HomeMy WebLinkAboutItem 07a - Business License Revocation for Sphinx Mart
DATE: October 15, 2024
TO: Honorable Mayor and City Council
FROM: Jason Kruckeberg, Assistant City Manager/Development Services Director
Lisa Flores, Deputy Development Services Director
By: Alejandra Smith, Business License Officer
SUBJECT: REVIEW OF THE BUSINESS PERMIT AND LICENSE REVIEW BOARD’S
DENIAL OF THE BUSINESS LICENSE REVOCATION APPEAL FOR
SPHINX MART LOCATED AT 142 E. HUNTINGTON DRIVE
CEQA: Not a Project
Recommendation: Adopt Resolution No. 7602 denying the appeal and
upholding the Business Permit and License Review Board’s decision
to revoke the business license for Sphinx Mart located at 142 E.
Huntington Drive
SUMMARY
The Appellant and business owner of Sphinx Mart, Mr. Saad Saadhom, is appealing the
Business Permit and License Review Board (“Board”) decision to revoke his business
license, after it was determined that the business was in violation of Arcadia Municipal
Code for selling cannabis products and California Health and Safety Code for selling
illegal mushrooms. Sphinx Mart is a tobacco shop located at 142 East Huntington Drive.
It is recommended that the City Council adopt Resolution No. 7602 (refer to Attachment
No. 1), denying the appeal and upholding the Business Permit and License Review
Board’s decision to revoke Sphinx Mart’s business license with the condition that this
business owner may not be allowed to apply for another business license within the City
for 12 months.
BACKGROUND
On June 17, 2013, the City issued a business license to Sphinx Mart to allow for the sale
of tobacco at 411 East Huntington Drive, Unit 112. On September 19, 2019, Sphinx Mart
relocated to 142 East Huntington Drive, and a new business license was issued to allow
for the sale of tobacco, tobacco accessories, and snacks (refer to Attachment No. 2). The
business has been operating in the City for 11 years. A condition of approval was placed
on the business license that “no cannabis sales or alcohol” shall be allowed. The business
owner had a previous violation for illegal gambling machines in 2019 but brought the
business into compliance soon after he was cited.
Business License Revocation
Sphinx Mart – 142 E. Huntington Drive
October 15, 2024
Page 2 of 6
The subject commercial building has two units, one of which is currently occupied by
Sphinx Mart, and the other unit will be occupied in the future by an approved speakeasy-
style bar. The building is located on the south side of Huntington Drive in Downtown
Arcadia. The property is zoned CBD, Central Business District. The CBD Zone is intended
to promote a strong pedestrian-oriented environment and to serve community and
regional needs for retail and service uses, professional office, restaurants, public uses,
and other similar and compatible uses. According to the Los Angeles County Assessor’s
database, the commercial building is owned by PI Properties No. 79 LLC. The property
owner has been informed of all correspondence from the City related to this revocation.
In May of this year, Business License Services conducted an inspection of all the tobacco
stores in the City. It was discovered that Sphinx Mart had illegal cannabis products for
sale. Businesses that engage in the sale of cannabis products are considered a marijuana
dispensary, which are prohibited uses under the Arcadia Development Code Section
9109.01.140. It was also discovered that Sphinx Mart had illegal psychotropic mushroom
products for sale, which are considered a Schedule I Controlled Substance under
California Health and Safety Code Section 11054. Sphinx Mart was in violation of State
and local law. As a result, on June 25, 2024, the City sent a Notice of Revocation letter
(refer to Attachment No. 4 of the Business License and Review Board Staff Report packet)
to the Appellant, and a citation was issued for the violations. The letter informed the
Appellant that in 10 days from the date of issuance, the business license would be
deemed revoked and all business activity in the City must cease. However, it informed
the Appellant of his ability to appeal the decision. The Appellant filed a written appeal on
July 5, 2024, within the required 10 days (Refer to Attachment No. 4 of the Business
License and Review Board Staff Report packet).
Prior to the Business Permit and License Review Board Meeting, the City’s Police
Department submitted the mushroom products that were seized from Sphinx Mart to the
District Attorney. The products were also sent to the Los Angeles County Sheriff’s
Department Scientific Services Bureau to determine if they contained psilocybin.
On August 13, 2024, the Business Permit and License Review Board (“Board”)
considered the appeal. After much discussion, the Board agreed to revoke the license but
modified the recommended term of revocation, so the business owner would not be
allowed to apply for a new business license within the City beginning 12 months from
revocation, reduced down to six (6) months from revocation. The amended Resolution
was adopted by the Board on September 10, 2024 – refer to Attachment No. 3 for an
excerpt of the August 13, 2024, Board’s Minutes, and Attachment No. 4 for the Board’s
Staff Reports, dated August 13, 2024, and September 10, 2024.
An appeal of the Board’s decision was filed by the Appellant on September 19, 2024,
during the 10-day appeal period – Refer to Attachment No. 2. As part of the revocation
process, the business was required to close permanently on September 23, 2024, which
they did.
