The initial costs of opening a cannabis business in San Luis Obispo and Lompoc

Dec 20, 2018

The city of San Luis Obispo will start accepting applications for cannabis businesses on January 7, 2019. There are just three licenses available for retail storefronts. City officials have already figured out where those three stores can go, and the taxing structure is in place. There are no limits on the number of manufacturing, distribution, testing and delivery businesses that can open.

But no matter what kind of businesses, in order to get a permit from the city, owners are going to have provide a lot of detail on their plans, and have a healthy chunk of change ready. The permit alone costs $22,519. And annual permit fees will cost anywhere from $65,000 to $90,000 in San Luis Obispo.

Jim Throop is the city manager of Lompoc. He says there is no limit in that city on the number of cannabis businesses—retail and otherwise—that can open. City staff are currently processing 26 applications.

“And of those 26, as of today, we just signed off on number ten,” Throop said. “So that gives them the license to proceed here in the city, and then next steps for them would be to pull permits for the plans and whatnot to eventually get their business open and running.”

In 2019, several cannabis storefronts are expected to open along Ocean Avenue, one of Lompoc’s main thoroughfares. Throop says the city isn’t exactly looking to become the cannabis capital of the Central Coast; it’s a matter of revenue.

“We're in a position right now that we need to either make some substantial cost reductions or find another way to increase our revenues,” Throop said. “This was one of the ways we looked at increasing revenues; that was one of the driving factors.”

Lompoc is charging a minimum of $13,000 for the initial application fee, but has not stipuated any annual permit fees. Throop said the paperwork involved in processing all these new businesses is substantial and the city hasn’t hired any new staff; current staff are doing it on top of their regular duties.

“Anyone who wants to come to town—we are trying to be as business friendly as possible,” Throop said. “I think trying to get through these, as quickly as we have, is kudos to our staff for taking that on, but also to let those that are trying to do business here know that we'll do whatever we need to do to be open and receiving to their business.”

The city of Lompoc has also assisted its cannabis business applicants with securing their state licensing.