Pot could bring sizable revenue into Bellflower

July 14, 2017

BELLFLOWER — Twelve recreational marijuana operations could bring the city $12 to $25 million over a 10-year period and provide 78 to 188 new jobs, according to a financial impact report by RSG Inc., a consultant firm based in Santa Ana.

It would generate from $11 million to $22 million in sales and services by 2019 but the economic output would probably not benefit other businesses in Bellflower, the study indicated.

Estimates are for businesses involved in cultivating and selling marijuana for recreational uses as approved by state voters last November. The estimates do not include medical marijuana, legal in California since 1996.

The report, along with resident comments, will be considered in the coming month prior to possible action on a marijuana ordinance at the Aug. 14 meeting, city officials said.

Much of the data is based on assumptions with little information available from states where recreational marijuana is legal. California rules, which take effect Jan. 1, 2018, are still uncertain, said Hitti Mossesman, principal of the consulting group which conducted the study an issued a report to the Bellflower City Council July 10.

She said the figures are based on the assumption that there would be 12 marijuana operations to include three dispensaries with one to three transporters, five cultivators of marijuana and four processors of the product. About 40,000 square feet of land, mostly zoned for industrial use scattered throughout the city, could be available for marijuana operations, Mossessman said.

Officials have said the total number of permits may be reduced.

Assumptions on sales were based on a University of California agricultural study and the Marijuana Policy Group, a private organization in Colorado, one of the states where recreational marijuana use has been approved along with Oregon and Washington.

Because of the uncertainties, the consultant firm made three “conservative guesses:” low, medium and high. Thus estimates of net revenue ranged from a low of $461,000 to a high of $1.2 million in fiscal year 2018-19, Mossessman said.

Municipal costs are projected at $1,750 a year for the city manager’s office to oversee the permit process, $697 for costs to the economic development department for coordination with the businesses, $1,750 annually for the city attorney to review the permits, $620 for the finance department to review gross receipts for the city, $143,000 in planning department costs; $222 a year for service from the Building Department and $1,066 a year for public safety.

Mossesman noted that the public safety expense would be for background checks of permit seekers and did not include regular law enforcement costs.

City Manager Jeffery L. Stewart said it is planned to recoup city costs in permit fees. Staff has proposed $21,600 per permit recipients.

In a special election March 7, Bellflower voters approved annual fees including $15 per square foot of cultivation space, 5 percent of gross receipts (to the city) from sales and a flat fee of $1,500 a year for delivery permits.

Some residents questioned the figures, noting they are based mostly on guesses.

Steve Alessi, a 28-year resident, questioned the estimates and was told by Mossessman that they did not include possible future competition from surrounding cities, which might lower revenue.

Mossessman said currently only Long Beach and Los Angeles have indicated plans to allow marijuana operations and neither city has put a cap on them.

However, Maywood has recently issued two licenses to sell marijuana while its neighbor, Huntington Park, will allow up to three permits, but so far has not announced any recipients.

Council received the report with some questions but few comments.

Asked by Councilman Juan Garza of possible market fluctuations, Mossessman said revenues from the sale of marijuana have exceeded expectations in other states.

She said she saw “no end to the demand for marijuana.”

The Bellflower City Council approved a tentative ordinance in October 2016, based on voter approval of Proposition 64 on the November statewide ballot.

That law includes a distance of 600 feet from a school, church or home for a marijuana operation.

Proposition 64 allows cities to prohibit all commercial operations, as Whittier has done. Neighboring Norwalk has placed a moratorium on issuing any permits.

The state law requires marijuana business owners to obtain a permit from both their city of operation and the state. The latter won’t be issued until Jan. 1, 2018.

In related action July 10, the council approved an agreement with Meridian Consultants to review and process marijuana permits for fees not to exceed $142,715.

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