Peninsula residents overwhelmingly supported marijuana legalization. So where are all the dispensaries?

Experts say it’s high time for a change in local cannabis regulation, but the future of access in Silicon Valley remains hazy.

Walk through the doors of Embarc, Redwood City’s first cannabis dispensary, and you’d be forgiven for thinking you’d entered a boutique pharmacy or hip, third-wave coffee shop. And, in a sense, you have.

The marijuana dispensaries opening today bear little resemblance to the dingy, dark smoke shops of yore. Like many others, the interior of Embarc is bright and uncluttered, featuring neat rows of sealed bags and colorful vials, well-placed leafy plants and “budtenders,” as the staff is called. Even the ubiquitous flashing neon signs are somehow less garish — glaring all caps replaced with a tasteful, delicate script.

“In our retail design and execution, we tried to be really focused on being approachable,” says Embarc co-founder & CEO Lauren Carpenter. “We wanted it to be upscale enough that you could bring your grandma in and feel really comfortable talking to her about CBD gummies for sleep or a little cream for wrist pain. But we didn’t want to be so high-end that we weren’t approachable for everyone.”

And yet, six years after Californians voted to legalize marijuana, places like Embarc remain relatively few and far between. 

Despite the passage of Proposition 64, the Adult Use of Marijuana Act, cities and counties statewide continue to waffle over the cannabis question; more than half don’t allow any type of cannabis business whatsoever. Those numbers are even higher along the Peninsula, where the large majority of cities prohibit all cannabis retail. In fact, beyond a couple of scattered delivery services, Redwood City is home to one of only two brick-and-mortar dispensaries along the roughly 45-mile stretch between cannabis-friendly Pacifica and San Jose. (MegaBud opened in Daly City last December.) And Embarc, which celebrated its grand opening Feb. 11, was the first storefront to open in Redwood City — more than two years after the City Council voted to allow up to six cannabis businesses citywide. 

As Redwood City debuts its first dispensaries, other cities like San Bruno and Mountain View continue to duke it out over regulatory details, and others still remain adamantly opposed to the idea. 

Meanwhile, the questions remain: Why — in ostensibly pro-cannabis communities — isn’t the legal industry thriving? And what does the future of weed look like along the Peninsula?

Today, 65% of cities in San Mateo County and more than 86% of cities in Santa Clara County prohibit any kind of cannabis retail, including delivery, online and storefront businesses. Photo by Devin Roberts.

The making of the Peninsula’s cannabis desert

On March 28, frustration and exasperation were audible in the voices of San Bruno officials and residents as they rehashed an old debate: what to do about cannabis in their city? 

Just six months after the City Council voted to allow three storefront cannabis businesses to open in San Bruno, they were back at the table discussing a proposal that would essentially undo their previous decision. If approved, the new ordinance would make the downtown area a no-cannabis zone and reduce the total number of brick-and-mortar dispensaries to one.

For many, the conversation was proving to be a sort of Groundhog Day experience. 

“We’ve been having these discussions, believe it or not, going back to 2011,” said Council member Michael Salazar, referencing the council’s original decision to ban medical dispensaries. “This has been very divisive from the beginning.”

Since 2016 alone, when San Bruno passed an urgency ordinance banning all cannabis-related business, marijuana has been a subject of discussion at more than 15 City Council meetings.

San Bruno is hardly alone. Since Proposition 64 legalized the cultivation and use of marijuana for adults statewide in 2016, government officials throughout California have been embroiled in ongoing debates about how, if at all, to bring cannabis retail to their cities. That reality might seem surprising given that the measure received 57.1% of the vote, including resounding support among voters in San Mateo and Santa Clara counties.

But progress along the Peninsula, where growth and innovation are king, has been minimal.

“The Peninsula should, by itself, be a half-billion dollar cannabis industry, (not including San Jose),” says cannabis advocate Hirsh Jain, who serves on the board of California’s chapter of the National Organization for the Reform of Marijuana Laws (NORML) and founded the cannabis consultancy Ananda Strategy. “Similarly, there should be two, three thousand people, at least, who are employed by the legal cannabis industry in the Peninsula. Yet those figures are 10% of that because of all of these huge cannabis deserts.”

