In a 4-0 vote, the Grover Beach City Council has given the green light to three commercial medical cannabis businesses. Approval of adult recreational use is next on the horizon.
That move brings the total to 8 so far, four retail storefronts and 4 manufacturing businesses.
“The only limit that we have in our ordinance is for up to four retail permits,” said City Manager Matt Bronson. “There are no limits for other permits be that manufacturing, cultivation or distribution uses. Our approach is to let the market dictate how many are appropriate within our community.”
Additionally, the council directed staff to move forward with plans to allow adult recreational use businesses.
People with medical marijuana cards do have a cost savings advantage.
“All medical purchases are exempt from sales tax,” said Bronson. “Only adult use products are taxed with the normal state and local sales taxes. There is an excise tax [15%] by the state for all commercial cannabis products.”
Should the ordinance be approved, establishments previously approved for medical cannabis can request that they be permitted for recreational use as well.
The council also took action to amend the cannabis tax rate structure. As previously reported, the commercial cannabis tax rate in Grover Beach would be 5% gross receipts on retailers, 3% gross receipts on manufacturers, distributors, and other commercial cannabis uses, and a $5 per square foot cultivation tax based on floor area.
Individuals growing for personal use will likely face stronger restrictions. If passed, cultivation would be limited to a single attached room of a residential structure that is locked and secure. Garages and detached type structures are not permitted for growing purpose.
“Odors shall not be detectable from adjacent properties, residences, or public rights-of way, on or about the exterior or interior common area walkways, hallways, breezeways, foyers, patios, balconies, or any other areas available for use by common tenants, or the visiting public, or within any other residential unit,” according to a staff report.
Further, grow lights cannot exceed 3,800 watts and must be shielded from the exterior of the residence.
The cannabis tax is expected to bring the city $1,000,000 to $2,000,000 per year over time. More businesses are expected to receive permits over the next couple of months.
The council had previously entertained a $3 million annual cap for each retailer and $2.5 million for manufacturing or distribution with no cap for cultivation. They opted to leave that out or the new ordinance.
With other cities in the county still debating the whether of not to go the new green, Bronson doesn’t see it impacting profits in Grover Beach.
“There has been tremendous interest in locating commercial cannabis facilities in Grover Beach given the available land, given the strong direction from the council and the strong support from the community,” he said. “ We are well on our way to establishing ourselves as the leader in the commercial cannabis industry within the Central Coast. That being said, it is a big industry. There are a lot of different businesses. The market share is very large. There is plenty of market share to go around.”
The cannabis tax, approved by voters in November 2016, rates were originally set at 5% of gross receipts for commercial medical and 10% of adult recreational use. This was the maximum amount as per Proposition 218, the Right to Vote on Taxes Act, for cannabis businesses unless voters approved a higher rate structure.
By Theresa-Marie Wilson