City of Lynnwood - City Council - Work Session
(November 18, 2020) - Summary

City of Lynnwood - City Council - Work Session (Nov 18, 2020)

Four retail allotments were on the table as Lynnwood City Council members began discussion of their jurisdictional ban on cannabis businesses in place since June 2015.

Here are some observations from the Wednesday November 18th Lynnwood City Council Work Session.

My top 3 takeaways:

  • Lynnwood was one of the cities in Washington which passed a moratorium followed by a ban to stop cannabis businesses from operating within their borders.
  • Council members heard a detailed presentation on the question “Should Marijuana Retail Stores be Allowed in the City of Lynnwood?” from Joshua Estes, Managing Partner at Pacific Northwest Regional Strategies.
    • Estes reached out to the Council on November 10th, asking that Lynnwood officials follow Everett’s move to expand the number of permitted cannabis retail stores and consider ending their retail ban.
    • Smith moved the work session to Item E and asked Hurst to introduce Estes (audio - 1m).
      • Hurst acknowledged Everett’s “movement” to welcome more cannabis retailers and the State’s endeavor to “encourage diversity amongst owners.” Due to fiscal pressure from the coronavirus pandemic, he felt that if “we have a business that is ready to come in---and our surrounding area has provided that opportunity”---the City could miss out on potential revenue and economic growth. Hurst said there had been “a lot of history” since the ban was passed in 2015, so he had invited Estes to provide “a really good overview” of the subject (audio - 1m).
      • Estes conveyed that he had “reached out to the City earlier in the year to explore the possibility of initiating discussion" on cannabis policy change before being delayed by COVID-19. He said he’d met with Mayor Smith prior to being invited to address the Council by Hurst (audio - 1m).
    • Estes said that he’d started Pacific Northwest Regional Strategies in 2014 with Sean O’Sullivan. Both lived in the region and began forming “non-traditional partnerships to tackle the most difficult challenges that our clients and our communities face” (audio - 4m).
      • Estes worked with local entities while O’Sullivan handled “state legislative work” in addition to research and professional development. Estes said they also worked with Chester Curtis, a Lynnwood veteran and business owner who handled “veterans affairs” legislation.
      • Estes shared how his group’s cannabis advocacy began when they represented the Association for Medical Cannabis Reform in 2015 where they opposed “the negative impacts” of SB 5052 which ultimately became law. He said the firm continued to work with cannabis clients, maintained a “foundational respect for those who rely on these products for every day function,” and represented businesses "that bring significant tax revenue and community dollars" to Washington cities.
      • Estes explained that his firm had formed a partnership with The Cannabis Alliance to form a Community Outreach and Engagement Committee "solely focused on working with local school districts, elected officials, law enforcement, and community groups to provide educational outreach and support to the local community."
    • Estes presented a suite of recommendations for the lawmakers to consider based on issues he’d heard expressed about cannabis regulation in other jurisdictions (audio - 1m):
      • “The first one is obviously the economic potential for the City."
      • “The public safety impacts, everything centers around public safety," he stated, remarking that "historically, the perception around safety does not match the reality, but it's really imperative” for cities to ensure that they “do their due diligence."
      • “Reviewing...current zoning for marijuana retail."
      • Community impact and other community a whole.”
    • Economic Benefits (audio - 8m).
      • When discussing the potential for a cannabis industry in a city, "the first question is always about the revenue potential," Estes said. His firm had witnessed a “dramatic increase” in inquiries since the pandemic began impacting the state. He noted that “excise tax and local sales tax are just part of...the value that these stores might provide to the budgets hit hardest by the pandemic.” However, he cautioned that it was a “misconception” that cannabis stores were a way “to win the revenue lottery” as cities only received a small fraction of the taxes imposed on cannabis products. Estes emphasized myriad associated economic benefits from active businesses like quality jobs that “folks could build a career out of,” commercial real estate use, patronage for other area businesses, and local media advertising spending which helped “support these critical sources of information.”
