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Sacramento leaders feud over cash from legalizing commercial marijuana grows

Sean Norton cleans the covers on grow lights in the marijuana vegetative room at Medicine Man in Denver. Norton says he’s a utility employee and helps out wherever he can at the dispensary and grow operation. Sacramento may soon license commercial marijuana growing operations.
Sean Norton cleans the covers on grow lights in the marijuana vegetative room at Medicine Man in Denver. Norton says he’s a utility employee and helps out wherever he can at the dispensary and grow operation. Sacramento may soon license commercial marijuana growing operations. MCT

A proposal to allow commercial cultivation of cannabis in Sacramento has stalled as City Council members jockey for control of public revenues from the industry.

The plan was pulled from the council agenda Tuesday as Councilmen Allen Warren and Eric Guerra push for mandatory money for impacted neighborhoods.

Cultivation could bring least $2.2 million in annual revenues, according to Ranelle Kawasaki of the city’s finance department. The amount of revenue depends on how many licenses the city issues and the size of grows.

About 300 to 400 entrepreneurs are interested in starting a legal cannabis cultivation business in the city, according to Kawasaki.

Warren said in a public letter on Thursday that at least some marijuana money should benefit neighborhoods that house marijuana businesses because they could face direct impacts, such as increased crime, from the new endeavors. He wants a “community benefit” system that gives money to neighborhoods similar to what exists for billboards and cell towers.

Warren, who represents Del Paso Heights, said keeping some money in specific neighborhoods is crucial to win his support for any ordinance.

He is concerned that low real estate prices and vacancies, even along the main streets in his district, would make the area attractive for growers. In turn, that could turn off retailers and create further economic challenges for the struggling area. Warren is proposing a $50,000 annual licensing fee for each business, with money going to the district that houses it.

Warren said he would like to see the grow facilities limited to industrial areas to start, and hefty penalties placed on illegal growers.

“I don’t want my commercial districts with facilities like that,” said Warren. “We want to promote retail and active business on our commercial corridors.”

Councilman Eric Guerra, whose District 6 includes Elmhurst and Tahoe Park, voiced similar concerns, adding that his and Warren’s districts are already negatively impacted by illegal marijuana grows. He said some money from licensed cultivators should help shut down rogue establishments.

“I’m trying to look at it from the practical standpoint of how do we get this out of our neighborhoods,” said Guerra. “My interest in this issue is more of mitigating the impacts to the community.”

The current proposal would make community benefit agreements voluntary. Councilman Jay Schenirer, who has championed the ordinance, said it isn’t necessary to regulate those agreements because marijuana industry members “are willing to do something over and above” without the mandate.

Schenirer has long advocated that marijuana proceeds be used to pay for increasing youth programs in the city. He wants to create and adequately fund a new Department of Youth, and has proposed using marijuana proceeds for that purpose.

Schenirer pushed a city ballot measure in June that would have imposed a 5 percent special tax on marijuana cultivation with funds going toward city and nonprofit children’s programs, but it fell short of the necessary two-thirds voter approval required for passage.

Under the latest plan, Schenirer said the Council could earmark funds for youth programs during the annual budget process, and that it would not be bound to spend marijuana money on kids. He said it’s important to create an ordinance soon – with voters considering legalization of recreational marijuana on the November ballot – in order to signal that Sacramento welcomes the industry.

“People in the industry are making decisions,” about where to locate, he said. “The longer we wait, the more potentially we miss out on as far the industry coming to Sacramento.”

The proposal currently under consideration by the Council would allow indoor grows of up to 22,000 square feet in commercial, agricultural and industrial areas. Each facility would be independently evaluated for a license through the city’s regular permitting process. City Council members may be able to request that the full Council review individual permits if an issue arises, Schenirer said.

It would allow dispensaries to legally deliver their goods as well. Warren opposes including delivery in the ordinance and said it should be pushed to later discussion.

The ordinance would not cap the number of licenses issued, but would allow neighborhoods to self-regulate locations and the number of facilities through the permit process, Schenirer said

The cultivation ordinance will likely return to the City Council on Nov. 15.

Anita Chabria: 916-321-1049, @chabriaa

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