CITY COUNCIL STAFF REPORT
Meeting Date: March 3, 2025
TO: THE HONORABLE MAYOR AND CITY COUNCILMEMBERS
TITLE: Discussion on Potential Commercial Cannabis Code Modifications
SYNOPSIS
City Staff is seeking direction from the City Council on whether to further explore preparation of amendments to the Zoning and Cannabis Codes to expand cannabis regulations to allow commercial cannabis retail storefront businesses, as requested by a potential retail cannabis business owner. Currently, the only cannabis businesses allowed to operate in Pleasant Hill are up to two, medicinal use, delivery-only cannabis businesses. Although up to two, delivery-only cannabis businesses are allowed, there are not now, nor have there ever been any cannabis businesses in Pleasant Hill. If directed by City Council, staff would need to prepare the necessary code amendments for review by the Planning Commission and City Council. At the September 24, 2024 Planning Commission meeting, the Commission recommended by a vote of 5-1 that the City Council, at this time, decline to pursue amendments to the current cannabis regulations.
DISCUSSION
The initial question before the Council is whether to modify the current cannabis regulations to allow storefront retailers selling either adult use (recreational) cannabis and/or medicinal use cannabis. If the Council wishes to allow storefront retailers selling either adult use (recreational) cannabis and/or medicinal use cannabis, the Council will need to determine in which zones storefronts would be allowed.
Background
In 2017, the State of California passed laws that legalized various types of cannabis activities including retail sales. Cities that declined to adopt local rules to regulate cannabis activities would default to State allowances. Thus, to allow adequate time to prepare appropriate cannabis provisions, the City imposed a moratorium on Commercial Cannabis operations.
In response to State laws, in 2019 the City Council adopted updated Zoning Code provisions for cannabis businesses. At that time, the City Council considered allowing adult use (recreational), storefront commercial cannabis retailers, in multiple locations. The City considered various commercial options as summarized on the following page:
Adult Use Cannabis Retailers
(Could include Medical Use Sales)
Medical Use Only Cannabis
Retailers
Delivery Only Store Front Delivery Only Store Front
No store front, no
in-person walk up
sales allowed
In-person walkup sales allowed
No store front, no
in-person walk up
sales allowed
In-person walkup sales allowed
Could have a
delivery option
Could have a
delivery option
Through the process, the City Council ultimately decided to allow a maximum of two, medicinal use, delivery-only cannabis retailers with approval of a Conditional Use Permit (CUP). At the same time, the City also approved business specific provisions for Cannabis Businesses (Chapter
6.60, Attachment A), including a two-phase review of applicants that requires pre-screening and scoring of each application to determine a list of eligible applicants that could move forward through the CUP process.
Later in 2019, the City Council adopted Resolution No. 69-19 to establish an application time period, fee, and scoring criteria for the selection of eligible cannabis businesses (Resolution 69- 19, Attachment D). Once established, the City opened the application time period, though no applications were received.
In August 2024, a potential retail cannabis business owner wanted to propose a medicinal and adult use retail storefront in Pleasant Hill. When he was informed that the Pleasant Hill Municipal Code did not permit retail storefront cannabis businesses, he inquired as to how the Code could be changed.
One way Code changes may be enacted is through direction from the City Council. Since the Planning Commission makes recommendations to the Council on Zoning Code changes, staff first consulted with the Commission regarding whether the City’s Zoning Code and the Code regulating cannabis businesses should be revised. The Commission recommended on a vote of 5-1 that the Council, at this time, decline to revise the existing cannabis regulations.
A majority of the Commission believed that there have not been any changes to the overall environment since the City adopted its current code that would warrant revisions.
Commissioners noted that there are nearby retailers Pleasant Hill residents may access, and Commissioners were not aware of significant demand at those existing nearby commercial cannabis retailers that would warrant the City’s consideration of any changes at this time.
Analysis
City staff is providing the following preliminary information and analysis for the City Council’s consideration.
