Novato’s second round of prospective cannabis business owners received unanimous approval from the City Council.

The council voted last week to conditionally approve three businesses, including a new cannabis delivery business, a 7-year-old cannabis testing laboratory and an all-in-one microbusiness. The businesses must receive state licenses and then return to the city for final approval before they can receive a city license.

The proposed Marin Haven would become the city’s second cannabis delivery business and is proposed to be located at 4 Commercial Drive. Attempts to contact Marin Haven owner Suzanne Brogger on Monday were unsuccessful.

The Velvet Fog Cannabis Co. also received conditional approval from the council. The microbusiness, which would include cannabis product manufacturing, distribution and delivery services, had previously received council approval as part of the first round of cannabis business applicants in 2021.

At the time, Velvet Fog was set to be located at 5400 Hanna Ranch Road, but now proposes to set up shop in a warehouse at 11 Digital Drive because of construction delays at the previous location. The company’s chief executive officer, Michael Clarkson, said he and his business partners plan to open in July or August depending on how the state and local permitting processes last.

Clarkson said they decided to start the business because he felt the cannabis industry focuses too much of its marketing and its jargon toward younger adults, but does not give enough attention to older adults.

“It’s something I think we can provide that niche in the market in our local Marin County,” Clarkson said on Monday.

The third license went to CB Labs, which has been operating since 2015 under the city’s medical marijuana program.

After adopting an ordinance in 2019 to allow for recreational cannabis businesses in Novato, the council inadvertently caused CB Labs to be out of compliance and ineligible for a license. The lab at 1615 Hill Road is located within 600 feet of the Hill Education Center at the Hill Recreation Area, which violated the city’s minimum setback rules for businesses near youth centers such as schools and playgrounds. To address this, the council reduced the minimum setbacks for testing laboratories last year to a range of up to 300 feet, with the distance at the council’s discretion.

“I’m grateful to the city of Novato for allowing us to continue to operate,” CB Labs co-owner Scot Candell, a Larkspur city council member, said on Monday. “We look forward to many years of a flourishing partnership in the future.”

All three businesses are inaccessible by the public. The city does not allow storefront retail sales of cannabis.

While the city does not have a special tax for cannabis businesses, it does enter into “community benefit agreements” where the businesses provide the city or other organizations such as nonprofits a percentage of its gross receipts each year. All three businesses will be providing 1.5% to 4% of their gross receipts in these agreements.

The city staff now plans to accept delivery business applications year-round. While the city has put a cap on the number of licenses it gives out to other businesses, such as cultivation or manufacturing operations, no cap exists for delivery businesses.

“Those are most of the inquiries I get,” Novato senior management analyst Will Morat told the council. He said requests come in every few weeks, if not weekly.

While a majority of Novato voters approved Proposition 64, the statewide ballot measure in 2016 that legalized recreational cannabis in California, some residents have expressed opposition to the change.

“I don’t have a whole lot of appreciation for the City Council allowing pot stores to open in Novato,” resident Sam Roth told the council.