Sacramento puts on hold proposal to allow more cannabis dispensaries

A Sacramento City Council committee on Tuesday put on hold a proposal to increase the maximum number of cannabis dispensaries by half after current owners said the market is oversaturated. 

City staff recommended raising the cap from 40 to 60 to give more participants in the city’s cannabis equity program opportunities to start businesses. But the council’s law and legislation committee said Sacramento first needs to expand where dispensaries can be located. 

Sacramento’s Cannabis Opportunity Reinvestment and Equity Program (CORE) helps people disproportionately affected by the war on drugs enter the legal cannabis industry. Participants include those who live or have lived in a low-income Sacramento household and were or have family members who were arrested for cannabis-related charges. 

Crystal Nugs Dispensary and Delivery CEO Maisha Bahati said it took her two years and eight months to open her business, which has one of the 10 permits the city approved reserving for CORE participants in 2020. About 100 of more than 390 participants applied for the permits, according to a staff report, and many since then have asked the city for more storefront opportunities. 

“I don’t agree with the idea of releasing a bunch of licenses and letting the nature of the industry decide who sinks or swims,” Bahati said. “Because that wasn’t the mission of the CORE to let people sink. The goal was to give us the opportunity to succeed and create generational wealth.” 

Other cannabis business owners argued the city should focus on supporting existing CORE dispensaries instead of introducing more competition for customers. Out of 40 total authorized dispensaries, 36 are currently open in the city, according to a staff report.  

Council member Eric Guerra said he knows some CORE participants might be ready to apply for permits. But he said he first wants the city to change its rules on where dispensaries can open. Current rules restrict dispensaries to certain commercial and industrial zones, according to a staff analysis. Most of these are located in District 2 and 6, which include North Sacramento and Tahoe Park, respectively. 

If the city approved the proposal to allow 20 more dispensaries before expanding where they can operate, Guerra warned landlords might hike rent prices because of high demand for limited spaces. 

“The zoning has to be done first so that we don’t create an artificial market that gouges everyone we’re trying to help out: both existing businesses and the applicants,” Guerra said.

City staff are collecting community feedback to update land use policies for all cannabis business types, such as cultivation and manufacturing. Recommendations include allowing storefront dispensaries in more areas of the central city, especially near public transit. City staff plan to release a draft of those updated policies around November.