      • Estes spoke about a retailer in Everett who had helped improve safety in an economically depressed neighborhood. Moreover, “these stores are frequently and active members with local...economic development councils” as well as area chambers of commerce “because they understand the real importance of economic development and finding unique ways to partner for long-term economic growth.”
      • Referring to preliminary information compiled by city staff about potential tax revenue, Estes asked that the City’s budget staff work with the Washington State Liquor and Cannabis Board (WSLCB) and the Washington State Department of Revenue (WA DOR) to create Lynnwood-specific forecasts. He indicated that available research sites only provided “general overview data” about cannabis revenue that failed to “drill down to the specifics” of cannabis taxation and “ancillary income revenue streams.”
      • Estes mentioned the City’s cannabis tax dollars could be “directed to the programs that are in jeopardy of funding cuts.” He pointed to Mukilteo Mayor Jennifer Gregerson’s use of that city’s cannabis revenue to continue paying the "crime victims coordinator" position with the City and was looking at funding their “Youth Advisory Committee and our Crime Prevention Public Outreach” program. Estes urged the Council to consider how Lynnwood might invest potential revenue if they moved ahead with ending the ban.
    • Public Safety (audio - 5m).
      • Another “hot point” on the subject was “always public safety,” Estes told the Council. He said statistics indicated that “crime does not increase where marijuana is legally available” and that the 502 market allowed “law enforcement to focus on the more serious situations” and solve more cases.
      • Estes reported that the Everett Police Department Crime Prevention Unit looked at cannabis retail locations and surrounding areas and found only a “minor impact on the overall calls for service count in the immediate area.” Overall, stores didn’t represent “significant calls for service,” nor were there frequent “cases at their exact locations.” He claimed cannabis stores often became civic partners with local police. 
      • Looking beyond crime statistics, Estes pointed to “other public safety benefits, including a higher compliance rate for underage access to legal marijuana products.” He added the checks showed better compliance for cannabis retailers than for alcohol and that some licensees were partnering with local youth access prevention organizations to “provide education to customers.” Estes indicated that state laws governing cannabis advertising already made retail stores “extremely limited” in their ability to advertise to the public.
        • Statistics on compliance checks for cannabis sales to minors were last reported during the WSLCB’s September 28th presentation to state legislators.
      • Finally, Estes noted comprehensive tracking from seed to sale” of regulated cannabis products in the state that “allows for the consumer to have confidence in the products that they are purchasing.”
    • Zoning (audio - 6m).
      • “If we allow” cannabis retail stores, Estes asked, “where should we put them?” He said there was “no specific, template answer” for all jurisdictions but the City should “understand how your current zoning will accommodate that allowance.” Estes explained that cities had different buffer distances and requirements, ranging from restrictive to permissive.
      • Calling Lynnwood a “retail hub,” Estes advised that “it might be beneficial to explore a variety of retail zones so you don’t limit...opportunity and potential of maximizing the tax revenue benefit.”
      • He noted that Everett’s retail expansion required new businesses to obtain a medical marijuana endorsement from WSLCB and stated the City was within their rights to require that as a precondition to securing local approval. Medically endorsed stores which stocked appropriate products would serve the “mobility impaired” and those who “rely on public transportation.”
      • Regarding “distance between retailers,” Estes said municipalities were “mixed on this requirement” with rules ranging from no additional buffer, to a 2,500 foot distance requirement between cannabis shops in Everett. He added that his firm had long supported a 2,500 foot buffer to “prevent the really unattractive clustering of businesses in one area.” The State required a minimum distance from several types of restricted entities, he remarked, adding that cities were given the authority to reduce these to “a minimum/maximum of a hundred foot” for some. Estes commented that the City of Quincy adopted the lowest possible buffer.
      • Estes described being asked about “the right number of stores” by local governments and said while that’s up to the specific needs of a locality, generally “we do encourage consideration of allowing all retail licenses that are allotted to your jurisdiction and letting the market decide what is the right number, like any of the other retailers” in most cities.
    • Community Considerations (audio - 5m). 
