San Diego will have a fully legal and regulated marijuana industry including pot farms, factories making edibles and retail storefronts selling the drug to both medical and recreational customers.
The City Council voted 6-3 on Monday to legalize local cultivation, manufacturing and testing of marijuana when new state laws take effect in January.
The council also agreed earlier this year to allow legally approved medical marijuana dispensaries to expand their sales to recreational customers. The city has approved 17 such businesses and 11 have begun operating.
The approval came despite strong objections from Police Chief Shelley Zimmerman, who warned of significant threats to public safety that she said couldn’t be outweighed by new tax revenue from the highly profitable industry.
The council majority said, however, that creating a local supply chain for the city’s dispensaries would boost the economy, create jobs and improve the quality and safety of local marijuana by eliminating the need to truck it in from elsewhere.
They also said it would prevent a local “black market” of unregulated cultivators and manufacturers that would emerge if the city outlawed those activities.
The council also took the less controversial step of allowing marijuana testing facilities in the city. Testing of for-sale marijuana will be required under new state laws prompted by California voters approving Proposition 64 last November.
The only other cities in the county that allow dispensaries are La Mesa and Lemon Grove, where voters forced the hands of city leaders by approving ballot measures last November. And only La Mesa has indicated it may allow cultivation.
The council also eliminated a proposed cap of two cultivating, manufacturing and testing businesses per council district, which would have allowed a maximum of 18 in the city. Instead, the council set a citywide cap of 40 such businesses.
Another proposal from staff that the marijuana industry opposed was a rule prohibiting such businesses from opening within 100 feet of each other or dispensaries. The council also eliminated that rule.
Councilman Chris Ward said the decision was obvious to him.
"Having sound policy and regulations in place will allow the city to enforce its rules and assist the cannabis industry in regulating itself," he said. "Would we tell Stone Brewery that we wanted them to manufacture everything in Riverside County and truck it down? Would we tell Ballast Point they can only grow their hops up in Humboldt?"
Councilwoman Barbara Bry said creating a legalized local supply chain was crucial.
"If we don't allow all parts of the supply chain in San Diego we are merely enabling a large black market," she said. "San Diego consumers are counting on us to provide them a safe product."
Councilwoman Lorie Zapf, who joined with colleagues Scott Sherman and Chris Cate to cast the “no” votes, said she shared the concerns expressed by Chief Zimmerman.
“I think we should listen to our police chief,” said Zapf. “We were elected if nothing else to oversee public safety and we’re just absolutely going down the wrong road.”
San Diego voters approved a local tax on recreational marijuana last November that would start at 5 percent and rise to 8 percent in July 2019.
That tax, which could rise as high as 15 percent with council approval, would apply to pot farms and factories as well as dispensaries.
Zimmerman said she doubted that revenue would be worth it.
"The negative consequences and secondary effects of the legal marijuana industry being allowed to operate on a larger scale in our city of San Diego are enormous," she warned the council before their vote. "I urge you not to allow any further marijuana facilities within our city."
She said the city’s legal marijuana dispensaries, which began operating less than three years ago, have generated 272 calls for service from police for burglaries, robberies, thefts, assaults and shootings.
"Officials throughout Colorado flat out told our team the revenue was just not worth these costs," said Zimmerman, who is retiring in March.
Dallin Young, executive director of the Association of Cannabis Professionals, said 30 businesses already engaged in cultivation, manufacturing and testing with tacit city approval have generated no complaints.
He said that’s primarily because such businesses have little or no contact with the public.
"It's clear there has not been a negative impact on the city by allowing these uses," Young said. "They’re supposed to have no public access. They are strictly for people to go in there, do their job and leave."
Young also stressed the importance of a local supply chain.
"We will know who the operators are and we won't have to import any of the products from our lovely neighbors to the north and we'll be creating jobs here," he said. "We'll be keeping all of the money here in San Diego where it belongs."
The 30 businesses already engaged in such activities without formal city approval will be allowed to continue operating for two years, but they won’t get a leg up on obtaining permits that would give them the right to legally operate long term.
Many of them, city officials said, are located in areas where the zoning makes it impossible for them to comply with the regulations the council adopted on Monday.
The council also agreed to address three additional issues at some point in the future: loosening rules on deliveries, compliance by marijuana businesses with labor laws and regulating odor at marijuana businesses.
Assistant City Attorney Mary Nuesca said it’s possible the council could act on its desire to regulate odor, but said that might not be legal because the state has chosen not to regulate that issue.
During a four-hour public hearing before the council’s vote, many marijuana legalization supporters thanked the council for being one of the few cities in the state to consider allowing a full supply and sales chain.
Many opponents also warned of the dangers of legalizing a drug that has become more potent in recent years and that is popular among teens.
Councilwoman Zapf said it was a major concern that high school students are frequently “high” in class.
“I know what’s going on with teenagers,” Zapf said.
Councilwoman Bry had a different take, contending that marijuana is not a new phenomenon on high school campuses.
“That’s a whole separate issue of educating our youth about the dangers of trying things like this,” she said.
Finalized state rules governing recreational marijuana are scheduled to be unveiled in January.
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