In a split 4-3 vote Tuesday night, Santa Ana council members approved a November ballot measure that would legalize, tax and regulate medical marijuana shops, an alternative to an initiative backed by advocates that city leaders say is too lax.

There are currently dozens of pot shops operating in the city and, despite a years-long ban on the stores, officials have struggled to shut them down. Meanwhile, medical marijuana advocates have managed to collect enough signatures for a ballot initiative that could make the businesses legal under city law.

Under the advocates’ proposal, the shops would be prohibited from residential zones and within 600 ft. of schools. There is also a tax of $20 per $1,000 in gross sales, and requirements for security like lights and alarm systems, according to a ballot summary.

City leaders backing the alternative measure say the advocates’ initiative doesn’t adequately regulate the shops. They claim it places no cap on the number of shops and doesn’t ban so-called mobile dispensaries, which are essentially marijuana delivery services.

“I am very strongly in favor of having an area where people can get their medicine,” said Councilman Sal Tinajero. “But keep them out of our neighborhoods.”

The city’s proposal would restrict the shops to industrial zones and would also be banned from opening within 1,000 ft. of schools, parks and residential areas. Only a fraction of land isolated to the city’s southern corners meet the requirements, meaning 18 to 24 shops could open, officials estimate.

It also more heavily taxes the shops, with a 5 percent rate – which could rise by ordinance to 10 percent — on total sales. There is also a minimum $2,000 base tax, according to a city staff report.

Revenue, estimated to be well over $1 million per year, would go towards policing illegal stores, city officials say.

During public comments, state Sen. Lou Correa (D-Santa Ana) said he supported the city crafting an alternative to the advocates’ proposal. He also related a story about a 12-year-old girl with seizures who could only prevent her symptoms with CBD, a chemical found in marijuana that is different from the THC that is the source of recreational highs.

Medical marijuana advocates argued that the city’s proposal would bar that girl from getting her medicine. They also said city leaders had misrepresented their proposal, by for example claiming there was no cap for the number of shops despite making the number tied to population.

City officials showed a “public display of contempt for veracity to your residents,” Doug Lanphere, a medical marijuana advocate, said to loud applause during public comments. “Shame on all of you.”

City leaders also settled on a method of choosing which shops received permits and how they would be allocated.

The idea of awarding conditional use permits via public hearings was scrapped in favor of a public safety permit granted administratively through the planning and police departments.

And instead of putting the permits out to bid – a process city leaders worried could appear fraught with corruption – they decided to use a lottery system for pre-qualified businesses. City officials have counted over 50 shops – with other estimates being much higher — making the limited number of permits very lucrative.

Government ethics experts have said that placing the permits under council purview, along with another proposal to relax campaign finance restrictions, could mean a windfall of contributions and undue influence.

Despite having spent months on the issue and several amendment requests by council members – the item was continued from the last meeting – the council could barely muster a consensus. Council members David Benavides, Michele Martinez and Roman Reyna voted against the measure.

Benavides proposed packaging the two initiatives with a third that would simply keep the current ban on stores in place. His proposal was shot down in a 4-3 vote.

Martinez said she couldn’t support the measure without a detailed enforcement plan against the illegal operations. And Reyna didn’t approve of shrinking the required space between shops from 1,000 ft. to 500 ft., a change that allows for more stores and tax revenue but creates a marijuana “red light district,” he said.

Tinajero said while the measure wasn’t perfect, it was necessary for the city to offer an alternative that would be better for residents. And while it would be a voter-approved ordinance, a clause allows the city council to change its mind about provisions and amend the law after it passes.

“It’s important to the community that we have something on the ballot,” Tinajero said. “And the clock is ticking.”

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