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San Carlos OKs Cannabis Businesses

Cannabis businesses can generate tax revenues for the city. Photo: Saint Petersblog

The City of San Carlos took a cautious first step towards permitting and taxing commercial cannabis businesses on Monday October 23 with the 4-1 City Council approval of an Ordinance to Regulate Commercial Cannabis Activities.

The city’s new rules will continue to allow the delivery of cannabis, and lift the current prohibition on the manufacture of cannabis products, cannabis testing facilities, and cannabis distribution. The ordinance will continue to ban retail dispensaries and commercial cultivation of cannabis within San Carlos, depriving the city of some lucrative sources of tax revenue.

Oddly, the new regulations also ban the delivery of cannabis products to locations within San Carlos if they originate from one of the city’s own registered commercial cannabis businesses, cutting off a sizable market for those businesses and with it all tax revenues on the products sold. The regulations will take effect on January 1, 2018, as they are written to comply with many provisions of California 2016 Proposition 64, which go into effect on that day.

City Council member Mark Olbert dissented, stating that he did not favor banning retail dispensaries from San Carlos. “I think we’re being short-sighted in thinking to ban retail shops in our town,” said Olbert at the meeting. “It strikes me as odd to be allowing [deliveries of cannabis], but saying no to retail stores.”

City staff were grilled by council members on whether a ban on deliveries of cannabis – hypothetically – could be enforced, but staff strongly advised against such a ban.

“With the passage of Proposition 64 there was a desire to have law enforcement not overly involved in the enforcement of marijuana,” said San Mateo County Sheriff’s Captain Greg Rothaus. “We’re talking about the delivery of a lawful product.”

“When you’re talking about deliveries, it’s coming from a licensed legal source,” said City Manager Jeff Maltbie. “There’s nothing we can do [to enforce against deliveries].”

One member of the public spoke on the item, in support of allowing commercial cannabis businesses to operate in San Carlos. “We have a fantastic opportunity to bring a crop to the community that has not been explored yet,” said William Graham.

The commercial cannabis ordinance will modify the San Carlos Municipal Code on December 13, 30 days after approval at its second reading at the November 13 City Council meeting. After January 1 the city will process business applications.