Encinitas to hold cannabis business license lottery Oct. 21

Encinitas will pick its four winning applicants for cannabis retail business licenses during a televised lottery on Oct. 21, the city manager reported last week to the City Council.

The lottery’s set for 1 p.m. at City Hall, and applicants who are eligible to participate will be notified about the event, City Manager Pamela Antil said.

However, the applicants and anyone else who wants to witness the process can’t do it in person — they’ll have to watch it on TV.

“There really isn’t an opportunity to come and watch. It is very tightly regulated,” Antil said.

After the lottery concludes, the four winning names will be posted on the city’s web site at:

https://encinitasca.gov/Government/Departments/Development-Services/Planning-Division/Policy-Planning/Cannabis-Ordinance-Measure-H

In 2020, Encinitas voters approved a citizens’ initiative — Measure H — that allows cannabis retail sales, cultivation, manufacturing, kitchens, distribution, and personal use cultivation, subject to certain regulations and restrictions. In the case of retail sales, four business licenses will be issued.

Under the regulations spelled out in the citizens’ initiative, proposed cannabis retail businesses must be at least 1,000 feet away from “sensitive uses” such as schools, day care centers and playgrounds. They can operate between the hours of 7 a.m. and 9 p.m., and they must have security cameras, alarms and 24-hour security guards.

Applicants who wanted one of the four retail business licenses had to submit their proposals to the city by Feb. 18. The city received 200 applications and began ranking them. Preference was given to applicants who had at least 12 months’ experience as a cannabis business owner, 36 months as a pharmaceutical business owner and 18 months as an Encinitas business owner. Applicants that met all criteria qualified for the top tier in the lottery process, the city’s web site indicates.

Selecting the four business license recipients is only one part of the process. There’s also the matter of taxing the new businesses. Encinitas voters will have their say on a proposed cannabis business taxing measure in the Nov. 8 election. Known as Measure L on the ballot, it calls for cannabis retailers to face a tax rate ranging from 4 percent to 7 percent on their gross receipts, and it also sets taxing rates for cultivation companies.

A city-hired consulting firm has forecasted that the city could collect $800,000 to $1.4 million in annual tax revenue, if the measure is approved.