City Under Pressure to Develop Recreational Adult Cannabis Regulations

in by

California Proposition 64, which legalized, and imposed taxes on, adult recreational marijuana consumption, was approved by 57 percent of state voters last November. However, under an ordinance passed by the San Francisco Board of Supervisors last month, the City won’t issue permits to sell recreational marijuana until it establishes a regulatory framework.

In 2015 the Board of Supervisors established the Cannabis State Legalization Task Force, to advise municipal departments on issues that may need to be addressed once pot is legal. The Task Force is co-chaired by Jennifer Garcia, a union representative for the dispensary 648 Cannabis Division, and Terrance Alan, a longtime cannabis activist.  Roughly 20 other stakeholders are a part of the group, including Kevin Reed, owner of The Green Cross dispensary at 4218 Mission Street.

In 2016, the Task Force issued a series of recommendations, including establishing licensing categories for commercial activities, such as baking, consumption venues and special events. It suggested that workforce development, entrepreneurship opportunities and youth education could be funded by local fees and taxes that’re in addition to state requirements. Over the past two years, the Task Force has held more than 20 public meetings, including one last month and another scheduled for October 18 at 25 Van Ness Avenue, and will soon publish further advice. 

With recreational marijuana use legalized under state law, and the Task Force scheduled to dissolve last August, the Board of Supervisors convened over the summer to discuss how best to regulate the emerging industry. District 8 Supervisor Jeff Sheehy and District 10 Supervisor Malia Cohen co-sponsored legislation to establish an Office of Cannabis and extend the Task Force’s term. 

“This ordinance puts San Francisco on the road to meeting the will of the voters as expressed by Proposition 64, which effective January 1, permits the adult use of cannabis,” stated Sheehy. “In San Francisco more than 74 percent of our voters supported adult cannabis. Although we have consensus on the adult use of cannabis, the devil’s in the details. That is why consistent and well considered regulation is needed to carry out the will of the voters in a way that is consistent with your City’s values.”

Sheehy believes development of a local regulatory framework for cannabis is critical, in part due to his concerns about the drug’s potential impact on the City’s youth, who will not be able to legally purchase recreational marijuana products, but who might end up viewing items designed to look like candy in convenience stores. Recreational marijuana use will be legal only for those aged 21 and older.

District 1 Supervisor Sandra Lee Fewer emphasized that the coming multi-billion-dollar industry should be regulated in a way that promotes economic equity among groups that haven’t profited from the region’s wealth-producing technology boom. According to Fewer, fairness should extend to those who were criminalized during the many decades when marijuana was illegal, enabling them to economically benefit from the sector.

The Office of Cannabis, which was approved unanimously by the Board last month, has been charged with conducting an analysis of the industry’s economic inequities, and to identify ways to make emerging economic opportunities accessible to historically marginalized demographics. “The War on Drugs has disproportionately impacted African-American and Latino people, so special attention should be paid to records expungement and economic equity,” stated Mayor Ed Lee.

“Nicole Elliot was recently appointed the director of the Office of Cannabis and she’ll be working with the state, as they’re establishing regulations as well,” said Jack Gallagher, policy aide, Office of the City Administrator. “The Board of Supervisors is working to establish an entire regulatory framework for recreational cannabis. It’s a multi-agency effort that includes the Planning Department and other City departments, and covers everything from permits, fees and registration for individuals and businesses. The City has just created the Office of Cannabis. The Board will be approving policies around recreational cannabis, which should happen soon since it’s crunch time.”

Similar issues are anticipated with marijuana as are associated with legal adult recreational alcohol and tobacco products.  These include illegal sales to minors, secondhand smoke and the operation of vehicles and machines under the influence of the substance.

According to Megan Filly, San Francisco Superior Court deputy press secretary, the court is unaware of any cases related to persons being under the influence of marijuana. The San Francisco Police Department was contacted for information regarding changes in operations and procedures in preparation for adult legalization.  A representative declined to comment, referring inquiries to the Office of Cannabis and Task Force.

According to the California Attorney General, the state anticipates eventual annual net tax revenues of up to $1 billion from the recreational marijuana industry. State duties will include an excise tax of 15 percent on retail sales, and cultivation taxes of $9.25 per flower ounce and $2.75 per leaf ounce. Medical marijuana will be exempt from some recreational taxation. Marketing and advertising directly to minors is prohibited.

The state also authorizes re-sentencing and record destruction for past marijuana-related convictions. In May, The New York Times reported that in 2015 more than 2,100 individuals were jailed in California for marijuana-related offenses. Since Proposition 64 passed, hundreds have been released; however, those facing federal marijuana-related charges haven’t been exonerated.

In 1996, under Proposition 215 California became the first state to legalize marijuana for medical use, with 55 percent of voters endorsing the initiative. According to municipal records, San Francisco has 39 medical cannabis dispensaries (MCD), including Dutchman’s Flat, on Third Street, which is owned by Dogpatch Collective, LLC.  Eleven more are going through the Planning Department’s review process. Although cultivation permits have yet to be issued in the City, there are a number of other medical marijuana-related spaces, such as laboratories and extraction facilities.

On September 12, a Cohen-sponsored ordinance passed the Board in a nine to two vote, imposing a 45-day moratorium on new medical cannabis dispensaries. Cohen stressed that she’s not anti-weed, and that the legislation isn’t designed to hinder the medical marijuana industry. Rather, the Board’s action was prompted by an increase in applications for new dispensaries since Proposition 64 passed, possibly because operators hope to segue into the recreational industry within the next several months. There’s concern that a large influx of dispensaries could exacerbate traffic, create land use issues, and impact neighborhood character. Cohen noted that the regulatory framework pertaining to MCD’s is more than a decade old, and in need of improvements. The Board is working to update MCD rules concurrently with the adult recreational policy framework.