Redding’s Rocky Road to Retail Pot Sales

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Nothing comes easy, or quick, on Redding’s hazy path to recreational pot sales.

The latest setback, of sorts, came last week when City Manager Barry Tippin postponed announcing the first applicants accepted for tentative approval to begin operating retail marijuana shops.

The city had hoped to release the names on Thursday. In a press release, Tippin said the selection process has been delayed for up to a month. He cited the complexity of Redding’s retail pot ordinance, the number of proposals (18) and their complexity. Many of the proposals were in excess of 200 pages each.

“We received many quality proposals, and City staff and I are diligently reviewing and discussing the merits of each with the intent of selecting the proposals that best reflect what the City is looking for in this new retail venture,” Tippin said. “We apologize to the applicants who are eagerly awaiting the conclusion of this process in order to begin with their businesses.”

The Shasta County Board of Supervisors in November voted to prohibit all commercial cannabis activity in the unincorporated areas of the county. The recreational use of marijuana became legal in November 2016 when California voters approved Prop 64, but commercial sales, cultivation and manufacturing remain subject to local government control.

It’s not cheap

Under terms of the city’s retail pot ordinance, the number of retail dispensaries is limited to 10. Persons interested in opening a dispensary had to pay a $5,000 application fee. Those selected by the city’s seven-member committee will then need approval from the Development Services Department.

Once clear of those two hurdles, the aspiring marijuana merchants will have to pay the city a $27,900 fee (and an annual renewal fee of $2,550). A state license, at a cool $36,000, also will be required.

The Redding City Council on Tuesday is expected to approve a retail and cannabis cultivation/manufacturing tax measure for the Nov. 6 general election. The general tax measure, which would need a simple majority to pass, would impose a tax up to 10 percent on pot sales and a tax of up to $25 per square foot of area dedicated to cultivation, processing, manufacture, testing, storage or delivery of cannabis products.  The city is recommending the tax start at 5 percent for retail and $3 a square foot for cultivation, processing and manufacture.

The city tax is expected to add about $750,000 a year to the general fund and could be spent on police and fire services.

That tax would be on top of the 15 percent excise tax California already has in place. The state also taxes cultivators at a rate of $9.25 per ounce of bud and $2.75 per ounce of leaves.

Shasta Lake issues

The city of Shasta Lake’s ambitious efforts to court the cannabis industry—including the rezoning of the Shasta Gateway Industrial Park to make it pot-friendly—recently earned a stinging rebuke from the Shasta County Grand Jury.

“In its rush to become the first Shasta County city to permit recreational cannabis businesses, the City of Shasta Lake ineffectively planned for the increase of cannabis businesses in the City. This resulted in multiple unexpected changes in planning and permitting procedures based upon infrastructure demands, which was exacerbated when the City chose to zone the Shasta Gateway Industrial Park for cannabis-related businesses,” says the Grand Jury report titled “Green Rush … Up in Smoke?”

Shasta Lake voters last year approved Measure A, a new cannabis tax that continues the 6 percent tax on sales at the city’s three marijuana collectives while reaching out to tax the commercial grows and processing plants proposed for the Shasta Gateway Industrial Park.

The measure’s proceeds—estimated to be from $400,000 to $700,000 annually within five years—will be earmarked for expanded law enforcement and code enforcement, City Manager John Duckett said.

Not so fast, said the Grand Jury, which recommended all development should stop in the industrial park until the city builds a secondary access road. In addition, the city should beef up code enforcement staffing and create “safe and effective methods of collecting and transporting the cash it collects.”

The city has yet to formally reply to the Grand Jury’s recommendations.

Last year, Duckett said he’s well aware that not everybody is in favor of the cannabis industry, and that’s why the city is restricting all commercial aspects to the industrial park and keeping all operations indoors to minimize visual and odor issues. The Measure A tax, he said, is a way to ensure the community benefits from the cannabis industry.

Jon Lewis
Jon Lewis is a freelance writer living in Redding. He has more than 30 years experience writing for newspapers and magazines. Contact him at jonpaullewis@gmail.com.
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19 Responses

  1. Avatar bruce vojtecky says:

    Quoting from elsewhere that allows marijuana sales providing jobs and tax money, This is ridiculous.

  2. Avatar Beverly Stafford says:

    Good heavens. And I thought obtaining a permit to build a home addition was difficult.

  3. Steve Towers Steve Towers says:

    That there are 17 applicants for 10 permits—in spite of the onerous fees and taxes—suggests that the opportunity to make some serious money is in play.

    • Avatar bruce vojtecky says:

      This sounds more like Redding realizing that there was such interest in marijuana stores decided to lift the financial costs to see what happens. Many other elsewhere areas did the same and then lowered their financial requirements when they realized that actual investors with real money can do a cost and profit analysis and wouldn’t commit until the financial costs were lowered.

      • Avatar Tim says:

        Yeah, what does the city care if they make it impossible for Grandpa Steve to sell artisan organic edibles as long as mega corporations like RJ Reynolds are willing to throw away $100k per store on permitting & compliance costs…

        • Steve Towers Steve Towers says:

          I was going to ask if, in awarding the 10 permits, local ownership is being favored. (I think I already know the answer.)

