HomeMy WebLinkAbout11/27/2018 Item 10, Souza
Purrington, Teresa
From:Megan Souza <megan.is.souza@gmail.com>
Sent:Monday, November 26, 2018 6:08 PM
To:E-mail Council Website
Subject:Feedback on Cannabis Retail Permit Application Criteria
Many thanks to City Council and Staff for developing well thought-out criteria for assessing cannabis retail
permit applications that further City values of economic justice, public safety, and the nurturing of local
economies. Your hard work at this early stage will result in a smoother and more fair process going forward.
As a long time local cannabis retail operator, I have some input to share regarding the latest version of the
Cannabis Retail Permit Application Evaluation Criteria and Proposed Cannabis Fee Schedule:
Annual Retail License Renewal Fee
The annual retail license renewal fee of $90,575 is way too high. A fee must pay for the cost of the thing the
fee is for. Will it really cost $90,575 to renew each dispensary permit application annually? This amount is not
in line with neighboring Cities and Counties:
City of SLO $90,575
Grover Beach $15,000
Monterey County $1,028
Morro Bay No Annual Renewal Fee
City of Santa Barbara $4,508
Unincorporated Santa Barbara County $3,250
Goleta $559
Dispensary operators will already be paying $65,000 for an annual State license, combine this with the
proposed City renewal fee and the cost of operating is hardly justifiable given the slim margins on cannabis
retail.
Recommendation: Reduce the annual retail license renewal fee to be more in line with neighboring
Cities and Counties.
Merit Criteria 1.0 - Community Benefit (B)
Since our inception in 2013, it’s been part of my company’s mission to change public opinion of cannabis users
and cannabis business operators so we’ve long since embraced a culture of public service, charitable giving,
and public outreach and education. We do monthly highway cleanups, 3x/year blood drives, host an
educational cannabis radio show, sponsor a softball team, we’re on the board of several local nonprofits, we
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donate on a continuing basis to at least a dozen organizations, and we’re active the LWV and other political
organizations.
Recommendation: It would help my company if points were added for local cannabis operators with an
existing track record of community benefits.
Merit Criteria 2.0 - Experience
“Applicant has previous record of operating a compliant commercial cannabis business (including medical). A
compliant business operation does not have a documented history of local or state level violations relating, but
not limited to: business code, public safety, environmental impacts, employment, and financial payments.
We could use some clarity from Staff/HdL on exactly what “a documented history of violations” means.
Because of the log history of semi-legality of cannabis business in California, most operators have had some
kind of minor code enforcement violation which they immediately and with no issues, corrected.
Recommendation: Change the language of this criterion to say, “A compliant business operation does
not have a documented history of unresolved local or state level violations"
Merit Criteria 4.0 - Equity and Labor
It would help a greater number of people at or below median income if instead of:
4 points for 1-2 primary principles at or below median household income
8 points for 3 primary principles at or below median household income
Points were allocated like this:
4 points for 1 primary principle at or below median household income
8 points for 2 primary principles at or below median household income
12 points for 3 primary principles at or below median household income
Or at least like this:
4 points for 1 primary principle at or below median household income
6 points for 2 primary principles at or below median household income
8 points for 3 primary principles at or below median household income
Merit Criteria 4.0 - Equity and Labor
My partner, Eric, and I are both at or below the median income level so we’re very pleased with the inclusion of
criteria favoring economically disadvantaged people like us.
This below median income criterion makes it appealing for wealthy investors to partner with economically
disadvantaged longtime local Mom’n’Pop cannabis business operators like myself.
Such partnerships between those of us with experience running local retail operations, and those with the $ to
fund costly dispensary development projects, are the ideal outcome for SLO as they’ll result in successful,
adequately-funded projects, while simultaneously supporting existing local operators and transitioning
economically disadvantaged locals into a higher income bracet.
But here’s the thing, these separate criteria are competing:
-max points for 3+ primary principles at or below median income
-max points for majority ownership in property
-max points for 91-100% of primary principles have 5+ years local cannabis experience
Economically disadvantaged longtime local Mom’n’Pop operators like myself, are not likely to have majority
ownership in the property or majority ownership in the company applying for the permit. Any partnership
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between economically disadvantaged longtime local Mom’n’Pop operators like myself, and those with the
means to fund a dispensary project, would necessarily result in a minority stake for my company compared to
that of the property holding, project-funding partner.
Recommendation: If the language changed from “3+ primary principles at or below median income” to
“3+ principles at or below median income” and if “principle” were defined as “someone with 2% equity
or greater,” it would go along way toward helping economically disadvantaged operators like me.
Merit Criteria 4.0 - Equity and Labor
The labor peace agreement at 10 or more non-management employees criterion is too onerous.
Please consider that because of tax code 280E, we can’t write of expenses (including labor) the same way
other businesses do. This means we already have a higher tax burden than other industries.
In addition to this high tax burden, there are the other retail permit application criteria: offering starting wages at
$3.00 above minimum wage, and average wages to be 40% higher than median. A labor peace agreement on
top of these these wage requirements will be a great expense for any new business.
Recommendation: Remove the labor peace agreement criterion or raise it to 25 employees.
Thank you for considering my comments!
Megan Souza
Megan’s Organic Market
megansorganicmarket@gmail.com
(805)709-0662
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