The capital city is readying to become a cannabis production center under a plan advanced Tuesday by a City Council committee.

The council’s law and legislation committee moved forward with a conceptual plan to allow indoor cultivation of marijuana in commercial, industrial and agricultural zones in Sacramento – with a possibility of granting conditional use permits for limited facilities operating just outside of residential areas.

The city’s push toward marijuana industrialization is expected to culminate in a plan to be voted on by the City Council in November, with facilities to be given operating licenses next year.

The effort, which would generate new tax revenue, is accelerating after city officials recently announced that Sacramento’s 30 medical marijuana dispensaries produced a record $4 million in city tax revenue during the 2015-16 fiscal year. The revenue, from a 4 percent local medical marijuana tax, has served to underscore the potential economic clout of cannabis businesses in Sacramento, a city long politically supportive of medical marijuana.

The city is surrounded by local governments, including Sacramento County, that ban marijuana businesses, and its dispensary sales have taken off as numerous pot stores reopened since federal forfeiture notices forced many to close in 2011 and 2012.

Now, with federal authorities backing off on enforcement in states permitting marijuana use and California voters to consider legalizing pot as a recreational drug in November, Sacramento is weighing decisions on how far it wants to go into the legal pot business. And Tuesday’s committee session revealed intense concerns among community groups over how close marijuana businesses might be to neighborhoods.

The law and legislation panel moved forward recommendations by the city’s planning commission to allow pot-cultivation sites within 300 feet of neighborhoods with strict rules and a conditional use-permit program giving residents input on such operations. Previously, City Council members Allen Warren and Eric Guerra complained that industrial areas in their northern- and eastern-Sacramento districts, respectively, would receive the bulk of the grow rooms. The planning commission recommended allowing the facilities closer to neighborhoods to more evenly space them throughout the city.

But that notion didn’t sit well with Kathy Anuszczykof the Hagginwood Community Association in North Sacramento. She urged the city to keep such facilities far from homes and also called for a cap on the number of cultivation sites in the city.

“We’re the neighborhoods. We’re going to live with this,” Anuszcyzk told the committee. “City Hall is not going to be next to this. My neighborhood will be.”

Brad Wasson, Sacramento’s revenue manager, said the city anticipates another $2 million in revenue from a 4 percent business tax from commercial marijuana cultivation facilities expected to be licensed in Sacramento by next year. But the revenue figures could be bigger, depending on how many growing facilities – and what scale – the city ultimately approves.

Wasson said the city is looking to persuade traditionally reclusive marijuana producers to operate transparent, licensed cultivation businesses. The city is seeking detailed security plans, including video surveillance, criminal background checks on employees, odor-control systems, efficient energy- and water-use requirements, and strict rules on shipping marijuana and handling cash.

“I would like to try to figure out how much medical marijuana Sacramento people need, and we will be able to support that with grow sites,” Wasson said. “It’s hard to get real information about what we need. They’re still very nervous about their grow sites. For years, they’ve been busted for growing marijuana. There is a little trust issue you’ve got to get to.”

Wasson said 180 individuals already cultivating within city limits have registered with officials in hopes of getting operating permits. He said many are in residential zones, where no commercial growing is allowed, and would have to move under the proposed rules. A total of 600 potential applicants have contacted the city about commercial cultivation, he said.

City staff members, who said they are seeking to allow at least enough cultivation to supply local dispensaries, haven’t recommended a cap on total marijuana production but have floated the idea as an option for the City Council. Under plans discussed by the law and legislation committee, the city could approve commercial growing permits for up to 22,000 square feet of indoor cultivation space to applicants who meet the city’s criteria.

“I think we can have a model ordinance, be a model city on cultivation, manufacturing and dispensing marijuana in a manner that offers a balance between the industry and community needs and creates a revenue stream for the city at the same time,” said City Council member Jay Schenirer. “The fact is it’s legal and it’s here, so let’s do it right.”

Schenirer championed Measure Y, a June ballot initiative that would have imposed a special 5 percent city tax on marijuana cultivation revenue and directed revenue to a special fund dedicated to programs and services for children. It fell just short of the required two-thirds vote for passage.

Schenirer said he will push a less-formal proposal before the City Council later this year to direct standard business taxes from cultivation – which don’t require voter approval – for youth programs.

Wasson said the city expects to follow the cultivation ordinance with other regulations for marijuana delivery services — with drivers working only for local dispensaries — and cannabis product manufacturing, including permits for producers of marijuana foods and concentrates.

Lanette Davies, whose Canna Care dispensary in North Sacramento is seeking a permit for a cultivation facility, said she expects considerable debate on the city’s plans before a final proposal reaches the council.

“I think you’ll see a lot of changes – I’m not sure what,” she said. “I’m pleased with it so far. Sacramento is taking a leadership position in showing the rest of California how well we can do things.”

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Founder & CEO of 420 College.

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