Costa Mesa officials could issue permits for the city’s first cannabis retail stores by mid-June, if the city council sets the rules for the operation and functioning of the stores when they meet on Tuesday, April 20.
The city will be the second in Orange County, along with Santa Ana, to welcome in-store cannabis sales – and tax revenues that are expected to follow. This division opens after Costa Mesa voters approved an election campaign in November to enable cannabis stores and delivery services. Just over four years ago, residents voted on a measure that allowed use outside of retail, including the manufacture, distribution and testing of cannabis laboratories.
The council debate is not expected to be controversial – no one commented on the city before the agenda was prepared for Tuesday’s meeting, and representatives from the cannabis industry were included in several ad hoc committee meetings over the past year. However, city council members still have a few questions to clear before finalizing the rules.
City guides hope the introduction of regulated cannabis sales will do several things, Mayor John Stephens said.
One goal is to stamp out illegal pharmacies, which shows that there is a demand in the city but is putting a strain on code enforcement and the police trying to shut them down, he said.
“The idea is to largely replace illegal cannabis companies that sell an unregulated product that we don’t generate income from with regulated cannabis products that are taxed and controlled by the city – from seed to sale,” he said.
Allowing cannabis sales in Costa Mesa will also create new jobs, Stephens added.
Areas that could spark a debate on Tuesday include:
- Whether cannabis stores need to be at least 500 feet from other cannabis stores. The measure approved by the voter already limits them to industrial zones.
- How to explicitly define “youth centers” that receive a 600-foot buffer under state law. According to Costa Mesa rules, cannabis retailers must be at least 300 meters from “sensitive uses” such as schools, playgrounds and the homeless shelters. However, state law is a bit vague about what qualifies as a youth center.
- What should the parameters of the “social justice” provisions look like? Existing city rules prohibit people with criminal convictions in the past seven years from working or working in cannabis companies, and proposed changes would make exemptions for some offenses related to cannabis. A program that offers help or incentives to improve the industry’s playing field could come later.
- How much taxes and in-store sales are to be taxed. With the election measure, the city can set taxes between 4% and 7%.
The tax debate is of particular concern to the Orange County chapter of the marijuana rights group NORML, Executive Director Kandice Hawes-Lopez said.
Her group advocates for medical cannabis patients, and she worries that some of them may struggle to pay the maximum city tax on top of a state excise tax of 15% and a local sales tax of nearly 8%.
Santa Ana and Long Beach both tax recreational cannabis at 6% and medicine at 5%, Hawes-Lopez said, and she would like to see Costa Mesa do something similar for patients.
Doctors’ recommendations as a loophole for obtaining cannabis used to be widespread, but as state voters legalized adult use, far fewer people bother getting it – and many who are still looking for a medical recommendation, “Really use them for medical reasons,” she said.
Hawes-Lopez also hopes Costa Mesa officials will waive delivery taxes for businesses in the city. She said she was concerned that higher tax rates on legal cannabis sales could bring more people to the (tax-free) black market.
Overall, however, she said: “We support this regulation. We want them to move forward. “
Stephens said if the rules are approved on Tuesday they will get a second procedural vote next month and go into effect sometime in June. Approval applications and a schedule of fees should be available by then. Approvals would have to be approved by the planning commission.