This content was originally published by the Longmont Observer and is licensed under a Creative Commons license.
The City of Longmont will be allowing marijuana retail stores in Longmont sometime later in 2017 or early 2018.
After being passed November 6th, 2012, the City Council addressed Colorado Constitutional Amendment 64 "Use and Regulation of Marijuana". The primary text of the law stating:
"The People of the State of Colorado find and declare that the use of marijuana should be legal for persons twenty-one years of age or older and taxed in a manner similar to alcohol" and "The People of the State of Colorado further find and declare that marijuana should be regulated in a manner similar to alcohol"
Currently, the cultivation, manufacturing, testing or retail sales of any marijuana within Longmont city limits is prohibited. There are, however, two shops situated in Boulder County enclaves, not affected by the ban, surrounded by city property. This, effectively, gives two Boulder County shops 100% of the sales for all Longmont marijuana sales without any of those sales tax revenues going back to the city.
Those two shops are Native Roots Dispensary and Green Tree Medicinals. Both are already operating inside the Boulder County enclaves situated within city limits. One of these two shops, Native Roots, owned by Peter Knobel, Rhett Jordon and Joshua Ginsberg, has at least 59 licenses in Denver, and likely more statewide, for various marijuana businesses such as grow operations, shops, dispensaries and infused product makers.
Native Roots is a harbinger of the trend Colorado is seeing of marijuana businesses consolidating into a few large players who dominate throughout the state. There is no limit to the number of licenses any one person or company can control.
Shannon Fender, Director of Public Affairs for Native Roots spoke at the council meeting. She felt Native Roots should get some form of preference because of their current and past investments in Longmont. She thought two of the proposed four licenses should be reserved for current city operators. She also encouraged locational restrictions to separate stores over distances. She was concerned that more than four stores would not serve the needs of the community.
Green Tree Medicinals, owned by Ally Feiler, has six shops total. She also holds 'premise cultivation' and 'medical infused products' licenses. Ms. Feiler also spoke at the council meeting talking about being banned and shut down (twice). She thinks a $15,000 non-refundable application fee is 'crazy'. Only Aurora does this. Most cities have a $5000 fee with $2000 non-fundable. A more reasonable fee would be $2,500 non-refundable out of a $10,000 application fee. Limiting the city to 4 dispensaries is the best route. Another way is to limit the distance between dispensaries to 1000 or 2000 feet. She says there are 20 viable locations. She thinks lotteries cause law suits and should be avoided. Existing businesses, like hers, should be given preference in an RFP (Request For Proposal) by awarding extra points to existing businesses operating in Longmont. She also felt that limiting medical marijuana use to 21 and up only is a disservice to the constitutional intent and people under 21 had a very real need to access to medicinal cannabis.
After significant discussion and multiple motions, revised motions and amendments to motions (detailed below with video of the discussion), the action to revise these codes taken by the council was as follows:
- They selected option 1a* which is to choose retail marijuana options via an RFP.
- Only four stores** would be allowed inside city limits and that number would be revisted sometime in the future if the need arose.
- The two existing stores should be given 'extra points' in the RFP process for investing in the community and could ask to be annexed into the city, with a time limit of 30-60 days to begin the process and with the annexation to be done within a year (although this was not set in stone and city staff would come back with something that made sense).***
- A 3% addition to the existing sales tax for all marijuana sales.
- A look at adjusting the license fee's to be either less than the originally proposed $15,000 or to have a portion of that money refundable, or both.
- Amendments to the development code to allow retail stores only in the gray and red areas of the map prepared by the city staff.
- Ensure all retail operations are at least 250 feet from residential areas.
- Ensure all retail operations are at least 1000 feet from any schools.
- No limits on distances between stores.
*According to Longmont's legal counsel, the highest risk option from a legal perspective was 1a (RFP). Second worse was 1b (a Lottery). The least likely to cause legal problems was option 2 (free market).
**There are at least 25 liquor stores in Longmont and several dozen bars and restaurants where you can buy liquor. They are largely regulated by market forces. It's safe to say there are at least 75 and likely over 100 places to commercially buy alcohol in Longmont Colorado. It's, possibly, going to become a legal issue for the city down the road since Amendment 64 says marijuana should be taxed and regulated like alcohol.
