Earning right to hold pot sales permit won’t come easy

Four-step process will decide city’s first dispensary operator



 

Applications will be available in mid-January for Thousand Oaks’ first cannabis business license, and the city expects competition to be fierce.

On Tuesday, the City Council voted 5-0 to approve a four-phase process that will require applicants to put up thousands of dollars in fees (see info box) with no guarantee of being selected for the permit. It also requires all parties interested to submit to an FBI-grade fingerprint scan.

In light of the passage of Prop. 64 last November, city representatives decided in June to end Thousand Oaks’ longstanding ban on the cannabis industry and grant a single permit for a medical marijuana dispensary and a single permit for a marijuana testing facility.

The council’s slow-go approach to legalized pot (Ojai and Port Hueneme, much smaller cities, have said they will allow at least three dispensaries each) also means the first individuals to obtain the two licenses will have a decided advantage.

In the case of the dispensary, because bans are still in place in neighboring Westlake Village, Agoura Hills, Moorpark and Simi Valley, the permit holder would be operating the only business selling medical cannabis in the Conejo Valley and east Ventura County.

A staff report said a 2,000-square-foot dispensary could bring in as much as $2 million per year, or about $38,000 per week.

All applications must be submitted between Feb. 13 and March 8, with a public meeting planned for sometime in February when the city and its consultant will answer questions from those seeking to apply.

Phase one is an initial sweep to weed out any applicants who don’t properly complete the necessary paperwork, have a criminal record or haven’t secured a site within an allowable zone—aka an industrial zone at least 600 feet from a residential property, schools, day-care center or youth centers.

Phases two and three involve a detailed scoring system that assign points based on several categories, including business plan, neighborhood compatibility, safety/security plan and qualifications.

Those with a high enough score in phase two move on to phase three, where applicants will have to submit to an in-person interview with a yet-to-be determined selection committee and provide a tour of their proposed location.

A staff report suggested the committee could include the city’s police chief and head of community development.

Between phases three and four, notice will be sent to any property owner or business within 500 feet of the permit finalists, and a public meeting will be held, potentially sometime in late June.

In the fourth and final phase, scores will be totaled up from phases two and three, and the finalists in both categories (dispensary and testing facility) will be presented before the City Council by City Manager Andrew Powers. The council will have the ability to ask questions of all the finalists before rendering their decision.

Initially staff suggested that Powers would make a final recommendation, but council members led by Al Adam said they’d rather vote without the endorsement of the city manager.

“I have a feeling this is going to be a very competitive process and there’s going to be a lot of money at stake here for a lot of people, and I just don’t want to get our city manager caught in a position where he’s “recommending” to us certain parties,” Adam said.

Cannabis tax

Also at Tuesday’s meeting, the council voted to instruct staff to begin putting together language for a ballot measure that would ask residents next fall whether they would be in favor of enacting a special tax on cannabis businesses.

Such levies have already been passed by municipalities up and down the state.

The city’s marijuana consultant, HDL Companies, suggested the rate would be between 4 and 6 percent and that would be charged on top of local sales tax and the 15-percent state excise tax coming Jan. 1.

Because Thousand Oaks is allowing only a medical dispensary and not a recreational one, Adam questioned how much tax revenue the future pot shop would earn for city coffers

He said that, as he understands it, medical users are exempt from sales tax and none of the excise tax stays local.

HDL’s David McPherson said only those medicinal cannabis users with an official medical marijuana identification card granted by the county via the state are exempt from sales tax.

He estimated that only 1 percent of medicinal users buy their pot using an ID card. The rest go with a doctor’s recommendation, he said, which requires less scrutiny than getting the card and doesn’t require entering a government database.

According to the city’s provided timeline, it expects to complete phase three in June, with the City Council voting in July to grant the two permits.

A webpage on toaks.org dedicated to the topic of the cannabis business permitting process will be posted soon, according to city staff.