Paso Robles City Council
August 19, 2025

Paso Robles Cannabis Regulations
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skills and in the long term it makes you lazy and borders on Schizophrenia diagnosis in some cases! It decays the human spirit.
465 Treat it like wine and beer. Both are a big part of our local economy. Let’s not make a big deal out cannabis. There’s no difference from other substance adults consume for recreation. 8/13/2022 4:05 PM
466 We need a recreational marijuana storefront in paso Robles it Would be more convenient for residents of the city
8/13/2022 3:44 PM
467 Alcohol is addictive cannabis is not. We have hundreds of Wineries and tasting rooms in our area just contributing to Drunk Driving
8/13/2022 3:32 PM
468 The organized criminal front groups of Megan's Organic Market, Natural Healing Center, and SLOCAL ROOTS should be disqualified from the application process in Paso Robles. They are controlled and are partnered with Helios Dayspring. They also have admitted to fraudulently obtaining the permits they currently hold in City of SLO. 8/13/2022 12:21 AM
469 We need to utilize the taxes that would be generated to fund mental health programs and homelessness in the city. The cannabis business should be required to campaign for responsible cannabis use and educate the public.
8/12/2022 10:24 PM
470 if we can have commercials and billboards and gas stations on every corner that blatantly promote addictions like alcoholism and tobacco use to both adults and minors, I see no problem with cannabis use. Maybe instead of letting some old “reefer madness” ads from your childhood lead your decisions on such a minor issue you should probably be taking care of our horrible roads and school system and treatment of the homeless by the community and police force. Should be working on rehabilitation of our community instead of pandering to the older generations of outdated thinking. Also our whole city looks horrible. There’s trash everywhere you look. Maybe use some of that money to clean up our community. I see no pride from the leadership in this city. Good job. -Andrew
8/12/2022 10:00 PM
471 People are already using recreational cannabis. Store front cannabis retailers is a strong tax revenue opportunity for the community. Models such as Megan’s Market in SLO have proven to be safe, aesthetic, and good successful. Not doing so is missing an opportunity to benefit from something already happening and improve our public safety and community growth. 8/12/2022 9:34 PM
472 It seems to me that Medicinal Marijuana should be treated more like a Pharmacy and Recreational Marijuana should be treated like a Winery or Wine-Tasting Room. I understand that some Cannabis businesses want to do both, but I feel that the two are entirely different uses and should be subject to different regulations - the regulations that apply to each use - respectively. I think the hours should NOT start at 6am. The hours of operation should match the other businesses located nearby.
8/12/2022 9:17 PM
473 I believe the city of Paso should allow the 2 current cannabis operators to move forward. They should be Grandfatherd in. If a business has shown to have been upstanding then I feel it is correct to allow them to move to the next level. If these business have been in operation for a awhile and the city is familiar with them then start with these companies. 8/12/2022 5:53 PM
474 We allow the legal products of alcohol and tobacco products to be sold within the City of Paso Robles. Cannabis is a legal product in California. The same rules used for alcohol and tobacco consumption should be applied to cannabis products. If cannabis storefronts a limited in location liquor stores should have the same restrictions applied. It is time for Paso Robles residents to have easier access to this legal products and the City should receive the tax revenue now going to San Luis Obispo, Morro Bay, and Grover Beach. 8/12/2022 5:20 PM
475 I think access to licensing should be given out based on a ranking system with weighting being given to board reviewed proposals listing what benefits each business plans on bringing to the community. Maybe also introduce contributions to a fund that works with addiction specialists - while marijuana may not have a physical or chemical dependence, it may have a physiological dependence, and it's important to be able to help those looking to quit and may not have the resources to do so themselves.
8/12/2022 3:28 PM
476 Cities that have allowed businesses to develop have already proven how safe and how much money can be raised. Many of the stores are similar to high end retail shops. 8/12/2022 2:46 PM
477 AS the Templeton Area Advisory Group (TAAG) Board member I Have been heavily involved in assessing and interacting with SLO County Planning, Code Enforcement and other related 8/12/2022 2:38 PM
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Paso Robles Cannabis Regulations
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County agencies regarding proposed SLO County Cannabis Land Use applications and permitting activities since 2018.
478 Medical patients should be exempt from the sales tax. Seems like that is unnecessary to tax them to alleviate their pain or side effects from cancer. 8/12/2022 12:03 PM
479 The only way to properly judge a cannabis dispensary and how they look, conduct themselves and impact their surroundings, is to visit the existing stores in other cities. You can not make a judgment until you see for yourself what these stores are truly all about. 8/12/2022 10:44 AM
480 Cannabis has been shown to reduce the effectiveness of the individual. Increasing our access will have a correlation to our citizens. Our town is also very small and there are not good locations away from areas of concern (schools, churches, parks etc). This is not a productive use of our space, time, and energy. We can attract better businesses than this that will build Paso's reputation - which is more desirable than adding the availability of recreational use. 8/12/2022 10:06 AM
481 It’s less dangerous than the wine that the city has based it’s whole economy on… 8/11/2022 10:10 PM 482 This would be one of the best things to do, to instantly raise tax revenue in paso. 8/11/2022 10:07 PM 483 All businesses should be expected to provide a living wage, insurance, and paid time off. 8/11/2022 8:53 PM 484 Open a dispensary now. The city is missing out on big tax dollars. 8/11/2022 8:16 PM 485 I think by adding store fronts for legal purchase of cannabis would add to the diversity of the city of Paso Robles. Alcohol a.k.a. wine and beer are addictive, cannabis is not. 8/11/2022 7:04 PM
486 Cannabis should be treated like any other retail business. 8/11/2022 6:03 PM 487 My wife and I are both high earning business professionals that are very active in the community focused on having a positive impact. We are parents. I do not drink as I have seen and experienced the negative impact alcohol has. Marijuana is much safer in my opinion and can provide tax dollars to the community.
8/11/2022 3:49 PM
488 Our city basically survives on alcohol and tourism. Weed is a tourist attraction for people from out of state just as much as Justin’s winery is. So what’s the difference between 700 wineries and 5 cannabis stores.
8/11/2022 3:44 PM
489 Keep it simple smartie.please. 8/11/2022 3:14 PM
490 Do not let the satanic libs take over our small town values. 8/11/2022 3:12 PM 491 Cannabis should be treated like alcohol, with fair and equal taxation, requirements, etc. 8/11/2022 3:12 PM 492 Overall this is a bad idea for the City of Paso Robles. They are understaffed to enforce anything and have too many other projects in the City.
8/11/2022 3:04 PM
493 This is a huge mistake for the City of Paso. This appears to be a money grab without any consideration for the fingerprint of the City itself. We are a wine/Ag community, not pot heads.

Weed will cause higher DUI's, there will be robberies, there will be issues associated. To think that there will not be is both naïve and shortsighted.
8/11/2022 2:53 PM
494 This is a terrible idea and will do nothing to benefit the city of Paso Robles. If you are doing this for the money, it wont be worth it, you will see costs go up drastically for other services related to dealing with the increased marijuana use and store fronts. 8/11/2022 2:39 PM
495 Paso Robles has profited off of the wine and alcohol businesses that you find on almost every street corner of downtown for decades at this point. Time for y'all to join the 21st century and treat the cannabis industry in a similar way.
8/11/2022 2:26 PM
496 Marijuana and cannabis should not be allowed anywhere in the city of Paso Robles - no good will ever come from it.
8/11/2022 2:09 PM
497 I believe that we should have a dispensarie here because most cannabis shops that I know and have been too are very clean and nice. And they have no odor at all. . They have limits of how many people go in and they are very clean
8/11/2022 1:47 PM
498 Treat it like alcohol 8/11/2022 1:09 PM
499 We have a unique opportunity to be progressive and make a lot of money for our city and much needed infrastructure upgrades. It would be a shame to let this pass us by without being 8/11/2022 1:08 PM
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Paso Robles Cannabis Regulations
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fully educated on the topic.
500 This survey does not appear to be geared toward whether or not I would like to have cannabis dispensaries in our city, but rather, how they should be regulated. I get the sense that the city council has already made up it’s mind to allow these businesses rather than really seek the community’s opinion. This seems to be a current trend in “public service”, whether at the local level, state level, or national level. That’s too bad. I have no doubt that dispensaries will bring more crime, more addiction, and more calls for police service. I really hope the city council will consider these things, and give them the weight they deserve rather than just continuing to focus on the bottom line. “For the love of money is the root of all kinds of evils”. 8/11/2022 1:07 PM
501 Any restrictions placed upon cannabis businesses should be no more restrictive than those placed on wi wine tasting rooms, bars, or liquor stores. 8/11/2022 12:54 PM
502 Just like alcohol. Cannibas should not be used when driving. Personally I feel like people smoking Cannibas r far less unlikely to violent. Alcohol causes far more problems in society than cannabis. This is my opinion
8/11/2022 12:49 PM
503 N/A 8/11/2022 12:26 PM
504 Good luck with this one 8/11/2022 12:02 PM
505 Folks is 2022 and we know marijuana is safe and has many medicinal uses. It would be almost laughable for this not to pass since we live in a town that is built on wine and now microbreweries. Come on let's be real and keep growing this city. There's many more deaths and crime because of alcohol then marijuana.
8/11/2022 12:01 PM
506 I'm a born and raised North County Resident and I'm appalled by having to drive to another city in our County to make legal purchases and spend tax dollars when those tax dollars could well be spent at my home city!
8/11/2022 11:53 AM
507 Paso should consider cannabis as they do alcohol. Cannabis consumption may include additional unpleasant aromas that are less controllable than those of alcohol, but cannabis is far less detrimental to health. Public consumption/intoxication should be handled similarly to alcohol.
8/11/2022 11:44 AM
508 I think the money from the taxes will benefit Paso in many areas. There isn’t an odor or loitering at other dispensary’s now. The business are clean and nice unlike many of the restaurants in Paso now.
8/11/2022 11:38 AM
509 A competitive process will result in high quality operators. 8/11/2022 11:36 AM 510 Since Dubs paid off Cheif Burton it has allowed a monopoly of overpriced cannabis. Small guys shod be allowed first.
8/11/2022 11:13 AM
511 Too many of the questions were hard to answer because there was no way to separate "if" cannabis was allowed. I think only one questions said "if" approved. So it would appear I agreed to let's say, space around a church when in reality i don't approve of storefront sales of cannabis at all so the question is irrelevant. There should have been a choice to denote that. 8/11/2022 10:54 AM
512 Alcohol is much worse than cannabis. 8/11/2022 10:44 AM 513 Incredibly long survey…when I see surveys like this I feel like whoever is sending the survey out doesn’t really want most people to fill it out.
8/11/2022 10:38 AM
514 As someone who can't function due to chronic pain, I would love to have access to more dispensarys
8/11/2022 10:31 AM
515 We already have a lot of drinking and driving. Adding cannabis to that is just asking for trouble.

