Following the statewide legalization of recreational cannabis by California voters in 2016, Pasadena officials are finally ready to accept applications for permits for those who wish to operate legal commercial cannabis dispensaries in the city.

In June, Pasadena voters approved Measure CC, which lifted the city’s self-imposed ban on cannabis dispensaries, with nearly 60 percent of the vote. City officials put that measure on the ballot because they would have been preempted by a citizen-led ballot measure in November that proposed to allow current illegal operators to get legal permits.

“The Pasadena residents voted on rules and regulations to allow limited commercial cannabis in the city and approved a taxation process and percentage,” David Reyes, Pasadena’s director of planning and community development, wrote in an email to the Pasadena Weekly. “It took over a year to get the regulations established based on an evaluation of various other cities to establish best practices for our city. The whole process is a great story in terms of where we started and where we are.”

Selective, Regulated & Costly

The city’s final regulations, based on public input at several community meetings over the past year, will allow a total of six permits for retail cannabis dispensaries within city limits, with only one allowed in any given council district. The regulations also allow four permits for cultivation centers and four permits for testing labs within the city, for a total of 14 potential businesses. About 300 people attended a public meeting the city hosted on Nov. 13 to provide information about the upcoming application process.

The retail and cultivation locations will be allowed in commercial and industrial zones and must also be 600 feet away from K-12 schools, residential zones, libraries, parks, substance abuse centers and other cannabis retailers and cultivators. Smoking, ingesting or other consumption of cannabis onsite will be prohibited. Hours of operation will be limited to 7 a.m. to 10 p.m. Monday through Sunday.

The regulations include other conditions, such as strictly controlled entrances with a buzz-in system, exterior signage standards and an advanced ventilation system. The retail space of any given dispensary will be limited to 15,000 square feet and cultivation space will be limited to 30,000 square feet.

Testing labs will only be allowed in zoning districts where laboratories are permitted and must be 500 feet away from cannabis retailers and cultivators. The labs must also comply with all state-mandated testing procedures, destroy any cannabis that does not comply with the state Bureau of Cannabis Control’s health and safety standards, and install advanced ventilation systems.

The Pasadena City Council retains the authority to make amendments to the ordinance in the future.

The application period opens Jan. 1 and closes at 11:59 p.m. on Jan. 31. The first-round nonrefundable application fee per permit type is $13,654. Once approved, applicants will then have to apply for a Conditional Use Permit and get approved by the Planning Commission. That second round fee is $10,639, for a total of $24,293.

According to Lisa Derderian, the city’s public information officer, Pasadena’s fees are higher than some other cities — Long Beach, for instance, charges up to $8,621—but reflect the amount staff said it needs to recoup the costs of developing the regulations, plus cover administrative expenses associated with running the program going forward.

“We are hoping we will break even,” she said. “[The city is] not making money off this process.”

After the application period closes, city staff will screen, review and score applications by March 31 and notify top applicants by April 15. Throughout spring 2019, top applicants will obtain city land use permits. In the summer, top applicants will obtain their city business licenses and non-transferable cannabis permits. By the end of 2019, finalists will obtain their state licenses and open for business.

The city plans to utilize a “merit-based approach to selecting which applicants will receive the cannabis permits,” according to city documents. The review criteria will consider applicants’ business plan, neighborhood compatibility and enhancement, security plan and the qualifications of the owner and operators. Applicants do not need to have already secured a physical location in order to apply.

Cracking Down

Meanwhile, the city continues to try to shut down existing cannabis dispensaries that are operating illegally. As of June, there were 19 such cannabis dispensaries operating in the city, officials told the Weekly at the time. In 2017, the city began shutting off utilities at illegal dispensaries in an effort to drive them out, following months of trying to get them to comply by other means.

“We shut down two [illegal dispensaries] in the last month,” Derderian said in November. “I know there are a few more out there. We are working with our city prosecutor’s office and our Police Department with the intent to close them all so that those who want to legally and officially apply for the permits abide by that process knowing that there are no illegal ones still in operation. We’ve been trying for several years to get many of them to comply and it hasn’t been effective, so we’re going to have to take legal action and close them down.”

Under Measure CC and the city’s subsequent regulations, those who have operated an illegal dispensary in the city after Nov. 6, 2017, will not be allowed to apply for a legal permit.

Also in June, more than 75 percent of Pasadena voters also approved Measure DD, which allows the city to levy a business license tax on commercial cannabis businesses of up to $10 per canopy square foot for cultivation and between 4 to 6 percent of gross receipts for retail sales. Combined with state taxes, the maximum total taxing rate would be approximately 30 percent. According to a presentation on Nov. 13 by Perry Banner, a contract planner in the city’s Planning and Community Development Department, the intent of the cannabis business tax is “to generate proceeds to offset [administrative] costs, not balance the [city’s] General Fund budget.”

The money, city documents state, will fund “general municipal services such as police and code enforcement services necessary for the proper administration of the regulations, as well as promote health education regarding the dangers of smoking cannabis, particularly to young people.”

In May, the Pasadena Public Health Department launched a campaign to inform the public about the health effects of cannabis use, as well as the consequences of driving under the influence.