Napa Valley sees groundswell for allowing recreational cannabis

The region that put cabernet sauvignon on the map is opening more doors to another type of harvest that’s long in coming.

On Feb. 1, Napa will bring forward the second reading of a new ordinance approved by the City Council Jan. 18, allowing for adult recreational cannabis sales, the first since Proposition 64 passed statewide in 2016.

The following year, Napa allowed for medicinal cannabis dispensaries to operate. But this ordinance would let the current medicinal dispensaries that were approved to operate within the city limits to apply for expanded permits and change their state licenses for sale to recreational use customers. Other dispensaries may follow.

If all goes as planned, the ordinance will take effect 30 days after the second reading.

“This is not a huge surprise. The only thing that’s kept the reins in is it’s still a federally controlled substance. That’s made it complicated,” Napa Community Development Director Vin Smith said. The U.S. government still considers cannabis illegal as a Schedule 1 drug.

Representatives of Perfect Union, one of the five Napa medicinal retailers that formed a coalition seeking the change to the city regulations, could not be more pleased with the change of heart.

“This is a great thing — allowing adult use,” Perfect Union Senior Director of Government Affairs Angelica Sanchez told the Business Journal.

The coalition called the Napa Cannabis Collective sent the county’s largest city a letter requesting the change to allow opening up to adult use, something City Manager Steve Potter had hinted late last year to the Business Journal would come up eventually.

Within the letter, the coalition reminded the city of the excise tax it stood to gain by approving such an ordinance. For example, the state Department of Tax and Fee Administration had collected $131.9 million in revenue from excise taxes statewide in 2021 by the time the coalition’s June 10 letter was delivered.

The city heeded the advice.

Perfect Union, based in Sacramento with 13 locations, opened in Napa to medicinal customers about a year ago and has high hopes for gaining new customers in the Wine Country market — especially with seniors coming on board more than ever.

Sanchez estimated a majority of its customer base across the board is over the age of 50. And according to the 2020 National Survey of Drug Use and Health released in October, the proportion of adults 65 or older who reported recent cannabis use jumped by 18%.

CEO David Spradlin told the Appeal Democrat newspaper in August 2020 that “expansion to adult use has been a game changer for us” in Marysville. Like Napa, Marysville used its receptiveness to medicinal cannabis sales as a gateway of sorts to adult, recreational use. There, the cannabis retailer averaged 500 customers per day.

Perfect Union is pushing for the same success in the Wine Country.

Other cities in the Napa Valley have allowed cannabis retail to gain ground lately as more cannabis operators have joined forces to have their collectives voices be heard.

The Napa Valley Cannabis Association just started a petition to get a ballot initiative for St. Helena to allow for cannabis retail. The city north of Napa currently allows for none.

“We need to be allowed retail. People want it,” association President Stephanie Honig told the Business Journal. “We need more points of access for cannabis brands.”

Many cannabis enthusiasts in Napa County have watched in vain as jurisdictions in Sonoma County, including that local government, have come on board with allowing for some form of operation. Sonoma County and its county seat, Santa Rosa, were considered early adopters after the state established its licensing program in 2018.

Napa County is still digging in its heels in respect to allowing for any cannabis operation. In January 2020, groups led by the Napa Valley Cannabis Association, debated with the opposition led by the Napa County Farm Bureau over whether cannabis cultivation should be allowed in the county to no avail.

But now all eyes are on the growth of retail to assist with the potential market collapse the cannabis industry has faced lately since a glut of product seeks more places to be sold in. The economic circumstances have driven down the price, prompting a tax revolt that spans the state.

Honig estimated the Valley cannabis group has collected about a quarter of the 350 signatures needed to get the initiative on the November ballot in St. Helena.

The city of American Canyon prohibits cannabis retail operations.

Susan Wood covers law, cannabis, production, biotech, energy, transportation, agriculture as well as banking and finance. For 25 years, Susan has worked for a variety of publications including the North County Times, now a part of the Union Tribune in San Diego County, along with the Tahoe Daily Tribune and Lake Tahoe News. She graduated from Fullerton College. Reach her at 530-545-8662 or susan.wood@busjrnl.com.