The city expects to collect $650,000 to $1.3 million each year in tax revenue related to cultivation in West Berkeley, staff has estimated. Officials voted July 11, among other criteria, to prioritize local growers and cooperatives who come “from populations or groups that… have been disproportionately targeted for enforcement, criminalization, and/or incarceration related to marijuana offenses.”
In November 2010, voters approved Measure T, which set a limit of six cultivation “locations,” up to 30,000 square feet each, for a total of 180,000 square feet. Changes at the state level in 2015 required Berkeley to cap the maximum size at 22,000 square feet, according to staff. When officials made that change, in February 2016, they also struck out the six-site quota while reaffirming the overall square footage voters approved. Then, in January, they established regulations for cultivation facilities. Unlike dispensaries, cultivators have neither retail sales or public access.
Once final language is approved, six cultivators will be able to seek permits that allow them each to span 15,000-22,000 square feet. The remainder of the licenses, and square feet, will go to smaller cultivators and cooperatives. Downtown Berkeley Councilwoman Kate Harrison, whose proposal won the night, said she didn’t expect more than perhaps 10 small operators to divvy up that balance.
“We’re not talking about hundreds and hundreds and hundreds of businesses,” she said. “I feel like this has been a bit exaggerated.”
The Medical Cannabis and Planning commissions still need to discuss standards to encourage those smaller operations, she said. Along the way, since Measure T was approved, both commissions have offered recommendations to council about how the city should proceed in relation to the medical cannabis business.
Harrison said the city wants to bring existing growers into the regulatory system; avoid significant impacts on the rest of West Berkeley’s manufacturing zone; promote small businesses; and raise money for the city as quickly as possible. She noted that cannabis cultivation has the highest business license tax rate in Berkeley.
“These people pay four times what I do for my consulting business,” she said. “I think we’re looking at quite a remunerative area of growth for our economy.”
The city receives business license tax revenue that’s based on gross receipts, outgoing City Attorney Zach Cowan told council. (Tuesday night, July 25, will be his final council meeting before retirement.) Operators will need to secure licenses at both the state and local level, staff added.
Each cultivator will be limited to one Berkeley site “to avoid anti-competitive practices and prevent a monopoly,” council said. Staff will do an analysis after one year to look at neighborhood impacts. Enforcement will be driven by complaints.
Southside Councilman Kriss Worthington said most existing cannabis cultivation in Berkeley probably isn’t happening in the right part of town to become legal. Under Measure T, voters set up an “extreme limit,” within “the M District” in West Berkeley, as to where cultivation sites could be. Now, hopeful operators are working on hammering out leases with landlords, he said, to get into the right neighborhood. That is likely to take months.
“If they could come out and stay where they are, we’d get 11 tomorrow,” he said. “We’re going to start with a couple — if we’re lucky. It would be pretty amazing if we get six in effect in six months. That to me would be pretty unlikely.”
Northeast Berkeley Councilwoman Susan Wengraf said she wants to keep an eye on potential neighborhood impacts. She said she doesn’t want to see large growers coming in and buying out all the smaller ones in Berkeley, and pointed out that permits run with the land. Once they are approved, there’s no taking it back.
Wengraf observed that, in Southern California, growers are buying desert land and using aquifers to grow cannabis there.
“The impact of this industry is really going to be something else,” she said. “Something we haven’t seen.”
Closer to home, Wengraf said she was recently on a tour of West Oakland with someone who was pointing out the grow facilities proliferating all around the neighborhood.
“Growers are coming into industrial areas and buying buildings and outbidding everybody, paying all cash, and they have very deep pockets. We, as a result, are losing a lot of the diversity in our communities,” she said. “It is changing the landscape of the state.”
Councilwoman Sophie Hahn, who represents North Berkeley, submitted her own proposal that would have capped the number of sites at 11. She described it as “the more prudent way to go.”
“I’m proposing something as a first step,” Hahn said. “Not as a last step, and not forever.”
Hahn said she was trying to keep in mind concerns similar to those raised by a longtime Berkeley business owner who told her there had been a downturn in business, and “a negative impact,” after an illegal grow site launched next door.
“They do not want me to say their name. And they do not want a report because they do not feel safe,” she said, though she admitted it was “just one business” and “truly anecdotal.” She continued: “That’s the element that I am concerned we’re not capturing when we allow anything to be unlimited.”
Hahn’s motion failed to win sufficient support, however, and she was the lone abstention in the vote on Harrison’s proposal. The rest of council voted aye.
Harrison said, primarily, her proposal was superior because it did not limit upfront how many sites could open. City staff advised that setting a quota “could reduce expected … revenue.” Staff said the city should avoid a quota altogether, or allow at least nine sites to operate.
The discussion wasn’t a complete loss for Hahn, however, as her suggestions to limit each operator to a single site, and give preference to groups that have been “disproportionately targeted” for enforcement and criminalization, were added to the Harrison item at the request of several other council members who agreed they were important additions.
Councilwomen Linda Maio and Cheryl Davila — who each represent different parts of West Berkeley — said they are trying help an interested party bring back the Macaulay Foundry, at 811 Carleton St., as a space for artisans, small manufacturers and cannabis grow facilities. The foundry was significantly damaged in a large fire in 2015. Maio said it would be wonderful to have a complex for all those uses in the building one day.
“It’s an enormous opportunity for the city of Berkeley,” she said, “particularly in that district and in that area.”
The cannabis commission has said previously that viable space in the approved area is extremely limited. The district encompasses 17-square blocks in West Berkeley, said the commission, though the railway line cuts out about four of them.
Staff still needs to bring back final language for the cultivation ordinance based on Harrison’s proposal before the law is amended and business licenses can be obtained. No date has been set for that to happen.
Tuesday night, however, council is set to consider clarifying its policy related to cannabis nurseries (Item 42), and may also discuss its licensing process for commercial cannabis operations (Item 51). Even with a vote, the licensing process will need to go to the Cannabis Commission for discussion. Mayor Jesse Arreguín has asked for that recommendation to come back to council by the end of the year.