Santa Rosa council member’s cannabis dispensary remains open a month after city ordered it closed

Santa Rosa Council member Eddie Alvarez’s cannabis dispensary remains open nearly a month after the city ordered him to close for not having proper permits and state authorities sought to recoup tens of thousands of dollars in unpaid business taxes.

He has racked up 26 citations from the city with fees totaling $13,000 for staying open almost daily since the order was issued last month.

City Hall officials, meanwhile, are taking steps to seek a court injunction that would reinforce the closure order.

Alvarez said he is working to get back into compliance with local and state business requirements and hopes to do so soon before the city takes further action to shut him down.

“It’s my hope to be in good standing with all agencies prior to the need for more drastic efforts,” he said.

City code enforcement officials served a March 15 cease-and-desist order on his Russell Avenue business, The Hook, after learning his state seller’s permit to operate a retail business was inactive.

A city investigation also found he was in violation of several city codes related to the reporting and remittance of cannabis taxes.

That investigation followed a February notice filed with the city by the California Department of Tax and Fee Administration which sought to levy Alvarez’s business and other properties to recover more than $380,000 in unpaid state business taxes.

The business was ordered to immediately close or face a $500 daily fine.

Alvarez has so far refused to close.

He said while he didn’t intend for the issue to rise to this level and understands city staff have a job to do, it would be a “disservice” to his employees and customers to shutter his doors.

“Truth is I love my city as much as I love my employees and the people we all serve in the community and at The Hook. To close would be a disservice to the community that depends on us,” he said. “I do understand the city’s position. I just hope they understand my drive to serve those who need service.”

The City Attorney’s Office is drafting an injunction to be filed in Sonoma County Superior Court, a step that will allow the city, if necessary, to take more forceful action to close the business.

That injunction, a tactic the city uses with other businesses and nuisance cases, could be filed as early as next week.

A city spokesperson said if Alvarez complies with the cease-and-desist order or if his seller’s permit is reinstated either before or after the injunction has been filed, the city will work to dismiss the case and allow him to reopen.

“We understand that sometimes it takes a minute to fix the issue,” spokesperson Kevin King said.

Alvarez said he hopes to remedy the issue before legal action is taken.

Alvarez said he is working with state tax authorities to pay down his debt, which last summer topped about $455,000, and resolve his licensing issue.

He estimated he owes about $40,000 plus taxes for the first quarter of 2023 that are due at the end of the month.

About 30% of the business’s gross revenue goes toward local and state sales tax and excise fees, he has said.

Alvarez, who was elected to represent south Santa Rosa in District 1 in 2020, has said his case is emblematic of the regulatory hurdles and tax liabilities that businesses in his industry face. The $500 daily fee is not an insignificant amount, he acknowledged.

Licensed and unlicensed cannabis companies owed the state nearly $200 million in unpaid taxes as of last June and the state tax agency in recent years has sought to better track cannabis tax reporting, enforce tax collection as well as crack down on illegal operations and noncompliant businesses, according to the trade publication Marijuana Business Daily.

As one of seven elected council members on the Santa Rosa City Council, Alvarez has the power to hire and fire the city manager and attorney, set city priorities, vote on ordinances and resolutions and appoint residents to boards and commissions.

Mayor Natalie Rogers didn’t respond to a request for comment by 4 p.m. Friday.

Vice Mayor Dianna MacDonald declined to comment on the case, adding that staff hasn’t kept council members abreast of the situation and that the business issue was between Alvarez and city workers to address.

Alvarez said he is not hiding from or ignoring his tax and business duties.

He said it will be up to voters in his district to decide if he is fit for the job, and he added that he had received support from people in his community.

“I would like to take this opportunity to thank my community for their support as we continue positive conversations regarding the shared goal of finding a resolution which I’m optimistic will be soon,” he said.

You can reach Staff Writer Paulina Pineda at 707-521-5268 or paulina.pineda@pressdemocrat.com. On Twitter @paulinapineda22.