Nevada City council moves forward with adult-use cannabis ordinance

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The only cannabis dispensary in Nevada County could be switching from medical-only to adult-use sales by the beginning of next year.

Months of emotional debate had marked Nevada City's decision last year to allow for the establishment, permitting and regulation of medical-only cannabis cultivation, manufacturing, distributing and testing laboratory businesses.

The city awarded its only dispensary permit to Elevation 2477' in February. But after the dispensary opened in August, its owners found they were turning away two-thirds of their potential customers because they did not have a medical marijuana recommendation. Dispensary co-owner Daniel Batchelor told the city council he estimated the city was losing $100,000 in tax revenue.

At the council's last meeting, a request to amend the cannabis ordinance to allow for adult-use businesses was tabled after Nevada City Police Chief James Leal and Lt. Chad Ellis brought forward concerns regarding monitoring.

On Wednesday, those concerns were discussed, as was a draft of the amended ordinance. Also on the agenda was the approval of a temporary local authorization for Elevation 2477', which is needed for the dispensary to gain a temporary state license prior to a December cut-off date. Both the local authorization and the state license are needed to enter the legal adult-use market.

The multiple moving parts to the cannabis discussion caused a fair amount of confusion in the audience and among the council members themselves.

As Russ Hildebrand, the city's contract attorney explained it, the draft ordinance was brought forward sooner than expected, as a necessary first step in the process. It's a mechanism for the temporary license for Elevation 2477', which is conditional on the ordinance becoming effective, he said.

"We were requested to look at (the) provisional licensing, and that authority needed to be tied to something," Hildebrand said.

Much of the discussion over whether Nevada City wanted to move ahead with adult-use cannabis took place before the ordinance even came up on the council agenda.

City staff had brought back the concerns first raised in October, which included the need for a compliance officer, the absence of staff trained in cannabis regulations and issues, a possible cap on cannabis businesses, and the need to tighten up background checks to weed out "undesirable" operators.

Council member Erin Minett noted the city has a number of code issues that could be addressed by a code compliance officer that was not solely devoted to cannabis businesses.

Adult use or medicinal

The discussion veered into a more wide-ranging one after council member Duane Strawser — who was not present at the previous council meeting — complained that adult-use cannabis had made its way onto the agenda.

"I'm shocked we're even here discussing that," he said. "We promised we would wait a year … We said from day one, this would be medicinal, not recreational."

The decision to go slow was regarding how many dispensaries to permit, said council member Reinette Senum.

Diana Gamzon, the head of Nevada County Cannabis Alliance, agreed, saying, "It is very clear in the ordinance that the one year (waiting period) was specifically related to the number of dispensaries. That was what was discussed and promised."

Gamzon agreed with Minett that a compliance officer should not address cannabis businesses exclusively. In her view, a cap is unnecessary due to the small size of the city.

"We are nearing our capacity, that's the reality," she said. "We're maxing out."

Gamzon took exception to the language surrounding the background check discussion, calling the term "undesirables" incredibly offensive.

She reminded the council that the cannabis industry is transitioning into legality and that business applicants with prior cannabis convictions should not be penalized for their efforts to become legitimate.

"We're coming out of a drug war right now," she said.

Local attorney Stephen Munkelt echoed her comments, telling the council that tightening background checks would have the effect of continuing prohibition policies.

"A significant number of cannabis business applicants do have prior convictions for activities that now are lawful," he said.

Several audience members spoke against allowing adult-use cannabis businesses before the one-year waiting period was over, including former county Supervisor Nate Beason.

"You need to consider the residents," Beason said. "We'll reach a point where something bad is going to happen … This will change the character of our town."

Others, however, argued that adult-use cannabis is now legal in California and that Nevada City should be comfortable in the forefront.

Minett, who was not on the council when the medical-only ordinance was passed, said she would be opposed to more than one dispensary but did not see an issue with allowing adult use.

"I don't think people are going to buy seven pounds and go to Seven Hills (school) to sell it," she said. "Regulation makes it not as (easily) available. I'm more worried about alcohol, and about meth and heroin."

Strawser continued to stress that while the one-year waiting period was for the dispensary, the conversation had always been about medicinal use.

"It's not fair or honest to leave that word out," he said, later adding, "It's an issue of integrity. We're absolutely breaking that promise."

Minett, however, argued the concerns raised by residents were fears that had not been realized.

"I'm sorry," she said. "I want the money (from the cannabis tax)."

The first reading of the draft ordinance passed on a 4-1 vote with Strawser voting no. A second reading could take place at the next council meeting in mid-December.

The approval of the temporary authorization passed unanimously after Strawser received an assurance that it did not mean the dispensary would be able to start selling cannabis for adult use immediately.

The city council also agreed to have staff move forward with trying to fund an overall code compliance officer who would be trained on cannabis issues.

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