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Commercial Medical Marijuana (Cannabis)
Status of Ordinance to Regulate Commercial Medical Marijuana Activities

The City of Grover Beach currently prohibits all commercial medical marijuana activities (e.g., dispensaries, manufacturing, distribution, testing, cultivation and nurseries).  

  • July 5, 2016: City Council provided direction for staff to begin working on a draft ordinance to regulate commercial medical marijuana activities.
  • August 15, 2016 and September 6, 2016: City Council provided direction on major components of the draft ordinance. (No formal Council action was taken at either of these meetings.) 
  • January 11, 2017:  The Planning Commission held a public hearing to consider a recommendation to the City Council on the proposed land use ordinance for commercial medical cannabis activity and uses.
    • Planning Commission Action: The Planning Commission unanimously recommended the land use ordinance establishing an Overlay Zone for commercial medical cannabis businesses to the City Council. The Commission also recommended reducing the hours of operation for dispensaries to 8:00 a.m. to 5:00 p.m. Monday-Friday and 10:00 a.m. to 3:00 p.m. on Saturday and Sunday, and applying the 100’ setback from residential zones to all commercial cannabis uses (not just dispensaries as proposed in the staff report). 
    • The proposed Overlay Zone is approximately 70 acres located in the Industrial (I) Zone and a portion of the Coastal Industrial (CI) Zone generally located south of Farroll Road, north of Highland Way, east of South 4th Street and west of South 13th Street: See Proposed Overlay Zone Map.
  • On February 6, 2017 the City Council held a public hearing for first reading of a proposed land use ordinance and an ordinance to enact a commercial cannabis tax. The land use ordinance was amended, with additional direction provided to staff (see City Council Meeting Update - 02/06/17). The City Council also considered and provided direction on a draft ordinance to regulate commercial medical marijuana activities.  
  • On February 21, 2017, the City Council held a public hearing to consider:
    • a land use ordinance to determine where commercial cannabis activities may be located within the city, and
    • a commercial cannabis tax ordinance 
    • Actions:
      1) The City Council provided direction to staff to make certain amendments to the land use ordinance and to schedule the amended land use ordinance for review by the Planning Commission. Recommendations from the Planning Commission on the land use ordinance will then be scheduled for consideration by the City Council.
      2) The City Council adopted the commercial cannabis tax ordinance.
    • For further details on the outcome of this meeting, see City Council Meeting Update – 02/21/17
    • At this same February 21 meeting, the Council reviewed and commented on a draft regulatory ordinance to regulate commercial medical marijuana activities that may locate within the city.
  • The City Council continued its review of the draft regulatory ordinance on March 6, 2017 and is scheduled to further review the draft ordinance on May 1, 2017.
  • The draft Initial Study-Negative Declaration is available for public comment. The public comment period will end on April 11, 2017 at 5:00 p.m. The draft Initial Study-Negative Declaration is based on the current draft of the Land Use Ordinance and Regulatory Ordinance. Please submit all written comments to Community Development Director Bruce Buckingham.

Until the City Council adopts the ordinance regulating commercial medical marijuana activities, the content of the ordinance in its final form will not be known. As a result, the City cannot process any development applications related to commercial medical marijuana activities at this time

If you have any questions, please email them to Community Development Director Bruce Buckingham 


Taxation of Commercial Cannabis Activities

On August 1, 2016 the City Council voted unanimously to place a cannabis tax measure on the November 2016 ballot for consideration by Grover Beach voters. If approved, the City Council would be authorized to enact a tax on commercial cannabis businesses which may establish within city limits. The tax would apply to both medical cannabis businesses and non-medical cannabis businesses, if those businesses are allowed under state and local laws.

On November 8, 2016, Measure L-16, which required a simple majority vote (50%+1) for approval by Grover Beach voters, passed by 70.59%.

The ordinance to enact the commercial cannabis tax is scheduled to be presented to the City Council at the same meetings as the ordinances regarding land use and regulatory matters. Once the ordinance setting the tax rate is adopted by the City Council, the tax would become effective 30 days thereafter.

Summary of proposed tax rate:

Commercial Medical Marijuana Activates: 5% tax on gross receipts.

Non-medical Commercial Medical Marijuana Activities: 10% tax on gross receipt. 

Cultivation and Nurseries: $25 per sq ft on the first 5,000 sq ft and $10 per sq ft on the remainder. 

Once the ordinance enacting the tax rate is adopted, the tax will not sunset and would be subject to annual CPI adjustments. The revenue generated by Measure L-16 would go to the City’s General Fund.

Any tax on non-medical (i.e., recreational) marijuana activities could only occur if the City adopted laws allowing the recreational use of marijuana. 



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