Pushed by voter initiative, Costa Mesa to consider medical marijuana regulations

A decade after it banned marijuana shops, Costa Mesa has drafted an ordinance that would allow operators to sell, cultivate and deliver the plant, giving in to pressure by the cannabis industry, which is proposing ballot initiatives with its own language to compel cities in Orange County to establish regulations for medical marijuana businesses.

“If something is going to happen, we’d much rather have say-so,” said Rick Francis, Assistant CEO for the city of Costa Mesa.

Last year, two voter initiatives that would set regulations for marijuana dispensaries and impose taxes on them qualified for a special election in Costa Mesa. There’s still legal debate between the groups and the city as to when that special election should take place.

City officials believe the proposals would be on the November 2016 ballot.

In response to those initiatives, the city council in December decided to review an old proposal the council voted down four months prior. With some modifications, the city unveiled its own proposal last week.

The draft ordinance, which will be discussed Tuesday at a city study session, would restrict pot shops to three manufacturing or industrial zoning areas.

Unlike the initiatives by medical marijuana advocates, the draft ordinance pushes pot shops further away from neighborhoods and commercial areas by requiring them to be 1,000 feet from schools, libraries or youth centers. They also can’t set up near sober living homes or drug and alcohol treatment centers.

Permits to operate a medical marijuana dispensary would have to be renewed annually. The permit fee would not exceed $10,000, according to the draft ordinance.

The city would impose a maximum marijuana tax of 15 percent or a rate set by the city council and a $10-per-square-foot fee for cultivation. Marijuana deliveries would not be allowed during the first two years the proposed ordinance is in effect.

It would not limit the number of dispensaries that could be established.

Francis said it’s too early to estimate how much revenue the city would get. There are still a lot of questions and room for change, he said.

No votes will be taken at Tuesday’s city study session.

In the December meeting, Council Member Katrina Foley talked about using the revenues to pay for the special election needed to impose the marijuana tax.

“She had other things in there like helping the city pay for its unfunded pension liabilities and education programs for school and different things like that,” Francis said.

The city banned marijuana shops in 2005, and since then has spent money chasing illegal stores out of town, like other Orange County cities.

Santa Ana was in a similar position. Its city council presented a measure to voters last year to tightly regulate medical marijuana dispensaries after a coalition of marijuana advocates qualified to get a similar but more relaxed referendum on the ballot. Both measures passed but the city’s initiative received more votes, 65.9 percent.

In Santa Ana, permitting fees and tax revenues from regulated medical marijuana dispensaries will go to funding a new enforcement team to shut down illegal pot shops.

Last month, Santa Ana raked in more than a million dollars in application fees.

Twenty dispensary applications were selected in a lottery to set up a store front, which will likely make Santa Ana the first major city in Orange County where pot will be legally sold.