***The two existing marijuana retail stores in the county enclaves could choose not to apply to have their existing stores annexed into the city. This would, effectively, give Longmont four stores in the city limits and two more stores within the city on Boulder County only enclaves (with lower County only tax rates, making these stores more price competitive than the "within city limits" stores) for a total of six retail stores for Longmont, two of which do not pay taxes to the city. Nothing prohibits the two existing stores from keeping their existing County based stores and applying for new licenses giving each of them two stores in Longmont, if they were awarded the licenses.
Detailed blow by blow of the council discussion:
- References to option 1a mean an RFP (Request for Proposal) process with a limited number of stores.
- References to option 1b mean a Lottery process with a limited number of stores.
- References to Option 2 mean a free/open market process.
To reference all the documents the City Council was working off of, click on this link and select the Regular Session and Informational Items for Tuesday, July 25, 2017.
Shawn Lewis, the assistant city manager, asked if they could go directly into the questions asked at the last council meeting on this topic. Erin Fosdick of the Planning and Development division presented. The Sales tax rate was the first question.
Coombs liked 3%. Peck liked 3.25%.
Bagley asked what rate would put them equal to the taxation of the county so a city shop wasn't competing with a county shop on tax rates. Fosdick said the city already had a sales tax that would make it more expensive even with a zero tax. Bagley asked if we'd talked to existing stores. Fosdick said no.
Coombs noted a store outside of the city limits wouldn't want to be annexed in if their taxes went up. Fosdick said neither existing store had asked to be annexed into the city.
Finley liked the 3% tax rate. She moved that the ballot language be for 3%. Coombs seconded it. Finley also liked the floating idea (3-15%).
Vote held: 5-2 in favor of a 3% additional tax, on top of existing sales tax, for marijuana sales in Longmont. Joan Peck and Gabe Santos voted against it.
Peck wanted to say the tax should be higher (the reason for her no vote).
The next question concerned licensing procedures. Should they be based on how liquor licenses are done today? The second question was fee-based and what appropriate fees would be. This would come back in ordinance form. Also to be considered was land use and to keep it out of residential areas similar to how they limit liquor stores today focusing on industrial and light industrial as well as commercial and keeping it out of residential areas and 1000 feet from schools. Jeff Moore liked 1000ft from schools as well as 1000 feet between outlets. Fosdick took it to mean that 1000 feet from schools and 250 feet from residential areas sounded like the preference. A motion was made to only allow these in the gray and red areas of the map and not the mixed use (see map here). Passed 5-2 with Christensen and Santos voting no.
The next question was the selection process. Is it important to limit it to 4 or does a market approach work better?
Bagley said he was a vocal advocate against doing this and he said he sensed the council and community had a different approach and he could get behind that now but also felt it should be limited to four and we'd already voted on that. He was frustrated that it even came up and four was the policy. He was concerned about the little guy, but that we need to have proven businesses who knew how to do this and he didn't think we should be a guinea pig for a new business. A submittal process was best. An open market approach, not limiting to four now, would eventually open it up to too many stores down the road. He also thought the scoring process give preference to companies that have invested in the community get more 'points' and a better shot at getting one of the four licenses and we're not kicking people out of the city (again), like the 10 or 11 stores we kicked out before.
Combs said, say Native Roots doesn't want to annex in, so, can they have 2 licenses? Then, do we have 6 stores instead of four? Two in County enclaves, four in the city limits? (Interestingly, this is exactly where they ended up).
Christensen said four is a good way to let it get going since 58% of the people in Longmont voted for this, and lets us do it slowly. She didn't think it was necessary to just have four and to let the market take care of it, she was 'open to it'. She didn't want us to let in stores, then throw them out, so, it's not a bad idea to limit things by zoning vs. number of stores. She also thought we should reserve two licenses for the existing stores if they wanted to come within the city limits. She did not agree with a $15,000 fee. She thought everyone had already been vetted by the state and we didn't need to charge a huge fee. It should just cover the cost of processing but no more. She thought requiring proof of $400,000 of liquid assets (one of the recommended city staff recommendations/requirements to apply) knocks out the little guy and is bad.
