Fresno City Attorney Douglas T. Sloan speaks to the City Council in this June 2018 file photo.

published on June 15, 2018 - 1:54 PM
Written by David Castellon

After voting to put an initiative on tax rates for cannabis businesses on November’s ballot, the Fresno City Council got a glimpse Thursday of some of the rules those businesses might have to follow.

For example, only seven cannabis dispensaries — one in each of Fresno’s council districts — would initially be allowed starting next year, and no less than nine months later seven more could be permitted.

And if the council members choose to allow it, seven more might be allowed some time after that, for a maximum number of 21 dispensaries in the city, said City Attorney Douglas T. Sloan.

He appeared during an afternoon workshop for the council, part of the regular, daylong Fresno City Council meeting.

Earlier, the six council members present, minus the absent Garry Bredefeld, voted 5-1 to recommend a tax rate of $12 per square foot of cannabis growing area and 10 percent of gross sales for businesses growing cannabis or doing other work with the plants, including manufacturing and packaging marijuana oils and marijuana-infused items.

Councilman Steve Brandau cast the “no” vote.

As part of the vote, the cannabis tax rates will be a ballot initiative that Fresno voters will approve or deny in November.

For more than two decades, the Fresno City Council has held its ground, not on allowing any sort of medicinal marijuana businesses in the city, despite it being legalized across California. After state voters in November 2016 approved the Adult Use of Marijuana Act, legalizing the use and sale of marijuana for recreational purposes, the debate was reignited.

Then in December — after heated debate — the City Council approved a plan to allow some marijuana businesses in the city, though the types of cannabis businesses have yet to be determined.

Work also began to develop the rules the city might adopt in permitting such businesses, along with tax rates, the latter of which is required by law to be approved by two-thirds of voters.

City officials estimate that tax revenues from cannabis businesses here could generate $10 million a year in tax revenues for Fresno, portions of which would go to regulating those businesses, with the rest funding programs to combat gangs, drug abuse, human trafficking and homelessness, as well as funding road projects, parks, police and the city’s fire department.

Councilman Clint Olivier, who championed allowing cannabis-related businesses in the city, said Thursday’s vote was done ahead of a deadline to get the tax initiative on the November ballot.

As for permitting such businesses, City Attorney Sloan said a committee that includes three councilmembers has been working since December to develop two sets of permitting rules, one for medical cannabis businesses and one for recreational cannabis businesses, and it will be up to the council members to approve one, both or neither.

The tax proposal includes both medicinal and recreational cannabis businesses, depending if either is permitted in the city.

For his part, Olivier said he’s hopeful the council will vote to approve both types of businesses, but fellow council member Steve Brandau said he wouldn’t support permitting any recreational marijuana businesses.

Sloan noted the potential permitting rules he presented were a work in progress, subject to change if the council members choose to make any and after a draft is released for public input, which would take a minimum 30-60 days to happen.

Among the other proposed rules:

— Cannabis businesses could be located only in four “hubs” that would be established by the city in light or heavy industrial districts. All would be within a mile of Highway 99 or within a mile of Highway 180 west of 99.

 — A fifth hub could be established “in downtown-type area, where you have older warehouses and so forth,” Sloan said.

— Laboratory testing businesses may locate outside the hubs, in commercial districts, as they tend to use low amounts of cannabis.

— Cannabis businesses couldn’t be located within 1,000 feet of residentially zoned parcels, with the exception of apartments and houses in zones later designated as industrial areas. Without this exception, most every possible hub space would be eliminated.

— Cannabis businesses couldn’t be located within 1,000 feet of any K-12 school, park, daycare center, playground or youth center.

— Dispensaries selling cannabis for recreational use couldn’t be closer than 800 feet from one another and other cannabis businesses, so they aren’t clustered together.

— No independent services offering home delivery of marijuana products will be allowed, though dispensaries may offer the service to deliver their own products.

— A cap of 100 cannabis-related businesses could be permitted in the city.

Under questioning by Brandau, Sloan said an analysis hadn’t been done yet on the city’s likely costs for the permitting process, from administrative tasks to doing background checks on applicants. He said some cities are setting their fees in the $20,000 range.

Sloan said if no extensive delays in finalizing and approving the permit rules occur, the city could begin taking permit applications after the start of next year.

Among the people likely to apply is George Boyadjian, of Fresno, who has spent more than a decade advising people in the process of applying for cannabis business permits across the state. He is looking to launch his own dispensary here.

After hearing the city attorney’s presentation, he said he didn’t favor the city limiting the number of dispensaries and some of the other potential rules mentioned, but “It’s OK — we’ll take what we can get. But it’s not a good idea. It should be an open market, and let everybody apply.”

JePahl White agreed, “But this is Fresno. It’s a conservative town, so we consider it a victory, the way they are going now. But it’s not bad either. In any good business deal, both sides are unhappy.”

White, who described himself as a community organizer and advisor working on violence reduction and a would-be entrepreneur who wants to get one of Fresno’s first seven dispensary permits, said once people “come out of the shadows” and start frequenting cannabis dispensaries — which they never have been able to do before in Fresno — the demand may be so high that the small number of dispensaries may not meet it.

But White said he hopes that over time a more amicable set of rules may evolve, as “Once the city sees the success of the industry, I think they’ll begin to expand and grow it out.”

Of course, all this could be moot if Fresno voters reject the proposed tax plan in November, as the city will not allow any cannabis businesses unless they can be taxed, Olivier noted.

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