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San Diego Gears Up For Permitting Cannabis Supply Chain

A pile of dried cannabis buds is seen here, Aug. 31, 2017.

Photo by Andrew Bowen

Above: A pile of dried cannabis buds is seen here, Aug. 31, 2017.

San Diego Gears Up For Permitting Cannabis Supply Chain

GUEST:

Andrew Bowen, metro reporter, KPBS News

Transcript

San Diego entrepreneurs on Thursday will begin submitting applications to open marijuana production facilities, as the city prepares for the legalization of recreational cannabis sales next year.

City Council members voted last month to permit up to 40 businesses to cultivate, process, distribute and test cannabis and cannabis products. Earlier this year, the council approved regulations for shops to sell recreational cannabis.

Marijuana production facilities must be located in industrial zones and cannot be within 1,000 feet of schools, daycare centers, parks or other so-called "sensitive uses." In addition to the city's conditional use permits, the businesses will eventually also need a license from the newly formed state Bureau of Cannabis Control.

San Diego has been through a similar process before — in April 2014 it began permitting medical marijuana dispensaries. Days before the city began accepting applications for those permits, people began camping outside the city's Development Services Department in an effort to get their applications in first.

RELATED: Marijuana Legalization Takes Root In San Diego Courts

Kimberly Simms, an attorney who represents several cannabis businesses, said the San Diego Police Department ordered the applicants in line to disperse — and that people later argued over the order in which they should get back in line.

"You could already seeing the arguing and fighting starting," she said. "I'm glad that we've come up with a different way."

This year, the city is assigning appointment times via a randomized lottery. Elyse Lowe, a deputy director in the Development Services Department, said that system should avoid some of the confusion and chaos seen in 2014.

"We want to ensure consistency throughout the applications, we don't want any applicants to get an unfair or perceived unfair advantage," she said. "The city's goal is absolutely the most fair and equitable process as possible."

Photo caption:

Photo by Kris Arciaga

Elyse Lowe, deputy director of San Diego's Development Services Department, shows KPBS reporter Andrew Bowen an application for a marijuana production facility, Nov. 6, 2017.

Proposition 64, approved by voters last year, immediately legalized adult possession and small-scale cultivation of cannabis for personal use. Beginning Jan. 1, licensed shops will be able to sell cannabis to people 21 and older who do not have a doctor's recommendation for the drug.

State law forbids those shops from getting their inventory from unlicensed suppliers — yet few cities and counties in California have set up local regulations for the cannabis supply chain. Simms said this could lead to supply constraints on the legal, regulated cannabis market.

"The dispensaries that already have their licenses are taking a tough look right now at who their suppliers are," she said.

Lowe acknowledged that San Diego's local cannabis supply chain would not be ready to supply licensed dispensaries with products next year. She said the city's conditional use permit application process takes three to six months — but Simms said she counsels her clients to expect to wait at least a year.

The process is often delayed by rival applicants who appeal the permit approvals of their competitors. Lowe described it as "fiercely competitive."

"I have even heard of an instance where someone went as far as to specifically open a childcare business near a competitor so that they could bump that person out of the market, and then they would be next in line," Lowe said. "It's a very, very interesting process because of how competitive it is. I've actually never seen anything like it."

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