Today, 65% of cities in San Mateo County and more than 86% of cities in Santa Clara County prohibit any kind of cannabis retail, including delivery, online and storefront businesses. In San Mateo County, Pacifica, Daly City, San Bruno, and Redwood City allow storefront and delivery, while Brisbane, Burlingame, and South San Francisco allow only the latter. (In 2018, Half Moon Bay residents voted to allow cultivation of cannabis seedlings but did not approve any commercial cultivation, retail sales or manufacturing.) While Mountain View permits delivery operations, San Jose is the only city in Santa Clara County to allow brick-and-mortar shops.

Since 2018, cannabis sales in Santa Clara County more than doubled, with the majority of revenue coming from San Jose, which hit $180 million in annual revenue last year — roughly 90% of the county’s total cannabis sales, according to data from the California Department of Tax and Fee Administration. By comparison, San Mateo County’s cannabis industry brought in just under $60 million in 2022.

A key part of the issue, experts say, is that cities like San Bruno are forced to have these conversations at all. That’s the result of one critical detail of Prop 64 which, rather than imposing broad, statewide rules, ceded power over cannabis regulation to the individual jurisdictions. In other words: local control.

“That’s been an obstacle,” says Sean Kali-rai, founder and president of the Silicon Valley Cannabis Alliance, a local marijuana trade organization. “If the state had to do this over again, maybe they would have thought about licensing being a statewide issue.”

Local control, which effectively gives each government the authority to write its own rules about what kind of cannabis business is allowed and where, has resulted in a slow, piecemeal rollout of retail and wholesale bans on retail in more than half of all California cities. Kali-rai, an entrepreneur who in recent years has earned a reputation as an outspoken local cannabis lobbyist, blames this policy for creating “cannabis deserts up and down the state.” 

The Peninsula, one such desert, is a good illustration of what happens when regulation happens jurisdiction by jurisdiction. While some cities like Burlingame have permitted limited and tightly regulated cannabis delivery, others, like Woodside and San Mateo, have banned cannabis businesses altogether.

And then there’s the case of San Bruno and Mountain View, where elected officials have proposed and then reversed course on progressive cannabis ordinances.

“This is, at least in my mind, the most interesting part of the story,” says Jain, who’s long been passionate about expanding access to cannabis. As he sees it, local control undermines the democratic process that legalized weed in the first place. 

“And I will say, the tone was set by Mountain View,” he adds.  

Embarc employee Malachi Smith examines cannabis plants at the Redwood City dispensary on April 18. Photo by Devin Roberts.

In the fall of 2018, the Mountain View City Council voted 5-2 to pass an ordinance that would allow up to four marijuana shops — two storefronts and two delivery businesses. But it was not without resistance. Droves of opponents began attending council meetings to fight the new policy. 

In response, the council proposed a new ordinance that would ban all storefront retail. In May 2019, during a public comment period that lasted more than two hours, nearly 80 residents spoke, many wearing stickers or holding signs that read “No Pot Shops” or “Protect Kids.” They warned of the dangers of having dispensaries in close proximity to schools and the “family-friendly” downtown areas. Several pointed to San Francisco as a cautionary tale, describing litter, secondhand smoke, homelessness and crime as ills that might befall their city were they to follow in the footsteps of the bigger, cannabis-friendly metropolises.

“I have concerns about potential criminal activities,” said Mountain View resident Dona Lee. “People who buy drugs from here have to come from all over the Bay Area.”

Another Mountain View woman, who did not give her name, described marijuana as “a gateway drug with potential to introduce a user to more serious, illegal substances like cocaine or heroin.”

Later that night, the council voted unanimously to ban all storefront cannabis shops in Mountain View, limiting local business to delivery only.

“For me it’s very clear that our residents really don’t want cannabis businesses in our city, and we should listen to our residents,” said former Mayor Lisa Matichak, who did not respond to several requests for comment. (Then-Vice Mayor Margaret Abe-Koga also did not respond to multiple requests for comment.)

Following a turnout of residents largely opposed to cannabis businesses in Mountain View, the City Council in 2019 adopted a more restrictive ordinance banning storefront cannabis shops. Photo by Magali Gauthier.

