The California Cannabis Countdown: The City of Sacramento

Sacramento cannabisUntil recently, the “Wild West” of U.S. cannabis lacked robust statewide regulations which left California cannabis companies subject to unclear rules and risk of federal shutdowns. The Medical Marijuana Regulation and Safety Act (MMRSA) created these regulations, but ultimately left control in the hands of local cities and counties. At last count, California has 58 counties and 482 incorporated cities across the state, each with the option to create its own rules or ban marijuana altogether. In this California Cannabis Countdown series, we plan to cover who is banning, who is waiting, and who is embracing the change to legalize marijuana — permits, regulations, taxes and all. For each city and county, we’ll discuss its location, history with cannabis, current law, and proposed law to give you a clearer picture of where to locate your cannabis business, how to keep it legal, and what you will and won’t be allowed to do. Our last California Cannabis Countdown post was on the City of Berkeley, and before that, Calaveras CountyMonterey County and the City of Emeryville.

Welcome to the California Cannabis Countdown.

As the capital of California, Sacramento is at the heart of cannabis reform not only locally but also statewide. Before state regulation had even been drafted, the city generously allowed noncompliant dispensaries operating within its boundaries to continue their operations and apply for newly created marijuana permits. Though it is no longer accepting applications for new dispensaries, recent developments are expected to allow for large-scale commercial cultivation permits within the city as early as September of this year.

Location. Sacramento is the capital city of the state of California. The city was named after the Sacramento River, which forms its western border. Sacramento is notably diverse racially, ethnically, and by household income, and has a notable lack of interracial disharmony. In fact, it was named “America’s Most Diverse City” in a 2002 Civil Rights Project conducted by Harvard University. The government of Sacramento operates as a charter city and is composed of the Sacramento City Council with 8 city council districts and the Mayor of Sacramento, which operate under a mayor-council government.

History with CannabisOn July 14, 2009, the Sacramento City Council declared that though medical marijuana dispensaries were not permitted in any zoning district in the city under Title 17 of the Sacramento City Code, several dispensaries were known to operate within the city. Thus, it adopted an emergency ordinance to temporarily ban any new dispensaries but also to exempt and allow the continued operations of the 39 medical marijuana businesses established as of June 19, 2009.

On November 2, 2010, Sacramento voters approved a Marijuana Tax under Measure C that allowed the city to tax medical marijuana businesses at to 2 to 4 percent. Currently, all marijuana businesses in the city are subject to a 4 percent business occupancy tax.

On November 9, 2010, Sacramento officially adopted an ordinance to regulate medical marijuana dispensaries under Chapter 5.150 of the city code.

In 2011, a  crackdown by the federal government on medical marijuana dispensaries in California resulted in the shuttering of several dispensaries across the state. As a result, on November 8, 2011, Sacramento instituted an administrative freeze on the issuance of new permits to medical marijuana dispensaries.

On November 20, 2012, the Sacramento City Council passed an ordinance to add Chapter 8.132 to the city code in order to regulate indoor cannabis cultivation in residential zones of up to 400 square feet.

On February 2, 2016, in anticipation of the now repealed March 12, 2016 deadline for cities to pass local cannabis regulations under the MMRSA, the Sacramento City Council voted unanimously in favor of an amendment to allow indoor commercial cultivation in Sacramento of up to 22,000 square feet. The amendment also included a 45-day moratorium on cannabis cultivation within the city.

On March 15, 2016, the City Council extended the moratorium on cultivation for an additional 6 months, except for indoor cultivation in residential zones and qualified existing cultivation operations that needed to register with the city by April 14, 2016.

On June 7, 2016, Sacramento voters failed to pass a marijuana tax initiative under Measure Y that would have imposed a special 5 percent Marijuana Business Operations Tax on future commercial cultivation in Sacramento and create a special Sacramento Children’s Fund dedicated to funding programs and services for children and youth.

Sacramento’s Current Cannabis LawsUnder Chapter 5.150, special permits are required to operate a medical marijuana dispensary in Sacramento. Applications are only accepted from registered medical marijuana dispensaries that were operating as of 2009, and the city is currently not accepting applications for new medical marijuana dispensaries.

Under Chapter 8.132, qualified patients and primary caregivers in Sacramento are allowed to cultivate indoors in residential zones in areas of up to 400 square feet without a city permit.

Under Section 17.228.127 of Title 17, indoor commercial cultivation is allowed within Sacramento with a conditional use permit. Commercial cultivation will be permitted in the following zoning districts: C-2 general commercial and C-4 heavy commercial; M-1S light industrial, M-2 heavy industrial and M-2S heavy industrial; and A agricultural. In addition, commercial cultivation within any zone must comply with the following provisions:

  1. Cannabis cultivation must be within a fully enclosed building and must not be visible from the public right-of-way.
  2. The total canopy size of cannabis growing on one premises must not exceed 22,000 square feet.
  3. Cannabis cultivation must comply with all applicable state and local laws.

Sacramento’s Proposed Cannabis LawsOn March 22, 2016, the City Council held a meeting to discuss its regulations for cannabis cultivation and announced that the city has currently not made decisions on cultivation operation requirements and has not yet established an application process or operating permit.  The city also requested feedback on the following information:

  • How much grow space do we need? How many permits issued? Should there be a cap and if so what should that be?
  • Should cultivators only be tied to a dispensary?
  • Should we allow product to be sold outside City of Sacramento?
  • Concerns about infrastructure?
  • Odor control and how to regulate?

The City Council is expected to prepare a draft ordinance by the end of September to lay out potential rules for operation and locations for commercial cultivation in Sacramento. Though Sacramento has yet to set a limit on the number of cultivation permits that will be issued, there is some concern that allowing too many permits will turn Sacramento into a medical marijuana cultivation hub.

For now, Sacramento has bought itself some time to figure out how best to regulate commercial cultivation within its boundaries. It may not be the best location to open up a new medical marijuana dispensary, but with a 22,000 square feet maximum canopy size, Sacramento will be a city to watch this year for any interested commercial cultivators.