Costa Mesa City Council members are looking to limit the number of retail cannabis shops to 35 after city officials began questioning just how many should operate within the city. 

Officials are also eying how close the shops should sit next to homes, youth centers and other cannabis storefronts. 

“Part of my intent today is to not only figure out the new buffers and also the cap, but also to address issues raised by the industry,” said Councilman Manuel Chavez during Tuesday’s city council meeting. “I think we’re doing a piece by piece approach which is fine but I do want to make sure we’re reforming some of the comments we hear from the industry.”

While the planning commission suggested the council put a cap on retail storefronts on several occasions, it’s the first time council members have discussed amending the current ordinance. 

The city council voted 6-1 on Tuesday to implement a cap of 35 conditional use permits. Mayor John Stephens was the only dissenting vote. 

According to a staff report, “As of March 1, 2024, the City has approved 22 CUPs for cannabis storefronts.”

Cannabis business permits and conditional use permits are two out of the five permits needed for a storefront to operate. 

“You would be establishing a maximum number of CBPs issued or renewed at 35 and that would be limited to those who have passed the pre application phase … once you get to 35 no more will be processed until the number operating has been reduced to ten,” said city attorney Kim Barlow just ahead of the vote.

Councilman Don Harper successfully pushed for cannabis businesses who are still in the early application process to be refunded their fees. 

According to a staff report, with 17 pre applications at $1,500 in application fees it would amount to $25,500 being refunded. 

The addition of a cap comes after some council members began raising questions on a potential cap during a Feb. 20 meeting that saw the denial of another cannabis shop. 

[Read: Costa Mesa Struggles With Just How Many Cannabis Shops City Should Have]

Cutting Down on Fees 

City officials are also considering how to reduce fees cannabis shops have to pay when opening up.

The badging fee, which requires businesses to pay for employees to get a live scan and background check through the police department will be discussed as early as April, with more input needed on how to reduce costs and speed up the process. 

During public comments, several cannabis store owners said the badge for employees can take several weeks which puts a strain on their staffing needs. 

The fee currently sits at $631 which comes from $81 in police fees and $550 in developmental services fees. 

Councilman Loren Gameros suggested cutting the developmental services fee in half which would amount to $306 in fees. 

While the state requires a badge, Costa Mesa has added background checks before issuing the badge. 

“It’s all time that staff puts in to really work through the badge issuing process. Once it goes into the DOJ and the FBI it can be as quickly as a one day review or if it’s a complicated review it could be up to two weeks or two months for that matter,” said Scott Drapkin, an assistant director of economic and development services.

Drapkin also noted Santa Ana has a badging fee that’s higher than Costa Mesa’s.

Gameros added that businesses with employees working at multiple locations in the city need not require separate badges for employees who work at multiple locations owned by the same person.

“I think we’re all interested in speeding up the process and reducing requirements,” Councilwoman Arlis Reynolds said.

Other Regulatory Changes 

City Council members voted 5-2 to stop requiring 24-hour security, and instead have guards only during business hours, delivery times or unless needed as directed by the businesses. Council members Andrea Marr and Reynolds were the dissenting votes.

According to police Chief Ronald Lawrence, there have been 48 calls from dispensaries from January 2022 to March 2024. 

“Most of those calls for service are very benign. Maybe false alarm calls, a suspicious person walking down the street, that type of thing,” Lawrence said.

He also said he thinks having security there during the night likely deters any burglaries which he said there have been six at the cannabis businesses, which include non-retail places like manufacturers or laboratories. 

Council members also unanimously voted to increase the distance between store fronts and youth centers – from 600 to 1,000 feet.

They also voted to keep stores at least 250 feet from homes.

The upcoming changes to the municipal code come just as another cannabis shop is set to appear at the March 25 planning commission meeting, which is one of the first steps in the permitting process. 

The second reading of the amendments to the ordinance is expected at the April 2 meeting.

Gigi Gradillas is a Voice of OC intern. You can reach her at Gigi.Gradillas@gmail.com She’s also on X: @gigigradillas