Is a Cannabis Cap Coming to Sacramento? Hearings Tomorrow and Thursday!

If you’ve been following the state of affairs of commercial cannabis licensing in California, you know that it really is a tale of two cities (or counties). Both the Medicinal Cannabis Regulation and Safety Act (passed by the California state legislature in 2015) and the Adult Use of Marijuana Act (passed as a ballot measure by a majority of Californians in November of 2016) granted absolute discretion to local jurisdictions in determining how they wanted to regulate commercial cannabis activities. This deference to local jurisdictions was included in Senate Bill 94 (a/k/a the Medicinal and Adult Use Cannabis Regulation and Safety Act), which merged California’s medical and adult-use cannabis regulations under one regulatory regime. Although granting local jurisdictions the authority to regulate cannabis businesses was a necessary concession to get statewide cannabis legislation passed, in practice it’s the local jurisdictions that have been a significant impediment to bringing cannabis operators into the regulated market (which we’ve covered here and here).

Very few of California’s 482 cities and 58 counties are allowing medicinal and adult-use commercial cannabis activities within their borders. Instead of seeing cannabis businesses operating evenly throughout the state, what we’re seeing is an undue concentration in just a select few jurisdictions. The fact that so many California jurisdictions have outright commercial cannabis bans in place is forcing cannabis operators to relocate to cannabis friendly jurisdictions if they want to participate in California’s legal cannabis market. Cities and counties that have been open to cannabis businesses are now starting to rethink their approach as they’ve been inundated with the number of cannabis applications they’ve received. We’re seeing this trend take shape in Sonoma county and the city of Sacramento may be next.

sacramento cannabis marijuana
Will Sacramento turn back the clock on cannabis?

Sacramento falls squarely in the camp of a cannabis-friendly jurisdiction (for now): It licenses both adult-use and medical cannabis businesses to go along with all seed to sale license types (outdoor cultivation and volatile manufacturing are the only prohibited cannabis activities). When you combine: the size of Sacramento’s population, its place as the state’s capital, its relatively inexpensive cost of living (compared to the Bay Area, Los Angeles, and San Diego), and their willingness to license all types of cannabis activities, then it shouldn’t come as a surprise that cannabis operators have been flocking to Sacramento.

Unfortunately, Sacramento legislators have noticed the inbound cannabis migration as well, and they do not seem happy about it. Like most California jurisdictions, Sacramento only allows commercial cannabis businesses to operate in a couple of zoned districts. According to the city these districts are being overwhelmed by cannabis applications.

Sacramento city legislators feel so strongly that some neighborhoods are home to too many cannabis businesses–specifically the area within the Power Inn Alliance Business Improvement District (PBID)–that they’ve introduced a proposed ordinance to curtail the number of cannabis businesses in the city. The proposed ordinance would prohibit a cannabis business from being issued a permit if the city’s cannabis decision maker finds that the proposed site will result in an undue concentration of cannabis establishments in the area. The proposed ordinance defines undue concentration as follows:

  • Any cannabis cultivation that it is located within the area bounded by Power Inn Road to the west, Folsom Boulevard to the north, and the city limits to the east and south; and will result in more than 2.5 million square feet of building floor space approved by a conditional use permit for cannabis cultivation use in that area; or
  • Any cannabis production facility (cultivation, distribution, or non-volatile manufacturing) in all other parts of the city that is located on a parcel within 600 feet of another parcel having a use permit for cannabis production or a cannabis dispensary, unless the decision-maker determines that there is an overriding public benefit in approving the use permit for the proposed location.

The PBID district already has approximately 2.8 million square feet in cannabis cultivation conditional use permit applications pending and over 1,169,090 square feet of cannabis cultivation has already been approved. If the proposed ordinance passes, then it will only be a matter of time before Sacramento closes its doors to new cannabis operators.

Unfortunately, this trend of curtailing cannabis permits is likely to become more common so long as a vast swath of California continues to prohibit commercial cannabis businesses from entering the legal market. Sacramento will hold hearings on its proposed ordinance tomorrow, May 8th (at 3pm before the Law and Legislation Committee) and on Thursday, May 10th (at 5:30pm before the Planning and Design Commission). If you want to make sure Sacramento keeps its doors open to cannabis businesses, it’s imperative you show up.