It has been over 5 years since California voters approved Proposition 64, which legalized recreational cannabis use and sales. An increasing number of voters in cities have also approved ballot measures to legalize local recreational cannabis business. As more cities open for cannabis businesses there are lessons and best practices that have emerged which may benefit cities that are considering their options.
1. Reduce cannabis taxes.
In order for legal operators to compete with the illegal cannabis market, legal operators must competitively price products. High cannabis taxes prevent legal operators from competing with illegal operators who pay zero taxes. While cities might experience marginal decreases in revenue at the outset if there is no gross receipts on cannabis transactions, increased sales tax revenue from legal operators may counter balance the difference. Also, a competitive legal market with less illegal operations, will not overburdening public safety, building and safety or planning departments with enforcement of illegal operators.
2. Reach out.
It may seem incredibly obvious, but legal, established, professional cannabis operators are a wealth of beneficial information for any jurisdiction. There is no substitute for experience, especially in an industry that transitioned from illegal to legal. Partner with established public affairs professionals, trade associations, local labor unions and other organizations that helped initiate the legal cannabis market.
"Do the difficult things while they are easy and do the great things while they are small. A journey of a thousand miles must begin with a single step."
3. Go beyond the written application.
Cannabis operators might look great on paper, but it is mission critical that cities meet with, interview and fully vet new operators. Integrating experienced operators who are not part of the competitive bidding process to your review process is an excellent manner to ensure that the paper application is supported by an entity that will partner with the City and community. Some applicants might “check the boxes” but could fail if there is no support beyond the paper.
4. Require community engagement.
Cannabis operators should be required to engage the communities they serve and continually dialogue with neighbors. By fostering conversations between operators and the community, the city may experience decreases in land use and public safety challenges. An engaged operator can help smooth relationships within the City and community.
5. Support local applicants.
As cities move towards allowing cannabis, there will be tremendous interest throughout the region from qualified, experienced operators. To fully benefit the local community with employment and training opportunities, cities should specifically seek to include local residents. As the cannabis industry expands, there is greater need for locally trained experts in the cannabis trade who have experience operating a business.
Approach is everything.
Ultimately, legal cannabis operations necessitates a different approach than most any other retail business. It is incredibly difficult, expensive and time consuming to revisit the laws and policies adopted after a ballot measure has passed. Broadening the approach and dialogue will save time and produce a better result.
If your jurisdiction is considering legal cannabis operations, Dragonfly is a willing expert. It’s time to fly, reach out.
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