SLO city to add new areas to cannabis zone, allow longer dispensary hours 

Amid lagging tax revenue, the city of San Luis Obispo wants to add new areas to its cannabis zone—the parts of town where cannabis businesses are allowed to operate—while also relaxing some of its rules for dispensaries.

At a Feb. 8 meeting, the SLO Planning Commission unanimously endorsed adding the "east airport area" to the city's cannabis overlay zone. The 58 acres adjacent to the airport and Broad Street, which were annexed into city limits in 2020, include Farmhouse Lane, Kendall Road, and Allene Way.

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• Map Courtesy Of The City Of SLO
• GREEN ZONE The city of San Luis Obispo wants to introduce new areas to its cannabis zone where dispensaries are allowed to operate. Its current zones are in green.

"It includes essentially the types of uses that are similar to what was looked at when the [cannabis] program was adopted initially ... all service commercial zoning," city planner Brian LaVelle said.

If finalized by the SLO City Council on March 7, the east airport area would be the eighth added to the cannabis zone since 2018—all in the southern part of the city. LaVelle said that a ninth area will be introduced soon that's also near the airport on Fiero Lane and Clarion Court.

Community Development Director Michael Codron noted at the meeting that downtown is not on the docket to join the zone. Even though it's the "natural place where one would want to locate" a dispensary, the idea still lacks public support.

"[Downtown] is not something we're looking at right now," Codron said. "We heard from downtown business owners and property owners who said they weren't interested and didn't think it was appropriate for one of those stores to be downtown."

SLO is maintaining its cap on the number of storefronts allowed to operate at one time in the city at three, though only two have opened in four years: Megan's Organic Market and SLOCal Roots. Two non-storefront cannabis delivery services are also in the city.

Natural Healing Center (NHC) had rights to the third dispensary permit before the city rescinded it in 2021 after company founder Helios Dayspring pleaded guilty to felony bribery charges.

Litigation between NHC and the city over that decision recently wrapped up, with a judge siding with the city. SLO officials say they plan to open a new application period for the third dispensary, but the timing is up in the air.

"We're going to ask the City Council," Codron said. "A lot of things factor into it, including staff capacity. It can be very contentious and you have to be very detailed in terms of how you do that. Litigation is very common in that environment."

Due in part to the lack of a third dispensary, SLO is coming up short on cannabis tax revenue. The city recently had to adjust down its revenue projections this year by $300,000, or 21 percent, due to slow progress.

In the same package of cannabis tweaks, the city is also proposing to revise its operating rules for dispensaries. It intends to extend allowable dispensary hours from the currently permitted 9 a.m. to 8 p.m., to 7 a.m. to 9 p.m.

Dispensaries will also be allowed to sell medicinal cannabis to customers aged 18 and older and operate a delivery business in conjunction with a storefront. Those reforms are set to go before the City Council on March 7.

According to city planner LaVelle, the rule changes are allowable by state law and in line with what comparable cities have on their books.

"San Luis Obispo currently has the most restrictive hours; it's the only city not allowing 18- to 21-year-old medical cannabis users access to storefronts; [and it's] the only city that does not allow storefronts to also deliver," he said. Δ