With the passage of proposition 64 or AUMA (Adult Use of Medical Marijuana Act), the current political and legislative atmosphere carries a striking resemblance to the period following the lifting of prohibition in the early 1930’s. As politicians scramble to calculate the repercussions of changing legal definitions regarding cannabis in the future of our state, there is an air of uncertainty as to what the future holds for cannabis culture. The implications of the changing laws are amplified by the size of the state. Since prop 64 was adopted in California, the population of US citizens that are now allowed to legally consume marijuana has risen from 5 to 20% (NY Times). This dramatic increase in potential demand has seen, and will inevitably result, in a corresponding influx in business eager to fill this lucrative void in supply. The hope is that through this legal avenue, California will see growth in both it’s tax revenue and economic prosperity, opening opportunities for economic growth that will have a domino effect on an unforeseeable number of industries.
Currently, the burgeoning of the cannabis market is strongly felt in the world of commercial real estate, and Sonoma County is a community ripe for the development of all levels of the cannabis industry; from growers to dispensaries. It is projected that the cannabis industry may even surpass Sonoma County’s famed viticulture business. The inflation of the commercial real estate market is clearly displayed in states with more lenient cannabis regulation, where the increase in demand is coupled with the risk associated with cannabis investment to create a market with enormous potential. With its fertile farmland and liberal living, Sonoma County is ideal for potential investors in the cannabis “gold rush.”
But the excitement of investors should be tempered by the reality of the bureaucratic process that is to follow the passage of prop 64. On the positive side, the passage of MMRSA (Medical Marijuana Regulation and Safety Act) in September of 2015, laid some framework for regulation and policy of cannabis law in Sonoma County. A similar infrastructure in the medical marijuana field developed in Colorado communities, allowed for a more fluid transition when cannabis expanded into the recreational sphere. It should not be assumed, however, that the impending transition will be an easy one. According to the federal government, cannabis is still considered a schedule 1 drug, placing it in the same category as heroin. With this classification under federal law, problems have inevitably arisen with lending protocol and bank hesitancy in dealing with cannabis related industries. In light of the disparity between federal and state law, in order for the state to see the highest possible positive externalities come to fruition in the passage of Prop 64, (ie tax revenue and growth) regulation at the local level is imperative.
The directive of the city of Santa Rosa regarding the passage of prop 64 as it relates to commercial development is as follows: “Comprehensive regulation of premises used for cannabis cultivation or commercial activities related to cannabis is proper and necessary to address the risks and adverse impacts (of cannabis) (City of SR Land Use Ordinance).” Within this regulation, it is the goal of Sonoma County policy makers to ensure the community provides, “a regulatory path to permit an existing underground industry, “fostering a viable cannabis industry for the local economy in order to create safe access to cannabis and ensure, “environmental, public health, safety and nuisance factors related to the cannabis industry are adequately addressed (City of SR Land Use Ordinance).” Overlaying the breadth and magnitude of these goals determined by policy makers is the impending nature of time. Business tends to want to move at a quicker rate than government regulation as market demand and supply do not wait when there is money to be made.
The Sonoma County Board of Supervisors, aware of the time sensitivity of the current climate, set forth to revise Chapter 26 of the Sonoma County Code on November 17 of 2016 following the passage of prop 64. Chapter 26 of the Sonoma County Code details the zoning regulations within the county. With the adaptations and revisions of Chapter 26, policymakers resolved to form a framework for a well-regulated cannabis industry within Sonoma county so as to allow for the lawful personal and commercial, “cultivation, manufacturing, distribution, transportation, laboratory testing, and dispensing (City of SR Land Use Ordinance)” of cannabis. The Sonoma County Land Use Ordinance seeks to zero in on an already semi-developed medical cannabis industry, but does not yet address the approaching broadening of the recreational market. And while no state permits for recreational cannabis will be issued until after the first of January 2018, and no local permits until a proposed Commercial Cannabis Tax is approved in Sonoma County, the cementing of medical cannabis policy is essential to create the necessary foundation for the future of the industry. The local concentration on the issue is made even more critical as local permits are required prior to obtaining state licensing.
So what does this next year look like for those looking to invest in the cannabis industry here in Sonoma County? First is the required conditional use permit, this ensures incoming investors adhere to Sonoma County’s General Plan, Zoning Code, and California Environmental Quality Act (CEQA). Coupled with the associated fee’s and public hearing, it is critical that those looking to invest stay at the forefront of the process or risk the potential availability of permits by the time licensing becomes available through the state. While the exact specifications of how the budding cannabis industry will be regulated within Sonoma County are currently under evaluation, it is imperative for all potential investors to stay informed regarding the current developments within the county. One thing is certain, competition in the marketplace is sure to block those who cannot keep up, and ensure the success of those who stay proactive.
Sonoma County Resources