, fracturing, earthquake, or subsidence. 9.Negligence by a person or an Entity exercising a right to extract or develop minerals, water, or any other substances. LIMITATIONS ON COVERED RISKS Your insurance for the following Covered Risks is limited on the Owner's Coverage Statement as follows: For Covered Risk 16, 18, 19, and 21 Your Deductible Amount and Our Maximum Dollar Limit of Liability shown in Schedule A. The deductible amounts and maximum dollar limits shown on Schedule A are as follows: CLTA Preliminary Report (11-17-06) Page 10 of 19 Your Deductible Amount Our Maximum Dollar Limit of Liability Covered Risk 16:1% of Policy Amount or $2,500.00 (whichever is less) Covered Risk 18:1% of Policy Amount or $5,000.00 (whichever is less) Covered Risk 19:1% of Policy Amount or $5,000.00 (whichever is less) Covered Risk 21:1% of Policy Amount or $2,500.00 (whichever is less) 2006 ALTA LOAN POLICY (06-17-06) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of: 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5. (b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 6. 2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 13, or 14); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage. 4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing-business laws of the state where the Land is situated. 5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury or any consumer credit protection or truth-in-lending law. 6. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction creating the lien of the Insured Mortgage, is (a) a fraudulent conveyance or fraudulent transfer, or (b) a preferential transfer for any reason not stated in Covered Risk 13(b) of this policy. CLTA Preliminary Report (11-17-06) Page 11 of 19 EXCLUSIONS FROM COVERAGE (continued) 7.Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the Insured Mortgage in the Public Records. This Exclusion does not modify or limit the coverage provided under Covered Risk 11(b). The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage: EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage, and the Company will not pay costs, attorneys' fees or expenses, that arise by reason of: The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage: 1.(a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the Public Records. 2.Any facts, rights, interests, or claims that are not shown by the Public Records but that could be ascertained by an inspection of the Land or that may be asserted by persons in possession of the Land. 3.Easements, liens or encumbrances, or claims thereof, not shown by the Public Records. 4.Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land and not shown by the Public Records. 5.(a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records. 6.Any lien or right to a lien for services, labor or material not shown by the Public Records. 2006 ALTA OWNER'S POLICY (06-17-06) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of: 1.(a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5. (b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 6. 2.Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. CLTA Preliminary Report (11-17-06) Page 12 of 19 EXCLUSIONS FROM COVERAGE (continued) 3.Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 9 and 10); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Title. 4. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction vesting the Title as shown in Schedule A, is (a) a fraudulent conveyance or fraudulent transfer; or (b) a preferential transfer for any reason not stated in Covered Risk 9 of this policy. 5.Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the deed or other instrument of transfer in the Public Records that vests Title as shown in Schedule A. The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage: EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage, and the Company will not pay costs, attorneys' fees or expenses, that arise by reason of: [The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage: 1.(a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the Public Records. 2.Any facts, rights, interests, or claims that are not shown in the Public Records but that could be ascertained by an inspection of the Land or that may be asserted by persons in possession of the Land. 3.Easements, liens or encumbrances, or claims thereof, not shown by the Public Records. 4.Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land and that are not shown by the Public Records. 5.(a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records. 6.Any lien or right to a lien for services, labor or material not shown by the Public Records. 7.[Variable exceptions such as taxes, easements, CC&R's, etc. shown here.] CLTA Preliminary Report (11-17-06) Page 13 of 19 ALTA EXPANDED COVERAGE RESIDENTIAL LOAN POLICY (12-02-13) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1.(a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16. (b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16. 2.Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3.Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 16, 17, 18, 19, 20, 21, 22, 23, 24, 27 or 28); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage. 4.Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing-business laws of the state where the Land is situated. 5.Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury, or any consumer credit protection or truth-in-lending law. This Exclusion does not modify or limit the coverage provided in Covered Risk 26. 6.Any claim of invalidity, unenforceability or lack of priority of the lien of the Insured Mortgage as to Advances or modifications made after the Insured has Knowledge that the vestee shown in Schedule A is no longer the owner of the estate or interest covered by this policy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11. 7.Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching subsequent to Date of Policy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11(b) or 25. 8. The failure of the residential structure, or any portion of it, to have been constructed before, on or after Date of Policy in accordance with applicable building codes. This Exclusion does not modify or limit the coverage provided in Covered Risk 5 or 6. 9. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction creating the lien of the Insured Mortgage, is (a) a fraudulent conveyance or fraudulent transfer, or (b) a preferential transfer for any reason not stated in Covered Risk 27(b) of this policy. 10.Contamination, explosion, fire, flooding, vibration, fracturing, earthquake, or subsidence. 11.Negligence by a person or an Entity exercising a right to extract or develop minerals, water, or any other substances. CLTA Preliminary Report (11-17-06) Page 14 of 19 NOTICE FEDERAL FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT OF 1980 (FIRPTA) Upon the sale of United States real property, by a non-resident alien, foreign corporation, partnership or trust, the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), and as revised by the Tax Reform Act of 1984 (26 USCA 897 (C)(1)(A)(1) and 26 USCA 1445), Revised by the Path Act of 2015, These changes may be reviewed in full in H.R. 2029, now known as Public Law 114-113. See Section 324 of the law for the full text of FIRPTA changes. Effective February 27, 2016, the amendments to FIRPTA contained in the PATH Act have increased the holdback rate from 10% of gross proceeds to 15% of gross proceeds of the sale, regardless of whether the actual tax due may exceed (or be less than) the amount withheld if ANY of the following conditions are met: 1. If the amount realized (generally the sales price) is $300,000 or less, and the property will be used by the Transferee as a residence (as provided for in the current regulations), no monies need be withheld or remitted to the IRS. 2. If the amount realized exceeds $300,000 but does not exceed $1,000,000, and the property will be used by the Transferee as a residence, (as provided for in the current regulations) then the withholding rate is 10% on the full amount realized (generally the sales prices) 3. If the amount realized exceeds $1,000,000, then the withholding rate is 15% on the entire amount, regardless of use by the Transferee. The exemption for personal use as a residence does not apply in this scenario. If the purchaser who is required to withhold income tax from the seller fails to do so, the purchaser is subject to fines and penalties as provided under Internal Revenue Code Section 1445. Escrow Holder will, upon written instructions from the purchaser, withhold Federal Income Tax from the seller and will deposit said tax with the Internal Revenue Service, together with IRS Forms 8288 and 8288-A. The fee charged for this service is $25.00 payable to the escrow holder. CALIFORNIA WITHHOLDING In accordance with Sections 18662 and 18668 of the Revenue and Taxation Code, a transferee (Buyer) may be required to withhold an amount equal to 3 1/3 percent of the sales price or an alternative withholding amount certified to by the seller in the case of a disposition of California real property interest by either: 1. A seller who is an individual or when the disbursement instructions authorize the proceeds to be sent to a financial intermediary or the seller, OR 2. A corporate seller that has no permanent place of business in California. The buyer may become subject to penalty for failure to withhold an amount equal to the greater of 10 percent of the amount required to be withheld or five hundred dollars ($500). However, notwithstanding any other provision included in the California statutes referenced above, no buyer will be required to withhold any amount or be subject to penalty for failure to withhold if: 1. The sales price of the California real property conveyed does not exceed one hundred thousand dollars ($100,000.00), OR 2. The seller executes a written certificate, under the penalty of perjury, of any of the following: a.The property qualifies as the seller's (or decedent's, if being sold by the decedent's estate) principal residence within the meaning of Internal Revenue Code (IRC) Section 121; or b.The seller (or decedent, if being sold by the decedent's estate) last used the property as the seller's (decedent's) principal residence within the meaning of IRC Section 121 without regard to the two-year time period; or c.The seller has a loss or zero gain for California income tax purposes on this sale; or d.The property is being compulsorily or involuntarily converted and the seller intends to acquire property that is similar or related in service or use to qualify for non-recognition of gain for California income tax purposes under IRC Section 1033; or e.If the transfer qualifies for non-recognition treatment under IRC Section 351 (transfer to a corporation controlled by the transferor) or IRC Section 721 (contribution to a partnership in exchange for a partnership interest); or f.The seller is a corporation (or an LLC classified as a corporation for federal and California income tax purposes) that is either qualified through the California Secretary of State or has a permanent place of Business in California; or g.The seller is a partnership (or an LLC that is not a disregarded single member LLC and is classified as a partnership for federal and California income tax purposes) with recorded title to the property in the name of the partnership of LLC; or h.The seller is a tax-exempt entity under either California or federal law; or i.The seller is an insurance company, individual retirement account, qualified pension/profit sharing plan, or charitable remainder trust; or j.The transfer qualifies as a simultaneous like-kind exchange within the meaning of IRC Section 1031; or k.The transfer qualifies as a deferred like-kind exchange within the meaning of IRC Section 1031; or l.The transfer of this property will be an installment sale that you will report as such for California tax purposes and the buyer has agreed to withhold on each principal payment instead of withholding the full amount at the time of transfer. The Seller is subject to penalty for knowingly filing a fraudulent certificate for the purpose of avoiding the withholding requirement. CLTA Preliminary Report (11-17-06) Page 15 of 19 NOTICE DEPOSIT OF FUNDS AND DISBURSEMENT DISCLOSURE Unless you elect otherwise (as described below), all funds received by (the "Company") in escrow will be deposited with other escrow funds in one or more non-interest bearing escrow accounts of the Company in a financial institution selected by the Company. The depositor acknowledges that the deposit of funds in a non-interest bearing demand account by Escrow Holder may result in said company receiving a range of economic benefits from the bank in the form of services, credits, considerations, or other things of value. The depositor hereby specifically waives any claim to such economic benefits payable to Escrow Holder resulting from non-interest bearing deposits. Unless you direct the Company to open an interest-bearing account (as described below), the Company shall have no obligation to account to you in any manner for the value of, or to compensate any party for, any benefit received by the Company and/or its affiliated company. Any such benefits shall be deemed additional compensation of the Company for its services in connection with the escrow. If you elect, funds deposited by you prior to the close of escrow may be placed in an individual interest-bearing account arrangement that the Company has established with one of its financial institutions. You do not have an opportunity to earn interest on the funds deposited by a lender. If you elect to earn interest through this special account arrangement, the Company will charge you an additional fee of $50.00 for the establishment and maintenance of the account. This fee compensates the Company for the costs associated with opening and managing the interest-bearing account, preparing correspondence/documentation, transferring funds, maintaining appropriate records for audit/reconciliation purposes, and filing any required tax withholding statements. It is important that you consider this cost in your decision since the cost may exceed the interest you earn. CLTA Preliminary Report (11-17-06) Page 16 of 19 PRIVACY POLICY NOTICE Purpose Of This Notice Title V of the Gramm-Leach-Bliley Act (GLBA) generally prohibits any financial institution, directly or through its affiliates, from sharing nonpublic personal information about you with a nonaffiliated third party unless the institution provides you with a notice of its privacy policies and practices, such as the type of information that it collects about you and the categories of a persons or entities to whom it may be disclosed. In compliance with the GLBA, we are providing you with this document which notifies you of the privacy policies and practices of: Montana Title and Escrow Company Placer Title Company National Closing Solutions, Inc.Placer Title Insurance Agency of Utah National Closing Solutions of Alabama, LLC Premier Title Agency National Closing Solutions of Maryland, Inc.North Idaho Title Insurance Company Texas National Title Wyoming Title and Escrow Company We may collect nonpublic personal information about you from the following sources: Information we receive from you, such as an application or other forms. Information about your transactions we secure from our files, or from our affiliates or others. Information we receive from a consumer reporting agency. Information we receive from others involved in your transaction, such as the real estate agent or lender. Unless it is specifically stated otherwise in an amended Privacy Policy Notice, no additional nonpublic personal information will be collected about you. We may disclose any of the above information that we collect about our customers or former customers to our affiliates or to nonaffiliated third parties as permitted by law. We also may disclose this information about our customers or former customers to the following types of nonaffiliated companies that perform marketing services on our behalf or with whom we have joint marketing agreements: Financial service providers such as companies engaged in banking, consumer finances, securities and insurance. Nonfinancial companies such as envelope stuffers and other fulfillment service providers. We do not disclose any nonpublic personal information about you with anyone for any purpose that is not specifically permitted by law. We restrict access to nonpublic personal information about you to those employees who need to know that information in order to provide products or services to you. We maintain physical, electronic and procedural safeguards that comply with federal regulations to guard your nonpublic personal information. CLTA Preliminary Report (11-17-06) Page 17 of 19 FACTS WHAT DOES OLD REPUBLIC TITLE DO WITH YOUR PERSONAL INFORMATION? Why? Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. What? The types of personal information we collect and share depend on the product or service you have with us. This information can include: Social Security number and employment information Mortgage rates and payments and account balances Checking account information and wire transfer instructions When you are no longer our customer, we continue to share your information as described in this notice. How? All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Old Republic Title chooses to share; and whether you can limit this sharing. Reasons we can share your personal information Does Old Republic Title share? Can you limit this sharing? For our everyday business purposes – such as to process your transactions, maintain your account(s), or respond to court orders and legal investigations, or report to credit bureaus Yes No For our marketing purposes – to offer our products and services to you No We don’t share For joint marketing with other financial companies No We don’t share For our affiliates’ everyday business purposes – information about your transactions and experiences Yes No For our affiliates’ everyday business purposes – information about your creditworthiness No We don’t share For our affiliates to market to you No We don’t share For non-affiliates to market to you No We don’t share Questions Go to www.oldrepublictitle.com (Contact Us) CLTA Preliminary Report (11-17-06) Page 18 of 19 Who we are Who is providing this notice? Companies with an Old Republic Title name and other affiliates. Please see below for a list of affiliates. What we do How does Old Republic Title protect my personal information? To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. For more information, visit http://www.OldRepublicTitle.com/newnational/Contact/privacy. How does Old Republic Title collect my personal information? We collect your personal information, for example, when you: Give us your contact information or show your driver’s license Show your government-issued ID or provide your mortgage information Make a wire transfer We also collect your personal information from others, such as credit bureaus, affiliates, or other companies. Why can’t I limit all sharing?Federal law gives you the right to limit only: Sharing for affiliates’ everyday business purposes – information about your creditworthiness Affiliates from using your information to market to you Sharing for non-affiliates to market to you. State laws and individual companies may give you additional rights to limit sharing. See the “Other important information” section below for your rights under state law. Definitions Affiliates Companies related by common ownership or control. They can be financial and nonfinancial companies Our affiliates include companies with an Old Republic Title name, and financial companies such as Attorneys’ Title Fund Services, LLC, Lex Terrae National Title Services, Inc., Mississippi Valley Title Services Company, and The Title Company of North Carolina. Non-affiliates Companies not related by common ownership or control. They can be financial and non-financial companies. Old Republic Title does not share with non-affiliates so they can market to you Joint Marketing A formal agreement between non-affiliated financial companies that together market financial products or services to you. CLTA Preliminary Report (11-17-06) Page 19 of 19 Old Republic Title doesn’t jointly market. Other Important Information Oregon residents only: We are providing you this notice under state law. We may share your personal information (described on page one) obtained from your or others with non-affiliate service providers with whom we contract, such as notaries and delivery services, in order to process your transactions. You may see what personal information we have collected about you in connection with your transaction (other than personal information related to a claim or legal proceeding). To see your information, please click on “Contact Us” at www.oldrepublictitle.com and submit your written request to the Legal Department. You may see and copy the information at our office or ask us to mail you a copy for a reasonable fee. If you think any information is wrong, you may submit a written request online to correct or delete it. We will let you know what actions we take. If you do not agree with our actions, you may send us a statement. Affiliates Who May be Delivering This Notice American First Abstract, LLC American First Title & Trust Company American Guaranty Title Insurance Company Attorneys’ Title Fund Services, LLC Compass Abstract, Inc. eRecording Partners Network, LLC Genesis Abstract, LLC Kansas City Management Group, LLC L.T. Service Corp.Lenders Inspection Company Lex Terrae National Title Services, Inc. Lex Terrae, Ltd.Mara Escrow Company Mississippi Valley Title Services Company National Title Agent’s Services Company Old Republic Branch Information Services, Inc. Old Republic Diversified Services, Inc. Old Republic Exchange Company Old Republic National Title Insurance Company Old Republic Title and Escrow of Hawaii, Ltd. Old Republic Title Co.Old Republic Title Company of Conroe Old Republic Title Company of Indiana Old Republic Title Company of Nevada Old Republic Title Company of Oklahoma Old Republic Title Company of Oregon Old Republic Title Company of St. Louis Old Republic Title Company of Tennessee Old Republic Title Information Concepts Old Republic Title Insurance Agency, Inc. Old Republic Title, Ltd. Republic Abstract & Settlement, LLC Sentry Abstract Company The Title Company of North Carolina Title Services, LLC Trident Land Transfer Company, LLC Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation Supplemental Application Requirement CAL-OSHA DD559 does hereby affirm that the company will, within one year of receiving a commercial cannabis business permit, employ at least one supervisor and one employee who have completed a Cal-OSHA industry outreach course offered by a duly authorized training provider (FMC 9-3316(c)). Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 – Cultivation/Distribution Commercial Cannabis Business Permit Application for DD559, LLC Sarah Street (2759 Braly Ave) Fresno, California 93721 ASSESSOR’S PARCEL NUMBERS: 468-313-15 & 468-313-17 Date submitted: December 4, 2020 Submitted to: The Community Development Department, Fresno City, California By applicant: DD559, LLC Project name: DD559 Cannabis Cultivation & Distribution APN: 468-313-15 & 468-313-17 Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 – Cultivation/Distribution i TABLE OF CONTENTS 1. DD559 Business Plan ................................................................................ 1 1.1. Owner and Team Qualifications ............................................................ 3 1.2. Budget ................................................................................................... 5 1.3. Proof of Capitalization ........................................................................... 7 1.4. Pro Forma for at Least Three Years of Operation ................................. 8 1.5. Hours of Operation and Opening/Closing Procedures .......................... 9 1.7. Daily Operations for Distribution ........................................................... 9 1.9. Daily Operations for Cultivation ........................................................... 17 Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 – Cultivation/Distribution 1. DD559 BUSINESS PLAN DD559, LLC (DD559) is a locally owned and operated business applying for a Commercial Cannabis Business (CCB) Permit and associated regional and state licenses to conduct indoor cannabis cultivation operations and to provide cannabis distribution services in the City of Fresno, in each case, in compliance with all applicable rules, regulations and laws promulgated by the City of Fresno and the State of California. DD559 aims to be an industry leader in the Fresno cannabis cultivation market with the build-out and operation of a locally-owned and state of the art indoor cultivation facility on the premises located at 2759 Braly Avenue in Fresno. DD559 will capitalize on our access to an already existing portfolio of excellent genetics to produce a clean and healthy product with efficient and ethical production protocols that aim to grow one of the best cannabis flowers in the world while establishing an innovative cultivation brand with affordable prices to licensed distributors, retailers, manufacturers, and consumers and providing first-rate transportation and related logistics services through our distribution arm. With strategic partners already in place, once operational we expect to be able to respond to the local and statewide consumer needs with swift agility. DD559 was built on a vision by its founders to bring thriving local cannabis cultivation and distribution businesses to the community of Fresno, a community where they grew up and now are raising families. Our management team is comprised of local philanthropists, industry experts and cannabis innovators who have seen firsthand the benefits in other areas where the legal cannabis industry has brought positive local effects in the form of blight removal, active street presence and taxation funds applied positively in the community. We intend to use a technical approach to cultivating cannabis that we have developed using only probiotic and vegan inputs. Between our expert team and our brand differentiation, our comprehensive expertise will establish our product as a moral and ethical standard bearer for the industry to recognize. These specific values are acknowledged, will be communicated to the market, and delivered in the final product. Our approach is intended to inspire a high-quality benchmark for all producers of cannabis to achieve. DD559’s primary focus is to obtain an indoor cannabis cultivation and distribution license, and to build a successful cultivation center and distribution hub that is fully compliant with all state and local regulations. Our goal is that our premises will first facilitate an infusion of tax revenue from our cultivation and distribution businesses, and secondly, we aim to establish a cultivator’s benefit fund which will be utilized to build partnerships with established community outreach organizations in the Fresno community. This base will also allow DD559 to be primed and ready for national expansion as federal laws adjust and evolve for the benefit of the cannabis industry, and as a result of any such expansion, we will be able to continue benefitting the Fresno community. DD559 also intends contribute to the Fresno Community Reinvestment Fund to support local cannabis equity businesses in their various business endeavors in the industry. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 – Cultivation/Distribution Contributions may be in the form of monetary support, staff training and development, or establishment and support of business relationships. Our operations model will include: 1. Indoor cultivation premises using probiotic and vegan inputs in a compliant facility built to the highest standards; 2. Procedures to ensure the secure receipt and delivery of all seedlings and immature plants, and to ensure that plants move from cultivation to drying, processing, packaging, storage and shipment in a manner so as to avoid cross-contamination; 3. Serving as a state and local information resource regarding cannabis innovation, cultivation and distribution as well as a source of community outreach; 4. Safe distribution and inventory protocols to ensure compliant transport of cannabis and cannabis products to licensed and authorized California clients; 5. Commitment to constructing a comprehensive and lawful distribution network by building upon the company’s early-mover footprint in Fresno, California; 6. The creation of business-to-business logistics solutions and overnight fulfillment capabilities offered on a statewide basis for wholesale and retail clients alike; and 7. Core distribution capacities with a dedicated focus on maintaining regulatory adherence, as well as offering value-added operational services. DD559 envisions as an integral part of its model the creation of a healthier, wealthier, and more verdant world in which the practice of legal, responsible, and dynamic commerce comes to define the commercial cannabis industry in Fresno, California. 1.1. Owner and Team Qualifications Matt Garza, Owner of DD559, is a lifelong Fresno County resident having grown up in Easton, a few miles outside of the City of Fresno, and attending Fresno State University. After a successful 12-year Major League Baseball career, Matt started G7 Commercial, a real estate investment and management company based in the City of Fresno. Since 2017, Matt and G7 Commercial have developed numerous properties in the City including a raisin farm in 2019. Matt also owns Dagobahz, which owns and operates two cannabis cultivation facilities in Mendocino County, and DD559 which has a cannabis and hemp product line that will be expanded in the City. Matt is active in many local philanthropic efforts such as youth sports, school donations, funding and participation in St. Jude’s charitable efforts, among others, and plans to both continue and expand those efforts in the community with this endeavor. Matt will leverage his understanding of the local community, consumer demand and preferences, and his cannabis cultivation and business experience to provide and distribute the safest and highest quality products to the citizens of Fresno. Ricardo Valenzuela, Security Manager of DD559 was born in Fresno and grew up in Easton. Ricardo earned academic and athletic honors while playing both football and wrestling in high school and joined the United States Marine Corps in 2000. While in the service Ricardo held many primary specialties and received multiple medals and commendations during his 20 years of service. Ricardo retired from the United States Marine Corps on September 30, 2020. Philanthropy includes volunteer youth sports coaching and each year the Valenzuela Family helps to collect, distribute and deliver food boxes and gifts with St. Jude’s Catholic Church during Thanksgiving and Christmas. Ricardo is a strong advocate for alternative medicine and drug rehabilitation using cannabis-based products and is pushing to develop an industry coalition to help address the community’s veterans PTSD, mental and physical welfare. He is highly qualified to manage the Security detail for our facility. Roberto Pena, Director of Distribution for DD559 has 40+ years experience in sales and distribution for Donaghy Sales/ Anheuser Bush, Sysco Foods, and California State Lottery. Pena also Co-owns Central Valley Hemp farm in Caruthers CA. Pena is also the director of sales and distribution at CVH farm LLC. Jesus Pena, Director of Cultivation for DD559 started volunteering at Dagobahz Farms in Mendocino county in 2016. There he learned an organic and vegan mixed growing concept that he has worked to hone his skill and create highly valued crops. Pena has transitioned from volunteer, cultivator, lead cultivator, to now co-owner of Central Valley Hemp Farm LLC. Pena is the director of cultivation, and quality assurance. Dustin Otero, Business Manager for DD559 graduated from Washington Union High School in Fresno and has held multiple positions of increasing responsibility while building his professional business management skills. Familiar with every aspect of successful building operations from warehousing, safety protocols, shipping/receiving, staff training, employee supervision, sales, customer support and more, Dustin brings an excellent skill set to the DD559 team. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-7 1.3. Proof of Capitalization CONFIDENTIAL See Attachment. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-8 1.4. Pro Forma for at Least Three Years of Operation Year 1: Secure license and establish a premier cannabis cultivation brand, Build out Building A Year 2: Brand is now trusted and consistent. Build out Building B. Year 3: Scale and grow company cultivation and distribution business Year 4: Increase sales Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-9 1.5. Hours of Operation and Opening/Closing Procedures Our operations will not be open to the public at any time. Cultivation will be 24 hours a day, Monday through Sunday. Distribution will be open from 7am – 6pm and will remain consistent with Operating Requirements of the Fresno City Municipal Code. This facility is for the cultivation, storage and distribution/ transportation of cannabis and will have onsite, trained security staff at all times. Only security personnel, authorized staff and distribution personnel will be allowed to enter the premises at any time. We anticipate that DD559 will have between 10 and 12 employees onsite at any given time. Parking is sufficient for all employees and there is additional parking available to accommodate overlap during shift change. 1.7. Daily Operations for Distribution DD559 places the highest emphasis on staff safety as well as product quality and security. Ours will be a non-public facility and no unauthorized personnel will be onsite at any time. We outline our process to uphold standards specific to the Distribution and Transportation uses noted below. We will provide transport solely to licensed dispensaries pursuant to application law and other legal and regulatory requirements promulgated by the City of Fresno and the State of California. DD559 has brought in Robert Pena as Director of Distribution who will apply his 40+ years experience in sales and distribution for companies such as Donaghy Sales/ Anheuser Bush, Sysco Foods, and California State Lottery. Robert also Co-owns Central Valley Hemp farm in Caruthers CA and is the director of sales and distribution at CVH Farm LLC. These established business relationships and current operations within the cannabis industry will help to create an effective and efficient distribution network. 