During its July 27 meeting, the Signal Hill City Council decided to add a ballot measure to the November 2022 election allowing residents to decide whether the City should allow up to two cannabis retail outlets.
Since California voters legalized the recreational use of marijuana in 2016, the council has been weighing potential tax revenues from allowing such businesses to operate in the city against associated costs, both fiscal and social.
The City hired Georgia-based cannabis consultants Harris & Associates in January for $50,000 to study the costs and benefits of allowing marijuana businesses to operate in Signal Hill. The 2.2 square-mile city is surrounded by the larger city of Long Beach, which has 32 licensed cannabis retailers.
Hitta Mosesman, senior director at Harris & Associates, told the council that given State zoning rules and the city’s real-estate landscape, Signal Hill can viably grant licenses for up to two cannabis retail outlets.
“We’ve been waiting a long time for this. We’re being a little too much of a ‘nanny state,’ telling everyone what they want when they have an opportunity to vote on what they want.”
—Signal Hill Councilmember Robert Copeland
The City would benefit economically from those businesses, Mosesman said. At the regional average tax rate of 7.5%, the City could expect net revenues of between $161,000 to $966,000 for two businesses in the first year, based on $6 million to $10 million in cannabis sales, according to Mosesman’s presentation.
Two businesses would create 18 to 32 new jobs, Mosesman added. They would also contribute between $7 million and $13 million per year to the local economy from direct sales and indirectly through purchases from other local businesses.
Harris & Associates used objective data in making its projections, Mosesman stressed, especially the budgets of Santa Ana and Long Beach, which have operated cannabis businesses for multiple years and record tax revenue by the specific type of marijuana business—retail, manufacturing, cultivating and testing.
“Our goal was to provide you with real numbers you could count on,” Mosesman told the council.
Benefits and drawbacks of cannabis retail
Cannabis dispensaries also benefit the community through higher real-estate values, Mosesman said. She cited articles seeing housing-price increases from 8% to 75% in communities that have added marijuana retailers.
Violent and property crimes and DUIs (driving under influence) rates do not increase with the presence of medical marijuana dispensaries, according to a 2018 study, Mosesman said.
In terms of costs, the main monetary consideration would be City staff time ranging from $30,000 to $159,000 annually per business for permitting, tax collecting, auditing, legal fees, and police code-enforcement and inspections, Mosesman said.
However, City Manager Hannah Shin-Heydorn noted she would need to hire three additional full-time staff in the finance, police and planning departments to accommodate that and other work.
Drawbacks include public nuisances from marijuana odor and smoke, Mosesman said, which the City could mitigate with ordinances banning onsite consumption and smoking in public places.
Traffic and parking near marijuana retail outlets would increase but be similar to the higher circulation around fast-food restaurants, Mosesman added.
Mosesman cited studies indicating that adding cannabis dispensaries would also likely increase usage among high schoolers. She noted that Santa Ana is using some cannabis revenue to bolster youth services such as library programs, excursions and paid internships.
Mosesman suggested that if the City wanted to move forward with allowing cannabis businesses, it should introduce a ballot measure to both gauge community support and make it easier to enforce tax collection.
Cannabis retail businesses can only operate in the “green zone”
Harris & Associates’ report identifies two areas of the city that are far enough away from schools, places of worship and youth centers to be marijuana retail sites—north of Willow Street between Obispo and Orange avenues, and south of Willow between Obispo and Redondo avenues.
Those “green” industrial and heavy-commercial zones are more favorable to marijuana retailing than business zones or residential areas of the city, Mosesman said.
However, Shin-Heydorn said the City may need to develop affordable housing in those “green zones” over the next eight years to meet the State’s new housing requirements, which would reduce the number of sites allowable for marijuana retailing.
The earliest the City would definitely know its future new housing locations would be February 2022, and possibly not until August 2022, Shin-Heydorn said, depending on when the State approves the City’s plans.
Contentious vote to add cannabis retail measure to November 2022 ballot
Councilmember Tina Hansen motioned to simply receive-and-file the consultant’s report until the City knew more about its new housing requirements, seconded by Councilmember Lori Woods. However, that motion was defeated 3-2, with only Hansen and Woods voting in favor.
Mayor Edward Wilson—who works for a marijuana cultivator in Long Beach and has been a proponent of allowing cannabis businesses in Signal Hill—motioned to add a measure to the June 2022 election ballot so residents could choose whether the City should allow up to two cannabis retailers.
That motion failed 3-2, with Hansen and Woods dissenting, saying they wanted to wait for the new housing locations to be certain before moving forward with a ballot measure.
Wilson called it a “delay tactic,” noting that Hansen has said in the past she will never vote for approving marijuana businesses in the city, which Hansen did not deny.
The third naysayer, Councilmember Robert Copeland, motioned instead to add the measure to the November 2022 ballot to allow time for the City to ascertain its new housing locations.
“We’ve been waiting a long time for this,” Copeland said, referring to the council’s cannabis deliberations over the past few years. “We’re being a little too much of a ‘nanny state,’ telling everyone what they want when they have an opportunity to vote on what they want.”
That motion passed 3-2, with Hansen and Woods objecting, saying they’d want the November ballot decision tied to whether dispensaries would even be feasible once the City decides its new housing plan.
Wilson said the ballot measure will include what the City knows of the housing element at that time. The sooner cannabis businesses are operational, he said, the more money the city will receive from license fees, sales tax, employment and economic growth.
“The revenues will exceed the cost,” Wilson said. “We actually are losing money the longer we delay.”
Correction: Friday, Aug. 6, 3:06 p.m. A previous version of this story stated net tax revenues for each cannabis business would be between $251,000 and $966,000 per business. The story was changed to reflect the fact that revenues are estimated to be between $161,000 to $966,000 for two businesses combined.
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