Costa Mesa, California council members have authorized a refund for cannabis retailers who voluntarily withdraw their requests to do business in the city, allowing prospective business owners the opportunity to recoup the costs associated with getting a business licensed and running due to the long waiting list for processing applications.
The refund is an attempt to clear the processing backlog for the city’s Development Services department, which has spent 25 percent of its time and personnel resources reviewing 63 cannabis business applications. Only 14 applicants have received a permit to open a storefront so far, and about 45 applicants have been waiting since August 2021 for a decision.
With both the conditional use permit fees and the cannabis business permits costing nearly $20,000 each, the city of Costa Mesa has collected just over $866,048 from prospective businesses who have yet to present to the Planning Commission for approval. A 6-0 vote for approval allows potential refund recipients 30 days to submit a reimbursement request and release form after being notified that the program has officially begun.
“Given the substantial number of applications and the time it takes to process each one, staff is suggesting that the council authorize the city manager to issue refunds of application fees for cannabis retail permits for those who decide to withdraw their applications,” Jennifer Le, director of economic and development services told council members.
Residents have raised concerns that processing the retail cannabis requests has taken up too much staff time and has pushed other priorities to the side, such as affordable housing and the implementation of Measure K, which modifies existing regulations to allow for the development of housing in commercial and industrial areas while keeping residential neighborhoods intact, which was passed by voters in November 2022.
“It’s a good idea to do a refund, but I don’t think you’re going to get any [withdrawal requests],” Fitzpatrick said. “For us to bring the numbers down, we have to give the industry some clear, concise and transparent feedback on where we’re going.”
The first legal dispensary opened in Costa Mesa in December 2022, more than two years after 65 percent of Costa Mesa voters cast ballots to support Measure Q, which allowed the sales and delivery of recreational cannabis within the city’s commercial areas.
California’s Department of Cannabis Control (DCC) has announced the launch of a first-of-its-kind grant program to support cities and counties in establishing local cannabis business licensing programs to help get more dispensaries up and running while also helping slow down the illicit market. The Local Jurisdiction Retail Access Grant will provide $20 million in funding to localities across the state, prioritizing those locations where surveys show a disconnect between the availability of licensed cannabis retailers and rates of adult cannabis use.
The DCC has identified 18 counties throughout the state, including Fresno County, Orange County and San Diego County as areas where “the proportion of licensed cannabis retail outlets is low compared to its share of consumer consumption.” Localities that have opted out of allowing cannabis businesses within city limits and have no plans to license them in the future are ineligible for the grants. Jurisdictions that have licensing programs and those where retailers have been approved are also not eligible. The DCC said of the 33 counties in California that currently do not offer cannabis licenses, there are nine counties where the rates of cannabis use are substantial despite there being one or even zero licensed cannabis retailers.
“Expanding access to California’s retail cannabis market is an important step towards protecting consumer safety and supporting a balanced market,” DCC Director Nicole Elliott said in a press release. “The retail access grant program ultimately seeks to encourage legal retail operations in areas where existing consumers do not have convenient access to regulated cannabis.”
