In December 2019, The Artist Tree won the first-ever retail cannabis license in unincorporated Riverside County.
On Friday, Oct. 8 of this year, the Highgrove store again made county history, this time by being the first retail cannabis shop to open in an unincorporated community.
Three years after the Board of Supervisors approved a regulatory framework for legal cannabis commerce, the anticipated wave of dispensaries in unincorporated areas has yet to materialize amid changing regulations, a lengthy approval process and the coronavirus pandemic.
“The county had a rush of eager green entrepreneurs when applications were being accepted,” Supervisor Kevin Jeffries said via email. “However, it appears the green gold rush turned into an expensive and drawn-out maze to get their business doors open.”
That’s not to say the county’s cannabis users have nowhere legal to go. Cities such as Moreno Valley and Perris have legal dispensaries, and at-home cannabis delivery is available online.
County government has land-use authority in communities that aren’t officially part of a city. In October 2018 — about two years after California voters legalized recreational marijuana use — supervisors voted 3-2 to open the door to cannabis businesses following months of public input and work by county planning staff.
The county’s framework, which included rules dictating how dispensaries could operate and where they could go — Temecula Valley Wine Country is off-limits, for example — invited applicants to submit proposals for dispensaries and other cannabis ventures. Officials received 119 responses and 69 of those got the green light to move forward in the approval process.
So far, the county has approved about 20 cannabis projects for unincorporated areas, including dispensaries and “microbusinesses” that combine retail, distribution and cultivation, county spokesperson Brooke Federico said via email.
Several are expected to be by the end of the year, she said, adding that another 45 or so cannabis projects are in the planning pipeline.
The Artist Tree, which has two Los Angeles locations and a West Hollywood store, submitted plans in April 2019 to convert a vacant building on Iowa Avenue into a store selling cannabis and original artwork. Among other requirements, The Artist Tree had to submit a detailed security plan and negotiate a development agreement with county lawyers.
The planning commission approved its application in November 2019 and the five supervisors unanimously OK’d it a month later. The Artist Tree submitted its building plans shortly before the onset of the pandemic in early 2020.
COVID-19 “threw everything out of whack,” Lauren Fontein, The Artist Tree co-founder, said via email.
The county approved building plans “after many months of limbo,” but an issue discovered during demolition forced changes, Fontein said.
“Riverside County was not set up to operate remotely, and it took quite a bit of time for everyone at the county to learn how to use the new online system,” she said. “To make matters worse, since the county offices were closed, we also could not reach anyone by phone or visit in person to resolve issues when we hit roadblocks.”
It took about eight weeks for plans to be reapproved, after which construction restarted, Fontein said. The Artist Tree also needed sign-offs from the fire, building and safety, planning, waste resources, transportation and environmental health departments and the state water board and permits from the state Department of Cannabis Control, among other agencies.
“Dealing with this many people to ensure compliance was logistically challenging and time consuming,” she said. “Doing all this paperwork while simultaneously gearing up for a retail store, hiring employees, and sourcing product was no small feat and explains why” The Artist Tree is just opening now.
When Riverside County first began accepting applications for cannabis business licenses, officials used a points-based system to evaluate proposals, with the highest-scoring applications moving on.
Courtney Caron, a Santa Monica-based attorney who specializes in cannabis licensing, said the Board of Supervisors “saw the merit-based process through to the end, but months later opened up applications for licensing to anyone who wanted to apply, whether they participated in the merit-based process or not.”
“Several winners of merit-based licenses protested this change out of fairness for the process that was previously implemented,” she added.
Scrapping the merit system also threw off applicants’ carefully calculated business plans, which were based on a limited number of competitors, Caron said.
“If, all of a sudden, the number of competitors is infinite, then you have no idea what your profit margin will be.”
Development agreements also take a long time to negotiate and no two dispensary agreements are the same, Caron said. It also can take multiple public meetings to approve a project, and getting on the planning commission and board of supervisors calendar can be a challenge, she said.
The pandemic also made it hard to get required documents notarized, she said. For example, one landlord for a dispensary refused to meet in person to sign documents, Caron said. Some planning commissioners or supervisors would ask why an applicant didn’t meet with them in person to go over plans, but the applicants were told those one-on-one meetings weren’t available, she said.
Despite the problems, Caron credits Riverside County for being one of the first counties to adopt rules for cannabis businesses, and she said these issues aren’t unique to the county.
“Was it done perfectly? No. Can I really blame them? Not really because nobody’s done it perfectly,” she said, adding that while West Hollywood came close, “no city or county yet has done it seamlessly where they took into account all the issues that might occur.”
Caron hopes the approval process for cannabis businesses in unincorporated Riverside County will be easier to navigate going forward.
“I would imagine it’s going to go somewhat smoother for others because the folks who are working at the administrative level know what to expect,” she said. “The planning commission has set standards” for others to follow.