Burlingame has interest in commercial cannabis

The evolving ordinance ultimately will stand to govern commercial cannabis companies such as Eaze, which is interested in setting up shop in Burlingame due to its central location on the Peninsula and proximity to a thriving customer base.

For their part, commissioners worked to assure that any distribution center from which drivers would coordinate delivery orders is located a fair distance from homes, schools and other potentially sensitive community centers.

Additionally, noting potential security risks, they clarified expectations that any commercial cannabis company should be in a nondescript storefront with no advertising to alleviate any threat that the site would draw criminal interests. And further, they sought guarantees that no retail activity would take place at the site and that Burlingame would only serve as a hub for fulfilling distribution orders.

With those promises in hand from either city officials or industry representatives, commissioners showed a general comfort with allowing the potential regulations to move ahead to councilmembers who will have final say in their approval.

“I don’t see anything here that needs to be changed,” said Commissioner John Schmid.

Consent was not unanimous among officials, however, as Commissioner Michael Gaul largely disagreed with the proposal to invite cannabis companies to town.

“I don’t feel that marijuana business is something that Burlingame needs to be involved with,” he said.

For his part, Gaul raised some concerns regarding the cannabis industry’s reliance on cash to operate, noting the federal banking sensitivities to endorse transactions on the recreational marketplace.

Furthermore, he expressed certainty that the location of the business would ultimately be discovered — despite the efforts to keep the site secret.

“Believe me, people will know where your cannabis distribution spot is,” he said.

He balanced his concerns against recognitions that the industry could ultimately stand to generate revenue for the city, but said those potential monetary interests are secondary to the larger fears he shared.

“I’m not comfortable with approving this ordinance. We can discuss it and talk about how other cities are doing it, but I don’t know that I’m in support of it,” he said.

Regarding the city’s opportunity to benefit financially from the business, Eaze spokesman Rashad Johnson said the company made about 11,000 deliveries in Burlingame last year. Of those sales, the city only benefited from some sales tax revenue.

But if officials allowed the company to open a distribution center, another tax could be established to generate more income from receipts on deliveries made across the Peninsula. Johnson estimated Burlingame could earn about $1 million annually through a 5% tax on Eaze deliveries to 250,000 residents across the Peninsula.

Eaze is a remote delivery service, with an online marketplace. Adult shoppers with verified identification can purchase products and receive discrete orders at their door, similar to a food delivery app.

Councilmembers late last year signaled they were generally comfortable with allowing the businesses, and officials have noted the additional revenue generated could offset some of the financial hardship brought by the pandemic. The direction marked a shift from previous orders which banned commercial cannabis business in 2018.

Regarding potential security concerns, Police Chief Mike Matteucci had said previously that his department checked with other local cities where cannabis business is allowed and found that the industry generally does not pose any greater public safety risk.

Offering officials additional peace of mind, Johnson said all orders will arrive at the center packed and ready for distribution — potentially assuaging any concerns that the site will be used for processing, and ultimately be the source of unwelcome scents linked to cultivation.

“There is no loose lettuce. It’s all packaged and sealed,” he said.

Considering the variety of efforts and plans in place to assure the business does not disrupt the larger community, Commissioner Will Loftis shared his support for the proposal.

“I personally don’t find anything highly objectionable about all of this,” he said.

Commissioners Richard Terrones and Richard Sargent were absent from the meeting and did not vote on the matter.

austin@smdailyjournal.com