Also would kill the small town feel of the area. It's tacky and unnecessary. 8/11/2022 10:24 AM
516 Corruption in cannabis industry in this county being investigated by FBI. This network of corruption has been in place for several years, and some of same players are positioned to set up in Paso. Until it's cleaned up, take care of your local med delivery and let him also sell recreational. No rush for our city to get tainted by the negative press. 8/11/2022 10:01 AM
517 I don't want these located next to my business. It will be tricky finding the correct locations. 8/11/2022 10:00 AM 518 The downtown has over 35 places to go drink. That's just a fact. Cannabis retail will bring in much needed revenue for the city to improve roads and quality of life for locals. I work at a 8/11/2022 9:48 AM
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Paso Robles Cannabis Regulations
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winery and the double standards surrounding cannabis from people who drink is astounding. I agree cannabis use businesses should be a reasonable distance from the park and library, but there should be no hesitation in allowing these businesses to thrive! Should be considered no different than an the alcohol allowed to be consumed in this town. 519 I strongly disagree with any initiative to bring retail cannabis (and related products) to storefront sales in Paso Robles. For any council member that votes in favor of this, I will vote for their opponent in the upcoming elections.
8/11/2022 9:31 AM
520 I think it would be a benefit to the city. 8/11/2022 9:30 AM 521 It would be nice giving back to our community instead of driving somewhere else for example or are you a Grande Santa Maria Morro Bay I San Luis Obispo why not put our money into our town?
8/11/2022 9:08 AM
522 I was under the belief we voted not to have storefronts for the sale of cannabis yet the city is pursuing this tax cash cow. We already have a vagrancy issue now the city wants to add even more crime notwithstanding the driving while intoxicated problem. At minimum this issue should be voted in at large rather than the city looking for more tax revenue through city council approval. I am not opposed to medical cannabis use or deliver but I am strongly opposed to storefronts encouraging cannabis usage in public. 8/11/2022 8:25 AM
523 I oppose cannabis buisnesses coming into Paso Robles. Paso needs to keep the big city stuff out! We've already got problems with drinking/driving and this will just add to the mix. 8/11/2022 8:20 AM
524 The city should have approved dispensaries years ago. We have missed out on that tax revenue for far too long. If you visit other dispensaries in our county you will find the store fronts are attractive, well maintained, and inviting. Paso needs the diversity . Paso should place no additional taxes above the State mandated minimum on any dispensaries. 8/11/2022 8:16 AM
525 If allowed the store fronts should be mandated to have security guard for parking and entering/exiting premises.
8/11/2022 7:41 AM
526 Downtown paso is so beautiful! I would add that retail storefronts must conform to any design requirements for downtown as well as limits on obnoxious signage. 8/11/2022 7:40 AM
527 I believe the city should move quickly to get cannabis retail in the city. Currently have to drive all the way to Slo
8/11/2022 6:24 AM
528 NA 8/11/2022 3:41 AM
529 Think you should follow the same rules that the other cities in SLO county have already been successfully following for past 3 years. No need to reinvent any wheels. Obtain best practice info from each city and consolidate information and make rules for PR based on that info.Thought the city previously hired a company to make recommendations to the city. Where are those recommendations?
8/11/2022 12:28 AM
530 For many of the reasons selected, I am opposed to cannabis businesses in Paso Robles. In particular, safety is a concern and easier access for teens. 8/10/2022 10:12 PM
531 Thank You for the opportunity to contribute 8/10/2022 9:40 PM 532 There are PLENTY of legal ways to get cannabis around this county. We do not NEED to have cannabis stores IN Paso Robles.
8/10/2022 8:30 PM
533 We should NOT have any more cannabis related businesses in the city. I am confident that this will probably be approved because at the end of the day all the city council sees is more money through taxes rather than the side affects these businesses have on our kids and the number of people that already struggle with addiction issues this will just make it worse. 8/10/2022 8:18 PM
534 Marijuana sucks. We do not need people thinking it's okay for them to walk around the town we live in smoking weed. It's disgusting and not everyone wants to smell it. 8/10/2022 8:15 PM
535 Downtown is full of shitty bars. These would be significantly less disruptive, provide additional revenue, and move our City forward into the future for new growth. 8/10/2022 8:11 PM
536 It would be a low impact way to bring additional funds to our city. These stores are clean and held to high standards. It would be less disruptive than the crowd outside Pappy's on a weekend evening. Allow the shops!
8/10/2022 8:07 PM
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Paso Robles Cannabis Regulations
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537 It is legal in this state just like alcohol. It should be legally accessible to purchase if someone so chooses. The tax revenue it would generate for our community would be huge. 8/10/2022 8:04 PM
538 Give other business owners that are in the industry the first opportunity to open a business in town that aren’t already operating in the city. I don’t think it would be fair to let the businesses that already deliver to open storefronts also, it would create better competition and share the business opportunity.
8/10/2022 7:32 PM
539 It’s 2022. Please stop making us drive down to SLO. We could use those tax dollars here in Paso Robles. I am a mom with young kids and I fully support bringing these businesses into Paso.
8/10/2022 7:31 PM
540 I think Cannabis regulations should mirror EXACTLY the regulations for businesses that serve/sell alcohol *with the exception* of smoking said products, because the smell is highly offensive (as is the smell of tobacco) to many people. Otherwise there should be no difference.

I say this as someone who does not use Cannabis in any form. 8/10/2022 7:03 PM
541 people are going somewhere else to get it we need the tax dollars to improve our roads ect ! ITs better than alcohol !!!
8/10/2022 6:53 PM
542 With reasonable precautions taken, cannabis businesses should be treated as other retail businesses are treated. How are liquor stores and wine and alcohol businesses treated? Weed stores should be treated similarly.
8/10/2022 6:13 PM
543 Tell me why people can get drunk at bars and wine tasting establishments but it not OK for them to smoke weed? These shops should have no more regulations and taxes than a liquor store.
8/10/2022 5:54 PM
544 I am highly concerned that a visible retail cannabis presence would have a dramatic affect on the City image that currently attracts well-heeled travelers to our world class wineries, restaurants, and vibrant downtown. Retail cannabis may impart a negative & gritty aspect upon our hard-fought upscale image that makes us such a popular weekend and vacation destination.
8/10/2022 5:44 PM
545 I hate that our beautiful city is even considering this. It will trash our reputation and allow drugs into our community, hurt our children with easy & illegal access to pot. The homeless population will now be stoned & stuck here. Stop any forms of drug use in our city! Shut this down now! Vote to keep it away from Paso! This is not okay! 8/10/2022 5:26 PM
546 Fair taxation and following state guidelines with no consumption on grounds. If someone is under any impairment that affects judgement should be treated as anyone under the influence. 8/10/2022 4:53 PM
547 I hope we allow cannabis store fronts as it will improve tourism and help our local economy in multiple ways.
8/10/2022 4:29 PM
548 Catch up with the times! You are missing out on millions of tax revenue for your city! 8/10/2022 4:25 PM 549 Legalized marijuana is a horrible way to generate income through taxes. 8/10/2022 4:19 PM 550 I believe people should not drive impaired including wine tasting, drinking at bars , restaurants or pot! I believe Paso would financially benefit from cannabis stores. They are just like a liquor store. It’s not like wines tasting we’re you consume the product on site. Also lots of tourists would be spending more money!! That’s more taxes for Paso = more improvements!! Please try to be open minded people.
8/10/2022 4:19 PM
551 Irresponsible persons are already using cannabis in public spaces and driving under the influence. This is NOT a new market and these behaviors are unlikely to change from how they already happen without storefronts in the city. If we're concerned about public safety, persons driving after events like the fair, concerts, or wine tasting are statistically a more significant threat. Safety requirements for cannabis are very strict by already established California law. 8/10/2022 4:15 PM
552 Any opposing arguments should not be based on misguided, outdated and misinformed thoughts. A city that leans heavily on the wine business will only be looked at as misinformed if they don't allow cannabis. Leave personal beliefs out of this. Allow allow allow 8/10/2022 4:14 PM
553 Cannabis should be regulated no different than the "prestigious" wine industry 8/10/2022 4:12 PM 554 I believe cannabis stores, both recreational & medicinal, should be welcome in PR. They seem to use guards, seek ID, & sometimes offer discreet delivery, all of which is beneficial. I'm a senior who has found that cannabis tinctures enable me to sleep solidly &, most importantly, 8/10/2022 4:10 PM
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get BACK to sleep after a bathroom trip. This positively affects my health & keeps me from seeking the same result from addictive pharmaceuticals. I don't even use it every night, but around 4x a week. Why make me go to SLO for that and let SLO keep the valuable taxes? Also, my husband & I use MJ recreationally in the privacy of our own home, as do many of the responsible adults we know. This can be done safely. Paso should get in on these revenues & help its residents.
555 Please do not allow any of these businesses. The cons far outweigh any financial benefits. It would severely contribute to underage drug use as well as an increase in the homeless population and increase in driving under the influence. PLEASE PLEASE PLEASE NO! 8/10/2022 4:06 PM
556 None 8/10/2022 4:00 PM
557 The people of California and SLO County overwhelming voted for legal recreational medicine and Paso Robles should not only allow it but support it as well. 8/10/2022 3:54 PM
558 Paso needs to get with the times. Why should a cannabis store cause this much concern.

Look at all the alcohol flowing thru town from all of the wineries and breweries. Also tobacco shops are gross and ppl don't freak out about then. Weed>wine. 8/10/2022 3:54 PM
559 Cannabis has psychotropic qualities and an educational campaign should be promoted about the many side effects of cannabis consumption.
8/10/2022 3:52 PM
560 Cannabis money should not be used for streets. We already approved that and the city is doing a poor job of managing that so far.
8/10/2022 3:44 PM
561 No need for it in this city 8/10/2022 3:43 PM
562 Because cannabis is something people can easily grow and use without retail access, and people have been doing that for many years, some of these requirements seem a bit silly.

