Cannabis in Colfax: Medicinal expanded, recreational retail still far off

On Aug. 26, the Colfax City Council approved two resolutions in a unanimous vote to expand commercial cannabis business within the city. According to Colfax City Manager Wes Heathcock, the approval of the resolutions will assist in expanding commercial cannabis activities such as testing, indoor cultivation, manufacturing and distribution, and likely provide "more revenue opportunities for the community." "... Cannabis sales have been a reality in Colfax for over a decade," Councilmember Trinity Burruss said. "My hope is that we can support legally operating businesses and benefit our taxpayers mutually. It is not in our citizens' best interest to have a string of businesses open and close because the competition is oversaturated on the retail side while the small businesses lack access to licenses that would lower their costs. By allowing the well-regulated process beginning to end, we are able to reduce rates, increase tax revenue and hopefully undermine the market for unethical or unlawful operations." Councilmember Kim Douglass said since 2012, the city has spent more than $400,000 in consultant fees, studies and attorney fees due to a change in the attitude of the council toward cannabis over the years with administration changes. Councilmember Joe Fatula said the costs have been totaled and embedded in the license fee for the city to recoup those costs. He said the license fee will eventually decrease once Colfax has recouped those costs. According to the 2016 Statement of Vote, Colfax residents voted yes on Prop. 64, marijuana legalization for adult use 462-342. Based on those results and feedback she has received from her constituents, Burruss said citizens support the direction she is advocating for cannabis. Said Fatula, "My belief is the recreational piece will have a hard time going forward." Fatula said when he walks around town, 85 to 90 percent of the people he talks to are in favor of the medical component but not the recreational. "There's a group of people that are going to be in favor of it for limited use, like the medical piece, and there's going to be a group of people that want it for recreational use," Fatula said. Applications are available for eight cannabis business permits, with a maximum of two permits designated for each activity. Burruss said separating the licenses provides the applicants with more flexibility, as all functions would not have to operate at the same premises. According to the application guidelines, two microbusiness permits, meaning businesses that conduct at least three of the activities in addition to retail, are also available if the applicant applies for and is awarded permits for cultivation, distribution and manufacturing. "I felt that our ordinance (Ordinance 535 and 536) did very little for Colfax residents but created a lot of industry pressure and competition for too many retail licenses in our small town, and by extension created a liability to the city," Burruss said. "It made more sense to me to break out the individual licensing types to allow for a more sustainable business model where product could be ethically and locally sourced. It would also allow our taxpayers to enjoy the full benefit of the expanded tax revenues through industry diversity versus oversaturated competition." "If you're allowing for the customer to get it in the end as medical cannabis, why would you restrict a person on whether they could buy it in bulk and break it up into pieces? So I think the microbusiness licensing was kind of a no-brainer from a city standpoint because it doesn't change the end result," Fatula said of allowing medical cannabis retailers to conduct more than one activity. Colfax only allows retail for medicinal cannabis. The only medicinal cannabis retail store in Colfax is Golden State Patient Care (GSPC) at 233 Highway 174. Heathcock said the city had not received any applications as of Oct. 13. Applications will be accepted until Nov. 24. Applications will then undergo a 30-day review period where staff and applicants can address deficiencies and questions. License recommendations will then be provided to the City Council before the final decision. Heathcock said permits will not be issued until Jan. 1, 2021. He said the application process will allow the city to "expand the activities through a very regulated process." "Our motivation in writing such a robust policy is to ensure we are doing things right the first time," Burruss said. "We have to tread a careful line to protect our city on a federal level, and frankly, the enforcement and guidance from the state leaves a lot to be desired versus alcohol and tobacco. We are really left to just figure it out. This is why we brought in industry experts (from SCI Consulting Group) to ensure our policies are fair and effective." GSPC owner Jim Dion, who runs the store with his children, completed the application for all the licenses in 2017 and said the entire process took six months. He was approved only for the medical retail license. Dion said he continues to fight for adult-use retail to be approved in Colfax and attends City Council meetings to keep the discussion open. According to the minutes of the cannabis workshop meeting May 27, the council discussed the allowance of adult-use