Will cannabis come to retail centers in San Jose after another delay?
A trimmer in San Jose prepares cannabis buds for packaging in this file photo.

    If you’re looking for a cannabis dispensary in San Jose, you have 16 to choose from. But you won’t be able to find one next to a CVS or your favorite restaurant: By city ordinance, all dispensaries are located in industrial zones instead of with other retail in places like strip malls.

    The San Jose City Council had plans to significantly widen access to dispensaries in April but delayed that decision, citing COVID-19 priorities and the need to do additional outreach. The proposal was on a list of other priorities at Monday’s priority-setting meeting but did not make a final list at the end. Now, advocates worry the initiative is in limbo, even though the council made it a priority in 2019.

    Why the delay? COVID-19.

    “The memo has been written, the work has been done,” said Sean Kali-rai, the founder of the Silicon Valley Cannabis Alliance, a chamber of commerce-like nonprofit for local weed businesses. “But they want to put us back on a list to reevaluate the other council policies that came after this one.

    “This is the problem we face,” Kali-rai added. “Why do we have to constantly deal with staff that has a personal bias and drags their feet pushing cannabis through the process because they feel they can?”

    The plan aims to make it easier for dispensaries to thrive by: allowing cannabis dispensaries to operate more than one storefront, expanding the number of dispensaries in the city and allowing cannabis businesses to open in shopping centers instead of often dimly-lit and parking-starved industrial zones. It would also push for dispensaries to be located in more areas around the city. Currently, the 16 legal cannabis businesses are all located in industrial centers concentrated in the northern, central and southern parts of the city.

    “It’s a land-use issue, so it shouldn’t really be that complicated,” said Councilwoman Pam Foley, who represents District 9. Foley originally suggested the proposal as a priority in 2019. “I don’t know why it’s taken so long.”

    Deputy City Manager Kim Walesh however says that “substantial” work still needs to be completed—outside of the planning department—with the city’s police department and community outreach staff. That work will begin later this month.

    Walesh notes that most of the city’s resources have been redirected to the COVID-19 response. Planning staff, which is primarily used to look at land-use issues such as the cannabis item, were moved to the city’s emergency operations center.

    “The administration implements the direction of the council without regard to personal bias; the timing of implementing council direction always depends on the availability of staff—in this case, affected understandably by the need to move staff from multiple departments into emergency operations during the worst pandemic in a century,” Walesh said.

    In the meantime, the continued red tape for cannabis products makes it difficult and costly for some businesses to establish themselves, said Terryn Buxton, who owns Oakland Extracts, a cannabis company whose products are sold by many dispensaries in San Jose. “You’re spending all this money trying to set up your business. Usually, it’s money given to you by someone else. You have a deadline for when you need to start paying back these loans.”

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    Cash for tax

    According to a city report, the cannabis industry is one of the largest revenue generators for the city, producing an estimated $13 million in business tax in 2018—second only to cardrooms. Activists say bringing more dispensaries in the city would only add to that number and boost the economy.

    There are certainly reasons to review cannabis regulations, said William Armaline, a sociology professor at San Jose State University, who has contributed to studies on cannabis policy, “considering the budget shortfalls that we are seeing in local governments across the state.”

    Last week, the Union City City Council allowed the city’s first-ever dispensary in Union Landing, the city’s main shopping center. This follows moves from other cities, including Redwood City and Oakland, to allow dispensaries to more accessible areas, bringing more foot traffic to retail areas.

    While smaller cities start to reap business revenue from commuters who want to buy cannabis while running errands, Kali-rai is worried the opportunity to capitalize might pass San Jose by.

    “We want this item brought forward, or we want some type of relief. It’s that simple,” Kali-rai said. “Do your job. And if you can’t do your job, maybe there’s another job you should be looking for.”

    Contact Lloyd Alaban at [email protected] or follow @lloydalaban on Twitter.

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