San Luis Obispo County Grand Jury Report Growing Pains: The Cannabis Industry in San Luis Obispo County

Conclusions 1

• CL1
  During this investigation, the SLOCGJ evaluated a number of issues and concerns regarding the legal cannabis industry. The SLOCGJ noted that in jurisdictions where cannabis programs generate revenue, they treat cannabis businesses in the same manner as any other legitimate business. This may include streamlining the licensing process, reducing fees, and lowering excise taxes. A statewide trend that impacts the ability of jurisdictions to determine cannabis policy is the unpredictability of the revenue generated by the legal cannabis industry. In short, revenues have not been constant from year to year. In several locations cannabis revenue seems to have peaked and is now in decline. Legal cannabis in San Luis Obispo County has not proven a financial windfall to the County and in fact has had a negative impact to the County’s General Fund. Legal cannabis can and should be economically viable and provide benefit to communities where it is allowed. To achieve this, governing boards may consider adapting and modifying ordinances and fees as the cannabis industry evolves. Ordinances and policies should be done in consideration with the needs of all stakeholders. No one group should bear the greater burden of cost nor unduly benefit either. Ultimately, governing boards must ensure that the cannabis industry is conducted in a manner that is safe, responsible, and responsive to the needs of the community. In March 2024 the California State Auditor (CSA) released an audit report (#2023-116) titled “Local Cannabis Permitting: Cities and Counties Can Improve Their Permitting.” The audit involved “cannabis‑permitting processes” of the counties of Monterey, Santa Barbara, and the cities of Fresno, Sacramento, San Diego, and South Lake Tahoe. Although the report did not specifically examine San Luis Obispo County, the key findings and recommendations could be applicable to Submitted June 18, 2024 15 the County’s Cannabis Program. In this report the CSA issued “Key Points,” one of which discussed cannabis business fees: “Local jurisdictions charge applicants fees—that varied widely in amount for the six jurisdictions we reviewed—to apply for and complete the cannabis‑permitting process.” The CSA report made the following observation regarding high cannabis business fees examined during their audit: “Local jurisdictions charge fees to recoup the costs of administering a permitting process, though such fees can present a barrier to entry if costs are high.” Finally, the CSA audit report contained “Recommendations,” one of which described increasing “the transparency of the cannabis-permitting process for potential applicants and for the public:” Publish permit-related ordinances, permit information, and permit application forms on the relevant public website. Create supplemental communications about the cannabis-permitting policies and procedures, such as step-by-step guides and frequently asked questions. Develop a web application through which applicants can apply. Publish cannabis-related fees on the relevant public websites.

Agency Responses 2

Government agencies' official responses to this report's findings and recommendations. Click on a response to see the structured breakdown.