Jessica Cejnar / Wednesday, Feb. 5, 2020 @ 6:25 p.m. / Local Government

Setback Decision Made, Crescent City Council Discusses Fees, Bonds For Commercial Cannabis Businesses

The Crescent City Council continues to discuss an ordinance regulating commercial cannabis uses within city limits. Photo: LoCO file photo

In the continuing saga of commercial cannabis in Crescent City, the discussion turned from setbacks to conditional use permits and surety bonds.

The Crescent City Council voted 3-2 Monday in favor of a 600-foot setback from schools and daycare centers for retailers. Councilors Jason Greenough and Isaiah Wright dissented with both saying places to purchase cannabis should be separated from youth centers as well.

With that decision made, Councilors agreed to set use permit fees by resolution for cannabis retailers, manufacturers, processors and cultivators. The proposed ordinance would also require business owners to obtain a $15,000 surety bond to pay for law enforcement and destruction for any material that’s produced or processed illegally, said Gary Rees, a planner with Eureka-based SHN.

Crescent City Mayor Blake Inscore pushed for staff to have that resolution drafted by the Council’s Feb. 18 meeting. Councilors could adopt the city’s commercial cannabis ordinance by March 2, allowing it to take effect April 2.

“We’ve still got work to do on a resolution side prior to, at the earliest, April 2,” Inscore told staff. “It’d be nice to have that when we do our second reading and we actually adopt the ordinance. I think it would be to the public’s benefit if that decision was made when we put this ordinance into law at our second meeting so they have 30 days to get their stuff lined up.”

Under the current draft, Crescent City’s commercial cannabis ordinance would allow cultivated, processing and retail in the city’s commercial, waterfront commercial, downtown business district and highway district zones.

The proposed ordinance allows indoor cultivation of no more than 2,000 square feet, storefront and non-storefront retail, processing facilities, micro businesses and testing laboratories. It also carries odor restrictions, requiring it be contained within a business’s property line.

Setbacks requirements
On Monday, the Council was unable to reach a consensus on whether a setback should include schools only; schools and daycare centers; or schools, daycare and youth centers.

City Attorney Martha Rice noted that there’s a difference between institutional daycare center such as a Head Start and a family daycare center, though both are licensed by the state.

Rees said he left out the home-based daycare centers, which significantly increased the area within the city cannabis could be sold in. He also noted that Del Norte County’s Coastal Connections program does qualify as a youth center — something that Councilors asked him to check on at their Dec. 23 meeting.

When Inscore asked his colleagues for a decision, Greenough and Wright argued that the setback should apply to schools, daycares and youth centers. However, Mayor Pro Tem Heidi Kime and Councilor Alex Fallman said the setback should apply to schools only.

Inscore put himself right in the middle.

“I do not think we need to put youth centers in,” he said. “I think it pops out an area of usable property that will provide necessary space for a business to thrive.”

Unable to reach a consensus, the Council took a formal vote with Fallman saying he could stomach schools and daycares.

Their former colleague Darrin Short, who is running for District 1 county supervisor, took issue with this decision, however, saying that the actual text of the law not only mentioned schools, daycares and youth center, it also referred to “any other place children gather.”

“The intent is to keep this away from kids,” Short said.

Fees and bonds

City staff proposed setting a use permit fee by resolution to allow for the cost of reviewing the permit and inspecting facilities, City Manager Eric Wier told the Council.

A business owner would also have to obtain a license, which is based on the number of employees, Wier said. This is less than $100 for businesses with about two employees, he said.

Rice noted that a resolution is easier to adjust than codifying fees in an ordinance. If the city is trying to gain anything beyond recovering costs, it’s a tax.

“Of course you can do less,” she said. “But part of what we’re trying to estimate is what the cost will be to process applications and monitor businesses. If it’s evident we didn’t aim high enough it could be adjusted next year when we do the fee schedule.”

According to an itemized list of fees the city may apply beyond the $15,000 surety bond, someone wanting to start a commercial cannabis operation could pay between $691 and $1,300, Rees said. The business license would be between $31 and $52, he said.

When it comes to conditional use permits, Arcata charges $3,000 and Humboldt County charges $5,000, Rees said. Crescent City currently charges $361.50 for use permits, he said.

Inscore, using Google, noted that a surety bond premiums typically cost from 1 percent to 15 percent of the total bond amount.

Jennifer Henson, owner of Pacific Paradise in Arcata who is exploring the possibility of opening a dispensary in Crescent City, said there are a lot of costs involved in starting a commercial cannabis business. Though she was happy that the surety bond was only for $15,000, Henson said she and other “mom and pop shops” are trying to get the product out into the open to destigmatize it.

“When I opened my business last year I had to put about $100,000 into being compliant,” she said. “Other retailers opening businesses have to have their own business plan. We have to have cameras running 24-7. We have to have guards, guard badges, security. It was really expensive to get started to be compliant.”

Henson also noted that excise taxes for retailers rose from 21 percent to 31 percent.

“The idea that there’s a lot of money in cannabis is a little delusional when you get to the retail end,” she said, adding that she’s also working hard to comply with state licensing regulations. “If you make it more affordable, you’ll encourage locals and people in the community to get involved in this movement.”


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