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Council votes 3-1 to change cannabis agreement for Kase’s Journey
Cannabis could be subject to a local tax if voters agree in November and if courts strike down developer agreements. - photo by Contributed to the Courier

The Ceres City Council worked itself out of January’s 2-2 deadlock tie over changes to the city’s developer agreement with Kase’s Journey cannabis dispensary.

The move gives assurances for Mike Reynolds, the man who blazed the cannabis manufacturing trail into Stanislaus County, to continue operating his dispensary at 4030 Farm Supply Drive.

On Monday the council picked up the discussion once again and this time voted 3-1 to approve the modified agreement – which lowers the monthly fees Reynolds pays to the city – for a period of 10 years.

The city has been amending its developer agreements with other cannabis related businesses in response to a proliferation of cannabis dispensaries throughout Stanislaus County have cut into the market for Ceres dispensaries. In September the city amended its agreement with Pacafi Cooperative, Inc., to operate its Patient Care First dispensary at 1442 Angie Avenue in Ceres since December 2017. The city also last year amended its agreement with Kase Manufacturing of Ceres, which is owned by Reynolds.

The new developer agreement with Reynolds for Kase’s Journey is being extended from three years to 10 years.

The old agreement called for Reynolds to pay a monthly fee of $40,000 if the firm earns $500,000 or less in gross receipts that month. A fee of $50,000 per month is due when gross receipts come in between $500,001 and $800,000; $75,000 per month for sales of $800,001 to $1.1 million; and $100,000 monthly for sales more than $1,100,001.

Reynolds and Pacific both said they couldn’t continue to pay the higher fees now that other cities have allowed shops which have undercut the Ceres retailers.

The proposed structure lowers the base amount of $20,000 per month or five percent of gross receipts, whichever is greater, and sets a cap of $70,000 per month. The gross receipts factor is modeled on a similar framework utilized by the state for tax purposes.

The Jan. 11 deadlock occurred when Councilwoman Linda Ryno protested the ability of Kase’s Journey to deliver cannabis products out of security concerns; and when new Vice Mayor Couper Condit insisted that the agreement designate that all revenues be earmarked for public safety. 

Ryno said she did not favor a 10-year agreement and ended up voting no on Monday because she wanted to see a five-year time frame.

“I would be okay with delivery but I think 10 years is too long,” said Ryno. “I think five years is fine.”

Once again the subject of home deliveries came up and Reynolds assured the council that deliveries are not left on porches unattended like Amazon and other delivery services. Reynolds also said that home deliveries have occurred without a single incidence of robbery. Ceres Police Chief Rick Collins said that he’s not seen any reports of a thefts or robberies of cannabis home delivery drivers in the county or state. Reynolds told the council that the whole idea behind home deliveries is mostly to accommodate medicinal users who can’t travel on their own.

Reynolds told the council in January that the federal government is likely headed toward legalizing marijuana at the federal level and that a longer agreement would give him confidence to go the long haul with the business.

Kase’s has been operating on a short-term extension as the agreement with the city expired in early February.