A Changing Paradigm: The New World of Commercial Cannabis

Authored by:

Sergeant Angela Voorhees, Sierra Madre Police Department  & Chief Michael Salvador, Coalinga Police Department contributing

The legislative year is slowly coming to an end and I, like many others in my profession, am still absorbing the results of the California elections. Proposition 64, the Adult Use of Marijuana, passed with fairly strong voter support leaving me to question, what does the road ahead entail? Prior to the election, the focus of law enforcement was to educate the public on the dangers and the repercussions that would ensue if the Adult Use of Marijuana Act were to pass. I, and many others in my profession, thought that with informed education, the people of the State of California would realize the negative effects that would result from a yes vote on Proposition 64. Unfortunately, we were wrong.

Law enforcement leaders in the state are now forced to assist with enforcement and regulation of an extremely large industry. The road is untraveled and it will not be easy to take, but there are pathways we can explore with the help of the experience from a small town in the heart of central California: Coalinga.

I sat down with Chief Michael Salvador of the Coalinga Police Department in September 2016 to talk about his experiences over the past year in anticipation of the legalization of recreational marijuana. The city of Coalinga is what Chief Salvador calls the ‘emerald green’ in a sea of brown. Located in Fresno County in the heart of the San Joaquin Valley, the city has struggled fiscally with a dwindling economy and a rotting private prison that is costing tax payers a million dollars a year. The concept of marijuana cultivation and industry in Coalinga is not something new to Chief Salvador, nor is he ill prepared for the tasks ahead.

According to the City of Coalinga website, “In 2015, the Legislature passed and the Governor signed into law three bills (Assembly Bills 243 and 266, and Senate Bill 643) that create a licensing and regulatory framework for medical cannabis. It is anticipated that the regulations will be developed by January 1, 2018. The Department of Consumer Affairs (DCA) is in the early stages of establishing the Bureau of Medical Cannabis Regulation and is not issuing licenses at this time. DCA recommends interested parties continue to work with their city or county governments to procure the local licenses and permits required to establish a medical cannabis business,” (City of Coalinga, 2016).

Due to the resources of available and usable land in Coalinga, the City Council realized the profitability of the marijuana industry. In January of 2016, the City Council moved forward with allowing the new industry after looking at the following considerations: local control of operations, operating and facilitating commercial cultivation, zoning, hours of operations, licensing requirements, fee structures, security measures, and an analysis of potential revenue versus costs of operations.

After holding several council meetings that were open to the public and after careful consideration of the responses from the community, the City of Coalinga proposed ordinances establishing regulatory restrictions on the new industry, cultivation taxes and two ballot measures to regulate a possible dispensary. Chief Salvador recommended to the Council a business model based on California Gaming Industry best practices for controlled consumables due to their experiences with large amounts of cash and commodities. Additionally, gaming practices of business inspection without notice and employee license requirements (similar to card dealers) were requested to deter criminal activity.

As negotiations with the City of Coalinga progressed, Chief Salvador was forced to sail on an unchartered course. The State of California has no established guidelines for marijuana cultivation, transportation and industry. Chief Salvador took another innovative approach by using a concealed carry weapons hybrid to conduct background checks on the new employees coming into the industry. The City of Coalinga’s approach also included hiring consultants to assist in the regulation, ordinance compliance, and business model development with no exposure to the general fund.  Not having a statewide policy forces local government to adopt regulatory practices that are uniquely tailored to the community. However, in Chief Salvador’s experience, potential businesses and cultivators are seeking guidelines from the state and a standardized structure. “Two decades after the Golden State pioneered the legal use of medical marijuana through Proposition 215, its vast cannabis industry has been operating under a patchwork of local regulations — or outside the law altogether. This local control is very different from the approach taken by other states, such as Colorado, Washington and Oregon, which put the state in charge from the very beginning,” (Kreiger, 2016). Regulation by the state offers a workable framework coupled with reliable funding and a better capacity for enforcement; something Colorado, Washington and Oregon were keen to grasp. California is forging its own path by leaving regulation decision making, at least for now, at the local level.  Chief Salvador pushed through this roadblock as he moved forward with progressive local legislation and policies.

