A New Market

Sacramento pot czar Joe Devlin on how the city is adopting legal cannabis

Back Q&A May 21, 2018

Joe Devlin, Sacramento’s first chief of cannabis policy and enforcement, is the face of the city’s historic efforts to regulate the legal cannabis market. Comstock’s recently sat down with him to talk about what can be expected in the near future for legal cannabis in Sacramento.

Related: We talk to the chief of the Bureau of Medical Cannabis Regulation

Related: Legal weed outlets, flush in cash, struggle to find financial institutions

Sacramento has over a hundred weed cultivators waiting for a city license, with some complaining the delay in licensing is creating supply problems. Why is this taking so long?

Like everything in cannabis, it’s all complicated. We have two groups of cultivators. The first is folks that registered with us before we adopted cannabis regulations. They raised their hand and said, ‘Hey, we’re doing it.’ The exchange was: ‘We won’t take enforcement action against you if you tell us what you’re doing and apply for both the conditional use permit and the business operations permit.’ We now have 170 people registered. Of those, 53 have submitted and received business operations permits and those folks are going through the process. Many of them have received a CUP. Where we’ve run into a challenge … is in issuing them a business operations permit [because] they have a whole bunch of unpermitted work in regard to our building code. We want to make sure these folks operate high-quality facilities, so we’re holding off on issuing business permits until the building folks have said, ‘Yes, this is a safe building.’ We really want to make sure that we have the carrot to encourage them to get into compliance.

Cannabis has been a disruptive economy. It has raised property values, and in the commercial industrial spaces it has raised rents. We’re adding regulation to a multi-billion dollar industry.

Then there is the second group that is not yet operating. For them, the bottleneck is the CUP process. Two things happened. One was the flood of applications. The second was that we had never done this before, and so we weren’t exactly sure what we were looking at. By the time we [figured that out], we had received well over 100 applications, and what was a four-month process became close to a nine-month process.  

There is concern that proposed marijuana businesses are overly concentrated in one area of town. Does location have anything to do with licensing approval?

No. Cannabis businesses are required to meet certain zoning and distance requirements from schools and parks, which really concentrate those available properties into a couple of areas in the city, one being the Power Inn area and one being in the north of Sacramento. It’s really just a function of where our industrial manufacturing land is in the city.

The City has received some pushback on this, correct?

There have been concerns of undue concentrations. We are looking at a cap in the Power Inn Alliance area of 2.5 million square feet of property dedicated to cultivation. That’s about 10 percent of their total square footage. Cannabis has been a disruptive economy. It has raised property values, and in the commercial industrial spaces it has raised rents. We’re adding regulation to a multi-billion dollar industry, and bringing that into safe and legal compliance and applying a set of rules to it is going to be similarly disruptive as businesses like Uber, Lyft and Airbnb.

What steps are being taken to shut down the proliferations of illegal weed delivery programs?

We’ve sent cease and desist letters to Weedmaps, which is one of the biggest advertising companies for illegal deliveries, as well as to the Sacramento News & Review. SN&R very quickly cleaned up their advertising and got into compliance with state regulations, but Weedmaps is still a challenge and is going to continue to be a challenge into the future. And if it’s not Weedmaps, it’s going to be some other version of it. Ultimately, we need to start taking enforcement action against some of the operators.

Are you trying to get delivery services involved in the legal market?

Yes, we are. We’re currently taking applications for delivery-only dispensaries, and we have set up a registry process. After that, we’re going to be looking at taking enforcement steps. We’ve already started internal discussion with our police department about how to go about doing that. Lori Ajax [chief of the California Bureau of Cannabis Control] has been a great partner. She has expressed an interest in doing joint sting law enforcement action because she also sees the problem. It’s going to take a little bit of time, but we will get there on these illegal delivery operators. It’s all a process. There is no way for the transition of a multi-billion dollar industry into a legal infrastructure — that had never been used or applied before — to happen overnight.  

There is growing interest in creating weed smoking lounges. Where is Sacramento in that process?

We don’t have any right now … and in the next couple of months, I believe the [Sacramento City] Council will be having that policy debate. There’s also a question of whether we want to add more storefronts, because right now weed sales have to be done at a dispensary. So we’re ether going to allow onsite consumption at our existing dispensaries or we’re going to potentially add some number of new storefront dispensaries. I think by the summer, the council will begin to have that discussion. Whether they choose to move forward on such a policy or not, we shall see.

You’re a proponent of an equity program to help aspiring entrepreneurs gain access to the legal marijuana industry. How would that work?

Equity is obviously a very big topic within the cannabis space, and it’s becoming bigger by the day. The program we put forward in Sacramento is a market-based approach to encouraging small businesses and small business development across all segments of the industry. Where we landed [is] the establishment of a small business support center that would be run by a third party. [We’re] hopefully starting our core program by summer. It’s designed to be a place where someone who is in the legal cannabis space —  or who wants to be in that space — can go and get help for any of the general business services they might need around cannabis … We’ve also established incentives for folks to house or incubate some of these applicants. So in exchange for housing a potential equity partner, the City [of Sacramento] would do priority processing of their conditional use permit or business operations permit. For those that are in the program, we’re going to be looking at waivers for our fees and/or fee deferrals.

San Francisco is clearing thousands of marijuana convictions, going back decades. There is legislation in the Capitol to do something similar statewide. What would that mean for licensing and operations here in Sacramento?

As part of our small business support and core equity program, one of the services we’re also going to request is the expungement of the records. There are provisions in the law that allow folks that have cannabis-related convictions to participate in the cannabis industry. Our local criminal history requirements mirror those of the state, and look specifically at violent felonies, or those that involve the selling of a narcotic that involves children. But in terms of a mass program in Sacramento, that might be a better question for the [district attorney].

Considering the backlog in processing permits, are you concerned that would make the process even slower?

I don’t know if it would add too many people to the application pool. There are provisions that allow people that have had previous cannabis convictions to move forward as applicants and owners, so I don’t know if it would change it that dramatically. I think it’s maybe more just the right thing to do now that it’s been legalized by the voters. 

What concerns do you have with legal cannabis? TWEET US @COMSTOCKSMAG.

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