Lobbyist Slams San Jose Over Delays on Cannabis Land-Use

San Jose’s hard-fought effort to regulate cannabis in the first half of the last decade made it a pioneer among California cities by the time it codified industry rules in 2014. Its strict vertical-integration requirements became a model for the state, which began issuing licenses to dispensaries under its own regulatory scheme in 2018.

Since then, not much has changed in the reluctant Cannabis Capital of Silicon Valley, where strict zoning relegates 16 licensed dispensaries to industrial pockets where landlords charge exorbitant rents to a captive market.

Despite elected leaders’ repeated requests since 2019 for City Hall to study expanding cannabis to retail zoning, there’s been little progress.

Just as San Jose lagged behind other cities in approving cannabis-related manufacturing, it’s behind the curve on expanding it to retail zoning. Even Union City beat San Jose to the punch, allowing a dispensary to set up shop in its flagship strip mall by summertime.

Cannabis lobbyist Sean Kali-Rai, evidently, has just about had it.

At a Feb. 25 City Council session, staff said the cannabis land-use issue will have to wait another few months—going on three years since it was deemed a “priority”—because pandemic-related issues take precedence.

Kali-Rai went full honey badger. “Unfortunately, I’m not going to make very nice comments,” he told City Hall reps tuning into the Zoom meeting. “I apologize, but I am completely displeased, and that’s an understatement. Surprised? Not at all! Cannabis has always been treated like a second-class citizen.”

The marijuana mediary accused bureaucrats of interfering with democratically endorsed policy through yearslong delays and by flipping cannabis purview back and forth between the city manager and police and leaving it languishing in priority-setting purgatory.

“The priority that I would like to have passed is that cannabis never become a ‘priority’ again,” he said, knocking the council’s so-called “priority-setting” process, “and would be treated like Google and Apple.”

According to city spokesfolks Cheryl Wessling and Elisabeth Handler, outreach begins this month on the land-use plan—which they say has drawn no applications and “very few calls showing interest”—and that it should make it to the council in June.

Kali-Rai called that answer “nonsensical and disingenuous.”

“San Jose’s not accepting new licenses, so of course nobody has asked to be in San Jose who wants to be in San Jose,” he countered in a phone call this morning. “Who would apply when there’s a moratorium?”

Redwood City, which is looking at the same retail zoning policy, received more than a couple-dozen applications, Kali-Rai noted—that’s four times what’s available. Oxnard, meanwhile, received 51 applications for 15 licenses. Regardless, he added, retail cannabis would benefit the 16 dispensaries that already operate and pay taxes in San Jose and doesn’t require interest from anyone else.

Handler went on to say in an email that cannabis priorities have been no more delayed than other policies—it’s “not being singled out,” she wrote—and the pandemic played no small part in postponing the conversation as employees who had been working on the issue were reassigned to staff the Emergency Operations Center this past year.

Handler explained that there are two pieces to the cannabis land-use change. One is to update the zoning ordinance, which requires input from the Planning, Building and Code Enforcement Department and City Attorney’s Office as well as guidance from police and an environmental review. The second component involves updating the regulatory ordinance, a police and city attorney responsibility.

Before the pandemic, Handler continued, the City Manager’s Office of Administration, Policy and Intergovernmental Relations would coordinate that effort. “In this case,” she said, “there was a strong need for some assistance with policy project management as [the] police department does not have a ‘policy shop,’ per se, and the policy team in [planning] was working on multiple council policy priorities.”

As for the supposed flip-flopping oversight between city manager and police, Handler said, that happened because it took coordination from both divisions to create a distinct division for cannabis regulation. Finally, Handler said, in answer to Kali-Rai’s question about why cannabis isn’t being treated like big tech companies: “As stated on the Google project webpage and at diridonsj.org scheduling of outreach and decision-making on the Google project was also delayed for half a year due to the Covid-10 emergency.”

Though the going’s been slow, the cannabis land-use priority did gain some momentum this week. Handler noted that the city just updated its landing page on the issue with information on a survey to solicit resident feedback. (Click here to learn more.)

Still, Kali-Rai said the cannabis policy changes aren’t advancing fast enough, considering that nine of 11 council members voted to make them the top priority in 2019 and that dispensaries pay a combined $2.3 million a year in taxes and fees for the city’s oversight.

“Why are people paying fees for work that has been delayed?” he asked. “The city either needs to get the work done or to cut checks for these dispensaries. Fundamentally, what I’m getting at here is that the City Manager’s Office and the people who work there have a bias against cannabis and have slow-played the issue because they felt like they could.”

The Fly is a weekly column written by San Jose Inside staff that provides a behind-the-scenes look at local politics.

3 Comments

  1. Keep cannabis shops out of retail zones! Just look to Oregon as to what unrestricted placement looks like! More shops than people!

  2. >>Just look to Oregon as to what unrestricted placement looks like!

    Actually doesn’t look that bad. Right now the 16 we have are pretty much a monopoly. Yes, I’ve driven through Oregon twice since 2014 up the 101, there’s shops everywhere starting from Stateline near Brookings and all towns in between. The difference between Oregon shops and our local shops is it’s a little more democratic in the sense that small mom and pops can prop up a shop. Under San Jose’s current regulations, it costs a million or more to start up a shop here.

    Where there’s money there’s power, and do we want to leave that kind of power in the hands of a select few?

    Personally, I’d be happy if we just let liquor stores sell it. I think we’re past the point of it being an experiment. Pot shops didn’t cause property values to shoot up, nor did they cause a crime wave. Pot sales have a negligible effect on a community. Oh we did finally open up our south bay substation thanks to the revenue.

  3. According to city spokesfolks

    oh jeez

    Mr Cortese, Im with you, let the liquid stores sell it.