Pittsburg approves Contra Costa County’s first cannabis manufacturing plant

Pittsburg’s first plant for manufacturing and distributing medical and recreational cannabis could soon be operating in an industrial park at the former U.S. Army’s Camp Stoneman site.

The City Council voted 4-1 Monday to approve a commercial cannabis permit and an operating agreement with Canyon Laboratories, a subsidiary of BioZone Laboratories Inc. Since 1992 BioZone has operated a lab developing, manufacturing and marketing over-the-counter drugs, nutritional supplements and cosmetics on Garcia Avenue, near where the new cannabis facility would be built.

With the vote, Pittsburg becomes the first city in Contra Costa Couty to approve such a facility. The business would operate on Clark Avenue, where Camp Stoneman was based from 1942 to 1954. It would accept raw cannabis materials, including tetrahydrocannabinol (THC) and cannabidiol (CBD), to process, package and ship products to approved retailers.

City staff had recommended the council’s approval of the permit and operating agreement, which has met all the city’s requirements, according to Jill Hecht, Pittsburg’s director of community development.

“They have an excellent track record and they are one of our major employers here in town,” she said.

Several neighboring residents, however, said they were worried about safety at and near the industrial park. David Miller, owner of Hospital Systems, which is directly across the street from the proposed cannabis plant, said his business was broken into last week and he is concerned there will be more break-ins once word gets out about the new facility.

“Their security system is fine as far as I am concerned, but I am worried about safety in the area,” he said. “Will there be an increased police presence?”

Fellow business owner, Pamela Kan of Bishop-Wisecarver Corp., a commercial and industrial equipment supplier, noted that children walk through the industrial park to get to and from school.

“I would like to see that the deliveries are not happening during these times when the kids are going back and forth to school,” she said. “This is not an area that is heavily policed … I am worried about the safety of my employees with these deliveries coming in and out.”

Under the agreement, the new manufacturing plant would have to abide by a security plan, limit the amount of THC stored on site, open the facility’s records to inspection by police on request, and install security cameras and card readers, among other measures. Deliveries would be made between 5 a.m. and 5 p.m.; however, a Canyon spokesman told the council that his company would be willing to reconsider the time frame though only one delivery is expected daily.

Senior planner Jordan Davis said the city has been working closely with Canyon Laboratories to review its security plan, which the police will approve before it is finalized.

“Perhaps the most crucial aspect of the security plan is making sure that raw material (cannabis extract) is housed in a safe location,” he said, noting it would be stored in a secured, gated area and that the delivery vehicles would pull directly into the facility where only up to 22 pounds of THC could be stored.

Those raw cannabis products will include extracts in carriers such as oil, corn syrup and powder, Jordan said. The extracts would be used in the manufacturing of ointments, lotions, topical creams and some ingestible products, according to BioZone CEO Richard Fischler, who also said he did not anticipate any problems with odors.

In June, the City Council identified Stoneman Industrial Park and several other industrial areas where cannabis-related manufacturing, testing and non-retail distributing could be located, while also prohibiting on-site tasting, sampling or retail sales of cannabis products.

Earlier this year, the City Council voted 3-0 to amend  city ordinances to limit the types of cannabis business to manufacturers, testing labs and non-retail distributors. Not allowed were medical or recreational dispensaries, collectives, cultivation, cooperatives or deliveries in the city.

In 2016, more than 68 percent of Pittsburg voters approved Measure J, which placed a maximum 10 percent sales tax on any future marijuana businesses. Based on Canyon Laboratories’ projections, the business could bring in more than $100,000 yearly for the city.

Councilman Jelani Killings, however, noted that the operating agreement with Canyon calls for only a 5 percent cannabis tax rate on the first $10 million in gross receipts. After that, there’s a sliding scale of 2.5 percent for earnings between $10,000,001 and $20,000,000, and 1.25 percent on those over $20,000,000.

“Why not stick to the 10 percent?” Killings said before casting the sole no vote. “It seemed it was a moot point to approve the 10 percent effective rate for cannabis tax, and then not have it not be relevant for every application that comes forward.”

Assistant City Manager Garrett Evans, however, noted that the city wanted to  be competitive with the tax rate and that if Canyon hits the limit of the first tier in the tax structure, it would mean $500,000 for the city, the highest taxes of any Pittsburg business.

Canyon Laboratories and BioZone also estimate the combined companies could see substantial growth in their consumer and medical products by utilizing cannabis. The companies estimate the combined operations would add about 80 jobs in the next three years.

For Mayor Pete Longmire, though, approving the new cannabis plant means more than simply money for the city. It follows in line with the direction a majority of Pittsburg voters have given with their approval of Prop 64 legalizing marijuana and a subsequent city tax for it in 2016, he said.

“Times have changed and the attitudes of our community have changed,” Longmire said. “This venture for the city is something new — and it could be very scary to all of us and very scary to members of the community, but if we are going to proceed down this path, I am very happy that we have capable staff that will comb through the issues, comb through the processes, and I’m glad that we have a responsible applicant that has been in the community that is willing to work with pretty much whatever we want them to do.”