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'Thorough process': Lompoc cannabis applicants, city officials navigate new terrain

'Thorough process': Lompoc cannabis applicants, city officials navigate new terrain

From the Lee President's Award - Green Rush in the 805?: Cannabis on the Central Coast - Looking at land use, money, science, law enforcement and education series

When Kaleb Asfaha decided last year to start his own company and transition into California’s burgeoning cannabis industry, the former Bay Area-based pharmaceutical chemist wasn’t sure where he would open up shop.

It was on the recommendation of a friend that Asfaha decided to explore Lompoc, a town that he was familiar with through his undergraduate studies at UCSB.

The more Asfaha researched the area his confidence grew that Lompoc, which since Jan. 1 has adopted cannabis ordinances on par with Los Angeles and San Bernardino as some of the most permissive in the state, would be the perfect place for his cannabis testing lab.

“Everybody’s just been really welcoming,” he said of his experiences working with the city.

Asfaha is among 17 applicants who have submitted paperwork to the city of Lompoc for cannabis-related business licenses since March 1, when the application period opened. The city had approved and issued four licenses, as of Aug. 28, though no businesses have opened in the city.

Although some of the applicants have indicated they would like to see a faster turnaround from submission to verdict, several said they are pleased with the process and the level of service provided by the city as they navigate the uncharted path.

“They’ve been pretty helpful from the various departments we’ve dealt with,” said Richard Smith, another applicant, of his experiences dealing with city staff. “They’ve been pretty good about getting information for prospective businesses that want to open.”

Getting the green

One of the biggest hurdles for Lompoc-area applicants, as in other regions of the state, has been the cost.

Depending on the type of license being sought, which impacts the complexity of the application, the fees to even begin the process could run into the tens of thousands of dollars.

The city is requiring an initial deposit of $11,900 per application, plus $1,100 per applicant and per each person listed in the primary section of the application. Those funds, according to the city, are used to pay all initial and annual fees to cover the city’s costs for processing, reviewing and auditing the licenses.

Asfaha, as one example, said he paid about $14,000 when he submitted his application, which is still pending, to open Merso Labs on West Laurel Avenue.

“I think the high fee will make it difficult for businesses that want to start out small,” he said. “If you have a $100,000 budget and then 15 percent of it goes to a fee, it’s going to make it hard to make ends meet for a business.”

Still, Asfaha acknowledged that the high fees could be a good thing because they'll likely weed out less serious applicants, as well as make room for larger businesses, which in turn could employ more people and contribute more to the local economy.

Smith, a Lompoc native who has already been running his CropLand Health medical cannabis delivery collective, said he exhausted all of his savings to get the ball rolling on the first of two cannabis licenses that he plans to seek from the city. The first, for a retail dispensary, has already set him back about $13,000. He intends to seek a second license for distribution.

“It’s costly if you want to be thorough and make sure you’re covering all the regulations,” he said. “I’m not a lawyer, and some of the things the state provides, you have to interpret them. So yeah, it’s a team effort with myself, lawyers and consultants.

“Luckily our town doesn’t require excess regulations beyond what the state requires, so the state process should be much easier.”

Navigating a new course

The use and planned business locations for the four licenses that have been approved in Lompoc are:

  • A medical and adult-use retail store and vape/smoke lounge that will also be able to offer on-site consumption and deliveries, at 1101 E. Ocean Ave., issued to Todd Mitchell;
  • A medical and adult-use retail store and delivery service at 423 W. Ocean Ave., issued to David Macfarlane;
  • A medical and adult-use retail store and delivery service at 1017 E. Ocean Ave., Unit A, issued to Mehran Mike Agazaryan; and
  • A dispensary at 805 W. Laurel Ave., issued to Victor Manuel Sanchez Jr.

The average length of time the city has taken to process applications has been about four months, according to Samantha Scroggin, the city’s public information officer.

“We have streamlined the application process to move as quickly as possible, while ensuring thoroughness and accuracy,” Scroggin said. “If there are omissions in submitted materials, or clarification is needed, more time might be necessary.”

The city lists a three-stage license application process.

The first stage involves an initial review by city staff, the payment of fees, and environmental reviews, if necessary.

During the second stage, the city works in partnership with SCI Consulting Group, a firm that offers cannabis-related consulting services, to review the application and verify its accuracy.

Lastly, the application goes back to the city to ensure that it meets the necessary requirements before receiving final approval from the city manager.

An applicant who is denied a license due to noncompliance after that third stage will have a 10-day period in which to file an appeal with the city clerk’s office.

Some of those currently in the application process have commended the assistance received from various city departments, particularly from the city clerk’s office and the planning and police departments.

Still, a couple of complaints have centered on the lengthy period between submittal and approval/denial, as well as the lack of information offered during that time.

“We don’t know where we’re at with the consultants; it’s kind of like a black hole once it gets there,” Smith said in late August, about six weeks after submitting his first application. “If they have questions about your application, I guess they reach out to you.”

‘Thorough process’

Getting through the city’s application process is not only an expensive endeavor but it can also be labor intensive.

The city’s standard application is 18 pages, and at least some of the completed applications are being returned in binders.

The application includes background info on the applicant, which covers things like where they’re from and information about other businesses or business interests they might have, as well as detailed questions about the proposed cannabis business, such as an overview of business operations including odor-abatement plans.

“You’re basically having to develop all of your processes in advance of your business,” Smith said. “Normally, startups are doing that as they’re starting up and developing and are going through a trial-and-error phase. We have to put it all down on paper first before we do any of it in action. It’s a thorough process with a lot of detail.”

Asfaha said he used his pharmaceutical background to his advantage. He noted that he was accustomed to meeting the stringent regulations of the U.S. Food and Drug Administration, so he took that same approach with his new business and tailored it to cannabis.

“We wanted to make sure it was all clean and crisp and that every base was covered,” he said.

“It’s kind of a much easier transition going from something super regulated,” he added. “Cannabis is still regulated, but it’s a little less (than pharmaceuticals).”

Neither Asfaha nor Smith have been issued a license from the city, but both are confident their businesses will be operational before the end of the year.

Asfaha — who commended the work of the city and his local real estate agent in helping him secure a location — said that much of the confusion that can occur during the licensing process comes from the newness of the industry and that it's regulated by the state while being outlawed federally.

“I think what’s made this process more difficult than anything is the federal prohibition,” he said. “That has such a long chain of effects, even down to the local level. I think the city has done a lot to help, and even the zoning for testing facilities is much more open than just industrial areas for cultivators and manufacturers.

“The big downfall,” he said, “is the four-month turnaround for our application. That’s kind of tough. I hope they can speed that along.”

More information about the city of Lompoc's commercial cannabis regulations can be found on the city's cannabis resource page at www.cityoflompoc.com/services/city-clerk/commercial-cannabis-business-in-lompoc.

Willis Jacobson covers the city of Lompoc for Lee Central Coast Newspapers. Follow him on Twitter @WJacobsonLR.

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