Stepping closer to legal sales

A cannabis (marijuana) industry is likely to come to the unincorporated areas of Riverside County, perhaps in 2018. Already nearly a dozen cities within the county have permitted at least one feature — retailing, cultivating, testing or distributing — of the novice industry.

At the end of a nearly three-hour workshop Tuesday, March 20, Supervisor Kevin Jeffries, 2nd District, summarized the Riverside County Board of Supervisor’s next steps.

“Today, we need to make two decisions. The first is, do we move forward? Second, if we do decide to more forward, what revenue structure do we want?” he asked his colleagues.

While none of the supervisors were enthusiastically welcoming legal cannabis entrepreneurs to Riverside County, all mentioned that voters in the districts or cities in their districts approved Proposition 64, the Adult Use of Marijuana Act passed in November 2016.

Jeffries related how illegal dispensaries are open, shut and re-opened throughout his district and don’t pay any county revenue. While he opposed Prop 64, he shared, “We’re losing this war. The voters of my district voted in favor of [Prop 64]. In my unincorporated areas, the voters have spoken.”

After more discussion, the supervisors agreed that staff should continue to develop ordinances for the regulation of the budding business.

County counsel was quick to point out that the 4-1 vote (Supervisor Marion Ashley opposed it) was only giving direction to county staff to proceed with its work on developing a regulatory scheme through an ordinance.

The existing ordinances remain in place and can be enforced. All aspects of the cannabis business remain illegal in the unincorporated areas of Riverside County.

Since the regulatory process will involve land use, the proposed ordinance will be prepared and move forward through the county’s Planning Commission. Staff emphasized that this would allow for additional public comments through the normal Planning Commission public hearings. The new ordinance could go to the board as early as July.

The board did not discuss the details of a potential regulatory scheme, although Charissa Leach, assistant director of Transportation and Land Management Agency, described several options.

The presentation also addressed the potential costs of regulation — about $1.5 million annually — and the amount and sources of revenue. It was the issue of revenue sources that attracted much of the board’s attention.

Staff identified three options for collecting revenue to regulate cannabis. The first was tax imposed on retailers, distributors and cultivators. However, all voters in Riverside County must approve a new tax. A tax referendum cannot be limited to just voters in the unincorporated areas. And this became an obstacle.

The second option was a licensing fee. However, this approach limits the amount of revenue to be collected.

The third option is the use of development agreements. In essence, the county and cannabis business could negotiate an agreement, which would include fees to the county.

Several supervisors felt it was unfair for the whole county of roughly 2.4 million people to decide the tax issue, which only applies in the unincorporated area of about 800,000 residents.

Third District Supervisor Chuck Washington, board chair, expressed this point during the initial discussion. After the vote to move forward, he made the motion to use development agreements.

“Given the two options — a cannabis tax or development agreements — it is my belief that the county maintains more control of its own destiny by way of the development agreement,” Washington noted.

“[Development agreements] would be a more timely process to arrive where we want to arrive at as opposed to a $750,000 ballot initiative put out to the million-plus voters of the county,” he averred.

In a second vote, which narrowly passed 3-2, the board told staff to include development agreements and not a countywide tax in the formulation of a proposed ordinance.

In describing the possible options for regulating cannabis business, county staff discussed the zones where each type of business might be allowed to operate. For example, cultivation could be limited to agricultural areas.

They also would discourage outdoor growing. The staff preferred indoor or mixed-lighting areas. Indoor cultivation might be permitted in commercial or manufacturing zones.

Growth plots would be limited to 1 acre, and cultivators would have to provide studies of water requirements and proof of availability.

The county will consider prohibiting on-site consumption at retail outlets. Tobacco and alcohol can be sold in the same location. The county will consider banning live entertainment at cannabis retail sites.

Comparing the ratio of cannabis dispensaries in town that already authorized retail sales, county staff estimated that 19 dispensaries might be sufficient in the unincorporated areas of Riverside County.

Testing and distributing businesses also were discussed.

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