‘We want protection’: Flagstaff marijuana retailers ask city council to limit influx of ‘big box’ pot shops | Local

Marijuana retailers in Flagstaff are concerned that a proposed amendment to a city zoning code would drive out local “mom and pop” dispensaries by forcing them to compete with an influx of larger businesses based outside of Flagstaff.

The proposed amendment came before Flagstaff City Council during Tuesday’s work session, and after hearing the concerns of local business owners, it decided to postpone a decision on the amendment to research the issue further.

The amendment in question would change city code to redefine what kind of marijuana establishments are legally permitted to operate within city limits. As it stands, the city only permits “dual-license” establishments — those that serve both medical and recreational marijuana users — to operate.

With the new amendment, Flagstaff would also open its doors to marijuana establishments that hold social equity licenses.

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Social equity licenses were distributed by lottery in April under Proposition 207 and are intended to “promote the ownership and operation of establishments by individuals from communities disproportionately impacted by enforcement of previous marijuana laws,” according to the Arizona Department of Health Services website. There are currently 26 social equity license holders in the state, none of which are held by Flagstaff residents, and by law they have 18 months to establish businesses before the licenses expire.

The trouble is that these license holders frequently “don’t have the funding” to get their business up and running, said David Stilley, owner of local marijuana dispensary High Mountain Health.

As a result, social equity license holders commonly “sidle up with larger companies, then get bought out and pushed out,” Stilley said. “Social equity was supposed to take our licensees and have them to be a direct reflection of the community. What we’re getting here is really quite the opposite.”

According to Steve Thompson, also of High Mountain Health, 18 of the social equity licenses “somehow wound up in the hands of big, multistate operators with large cultivation sites in the desert.”

If large operations are permitted to set up shop in Flagstaff, “They’re going to split up the business that is here, and that’s it,” Thompson said.

“You’ll be creating a situation that will severely hurt local businesses, won’t generate another nickel in local taxes and will probably cost local jobs,” he said.

Thompson also painted a picture of what he considered Flagstaff’s likely future as another “California or Colorado” should the amendment pass.

“The advertising alone would be staggering. Everywhere you go, you’re going to see pot,” he said. “We’re talking big box versus mom and pop. We’re mom and pop. We want protection. We are worthy of protection.”

Thompson noted that High Mountain Health has donated roughly $130,000 to local charities, and that together with Noble Herb — one of Flagstaff’s other local marijuana establishments — they employ about 200 people in the city.

“Many of these people made life changes and relocated to Flagstaff for this job,” Thompson said.

For Noble Herbs co-founder Ryan Hermansky, a key issue is timing. Because social equity license holders have a limited time to establish businesses and aren’t permitted in most major municipalities across the state, he doesn’t want to see Flagstaff invite “an onslaught of attention” by being one of the first to open up to social equity license holders.

“They’re already four months in and got about 14 months to go [before social equity licenses expire],” he said. “They’re going to start feeling a time crunch on when they can open. So if Flagstaff is the first city to say it will allow adult-use-only licenses, there’s going to be a mass rush to find locations in Flagstaff.”

Based on Hermansky’s research, there are roughly 10 locations in Flagstaff that meet the zoning and separation requirements to make them viable for marijuana stores.

“There’s basically three already,” he said, referring to High Mountain Health, Noble Herb and GreenPharms, which is just outside city limits. “If we have 10 to 13 dispensaries in Flagstaff, I don’t think that’s good for anybody. I don’t think that’s what the citizens of Flagstaff would openly embrace.”

Research conducted by city staff, however, tells a different story. According to Kevin Fincel, the deputy city attorney, it’s estimated that current zoning and separation requirements would only allow the establishment of “two to five” new pot shops within city limits.

During the city council meeting, Fincel also confirmed that Flagstaff would not be the first to accept social equity licenses, and that “Avondale, Glendale, Maricopa County, Payson, Santa Cruz County, Tempe and Pima County” also permit social equity establishments — though it’s important to note county permission does not equal city permission.

Larger cities such as Phoenix and Tucson are still holding out.

Fincel also stated that, despite other cities’ decisions, “no one is aware” of any social equity marijuana establishments having opened in Arizona since the licenses were distributed.

According to Tiffany Antol, city planning director, “not more than a handful” of businesses have inquired as to whether Flagstaff will allow rec-only and social equity establishments in the city, suggesting that the interest may not be as great as local business leaders fear.

Council as a whole seemed somewhat split on how to proceed with the information at hand. Mayor Paul Deasy offered the alternative of requiring “conditional-use permits” to make sure that new marijuana establishments had to go through a public process before opening up shop — a system currently utilized by Pima County — but Antol warned that this route ” may not achieve what you’re looking to achieve.”

“It’s an additional step and a $3,000 fee, but it’s not a ‘yes or no’ decision,” Antol said, noting that if requirements are met, the city can’t necessarily deny a conditional-use permit applicant.

“Sometimes it gives the public a false sense of security,” she said. “It’s not as discretionary as a rezoning case is.”

Despite murmurs of support for the amendment toward the meeting’s end, most councilmembers seemed unconvinced either way, with the exception of Councilmember Austin Aslan, who expressed explicit opposition.

“I’m a no vote,” Aslan said. “I don’t want to see social equity licenses become available.”

Ultimately, all members of Council supported a motion to postpone the amendment for further consideration, with Deasy noting that “we need to not pump the brakes too long.”

Delaying was the right move, said Hermansky.

The pause, in his opinion, will give Flagstaff time to see how the social equity situation settles out across the rest of the state as well as give the public some more time to learn about the amendment and weigh in on the process.

“A slight delay is beneficial for everybody,” he said.

It is unclear when the amendment will return to Council for reconsideration.

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