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Roswell city councilors considered a proposed set of fees for the process of permitting cannabis businesses, after discussion that included if the fees would be enough for the city to recoup its expenses and if they might be seen as punitive.
The city council’s Finance Committee voted to recommend the proposed fee schedule at its meeting Monday morning in City Hall by a vote of 3-0. Committee Vice Chair Juan Oropesa was not present. The committee’s meeting was rescheduled from its usual Thursday meeting time due to the New Mexico League of Municipalities annual conference, which takes place the rest of the week in Albuquerque.
The cannabis permit fee structure will be considered by the full council at its Sept. 9 meeting.
The city council last month approved a new chapter of city code dealing specifically with cannabis regulations. With the state to begin processing applications for cannabis producers and cannabis producer microbusinesses on Wednesday, local governments raced to put their own regulations in place before then. The proposed fees are among the first amendments the city will consider adding to Chapter 27 of the city code.
“Right now, the cost to process a permit for cannabis is exceedingly expensive, far in excess of a traditional permit. These are incredibly complex facilities. They require multiple levels of review,” Community Development Director Kevin Maevers told the committee.
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“The amount of time and effort that is going to be taken to do this is significant,” he said, adding the building inspections staff recently attended a conference in Albuquerque on inspection requirements for cannabis businesses.
Among the proposed fees is an $850 pre-application review that will be required of any type of cannabis business. The concept is actually part of a process to streamline all types of permitting, Maevers said, and will include a meeting with the business developer and multiple city department directors.
After a review of the project, the developer will have a list of what the city needs in order to process its formal application, he said.
Other fees include a zone change application. The regulations the city passed last month establish floating Commercial Cannabis and Industrial Cannabis zones within the city’s Community Commercial, or C-2, Zone and the Heavy Industrial, or I-2, Zone, respectively. A developer would apply for a zoning change to CCAN or ICAN for a specific property. The fees would range from $400 to $1,000 for up to 5 acres. For a site of 10 acres or more, there would be an additional $50 per acre.
A site plan review, which would be required of all cannabis projects, would follow the same fee structure as the zoning change fee. Conditional use permit applications would require a fee of $850.
Technical site studies reviews — which could include plans for business operations, site security, green waste disposal, air quality and odor control, and effluent disposal — would be $250 each.
“The technical studies are required because of the very complex and potential environmental, social and fiscal impacts associated with these projects,” Maevers said.
He said a site security plan, for example, is needed because cannabis businesses are cash-only businesses. Cannabis is still an illegal drug under federal law, so many banks, which are federally regulated, avoid doing business in the cannabis industry.
“It’s all cash coming in, all cash going back out. They have a high potential for theft,” Maevers said.
Environmental controls also must be in place, he said. Green waste from industrial producers can contain trace amounts of THC so must be disposed separately from traditional green waste.
A lack of air quality and odor control measures have had negative effects in California communities, Maevers said, with some cities losing rights to professional golf tournaments because of odors.
Water from greenhouse and indoor grow facilities are also of concern, he said.
“These contain nitrates and other things that are in them. That water has to be recycled, it has to be reclaimed and then the effluent has to be disposed of properly. We do not have an appropriate system here in the city that allows us to dispose industrial outflows directly into our sanitary sewer system,” he said.
Regulatory permit applications for an industrial cannabis business would be $750, and for a retail business would be $950. That would mirror the state’s regulatory permit system, Maevers said, and would ensure the city knows who is applying to run the cannabis businesses.
“We need to made sure that the right kinds of people, good people, are running these facilities and they have the ability to get licenses to get permitted,” he said.
A permit for on-site consumption would be $550, and a special event permit would be $750.
A development agreement would cost $1,500 and would allow necessary public improvements to be phased in.
“Many of these facilities, because they are doing their best to go up on a shoestring, do not have the ability to pay for many of the public improvements, at least not up front,” Maevers said.
The development agreement would involve multiple departments including the Community Development and Engineering departments, as well as a legal review and a review by the city manager before it can move forward, Maevers said, which is why that fee is so high.
Other fees include costs for notifications of public hearings and appeals.
It’s likely further amendments to fees associated with building review and inspection could be brought to the city council and committees in the coming months, Maevers said.
Maevers, in response to a question from Committee Chair Jason Perry, said the fees were determined from the amount of time it would take mid-level staff to work on the permits. He said at first, he and other high-level staffers will likely have to work with staff to help train them in procedures.
“I’m assuming though, after two or three projects come forward, we start getting used to it and I get my team trained up, we’ll be hopefully recouping better than half of our actual direct costs working with this,” he said.
Councilor Jacob Roebuck said he favored the fee schedule because he doesn’t see that cannabis businesses will generate much tax revenue for the city.
“If we don’t recover fees this way, I don’t think we’re going to recover the money that goes into it through taxes,” he said.
Roebuck and Perry said they believed the fees were fair, especially considering the amount of work city staff and city councilors have already put into forming regulations.
“I want to be clear this is not punitive in nature. The reason for having this is cost recovery and also to protect the economic welfare of the city,” Roebuck said.
Perry asked if the fees, even though they are higher than fees for other permits, would be enough to recover the expenses to the city.
“These are hours, time taken away from anything else,” Perry said. “I think that we’ve got to get to a place of (cost) recovery.”
Maevers said as the city gains more information on the actual process, it’s possible the fees could be adjusted and streamlined, but it does need to be careful that any increases aren’t seen as punitive, especially by the state government.
“I think if we make a significant bump, we’re going to possibly get to the point of where we are right up against that threshold and appearing to be punitive or maybe even crossing over it depending on who the applicant is,” Maevers said.
City/RISD reporter Juno Ogle can be reached at 575-622-7710, ext. 205, or firstname.lastname@example.org.