Especially the one about youth access. It's usually easier for young people to obtain controlled substances illegally than legally.
8/10/2022 3:41 PM
Attachment 6

Sincerely,
Aaron Anderson
Paso Robles Resident
Anderson, Aaron
Q2 - Public Comment

Melissa Chavez
Paso Robles, CA 93447
Paso Robles City Council
1000 Spring Street
Paso Robles, CA 93446
August 18, 2025
Subject: Support for Regulated Cannabis Storefront (Dub’s Green Garden) Dear Mayor Hamon and Members of the Council,
I’ve worked in Paso Robles for decades and have seen our community rise to meet challenges with courage and creativity. We’ve grown into a city that values smart planning, thoughtful regulation, and a strong sense of place. I’m writing today in support of the application from Dub’s Green Garden to open a regulated cannabis storefront—the first in Paso Robles.

Cities this size throughout California have already embraced this opportunity. They’ve done so without raising a single tax on residents, and in return, they’ve gained revenue for essential services like public safety, youth programs, libraries, and community health. Grover Beach, a smaller city than Paso Robles, now generates close to $1.8 million annually from its four cannabis storefronts—more than its entire gas tax revenue.

Paso Robles has the same opportunity, and likely more. Even one or two well-run dispensaries could generate an estimated $300,000 to $600,000 annually in cannabis-related tax revenue.

That’s money that could be reinvested locally in the services and safeguards residents value most.

Cannabis is already here. It circulates in Paso Robles through unregulated sources in neighboring cities or online delivery. Without local storefronts, the City forfeits every dollar of tax benefit and every opportunity for local accountability. There are no safeguards on age, no product testing, and no control over what’s being sold or to whom.

By approving Dub’s Green Garden, Paso Robles has the chance to do four important things:

1. Regulate what is already happening in the community through licensed, local oversight.

2. Protect youth by ensuring sales only occur with ID verification in monitored, legal settings.

3. Capture tax revenue that could help fund youth services, recreation, or even mental health, homeless, and addiction programs.

4. Afford a woman-owned, locally active business the same fair consideration given to others in Paso Robles.

Chavez, Melissa
Q2 - Public Comment

Dub’s Green Garden is not a fly-by-night applicant. This is a well-established, family-run business that has already served hundreds of Paso Roblans through its licensed delivery service—a significant majority of clientele who are older adults choosing cannabis as a safer alternative to prescription medication. I’m not a stakeholder in my support of Dub's, nor am I a customer. But I see opportunities on the table that could benefit more customers, safeguard the public, and support the General Fund with real revenue at the same time.

Dub’s Green Garden has built trust in the community, is operating under the state’s rigorous compliance rules, and has stepped forward with professionalism. They are asking to be part of the solution—to operate visibly, legally, and responsibly under the city’s oversight.

The City of Paso Robles has a timely opportunity to manage cannabis as it emerges in the broader region, rather than letting it manage us. Paso Robles can move forward with clear rules, strong expectations, and meaningful public input. I respectfully urge the Council to approve Dub’s Green Garden’s application and help set a thoughtful example for others to follow.

Thank you for your time, consideration, and leadership.

Sincerely,
Melissa Chavez
Chavez, Melissa
Q2 - Public Comment

Cannabis Revenue and Community Impact – Source Citations

1. Grover Beach Cannabis Tax Revenue Report – Q1 2023
https://groverbeach.org/DocumentCenter/View/13014/Q1-FY-2023-Cannabis-Revenue-Report

2. SLO County Cannabis Business Tax Ordinance
https://library.qcode.us/lib/san_luis_obispo_county_ca/pub/municipal_code/item/title_3- chapter_3_22

3. California Department of Tax and Fee Administration (CDTFA) – Cannabis Tax Revenue https://www.cdtfa.ca.gov/dataportal/charts.htm?url=CannabisTaxRevenues

4. California State Auditor – Regulating Cannabis (Report 2023-106) https://www.auditor.ca.gov/reports/2023-106/index.html

5. League of California Cities – Revenue from Cannabis Operations (Policy Guide) https://www.cacities.org/Resources-Documents/Policy-Advocacy-Section/HotIssues/Regulating-Cannabis/Cannabis-Revenue_Finance-Guide

6. City of San Luis Obispo – Cannabis Business Tax Code https://www.slocity.org/home/showpublisheddocument/35437/637790362264330000

7. SLO County Homeless Services Dashboard (Funded in part by cannabis revenue) https://www.slocounty.ca.gov/Departments/Social-Services/Homeless-Services.aspx

8. Paso Robles Library Improvements and Renovation Highlights https://www.prcity.com/250/Library

9. California Department of Cannabis Control – Public Health & Safety Regulations https://cannabis.ca.gov/

10. Institute of Governmental Studies – Berkeley: Local Cannabis Regulation in California (Policy Brief)
https://igs.berkeley.edu/publications/local-cannabis-regulation-california Chavez, Melissa
Q2 - Public Comment

From: Josh Nelson
To: City Clerk
Subject: Marijuna means stoner
Date: Tuesday, August 12, 2025 11:40:39 PM
[Some people who received this message don't often get email from Learn why this is important at https://aka.ms/LearnAboutSenderIdentification ] [EXTERNAL EMAIL]
Msrijuna is a drug and shouldn’t be downplayed. I started smoking weed my freshman year in high school in 1988.

The high felt good and had some perks, but honestly, I ended up just hanging out with other smokers, dropped out of sports, and my grades took a nosedive. I tricked myself into thinking that being high was what I needed. Without the drug, it was tough to feel grateful, and to be real, I never used marijuana to deal with physical pain. It became a huge problem for me, and eventually, I moved on to other drugs, which caused even more issues. Today, August 12, 2025, I’m celebrating 13 years clean from drugs and alcohol. I’m not the best writer, and I didn’t spend much time on this, but I really don’t think selling marijuana is going to help our society Sincerely Paso Local
Nelson, Josh
Q2 - Public Comment

From: Rick Vagnini
To: City Clerk
Subject: City Cannabis Regulations Policy Review
Date: Wednesday, August 13, 2025 6:58:11 PM
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Dear City of Paso Robles,and all others to whom it may concern, I’m writing in support of a cannabis dispensary in the city . As a senior citizen I frequently use cannabis to relieve pain from my spinal stenosis operation a few years back as an option to dangerous and addictive opiates . Cannabis is a natural solution to my problem , it’s safe and effective . My opinion is a brick and mortar establishment is way over due . It will also provide revenue to the city . Thank in advance for any consideration .

Sincerely , RR Vagnini
Vagnini, Rick
Q2 - Public Comment

From: Peder Wilkinson
To: City Clerk
Subject: Cannabis Policy Review - Citizen Input
Date: Monday, August 18, 2025 2:46:37 PM
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Hello,
My name is Peder Wilkinson. I am a fairly new resident of Paso Robles. My wife and I both grew up in different parts of the state, but we recently moved our family back to CA after about a decade in Colorado. We have fallen in love with Paso Robles and with the people here, both the greatest on the planet, IMO.

Since we’ve been here in Paso Robles, we’ve endured some tragedies in the family. I also have dealt with various mental ailments over my life. Cannibas has been a lifesaver for me. Dubs has been a tremendous help providing me the medicine I need. Before I found Dubs’ business, I was driving to SLO every week to get the medicine I’ve needed.

Further, I speak to the houseless community a lot. The other day I met a gentleman who needed his medical cannabis and did not have it. I see a great need for better access in Paso Robles and would like to do my part to help provide this helpful plant to those who need it.

This email is to say thank you for being so awesome and receiving my family so well into our beloved community.

Also, I humbly ask that you allow Dubs to move forward with his mandate to serve the people of Paso Robles with the natural and safe medicine of Cannibas they need, in a safe and edifying manner.

Thank you for your service to our community.

Sincerely,
Peder Wilkinson
Sent from my iPhone
Wilkinson, Peder
Q2 - Public Comment

Q2 - Public Comment
Powell, Murray

DISCUSSION
Cannabis Tax Revenue
While initially the County received a "green rush" of cannabis tax revenue, that revenue has since declined steadily from its high of $15.7 million in 2020-2021 to less than $6 million in 2023-2024.

Since 2017, there has been no change in the County's cannabis tax model/structure, which remains based on a cannabis business' gross receipts. Table 1 reflects these declining tax revenues based on the financial data the Jury collected during its investigation.

Issues adversely impacting tax revenues of the County's Cannabis Program include the following factors:
• Market oversupply has caused cannabis prices to drop from approximately $1,200 per pound in 2020 to a low of $250 per pound in 20253
• Competition from out-of-County illegal uppliers has also driven the market price of cannabis down, reducing the profit margins of legitimate cannabis businesses and thereby, reducing their ability to recoup their costs
• Unregulated and cheaper yntb tic products have also adversely impacted the sale price of cannabis products
• High tax rates have resulted from the unavailability of Federal tax deductions for cannabis businesses, which means their tax burden, compared to other businesses, is higher • High co t of permits, licenses, and compliance fees:

A. Initial Application Fee: Ranging from $5,180 to $10,450, depending on the license type and operational scope
B. Annual Renewal Fee: Between $2,803 and $4,989
C. Compliance Management Fee: Fixed fees ranging from $2,593 to $4,276, replacing the previous deposit-based model
• High start-up costs related to infrastructure, security, and maintenance are forcing many of the cultivators out of business because they cannot recoup their initial investments and be profitable
The combined effects of all these factors have led to a steady decline in cannabis tax revenue in Santa Barbara County. The current Cannabis Program revenue in the first quarter of fiscal year 2024-25 was only $1.3 million. This is the lowest first-quarter cannabis tax revenue since the Cannabis Program's inception in 2018.
3 Bums, Melinda. "The Downward Trend in Cannabis Tax Revenues." The Santa Barbara Independent, Published January 27, 2025 . http ://www.independent.com/2025/01 /27 /the-downward-trend-in-cannabis-tax-revenues/ 2024-2025 Santa Barbara County Grand Jury 4

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Cannabis Tax Expenditures
When Santa Barbara County approved the cultivation, processing, manufacturing, distribution, and sale of cannabis products for recreational use in Santa Barbara County in 2018, the County developed expenditure projections based on the expected "green rush" of cannabis tax revenue.

