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Pot Shots: South Bay Cities Want a Piece of Budding Marijuana Market

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A growing number of smaller cities that want a piece of the newly expanded marijuana market are considering ordinances that would sanction pot sales. Photo by Mitch M, via Shutterstock.

A growing number of smaller cities that want a piece of the newly expanded marijuana market are considering ordinances that would sanction pot sales. Photo by Mitch M, via Shutterstock.

South Bay communities that once made pariahs of pot clubs have now warmed up to them. In a move that should surprise absolutely no one, Santa Clara County jurisdictions like Los Altos and Milpitas, as well as Redwood City in San Mateo County, now want a slice of California’s legal and highly lucrative cannabis market and are in various stages of making that happen.

Mountain View has made the most progress on opening its borders to buds, said Silicon Valley Cannabis Alliance President Sean Kali-rai. The city recently started studying neighborhood retail areas like El Camino Real for up to six brick-and-mortar locations.

“Their planning department’s really on top of things and they’ve had a number of community meetings,” Kali-rai said. “They’re super efficient, Mountain View has just been awesome.”

After generating nearly $61 million statewide during the first quarter of 2018, pot clubs are a proven cash cow basically anywhere that one opens. San Jose’s de facto weed monopoly raked in $10.5 million in marijuana business tax revenue last year but will dissolve whenever Santa Clara and Milpitas catch up. The city could be forced to compete with its neighbors if that happens, Kali-rai suggested, by perhaps lowering its marijuana tax or allowing more businesses to open.

“If you take tax dollars out of San Jose, will San Jose look at expanding the number (of clubs) so they don’t have that economic leakage?” he added.

Santa Clara, which could be the closest city to lure buyers away, will outline its proposed marijuana business ordinances and taxes at a community meeting on May 30 at Northside Branch Library. Milpitas planning staff are also working on creating a zoning map and holding a study session to the City Council in July. But more available commercial space gives San Jose an advantage for attracting cannabis-related ventures like manufacturing, distribution and lab testing, all of which fit perfectly with the city’s economic goals and could offset loss from clubs opening in adjacent cities. To that end, San Jose held its own community meeting on Monday about allowing such businesses to open in town later this year.

The entire region could outpace San Francisco and Oakland, which have been recently losing cannabis businesses as merchants look for the best tax rates and rents around the Bay Area, and also offers more agricultural space for cultivation.

“Businesses will go where it’s easiest to do business,” Kali-rai said. “This industry will be no different.”

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