Twice as many dispensaries, looser rules on locations: How San Diego plans to make the cannabis business fairer
The goal is to provide opportunities in the industry for people adversely affected by the war on drugs.
San Diego officials say they want to double the number of cannabis dispensaries allowed in the city and expand the kinds of neighborhoods where they can operate from light-industrial areas to tourist and entertainment areas near mass transit.
The proposal would also eliminate buffer requirements that now prohibit dispensaries within 1,000 feet of parks, churches, playgrounds and libraries. Buffers would remain for schools, childcare facilities and other buildings that serve predominantly minors.
Officials say the expansion is needed to ensure the success of the city’s new cannabis equity program, which aims to help people adversely affected by the war on drugs break into the industry.
Because 30 of the city’s 38 dispensary permits have already been awarded, opportunities for those in the equity program will be scarce unless the city raises the current cap on dispensaries, officials said.
The city plans to use its first equity grant to help people adversely affected by the war on drugs with money for permits, site searches and other hurdles.
The proposal would add 36 new dispensary permits that would be reserved only for people eligible for the city equity program, which the City Council approved last fall after several years of preparation and analysis.
There are several eligibility criteria, but the primary requirement is that a person must have been convicted of a cannabis crime, or had a family member convicted of one, after 1993.
Equity applicants would get a leg up on other dispensary operators because they could open in more appealing neighborhoods than the light-industrial areas where city dispensaries have been forced to operate since they were legalized in 2014.
They would be allowed to open dispensaries in community commercial and neighborhood zones within the city’s transit priority areas, which are defined as areas within half a mile of a transit line.
Lara Gates, who runs the city’s Cannabis Business Division, said the loosened zoning would likely allow many dispensaries owned by equity applicants to open in parts of the city focused on entertainment, hospitality and tourism.
The proposal would also waive permit fees for equity applicants and eliminate a requirement that they secure a property before being awarded a permit.
A cannabis equity assessment San Diego completed last year found the biggest hurdles to entering the industry are lack of capital, lack of training, problems finding suitable sites and complex government regulations.
As San Diego’s cannabis tax revenue plummets, officials blame illegal market, new competition
Inflation may be driving customers to illegal delivery services, which can charge less because of lower overhead, fewer regulations.
The proposed rule changes would also allow dispensaries operated by equity applicants to remain open two hours longer each day than ordinary city dispensaries.
To avoid flooding the market with new dispensaries, the proposal would allow no more than nine new permits to be awarded each year.
Groups opposed to cannabis legalization spoke against the proposal Wednesday when it was presented to the City Council’s economic development committee.
They said it would be too much change too quickly and would undermine years of lobbying by supporters and opponents of cannabis that have led to refined and nuanced regulations.
“I’m concerned with this radical direction the Cannabis Business Division would like to see,” Becky Rapp, a local parent, said. “These barriers were not decided in haste. They were created strategically and thoughtfully.”
A group representing operators of the city’s existing dispensary operators said it supports the new equity permits but warned that the local industry is facing significant competition from lower-priced illegal delivery services.
“We simply caution that this going to be difficult and require resources, and that there are going to be economic forces that are going to be a challenge as we move forward,” said Phil Rath, executive director of the United Medical Marijuana Coalition.
In an effort to keep marijuana businesses in the backcountry competitive, supervisors set their cannabis sales tax rate at 2 percent.
Councilmember Monica Montgomery Steppe, who represents low-income neighborhoods in southeastern San Diego that were affected significantly by the war of drugs, said it’s important for city officials fix obvious unfairness.
“It is inherently unfair that so many people, particularly people of color and Black people, are in jail or prison for the sale of marijuana — or have been in jail or prison for the sale of marijuana — when it is now legal,” she said. “There has been racial criminalization of particular communities.”
The economic development committee didn’t vote on the proposed rule changes, which will be discussed and debated by a new 15-member task force that city officials said they expect to start meeting this spring.
To be eligible for the city’s cannabis equity program, applicants must have lived for at least five cumulative years in either Barrio Logan, Linda Vista, southeastern San Diego, Encanto, Golden Hill, North Park, City Heights, the College Area or San Ysidro.
Applicants must also meet two of four other criteria: They must have a household income below 80 percent of the area median, have been in the foster care system any time between 1971 and 2016, have attended school in the San Diego Unified School District for at least five years between 1971 and 2016 or have lost housing in San Diego through eviction, foreclosure or subsidy cancellation after 1994.
The state awarded San Diego an $880,000 cannabis equity grant this winter. It’s the first such grant received by the city, which didn’t create its equity program until several years after other large cities like Los Angeles, San Francisco, Oakland, Sacramento and Long Beach.