T&B Sports site among prominent trio of Santa Rosa spots sold to marijuana ventures

Three prominent commercial properties in Santa Rosa that were the long-time homes of well-known entities - T&B Sports, the Sonoma County Farm Bureau and Cokas Diko furniture outlet - are now slated to become marijuana businesses, the strongest sign to date of how deeply the cannabis industry is taking root in the city.

The three properties in northwest Santa Rosa have all sold in recent months either to cannabis operations or to new owners leasing the sites to cannabis cultivation, manufacturing or testing facilities.

The million-dollar-plus sales suggest that the “green rush” of investment that many predicted would follow California's 2016 approval of marijuana for recreational use is coming to pass in Santa Rosa. It was the first city in the region to create a legal pathway for commercial cannabis production and its proposed tax framework is viewed favorably by the industry.

“A lot of people from all over are interested in Santa Rosa,” said Joe Rogoway, a local attorney whose firm specializes in cannabis law and represents all three proposed cannabis operations.

The turnover of long familiar sites in the city to cannabis operation may come as a surprise to many residents. It is a sign of how profoundly the city's commercial landscape could be transformed by the expansion of marijuana businesses.

Already, competition for property in areas zoned for industrial uses has heated up, inflating prices and squeezing out some non-cannabis enterprises, according to a veteran real estate broker.

“The cannabis folks are bidding up prices to a very high level,” said Al Coppin, president of Santa Rosa brokerage Keegan & Coppin/Oncor International. “And they're making it difficult for other ordinary businesses” who want to find spaces in order to start or expand their operations.

When Santa Rosa first opened its doors to the cannabis industry this time last year, the projected rush from marijuana ventures was initially more of a dribble.

Just three growers stepped forward proposing modest operations in out-of-the-way locations - a vacant lot on Sebastopol Road, an auto repair shop behind Corby Avenue's Auto Row, and a tile shop in an industrial park in the northwest corner of the city.

But now the city has 24 approved or pending cannabis applications. The latest wave of interest signals that pot ventures are now making moves to snap up better-known locations in commercial sections of the city where cannabis production and processing is allowed. None is so familiar as this trio:

Local supplier to schools, leagues

San Rafael-based T&B Sports, which has been in the city for 35 years, is closing at the end of this month. The owners, under a limited liability company known as 2049 West Steel Lane, and store manager Mel Arnerich, sold the West Steele Lane building in January for $4.25 million to Steele Park LLC based in Newport Beach.

In December, city planners received an application from New Tropic Collective Inc. of San Francisco to operate medical cannabis manufacturing, lab testing and wholesale distribution at the location.

The proposal calls for increasing the building's floor area to 32,000 square feet from 22,378 square feet by adding second floor space. The parking lot would be expanded to 82 spaces from 37.

A hearing before a city planner is slated for April 6 because of a concern raised by neighbors.

Rogoway, the attorney who represents the business, said the proposal is consistent with the City Council's directives. He insisted residents on West Steele Lane - homes sit across the street from the site - and the nearby Children's Museum of Sonoma County won't notice any impacts, including odor from cannabis.

“What they should notice is a pretty substantial decrease in traffic from the current use,” he said.

Collette Michaud, founder and CEO of the Children's Museum, said “we do not have any concerns with the project” and the organization is pleased to be able to continue using the location's parking lot, as it did with T&B Sports, for overflow parking.

“We often times max out our parking lot,” Michaud said.

Furniture outlet

The sale of the former Cokas Diko warehouse on Industrial Drive demonstrates how prices can swiftly rise for properties deemed suitable for cannabis operations.

The property, owned through a limited partnership and trust unaffiliated with Cokas Diko, was purchased on Sept. 9 for $1.38 million by David Bianco of San Jose, according to county records. In October, Bianco transferred ownership to 3499 IDSR, a limited liability company he manages.

And on Nov. 9, the day after California voters approved Proposition 64, allowing adult recreational marijuana use, the property was purchased by Joseph and Jill Cabral, former owners of Lava Vine Winery in Calistoga. The new price was $1.85 million, an increase of 35 percent in two months.

A venture called Diamond Mountain Cultivation Club has applied for a conditional use permit to operate a cannabis cultivation, manufacturing, distribution, transportation and testing facility in the 9,000-square-foot warehouse that served for years as Cokas Diko's outlet location.

Joseph Cabral declined to comment. DMCC, Inc. is registered to Jay Hutchinson, who is listed in the city application material as the general manager of the operation and a former food industry executive. DMCC says it expects to hire at least 15 workers making $20 or more per hour, according to its application.

No retail component is proposed.

Because the warehouse property is not near a residential area, the proposal does not fall under any requirement to notify neighbors.

Farm Bureau

The Sonoma County Farm Bureau had been in its building on Piner Road since 1968, but it was running out of room for staff and the space it needed to provide programs such as worker training, according to Kim Vail, the group's executive director.

In October, it sold its 4,400-square-foot headquarters, plus a 6,000-square-foot building leased to an automotive company. The buyer was San Francisco-based Piner Road Ventures, LLC, whose owners have proposed a cannabis cultivation and processing operation. The 1.6-acre parcel was sold for $1.7 million, and the Farm Bureau leased it back until last month, when it completed its move to new offices on Westwind Boulevard near the county airport.

The Farm Bureau didn't initially know that it was selling to a cannabis venture, but it became apparent as the sale moved forward, Vail said.

Steve Dutton, president of the Farm Bureau, said he felt that the improved economy and the additional demand for industrial spaces from the cannabis industry gave the group “a bump” in the sale price over what it would have received a few years ago.

“I think we did really well,” Dutton said. “I think we're setting ourselves up for the next 40 years where we are.”

Piner Road Ventures, the new owner, is controlled by two men who run a small, San Rafael-based medical cannabis collective and delivery-only dispensary called Marin Gardens. They plan to expand to Sonoma County, where they have friends and family, and operate as Sonoma Gardens, said co-owner Brian Bjork.

Bjork and co-owner William Hidden, who have been operating in Marin for about six years, were hoping to get permission for a walk-in cannabis dispensary in Marin, but it hasn't worked out because of the strict limits on such permits, Bjork said. So they're looking to Santa Rosa, feeling the area is open to industry expansion.

Sonoma Gardens, like all other cannabis business applying for permits to operate in the city, would be presently limited to medical uses. But Bjork said he's planning to transition the business to selling marijuana for recreational use as soon as the law allows, and is actively looking for a site that might work for retail sales.

At some point, the men plan to expand their growing operation into the site's second building when the lease of the automobile shop is up, Bjork said. He said the northward expansion could make for some logistical challenges serving Marin patients, but it ultimately made sense for the future of the business.

“I feel like Sonoma (County) and Santa Rosa, they've kind of got their act together as far as what the future holds,” Bjork said.

You can reach Staff Writer Kevin McCallum at 707-521-5207 or kevin.mccallum@pressdemocrat.com. On Twitter @srcitybeat. You can reach Staff Writer Robert Digitale at 707-521-5285 or robert.digitale@pressdemocrat.com. On Twitter @rdigit.