Pasadena City Council Votes to Continue Cannabis Permit Litigation

Pasadena voters approved a tax revenue measure to permit commercial cannabis businesses in the city on June 5, 2018. The tax measure permitted six retail operations. Pasadena’s restrictive zoning ordinance and flawed permitting process created a litigious battle that stained the city’s new cannabis industry. The end result is increased costs for new cannabis businesses and ongoing contentious proceedings.

Prior to the cannabis tax ballot, approximately thirty (30) illegal cannabis dispensaries were operating in the city. Those dispensaries are no longer operating. Pasadena has a population of 138,101 and is 11 miles from Los Angeles. The city was optimal for any cannabis retailer, which meant that the process was competitive.

Like most cities, Pasadena implemented buffer zones around sensitive use areas that included schools, daycare centers, youth centers, rehab centers, libraries churches, parks, and residential neighborhoods. The zoning ordinance also required cannabis retailers to be 1,000 feet from another cannabis retail store. The city adopted significantly more restrictive buffer zones than required under state law.

The buffer zones limited the number of sites in the city that complied with the zoning requirements to three or four. This number of available retail sites was less than the 6 firms that the city determined were qualified for a cannabis retail permit out of 122 applicants.

The permitting process became a nightmare for the city when three (3) applicants Harvest of Pasadena LLC, SweetFlower Pasadena LLC, and the Atrium Group LLC sought real estate in the same district. Harvest of Pasadena, LLC was the first applicant to submit a completed application with real estate that complied with the zoning requirements.

The facts surrounding the applications of Sweeflower and Atrium are difficult to understand and center on the interpretation of what it means to submit a “completed application” to the city manager. The aftermath of Pasadena’s decision to accept Harvest’s completed application set off a firestorm of protest from Atrium and SweetFlower. To date, Pasadena has released over 150 documents related to the proceedings and held two hearings to appeal the decisions.

Pasadena’s city council voted down a proposal at last night’s city council meeting that would have resolved the issue by reducing the buffer zones between cannabis stores from 1,000 feet to 450 feet, and to permit three (3) stores in one district. The city council’s decision will continue the fight.

Pasadena continues to bungle the process by permitting an appeal of Harvest’s CUP. Pasadena’s city council is scheduled to hear the appeal of Harvest’s CUP on December 16, 2019. The continued litigation places uncertainty and additional costs on a business that complied with the rules and obtained a valid cannabis permit.

There are no winners in the Pasadena cannabis fight. Other cities and the cannabis industry should take away lessons from this process. Cities should ensure that there are enough properties available given the sensitive use buffers. Lassen County recently adopted an ordinance to permit 7 retailers with no available real estate. The cannabis industry must also recognize that the risk of litigation will prevent cities from entering the industry as the additional costs are not being absorbed by tax revenues.

It may be time to reconsider the permitting process in California. Los Angeles County has floated a model ordinance and a licensing process. A centralized approach may reduce the overall risk and cost for the cities and applicants.

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