Lincoln aldermen continue preparations for resale cannabis business

 

[January 16, 2020] 

The Lincoln City Council continues to hash through the details of allowing for the legalized sale of recreational cannabis within the city limits.

At the last voting session of December 2019, they approved language for ordinance violations for buyers and set the fine structure for violations.

Also in December, the aldermen discussed the licensing fees for establishing a retail business (officially called a dispensary) in town as well as the fines for retailer ordinance violations, but reached no decisions before the end of the year.

This week, the topic was back on the agenda at the Tuesday night Committee of the Whole. The topic was introduced by Kevin Bateman who said he was going to stay with his previous recommendation that the license fees be set at $5,000 for the initial permit and $2,500 per year for the renewal.

In regard to dispensary ordinance violations, Bateman suggested perhaps the city should set the fines at rates comparable to that of liquor violations, while city attorney John Hoblit suggested that the city look at the fines already established for smoking violations.

City Treasurer Chuck Conzo said that because there would only be one cannabis dispensary allowed, the license would resemble that of a franchise. He said he felt the city should keep the initial fee and the renewal fee the same, and said it should be $5,000 per year if not more.

Tracy Welch objected to the use of the word ‘franchise’ and said that the city had not originally set out to franchise a cannabis dispensary in Lincoln. Conzo said that while the cannabis retailer would not be a true franchise, it would bear strong resemblance to one because there will only be one allowed.

Welch also wondered why the licensing fee needed to be so high when there would also be a good deal of sales tax revenue coming to the city from the sale of product. Conzo said that in the case of the franchises that are in the city – Comcast and Ameren Illinois – the city gets revenue from the franchise and also from the municipal sales tax, so why not do the same for the cannabis.

However, it was noted that the trash service – Area Disposal – is also an exclusive operator in Lincoln and does not pay a franchise fee or tax.

Welch felt that because there was high potential for income for the business that the city was taking advantage of them. He said that he felt like the city was trying to take the money because it knew the retailer could afford it. Welch said that what the city was proposing was not “business friendly” and wouldn’t look good for other businesses of any type who might be exploring coming to Lincoln.

Steve Parrot was supportive of the higher permit fees for cannabis retailers and said if the business couldn’t afford the fee, they didn’t have to apply or come to Lincoln.

That portion of the discussion concluded with Welch saying that the council should just put the flat $5,000 per year on the agenda and let the vote decide.

Retailer Ordinance violations

In discussing the dispensary ordinance violations the council is again split on how it should be handled. For the upcoming vote there will be no motion on the agenda for the fines as aldermen will continue to try and work through it.

During the Tuesday night discussion Hoblit suggested that the fines be outlined comparable to violations of smoking, while others thought perhaps they should be established along the same line as violations for liquor.

This sparked a discussion of what is done by the liquor commission to violators. The answer came from City Clerk Peggy Bateman, who said that for the liquor violations a lot of the time the most effective deterrent is to suspend sales for a period of time. This costs the retailer days of income and makes a greater impression than slapping a fine on them.

Kevin Bateman suggested that the city establish a fine and a ‘three strikes’ process when after three violations a license would be revoked.

Another suggestion was that fines for second and third violations be substantially increased each time. It was also discussed that to make sure the fines were paid at the renewal period for the license, all fines should be paid in full before the license is renewed.

Sam Downs had concerns about the suggestion because he said he didn’t want long-time businesses to be penalized for mistakes made early in their store operations. He said that it concerned him that a business could make a few errors in the early days, work it all out and run according to the rules for years, then suddenly have a third violation that cost them their entire business.

Bateman said the three strikes plan could have a clock on it. He said for example the city could say three violations in 36 months.

In the midst of the discussion, Hoblit reminded the council that this is all new to them and also to the state of Illinois. He said that even now the state is writing new amendments to the cannabis laws and that when those amendments come out as law, it will more than likely have an impact on the city as well. He said that what the city does now may have to be changed multiple times before it is all worked out.

At the end of the discussion, Bateman said that the city could put this particular portion on hold for a little while longer, but he felt there needed to be a vote very soon on the licensing fees.

While that was the consensus of the council, to wait another couple of weeks on the fines, it was also mentioned that the fines need to be in place before the retail permit is issued so that the potential seller will know what the city expects.


RELATED TOPIC

At the end of the night, City Administrator Beth Kavelman shared that Cresco Labs is going to be hiring approximately 100 new employees to accommodate the expansion of their cultivation center on the north side of town. Cresco will be hosting a job fair on January 27th at the Oasis Senior Center.

Cresco Labs is a cultivation center and grows cannabis to resale to dispensaries. For the last few years the operation has grown cannabis for medical use only. With the change in the state law, it has now expanded the size of its operation substantially to accommodate the demand for recreational marijuana.

Note:
In the first 12 days of sales from January 1st to January 12th, 2020, the state has reported that the total sales of cannabis has totaled more than $19,000,000 in 495,385 transactions. At the same time, sales declined continually throughout the 12 day period. On January 1st total sales were $3,176,256.71 while on January 12th the sales totaled only $874,121.97.

[Nila Smith]