Business License Revocation
Sphinx Mart – 142 E. Huntington Drive
October 15, 2024
Page 3 of 6
DISCUSSION
Pursuant to Arcadia Municipal Code (“AMC”) Section 6216.7(3) and 6216.8, the License
Officer and the Board upon an appeal, “may suspend or revoke any business license
upon receipt of any of the following information from any source that the holder of the
license has violated any conditions of said license, or has violated or permitted to be
violated any law or laws of the United States or the State, or any ordinance applicable to
the premises where the business covered by said license is conducted, or in connection
with said business.”
The Board revoked Sphinx Mart’s business license because they clearly violated the
conditions of approval on the business license that prohibit the sale of cannabis, by selling
various cannabis products and for operating an illegal marijuana dispensary, which was
in violation of local law. Sphinx Mart also illegally sold psychedelic mushroom products,
which contained psilocybin, in violation of State late.
Cannabis Violations
Arcadia Development Code (“ADC”) Section 9104.02.030(C), prohibits marijuana
dispensaries in all zoning districts in the City: “Marijuana cultivation, dispensaries,
manufacturers, and delivery of marijuana, as defined by Division 9 (Definitions), shall be
considered prohibited uses in all zoning districts of the City.”
Sphinx Mart was considered a marijuana dispensary under ADC Section 9109.01.140,
which defines marijuana dispensary as “a facility where marijuana, marijuana products,
or devices for the use of cannabis or cannabis products are offered, either individually or
in any combination, for retail sale, including an establishment that delivers cannabis and
cannabis products as part of a retail sale.” As a facility where marijuana products or
devices for the use of cannabis or cannabis products are offered for retail sale, Sphinx
Mart was illegally operating as a marijuana dispensary.
Marijuana (cannabis) is defined under ADC Section 9010.01.140 as “all parts of the plant
Cannabis sativa L., whether growing or not; the seeds thereof; the resin extracted from
any part of the plant; and every compound, manufacture, salt, derivative, mixture, or
preparation of the plant, its seeds, or resin. It does not include (1) Industrial hemp, as
defined in Section 11018.5 of the California Health & Safety Code; or (2) The weight of
any other ingredient combined with marijuana to prepare topical or oral administrations,
food, drink, or other product.”
Marijuana products are defined under ADC Section 9010.01.140 as “marijuana that has
undergone a process whereby the plant material has been transformed into a
concentrate, including, but not limited to, concentrated cannabis, or an edible or topical
product containing marijuana or concentrated cannabis and other ingredients.”
Business License Revocation
Sphinx Mart – 142 E. Huntington Drive
October 15, 2024
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Sphinx Mart offered the following cannabis/marijuana products for sale:
• STIIIZY 40’s Infused Pre-Rolls (premium cannabis flowers infused with live resin);
• TREHouse Delta 9+ Syrup and D9+ THC Syrup (chemicals found in cannabis sativa
plants);
• STIIIZY Weed Vape Pods (products which contain varying levels of THC and CBD);
and
• FRYD Extracts Vape Cartridge (products which contain THC, cannabis oil, and live
resin).
Refer to Attachment No. 4 for photos of the illegal cannabis products.
Mushroom Violations
Sphinx Mart’s business license was also revoked due to their sale of illegal mushrooms.
Mushrooms and mushroom products that contain psilocybin or psilocin are a Schedule I
Controlled Substance under Health and Safety Code Section 11054(d)(18) and (d)(19).
Under Health & Safety Code Section 11378(2), possession for sale of this controlled
substance is illegal. Attachment No. 4 includes photos of these illegal mushroom products
containing psilocybin. The mushroom products were sent to the Los Angeles County
Sheriff’s Department Scientific Services Bureau and tested positive for psilocybin.
Business and License Review Board Hearing
The Board held a public hearing on August 13, 2024. During the meeting, the Appellant
requested that the City not revoke his business license on the basis that he was not aware
that these products were illegal since he was informed by his wholesaler that the
mushrooms comply with State law and are legal to sell. He also stated that this business
was his only source of income and requested that the Board reconsider the revocation
and reinstate the business license, with a contingency that he will comply with all the rules
and regulations that are applicable to local law.
Following the public hearing, the determination of the Board was to deny the appeal and
uphold the License Officer’s decision to revoke the business license, with a provision that
the business license holder, the holder’s employee, agent, partner, director, officer,
controlling stockholder or manager, shall not be allowed to apply for a new business
license within the City for at least six (6) months. This was a modification of the original
recommendation of the Staff, which had been for a 12 month waiting period to reapply.
The amended Resolution was adopted by the Board on September 10, 2024.
Subsequent Violations
Pending adoption of the amended Resolution, but after the appeal hearing with the Board,
on September 2, 2024, the City’s Police Department witnessed juveniles in possession
of tobacco products loitering in front of Sphinx Mart. Police investigated and confirmed
Business License Revocation
Sphinx Mart – 142 E. Huntington Drive
October 15, 2024
Page 5 of 6
the tobacco products were purchased at Sphinx Mart, and a citation was issued to the
business for selling tobacco to minors.
