Location, Location, Location: When Will We See Brick and Mortar Cannabis Retail Locations in California?

Opponents of the Adult Use of Marijuana Act (AUMA), or Proposition 64, likely feared marijuana businesses being integrated into everyday shopping centers and other retail areas. However, a close reading of Proposition 64 makes it clear that cannabis entrepreneurs will have a hard time opening brick and mortar retail locations.  This article highlights some of the obstacles entrepreneurs will have to overcome.

 

Protecting Children

Prohibiting children from exposure to recreational marijuana is one of the clear goals of the AUMA: the sale of nonmedical marijuana to anyone under the age of 21 is barred, and those licensed to sell it cannot allow any person under 21 years of age on their premises (link to Bus & P C §26140).[1]  Less black and white, however, is where marijuana businesses may be located.  Proposition 64 prohibits the establishment of any marijuana business within 600 feet of both grammar schools and high schools and other areas where children congregate, such as day care centers or youth centers that exist at the time the license is issued (link to Bus & P C §26054 and AUMA Findings & Declarations, Section D).[2] and [3] While cultivators and manufacturers can successfully operate in more remote areas, these regulations will have a profound impact on retailers who would rely in part on foot traffic. 

What does the above language even mean, exactly? Is it okay for a cannabis business to be next to a Morton’s Steakhouse, but not a McDonalds with a play place?  Alcohol/tobacco and medical marijuana regulations may shed light on some of these questions, but it seems that the idea of recreational marijuana retail locations creates unique challenges.  Will retailers be allowed to integrate into areas with heavy foot traffic and other businesses, or will they be relegated to areas of town devoted strictly to the sale of marijuana?  Are retailers better off selling online?   

Even if we put the location issue aside, cannabis entrepreneurs need to be cautious in the way they go about marketing their products or services. The AUMA mirrors alcohol/tobacco advertising and labeling restrictions, and goes even further to require that the label list any solvents, nonorganic pesticides, herbicides, and fertilizers that were used in the cultivation, production, and manufacture of the product (link to Bus & P C §§26120, 26152).[4] and [5] Consequently, we will likely see an influx of compliance “stings” similar to those seen in the alcohol/tobacco context.  This seems to throw yet another wrench into the reality of opening a cannabis retail location.

Sacramento: A “Case Study”

It is important to remember that municipalities retain the discretion to ban recreational marijuana activity altogether.  While some cities are outright banning non-medical commercial marijuana activity, many seem to be saving retail regulations for last.  Sacramento is a perfect example.  California’s capital is addressing cultivation ordinances first, followed by manufacturing and testing lab ordinances.  The City began accepting Conditional Use Permit and Operating Permit Applications for marijuana cultivation on April 3, 2017 and began accepting manufacturing non-volatile manufacturing and testing laboratory applications on May 4, 2017, but has yet to address retail issues.  While it would be impossible to promulgate ordinances for each type of license simultaneously, it might be that Sacramento officials are concerned with the retail location issues discussed above.  This seems likely, as local city council members have passionately voiced concern with the location of cultivation operations, particularly with the prospect of individual districts being oversaturated with cultivation operations.  This concern prompted the requirement that entrepreneurs attach “Neighborhood Responsibility Plans” to their cultivation applications.

 

When will we see Brick and Mortar Cannabis Retailers in California?

We will likely see brick and mortar marijuana retail locations in California eventually. However, these licenses will be among the last licenses to be issued given the complexities, and it is unlikely that they will be located next to your local Safeway.  When these licenses become available, they will be heavily regulated by local zoning ordinances and public opinion.  Regulations such as those promulgated in Denver, Colorado may be instructive.  Whatever the case may be, entrepreneurs looking to break into the cannabis industry need to do their homework if they plan on entering the retail space.   

 

[1] BPC Section 26140

[2] BPC Section 26054

[3] AUMA, Findings and Declarations, Section D

[4] BPC Section 26152

[5] BPC Section 26120

 

Ryan Kocot is the owner/operator of the Law Office of Ryan T. Kocot. His office is located in Sacramento, CA, but he practices all throughout Northern California.  His practice focuses on criminal defense, as well as ensuring that cannabis cultivators, manufacturers, distributors, and retailers stay in strict compliance with state and local law. 

Visit his web sites, Sacramentomarijuanalaw.com  and Sacramentoduidefender.com

 

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