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San Diego Cannabis Shops Want To Form 'Business Improvement District'

A vendor points to a selection of cannabis strains for sale during a 2018 marijuana festival in California.
Richard Vogel AP
A vendor points to a selection of cannabis strains for sale during a 2018 marijuana festival in California.

A group of San Diego cannabis dispensaries want to form a city-sanctioned 'business improvement district' that would try to stamp out black market operators and lobby for policy changes that support the legal industry.

The district, which its supporters say would be the first of its kind in California and possibly the whole country, would be similar to the San Diego Tourism Marketing District. That agency receives a portion of hotel revenues to promote the city as a tourist destination.

San Diego Cannabis Shops Want To Form ‘Business Improvement District’
Listen to this story by Andrew Bowen.

The City Council's Economic Development and Intergovernmental Relations Committee gave the proposal unanimous approval Friday. It could go to the full council for an initial vote as soon as February next year.

So far, the city has issued 24 permits to operate retail cannabis outlets, though not all of them have opened for business.

If the BID is approved by the full council and mayor, it will also need approval from a majority of those retail outlets, which would then contribute 0.33% of their gross revenues to the district.

Phil Rath, executive director of the United Medical Marijuana Coalition, estimated the annual budget would start around $640,000. The district would not receive any taxpayer dollars.

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Rocky Goyal, owner of Apothekare in Mission Valley, said the district's primary goal would be to direct consumers to the legal market and away from illicit operators, which typically do not pay all their local or state taxes or follow regulations on testing, safety and security.

"We see the black market as still a huge problem for the industry," Goyal said. "This doesn't affect one shop, it affects all of us equally and together."

Unlike a private trade association, the cannabis business improvement district would have to follow state open meeting and public records laws.

The vast majority of the funds would be used for marketing, public relations and policy development. But about 5% would be used for "social equity" programming that would aim to help people who were harmed by the decades-long “war on drugs” share in the profits of the legal market.

Councilmember Monica Montgomery Steppe, who is working to create a city-funded cannabis equity program, said the one envisioned as part of the proposed BID could complement a future program sponsored by the city.

"I'm very, very hopeful that we can couple it with a robust social equity program within the city," Montgomery Steppe said.

Formal creation of the business improvement district would require three public hearings at the City Council. Backers of the district hope to begin collecting revenue from cannabis retailers by May 2021.