Since the business owner of Sphinx Mart continues to violate the law, it is recommended
that City Council expand the term or revocation, prohibiting the business license holder
from applying for a new business license for 12 months, as was the City’s initial
recommendation, instead of six (6) months. The business license would be revoked with
a provision that no new business license for any business in the City may be requested
by the holder of the revoked license, for 12 months. This condition would apply to any
employee, agent, partner, director, officer, controlling stockholder, or manager of the
license holder, for any business or location within the City, or by any other person for the
same business on the same premises where the business covered by the revoked license
was conducted, or for the same business on a different premises within the City. If, after
the period specified, application for a new business license is made, the applicant must
comply with all requirements of the City Codes for issuance of a new business license.
There shall be no automatic reinstatement of a revoked business license and the City is
under no obligation to grant the new application.
ENVIRONMENTAL ANALYSIS
The business license revocation is exempt from the California Environmental Quality Act
(“CEQA”) pursuant to Section 15358 (the activity will not result in a direct or reasonably
foreseeable indirect physical change in the environment) of the CEQA Guidelines,
California Code of Regulations, Title 14, Chapter 3, because it has no potential for
resulting physical change to the environment, directly or indirectly. Moreover, the
revocation does not constitute a project under the California Environmental Quality Act
(“CEQA”) under Section 15061(b)(3) of the CEQA Guidelines, as it can be seen with
certainty that it will have no impact on the environment.
FISCAL IMPACT
Although the current business does generate sales tax, the recommended revocation will
not have a significant impact on City revenues.
RECOMMENDATION
It is recommended that the City Council determine that this action does not constitute a
project under the California Environmental Quality Act (“CEQA”); and adopt Resolution
No. 7602 denying the appeal and upholding the Business Permit and License Review
Board’s decision to revoke the Business License for Sphinx Mart located at 142 E.
Huntington Drive, with the condition that this business owner may not be allowed to apply
for another business license within the City for 12 months.
Business License Revocation
Sphinx Mart – 142 E. Huntington Drive
October 15, 2024
Page 6 of 6
Attachment No. 1: Resolution No. 7602
Attachment No. 2: Appeal Letter, dated September 19, 2024
Attachment No. 3: August 13, 2024, Minutes of the Business Permit and Review Board
Attachment No. 4: August 13, 2024, and September 10, 2024, Business Permit and
Review Board Resolution No. 2150 and Staff Reports with all the
original attachments
Attachment No. 1
Resolution No. 7602
1
RESOLUTION NO. 7602
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARCADIA,
CALIFORNIA, DENYING THE APPEAL AND UPHOLDING THE
BUSINESS PERMIT AND LICENSE REVIEW BOARD’S DECISION TO
REVOKE THE BUSINESS LICENSE FOR SPHINX MART LOCATED AT
142 E. HUNTINGTON DRIVE
WHEREAS, on September 19, 2019, the City issued a business license to Mr.
Saad Saadhom, the business owner and Appellant of Sphinx Mart that is located at 142
East Huntington Drive, for the sale of tobacco, tobacco products, and food snacks. A
condition of approval was placed on Sphinx Mart’s business license that prohibits the sale
of cannabis or alcohol; and
WHEREAS, in May of 2024, Business License Services conducted an inspection
of all the tobacco stores in the City. It was discovered that Sphinx Mart had illegal
cannabis products for sale. The business was in violation of its business license condition
of approval prohibiting cannabis sales.
WHEREAS, businesses which engage in the sale of cannabis products are
considered a marijuana dispensary and are prohibited under the Arcadia Development
Code Section 9101.01.140. The business was operating in violation of local law.
WHEREAS, in May of 2024, it was discovered that Sphinx Mart also had illegal
psychotropic mushroom products containing psilocybin for sale, which are considered a
Schedule I Controlled Substance under the California Health and Safety Code Section
11054(d) and their sale prohibited under the California Health and Safety Code Section
11378(2). The business was in violation of State law; and
WHEREAS, pursuant to the Arcadia Municipal Code Section 6216.7(3) the License
Officer may suspend or revoke any business license upon receipt of any of the following
2
information from any source that the holder of the license has violated any conditions of
said license, or has violated or permitted to be violated any law or laws of the United
States or the State, or any ordinance applicable to the premises where the business
covered by said license is conducted, or in connection with said business; and
WHEREAS, on June 25, 2024, a Notice of Revocation was issued to the Appellant,
and a citation was issued for the violations. The business was required to close their
business permanently on July 6, 2024, unless an appeal was filed; and
WHEREAS, on July 5, 2024, within the prescribed 10-day appeal period, an appeal
was timely filed by the Appellant, Mr. Saad Saadhom; and
WHEREAS, on August 13, 2024, a public hearing was held before the Business
License Permit and Review Board (“Board”), at which time all interested persons were
given full opportunity to be heard and to present evidence; and
WHEREAS, the City recommended the Board uphold revocation of Appellant’s
business license subject to the condition that Appellant and his employees, agents,
partners, directors, officers, controlling stockholders or managers may not request any
business license for any business or location within the city or by any other person for the
same business on the same premises where the business covered by the revoked license
was conducted, or for the same business on a different premises within the City, for a
period of 12 months; and
WHEREAS, following consideration of all testimony and evidence, including staff
report and attachments, the Board voted unanimously (Board Member Hui was absent)
to deny the appeal and uphold the revocation and amended the terms that the Appellant
may not be allowed to apply for another business license within this City for six (6) months
3
rather than the recommended terms of 12 months, and directed Staff to return with a
revised Resolution. The Board also closed public hearing at this meeting.
