Sacramento City Council finalizes licensing fees for commercial marijuana growers

Sacramento City Council finalizes licensing fees for commercial marijuana growers



The Sacramento City Council has advanced an ambitious commercial marijuana cultivation program by finalizing local licensing fees for an anticipated 200 cannabis grow rooms expected to flourish in mostly light industrial zones in the capital city.

As a result of council action Tuesday night, city staff is to begin accepting permit applications for the businesses in early April, triggering a process – expected to last several months – for licenses to be approved.

The approval of permit fees was the first step in a city effort to raise $6.3 million in revenues from marijuana businesses to pay for hiring additional city staff and police over the next three years to regulate the cannabis industry in Sacramento and drive out illegal cultivators operating in neighborhoods or other zones where the businesses are prohibited. The effort is expected to require 54 positions, including 32 new city hires at a cost of $5.4 million.

As part of funding that effort, the City Council also is due to establish fees for other pot businesses, including Sacramento’s existing 30 dispensaries and eventually cannabis delivery, distribution, manufacturing, lab testing and transportation businesses.

On Tuesday night, the council approved first-year permit fees ranging from $9,700 for indoor grow rooms with up to 5,000 square feet of marijuana to $28,910 for facilities of up to 22,000 square feet, with the annual fees dropping to a range of $8,240 to $26,630 the second year.

The marijuana companies will be subjected to the city’s 4 percent standard business tax, plus sales taxes, and the city could put additional taxation measure before voters. Currently, Sacramento collects $4 million annually from its cannabis dispensaries under a 4 percent medical marijuana tax approved by voters in 2010.

“I think what we’re doing tonight ... is really just the beginning,” said Sacramento Mayor Darrell Steinberg as the council took up five marijuana-related measures Tuesday.

The actions included a unanimous vote to allow people convicted of marijuana crimes to petition the city manager for hearings that could allow them to work in licensed cannabis businesses in the city. Those seeking to do so cannot have been convicted of any crime involving violence or distribution of pot to minors.

Under state medical marijuana law, state and local agencies may – but are not required to – deny licenses to people with felony convictions, including narcotics offenses or other crimes “substantially related” to the cannabis business. The Proposition 64 recreational marijuana initiative prohibits anyone from being denied solely for a drug conviction.

City governmental affairs director Randi Knott said the policy is intended to allow people convicted of marijuana crimes “that are no longer illegal” to work in a legally sanctioned industry.

Steinberg called for caution and a “broader discussion” by the City Council on unfolding marijuana legalization in California. He also referenced “a potential cloud” of federal enforcement in states where voters have approved marijuana for recreational use. But he said the cannabis industry could be a significant economic opportunity for the city.

“I want us to be really proactive and upfront about where we want to go,” Steinberg said. “I think there is a tremendous revenue opportunity for us – and jobs, potentially high-wage jobs. But we want to do it right.”

Four cultivation related measures, including one setting a 600-foot distance requirement from parks, passed by 9-0 votes. Steinberg’s former mayoral opponent, council member Angelique Ashby, cast the only “no” vote against lifting the moratorium to begin accepting applications for cultivation licenses.

Ashby said the city was moving too fast to accommodate the marijuana industry before state regulations for medical marijuana and voter-approved recreation marijuana – under November’s Proposition 64 – take full effect Jan. 1, 2018.

“I am not interested in seeing Sacramento be overwhelmed by this industry and cultivation,” Ashby said.

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