Arcata considers lifting cannabiz cap

Move could apply to manufacturing, distribution biz, not retail

The campus on West End Road, located in Arcata’s cannabis innovation zone, houses several cannabis businesses that city staff say have benefited the city. The city is considering lifting its cap of 20 on non-retail cannabis businesses that are more focused on manufacturing and distribution, among other things. (Courtesy of Arcata Chamber of Commerce)
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Arcata is considering increasing the cap on the number of cannabis businesses that do manufacturing and distribution. (Retail is covered by another cap.)

The number of businesses allowed for non-retail in the city’s specially designated cannabis innovation zone is 20. Now that the cannabis innovation zone has proven successful, the city’s considering raising that cap.

“We’re nearing the cap pretty rapidly here,” said Community Services Director David Loya.

Three members of the Arcata Planning Commission — Chair Daniel Tangney, Julie Vaissade-Elcock and John Barstow — supported lifting the cap at the Tuesday meeting when Loya presented the idea. Loya said he’ll be presenting the idea to the Arcata City Council at its March 4 meeting. No vote was taken by the commissioners Tuesday night.

“I would lean against holding the cap where it is or trying to limit the businesses that go in,” Barstow said. ” … We don’t know which way the whole industry is going, it’s not too predictable. It is predictable that if we limit the cap to 20 that growth will not happen.”

While there aren’t any businesses currently pursuing permits in the zone, Loya said two parties had inquired about the process and it was better to get ahead of the issue before there was pressure from any particular business to do so.

Commissioner Kimberly White and Vice Chair Judith Mayer had concerns with raising the cap.

White asked if raising the cap might lead to saturation of the market and then “nobody makes any money.”

The cap was implemented in the first place to protect other businesses in the industrial zone who might end up displaced by rising rents if cannabis businesses were allowed to grow unfettered, Mayer said.

In terms of Mayer’s concerns, Loya said there was some displacement and initial spikes in rent when the cannabis innovation zone was established, but there is still plenty of industrially zoned property in the city for those businesses.

“The reality is that we have a lot of available acreage of industrially zoned properties that still aren’t being used,” Loya said.

Aging property owners who may not have been up to the task of rehabilitating their properties were also able to sell those properties and retire, Loya said.

New property owners have come in and improved those areas, Loya said, adding more vibrancy overall to the area than detracting from it.

In terms of saturating the market and increasing competition, most of the commissioners said they didn’t see it as an issue.

Tangney said he imagines most of the products these businesses are producing aren’t being sold locally; they’re being shipped out of the area and bringing valuable income back into the city.

Some synergy may develop between the businesses similar to what played out in Silicon Valley, Barstow said, because they’d be collecting and gathering a lot of expertise, capital and so on in one area.

Ross Gordon, of the Humboldt County Grower’s Alliance, said because of how complicated licensing is on the state level, it is more convenient to have different cannabis businesses centrally located.

Obviously, there is competition among many of these businesses, Gordon said, but really the competition is between Humboldt County and outside areas like the Bay Area and Los Angeles.

Gordon said the ability to keep the supply chain, the manufacturing and distribution in town, “is one of our greatest strengths” and “keeps this entire thing moving.”

Sonia Waraich can be reached at 707-441-0506.

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