1.7.1 Criteria for Distribution Operations i. Number of Drivers, Hours, and Vehicles DD559 will employ one driver at a time to operate a transport van such as a Ford Transit Connect or similar vehicle. Drivers will be licensed with the proper motor carrier permits. Operational hours for the facility will be 24 hours a day. As noted above, distribution will be open from 7am – 6pm and transportation specifications procedures will be maintained in a manner consistent with the Operating Requirements of the Fresno City Municipal Code. ii. Transportation Security Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-11 iii. Inventory Management and iv. Quality Control Production Sites and Sources - Vendors and Suppliers Supply chain management (SCM) involves the controlled movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption/sale all while assuring the purity, composition, and quality of the product. DD559 maintains strict criteria for suppliers of all raw materials, products, inputs and components that will be used in the supply chain. Comprehensive Standard Operating Procedures will be in place to define the Approved Supplier List, the selection procedures, responsible parties, evaluation procedures, and annual review/maintenance procedures. DD559 will rely on a Lean Manufacturing/Six Sigma approach to SCM, and will control each supply chain input as follows. Approved Supplier List DD559 will maintain an Approved Supplier List (ASL) of vendors for purchasing materials or services in the creation of cannabis or cannabis product. The ASL will be maintained by a designated quality assurance representative within the company. Materials / Purchased Goods In the cultivation process, a material/purchased good can include soil, nutrients, beneficial microbes or insects, cloning hormones, pH adjusting solutions, etc. Control Methods for Materials / Purchased Goods • A specification sheet will be on file for each material/purchased good used by DD559. The specification sheet will include the manufacturer’s contact information and the criteria necessary for assessing the quality of the material. It will be the responsibility of the Quality Assurance (QA) representative to assure that a specification sheet is on file for every material used by the company in any cultivation/packaging process. The specification sheet will be drafted by committee with stakeholders from the various areas within the organization. The QA representative will be responsible for determining the quality of the received material against the specification sheet on file. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-12 • Purchasing controls will assure that only items with a specification sheet can be purchased. • When a purchased material is received at DD559, it will be quarantined by the QA representative pending inspection. • Once inspected, the QA representative will release the material for use, or reject it back to the vendor. A QA-issued sticker will identify its status. • Only materials with a “Release” sticker will be used in the operation. “Rejected” items will be isolated until returned to the manufacturer or destroyed. Methods All methods for purchasing, processing, receipt, QA disposition, and use will be documented following current Good Manufacturing Practices (GMPs). Documented methods for work-in-process and finished good testing will assure product integrity with respect to quality, composition, and purity. Once received on-site, materials will be sampled for inspection and disposition by QA. Aseptic sampling per standard operating procedure will assure that contamination is not introduced into the item being sampled. Environmental Purchased materials and supplies will be stored according to the suppliers’ recommendations and will be stored to avoid contamination and mix-ups. All facility waste storage areas will be located away from process/handling areas to prevent cross-contamination and avoid attracting pests. Waste storage areas and containers will be adequate for waste generated between disposal times. Waste storage areas will be cleaned frequently enough to avoid creating conditions that can cause cross- contamination or attract pests. Containers with lids will be used for the storage of waste until removal. All materials and supplies will be stored in compliance with relevant OSHA regulations for the storage of hazardous materials. Personnel Personnel will have documented training on the SCM program. Training will occur as part of new employee orientation, and on a recurring annual basis. Supplier Services DD559 will utilize an evaluation system to initially assess supplier capability. Ongoing evaluation of the supplier will be required and will be based on: 1) The supplier’s ability to meet the needs of the company; 2) Supplier’s history and length of time in business as indicators of dependability; 3) Experience and qualifications of the supplier’s staff Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-13 4) Demonstrated evidence the supplier utilizes a Quality System structure for operations; 5) ISO or similar registration; 6) Trend analysis of products purchased from the supplier; and 7) Reputation of the supplier in respective industry. We require documentation such as Certificates of Conformance or Compliance from suppliers in support of the purchase goods’ quality, composition, and purity. Receiving/Processing. All distribution inventory transports will be scheduled in advance with a manager and can only be signed off by a manager. Security guards will be made aware of any pertinent distribution schedules and confirm the credentials of the distribution driver upon arrival. No unscheduled or ad-hoc transports will occur. If the credentials are authenticated, the distribution driver will be met by a manager onsite where each item is immediately weighed and taken through quarantine and registration according to the tracking system in place. Any cannabis product taken for distribution will not enter any portion of the facility other than the secure distribution center. Goods will be received in the limited-access Distribution area. Distribution drivers will access the premises through the secure gate designated for such vehicles. DD559 will track the location and disposition of cannabis goods on the premises through several methods, including but not limited to: tracking the UIDs assigned to each batch/lot/unit; inventory software database, shipping manifests, chain of custody/records, and purchase orders. All movements of cannabis goods will be recorded in the inventory software database and documented using Shipping Manifests, chain of custody forms, and purchase invoices. All movements of cannabis goods will be transmitted to the Metrc within 24 hours of occurrence. DD559 procedures for tracking inventory are as follows: (a) Cannabis goods that enter the facility will be immediately be weighed and the UID information will be logged into the internal tracking software; (b) DD559 shall keep a record of the following information for all the cannabis goods received into inventory: (1) Name and type of the cannabis goods; (2) Unique identifier of the cannabis goods; (3) Amount of the cannabis goods, by weight or count; (4) Date and time of the activity or transaction; (5) Name and license number of other licensees involved in the activity or transaction; and (6) Where on the premises the cannabis product will be stored. (c) Each batch of cannabis goods will be placed in a separate and district opaque container and the container will be labeled with identifying information for that specific batch (See (b) above); Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-14 (d) DD559 shall keep a record of the following information relating to testing: (1) Date and time batch sampling took place; (2) Batch size that was tested; (3) Results of the tests and the respective Certificates of Analysis (“COA”); (4) Chain of Custody (“COC”) records; and (5) Where on the premises cannabis goods are located (i.e., in quarantine, ready to be packaged, etc). (e) When cannabis goods are removed from inventory, DD559 shall keep a shipping manifest and/or a record of sale, with the following information: (1) First name and employee number of the employee who processed the sale; (2) The licensed retailer name and license number; (3) The date and time of the purchase transaction; (4) A list of all cannabis goods purchased, including the quantity purchased; and (5) The Total amount paid for the sale including the individual prices paid for each cannabis good purchase and a breakdown of any amounts paid for taxes. (f) A record of the following information shall be entered into the inventory tracking software database in the event of destruction or disposal of cannabis goods: (1) The name of the employee performing the destruction or disposal; (2) The reason for destruction or disposal; and (3) The entity or company being used to collect and process the cannabis waste. (g) DD559 will maintain an accurate record of its inventory at all times. DD559 shall also perform inventory reconciliation at least once every thirty (30) days. The inventory tracking software will automatically transmit inventory data to Metrc by 11:59 p.m. Pacific Time on the day of entry of said data. Shipping/Transport Out DD559 will use paper hardcopy Shipping Manifests until we are able to implement Metrc facility-wide. The physical copies of the Shipping Manifests will be scanned and stored in a digital format. The Shipping Manifest shall include the following information: • Name, license number and license premise address of the originating licensee; • Name, license number and license premise address of DD559; • Name, license number, and licensed premise address of the destination licensee receiving the cannabis goods into inventory or storage; Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-15 • Date and time of departure from DD559 and approximate date and time of departure from each subsequent licensed premises; • Arrival date and estimated time of arrival at each licensed premises; • Name and type of cannabis goods; • Unique identifiers; • Amount of cannabis goods by weight or count and total wholesale sale cost of the cannabis goods; and • Date and time of the transportation. The Distribution Manager will supervise the preparation of cannabis goods for shipment by reviewing the purchase orders, retrieving the requested cannabis goods, reviewing the packaging and labeling for regulatory compliance and cross-referencing the corresponding COAs, preparing a shipping manifest, and documenting the removal of inventory into the inventory database software and Metrc system. The Distribution Manager will verify the contents of all shipments by cross-referencing any transfer records, shipping manifests, inspecting each unit or batch of the cannabis goods received, cross-referencing the unique identifiers, name and type of cannabis goods, and weight and/or number of units transferred. When distributing for other license holders, in addition to the foregoing, the Distribution Manager will review the shipping manifest and cross-reference the name and license number of the original producer (cultivator or manufacturer) with the respective licensing agency by utilizing the online license search. The distribution vehicle will be loaded with cannabis goods in the Distributor parking/loading area. The parking/loading area will be secured by a metal security gate, security personnel, and video surveillance cameras. The Distribution Manager, a distribution employee, and security personnel will supervise the loading of vehicles or trailers with cannabis goods. Another employee will monitor the video surveillance cameras while cannabis goods are being loaded into a vehicle or trailer. Cannabis goods will be transported inside a fully enclosed cage. The cage is welded within the frame of the vehicle. The cage will remain locked with a lock on it. DD559 will have a dedicated parking/loading area for distribution vehicles/trailers in the distribution premises. The Secured Vehicle Area will be secured by a metal gate that is controlled by security personnel. The parking lot will be under video surveillance which shall be closely monitored by the security personnel. The distribution employee transporting the cannabis goods will review the video surveillance footage of the parking lot for any suspicious activity prior to loading the vehicle. Security personnel will visually inspect the adjacent street for any suspicious activity or threats of theft and diversion. The distribution employee will transfer the cannabis goods into the enclosed cage in a dark/opaque and unmarked bag. The distribution employee will be accompanied by security personnel while loading the vehicle with cannabis goods and while transporting the goods. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-16 Storage. Storage controls as are necessary to minimize the potential for: the growth of microorganisms, contact with allergens, cross-contact with other products, contamination of cannabis products, and deterioration of cannabis products. Cannabis goods shall be separated by product type into different opaque bins/containers to prevent light penetration and to promote a longer shelf life. The cannabis goods in inventory shall be separated by batches, strains, producers and different units of weight if prepackaged (grams with grams; eighths with eighths, etc.). Cannabis goods will also be separated on different shelves based on their testing status:(i) pre-testing; (ii) post- testing and awaiting results; (iii) passed testing; (iv) quarantine; (v) waste. Cannabis flower products shall be kept separate from cannabis tinctures, cartridges, and concentrates. The temperature within the Distribution limited-access area shall always be maintained between 68 – 70 degrees Fahrenheit to prevent humidity. The ideal storage climate is controlled using HVAC and monitoring systems, including thermometer, and dehumidifiers. Humidity control will prevent cannabis from hydrating or dehydrating, causing weight and volume fluctuations, while potentially impacting both shelf-stability and the homogeneity of products. Management will perform regular audits to ensure that the vault area (Vault) has adequate ventilation and will coordinate maintenance of systems, as needed. Security. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-17 . 1.9. Daily Operations for Cultivation As noted above, DD559 places the highest emphasis on staff safety as well as product quality and security. Ours will be a non-public facility and no customers or unauthorized personnel will be onsite at any time. We outline our process to uphold standards specific to the cultivation processes below. 1.9.1 Criteria for Cultivation Operations Deliveries All cultivation inventory deliveries, including all seedlings and immature plants, will be scheduled in advance with a facility manager to be received in a defined delivery area on the premises. Security guards will be made aware of any pertinent delivery schedules and confirm the credentials of the delivery driver upon arrival. No unscheduled or ad-hoc deliveries of plants will occur. If the driver’s credentials are authenticated, the delivery driver will be met onsite by the facility manager on duty at a defined area where each item will be immediately weighed and taken through quarantine and registration according to METRC. Only a DD559 manager can sign off on the receipt of any delivery. Cultivation Inventory Management On a weekly basis, the Lead Cultivator or designee will conduct a comprehensive inventory of all plants in various stages within the cultivation/grow area. This will include seeds, immature seedlings, clones, vegetative plants, flowering plants, harvested plants, cured plants, etc. • Cultivation inventory will be broken down by room: o Propagation/Cloning and Seed Storage o Mother Room o Vegetation Room o Flowering Greenhouses o Cultivation Inventory o Soil Storage o Dry/Cure o Processing/Trimming Quality Assurance/Compliance Inventory Management On a weekly basis, the Quality Assurance/Compliance Manager or designee will be responsible for conducting a comprehensive inventory of the following areas: • Vault o Finished product ready for sale o In process product pending registration or final packaging o Quarantined products: returned product, defective products not suitable for sale, expired products, etc. o Retain and Stability products Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-18 • Components o Packaging materials o Labels • General facility supplies Tracking Gross Sales All financial records will be maintained in Quickbooks. Quickbooks is an industry leading business software that tracks inventory, gross sales, returns, and discounts. Established Security Policies and Procedures DD559 will ensure completeness and integrity of required documentation, required elements in manual and electronic forms of documentation (inventories, transport, cash handling), surveillance findings and actions, discrepancy investigations, and reports to relevant authorities. These documents will be readily retrievable. Regular Auditing of Processes and Transactions Security audits will occur quarterly when operations begin initially. Findings will be documented as Corrective Action and Preventive Actions (CAPAs) in the Quality Management System. Once the audit findings drop to an acceptable level with respect to CAPAs, audit frequencies can be annual. Planned Response to Suspected Diversion If diversion is suspected, the Security Manager will meet with the Committee to determine the course of action. A Diversion Prevention Report will be initiated that includes: 1) Diversion Prevention Report for any possible loss of any controlled substance. a) Surveillance will be reviewed and documented. Copies of video surveillance, photos, and access-control incidents will be saved electronically in a secure format. b) Inventory verification will occur – physically and in the electronic and manual systems. c) Employees may be interviewed. d) All activities associated with response will be documented in detail in the report including quantities of potential loss. 2) If diversion is confirmed, the Security Manager will immediately notify local law enforcement and appropriate authorities. Employee Screening Potential employees will be vetted (background checks and/or Livescan) to the satisfaction of the City of Fresno Chief of Police and in compliance City Ordinance. An agreed upon third party will perform the check and results will be shared with the City and the Police Chief and DD559 as well as with any consultant the City engages to assist with background check reviews. Once the Police Department approves the potential employee, we will proceed with the interview and hiring process. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-19 Identification Each person on the premises shall wear his or her personal identification card at a prominent and readily-visible location on the outermost garment and approximately chest- high. Such identification card shall at all times be in good and readable condition. Age of Personnel At no time will anyone under the age of 21 be employed by the business. The DD559 facility and operation will not be open to the public, we will not have to conduct medical recommendation verification, and youth will not be allowed on site. The doors will remain locked during business hours with only authorized personnel allowed inside the premises. This will ensure that youth may not access the facility. Employee Records DD559 will maintain on-site a current register of all the employees currently employed and shall produce such register to the City Manager or his/her designee or any other City of Fresno official authorized to enforce the Fresno City Code for purposes of determining compliance. In the event a person changes employment from one commercial cannabis business within the city to another, DD559 shall notify the City Manager or his/her designee in writing of the change of employment within ten (10) days of such change or the work permit shall be suspended or revoked and such person shall not be permitted to work within any commercial cannabis business within the city. All staff will undergo initial and ongoing training according to our SOPs and as defined herein. Training will also include secure facility protocols to ensure against theft and diversion and be documented in the employee file. Onsite Consumption Prohibited Cannabis shall not be consumed on the premises. Loitering Loitering by persons outside the facility both on the premises and within fifty (50) feet of the premises is prohibited. Cultivation Space While most businesses in any industry try to keep startup costs as low as possible, that isn’t necessarily the best way to proceed when opening a grow. Creating a cost-efficient cultivation site often involves investing in technology and processes that may result in a big near-term hit. Yields and quality of plants grown under artificial lights mostly depend on: • the clone variety, • source of clones, • after how many days of growing the plants are put into flowering, and • the optimization of the climatic conditions of the grow-room. Warehouse Design Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-20 1. A warehouse environment provides with maximum control, and therefore the most reliable consistent cannabis crops can be produced in a properly designed warehouse grow room. 2. Without natural light, warehouse grow rooms depend on intelligent grow lights which need to replicate the parts of the sunlight spectrum that the marijuana plants need at each stage of growth. Lighting is a key component in an integrated system. 3. Air filtration and circulation systems are essential for controlling heat buildup, and eliminating exhaust odors. It is critical that the air circulation in a marijuana warehouse is designed in conjunction with the grow lights because lighting systems emit large amounts of heat. 4. There are various irrigation systems for growing cannabis appropriate for growing in a warehouse: including drip irrigation, hydroponic flood benches, or trough benches. 5. The irrigation system should be designed in conjunction with a nutrient management system for maximizing the production yield of the cannabis plants. 6. Environmental computer. The computer control systems for a cannabis warehouse control and monitor all the nutrients, lights, air circulation, and irrigation needs of the plants 7. De-humidification to optimize growing environment. 8. Computer controlled CO2 injection and monitoring. DD559 will use rolling benches / growing tables which are highly recommended for any commercial cannabis grow operation. They provide up to 50% more plant space by eliminating the need for a dedicated aisle. With a crop as valuable as marijuana, this directly equates to much higher profits and maximum space efficiency. Main features: • Aluminum extruded sides and ends • Miter cut corners • Hot dipped galvanized steel stands • Aluminum cross members • Snap together fittings • Threaded rods for adjustment up to 12" • Top quality plastic or aluminum flood trays • 13 gauge expanded metal bench tops • 2" diameter rolling tubes The cultivation for flowering plants will be located within two warehouse buildings to be built on the corner property. Parcel “A” is 0.48 acre with a 10,751 square foot building Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-21 and Parcel “B” is 0.55 acre with a 12,886 square foot building proposed. With row spacing, mother room, clone room, office space, distribution space, and processing rooms, it is anticipated Building “A” will accommodate 7,000 square feet and Building “B” will accommodate 10,250 square feet of licensed cultivation canopy. Our cultivation & processing area will include: • Mother Room & Cloning • Vegetative Growth Rooms • Flower Stations • Drying & Trim Rooms • Curing Room • Packaging & Storage Room Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-25 Yields and quality of plants mostly depend on: • The seed variety • The microbiology of the soil • Optimization of the climatic conditions, and • Timely inputs Our company will grow from seeds/clones of the following strains (among others): • Proxima OG (THC) • Honey Trees (THC) • Gas Valley OG (THC) • MEOW (THC) • Amaretto (CBD:THC) • Mimosa (THC) • Kobe (THC: THCA) • Slugger (THCA) • Blissful Wizard (THC:CBD) • Blue Bacio Gelato (THC: CBG) • Fred's Haze (CBD:THC) Phases of Production Germination of seeds, gendering plants, male/female, or feminized plants (10 weeks) • 1st stage: taking and rooting clones (2 weeks) • 2nd stage: clone/vegetation (1 week) • 3rd stage: vegetation (2 weeks) • 4th stage: flowering (8 weeks) • 5th stage: processing/trimming (3 days) • 6th stage: drying and curing (11 days) • Total elapsed time: approximately 15 weeks Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-26 DD559 will have the ability to vegetate plants and flowers concurrently, will grow up to 11 different strains of cannabis, and will have the ability to grow from seedling to finished product. DD559 intends to also grow additional exclusively created strains that other growers do not have. Estimate Pounds per Harvest Each building within the cultivation premises will be permitted up to 6,200. and 7,400 square feet of canopy and will be adequate to house and grow up to 9,000 plants each for a total of 18,000 plants. Once the mother plants are producing and the clone plant facility is fully operational, it is feasible that a harvest of 936 pounds of cannabis can be produced 3-5 times per year. Cultivation Style Our unique style entails the use of veganic inputs into the soil by properly fermenting fruits and plants to help promote healthier, tastier, and more potent flowers. Taking a page out of the wine industry book, and with ethical testing on terpenes, we now know cannabis flowers contain brix levels, or sugar content. Timely adding ferments while using the mycelium web gives the microbiology complete control of the overall health of the plants, thus, reducing chances of any molds, mildews, and pesticides. Our efficient design will consist of an environmental controller that controls all fans, shutters, and pumps. Our unique and efficient design is designated for one concept in particular, and that’s to establish perpetual harvests, every month. Quality and consistency is the core value in establishing the bridge between our distribution partners. With full automation and environmental control, we give ourselves the best opportunity to successfully harvest top quality cannabis at the most competitive price. The project will utilize mixed light within a warehouse design. A warehouse environment provides with maximum control, and therefore the most reliable consistent cannabis crops Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-27 can be processed in a properly designed warehouse. Air filtration and circulation systems are essential for controlling heat buildup and eliminating exhaust odors. It is critical that the air circulation in a cannabis warehouse is designed in conjunction with the surrounding elements. De-humidification will be used to optimize drying environment along with proper medical grade equipment to reduce chances any spores or pathogens to enter the facility. Cultivation Grow Cycles From a high-level perspective, cannabis plants undergo two distinct phases of growth: vegetative and flowering phases. The cultivation environment will obtain inventory from the nursery environment following the Stage 1 vegetative growth. Refer to Exhibit 11, Cultivation Lifecycle. During each phase of growth, all activities related to a batch of plants will be tracked in a lot-specific batch record. Plant Phases of Growth Stage 2 Veg The plants are placed in their final medium and containers that they will stay in throughout the flowering and harvest. The plants are allowed to continue gaining mass until they are of the desired size and structure, based on the cultivar being grown, prior to having the lighting cycles changed to 12-hours in order to induce flowering. Flowering The flowering stage of growth is the gametophytic or reproductive state of cannabis. For production, only female plants are selected for cultivation. Flowering occurs mainly in four (4) stages: Transitional, Early, Middle, and Late phases. Transitional - The Transitional flowering phase facilitates the acclimation and inoculation of vegetative plants. Early Flowering - Early flowering phase is differentiated by the formation of flower heads on racemes and a large separation existing between nodes. Middle Flowering - During the Middle flowering phase, individual racemes begin to connect, forming larger flowers while the pistil and trichomes begin to mature. Mother Plant donates cuttings. Cuttings develop roots in an aeroponic cloning machine over a period of 2 weeks. Vegetative Phase 1 The rooted cuttings are transplanted into a 3 gallon pot for 4 to 6 weeks. Vegetative Phase 2 Plants transplanted from 3 gallong to 10 gallon pot for 7 days. Flowering Phase Plants will flower from 56 to 70 days depending on the strain. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-28 Late Flowering - Finally, Late flower brings the final flower maturation: calyxes and trichomes ripen, all the racemes are connected and flowers become more dense and heavy in weight. Harvest - When the plants are at their target ripeness (based on terpene content, cannabinoid content, etc.) they are cut at the base of the stem and either have the flower material and foliage immediately removed and prepared for freezing, or taken to the drying environment and taken through the dry/cure procedures according to the documented SOPs. Cultivation Irrigation Plan Water usage in the cultivation environment may leverage the use of reverse-osmosis filtration. The organic environment is irrigated by hand using a cycled regimen of nutrient and microbe rich compost teas and pure mineralized water. The hydroponic environment uses a deep-water-culture system in which a large reservoir of nutrient and oxygen rich water is continuously circulated throughout a network of plant growing sites. In both cases the wastewater from the system itself is minimized as the water is reused or only mixed according to the feeding schedule at hand. The largest amount of water waste would come from the reverse osmosis purification system that has a 1:1 ratio of wastewater to clean. Cultivation Waste Products (type, amount), Handling Chemicals used in the cultivation process will be handled according to OSHA standards and referenced via the MSDS. Chemicals used in the cultivation process will be disposed of according to appropriate regulatory controls.   Cannabis waste in various forms will be stored, secured, locked, managed and disposed of in accordance with state and local regulations. Controlled waste practices will be under the direct supervision of the Security Manager. The Security Manager will have direct control over all waste receptacles. The Security Director will achieve this by placing locks on all exterior dumpsters and waste containers. Acceptable forms of destruction shall render cannabis products to a non-retrievable state in avoidance of diversion and illegal purposes. The following forms of cannabis can be disposed of through acceptable forms of destruction: • Plant waste: stems, stalks, leaves, inflorescence DD559 shall use one or more of the following forms of disposal: • Grinding and Composting • Incineration • Cultivation Release into City Sanitary Sewer The wastewater from the reverse-osmosis system is released into the sewer and the limited amount of isopropyl alcohol is released into the sewer according to city ordinance. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-29 Safety Considerations and Mitigation for Cultivation Operations DD559 takes the safety of our employees, partners and consumers very seriously. There are comprehensive SOPs in place for every phase of the cultivation process and policies for safety and sanitation within the environments. All employees are trained on these SOPs and relevant MSDS information during initial orientation as well as annually as part of the Quality Management System in place. All employees wear personal protective equipment (“PPE”) when in any cultivation environment to minimize exposure to the plants and minimize contamination of the plants by foreign objects, pests, or disease. PPE refers to protective clothing, gloves or equipment designed to protect the wearer’s body from injury or infection. Furthermore, pursuant to the California Occupational Safety and Health Act of 1973 and Title 8 of the California Code of Regulations, DD559 will implement the following policies and procedures to ensure Employee Safety and Hygiene compliance: • Establish, implement and maintain a written Injury and Illness Prevention Program (IIPP) and update as necessary with advance written notice of all changes to employees • Implement employee orientation and training programs with applicable workplace safety and health training programs; • Employees shall at all times wear appropriate clothing - including gloves, footwear, and PPE; • Inspect workplace(s) to identify and correct unsafe and hazardous conditions; • Make sure employees have and use safe and tools, equipment, and machinery, as well as properly maintain such tools, equipment and machinery; • Provide and pay for personal protective equipment; • Use color codes, posters, labels or signs to warn employees of potential hazards; • Establish and update, as necessary, any and all operating procedures and provide training, education and workshops, as necessary to ensure employees follow these safety and health requirements; • Provide medical examinations and training when required by Cal/OSHA standards; • Immediately report any work-related death or serious injury or accident; • Keep records of work-related injuries and illnesses on the log 300, transfer the totals to the log 300A, and post the log 300A from February 1 through April 30 of the following year; and • Post, at a prominent location within the workplace, the Cal/OSHA poster informing employees of their rights and responsibilities. Testing Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-30 Whenever possible, DD559 will purchase lot-traceable materials for all inputs to any products – this is true for all soil and fertilizers in the cultivation environment. Documents such as Certificates of Conformance or Compliance that are received from suppliers in support of the purchase good’s quality, composition, and purity will be tracked and filed by the quality assurance representative according to DD559’s record retention policy. All cannabis moved through the supply chain will be tested at multiple checkpoints throughout the process: Cultivation – License Type 3A a. DD559 only leverages plant stock from our onsite propagation to ensure consistency and preservation of the target genetic profiles (chemotypes and phenotypes). b. Product is tested using 3rd party licensed laboratory analytical capabilities upon harvest and following dry/cure procedures. These test results are tracked according to date, batch, cultivar and filed by the quality assurance representative according to DD559’s record retention policy. Enhanced Product Safety All products will undergo state-mandated Quality Assurance Testing prior to the sale at a retail location. DD559 will utilize the Metrc program in order to report the movement of cannabis and cannabis products throughout the distribution chain. Products shall be labeled and placed in a resealable, tamper-evident, child-resistant package and shall include a unique identifier for the purposes of identifying and tracking cannabis and cannabis products. All packages and labels shall not be made attractive to children. Products will also be packaged and labeled in accordance with all regulatory requirements outlined in the Emergency Regulations published by the Bureau of Cannabis Control, Department of Agriculture’s CalCannabis Division, and the Department of Public Health’s Manufactured Cannabis Safety Branch. Any product complaints shall be logged and reported in accordance with the state- mandated Metrc program which shall ensure proper movement of the product through the distribution chain. Any such complaints shall be logged and reported in the system thereby notifying proper state and local authorities of any product issue/s. If at any time the Metrc system is interrupted or inaccessible, a physical comprehensive record shall be maintained in accordance with applicable state reporting requirements. Product complaints will be properly investigated by our team and shall be reported as necessary to the proper state and local authorities. Moreover, a written record of the complaint and where applicable its investigation will be kept by the team, including: the identity of the product or products complained of; batch, lot or other control number of the product; date the complaint was received and the name, address, or telephone number of the complainant, if available; nature of the complaint including, how the product was used; name of the team members who handle the complaint and following steps, if necessary; findings of the investigation and follow-up action taken when an investigation is performed; and response to the complaint, if applicable. