City’s lone operating delivery-only license holder, MedLeaf, will be allowed to apply to convert to a storefront


Oceanside could get as many as three storefront cannabis shops under recommendations the City Council approved Wednesday.

The council agreed to allow two licenses for walk-in retail shops and possibly a third if the city’s one operating delivery-only license holder, MedLeaf, succeeds in converting to what would be the third storefront license.

The decision allows city staffers to work with consultants on details of how the storefront cannabis licenses would be issued and overseen. Staffers were asked to return to the City Council with a plan for approval in three to six months.

MedLeaf’s possible conversion was added at the request of owners, employees and clients of the locally owned business. The other two licenses will be awarded on the basis of a lottery, but weighted with priority for local and experienced applicants. Should the MedLeaf conversion fail, there would only be two storefront licenses.

“The direction would basically be a two-track process,” said City Attorney John Mullen, with one track for everybody participating in the lottery process, and one for MedLeaf’s conversion.

Oceanside approved the first of its cannabis-related ordinances in 2018. Originally, the city allowed only medical uses and on-site sales were prohibited. Since then, the City Council has approved a steady progression of ordinances leading to Wednesday’s 4-1 approval, with Mayor Esther Sanchez opposed, of recommendations to allow in-store sales for medical and adult recreational uses.

Sanchez objected to a proposal added by the council majority to expand the area where shops will be allowed to include some zones along Vista Way. The shops will be prohibited in many places, including within the city’s coastal zone, which is primarily areas west of Interstate 5.

Council members added the condition of the weighted lottery in response to people who said that a straight lottery would be unwise.

“You don’t want to risk seating a bad player on the roll of the dice,” said Amber Newman, an Oceanside resident and cannabis activist since about 2016.

So far, Oceanside has issued 20 licenses for various cannabis-related businesses, from cultivation to delivery and off-site retail sales. Of those licenses, only five are in operation. The rest are in various stages of starting up.

Presently, there is no limit on how long a business can hold a license without using it. City staffers recommended the council adopt a limit of one year. After that, the holder would forfeit the license to allow another applicant to proceed.

MedLeaf Delivery was approved by the City Council in May 2020 to operate out of a 4,800-square-foot building formerly used for 25 years by a general contractor in an industrial park near the city’s airport in the San Luis Rey Valley.

MedLeaf now has 40 employees, many of whom attended the City Council meeting Wednesday to support the business.

“You have experienced operators,” said Karen Hannawi, who owns the business with her husband, George. “Why are you leaving it to chance?”

Unlike most previous public meetings on cannabis issues, no one from the public or groups such as the nonprofit North Coastal Prevention Coalition was there to oppose approval.

Vista is the only other North County city to legalize storefront cannabis sales so far. Voters there approved a measure allowing dispensaries in 2018. Most other cities in San Diego County prohibit dispensaries.

Vista is on track to receive $7 million from its 11 cannabis shops this year. The money has helped the city to fund several new programs, including a safe parking lot for homeless people with vehicles.

The San Diego City Council voted 6-3 in 2017 to legalize cultivation, testing, the manufacture of products such as edibles, and retail sales in storefront dispensaries for recreational and medical marijuana.

Chula Vista legalized the sale of adult-use cannabis in March 2018 and the first dispensary there opened in April 2021. La Mesa, Lemon Grove and some unincorporated areas of San Diego County also have licensed dispensaries.

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