Council to consider permitting twice as many cannabis businesses in Richmond
on December 4, 2023
Richmond wants to add cannabis retail permits, doubling the number of permitted dispensaries from three to six.
On Tuesday, the City Council will hold a public hearing on making the change possible, by amending the Richmond Municipal Code. The city staff says existing retailers are making significant revenue, even in the face of increased competition. But those in the business say sales have been declining post-pandemic. And some advocacy groups feel there is a health risk in increasing the number of dispensaries in the city.
The proposed change would help the city achieve its economic, health, and wellness goals, as well as support equity program applicants — people and communities harmed by cannabis criminalization.
In 2021, the city received a $1.3 million grant from California Go-Biz to provide financial, business and technical support to equity applicants. However, Natalia Thurston, director and legal counsel at the nonprofit Equity Defense Firm in San Francisco, said Richmond has yet to use any of its funding.
“Richmond has to address the significant barriers to entry, like capital, regulations, and infrastructure to issue permits under the equity program,” Thurston said.
Any new permits will likely go to multi-state operators who have the resources and ability to operate storefronts, she added.
Lina Velasco, the city’s director of community development, said new cannabis retailer licenses would go through a competitive selection process — with two of the three licenses designated for equity applicants.
City Council will hold the first public hearing Tuesday to consider the amendments, which include increasing the number of storefront retail permits and adding new non-storefront (delivery only) permits. The hearing was supposed to be held on Nov. 7, then was pushed back to the end of November, before being placed on the current agenda.
At the Nov. 7 meeting, a speaker and 10 written public comments were all against adopting the amendments, especially the increase of cannabis retail permits. Some in the community fear a replay of the 1980s and 90s when the city was overrun with drugs.
The Alcohol, Marijuana, and Prescription Drug Coalition said in a written statement to the council that it opposes the change because it could be harmful to youths.
“Increasing the number of cannabis retail permits could impact public health, as cannabis use has been linked to emergency room visits,” Nabila Sher-Oliver wrote on behalf of the group. “To truly promote equity, we need concrete steps, not just promises, to address disparities in the cannabis industry.”
Of Richmond’s three dispensaries, only one — 7 Stars Holistic Healing Center — provided a comment for this story. “If the city must add new dispensaries, it should be up to the Richmond community,” said Executive Director Zee Handoush, adding that the city should not increase taxes on the product because high taxes are reducing retail customers.
Green Remedy and Holistic Healing Collective did not respond to requests for comment.
A report to the council by the city’s Economic Development Commission revealed a consistent upward trend in cannabis sales from 2016 to 2021 for the city’s three retailers, and then a significant drop in sales 2022 to 2023.
“During the pandemic, there was a lot of uncertainty. People were mostly at home, they were worried and they relied on cannabis, Handoush said. “But the business is down right now.”
He added that the declining sales could be due to people cultivating their own marijuana. Since it is expensive to buy cannabis from a storefront, $25 to $30 on average, he said people like to share the plant with friends or neighbors for half the price or less.
The city’s findings indicate that the demand for cannabis products may be reaching a saturation point, both in Richmond and surrounding areas.
“In Oakland and San Francisco, they issued these licenses to people under the equity program, and there was no money to support their businesses,” Thurston said. Some cannabis businesses in Oakland have closed, she said, adding, “Many of my clients are no longer in the business.”
The report captures over 80 retail dispensaries in the Bay Area, with Oakland having the most, at 27, followed by Vallejo, with 11 dispensaries.
High demand in Richmond
Looking at demand for cannabis in the Bay Area, Richmond ranks second, behind Hayward. The report, by the Economic Development Commission and SCI Consulting Group, notes that three retail locations in the city serve a population of approximately 116,000 people, which translates to about 38,000 people per retailer. They concluded that Richmond can support an additional three to five retail locations for a total of six to eight retailers.
Cristian Comacho, a security officer in Richmond, says dispensaries are all over California, making the product easy to come by. “It is unnecessary to introduce new cannabis stores in Richmond since people can use those nearby,” he said.
Thurston proposes that the city tap into state funding created by the cannabis excise tax to create a shared-use model program to support equity businesses. Such a program would offer a platform for shared resources, skills and tools among the retail owners.
“When the city issues these licenses to individual business owners, there is a lot of frustration when people cannot get the support and funding they need to run their businesses,” she said.
California’s cannabis excise tax generated $156.9 million in the third quarter of this year alone, while the state collected $112.4 million in sales tax, according to the California Department of Tax and Fee Administration .
As of 2021, the United States had over 6,850 legalized cannabis dispensaries leading to a thriving and competitive market. Data from Statista, a global data and business intelligence platform, projected revenue to reach nearly $34 billion in 2023.
California passed Proposition 64 in 2016, legalizing the recreational use of marijuana by adults 21 years or older. With the right doses, Handoush says cannabis helps people manage sleep, pain, temperature regulation and stress.
“With consultations at the dispensary, people find the right doses,” he said.
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