San Diego could get more cannabis dispensaries, as proposed rule changes get key OK

SAN DIEGO — 

San Diego officials are proposing new cannabis regulations that would allow more dispensaries to open and would close a loophole that allows some existing dispensaries to avoid city scrutiny of their operations.

The City Council’s Land Use and Housing Committee unanimously approved both proposed rule changes Thursday and forwarded them to the full council for final approval this fall.

Leaders of the local cannabis industry praised the proposals as sensible updates to city regulations, but critics of cannabis legalization say the changes would be another example of San Diego being too accommodating to businesses they say damage public health.

The first change is a reaction to San Diego’s once-a-decade re-drawing of boundaries for the city’s nine council districts based on population and demographic changes reflected in the 2020 U.S. Census.

Twelve of the 27 dispensaries with city permits will shift from one council district to another under the new boundaries, which take effect in November.

That significant upheaval matters because current city regulations allow no more than four dispensaries per council district.

The proposed rule change would allow council districts to have more than four if the re-drawn boundaries are the cause of such an increase. Only north coastal District 1 would see an increase to five permitted dispensaries, but the change would open other opportunities for more dispensaries.

New openings for dispensaries will emerge in three council districts that reached the cap of four dispensaries several years ago: Districts 2, 6 and 8. The re-drawn boundaries will open two slots in District 2 and one each of Districts 6 and 8, and new applicants are already seeking to fill those slots.

The new rule will increase the maximum number of citywide dispensaries from 36 to 37.

But perhaps more importantly, the re-drawn boundaries are expected to raise the number of approved dispensaries to well over 30. Of the 27 that have been approved, 24 have begun operations.
The second change would close a loophole that lets dispensaries with expiring permits apply for a five-year extension, but only passively pursue the process of securing that extension to avoid the scrutiny that comes with that process.

When a dispensary applies for an extension, city officials evaluate how well the business has adhered to city rules and regulations. That includes whether the dispensary has paid all the city cannabis tax it owes.

“People find loopholes, and that’s unfortunate,” said Phil Rath, leader of a group of city dispensaries called the United Medical Marijuana Coalition. “I think it’s smart to close this loophole and ensure that permit holders are coming back in for accountability and having their permits reviewed on a five-year cycle.”

City officials said delays securing extensions, which sometimes can last more than a year, also make it harder for aspiring dispensary owners to enter the industry by keeping potentially available slots unavailable.

“Staff has significant equity and due-process concerns with these extended amendment periods and how they can function as holding a spot,” said Travis Cleveland, a project manager in the city’s Cannabis Business Division.

Rath said both proposed changes make sense.

“These are both common-sense fixes,” he said.

Scott Chipman, leader of an anti-legalization group called San Diegans for Safe Neighborhoods, called the proposals the latest in a series of misguided efforts to boost a harmful industry.

Chipman said city officials in recent years have softened rules on how far away cannabis businesses must be located from places like schools and residential areas. He also said the city has tightened the definition of what a park and a “youth-oriented” facility are to allow more dispensaries.

“This city has bent over backwards for an industry that thrives on addiction, impairment and harming people,” Chipman said.

Other legalization opponents said allowing additional dispensaries because of redrawn boundaries would break the promise the city made to residents in 2014 that no council district would have more than four dispensaries.