San Jose’s 16 existing cannabis dispensaries were cleared for sales and deliveries of non-medical, or adult-use, cannabis on Tuesday November 14 by the City Council in a unanimous 11-0 vote. Effective January 1, customers will no longer require a doctor’s recommendation to purchase cannabis products if each dispensary obtains a state license, as expected. Increased sales will likely boost the $10.5 million that the city’s 10 percent gross receipts tax nets each year, although city staff declined to estimate by how much.
“Continuing the ban on sales and delivery of non-medical cannabis will not meet the will of the voters and will not provide a safe alternative to the illegal non-medical cannabis market,” wrote Chief of Police Edgardo Garcia in an October 31 memo.
Despite opening up the city’s 16 dispensaries to non-medical cannabis sales, the city’s failure to allow more retail stores to open means that most cannabis will stay in the non-regulated and non-taxed market. In comparison, 36 dispensaries operate in San Francisco, a less populous city.
“We’ve come a long way in a short period of time,” said Garcia at the November 14 meeting, boasting of the city’s “successful” shutdown of dozens of small businesses, with the loss of an estimated 500 jobs. “Just a few years ago, San Jose had as many as 120 illegal medical marijuana dispensaries.”
“But the time to dab in reefer-regulation is over. This council should dispense with any trepidation and concentrate our efforts to hash out a potent policy on commercial cannabis. Through smart regulations and taxes, we can weed out bad actors and get our general fund revenues high.” – San Jose City Council member Lan Diep, November 13, 2017
“Other states with legalized marijuana have actually seen teenage experimentation and the use of marijuana increase,” reported Garcia, an assumption debunked just last week by a Columbia University study. For this reason, and because there is no test available to police officers for driving while under the influence of cannabis like for alcohol, “staff is recommending no changes to zoning districts, no changes to the sensitive use buffers, no expansion in the number of dispensaries, and no re-opening of the registration process.”
“It was a bit of a Wild West,” said Mayor Sam Liccardo, referring to the period from 2009 to 2014 when the failure of the City Council to enact any regulations allowed a rapid expansion to around 80 medical cannabis dispensaries. (Garcia and Mayor Liccardo now claim there were 120 dispensaries.) “What we have now in place is something that works, we’ve got regulated dispensaries, we’ve got an industry that is likely to grow. I see no reason why we should fix what’s not broken,” said Liccardo.
“We wouldn’t be here today if it wasn’t for prior Mayor Chuck Reed, the courage of prior councils, and the fact that this is a tough issue, and they took leadership, and they dealt with it,” said Silicon Valley Cannabis Alliance President Shawn Kali-rail.
“The voters have spoken on Prop 64, the question remains just what to do with it,” said City Council member Lan Diep, who insisted on assessing an new impact fee on cannabis dispensaries. “We need to be able to regulate and address the negative consequences of recreational pot, whatever they may be.”
“These aren’t the types of impacts that you can establish a fee for,” objected City Attorney Rick Doyle, explaining that dispensaries already pay a regulatory fee that covers the city’s staffing needs to oversee the dispensaries and collect taxes but “we can’t go beyond that.”
“I think we’ve been fortunate in our work that we’ve done going from over 100 dispensaries, really a Wild West, and being able to hone that in and have a tremendous program I think, 16 legally operating dispensaries,” said City Council member Raul Peralez, who praised the growing revenue source available from taxing non-medical cannabis.
San Jose remains the only city in Santa Clara County with cannabis dispensaries, although the neighboring cities of Santa Clara and Mountain View are interested in allowing them to open as early as next year.