Main Street or Industrial Park? Where does cannabis industry fit?

 Submitted by: Jeff Kolin

The adage that success involves three words -- location, location, location -- comes to mind in any discussion about where the cannabis industry should be located.

Local governments typically answer this question based on their General Plans and Zoning Codes. These documents allow businesses to determine where they can legally site their operations in a city or county unincorporated area.

Cannabis industries face unique challenges. Some communities are still developing their regulations. Some have chosen to passively ban cannabis industries by omitting them from their land use and zoning codes.

Other communities have banned all or portions of the cannabis industry through local ordinances. And still others have clearly defined what segments of the industry can be approved, where they can be located, and the conditions for approval.

California’s dual licensing system for medical cannabis industries requires that local approvals be obtained before submission for state licenses. This makes it even more important for local communities to define their positions related to medical cannabis industries to avoid confusion.

Communities interested in accepting the industry should make sure their local regulations are up to date and clearly define where and what type of cannabis activities are acceptable.

The answer to the question of where they should locate depends on a number of factors and local conditions. Some are defined in state law. Others are left to local governments to define, based on local conditions and preferences. Clearly, not all cannabis industry segments are the same.

Cultivation has its own set of potential impacts and limitations, as does manufacturing. Outdoor grows may be limited to agricultural areas. Manufacturing may be restricted to industrial or light industrial areas, depending on their use of volatile chemicals.

Testing facilities have fewer impacts and may be able to be located in industrial, commercial and office zones. Finally, dispensaries or retail sales can pose unique challenges.

Should dispensaries be located in high traffic, visible retail locations? Would they positively impact the image of your community? What would be the reaction of the surrounding businesses and residents?

Location impacts the level of revenue raised through state and local taxes. Some communities have chosen to restrict dispensary locations to light industrial areas. Others have broadened their locations to include retail and commercial sites.

Local communities should think carefully about where dispensaries and cannabis industries work best. They should seek input from their business community, residents and the cannabis industry.

Expectations for tax revenues should be based on possible locations, product mix, anticipated volumes, demographics and patient counts.

Action Steps for Local Governments:
-- Educate yourself and your residents with an understanding of the many types of activities, methodologies and impacts related to cultivation, manufacturing, distribution, delivery and sales.
-- Survey your community to determine the number, type and location of existing medical cannabis businesses operating both legally and illegally.
-- Review and update your General Plan and Zoning Code to reflect your local government’s current position on cannabis industries.
-- Enact appropriate limitations and requirements for each segment of the cannabis industry that will be eligible for permits.
-- Consider establishing exclusionary areas for youth facilities (i.e. schools, parks, youth centers, churches and libraries).
-- Consider establishing subzones within retail and commercial zones if additional exclusions within zones are desired.
-- Consider limiting the number of dispensaries, manufacturers and the number and amount of cultivators that can be permitted, and include controls to avoid over-concentration.
-- Establish a review period when the impacts of initial regulations and ordinances will be reviewed and changes proposed for improvements.
-- Develop a process map for obtaining cannabis industry permits within your jurisdiction and develop answers to Frequently Asked Questions.
-- Identify and develop all potential costs for administering medical cannabis regulations and permits and propose appropriate fees and/or taxes.
-- Develop local requirements for inventory control and sales tracking to facilitate future audits.

The cannabis industry will advertise and conduct promotions to increase their revenues. Ask these questions:

What types of restrictions are appropriate in your community?
Billboards, advertising flyers, promotional events, window displays, signs?
Is your community ready to accept cannabis into the fabric of its business community?
Will it positively or negatively impact a community’s image, tourism and attractiveness to other businesses or current and future residents?

Whether it is on Main Street or Industrial Lane, each community will develop its own approach to medical cannabis and determine whether it's an appropriate industry.

Early involvement of the public, business community, residents and the cannabis industry will help to avoid costly missteps in the process.