Mar. 19—City officials say it’s high time that the growing cannabis industry lights up in Merced.
Further, the city should prioritize local “mom and pot” businesses, said Councilman Fernando Echevarria — who was deemed by Mayor Matt Serratto as having the best cannabis pun of the night on Monday.
That, and countless other intentional and unintentional marijuana-themed quips alike, were chuckled over in between the City Council’s serious discussion of sweeping adjustments to Merced’s cannabis business policies at Monday’s meeting.
Since the city’s first cannabis business ordinance was adopted in December of 2017, three dispensaries have fully opened their doors in Merced. City officials say that despite concerns at the time about negative public safety impacts, legal cannabis has failed to bring any fears about increased violence or crime to fruition.
“I think the industry has been good for Merced,” City Council member Kevin Blake said at the meeting. “It’s brought in a lot of revenue and didn’t bring in a negative impact.”
The new changes, ranging from later marijuana dispensary hours to lower business taxes, aim to make Merced a more cannabis-friendly city.
The council’s final decisions on Monday served as direction to city staff to begin turning the recommendations into official cannabis policy. The process will take at least 90 days for city staff to draw up ordinance amendments. The council eventually will vote on the changes following a public hearing down the road.
Merced is already getting calls from prospective cannabis businesses excited about the proposed changes, city staff told the Sun-Star.
“It’s a strong industry,” said City Manager Stephanie Dietz. “It’s on the cusp of taking off in Merced.”
Dispensaries to open later — and in more areas of Merced
Those of legal age will soon be able to shop for marijuana at their leisure later into the night, as Merced dispensaries will be permitted to expand their hours and areas of operation.
“You can’t even go to a dispensary after a city council meeting,” said Councilmember Bertha Perez, to more chuckles in the Council Chambers, on Monday.
The council agreed to extend dispensary hours from 9 p.m. to 10 p.m.
Plus, all cannabis business types will be allowed to operate in the city’s business park zones, while dispensaries may also establish residence in Merced’s thoroughfare commercial regions off of the highway.
The council’s move to extend the hours and domain of cannabis business reflects how safe the legal marijuana industry has proven to be, Merced Principal Planner Michael Hren told the Sun-Star.
The businesses see no more trouble than any other kind of shop, and the city rarely, if ever, hears complaints from the community. “They’ve revitalized some locations that have sat vacant and dormant for years,” Hren said.
The expansions are generally intended to increase legal cannabis access for all residents, Hren said, noting the product’s medicinal value.
With more of the city opening up for future dispensaries, the council implemented a stronger policy of local business prioritization.
Cannabis businesses hailing from Merced County will be granted more points by the city selection committee, which ranks prospective dispensaries on a set of merit criteria that adds up to a 100 point maximum.
Possible dispensaries will also be given an additional merit point if they intend to operate at least three blocks away from any existing dispensaries.
“Basically, the idea was to make it so that we don’t end up with all these services in one over-concentrated location,” Hren said.
Breaking down business barriers
In addition to Merced’s three existing dispensaries, another is currently finishing up improvements. That leaves just one open permit before the city reaches its maximum cap of five dispensaries.
City Council agreed to keep the limit but may raise it later after the five-dispensary threshold is reached. As the city’s principal point of contact for many cannabis businesses, Hren said he regularly hears from interested dispensary owners.
Other cannabis business types that don’t have a maximum cap, like manufacturing, distribution, and cultivation, have been issued permits but are not yet operational. The only marijuana use to not yet be issued a permit by the city is cannabis testing.
“We would like to see the total cornucopia of cannabis uses here in Merced,” Hren said. “We’re trying to become more cannabis-friendly and business-friendly at every level.”
As more cannabis businesses set up shop, the local Measure Y tax on the industry puts money toward Merced’s police, fire, parks, and recreation services. Measure Y gives the City Council discretion to modify the tax on each type of cannabis business.
But city staff increasingly heard from prospective new businesses that some of Merced’s cannabis taxes were too high. The concerns, and analysis of the policies adopted by nearby cities in competition with Merced’s cannabis industry, spurred staff to recommend several tax reductions to City Council.
“Unless we’re trying to push business away, I think it’s smarter to start lower,” Serratto said. “It really helps the businesses get off the ground.”
Merced’s cannabis cultivation taxes received the most complaints. The City Council agreed to nix taxing cultivation businesses’ square footage entirely and only use a 2.5% tax on gross receipts. City staff said the move would attract more cultivation businesses and make Merced more competitive.
Dispensaries’ tax on medicinal marijuana use was also reduced from 4% to 2%. Cannabis manufacturing and distribution saw tax reductions as well.
The council also reduced the number of annual cannabis business inspections and associated fees. Inspections were reduced for all business types to two per year. For some cannabis businesses, it had been as high as six inspections annually.
City Council concurred that the sweeping adjustments would facilitate Merced’s burgeoning cannabis industry to grow properly and responsibly.
“There’s a lot of people with some very aggressive ideas about how they want to pursue business,” Hren said. “I think these will be good changes.”
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