Grover Beach: Commercial Cannabis Industry Is Growing

When people think about Grover Beach, think about wineries, the legendary Pacific Coast Highway 1, and tourism. This small community is home to around 14,000 people and is located near Pismo Beach and Arroyo Grande. The seaside location is family friendly with great restaurants and sites. Grover Beach is just one of the many cities around the world that is embracing the cannabis industry.

Cannabis regulation started in Grover Beach in 2015. California passed bills that outlined the regulation of medical cannabis. Following this approval, governments were directed to pass local regulations for cannabis. If they did not pass legislation by March 2016, then the state would take control. Grover Beach, along with other local governments, was motivated to pass legislation.

The City Council in Grover Beach asked the Office of Matthew Bronson, City Manager, to come up with regulations and a tax structure for commercial medical cannabis. People in the community did this for a few reasons. Firstly, they did not want the state to have control over their local regulations. Secondly, they saw medical cannabis as an economic opportunity. Lastly, this was a chance to entice private investors to come to Grover Beach, which would create jobs and increase tourism. The community was interested in the increased business as well as the tax revenue to improve the city. 70 percent of voters approved a tax structure that supported both medical and recreational cannabis businesses coming to Grover Beach. At the same time, the State of California also had recreational use legalized.

Legislation focused on cannabis regulation was further developed between 2016 and May 2017. Residents and community leaders wanted to find safe, responsible, and clear ways to bring the cannabis businesses into Grover beach. There were many public workshops where people could pose questions, offer ideas, and connect with legislators and community leaders. Public engagement was strong, especially in the first 10-15 meetings. The high public turnout showed the community commitment to bringing the commercial cannabis industry to Grover Beach. At first, the regulations focused on commercial medical cannabis activities. Legislation was also affected by what was happening on the state level. In May 2018, recreational use was included via a series of amendments.

Currently, Grover Beach embraces a range of cannabis industries. The current commercial cannabis license allows the cultivation, processing, distribution, and sale of cannabis. There are regulations in place so that businesses are safe. For example, cultivation has to happen in enclosed indoor spaces; Grover Beach does not allow cannabis to be grown outdoors or in greenhouses because residents were concerned about security and the local architecture. Grover Beach also considered how other cities handled regulations. For example, some cities ban greenhouses because they are hard to define and because operating hours can be challenging for local residents.

Grover Beach saw the same challenges and conversations that other cities had, specifically regarding schools, zoning and youth centers. The state handled this in many ways by banning cannabis businesses from operating within a certain distance from youth centers. Grover Beach felt comfortable bringing this industry into their community because there would be regulations around where cannabis businesses could operate.

The community in Grover Beach was thoughtful about how to bring the cannabis industry into their safe and vibrant community. Many people wanted to make sure this was done in a thoughtful manner. Thus, the local government mandated that any businesses involved with cannabis needed to add improvements to their properties. For example, these businesses needed to follow code requirements like fixing their sidewalks and investing in landscaping. Bronson said this was a chance to “raise the bar on the city’s businesses and to ensure the cannabis industry fit into the community. Due to community support and clear regulations, Grover Beach increased the number of cannabis retail businesses like 805 Beach Breaks from two locations in May 2017 to four by December 2017. The number has only continued to grow since then because of the success of the industry. By March 2020, Grover Beach had approved 30 permits for cannabis businesses, and there may be more on the way.

Grover Beach has been thoughtful about its introduction and cultivation of the cannabis industry. The city itself is a great fit because it has a lot of industrial land, is close to major highways, and because of the items already produced in the area. Grover Beach was already a tourist location, so it was an ideal place for investors and business owners to come. Currently, the city is the only commercial cannabis location for 100 miles. Economic growth has increased locally and tourism has also increased.

Instead of fighting the cannabis industry, Grover Beach has embraced it. The community was included in the decision making, which helped. That said, there have been some downsides, specifically regarding the rising land value and increased business rents. Some businesses have even had to move to other locations because they cannot afford to operate in the area.

Despite the challenges, experts predict that the community commitment to the cannabis industry and the synergy between existing businesses and new industries and services like testing labels and cannabis manufacturing mean the economy will only continue to grow. For example, there are more businesses in the area and jobs and tax revenue have only continued to increase. Currently, the tax structure in the community is a five-percent tax on gross retail receipts from businesses and three-perfect tax on receipts from manufacturers and other commercial uses. The tax structure focuses on the commercial market, not the underground economy. The revenue has been substantial. In the first full year, the city made $950,000 from cannabis tax revenues. In the second year, they are producing nearly $2 million dollars. The city wants to use the tax revenues for one-time improvements like capital improvements and paying down pension liabilities.

Grover Beach is an ideal location for supporting the cannabis industry since they are equi-distant from major cities like Los Angeles and San Francisco. The community is open to developing this economic opportunity and includes community voice in decision making. The hope is to leverage this industry to benefit the city as a whole. They hope to adapt tax structures and improve the community along the way. The city has an interdepartmental process to consistently update regulations to stay in line with federal and state legislation. The community as a whole has supported the industry because of the regulations and investments that have come from embracing the commercial cannabis industry. Cities around the country can look to Grover Beach for inspiration on ways to integrate a new industry into a growing community.