Pubdate: Mon, 01 Feb 2016
Source: Sacramento Bee (CA)
Copyright: 2016 The Sacramento Bee
Author: Peter Hecht


City Officials Considering Plan to Tax and License Commercial 
Marijuana Production

Council Member Says Cultivation Business Tax Could Bring $5 Million Annually

Majority of Grow Sites Could Be Concentrated in Two of Eight City 
Council Districts

California's capital city is contemplating going into the 
marijuana-cultivation business, but not without considerable caution and angst.

The Sacramento City Council on Tuesday is expected to vote on a 
working framework to begin creating rules for licensing, regulating 
and taxing indoor commercial pot gardens. They would grow medical 
marijuana for California cannabis businesses, including 30 permitted 
dispensaries within Sacramento city limits.

The City Council's law and legislation committee also has endorsed a 
parallel move, expected to be considered later by the council, that 
would ask voters to raise the city's business occupancy tax of 4 
percent to 5 percent in the case of commercial marijuana growers. The 
increase would have to be approved by a two-thirds vote, and it's 
being considered for a June ballot initiative.

The sponsor of the initiative effort, Councilman Jay Schenirer, said 
the cultivation taxes could amount to $5 million annually for the 
city. His proposal also calls for the tax revenues to be spent on 
youth programs.

"I'm pretty comfortable with that estimate" of city cultivation 
revenues, Schenirer said. "Everyone else in this area is banning it. 
So we're the only game in this area."

Sacramento, which began licensing medical marijuana stores in 2010 
while capping their number, has taken a politically tolerant view 
toward marijuana businesses while Sacramento County and neighboring 
cities and counties have enacted strict bans on dispensaries and bans 
or restrictions on cultivation.

Sacramento collected $2.86 million from dispensaries in the 2014-15 
fiscal year from a 4 percent medical marijuana tax.

Despite projections of new revenues, City Council members are split 
on a plan to permit indoor commercial cultivation in areas of the 
city zoned for industrial or agricultural use or dense commercial construction.

A political rift centers on the fact that the staff 
proposal  designed to keep pot cultivation more than 600 feet from 
schools or parks means concentrating the overwhelming majority of 
grow sites in two of eight council districts.

"As a council member that represents a district most impacted by 
this, I'm still uncomfortable with acting on this," Councilman Allen 
Warren said last Tuesday, as the City Council decided to table an 
anticipated vote on the cultivation guidelines.

"I have been an advocate and support medical marijuana," Warren said. 
"I want to support this issue. But I believe it has to be right."

Warren complained that the city's commercial cultivation plan would 
allow a disproportionate share of grow houses north of Interstate 80 
and east of Dry Creek Road in his northeastern Sacramento District 2.

Also expressing concern was District 6 Councilman Eric Guerra, whose 
southeastern Sacramento region stands to accommodate 
marijuana-growing operations in industrial and warehouse districts 
south of Jackson Road, east of Power Inn Road and West of Watt Avenue.

"We didn't talk to the communities," Guerra said at last week's 
council meeting. "We didn't look at what other cities are doing. And 
we know that it only impacts two very specific parts of the city."

He asked the city's staff to try to come up with a plan to more 
evenly distribute where cultivation operations may go.

I have been an advocate, and (I) support medical marijuana. I want to 
support this issue. But I believe it has to be right.

Councilman Allen Warren

Sacramento now allows marijuana cultivation of up to 400 square feet 
in private homes for individual medicinal users. The city's staff is 
recommending commercial cultivation for nonresidential zones, with a 
requirement that all growing take place in enclosed buildings and out 
of public view.

The intensity of the city discussions reflects new challenges of 
state medical marijuana regulations signed by Gov. Jerry Brown in 
October. Those rules will create a governance system for marijuana 
businesses, with both state and local permits required for commercial 
operations. A new state Bureau of Medical Marijuana Regulations, to 
be funded with taxes and fees on marijuana businesses, is to be 
staffed over the next two years.

Cities around California have been rushing to regulate marijuana or 
enact bans because of language in the regulations that required local 
governments to put in place cultivation rules by March 1. That 
provision has been stripped away in a cleanup bill, Assembly Bill 21, 
which passed in the Assembly on Thursday and is expected to be signed by Brown.

Meanwhile, numerous Sacramento marijuana-growing facilities  many 
supplying local dispensaries  are already operating, secreted away in 
unknown industrial spaces or other areas within city limits.

"There are many," Schenirer said of the cultivation rooms. "But they 
are not regulated. It's generating nothing in taxes out of it."

Schenirer, who represents District 5, has proposed that Sacramento 
consider allowing the growing facilities to come forward and register 
with the city under an agreement that would allow them to continue to 
operate  at least until the city adopts strict rules governing 
siting, security and other issues.

Medical marijuana advocate Marcia Blount of the Brownie Mary 
Democratic Club of Sacramento, hailed that idea.

"If there are a bunch of grows out there and nobody knows about them, 
obviously, they are not a nuisance," she said.

Kimberly Cargile, operator of A Therapeutic Alternative dispensary in 
midtown Sacramento, said local medical marijuana stores are poised to 
request as many as 90 commercial cultivation permits. Another 
advocate, Richard Miller, Sacramento director for the medical 
marijuana group Americans for Safe Access, said requests for growing 
permits could reach 150 if recreational pot use is legalized under a 
November ballot initiative.

New state medical marijuana regulations allow licensing of indoor 
growing facilities totaling up to 22,000 square feet of plants. 
Cargile said most local grow rooms are much less than 5,000 square feet.

"I don't think anybody is thinking of doing 22,000 feet," she said.

The prospect of a growing surge is worrisome to Tracey Schaal, 
executive director of the Power Inn Alliance, which represents more 
than 10,000 businesses in southeastern Sacramento.

Schaal urged City Council members to act slowly and cautiously before 
sanctioning marijuana cultivation. She said other business owners are 
concerned that "these facilities can lead to increased crime and blight."

She also urged the council to mandate conditional-use permits for all 
grow rooms  which would require public notices to inform nearby 
business and residents of the pending operations.

"My request to you is that we have the opportunity to review these 
facilities so that we will be able to know who our neighbors are," Schaal said.

22,000 Total square feet of plants in an indoor growing facility 
allowed by California's new medical marijuana regulations

But Cargile said marijuana advocates cringe over such public 
disclosure. She said that could create the very crime that other 
business owners fear.

"The fewer people who know" of the cultivation operation, "the less 
the impact will be on the community," Cargile said.

That view was reflected in a city staff report, prepared for last 
Tuesday's City Council meeting. It noted that the city's Planning and 
Design Commission recommended that the council disallow grow rooms in 
commercial areas because those areas require a conditional-use permit 
and public notification.

The document said such notification "would bring a cultivation site 
to the attention of others, and that is a safety concern."

However, commercial zones exist throughout the city, and cultivation 
there would increase the possibility of a more equitable distribution 
of grow sites.

Allowing cultivation in manufacturing, warehouse or agricultural 
areas, which differ from commercial zones, wouldn't require the same 
public notification without the city adopting a specific rule.

Even as the city works toward allowing commercial cultivation, City 
Council members plan to vote on a 45-day moratorium that would 
prohibit the issuance of any growing permits while they formalize 
regulations. Guerra suggested that the moratorium may have to be 
extended as the city works on the issue.

"It's not legal now," he said of marijuana-growing operations. "It's 
still illegal. We're trying to find a legal path."
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MAP posted-by: Jay Bergstrom