Redwood City’s new storefront retail to end ‘cannabis desert’ in San Mateo County

In a city first, people will be soon able to shop for cannabis at retail stores in downtown Redwood City, where four local businesses received storefront licenses earlier this week.

Concluding a year-long application and review process, the city awarded cannabis permits to Juva Retail RWC Inc at 2301 Broadway, Responsible and Compliant Retail Redwood City LLC at 1870 Broadway, Runway Services Inc at 928 Whipple Ave and MMD Redwood City Inc at 1764 Broadway, which hope to begin selling products to in-store customers later this year.

Sean Kali-rai, founder and president of the Silicon Valley Cannabis Alliance, called the decision “a great step forward.”

“There really was no retail cannabis between San Francisco and San Jose along the 101,” Kali-rai said. “California is littered with cannabis deserts — areas that voted for cannabis but for some reason or another don’t have it. I think it’s really meaningful that in San Mateo County, it’s not a desert anymore.”

In October 2020, the city council approved zoning amendments that would allow up to six cannabis businesses to offer storefront retail in Redwood City. Twenty-eight businesses that were already offering non-storefront, delivery retail submitted applications in early 2021 and underwent a phased review process. Of those, City Manager Melissa Stevenson Diaz selected four finalists and may award up to two additional permits at a later date under the city’s program.

“After meticulous review of all 28 applications received, these top candidates satisfy the established criteria to operate storefront retail cannabis businesses in Redwood City,” said Stevenson Diaz in a press release. “I believe these businesses will be assets to the Redwood City business community.”

Doug Chloupek, CEO of Juva, said he’s excited about what this decision means for his business and its relationship with the community.

“We’ve operated in Redwood City for a couple of years now,” he said. “We’re excited to expand our footprint, operating right opposite of Courthouse Square in the heart of downtown Redwood City.”

In evaluating the applications, each business was scored on a variety of criteria including safety, business and security plans, neighborhood compatibility and proposed community benefits.

Applicants were asked to describe how their business would benefit the local community and align with the council’s strategic priorities, including housing, transportation and children and youth. According to the city, all four selected cannabis retailers must also offer a “Community Benefits” package, which will annually total more than 4,000 hours of volunteer service and roughly $600,000 in monetary contributions to Redwood City groups, nonprofits and community-based organizations.

In addition to filling a local need, Kali-rai said that opening brick-and-mortar cannabis shops in Redwood City sets a meaningful precedent by showing other communities that the cannabis industry can survive outside of big cities. On top of which, he said, the city will now be able to reap the benefits of cannabis profits.

“You will capture that economic leakage that has been going to those areas,” like San Francisco and San Jose, he said.

In the first year of operations, cannabis storefront retail is expected to bring in $500,000 to $750,000 in revenue, which will go towards the city’s general fund and provide “much-needed additional revenue,” according to the city. On top of the state’s 15% tax and the city’s 10% sales tax, all four businesses will fund a 4% general tax on gross receipts paid directly to the city.

With plans to open 12 hours per day, seven days a week, Juva COO Neil Ruditsky said the new storefront will also create jobs for full and part-time workers. He expects Juva will hire 20-25 workers in the first round, eventually ramping up to 40, and said they will “source from and reach out to the local community.”

Over the course of 2021, the city hosted discussions with various stakeholders—including the fire and police departments, school boards and local community members — and sent out surveys to gauge public support.

“The City carefully designed the cannabis program to incorporate best practices and community feedback,” said Stevenson Diaz in the press release. “We have seen strong community support through the voter approval of cannabis-related tax measures, a citywide survey, and public input as we developed the program.”

In 2016, over 66% of Redwood City voters approved Prop 64 (the Adult Use of Marijuana Act) and over 78% supported the 2018 Cannabis Business Tax ballot measure. A 2020 survey found that more than 60% of respondents supported cannabis storefronts retailers in Redwood City, according to the city.

Kali-rai said he was impressed by the amount of consideration put in by the city.

“Redwood City has always been very aware that they are one of the first communities in San Mateo County that is going to be allowing retail cannabis storefront,” he said. “I started talking with Redwood City back in 2017 and met with the mayor and council. I met with city staff. I took them on tours of legal cannabis dispensaries … It was an exhaustive process.”

Still, the decision to support walk-in cannabis retail is not without its critics. A spokesperson for the city said that some residents expressed concern about the safety of opening cannabis retail shops in their neighborhoods.

Other residents voiced fears about the health effects of using cannabis. At the November 2020 council meeting, during which the council approved the ordinance permitting storefront cannabis retail, three people shared their concerns.

Isabella Chu, Chair of the Friendly Acres Neighborhood Association and a data researcher at the Stanford Center for Population Health Sciences, said that legalization was important to prevent the consequences of criminalization. However, she noted that the health risks of cannabis consumption are still unknown.

“Already, emerging evidence shows that when you legalize it, there are health consequences,” she said, urging the council to limit the locations where cannabis is available and to regulate sales with careful pricing and taxation.

In a letter sent to the council, Chu cited a 2020 study in World Psychiatry that looked at the public health impacts of legalizing recreational cannabis use in the U.S. With lower prices and easier access, the authors warned that legalization could potentially result in higher cannabis usage and more potent strains. However, they acknowledged that current research is limited and inconclusive, and recommended continued monitoring of impacts on impaired driving, mental health disorders and the criminal justice system.

Stella Chau, a drug prevention coordinator with the county Behavioral Health And Recovery Services, echoed the call for close oversight. She read from a report from the Office of Policy and Planning in the San Francisco Department of Public Health that recommended careful advertising, public education and stringent regulation.

The city said it has taken the necessary steps to ensure the safety of residents and customers alike. All cannabis retailers will be required to check IDs and confirm that customers are over 21 — or over 18 with a medical prescription. In addition, dispensaries must be located at least 600 feet from schools, childcare facilities, youth centers, public parks and libraries.

“All cannabis operators are subject to inspections, audits, and oversight from the city, police department, state, and special consultants all working together to safeguard the community where these operators are established,” the city told the Pulse.

Improving access to legal cannabis is a matter of public safety, according to Kali-rai. Currently, two-thirds of California’s municipalities have banned cannabis retail, forcing their residents to travel or rely on illicit markets.

“There is a problem with illegal cannabis,” Kali-rai said, emphasizing the dangers of buying untested, unregulated products. “It is being sold to children through Instagram, TikTok, Craigslist,” he said. “One of the ways to combat that is to have legal ways to purchase cannabis.”

But legalization isn’t a panacea, he said. Tamping down on the illegal market is as important as providing people safe, legal access to controlled cannabis, he said, adding that he hopes revenue from new retail will support enforcement efforts by local and state police.

Walk-in shopping won’t be happening immediately, the city said. Before opening their storefront operations, all selected cannabis businesses will have to satisfy state and city requirements, including completing necessary building permits and inspections. Chloupek said he’s hoping to begin construction on Juva’s space soon, with a goal of opening their doors to patrons in the next five to seven months.

All applicants not approved for walk-in retail will be able to continue operating non-storefront delivery sales.

In November 2016, California voters passed Prop 64 legalizing the use of cannabis by persons over the age of 21. The Medicinal and Adult Use Cannabis Regulation and Safety Act (MAUCRSA), which was enacted in June 2017, established a basic framework for licensing, oversight and enforcement of cannabis businesses. California began issuing state licenses to businesses selling cannabis products to adults over the age of 21 or over the age of 18 with a medical recommendation.