      • Showing his “favorite slide,” Estes said that cannabis businesses improved their communities “through volunteerism, outreach, donations, sponsorship, and finding their seat at the table.” He argued that a perception that legal cannabis would “harm local communities, have less-than-desirable clientele, increase crime, bring down the aesthetic charm of the community,” and was motivated by greed alone amounted to “a Reefer Madness 2.0 theory.” In Estes' experience, “nothing could be further from the truth” and cannabis businesses “gave back in big ways.” He called attention to the work of area retailers to support food banks and community health initiatives for children and the broader public.
      • He said the cannabis sector had organized events “that drive tourist dollars to the community.” Everett's Fisherman’s Village Music Festival and the Leadership Snohomish County Step Up Conference had both benefited from cannabis industry support. Estes said licensees “show up in big ways...and it’s constant, it’s not just a marketing ploy.” He suggested retailers would be good community partners and “make a difference” in a variety of ways.
      • Aesthetics in the cannabis industry is a concern for many,” Estes said. Former unlicensed dispensaries “gave way to less than attractive storefronts and buildings.” In contrast, contemporary retailers “have improved their design standards and landscapes,” he explained, and his firm’s clients were interested in providing a shopping feeling that was “upscale, and a different experience altogether.”
    • Estes next spoke to Lynnwood’s Cannabis Retail Title Certificate holders, businesses which had been approved for state licensure by WSLCB but were prevented from opening by the local government. He said Lynnwood had “four active potential licensees holding a valid title certificate that will allow them to operate” should the City Council end the ban. “So, you know who you’ll be dealing with,” Estes reasoned. He reviewed factors the State used to determine the maximum number of stores in a jurisdiction, indicating that Lynnwood’s current allotment was four stores. Estes said one title certificate holder had acquired survey results with “1,200 signatures from Lynnwood residents indicating their interest and support of bringing a retail store to the city” population of around 39,000. He said the firm who compiled the survey was prepared to address council members on their methodology and results at a future meeting. As retailers were deemed essential during the pandemic, Estes commented, they were able to provide consistent revenue other businesses couldn’t. Some cannabis stores, he said, were “minority owned businesses, promoting social equity in the cannabis industry and broader community.” Estes claimed half of Lynnwood’s retail title certificate holders were “black owned businesses, and one is a woman-owned business,” so racial minorities in Washington would be “significantly represented” in the City if allowed to open. Additionally, he told the Council that three certificate holders graduated from area high schools (audio - 5m). 
    • Estes wrapped up his comments looking at “next steps,” noting his understanding that the Council was already weighing further meetings. Following those meetings, he suggested “a draft ordinance might be created” for formal review by city staff. “We recognize that you guys are the experts on your city,” Estes concluded, promising to respond to any questions council members had (audio - 2m).
  • City council members had questions about lifting the prohibition and offered insight into their original deliberations.
    • Hurst stated “times are changing” and Washington’s cannabis industry “has changed and has really grown into an everyday business.” As there were “local owners” who wanted to offer a “vibrant business,” he asked fellow members to consider the subject. “I, for one, would be glad to see them come in,” he concluded (audio - 1m).
    • Altamirano-Crosby was grateful for the chance to learn about the issue, and asked Estes what “challenges do you face when you work with the cities” to open cannabis retail (audio - 7m) . 
      • Estes replied that his presentation illustrated “the real points of contention” he’d heard when engaging city governments on the matter. In his collaboration with Everett officials, comfort around “crime statistics” posed the largest hurdle and the City’s “public safety subcommittee” took the lead on reviewing the potential impacts of policy change.
      • The next obstacle Estes found was changing a perception that “cannabis is just a recreational drug” and emphasizing the need for accessible medical cannabis throughout the state. He said patients lived in the Lynnwood area but sometimes “have to go, sometimes, two, three, four stores to find the strain that they’re looking for.”
      • Estes had been challenged to convey cannabis businesses were not “the revenue lottery” some imagined but the income could still be useful for the local government. “Getting a grasp” on the limitations and benefits of retail cannabis was a common theme he’d seen among local governments.
