California’s capital city is contemplating going into the marijuana-cultivation business, but not without considerable caution and angst.
The Sacramento City Council on Tuesday is expected to vote on a working framework to begin creating rules for licensing, regulating and taxing indoor commercial pot gardens. They would grow medical marijuana for California cannabis businesses, including 30 permitted dispensaries within Sacramento city limits.
The City Council’s law and legislation committee also has endorsed a parallel move, expected to be considered later by the council, that would ask voters to raise the city’s business occupancy tax of 4 percent to 5 percent in the case of commercial marijuana growers. The increase would have to be approved by a two-thirds vote, and it’s being considered for a June ballot initiative.
The sponsor of the initiative effort, Councilman Jay Schenirer, said the cultivation taxes could amount to $5 million annually for the city. His proposal also calls for the tax revenues to be spent on youth programs.
“I’m pretty comfortable with that estimate” of city cultivation revenues, Schenirer said. “Everyone else in this area is banning it. So we’re the only game in this area.”
Sacramento, which began licensing medical marijuana stores in 2010 while capping their number, has taken a politically tolerant view toward marijuana businesses while Sacramento County and neighboring cities and counties have enacted strict bans on dispensaries and bans or restrictions on cultivation.
Sacramento collected $2.86 million from dispensaries in the 2014-15 fiscal year from a 4 percent medical marijuana tax.
Despite projections of new revenues, City Council members are split on a plan to permit indoor commercial cultivation in areas of the city zoned for industrial or agricultural use or dense commercial construction.
A political rift centers on the fact that the staff proposal – designed to keep pot cultivation more than 600 feet from schools or parks – means concentrating the overwhelming majority of grow sites in two of eight council districts.
“As a council member that represents a district most impacted by this, I’m still uncomfortable with acting on this,” Councilman Allen Warren said last Tuesday, as the City Council decided to table an anticipated vote on the cultivation guidelines.
“I have been an advocate and support medical marijuana,” Warren said. “I want to support this issue. But I believe it has to be right.”
Warren complained that the city’s commercial cultivation plan would allow a disproportionate share of grow houses north of Interstate 80 and east of Dry Creek Road in his northeastern Sacramento District 2.
Also expressing concern was District 6 Councilman Eric Guerra, whose southeastern Sacramento region stands to accommodate marijuana-growing operations in industrial and warehouse districts south of Jackson Road, east of Power Inn Road and West of Watt Avenue.
“We didn’t talk to the communities,” Guerra said at last week’s council meeting. “We didn’t look at what other cities are doing. And we know that it only impacts two very specific parts of the city.”
He asked the city’s staff to try to come up with a plan to more evenly distribute where cultivation operations may go.
Sacramento now allows marijuana cultivation of up to 400 square feet in private homes for individual medicinal users. The city’s staff is recommending commercial cultivation for nonresidential zones, with a requirement that all growing take place in enclosed buildings and out of public view.
The intensity of the city discussions reflects new challenges of state medical marijuana regulations signed by Gov. Jerry Brown in October. Those rules will create a governance system for marijuana businesses, with both state and local permits required for commercial operations. A new state Bureau of Medical Marijuana Regulations, to be funded with taxes and fees on marijuana businesses, is to be staffed over the next two years.
Cities around California have been rushing to regulate marijuana or enact bans because of language in the regulations that required local governments to put in place cultivation rules by March 1. That provision has been stripped away in a cleanup bill, Assembly Bill 21, which passed in the Assembly on Thursday and is expected to be signed by Brown.
Meanwhile, numerous Sacramento marijuana-growing facilities – many supplying local dispensaries – are already operating, secreted away in unknown industrial spaces or other areas within city limits.
“There are many,” Schenirer said of the cultivation rooms. “But they are not regulated. It’s generating nothing in taxes out of it.”
Schenirer, who represents District 5, has proposed that Sacramento consider allowing the growing facilities to come forward and register with the city under an agreement that would allow them to continue to operate – at least until the city adopts strict rules governing siting, security and other issues.
Medical marijuana advocate Marcia Blount of the Brownie Mary Democratic Club of Sacramento, hailed that idea.
“If there are a bunch of grows out there and nobody knows about them, obviously, they are not a nuisance,” she said.
Kimberly Cargile, operator of A Therapeutic Alternative dispensary in midtown Sacramento, said local medical marijuana stores are poised to request as many as 90 commercial cultivation permits. Another advocate, Richard Miller, Sacramento director for the medical marijuana group Americans for Safe Access, said requests for growing permits could reach 150 if recreational pot use is legalized under a November ballot initiative.
New state medical marijuana regulations allow licensing of indoor growing facilities totaling up to 22,000 square feet of plants. Cargile said most local grow rooms are much less than 5,000 square feet.
“I don’t think anybody is thinking of doing 22,000 feet,” she said.
The prospect of a growing surge is worrisome to Tracey Schaal, executive director of the Power Inn Alliance, which represents more than 10,000 businesses in southeastern Sacramento.
Schaal urged City Council members to act slowly and cautiously before sanctioning marijuana cultivation. She said other business owners are concerned that “these facilities can lead to increased crime and blight.”
She also urged the council to mandate conditional-use permits for all grow rooms – which would require public notices to inform nearby business and residents of the pending operations.
“My request to you is that we have the opportunity to review these facilities so that we will be able to know who our neighbors are,” Schaal said.
But Cargile said marijuana advocates cringe over such public disclosure. She said that could create the very crime that other business owners fear.
“The fewer people who know” of the cultivation operation, “the less the impact will be on the community,” Cargile said.
That view was reflected in a city staff report, prepared for last Tuesday’s City Council meeting. It noted that the city’s Planning and Design Commission recommended that the council disallow grow rooms in commercial areas because those areas require a conditional-use permit and public notification.
The document said such notification “would bring a cultivation site to the attention of others, and that is a safety concern.”
However, commercial zones exist throughout the city, and cultivation there would increase the possibility of a more equitable distribution of grow sites.
Allowing cultivation in manufacturing, warehouse or agricultural areas, which differ from commercial zones, wouldn’t require the same public notification without the city adopting a specific rule.
Even as the city works toward allowing commercial cultivation, City Council members plan to vote on a 45-day moratorium that would prohibit the issuance of any growing permits while they formalize regulations. Guerra suggested that the moratorium may have to be extended as the city works on the issue.
“It’s not legal now,” he said of marijuana-growing operations. “It’s still illegal. We’re trying to find a legal path.”