Pasadena Responds to the Green Rush of the Cannabis Economy

Like panning for gold, a piece of the cannabis economy has proven powerfully enticing for modern-day prospectors. Pasadena responds to the lure of legalization.
Photo by Roberto Valdivia - Unsplash

Despite statewide passage of legalized recreational marijuana commerce and use, to date more than 3 out of 4 California cities still ban licensed shops. In Pasadena, this has recently changed. While a number of black-market operators have persisted on the margins, a Pasadena city ordinance technically forbid sales of recreational marijuana within city limits…until January of 2019. The resultant revolution, however, has proven to be more of a very slow rollout.

Long before legalization, California’s marijuana economy was massive. Generating an estimated $2.5 billion per year, it rivaled strawberries in economic output for the state. In 1994, California legalized medical marijuana, opening the genie’s bottle for other states across the nation, and leading to the legalization of recreational use in California 25 years later.

With California legalizing marijuana on a state level, Pasadena city government responded to the passage of local measures CC and DD legalizing the sale and taxation of cannabis within the city by drawing up a plan for a rigorous license application review process that would result in the selection of six “winners” to be awarded a license for a storefront cannabis dispensary. (The law also allowed for “manufacturer” and “cultivation” licenses as well.)

This was in line with voter desire—the measures passed by 61% and 76% respectively—and had the backing of the local business community. “Legalization was a long time coming, and overdue. These are legal businesses… The people we’ve been dealing with are top of the line… The Chamber supports those businesses,” says Pasadena Chamber of Commerce President Paul Little. When the question of pushback comes up, Little says they didn’t really get any, at least from local businesses. “We got more pushback when we arranged a trip to Cuba a few years ago,” he says with a chuckle. In fact, would-be cannabis operators were quickly joining the Chamber of Commerce. “It was our fastest growing category last year,” says Little. “It’s in the interest of the whole community to have legal operators who are following regulations and paying taxes.”

The city, too, seemed committed and ready to create the specific legal framework required by measures CC and DD. “The voters of Pasadena have made it clear they want recreational cannabis. But they want it with reasonable restrictions. Like proper separation from schools, churches and homes,” says City Manager Steve Mermell.

Looking at industry standards and the experience of cities that had come before, like Long Beach and West Hollywood, city staff put together a set of requirements each applicant business had to meet. “We wanted criteria that made sense specifically for Pasadena. We published them as drafts on the web and kept them up there for months for public comment,” explains David Reyes, director of planning and community development. This commitment to listening to citizen voices extended to community meetings at the convention center, attended by over 300 residents

where questions were answered, and the scoring criteria and city’s goals were explained. The city then opened up the scoring system for public comment. “And, as a result of those comments, several of the criteria were changed,” says Reyes.

Plans from applicant businesses were due by Jan. 30 of 2019. The city received 128 applications for dispensary licenses. From the beginning there was some discord over the selection process, but Mermell is sanguine, feeling that given the complexity of the issues things are on track. By way of explanation he says, “As of today one operation has been approved—for the location on Colorado Boulevard (and the corner of Pasadena Avenue). They still need a health permit, a city license, and state approval. We’re estimating a couple more months.” (As this article was being written a second store front has received city council approval to proceed and is in the process of obtaining the remaining permits.)

In all, six organizations emerged from the selection process as potential license holders. Part of the criteria required that dispensaries be limited to one per council district. Coupled with other “proximity” exclusions, some believe there are simply not six viable locations under the current regulations. In fact, at least 2 of the 6 applicants are on hold as they compete for a location already granted a competitor. There has been talk of relaxing the restrictions, but City Council is reluctant to revisit the issue. At least not without some data. “Let’s get a couple open, and we’ll revisit it,” says Reyes.

While the city continues to work toward eliminating unlicensed storefronts, their success in that regard will be part of the ultimate equation. Because of competition from unlicensed operators, statewide tax revenues have been only half of the $1 billion annually projected. “We’ve shut down over 26 illegal operators,” says Mermell. “What the voters want is quality operators. Stores that look like an Apple store. Our concern was getting in reputable, knowledgeable, professional operators.”

Both Mermell and Reyes think of this as a beginning, not the end. More licenses are certainly coming, though getting six operational in the very near term does not look likely. It is Mermell’s expectation that all will end up before City Council on some sort of appeal before advancing through the process. But both Mermell and Reyes are confident the resulting tax revenue will eventually materialize and will justify the city’s regulatory efforts. “Ultimately, it’s dependent on the number of operators, of course,” says Mermell, “but we’re expecting at least $1 to $2 million annually.” While this money is headed for the general fund, Mermell says it will be earmarked for enforcement and education. Expect all stores approved to display a certain level of aesthetic sophistication, and to engage with the community in positive, proactive ways. In fact, all business plans submitted for approval were required to contain a community support component detailing plans for philanthropic and civic involvement.

If slow and steady wins the race, then Pasadena’s legal pot regime should be a success. While it’s been a seemingly long time coming, both local businesses and the general public are on board, and fully licensed and approved locations are opening, if doing so slowly. Welcome to the green rush.

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