WHEREAS, on September 10, 2024, the Board voted with a 4-0 vote (Board
Member Hui abstained) to approve Resolution No. 2150 and issued a final decision as to
the business license revocation; and
WHEREAS, within the prescribed 10-day appeal period, the Appellant filed an
appeal on September 19, 2024.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARCADIA,
CALIFORNIA, HEREBY RESOLVES AS FOLLOWS:
SECTION 1. The facts set forth above are true and correct and are incorporated
herein by reference.
SECTION 2. The City Council finds that based upon the entire record, pursuant
to Section 6216.7(3) of the Arcadia Municipal Code (“AMC”), the business holder of the
license has violated both the conditions of approval of said license, which prohibits the
sale of cannabis or cannabis products, and the Arcadia Development Code (“ADC”)
Section 9104.02.030(C) which prohibits marijuana dispensaries in all zoning districts in
the City. As a facility where marijuana products and/or cannabis products are offered for
retail sale, Sphinx Mart was considered a marijuana dispensary under ADC Section
9109.01.140, which is prohibited in the City of Arcadia. Sphinx Mart’s business license
was also revoked due to the sale of illegal mushrooms. Mushrooms and mushroom
products which contain psilocybin or psilocin are a Schedule I Controlled Substance.
Sale of this controlled substance is illegal under Health & Safety Code Section 11378(2).
4
Given that the sale of cannabis is a violation of local law, and sale of Schedule I
drugs containing psilocybin is a violation of State law, the Appellant should have been
aware of these City and State regulations, the Board recommended that the business
license be revoked with a provision that no new business license for any business in the
City may be requested by the holder of the revoked license for six (6) months by the
business holder’s employee, agent, partner, director, officer, controlling stockholder or
manager, for any business or location within the city or by any other person for the same
business on the same premises where the business covered by the revoked license was
conducted or for the same business on a different premises within the City. If, after the
period specified, application for a new business license is made, the applicant must
comply with all requirements of this Code for issuance of a new business license. There
shall be no automatic reinstatement of a revoked business license, and the City is under
no obligation to grant the new application.
SECTION 3. The business license revocation is exempt from the California
Environmental Quality Act (“CEQA”) pursuant to Section 15358 (the activity will not result
in a direct or reasonably foreseeable indirect physical change in the environment) of the
CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has
no potential for resulting in physical change to the environment, directly or indirectly.
Moreover, the revocation does not constitute a project under the California
Environmental Quality Act (“CEQA”) under Section 15061(b)(3) of the CEQA Guidelines,
as it can be seen with certainty that it will have no impact on the environment. Thus, this
matter is exempt under CEQA.
5
SECTION 4. For the foregoing reasons the City Council, given the discretion
authorized by AMC Section 6216.9, determined that appeal shall be denied, and the
business license for Sphinx Mart shall be revoked subject to the terms that no new
business license for any business in the City may be requested by the holder of the
revoked license for 12 months by the business holder’s employee, agent, partner,
director, officer, controlling stockholder or manager, for any business or location within
the city or by any other person for the same business on the same premises where the
business covered by the revoked license was conducted or for the same business on a
different premises within the City. If, after the period specified, application for a new
business license is made, the applicant must comply with all requirements of this Code
for issuance of a new business license. There shall be no automatic reinstatement of a
revoked business license, and the City is under no obligation to grant the new
application.
SECTION 4. The City Clerk shall certify to the adoption of this Resolution.
[SIGNATURES ON THE NEXT PAGE]
Passed, approved and adopted this 15th day of October, 2024.
