San Jose relaxes cannabis rules to double dispensaries

San Jose officials have indicated their desire to double the number of authorized cannabis retail sites, and last month the City Council relaxed regulations with a 10-1 vote to make it easier for retailers to expand geographically, with the lone dissent from incoming mayor Matt Mahen.

The new policy aims to lower three hurdles to make it easier for dispensaries to set up shop. First, the rules change the way the city measures distance between dispensaries and sensitive spots such as schools and homes; second, they eliminate the distance requirement between dispensaries; and third, they remove the crime restriction which prevents new shops from opening in areas with high crime rates.

The goal is to enable dispensaries clustered in East San Jose to move into other areas while also increasing the number of cannabis business licenses in the city from 16 to 37.

“We were here in June and we passed an ordinance that we were hoping would move cannabis dispensaries out of the highly concentrated District 7 and move them to other parts of the city,” Councilwoman Pam Foley said. “Unfortunately, that wasn’t the case.”

Foley was the council member who introduced the three-part regulatory changes.

Councilwoman Sylvia Arenas said removing the distance requirement may create another cluster of dispensaries, a problem the new policy seeks to solve. She also worries if retailers move closer to each other, bigger retailers may just absorb smaller cannabis retail sites, or smaller shops will purposely locate near bigger dispensaries to access their customers.

While Arenas voted in favor of relaxing the rules, she was unsure if these changes would encourage retail sites to diversify beyond certain parts of the city.

Martina Davis with the city Planning Department said there has been reluctance from residents against having dispensaries open near them.

“They are finding locations and realizing there are sensitive receptors near them. We are finding there are a surprising number of daycare facilities in the city,” she said. “Property owners are unwilling, unable or reluctant to lease to them because of the nature of the business.”

While there wasn’t a specific location outlined about where the city wants to see cannabis sites, the planning staff said that the former laws incentivized sites in more industrial parts of towns and the new ordinances would make it easier to open near retail areas.

Mayor Sam Liccardo raised another concern about crime for customers and employees.

“Because of federal law, these businesses are very cash heavy and that makes them a target,” he said. “I can understand why there would be a concern about overconcentration of businesses when you have this many cash businesses. If you have five in one neighborhood, there is a concern about safety.”

He continued to say “we could accomplish a lot by adopting Councilmember Foley’s recommendations, but we should give staff an option of coming back and considering other options.”

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