Healdsburg approves business tax for retail cannabis sales

Healdsburg’s vineyard-studded landscape may soon be home to a different kind of greenery now that city leaders have approved the operation of two marijuana dispensaries and other cannabis-related businesses within city limits.

Earlier this month, City Council approved commercial cannabis business tax rates — which were OK’d in November by 72% of the city’s 4,869 registered voters with the passage of Measure M — in tandem with amendments to the city’s municipal code.

The new rates are set at 4% for retail sales, 0% for distribution, 2% for manufacturing and 2% for testing with a medical cannabis exemption.

According to a city staff report, the anticipated annual tax revenue Healdsburg can expect from cannabis-related businesses will be about $500,000, which “may be spent on unrestricted general revenue purposes, including for police, fire and emergency services, parks, affordable housing, and street maintenance.“

Businesses could legally begin operating in the city as early as Wednesday, officials said, adding that Healdsburg now joins a growing list of cannabis-friendly communities in the region, including Cloverdale, Cotati, Petaluma, Santa Rosa and Sonoma.

In addition, Healdsburg also legalized cannabis manufacturing, distribution and testing , the next major cannabis-related change to impact the city, said Healdsburg Assistant City Manager Andrew Sturmfels.

“So in theory … if there was a manufacturer who wanted to just do manufacturing only, and you know, identified a site and wanted to apply for a permit, they would come into our Planning Department and share that with us and we would provide them an application to fill out to start that process,” Sturmfels said.

The city, though, still prohibits commercial cannabis cultivation.

Residents, however, will be allowed to cultivate up to six indoor plants for recreational use or up to three outdoor plants for medical purposes, officials said.

Dispensary application process

At its mid-April meeting, the city approved in a 3-1 vote the application approval process that will later determine which two applicants received dispensary licenses.

Council member Ron Edwards cast the sole nay vote, citing concerns the application’s site-specific requirement would limit the applicant pool, especially in terms of diversity, equity and inclusion.

Mayor Ariel Kelley was absent that night, with Vice Mayor David Hagele and Council members Chris Herrod and Evelyn Mitchell supporting the process as introduced by city staff.

“I think it’s about doing it right,” Edwards said at the meeting.

The site-specific requirement asks applicants to identify a location in their application before they get the green light to open, which some potential dispensary owners spoke against.

“I think that there’s some predatory landlords in town and I think that it’s really hard to find a location ... in town,” said Erin Gore, founder and CEO of Garden Society, a Cloverdale-based cannabis brand.

Eli Melrod, CEO and co-founder of Sebastopol-based dispensary Solful, called the search for few viable locations, “a feeding frenzy,” with some landlords also driving up rents for cannabis-related businesses, he said.

The city will begin accepting applications sometime this summer, Sturmfels said.

The date hasn’t been finalized as the city awaits expected Department of Justice approval to conduct background checks on applicants, he added.

The application will be divided into three parts: eligibility determination, evaluation and review and applicant interviews. Eligibility will be determined through a pass-fail assessment, whereas the application evaluations and interviews will be scored on a point system.

After successful applicants pass those steps, they will meet with City Council for a public hearing.

In the end, “the council has discretion to determine the ultimate applicants,” during the hearing, Sturmfels said.

Santa Rosa-based Jane Dispensary is one of the dispensaries looking to expand into Healdsburg, said Leigh Anne Baker, chief operating officer of the company.

The woman-led dispensary opened its first location in 2021 then expanded to Cotati and then out of state to St. Louis, according to Baker.

As company leadership looks toward possibly expanding, Baker said she is “really anxious to get into the market and support the (Healdsburg) community.”

One of the company’s founders and chief creative officer,Jamie Shira, is a Healdsburg resident so the possible expansion makes sense to leadership who want to work close to home.

Through the vetting process, potential dispensary owners will be asked to consider ways they can support and engage with the Healdsburg community.

While a national operator may have “the flashiest application or most experience” filling out such applications, they might not be mindful of Healdsburg, Mayor Kelley said.

As part of the objective standards, “We wanted … an opportunity to evaluate the applications with a lens to a connection to our local community,” she said.

You can reach Staff Writer Jennifer Sawhney at 707-521-5346 or jennifer.sawhney@pressdemocrat.com. On Twitter @sawhney_media.

.