First Retail Marijuana Establishment!

Embarc Ventura, also known as Responsible and Compliant Retail Ventura LLC, became the first retail marijuana establishment in the city when it debuted on Main Street a few weeks ago. The Ventura City Council has all of a sudden approved six dispensary outlets for the city's downtown district, which is more than double the amount that had been planned for 2021. This comes despite the fact that the state of California legalized cannabis in 2018, and the city had previously placed a complete prohibition on the cannabis industry.

The municipal council and city manager came to the conclusion that a restricted-license jurisdiction would be the best way to ease into the sector without generating a stir in a largely family-oriented neighborhood. Because of this, they decided that they would only allow a certain amount of stores.

In October of 2016, out of a total of eight applicants, three companies were selected to get permits. However, the other five businesses appealed the decision, which led to a compromise in which they were each granted three additional permits.

The city awarded the second round of evaluations to the consortium known as Safeport, which included the companies MOM Ventura LLC, Shryne Ventura LLC, and Harbor Management Group LLC.

Those who were picked the year before, such as The Artist Tree LLC of West Hollywood, were under the impression that the city caved in after maintaining stringent conditions for their own permitting campaigns, which resulted in a reduction in the market share of each business.

Lauren Fontein, founder of The Artist Tree and executive in charge of regulatory compliance, expressed her sadness that the city had given in to the demands of a few individuals rather than standing firm on its initial plans.

Waiting costs

Fontein's dispensary rented a location in the heart of Ventura, close to Embarc's headquarters. Fontein claimed that the city did not issue her company any licenses to begin renovations or construction after the other applicants challenged the city manager's decision from last year.

A business, according to Fontein, must recoup the cost of applying, which can reach $100,000 when factoring in application fees, consulting fees, and the price of building mockups of stores.

Fontein claims that the city did not take into account these commercial implications when it granted three more licenses. According to Fontein, the group had tried to have a voice in the city's settlement talks. They utterly ignored us.

During the appeal process before the California Office of Administrative Hearings, the initial permit winners could file filings and appear at hearings, as stated by Miles Hogan, senior assistant city attorney for Ventura. However, the "actual" negotiations were private conversations between the five appellants only. The city saw this settlement as preferable to a drawn-out dispute that could have further delayed the first three applicants' ability to open for business.

Hogan stated that the city's view was that the three original grantees would not be harmed by the settlement arrangement. "Completing the procedure and having them open as soon as feasible were both made possible by reaching that settlement agreement.

Haven #2 LLC and 805 Reefinery Inc., the two companies that were not chosen by Ventura in the second round, have 90 days to file a lawsuit challenging the interim City Manager Don Pittman's most recent pick.

Localized stress

The California Department of Cannabis Control states that local governments have the right to ban cannabis dispensaries. This has led to the state being a hodgepodge, with some localities having significantly more dispensaries than others.

The city of Ventura is one of just four municipalities in Ventura County to permit all stages of the cannabis industry, from cultivation to retail sales to delivery services to distribution to testing to manufacturing. Only distribution is legal in unincorporated Ventura County.

Most California municipalities begin as limited-license jurisdictions, but after multiple rounds of appeals by business applicants, they eventually give in and allow more permits, says Matt Portnoff, a partner at Venable LLP, a law firm with an extensive cannabis practice with offices in Century City.

Portnoff argued that this approach was frequently inefficient and counterproductive for the local community.

Despite the fact that none of Portnoff's clients were involved in the case against the city of Ventura, he has handled a number of local application reviews involving subjective judgment on behalf of city leaders because there are no statewide standardized systems for measuring community benefits or business strength. Permitting decisions become more vulnerable to litigation in the absence of established criteria for selection.

According to Portnoff, retail expansion into new cities is now as much a test of lobbying power as commercial judgment, with only the most financially secure companies able to weather the inevitable legal challenges.

The city of Ventura has awarded licenses to six different businesses, five of which sell "premium" marijuana and have many stores across the state. Most of Portnoff's clients fall into this category, being the kinds of vertically integrated businesses that can weather the delays and inefficiencies inherent in the approval process. Businesses are responsible for the up-front cost of municipal permits and the ongoing expense of city and state cannabis taxes.

I'm not sure how well-equipped a mom-and-pop shop can be to succeed in a lot of those areas, even though there may be all kinds of social justice licensing available in some of those jurisdictions.

It has taken several municipalities until now, five years after the state legalized marijuana, to begin the permitting or voting process to allow legal dispensary businesses. Eighteen municipalities and counties will share $4 million from the Department of Cannabis Control to create and implement local cannabis retail licensing programs.

Of these, $600,000 was allocated to Los Angeles County and the city of Calabasas respectively, to investigate the possibility of retail cannabis sales.