ATTEST:
City Clerk
APPROVED AS TO FORM:
MICaeiJ. Maurer
City Attorney
Mayor of the City of Arcadia
6
Attachment No. 2
Appeal Letter, dated September 19, 2024
Attachment No. 3
August 13, 2024 Minutes of the Business
Permit and Review Board
Attachment No. 4
August 13, 2024 and September 10, 2024
Business Permit and Review Board
Resolution No. 2150 and Staff Report with
all the Attachments
DATE: September 10, 2024
TO: Business Permit and License Review Board
FROM: Lisa Flores, Deputy Development Services Director
Prepared By: John Wade, Business License Assistant
SUBJECT: RESOLUTION NO. 2150 - DENYING THE APPEAL AND UPHOLDING THE
REVOCATION OF THE BUSINESS LICENSE FOR SPHINX MART
LOCATED AT 142 E. HUNTINGTON DRIVE
Recommendation: Adopt
On August 13, 2024, the Business Permit and License Review Board voted unanimously to
deny the appeal and uphold staff’s recommendation to revoke the business license for
Sphinx Mart located at 142 E. Huntington Drive. City staff recommended a provision of
revocation that the business license holder, the holder’s employee, agent, partner, director,
officer, controlling stockholder or manager, shall not be allowed to apply for a new business
license within the City for at least twelve (12) months. After much discussion, the Board
agreed to modify Staff’s recommended term from twelve (12) months to six (6) months and
directed Staff to return with an amended Resolution. Attached is the amended Resolution
(Resolution No. 2150) for adoption.
Pursuant to Arcadia Municipal Code Section 6216.9, the Appellant will have ten (10) days
to appeal the decision. The appeal period ends on September 23, 2024, which is the last
business day (City Hall is closed on September 20, 2024). If no appeal is filed, Sphinx Mart
shall be required to cease their operation, and it must be entirely closed for business as of
September 24, 2024.
If any Board Members, or other interested party has any questions or comments regarding
this matter prior to the September 10, 2024, Business License and Review Board Meeting,
please contact Business License Officer, Alejandra Smith at (626) 574-5437 or by email at
asmith@ArcadiaCA.gov.
Business License Revocation
Sphinx Mart – 142 E. Huntington Drive
September 10, 2024
Page 2 of 2
Approved:
Lisa L. Flores
Deputy Development Services Director
Attachment No. 1: Resolution No. 2150
DATE: August 13, 2024
TO: Business Permit and License Review Board
FROM: Lisa Flores, Deputy Development Services Director
By: Alejandra Smith, Business License Officer
SUBJECT: RESOLUTION NO. 2150 - DENYING THE APPEAL AND UPHOLDING
THE REVOCATION OF THE BUSINESS LICENSE FOR SPHINX MART
LOCATED AT 142 E. HUNTINGTON DRIVE
CEQA: Not A Project
Recommendation: Adopt
SUMMARY
Sphinx Mart is a tobacco shop located at 142 East Huntington Drive. The Appellant and
business owner of Sphinx Mart, Mr. Saad Saadhom, is appealing the City’s decision to
revoke his business license. On June 25, 2024, the City revoked Sphinx Mart’s
business license after it was determined that the business was in violation of Arcadia
Municipal Code for selling cannabis products and California Health and Safety Code for
selling illegal mushrooms. On July 5, 2024, the Appellant filed a written appeal.
It is recommended that the Business Permit and License Review Board
adopt Resolution No. 2150 (refer to Exhibit No. 1), denying the appeal and upholding
the business license revocation for Sphinx Mart with the condition that this business
owner may not be allowed to apply for another business license within this City for
twelve (12) months from this revocation appeal.
BACKGROUND
On June 17, 2013, the City issued a business license to Sphinx Mart to allow for the
sales of tobacco at 411 East Huntington Drive, Unit 112. On September 19, 2019,
Sphinx Mart relocated to 142 East Huntington Drive and a business license was issued
to allow for the sale of tobacco, tobacco accessories, and snacks (refer to Exhibit
No. 3). The business has been operating in the City for eleven (11) years. A condition
of approval was placed on the business license that “no cannabis sales or alcohol”
shall be allowed. The business owner had a previous violation for having illegal
gambling machines in 2019, but brought his business into compliance soon after he
was cited.
Business License Revocation
Sphinx Mart – 142 E. Huntington Drive
August 13, 2024
Page 2 of 5
The subject commercial building has two units, one of which is currently occupied by
Sphinx Mart, and the other unit will be occupied in the future by a speakeasy bar. The
building is located on the south side of Huntington Drive in Downtown Arcadia. The
property is zoned CBD, Central Business District. The CBD zone is intended to promote
a strong pedestrian-oriented environment and to serve community and regional needs
for retail and service uses, professional offices, restaurants, public uses, and other
similar and compatible uses. According to the Los Angeles County Assessor’s
database, the commercial building is owned by PI Properties No. 79 LLC. The property
owner has been informed of all correspondence from the City related to this revocation.
In May of this year, Business License Services conducted an inspection of all the
tobacco stores in the City. It was discovered that Sphinx Mart had illegal cannabis
products for sale. Businesses which engage in the sale of cannabis products are
considered a marijuana dispensary and are prohibited under the Arcadia Development
Code Section 9109.01.140. It was also discovered that Sphinx Mart had illegal
psychotropic mushroom products for sale, which are considered a Schedule I Controlled
Substance under California Health and Safety Code Section 11054. The business was
operating in violation of the State and local law. As a result, on June 25, 2024, the
City sent a Notice of Revocation letter (refer to Exhibit No. 2) to the Appellant, and
a citation was issued for the violations. The letter informed Appellant that unless
an appeal was filed, the revocation required the business to close and cease
operation on July 6, 2024. The Appellant filed a written appeal on July 5, 2024 (refer
to Exhibit No. 4).
