MARTINEZ, Calif. – In the first of two workshops on the topic, Martinez residents heard the options the city could take to regulate commercial marijuana operations in their city.
What city officials are hoping to hear is whether residents want any marijuana related businesses at all, and if so, whether they want it limited to medicinal marijuana or adult use – or both.
And of those two types of cannabis types, what kind of businesses would residents prefer in Martinez – cultivation; manufacturing and processing; retail sales, whether in a storefront or through offsite orders that are delivered to customers; or testing laboratories?
About 20 people attended the first workshop Wednesday, including three members of the Martinez City Council and Martinez Police Chief Manjit Sappal. A handful had questions, but most listened to Matt Eaton, HdL Companies’ cannabis compliance manager.
HdL, based in Diamond Bar, helps local agencies manage revenues through audits, analytical services and software products. It also has a specialized division that deals with helping government agencies develop policies and regulations of the commercial marijuana industry.
California first allowed cannabis use for medicinal purposes and later decided to allow adults consume it recreationally, and the Legislature resolved conflicts in state regulation of the two types.
But cities also have a hand in regulating the commercial industries, and can choose to ban marijuana businesses outright to allowing all forms to operate.
Eaton explained he wasn’t talking about private use. In California, households can grow up to six plants for private consumption, and while cities can’t ban those private-use grows, they can regulate and limit them.
Instead, he and his company act as a guide for cities to plan cannabis ordinances that would affect how the commercial operations look in five years, 10 years and beyond.
“Some don’t want it at all, and others insist on it,” he said. Many decide to regulate hours of operation, where such businesses are allowed, signage and advertising, physical security, odors and where the drug can be seen, how processors discard their refuse, reporting requirements and employee badging.
Retail operations should be in suitable neighborhoods, he said.
He used photographs to dispel what many presume are marijuana cultivation and processing operations. “It’s expensive,” he said. “If you run an unorganized, filthy, dismal place, you’ll be out of business.”
Regulations can prevent the black market operations that may have grows with electrical lines running through water or extractors using butane to freeze the plant, but who take no precautions to prevent fumes from being ignited by a nearby heat source, such as a pilot light or a refrigerator, he said.
The unlicensed processors are the ones that blow up houses and get people hurt, he said.
Licensed operators use extraction machines that resemble those that extract essential oils from plants or take caffeine out of coffee, Eaton said.
“In seven years in Colorado, there has been not one explosion at a licensed, regulated manufacturing and extraction (plant),” he said.
Prior to working at HdL, he developed some of Colorado’s regulations and hired and trained those who dealt with those laws.
Safety, he said, was one thing Colorado got right, and California is expected to do an even better job, he said.
Security systems are important, and include limiting and controlling access to the business, use of cameras that should produce clear images of those 20 feet away, and accurate records-keeping.
This includes inventory tracking, with numbered tags on plants or batches. Those numbers stay with the plants, and should there be a problem with a finished product, those numbers should track the plants back to the original plant from which they are cloned, he said.
Colorado learned it needed to regulate the drug’s odor, he said. “No one gave a thought to the manufacturing odor,” he said. It’s strongest during harvesting, he said.
The pungent smell can be controlled through air filtering and scrubbing, he said.
Even when the drug is legal to use, communities may need to regulate its consumption, he said. Colorado learned that lesson when tourists, who were not accustomed either to marijuana or Colorado’s altitude, began overdosing.
Part of that state’s approach is public education, he said, and another approach is packaging.
He urged residents to consider public health and safety when deciding what type of regulations of commercial operations they want. That covers safe construction, power and water use, waste management, and quality of life issues, such as lights, noise and odors.
“You have to anticipate complaints,” he explained.
Once regulations are in place, they need to be monitored and their results measured, he said. Sometimes they will need to be modified as concerns arise.
Municipalities can charge taxes and fees on commercial operations, and state law also allows for complete cost recovery. “That’s how HdL got involved,” he said.
Fees can be applied to applications, and taxes can be placed on flower and leaf cultivation, sales and other steps of a commercial operation. Then a city can recuperate the costs of regulating the businesses, he said.
But those taxes and fees shouldn’t be so high that companies decide instead to do their business outside the law, on the black market, he said.
“You want the ‘sweet spot.’”
How profitable a specific cannabis business is depends on a number of factors, Eaton said. And how much a municipality gets in revenues also varies. However, in Colorado, $1.3 billion was spent on marijuana last year, primarily in or near Denver, and that is expected to increase.
As a result, the state had $40 million to spend on schools and enough to fund the state officials that watch over the marijuana industry.
Colorado also dedicated construction money to its rural areas, some of which has homes that have never had air conditioning and schools that have no central heat.
But he agreed with a man who said he was a pharmacist and said Colorado’s former director of marijuana coordination, Andrew Freedman, discouraged governments from authorizing commercial operations for the money.
“You don’t do it to make money,” Eaton said. However, Zachary Barnes, who has operated an edible cannabis company for several years and hopes to return to his former home town, Martinez, and open a business here, said his company helped a city in bankruptcy.
The pharmacist, who refused to give his name, expressed his concern about marijuana’s interactions with commonly prescribed drugs, and that patients aren’t warned about those and other complications.
That was beyond the scope of the workshop, Eaton said.
Responding to Sappal’s inquiry about the future of the industry, Eaton said it could become a delicate balance, easily upset if one portion of the process received a large number of licenses. If this causes problems in production, businesses could close with proprietors turning instead to the black market.
Eaton said most complaints came from private grows, and said some schools had to deal with students from homes where the drug was grown and process, because the strong odor had soaked into their clothes. Quality commercial operations often lead people to purchase their marijuana instead of growing their own.
Retired forensic scientist Tom Abercombie said California should look at the history of both Colorado and Washington, as those states have a head start on this state in regulating the drug.
“It’s in your community,” he said. “So how do we regulate it?
Those attending were urged to take comment cards, which also are postcards they could mail in, and express their views on the topic.
In addition, a second workshop on the topic will take place at 7 p.m. April 19 in the Council Chamber of City Hall, 525 Henrietta St. Those with questions may contact the city’s Community Development Department, 925-372-3500.