But cannabis advocates disagree, noting that more than two-thirds of Mountain View residents voted for Prop 64 in 2016. Former Council member John McAlister, who was in office during both votes, says he supported cannabis retail because he believed his constituents were largely in favor of it. “I don’t think the advocacy was representative of the full city,” he says, in retrospect. 

“It all depends on the council,” he adds. From his perspective, his support of the revised ordinance was a decision to compromise. Given the new council’s attitude toward cannabis, “It was either going to be nothing at all or delivery.” 

Still, the fact that a vocal, anti-cannabis contingent succeeded in swaying the minds of Mountain View’s elected leaders just three years after statewide legalization, Jain adds, “epitomizes what’s going on in the Peninsula.”   

This phenomenon has been observed by researchers throughout the state, according to Brad Rowe, a lecturer of public policy at UCLA and an expert on criminal justice, cannabis and other drug policy. He described the reality of local control as it’s played out in California over the last few years as a “huge failure of the industry” that has crippled residents’ access to cannabis, siphoning money away from legal, regulated sources and enabling the illicit market — which is roughly twice as big — to thrive. (Since 2020, the state Department of Cannabis Control has seized an estimated $11.2 million worth of illegal cannabis in several busts of unlicensed facilities in San Jose and Gilroy. No busts were reported in San Mateo County.)

As a result, cities are also missing out on major economic opportunities, particularly in desirable, well-trafficked areas like the Peninsula. Even with ongoing challenges, cannabis is one of the nation’s fastest growing industries, and cultivating a regulated market can reap major rewards for a community, including tax revenue, jobs, and upward mobility, according to Rowe.

“We’re sitting in a very, very, very strange position that most other states don’t have to deal with,” he says. “Most people want to have licensed, tax-regulated cannabis. And the localities are not representing the will of their constituents.”

Lifelong resident and San Bruno Vice Mayor Tom Hamilton observed a similar story unfolding in his city. While not a cannabis consumer himself, Hamilton has long seen the industry as a promising source of new tax revenue and imagined San Bruno could be a leader in that market. Given strong support from San Bruno voters for both California Proposition 215, which legalized medical marijuana in 1996, and a local ballot measure imposing taxes on commercial cannabis activity, he hoped to hear a strong endorsement from community advocates. Instead, what he perceived to be a minority of residents voiced concerns that echoed those of opponents in Mountain View and elsewhere. 

Ultimately, the council voted 3-2 this month (with Hamilton among the opponents) to reduce the number and location of retail stores, a decision that directly defied the recommendation of the city’s Planning Commission and that Hamilton says was not reflective of the city as a whole.

“The majority of our council are listening to a minority of constituents who don’t like cannabis,” he says.

Salazar, the council member who first proposed revisiting the ordinance, says his goal was to “devise a solution that was more palatable to everybody across the community.” In response to the original retail-friendly policy, he recounts “continued opposition” — and even legal threats — from constituents who were worried about the impacts of having multiple dispensaries within a relatively small area.

Though Salazar supports slowly expanding cannabis retail in San Bruno, he remains sympathetic to concerns about how dispensaries might change the feel of the city.

“Imagine a very seedy-looking business with blocked-out windows, people coming in and out, armed guards standing at the door,” he says. “That could potentially have a negative impact on the neighboring businesses.”

Jain, for his part, says he was “disappointed, but not surprised” by the last-minute pivot. 

“San Bruno, given its proximity to SFO, could have had one of the most successful cannabis programs in the state,” he says.

“The majority of our council are listening to a minority of constituents who don’t like cannabis,” says San Bruno Vice Mayor Tom Hamilton.

Leading from fear

At the heart of the issue? Experts point to fear and outdated misconceptions about cannabis.

Nearly 90 years have passed since “Reefer Madness” warned audiences about “a new and deadly menace lurking behind closed doors.” The propaganda film painted weed smokers as debaucherous, violent, murderous, hopeless addicts and fueled an anti-marijuana narrative, now decades in the making.

