Santa Ana Sets More Pot-Shop Friendly Policies

JULIE LEOPO, Voice of OC

Orange County Cannabis Club, a medical and adult-use licensed cannabis dispensary, on the southside of Santa Ana.

Santa Ana is pushing ahead with tax relief and other policies to bring more legal marijuana businesses into the city, though City Council members are backing off a proposal that would have required businesses to go further in hiring local.

Still, some council members continue to voice their continuing unease with the presence of cannabis in the city, five years after residents voted to regulate and tax cannabis businesses in 2014.

“We may be generating $8 million in revenue, but we are spending a lot more to undo the harm of having cannabis in our city,” Councilwoman Ceci Iglesias said at the Tuesday meeting. “I know you may not agree with me, but cannabis is a gateway drug.”

Some of the local marijuana business representatives, sitting in the back of the council chambers, booed.

“It’s something that’s affecting our community,” Iglesias added. “Being on the school board, the thing that really grabbed me was … students had access to marijuana.”

Councilman David Penaloza said although young school kids do get a hold of marijuana or vape pens illegally, they do so with the help of illegal dispensaries — not the legal shops the city is endorsing, which he said have notably high security and customer vetting measures.

“The kids at school found with cannabis will find it regardless, whether the shops are legal or not,” he said, adding the new laws “are here to stay.”

“Crime is not up because of these dispensaries,” said Councilman Jose Solorio. “If anyone has that type of data, I’d like to see it, because it’s not there.”

Councilman Juan Villegas said although he’s “not a fan of cannabis,” and that he has his reservations about it being in the city, the “voters voted.” 

The new policies approved by the Council Tuesday — with Councilwoman Ceci Iglesias being the lone “no” vote — are aimed at encouraging more pot shops to get licensed and bring new business into the Santa Ana marketplace.

They’ll come back at the Council’s next meeting for a second reading and final adoption.

Council members backed off a proposal that would have required 50 percent of the pot businesses’ workforce to comprise of Santa Ana residents — an effort to bring more jobs to the city — after representatives from the businesses spoke in opposition to it at the meeting.

“We make many efforts to hire qualified applicants from Santa Ana. We offer incentives for people not living in Santa Ana to move to Santa Ana,” said Arya Maghbouleh, a manager at the OC3 Dispensary in the south end of the city, during public comment. “We do everything we can to help the Santa Ana economy here, but it’s kind of difficult to weigh that balance.”

Maghbouleh said currently, out of the 25 people working for the dispensary, “I’d say about 5 percent from Santa Ana and that 50 percent could disrupt the flow of things with the amount of people we see everyday.”

Will Emrick, representing a business known as Malibu Gold, said with the hiring requirements, “there’s no guarantee that we’re going to find the right talent that we need.”

“In our business, it’s very specific. We need a certain talented person to be able to execute certain tasks. You don’t always find it in one particular place,” he said.

That hiring provision of the policy, which staff called the “social equity” component, would have also required cannabis businesses to commit to “community reinvestment” through providing residents with internships, mentorship programs, and pathways to professional careers.

“I spoke with some of the industry representatives who spoke here today, and I think we can probably finesse some of the language and come to some understanding,” Councilman Vicente Sarmiento said before the vote. “Because, from what I hear from the speakers, is you all want to do the right thing.”

Iglesias, despite her objections to cannabis in the city, agreed.

“We shouldn’t be imposing on businesses how to run their business,” she said.

City Manager Kristine Ridge and City Attorney Sonia Carvalho indicated staff could come back to the Council at the measures’ second reading with revised language on the hiring provision.

Under some of the new policies, Santa Ana’s local marijuana tax laws will recognize legal businesses that integrate different parts of the industry, like cultivation and sales.

City staff say this will relieve businesses from multi-level taxation. Previously, multi-faceted marijuana businesses were subject to multiple state and local tax assessments for things like sales and cultivation, which led to those businesses facing combined state and local tax rates exceeding 50 percent of the retail sale value of their cannabis goods.

The city has also set limits on the amount it can charge businesses for security deposits, and will reduce the tax rate on marijuana testing laboratories from 5 percent to 1 percent.

Brandon Pho is a Voice of OC intern. Contact him at bpho@voiceofoc.org or on Twitter @photherecord.