The initial Cannabis Program operating budget was developed to cover the full cost of staff time associated with licensing, application reviews, compliance checks, renewals and enforcement, and to provide funding for County deferred maintenance and capital projects. Unfortunately, the steady decline in cannabis tax revenue since 2020-2021 is projected to make the Cannabis Program a financial burden to the County in the future after the reserves, which are kept in a dedicated fund, are spent if the cannabis tax revenue and expenditures are not balanced (see Table 1).

Table 1
Cannabis Program Tax Revenues and Expenditures
Tax Revenue Ongoing One-time FY Net Fund Ending
Expeudi tu res Expenditures Balance
FY 2018-19 . $ 6,760,700 : $ 2,190,500 $ 2,847,800 $ 1,722,400 $ 1,722,400 FY 2019-20 $ 12,182,200 $ 3,216,500 $ 1,822,300 $ 7,143,400 $ 8,865,800 FY 2020-21 $ 15,746,600 $ 4,889,700 $ 4,056,900 $ 6,800,000 $ 15,665,800 FY 2021-22 $ 8,718,800 $ 7,883,200 $ 2,933,400 $ -2,097,800 $ 13,568,000 FY 2022-23 $ 6,117,400 $ 7,763,000 $ 3,641,200 $ -5,286,800 $ 8,281,200 FY 2023-24 $ 5,770,300 $ 4,291,100 $ 1,055,200 $ -1,148,800 $ 7,132,400 FY 2024-25 $ 5,411,300 $ 6,794,500 $ 1,547,400 $ -2,930,600 $ 4,201,9004 FY 2025-26 $ 5,529,800 $ 6,715,900 $ 2,682,500 $ -3,868,600 $ 1,203, 7005 Figures in italics are based upon projected estimates.

Since taxes are based on self-reported gross receipts, there has been concern about potential underreporting of cannabis revenue by individual operators. A sum of $300,000 was allocated by the Board of Supervisors to develop a cannabis tax auditing process and perform auditing of cannabis businesses. Hinderliter, de Llamas & Associates (HdL) was hired to assist the County with the development of a cannabis application fee structure, tax structure, and to perform fiscal analysis and audits. HdL completed three audits for a total cost of $27,000 in the fiscal year 2024- 2025 with the following results:
• 1 audit completed with no issues;
• 1 audit completed with objections (under review); and • 1 audit never completed because the business license was relinquished.

The Jury learned that six additional audits are planned for the next fiscal year. 4 This figure excludes $2,090,600 in earmarks for deferred maintenance and capital projects. 5 This figure is based on a projected July 1, 2025, fund balance of $5,072,300. 2024-2025 Santa Barbara County Grand Jury 5

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The 2025-2026 Santa Barbara County cannabis compliance and enforcement expenditure allocation of $3,290,800 takes up a large portion of the Cannabis Program budget (see Table 2).

However, compliance and enforcement actions are less imperative now that illegal cannabis cultivation activities are declining in the County. In addition, the number of licensed cannabis businesses has also been declining. Consequently, cannabis compliance and enforcement costs should be readdressed to evaluate opportunities for lowering the current enforcement expenditures and the number of personnel supporting cannabis compliance.

Table 2
Cannabis Revenue vs. Compliance and
Enforcement Costs
Tax Revenue Compliance &
Enforcement
Costs
FY 2018-19 $ 6,760,700 $ 2,104,300
FY 2019-20 $ 12,182,200 $ 2,711,800
FY 2020-21 $ 15,746,600 $ 2,755,400
FY 2021-22 $ 8,718,800 $ 2,419,400
FY 2022-23 $ 6,117,400 $ 2,391,000
FY 2023-24 $ 5,770,300 $ 3,129,500
FY 2024-25 $ 5,411,300 $ 3,242,900
FY 2025-26 $ 5,529,800 $ 3,290,800
Figures in italics are based upon projected estimates.

Cannabis Tax Oversight, Compliance, and Enforcement
Santa Barbara County has faced significant challenges with its cannabis tax revenue system due to its reliance on self-reported gross receipts from cannabis operators. This approach has led to issues with compliance, transparency, and revenue shortfalls. Current problems include:
• Cannabis businesses can fail to submit tax reports, report zero earnings, or submit late reports. Operators may exploit legal loopholes by selling products to themselves at artificially low prices to minimize tax liabilities.
• The County's Tax Collector staff can have issues with verifying the accuracy of selfreported figures, making enforcement difficult and time-consuming. • The cannabis-related expenditures associated with oversight, compliance, enforcement, and the County's planned non-cannabis deferred maintenance and capital projects are projected to surpass the revenues collected from cannabis taxes. • The County's relian~e on self-reported gross receipts has made it difficult to evaluate their accuracy. This self-reporting system has made it challenging for budget analysts to predict revenue and for auditors to ensure compliance.
2024-2025 Santa Barbara County Grand Jury 6

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A further disadvantage is that Santa Barbara County does not have a central cannabis reporting department/program. The County relies on multiple departments, agencies, and programs for cannabis oversight, compliance, and enforcement as shown below:
• The County Executive Office's Cannabis Division oversees the regulation and licensing of commercial cannabis activities, including issuing permits, ensuring compliance with local ordinances, and managing the licensing process.
• The Sheriff's Office is responsible for enforcement against illegal cannabis activities. It also collaborates with multiple agencies and departments to ensure oversight and enforcement of cannabis regulations.
• The County's Department of Planning and Development is required to ensure the proposed activity aligns with zoning regulations and to monitor ongoing compliance. • A County cannabis business license is issued by the Tax Collector after obtaining a land use entitlement; this license is required for all commercial cannabis operations and must be renewed every year.

Santa Barbara County, as in all of California, continues to struggle with a market oversupply of cannabis largely due to out-of-county illegal competition. Estimates suggest approximately 60% of California's cannabis is sold through illicit channels.

While the illicit cannabis retail market poses a large problem throughout the State, the illicit cannabis cultivation problems have been declining in Santa Barbara County. The Jury discovered that the law enforcement reports filed with the State indicate that there has been negligible illicit cannabis cultivation activity in Santa Barbara County for the past three years. In addition, the Jury learned that the State provides grants to counties to combat illegal cannabis activity; the Santa Barbara County Sheriff's Office received grants from the State in excess of two million dollars for such purposes within the past few years.

CONCLUSION
The Cannabis Program began with the expectation that it would provide a windfall of tax revenue to Santa Barbara County. However, those expectations are no longer being met due to changing market conditions. Cannabis tax revenue has been steadily declining in Santa Barbara County since fiscal year 2021-22. Current County expenditures from cannabis tax revenue on deferred maintenance and capital projects, licensing, monitoring, compliance, and enforcement are projected to become a financial burden to Santa Barbara County in the near future if the current cannabis tax structure and expenditures are not reviewed and revised to account for the continuing decline in cannabis tax revenue.
2024-2025 Santa Barbara County Grand Jury 7

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Bl ] 9/25, 4:29 PM 'Green Rush' Fades: Santa Barbara Cannabis Revenues Go Up in Smoke, Grand Jury Says I News Channel 3-12 MENU
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'Green Rush' Fades: Santa
Barbara Cannabis Revenues Go
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KEYT
By Ryder Christ ( FOLLOW
Published June 20, 2025 6:44 pm
... https://keyt.com/news/cannabis/2025/06/20/Qreen-rush-fades-santa-barbara-cannabis-revenues-Qo-up-in-smoke-Qrand-jury-says/ 1/11

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8/19/25, 4:26 PM 'Green Rush' Fades: Santa Barbara Cannabis Revenues Go Up in Smoke, Grand Jury Says I News Channel 3-12 f X in m
SANTA BARBARA COUNTY, Calif. - Santa Barbara County's
once-high hopes for cannabis tax revenue are going up in smoke, with a new Grand Jury report warning the program may soon become a financial burden without major reforms.

Tax revenues peaked at $15.7 million in fiscal year 2020-21 but are projected to bring in just $5.4 million this year. At the same time, compliance, enforcement and administrative
costs are climbing. The Grand Jury warns the program could run a $3.8 million deficit by fiscal year 2025-26 if changes aren't made.

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The drop in revenue is driven by an oversaturated market, declining wholesale cannabis prices, competition from illegal suppliers and high costs of doing business. The wholesale price of cannabis has fallen from about $1,200 per pound in 2020 to as low as $250 this year, the report said.

Rising costs have made it increasingly difficult for cannabis growers in Santa Barbara County to stay in business.
hltps:/lkevt.com/news/cannabis/2025/06/20/Qreen-rush-fades-santa-barbara-cannabis-revenues-Qo-up-ln-smoke-Qrand-iurv-savs/ 2/11

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8/) 9/25, 4:26 PM 'Green Rush' Fades: Santa Barbara Cannabis Revenues Go Up in Smoke, Grand Jury Says I News Channel 3-12 Cultivators face steep financial barriers, including application fees as high as $10,450, annual renewal fees nearing $5,000, and compliance management costs exceeding $4,200. In
addition to these regulatory expenses, growers must absorb high startup costs for infrastructure, security and
maintenance. The report notes that many operators have
been forced to shut down because they can no longer recoup their investments or turn a profit.

The county continues to face challenges in collecting accurate tax revenue due to its reliance on self-reported gross receipts from cannabis operators. Only three audits were completed last year, with six more planned for the coming year.

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In June, the Board of Supervisors voted to disband the
Sheriff's Cannabis Enforcement Team, a five-member unit that had conducted dozens of raids since 2018. Most team members have been reassigned. One deputy will continue
working on cannabis-related felony warrants, and the
https://keyt.com/news/cannabis/2025/06/20/Qreen-rush-fades-santa-barbara-cannabis-revenues-Qo-up-in-smoke-Qrand-iurv-says/ 3/11

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8/~ 9/25, 4:2.6 PM 'Green Rush' Fades: Santa Barbara Cannabis Revenues Go Up in Smoke, Grand Jury Says I News Channel 3-12 remaining funds will be redirected to audits and compliance monitoring.

During that meeting, Board Chair Laura Capps sharply
questioned Sheriff Bill Brown about a $19,185 monthly lease for the cannabis enforcement team's headquarters in Santa Maria-stressing that it amounted to more than $1.2 million since 2019.
"It's an alarming, eye-popping number that shows me I'm not sure we're using these funds efficiently," Capps said during a tense exchange, asking whether anything could
justify such high rent.