“For all the rhetoric out there of people approving the idea of legalization of cannabis…when it comes down to your community, there’s just a huge amount of NIMBYism with it,” Rowe says. “It’s a carryover from the battle days of the war on drugs. The rhetoric of the dangers of cannabis and the industry still linger.”

As with any drug, there are important impacts to consider when it comes to cannabis — the effects on young, undeveloped brains, interactions with mental health and the role that marketing and access play on increasing usage. Still, broad claims that it’s highly addictive, acts as a gateway drug to more serious substances and breeds criminal activity have time and again been disproven by research, Rowe says. 

Now, a few years into legalization, attitudes are shifting. Rowe attributes this change to the fact that legalization hasn’t — as some feared — caused a huge upsurge in crime or use among teens. “People have seen that the skies haven’t fallen,” he says.

But the progress is slow and emotions, on both sides of the aisle, run high.

For her part, Carpenter, who has opened eight Embarc locations throughout California and engaged in countless conversations with residents, says she understands that cannabis can be a “deeply personal issue” for many, particularly those with kids.

“In every community, the biggest concern is always youth,” she says. “We recognize that with the integration of local, legal cannabis activities comes this paradigm that parents are put in, which is: How do we tell our kids that they can’t use cannabis, when it is now down the street, or when it is now in our medicine cabinet?”

Like other retailers, Carpenter tries to dispel fears by emphasizing the role that dispensaries play in tightly regulating a legal market that is strictly off-limits to minors. She also wants to rectify stereotypes about marijuana clientele.

“There’s this perception that cannabis users are 22-year-old kids with no future. And that simply isn’t the case,” she says. “The average age of Embarc’s customers is 44 years old, and it skews almost perfectly 50:50, male to female.”

But despite their best efforts, many advocates worry that a vocal, opposing minority will continue to have an outsized role in shaping city policy. In the end, the city leaders make the final decision, and they, too, are susceptible to their own personal and political misgivings.

The line for public comment on proposed cannabis shops in Mountain View snakes through the second floor of City Hall during the council meeting on Mar. 5, 2019. Photo by Magali Gauthier.

Both Mountain View and San Bruno saw a shift in leadership at a critical moment in the cannabis debate. Just months after initially passing pro-retail ordinances — and following the election of several new council members — officials in both cities flip-flopped on their original decision. 

Looking back, Jain believes the Mountain View case instilled fear in neighboring areas. Following the city’s dramatic reversal, he recalled hearing from countless elected officials throughout the Peninsula who were personally in favor of cannabis but afraid of the political repercussions of taking a public stance behind it. He recounted conversations in which leaders told him, “I have more to fear from the 10% of people in my town that believe that cannabis is the end of civilization, and can initiate a recall against me, than I do from the passive 60, 70, 80% who believe this product should be sold legally.”

Rowe, who has spent more than a decade working with cities on developing cannabis policies, has observed similar trends everywhere from Los Angeles to Sausalito and Daly City. Facing pressing issues — job insecurity, housing, COVID recovery — many city officials aren’t making cannabis retail a top priority, he says. And when worried parents or angry neighbors approach the dais to accuse their elected leaders of exposing youth to drugs, officials are faced with an emotionally and politically fraught calculation.

Salazar also describes the heavy burden placed on cities “to regulate this very regulated industry,” which he says has caused a lot of officials to pause and reconsider if, and how, to roll out retail. 

Still, he doesn’t believe that political fears played into his or his fellow council members’ decision.

“​​The attitudes towards marijuana have changed dramatically nationwide,” he says. If anything, he adds, “We want to make sure that the approach we’re taking is the right one…by starting small and letting it grow as needed.”

Former San Carlos City Council member Mark Olbert has a different take. He was in office in the fall of 2017 when the council voted to ban retail cannabis. The only one on the five-person council to support commercial operations, Olbert recalled his colleagues’ “knee-jerk” reactions against the idea, which he chalked up to fear of being painted as a pro-drug politician.

“It’s like, ‘Oh geez, I don’t want to be on that side of the debate,’” he says. “‘I’m afraid of what might happen to me if I tried to run for reelection.’”

A neon sign adorns the wall at Embarc, a dispensary that opened in February in Redwood City. Photo by Devin Roberts.