DISCUSSION
Pursuant to Arcadia Municipal Code (“AMC”) Section 6216.7(3), the License Officer
“may suspend or revoke any business license upon receipt of any of the following
information from any source that” “the holder of the license has violated any conditions
of said license, or has violated or permitted to be violated any law or laws of the United
States or the State, or any ordinance applicable to the premises where the business
covered by said license is conducted, or in connection with said business.”
In this case, Sphinx Mart’s business license was revoked for violating both their
business license conditions of approval and State and local law.
First, Sphinx Mart violated their business license conditions of approval which
prohibit the sale of cannabis, by selling various cannabis products (refer to Exhibit
Nos. 3 and 5).
Second, Sphinx Mart violated local law by operating as an illegal marijuana dispensary
in violation of local law.
Specifically, Arcadia Development Code (“ADC”) Section 9104.02.030(C)
prohibits marijuana dispensaries in all zoning districts in the City: “Marijuana
cultivation, dispensaries, manufacturers, and delivery of marijuana, as defined
Business License Revocation
Sphinx Mart – 142 E. Huntington Drive
August 13, 2024
Page 3 of 5
by Division 9 (Definitions), shall be considered prohibited uses in all zoning
districts of the City.”
Sphinx Mart is considered a marijuana dispensary under ADC Section
9109.01.140, which defines marijuana dispensary as “a facility where
marijuana, marijuana products, or devices for the use of cannabis or cannabis
products are offered, either individually or in any combination, for retail sale,
including an establishment that delivers cannabis and cannabis products as
part of a retail sale.” As a facility where marijuana products or devices for the
use of cannabis or cannabis products are offered for retail sale, as will be
explained below, Sphinx Mart was illegally operating as a marijuana
dispensary.
Marijuana (cannabis) is defined under ADC Section 9010.01.140 as “[a]ll parts
of the plant Cannabis sativa L., whether growing or not; the seeds thereof; the
resin extracted from any part of the plant; and every compound, manufacture,
salt, derivative, mixture, or preparation of the plant, its seeds or resin. It does
not include (1) Industrial hemp, as defined in Section 11018.5 of the California
Health & Safety Code; or (2) The weight of any other ingredient combined with
marijuana to prepare topical or oral administrations, food, drink or other
product.”
Marijuana products are defined under ADC Section 9010.01.140 as
“[m]arijuana that has undergone a process whereby the plant material has been
transformed into a concentrate, including, but not limited to, concentrated
cannabis, or an edible or topical product containing marijuana or concentrated
cannabis and other ingredients.”
Sphinx Mart was offering for sale the following cannabis/marijuana products:
•STIIIZY 40’s Infused Pre-Rolls (premium cannabis flowers infused with live
resin);
•TREHouse Delta 9+ Syrup and D9+ THC Syrup (chemicals found in cannabis
sativa plants);
•STIIIZY Weed Vape Pods (products which contain varying levels of THC and
CBD); and
•FRYD Extracts Vape Cartridge (products which contain THC, cannabis oil,
and live resin).
Refer to Exhibit No. 5 for photos of the illegal cannabis products.
Sphinx Mart’s business license was also revoked due to their sale of illegal mushrooms.
Mushrooms and mushroom products which contain psilocybin or psilocin are a
Schedule I Controlled Substance under Health and Safety Code section 11054(d)(18)
and (d)(19). Under Health & Safety Code Section 11378(2), possession for sale of this
Business License Revocation
Sphinx Mart – 142 E. Huntington Drive
August 13, 2024
Page 4 of 5
controlled substance is illegal. Exhibit No. 6 are photos of these illegal mushroom
products containing psilocybin.
Appellant is requesting that the City not revoke his business license on the basis that he
was not aware that these products are illegal since he was informed by his wholesaler
that the mushrooms comply with State law and are legal to sell. He has also stated that
this business is his only source of income and is requesting that the Board reconsider
this revocation and reinstate the business license with a contingency that he will comply
with all the rules and regulations that are applicable to the local law (refer to Exhibit No.
4).
Given that sale of cannabis products are a violation of local law, and sale of Schedule I
drugs containing psilocybin are a violation of State law, Appellant should have been
aware of these City and State regulations. The License Officer recommends that the
business license be revoked with a provision that no new business license for any
business in the City may be requested by the holder of the revoked license for twelve
(12) months. Also, this condition that a new license may not be requested for twelve
(12) months applies to the business license holder’s employee, agent, partner, director,
officer, controlling stockholder or manager, for any business or location within the city or
by any other person for the same business on the same premises where the business
covered by the revoked license was conducted or for the same business on a different
premises within the City. If, after the period specified, application for a new business
license is made, the applicant must comply with all requirements of this Code for
issuance of a new business license. There shall be no automatic reinstatement of a
revoked business license and the City is under no obligation to grant the new
application.
