Sales surge at Vista cannabis shops after city OKs recreational use

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Cannabis dispensaries have turned out to be a pot of gold for the city of Vista, and they likely will bring in more tax revenue following a recent change that allows the businesses to sell their products for recreational use.

“Sales automatically increased,” said Mike Mellano, owner of Coastal Wellness dispensary. “We had such a quick response. Sales have been up about 35 percent or 40 percent. I was expecting 15 maybe.”

Tradecraft Farms became the first of the city’s 11 dispensaries when it opened in 2019 following the passage of the citizen-driven Measure Z initiative, and store manager Edgar Gaytan said business appears to be up by about 20 percent since the shop was allowed to sell products for recreational rather than just medical use about a month ago.

Even before the uptick in business, dispensaries had proven to be a surprising financial benefit to Vista.

In April, the City Council was told that revenue from the dispensaries had done much better than the $1.3 million that was anticipated, and instead were expected to bring in about $4 million. The windfall helped the city balance its $92.3 million budget despite the pandemic.

The unexpected revenue got council members contemplating about how to spend the money, and at that meeting they discussed spending it on youth programs, a dog park, another social worker and law enforcement.

The next month, council members learned that the businesses didn’t cost as much to oversee as expected. The city had charged businesses $28,000 in annual fees for audits, inspections and other costs, but in May they agreed to lower the fees by $8,000 after learning an analysis found they were higher than necessary.

In its most significant change, council members agreed in June to no longer restrict cannabis sales in Vista to products for medicinal use only. Under the restriction, customers were allowed to buy products only after getting a prescription, which could be obtained by a quick chat with a doctor over the phone or by filling out and submitting a form online.

Councilman John Franklin called the restriction a farce, and other council members agreed it was time for a change.

As of this past week, all 11 dispensaries had paid a $329 application fee and received permission to convert their businesses from medicinal use to adult use, allowing cannabis purchases for recreation.

While the process was relatively easy and inexpensive to get a medical card — Tradecraft Farms charges $20 a year for its cards — the extra hoop was enough to keep some potential customers away.

Specifically, those customers may have been seniors afraid of losing their Medicare benefits and veterans afraid of losing their right to buy guns, said Jon Jesse, one of the owners of Doctorgreenrx dispensary in Vista.

“People don’t want doctors’ notes,” he said. “People don’t trust the government.”

Although marijuana is legal in California, the federal government still classifies it as a Schedule 1illegal drug alongside heroin and LSD. Jesse said that inconsistency has created some legitimate concerns with seniors and gun owners who have to deal with federal regulations.

Seniors have declined to buy cannabis for fear it may show up in their system if tested for drugs, he said, causing Medicare to deny them prescribed pain medication.

Jesse said gun owners also have declined medical cards because a federal form for firearm transactions ask applicants if they use marijuana. The form even comes with a warning: “The use or possession of marijuana remains unlawful under Federal law regardless of whether it has been legalized or decriminalized for medicinal or recreational purposes in the state where you reside.”

“I get this question all the time,” Jesse said. “‘I need a note to get this? What about my guns at home?’”

While he has noticed an increase in sales, Jesse said it’s too soon to tell how significant that increase will be.

Allowing dispensaries to sell cannabis for recreational use does come with one additional restriction. Consumers can buy only one ounce per day, while people with medical cards still can buy eight ounces a day.

“The smart shoppers come in and shop for a month and buy eight ounces a day,” he said. “But I’d say 98 percent are not going to renew their medical note.”

At Tradecraft Farms, Gaytan said the one-ounce restriction does not seem to have affected customers’ shopping habits, as even with medical cards they did not buy large amounts.

As for the people who had declined to get medical cards, Gaytan said people had a variety of reasons.

“Some people have misconceptions that if you get a medical card, you’re going into some kind of data base,” he said. “That’s completely untrue. It’s protected by law, and it wouldn’t come up with any background check.”

Gaytan said sales are up now that the medical card isn’t required, and he suspects some people who otherwise would have gone to an unlicensed dispensary are coming to Tradecraft Farms and other legal businesses. Because sales taxes for recreational-use products are 15.25 percent and twice as much in San Diego, Gaytan said Vista businesses may be drawing customers from other cities.

He also suspects business will continue to go up, and he wonders if other cities that do not allow dispensaries are taking note.

Vista is the only North County city to allow in-store cannabis sales for recreational use, but jurisdictions are slowly changing rules about dispensaries throughout the county. In June, the Oceanside City Council agreed to lift its medical-only restriction on the businesses, but still restricts sales to delivery only. Carlsbad, Escondido and San Marcos prohibit commercial cannabis activities, although a divided Escondido City Council did vote on the proposal in May.

Voters in Encinitas last year approved Measure H, which will allow four dispensaries to open in the city for adult-use sales. In May, National City became the first city in the county to allow consumption lounges as part of its new ordinance allowing the businesses. Chula Vista, Imperial Beach, La Mesa and San Diego also have approved ordinances allowing for cannabis businesses, and the website www.weedmaps.com lists 59 dispensaries throughout the county.

El Cajon is against dispensaries, Lemon Grove has allowed one for recreational use and Santee recently held a workshop to consider allowing them.

The county Board of Supervisors this year also agreed to allow dispensaries to open in unincorporated areas.

At Coastal Wellness, Mellano said the medical-use only restriction had driven away some customers who instead went to unlicensed dispensaries. By allowing licensed dispensaries to sell cannabis for recreational use, he said the black market shops now will be losing customers. That will be another benefit for the city because the unregulated businesses are more likely to sell to underage customers, he said.

Justin Christman, co-owner of Flora Verde dispensary in Vista, said he cannot tell if business has increased by a certain percent in the three weeks since his shop got its permit to sell recreational-use products because sale volumes tend to ebb and flow.

More telling, he said, is the many new faces he sees coming into the shop. While in the past one out of every 20 customers were new to the store, now one in five are first-time visitors, he said.

Christman sees the tide turning toward more acceptance of licensed, adult-use dispensaries, and he expects more cities will begin allowing them.

“I don’t see how it couldn’t happen,” he said. “If anyone is looking at this unbiasedly, it makes sense. There’s nothing but positive ramifications for it.”

It won’t be a completely smooth road, however. Speakers opposed to dispensaries spoke at Vista City Council meetings before each vote on the businesses, and opponents appeared before the Board of Supervisors whenever dispensaries were discussed. Arguments opposed to the businesses often focused on the ill effects of drug use in society and especially on youths who might be likely to use marijuana if it is widely available.

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