By Tom Robertson
Vista’s medicinal marijuana dispensaries yearly business license fees, paid to the City of Vista, have gone up significantly based on the Cannabis Businesses – Regulatory Inspection and Financial Audit Program Fees report approved by the Vista City Council on June 23rd of this year. The fee increase is the result of the passage of Measure Z, in 2018, which allows the City of Vista to adopt regulations permitting certain forms of cannabis testing, manufacturing, distribution and delivery. Included in this are “requirements that cannabis businesses in the City of Vista be subject to annual financial auditing by the City, and in most cases, quarterly regulatory inspections.” As a result of this, the City of Vista engaged the services of HdL Companies in conducting a study to find out what would be the cost of implementing a Cannabis Management Program (CMP). The City wanted to make sure they receive full reimbursement for staff time, consultant’s fees, auditing procedures and any other expenses in monitoring this program. The initial study indicated 185 hours of Consultant, City Staff and Vista Sheriff’s Department time would be needed in dealing with the medicinal marijuana dispensaries. It is anticipated nine cannabis operator permits will be issued this year and within two years the allowed eleven permits will be issued.
The Staff fees that were recommended, and adopted, were $23,000 a year for Cannabis Retail without delivery Business Operator Licenses and $28,000 a year for Cannabis Business Operator Permits with delivery and any other Cannabis manufacturing, distributing and testing labs. These charges would be assessed to any new business prior to issuing a Cannabis Operator Permit. For businesses already operating the City will possibly prorate all fees making them due on the same date to assist when yearly renewal is established.
It should be noted that all of this does not include the other fees adopted by the City for Medical Cannabis Retail under Measure Z Application fee of $9,368, Cannabis Enterprise License Application fee of $4,318, Cannabis Delivery Service License Application fee of $978 and the Employee Work Permit Application fee of $15 associated with a one time services cost.
Assistant City Manager Aly Zimmerman said they haven’t started the auditing program yet and she anticipates this would all begin in the Fall as they begin tracking the hours the staff puts in dealing with the financial auditing of the Cannabis businesses. No bills have been sent out yet. She said the regular inspections would be quarterly as they deal with the tedious process to make sure everything is done correctly. The consulting firm the City is using is the same one used by the state and will be used to help implement this auditing program.
The Cannabis Shop owners knew about the state and city requirements, but the amount of the City auditing fees caught many of them off guard and unprepared. Justin Christman, owner of Flora Verde, said he was “shocked” when he received the letter indicating the increase. He said part of his shock was, “He, and the other medicinal marijuana dispensary owners, were given no notice of the amount of the increase and no indication of why there would be an increase of this size”. Christman said the letter indicated the increase was to enable Vista to start a new accounting program and an auditor to come on site and audit the dispensaries books. Christman, and owner Mike Mellano of Coastal Wellness, have indicated they are already heavily taxed with state licensing fees and this new Vista fee increase is “simply not fair”. Several of the owners feel the small Cannabis shops will not be able to financially survive and make any profit and may have to close their doors.
Christman indicated they have been “100% compliant in every way and their books are open at any time for city, county or state officials to check”. He feels they are already “taxed and regulated to death”. He said, “To my knowledge, no other city with medicinal marijuana dispensaries have fees that come remotely close to this amount.” He would like to know if the City Council studied what other cities charge for their licensing fees and if they have city auditors that monitor the dispensaries books. Vista City Council Member Joe Green said, “This was presented as an annual audit fee, to review tax revenue received and delivery procedures. It is in-line with other cities that allow this type of business and is based off staff time. It is a new fee as delivery was just implemented, post Measure Z.”
Christman did note that if the dispensaries were allowed to sell as a controlled recreational marijuana dispensary, they would most likely see a 25% increase in sales and be able to offset the high yearly business license fee. The City of Vista, based on Prop Z, only allows a limited number of medicinal marijuana dispensaries to exist.
According to City Clerk Kathy Valdez, it should be noted that the city will hire an outside consultant to determine if the increase in the business fees is too high and if an end of the year adjustment will be needed.
It is estimated the medical dispensaries pay $200,000 monthly in tax revenue to the City of Vista.
On a positive note, Flora Verde has been awarded 13 on and off ramps and 2 stretches of Highway 78 in California’s Adopt-a-Highway program.
You will see the signs indicating their name on the Emerald, Vista Village, Civic Center and Sycamore on and off ramps and along the west bound Highway 78 corridor between Mar Vista and Civic Center Drive.
Christman has said they want to be a major part of the Vista community and have already been involved in food drives and with veteran’s groups and this is just another way they want to give back. He said his employees will not specifically be allowed to pick-up the trash, along the highway and on/off ramps, as the liability insurance that would enable them to do this was quite high. Instead, he has contracted with one of the four companies that cleans the freeways. Adopt-a-Highway Litter Removal will be representing Flora Verde once a month, picking up the unsightly trash that builds up along the roads.
