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5aa._City_of_Fortuna_HdL_Presentation_09.02.25

Fortuna City Council
September 2, 2025

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5aa._City_of_Fortuna_HdL_Presentation_09.02.25
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September 2, 2025
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Fortuna City Council
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City of Fortuna
Cannabis Policy Study Session
Image Credit: Fortuna Chamber of Commerce
Mark Lovelace
Senior Policy Advisor
HdL Companies
About
HdL
• Municipal finance consulting firm providing revenue
and economic insights to local governments
• HdL Serves:
• 303 cities
• 48 counties
• 108 transaction districts
• We provide sales tax, property tax, business licensing, economic development, and cannabis management
• HdL has provided consulting services to over 175 local agencies to help develop cannabis policies
• Team includes former policymakers, law enforcement
and cannabis regulators with State, county and local
level experience
2 Objectives of Discussion
• Provide brief overview of cannabis policy in California, the Fortuna area and Humboldt County
• Take comments and input from the public
• Discuss and ask questions
• Consider key policy questions before providing direction to staff 3 Business
Types
4 CULTIVATOR

MANUFACTURER

TESTING LAB

DISTRIBUTOR
RETAIL

TESTING LAB

CONSUMER
Cannabis Business Types
5 State/Regional
Environment
6 CA CANNABIS LICENSES AS OF AUGUST 2025
4,775 Cultivation
537 Manufacturer
1,199 Retailers
260 Retailers Non-Storefront
877 Distributors
125 Distributor Transport Only
402 Microbusinesses
22 Testing Labs
46 Cannabis Event Organizers
8,162 Total
7 CANNABIS RETAILERS IN THE FORTUNA AREA
8 CANNABIS RETAILERS IN THE EUREKA AREA
9 RETAILERS IN THE ARCATA/McKINLEYVILLE AREA
10 11
Cannabis Business Types Allowed
City/County Cultivation Retail Wholesale Testing
Humboldt County Y Y Y Y
Eureka Y Y Y Y
Arcata Y Y Y Y
Fortuna N N N N
Rio Dell Y Y Y Y
Ferndale N N N N
Blue Lake N N N N
Trinidad N N N N
Cannabis Business Types Allowed by Jurisdiction
12 Cannabis Taxes and Rates
City/County Cultivation Retail Wholesale Testing
Humboldt County 10¢/20¢/30¢ - - -
Eureka - - - -
Arcata - - - -
Fortuna - - - -
Rio Dell $2/SF 2.0% 2.0% 2.0%
Ferndale - - - -
Blue Lake - - - -
Trinidad - - - -
Cannabis Business Tax Rates by Jurisdiction
POLICY

DISCUSSION
13 A REGULATORY SYSTEM CAN:
 Give the local agency authority and
control over licensing decisions
 Establish facility design and location
requirements
 Impose operating restrictions that are
more stringent than the State
 Enhance accountability for security and
product safety
14 15

ZONING AND

LOCATION

REQUIREMENTS
 City can determine
allowable zones for
each business type
 City can apply other
restrictions such as
setbacks from
schools, parks or
other sensitive uses
• Cannabis businesses cannot be
located within 600 feet of a
“sensitive use,” defined as a
school, day care center, or
youth center.
• Local jurisdictions have the
authority to increase/decrease
buffer distances, and/or expand
the definition of “sensitive use.”

STATE-MANDATED BUFFER ZONES
16 COMMUNITY PRIORITIES
1 2 3 4
Public Safety Public Health Neighborhood
and Land Use
Protection
Preventing
Youth Access
17 • Existing State Law:
• Security personnel on-site during all
hours of operation
• 24-hour video surveillance
• Alarm systems monitored by third-party
• Limited access areas
• Sign-in/sign-out procedures
• Employee badge requirement
• Criminal background checks of owners

PUBLIC SAFETY
• City Regulatory Authority:
• Motion sensor lighting
• On-site safe/vault
• Security patrol or presence when closed
• Annual compliance inspections/
financial audits
• Criminal background checks of
employees
• Limitations on amount of cannabis
goods in retail space
18 PUBLIC HEALTH
• Existing State Law:
• Third-party testing for mold, pesticides,
and other contaminants
• Product labeling / dosing
• THC concentration limits
• Daily purchase limits for customers
• No public consumption
• Dedicated public health program
funding through cannabis tax revenue
• City Regulatory Authority:
• Warning signage inside facility
• Display of CDPH health pamphlets
• Visibility restrictions
• Budtender training program
• Annual public health fee
• Allocation of tax revenues to fund local
public health programs
19 LAND USE PROTECTION
• Existing State Law:
• Sensitive use buffer requirements
• Cannabis waste disposal requirements
• Cannabis goods display only in retail area
• Opaque exit packaging requirement
• Shipment of cannabis goods may only be
accepted during business hours
• Mandatory 10PM closure
• City Regulatory Authority:
• Exterior lighting + landscaping
• Stringent facility design standards
• Strict enforcement of odor control
• Exterior waste receptacles and
scheduled cleaning
• Designated community liaison
• Prohibition on queue outside facility
• Further restrictions on hours of
operation (e.g. 9PM closure)
20 PREVENTING YOUTH ACCESS
• Existing State Law:
• Retailers cannot sell cannabis to persons
under 21 (or 18 with a valid doctor’s
recommendation)
• ID verification prior to entry
• Employee presence at all times
• Track and trace of cannabis goods
• Tamper-evident child-resistant packages
• Product warning labels
• Universal cannabis symbol:
• City Regulatory Authority:
• Underage decoy program
• Routine inspections
• Funding of youth prevention services
using cannabis tax revenues
• Annual license renewals with automatic
revocation for underage sales
• Prohibition on temporary signage
21 REVENUE GENERATING STRATEGIES
Standard fee to
recover City
administrative
costs
General tax to be
considered by the
voters
22 Operational /
Community
Benefit
Agreement

CANNABIS

RETAIL TAX

REVENUE
Annual Retail Cannabis Tax Revenue
 Potential cannabis retail sales:
 $3.5 million to $5.5 million
 Potential cannabis tax revenue:
 $180,000 to $320,000
 Depending upon tax rate
 Plus $45,000 in sales tax
23 Key Policy Decision
Does the City want to maintain the current prohibition
on commercial cannabis businesses
or
Does the City want to develop a program to permit
and regulate commercial cannabis businesses?
24 Key Policy Decisions
• Which business types to allow?
• Storefront retail? Delivery? Cultivation?
• Does the City want to limit the number of businesses? • Where would each business type be located?
• What kinds of buffers, setbacks and other restrictions? • What kinds of security measures?
• Does the City want to impose a revenue measure?
• Voter approved Tax? Operating agreements?
25 Questions?

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