Brown responded that the lease also covers space for
narcotics operations and had historically been used to store seized marijuana. He noted plans to relocate to a smaller facility within six months.
https://keyl.com/news/cannabis/2025/06/20/Qreen-rush-fades-sanla-barbara-cannabis-revenues-Qo-up-in-smoke-Qrand-iurv-savs/ 4/11

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8/) 9/25, 4:?.6 PM 'Green Rush' Fades: Santa Barbara Cannabis Revenues Go Up in Smoke, Grand Jury Says I News Channel 3-12 The board also approved funding for the Immigrant Legal Defense Center, including two therapists to support families affected by deportation.

The Board of Supervisors has 90 days to respond to the
report. While some of the Grand Jury's recommendations are already being implemented, such as reducing enforcement spending, the report warns that broader structural changes are needed to stabilize the program's future.

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CANNABIS TAXATION AND EXPENDITURES

SUMMARY
The 2024-25 Santa Barbara County Grand Jury (Jury) investigated the current Santa Barbara County cannabis tax revenue and expenditures and how they are reported. During its investigation, the Jury learned that Santa Barbara County's (County) tax revenues from the cannabis industry have been declining steadily since cannabis was approved for recreational use in California in 2018. In this same period of time, the County's expenditures in regulating the cannabis industry have increased. As a result, the expenditures covering the County's cannabis industry-related management and taxation operations (Cannabis Program) are on track to become a financial burden in the near future unless the County takes corrective measures.

The Jury also found that a significant number of growers have left the Santa Barbara County cannabis industry due to high cost of operations, price collapse, and market oversupply in part due to black-market competition.

Currently, budgeting, tax collection, and compliance activities are the responsibility of different agencies and departments in the County. Inefficiencies in the management and required reporting of the Cannabis Program can be mitigated by the creation of a centralized information database that tracks the budget, tax revenues, expenses, and administrative activities related to licensing and compliance. In addition, Cannabis Program spending can be reduced by allocating tax revenues to support only operating expenses directly related to it. Given the volatility of the cannabis market, the Jury further recommends that the County maintain the solvency of the Cannabis Program by ensuring that expenditures do not exceed cannabis tax revenues each year.

This Grand Jury Report was based on an investigation conducted from August 2024 to May 2025. The Report was in the final stages of production on June 3, 2025, when the Santa Barbara County Board of Supervisors initiated significant changes to the County's Cannabis Program, many of which are consistent with the Findings and Recommendations in this Report. This Report was not altered or amended in any way following the Board's actions.

BACKGROUND
On November 8, 2016, California voters passed Proposition 64, which legalized the cultivation and sale of cannabis for recreational and/or medicinal purposes. At that time, even though cannabis 2024-2025 Santa Barbara County Grand Jury 1

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remained illegal under Federal law, the Federal government chose not to interfere with those states that legalized it for recreational and/or medicinal use. Going forward, this legal discrepancy would create a unique challenge for California and Santa Barbara County in developing, implementing, and enforcing a cannabis program. For example, because an IRS Code (26 U.S.C., § 280E) prohibits cannabis businesses from deducting ordinary business expenses, limiting deductions for cannabis cultivators only to the cost of goods sold, cannabis businesses carry a heavier tax burden overall than other types of businesses. Further, because cannabis is still listed as a Schedule I drug (similar to heroin, cocaine, LSD, ecstasy, etc.) under Federal law, many major financial institutions are hesitant to work with cannabis businesses.

Because cannabis is still illegal under Federal law and regulated as a Schedule I drug, California has contracted with METRC Inc, a track and trace technology company, to create a customized version of their Marijuana Enforcement Tracking Reporting Compliance (METRC) software that incorporates the State's regulatory adjustments. This system is called the California Cannabis Track-and-Trace (CCTT) System that is used statewide by cannabis businesses to record the inventory and movement of cannabis and cannabis products though the commercial supply chain of the cannabis industry - "from seed to sale. 11
With CCTT, every plant is tagged with a tracking number and can be followed from seed germination, through cultivation, to distribution, manufacturing, and finally to retail sale. Santa Barbara County utilizes the State's CCTT system to monitor and confirm that gross receipts from cannabis are being accurately reported by local cannabis businesses to the Santa Barbara County Tax Collector.

Once the industry was legalized at the State level, the County set about developing ordinances to regulate the newly created cannabis industry within the County (Cannabis Program). To assist it in this task, the County hired Hinderliter, de Llamas & Associates (HdL) to develop a tax model for cannabis. HdL's report/recommendation, dated October 14, 2017, was presented to the County's Board of Supervisors on December 14, 2017 .1
HdL's report listed four possible approaches for the County to tax the various cannabis activities:
• Tax on the cultivation area by square foot;
• Tax on the gross receipts of a cannabis business;
• A per-unit tax on the product by weight or volume; or • A retail sales tax at point of sale.
1 See the 2019-2020 Santa Barbara County Grand Jury's Report entitled "Cannabis," p. 15-18. https://sbcgj.org/wp-content/uploads/2022/02/ annabis.pdf 2024-2025 Santa Barbara County Grand Jury 2

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Ultimately, HdL recommended, and the County agreed, on a tax model that was based on the gross receipts of the various cannabis businesses, with quarterly reporting to the County. 2 The various cannabis business taxable categories and their respective tax rates are:
• Nursery: 1 % of gross receipts. Nurseries include operations which, in essence, deal with seedlings, immature plants, and clones.
• Distributor: 1 % of gross receipts ( excludes Distributors for Transport Only). Distributors are involved in the procurement, sale, and/or transport of cannabis and cannabis products between two or more cannabis businesses.
• Manufacturing: 3% of gross receipts. Manufacturers are those operators who are engaged in the processing, packaging, holding/storing, and labeling of cannabis. • Cultivation: 4% of gross receipts. Operators are those who plant, grow, (whether indoor or outdoor) and harvest mature plants.
• Retail: 6% of gross receipts. Retailers are those who work in storefront and non-storefront, e.g., web-based, settings.
• Microbusiness: 6% of gross receipts. A microbusiness is a business that is engaged in any of the above-described categories except Nurseries.

Because of declining tax revenues and concerns about the transparency of a cannabis business' gross receipts report, the Jury has focused its investigation on the County's cannabis tax revenue, expenditures, and related administrative processes.

METHODOLOGY
In support of its investigation, the Jury interviewed:
• Santa Barbara County Supervisors
• Santa Barbara County Tax Collector staff
• Santa Barbara County CEO staff
• Cultivators in Santa Barbara County
• Knowledgeable industry observers and analysts
The Jury also reviewed:
• Documents from the Offices of the County CEO, Tax Collector, and the Sheriffs Office • Tax data from the Santa Barbara County Cannabis Program • Published articles and literature on cannabis taxation within Santa Barbara County The Jury also visited the facilities of multiple local cannabis businesses. 2 See Santa Barbara County Code, Chapter 50A.
2024-2025 Santa Barbara County Grand Jury 3

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Flower: 31% THC Vape: 93% THC 100 mg THC in 2 oz. Shatter: > 90% THC /

REPORT AND

RECOMMENDATIONS OF THE

HIGH POTENCY CANNABIS THINK

TANK TO THE STATE OF

CALIFORNIA
October 30, 2024
Prepared by an independent scientific committee convened by the California Department of Public Health
1

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TABLE OF CONTENTS

REPORT AND RECOMMENDATIONS OF THE HIGH POTENCY
CANNABIS THINK TANK TO THE STATE OF CALIFORNIA ..................... 1 TABLE OF CONTENTS ........................................................................ 2 COMMITTEE MEMBERS ..................................................................... 3 EXECUTIVE SUMMARY ...................................................................... 4 BACKGROUND .................................................................................. 9 PROCESS ........................................................................................ 14 DEFINING THE PROBLEM: WHAT IS THE CHALLENGE OF HIGH
POTENCY CANNABIS? .................................................................... 16 ADVERSE EFFECTS OF HIGH POTENCY CANNABIS ......................... 17 DESI RED POLICY OUTCOMES ......................................................... 20

RECOMMENDED POLICIES TO REDUCE ADVERSE OUTCOMES FROM
HIGH POTENCY CANNABIS ............................................................. 20 INPUT ON INFORMATION TO CONSUMERS FOR SB540
IMPLEMENTATION .......................................................................... 27 SUPPORT FOR RESEARCH AND EVALUATION ................................. 29 CONCLUSION ................................................................................. 30 APPENDIX: COMMITTEE MEMBERS ................................................. 32 REFERENCES .................................................................................. 35 2

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COMMITTEE MEMBERS
(Alphabetically)
Jane Appleyard Allen, 1 Neal Benowitz, 2 Ricky Bluthenthal,3 Beatriz H. Carlini,4 Ziva Cooper, 5 Timothy Fong,5 Bonnie Halpern-Felsher, 6 Renee M. Johnson,7 Pamela Ling,2 Rosalie Pacula, 3 Daniele Piomelli,8 Lynn D. Silver, 9
•
2 Kelly Young-Wolff2·
10 1 RTI International
2 University of California, San Francisco
3 University of Southern California
4 University of Washington
5 University of California, Los Angeles
6 Stanford University
7Johns Hopkins Bloomberg School of Public Health
8 University of California, Irvine
9 Public Health Institute
1 ° Kaiser Permanente Division of Research
This report was prepared by a committee of scientists and medical experts convened by the California Department of Public Health, in response to a Resolution of the Department of Cannabis Control's Cannabis Advisory Committee and a Governor's Directive to provide analysis of the problem of increasing potency of cannabis and cannabis products and to formulate recommendations to address it. The group was also asked to prepare input on implementation of a new legislative requirement (S8540) for consumer information on the issue. The Committee proposed preparing an independent scientific report based on the scientific literature and knowledge of existing policy. This report and its recommendations represent the independent consensus of the scientific committee and do not necessarily represent the official views of, nor an endorsement by, the California Department of Public Health, the California Department of Cannabis Control, or the California State Government.

Acknowledgements: We wish to thank the staff of the California Department of Public Health that convened the Committee and supported our meetings. We would also like to thank the group of 21 external scientific experts who were invited to anonymously contribute to the Delphi panel consultation.

