UPDATE: This story has been edited to reflect that Modesto expects to collect at least $1 million annually from its cannabis business tax. A city official had initially provided an outdated estimate of $5 million.
Modesto expects it could start accepting applications for permits for marijuana businesses as soon as the middle of January and start issuing permits as soon as the middle of February, according to the city’s community and economic development director.
The City Council gave its initial approval for allowing commercial enterprises — including as many as 10 dispensaries — at its Dec. 12 meeting. The vote was 6-1. The council is expected to give its second and final approval at its Jan. 16 meeting and the regulations would take effect 30 days later.
The council will approve the permits for the businesses. Community and Economic Development Director Cindy Birdsill said that will come after city staff has vetted the businesses, including conducting background checks and reviewing the businesses’ security plans.
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Birdsill said the council could start issuing permits as soon as the city’s regulations take effect in mid-February. “Our goal is to do this as quickly as possible,” she said. But she acknowledged that may be an ambitious timeline and is contingent upon getting background checks completed.
Proposition 64 — approved by voters in November 2016 — legalized cannabis for adult use and makes cannabis businesses legal as of Jan. 1 if they have a state license. The law also lets local governments set their own regulations, including banning businesses.
Retired Modesto cardiologist and real estate investor Stephen Endsley said he purchased the former Post Foods building on East Whitmore Avenue in south Modesto with the intention of leasing space to marijuana businesses, including growers, a dispensary, testing lab, and a company that would extract the oil from the plant to make medicine.
Endsley said he has had informal discussions with the city and small, local growers approached him about doing this. He said marijuana businesses could occupy about 220,000 square feet of the 272,000-square-foot, six-story building and employ as many as 100 people in well-paying jobs. He said the site would be called the Professional Cannabis Center and have 24-7 security, including guards.
But others have questioned the costs — including the potential for crime and substance abuse — of legal marijuana and say they outweigh the benefits.
Modesto can impose a cannabis business tax of as much as 10 percent on businesses’ gross receipts. The tax is expected to bring in at least $1 million annually, according to the city. The tax proceeds will be used to cover the city’s costs of dealing with marijuana, such as increased law and code enforcement.
Modesto’s regulations allow for such activities as indoor cultivation, manufacturing and distribution in areas of the city zoned for industrial uses. Dispensaries can be in industrial and commercial areas. Birdsill said the most likely commercial areas for dispensaries are along some parts of McHenry Avenue and Yosemite Boulevard.
The council decided not to allow dispensaries in downtown and banned outdoor commercial grows and delivery services.
Modesto also is restricting where businesses can locate by placing buffers between them and homes, schools, parks and other land uses. For instance, a marijuana business needs to be at least 600 feet from schools, day cares and youth centers, 200 feet from parks, and 100 feet from residences.
Kevin Valine: 209-578-2316
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