To expedite development of the industry and ease the economic pain, the City of Coalinga chose to enact an urgency ordinance. The urgency ordinance took effect immediately and allowed for a complete removal of the ban on cultivation within in the city. Chief Salvador and city officials next addressed fees and tax schedules. They developed the fee structure to license the facilities and employees that will work in them. There will be substantial costs for municipalities wishing to enter this new industry. Agencies will need additional sworn employees to monitor compliance and background checks.  Additional support staff will be needed to assist in the issuance and monitoring of licensing and coordinate background checks.  New reporting systems will be needed to allow for consistent work flow analysis and license tracking. There are a various potential tax revenues available to mitigate impacts. Revenue sources are derived from pre-application fees, fees for consideration of submitted applications, business licensing fees, one time employee licensing fees, and employee transfer fees.

In Chief Salvador’s journey through unknown territory he discovered that the industry is not tailored for the small knock off players; it is big industry. He has met with serious business minded people in the industry who are investing in testing labs, lighting manufacturers, sustainable hydroponic indoor grows that use solely recycled ground water, and a global market that is anxious to invest in an industry that has the potential to have a great impact on California economy. All the land available to the industry are in former redevelopment agency areas. The sale of the land will benefit a variety of taxing authorities. The beneficiaries in the City of Coalinga are the five taxing authorities: city, education, colleges, recreation and the county of Fresno. Chief Salvador’s advice: make lemonade out of the lemons of the Adult Use of Marijuana Act by getting ahead of the new industry in your community to get on the right track. Be active in the regulation process. Regulation is necessary to attract well-funded corporations and be vigilant to bad actors. Be ready to introduce all factors that will be affected by legislation (health care, transportation, homelessness, enforcement). Be prepared to fight for and assign additional funds for experts assigned at your department. If you have the opportunity use additional revenues to form a dedicated marijuana control unit.

Not every city and county will be affected by the cultivation aspect of Proposition 64, but every city and county in the state of California will be affected by distribution, sales, and consumption of marijuana. Prop 64 was modeled largely after the medical marijuana legislation passed in 2015, therefore the pitfalls that Chief Salvador has noted need to be considered. As leaders in law enforcement, we have the ability to responsibly address the hand that we have been dealt. The questions of if and when have been answered. As we move forward as a profession, we have the ability to assist in laying the acceptable framework in which we hope to operate. Chief Salvador has shared his experiences in the hope that he can be an asset to those embarking on the same challenges he has faced.

The following is the City of Coalinga’s Permanent Commercial Marijuana Ordinance. It is the hope of the author that the ordinance will assist as a guideline for CPOA members as they address the challenges ahead in the communities they serve.

Coalinga Permanent Commercial Marijuana Ordinance

On November 3, 2016 the City of Coalinga City Council adopted Ordinance No. 797 establishing permanent regulations for licensing commercial cannabis facilities within the City of Coalinga. The permanent ordinance will allow Commercial Marijuana Operations to conduct cultivation, processing, extraction, manufacturing, testing, distribution, and transportation activities under Conditional Use Permits (CUP) and Regulatory Permits within areas of the City zoned MBL. The requirement of CMOs to operate under a CUP, allows the City to strictly regulate such activities, and provides a means of enforcement for potential violations. Central to the CMO Permanent Ordinance is the inclusion of specific Minimum Operational Requirements and Restrictions, which regulate various portions of CMOs including, the registration of employees, the type of signage allowed, the distance of CMOs from schools, as well as building construction and security standards among other regulations.

References:

Krieger, L. M. (2016, October 5). Medical marijuana: California’s new weed czar tours state to tout new cannabis rules. The Mercury News. Retrieved November 11, 2016, from http://www.mercurynews.com/2016/10/05/medical-marijuana-californias-new-weed-czar-tours-state-to-tout-new-cannabis-rules/

(n.d.). Retrieved November 11, 2016, from http://www.coalinga.com/?pg=147





Related Recent News