We appreciate the assistance of Allison Temourian , PhD. at UCSF and Kiara Gonzalez Garcia at PHI , who supported report formatting. The Committee was co-chaired by members Silver and Allen . 3

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BREAKING
Ghost ship drifts into Northern Calif. waters with no souls aboard CAI\II\IABIS Follow
UC San Francisco study uncovers troubling
new cannabis health risk
Marijuana edibles may not be as safe as doctors had previously thought By Lester Black, Cannabis editor
May 29, 2025

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- SFGATE l\lewsletters Sign in
FILE: Marijuana plants produce an intoxicating chemical called THC, which is often infused into a variety of edible products.

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Researchers at UC San Francisco published a study Wednesday that found troubling cardiovascular risks linked to using cannabis, even for people who avoided smoking cannabis entirely.

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SFGATE
The study tested 55 people from the Bay Area to see if their cardiovascular function was different depending on whether they used smoked cannabis, used cannabis edibles or abstained from cannabis entirely. The research found that regular cannabis users - both edible users and cannabis smokers - had reduced cardiovascular function and increased risk of developing premature heart disease.

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r.

The study joins a growing body of evidence that chronic cannabis use could be damaging cannabis users' cardiovascular system. A 2024 study evaluating survey data found that daily marijuana use was associated with a 25% increase in risk of heart attack and a 42% increased risk of stroke, but this is one of the first studies that measured cardiovascular function in healthy adults who strictly used cannabis edibles without smoking, according to UCSF researcher and lead author Leila Mohammadi.

The findings that even people using only THC edibles without smoking still showed signs of cardiovascular damage surprised Matthew Springer, a UCSF researcher and another author on the study. Edibles have been seen as possibly less likely to damage the heart, according to a 2020 recommendation by the American Heart Association.

FILE: UCSF Medical Center is a research and teaching hospital in San Francisco.

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Sundry Photography/Getty Images
"When I first saw the THC result, I said to Leila, 'Scientifically, this THC result is really interesting but boy does it screw up the public health messaging,"' Springer said.

The UCSF study tested cardiovascular function with a two-part test. First, they conducted ultrasounds of an artery in each subject's arm to see how blood flow changed after being constricted with a blood pressure cuff. The ultrasound study found that both cannabis smokers and cannabis edible users had arteries with lower dilation rates compared to people who did not consume cannabis.

The study then examined blood serum from test subjects to see how it reacted to endothelial cells, which regulate blood flow. This test found that cannabis smokers, but not edible users, produced less nitric oxide levels, which is an indicator of cardiovascular health. The drop in nitric oxide levels seen in marijuana smokers was similar to earlier research on the effects of smoking tobacco, according to the study.

Springer said the fact that edible-only users showed signs of damage on the dilution test but not the nitric oxide test, while cannabis smokers showed damage on both tests, shows that THC alone without smoking could be directly damaging the vascular system. He said that could be evidence that smoking marijuana could be causing a "double whammy" of negative effects on heart health.

The study authors tested all subjects for nicotine exposure to make sure none of the participants used tobacco.

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Taken together, these findings indicate that using THC is associated with an increased risk of developing heart disease early, according to the study.

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FILE: Kiva Confections employees package cannabis gummies into individual containers at Kiva's factory in Oakland, Calif., on May 16, 2025.

Douglas Zimmerman/SFGATE
The study did not prove a causal relationship between consuming THC and heart disease, but Springer said that because this latest study found early warning signs of heart disease in healthy subjects that confirm earlier studies, "we can be pretty confident" that cannabis use causes damage to the cardiovascular system.

Got a tip? Send us the scoop.

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Benjamin Caplan, a Massachusetts medical doctor who specializes in medica cannabis use, said in an email that the study "raises important questions" bu

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short of providing "convincing evidence of cardiovascular damage from cannabis use." Caplan said the study did not control for what specific cannabis products subjects used or their diet, body mass index, or lifestyle factors and contained only one woman in the edible group, which he said limits its generalizability.

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"This study says nothing about what happens when cannabis is used thoughtfully, in low doses, under medical supervision, or as part of a broader care plan," Caplan said. "It doesn't reflect the patients I see - older adults tapering off opioids, cancer survivors managing pain, or anxious individuals finally sleeping through the night. It's a narrow lens applied to a very broad subject."
The study's subjects were all regular users who used cannabis at least three times a week, and the cardiovascular harm was stronger for people who used more THC a week, which Springer said is a sign that even using less cannabis could spare

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from the heaviest cardiovascular harm: "It really does seem like the more you take, the worse it is."
More Cannabis Coverage
- One of California's most expensive licenses is now basically worthless - How weed drinks became the only winner of California's legal weed market - UC San Francisco study uncovers troubling new cannabis health risk - Gavin Newsom can't stop California's pot companies from jumping to hemp - 'This is freaking crazy!': The rise and fall of a San Francisco party that changed the world
- Full SFGATE cannabis coverage
May 29, 2025
Lester Black

CANNABIS EDITOR
Lester Black is SFGATE's cannabis editor. He was born in Torrance, raised in Seattle, and has written for FiveThirtyEight.com, High Country News, The Guardian, The Albuquerque Journal, The Tennessean, and many other publications. He was previously the cannabis columnist for The Stranger.

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BREAKING
Ghost ship drifts into Northern Calif. waters with no souls aboard CANNABIS '.;11,w,•
One of California's most expensive licenses
is now basically worthless
The interior of Gorilla Rx is seen on April 23, 2025, in Los Angeles.

Jessie Alcheh/SFGATE
By Lester Black, Cannabis editor
l:

D
I
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E
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June 11, 2025
► 0 Listen Now: [t's never been cheaper to get a license to sell po1 1x
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A license to legally sell cannabis in California was once a coveted item, with some selling for millions of dollars. But now, as the California market's struggles have left ~ SFGATE Newsletters Sign in
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Case in point: One cannabis company is offering its retail license in the Southern California city of Oxnard for "free" to anyone who will assume responsibility for paying the lease on the retail location, which has not yet opened for business

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listing still prices the license at $35,000, but broker Meilad Rafiei confirmed to SFGATE the seller is willing to walk away without getting any cash. "From day one I was telling [the license holders], I don't know if there's any value here," Rafiei said.

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Rafiei, the CEO of cannabis industry consulting firm WeCann, said the Oxnard license could have once been sold for as much as $3 million, making the curr

Q2 - Public Comment
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deal a stunning drop in value.

Ryan George, the CEO of 420Property.com, which is a marketplace for cannabis licenses and real estate, said during the early years of legalization, licenses could trade from $500,000 to $3 million, with one Santa Ana license selling for $8 million.

Now he's increasingly seeing licenses trade for free as they become "effectively worthless" in certain areas.
"Fast forward to today, and the picture has changed dramatically. Market saturation, regulatory challenges, and competition from the illicit market have driven values down," George said in an email.

Fl LE: Sustainable cannabis farmer Dylan Turner applies fertilizer to a crop of plants at Sunbol Farms, a small family farm run by Sunshine and Eric Johnston in Humboldt County, Calif., 2076.

Robert Gauthier/Los Angeles Times via Getty Images
5,

Q2 - Public Comment
Powell, Murray
The downfall is driven by multiple factors that have all come together in a perfect storm. Entrepreneurs likely overvalued the licenses when the market first opened in 2018, expecting that cannabis retailers would be printing cash. Licensed pot stores across the state are heavily concentrated in the few cities where selling cannabis is allowed, creating extreme local competition.

California's legal market also continues to underperform, with illegal cannabis stores supplying the majority of cannabis consumed in the state, according to government estimates. That has resulted in California's low per-capita sales and starved cannabis stores from attracting the customers they expected.

Palm Springs and the surrounding towns, where pot stores initially proliferated but are now rapidly closing, has been one of the hardest-hit areas. Rafiei, who said his company has brokered over $300 million in cannabis deals, said entrepreneurs are taking over cannabis stores in the region without handing over any cash. "If anyone is interested in going into Palm Springs, they're looking to steal a business and just get it for nothing," Rafiei said. "Palm Springs is one of the worst horror stories in terms of what we're talking about."
Rafiei said the biggest hindrance to selling the Oxnard license is the fact that the city charges a $250,000 fee to open a pot store, a cost that any presumptive buyer would have to absorb before opening. He said his clients initially listed the license at $300,000, then dropped the price to $150,000.

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"We got a few hits, but no one was serious, especially once they learned about the crazy fee," Rafiei said.

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FILE: Homes on Hollywood Beach and Channel Islands Harbor in Oxnard, Calif., on May 15, 2018.

Paul Harris/Getty Images
The seller eventually dropped it to $35,000, before finally telling Rafiei that they could "just walk away" from the Oxnard license. He said dropping the sticker price on the license to zero has finally attracted some viable offers.

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"We haven't gotten a deal done, but we do have some serious people looking now, and it looks like we might make it happen," Rafiei said.

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June 11, 2025

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BREAKING
Ghost ship drifts into Northern Calif. waters with no souls aboard CANNABIS f'ollow
Major Calif. city increases pot tax rate even
as sales decline nearly 50%
Los Angeles and San Diego are both raising cannabis fees By Lester Black, Cannabis editor
Aug 7, 2025

Q2 - Public Comment
Powell, Murray
Workers at a legal cannabis farm in California process cured marijuana flower.

Lester Black/SFGATE
►
◄
n Listen Now: California cities increase pot costs even as 3:24
1x
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►
California's two largest cities are ratcheting up fees and taxes on the legal cannabis industry even as retailers shutter and the entire legal market sputters with tax revenue dropping significantly.

Q2 - Public Comment
Powell, Murray
Skip /\d
0:27 1 ruo
San Diego is squeezing its legal cannabis industry as it faces a dire cannabis market.

Sales inside the city of San Diego have fallen nearly 50% in the latest fiscal year compared to sales in fiscal year 2021, according to NBC San Diego (KNSD-TV).

Despite the sales decline, the San Diego City Council voted in March to raise the cannabis tax rate from 8% to 10% to raise revenue while the city faces a broader budget crisis.