ENVIRONMENTAL ANALYSIS
The business license revocation is exempt from the California Environmental Quality Act
(“CEQA”) pursuant to Section 15358 (the activity will not result in a direct or reasonably
foreseeable indirect physical change in the environment) of the CEQA Guidelines,
California Code of Regulations, Title 14, Chapter 3, because it has no potential for
resulting in physical change to the environment, directly or indirectly. Moreover, the
revocation does not constitute a project under the California Environmental Quality Act
(“CEQA”) under Section 15061(b)(3) of the CEQA Guidelines, as it can be seen with
certainty that it will have no impact on the environment. Thus, this matter is exempt under
CEQA.
RECOMMENDATION
It is recommended that the Business Permit and License Review Board adopt
Resolution No. 2150, denying the appeal and uphold the decision to revoke the City’s
business license for Sphinx Mart and that Sphinx Mart employees, agents, partners,
directors, officers, controlling stockholders or managers not be allowed to apply for a
Business License Revocation
Sphinx Mart – 142 E. Huntington Drive
August 13, 2024
Page 5 of 5
new business license in the City of Arcadia for a period of twelve (12) months from the
date of this revocation appeal.
If the Board intends to deny this revocation, the Board should make a motion to deny
the revocation stating that the finding(s) does not satisfy with reasons based on the
record, and direct staff to prepare a resolution for adoption at the next meeting that
incorporates the Board’s decision and specific findings.
If any of the Business License and Review Board Members or other interested party has
any questions or comments regarding this matter prior to the August 13, 2024, hearing,
please contact Business License Officer, Alejandra Smith, at (626) 574-5437, or by
email at asmith@ArcadiaCA.gov.
Approved:
Lisa L. Flores
Deputy Development Services Director
Exhibit No. 1 – Resolution No. 2150
Exhibit No. 2 – Notice of Revocation Letter
Exhibit No. 3 – Sphinx Mart Business License
Exhibit No. 4 – Appeal Letter
Exhibit No. 5 – Photos of Cannabis Products
Exhibit No. 6 – Photos of Mushroom Products
Exhibit No. 1
Resolution No. 2150
Exhibit No. 1
1
RESOLUTION NO. 2150
A RESOLUTION OF THE BUSINESS LICENSE PERMIT AND REVIEW
BOARD OF THE CITY OF ARCADIA, CALIFORNIA, DENYING THE
APPEAL AND UPHOLDING THE REVOCATION OF THE BUSINESS
LICENSE FOR SPHINX MART LOCATED AT 142 E. HUNTINGTON
DRIVE
WHEREAS, on September 19, 2019, the City issued a business license to Mr.
Saad Saadhom, the business owner and Appellant of Sphinx Mart that is located at 142
East Huntington Drive, for the sale of tobacco, tobacco products, and food snacks The
subject business address is zoned CBD, Central Business District. A condition of approval
for Sphinx Mart’s business license provided that no cannabis sales or alcohol shall be
permitted and
WHEREAS, in May of 2024, Business License Services conducted an inspection
of all the tobacco stores in the City. It was discovered that Sphinx Mart had illegal
cannabis products for sale. The business was operating in violation of its business license
condition of approval prohibiting cannabis sales. Businesses which engage in the sale of
cannabis products are considered a marijuana dispensary and are prohibited under the
Arcadia Development Code Section 9101.01.140. The business was operating in violation
of local law. It was discovered that Sphinx Mart had illegal psychotropic mushroom
products containing psilocybin for sale, which are considered a Schedule I Controlled
Substance under the California Health and Safety Code Section 11054(d) and their sale
prohibited under the California Health and Safety Code Section 11378(2). The business
was in violation of the State law; and
WHEREAS, Section 6216.7(3), the License Officer may suspend or revoke any
business license upon receipt of any of the following information from any source that the
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holder of the license has violated any conditions of said license, or has violated or
permitted to be violated any law or laws of the United States or the State, or any ordinance
applicable to the premises where the business covered by said license is conducted, or
in connection with said business; and
WHEREAS, on June 25, 2024, a Notice of Revocation was issued to the Appellant,
and a citation was issued for the violations. The business was required to close their
business permanently on July 6, 2024, unless an appeal was filed; and
WHEREAS, on July 5, 2024, within the prescribed 10-day appeal period, an appeal
was timely filed by the Appellant, Mr. Saad Saadhom; and
WHEREAS, on August 13, 2024, a public hearing was held before the Business
License Permit and Review Board, at which time all interested persons were given full
opportunity to be heard and to present evidence.
NOW, THEREFORE, THE BUSINESS LICENSE PERMIT AND REVIEW BOARD
OF THE CITY OF ARCADIA, CALIFORNIA, HEREBY RESOLVES AS FOLLOWS:
SECTION 1. The facts set forth above are true and correct and are incorporated
herein by reference.
SECTION 2. The Board finds that based upon the entire record, pursuant to
Section 6216.7(3) of the Arcadia Municipal Code, the business holder of the license has
violated both the conditions of approval of said license, which prohibits the sale of
cannabis or cannabis products, and the Arcadia Development Code (“ADC”) Section
9104.02.030(C) which prohibits marijuana dispensaries in all zoning districts in the City.