retail in Colfax. Four council members supported keeping cannabis retail as medical only; Burruss stated she supported adult use and wanted "the ability to consider a second retail location." Dion said the expansion of cannabis activities without the allowance of adult use is fueling the black market. "The denial of the license has unduly limited the development of the legal market so as to perpetuate the illegal market in cannabis," said Dion's son, Tim. Fatula said the restriction of cannabis needs to be addressed at the state level, as the state allows for deliveries anywhere, which the city does not control since it is California regulation. "My view is this is not a city issue, it's not a county issue," he said. "It's a state/federal issue. Go fix the problem where it needs to be fixed." Fatula said the city and county cannot supersede the federal regulation, and if state regulations are changed, they will need to be sensitive about what happens in Colfax. According to Jim Dion, having adult use approved could help cut down on individuals buying cannabis from the black market, as stores with the license are not limited like stores with a medical-only retail license and can have both adult use and medical retail. "We need adult use for the benefit of Colfax," he said. Dion said another benefit of having the adult-use license is it could bring additional revenue to the city, as he wouldn't have to continue turning away individuals who do not have a recommendation from a doctor. In 2019, Dion said he paid $35,000 to Colfax and $60,000 to the state of California for sales tax. "I'm fighting to get this adult use because then it'll at least double these costs," he said. "I'd be giving the city of Colfax $70,000 a year, minimum, and the state of California $120 (thousand). "It's about time people of Colfax realize that hey, this is a lot of tax money we're throwing away." After a three-year battle with the city, the Dion family obtained a manufacturing and distribution license from the state. "This has always been near to our hearts, but unfortunately, the medical cannabis industry is a dying business in California and if you look at statistically, little guys like us, mom-and-pop shops like us, we won't be around," said Dion's daughter, Wendy Dion. "We can't make it against the big guys, especially if we're medical only. It will put us under because we can't compete." Said Burruss, "My opinion is that we should allow for it to be licensed here, and I would be willing to vote yes on it immediately. The truth is that you would have to be in perfect health, and I mean PERFECT, to be ineligible for a prescription as it is. Adult use is already available for purchase here through delivery, but instead of collecting the tax revenues, we are watching it drive away to neighboring jurisdictions. I have a huge ethical opposition to us applying sales tax to anything which is considered by law to be medication. My desire would be to allow adult-use sales and do away with the added taxation of medicinal cannabis." "I'm not a person in favor of cannabis but for the medical situation, it seems to be something that's helping people," Fatula said. "I'm not in favor of the recreational." "The human species has always suffered from psychological and emotional problems and frequently turned to quick and easy solutions which usually create a new set of problems which then require even more resources to solve them," Douglass said. "We already have one imperfect solution: alcohol. Adding another crutch, cannabis, will cause mankind to limb even more toward self-fulfillment." According to Dion's son, Nick Dion, having a medical-only license limits the amount of product they can obtain so they avoid throwing out unsold product. "If we had the adult use, it would be like the rest of the state operates," Nick said. "We'd probably be able to succeed, maybe give our staff raises or pay for healthcare. … We're not in the position to be able to buy anything commercially because we don't move that much product. We move what we can." Despite the limitations, the Dion family remains hopeful and looks forward to expanding the business. They plan to utilize the parking lot space in front of the store to develop a new building, which would be used as a storefront for recreational and medical retail. "We're not trying to hurt anybody, we're just trying to expand our business as well," Wendy said. "Everyone's allowed to do that." Jim Dion said he would next like to see the council agendize the discussion of allowing adult use in Colfax. "It makes sense," Jim said. According to Douglass, the medicinal program is still in the pilot study and would need to be concluded before the city considers opening the cannabis door wider. "Civilization should progress in baby steps, not taking giant leaps by making everything legal," Douglass said. Douglass said he believes the issue should be put on the ballot and settled by voters instead of the council. Burruss encourages anyone in the community to share their views during a City Council meeting. "I am always more than happy to hear from anyone who has another perspective they wish to share," she said. "I would encourage everyone to join our meetings and be an active participant. If you live here or have a vested interest in our town, you deserve to have your voice heard."