Costa Mesa officials this week rejected a cannabis dispensary planned for a busy Harbor Boulevard retail center, after business owners and residents complained there is an over-concentration of pot shops in the neighborhood and called the applicant’s moral character into question.

A City Council hearing Tuesday played host to a dispute between Keith Scheinberg, of Newport Beach-based RDK Group Holdings, LLC, and Jayne Flinn, who owns the Harbor Place shopping center directly south of the site, located at 1912 Harbor Blvd.

Scheinberg and his colleagues since 2021 have sought to open a 2,400-square-foot Green Mart in the former site of the King of BBQ, a restaurant nestled between Harbor Place and a strip mall to the north occupied by various restaurants, a boba tea shop, dentist and dog groomer.

Scheinberg finally got a chance to appear before the Costa Mesa Planning Commission in a Feb. 24 hearing at which commissioners narrowly approved a conditional use permit for the project in a 3-2 vote (with one recusal and one absence).

Costa Mesa officials Tuesday overturned Planning Commission approval of Green Mart, proposed for 1912 Harbor Blvd., the former site of a King of BBQ restaurant.

(Don Leach / Staff Photographer)

Seven days later, a representative of VMA Harbor Place Holding Co. appealed the decision on the grounds that RDK’s plans for the dispensary were inadequate and that the retail shop was incompatible with surrounding businesses and would present traffic and parking issues.

VMA representative Kendra Carney Meher explained to the City Council conducting a de novo review Tuesday that Green Mart was closely situated to a church that hosts youth programs and a nearby apartment complex that, while zoned commercial, qualifies as a residence eligible for a 250-foot buffer spelled out in the city’s retail cannabis ordinance.

“A compatible and harmonious relationship does not exist between the proposed use and the existing buildings, site development and uses on surrounding properties,” Carney Mehr reasoned.

Others speaking in public comment shared their frustration with what they described as an oversaturation of cannabis shops in the immediate neighborhood. So far, Costa Mesa has approved 26 use permits citywide, and 13 shops are currently open for business, according to a city map displayed at Tuesday’s meeting.

Jayne Flinn owns a retail center due north of the proposed Green Mart location and has a storied past with the shop’s proprietor.

(Screenshot by Sara Cardine)

Of those, four are operating within one-quarter mile of 1912 Harbor Blvd., while two other shops within that radius, including Green Mart, are in the approval process.

“What is the appropriate number of dispensaries any one neighborhood should shoulder?” asked a Bernard Street resident who identified herself only as “Kelly.” “Maybe you all, when you walk your dog, pass two, three, four, five six — I can keep going — dispensaries. Maybe this is the Costa Mesa experience.”

During the hearing, property owner Flinn cast aspersions on Scheinberg’s character, particularly for what she alleged was a “complete disregard for following city rules, guidelines and regulations,” which she said she witnessed firsthand.

She described the two parties as having a turbulent past involving tenancy, ownership and alleged bad behavior, details of which are briefly recounted in public comments submitted for the Feb. 24 Planning Commission hearing.

Keith Scheinberg, a member of RDK Group Holdings LLC, said he has spent four years and $500,000 trying to open a dispensary in Costa Mesa. His proposal was denied by the Costa Mesa City Council Tuesday.

(Screenshot by Sara Cardine)

Flinn said she owned a residential property on Newport Beach’s 32nd Street adjacent to another residence where, she claimed, Scheinberg posed as a tenant and then rented out the unit as a venue for for-pay nightclub parties — promoted under the moniker “GatsbyOC” — and the production of adult films.

“I am requesting the council tonight deny the [use permit] not because I am confident it is only a matter of time until Costa Mesa finds itself in a battle to remove an unruly and unlawful use, or because of a history showing a clear pattern of the applicant’s disregard for local regulations, but because you as a council have already determined this is an incompatible use,” Flinn told council members Tuesday.

Scheinberg acknowledged his historic conflicts with the property owner, calling it an “ironic coincidence” that their paths were crossing once more in a similar scenario. He said Flinn hired a private investigator to sit outside his personal residence and interview neighbors about his character.

“What she presented to you, the Gatsby, that’s not me; my Instagram is completely separate,” he said. “When they say I’m running a nightclub — it goes to an extreme and an extent that this appellant is willing to go to to lie and kind of defame me at this point, to try to prevent me from opening this.”

Citing the four years he’s complied with the city’s long processes for opening a dispensary, and having rented a commercial space throughout the interim, at a total cost of about $500,000, Scheinberg urged the council members to uphold the Planning Commission’s approval of Green Mart’s conditional use permit.

“The council voted for the number of dispensaries that we were allowed to have, I just played by the rules,” he said. “To pull the rug out at this point would be unfair. I’ve put so much time and effort and money into this. I’ve waited — I believe I deserve this opportunity to run a business.”

Mayor John Stephens and Councilman Loren Gameros sided with the applicant, respectively putting forth and seconding a motion to uphold the Planning Commission’s approval of Green Mart.

Stephens eschewed Flinn and Carney Mehr’s claims that the cannabis shop fell within residential and youth center buffer zones, stating that churches do not qualify for a youth center 1,000-foot buffer, while the law’s 250-foot residential buffer was crafted last year during a revision of the 2021 ordinance, after Scheinberg’s application was received. He briefly addressed the fairness of the situation and claims against Scheinberg’s character.

“The carrying costs of these businesses, getting through the process — almost a four-year odyssey — is a lot. It takes personal character and it takes personal capital to go through,” Stephens said. “It’s a bummer that it takes so long to go through the process, but it did, and I think there should be some credit given for that.”

But Councilwoman Arlis Reynolds, in a substitute motion, suggested overturning the commission’s approval of the project, finding Green Mart not substantially compatible with surrounding uses and potentially detrimental to public safety and injurious to nearby properties.

In addition to being located in a pedestrian priority zone, she said the proposed location fell within several other family-serving businesses and could possibly impede the success of those businesses.

Mayor Pro Tem Manuel Chavez acknowledged the area is already too saturated with retail cannabis options.

“While I sympathize with the applicant, and I understand the effort they put in, I cannot in good conscience move forward seeing there’s going to be four cannabis shops within a [quarter-mile] radius. For me, that over-concentration is a big factor, and residents spoke to that factor.”