Santa Rosa bans new cannabis operators in zone near West End neighborhood

Santa Rosa’s need for more housing edged out any chance of future cannabis businesses in a small industrial neighborhood near downtown and the SMART railroad tracks.

The City Council Tuesday unanimously passed a temporary ban on additional marijuana companies operating in the 30-acre industrial area, one viewed by planners and elected council members as ideal for the type of high-density, transit-oriented housing developments Santa Rosa wants to attract. The decision carves out less than a half percent of the total 10.3 million square feet of industrial space where cannabis businesses are allowed in the city.

It comes less than a month after the council, over the objection of housing developers, approved a medical marijuana cultivation project in the same area, off Maxwell Court near the city’s West End neighborhood.

Speaking in support of the ban, Councilwoman Julie Combs said Santa Rosa needed to “close a gap we created in our haste” in adopting rules that allow the newly regulated marijuana industry to get its start in the city.

“This market is changing rapidly, and I want to make sure this takes care of it, that there aren’t any other areas designated as future housing” that could be taken up by marijuana businesses, Combs said.

Clare Hartman, deputy director of planning, assured Combs the area in question along Maxwell Court was the only one of its kind - an industrial area slated to eventually become residential.

Hartman said the ban - in the form of an urgency ordinance that takes effect immediately and will be revisited in July - was needed because of how quickly industrial buildings in the city are being bought up by cannabis companies. Commercial cannabis operations are allowed within city limits only in places zoned for industry.

The city’s vacancy rate for industrial space has dropped to 5 percent, and real estate agents are telling city officials industrial properties are “selling for two to three times the market value,” Hartman said.

“There’s a great deal of excitement in the cannabis industry,” she said.

California’s push to create long-needed rules allowing an open and robust marijuana industry has fueled a profound growth in the once-illicit trade and pushed local governments to make quick decisions about whether and where to allow cannabis businesses to take root.

Late last year, Sonoma County supervisors chose to prohibit marijuana cultivation in rural residential areas, causing an outcry from marijuana growers who said it would displace 2,000 farmers. The move was favored by some unincorporated county residents who asked officials to shield rural neighborhoods from commercial cannabis cultivation.

Other cities are making similarly tough choices. Petaluma and Cloverdale officials have prohibited commercial marijuana operations in their cities. Sonoma and Rohnert Park ban all outdoor marijuana cultivation.

Other cities, like Windsor and Healdsburg, have banned manufacturing but allow limited amounts of marijuana grown indoor for personal use.

Santa Rosa took a stand last year to welcome the industry, moving quickly to craft rules governing cannabis manufacturing, cultivation and other related businesses.

But the initial rules failed to account for the city’s long-range vision for the Maxwell Court area, which sits between the BoDean Co. asphalt plant and the downtown SMART station at Railroad Square.

A pair of business partners connected to Cotati’s Mercy Wellness dispensary saw the tucked-away location as an ideal site to grow medical marijuana.

Partners Brandon Levine, the dispensary director, and Aron Milhaly, who grows cannabis at an undisclosed location for Mercy Wellness, submitted a plan to the city for their company, Flueron Inc., to operate in a Maxwell Court building formerly used for sign fabrication.

Their proposal opened up a conflict between the city’s support for a local cannabis industry with its mission to create opportunities for much-needed new housing.

Two developers of proposed apartment complexes in the area objected to Flueron’s plans, arguing cannabis businesses are incompatible with the residential complexes they plan to build. Developers Rick Deringer and Loren Brueggemann are proposing separate apartment complexes on opposite sides of the railroad tracks that would add a total of 257 apartments.

But the city last month granted Flueron’s permit because the area is still zoned for light industrial uses.

The ordinance passed Tuesday will not prevent Flueron from going forward with its plans because the city has already approved it, said David Guhin, director of planning and economic development.

“They were approved and they followed all the rules,” Guhin said.

Guhin said officials do not expect the ordinance to limit the growth of marijuana business in the city.

“There’s still a healthy amount of activity in the cannabis industry in industrial areas,” Guhin said.

At Tuesday’s council meeting, one person spoke during an opportunity for public comment on the ban.

Santa Rosa resident Duane De Witt urged the council to make it a priority to create opportunities for affordable housing projects.

“Do whatever you can to make sure and keep high-density housing at the forefront,” De Witt said.

You can reach Staff Writer Julie Johnson at 707-521-5220 or julie.johnson@pressdemocrat.com. On Twitter @jjpressdem.