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San Benito County partners with HdL Companies to design cannabis ordinance

Consulting group says county could gain $2 million to $8 million in annual pot tax revenue.
CAO Ray Espinosa told board staff needs its input before working with HdL to come up with the ordinance. Photo by John Chadwell.
Supervisor Jaime De La Cruz said county should use template it already has to move quickly through the process. Photo by John Chadwell.
Supervisor Mark Medina wants to be sure greenhouse placement and structure is in final ordinance. Photo by John Chadwell.
Local attorney Aaron Johnson said he favored a merit-based method of choosing applicants for cannabis permits. Photo by John Chadwell.

The San Benito County Board of Supervisors on July 24 approved a one-year contract with HdL Companies to assist staff in designing a cannabis business activity ordinance to establish best practices for ensuring public safety within the county.

The work will include designing an application review process that will enable county staff to identify incomplete submissions including live scan materials and background checks of all business partners.

In the June 6 primary election, county voters in the unincorporated area approved Measure C to create a tax on cannabis businesses. As a result, the county entered into a contract with HdL Companies for $10,000 to work with staff to draft the framework for an ordinance.

County Administrative Officer Ray Espinosa told the board staff was insufficient to expedite the development of the ordinance, necessitating the hiring of an outside consultant. David McPherson, HdL’s cannabis compliance director, gave a presentation for the supervisors, outlining topics ranging from how cannabis should be grown, what type of land it can be cultivated on and what sort of manufacturing should be allowed.

“One area we’re not clear on is whether to have a discussion on retail,” McPherson said. “Should cannabis retail establishments be allowed in the unincorporated areas of the county? Do you want to set a cap on the number of retailers or manufacturers?”

He advised the board to think about the application process. Should it be on a first-come-first-serve basis, a lottery, or merit-based on review of applications? McPherson said fees and taxes could include an initial application fee, an annual regulatory fee and a cannabis tax.

McPherson then addressed potential revenue based on the number and types of businesses approved. He outlined three estimates that included mixes of indoor and outdoor grows, manufacturing and retail. The conservative estimate involved 37 businesses that would generate $2 million to $4.1 million annually; a moderate estimate of mixed businesses would generate $3.4 million to $6.7 million; and an aggressive approach of 78 businesses would bring revenues of $4.4 million to $8.7 million.

Espinosa reminded the board that staff needed direction as the process moved forward.

“We’ll package something, work with [Resource Management Agency],” Espinosa said. “For land use, it would go to the Planning Commission and then back. We wanted input from the board before we go down this route because we didn’t want to redo this again.”

Supervisor Jaimie De La Cruz asked if the county didn’t already have a draft ordinance or template. Espinosa said there was a template that indicated where the board more or less wanted to go. He reminded the board that they had put a hold on it. De La Cruz said that was because the board wasn’t clear how the public felt about cannabis, but that the public sent a clear message in June. De La Cruz also brought up that Monterey County was “back peddling” on its tax rates and he wanted to make sure San Benito County wouldn’t have to do the same.

“I don’t want to be like Monterey,” he said. “They taxed high and now they’re dropping their tax rate. We’ve got a template and if we can get all these other things in place, we can get something. I don’t want to start writing checks to [HdL], having public input and frustration knowing at the end of the day it’s going to be shelved.”

Supervisor Mark Medina said early discussions concerning the ordinance were based solely on indoor grows and limits where greenhouses could be located and how they would be constructed. He also asked what the dollar figures were based on. McPherson told him it was based on the range of rates the earlier draft ordinance indicated, as well as prevailing rates in surrounding counties.

During public comments, county resident Tim McCord described the county’s previous attempt to permit cannabis growing operations as a failure.

“We’re ruining our county,” McCord said. “We’ve got to look at our health and welfare of the people of this county. We have to take a hard look at our agricultural land and what it’s used for. We do not need marijuana to live. We have to have fruit, vegetables, and a good quality water.”

Aaron Johnson, a local attorney who represents a number of cannabis concerns, spoke in favor of the merit-based selection of cannabis businesses.

“It makes sure people applying have standards you check against others to see how high each applicant is scoring and what they will adhere to as operators,” he said. “If they don’t, they don’t get permit renewals later in the process.”

He said residents should always be given the opportunity to come to public meetings to give its input into where cannabis operations are located.

“I would recommend you follow the direction you’ve been going, take what you’ve done before, but I would be open to HdL’s process,” he advised the board. “They’ve done it all over California and they’ve shown they’re fair and very professional.”

 

 

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About:
John Chadwell (John Chadwell)

John Chadwell is freelance photojournalist, copywriter, ghostwriter, scriptwriter and novelist. He is a former U.S. Navy Combat Photojournalist and is an award-winning writer who has worked for magazine, newspapers, radio and television. He has a BA in Journalism and Mass Communications from Chapman University and underwent graduate studies at USC Cinema School. John has worked as a script doctor and his own script, God's Club, was released as a motion picture in 2016. He has also written eight novels, ranging from science fiction to true crime that are sold on Amazon. To contact John Chadwell, send an email to: johnchadwell@benitolink.com.

Comments

I submit the estimated revenue data extrapolated by HdL for cannabis cultivation is very conservative and fails to consider correlated opportunities for hospitality/tourism and retail/wholesale supply sales. Further, the opportunity to cultivate industrial hemp in San Benito County is conspicuously absent from consideration. Hemp - the non-psychoactive cousin to cannabis sativa/indica - can be produced and utilized to manufacture medicine, high protein foods, textiles, paper, bio diesel and green construction materials.

https://www.cdfa.ca.gov/plant/industrialhemp/

The Board of Supervisors would do well to probe the cannabis market in the aggregate of correlated business opportunities which will improve its economy and consider the now-legal recreational cannabis industry as a planetary subset of a much greater economic solar system operating in California. 

 

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