          Mega corporations taking over this business, absent regulations and policies preventing it, seems inevitable to me. Once it’s legal for RJ Reynolds to grow marijuana on factory farms in the Sacramento Valley, Trinity County is hosed. All of those mom-and-pop shops that sell grow bags and fertilizers and such are screwed, too.

  4. Avatar Tim says:

    Well, at least someone trustworthy is picking business winners and losers. Oh wait…

    • Steve Towers Steve Towers says:

      Hey, there’s always bootlegging in the short-term—the black market is ultimate in libertarian enterpreneurship. I know two growers who are exporting their crops to states where it’s still illegal because that’s where they get the highest price. I’m currently trying to talk a third friend out of going to work for them as a mule.

  5. Jon Lewis Jon Lewis says:

    Please note: With the adoption of the retail & cultivation/manufacturing ordinance, the city’s moratorium is no longer in effect. Additionally, the city is recommending its proposed tax start at 5 percent for retail and $3 a square foot for cultivation, processing, distribution, etc. This article has been edited to include those clarifications.

    My apologies for any confusion.

  6. R.V. Scheide Jr. R.V. Scheide Jr. says:

    I’m curious: Are the 18 applications all for dispensaries, or are some of them for manufacturing or indoor growing facilities, which are also now permissible?

    • Jon Lewis Jon Lewis says:

      Yes, all the applications are for retail shops. They were solicited through a request-for-proposal (RFP) process. Redding’s ordinance does not limit the number of cannabis manufacturing/cultivation businesses & anybody interested in that part of it can begin the application process through the Development Services Department. (Keep in mind that greenhouses, CBD oil manufacturers, etc. are restricted to the appropriately zoned areas of the city.)

    • Avatar Hollis Pickett says:

      Technically, they wouldn’t be “dispensaries” – they’d be retail businesses. Interesting that COR is establishing a flat fee for the license instead of charging as they do for other businesses. Where I used to work, business license charges were assessed by employee – $90/professional (up to 8) and $6 (or so) for “other employees”. Also, I believe the fee to submit an application to be considered for a license was $1,000, not $5,000. If your proposal is accepted, then the $5,000 comes into play for the actual license (with another amount for a renewal fee per year). As of now, if you go to the COR page, the original “Addendum 4977” (the actual criteria for submitting a proposal for a retail license) has…..disappeared?….is not available?……..hmmm-mmmm…….. And yes, different types of retail licenses were being considered…..storefronts, commercial grows and delivery-only businesses were options.

  7. Avatar Common Sense says:

    Day late and a Dollar SHORT. Ever heard that one?. The City of Redding is Quite Late to the Party. There has already been one very large player from Nevada that wanted to come to Redding a Year ago and open up a large Facility. Problem was, a Year ago this whole Idea was still a NO go! They ended up going down south.Yes…the jobs did also and the tax revenues!

    Cannabis Legalization In California(Prop 64) was passed almost a year and a half ago. That was the time to “start” talking about it like SLC did. This Grand Jury Report was obviously done by some “Not in my Backyard” folks that really hate the idea of the whole thing!

    The whole let’s wait and see is a great approach if you are not concerned with tax revenues and jobs….the only reason Redding Got on board was they kept hearing about the half million SLC was bringing in, in tax money, and that is a city about 80% smaller in size!

    Shasta Lake City got out in front of the ball. Now Redding is Chasing the ball downhill. If you want to learn at a deeper level about the Biz just read up on what happened in Ore and Wash.

    The fact they actually had 18 that wanted permits being this late into the game is amazing to me!

    Out of the 18 ten get picked…. a couple years down the road that 10 in business will probably be 7-8 after they see just what margins are actually made. The winners in this game are the Dispensaries….the losers are the Growers. In Ore the price of a gram is $5.00 at many places….the Growers are taking it in the shorts as there is a huge Over Supply there….it will be a battle of the fittest between the growers in this segment.

    Julie Winter was sent a proposal a week before she won her city council seat outlining the benefits and the potential tax revenues available if they quickly moved forward on it (now that prop 64 had passed)….that was over a year ago….funny how that was never brought up/mentioned or made public or even shared with her fellow council persons? Snooze….ya lose…. Change…its come very slowly in these parts….that Cognitive Dissonance, it runs deep.

    Ya gotta love Pol i ticks

    • Avatar Ron C. says:

      I predict there will be no problems with retailers. Some will come, others will go but there will always be weed to sell and money to make. Just look at booze? No shortage there.

  8. Avatar Marc Carter says:

    Operating costs appear quite exorbitant. Retail products in Redding will likely be very pricey. Probably three or four times higher than similar merchandise selling in Oregon these days, my guess. After awhile, retail in Redding may become sluggish because of extraordinarily high prices.

    Again, Redding is slow on the uptake, then greed sets in followed by a misfire to the foot.

  9. Avatar Jose says:

    I’m a firm believer that Marijuana should be illegal. I can’t stand the thought of someone smoking a marijuana cigarette eating Doritos in their home. I prefer the old fashioned high of chugging 16 bud lights and beating my wife.