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Council approves zoning changes allowing for the sale and delivery of adult-use cannabis

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In Tuesday’s meeting Council approved changes to the city’s zoning code to allow for expanded retail cannabis sales, finally acknowledging the opportunity it presents to assist in the city’s economic recovery.

In the seven hour long meeting that was dominated by a number of undiscussed items brought over from last week, this particular item took 90 minutes incorporating some extensive and on occasion extraneous conversation. However, the decision was a unanimous one.

The first cannabis dispensary opened in the city of Santa Monica back in June, more than a year and a half after the permit was granted in October 2021, six years after the application was requested in December 2017 and over 26 years since medical marijuana was made legal in the state of California. Per the Santa Monica municipal code, only two dispensaries are allowed in the city and they are limited to medical use only, which means that customers will be required to have a doctor’s recommendation to purchase products.

This item hasn’t been discussed in front of City Council since the June 13 meeting when Ajay Kolluri, HdL’s Director of Cannabis Services (a municipal consulting firm that provides guidance on cannabis business regulation) said, “Santa Monica residents therefore can, and most certainly do, cross city limits to purchase adult-use cannabis from LA based businesses.”

During that meeting Mayor Gleam Davis asked, “Could we allow the two current medical dispensaries to convert to recreational dispensaries?” It was mentioned then that the only existing dispensary in Santa Monica, the Local Cannabis Company was losing the interest of the majority of walk-in customers who, upon learning they need to apply for a medical card, simply leave without purchasing anything.

“Since we’ve opened, we’ve only had about a 20% conversion rate. I think it’s closer to 10%, but you can see how far off that is, it’s people just not wanting to wait,” Erin Carachilo, CEO of Calyx Peak, the parent company of the Local Cannabis Company, told the Daily Press.

The request for applications ran from December 2017 through to February 2018 and saw over 21 different requests. A second dispensary, Harvest of Santa Monica, which was set to be situated at 1416 Wilshire Blvd was also approved, in January 2022, but that hasn’t materialized yet. Since this vote would allow this second outlet to open, issues pertaining to the proximity to local schools and housing, the danger to children and even the design of labels was raised.

“With regard to the second business on Wilshire, it’s in the 1400 block and in that same 1400, block — actually closer to the front door of Lincoln school [than the new store] — you have a Rite Aid and you have a Vons that both sell liquor. And they don’t have guards, like marijuana dispensaries are going to have,” said Davis.

“So, if you’re worried about children from Lincoln middle school getting access to things they are not of age to have, they can already walk into the Rite Aid, or the Vons and attempt to buy liquor. They’re going to have to show proof of age at the door of the cannabis dispensary, which they don’t have to show at the door of the Rite Aid or the Vons.”

Council-approved changes will include allowing for adult-use cannabis sales and delivery for the two medicinal cannabis retailers with active Conditional Use Permits issued before October 10, 2023, and approval of an Interim Zoning Ordinance that would remove certain requirements and permit retailers within the city to deliver, cultivate, and sell adult-use cannabis or adult-use cannabis products to persons 21 years of age and over.

The sales of adult-use cannabis products are subject to the cannabis business tax at 3% of gross receipts. The tax was recently approved as Measure HMP by 66% of Santa Monica voters and the rate may be adjusted by the council, but cannot exceed 10% without voter approval.

The council also previously directed the creation of an ordinance permitting adult-use cannabis in more areas of the city and a cannabis social equity program that may apply to these two medicinal cannabis retailers to help ensure that the communities most impacted by federal and state cannabis enforcement policies are provided an opportunity to benefit from the cannabis industry. Implementation of council direction is forthcoming.

“Santa Monica’s decision to embrace cannabis adult use is a long awaited move that aligns with the trend seen in many other cities,” Mayor Pro Tempore Lana Negrete told the Daily Press.

“By legalizing recreational cannabis, the city can tap into a new source of revenue through taxes and allocate those funds to benefit the local community. Additionally, this move helps keep tax dollars within the city instead of flowing out to delivery services operating in neighboring areas,” Negrete said.


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