Santa Rosa may welcome more pot businesses

Santa Rosa, which already permits commercial cultivation of medical marijuana, is considering whether to allow other types of pot businesses to set up shop in the city, too.

The City Council's Medical Cannabis Policy Subcommittee today will review proposed interim regulations governing how and where businesses can manufacture, test, distribute and transport medical marijuana locally.

The move is the latest step in the city's ongoing effort to craft regulations that strike a balance between allowing the medical cannabis industry to operate openly after years in the shadows without getting ahead of new state laws that will license and tax the sector in 2018. The city's efforts have come under greater scrutiny in the wake of last month's massive police raid on a facility producing a popular line of cannabis oil products in a southwest Santa Rosa business park.

The investigation of the nonprofit collective CBD Guild by city police and the federal Drug Enforcement Agency resulted in the arrest of facility manager Dennis Franklin Hunter, the confiscation of hundreds of thousands of dollars in cash and the collective's inventory of cannabis oils, sprays and gels.

Hunter, 43, of Rohnert Park, was released without charges. He said on Wednesday the collective is trying to get back up and running as it awaits the outcome of the investigation and guidance from the city about processes it needs to follow to become compliant.

“We are very determined to do the right thing and move things forward,” Hunter said from the collective's 34,000-square-foot Circadian Way facility. “We have a commitment to our patients to get back in business as soon as possible.”

The new rules under consideration may make that easier. If approved by the full council, the rules could dramatically increase the number and type of medical marijuana businesses operating openly in the city, as well the industry's geographic footprint here.

Currently, medical marijuana cultivation is limited to three industrial areas of town: areas zoned for light industrial, general industrial, and limited light industrial use. Three businesses have applied for cultivation permits since the city began accepting applications in April, but none have yet been approved.

The subcommittee is now looking at allowing so-called “support uses” in non-industrial areas, as well, specifically business parks and commercial office buildings. In most cases, the proposed uses would be allowed by right, meaning permitting would be limited, explained David Guhin, interim director of the Planning and Economic Development Department.

“We're moving forward with trying to find a legal and compliant pathway for people who want to do these types of businesses in Santa Rosa,” Guhin said.

The changes under consideration would interpret the existing zoning code to allow some uses in some zones but not in others. For example, testing and laboratories would be permitted outright in business parks and light industrial areas and with a minor use permit in commercial office zones. Manufacturing would be allowed by right in business parks, light industrial and general industrial zones, unless the parcels abutted residential areas, in which case a minor use permit would be required.

Distributors and transporters would similarly be allowed in light industrial and general industrial zones, in some cases by right and other cases with a minor conditional use permit.

Before being allowed to operate in such zones, all businesses would need to have building, fire and environmental compliance permits, as well as a business tax certificate.

That's where CBD Guild appears to have run afoul of the city rules. When the outfit applied for a tax certificate, it was clear it was involved in the business of “extraction of cannabis oil.” But planning officials said the zoning permit the organization received did not allow marijuana extraction and the group never received a required building inspection.

Hunter said the guild “had an interpretation” that, it believed, meant it was operating properly. He noted that the business has regularly given tours to regulators, including a group of state officials he declined to name just weeks before the raid.

The raid sent ripples of fear through the marijuana community at the precise time the city was trying to encourage cannabis businesses to submit to regulations, said Tawnie Logan, executive director of the Sonoma County Growers Alliance, which represents 400 marijuana growers and members of the cannabis industry.

“I can't bring these operators forward if they are afraid of a raid every single time something goes wrong,” Logan told the City Council last month, noting that the zoning rules were complex.

She urged the city to establish a “safe harbor” system that would allow businesses to privately ask for guidance from the city about how to operate legally without fear of law enforcement action.

But Guhin said he doesn't think the city should keep a secret list of above-board cannabis operators.

“We're actively pursuing a pathway to legalization for this industry in the most transparent and open way we can,” he said.

City Councilwoman Julie Combs expressed concern last month that the raids might be counterproductive to the city's overall goal of being welcoming to the home-grown industry.

“It seems to me that the war on cannabis is ending and I feel a little bit as if we have some departments that understand that, and some other departments that are like those Japanese soldiers who are on an island and fighting a battle that may have ended,” Combs said.

The subcommittee meeting begins at 10 a.m. in the City Council chambers.

You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@pressdemocrat.com. On Twitter @srcitybeat.

EDITOR'S NOTE: CBD Guild is the name of a nonprofit collective that makes cannabis oil products, including the Care by Design brand. An earlier version of this story contained an incorrect name for the collective.