- Posted by Ryan Reaves
- On May 25, 2017
- AUMA, cannabis, cannabis business, cannabis permits, cannabis policy, central coast, commercial cannabis, Grover Beach, land use ordinance, medical cannabis, Prop 64, regulatory ordinance, san luis obispo, taxation
Grover Beach is a small city on the central coast of California and is slated to champion the commercial cannabis industry in San Luis Obispo County. Since the passage of Proposition 64, or the Adult Use of Marijuana Act (AUMA), Grover Beach has been progressing steadily towards regulating commercial cannabis. The city has been drafting and amending ordinances to regulate commercial medical cannabis activities since as early as July 2016. Grover Beach initially adopted a commercial cannabis tax ordinance on February 21, 2017 and has been holding public hearings to amend drafts of both a land use ordinance and regulatory ordinance relating to commercial cannabis.
The proposed land use ordinance in Grover Beach, which has gone through two public readings and several amendments, has resulted in some controversy. Since its initial draft in February 2017, the land use ordinance has been amended to increase total commercial cannabis activity zoning from “64 acres to 86 acres… on the western side of the city, along Highway 1”. The land use ordinance will allow the establishment and operation of commercial medical cannabis activities in the Industrial (I), Coastal Industrial (CI), and Coastal Industrial Commercial (CIC) zones of Grover Beach prompting a real-estate “green rush” in the area with some properties selling for much more than their previously listed market value. In some instances, local tenants have been displaced by commercial cannabis businesses willing to pay inflated rent.
Both the land use ordinance and a commercial cannabis regulatory ordinance were adopted after several drafts on May 15, 2017 and will become effective on June 14, 2017. June 14th marks the first day the City will accept Use Permit and Commercial Cannabis Permit applications for commercial medical cannabis cultivation, manufacturing, testing laboratories, transportation, delivery, and distribution. Applications for retail dispensaries will not initially be accepted. A June 5, 2017 City Council meeting will consider a pre-application process for dispensaries in addition to further defining operational requirements for extraction manufacturing, cultivation, and testing laboratories.
Similarly, to L.A.’s Measure M, Grover Beach will be taxing medical cannabis activities at 5% of gross receipts. When the city adopts laws allowing for recreational cannabis activities after state licensing comes into effect, the tax rate will be 10% of gross receipts. There will be a separate tax on cultivation and nurseries of $25 per square foot on the first 5,000 square feet and $10 per square foot on the remainder. These tax rates will be subject to annual CPI adjustments and all generated tax revenue will go to the City’s General Fund. Proposed tax rates on commercial cannabis activities statewide are still in their infancy and continuing research will be necessary to conclude if the overall tax structure influencing the cannabis industry adequately reduces the prevalence of the black market.
A former councilmember and mayor of Grover Beach, Ron Arnoldsen, has publicly come out against the proposed commercial cannabis ordinances along with several others from the Grover Beach community. An effort on his part to lead the opposition against the proposed ordinances has been set back by offensive comments he made towards the current City Council at a public hearing on May 15, 2017. Despite local opposition, support for the commercial cannabis industry in Grover Beach is strong and the city will be moving forward by publishing permit application forms and checklists on the City website in early June, 2017.
If you have any further questions about the land use and regulatory ordinances in Grover Beach, or are otherwise interested in Cannabusiness, please contact CannaBusiness Law for legal assistance in compliance with cannabis licensing, permitting and the application process relating to commercial cannabis.
Ryan Reaves is a Public Policy Analyst for CannaBusiness Law and Master of Public Policy candidate at the Lorry I. Lokey School of Business and Public Policy at Mills College in Oakland, California.