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Chula Vista Moves Into The Marijuana Business

A jar containing dried cannabis flower sits on the shelf at Torrey Holistics dispensary, Dec. 28, 2017.
Kris Arciaga
A jar containing dried cannabis flower sits on the shelf at Torrey Holistics dispensary, Dec. 28, 2017.
Chula Vista Moves Into The Marijuana Business
Chula Vista Moves Into The Marijuana Business GUEST: Gustavo Solis, south bay reporter, The San Diego Union-Tribune

Chula Vista is moving forward with plans to become the second city in the county to allow the sale of adult use marijuana. And ordinance approved by the city Council could make the South Bay City the largest marijuana marketplace in the county. The ordinance allows more cannabis retail outlets per capita than the city of San Diego. And an unlimited number of marijuana testing and manufacturing facilities. Joining me is Gustavo so lease South Pole -- welcome to the program. >> Thank you. >> City council members approved a regulation framework this week, what with this ordinance allow for instance, how many marijuana businesses would be allowed to open in Chula Vista? >> The way it is set up they can open up to 12 retail stores, that's dispensaries or deliveries. They can open 10 cultivation sites and an unlimited number of testing and manufacturing facilities. >> Are there areas within these districts, where retailers would not be allowed? >> It depends on existing zoning. If it allows for retail, even in mixed-use, they can open up. Chula Vista is in for districts, they have to be split in evenly in a two-tier cap for dispensaries. There are 12 retail slots, if there are three in each district, there can only be two dispensaries in each district. >> The only other city in the county that allows recreational sales is San Diego. How to Chula Vista's rules compare? >> One difference, is delivery services. San Diego does not account for them. Dispensaries can deliver but they don't regulate delivery services. The industry in San Diego priest Chula Vista as historic for regulating the industry. >> Indeed, the other difference is that the unlimited number of supply-side businesses, related to cannabis, testing and manufacturing. Was there any discussion about whether or not that should be capped or capped unlimited? >> There was discussion with cultivation. The original ordinance that was recommended to city Council did not have a cap on cultivation. It would have been unlimited cultivation, manufacturing and testing. A council member thought that would be too much so he lobbied for a cap of 10 and said he would not vote unless there was a cap on cultivation. Originally, it was unlimited. That brought it down. >> San Diego caps dispensaries at 36 but partly in the city there are only 13 licensed stores because of the zoning rules. Some cannabis advocates have argued that San Diego's tight rules have led to a thriving black market. Did San Diego's cannabis regulations factor into the debate over how Chula Vista was moving forward with its rules? >> I'm not sure how big of an impact San Diego's regulations had. I know the black market did have a big impact. Chula Vista wanted to regulate it themselves, they have a big issue with illegal dispensaries. They think this ordinance will help in several ways, it will make it clear where the legal businesses are and they hope that through sales tax revenue they can increase enforcement, to get rid of the illegal shops. >> Let's talk about sales tax revenue. Voters of proved attacks starting at 5% and it could be up to 15%. What about Chula Vista? >> They have not written anything. The staff commended -- recommended 15% and the city Council will decide on anything below that. There is a range, 5% to 515 that could be shifted to Pender -- depending on the market. >> How much revenue will the city generate and was that a major motivator in moving forward with the ordinance? >> It's been a big selling point, especially for council members and constituents who were on board. Estimates that I have seen are up to $6 million but it's hard to tell just because they have not figured out how they will tax it. >> The city decided to choose qualified applicants for marijuana sales permits by a lottery. That's not how it will work in Chula Vista. >> It is not. It was a point of contention. Staff recommended a two-tier selection process, the first phase in one was merit-based applicants had to demonstrate a level of background in the industry, have liquid assets and a property secured and after that it would go to a lottery. Staff recommended that because they thought it would protect them from litigation, if someone did not get chosen and they thought there was an issue with that. City council members, after hearing testimony from people from the industry, including summa want to open up dispensaries in Chula Vista opted to go for merit-based system. They want to have a same -- say in who opens up shop. >> What's next? >> The ordinance let's the staff begin the process of writing the regulation. The details, how much an application fee will cost or flush out the merit-based criteria. Once the regulations are written, the city will have to ask the citizens to approve attacks measure in November. Realistically, a timeline would be 2019. >> This ordinance hangs on a sales tax? I've been speaking with Gustavo so lease South Bay reporter at the San Diego Union Tribune. Thank you.

The Chula Vista City Council has approved an ordinance that would allow marijuana sales, cultivation and manufacturing, as long as voters approve a marijuana tax later this year.

The ordinance passed by the city council on Tuesday allows the creation of a dozen marijuana retailers in Chula Vista — three per council district — and 10 cultivation sites throughout the city. The retailers would be either storefronts or delivery services, though there can be no more than two storefronts in each district.

RELATED: Workshop Teaches Cannabis Industry Of New 'Track And Trace' System

"And at this point we'll begin working on the all the regulations that will be associated with this," said Deputy City Manager Kelly Bacon.

She said the new ordinance depends on Chula Vista voters approving a marijuana tax.

"We'll bring forward a tax measure for the November ballot. If for some reason that tax measure doesn't pass, it makes the ordinance null and void," she said.

RELATED: Marijuana Businesses Are Legal — But Darn Near Impossible To Open In San Diego

Chula Vista anticipates the marijuana business would generate $6 million annually in tax revenue. Bacon said the revenue generated by marijuana businesses was a key consideration.

"The positive being that you will have another revenue source in your city," she said. "The negative part of that is you're going to have to put money into the enforcement to keep those illegal operators out of your city."

Chula Vista expects it will tax wholesale and retail sales, and cultivation based on square footage.

What questions do you have about the Statewide General Election coming up on Nov. 8? Submit your questions here, and we'll try to answer them in our reporting.