Sacramento has begun accepting applications for commercial marijuana cultivation, starting the process of permitting licensed grow rooms to operate in mostly light industrial zones in the capital city.
The city received more than 70 applications for cultivation licenses on Monday, the first day of the application period. Applications will undergo review by the city planning commission to ensure potential businesses adhere to distance requirements from schools and parks, and other permitting requirements.
City officials said it will be many months before most of grow rooms are allowed to go into business under separate operating and conditional use permits.
“It really depends on how long it takes to get through the conditional use permit process,” said Brad Wasson, the city’s revenue manager. “That can be three months. Six months is about average. It could take longer if there are concerns.”
Previously, the city received 800 inquiries from potential applicants, officials said. Staff reports say Sacramento is expected to license 200 cultivation businesses.
In addition, the City Council is expected to set rules for future applications for other cannabis businesses, expected to include 25 marijuana product manufacturers, four testing labs, five transportation businesses and 30 marijuana delivery business – on top of deliveries that will be allowed for the city’s existing 30 marijuana dispensaries.
The council last month approved first-year permit fees ranging from $9,700 for indoor cultivation rooms with up to 5,000 square feet of marijuana to $28,910 for facilities of up to 22,000 square feet, with the annual fees dropping to a range of $8,240 to $26,630 the second year.
The marijuana companies also will be subjected to the city’s 4 percent standard business tax, plus sales taxes, and the city could put an additional taxation measure before voters. Currently, Sacramento collects $4 million annually from its cannabis dispensaries under a 4 percent medical marijuana tax approved by voters in 2010.
The approval of cultivation permit fees was the first step in an effort to raise an additional $6.3 million in revenues from pot businesses to cover costs of regulating the cannabis industry in Sacramento and carry out code enforcement actions to remove illegal cultivators from residential neighborhoods or other zones where such businesses are prohibited. The effort is expected to require 54 positions over the next three years, including 32 new city hires at a cost of $5.4 million.