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Redwood City To Open Cannabis Dispensaries By 2019

Cannabis cultivation, manufacture, and testing will all remain banned in Redwood City, while distribution centers and retail stores will be allowed to open in 2019. Photo: James MacDonald

The Redwood City City Council voted 7-0 to extend its complete ban on all cannabis businesses (except deliveries) to the end of 2018, but then allow retail cannabis dispensaries to open in 2019. City staff estimate that a 4 to 7 percent excise tax on gross receipts could garner up to $267,000 in revenues from deliveries, storefront retail sales, and distribution center shipments, but didn’t report how many business they estimated would be operating.

The excise tax, which the city plans to place on the November 2018 ballot, would have to be approved by a majority of voters.

“Since the time that medical delivery has been allowed in Redwood City [January 1, 2016],” said City Manager Mellisa Stevenson Diaz, “we are not aware of any community impacts associated with that. Not traffic impacts, crime, or any other kind of negative concerns.”

The city’s “phased approach” to cannabis regulation will first see all industry, except deliveries, banned for another 15 months. Delivery businesses will be registered with mandatory business licenses in 2018 ($5,000), cannabis distribution centers could open in the city in early 2019 ($125,000), then storefront cannabis dispensaries would be allowed to open later in 2019 ($267,000). These figures are the amounts the city projects it will earn on fees and taxes in each phase.

A cannabis delivery business owner currently operating in the city stated at the meeting that her business alone could probably generate that much revenue from a 5 percent tax, and Diaz noted that the figures were conservative.

“We have something like 400 patients here who we deliver medical marijuana to,” said another delivery service owner. “There’s a lot of people who really need this medicine. People are dying from opioids, left and right.”

City Council members were especially swayed by public comments made by representatives of a cannabis bio-science research company, and instructed staff to provide more information on such businesses to possibly permit them as well.

“As currently conceptualized, areas such as pharmacology and agro-science would not be permitted in Redwood City,” said industry lobbyist Michael Smith of the ordinance. “Those areas of commerce have proven to be the most enduring and profitable of the value chain.”

City Council member Shelly Masur spoke in support of allowing state-licensed businesses testing cannabis products to operate in the city as well.

“The voters did say yes, two-thirds, it’s here, and we need to get in front of it,” said Mayor Jeff Gee. “But I’m just not comfortable with having a retail dispensary or a series of them in Redwood City at this point.”

City Council member Diane Howard spoke favorably of San Jose’s cannabis regulations, having toured multiple facilities to observe their operation, and expressed support for allowing retail sales from distribution centers, as did other council members.

The City Council will review a proposed schedule for phasing in cannabis regulations again in early 2018, as the city begins registering cannabis delivery services.