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Solimar Research

Cities Consider How to Plan for Legalized Marijuana

Jun 28, 2010

To this day, the State of Kentucky forbids the sale of alcohol on election days. This momentary dry spell – which hearkens back to frontier times – is meant to encourage sober voting and discourage bribery via alcohol, turns a legal substance into something illegal for the public good.

On Election Day in California this November, quite the opposite might happen.

As of June 24, the Regulate, Control, and Tax Cannabis Act of 2010 (full text pdf) had collected more than the 435,000 signatures needed to put it on the ballot. If passed, it would strip away the medicinal veneer of cannabis use and simply make it legal for anyone over age 21 to possess, grow, and use cannabis, hemp, and related products. It would also authorize the state and local jurisdictions to impose taxes on its sale and cultivation and – importantly for planners – to decide where it can be sold and consumed. 

(Update: The Tax Cannabis 2010 initiative has been named Proposition 19 on the Nov. 2 ballot.)

An April 2009 Field poll of registered voters found 56 percent in favor of marijuana legalization and taxation. A SurveyUSA poll from the past April came up with the exact same number in favor of legalization, with only 42 percent opposed. If these sentiments hold firm, a vote that will be a fantasy for marijuana connoisseurs may turn out to be a very bad trip for city planners and local public officials. 

"If it passes, and the polling right now says it has a real good chance, we will go through a period of a couple years where some folks put their heads in the sand, others jump out in front, and after two years at lot of people will say, ‘shoot, we have to get our arms around this because it's gotten kind of crazy,'" said University of San Francisco Professor of Politics Patrick Murphy, who specializes in drug policy.

Voter-approved legalization would likely force cities' hands in two ways: first, it will give public officials the simple choice of whether to allow sale and/or cultivation in their jurisdictions, and, second, if it is allowed, then they will have to decide where it will go. Some embarrassing experiences with medical marijuana suggest that cities should think carefully about the land use ordinances that they will use if marijuana goes fully mainstream.

"Planning gets caught somewhere in the middle" of the current confusion over medical marijuana, said Dale Clare, spokesperson for the Tax Cannabis 2010 campaign. "You're trying to zone for over-the-counter retail sales…while claiming that all of that is basically illegal activities."

That bind became clear as the medical marijuana took off in 2009 and the City of Los Angeles became the poster child for cluelessness. A tardy, sloppily-written ordinance led to the proliferation of pot shops of varying degrees of respectability. Some felt like elegant day spas while others were no so luxe. The rap on the city was that it had more medical marijuana outlets than it did Starbucks.

Los Angeles has since cracked down on what it considered rogue pot shops and instituted a complex and restrictive land use ordinance that, planners say, ensures access to those who need marijuana as medicine but otherwise prevents the blight and unseemly connotations that come with the trade of a formerly illicit substance.

"The recommendations we came up with ensured that there would be potentially medical marijuana collectives located within all the community plan areas in the city," said Alan Bell, senior planner at the Los Angeles Department of City Planning, who led the crafting of the marijuana ordinance. "We'd limit the number so that we could have a limited number that we could enforce and monitor."

By November, though, the marijuana trade may not be a matter of "need" but rather of "want" – want not only on the part of recreational uses, but also on the part of cities that perceive a monumental opportunity to generate revenue.

The Regulate, Control and Tax Cannabis Act of 2010, despite its title, does not prescribe how cannabis should be regulated, controlled, and taxed. Nor does it dictate where pot can be sold or grown. It leaves those complex decisions up to cities and counties, which many consider both a blessing and a curse.

"In Prop 215 we used a process to make a policy without regard for how it would be implemented. That's a lousy way to make policy," said Murphy. "We've got a similar situation on the horizon now where we will be making another very broad, very vague policy and say, ‘locals, figure it out.'"

A report authored by Dale Gieringer, California Director of the National Organization for Reform of Marijuana Laws (NORML), in October 2009 proposes that a legal cannabis market could generate between $2.7 and $4.5 billion in state excise tax revenue, several hundred million in local sales tax revenue, and $12 - $18 billion in spinoff economic activity, including that from tourism and coffee shops.

The California Board of Equalization estimates that cannabis could yield roughly $1 billion per year in direct tax revenues for the state, irrespective of how much local tax revenue they generate.

Thus far, the City of Oakland has heartily embraced commercial medical marijuana through Measure F, a 2009 ballot initiative that passed with 80 percent of the vote and authorized the city to raise the tax on "cannabis business" from its standard 1.2 percent citywide sales tax to 1.8 percent.

Oakland city officials are not shy about their embrace of marijuana's economic powers, and an entire neighborhood has been renamed with the convenient portmanteau of Oaksterdam. The name comes originally from Oaksterdam University, a school gives seminars to hobbyists and pot entrepreneurs about how to cultivate, process, and market the herb.

The name has caught on throughout a half-dozen block area between downtown Oakland and Lake Merritt. What has also caught on is a minor economic boom.

