SLO City News

Where Cannabis is Taking Root in SLO County

As 2017 draws to a close, the New Year will usher in new rules regarding recreational use of cannabis and an expanded, industrialized production of medical marijuana throughout San Luis Obispo County.
For much of the past year, communities throughout the county have been preparing for these changes and weighing their own regulations to govern how, when and where cannabis will take a more prominent space in the marketplace.
Like the microclimates that define the local weather, the emerging cannabis industry is taking shape differently in each region of the county. Here’s our analysis of what’s coming:
San Luis Obispo County
In late November, the Board of Supervisors passed regulations governing personal and commercial cultivation, as well as the establishment of nurseries, water usage, manufacturing facilities, dispensaries, distribution, and testing.
While the new county rules allow for commercial production, it bans retail stores or dispensaries in unincorporated areas. Those who grow for personal use won’t be able to grow plants outdoors.
The new ordinance goes into effect Dec. 31 and affects residents outside of city jurisdictions, most of which have their own set of regulations or are in the process of developing them.
County Auditor Jim Erb released a draft of a proposed tax he will be presenting to the Board in early 2018. He sought input from business insiders at a public workshop where he asked attendees for insights into the operation of the emerging industry.
Erb said the County could see $2-$5 million a year in taxes from the cannabis sector. The proposed tax ordinance, he said, would not designate how the money should be spent. The money would be added to the County general fund and used as directed by the Board of Supervisors, said Erb.
“We anticipate indirect consequences from this industry that could have impacts on social services, mental health, drug and alcohol services,” Erb said. He anticipates some of the proposed tax revenue would help fund those public services.
Assistant Auditor, Jim Hamilton, said they are approaching the subject with as much flexibility and sensitivity to how the industry operates as possible, down to the timing and method of collection.
Erb said his staff has been researching ways to effectively manage payments from the cash-heavy industry, including the purchase of a high-speed cash counting machine. Until recently, much of the cannabis industry operated primarily in cash because banks declined to work with them. But that financial tide may be turning as the industry becomes mainstream.

Grover Beach
The County isn’t the only governmental body considering taxation. The City of Grover Beach was the first within the county to get a pro-cannabis ordinance on the books.
The City Council directed staff in July 2016 to draw up a draft ordinance for the November 2016 General Election. After many reviews and hearings, the ordinance went into effect this past June. Recently, the council began reviewing the ordinance once again to stay in line with changes in State law.
Earlier this month, the council made the first of two required votes to expand the number of permitted cannabis dispensaries from two to four.
“We’ve gotten out ahead of this and now, I wouldn’t want us in an overabundance of caution, to hold back [on expanding dispensaries] unless it’s really justified,” Mayor Pro Tem Mariam Shah said at the meeting. “From the very beginning I’ve wanted to go slow; I want to see how this develops. But one reason I would lean toward [allowing] up to four [dispensaries] is we are ahead, we are on the cutting edge.”

San Luis Obispo
San Luis Obispo is still studying its options for regulation and taxation, which could be scheduled for a meeting in early 2018. However, the City Council’s plan to address a looming budget shortfall due to retirement cost increases, includes making up to $3 million a year from a future cannabis tax, which the city manager said would probably be on next November’s ballot.

Morro Bay
The Morro Bay City Council approved an ordinance that would allow two medical pot dispensaries to open in specific commercial zones in the city. The council unanimously agreed to ban sales of marijuana for recreational — both in a storefront and deliveries from outside the area.
The ordinance includes extensive restrictions on growing — no more than two plants outdoors — indoor cultivation equipment, city-issued permits and permission to grow from landlords, among other requirements. No applications will be taken for the two dispensaries until next July. The City Council plans next year to put a ballot measure up to establish a special tax on marijuana sales.

Arroyo Grande
In October, the City of Arroyo Grande amended its ordinances banning all commercial cannabis activity within the city, to allow for limited delivery services, regulated indoor cultivation and a ban on outdoor cultivation.
The city requires delivery services to obtain a permit and delivery drivers to be registered with the police department.

Pismo Beach
The Pismo Beach City Council issued a temporary ban on outdoor cultivation and commercial sales of cannabis in 2016 with the aim of giving city staff time to research the topic.

Paso Robles
In contrast to County regulations, Paso Robles’ ordinance forbids the public to “plant, cultivate, harvest, dry, or process marijuana plants inside a private residence or inside an accessory structure to a private residence located upon the grounds of a private residence, or inside any other enclosed structure within any zoning district of the city.”
However, the ordinance allows for structures that are not a private residence to plant, cultivate, harvest, dry, or process marijuana plants if a person receives an indoor cultivation permit from the Community Development Department. Paso’s CDD will issue applications and processing guidelines for permits.

The City of Atascadero prohibits all forms of commercial aspects of medical marijuana, including dispensaries and cultivation. However, patients who utilize medical marijuana are allowed to cultivate no more than six mature plants and up to 12 immature plants and are allowed to grow them in a private residence or an enclosed yard. The plants are strictly for personal medical use and may not be distributed to others.
In October 2017, the Atascadero Council voted to allow medical and recreation marijuana deliveries, as well as testing facilities in certain non-residential areas. Outdoor recreational cultivation is allowed up to six plants, but comes with restrictions, such as not being able to grow a plant in the front yard of a private residence and it may not be visible from the street and must be at least 25 feet from publish rights of way and adjacent homes.

– By Justin Stoner, Mark Diaz and Neil Farrell