Peck said the $15,000 non-refundable fee only allows in the large established shops. We're supposed to be a city that welcomes and encourages small business. She seemed to be for a more free market approach that limited stores by distance from each other vs. setting a number of stores, all without an RFP process.
Fosdick said there are no separation requirements between businesses today and that it means there are issues with that approach in choosing who get's a license such as first come first serve? Something else? Public safety (police) said they wanted the businesses closer to each other so there isn't a public safety concern about them all being in one area. Looking at a map, they thought a market-based approach was worth considering. It could be 1 store, or it could be 10. She said a more simple/transparent approach was the simple approach.
Peck said what limited their shops was they couldn't find that many people that would rent to them and that seemed to limit shops in other cities.
Jeff Moore said he thought four stores were the best approach. He thought we should reserve spots for the two existing businesses - we'll end up with six stores with the intent to annex within six months or some other period of time. He likes the idea of having a complete application process and they have the resources to support the business. He doesn't like a scoring system (RFP), he would want a lottery based on qualified applications. He wanted to make sure that if we collect taxes, the question of what programs should we be dedicating that money to, are answered.
Christensen thought affordable housing would be a good use for the tax. She thought a window for the application would limit the number of applications (30-60 days, for instance).
Coombs said to go with option 2 (open market) for a limited amount of time/months. He was concerned that lotteries aren't fair and get legally challenged.
Finley said we should have a 30 day application period and a free market (option 2) approach. With a 30 day window, you don't get businesses kicking out others to get a higher rent. Coombs agreed.
Fostik said: I hear you say, we'd allow zoning to limit the area to 250 away from residential and 1000ft from schools and we'd only have a 30 day window.
Bagley asked is this is a zoning approach, and does that mean we could get up to 20 stores if we get 30 applications in 30 days. Fostik said they would require site control which means only one application at any given spot would be accepted. Assigned lease or property ownership based. It is unlikely every property (20) would get a store. Fostik said we could limit the number of licenses by an individual. Bagley said the total number of stores could still be up to 20 by this motion, meaning unlimited stores (i.e. up to 20). Coombs said with a 30-day window it would be 2, 3, 4, maybe six.
Fosdick said it could be 0 or it could be 50, but we're restricting it quite a bit by only allowing it in the gray and red areas on the map and only for 30 days.
Bagley then asked what other cities had a free market approach. Fosdick said many cities did siting Denver and Boulder, but each did things in different ways.
Coombs said if he thought it would be more toward 6 or 7 stores that with a 30-day window and limited areas, it would work best. It would require less staff time and make things simpler.
Harold Dominguez said if you pick a number (like 4) you know what you get. If you open it up, it could be 20. It may not happen, but we don't know it won't and we'll get 20 people doing it. That's the risk. Certainty vs. uncertainty.
Finley said there aren't that many leases in the allowed area that would let in 20 and a 30-day window is short. The other options (RFP and Lotteries) have created big problems for other cities.
She motioned that we go with option two, open market, with a 30-day window. Coombs 2nded it. Christensen wanted just the red areas considered which would limit it by zoning. She's for option 2 (free market) with a 30-day window.
Bagley just texted 'an expert' and said even Denver just put caps on this ( to be fair, Boulder currently has 27 cannabis related outlets. Longmont's population is 92,858 and Boulder's is 108,090 per Google as of 2016). He says the free market model is not the standard and he'd be voting against it.
Santo said 'Leave it the way it is' (i.e. prohibited).
Christensen said if we wanted to put a number on this of say, 10 max applications, can we do that? Shawn Lewis said if there's a line out the door, how do you pick which 10? Market-based with a cap is very hard to do.
Peck then asked, again, about the $15,000 fee and how did you come up with that. Shawn Lewis said they picked the highest one (Adams county) was the one they went with for a limited number of stores (i.e. four stores). Apparently, 2 businesses said higher than $15,000 was better (i.e. existing cannabis businesses).