Contra Costa County Jurisdictions
Staff completed a survey of Contra Costa County jurisdictions. At present, eight cities and the County (Antioch, Concord, El Cerrito, Martinez, Pittsburg, Pleasant Hill, Richmond, Walnut Creek and Contra Costa County) currently allow some type of cannabis sales, with the remaining 10 cities prohibiting any sales. All jurisdictions that allow sales (except for Concord) have mandatory distance provisions from both sensitive uses, such as schools, churches, parks, and other cannabis operations. In Pleasant Hill, for example, our Code requires 600 feet between medical cannabis operations and sensitive uses (schools, day care center, and youth centers).
None of the cities contacted noted specific planning and/or land use concerns, though there is more discussion of police concerns below. A table of staff’s preliminary survey can be found in Attachment E.
Regarding the proximity of existing cannabis establishments, there are at least four businesses within two miles of the Pleasant Hill city limits. The nearest (“STIIIZY”) is located in unincorporated Contra Costa County (Pacheco), less than a quarter mile from the City’s border.
CoCo Farms Dispensary in Concord is approximately one mile away; Coastal Dispensary, also in Concord, is approximately 1.25 miles away. Velvet Cannabis Weed Dispensary in Martinez is also about 1.25 miles from the City. There were two approved businesses in Walnut Creek, but one never opened and the other is now closed.
Potential Revenues
Staff has had very preliminary discussion with HdL Companies, since they provide assistance to local municipalities with cannabis issues and potential revenue estimates. HdL did note that revenue has been relatively flat in Contra Costa County over the last four years. The early adopters saw a revenue surplus, but HdL advised that as more cities allow cannabis retailers, the revenue trend will normalize to the city’s population. They also noted that the revenue is difficult to estimate since additional information would be required such as type of cannabis businesses that the City would approve and the revenue structure (i.e. gross revenue calculation or developer agreement).
Assuming a majority of the City Council would like to modify the cannabis regulations and provides direction to staff regarding the desired modifications, staff would need additional consulting assistance to be able to provide a reasonable revenue estimate in the future. Staff notes that our neighboring cities are generating approximately $1.2 million to $1.3 million in gross revenue, but they have a mixture of retail, manufacturing, distribution and testing labs. It is also important to note that because of regulations and the taxes imposed, the revenue continues to fall short of initial estimates.
Safety Considerations
The police department has significant concerns about storefront cannabis retail establishments given the increased risk of violent crime they attract. Cannabis businesses often handle large amounts of cash and cannabis, making them prime targets for criminal activity, including robberies. The violent nature of these crimes has compelled cannabis storefronts to hire armed security guards to protect their assets and employees. A tragic example of this danger is the 2024 shooting death of Peter Popovich, who was targeted and killed by criminals believing he possessed significant quantities of cannabis. This incident highlights the threat posed by cannabis storefronts, which not only endanger the individuals directly involved, but also elevate the overall risk to the surrounding community.
FISCAL IMPACT
Revising the Zoning and Cannabis Codes will incur staff time and attorney time to draft and process the Code amendments.
PUBLIC CONTACT
Public Contact was made through posting of the City Council agenda on the City’s official notice bulletin board, at the Pleasant Hill Senior Center, and at the Pleasant Hill Police Department. The agenda and staff report are posted on the City’s web page.
RECOMMENDED CITY COUNCIL ACTION
In light of the preliminary information presented, staff recommends that the Council provide direction to staff, first, whether to pursue modifications to the Zoning Code and Cannabis Business Code to allow for retail storefront cannabis operations within the City. If pursuit of amendments is directed, staff requests the Council identify what factors to consider or study further when drafting amendments to the Municipal Code.
ALTERNATIVES TO RECOMMENDED ACTION
Continue the item to a later date with direction provided to Staff.
ATTACHMENT(S)
Attachment A PHMC Chapter 6.60 – Cannabis Businesses
Attachment B PHMC Section 18.25.170 Cannabis Retailers
Attachment C PHMC Section 18.50.140 Marijuana/Cannabis
Attachment D City Council Resolution No. 69-19 – Cannabis Retailer Business Permits Application Time Period, Fee and Scoring Criteria
Attachment E Summary Survey of Contra Costa Jurisdictions and allowances of Cannabis Sales Prepared by: Troy Fujimoto, City Planner
Reviewed by: Janet Coleson, City Attorney
Approved by: Ethan Bindernagel, City Manager