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-31 Any cannabis or cannabis products which fall outside of compliance shall be properly destroyed in accordance with state law and regulations relating to the disposal of cannabis waste. Odor Control The facility will be equipped with odor control devices and techniques including sufficient odor absorbing ventilation, an exhaust filtration system, and a negative air-pressure system so that odor generated inside the facility that is distinctive to its operation is not detected outside of the facility, anywhere on adjacent property or public rights-of-way, on or about the exterior or interior, or within any other unit located inside the same building as the commercial cannabis business. DD559 will maintain the following equipment, as determined necessary: 1) An exhaust air filtration system with odor control that prevents internal odors from being emitted externally; 2) An air system that creates negative air pressure between the interior and exterior building area so that the odors generated inside the commercial cannabis business are not detectable on the outside of the building. 3) All ventilation from cultivation will pass through a series of HEPA, charcoal and Syneco filtration or similar systems. The ventilation is used primarily for scrubbing of any odors generated from the cultivation environments. These airflow systems work in conjunction with our climate control systems and abide by ISO 7 and 8 regulations. The hoods used for preparation will feature industrial odor control filtration system from Synecosystems.com or similar 4) HEPA stands for High-Efficiency Particulate Arresting Filter. HEPA is a certification standard that means the filter meets criteria for filtering at least 99.97% particles of 0.3 microns in size and other criteria set by the US Department of Energy. These filters are industry standard in medical and quality industrial sites. HEPA filtration is mandatory to abide by pharmaceutical ISO 7/8 standards. Nursery & Cultivation Odor Control Each room where plants are cultivated shall be equipped with 2 Phoenix Guardian HEPA Air Scrubbers - #PH-GHS2-EA that provide the following specifications: • < 1,400 CFM • 4 stage filtrations • 110-120 VAC 12 Amp • Stainless steel housing • 4th stage is carbon Where odors are significant, a 2nd tier odor mitigation system from Syneco Systems will be implemented in the exhaust path. The 1,400 CFM capacity of the Phoenix Guardian HEPA Air Scrubber System allows it to completely change the air in a 14' x 14' room in four minutes. To be this effective, air Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-32 scrubbers must perform a minimum of four air changes per hour. This allows a single Guardian to control up to 21,000 cubic feet of air volume in room. The Guardian Air Scrubber offers high airflow and multiple ducting options, achieving a combination of negative or positive airflow control and containment air scrubbing. This gives the unit the unique ability to continually filter indoor air while depressurizing a damaged site. The result is that the spread of contamination is almost non-existent. The intake accepts either 18" flex-duct or 12" flex-duct with an adapter (included) to contain contamination or draw contaminated air from hard-to-reach places not usually accessible to air scrubbers. Every Guardian HEPA System comes with a 14-inch, lay-flat duct ring, offering 100% negative air operation, and two 10-inch lay-flat duct rings for a combination of negative air, air scrubbing, or positive airflow results. Distribution and Transport Odor Control Our distribution and transportation functions should not incur any odor that will not be managed utilizing the overall facility’s odor control and ventilation system. Waste Management Cannabis waste will be stored, secured, locked, managed and disposed of in accordance with the requirements of the City of Fresno, the Fresno County Solid Waste Authority, and the State of California. Waste that is stored for any amount of time will be secured separately on the premises from any other operations. Controlled waste practices will be under the direct supervision of the Security Manager. We will have locks on all exterior dumpsters and waste containers. Acceptable forms of destruction shall render any cannabis waste products to a non-retrievable state to prevent diversion and to discourage any perception that useable cannabis product is leaving the facility. The following types of cannabis waste will be disposed of from our facility through acceptable forms of destruction that make them irrecoverable: • Plant waste: roots, stems, stalks, fan leaves, inflorescence • Finished products: in bulk form or in packaged form • Quarantine/returned products DD559 will sort the waste into the above categories and use one or more of the following forms of disposal: • Incineration • Grinding and Composting • Standard Refuse and Recycling Services Incineration Waste intended for incineration or destruction through a third party will be logged, stored, and maintained in a secure area. Products for destruction by third party incineration are logged out of the facility as waste. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-33 Products deemed inorganic and unable to undergo decomposition, such as products irretrievable from their packaging, are suitable for incineration. This also includes quarantined products returned from dispensaries, expired products irretrievable from their packaging containers, or products with cannabinoid concentrations exceeding or meeting the defined limit that cannot be reworked. Grinding and Composting Organic cannabis waste intended for grinding and composting shall be placed into an industrial grinder or chipper (if necessary). From there, the material will be placed into a secured and controlled container with a layer of manure, wood chips and/or paper and thoroughly mixed to render it irrecoverable for theft, loss, and diversion. This container will be locked and under the direct supervision of the Security Manager. The Security Manager will escort employees to the container and unlock it to allow access. Not all organic waste will need to pass through an industrial grinder or chipper prior to being composted. Only organic materials capable of decomposition shall be placed into the compost container. This includes, but is not limited to the following: • Plant Material (plants at any stage, roots, stems, stalks). • Immediately after harvest, roots, stems, and stalks will be transferred to the Waste Management Area located in the Secured Storage area. The area will be fenced, locked, and access controlled. Note: The Waste Management area will be located with a limited access area for an added measure of security. • For processing, the material will be transferred to a grinder/chipper located within the Waste Disposal area and ground with leaves, manure, and other approved compostable material leaving the resulting mixture at least 50% non- cannabis waste by volume. • Leaf and trim material. • Leaf clippings and trim material will be stored in a secure location to later be used in the extraction process. • The material will be tracked using the electronic tracking system. • When a sufficient quantity of the leaf and trim material is collected, a homogenous sample will be submitted to the contract laboratory for analysis. • Once the cannabinoid profile is identified, a determination will be made to use the leaf and trim material for extraction, or to compost it as described above under plant material. • Finished products independent from inorganic packaging. • Product that has been rendered unsellable or unable to be reworked. • Products could include leaf and trim material or inflorescence material. • Plants in various stages (clone, vegetative, and flowering states) may have to be destroyed for various reasons such as disease or environmental factors. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-34 DD559 will use an electric chipper such as the EcoShredder™ to pulverize and compact plant waste intended for composting: • The EcoShredder™ Electric Waste Chipper is capable of chipping, shredding, and mulching plant material. • It is compact and portable and it is convenient for use in different areas of the building. • This machine is capable of pulverizing plant material into compact/convenient consistency suitable for composting. By reducing the size of the starting material for compost, more material can be added to the compost container for disposal. DD559 will contract with a local farm to handle compost waste. • After each harvest, remnants of plants will be cut or pulled from the pots of soil. • The pots of soil will be loaded outside the corresponding greenhouse. • The contract farm will be notified and they will pick them up to be transported to the farm. • The soil will be applied to a designated compost pile for future use. • The pots will be returned to DD559 for sanitation and reprocessing. • The farm will also provide manure to mix the compost material to aid in rendering waste irrecoverable. Non-Cannabis Waste Non-cannabis waste will be placed into opaque trash bags for visual verification of contents prior to disposal. All dumpsters and trash receptacles will be controlled and monitored by the Security Manager. • This will include waste such as gloves, paper towels, and other disposable items that do not contain medical cannabis products or byproducts. • The opaque trash bags will further enable the security department to prevent theft, loss and diversion by being able to visually inspect waste prior to being placed in a dumpster. • Dumpsters will be locked and controlled by the Security Manager. Summary of Waste Disposal Given the size and breadth of our operation we estimate the types, volumes, and methods outlined below will be used. The EcoShredder Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-35 Product Weekly Volume Method of Disposal Plants at any growth stage (immature, vegetative, flowering, etc.) 1-3lbs of plant material. Industrial Grinder/Chipper & Compost Container mixed thoroughly with manure or other compostable material Stems, stalks, fan leaves, sugar leaves, seeds 500 plant stems/root mass. 10lbs of leaf material. Industrial Grinder/Chipper & Compost Container mixed thoroughly with manure Products returned by dispensaries (finished products) Minimal Incineration Unpackaged Quarantined Products (finished, expired, or in process products) Minimal Compost Packaged Quarantine Products (finished, expired, or in process products) Minimal Incineration Department Controlled/General Waste Generated Grow/Cultivation • Remnants of harvested plants: stems, stalks, leaves • Plants to be destroyed at any growth stage for various reasons (disease, poor growth, etc.) • Seeds Packaging • Stems from cleaned flower • Defective finished products Vault • Expired products • Quarantined products • Returned products Facility • General waste • Paper materials • Gloves, shoe covers, hair nets, etc. • Consumables Use of Gases in Cultivation Operation No volatile gases will be utilized in the cultivation operation. DD559 leverages both organic and hydroponic cultivation methodologies depending on environment and cultivar and follow a strictly organic pest/disease management regimen. All organic inputs Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-36 additives and chemicals used in the cultivation process are certified by one or more of the following governing bodies – CDFA, OMRI, WSDA and DD559 maintains all pesticide and fungicide controls as aligned with California regulations and controls published for use on regulated cannabis crops. All nutrients, fertilizers and soil inputs are stored in the locked storage area and include the following: Organic Cultivation  Dry Fertilizers & Amendments – 4 x 30lb bags onsite at any time. Primary vendors are Vital Gardening Supply, Malibu Compost, and Build-a-Soil • Peat potting soil base • Compost • Worm Castings • Seabird Guano • Rock Dusts • Perlite • Alfalfa • Oyster Shell • Bone Meal • Greensand • Neem Cake • Insect Frass • Kelp Meal • Fish amino powder  Liquid Fertilizers • Fish Hydrolysate • Calcium / Magnesium Supplement • Liquid Guano • Yucca Extract  Hydroponic Cultivation • Cultured Solutions Nutrient Suite – Between 10-30 gallons onsite at any given time. • Roots • Veg A&B • Bloom A&B • Bud Booster  Integrated Pest Management – between 5-20 gallons onsite of each product at any given time. • Neemix – Organic certified Certis neem oil product for insect and fungal control • PFR97 – Organic certified Certis biological insecticide product • Silicic Acid – OSA28 product to prevent fungal disease • Stylet Oil – Organic certified Mineral oil product for insect and fungal control Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 1-37 • Procidic – Organic certified Citric acid based product for fungal and disease control (listed for cannabis crop usage)  General Cleaning – up to 5 gallons of each onsite at any time. • Isopropyl Alcohol • Physan20 • Hydrogen Peroxide -End of Section 1- Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 2-1 SECTION 2. SOCIAL POLICY AND LOCAL ENTERPRISE PLAN 2.1 Living Wage Commitment DD559 is committed to offering their employees a Living Wage. As good moral stewards and as part of our commitment to creating a business model where our employees are treated like family, it is crucial that all employees are taken care of first through fair compensation. According to a recent study by the Public Policy Institute of California, while Federal poverty statistics consider a living wage of $ is required to support a family of four, that does not take in key family needs and resources specific to California. When factors such as cost of living and safety net benefits are considered, a family of four requires an annual income of $ on average. In 2018 (the most recent data available), more than a third of California residents were poor or near poor, with the official poverty rate in Fresno County at 17.7%, or 0.1 percentage rate higher than the official overall state designation. (SOURCE: Just the Facts: Poverty in California (ppic.org)). All employees will be paid above the State of California’s minimum wage (currently) per hour. Our average hourly rate will be per hour plus benefits and quarterly revenue sharing. The Security Manager will be paid a minimum of $ per hour plus quarterly revenue sharing. Below is an outline of the minimum wages that will be paid to employees working for DD559. Position Rate Lead Cultivator (1) Security (1) Security Manager (1) Cultivator (7) Distribution Manager (1) Distributer/Driver (1) Average 2.2 Employee Benefits Employee benefits will be provided in the form of a direct benefit package for individual or family health care, in addition to quarterly revenue sharing. In addition to annual wage increases according to living wage requirements, we will also offer annual employee reviews where increases to compensation will be awarded based on employee performance. DD559 is committed to making all employees shareholders. We will do this by creating quarterly projections and offering from 20% of the excess profits to be divided amongst the full and part-time employees on a quarterly payout. By doing this, all employees have the chance to earn bonuses with the profitability of the company. By combining the Employee Revenue Sharing and a Fresno Hiring Preference, this will infuse extra income for employees, and drive community/company engagement. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 2-2 2.3 Continuing Education and Employee Training The organization invests in the professional development and education of its personnel to uphold a standard of excellence in our cultivation and distribution operation. The organization will require all employees to participate in the assigned education and training programs. Any employees that fail to pass the education and testing requirements may experience disciplinary action and/or termination. All employees will go through a comprehensive training. The program incorporates State of California requirements and regulations including background checks, as well as new- hire training and continuing education protocol. The training program will include the following: Procedure Description Legal We will distribute a worksheet regarding the state of the law as well as include a section in our manual and SOP’s addressing the law, compliance, and law enforcement interaction. Distribution and Storage This will outline the procedures regarding how materials will be received, handled, and stored safely. Cultivation This will include training from our lead cultivation staff on proper plant care, handling, fertilization techniques, trouble shooting, water system management, and all aspects to produce a high-level product ready for the marketplace. Inventory Control Plan Will spell out how DD559 will address inventory and includes protocols to ensure operational consistency and proper compliance with the State of California. Emergency Procedures Will provide the specific protocols in case of medical, police or other emergencies to ensure rapid response involving the appropriate personnel and/or outside authorities. Security Patient, worker, and neighborhood security are our highest priority. As discussed more fully in our Security Plan, we institute state-of-the-art security procedures to take advantage of the security industry’s best practices and most up-to-date technology. This will ensure that our facility operates at the highest level of legal compliance and security preparedness. Legal We will distribute a worksheet regarding the state of the law as well as include a section in our manual and SOP’s Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 2-3 addressing the law, compliance, and law enforcement interaction. 