Sacramento Taking Steps To Regulate Marijuana Businesses

SACRAMENTO (CBS13) — The City of Sacramento is continuing to move forward with the legalization and regulation of marijuana-related businesses.

On Tuesday, the City Council passed two ordinances relating to marijuana manufacturing and testing businesses. Business owners will be able to apply for a permit beginning May 4.

The rules and regulations are similar to the marijuana cultivation ordinance, which was passed several months ago. Roughly 80 cultivation applications were submitted on Monday, the first day they were accepted.

The city will cap manufacturing businesses at 25 and testing businesses at four.

"Flowers, concentrates, edibles, balms, creams, dabs, tinctures," explained Jeff Hatley, the owner of Sequoia Analytical Labs.

His lab examined more than 900 products last month.

"The main purpose is potency," said Hatley. "They want to know what the strength of it is."

His marijuana testing lab currently operates under it's own best practices, but will soon be required to have a city permit.

"We want to be first in line," said Hatley.

"I've been excited for it honestly," said Carter Lash, the owner of a marijuana manufacturing company called Carter's Aromatherapy Designs.

Lash says he'll also be lining up to get a permit for his marijuana manufacturing business.

"We'll infuse our CBD pain cream," said Lash explaining the work his company does. "We'll infuse our body butter with CBD."

The regulations for manufacturing and testing includes location restrictions. Applicants must develop a community responsibility plan, and be subjected to public comment to get a permit.

"We've also got state licenses to do to, so we've got fees like crazy, and we've got hazardous waste fees," said Hatley.

Each applicant must get a conditional use permit with associated fees of about $20,000. Testing labs are also tacked with a $15,000 operation fee.

"It's ah, it's quite costly," said Hatley.

"It's an awful lot of money for manufacturer that's just trying to make pain creams and CBD products at the end of the day," said Lash.

His type of business, manufacturing has an even steeper operations fee of $30,000.

"We can only charge what it costs us to provide something," said Brad Wasson, the city's revenue manager.

The permit fees cover the city's administration costs and added law enforcement to crack down on illegal operations. City staff estimates that cost to be roughly $5 million.

"We took those costs and estimated how many marijuana businesses there would be and just divided it out," explained Wasson.

Small-business owners say in order to stay in the game, they must adapt.

"Work that much harder and put those hours in to make up for that," said Lash.

The city does make money from a 4 percent voter approved tax on all marijuana revenue. Wasson says that tax brought in $2.8 million last year and is likely to double in the next year as more businesses begin operation.

The city will also develop regulations for marijuana transportation and delivery services in the coming months.