The uphill battle of opening a dispensary

Carpenter began scouting Redwood City in 2020, shortly after opening Embarc’s flagship store in Lake Tahoe. Centrally located on the Peninsula and with a budding interest in the cannabis industry, Redwood City seemed like an ideal location for a new storefront.

Through subsequent conversations with nonprofit leaders, electeds and public health officials, Carpenter found her interest growing. Redwood City was on track to become one of the first cities in the region to open a dispensary, a possibility that invoked both excitement and fear among its residents.  

That fall, the City Council unanimously approved zoning amendments that would allow up to six cannabis businesses to offer storefront retail. 

“I certainly care quite a bit about (the) health outcomes of our community,” Redwood City’s then-Vice Mayor Shelly Masur told the council in October 2020. “One of the reasons that I support legal cannabis is I do believe that when we have it regulated and in stores that are safe, that people have to show their ID to get into, etc., it actually limits youth access in a way that we can’t limit when they’re buying it illegally.”

In early 2021, Carpenter joined 28 retailers applying for a license to operate in Redwood City. The following March, after a yearlong application and review process, Embarc was one of four applicants selected to receive the first round of licenses. Another year would go by before they could open their doors. 

And hers was a fairly smooth, expedited process, Carpenter says.

From licensing and entitlement processes to administrative review and operating contracts, retailers have their paperwork cut out for them. Municipal oversight can take weeks, even months, followed by an extensive, back-and-forth approval process for the design of the proposed retail space. Then there’s the physical construction of the storefront itself  – which has to adhere to all local regulations – and, if all goes well, the final prep, including hiring, onboarding and training of staff.

Embarc general manager Mela Bennett works at the Redwood City dispensary on April 18. Photo by Devin Roberts.

“It can be anywhere from a handful of months to, for some operators, any number of years in order to get open and operational,” Carpenter says. From concept to reality, she adds, the process can easily add up to a seven-figure investment. “It is certainly not for the faint of heart.”

While much of the burden falls on the shoulders of independent retailers, the city staffers, too, have their fair share of bureaucratic hurdles to jump through. Even once a jurisdiction opts into cannabis sales, there are the regulatory details to iron out and required sign-offs from the fire and police chiefs, as well as approval from a number of other city departments. 

All in all, cannabis consumers might wait years to shop locally because of a system that, in Jain’s words, “the Kremlin would think is overcomplicated.” Case in point: Redwood City, which first broached the subject of cannabis retail in 2019, has only just cut the ribbon on its first dispensary. Meanwhile, Jain adds, “These businesses have been paying rent on empty storefronts for two and a half years as they try to navigate the local and state bureaucracy.”

Not only does this process present a barrier to access for recreational or medical cannabis users, it also limits the pool of potential business owners — particularly in high-income regions like the Peninsula.

Historically, Black Californians have suffered disproportionately from cannabis criminalization, something the Department of Cannabis Control is trying to address through grants and other state-funded efforts. But local social equity programs are still at the behest of each individual city. Within San Mateo and Santa Clara counties, only San Jose has implemented one.

Looking at data from a handful of California’s largest jurisdictions, the Los Angeles Times found that “equity applicants” comprised less than 8% of all those granted cannabis licenses through 2020.

“This is an equity issue,” Jain says. The amount of capital required to hold down an empty storefront for several months or even years — at least half a million dollars, Jain estimated — is preclusive to the majority of would-be retailers. 

“Anyone who has half a million dollars is probably not someone who has been negatively impacted by the war on drugs,” he says.

Lt. Don Morrissey of the Santa Clara County Sheriff’s Office holds up a seized marijuana plant found growing in the Santa Clara hills in 2009. The growth of the illegal market has contributed to a decline in legal cannabis sales. Photo by Veronica Weber.

What’s to come?

As throughout much of California, the future of cannabis retail along the Peninsula remains rocky.

Part of that uncertainty is due to bleak market trends. A combination of high taxes, limited dispensaries, plummeting cannabis flower and extract prices and distribution challenges — not to mention a nationwide economic downturn — have paved the way for what Rowe called “a fairly major extinction event,” with many businesses shutting down over the next year. According to data released by the California Department of Tax and Fee Administration, cannabis sales fell by 8.2% in 2022 — the first drop since legalization.