      • Estes believed “the community engagement piece” changed minds about the cannabis industry once people realized “the impact that we have.”
    • Cotton commented that he’d been involved in the earlier city moratoriums, and said they were “largely as a response to the fact that this was brand new and a bit of the Wild West.” He felt many “unknowns have become knowns" which “really assuages my initial concerns” (audio - 2m).
    • Sessions countered that officials hadn’t heard “a lot of new stuff" in Estes' presentation that differed from what the previous Council had heard, noting "I still think there’s a lot of unknowns" (audio - 6m).
      • Sessions said the city’s cannabis consumers “can find marijuana stores on all of our borders, you don’t have to go far at all” as there were “tons of them” around the City’s boundaries. She added, “I don’t feel badly” about the City’s ban impacting consumer access.
      • Sessions noted a revenue estimate of $70,000 to $90,000 annually for the City and said, “I’m not sure that’s worth the trouble of having stores like this” in Lynnwood.
      • Public safety was “a concern for most people who aren’t a fan of these in their cities,” Sessions observed, and asked for “proof...that they do not bring more crime in the city.” The claim that cannabis retail compliance was “better than some other similar establishments” was “not the answer that I want to hear.”
      • That some retailers were giving back to their communities was “not impressive to me,” Sessions continued, and she felt cannabis businesses were “a little disingenuous” for making “so much money...for themselves that they should be giving out little grants here and there. And, I’m glad they’re doing it, but that doesn’t make me feel like I need them in my city more because I think it’s not enough.” She maintained that she’d seen “a lot of proof” that “a major increase in underage youth usage” of cannabis had resulted from legalization, “and I’m not sure these establishments are doing enough to prevent” youth access.
      • Sessions was concerned that cannabis reform was presented as “an urgent need” and pointedly asked Hurst if he was the recipient of political donations from the cannabis sector.
        • Responding to Session’s questioning of his motivations for supporting the issue, Hurst recommended review of his profile on the Washington State Public Disclosure Commission (WA PDC) website and acknowledged that he had received contributions from cannabis businesses. He asked that Sessions present data to support her assertions, and said the information they’d just heard addressed some of her fears around easy youth access. He felt cannabis businesses should be evaluated on an equal basis with any other new business in the city (audio - 1m).
        • See Sessions’ campaign donors on her WA PDC profile.
        • Sessions’ assessment of trendlines for underage cannabis use in Washington significantly differs from analysis provided by staff of the Washington State Health Care Authority (WA HCA) on September 29th.
      • Later, Sessions asked about the calculation of retail allotments for the city (audio - 3m).
    • Ross said she’d been on the Council “when this was originally proposed” and her position was unchanged: “no opposition to marijuana stores in Lynnwood.” She suspected that “the vast majority of people in Lynnwood don’t care either” (audio - <1m).
      • Ross later wanted to know if it was possible for a retailer to only serve medical cannabis patients (audio - 1m).
    • Having been “a community member” during the City’s many discussions on the moratoriums, Frizzell shared Sessions’ view that the information presented was not new but believed opponents to cannabis businesses should show how their objections “still exist” (audio - 5m).
      • Frizzell claimed to have talked to cannabis consumers who told her they were “glad Lynnwood doesn’t allow it, I’m glad there’s some place where it’s off limits.” She wanted to hear more from the Lynnwood Health Department, but felt that “kids are going to get marijuana, they’re going to get drugs wherever they can get it.”
      • She thanked staff for mapping cannabis retailers in neighboring jurisdictions around Lynnwood and called attention to Municipal Research and Services Center (MRSC) research which indicated the city was far from alone in banning legal cannabis.
      • Frizell supported continued discussion and asked members to review reasons the prior council had adopted a prohibition. She encouraged council members to develop questions that they’d need answered before contemplating any changes to the ordinance.
    • Wrapping up, Estes asked council members to study available information on cannabis excise and sales tax beyond his firm’s data as “due diligence” on the retail title certificate holders who would be the most likely to set up shop in the city (audio - 2m).

Information Set