Arroyo Grande to allow more cannabis deliveries — but no warehouses or other businesses

Tami Peluso, left, and Cynthia Gonzalez co-founded Elite Care California, the only marijuana business in San Luis Obispo County to have obtained a state license, but it was revoked this month over a dispute over location of its storage warehouse.
Tami Peluso, left, and Cynthia Gonzalez co-founded Elite Care California, the only marijuana business in San Luis Obispo County to have obtained a state license, but it was revoked this month over a dispute over location of its storage warehouse. dmiddlecamp@thetribunenews.com

Arroyo Grande is making moves to allow more medical cannabis deliveries into the city, but it won't immediately help the county's first state-licensed marijuana business, which saw its license revoked this month due to a dispute over where it could store its goods.

In a tense meeting Tuesday night, City Council members stressed that they understand the importance of medical cannabis deliveries in the city, but also expressed frustration at the difficulty in meshing conflicting local and state marijuana regulations.

"I think we can all agree, and I think probably the council agrees, that medical cannabis is absolutely effective; it works for all different kinds of diseases, anxiety, etc. I'm not here to argue that, and I don't think any of us doubt that," Councilwoman Kristen Barneich said. "My goal when creating ordinances is to do what is best for the citizens of Arroyo Grande — it's not to do what is best for a couple of people or one business."

The City Council voted 3-2 — with Mayor Jim Hill and Councilwoman Caren Ray dissenting — to remove the medical cannabis delivery permitting system the city put in place last year, and instead allow any service that obtains a state license to make deliveries into the city. The amendment will have to come back to the council for final approval at a later date.

The issue came to the City Council after Elite Care California had its temporary state license revoked amid a disagreement on where the service was allowed to keep a "premise" or physical location.

Elite Care was the only business to receive a permit last year to deliver in Arroyo Grande. Under the city's current ordinance, up to three businesses are allowed to operate, but they must receive both a city permit and a state license.

Owners Cynthia Gonzalez and Tami Peluso said while applying for their permanent state license, they were told by the California Bureau of Cannabis Control their premise or physical location had to be in the city that permitted them. Peluso previously told The Tribune the location in question would be a warehouse in Arroyo Grande.

City Development Director Teresa McClish previously said the service was permitted to make deliveries into the city, but couldn't have a physical location in Arroyo Grande because that would violate existing ordinance prohibiting cannabis activity except for medical deliveries.

Elite Care's temporary state license was revoked June 5 because of the failure to resolve the premise question, halting deliveries to its 400 patients.

Several patients spoke at the meeting Tuesday night, including Arroyo Grande resident Devin Ward, whose rousing words about his struggle with pain related to his ALS in 2016 inspired the city to allow deliveries in the first place.

Ward, speaking through an assisted communication device, asked for the council to think of the patients who rely on medical cannabis when making their decision.

Sean Donahoe for CFAM Mangement Group was behind a referendum to overturn San Luis Obispo County’s cannabis ordinance.

"It's no secret this city feels emboldened by the new state cannabis laws, which permit local control; you've prohibited everything you can, while the rights of patients like me go ignored," he said. "It is patients who should be front and center in this debate. It is clear that your fantasy of a city without cannabis is a farce. It is time to stop the outdated stigma."

Councilman Tim Brown said in an impassioned speech during council comments he personally uses medical cannabis to treat chronic pain from cerebral palsy, but called out Elite Care for not being forthright with the city about their efforts to establish a location, and questioned why it could not have been located in Grover Beach where more cannabis businesses have already been permitted.

"When you hear me criticize what is going on, it is from a position of experience," Brown said. "The idea that if we don't give (Elite Care) exactly what they want, that we are not going to give our citizens what they need is total nonsense. It's not reality."

Hill and Ray in their dissent both advocated for amending the existing ordinance to allow a physical premises in Arroyo Grande, thus allowing Elite Care time to resolve its licensing issue.

"My concern is that the people who need medicine in the city of Arroyo Grande can get that as expeditiously as possible, and it appears to me that the way to do that is to modify our ordinance," Hill said. "We have established — and I think we owe it to our residents to establish — the highest standards, and Elite Care met those high standards for delivery."

The council ultimately voted to remove their own permitting process and instead make the state licensing system their primary method of regulation. This opens up the city to outside services that are already permitted by the state.

According to the state's Cannabis Control Bureau website, there is one licensed non-store front medical delivery service in San Luis Obispo County: Dubs Green Garden out of Paso Robles. There are more than 115 licensed delivery services across the state.

The council also chose to continue to ban all other commercial cannabis activities, including Elite Care having a physical location in Arroyo Grande.

It is unclear what will happen to Elite Care after Tuesday's decision: Gonzalez previously told The Tribune that if the council did not support their request to keep operating in Arroyo Grande with its warehouse there, it would be forced to move to a different area.

Gonzalez did not respond to a request for comment on the decision Tuesday night.

Kaytlyn Leslie: 805-781-7928; @kaytyleslie