"[Oaksterdam University] were essentially moving into a place where there was a lot of vacant space," said Oakland City Councilmember Rebecca Kaplan, who authored Measure F. "They did a fair bit to clean up the area. There were dispensary owners out in the morning sweeping the sidewalks." Ada Chan, Kaplan's policy analyst for economic development, said that nearby hotels have been, at times, sold out and full of Oaksterdam students.

"Why go to Amsterdam when you can go to Oaksterdam? We can keep our dollars here," said Clare. "While we're bringing in students to come to Oaksterdam, we're also improving the city and putting more money in the coffers because of all the folks who are coming to stay."

(Richard Lee, the proprietor of Oaksterdam University, is one of the main sponsors of the Tax Cannabis 2010 initiative.)

At a time when many cities' coffers are cached out and when the state, itself $21 billion in the red this year, has announced plans to divert over $2 billion from local redevelopment funds to school funds, marijuana may prove as effective a redevelopment tool as any. 

Moreover, a retail scheme coordinated with local production could create a tightly closed economic loop that keeps money circulating within the city, thus creating multipliers that are absent from the sale and production of many other consumer goods. 

 "I do see using it as a further economic development tool. Part of what's in the pipeline for Oakland is to be looking at production and cultivation," said Kaplan. "There isn't yet still effective permitting and regulation for that.  I think that could contribute significantly to jobs and economic development in Oakland."

The prosperity of the Oaksterdam neighborhood offers a glimpse of one end of the spectrum of legalization: entire neighborhoods dedicated to marijuana, replete with places to get high, spend the night, satisfy the munchies, and commune with fellow travelers. While current medical marijuana regulations forbid on-site consumption, the November ballot measure explicitly permits on-site consumption if cities choose to allow and zone for them.

The potential to stoke a neighborhood by allowing "coffee shops" in fact could achieve many of the popular smart growth goals, including pedestrian activity and neighborhood-focused economies not unlike those that surround nightclub-oriented neighborhoods such as Hollywood.

"Places that are appropriate for street cafes are appropriate for coffee shops in general," said Gieringer, of NORML.

"Like-minded people tend…to come together and share their joys and experiences together, so this would be similar to that," said Clare. "Maybe it's just a block, maybe it's a neighborhood…or maybe just a couple of businesses side by side that become a destination."

The types of outlets that appeal to tourists will not necessarily be the same as those that simply sell medicine to patients. Understanding the difference, and knowing how to capitalize on them, will be one of many matters that planners will have to take up.

"The question is what kind of outlet? Would you have cafes, walk-in clubs where people could smoke marijuana, or would it all be in package stores or something like that?" said Gieringer. "Of course there are siting issues and zoning issues all up the kazoo."

In small towns and rural areas, the race may be on to see who can perfect a version of pot tourism based on the wine country model, where small towns provide an idyllic backdrop for marijuana use.

"There are different levels of opportunities for different areas," said Clare. "You may find….more of a B&B where people come out to experience varietals and classic strains that are hard to come by and more expensive in the higher end."

The early favorite in that race to provide the perfect marijuana getaway would be the towns of the so-called Emerald Triangle counties of the north coast -- Mendocino, Humboldt, and Trinity -- where cannabis has long been a way of life. Legalized marijuana may offer those towns a way to get a handle on an industry that is thriving but unregulated.

"If I had to make a wild guess, just because of the lengthy association we've had with it up here there's going to be value to the Humboldt name," said Humboldt County Supervisor Mark Lovelace.

"I think that the land use issues are going to be our biggest issues," said Eureka City Councilmember Linda Atkins, who authored a marijuana ordinance that is now under discussion in the picturesque coastal city.

These prospects, whether rural or urban, put planners in the unusual situation of devising land use schemes to maximize public benefits and revenue for something that used to be confined to back alleys and unsavory streetcorners. For those who are skittish about that prospect -- or just uncertain about how to plan for pot – they have ample reason to get up to speed.

"Some of those progressive localities were among the first to both regulate medical marijuana and create model ordinances that controlled the distribution of medical marijuana," said Stephen Gutwillig, California state director of the Drug Policy Alliance. "Cities like Los Angeles sat on their hands while dispensaries proliferated."

As unsettling as the prospect of drug legalization might be for some public officials, the worst-case scenario for many cities would be not to plan and then to end up in a city that is neither wet nor dry but, indeed, hazy.

"Don't pretend like it's going to go away," said USF's Murphy. "You're going to have to take elected officials, hold them by both shoulders, and explain to them the consequences of not acting."

Contacts:

Alan Bell, Los Angeles Department of City Planning, (213) 978-1322

Dale Clare, Control and Tax Cannabis California 2010, (415) 981-9940

Dale Gieringer, Director, California Office of the National Organization for the Reform of Marijuana Laws

Stephen Gutwillig, California State Director, Drug Policy Alliance, (213) 382-6400

Rebecca Kaplan, City Councilmember, City of Oakland,  (510) 238-7008

Mark Lovelace, Supervisor, Humboldt County, (707) 476-2396

Patrick Murphy, University of San Francisco Department of Politics, (415) 422-5867

 

 

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