Sonoma considers whether to join other cities in doing retail cannabis

Come Nov. 3, Sonoma may join the party of regional jurisdictions allowing for a cannabis operation within the city limits.

On Sept. 9, the City Council approved a resolution that paves the way to allow for a first-time retail storefront in town with a conditional use permit. Voters would also need to approve Measure X on the November ballot to impose a 4% tax on gross receipts the business takes in.

Of several applicants, the city selected “SOSPARC,” a Sonoma version of the SPARC cannabis dispensary that operates in Santa Rosa to receive the permit. Its regional manager failed to respond as of press time. The permit will return to the council Sept. 21.

From the Emerald Triangle in the North State to the Golden Gate Bridge, a North Bay community’s appetite for cannabis ranges in a wide spectrum since California legalized for adult use in 2016.

Some jurisdictions throughout the state allow for a storefront retail operation. Many have approved outside delivery from dispensaries in other towns. Others have opted for residential cultivation.

In addition to the proposal to levy a tax on cannabis sales in the city, Sonoma voters will also decide on Measure Y, whether to authorize cultivation within city boundaries.

Cannabis stakeholders suggest some cities embrace it and others don’t because of many reasons ranging from the politics and culture to the residents’ awareness of cannabis and even if it’s readily available elsewhere.

“There was a first wave that said no because they felt unprepared, and a lot of localities wanted to get it right. Now that they have about a year and a half under their belts, and they’ve watched their neighbors do it, there’s a second wave,” said Alana Joyce, who runs the Eaze delivery platform. “I think we’re seeing a change of attitude because the California market is showing strength.”

Some cities lead while others follow.

As the Sonoma County seat, Santa Rosa embraced cannabis soon after it became legal as one example of a city with a high acceptance level, allowing for cultivation and adult-use retail storefronts.

Napa County was slower to come around. The county does not allow for storefronts, with only Yountville entertaining the idea of a retail storefront in the valley to accompany its multitude of wine tasting rooms.

In Marin County, the citizens of Larkspur appear satisfied, allowing personal cultivation but not retail storefront for sales. Suppliers can also come into the city and deliver to customers.

The city recently had a forum on the topic of its cannabis rules, and only one person spoke in favor of revisiting the city rules.

“I’m struck by the absence of folks asking for it. I don’t have anybody calling me saying they’re not getting what they want,” Larkspur City Manager Dan Schwarz told the Business Journal.

Schwarz indicated that perhaps his residents are getting it elsewhere as more and more cities jump on the bandwagon.

After all, about five miles away lies the first storefront dispensary that opened in the state of California — the CBC Marin Alliance in Fairfax.

And even without storefront sales or personal cultivation allowed, San Rafael has seen a record 4% tax windfall in the first quarter year over year, in just by taxing cannabis deliveries into the city. The city raked in more than $117,000 in receipts in the first quarter ending March 31, compared to about $43,000 in 2019.

Danielle O’Leary, San Rafael’s director of economic development and innovation, agrees the tax bonus represents a welcome mat to financially struggling cities all over the state. To O’Leary, the acceptance of the substance — which is still considered a Schedule 1 illegal drug by the federal government— may come down to whether it’s dispensed on Main Street USA.

“I think the highest sensitivity our people have is the same as any other city, and that’s retail storefront and cultivation. This is not the business people are going to shop at, but that doesn’t mean there won’t be a storefront in our future,” O’Leary said, calling her city’s acceptance level as a “toe in the water” approach.

Baby steps allowed for San Rafael’s citizenry to gain access to medical cannabis in 2018, a year before it moved into adult recreational use.

She agreed the city’s appetite for cannabis isn’t as hearty as Santa Rosa’s coming out of the starting gate. O’Leary knows firsthand, as she worked for the Sonoma County city.

“Santa Rosa was one of the first pro cannabis cities,” she declared.

But most cities realize they can wait if need be because chances are their citizens who want cannabis can get it at other places around the San Francisco Bay Area.

Delivery has become a sticking point for some regions, which has led to legal fights.

According to the Los Angeles Times, California Attorney General Xavier Becerra joined a lawsuit by a Salinas cannabis business against the county, which outlawed deliveries by companies it didn’t license. The legal action has come up while a slew of cities is fighting California’s home delivery rules in Fresno County Superior Court. The argument stems on California’s new 2020 rules that opens up marijuana delivery to homes anywhere in the state.

“Sometimes it comes down to the demographics, and the politics of the city council and local representation could be different than the opinions of their constituencies,” said Jeff Hamilton, a mergers and acquisitions consultant.