Poulsbo reconsidering allowing retail cannabis

Revenue could support police, education, healthcare

The Poulsbo City Council voted to prohibit the production, processing and retailing of cannabis in 2014, but the governing body is now considering allowing it.

The reason: mainly for revenue purposes to help with other city needs such as law enforcement, education and healthcare.

In 2012, Initiative 502 was passed with 52% of Poulsbo residents approving the legalization of recreational cannabis, council documents state. The city passed interim regulations in 2013 to allow cannabis-related uses (retailers, producers, processors and medical marijuana collective gardens) in “light industrial zoning district.”

A year later, the planning commission recommended allowing recreational cannabis uses and collective gardens in “light industrial zoning district,” but it ended up being rejected by the council.

Councilmember David Musgrove, who was also on council at the time, explained why the council voted to prohibit cannabis then.

“The taxation came around of how they were going to distribute the tax dollars, and, effectively, the council voted in protest because they said we weren’t going to get anything,” he said. “We would approve the use of marijuana and get none of that funding to help support our police or any of the other things we had to do.

“If you’re not going to help us roll this out safely and properly, we’re not going to roll it out.”

Most counties in the state allow cannabis businesses to operate, while six counties prohibit them. There are 21 cannabis shops in Kitsap County, per 502data.com, with most located in Central and South Kitsap. Poulsbo is the only city in Kitsap that still prohibits cannabis.

Per documents, the state imposes a 37% excise tax at the time of retail sale, and that revenue is shared with cities, towns and counties. Revenues are distributed on per capita (population) and actual sales. Payments come in four installments to local governments each year.

In projecting how much revenue Poulsbo might receive, planning director Heather Wright looked at how Bainbridge Island’s cannabis business, Paper & Leaf, has been doing. On average, BI collects $47,500 a year from the cannabis shop and collected $53,000 in 2022.

The state share estimate alone is about $15,000, plus revenue from the cannabis shops themselves. Receiving state share does not depend on having a store as long as the city has voted to allow retail cannabis. Since Poulsbo has banned cannabis retailers, it is not eligible for per capita distribution. Wright said the money could be used for law enforcement (violent, property crime), education and healthcare (substance abuse and prevention).

Regarding zoning restrictions, cities, towns and counties can choose to prohibit or allow state-licensed cannabis businesses within their jurisdiction, documents read. Cities, towns and counties may also file objections to the granting of a state license at a particular location, and the state Liquor and Cannabis Board must give “substantial weight to objections.” The LCB has final authority over whether to grant a license to operate.

State law established a minimum buffer for cannabis shops at 1,000 feet from schools and playgrounds and 100 feet from a recreation center, child care center, public park, public transit center, library or any game arcade (where admission is not restricted to people age 21 or older).

Councilmember Connie Lord said she wanted time for the full council to review the topic since two councilmembers were absent. She also wants public participation to see if it’s wanted. Councilmember Britt Livdahl agreed on public participation, but mentioned a survey could be more effective as it would reach more people.

“I don’t want us to keep kicking the can down the road,” Livdahl said. “I want us to make (cannabis) allowed. I hope at some point licenses will become available.”

Councilmember Gary McVey, a proponent of allowing retail cannabis in the city, said he wants the planning commission to propose where it thinks the best locations would be for a shop and bring it back to council. “I don’t want to make this more complicated than it needs to be,” he said. “It’s been a legal product for more than ten years. This is the second or third conversation we’ve had about it.”

Ultimately, the topic will be brought back to the planning commission to identify potential sites. Once identified, the issue will be brought back to council for further discussion and public participation.