Green Wave in California after 2020 Election

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" Some jurisdictions are finally allowing cannabis-based businesses to operate, while others are expanding the types of operations permitted within city limits. "

The “green wave” is demonstrated by voter approval of local ballot initiatives in jurisdictions that have historically rejected or severely restricted cannabis-based businesses.  Some jurisdictions are finally allowing cannabis-based businesses to operate, while others are expanding the types of operations permitted within city limits.  Even jurisdictions that currently prohibit cannabis operations are beginning to authorize business taxes on these operations before they are legally allowed – thus signaling the expectation that these operations will continue to expand throughout the state as pro-cannabis legislation gains traction.  Examples of these initiatives are described below.

A. Encinitas – Measure H

Narrow Margin Pass (51%) – Measure H would allow cannabis-related business operations within the City, including but not limited to retail, cultivation, and manufacturing.  Encinitas does not currently allow cannabis retail dispensary stores to operate within city limits.  As recently as 2014, a similar measure to permit dispensaries was unsuccessful.[5]  Although the Encinitas City Council opted not to take a position on the controversial Measure H,[6] the 2020 election results indicate that Encinitas voters are warming up to cannabis-based operations.

B. Carson – Carson Cannabis Regulation Measure

Expected to Pass – Carson’s Cannabis Regulation Measure (“Measure”) repeals the existing prohibition on medical and recreational dispensaries within the City of Carson, and establishes permitting procedures for cannabis operations within city limits.  The Measure authorizes up to four commercial cannabis operation centers, which may include any type of cannabis operations permitted by state law, such as cultivation, manufacturing, testing, distribution, and medical or recreational retail operations.  Although the Measure is a path forward for additional facilities within the City, only four operation centers are permitted at any one time.  This number may only be increased by voter initiative.  For this reason, the Measure is not expected to result in immediate opportunities for additional facilities.  However, it indicates a measured, but increasing acceptance of cannabis-based businesses amongst Carson residents.

C. Costa Mesa – Measure Q

Expected to Pass – Measure Q would allow for two retail cannabis storefronts within a limited area of the city, aptly named the “Green Zone,” and establishes a retail tax of 4% to 7%.  Existing municipal law allows permitting, manufacturing, testing and distribution, but retail operations are prohibited.  Existing municipal law also requires voter approval of any amendments to municipal cannabis laws regarding dispensaries, cultivation, and the boundaries of the Green Zone.  Measure Q softens this requirement to a 2/3 vote of City Councilmembers – facilitating faster amendments to local cannabis laws.

D. Calabasas – Measure C

Expected to Pass – Measure C authorizes a business tax of up to 10% on cannabis-based businesses.  Existing municipal law prohibits all commercial cannabis businesses from operating within city limits.  Measure C establishes a tax structure for cannabis-based businesses in the event that they are allowed in Calabasas in the future.  Measure C  does not amend the existing ban on commercial cannabis businesses.  Although Calabasas may not be ready to allow cannabis-based businesses to operate within city limits, the Measure C ballot results indicate voter anticipation of cannabis-friendly state legislation in the near future.

E. Hawthorne – Measure CC

Likely to Pass – All cannabis businesses are currently prohibited in the City of Hawthorne.  Measure CC authorizes a business tax of up to 5% on cannabis-based businesses in the event they are eventually allowed within the city.  The City of Hawthorne recently hired a consultant to evaluate the fiscal impacts resulting from a single retail operation within the City.  The study estimates that each retail facility could generate between $85,718 and $175,494 in net general fund revenue, indicating a general interest in exploring the possibility of future retail operations in Hawthorne.

As demonstrated in the jurisdictions above, on the whole, California’s 2020 local ballot initiatives are trending towards expansion of cannabis-based businesses in jurisdictions where they are currently allowed, and planning taxation schedules in jurisdictions that have not yet authorized these operations within city limits.  The common thread tying these initiatives together is a growing acceptance of cannabis-based businesses throughout California, as it has throughout the country, and the shared anticipation that this trend will continue.

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