SLO finally set to tackle marijuana, but will it allow stores downtown?

As the recreational marijuana industry blossoms statewide on Jan. 1, the city of San Luis Obispo will at last take up the issue of how to regulate the product, including where to allow storefronts and how to tax it.

The City Council is expected to formally discuss its marijuana policy early next year, though a meeting date hasn’t been set. An ordinance on commercial marijuana is expected by late spring or early summer. California’s commercial licensing begins Jan. 1, but San Luis Obispo’s licensing regulations must be adopted before businesses can apply.

City staff and council members are evaluating a variety of issues, such as whether cannabis shops might be allowed in the downtown as well as how marijuana may be taxed, cultivated and delivered.

San Luis Obispo leaders say they’ll strive to adopt laws that reflect the political will of city voters, who heavily supported Proposition 64 — which legalized marijuana in California — with a 67.5 percent majority.

“There was a high degree of support from city voters for Prop. 64, higher than the statewide vote, in fact (57.1 percent in favor),” said Mayor Heidi Harmon. “As local leaders, that’s important to keep that in mind. We’ll do our best to roll it out in the ways the community is hoping for.”

In contrast, county supervisors spent months debating marijuana policy before finally voting 3-2 last week to adopt a slate of regulations that are widely viewed as restrictive, including to prohibit marijuana stores in unincorporated communities.

Harmon said that the city will base its decisions on “facts and real data,” saying that while she’s not a marijuana smoker, she even might experiment with growing cannabis in her backyard to observe firsthand the strength of odors and what cultivation entails. State law currently allows residents to grow up to six plants for personal use.

“While there’s no doubt challenges (with regulation), there’s no need to panic about it,” Harmon said. “People already use it, and we need to avoid a fear campaign that isn’t necessarily based on facts.”

The city currently has a prohibition on all commercial cannabis until it can get its new policies on the books.

Community Development Director Michael Codron said the city’s timing on establishing commercial marijuana regulation is partly due to other priorities that required more attention this year.

“Our major city goals are housing and climate action, which took much of our time,” Codron said. “Waiting has given us time to see how other jurisdictions in our county and across the state are handling (marijuana regulation).”

Initial city visions include establishing potential locations for cannabis retail sales, creating certain limits on cultivation and manufacturing, and developing a qualification system for vendor applicants, among other concepts. Those will be subject to council input and approvals.

The idea of outdoor cultivation doesn’t make a lot of sense for an urban area like San Luis Obispo without much agricultural land, Codron said, and thus the city isn’t considering allowing outdoor cultivation.

At a cannabis education forum in October, Police Chief Deanna Cantrell expressed her concerns about having retail marijuana stores in the downtown, saying it has the highest concentration of calls for police services and policing the zone could be difficult.

She said marijuana retail businesses have seen high rates of robberies in states like Colorado, where stores opened in 2014.

“Downtown is congested and there’s a lot of vehicular traffic,” Cantrell said. “It could be very difficult for law enforcement to get around in downtown when we need to.”

Cantrell said it could make sense to put retail stores on major arterial streets where they could be easily monitored by patrol officers, as opposed to being tucked away in more hidden locations.

Council member Aaron Gomez also said that he’s concerned that marijuana businesses in the downtown core could price out other retail businesses for rent space.

“Those stores can basically spend whatever they want,” Gomez said. “If those businesses are paying above whatever other people are paying in the downtown, it creates more problems.”

But Gomez said he’s excited to talk about healthy uses of cannabis, including organic products, rather than marijuana that serves as “more of a drug than a therapy item.”

Gomez said the city will need to find the middle ground of ensuring that taxation pays for city administration and enforcement and generates revenues without driving cannabis producers to the black market.

“Extreme lows in taxes don’t pay for it, and extreme highs drive people away,” Gomez said.

Codron said that depending on the City Council’s approvals of commercial marijuana businesses, an excise tax on gross receipts could possibly be voted on in the November election. But cannabis businesses could be established before then with land-use agreements that require fees.

Based on preliminary estimates, if the city allows cannabis cultivation and distribution in fiscal year 2018-19, the city could realize up to $500,000 in taxes that year, incrementally increasing to up to $3 million by 2020-21.

Community groups like the Chamber of Commerce and Downtown SLO will weigh in on their commercial marijuana preferences, and the city has established an online survey to garner community feedback at https://www.peakdemocracy.com/portals/189/Issue_5526.

This story was originally published December 7, 2017 at 6:49 PM with the headline "SLO finally set to tackle marijuana, but will it allow stores downtown?."