San Luis Obispo County’s liberal majority of supervisors is slowly relaxing the cannabis ordinance’s grip on operators.
In three separate motions during the Board of Supervisors Sept. 26 meeting, 2nd District Supervisor Bruce Gibson, 3rd District Supervisor Dawn Ortiz-Legg, and 4th District Supervisor Jimmy Paulding voted to ease certain regulations in the county’s cannabis ordinance.
“This ordinance is the most disastrous ordinance I think that anybody could possibly write in regard to trying to help a business thrive,” Ortiz-Legg said at the meeting. “There’s more than just a couple of cleanups, so this is a long conversation in regard to how we can go about really recovering the revenues we’re losing and we can actually recoup the investment the general fund has made.”
The ordinance was largely shaped by 1st District Supervisor John Peschong, 5th District Supervisor Debbie Arnold, and Paulding’s predecessor, Lynn Compton.
At the meeting, a slew of cannabis operators such as The Source owner Shawn Bean expressed the difficulty of running their businesses in SLO County due to exorbitant fees, restrictions on starting brick-and-mortar dispensaries, and covering the costs for enforcement on illegal operations. Bean also submitted written correspondence on the issue.
“Currently, the CBT [Cannabis Business Tax] for retail sales paid to the county is only for deliveries performed in the unincorporated areas of the county,” he wrote. “This means that the majority of CBT paid by county licensed businesses is paid to other jurisdictions. If brick-and-mortar dispensaries are allowed, all of the CBT for those sales will go to the county.”
The Cannabis Business Tax took effect in unincorporated SLO County soon after voters approved Measure B-18 in 2018. The CBT rate last year was 8 percent, but the Board of Supervisors voted to decrease it to 6 percent for the 2023-24 fiscal year—a move Bean appreciated in his letter to the supervisors.
But the CBT hasn’t generated the funds it was expected to. According to county staff’s fiscal analysis, the tax only produced $597,747, which was part of the $1.1 million total revenue in the 2022-23 fiscal year. The county’s cannabis program cost $1.5 million to run, meaning the county used $400,942 from the general fund to fill the gap.
In a 3-2 vote with Peschong and Arnold opposed, the supervisors asked staff to plot the necessary resource requirements to accommodate for retail storefront dispensaries in the county’s land use regulations. The supervisors are scheduled to deliberate the issue in-depth on Oct. 17.
Similarly, through another 3-2 vote along the same lines, the board agreed to begin trimming the fat. Gibson sparked the idea to “investigate a Lean 6 Sigma analysis of our entire cannabis regulatory framework” that would focus on the background check and inspection requirements. Background checks through the Sheriff’s Office can cost as much as $24,630 for a cultivation business license, and as little as $628 for a business employee investigation.
The Lean 6 Sigma process is designed to improve program performance by eliminating operation waste. County Administrative Officer John Nilon told the supervisors that the cannabis program could be put through that wringer to make it more streamlined and efficient.
“It asks on each step: ‘Is this required by law and is this providing quality?'” Nilon said. “[If not,] it should be eliminated.”
Peschong, however, dubbed it “Weed 6 Sigma” and elaborated on his reservations with establishing brick-and-mortar businesses. He detailed a trip he took with Arnold and the SLO Chamber of Commerce to Boulder and Denver in Colorado. In Boulder, they met with a judge who oversaw local cannabis policy.
“The one thing that judge said that she got from the school system was they did have a 17 percent increase in childhood schizophrenia over the legalization of cannabis, and it was related to cannabis use in middle school,” Peschong said.
He also reported that the Denver County sheriff alleged that there was a 100 percent increase in traffic fatalities because of cannabis use.
In a third motion, supervisors directed staff to swiftly get the ball rolling on changing some of the regulations in the ordinance. One would allow the five-year cannabis permit to activate only when a business becomes operational as opposed to when the permit’s granted. Gibson even suggested an analysis on extending the permit lifespan to 10 years.
As part of that motion, supervisors also asked staff to study cost estimates for allowing mobile dispensaries to operate from 8 a.m. to 10 p.m., whereas those dispensaries currently close at 8 p.m. This motion passed in a 4-1 vote, with Arnold dissenting.
She expressed her disapproval of lengthening delivery times for mobile dispensaries in unincorporated areas, claiming that law enforcement would be “spread too thin late at night.”
“You’re not the only industry that has a really difficult time and a lengthy process to get through before you’re operational in this county,” Arnold said. “It isn’t just about cannabis.” Δ
This article appears in Oct 5-12, 2023.