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As the county looks to expand its commercial cannabis zones, Crescent City staff and elected officials are beginning to grapple with where and how the substance should be cultivated, processed and sold within city limits.

Public Works Director Jon Olson and Garry Rees, a planner with Eureka-based SHN, presented a draft ordinance to the Crescent City Council on Monday. The ordinance reflects recommendations from the Crescent City Planning Commission following meetings in August, October and November, Rees told City Councilors.

According to the draft ordinance, the Planning Commission recommends allowing commercial cannabis use in the city’s general commercial, waterfront commercial, downtown business district and highway district zones.

These areas include along U.S. 101 south of Front Street; along the eastern side of the city; along Front Street and in Downtown Crescent City, Rees said. Commercial cannabis uses include indoor cultivation of no more than 2,000 square feet, storefront retail with deliveries and onsite consumption, non-storefront retail, delivery only, processing facilities and micro business and testing laboratories, according to the draft ordinance.

The Planning Commission proposes banning cannabis processing that uses potentially explosive substances as well as stores that allows drive-through sales within city limits, Rees told the City Council. The Commission recommends that all commercial cannabis operations require a use permit and comply by the state’s 600-foot setback requirements from schools, daycare centers and other places where youth congregate, he said.

“(The Planning Commission) is also recommending that there should not be a cap on the number of use permits issued for commercial cannabis uses,” Rees told the City Council. “They believe the market will dictate how many uses (there will be) in the city.”

The use permit obtained by a commercial cannabis proprietor would be subject to annual review by city staff, Rees said.

The Planning Commission also recommended cannabis businesses be subject to operating standards, Rees said, adding that Crescent City has rules related to the sale of tobacco products in its municipal code.

Commissioners felt that though they initially thought a track and trade program at the city level would be a good idea, it may be a lot for businesses to deal with, Rees said. He noted that other jurisdictions crafting cannabis ordinances felt developing a local system for recording the inventory and movement of cannabis was unnecessary.

Planning commissioners recommended adopting state requirements that access to cannabis be restricted to people age 21 and older; that the consumption of it not be visible from public places; and that a commercial cannabis business also doesn’t offer the sale and consumption of tobacco or alcohol on their premises, Rees said.

As for the cultivation of cannabis, the Planning Commission proposed prohibiting the outdoor growing of the product, but stated that cannabis could include on-site processing as well as a nursery, Rees said.

Though it commended the work the Planning Commission did, the City Council discussed increasing the setback requirement between a cannabis operation and a school to 1,000 feet. Councilor Jason Greenough said he’d like to apply those set back requirements to parks, churches and the Fred Endert Municipal Pool.

Crescent City Mayor Blake Inscore suggested using maps to show what a 1,000 foot buffer zone would look like as opposed to the state-required 600 foot setback. He agreed with Greenough that there should be setbacks between cannabis operations and places that have a high concentration of youth, using the bowling alley as one example.

Monday’s conversation also included how to go about taxing cannabis use within city limits. Inscore asked Rees if the proposed ordinance requires cannabis operators to apply for a regular business license or a special license.

“In my research, one of the things I learned is down south, they didn’t put a tax on theirs,” Inscore said. “In the cities of Eureka and Arcata, they made their business license costly enough that was where they were going to generate revenue to cover staff time needed to manage all this. As opposed to taxing the people using it are we putting a cost on business owners up front for services?”

According to Olson, the Planning Commission proposed treating commercial cannabis operations like any other business, only requiring they have a basic business license.

The Planning Commission wanted to leave the decision of whether a special license would be required to operate a commercial cannabis business up to the City Council, Rees said. The Commission also discussed taxes with Rees noting that the Del Norte County tax rate for cannabis retailers is 2 to 6 percent and manufacturing is 1 to 3 percent.

Humboldt County only taxes cannabis cultivation, Rees said. For indoor cultivation Humboldt’s tax is $3 per square foot, he said.

“The Planning Commission basically stated they didn’t necessarily want taxes or other fees to be prohibitive,” he said, adding that commissioners felt the cannabis industry was over regulated and didn’t want to add onto that burden. “They recommended a 3 percent tax for retailer and a 0 to 3 percent tax for manufacturing. They didn’t recommend anything for cultivation.”

Policy makers in other jurisdictions also argued that paying up to 30 percent in taxes would provide an incentive for cannabis retailers to be in the black market, Rees said.

At the state level, cannabis retailers would be subject to a 15 percent excise tax as well as an 8- to 10-percent sales tax, he said.
Inscore, however, argued for a higher level of consideration for recovering staff costs to evaluate a cannabis business.

“This is not Joe’s Hot Dog Stand,” he said, adding that he’d like the city’s staff report to include what applying for a conditional use permit would cost. “There’s a lot of things that are going to have to be looked at and a lot of staff time that’s going to be required.”

Inscore also questioned Crescent City Police Chief Richard Griffin on what the responsibility would be to someone who’s “providing an intoxicating substance” to a customer. Inscore asked if that person would bear the same responsibility as a bar owner would be for serving a drink to someone who already had too much.

Inscore also noted that when cannabis was legalized in Oregon, Brookings saw an increase in emergency medical calls because the THC potency in the product people were purchasing was higher than it used to be several years ago.

“It was these people who remembered marijuana from when they were teenagers, but they weren’t interested in smoking it anymore,” Inscore said. “They’re getting edibles and they’d eat one and dind’t feel anything, so they’d have another one. After the third one, all of a sudden they start freaking out, they think they’re dying and they call 911. I don’t know if we can control that.”

Griffin noted that the THC levels in cannabis is higher than it used to be in the 1970s and 1980s and a person’s ability to drive is different with marijuana in their system than alcohol. However, he said, officers wouldn’t camp out at a business where cannabis consumption is taking place.

Under currently one permitted commercial cannabis proprietor in Del Norte County. On Nov. 12, the Del Norte County Board of Supervisors addressed a discrepancy involving Sticky Grove's proximity to the county's juvenile hall facility, which operates a school. Noting that, Sticky Grove is currently 450 feet from juvenile hall, supervisors chose to split the property that houses the youth detention facility to ensure its owner, Robert Derego, complies with the state-mandated setback of 600 feet.

On Monday, in addition to crafting the ordinance so it addresses places that attract youth, Inscore urged staff to find out where all the licensed daycares in city limits are located. Greenough also advised staff to consult with the school district on where their properties are.

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