ELECTION 2022 – Cannabis initiative makes November Manhattan Beach ballot

by Mark McDermott 

An initiative that, if approved, would allow up to three commercial cannabis stores in Manhattan Beach will appear on the November ballot. 

The Cannabis Initiative, submitted with 3,326 signatures by local resident Derek Glunts and funded by two commercial cannabis companies, was certified by the LA County Registrar. In early April, the City Council reluctantly agreed to put the initiative on the November 4 ballot in a 4-0 vote, with Councilperson Richard Montgomery recusing himself. 

The Council chose not to establish an advisory committee, as did neighboring Hermosa Beach and Redondo Beach did, but instead placed  the matter on the ballot, while instructing staff to research the maximum amount of taxation that can be imposed if the initiative overturns the City’s current ban on retail cannabis sales. 

Mayor Pro tem Steve Napolitano said the City cannot block a citizen’s initiative. 

“We have no option but to put it on a ballot,” he said. “Once the signatures are collected, it’s just a matter of which ballot.” 

Neighboring Redondo Beach, because it is a Charter City, was able to put off the initiative’s election until November 2023. Manhattan Beach is a general law city, and must abide by state election guidelines. The Council chose this November’s election because it is a statewide consolidated election, meaning the City’s cost would be lower, at about $19,000. 

The Council also directed staff to complete a report on its options regarding the initiative, including the maximum allowable taxation, and the possibility of putting a competing initiative that would curtail or take precedence over the Cannabis Initiative

Napolitano suggested if tax rates are high enough it could keep cannabis shops from coming to town. 

“If anything passes allowing retail sales or any kind of sales in Manhattan Beach, then we tax it at a certain percent. We can disincentivize,” Napolitano said. “If there are more attractive places to sell than Manhattan Beach because of taxation, they will go elsewhere —  they’ll go there before they come to Manhattan Beach. So if we had a 20 percent tax rate on gross sales in Manhattan Beach, I highly doubt any cannabis operator would open up shop here.” 

Mayor Hildy Stern urged the Council to take some kind of action, such as drafting an alternative initiative, to forestall the Cannabis initiative. She noted that two-thirds of local votes voted in favor of the statewide 2016 initiative that legalized recreational marijuana use and sales. 

“So all I’m saying is if we do nothing, and this goes to the ballot, we could end up with this very flawed initiative,” Stern said. 

Those flaws, she indicated, include a lack of provision for taxation and restrictions on deliveries from companies based outside of Manhattan Beach, currently a manner in which many local residents purchase cannabis products. 

Jonathan Cvetko, director of the United Cannabis Business Association, told the Council that the two firms backing the initiative, Catalyst Cannabis Co. and TradeCraft Farms, were attempting to establish a monopoly locally and had paid canvassers to spread misinformation in order to collect signatures. 

“Each of these Beach Cities have identified the overarching problem, that these initiatives take local control away from the cities to regulate cannabis retail activities,” Cvetko said. “It’s worth mentioning, though, that there are some other important and lesser discussed policies in the initiative that could affect the city. There is no local cannabis tax, resulting in an unfunded enforcement liability. It bans the delivery of cannabis from delivery services outside the city. This will be an enforcement nightmare for the city’s police force…. Number three, it bans all hemp businesses and products from the city. Mother’s Market, the Vitamin Shoppe, and other can no longer sell a variety of CBD or other hemp products. This policy allows the proponents to eliminate the competition to the disadvantage of the residents, furthering their monopoly in the city.” 

Public testimony was largely against the initiative. Jacqueline Sun, from the Beach Cities Health District, said the public health agency opposes it and is ready to help the City to devise its own regulations. 

“We do not support the introduction of recreational dispensaries, based on the evidence [regarding the negative impact to our youth],” she said. “Especially in developing brains,we tend to see impairments and vulnerabilities in mental health issues, just to name a few. We know that youth initiation, and use are influenced by accessibility as well as social acceptability of cannabis. And we have studies showing that youth living near dispensaries use marijuana more frequently than those who do not, which is a concern, especially as we’re starting to see some declines in youth usage of cannabis in the Beach Cities.” 

The Council will receive an update on its options next month. Councilmember Montgomery, who at the April 5 meeting recused himself, noting that he had financial interests “that could pose a conflict,” in a subsequent interview elaborated. He said that he has invested money in a diversified fund that specializes in high growth, high risk investments, and that fund includes cannabis farms —  mostly in Canada, he said, and not directly related to the firms advancing the initiative. 

“None of the investments have anything to do with the companies that have put the initiative in front of the city,” Montgomery said. “Nothing at all. They’re not even in this country.” 

Montgomery had another potential conflict in that he worked as a paid consultant with a public relations firm in making introductions for cannabis industry representatives to South Bay elected officials, although he said none of those introductions were within Manhattan Beach. He said that contract has expired, but at the advice of City Attorney Quinn Barrow stated both issues as potential conflicts. 

“I’m not advocating one way or another,” Montgomery said. “I just have to recuse myself, on the advice of counsel.” ER 


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