By Theresa-Marie Wilson ~
The Grover Beach City Council is on the verge of a turnaround on its stance on medical marijuana.
The legalization of recreational use of cannabis in California is likely to be a hot button for voters this November, but the potential impact also made its way to individual cities.
Earlier this year, jurisdictions across the state scrambled to get policy on the books before state legislation came down the pipeline.
The Grover Beach City Council originally voted to ban the cultivation of cannabis, which seemed in keeping with the previous prohibition of brick and mortar dispensaries, but they promised to revisit the issue.
As of last week, the council directed staff to take a closer look at regulating medical marijuana use including zoning laws allowing businesses to open shop. The city could also be the first in the county to ask voters to approve a tax initiative on the November ballot.
“In everything I have heard and everything I have seen, the industry is coming,” said Councilmember Jeff Lee who was in favor of moving the conversation forward. “Whether it is here, it is just a matter of how it enters the market. I think Grover Beach has an opportunity.”
The rest of the council agreed.
“I definitely think it is time to get engaged in this from a compassionate standpoint as well as a revenue standpoint,” said Councilwoman Barbara Nicolls.
The process is expected to take about four to six months from the beginning of the process to adoption of the ordinance.
As of 2003, California allows issuing identification cards for qualified patients and allowing patients and their primary caregivers to collectively or cooperatively cultivates medical marijuana. Law does not regulate or restrict local zoning requirements for medical marijuana dispensaries. However, uncertainty remained as federal law continued to categorize marijuana as a controlled substance.
In October of 2015, Gov. Jerry Brown signed the Medical Marijuana Regulation & Safety Act, a comprehensive package of bills to establish a regulatory structure for medical marijuana. Cities were desperate to establish policy if only to keep some control of the issue. Individual municipalities would continue to manage local medical marijuana legislation via the established laws related to cultivation in place Mar. 1 of this year.
For those cities that failed to lay down land use regulations or ordinances regulating or prohibiting the cultivation of marijuana, the state became the sole licensing authority.
There really isn’t a shortage of business waiting to open the doors to sell marijuana. Four establishments have already approached Grover Beach. “Recently staff has met with four groups that are requesting a municipal code amendment,” said Community Development Director Bruce Buckingham, “to allow a variety of commercial medical marijuana uses including dispensaries, cultivation, manufacturing, laboratory testing, and mobile delivery.”
Those groups include:
• The Monarch – proposal to operate a dispensary, indoor cultivation, laboratory testing, level one manufacturing, and mobile delivery.
• Beachside Health & Wellness Center – proposal to operate a dispensary and mobile delivery.
Point Bay Distributors – Proposal for level one manufacturing, distribution, and laboratory testing.
• Elite Care – Proposal to operate a dispensary and mobile delivery.
• Point Bay Distributors – Proposal for level one manufacturing, distribution, and laboratory testing.
The ordinance could cover any or all of the above uses.
“That is a decision that would be potentially flushed out in the six-month process and the public review and input process,” said City Attorney Martin Koczanowicz.
Taxing the manufacturing or sale of medical marijuana products requires approval by a majority vote of Grover Beach voters on a general election ballot. The next general election is November 2016 followed by the November 2018 election.
“If the council moved forward today, you would likely direct us only to draft an ordinance that would address medical marijuana since recreational use has not been approved,” Buckingham said. “If you waited until November, and it was approved, and the council wanted to go in that direction, then you could draft an ordinance that would regulate both of those uses.”
Should the ballot measure be approved, the city would receive increased revenues based on the amount of the tax and the number of businesses operating within the city.
If the measure is not placed on the 2016 ballot and the city decides to allow legal marijuana business, it could not apply taxes until voters approved the measure in 2018.
“There is no revenue generating mechanism other than a tax,” said Koczanowicz. “In order to pass a tax, it would need to go before the voters.”
As for the actual tax amount, that would also be up to the council’s consideration and could range from the square-footage usage of the building to the amount manufactured.
Collecting sales tax on legal marijuana is still up in the air.
“The issue of sales tax is open at this time; it is going through some revisions,” said Koczanowicz. “The determination hinges on whether or not it is medicine—medicine is not taxable.”
The state, however, is in the process of establishing its own tax that would not be shared with local agencies. Officials said that in meetings with the Grover business applicants, they have indicated support for local taxation, but expressed concerns that over taxation could be detrimental to sales.
“The powers are separate,” said Koczanowicz. “The city’s action does not supersede the state action. It is likely the state will be taxing this activity as well. The city has the ability and the power to go to the voters and have taxes imposed through the voters’ action.”
There is more money to be made beyond sales tax, the adoption of a medical marijuana ordinance would allow the city to charge a fee for all staff time spent on future development applications, background checks, facility inspections, and all other time spent by staff related to enforcing the adopted ordinance, the same as it does with any other development application.
If the council directs staff to draft an ordinance regulating medical marijuana dispensaries, cultivation, manufacturing/testing, and mobile delivery, it would cost $30,000 including $10,000 in city attorney costs, $20,000 for a consultant to prepare the CEQA document and another $10,000 in additional staff time.
The total estimated costs related to the ballot measure is $25,000–$15,000 for placement and $10,000 for the city attorney to draft the ballot.
Another option the council is considering would be for the business applicants to fund all or a portion of the direct costs and/or staff time to draft the ordinance. This would still require the same amount of staff time, but the city would be reimbursed by the applicants for all or a portion of the costs associated with the regulatory ordinance and/or ballot measure.
Several cities including Santa Cruz, San Jose, Palm Springs, Oakland, and Sacramento have approved tax measures and the cities of Santa Barbara and King City will have tax measures on the November 2016 ballot.
The city has until Aug. 12 to submit the ballot measure to San Luis Obispo County. The council is expected to introduce and ordinance at the July 18 meeting with a second reading, and likely approval, on Aug. 1.
