Large unknown looms in future of South Lake Tahoe cannabis regulations
October 10, 2018
SOUTH LAKE TAHOE, Calif. — After more than three hours of conversation Monday, stakeholders made apparent progress on new cannabis regulations for the city, but one critical detail remains unknown: how to deal with Tahoe Wellness Cooperative?
The city's only legally operating dispensary is fighting to ensure it can continue its current medical operations — which include retail, cultivation, distribution and on-site consumption — and expand those into adult use.
The city adopted an ordinance in August that would have grandfathered in Tahoe Wellness' current operations while also establishing six licenses: two for retail, two for cultivation and two microbusiness licenses, which allow for multiple uses. All six would be able to operate for adult use, which is more lucrative than medical because customers do not need a medical card.
In order for Tahoe Wellness to continue current operations for non-medical purposes, it would need one of the two microbusiness licenses, which, based on city staff's interpretation of the zoning laws, are not permitted in the Bijou area where Tahoe Wellness operates.
That reality, in addition to other concerns with the ordinance, led to a successful referendum on the cannabis ordinance adopted in August. The effort was spearheaded by James Anthony, an attorney for the executive director of Tahoe Wellness and current City Council candidate, Cody Bass.
Monday's subcommittee meeting — attended by several city councilors, community members and hopeful cannabis license applicants — was an attempt to find substantive changes to the previously adopted cannabis ordinance, which would be repealed and replaced.
Speaking at the meeting, Bass contended the easiest path forward would be to grandfather in Tahoe Wellness' existing uses for adult use. Failing to allow Tahoe Wellness to operate for adult use will only lead to another referendum and further delay of the process, Bass added.
City Councilor Austin Sass, who sits on the subcommittee with Councilor Brooke Laine, said the city could not grandfather in uses that weren't previously permitted, meaning the city could not grandfather in Tahoe Wellness for adult use since it was never able to conduct business for adult use.
Bass said that wasn't true and that cities, such as Berkley, had taken the same route with their existing medical marijuana businesses.
During the course of three hours those in attendance seemed to reach compromise on other key sticking points, including concerns that the previous ordinance created, as Bass has said, an auction where the highest bidders could come in and scoop up available licenses.
That was based on a scoring system that is not actually part of the ordinance that was subject to the referendum.
Oliver Starr, a local resident who hopes to obtain one of the available licenses, suggested that the scoring rubric be changed to allow for a range of gross profit sharing based on percentage. This would help even the playing field so that the scoring doesn't favor larger companies that can put down larger sums of money.
The profit sharing would have to be voluntary to avoid being considered a tax, which would have to be approved by voters.
The profit sharing would be separate from fees used to recover the city's cost of administering the license.
The suggestion received general approval from those in attendance, including Bass.
There also seemed to be general consensus that separate licenses should be created for distribution. Under the ordinance that is subject to the referendum, only the microbusiness license holders would be able to distribute. As some of those in attendance expressed, it's possible the microbusiness license holders who are more interested in uses such as retial and cultivation would want to be in the distribution business, which is more about logistics.
If neither of the two microbusiness license holders chose to distribute, that would force South Lake Tahoe's cannabis businesses to send their product of the hill.
Tense at times
Despite the occasional agreement, other points of the conversation were tense. Bass' statement early in the meeting that he will fight any ordinance that does not allow him to continue his current operations for adult use, a suggestion that some in attendance called "a threat," sparked a heated exchange.
"This is not what I consider a public forum," Laine said in breaking up a verbal argument.
Tensions flared later in the meeting when those in attendance sought to address the Tahoe Wellness question.
Several people in attendance asked Bass if he was willing to compromise, to which Bass said "no" if compromise means giving up any of the uses he has conducted for nearly 10 years.
"I tried to simplify it for the good of you people," Bass, who was noticeably upset with the direction of the conversation, said.
"You're a bully," Starr shot back after Bass had interrupted one of the attendees.
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There seemed to be a cooling of tensions based on a suggestion from Jude Wood, executive director of the Boys & Girls Club of Lake Tahoe. Wood asked if the city could allow Bass to operate as he currently desires for a limited period of time, during which he would be able to either try and become a conforming use or find a new location.
Bass said Anthony, his attorney, would need to be a part of any such discussion before he could agree to it.
The meeting ended with plans for Anthony to talk with newly hired city attorney Heather Stroud.
Laine and Sass will take the suggestions from Monday to City Council's meeting on Oct. 16. If council agrees on a new draft ordinance, it would then head to the planning commission before coming back to council.
If that process runs as smoothly as possible, second reading of a new cannabis ordinance could come before council in January.
Asked if they saw a path forward after Monday's meeting, Laine and Sass were short in their answers.
"Sure," said Laine.
Noting the potential roadblocks and complicating factors, Sass followed with "I don't know."
UPDATE: The last sentence of this story has been updated to reflect that City Councilor Sass noted multiple variables that could complicate the process of moving forward with and implementing new cannabis regulations.