The city of Tracy’s policy regarding cannabis dispensaries is up for revision, with the likelihood that a restriction on the number of retail storefronts could be relaxed to allow as many as 10 such businesses to operate in town.

The council agreed unanimously on Tuesday that it will take a second look at the ordinance regulating cannabis businesses following a wave of appeals from people whose applications for permits were rejected.

The city established its rules for issuance of cannabis business permits in December 2019 in response to Proposition 64, approved by California voters in 2016, which legalizes cannabis for adult use. There are no limits on permits that could be issued for indoor cultivation, distribution, testing, manufacturing and non-storefront retail. Retail storefronts, where customers can visit the business for in-person transactions, were limited to four.

The city received 41 applications, some proposing multiple business types on the same application, including 31 businesses seeking to open retail storefronts. Each application was evaluated based on criteria established in the December 2019 policy, with 10 advancing to the final selection process. On June 21 Tracy Police Chief Sekou Millington picked four of those 10 as qualified to continue through the planning process. Seven more who didn’t make the cut filed appeals with the city.

While the applications covered aspects like business plans, community relations, local preference, security and social equity, some were disqualified after the city reviewed their community service proposals.

On Tuesday the Tracy City Council heard from some of those business people, who told the council that the city disqualified applicants that had exemplary success in business and in community service.

Michelle Trew, founder and CEO of Tracy Cannabis Collective and a 27-year resident of Tracy, told the council that her score on the community benefits portion of the application dropped the company’s overall score to ninth place.

“I have a personal and family history of volunteering. Our company has a history of volunteering: Special Olympics, Make A Wish, Tracy Little League, Boys & Girls Club and so on,” she said.

Kimberly Cargile, an owner with Tracy Cannabis Collective, said that she had been confident that her company has a solid community service record.

“Even though our company has been a leader in community outreach, education and charity over the last decade, and our CEO has been a resident of Tracy giving back over the last 25 years we failed this portion,” Cargile said. “We do not understand how this could have happened, especially when we compare our scores and our plans to the winners.”

Mike Souza, a third-generation Tracyite, said that he and other local business partners put cannabis business operators through their own vetting process after they recognized the potential for a new local industry. The company he partnered with, Garden of Eden, Tracy, ranked seventh in the city’s process.

Souza added that his family, and the families of other local partners, have a long record of community service, including serving as volunteers and on boards of local non-profits and charities.

“It’s very important for you to hear what some of the folks have said here tonight, and that is you really have to look at the quality of the operator. It’s so very important, and that’s what we learned very early on, and what we made sure we brought to the community in our partners,” he said.

“I doubt all of us would make it through the CUP process, but I think that would be another good vetting process to be able to make sure we’re picking the quality folks that will be able to bring this industry to town and provide the best benefit to the community.”

The council voted unanimously to direct city staff to draft a new ordinance, which could be up for review by next month, that could allow up to 10 retail storefronts, and also revise the way that the non-competitive licenses are evaluated.

Council members said they didn’t want to disrupt the process that is already under way, and agreed that the top four businesses that ranked high in the first part of the review process should be allowed to move forward with their applications as the city considers revising its ordinance to give more businesses a chance to move forward.

“They can move on as we continue this other discussion, parallel to this, to see if we can facilitate a better opportunity for competitive businesses to be able to succeed in our city,” said Mayor Pro Tem Veronica Vargas.

Councilman Dan Arriola said that because the selection and licensing of cannabis businesses is so new to the city there are still details to work out as the overall process moves forward.

“During initial discussions, my perception was that we were going to take a conservative approach to this, and we did, and that’s why it was limited to four,” he said.” But I think it’s because of that artificial barrier that we placed, that we were forced to do certain things and write this in a certain way, and now this is a new council so things can be changed.”

Councilman Mateo Bedolla said that the current top four should complete their process first, adding that it’s a suitable number for a city of nearly 100,000.

“I believe that one brick-and-mortar dispensary per 25,000 residents is a good place to start, where we can add more if needed, if we find out that it’s just not enough to deal with Tracy’s demand,” he said, though he also supported the proposed revisions to allow up to 10.

Councilwoman Eleassia Davis said that any process the council chooses should still be capable of vetting business and their plans, with some inevitably getting turned down as some point in the process.

“I do believe 10 is plenty, and I don’t think that 10 are going to make it through the CUP process. No disrespect, but it’s unlikely.”

Mayor Nancy Young said the long-term discussion leading up creation of the city’s policy, and discussions since then, will continue to shape the city’s approach to cannabis businesses.

“Our councils have changed over time and it’s definitely been a process to get to this point.”

“There’s a lot that goes into the cannabis business that at least heightened my respect for the entire industry, personally, so this is a brand new process.”

• Contact Bob Brownne at brownne@tracypress.com, or call 209-830-4227.

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