Hanford mulls big cannabis offer as Clovis, Lemoore reject pot farms

It was a big week for pot in the Valley. As the state counts down to the likely approval of recreational marijuana use in the November election, three city governments examined their current guidelines.

The Hanford City Council dealt with a bomb dropped in its lap at its Tuesday meeting. Keith Stephenson, owner of a Bay Area medical marijuana distribution company, is in escrow on an industrial park – formerly a Pirelli tire plant – in south Hanford. He wants to turn it into one of the state’s largest medical marijuana cultivation and distribution operations, which he said would provide $14 million per year to a city whose annual general fund totals $24 million. He will need Hanford to adjust its city laws – and fast – to make that happen.

In Clovis and Lemoore, city councils opted for a more cautious approach. Both decided to extend their current ordinances governing medical marijuana – legal in California since 1996 – to include recreational use should Proposition 64 pass. However, both closed the door for commercial operations – at least, for now.

Hanford doing its homework

Hanford Mayor Justin Mendes was blown away by the proposal from Stephenson’s company, Purple Heart Patient Center.

“The $14 million a year grabs your attention. That’s for sure,” Mendes said. “But (the council) had some questions as to how to make it work.”

Among those questions, Mendes said, were things such as how do the licensing and legal stipulations work? What are the levels of taxation, and how would Hanford put them in place? What are the difficulties coming from Washington, D.C., given that marijuana remains federally illegal? Would other businesses leave town if pot moved in?

Stephenson is also promising the council around 1,100 new jobs with wages ranging from $15 per hour to six-figure salaries. Attempts to reach Stephenson through Purple Heart’s Oakland office were not successful.

The tire plant closed in 2001. It was bought and rebranded as a business center in 2006, but most of the building has remained vacant. The Kings County Economic Development Corp. lists the price of the entire plant as $12 million.

Law enforcement weighed in on the issue. Kings County Sheriff David Robinson offered fierce opposition to the proposal, noting the federal laws. Hanford police Chief Parker Sever suggested the council take its time, as a marijuana operation this big is something very few people in the country have experience with. He added that the city’s staff may want to visit Colorado or Washington state, where recreational use is legal, to gather more information.

Taking all of this in, the council directed city staff members to start working on finding some answers to these questions and concerns. The council members must also reach out to their constituents to get a feel for public sentiment.

Hanford must do all of this in an extremely tight window. The offer from Purple Heart – not to be confused with a Reedley company looking to bring medical cannabis to Huron – could expire in late October if sufficient progress isn’t made before the Nov. 8 election. That’s a tall order given that Coalinga – a small Fresno County city about 50 miles west of Hanford – took about seven months to formalize ordinances allowing commercial cultivation.

Here are the specifics of the Purple Heart proposal, according to Mendes: The 1 million-square-foot facility would produce 180,000 pounds of marijuana per year once it gets going. For perspective, the Manchester Mall in central Fresno offers about 1 million square feet in retail space. A football field, counting end zones, is about 57,600 square feet, so the operation would likely hold dozens of football-field-sized plots of marijuana plants.

The new facility would be a sort of one-stop shop for marijuana operations – with cultivation, lab testing and sale to customers happening all under one roof.

The $14 million figure seems a stretch, but it’s possible. The going rate for property taxes in cities to embrace cultivation like Coalinga and Desert Hot Springs in Southern California is $25 per square foot for the first 3,000 square feet and $10 per square foot for anything beyond that. At 1 million square feet, the annual property taxes could be as high as $10 million.

Many marijuana opponents – especially law enforcement agencies – believe city governments are swayed by greed, given figures like this. Mendes doesn’t fully agree with this assertion, but he didn’t shy away from it, either.

“As a mayor, I am always obligated to say we need money,” Mendes said. “We are not at a deficit, but you can always use a little more just from a basic business perspective. If I can increase my general fund – which pays for things like firefighters – by 60 percent, I have to take a hard look at that.”

Mendes said that like any business owner, he will also have to look at costs. Things like security and enforcement of city regulations will cost quite a bit. Water use is also a concern. The industrial park uses city water, which is stretched thin in an agricultural city like Hanford. Unlike Coalinga, Hanford does not receive any federal water. The U.S. Bureau of Reclamation sent Coalinga a letter in July threatening to cut off the city’s supply should water be used for marijuana growth, but it does not have jurisdiction in Hanford, he said.

Mendes also stressed that this would be a medical marijuana facility. He acknowledges the place would likely be used to grow pot for recreational use should Proposition 64 pass, but he said the council will likely “be very strict on recreational use.”

Clovis not convinced

Meanwhile, on Monday the Clovis City Council voted 5-0 to extend regulations on medical marijuana patients to recreational pot users, should Proposition 64 pass.

Clovis Mayor Nathan Magsig said the council took its cues from the Clovis Police Department. The new rules for recreational users would allow them to grow several plants in their homes with various restrictions, including keeping them out of sight and reducing odors. Commercial cultivation would remain prohibited. Sale or distribution of marijuana also would remain illegal.

“We take pride in the fact that we are one of the safest cities in the Central Valley,” Magsig said. “We want to follow state law, but also continue to keep our residents safe.”

Magsig referred to medical marijuana as a medicine several times. He said he is not looking to deny access to patients in any way, but the city must give the Police Department the power to go after those who abuse the law.

When asked if not allowing patients to buy medical cannabis within the city was, in fact, denying them access, Magsig said the city believes current ordinances allowing patients to grow it themselves are fair. He added that, to his knowledge, the city had not received any complaints about the existing rules.

Magsig said the city could revisit the issues if Proposition 64 passes.

A Navy town tightens rules

Like Clovis, Lemoore also extended its existing personal-use regulations to include recreational users. Unlike other local cities, the Lemoore bans also extend to deliveries. Patients are not allowed to have marijuana delivered to them under Lemoore ordinances.

City Manager Andrea Welsh said Lemoore has a lot of federal employees and retirees given the massive naval air station. This demographic looks to distance itself from anything federally illegal.

City Councilman Ray Madrigal likened the adjustments to existing ordinances to raising a child.

“You’d rather start more strict, then loosen the reins as they get older,” Madrigal said. “As opposed to starting out loose and trying to tighten later.”

Madrigal said the city’s voters opposed marijuana legalization in 2010 by a two-thirds majority, which indicated to the council that their constituents probably still aren’t interested. He also credited Lemoore police Chief Darrell Smith for a presentation on the safety concerns associated with marijuana use.

Madrigal admits that the movements in Hanford, just 8 miles to the east, have piqued his interest.

“I would be lying to you if I told you that’s not tempting,” he said. “Revenue streams have really diminished over time. Property taxes aren’t what they used to be. Our general fund is very tied to sales-tax revenue.”

Madrigal said the city may revisit the issue if Proposition 64 passes.

This story was originally published September 21, 2016 at 5:04 PM with the headline "Hanford mulls big cannabis offer as Clovis, Lemoore reject pot farms."