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Pot shops in the state's largest city are facing a similar situation. The Los Angeles City Council voted unanimously this week to increase licensing fees for legal stores because falling cannabis licensing revenue is no longer bringing in enough money to support their marijuana regulator, which has nearly doubled its staff in recent years, according to the Los Angeles Times. Luis Rivera, the owner of a delivery service, told the paper the fee increase would be "disastrous."
Legal cannabis sales are sharply contracting in the city, with cannabis sales dropping 20% in the previous quarter compared to a year earlier, according to state data. Sales have dropped 41% compared to the same quarter in 2021.

A staff member shows products to a customer at Gorilla Rx on Apdl 23, 2025, in Los Angeles.

Jessie Alcheh/SFGATE

Q2 - Public Comment
Powell, Murray
Timothy Dodd, the CEO and co-founder of the Sweet Flower retail chain, said the new fee rates, which will increase from $8,486 to $12,617 for a license renewal, are loosely aligned with fees in other cities, but said LA's high tax rate and inability to shut down the illicit stores has left operators with no way to pay. "Many of the remaining LA retailers are on the verge of closing and personal bankruptcy now. They don't have any extra funds for more fees," Dodd said in an email.

LA has been plagued by illegal cannabis stores that operate without paying any cannabis fees or taxes. Todd said the higher costs make it hard to justify paying for licensing fees at all.
"In the current state of affairs, you could argue that cannabis operators are better off operating without a license. The fee increase just solidifies that argument," Dodd said.

Q2 - Public Comment
Powell, Murray
Products are seen inside of Gorilla Rx on April 23, 2025, in Los Angeles.

Jessie Alcheh/SFGATE
.!
Cannabis industry experts have been warning tor years that California's high regulatory costs and taxes are stifling the legal industry. The state saw the biggest sales decline in legalization history in the first quarter of 2025, with an 11% drop in sales compared to the same quarter a year earlier. That sales drop appeared to be largely because customers were buying cheaper, not fewer, products, with overall unit sales increasing slightly.

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The industry's warnings have largely gone unheeded. Not only have the state's two largest cities increased the costs of doing legal business, but the state government has also increased legal cannabis taxes. The state increased the excise tax rate from 15% to 19%, an increase of 26%, this July.

While the legal industry falters, California's illicit cannabis industry continues to thrive. According to the state's own estimates, illegal cannabis sales still outnumber legal sales by a healthy margin.

More Cannabis Coverage
- One of California's most expensive licenses is now basically worthless - How weed drinks became the only winner of California's legal weed market - UC San Francisco study uncovers troubling new cannabis health risk - Gavin Newsom can't stop California's pot companies from jumping to hemp - 'This is freaking crazy!': The rise and fall of a San Francisco party that changed world

Q2 - Public Comment
Powell, Murray
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Q2 - Public Comment
Powell, Murray
Most analysts contend that companies have enough time to craft solutions to refinance their debt on favorable terms.

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However, some factors not under the industry's control - such as major federal or state reforms that could open new markets and ease operations for existing companies, or a total lack thereof - will also determine whether companies are forced to sell assets, disappear entirely or cede more control to their lenders, observers told MJBizDaily. "It paints a concerning picture," said Jesse Redmond, a California-based analyst and head of cannabis at Water Tower Research, an investment advisory firm. "I think anyone investing in cannabis has to be concerned," he added. "I don't know if it's to the point where it's dire or not, but it's not obvious what's going to happen" to some of the more leveraged companies.

And as a well-publicized letter to struggling multistate operator The Cannabist Co, from one of its creditors shows, some lenders aren't waiting to impose demands.

Debt financing not unique but ...

Subject to much heavier tax and regulatory burdens than businesses in other sectors, the $32 billion U.S. cannabis industry i£.stilUypkaJ jn at lease one way .(hllps· //www investopedla.comlask/answcrs/042215/what-a re-benc!lts-comp.any-using::
ft]~g:-vs-debt-flnaocing.a,sp).: Marijuana companies raise capital by trading cash for an ownership stake (equity financing) or by obtaining loans (debt financing).

However, without access to traditional sources of capital, marijuana companies have commonly been more reHaor on debt financing
.(hltps·l/wwwbioombergJawcomfextemaI/don1mrnr1xFAEEE8QQ0000lfina111:i~professionalDfi,'illecrjve-deb1;:fjnancjng-lo-rhe-cannabls-l, according to Bloomberg Law.

That trend continued even with the advent of marijuana multistate operators trading on public markets, thanks In part to increasing Interest mes Chttps;ilmjbwlaily com/cannabis~ mpanie:,-looklng-:.lnaraalngly-at:<Jehr-solurlons-amld::<:apltal-L'.Oo:.tralorsll and falling stock prices that left companies with improving credit preferring to secure loans rather than sell equity at what they might have perceived as a discount.

Debt financing - which eclipsed equity as the cannabis industry's preferred source ofrapital in..2Q22_(hltps;JLmj~ romldeht-Cloaocln{'.:.edi~u1.t:y-ln-us-caona1>is-et1)tJvationa od-rn1an-funding~l., according to M/BizDaily- allows a company to obtain capital without ceding control of the company. That's contingent, of course, on the loan being repaid or refinanced.

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It's not extraordinary for companies to carry significant loan debt, even debt in the nine figures. (That's distinct from the estimated $4 billion (htt~.prnews;vlre c:oJJllo!'W$:; ru!ease,~[cash:-starved-caooi1WS=.Ql1er:aiors-tonped-3-6-hillioo-in::<lelirulUflll:PilYOO!?uts-in2023-302101.100 html) in delinquent payments and past-due invoices owed within the industry, according to Oregon-based Whitney Economics.) It's also typical for debtors to continuously refinance loans for years on end, as paying it all off "means having a bunch of cash lying around," said Frank Colombo, who has followed the debt situation closely as a managing partner at New York-headquartered cannabis capital, M&A and strategic advisory firm Viridian Capital Advisors.

That leaves companies with two options once a loan matures: Refinance the debt or restructure the company.
"You refinance," Colombo added. "Or you have a problem." And some over-leveraged firms have problems.

The impact on 280E
Estimates of how much debt is coming due in 2026 vary from as low as $2 billion, as Viridian's Colombo pegs the figure, to as much as Sl bUlloo (https·ll(jsal rom/pri:,-;s-cclcases/Fjfull-CBSTll2::26:::2!bpdfl., as noted in a September public letter to The Cannabist's board from FiSai US Management, a Los Angeles-area, marijuana-focused investment fund that loaned the company $50 million.

But most of the loans maturing next year are held by a handful of companies: Five firms report more than $1.8 billion in loans coming due in 2026 on their publicly available earnings statements, according to quarterly reports filed in November. (lilln.s:JlmJ~com/can nabisw.aile.r::Wglt:tide-enteriag:. germao-market-yia-acq1milionD.

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Q2 - Public Comment
Powell, Murray
They are:
• Curaleaf Holdings :wiltLS460 Ol~llon (httoa·/t,wm lf&dillolus ca/csa-pgrtwteco<dsJdocum0:n1J1ftnl'> id--bd84 2325[764C..827f'lffl7270914mM9tf25ct8637toOcb24Q72e6.adSbOSl19a) coming due in December 2026, Cresco Labs, $400 million, August 2026.

Trulieve Cannabis Corp., S390 million,
Ayr Wellness, $358 millron,
Verano Holdings Corp., ~bll~pfpb@fll!YClwiOl: opm/QO,)'Q:
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Analysts note that the companies all have ~gnificant prr:;cnrcs jn Florldi!. .(hllps:ilknowthefactsmmj~1cmm/uploads/ommu updares1202s1u1m25-0MM\Jl.l!2liatf.(ll!fl, where an enonno.us.lynp_ens.jye_PJ,ISh..mlegali.z.e...(hll!l£Jlmjb.izda.ily.comltruHeveC/JIJ1JabJs-donates- 5-mHllon-morn-to-ad, 1Jr-,1s<!:campaign-jn-Oorldail adult- use cannabis - and open what would have been the fastest-growing new market in the country - failfd.in November (bllp..sJLrnjbwl.ally.comlflorlda -vorers-reiect-aduJt use-marijuana-amendment-3/l.

That also reflects what some critics say is an overreliance in the marijuana industry on outside developments to meet earnings goals or fulfill other ambitious promises.

These include state and federal reforms including rescheduljng.rnarijuana under federal law .(hll!l£Jlmihizdally,comlblascd:dea-kcpt-colorado-m1r-of-n1arijuaoa-rescbcd11llo!!:b.eatlog:c filing::Sa.y.sL) and new state markets in populous, medical-only states such as Florida and Pennsylvania as well as - eventually - federal legalization and interstate commerce.

However, many of these companies are already banking on the tax savings they plan to realize when and if marijuana is moved to Schedule 3 of the Controlled Substances Act.

That would mean relief from Section 280E of the Internal Revenue Code, which prohibits cannabis businesses from claiming most business expenses on their federal tax returns.

But marijuana is still Schedule 1, barring the result of a highly anticipated U.S. Drug Enforcement Administration hearing scheduled to resume this month .(hllps;Jlmjllwiaily corn lhistodc-dea-madJ.uallitlfschfduliDg:lleaiiog~1ll!nS:-pauserl-11ot\l:
m.id::jarn!ilI.yl).

And the IRS has consistently said that 280E stj)) a12plies_(hll!l£Jlmjb.izdillly.rnm/irs-warnsmarii=opcra1ors-1hat-2soe:raxes-sr111-must-be-traid.llSome observers have come to understand the insistence by MSO J..llat..they don't owe taxes .(hllps;Jimiblzilili(ytom/marijnana-msos-set-ulchigh=Iiskcfight-wJtb•in,-ovec-2soe11. under 280E is another type of loan, one that might need to be repaid to the IRS with interest.

However the 280E situation is categorized, it reflects an ethos that an increasing number of investors and analysts say is risky and unreliable.
"Expecting things to change based on politics generally has never worked out for this industry," Marc Hauser, the chief of staff at Las Vegas-based Jardin and a former deal and capital markets attorney, told MJB/zDaily.

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Gt! ID• Faci, lh1tizs:J1m1g~Uy com/faclbook-2024·11/J)bedd!)d-clal? utm Mhfci1-=:wob$!t!Z&UJm mndbun-Jn erJ[Glo cta~ulm ramga1go:bxl1nool0 Debt decisions
The Cannabist Co., formerly known as Columbia Care, also has $)85 mjJJjon io debt matu ring .(hllps:l/fisaj,comlpress-relcaseslFiSal-CRS'.I':Q2-26-Z'• pdf). in February 2026, as noted in a September public letter to its board from FiSai US Management which loaned the company $SO million.

