Citing a backlog, Costa Mesa offers refunds to cannabis applicants willing to cut bait

BY SARA CARDINESTAFF WRITER

FEB. 22, 2023 2:12 PM PT

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Cannabis retailers who’ve spent thousands to operate in Costa Mesa, only to be placed on long waiting lists, will soon be able to recoup money from the city after officials agreed to refund application fees to those who voluntarily withdraw their requests.

Council members Tuesday authorized a refund of licensing and permitting fees to some 45 applicants that have been waiting since August 2021 for a determination on whether they may do legal business in the city.

It’s an attempt to help clear a processing backlog that has plagued the city’s Development Services department, which has allocated roughly 25% of its time and personnel resources toward reviewing 63 retail cannabis applications.

Despite the department’s efforts, only 14 applicants have so far received the permits needed to open a storefront.

“Given the substantial number of applications and the time it takes to process each one, staff is suggesting that the council authorize the city manager to issue refunds of application fees for cannabis retail permits for those who decide to withdraw their applications,” Jennifer Le, director of economic and development services told the council.

With conditional use permit fees set at $18,499 and another $19,732 charged for cannabis business permits, staff estimate Costa Mesa has collected $866,048 from would-be operators who have yet to go before the Planning Commission for approval.

After a 6-0 vote from the council Tuesday (Councilman Don Harper was absent), potential refund recipients will have 30 days to submit a reimbursement request and release form after being notified by the city the program has begun.

The move to encourage withdrawals comes as Costa Mesa officials consider revisiting retail cannabis ordinances drafted in 2021 that failed to place a cap on the number of dispensaries that could do business in the city and placed no distance buffers between them.

Many residents, and some council members, have intimated processing retail cannabis requests is taking up too much staff time and placing a choke-hold on other priorities, including affordable housing and the implementation of Measure K, passed by voters in November.

Jim Fitzpatrick, a former planning commissioner who now advises cannabis enterprises on how and where to open locally, said he favored the idea of offering refunds to proprietors but urged the council to have the policy discussion first.

“It’s a good idea to do a refund, but I don’t think you’re going to get any [withdrawal requests],” he said. “For us to bring the numbers down, we have to give the industry some clear, concise and transparent feedback on where we’re going.”

Mayor John Stephens said he’d prefer that anyone willing to bow out would do so before the council potentially revised its approval process.

“What I’d like to do is, when we have the policy discussion, to be able to have gone through the process of at least having them request the refunds,” Stephens said. “Then, we’ll have a more precise number of what we’re dealing with.”

Resident Schellie Walsh said she supported halting the influx of applications.

“It’s created such a glut and a logjam in the city,” she said. “If it is taking up 25% of the city’s time, that means people who want permits to remodel their houses, Measure K, all this stuff is on the back burner. We’re the residents, and we should be the recipients of what we pay for.”

Councilman Manuel Chavez, who made the motion to approve a refund program, agreed.

“Our focus is shifting elsewhere,” he said. “I think it’s fair for those who did invest in Costa Mesa the opportunity to recoup at least part of their investment if it did not work out.”