CALIFORNIA CITY — The City Council narrowly agreed to expand the number of delivery-only marijuana retail outlets in the city from two to 10, an ordinance that will go into effect in the new year.
On Dec. 11, the first council meeting with newly elected Mayor Chuck McGuire and two new councilmembers, the council voted 3-2 to allow the additional delivery-only outlets. Council members Donald Parris and Gene Stump dissented, after proposing the matter be tabled until the application process for the two such outlets already approved is underway and the council can see if the response warrants allowing additional outlets.
During the same meeting, the council approved a revised application process for all commercial marijuana businesses in California City, as well as the new process for retail outlets. That was also passed on a 3-2 vote, with Parris and Councilman Nick Lessenevitch dissenting.
In September, the council approved changes to the city’s two-year-old commercial marijuana code to eliminate the restriction to strictly medical marijuana businesses — allowing for recreational, or adult use, marijuana businesses as well — and allowing for two storefront retail outlets and two delivery-only retail businesses.
This change created a need to revise the application process for granting permits to commercial cultivation, manufacturing, distribution and testing businesses, as well as to establish a procedure for retail outlets.
The approved processes were streamlined somewhat, with the city manager making the final award for all businesses except retail, and the City Council maintaining final approval of permits for both types of retail outlets, owing to the competitive nature of the limited number of retail permits.
Applicants for these businesses will have a 60-day period in which to submit their applications, which will then be vetted and ranked by city staff. The highest-ranked applicants will make presentations before the City Council, which will have the final say as to which ones will be permitted.
This is the same process that was originally used by the city in awarding all commercial marijuana permits, before the council lifted the limit on the number of permits it would award.
“It eliminated the need for the competitive process,” City Attorney Christian Bettenhausen said.
Because the number of permits on retail outlets is capped, award of those is still a competitive process.
“It is limited, so it should be whoever gets it is the most qualified,” Bettenhausen said.
The council is not required to award any permits if they do not deem any of the applications to be sufficiently qualified, City Manager Robert Stockwell said.
”This is a business that can open very quickly without the problems of electrical power” that have plagued cultivation and other operations attempting to establish in Cal City, he said. “There is a demand. There are people who are interested in moving forward on these things.”
Stump wanted assurances, before any notice of opening the application process was made, that the handful of businesses who had earlier applied for retail permits under earlier rules had their fees refunded so they could start anew with any others at the same time.
“We need to all start at the same gate with a level playing field for all,” he said.
Lessenevitch, taking his first meeting as a council member, felt the processes were not clear enough, and felt trying to start the retail outlet application process over the holidays would not allow enough time for interested applicants to adequately prepare.
“To be honest with you, I’m a little bit bewildered by all this tonight,” he said.
Supporters, however, urged the council to proceed, as the longer it takes to get these outlets permitted, the longer it will be before the city may begin collecting tax revenues from them.
The decision to increase the number of delivery-only outlets was intended to capture what staff believes could be a large market for such services, and claim the city’s 6% tax and state 1% tax on each sale made by these businesses.
“For every transaction that goes on, we will receive 7%,” Stockwell said.
The focus on delivery-only businesses is not to address a market within the city itself, but to serve other communities as Cal City is the only one in the region right now to allow such activity, he said.
“It’s critical for us to recognize it opens one more element of the cannabis industry,” he said, and will help the city meet its goal of establishing a new revenue stream in order to end its reliance on voter-approved special parcel taxes.
Opponents to the increase, including Parris, felt the city has allowed plenty of the marijuana businesses as is.
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