2.4 Social Policy Recruitment Plan DD559 will actively recruit individuals who meet the criteria listed in the Social Policy Section 9-3316 (b) (1) of the Fresno Municipal Code (FMC) to meet or exceed the required 33.3% of local employees it hires. DD559 is also committed to recruiting from low income neighborhoods within the City of Fresno. In our local philanthropic work with agencies such as St. Jude’s, CASA, Habitat for Humanity, The Candie’s Foundation and others, we have witnessed firsthand how without proper support how a single adverse situation such as living in poverty, a criminal conviction, or growing up in foster care can easily derail an otherwise successful life path. We will utilize our existing connections with local philanthropic institutions to actively recruit Fresno citizens who meet the listed qualifications and will be proud to bring them into the DD559 family in order to contribute to their success within our company and beyond. 2.5 Local Management Enterprise Plan DD559 is committed to engage in professional recruiting practices to hire the most qualified candidates. Additionally, an active effort will be made to recruit a diverse workforce from within the City of Fresno and nearby communities. We will do this through outreach to our many local business and philanthropic organization connections as well as local job fairs and other recruiting events. Our employees will be well paid, well qualified, and well-trained personnel. All employees will be fingerprinted and have successfully passed a criminal background screening. All staff will be required to wear photo identification at all times while on the premises. Employees will be provided with precise definition of responsibilities, clearly understood chains of authority and thorough training. Our staff will be expected to uphold DD559’s professional brand image. 2.6 Employee Structure DD559 is a collective group dedicated to principals of health and wellness and includes some of the most intricate styles and techniques to cultivation and marketing. Having a qualified foundational staff regarding the strict rules and regulations governing the cannabis industry of which cultivation falls under is the first step to even considering an opportunity in this booming industry. We hope, with everyone involved, to leverage our expertise in cultivation, financing, and marketing to build our business brand to be one of the most well-known cannabis companies in the United States. We anticipate our business to operate with 9-12 key staff, including our CEO and CFO. Our Operations Manager will be onsite at all times during business hours, providing the Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 2-4 team with a solid leader well versed in all aspects of cultivating mixed-light cannabis within a safe and secure facility with every attention to worker safety and well-being at all times. Our Master Cultivator and Distribution Representative will report directly to the Operations Manager and will be responsible to ensure our Cultivators, Propagation Specialist and Trimming/Packaging teams are on track and operating in strict accordance with all safety and cannabis-specific track and trace protocols. Please see organization chart below. 2.7 Labor Peace Agreement DD559 intends to employ more than five (5) employees and will provide all hired employees proof of a signed labor peace agreement that would allow employees to unionize within the industry without interference. 2.8 Workforce Plan Our workforce plan is focused on maximizing the benefit that DD559 can bring to the City of Fresno. 2.8.1 At least 30% of our employees will be local hires. As our management structure is comprised of locals within the larger community of the Fresno area, we are well suited to conduct outreach for employees that are interested in being a part of a truly locally run business. 2.8.2 As part of our workforce plan, we intend to offer on the job training to benefit our employees so that they will be able to learn the industry beyond their stated job description and apply those skills beyond our operation. Our entry-level cultivation staff will learn the science behind cannabis cultivation and come to understand the vital importance of plant health, care, and Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 2-5 maintenance from seed to harvest. For staff showing interest and aptitude, DD559 will foster an apprenticeship program and assist employees in pursuit of career advancement opportunities. In addition, as our operational structure includes business connections with every aspect of this business, we will endeavor to create a transfer apprenticeship program where our cultivator may do an internship at a dispensary, outdoor farm, or manufacturing facility in order to receive cross-training and gain valuable training on other aspects of the business. 2.8.3 As stated above in Section 2.1, DD559 is committed to providing a living wage to all staff. 2.9 Social Equity Business Support DD559 is well-suited to serve as a Social Equity Business Incubator for local cannabis social equity businesses. Our management team prides themselves on the mentorship they have exhibited in the community at large, and will bring that positive leadership to the Fresno cannabis industry as well. As successful cultivators and our team’s business acumen, we can offer support in the form of mentorship programs or apprenticeships to assist social equity businesses in successful start-up of their cultivation business. If possible, once established we will also work to provide our purchase power benefits to our local social equity business partners. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 3-1 SECTION 3. NEIGHBORHOOD COMPATIBILITY PLAN DD559 will provide an appealing addition to the Sarah Street and Braly Avenue corner, by maintaining excellent relationships with the community and will organize the daily functions to minimize impacts on the neighborhood. 3.1. Complaint Response Plan DD559 will implement an active neighborhood outreach plan including providing all property owners and tenants within a 500’ radius access to our site manager’s contact information so that concerns can be immediately addressed. In the event of a complaint, our site manager will continue dialog with the affected neighbor to ensure full transparency with our internal processes to address concerns and come to a solution. With the high level of security necessary for operations of this kind, we intend that our presence in the neighborhood will be of benefit to our neighbors by providing more consistent human presence in the area. The facility is not anticipated to create any nuisance related to noise as the internal odor control devices operate within applicable noise limits and the site is located within a primarily industrial area. The facility is a fully indoor operation that will not emit any lighting from the grow environments to the outdoors. All security lighting will be downcast so as to not spill onto adjacent properties or cause a nuisance. Our highly developed odor control plan and mitigation devices are intended to prevent cannabis odors from escaping offsite, but in the event that there is a nuisance odor, our site manager will be proactive in identifying system failures and implementing solutions with utmost speed. The fully fenced and secure site will not be a source of litter, and our staff will also ensure that the frontages of the property remain in good condition and free of litter. Our waste management protocols are strict and do not allow for the presence of any litter or visible waste on the premises at any time. Vehicular traffic will be limited to our staff who will all park on the premises within the securely fenced area, and distribution vehicles to facilitate deliveries to and from the site. In the event a traffic safety concern is identified, our staff will make necessary accommodations to ensure our operation is not negatively affecting the neighborhood or causing an undue safety concern. The facility is a non-public and fully secured property with no pedestrian traffic anticipated other than our staff either in transport to/from work or on breaks. 3.2. Neighborhood Nuisance Avoidance Plan DD559 will establish a state of the art facility to increase the aesthetics of the currently Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 3-2 vacant street corner and provide a positive addition to the neighborhood. The goal is to provide a new and secure facility yet not draw unneeded attention to the proposed site. There will be no signage that will contain any logos or information that identifies, advertises, or lists the type of business operated within. Onsite Consumption Prohibited. Cannabis shall not be consumed on the premises. Loitering. Loitering by persons outside the facility both on the premises and within fifty (50) feet of the premises is prohibited. Distribution Receiving/Processing. All distribution inventory operations are scheduled in advance with a manager and can only be signed off by a manager. Security guards are made aware of any pertinent distribution schedules and confirm the credentials of the driver upon arrival. No unscheduled or ad-hoc activities will occur. If the credentials are authenticated, the distribution transport driver is met by a manager onsite where each item is immediately weighed and taken through quarantine and registration according to the tracking system in place. Any cannabis product taken for distribution will not enter any portion of the facility other than the secure distribution center. Goods will be received in the limited-access Distribution area. Distribution drivers arrive to the premises through the secure gate designated for such vehicles. Cultivation Receiving/Processing. All cultivation inventory supply deliveries are scheduled in advance with a manager. Security guards are made aware of any pertinent schedules and confirm the credentials of the supplier upon arrival. No unscheduled or ad-hoc operations will occur. If the credentials are authenticated, the supplier is met by a manager onsite where each item is immediately weighed and taken through quarantine and registration according to the tracking system in place. Only a DD559 manager can sign off on supplies received. Distribution Transportation. The Distribution Manager will supervise the preparation of cannabis goods for shipment by reviewing the purchase orders, retrieving the requested cannabis goods, reviewing the packaging and labeling for regulatory compliance and cross-referencing the corresponding COAs, preparing a shipping manifest, and documenting the removal of inventory into the inventory database software and track- and-trace system. The purchase order, cannabis goods, COAs and shipping manifest will be cross-referenced prior to shipment. The distribution vehicle will be loaded with cannabis goods within the secure Distributor parking/loading area. The parking/loading area is secured by a metal security gate, security personnel, and video surveillance cameras. The Distribution Manager, a distribution employee, and security personnel will supervise the loading of vehicles or trailers with cannabis goods. Video surveillance cameras will be reviewed while cannabis goods are being loaded into a vehicle or trailer. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 3-3 Cannabis goods will be transported inside a fully enclosed cage. The cage is welded within the frame of the vehicle. The cage remains locked with a lock on it. DD559 has a dedicated parking/loading area for distribution vehicles/trailers in the distribution premises. The Secured Vehicle Area is secured by a metal gate that is controlled by security personnel. The parking lot is under video surveillance which is closely monitored by the security personnel. The distribution employee transporting the cannabis goods will review the video surveillance footage of the parking lot for any suspicious activity prior to loading the vehicle. A security personnel will visually inspect the adjacent street for any suspicious activity or threats of theft and diversion. The distribution employee will transfer the cannabis goods into the enclosed cage in a dark and unmarked bag. The distribution employee will be accompanied by security personnel while loading the vehicle with cannabis goods and while transporting the goods. 3.3. Odor Mitigation Odor mitigation practices are provided by state of the art systems and controls within the closed and secure warehouse facility. These mitigations are described in detail below in Section 3.5 Odor Control Devices and Techniques. 3.4. Potential Odor Source Identification Potential sources of odor will be limited to the cultivation (flowering) plants and the mother plant room. No odor is anticipated from the distribution facility due to regulatory controls on transport and packaging that restrict ability of the product to emit smell during transport or once packaged for sale. Since the facility will be run with continuous harvest activities, every operational control to ensure no smell is emitted from the facility will be employed. 3.5. Odor Control Devices and Techniques The facility will be equipped with odor control devices and techniques including sufficient odor absorbing ventilation, an exhaust filtration system, and a negative air-pressure system so that odor generated inside the facility that is distinctive to its operation is not detected outside of the facility, anywhere on adjacent property or public rights-of-way, on or about the exterior or interior common area walkways, hallways, breezeways, foyers, lobby areas, or any other areas available for use by common tenants or the visiting public, or within any other unit located inside the same building as the commercial cannabis business. DD559 will maintain the following equipment as determined necessary: 1) An exhaust air filtration system with odor control that prevents internal odors from being emitted externally; 2) An air system that creates negative air pressure between the interior and exterior building area so that the odors generated inside the commercial cannabis business are not detectable on the outside of the building. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 3-4 3) All ventilation from manufacturing and cultivation will pass through a series of HEPA, charcoal and Syneco filtration or similar systems. The ventilation is used primarily for exhaust of gases used during manufacturing and scrubbing of any odors generated from the cultivation environments. These airflow systems work in conjunction with our climate control systems and abide by ISO 7 and 8 regulations. The hoods used for preparation will feature industrial odor control filtration system from Synecosystems.com 4) HEPA stands for High-Efficiency Particulate Arresting Filter. HEPA is a certification standard that means the filter meets criteria for filtering at least 99.97% particles of 0.3 microns in size and other criteria set by the US Department of Energy. These filters are industry standard in medical and quality industrial sites. HEPA filtration is mandatory to abide by pharmaceutical ISO 7/8 standards. Nursery & Cultivation Odor Control Each room where plants are cultivated shall be equipped with 2 Phoenix Guardian HEPA Air Scrubbers - #PH-GHS2-EA that provide the following specifications: • < 1,400 CFM • 4 stage filtrations • 110-120 VAC 12 Amp • Stainless steel housing • 4th stage is carbon Where odors are significant, a 2nd tier odor mitigation system from Syneco Systems will be implemented in the exhaust path. The 1,400 CFM capacity of the Phoenix Guardian HEPA Air Scrubber System allows it to completely change the air in a 14' x 14' room in four minutes. To be this effective, air scrubbers must perform a minimum of four air changes per hour. This allows a single Guardian to control up to 21,000 cubic feet of air volume in room. The Guardian Air Scrubber offers high airflow and multiple ducting options, achieving a combination of negative or positive airflow control and containment air scrubbing. This gives the unit the unique ability to continually filter indoor air while depressurizing a damaged site. The result is that the spread of contamination is almost non-existent. The intake accepts either 18" flex-duct or 12" flex-duct with an adapter (included) to contain contamination or draw contaminated air from hard-to-reach places not usually accessible to air scrubbers. Every Guardian HEPA System comes with a 14-inch, lay-flat duct ring, offering 100% negative air operation, and two 10-inch lay-flat duct rings for a combination of negative air, air scrubbing, or positive airflow results. Distribution and Transport Odor Control Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 3-5 Our distribution and transportation functions should not incur any odor that will not be managed utilizing the overall facility’s odor control and ventilation system. 