Marijuana supply chain forming in San Diego
As the city nears a cap on pot farms, battles over permit approvals are growing fiercer.
SAN DIEGO — The local supply chain for marijuana dispensaries in San Diego is quickly taking shape, but approvals for indoor pot farms and edible factories are becoming more contentious as the city nears a cap it set of allowing 40 such businesses.
The city has awarded permits to nearly 30 marijuana production facilities since August, setting up a fierce battle for the final wave of permits among 31 more applicants.
Those not among the first 40 to be granted environmental exemptions and city approval hearings have begun trying to leapfrog the other businesses ahead of them in line by appealing their exemptions and preliminary approvals.
In addition, businesses near some of the proposed facilities have begun protesting more vocally based on concerns about crime and safety, including a church in Kearny Mesa and tenants in an Otay Mesa Business Park.
Meanwhile, leaders of the local marijuana industry say they’re hopeful the city might increase the number of production businesses it allows beyond 40.
That would boost the supply chain and increase the tax revenue the city generates from the emerging industry. In addition to sales tax, San Diego has a marijuana tax of 5% that will increase to 8% in July.
Prospects for lifting the cap may have improved with the Nov. 6 election, which shifted the San Diego City Council further left.
Most notably, Democrat Jen Campbell, a vocal supporter of marijuana legalization, defeated Republican Lorie Zapf, who successfully lobbied for a cap on dispensaries and voted against allowing a local supply chain.
San Diego officials want the 19 dispensaries they’ve approved to have an adequate supply chain to eliminate the need to truck marijuana in from elsewhere and to prevent a “black market” of marijuana producers.
Unless the cap is lifted, marijuana attorneys say, they expect the final wave of approvals to be marked by some fierce battles.
“There are a variety of appeals left, right and center,” attorney Gina Austin said last week. “We are past the halfway point toward 40, so the hearings are starting to get more interesting.”
In addition to those appeals, nearby businesses have also been more vocal.
Attorney Jessica McElfresh said that’s partly because many of the marijuana production facilities in the first wave of approvals are in ideal spots where no one would be inclined to appeal them.
But as city officials have moved on to proposed businesses in less ideal locations, the approvals have become more turbulent.
Last month, an Otay Mesa business park association appealed the environmental exemption of a marijuana production facility proposed for 1555 Laurel Bay Lane, contending the businesses would be a bad fit.
“The park was planned as an upscale, quiet group of small businesses with a professional image,” association president Jaime Casano told the City Council. “The need for armed security at this business makes the neighbors nervous.”
Casano also said the city’s approval process deprives nearby businesses of an opportunity to fight against such businesses until it’s too late in the process.
Last week, dozens of congregants from Kairos Christian Church in Kearny Mesa unsuccessfully lobbied the city’s hearing officer to reject a permit approval for a marijuana production facility in the 7800 block of Convoy Court.
They said they were concerned about odor, loitering and crime, noting that marijuana businesses are typically cash-only because the drug is still illegal under federal law, making most banks shy away.
Austin said a good indicator of the effect of marijuana production facilities is a handful of the businesses that began operating a few years ago, thanks to an unintended city loophole.
“When you look at the ones that have been in operation, nobody even knows that they’re there,” she said. “These ‘sky is falling’ stories will play themselves out because we haven’t seen that from the ones that are up and running under the old system.”