Meanwhile, illegal marijuana dealings have continued to grow, offering cheaper, more accessible options and strangling the legal cannabis market. A 2022 Leafly report found that “opt-out towns” are often hubs of flourishing black market sales. In other words, the authors write, imposing a local ban on legal cannabis “effectively creates an economic protection zone for illegal street sellers.” With only three stores per 100,000 residents, California has one of the lowest rates of dispensaries per capita nationwide. After New Jersey and Michigan, the Golden State also has the third-most-robust illicit market in the country, with an estimated 55% of all cannabis sales going to illegal dealers.

Macroeconomics aside, cannabis has little hope of gaining a foothold in new communities without a concerted push from city leaders. And interest in expanding cannabis business along the Peninsula is a mixed bag, according to Kali-rai, who has had countless conversations with retail clients, local elected officials and other community leaders. His research has also revealed some trends, however — most notably, a stark and telling difference between lawmakers in San Mateo and Santa Clara counties.

“San Mateo County is fairly unique, especially in the Midpeninsula,” he says. “I have met more people in public office that are open to a conversation, an idea — even if they disagree with you — in San Mateo County than anywhere else.”

In fall 2020, Redwood City’s City Council unanimously approved zoning amendments allowing up to six cannabis businesses to offer storefront retail. Embarc is the first to open in the city. Photo by Devin Roberts.

Redwood City, which Kali-rai called a “trailblazer” in cannabis retail, was one of the first cities in the county to reach out to him with questions about the new, legalized marijuana landscape. At their request, he took several city staff members on a tour of a San Jose dispensary in 2017 to show them what business looks like from the inside. 

Kali-rai says he was struck by the interest among Redwood City’s electeds, particularly former Mayor Diane Howard and Council member Janet Borgens. Their open-mindedness, he says, made it possible to have productive conversations about the pros and cons of cannabis retail, which ultimately informed their decision to pursue it.

Might Redwood City inspire neighboring cities to follow suit? Kali-rai thinks so.

“The early adopters do quite well. And then the surrounding communities usually want to jump in,” he says, describing a similar domino effect among Southern California cities after Santa Ana launched cannabis retail in 2017. With pent-up demand and no nearby competition, Redwood City is poised to have an enviable monopoly on the local cannabis market.

“And everyone’s gonna look at these guys and go, ‘Hey, I want to make some of that money too,’” Rowe says.

Cannabis products at Embarc, a dispensary in Redwood City. Photo by Devin Roberts.

Business in Redwood City is taking off. Hundreds attended the grand opening at Embarc earlier this year, and Carpenter says the store has already made tens of thousands of transactions. So far, flower and pre-rolled joints dominate sales, but Carpenter says that wellness products like topicals and tinctures have been unusually popular in Redwood City. Anecdotally, she’s been pleasantly surprised by the level of interest that locals have taken in the new dispensary. She recalled one woman, a resident of a nearby low-income senior home who uses cannabis medicinally and, after traveling miles away to fill her prescription, was delighted to finally have a source in her own backyard.

“She was coming by every day to cheer us on in those final days (leading up) to opening,” Carpenter says. Less than two months post-launch, and having received generally positive feedback from the community, she says she’s  “really excited about the future of cannabis in the Peninsula.”

If Redwood City is any indication, Jain says, progress is happening — but frustratingly, almost imperceptibly slowly. In San Bruno and Mountain View, on the other hand, change looks more like two steps forward, one step back. 

“My prediction is that a cannabis dispensary doesn’t actually open in San Bruno until 2026 or later,” Jain says.

The recent defeat has left Hamilton feeling less than optimistic. One of two San Bruno council members to reject the revised ordinance, he doesn’t know what it would take at this point to get cannabis retail off the ground in his city.

“As far as the (cannabis) storefront goes, we can only approve one,” he says, adding that the council could choose not to approve any at all. “I still see it as an uphill battle.”

The post Peninsula residents overwhelmingly supported marijuana legalization. So where are all the dispensaries? appeared first on The Six Fifty.


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