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Healdsburg may be on a path to legalize commercial cannabis

The cannabis express is picking up steam in Healdsburg.

Unlike Santa Rosa, Cloverdale, Cotati, Petaluma, Sebastopol and other Sonoma County municipalities, Healdsburg prohibits all commercial cannabis operations.

As it indicated during a two-hour-long special meeting in mid-November, however, the City Council appears to be in the early stages of ending that ban. A handful of retail spaces — and perhaps a manufacturing plant or two — could add jobs and bring in hundreds of thousands of dollars in tax revenue, said City Manager Jeff Kay, during his impressively in-depth report on the subject.

Coming out of the meeting, “there were no decisions, but there was definite interest” among the council in exploring the issue further, Kay said on Friday. Among the steps it agreed to take was to survey to members of the community on where they come down on this issue.

“The City Council will use this feedback to help guide policy discussions later this year,” promised the text atop the survey, which went out a month ago and was scheduled to close on Friday. Instead, said Kay, “I think we’re going to leave it open over the weekend.”

The city had received 500 replies as of Friday, said Mayor Ozzy Jimenez, who described the Council as “generally interested in allowing some uses, but we’re looking to the community to help define the particulars.”

The city’s initial reluctance to embrace commercial cannabis after California legalized it five years ago was rooted less in a puritanical, prohibitionist zeal, noted Vice Mayor Ariel Kelley, than it was in a desire to see how it was shaking out in other cities and to learn from them, before Healdsburg made any big decisions itself.

“Several years have now passed,” said Kelley on Friday, “and many cities have gone before us, and worked through the pros and cons.”

In Healdsburg, “we have reached a moment where we’re ready to open the door, in some way, to commercial cannabis,” said Kelley, allowing that legalization isn’t likely to happen for “a couple years.”

Based on their questions and comments at the November meeting, her fellow city council members agree. “But the question for the community, and the council,” she said, “is what types of commercial uses do we want to allow within the city, and in what volume?”

The issue is not as simple as “Do we want it or do we not want it,” said Kay. “It’s, ‘Do you want dispensaries? If so, how many? Where can they be? How do (prospective retailers) apply? How does the city decide?

“Do you want manufacturing — an interesting use that isn’t impactful on the community. If so, how much and where?’

“So it’s a pretty complicated thing. We tried to start at ground zero in that meeting.”

To maximize its revenue, Healdsburg would likely put a measure on the November, 2022 ballot, allowing it to further tax cannabis operations. While the resulting revenue would be substantial, “it would not be a transformative cash cow,” Kay said Friday. “We would have to be comfortable with it on other grounds.”

Asked at the November meeting by Councilmember Skylaer Palacios which commercial uses tend to generate the most revenue for cities, Kay said “it tends to come from the retail side,” adding that he’s seen “significant revenue manufacturing operations, which are taxed on “gross receipts,” yielding a percentage of every dollar to the local jurisdiction.

At that meeting, he presented the council four alternatives to consider — while emphasizing that none were binding; he offered them merely to provide a framework for the conversation, moving forward.

The first was “A mix of commercial uses that would allow no more than two storefront retail locations, plus delivery and distribution. It would also allow “nonvolatile manufacturing and testing,”.

Alternative B was limited to “retail only” — one or two storefronts.

Alternative C would be “more like Cloverdale, Cotati, or Sebastopol,” featuring a “more aggressive approach than Alternatives A or B, allowing manufacturing, and possible commercial cultivation — not particularly plausible, noted Kay, in a relatively small community that’s already built out.

All three options include equity provisions requiring the city to give more consideration when granting licenses to businesses that would hire from historically disadvantaged communities.

Alternative D — no change to current law — now seems the least likely to be chosen. Some form of commercial cannabis will be legal in Healdsburg withing the next couple of years.

“There’s definitely an appetite for the council to move forward” with legalized commercial cannabis, said Kelley. “The question is, How many different types? Do we want to limit it, or do we let the market limit it?

“Do we just throw open the barn doors? Or do we proceed in a measured, methodical way? That will be the next phase of this conversation.”

You can reach Staff Writer Austin Murphy at austin.murphy@pressdemocrat.com or on Twitter @ausmurph88.

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