New cannabis stores open up in underserved areas of Sonoma, Napa counties

The challenges of the cannabis business still linger as the multibillion-dollar industry continues to emerge from out of the shadow in California. But there has emerged one bright spot: More licensed dispensaries are opening in areas that are underserved.

That’s especially been the case locally in eastern Sonoma County and Napa County ― an area of more than 200,000 residents. That region was one of those so-called “weed deserts,” and within a month, has had more brick-and-mortar shops opening for consumers to buy products from flower to drinks and chocolates for recreational use.

On Friday, the Solful dispensary opened its location in east Santa Rosa across from Montgomery Village as co-founder Eli Melrod saw an opportunity in a spot with affluent customers and next to a well-visited shopping area.

On April 20, entrepreneur Erich Pearson will open his latest SPARC dispensary in the town of Sonoma, which will be the first one in the Sonoma Valley and well positioned to serve both tourists and seniors.

That activity has been preceded by the city of Napa finally allowing dispensaries to sell for adult use within its jurisdiction. Four of the six shops operating under medical usage in Napa have already been cleared to do so for adult clients.

Long time coming

The openings have been a long time in preparation and come after passage in 2016 of Proposition 64, which legalized adult recreational use in California. The law went into effect for retailers on Jan. 1, 2018.

“We are four or five years from legalization, and I still think we are just scratching the surface. There are still so many consumers who are interested and who are on the sidelines,” said Melrod, who serves a chief executive officer.

Solful also operates a store in Sebastopol where customers come as far as from Marin County, also another underserved area.

The openings come as the cannabis industry still grapples with many other obstacles and it enters an era of consolidation. Small growers have especially been affected by a combination of a high tax rate and competition from illegal weed coming in from out of state.

There also has been uneven regulation and delays at the local level, including Sonoma County. Meanwhile, efforts for legalization at the federal level have not passed Congress.

The increase in licensed retail outlets reflects a growing appetite for cannabis products in the aftermath of passage of Proposition 64, especially from those who have not been regular users or prefer products that they do not have to smoke, advocates say.

They are dubbed as “canna-curious.”

There were about 12,000 retailers who operated under medical usage rules from Proposition 215 that was passed in 1996, said Hezekiah Allen, the former head of the California Growers Association who has served as a consultant for the industry. That level dropped to about 400 licensed dispensaries when new rules for adult usage were implemented more than four years ago, Allen said.

But retailers have increased their reach.

The number of commercial storefront dispensaries in the state totaled 933 as of this month, which was an increase from 770 in July 2021, according to the state Department of Cannabis Control. Those figures do not include microbusinesses.

“There is sustained consumer demand beyond what retailers are able to do,” Allen said.

That’s what Pearson, a Glen Ellen resident, saw in the opportunity to open his new dispensary along Highway 12 in a building from the early 1900s that once housed the renowned Sonoma Grove resort. The new space will compliment SPARC’s other local outlets in Santa Rosa and Sebastopol. Other entrepreneurs also are planning dispensaries for Sonoma Valley.

“It’s a long time coming,” said Pearson, whose company also grows and produces cannabis products. “Once it’s up and operating, some of the people who were skeptical of the idea often come around.”

The area also has great growth potential, especially with the large number of seniors who live in the valley, such as those at Oakmont Village, a community of more than 4,500 residents of 55 years and older, he added. SPARC intends to do outreach with seniors in the area who may be looking for cannabis alternatives from the pharmaceutical drugs they are taking for such conditions as anxiety, Pearson added.

“Often times, we get a senior and they say, ‘I haven’t smoked cannabis since the ‘70s,’” he said.

Such outreach would be welcome, said Heidi Klyn, president of the Oakmont Cannabis Club. “I think it’s great because a lot of people don’t want to drive as far,” said Klyn. She noted that there has been an influx of those less than 60 years old into the community and that they have a much more open view on cannabis.

Another opportunity would be tourists. Those in the Napa cannabis community said they believe out-of-town visitors would be a good source of business, especially as Napa County has garnered a reputation as being one of the most unwelcoming places for legal marijuana in the state, especially for cultivators. There are no dispensaries outside of the Napa city limits in Napa County.

“Cannabis and wine is so related and so easily intersecting. With tourism, yes absolutely, there is going to be a huge increase,” said Michaela Reed, CEO of the Napa Cannabis Collective, which is in the process of finalizing its adult usage license. That business should more than double the revenue that comes into the dispensary, Reed added.

Locals also will benefit. Many Napa residents chose delivery options as they would be faced with either driving to Vallejo or Santa Rosa to visit a dispensary without a medical card, Reed said. “It’s a huge deal,” she added.

Still facing hurdles

At Solful, Melrod said he was excited about the opening as the staff began stocking shelves this past week. But he also noted that there are still hurdles beyond the licensing issues and neighbor complaints. The latter is increasingly not as big of a barrier as the industry becomes more mainstream.

In Santa Rosa, there are now a dozen licensed dispensaries operating though there are 23 businesses that have had their licensing approved and another five who have their applications pending, according to city of Santa Rosa records.

One problem is still finding willing landlords because many large commercial real estate companies and firms are unwilling to take a cannabis business given that marijuana is still illegal at the federal level and could potentially put at risk a bank loan, Melrod said. He first secured his lease for the Farmers Lane property in 2019.

“We would love to be in Montgomery Village, but they are not going to touch it,” he said. “Landlords are wary … but it’s getting incrementally better.”

The Santa Rosa store features many improvements that Solful has learned since opening in Sebastopol in late 2017 as the industry has grown beyond so much more than flower to be smoked.

Last year, Melrod brought in Mike Jones as Solful’s chief retail operations officer who had experience working at Fox Racing apparel and Skechers shoes.

The new location has a consultation booth in one corner where staff can speak in-depth with a customer to learn more about what they are looking to achieve with a product. There is much more refrigerated space for drink products that are increasing in their popularity.

Another part of the space showcases the cannabis farms from which it sources its weed with explanatory notes about the marijuana and a jar to smell the product. Photos of the farms are on display. The store also will have a space where local growers can meet customers and explain more about their product.

The industry also has experienced an explosion of new items. They range from gummies that have become more popular for sleep aid to more high-potent resin products that are inhaled through vaporizing devices. Many producers are highlighting the cannabinol, CBN, which proponents claim helps promote a restful sleep, he said.

When Solful first opened in Sebastopol, it stocked about 600 items. The Santa Rosa store will carry about 900, Melrod said.

“We really want to make it approachable and simplify it for people because not everybody wants to be a cannabis expert,” he said.

You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com.