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North County coastal cities slow to embrace recreational cannabis

ENCINITAS — Despite broad support for Proposition 64 in 2016, which legalized cannabis statewide, some North County coastal cities have been slow to embrace recreational pot due to state-level bureaucracy, local hesitation and a lack of knowledge on the subject.

In 2016, over 50% of voters in the cities of Carlsbad, Oceanside, Encinitas, Solana Beach, Del Mar, Vista and Escondido voted in support of Prop 64. But as of today, only the cities of Oceanside and Vista allow recreational cannabis sales.

In 2020, Encinitas voters passed Measure H, calling for recreational cannabis shops to open in the city. Nearly a year after the vote, the city is still waiting for approval from the California Coastal Commission before beginning its cannabis business application process.

While some Encinitas officials remain opposed to recreational cannabis, the city has cited state-level bureaucracy as a major contributor to its plodding pace toward adult-use implementation.

In a statement to The Coast News, the California Coastal Commission said that changes to city ordinances related to cannabis typically also require adjustments to a municipality’s Local Coastal Plan, which in turn requires state approval.

“Because cannabis sales are generally restricted (i.e. locational requirements from schools), adding them to local zoning codes does typically necessitate an LCP amendment because the allowance comes with new provisions,” the commission said in a statement. “Local governments have also sought to limit the number of outlets and at least down here, we have not taken issue with any proposed regulations. We might raise a concern if a local government proposed them within a visitor commercial node but to date, that has not been proposed.”

Laura Wilkinson Sinton, founder and CEO of AFC Products, a cannabis consulting firm, believes the residents of these cities have clearly voiced their opinion on recreational cannabis and urges cities to act with more urgency.

“Encinitas was the number one Prop 64 voting city and yet they’ve got nothing,” Wilkinson Sinton said. “Once (cannabis shops) are on Main Street, you’re going to be really sorry you weren’t an early adopter.”

In Encinitas, 65.2% of voters voted in support of Prop 64. Four years later, local support for Measure H dropped to 51.1%, but a clear majority of residents showed support for the initiative.

“It’s almost embarrassing how far behind we are,” Wilkinson Sinton said. “And it doesn’t need to be this way.”

Despite the support for the addition of cannabis businesses at the polls, some in the city have shown apprehension and Deputy Mayor Tony Kranz has been candid in his disappointment that the measure was passed.

“This is one of my great regrets that this was successful,” Kranz said during a public hearing on the ordinance in August. “I get that this was a ballot measure and I get that more people said yes than no, but this is not something that I think will be good for the city of Encinitas.”

Neighbors

Similarly, Solana Beach showed wide support for Prop 64 in 2016 with 61.2% of voters voting in favor. Also like Encinitas, Solana Beach had a measure on the ballot in 2020 to bring cannabis retail shops to the beach town.

Measure S would have established up to two retail cannabis storefronts in the city along with cannabis delivery and cultivation.

Despite the support for Prop 64, Measure S failed at the ballot box in Solana Beach gaining the support of just 38% of voters in the city.

Solana Beach told The Coast News there are no further plans at this time for ordinances related to cannabis in the city.

Del Mar also showed very broad support for Prop 64 with 64.9% of voters approving the proposition, making it the municipality with the second highest support for the initiative in the county in 2016. 

However, there has yet to be a ballot measure or city council-initiated ordinance related to the sale of recreational cannabis.

Speaking with The Coast News on the topic, Del Mar Mayor Terry Gaasterland said she would support a measure allowing cannabis sale in the city but would have reservations she would like to see addressed.

Gaasterland, who is also a professor at UCSD and a biomedical researcher, says she would like to make sure the youth in the city would be protected.

“Young brains continue to develop through age 26 and there are studies that show that use of marijuana up until about age 26 may well have an effect that’s not fully worked out,” Gaasterland said.

Gaasterland said she is aware that Del Mar Plaza is interested in bringing in high-grade cannabis retail stores and she is open to that possibility in the future.

“I would really hope that we would be able to come up with a way in Del Mar to educate the younger people,” Gaasterland said. “However as a councilmember I make the decisions that are in the best interest of Del Mar and that means that if it’s the difference between not having cannabis sales at all and protecting the group that I personally believe needs to be protected, I would vote yes for the cannabis sales because that’s the right thing to do.”

To Gaasterland’s knowledge, the greatest economic impact to cites such as Vista that allows for cannabis retail and cultivation comes not from the sale of the product but from the growing and distribution.

“That’s the major income to Vista and Del Mar does not have the land to grow or the warehouses to distribute,” Gaasterland said. “If people come to me with a plan for doing that in Del Mar, fine. But that’s the real income earner is the distribution.”

Slow biz

For cannabis businesses, waiting for city approval of recreational pot sales is just the first hurdle they have to clear, and often the easiest. The application process, on the other hand, is costly and far from guaranteed.

Daniel Wise, CEO of The Cake House, a chain of recreational cannabis shops in Vista, Wildomar and Malibu, said his company is prepared to submit a permit application in Encinitas for one of four permits specified under Measure H.

“We’ve started the initial due diligence process with the ordinance and with the real estate and sensitive use and all those processes and just getting an initial understanding of the rules and guidelines there,” Wise said. “I think it’s one of the more difficult processes to go through in development in general. At each step, they can put different burdens or requirements on you. And they call them ‘contingencies of approval’ but it’s really them fixing whatever issues that they think they want to fix. And making us pay for it.”

In total, Encinitas will award four permits based on a lottery system run by HdL Companies, a consulting firm with experience in cannabis-related ordinances.

The Coast News previously reported on HdL’s dealings with the City of Fairfield resulting in the city terminating its contract with the firm.

Wise said it was his company that sparked the issue between HdL and Fairfield.

“Because of some scoring discrepancies in our application that we deemed to be not necessarily intentional but grossly misgraded portions of our application that led to the City of Fairfield firing HdL,” Wise said.

According to Wise, based upon HdL’s scoring, The Cake House was not even called for an interview. After the city conducted its own review of applications, Wise’s company was found to be the second-highest scoring applicant.

Wise also questioned why a city choosing permits via lottery would need to hire a consulting firm in the first place.

“I don’t know why the City of Encinitas would need HdL if they’re going to ultimately do a lottery system,” Wise said. “I know the city of Vista didn’t use HdL because as part of a lottery system, you don’t necessarily need a third-party consultant for their scoring. I think most cities are choosing not to get HdL involved at all.”

Wilkinson Sintonis currently involved in litigation against the City of Chula Vista, which also hired HdL, over its scoring practices.

“(The scoring process) was completely opaque, it was arbitrary and capricious,” Wilkinson Sinton said. “There seems to be a certain favoritism that was given to certain applicants.”

As more and more cities open up cannabis shops in North County, the bureaucratic process is likely to change as it has for liquor stores. But for now, businesses like The Cake House and potential customers will have to get used to a drawn-out process.

“It used to be frustrating, but we just got used to the way the industry moves,” Wise said. “Every industry kind of just has its own pace and its own direction so we just navigate it as it comes.”