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SF may create a Cannabis Department

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In November, voters approved Proposition 64, which legalizes recreational marijuana statewide beginning in January 2018. (Jessica Christian/2016 S.F. Examiner)

San Francisco may grow city government by creating a Cannabis Department to handle an expected flood of applicants seeking to sell recreational marijuana when it becomes legal in January 2018 throughout California.

Supervisor Jeff Sheehy, who Mayor Ed Lee appointed to the District 8 post in January, introduced legislation last week that would create a seven-member Cannabis Commission and Cannabis Department with a director and staff.

The commission will decide whether to grant or deny permits related to commercial cannabis businesses as well as decide whether to suspend such permits based on yet-to-be-developed guidelines. San Francisco is currently working on regulations for the recreational marijuana industry after California voters legalized the drug by passing Proposition 64 in November 2016.

The state is expected to begin issuing licenses for recreational marijuana as early as January 2018, but operations must comply with local laws.

Sheehy’s proposal gives the mayor the power to appoint a director of the Cannabis Department and grants the mayor the power to appoint all seven commissioners.

Sheehy’s legislative aide Bill Barnes said that under the city charter a commission created by an ordinance must have all appointments made by the mayor. Splitting them up between the mayor and the Board of Supervisors would require voter approval.

He likened the Cannabis Commission to the Entertainment Commission, which was first created through an ordinance in 2002 by then-Supervisor Mark Leno. The commission appointments to the Entertainment Commission were initially made by the mayor under the ordinance, but subsequently divided between the board and mayor by voter approval of Proposition F, also in 2002.

Barnes pointed out that the mayoral Cannabis Commission appointees would require approval by the board. It is a high threshold, however. To reject mayoral appointees would take a two-thirds board vote.

Supervisor Hillary Ronen said she supports the creation of the department, but had yet to review the proposal. She said she “absolutely” preferred split appointments on the commission. The first opportunity to ask voters to split up appointment power on a cannabis commission would be at the next scheduled election in June 2018.

Some of the most significant city commissions have appointments split between the mayor and the Board of Supervisors, such as the Planning Commission and Police Commission. Supporters of split appointments argue it creates a better balance of power between the two branches of government and better representation of neighborhood concerns.

As The City faces budget deficits and other financial uncertainty from possible federal cuts under President Donald Trump, costs of creating the department would likely be a concern. Barnes, however, said that Sheehy doesn’t want any general fund dollars funding the department.

“It will be a fee-based department,” Barnes said. That means the cannabis industry will fund the department’s staffing costs through permit and license fees, rather than the regular taxpayer.

When announcing he was going to craft legislation to create such a department last month, Sheehy said he wanted a department “that will function as single point of contact for cannabis in San Francisco to ensure that we have good quality operators and that we are preserving and protecting the quality of our neighborhoods and that there will be accountability.”

The creation of the department was among recommendations made by the State Cannabis Legalization Task Force. Terrance Alan, who chairs that task force, also was influential in the creation of the Entertainment Commission, on which he also served.

The commission “shall conduct hearings upon applications for permits related to commercial non-medical cannabis businesses, and issue, deny, condition, suspend, or revoke such permits in accordance with applicable laws and regulations,” the legislation says. “The commission may impose reasonable conditions upon the issuance or renewal of non-medical cannabis business permits, consistent with applicable law and regulations, for the location and activities for which a permit is sought.”

Permit decisions could be challenged before the Board of Appeals.

The legislation does not impact permitting around medical cannabis dispensaries, which is overseen by the Public Health Department and Planning Commission.

Sheehy hopes the board will approve the legislation in time for the budget process for the fiscal year beginning July 1. A board committee is expected to review it in May.

While state licensing doesn’t begin until January, Barnes said it may be wise to start processing local applicants before then given the often time-consuming processes of going through the various city departments. “We may want to start sooner,” he said.

The mayor may authorize the Cannabis Department staffing in his budget proposal for the fiscal year beginning July 1, which he must submit June 1 to the Board of Supervisors for review and adoption.

“We are in the process of reviewing Supervisor Sheehy’s legislation,” mayoral spokesperson Ellen Canale said in an email to the San Francisco Examiner on Friday.

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