3.6. Staff Odor Training Plan and System Maintenance All staff will undergo initial site training to include strict performance protocols in regards to odor. Staff will enter the securely fenced facility in street clothes and enter the building where they will be provided clean suits to change into. If staff leaves the premises for breaks or lunch, the employee will doff the work suit so that it remains inside the facility at all times. Strict access controls will be in place for all rooms of the facility, including a requirement that any entry door is closed and sealed prior to opening any interior door within the facility. The highly developed odor systems will be maintained by trained staff and/or equipment service technicians and included regular checks to ensure all systems are in proper working order to prohibit odor from emitting outside of the facility. 3.7. Waste Management Plan All facility waste storage areas will be located away from process/handling areas to prevent cross-contamination and avoid attracting pests. Waste storage areas and containers will be adequate for waste generated between disposal times. Waste storage areas will be cleaned often enough to avoid creating conditions that can cause cross- contamination or attract pests. Containers with lids will be used for the storage of waste until removal. All materials and supplies will be stored in compliance with relevant OSHA regulations for the storage of hazardous materials. Cultivation Waste Products (type, amount), Handling Chemicals used in the cultivation process will be handled according to OSHA standards and referenced via the MSDS. Chemicals used in the cultivation process will be disposed of according to appropriate regulatory controls.   Cannabis waste in various forms will be stored, secured, locked, managed and disposed of in accordance with state and local regulations. Controlled waste practices will be under the direct supervision of the Security Manager. The Security Manager will have direct control over all waste receptacles. The Security Director will achieve this by placing locks on all exterior dumpsters and waste containers. Acceptable forms of destruction shall render cannabis products to a non-retrievable state in avoidance of diversion and illegal purposes. The following forms of cannabis can be disposed of through acceptable forms of destruction: Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 3-6 • Plant waste: stems, stalks, leaves, inflorescence DD559 shall use one or more of the following forms of disposal: • Grinding and Composting • Incineration Cultivation Release into City Sanitary Sewer The wastewater from the reverse-osmosis system is released into the sewer according to city ordinance. Cannabis waste will be stored, secured, locked, managed and disposed of in accordance with the requirements of the City of Fresno, the Fresno County Solid Waste Authority, and the State of California. Waste that is stored for any amount of time will be secured separately on the premises from any other operations. Controlled waste practices will be under the direct supervision of the Security Manager. We will have locks on all exterior dumpsters and waste containers. Acceptable forms of destruction shall render any cannabis waste products to a non-retrievable state to prevent diversion and to discourage any perception that useable cannabis product is leaving the facility. The following types of cannabis waste will be disposed of from our facility through acceptable forms of destruction that make them irrecoverable: • Plant waste: roots, stems, stalks, fan leaves, inflorescence • Finished products: in bulk form or in packaged form • Quarantine/returned products DD559 will sort the waste into the above categories and use one or more of the following forms of disposal: • Incineration • Grinding and Composting • Standard Refuse and Recycling Services Incineration Waste intended for incineration or destruction through a third party will be logged, stored, and maintained in a secure area. Products for destruction by third party incineration are logged out of the facility as waste. Products deemed inorganic and unable to undergo decomposition, such as products irretrievable from their packaging, are suitable for incineration. This also includes quarantined products returned from dispensaries, expired products irretrievable from their packaging containers, or products with cannabinoid concentrations exceeding or meeting the defined limit that cannot be reworked. Grinding and Composting Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 3-7 Organic cannabis waste intended for grinding and composting shall be placed into an industrial grinder or chipper (if necessary). From there, the material will be placed into a secured and controlled container with a layer of manure, wood chips and/or paper and thoroughly mixed to render it irrecoverable for theft, loss, and diversion. This container will be locked and under the direct supervision of the Security Manager. The Security Manager will escort employees to the container and unlock it to allow access. Not all organic waste will need to pass through an industrial grinder or chipper prior to being composted. Only organic materials capable of decomposition shall be placed into the compost container. This includes, but is not limited to the following: • Plant Material (plants at any stage, roots, stems, stalks) • Immediately after harvest, roots, stems, and stalks will be transferred to the Waste Management Area located in the Secured Storage area. The area will be fenced, locked, and access controlled. Note: The Waste Management area will be located with a limited access area for an added measure of security. • For processing, the material will be transferred to a grinder/chipper located within the Waste Disposal area and ground with leaves, manure, and other approved compostable material leaving the resulting mixture at least 50% non- cannabis waste by volume. • Leaf and trim material • Leaf clippings and trim material will be stored in a secure location to later be used in the extraction process. • The material will be tracked using the electronic tracking system. • When a sufficient quantity of the leaf and trim material is collected, a homogenous sample will be submitted to the contract laboratory for analysis. • Once the cannabinoid profile is identified, a determination will be made to use the leaf and trim material for extraction, or to compost it as described above under plant material. • Finished products independent from inorganic packaging • Product that has been rendered unsellable or unable to be reworked. • Products could include leaf and trim material or inflorescence material. • Plants in various stages (clone, vegetative, and flowering states) may have to be destroyed for various reasons such as disease or environmental factors. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 3-8 DD559 will use an electric chipper such as the EcoShredder™ to pulverize and compact plant waste intended for composting: • The EcoShredder™ Electric Waste Chipper is capable of chipping, shredding, and mulching plant material. • It is compact and portable and it is convenient for use in different areas of the building. • This machine is capable of pulverizing plant material into compact/convenient consistency suitable for composting. By reducing the size of the starting material for compost, more material can be added to the compost container for disposal. DD559 will contract with a local farm to handle compost waste. • After each harvest, remnants of plants will be cut or pulled from the pots of soil. • The pots of soil will be loaded outside the corresponding greenhouse. • The contract farm will be notified and they will pick them up to be transported to the farm. • The soil will be applied to a designated compost pile for future use. • The pots will be returned to DD559 for sanitation and reprocessing. • The farm will also provide manure to mix the compost material to aid in rendering waste irrecoverable. Non-Cannabis Waste Non-cannabis waste will be placed into opaque trash bags for visual verification of contents prior to disposal. All dumpsters and trash receptacles will be controlled and monitored by the Security Manager. • This will include waste such as gloves, paper towels, and other disposable items that do not contain medical cannabis products or byproducts. • The opaque trash bags will further enable the security department to prevent theft, loss and diversion by being able to visually inspect waste prior to being placed in a dumpster. • Dumpsters will be locked and controlled by the Security Manager. Summary of Waste Disposal Given the size and breadth of our operation we estimate the types, volumes, and methods outlined below will be used. Product Weekly Volume Method of Disposal Plants at any growth stage (immature, vegetative, flowering, etc.) 1-3lbs of plant material. Industrial Grinder/Chipper & Compost Container mixed thoroughly with manure or other compostable material The EcoShredder Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 3-9 Product Weekly Volume Method of Disposal Stems, stalks, fan leaves, sugar leaves, seeds 500 plant stems/root mass. 10lbs of leaf material. Industrial Grinder/Chipper & Compost Container mixed thoroughly with manure Products returned by dispensaries (finished products) Minimal Incineration Unpackaged Quarantined Products (finished, expired, or in process products) Minimal Compost Packaged Quarantine Products (finished, expired, or in process products) Minimal Incineration Department Controlled/General Waste Generated Grow/Cultivation • Remnants of harvested plants: stems, stalks, leaves • Plants to be destroyed at any growth stage for various reasons (disease, poor growth, etc.) • Seeds Packaging • Stems from cleaned flower • Defective finished products Vault • Expired products • Quarantined products • Returned products Facility • General waste • Paper materials • Gloves, shoe covers, hair nets, etc. • Consumables Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 4-1 SECTION 4. SAFETY PLAN To make sure we develop a fire protection plan adequate in all of the occupancy categories relevant to a medical cannabis dispensary, we have partnered with Cintas Fire Extinguisher Service & Sales to evaluate our building and assist us in crafting a comprehensive plan. The Safety Plan should consider all possible fire, medical and hazardous situations. Complete policy/procedures manuals are not required at this point in the application process. Please only provide a description for each criterion which incorporates the following provisions: 4.1 The Safety Plan shall be prepared and/or assessed by a professional fire prevention and suppression consultant. 4.2 Describe accident and incident reporting procedures. 4.3 Describe evacuation routes. 4.4 Location of fire extinguishers and other fire suppression equipment. 4.5 Describe procedures and training for all fire and medical emergencies. 4.1 Safety Plan Development Fire Safety We fully understand the importance of fire safety for operations. DD559 will do its best to learn from other examples to prevent problems from occurring with our facility. To make sure we develop a fire protection plan adequate in all of the occupancy categories relevant to our operation, we will partner with a local fire protection company to evaluate our building and assist us in crafting a comprehensive plan. We fully understand the importance of fire safety for operations. DD559 will commercially reasonable efforts learn from other examples to prevent problems from occurring with the facility. DD559 recognizes that a prime motivation for regulating cannabis businesses is to protect the peace, health, safety, and welfare of the community from these types of problems. Electrical fires not only cause millions of dollars of property damage annually, but they also affect lives. Because of the complex nature of a cultivation and distribution operation, which combines indoor lighting operation, odor control and storage of finished goods the building must meet safety standards for B (professional service) occupancy classification. Fire Suppression Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 4-2 DD559 will employ many techniques to mitigate and control fires if they occur. Smart mitigation techniques limit fire damage and danger, and they conserve the resources of the Fresno Fire Department by reducing the number of incidents that require response by firefighters. These mitigation techniques include the following: • Fire Alarms • Sprinklers • Extinguishers • Monitoring Services • Fire Evacuation Plan Standardization of Procedures Standardization of procedures is the only way to ensure accountability and comprehensive preparedness. Accordingly, DD559 has developed a set of standardized forms and checklists to ensure that our safety procedures are correctly implemented and followed. In our Fire Safety Plan we will provide a sample of these safety-procedure forms and checklists: • Fire Risk Survey • General Fire Prevention Checklist • Exits Checklist • Flammable and Combustible Material Checklist First Aid and Safety The local fire safety protection company will provide a first aid kit and A.E.D. defibrillator on site for employees and customers. 4.2 Accident and Incident Reporting Procedures DD559 will utilize checklists to ensure all process areas are up to safety & quality standards daily. A pre-production inspection will occur daily as well as weekly, monthly, semiannual, and annual audits for quality and safety. The facility will also maintain a log of any incidents, operational failures, or non-conformances identified internally. 4.3 Evacuation Routes DD559 recognizes that the safe, orderly and prompt evacuation of our employees and other building occupants depends on having the physical safety features of the building in operating condition in addition to having an emergency evacuation plan. The Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 4-3 cooperation and participation of every building occupant is essential. Every employee has an individual responsibility to know how to evacuate in an emergency and to accomplish the evacuation when the fire alarm device sounds or when directed by an authority or management. The Fire Evacuation Plan includes the following: a) Pre-planning the escape: • The locations of fire alarm pull box will be clearly identified and all employees will be made aware of them. • Exits will be checked routinely to ensure there are at least two unobstructed pathways out. • The fire exits will be checked routinely to make sure they are usable. • Periodic fire drills will be provided to ensure employees learn the sound of the building’s fire alarm. • Emergency telephone numbers will be posted near all telephones. • Fire evacuation exit diagrams will be posted throughout the building. • Exits will be clearly marked. b) Evacuate if there is a fire or fire alarm: • When an employee discovers a fire or smoke condition, he/she must sound the building alarm by activating the nearest pull station, and make a follow-up call to 911. • Whenever the fire alarm is sounded, all employees must leave immediately! Employees must not assume the fire alarm is false or a test and wait to see what others do. In a fire, seconds count. • Each employee must try to help others, if he/ she can do so safely. • Unless unusual conditions dictate otherwise, all employees must use the nearest hallway as this is the best evacuation route to the nearest exit. • When leaving, each employee must close but not lock the door behind. If the door locks automatically, the employee shall carry his/ her key in case the employee needs to return for refuge. • Once outside, the employee shall meet at the relevant assembly point and a head count will be taken to ensure everyone is out of the premises, and accounted for. Employees must never attempt to re-enter the building to search for someone believed to be missing; instead promptly inform the fire or police officials. c) Check the door • Before opening a door, each employee should make sure there is no fire on the other side by using the back of one’s hand to feel the door, door knob or door frame for excessive heat. • If the door, doorknob or doorframe feels hot, the door shall not be opened, as there is probably fire on the other side. If the door, door knob or door frame feels cool, the door should be opened slowly, and the employee shall leave the area Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 4-4 and close the door without locking behind them. • Stay low when there is smoke. • If an employee encounters smoke while escaping, crawl or get as low as possible as the cleanest air will be within 1 to 2 feet from the floor. If the main exit is blocked by fire or smoke, the employee should use their alternate route. If this is not feasible, the employee shall go back in his/her room to wait for rescue. d) If one can’t escape • Close all doors between the employee and the fire. + All cracks around doors must be sealed with cloth to keep the smoke out. • Call 911 to notify emergency personnel of the employee’s location 4.4 Location of Fire Extinguishers and other Fire Suppression Equipment Upon finalization of final floor plans, DD559 will submit a chart to the city and local fire department showing the location of fire extinguishers and other fire suppression equipment. 