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New council deadlocks over changes to cannabis developer agreement
• Dispensary now in limbo
ceres city seal

The divisions among the new – and incomplete – Ceres City Council continued on Monday when it found itself deadlocked in a 2-2 tie over proposed changes to the city’s developer agreement with Kase’s Journey cannabis dispensary.

The proposed amendment effectively lowers the monthly fees owed to the city.

Previously the council amended two other cannabis related developer agreements in response to a proliferation of cannabis dispensaries throughout Stanislaus County have cut into the market for Ceres dispensaries. In September the city amended the agreement that has allowed 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 Mike Reynolds, the same man who owns Kase’s Journey dispensary at 4030 Farm Supply Drive.

The amendment proposes to be expanded from three years to 10 years.

The old agreement called for payment of a monthly fee of $40,000 if the firm earns $500,000 or less in gross receipts that month. The fee was $50,000 per month for gross receipts 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.

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 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 also does not favor a 10-year agreement.

Police Chief Rick Collins said he’s not seen any reports of a theft of cannabis during home deliveries.

“But even if it hasn’t happened yet, I don’t want to be on the council that said we don’t care about our citizens because they’re not going to have the same security that the cannabis businesses have for their own employees,” said Ryno.

Mayor Javier Lopez argued that cannabis businesses need to have the ability to deliver especially during COVID-19 lockdowns.

Reynolds told the council that the whole idea behind home deliveries is mostly to accommodate medicinal users who can’t travel on their own.

“We do have delivery already approved in our city and there are deliveries coming from outside our city into our city,” said Reynolds. “It’s also a disservice to ban us but then we have outside agencies and already one dispensary that’s already coming in to deliver.”

He said little product is carried in a vehicle.

“It’s not like you’re driving around in an ice cream truck full of cannabis and cash,” said Reynolds. “Most pizza deliveries carry more cash than we do.”

Reynolds argued that the federal government is likely headed toward legalizing marijuana at the federal level and a longer agreement would give confidence.

Citizens Lee Brandt and John Warren expressed concern about home deliveries as did Rosalinda Vierra who said she’s seen drug-related violence on a Ceres street.

John Osgood ripped into the council for attempting to treat Reynolds any differently than the other cannabis businesses who received 10-year agreements.

Silveira said home delivery of cannabis is legal in California and his research did not uncover any incidences of robberies.

The discussion hit another bump when Condit demanded earmarks for public safety.

Cannabis revenues now go into the general fund, of which 74 percent is already spent on public safety. Condit suggested only the police and fire chief – not the City Council – decide where to spend the money.

Ryno balked at his suggestion, saying the council decides where to spend revenues.

“I don’t see how giving this money to police and fire is fair to the rest of this city,” said Ryno, who mentioned other departments who are also affected by cannabis businesses. She mentioned citizen complaints also about parks and code enforcement.

Past efforts to earmark cannabis sales failed when brother and then Councilman Channce Condit brought up the issue.

Councilman Bret Silveira asserted that the agreement with Kase had nothing to do with earmarks and suggested discussing earmarks later as a separate agenda item in the future. He noted that the community already passed Measure H to generate a half-cent sales tax earmarked for public safety.

He also chided Condit for “changing things that aren’t on the agenda.”

“I think we need to, as a newer council, do a better job of sticking to the agenda … not create open discussions as we go,” said Silveira. “That’s why we have an agenda. We did it in December and here we’re doing it again.”

When there was a motion to amend the agreement spelling out where the funds will go, it died for a lack of a second.

When the proposed agreement amendment, with its 10-year length, went to a vote, Ryno and Condit voted no while Silveira and Lopez voted yes. Ryno later explained her no vote was tied to her opposition of the 10-year period and home deliveries.

Silveira said he wants a full council to consider the Kase agreement when a new member is appointed.

Knowing Kase’s agreement with the city expires in early February, City Manager Tom Westbrook said the council needed to grant a short-term extension to the agreement so the firm can continue to do business. City Attorney Tom Hallinan said the council could give a temporary extension. The matter was tabled until April 12 with Condit casting the lone “no” vote.