At one point it seemed that South Lake Tahoe’s revised cannabis regulations were about to go up in smoke. After a brief recess, attempted lobbying at the dais and another round of debate, City Council landed on a decision.

With a pair of 4-1 votes, council on Tuesday agreed to repeal its previous ordinance, which was the subject of a referendum, and move forward with a draft ordinance containing changes born out of a recent stakeholder meeting. Councilor Jason Collin was the lone “no” in both votes.

Hopeful cannabis business operators viewed the outcome as a positive step — at least when compared to the alternatives.

“I was pleased that the city moved this forward,” Oliver Starr, a local resident and hopeful cannabis business operator, told the Tribune after the meeting.

One of the major unknowns heading into the discussion was how the new ordinance would address Tahoe Wellness Cooperative, the city’s only legally operating cannabis business.

After all the discussion and drama of the day, the Tahoe Wellness topic remains uncertain.

Although the cooperative’s executive director Cody Bass told the Tribune, after some consideration, that the development was positive for the industry, he still sees several flaws he wants addressed. He said he is optimistic his attorney, James Anthony, can work with the city’s attorney to address those issues in the coming weeks.

How we got here

Bass has fought to continue the cooperative’s current medical uses — retail, cultivation, distribution and on-site consumption — for adult use purposes.

When council adopted regulations in August that would allow adult use cannabis businesses while making it prohibitive — based on the city’s interpretation of zoning laws — for Tahoe Wellness to continue all of its current uses for adult use, Anthony initiated a successful referendum effort.

The referendum process forces council to repeal and replace the ordinance, repeal without a replacement or put the previous ordinance before voters.

A subcommittee consisting of councilors Brooke Laine and Austin Sass met with stakeholders earlier this month to discuss possible changes for a replacement ordinance — under state election law council has to consider an ordinance with substantive changes.

The revised ordinance before council Tuesday met those requirement in the opinion of city attorney Heather Stroud.

Changes

One revision addresses Tahoe Wellness.

The draft ordinance allows a three-year window for Tahoe Wellness to try and come into compliance with the laws. During that time it can continue its current uses for both medical and adult use.

Other changes included provisions to ensure there will be four retail businesses and two distribution businesses.

Download the draft ordinance and staff report

The original ordinance made both of those numbers possible via two microbusiness licenses, which allow for multiple uses. However, a microbusiness licensee could decide to not be in the retail business or the distribution business. It also could be prohibited from one of those uses based on zoning.

If, hypothetically, neither microbusiness licensee wants to be in the retail business, two additional retail licenses would become available. The same would be true for distribution licenses.

The new ordinance also added four “manufacturing licenses” for creating and packaging edibles. The license does not include extraction and is for purposes closer to cooking than chemistry.

Concerns

Those changes caused confusion among some in the public and on council, who saw the revised ordinance as a significant expansion of the overall number of licenses.

After an initial suggestion from Collin that council put the original ordinance before voters, rather than craft a revised ordinance, Laine said she was open to the idea.

As the conversation continued and the possibility of putting the ordinance before voters became more likely, the groans from the audience grew louder.

“There was a point where it looked like this whole industry would have been dead here for the foreseeable future,” Starr told the Tribune.

Recognizing the rising emotion in the room, Mayor Wendy David called for a recess.

At that point, multiple audience members made their way to the dais to seemingly lobby several members of council.

David listened as several different audience members spoke.

Laine decided to walk away.

Bass was the first to approach the dais, saying that if council did decide to put the original ordinance to a vote of the people, he could run a competing ballot initiative.

Starr also approached the dais to try and explain some of the changes, given that some appeared concerned that the new ordinance would allow for too many licenses.

“There actually were as many varying views from the industry as there were varying views up here … it was totally confusing,” David told the Tribune.

Frustration

Eventually council reconvened and continued debate.

Laine called out Bass for threatening yet another potential ballot issue. In expressing some understanding for his position as a business owner, Laine said council’s job was to do what is best for the community, not what is best for one person.

David also said she was frustrated that council was put in the position by the referendum after having spent months on the original cannabis ordinance.

Shifting back to the proposed changes, Collin repeated his concern over the expanded number of licenses.

Sass clarified the only true expansion was the manufacturing licenses. The original ordinance allowed for up to four retail businesses and two distribution businesses.

On the issue of Tahoe Wellness, Bass said prior to the recess that his attorney recommended he agree to no less than a seven-year window to try and come into compliance, but Bass was willing to agree to five years.

Councilor Tom Davis suggested changing the draft ordinance to meet Bass’ request, but David and others rejected it.

“I have greater trust in the subcommittee and the working group and their recommendations than just one person that’s here for his own self interest,” David said after the meeting.

Laine told the Tribune that three years is a fair number.

Moving forward

Ultimately council agreed to send the draft ordinance to the city’s Planning Commission, as is required. If everything runs as smoothly as possible, it could come back before council in December for first reading.

In explaining her thought process, Laine said that while she felt putting the old ordnance before voters would have been a good outcome, going with the revised ordinance was an equally positive outcome and the most expedient path forward.

Granted, she added, it does open to the door to another potential challenge from Tahoe Wellness Cooperative.

Bass said some progress was made Tuesday. However, there are still some areas that need to be addressed, specifically the three-year provision allowing him to come into compliance.

He also opposes revised interpretation of the zoning, which makes cultivation an “industrial services” use rather than “nursery.” The changes further restrict where cultivation operations would be allowed in the city.

“It’s a good victory” for all of the cannabis businesses hoping to open in the city, said Bass. “Are we there yet? No.”