As a facility where marijuana products and/or cannabis products are offered for retail
sale, Sphinx Mart is considered a marijuana dispensary under ADC Section
3
9109.01.140, which is prohibited in the City of Arcadia. Sphinx Mart’s business license
was also revoked due to the sale of illegal mushrooms. Mushrooms and mushroom
products which contain psilocybin or psilocin are a Schedule I Controlled Substance.
Sale of this controlled substance is illegal under Health & Safety Code Section 11378(2).
Attachment No. 4 are photos of this illegal substance these illegal mushroom and
products containing psilocybin.
Given that the sale of cannabis is a violation of local law, and sale of Schedule I
drugs containing psilocybin is a violation of State law, the Appellant should have been
aware of these City and State regulations, and the License Office is recommending that
the business license be revoked with a provision that no new business license for any
business in the City may be requested by the holder of the revoked license for twelve
(12) months by the business holder’s employee, agent, partner, director, officer,
controlling stockholder or manager, for any business or location within the city or by any
other person for the same business on the same premises where the business covered
by the revoked license was conducted or for the same business on a different premises
within the City. If, after the period specified, application for a new business license is
made, the applicant must comply with all requirements of this Code for issuance of a
new business license. There shall be no automatic reinstatement of a revoked business
license and the City is under no obligation to grant the new application.
SECTION 3. The business license revocation is exempt from the California
Environmental Quality Act (“CEQA”) pursuant to Section 15358 (the activity will not result
in a direct or reasonably foreseeable indirect physical change in the environment) of the
CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has
4
no potential for resulting in physical change to the environment, directly or indirectly.
Moreover, the revocation does not constitute a project under the California
Environmental Quality Act (“CEQA”) under Section 15061(b)(3) of the CEQA Guidelines,
as it can be seen with certainty that it will have no impact on the environment. Thus, this
matter is exempt under CEQA.
SECTION 4. For the foregoing reasons the Business License Permit and Review
Board determined that the business license for Sphinx Mart shall be revoked subject to
the conditions of approval that no new business license for any business in the City may
be requested by the holder of the revoked license for twelve (12) months by the business
holder’s employee, agent, partner, director, officer, controlling stockholder or manager,
for any business or location within the city or by any other person for the same business
on the same premises where the business covered by the revoked license was
conducted or for the same business on a different premises within the City. If, after the
period specified, application for a new business license is made, the applicant must
comply with all requirements of this Code for issuance of a new business license. There
shall be no automatic reinstatement of a revoked business license and the City is under
no obligation to grant the new application.
[Signature on the next page]
5
Passed, approved and adopted by the Business License Permit and Review
Board this 13th day of August 2024.
_________________________
Vincent Tsoi,
Chair, Business License Permit and
Review Board
ATTEST:
______________________
Lisa L. Flores
Secretary
APPROVED AS TO FORM:
______________________
Michael J. Maurer
City Attorney
Exhibit No. 2
Notice of Revocation Letter
Exhibit No. 2
Exhibit No. 3
Sphinx Mart Business License
Exhibit No. 3
Exhibit No. 4
Appeal Letter
Exhibit No. 4
Exhibit No. 5
Photos of Cannabis Products
Exhibit No. 5
Figure 1 – Cannabis Products
Products in yellow box – STIIIZY 40’s Infused Pre-Rolls
Products in blue box – TREHouse Delta 9+ Syrup and D9+ THC Syrup
Products in red box – STIIIZY Weed Vape Pods
Products in green box – FRYD Extracts Vape Cartridge
Figure 2 – Photo taken at Sphinx Mart
STIIIZY 40’s Infused Pre-Rolls
Figure 3 – Photo from STIIIZY
website
Figure 4 – Photo from STIIIZY
website
Figure 5 – Photo taken at Sphinx Mart
TREHouse Delta 9+ Syrup and D9+ THC Syrup
Figure 7 – Photos from Figure 8 – Photos from
TREHouse website TREHouse website
Figure 6 – Photos from
TREHouse website
Figure 9 – Photo taken at Sphinx Mart
STIIIZY Weed Vape Pods
Figure 10 – Photo from STIIIZY website Figure 11 – Photo from STIIIZY website
Figure 12 – Photo taken at Sphinx Mart
FRYD Extracts Vape Cartridge
Figure 13 – Photos from Flower
Avenue Cannabis Online Store Figure 14 – Photos from Flower
Avenue Cannabis Online Store
Figure 15 – Photo taken at Sphinx Mart
Front view of STIIIZY Premium THC Pods
Figure 16 – Photo taken at Sphinx Mart
Back view of STIIIZY Premium THC Pods
Exhibit No. 6
Photos of Mushroom Product
Exhibit No. 6
Figure 1 – Mushroom Product
Product in yellow boxes – Magic Mushrooms
Figure 2 – Mushroom Product