Coombs said 'if someone turns in an application and $15,000, could we refund say 50% of the fee if we throw out the application? He's conflicted and thinks 2 and 1a both have advantages.
Jeff Moore said 'When did we talk about more than four stores'. Fosdick said 'one of the things we talked about was four and there was some question if that number was really two or really six, but, as the task force went through options they realized there were potential challenges for RFP's and Lotteries, as they looked at the map what would the risk be for a market based approach limited by zoning and they thought it was fair to bring it back to you even though council didn't direct them to to it because it would be much easier to administrate it.
Moore said said 80% of the stores would be in his ward and he was objecting to market based option two for that reason. A market-based system was not something he would support. He wanted four stores.
Coombs said he's now leaning toward four stores and doing the 1a approach (RFP).
Bagley said, let's do 1a, limit it to four stores and look at it again in 2 years. Bagley said there will be unforeseen consequences that means we should start slow and revisiting it in the future and growing the number if it makes sense.
Coombs asked which is the riskiest for the city, 1a (RFP) or 1b (Lottery).
Shawn Lewis said 1a is the riskiest in terms of liability (challenge scoring and choosing the 4 winners). 2nd was the lottery and the least risky, and why they brought it back to the council, was the free market approach (option 2). It allowed the least legal exposure to the city.
Christensen said Louisville opened it up the applications, only 3 applied, one failed, and they only have 2 now. She thought we're more like Louisville then Denver. She likes number 2.
Jeff Moore said we can always add more and that starting with four is the way to do this. It's been the direction for almost a year and we can't keep flip flopping around.
They went back to the motion to vote on option 2 (free market) with a 30 day window and voted.
The council voted down the free market option with Jeff Moore, Brian Bagley, Gabe Santos and Joan Peck voting against it. Christensen, Coombs and Finley voting for it.
Peck said she changed the vote to look at the licensing fee again, and we could reimburse say 50% of the fee. She moved they go with option 1a.
Bagley asked who voted for what. He said if they vote on 1a. Staff (Fosdick) said she wanted clear direction. Is it 2 with 2 in the county? 4? 6?
Bagley said, 2 new stores, give the existing 2 stores X time to decide if they want to annex in. If not, they'll allow two other's to come in. He's effectively saying 6 stores if the two not in the city don't apply.
Peck said, go with 1a, with 4 stores, without consideration for the 2 in the county. Coombs seconded it.
This passed 6-1 with Gabe Santo's voting against.
Fosdick brought back:
3% tax rate
Look at license fees with a portion refundable.
Ammendments to development code to allow it in commercial zones (red and grey only)
1000 ft from schools
250 feet from residential areas.
Only 4 stores through the 1a (RFP) process.
No consideration is given to businesses not currently in the city.
Bagley then moved to reconsider what was just passed and to take into account specific weight for those who want to annex into the city. He moved that they direct staff to create a scoring RFP system, but they do give preference/weight to those stores that are willing to annex into the city.
Coombs said why would they do that and not just try for another store in the city?
Peck said if we do this, don't we need a window for the annexation process? Fosdick said it would take 6 months minimum to do that. She wants a 30 day window.
Bagley said, let's vote on what we just made a motion on first, then on how long it should be.
They voted on Bagley motion.
The motion passed with Christensen and Santo's dissenting.
Finley said, as far as timing, they have to begin within 30 days, but they have to finish it within a year.
Moore asked if 1a had a time motion, Fosdick said not specifically, but they could set a time limit. Jeff moves they give them 60 days to move for annexation from council. Bagley said, 60 days from when? Moore said 60 days from when ordinance becomes effective.
Vote was on this motion:
Passed 6 to 1 with Santo's dissenting.
Fosdick said they'll will 'the how' back for finalization to the City Council as soon as they can get it done.
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The discussion by the city council started at approximately 1 hour, 45 minutes into the meeting and ended about 3 hours, 3 minutes into the meeting. Click on the videos play button below to start at the beginning of the marijuana discussion:
https://youtu.be/27hCtcq1DV4?t=1h45m12s