4.5 Procedures and Training for all Fire and Medical Emergencies (“EAP”) EAP procedures shall be developed, and are updated annually, to minimize risks arising from incidents that could threaten the safety of employees. The EAP shall include the following response plans: • Fire emergencies • Earthquake • First-aid emergencies • Robbery The EAP will be communicated to all employees by means of a Safety Training Program. EAP procedures will be posted in common areas and will subject to yearly updates. EAP procedures will be required in the training for all employees upon hiring and will be reviewed by all employees at annual safety trainings. The EAP describes, in detail, the responsibilities of all employees during emergencies and critical incidents. Employee trainings shall be documented by our management and records kept in the Master Safety Plan Binder. Fire Emergencies The objective of the Fire Emergency Action Plan is to ensure the safety of employees and members in the case of a fire emergency. Training includes making each staff member aware of his or her specific duties during a fire emergency. The Safety Training Plan will give staff members training and preparation to deal with a possible fire emergency. Staff Training and Preparedness. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 4-5 Fire Prevention Plan The Fire Prevention Plan is designed to provide safe workplace practices that minimize the risk of a fire emergency. The Fire Prevention Plan includes: • Conducting and recording periodic facility inspections and identifying and correcting any unsafe conditions. • Conducting and recording monthly safety inspections of fire emergency equipment including all: smoke detectors, emergency evacuation lighting, and fire extinguishers. • Conducting periodic inspections and tests of the fire alarm systems in accordance with state and local regulations. • Conducting periodic fire drills in accordance with the procedures of the Fire Emergency Action Plan. • Checking to make sure electrical cords and cables are in good working condition and are not frayed or worn. • Storing oily and dirty rags in closed metal containers. • Making sure all potentially flammable chemicals are stored in a safe manor. • Daily cleaning of work areas with any potentially flammable chemicals. Earthquake Response Earthquakes will most likely occur with little or no warning. If the intensity of the quake is such that it causes alarm among the employees, there is the likelihood that there will be building or structural damage. In the event of an earthquake the following response plans should be followed: • Shelter in place. Protect yourself from falling objects. Crawl under a desk, table, or door frame until all shaking stops. • Stay clear of windows, heavy and unstable furniture and equipment. • Remain sheltered in place for a few minutes to account for any potential aftershocks. • Management will assess if the building should be evacuated or to remain inside. • Proceed outside when instructed by Management. • Once outside, if possible, get into an open area away from buildings, power lines, falling debris or glass. First Aid Emergencies Serious injuries and first aid emergencies can occur with almost any emergency or work activity. At least 1 first aid trained and certified staff member is required to be present. All Safety staff and Management are required to be CPR and first aid trained and certified. All staff will know the location of all first aid kits and eye wash stations. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 4-6 Critical Incidents Any event or incident that can pose a potential threat or danger to members and employees. Critical incidents can often be prevented, addressed, and de-escalated before they become a more serious problem. On a daily basis all employees, but primarily the Management Team are expected to maintain an acute awareness of the environment towards the goal of preventing problems from escalating and getting out of hand. Simple routines and a calm demeanor are often an effective way to diminish the likely hood of certain problems. Towards this effort, the Management will be expected to do the following: • Regularly clear debris and trash from outside the front and surrounding premises prior to opening and periodically during daily operating hours. • Politely discourage loitering, solicitors, or people obstructing the sidewalk without lawful reason. • Politely discourage double parking and blocking of sidewalks, streets, and other roadways. • Enforcing a comprehensive member code of conduct. • Preventing unnecessary nuisance activity within close proximity such as loitering, consumption of alcohol or drugs within 500 feet, noise, illegal parking, etc. • Place appropriate calls to help maintain a clean and orderly appearance of the dispensary and surrounding area. To further ensure a safe environment, the premises will be staffed by a manager who is dedicated to the safety and well-being of the members and employees. Every day, security members will be posted at key positions within the store to provide for maximum oversight. An additional Management Team member will be available to move around the interior and exterior of the dispensary to address any issues in a preventative and helpful manner. The possibility of physical altercations or open hostilities, however slight, shall be considered carefully – violence and any threatening or dangerous behavior will not be tolerated. Any such actions are considered immediate reasons for ejection or non- admittance to the dispensary. persons involved in critical incidents will be escorted to the exit and removed with an admonishment not to return. The staff is required to document all critical incidents, including the name of the person(s), date, time, and brief description of the incident. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation 5-1 SECTION 5. SECURITY PLAN Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 6 LOCATION 6.1. Location Description The project site consists of two contiguous vacant parcels located at the south east corner of East Braly Avenue and South Sarah Street. 2759 East Braly Avenue located in the center of a Heavy Industrial zone and is surrounded by industrial uses in all directions, with the exception of to the east, where three existing non-conforming residential uses are located on the east side of Sarah Street. View east of existing non-conforming residential uses on Sarah Street. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution Viewing Southeast from Project Site. Viewing South from Project Site. Viewing Southwest from Project Site. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution The project includes adjustment of the existing property lines to accommodate two separate, similarly sized buildings to accommodate mirrored uses on both parcels. APN 468-313-15 or Parcel ‘A’ (0.48 acre) will accommodate a 10,761 square foot building and APN 468-313-17 or Parcel ‘B’ (0.55 acre) will accommodate a 12,886 square foot building. Vehicle access for both buildings will be from a secure entry point at the southeast property corner on Sarah Street, with egress from the fenced project site onto E. Braly Avenue. Parcel ‘A’ will accommodate 9 standard parking spaces and one disabled parking space, and Parcel ‘B’ will accommodate 11 standard parking spaces and one disabled parking space for a project total of 22 on-property parking spaces. The project site will be entirely fenced at the property line, with the exception of the western frontage where the buildings will provide a solid wall (fencing between the two buildings and at the southwest parcel corner of E. Braly Avenue will provide uninterrupted restricted access). Improvements on the corner project site will be setback as follows: • North (side): 5’6” from adjacent existing developed parcel • West (side): 0’0” from approximately 12’ wide existing alley • South (E. Braly Ave): 10’ from property line • East (Sarah Street): Parking 10’ from property line. Buildings 60’ from property line. • Internal: Parcel ‘A’ Building 5’9” from Northern property line. Parcel ‘B’ Building 5’3” from Southern property line Building A (10,761 square feet) will accommodate the following (all square footages are approximate): • Cultivation: Five separate rooms, four at 1,271 square feet and one at 1,179 square feet for a total of 6,263 square feet of cultivation area. • Vegetation: One 1,179 square foot supportive vegetative space/clone room • Distribution: One 1,271 square foot loading and distribution storage room • Storage: 400 square feet for miscellaneous storage • Office: 688 square feet for office and entry vestibule • 36” standard commercial hallways and two ADA-Compliant restrooms will encompass the remaining square footage of the 10,761 square foot building. Building B (12,886 square feet) will accommodate the following (all square footages are approximate): • Cultivation: Seven separate rooms, four at 1,271 square feet and two at 1,179 square feet for a total of 7,442 square feet of cultivation area. • Vegetation: One 1,179 square foot supportive vegetative space/clone room • Distribution: One 1,234 square foot loading and distribution storage room • Storage: 400 square feet for miscellaneous storage • Office: 688 square feet for office and entry vestibule • 36” standard commercial hallways and two ADA-Compliant restrooms will encompass the remaining square footage of the 10,761 square foot building. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 6.2. Existing Parcel Photographs Existing View of Parcel from Corner of E. Braly Avenue and Sarah St. Viewing North along Western Property Line of Project Site. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution Viewing Southwest from Northeast Property Corner/Existing Entrance. 6.3. Premises (Site) Diagram Premises Diagram and preliminary floor plans are provided on the following pages. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 7-1 7 COMMUNITY BENEFITS AND INVESTMENTS PLAN DD559 is committed to continuing our efforts to support the community in the form of ongoing personal and financial support partnerships with several local charity organizations as well as developing a new DD559 community specific program. The DD559 program is scheduled for roll out in mid-December and is set up to be expanded and/or replicated on a larger scale once additional supportive businesses come together on the initiative. We plan to invite other CCB’s in the City the opportunity to partner via financial contribution, or for our Social Equity CCB’s, an ability to contribute via donated time and expertise from within their organizations. We intend for the DD559 community benefit program to become a vehicle to maximize benefits that the overall Fresno CCB community can bring to the City of Fresno. 7.1 Existing Benefit Program Contributions Matt Garza, founder of DD559 will continue the philanthropy partnerships with several existing community organizations. With available increased funding for these efforts resultant from the profits realized within the proposed project, DD559 will be able to increase that impact to reach more of our disadvantaged youth and community members. Financial support partnerships that will be continued and expanded include Habitat for Humanity, Little League team sponsorships, Fresno County Unified School District annual shoe and sweater donations, Fellowship of Christian Athlete Camps participant sponsorships and CASA Fresno/Madera County hosting of annual fundraising event. DD559 Annual Food Box and Holiday Gift Program Annual financial contributions historically provided to a holiday season food box giveaway and gift giving program with St. Jude’s Catholic Church will be used as the baseline to expand this program. Starting this December, DD559 has taken on a larger management and partnership facilitation role in this outreach effort by leveraging existing business partnerships for donations and participation to support the program established by St. Jude’s. DD559 has brought on several 2020 Program partners to provide food, goods and services and intends to build on the existing success of the program by bringing on interested Fresno CCB’s looking for effective programs to donate funds or services too. With the collective business and community relationships of CCB’s in the City, this program has the potential to serve many more of our at need populations. 7.1.1 Funding for or Hosting Expungement Clinics or Outreach Services. Needles for Joints. Fresno has a huge opiate issue and the scientific research of the cannabis plant has definitively shown that it can provide a pathway toward healing of both illicit opiate use and reliance on prescribed opiates for conditions such as PTSD, pain management, cancer, and many other serious conditions. Discussions to fund a program are being developed at our local leadership level and DD559 plans to directly support a pilot needle exchange first with a hemp joint, as one of our current operations is a farm focused on producing CBD-rich (minimal trace THC) therapeutic-grade hemp. Once our Fresno facility is operational, DD559 would continue to work with our community leaders Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 7-2 to provide either hemp, cannabis, or hybrid hemp (CBD) and cannabis (THC) joints as an ongoing expungement service. DD559 is actively conducting outreach to existing service providers, community leaders, and public safety representatives to find the most effective way to initiate this sort of program, whether there is an appropriate existing operation that could be expanded to provide the Needles for Joints location, or if a mobile service facility could be developed in order to ensure all vulnerable populations are being adequately served. Once the most effective mechanism for this program is identified, DD559 will donate a portion of the hemp harvest as a “test of change” program and ensure there is value and achievable social benefit in supporting such program long-term. 7.1.2 Incorporating an Environmentally Sustainable Business Model Including Energy Efficient Buildings and Vehicles. The newly constructed buildings will be held to current energy standards for commercial buildings and designed to operate efficiently from an energy standpoint and with attention to environmental stewardship. We commit to utilizing hybrid vehicles where available for our distribution/transport operation. We will utilize LED lights for the cultivation environment to reduce energy needs as compared to high powered fluorescents. These measures will ensure our operation is environmentally sustainable. 7.1.3 Utilizing Vacant Buildings, Brownfields Land, or Blighted Areas of the City DD559 identified the proposed location on the corner of Sarah Street and Braly Avenue specifically for the opportunity it provides to improve a street corner in one of the blighted areas of the City consisting of older commercial service parcels such as distribution supply companies, recyclers and machine shops. By investing in this specific area, tax revenue from DD559’s sales can be directly provided to the local community and/or businesses to help support their success. DD559 intends to be a good neighbor to our fellow businesses in the area and seeks to form a strong sense of community that will take pride in the collective betterment of the environment in which we work. 7.2. PUBLIC HEALTH OUTREACH AND EDUCATIONAL PROGRAMS DD559 understands that the risk for young people using cannabis and other drugs such as nicotine and alcohol can lead to serious addiction and health problems. We are committed to increase public health outreach and education on these topics by partnering with the United Way and Fresno Police Department to reach the most vulnerable populations among our young people and ensure that they are both aware of and have access to resources available to youth related to drugs and drug addiction. DD559 is providing direct funding to The United Way to fund the time, coordination and marketing to reach 500 households in southeast/downtown neighborhoods by providing outreach materials combined with a benefit box filled with food and/or other essential items. The program needs materials, supplies, prints, as well as funding for staff time to implement and create the marketing platform. The program will include both video and photos for social media campaign as well as PR to attract local news outlets. Commercial Cannabis Business Permit APNS: 468-313-15 & 468-313-17 DD559 Cultivation and Distribution 7-3 The DD559 team (staff/partners/volunteers) has committed its people power to contribute for both the heavy lifts of packing/sorting the boxes (with food, prints, activity kits, etc.) as well as distribution door to door. We are establishing connection with the Fresno Police Department to participate with us in order to highlight the support that the Department has for the legal cannabis market, and provide an opportunity for the community to experience positive interactions with law enforcement. The Fresno Unified School District is another key partner with their ability to identify the highest need households in the target neighborhoods so outreach can be better targeted with information such as household composition, # and age of kids and languages spoken so the materials can be customized based on needs. The District will also coordinate delivering pre-packaged breakfast and lunches for the number of children in each household (freeing up resources that can focus on activities, materials and other resources). 7.3. FRESNO COMMUNITY REINVESTMENT FUND DD559 has committed to contributing $ a year to the Fresno Community Reinvestment Fund to support our local social equity business partners. In addition, we plan to provide industry support in the form of knowledge, training, and sharing of resources such as DD559’s management team’s long-standing relationship with the Fresno EOC for various industry trainings. We are eager to support and develop these types of relationships within our community and at the same time provide our valuable knowledge to our fellow cannabis businesses.