San Francisco Continues to Struggle with Cannabis Regulation

On November 9, 2016, California voters approved (by a 56-44% margin) Proposition 64, the Adult Use of Marijuana Act (AUMA), which allows adults to possess and cultivate marijuana for recreational purposes. Municipalities were given until January 1, 2018 to plan for regulation of the industry, at which time recreational retail use will begin and additional State-wide regulations will be imposed. Like other California municipalities, San Francisco has been struggling to implement regulation of recreational marijuana. Mayor Ed Lee has directed the Department of Public Health and the Planning Department to work on creation of a regulatory scheme, but it is not yet clear how existing regulations on medical marijuana will be revised to allow for recreational use. Many on the Board of Supervisors have expressed concern about a “proliferation” of Medical Cannabis Dispensary (MCD) applications, with recreational legalization on the horizon.

This week, the Board’s Land Use and Transportation Committee heard and referred to the full Board an interim moratorium on MCDs that would remain in place for 45 days unless: (1) extended by ordinance; or (2) permanent controls are adopted to address the proliferation of MCDs and the regulation of non-medical cannabis outlets. The moratorium does not apply to MCDs that have already been approved or are scheduled for a hearing before the Planning Commission as of September 11, 2017. We do not yet know how long the moratorium will be in place, but it is clear that the City has significant work to do to establish regulations for this industry at the intersection of zoning, public health and safety.

At the same time this week, the San Diego City Council voted on cannabis regulations allowing cultivation, manufacturing, and testing of marijuana (supply chain businesses) with conditional use approval. While a major step forward for San Diego’s recreational cannabis industry, the regulation also imposes land use controls on the businesses, including capping the total number of marijuana supply chain businesses at 40 and limiting them to industrially zoned areas. San Diego has boosted taxes on the industry to capitalize on what is sure to be a lucrative expanding industry. It will be interesting to compare how California’s cities work to implement Prop 64.

Stay tuned for an upcoming article about cannabis regulation by Reuben, Junius and Rose’s Tom Tunny in the September edition of the View, the quarterly Bay Area publication by Commercial Real Estate Women (CREW). In the article, Tom will explore the implementation of Prop 64, including the Mayor’s Directive, the intersection of medical and recreational cannabis regulation, and how cannabis may impact the culinary and hospitality industries in San Francisco.

Authored by Reuben, Junius & Rose, LLP Associate –  Jody Knight 

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full-service real estate law firm. We specialize in land use, development, and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision, and condominium work.