Ceres taking the lead in allowing pot dispensaries as businesses gravitate to the city

Ceres is considering a proposal for a marijuana dispensary off Mitchell Road in another action that could put the city on the weed map in Stanislaus County.

Pacafi Cooperative, Inc. wants a permit for a medical pot dispensary at 1442 Angie Avenue, near East Hatch and Mitchell roads. The site is next to 5 Star Auto Sales, a Jack in the Box and KFC restaurant.

City staff recommended the City Council approve a development agreement for the 6,000-square-foot medical cannabis business at Monday’s meeting. The council approved the dispensary on a 5-0 vote.

The Ceres council turned some heads in May in approving a development agreement for a 22,000-square-foot medical pot manufacturing facility in Miller Industrial Park off Service Road. The city later issued a building permit for Kase Manufacturing’s indoor cultivation and manufacturing areas on Brew Master Drive. Kase will produce a marijuana-based product as a treatment for children with seizure disorders and expects to be in operation next month.

Ceres resident Bridget Ludy hopes to move her manufacturing of chocolate cannabis edibles from an Oakland facility to Ceres.

A Pacafi representative did not return a message to discuss its Ceres proposal prior to Monday’s council meeting. The coop was registered as a nonprofit with the Secretary of State in November 2016. Burt Sarkis is named as the chief executive officer of Pacafi.

According to its articles of incorporation, the coop was formed to facilitate herbal and natural remedies for patients with chronic pain, glaucoma, arthritis, cancer, HIV, AIDS and other medical conditions.

At least one Ceres resident was opposed to the city allowing dispensaries. Ramona Moore said the Angie Avenue dispensary could increase car traffic in that location. Moore said that Ceres has enough impaired drivers on the streets.

“It is going to make the problems we have worse,” she said. “It is already difficult to drive around here. It will bring more people from the outside because we are the one with dispensaries.”

In August, the City Council called for a broader ordinance dealing with proposed cannabis dispensaries on a case-by-case basis. The proposed code amendment defines dispensaries as a retail outlet where medicinal or adult-use cannabis products are sold to customers under a state license. Only dispensaries could operate a cannabis delivery service, says the amendment, which would place dispensaries in industrial zones.

According to staff, industrial areas have parking and traffic improvements to minimize the impacts.

City Manager Toby Wells said the amendment and the permit for the Pacafi dispensary are part of the city’s evolving position on legalized marijuana. California voters approved legal pot for recreational use in 2016, and a law signed by Gov. Jerry Brown created a regulatory and licensing framework for medical marijuana last year.

Ceres expects to take in millions of dollars in fee revenue from the cannabis industry. Under a three-year agreement, Kase is obligated to the pay $2.7 million in fees to the city.

Pacafi is expected to make an initial fee payment of $80,000 two months after a marijuana business permit is issued. The coop will then pay the city monthly fees based on gross sales: the fees will be $40,000 a month if sales are $500,000 or less or as high as $100,000 a month if monthly sales are greater than $1.1 million.

The dispensary could generate from $560,000 to $1.2 million in annual fees for Ceres. That revenue will pour into a city general fund primarily used for public safety services.

Councilman Mike Kline said he was still undecided about cannabis regulation and first wanted to hear the discussion at Monday’s 6 p.m. meeting. “It’s amazing how some police officers are totally against it and others say it is here to stay and we will have to embrace it,” Kline said.

Kline said he visited a dispensary in the county unincorporated area and found that a nearby business owner had no complaints, except for a lack of parking that required customers to walk in front of his business.

The Angie Avenue site is near a commercial area with fast-food restaurants, though industrial-type businesses are also nearby, such as an auto dealer, tow service and cabinet shop.

“I can’t say the fees are the sole motivation behind this,” Kline said. Ceres could follow other cities and the county in allowing a certain number of dispensaries based on population, he said.

The Adult Use of Marijuana Act, approved by voters statewide in November 2016, allows for state-licensed businesses to start selling recreational marijuana in January.

This story was originally published October 23, 2017 at 5:04 PM with the headline "Ceres taking the lead in allowing pot dispensaries as businesses gravitate to the city."