That letter also critiqued The Cannabist's reliance on last-second restructuring or outside political developments to boost its fortunes.

The letter mentioned the presidential election, rescheduling and the Florida legalization vote as "events with potential to materially impact" the firm's access to capital and its ability to refinance its current obligations.
"A 'pray and hope' strategy that all these events go in the Company's favor without engaging with creditors to explore contingency strategies is misguided and unacceptable," the letter noted, in part.

Q2 - Public Comment
Powell, Murray
wilY~mD
ibi?M:irncr corn/l
In private conversations and on social media, many investors and regulated marijuana operators expect President-elect Donald Trump's administration robe cannabis-frjendly .(https;JLrnj~com/are-repubticaos-foend-or-Cor=of-1he-state rcgulaccd-macii= .indl.lstryl)., though it's far from clear what reform measures the once-and-future president might convince a partisan Congress to pass.

Viridian's Colombo preached caution in his interview with MJBizD,1ily, saying that "it's premature to panic" over the looming debt situation.

And some companies already have managed to refinance.

Ayr Wellness' debt was supposed to come due in 2024, but the company managed to pull off a deal early last year ro excend terms to 2026 !htt~iblzclaily.comlmarjjuana-mso:ayr~ welloess-comp!etes-debt-exteusion-raises-40-roillionl).

But that also meant accepting a higher interest rate as well as stronger lender control over the company.

That's a reflection of the significant decisions looming for some companies, Water Tower's Redmond predicted.

Solutions could include an uptick in merger and acquisition activity - though companies are unlikely to want to acquire underperforming stores or extra cultivation capacity when they have plenty of both in their own portfolio.
"If there's no obvious way to grow revenue and you need more cash flow ... your only option is to get leaner," Redmond said.

But lenders are also in a bind. They generally don't want to either own a borrower's assets or take over the company.

In this way, everyone could be left holding the proverbial bag. "It's a pretty intractable problem, and there are no good solutions," Hauser said. "The only solution is legalization, and that's not happening anytime soon." Chris Roberts can be reached at chris roberts{g]JJJj/JlzdiJJJy&JIIJ (rna ii ro·chris [email protected]).

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Powell, Murray
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B..E..eQ.!ID. ~ ~::::: ~HTTPS·J/INFO MIDtZD1ltYCOH/WJiDINAB$) .swm:rilw~!zdally;eomremail-o•w$lCUrr-'llgJlU)bl/)
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lenders circle overleveraged operators
By Chris Robens Chttps;//rnjbizdaily.coJJ1/author/crobens/l, Reporter May 29, 2025 - Updated May 29, 2025
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As spurned lenders begin to encircle marijuana companies owing an esllmated $3 billion in collective debt (httllSJlmjblzdailycomlcannabis-debt-crlsls-looms-as-billions-in-Joans- come-dne-in-20261) coming due soon, one overleveraged operator is resorting to what observers say are increasingly creative and desperate methods to protect assets from liquidation.
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Q2 - Public Comment
Powell, Murray
That includes shutting down licensed locations and even moving a pre-roll machine from one location to another in an attempt to elude creditors, according to a lawsuit filed earlier this month.

Those are some of the allegations made against Colorado-based Medicine Man Technologies, which dal!S business as Schwazze (hUps;JJmjbizd.iill.y,com/mar jj~ man-technoiogjes-rebrands-as-schwaz,,e/), by one of its lenders, Virginia-based cannabiscentric investment fund Altmore Capital, in a lawsuit filed May 3 in Denver District Court.

The techniques Schwazze is allegedly using to delay repaying Altmore are familiar to highyield markets but "seem like a new development in cannabis restructuring," said Frank Colombo, a managing director at New York-headquartered investment banking and data firm Viridian Capital Advisors.

But the situation might also portend a halt to the stalling tactics that ha11e so far avoided any major reckoning, such as an adjustment of cannabis companies' valuations or of the loans offered them.
"In terms of a harbinger of things to come, we've seen multiple rounds of 'extend and pretend' stuff done:' Colombo added.
"I've been arguing we're coming to a time where you need to try to fix these companies."

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Lender claims company is 'insolvent'
In its lawsuit, Altmore claims Schwazze - whtcb bas repor1ed nearly S200 mllijon jn deht .(htt!2SJLwwwglobenewswirecom1news-rcleasef202t.111/07f22771 5JI0/cn/ScbwazzcADDO\mCes-Pn:llroloary::'.thiid::Quartcr-2024-Etoaoclal-Resu1ts hrrnl) and liabilities far outstripping assets - is "insolvent."
Altmore is requesting, in part, that a judge appoint a receiver to divvy up the company.

The cannabis-specific lender declined to comment to MJBizDaily.

MJBizDailyefforts to contact Schwazze were unsuccessful.

But Schwazze spokesperson Sean Mansouri told BusinessDen that the company "vehemently den.(ieli)" devalulng.as.sets..(https·//b11sfnessden com1202stos1201lender-says-denver::Ormmay-rJose-dispensarles-ro-avoidcpay.lng::llmLl and "intend(s) to vigorously defend ourselves through the appropriate legal channels."

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The company "had to make strategic decisions about how and when to allocate resources, including the timing of certain payments," Mansouri told BusinessDen.

But the situation also could portend significant revaluations of cannabis companies that racked up debt in a bygone boom market as lenders fight over what's left, said Hirsh Jain, a California-based consultant and University of Nevada, Las Vegas law school lecturer. 'Zombie companies' using 'questionable tactics'
Schwazze is likely to be among the first of a wave of companies that "do not have the money to repay their debt obligations and may resort to questionable tactics to avoid repaying these debts:• Jain added.
"Like Schwazze, these MSOs may continue to operate for some time - retaining employees and serving customers - but they will in some respect be 'zombie companies' whose financial health is long past salvageable and whose lenders may get stuck incurring significant losses." Schwazze, which once listed its shares on the over-the-counter markets and the NEO Exchange /now known as Choe Canada (h.ttps;Jlmjbizdaily,com/crcsco-labs-cofnmbia-care1eoninare-planned"rannabls-mergerl)), tran·s1t1oned last July. .(htt~globenewswlce corotoews-releasef2024/07/0J 12907072/Qten/SchwazzeAnnonocrs::Tcausitioo-to-:OTC-Expert-Market-and-Provides-Update-on-Delay~g.htm!) to the OTC Expert Market, which is closed to retail investors.

Then, in December, the company announced that its financial reports from 2023 and 2022 "should no longer be relied upon" because of "certain accounting errors that require corrections."
Not long after that, the U.S. Securities and Exchange Commission Slllitlellded rhc accmmrao.c .(https· l/www sec goy1Arcblves/edgar1datal)6228721PQPJ J046592503Q5C>J /tm253 JOCJ2d l mJOk b tm) whom Schwazze had hired as its independent auditor, according to an April 1 filing that said reports from 2024 also would be late.
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Q2 - Public Comment
Powell, Murray
More recently, Schwazze announced the.April 30 exit of Daniel Pabon (hJ:tps· llwww;sec gov/ix? doc=IAccbivesledgarldara100016228791QQPUQ't6592SQ1,5P29/tm251't177dt Bis tum), the company's chief policy and regulatory affairs officer.
'Insolvent' company claims owed $196 million
According to filings, Schwazze operates:
30 marijuana stores, one manufacturer and four cultivation sites in Colorado. 33 marijuana stores, two manufacturers and two cultivation sites in New Mexico, The company reported holding total dchI o{ $196 mjlljon (bttps;JLwwwglohenewswlre comtoews-release1,02t.1111oy297715310/J!,n/Si:lllY~ Announces-Prellwloary.:Third:.Quartcr-2024-~1nanciaJ-Results html} in preliminary thirdquarter filings made in November.

According to the lawsuit and previous filiog!L(bttps:1/lr schwazze com/news-rcleases/newsrelease-<letailslschwazze::announces-res1ructudng-:felm.!ary-2025-debt-obllgation.s), the debt includes:
$95 million loaned by Chicago Atlantic in December 202L $15 million from Altmore in February 2021 -
$17 million from Reynold Greenleaf & Associates.

As MJBlz0,1ilypreviously reported, another lender, Atlanta-based GGG Partners, "exercised control" of $J.5 million in cash (https;JLmjllizdallycomfmarlju.ana.:,pperatm,_schwzz<~ defaulrs-on-rgsrrucmred-dcbtl) from Schwazze's bank accounts after the marijuana operator missed a $700,000 payment March 3 and defaulted on a restructured loan, according to SEC filings.

According to the suit, Schwazze missed a March loan payment, then informed Altmore it would classify four stores, one grow and a manufacturing location as "bad collateral" protected from the lender's claims and shut them down unless Altmore reduced Schwazze's debt by 70%.

Altmore's suit also claims it was informed by Schwazze that it was forming a new company that would acquire the "good collateral" and that Chicago Atlantic "was leading the negotiations."
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In addition to allegedly shuttling around a pre-roll machine, Altmore's lawsuit accuses Schwazze of overstating operational costs by nearly 400% - part of an effort to cajole more cash from its lender.

In all, it appears Schwazze "is simply the one of the most dramatic examples of a phenomenon seen throughout the industry;• Jain said.

Altmore made its loan to Schwazze in 2021, when annual sales and company valuations were at an all-time high.

That year, for example, Colorado recorded a staggering $2 2 bjlljon in marijuana sales !lill~ibl zdailY comkolorados-2021-cannabis-saJes-set-another:-annual-record-at-2-22- b.ill.ionD.

But that "temporary sales bonanza" was a false dawn fueled in part by COVID-19 stimulus checks, Jain noted.

In 2024, Colorado's marijuana sales mmbJed to $1/t biUion (https;JJmjbizdailytom/coloradoIllill'ijmma-saJes-fall-by-20-milllon-ln-early.:2Q251), the lowest annual total for the market since 2016.
"In that context, it is hardly surprising that Schwazze's debts now surpass its assets and it finds itself unable to repay this loan to Altmore;' Jain said.

Chris Roberts can be reached at chcls,rob,:rts@mjbizdaflv,com (mailro·chris [email protected];Cllllll.

Q2 - Public Comment
Powell, Murray
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