Is San Diego ready to regulate the sprawling business of selling bud? With the state’s newly minted rules for permitting the medical-cannabis industry, local officials have some sticky decisions to make.
Starting in 2018, the state plans to start issuing business licenses for a wide range of activities. Much like rules for alcohol, devised to prevent monopoly control, the licensing structure for cannabis will create a supply chain that separates permitting for everything from growing to distribution to sales to manufacturing of edibles and concentrates.
In all, the state will offer 17 different cannabis business licenses. For each activity, local municipalities will need to either establish a parallel regulatory system, an outright ban or default to state control.
Officials will need to quickly come up to speed on what this means, said Cynara Velazquez, political director of the Association of Cannabis Professionals, a trade group located in San Diego.
“What the state wants municipalities to do is fairly straightforward,” she said. “What they’re going to do if the municipalities don’t do anything is somewhat of a question mark.”
In San Diego these decisions will build on a long-debated ordinance, which allows roughly 14 dispensaries to operate citywide. However, murky rules for cultivation of cannabis will likely need to be updated over coming months, or the city could risk significant state intervention.
“When it comes to cultivation, the state does have control,” Velazquez said. “They were very explicit about that. If municipalities do not put in place rules, the state then takes over.”
At the same time, cities have a wide range of discretion when it comes to working with the still-forming Bureau of Medical Marijuana Regulation. Officials could decide to allow certain parts of the industry while prohibiting others, for example, allowing cannabis-testing facilities while banning manufacturing of edibles. Officials could be fine with large distribution centers but significantly limit outdoor grows.
City-permitted dispensaries operating before 2016 will be grandfathered in under previously establish local regulation. In response, San Diego has about a dozen dispensary owners hustling to get city permission to open before the end of the year.
The new rules would also require delivery services to operate out of permitted storefronts. This will be a dramatic shift for the city of San Diego, which for years has turned a blind eye to dozens of home delivery services.