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Mayor Lee proposes Office of Cannabis to permit businesses selling marijuana

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San Francisco residents demonstrated overwhelming support for cannabis, both medical and adult use, with their support of Proposition 215 in 1996 and Proposition 64 last year. (Jessica Christian/S.F. Examiner)

San Francisco is advancing a proposal to create a $700,000 Office of Cannabis to handle permitting of recreational marijuana sales. Meanwhile, The City is expected to propose rules within three months dictating where pot-selling businesses can open.

Mayor Ed Lee introduced legislation last week to create the Office of Cannabis within the Office of the City Administrator, a mayor-appointed position currently held by Naomi Kelly.

Kelly would have the power to appoint the director of the new marijuana department. The Office of Cannabis is expected to include three staff positions costing a total of $472,465 in salaries.

The City Administrator’s budget is up for review Thursday by the Board of Supervisors Budget and Finance Committee.

The powers of the director of the Office of Cannabis would be to “issue, deny, condition, suspend, or revoke cannabis-related permits in accordance with applicable laws and regulations,” according to the legalisation.

Those objecting to the director’s decision could appeal to the Board of Appeals.

The proposal comes as The City has a Cannabis State Legalization Task Force, now in its second year of work, and a mayor’s working group, led by John Rahaim, director of the Planning Department, and Barbara Garcia, director of Department of Health, to figure out how to regulate adult use of marijuana, which was legalized in California by voters last year with the passage of Proposition 64. The state law allows The City to regulate recreational use with local controls like permitting, land use and taxation.

Kevin Reed, founder of Green Cross, one of the approximate 38 permitted medical marijuana dispensaries in San Francisco, opposes the new department.

“Based upon my expertise, I believe the creation of such a department is unnecessary; it increases costs to an already costly and bureaucratic permitting process, burdens the industry, in particular, small business owners, and is poor use of city resources and taxpayer funds,” Reed said in an email to the Board of Supervisors last month.

Reed expressed another concern in an interview with the San Francisco Examiner on Friday “about who is going to end up running the department and all the shady shit that’s going to go on behind the scenes.”

Lee’s spokesperson Ellen Canale argued the office was necessary.

“This is a big undertaking and the centralized office will ensure we leverage and coordinate existing processes and are able to monitor and adjust to this emerging industry,” Canale said in an email Friday. “At its core, this office will be a navigator for the public, businesses, and city agencies in the rapidly evolving cannabis landscape.”

The office would charge an application fee for a cannabis permit and an annual license fee.

The legislation requires the fees be set by Dec. 1 in consultation with the City Controller’s Office which could be set at an amount to pay for such things as an online application system, enforcement, permit processing, education and coordination with state agencies and other city departments. Even with the Office of Cannabis, applicants would still need to comply and go through the other city department processes such as the planning and fire departments.

A previous proposal, introduced by Supervisor Jeff Sheehy, who was appointed by the mayor, would have created a city commission along with the director but that proposal was recently scrapped in favor of a director.

Aaron Starr, manager of legislative affairs for the Planning Department, told the Planning Commission last week that while the commission handles land use it is challenged to address the behavior of operators and that’s where the Office of Cannabis will come in, to “regulate the operator.”

Starr said the mayor’s working group will have “an ordinance introduced by Sept. 1 that changes the planning code as well as the health code and perhaps police and fire code” that will impose regulations of new adult-use marijuana industry, such as where such businesses could operate.

Several planning commissioners said the current rules for medical marijuana dispensaries, such as having to be 1,000 feet away from schools, have not worked because they are too restrictive, creating the now infamous green-zone and a clustering effect of dispensaries.

While Prop. 64 says adult-selling marijuana businesses cannot locate within 600 feet of a school, day care center or youth center, it allows local cities to reduce that restriction, which is what San Francisco officials are discussing.

The state is expected to begin issuing licenses to sell adult-use cannabis in January.

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