Cannabis

Umberto Bagnara, Banning restaurateur and owner of a cannabis dispensary in Desert Hot Springs, addresses Banning’s city council.

BY DAVID JAMES HEISS

Record Gazette

Industrial and business park zones until Aug. 24 previously allowed for cannabis cultivation, manufacturing, testing and distribution, and the city allows up to three retail cannabis outlets, two of which are up and running.

After a couple of public hearings earlier this summer, the city has moved forward to also allow cannabis microbusinesses, or commercial cannabis businesses that are vertically integrated to cultivate, manufacture and operate their own cannabis retail outlets, provided that they have canopy space of less than 10,000 square feet, or a distribution facility on the same campus.

To qualify as a cannabis microbusiness, entity must engage in three of the four categories, though a retail component is not required.

Cannabis cannot be consumed on site at a microbusiness.

A distinction of a 10,000 square feet cap on canopy space differentiates a microbusiness from other cannabis operations which require a minimum of 10,000 square feet.

Most of the commercial and industrial zones that could allow for cannabis microbusinesses are on the east end of the city, south of the freeway.

The planning commission recommended at its July 14 meeting to allow microbusinesses to be non-storefront delivery service only for any retail operators, and recommended a cap of one microbusiness per 8,000 residents, or four altogether.

The planning commission recommended removing a 200-foot separation from residential zones, since consumption would not occur on site, and traditional retail traffic will not take place, though the separation would remain for “sensitive” entities such as day care centers and parks.

Mayor Pro Tem David Happe lambasted the limitations suggested by the planning commission as being too prohibitive, pointing out that a lot more retail business could be offered if cannabis microbusinesses weren’t limited to just “delivery service only” as a retail option, which could likely be taken advantage of only by locals.

“I’m so excited about this — this is the key to me” to Banning’s potential success, surpassing all other “pie in the sky” projects that never really got off the ground, but promised to bring revenues to the city. “We’ve been dancing around it and shooting ourselves in the foot saying no to revenue, saying no to prosperity, saying no to new cops, saying no to paved roads, saying no to libraries, saying no to parks. Why? Because we don’t want a nice storefront. It’s absolutely insane in my mind.”

Happe said “We need to remove the cap, because free enterprise must reign. If we’re going to actually take advantage of our position in the Pass” with its convenient location adjacent to a freeway, “this our time, this is our chance.”

Councilwoman Mary Hamlin tacked on to Happe’s point about not having a cap, saying that “We should let the market determine” how many dispensaries or microbusinesses should be supported within the city, rather than to discourage them and see them set up shop “next door” instead.

Laura Leindecker, who consults local cannabis entrepreneurs, said during a public comment portion of the discussion that she did not feel a cap was necessary, but also did not think it would be helpful to have as many microbusinesses as the city does liquor stores, and that too many retailers would harm the market.

Chamber of Commerce board member and Xenia Racing Wraps owner Oleg Ivaschuk also advocated for not having caps on cannabis businesses.

“Cannabis is just simple business — the same as any businesses: no retail, no sales, no business growth. You have to give retail possibilities to grow. If you don’t bring money in, there is no reason to stay. Say no to cap. There should be no limit. If you survive, you survive: you’ve earned it.”

He also did not agree that for cannabis to survive in commerce, it should not be limited to the industrial zone.

Umberto Bagnara, who owns Guy’s Italian Restaurant and operates a cannabis business in Desert Hot Springs, also advocated expanding the cannabis commercial zone.

“As long as you pay your taxes and you’re in good standing like any other business,” legitimate cannabis retailers can thrive, generating revenues for the city. “The cannabis industry has more money than they know what to do with,” he said. “To not pluck some of this cash for the city of Banning is ridiculous.”

He told Hamlin that he could open a store in Banning “tomorrow” if given the opportunity.

Business owners are passionate about their products, and like to share what they produce, Happe explained.

“From farm to table under one roof, you have pride of ownership,” Happe said. “If you say no, delivery only,” available only to Banning’s residents, “then you’re just shooting the ordinance in the foot. Revenues will be miniscule. I’d recommend no cap, and recommend that retail be allowed.”

Councilman Kyle Pingree said that many of his constituents are retired law enforcement and military, and “you’re wanting to put it right up against their property lines. I would ask that we keep the buffer” of 200 feet as mandated by the state.

If a cannabis microbusiness did not intend to have a retail component, then a 200-foot buffer would not apply, Community Development Director Adam Rush said.

Councilman Alberto Sanchez said that retailers would drive a lot of traffic that would encumber residents, and suggested having cannabis microbusinesses simply be delivery-only if they are to operate a retail component.

He preferred having a cap and having the city ease itself into the industry, rather than removing a cap on microbusinesses and suddenly having an influx of cannabis businesses inundate Banning, pointing out that the city can always adjust the cap later.

“We did ease into cannabis on the retail side, and we missed out on two years of revenue,” Happe said.

“We learned from that,” Sanchez said. “We had COVID come into play” in the opening of retailers.

Happe disagreed that COVID had anything to do with delayed opening of retailers.

With Banning’s original ordinance “We strangled the business operators on location and we also strangled the opportunity for people who are willing to open a storefront, and yet they dragged it on for two years because they had no intention of competing with their own location in Desert Hot Springs. This is a unique opportunity” and “time is of the essence.”

Yakoub Kawaja praised the council during its public comment period, and laudedthe fact that $300,000 in tax revenues were generated by the two cannabis retailers operating in Banning for the first six months of 2021 (one opened in April and the other last January).

“There’s not a lot of entrepreneurs beating down the doors for grocery stores; there’s not entrepreneurs beating down doors for a lot of different opportunities. Here opening up microbusinesses is a real opportunity. The amount of tax revenue generated from just two stores for a short period of time I’m sure is outnumbering a lot of other retail stores that have been here for years that don’t generate that kind of tax revenue for the city,” Kawaja said.

He explained the need for competition, and how innovation keeps it healthy.

“Do all 30,000 residents in Banning smoke marijuana? They do not,” Kawaja pointed out. “If you’re thinking you’re going to be living off the community of Banning, you’re not supposed to be doing business within this city,” claiming that microbusinesses offer “an opportunity to drive outside commerce” to the city.

Happe motioned to have it reintroduced at the Sept. 14 council meeting with revisions to allow cannabis microbusinesses within the city’s general commercial and highway-serving zone, to allow for full retail, and to remove a cap on the number of cannabis microbusinesses that would be allowed. It passed 3-2, with Pingree and Sanchez dissenting.

Staff Writer David James Heiss may be reached at dheiss@recordgazette.net , and messages may be left at (951) 849-4586 x114.

Staff Writer David James Heiss may be reached at dheiss@recordgazette.net , or by calling (951) 849-4586 x114.

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