Belmont’s 1st dispensary opens

“Being a very small conservative town on the Peninsula where there aren’t many dispensaries, for the most part, this community was pretty receptive to it,” said Hrant Ekmekjian, owner of Cannavine, which partnered with NUG Dispensary in Belmont. “Obviously there are always outliers who are not going to be receptive. Even in San Francisco, they’re going to say ‘not in my neighborhood,’ even if they’re receptive to cannabis as a whole.”

As part of a more palatable pilot program, the city settled on a small radius of allowable sites for at most two cannabis stores — along El Camino Real between O’Neill Avenue and F Street — however, they’re still subject to council approval. For cities like Belmont, the additional revenue stream is especially appealing, given many jurisdictions are facing long-term structural deficits.

Located at 1538 El Camino Real, NUG Cannavine Dispensary, which also has other locations in the Bay Area, is one of two dispensaries the city approved earlier this year and just opened on Sunday, Dec. 7. The second dispensary, Canna-Bel, will occupy the former Sumac Restaurant. The cannabis retail market is highly dependent on city policies, which vary greatly from one jurisdiction to the next. Some Peninsula cities, like San Mateo, have contemplated overturning its current prohibition of retail cannabis, but the City Council has tabled the conversation at least twice in the last couple years.

“San Carlos might revisit the process, and San Mateo, in my opinion, would be the next to consider it,” said Raj Pottabathni, who helped NUG Cannavine Dispensary with the permitting and licensing process and owns the cannabis company Jiva. “Millbrae probably won’t, and Burlingame is similar to Millbrae in terms of the constituency that wants [cannabis].”

A long journey

Allowing cannabis retail in Belmont was a winding, multiyear journey that started in 2017. In response to intense community pushback, the current parameters are significantly scaled down compared to original proposals. Even after the council approved the new zoning district, the Planning Commission rejected two applications earlier this year, with one commissioner, Peter Meier, stating that retail cannabis stores are “a magnet for crime,” including violent crimes, and that they “contribute to the degradation of public spaces.”

Redwood City police Officer Jeff Clements, a spokesperson for the department, previously said the city, which has several dispensaries, hasn’t noticed an increase in crime related to the cannabis operators, and Belmont police Lt. Pete Lotti said the department looked into the potential increase in dispensary-related crime but said it didn’t raise concerns.

“We’ve worked with the city. We did our due diligence and checked the other jurisdictions, and we’re not too concerned about that being an issue as far as creating an uptick in crime,” Lotti said.

Individuals must be 21 to enter, and the dispensaries must be located at least 600 feet from child care facilities or schools. Pottabathni said that differs from liquor stores, which don’t have age minimums to enter, and grocery stores, which openly display alcohol on their shelves. There is also no smoking or loitering allowed outside the stores.

Ekmekjian said he is often approached by law enforcement in other cities where he runs dispensaries to help solve crimes unrelated to his businesses.

“We want to be secure for ourselves and our customers so it’s in our best interest to bring security to the area,” Ekmekjian said. “We want to show that crime doesn’t necessarily go up. Most often it goes down, because we secure ourselves, and they know there are a lot of cameras.”

He added that most customers don’t fit the stereotype that critics think of when envisioning how cannabis will affect their neighborhoods. About 60% of his customers are over the age of 40.

The number of cities that allow dispensaries is starting to increase but not at a quick pace, especially given recreational cannabis sales have been allowed since 2018.

“We’re eight years in, and way more than half the state doesn’t have a dispensary in their town. You have a town that has 30 stores and some that have zero stores,” Ekmekjian said.

Pottabathni, who also grew up in the Bay Area, said he expects more cities to start allowing dispensaries, but there are still a lot of cities in the region that don’t have enough supportive residents and need for tax revenue to make it worthwhile.

“There are towns on the Peninsula that feel a lot of pressure and are now walking it back. Some of the more affluent ones are probably not going to touch cannabis. It’s all dependent on tax revenue incentives and residents,” said Pottabathni, who has also worked in the cannabis retail industry in other states, including New Jersey. “Everyone thinks California is so liberal and open, but a lot of these towns are pretty conservative.”

Costly operations

Even for those cities that allow retail cannabis, opening a store can be cost prohibitive for many operators. Permitting and licensing processes are often arduous, and the tax rate is exorbitantly higher than other retail businesses. In Belmont alone, cannabis operators face a 6% business license tax on gross receipts — compared to 0.4% for other retailers — and as part of the development agreement, both dispensaries will pay an additional 1.5% to 2% of gross receipts toward community benefit funds.

However, the black market is still NUG Cannavine Dispensary’s biggest challenge, which Ekmekjian attributes to a lack of state regulation and enforcement. Due to lax cultivation and distribution regulations, it’s easy for unlicensed, underground operators to funnel marijuana to their own ventures, which means customers can often find the same products at the dispensary as they can on the black market — and cheaper.

“They don’t pay taxes, and with the state doing a terrible job regulating the legal market, a lot of the same products end up on the black market, so that’s why we spend a little extra time curating products,” Ekmekjian said.

He hopes NUG Cannavine Dispensary will not only take more Peninsula customers away from the black market but also combat some of the misconceptions around the impact of cannabis retail, especially in suburban areas.

“If you continue to do good business, other towns will notice, and that gives confidence to people. … Redwood City has been doing it for a little while, and it doesn’t seem like they’ve had any issues,” he said. “If we do what we promised to do and run an upstanding business, we can change that perception.”