Central Coast Curious: The cannabis industry in SLO County, two years after Prop. 64

Nov 18, 2018

Here's another segment from KCBX News’ Central Coast Curious project; we take listener questions  submitted at our website, KCBX.org, and send our reporters out to find answers. This time, our question focuses on cannabis. Listener Charlie Blair wondered how commercial, recreational cannabis has impacted the Central Coast economy so far. Contributor Menaka Wilhelm took a look at the industry in San Luis Obispo County.

When Proposition 64 landed on the ballot in 2016, KCOY newscasters described it as:

[Sound bites of newscasts: KCOY: “One of the most controversial measures on the ballot. Proposition 64 is causing quite the stir in San Luis Obispo County. If passed, it would legalize, regulate and tax recreational marijuana for users 21 and up.”

Prop. 64 passed in San Luis Obispo County with support from roughly 60 percent of voters. But the law left lots of decisions to local governments. So two years later, commercial cannabis is off to a slow start.

Until a few weeks ago, Megan Souza of Megan’s Organic Market grew and sold cannabis across San Luis Obispo County as a delivery business.

From her vantage point, Prop. 64 has actually hurt her business over the past two years.

“It's a lot harder to get cannabis now, than it was before Prop 64, because retailers are not able to get licensed, and so there are just not enough retail outlets,” Souza said. “ People are still buying from the black market.”

To get a state license, cannabis growers and retailers have to show that they’re operating within all the local rules. But if city ordinances don’t exist, or local governments haven’t approved permits, cannabis retailers are stuck.

Although she's been operating legally for years, Souza had to stop her delivery business because she couldn’t get a county license, which in turn prevented a state license. And because she didn’t have a state license, she couldn’t source her products from legal vendors.

“The main issue that we’re having as local industry stakeholders is that SLO County has been moving way too slowly,” Souza said. “Much more slowly than neighboring counties like Monterey and Santa Barbara, who have already permitted cultivators.”

Souza has opened a CBD shop in Morro Bay, selling a range of products featuring cannabinoid, the non-psychoactive part of the cannabis plant. And she is waiting to find out if her application for a storefront license will be approved by Morro Bay city officials. 

San Luis Obispo County’s planning and building commission has gotten more than 70 applications for cannabis related permits this year—but only a few have been approved. The county’s deputy director of planning and building, Rob Fitzroy, said the county will hire more people to help review those applications.

Ultimately, the county’s decisions have the biggest effect on unincorporated areas—cities like Morro Bay and San Luis Obispo make the calls that govern businesses within their jurisdiction. That makes for a pretty varied landscape.

San Luis Obispo New Times reporter Chris McGuinness has been covering cannabis in the area since before Prop. 64 passed.

“It is a bit of a patchwork, Prop. 64 and the cannabis regulations in the state do give cities and counties a lot of local control,” McGuiness said. “What’s really interesting to me is that you can see the character of various cities and how they want to handle it.”

Especially in San Luis Obispo County, McGuinness says commercial cannabis is really just a fledgling industry getting off the ground—so it’s hard to say how the industry will really impact the area.

“If you think about it, this is almost a brand new—not only just a brand new industry, but it’s a brand new regulatory scheme as well,” McGuiness said. “The Bureau of Cannabis Control is still amending and hammering out regulations, and especially because you’re bringing an industry that used to be in the black or grey market, really out. Also because everyone’s king of doing something a little different, it’s going to be a while before we can definitively say what the impact on the county is going to be.”

In the most recent election, several cities passed cannabis business taxes—a step in the bureaucratic process towards storefronts. That list included Paso Robles, Atascadero, Morro Bay and San Luis Obispo in San Luis Obispo County, and Lompoc, Solvang, and Goleta in Santa Barbara County.

But there’s still some concern among some residents about cannabis businesses moving into San Luis Obispo County, and the spectrum of commercial cannabis includes plenty of particularities.

“The full array of cannabis businesses in the licensing landscape are everything from the nursery to the cultivator,” said Adam Laurent, the interim president of the Central Coast Cannabis Council. “To the manufacturer, and edibles producer, distribution transportation, lab testing, and then the retail side, and that’s either brick and mortar dispensaries or delivery.”

One day, Laurent hopes that central coast cannabis will be, kind of a big deal.

“In the same way that wine, and other produce that comes from here, sort of has its own brand panache,” Laurent said.

But so far, that’s not happening very quickly.

KCBX's Greta Mart contributed to this report.