Oceanside’s Planning Commission has unanimously recommended the City Council approve zoning and code amendments for what would be the city’s first four walk-in retail cannabis shops.
The commission also discussed ways to make it easier for applicants to obtain the retail sales licenses, such as reducing restrictions on locations for the shops, although those ideas were not part of their recommendation.
City Planner Sergio Madera advised the commission that its decision Monday was to be only on the proposed zoning and code amendments and that the other issues could come up later.
Former Councilmember Chuck Lowery served on an ad hoc committee that laid the groundwork for the cannabis program in 2017. He told the commission that though much good work has been done so far, the city should remove a requirement for applicants to have a location selected before they are awarded a license.
The expense of leasing property before completing the time-consuming process of obtaining a license could be prohibitive, Lowery said.
“There are very few properties in the first place,” he said. “I can’t imagine spending $10,000 a month for 12 months and then being told (if the application is denied) that you just blew the money down the drain.”
Walk-in cannabis shops would be allowed in various commercial and industrial zones, mostly in the San Luis Rey Valley, and not in downtown Oceanside or the city’s coastal zone.
Kelly Hayes, an attorney representing cannabis businesses, said the city should remove or reduce the 1,000-foot minimum proposed between a cannabis shop and other regulated businesses such as bars, liquor stores and tobacco sales.
“I’m a little surprised to see that” because most other cities do not require it and the businesses could be compatible, Hayes said.
The shops also would be prohibited within 1,000 feet of schools, churches, youth centers, public parks, playgrounds and residential neighborhoods.
Several commissioners agreed with the suggested changes and offered some of their own.
Commissioner Louise Balma said cannabis shops should be allowed in South Morro Hills, the more rural area of northeast Oceanside where the city promotes agritourism.
“Agritourism in big in South Morro Hills,” Balma said. “We want more agribusiness. We have farm tours. Could we consider possibly adding that area of our city?”
Madera, the city planner, responded that South Morro Hills may not be ready for retail cannabis sales.
“But your idea is not lost,” he said. “In the future, that’s something that can be expanded … maybe a combination of cultivation and sales … but we’re not there yet tonight.”
Commissioner Tom Rosales agreed with the suggestions.
“Let’s not make it overly restrictive,” Rosales said. “Maybe that will come up in the next round.”
Two of the four proposed licenses would be reserved for applicants already operating related cannabis businesses in the city, and the others would be available at-large.
Oceanside legalized cannabis for medicinal uses only in 2018 and later added recreational uses. So far, the city has issued 20 licenses for a variety of cannabis-related businesses, from cultivation to off-site distribution.
Only five of the licenses are active, and those are held by just two local businesses. MedLeaf delivers cannabis products, while Left Coast has manufacturing and commercial distribution, but no delivery.
Retail shops will collect 5% in sales tax on cannabis products, in addition to the city’s regular 8.5% sales tax.
A staff report prepared for the City Council in April, before a fourth license was added, said that Oceanside can expect to receive about $1.3 million annually in tax revenue from three retail cannabis sales licenses.
The only other legal cannabis walk-in dispensaries in North County are in Vista and Encinitas, which both collect a 7% sales tax from the businesses. Countywide, there are about 70, and generally the additional sales tax ranges from 4% to 7%.
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