Sonoma City Council mulls a second cannabis dispensary

After discussing a second dispensary in city limits, the Sonoma City Council declined to take action on Wednesday, citing the threat of over saturating the emerging cannabis market amid industry struggles.

The city council listened to the pleas of representatives from SPARC, Sonoma’s first dispensary to protect their budding business, and the blunt feelings of Sonoma Valley Cannabis Group that has long sought additional cannabis options.

“Today, to urge you to wait on the process to permit another retail dispensary in our city,” SPARC CEO Erich Pearson said. “The California cannabis industry is fraught with structural problems, unless it operators over regulation and the over-saturation of stores make it difficult environment to operate in.”

The Sonoma Valley Cannabis Group, which has spent years advocating for marijuana access in city limits, said the city council has created a de facto monopoly, limited the options for consumers and helped prop up SPARC’s business.

“This is a free market society. If you can't make it with two dispensaries, then maybe you have to find another location,” Gil Latimer, founder of the Sonoma Valley Cannabis Group said. “There's only one dispensary right now, that’s serving technically 40,000 people.”

Cannabis businesses have been fraught with challenges in the years since legalization as hefty taxes on growers and sellers alike have gutted revenues, industry leaders say. But Sonoma’s city council has weighed the decision to add a second dispensary since April 2021 when it introduced an ordinance that would permit a second walk-in store.

The process to permit Sonoma’s first dispensary was highly competitive, with 10 different proposals before the council, which ultimately selected SPARC, a San Francisco-based cannabis company with five locations from the city to Sonoma County. From its opening on April 20, 2022, through February, 2023, SPARC’s revenue was $3,752,553.77, and total Cannabis Business Taxes to the city, at a rate of 4% were $150,102.15.

With two other dispensaries set to open in Sonoma Valley in 2023 — Loe Firehouse Dispensary in Glen Ellen and Loe Dispensary on Fremont Drive Schellville — city council members expressed concern about over saturating an already-stressed market.

“I’m not interested in an RFP tonight,” Councilmember Ron Wellander said. “I’m not close-minded ultimately to a second dispensary, but at this point in time, I am.”

Vice Mayor John Gurney did not outright reject the idea of a second dispensary, but recognized that two cannabis shops would be opening just miles from the town’s center in Glen Ellen and in Schellville. Both dispensaries will be open by the end of 2023, according to owner John Loe.

“The city of Sonoma and Sonoma County would be smart to look at Santa Rosa and the problems they are having. Santa Rosa allowed far too many dispensaries,” Loe wrote in an email to the Index-Tribune. “Many will fail … It was the low hanging fruit that they all took a bite of.”

Pearson said the city’s permit to sell cannabis at 19315 Sonoma Highway came with verbal commitments from the previous city council to be “the sole operator in the city for some time,” and in return, SPARC would partner on the city to provide free cannabis products to residents with HIV and those battling cancer.

“We found a location, committed to an expensive rent and historically sensitive remodel, committed to our partnering nonprofits to give back, committed to the city's tax and invested heavily into our local team of employees, many of whom are here tonight,” Pearson said. “Moving the goal posts now is not fair to us,”

Contact Chase Hunter at chase.hunter@sonomanews.com and follow @Chase_HunterB on Twitter.