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Council Approves Retail Sale of Recreational Cannabis

By Jorge Casuso

October 27, 2023 -- Hoping to boost much-needed tax revenues and salvage a struggling new business sector, the City Council on Tuesday voted to allow the retail sale of cannabis for recreational use.

The unanimous vote -- which puts the City in line with California law -- allows the two retailers with Conditional Use Permits (CUP) to deliver, cultivate and sell cannabis to anyone over 21 years of age.

Under local regulations adopted six years ago, cannabis retailers could only sell the legalized drug to those over 18 with a valid recommendation from a physician.

Councilmembers worried that the regulation straight-jackets current and future retailers from competing in a growing lucrative market.

Of the more than 11,000 licenses issued by the State's Department of Cannabis Control (DCC), 1,360, or 12 percent, are for medicinal cannabis only, staff said.

Already, the City's current law is hampering Santa Monica's lone dispensary, which recently opened at 925 Wilshire Boulevard and is struggling to stay open.

The second retailer, located at 1416 Wilshire Boulevard, is still in the permitting process.

Both face stiff competition from retailers outside the city that sell -- and deliver -- cannabis to adults for recreational use.

As a result, the City is potentially losing tax revenues as it recovers from a coronavirus shutdown that resulted in the permanent loss of local businesses, staff said.

A local tax on cannabis approved with 66 percent of the vote last November paves the way for a new, and potentially lucrative, revenue source, staff said.

Measure HMP imposes a 3 percent tax on gross receipts for adult-use cannabis retailers, and allows to Council to raise the rate to as high as 10 percent without voter approval.

The money generated will grow as more dispensaries open after the Council recently directed staff to return with an ordinance permitting adult-use cannabis in more areas of the city.

The Council also has asked staff to return with a "cannabis social equity program" that would apply to the two medicinal cannabis retailers current allowed in the city.

The program would "help ensure that the communities most impacted by federal and state cannabis enforcement policies are provided an opportunity to benefit from the cannabis industry."

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