San Leandro: Unopened dispensaries get deadline; council moves toward allowing adult use cannabis

PHOTO/Wiki Commons.

More than three years since San Leandro approved its first cannabis permit to Harborside, and two years since a second was given to a local operator, the city will give both dispensaries until the end of this year to open or risk losing their permit.

Last week, the San Leandro City Council also gave clear direction to staff to amend its current cannabis ordinance to allow its permitted dispensaries to sell adult recreational use cannabis in its stores.

The pair of directives come at a time when city leaders are grumbling about the slow speed of two of three permitted dispensaries and the lack of cannabis tax receipts coming to the city.

Council also gave clear direction to soon allow adult use sales in San Leandro

Harborside and Nug Inc., formerly known as the Davis Street Wellness Center, have not opened despite receiving approvals in September 2015 and July 2016, respectively. A third dispensary approved in October 2016, Blum San Leandro, opened its doors last month on Fairway Avenue, near Kaiser Permanente.

“We are losing out on a lot of money,” said San Leandro Councilmember Victor Aguilar, Jr, that could be available for projects in the city.

Councilmember Corina Lopez said the omission of a specific time frame when the council approved its cannabis ordinance in 2015 is “one of my regrets.”

“Going into the permitting processes, I didn’t have the foresight at that point to create a time frame. There’s some lessons learned there,” she said.

Both Harborside and Nug voiced no opposition to the imposition of a “shot clock” placed on the opening of their dispensaries. No date was mentioned during Tuesday’s meeting, but a city staff report recommended a deadline of Dec. 31.

In addition, representatives from both unopened dispensaries told the council they expect to open for business sometime this spring.

The absence for allowing adult use recreational sales in San Leandro has long had the potential to stymie the growth of the city’s medical cannabis-only dispensaries once legalization came to the state two years ago.

Stephen Cassidy, a representative for Nug, and former San Leandro mayor, said there is no longer a reason for cannabis customers to spend a fee for procuring a medical cannabis card when the product is now legal for all adults. “It would be like you signing up for a credit card with an annual fee that you never have to use,” he said. Furthermore, some services already delivery to users’ door, thereby, denying the city tax revenue.

A representative for Blum San Leandro, says its recently opened store has to turn away 30-50 potential customers on a daily basis who are shopping for adult use recreational cannabis. The lack of an adult use ordinance costs Blum $2,000 a day, according to the representative. “Most of the responses [from customers] are, ‘I can go to one city over.'”

A direction for staff to begin formulating amendments for adult use cannabis sales to its existing ordinance, however, was met with opposition from one elected official

Councilmember Pete Ballew, a former San Leandro police officer, said he opposes adult use cannabis, stating it would be hypocritical to support a substance that can worsen some mental illnesses in children and can cause birth defects.

But on the issue of placing a deadline on the two unopened dispensaries, Ballew urged to think about using tax incentives for the dispensaries to open much earlier than the potential year-end deadline. For example, a tax break or rebate decreasing the city’s tax on gross receipts by one percent for three months if they open before October.

At one time, the cannabis tax was estimated to bring in roughly $500,000 in annual revenue to the city. But because of the inactivity of the three dispensaries, San Leandro only last month began receiving any tax benefits.

Every jurisdiction surrounding San Leandro already allows adult use cannabis sales. They include: Berkeley, Emeryville, Oakland, Alameda, Hayward, and unincorporated Alameda County.

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