Beginning Jan. 1, cannabis dispensaries and cultivation businesses will be allowed in the City of San Luis Obispo. With almost 80 percent voter approval of Measure F-18, the marijuana business tax, cannabis cultivators and businesses are now allowed to apply for permits to open up shop in San Luis Obispo.

The tax will start at 4 percent and increase 2 percent every year after 2020 until it caps at 10 percent.

“The tax will work just like any other sales tax,” Kyle Bell, an associate planner for the city’s Department of Community Development, said.

The approval of Measure F-18 also approved a cannabis ordinance that will allow cannabis businesses and cultivation in certain zones in the City of San Luis Obispo.

The zones have been developed to keep the businesses away from any sensitive areas, such as schools, parks and playgrounds. Every retail storefront application must be 1,000 feet from any school, park and playground, 600 feet from any daycare centers and 300 feet from any residential zone.

Some cannabis zones are located at the Higuera Street and High Street intersection, S. Broad Street and South Street intersection and by Tank Farm Road, near the airport. There are a total of eight cannabis zones in San Luis Obispo.

With this new ordinance comes permit fees for potential cannabis businesses.

Initial permit application fees will run the bill up $22,519 and in addition, annual fees to renew permits for retail businesses can range from almost $66,000 to $90,436.

The fees are meant to cover all of the city’s departments’ costs used to oversee the cannabis industry. These resources include police, fire, community development, administration and many others. The total costs for the initial implementation are $442,169 based on 20 businesses and the annual costs for the city are $1,364,326 based on 18 businesses. These numbers are determined by the number of cannabis businesses the city expects and they may change with more precise knowledge.

With the limited number of space, cannabis businesses will compete for a spot in San Luis Obispo. The application process will include a scoring system and highest scoring businesses will get the opportunity to pursue a permit, Bell said. Points are grouped into three categories: community benefit, equity and labor and financial investment. Here are some of the criteria:

  • “Over 90 percent of employees will be San Luis Obispo County residents,” (10 points)
  • “Base wages of employees exceed the minimum wage by at least $3/hr,” (two points)
  • “Applicant demonstrates financial capacity to capitalize, start up, and sustain business
    operations” (10 points)

After passing the application phase, potential business owners will then continue the process of opening up shop by modifying the building and hiring staff.

“We’re probably looking at a year before the first one is even open if everything goes well,” Bell said.

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