Kevin Hume_Examiner

Trimming the Supply

San Francisco has more dispensaries per square mile than any other major California city. With a current 37 dispensaries open and 41 delivery services operating in our 47-square mile city, that’s twice as many pot retailers per square mile than Los Angeles, Oakland, Sacramento, or San Jose, according to a recent report from the San Francisco Office of the Controller.

And that may be just too many places to buy weed. The same report found that average cannabis sales were decreasing at each dispensary as more new retail shops got approval, leaving a smaller piece of the pot pie for the new equity dispensary owners who were supposed to enjoy financial restorative justice for the harms they suffered during the War on Drugs.

Since the system may be shortchanging those new equity dispensaries that tend to be smaller and locally owned, one San Francisco supervisor is proposing a radical measure to reverse the declining sales trend.

Sup. Shamann Walton has introduced a bill demanding that San Francisco just stops considering any and all new applications for cannabis dispensaries.

“It appears doubtful that the San Francisco market can sustain additional Cannabis Retail businesses in a number greater than those already in the application pipeline,” Walton says in his proposed legislation.

In addition to the nearly 80 combined dispensaries and delivery services operating in San Francisco now, the San Francisco Office of Cannabis is reviewing applications for 145 more dispensaries and 42 more delivery services in a town that’s already jam-packed with more of these per square mile than anywhere else in the state.

Walton proposes “ceasing to accept new applications for Cannabis Business Permits for retail sales — including permits for Storefront Cannabis Retail, Delivery-Only Cannabis Retail, Medicinal Cannabis Retail, and retail-related Cannabis Microbusiness.”

The bill would cut off retail applications, and would not affect other sectors like indoor growers or testing labs. But most San Francisco pot smokers only ever deal directly with dispensaries and delivery services. From a consumer standpoint, this would be one of the most significant changes to hit the local cannabis industry since recreational cannabis was enacted in January 2018.

The moratorium was not Walton’s idea. It was recommended in December in the report from the Controller’s office. “The Board of Supervisors and Mayor should consider a moratorium on new storefront retail applications,” that report says. “There is such a high number of storefront retail applications that this activity may not be viable for many of these equity applicants, who may be expanding resources to reach a market that may already be saturated.”

It’s highly unlikely that the nearly 150 new dispensaries who’ve applied for permits will actually open. Many of those applications are “On Hold,” because their location is within 600 feet of another permit application, and local law says there cannot be two dispensaries that close to each other. Others just won’t make it all the way through a costly and years-long approval process.

Walton’s bill is co-sponsored by Sup. Ahsha Safai, who previously put a similar moratorium on dispensaries in his Excelsior district three years ago. Both Safai and Walton insist they support legal cannabis. In fact, both have received some conspicuously generous donations from some of the biggest dispensary operators in town.

Safai and Walton both ran in Tuesday’s election for something called the SF Democratic County Central Committee (DCCC), a local party committee that makes endorsement and fundraising decisions for Democrats. While the DCCC bylaws place a $500 limit on outside campaign contributions, those bylaws have been flouted by several DCCC candidates who exploit that there is no legal enforcement of that rule.

And these two supervisors have taken some of the largest donations that go way beyond the $500 limit, many of these donations being from cannabis dispensaries.

According to campaign filings at the SF Ethics commission, Sup. Walton’s DCCC campaign received a $3,000 donation from FMSF, Inc. dated Feb. 19. Permit documents from the California Bureau of Cannabis Control show that “FMSF, Inc.” is the legal name for Moe Greens dispensary on Market Street.

His campaign also took a $3,000 check on Jan. 20 from Outer Sunset Holdings, which state documents show is the parent company of the Barbary Coast Sunset dispensary. That same day, he received another $3,000 check from BCSF, Inc. which is the listed owner of the Barbary Coast location on Mission Street. Walton’s DCCC campaign had previously reported another $3,000 from FMSF, Inc. on Jan. 24.

That’s a total of $12,000 from the cannabis industry to Walton’s 2020 DCCC campaign, which represents 44 percent of his $27,000 war chest of cash campaign contributions.

Safai’s cannabis contributions are much more modest, but have exceeded the committee’s limit. Safai’s DCCC campaign filings show a $1,000 contribution from Moe Greens co-owner Brendan Hallinan dated Feb. 13, as well as $500 contributions from both BCSF, Inc. and Outer Sunset Holdings.

There is no evidence that any of these contributions have influenced the supervisors’ cannabis policy proposals. But it shows that some of the bigger local cannabis industry players have figured out how to play ball in San Francisco politics.

Still, would a freeze on new dispensaries help established shops, and the up-and-coming new equity dispensaries? We asked a few dispensary owners, and their responses to the proposal were a mixed bag.

“It’s too little, too late,” SPARC owner Erich Pearson tells SF Evergreen. “Supervisor Walton is proposing the moratorium in an attempt to stem the ultimate failure of many of the current applicants, and I am doubtful this will prevent that. The city has failed to grasp the economic realities of the program from day one.”

But over at the Green Cross dispensary, owner Kevin Reed voiced support.

“This proposed ordinance seems totally reasonable to me,” Reed says. “I agree with the Controller’s reasoning that a moratorium would protect the interests of those equity retail applicants who are already in the pipeline. Allowing more applications would just make the strained permitting process even slower.”

Walton’s proposed moratorium is a long way from being approved. He introduced the bill on Feb. 11, and it’s now under a 30-day hold before it will even be discussed by the board’s Public Safety and Neighborhood Services committee. The earliest they can take it up would be their March 12 meeting, and the proposal could remain in committee for months, or get rejected outright, before going to a full Board of Supervisors vote.