-Editorial
At the May 7 Calexico City Council meeting, Planning and Building Director Michael Coyne presented a comprehensive report on the current state of Calexico’s commercial cannabis permitting program, highlighting regulatory milestones, declining revenues, and operational challenges as the City evaluates the future of its cannabis industry.
Coyne began by tracing the program’s origins to the passage of Proposition 64 in 2016, which legalized adult-use cannabis in California. Although Imperial County voters opposed the measure, Calexico’s City Council moved forward in 2017, adopting Ordinances No. 1177 and No. 1178 to allow non-retail cannabis activities—such as cultivation, manufacturing, and distribution—within a designated Cannabis Overlay Zone. The City expanded its cannabis ordinances in 2018 and 2019 to include retail sales, eventually allowing up to 12 retail permits, and conditionally permitting testing laboratories outside the overlay zone.
To regulate this growing sector, Calexico developed a dual-permit process requiring businesses to obtain a Conditional Use Permit (CUP) or Development Agreement, and a Commercial Cannabis Activity Regulatory Permit (CCARP). These permits ensure compliance with local, state, and federal guidelines, including financial transparency, security, odor control, insurance, and background checks.
Coyne reported that the City received 37 commercial cannabis applications between 2017 and 2022. Of those, 30 were granted permits, but only 10 obtained licenses from the California Department of Cannabis Control. As of today, just two cannabis businesses remain legally active within the city—one retailer and one cultivator. The decline in participation has mirrored a drop in tax revenue, which peaked in 2021 at $290,317.14 and has since dropped annually, reaching $155,735.80 in 2024.
Factors contributing to the decline include market saturation and increased competition from neighboring jurisdictions like Imperial County and El Centro, both of which have launched their commercial cannabis programs. Coyne also cited limited code enforcement staffing as a barrier to effective oversight and auditing of cannabis businesses.
In response to these challenges, Coyne outlined several considerations for the Council. One suggestion was to reevaluate the geographic restrictions of cannabis retail businesses, which are currently confined to a single overlay zone. He argued that, unlike manufacturing or cultivation operations, retail businesses require visibility and accessibility to succeed. The City may need to consider expanding permissible zones to attract and sustain retail operations.
Additionally, the dual-permit process has proven cumbersome and may deter new applicants. Other jurisdictions have streamlined this with a single-permit system. Coyne recommended that Calexico consider similar changes to simplify the permitting process and encourage business development.
Regulatory compliance remains a critical issue. Coyne emphasized the need for consistent site inspections, inventory reviews, and enforcement of the state’s track-and-trace system. He suggested that the City either bolster its internal staffing or contract with third-party firms that specialize in cannabis compliance and financial auditing.
The report concluded with a request for Council direction regarding the long-term vision for cannabis in Calexico. Coyne reiterated that the City must decide whether to expand cannabis activities, simplify the permitting process, and invest in regulatory oversight to ensure the program’s sustainability.
The Council received the report and is expected to revisit the issue in future meetings to determine next steps.
