The city of Turlock is set to remain in the cannabis business after the planning commission voted to recommend extending development agreements with all four of the city’s licensed dispensaries and one cultivator.

Dispensaries FF Farms, Firehouse, Natural Healing Center, and Perfect Union all came online at different times since the council approved the pilot program in 2019, but each will have their development agreement extended through June 2029 to streamline the renewal process moving forward.

As part of their development agreements, the dispensaries were required to pay a public benefit fee of 5.25 percent of gross receipts or $25,000 (whichever sum is greater) in the first year, with the lump-sum option increasing by $5,000 per year in the subsequent four years.

The city is considering a move to a cannabis tax, which requires the approval of city voters.

“We want to end the pilot program and regularize these as normal businesses,” said George Petrulakis, who was attending his final meeting as city attorney. “At the end of the day that requires a tax to be passed and some amendments to be made to the municipal code, then we can rotate out of these development agreements.”

In the meantime, in response to concerns from operators, the city is proposing to amend the monthly minimum payment and move solely to a percentage payment. The city would recommend up to 9 percent of gross receipts but would propose to set the amount at 5.25 percent through May 2027, at which time the city council could set a new public benefit amount within that proposed range.

City staff believe the proposed change would reduce the public benefit amount but provide more stability for operators.

To date, the dispensaries have generated $8 million in public benefit funds, with Firehouse ponying up more than half of that total, $4.1 million, since opening its doors in August 2020. Perfect Union has contributed nearly $2.4 million since opening in September 2020; NHC has paid $1 million since opening in May 2023; FF Farms has paid just over $500,000 since opening last year.

The city’s pilot cannabis program was approved in 2019 by a split 3-2 vote of the city council. Former councilmembers Gil Esquer, Nicole Larson, and Andrew Nosrati voted to approve, while Becky Arellano and current Mayor Amy Bublak were opposed.

Other proposed regulations to the agreement include requiring remote real-time access to the video footage of cameras installed at the businesses and requiring background checks prior to any changes in ownership or on any individual or entity every two years or at any other time upon reasonable cause.

A section has been added detailing if anyone with direct or indirect ownership or controlling interest in the project is convicted of a felony or any crime substantially related to the ownership or operation of a cannabis business, the city may terminate the DA, and the developer would have 180 days to complete a city-approved transfer of their interest.

Cultivator Plan4Dream, formerly JDI Farms, had its DA extended though it is not yet operational.

In January, Turlock Police Department was notified by the Sacramento County District Attorney’s Office regarding an ongoing investigation of illegal drug trafficking and money laundering. The investigation included payments to Cold Storage Manufacturing, the contractor working on improvements Plan4Dream’s D Street facility.

Attorney Zach Drivon – speaking on behalf of property owner Quingyu Huang – provided additional details on the Sacramento County investigation.

“The subjects of this investigation are not investors in this project,” said Drivon, CEO of Drivon Consulting, which represents nearly 20 cannabis operators throughout Northern California. “At the request of Cold Storage, the operator secured loans from certain individuals that, unbeknownst to him, happened to be under investigation. As soon as we caught wind of Cold Storage’s funds having been seized, we reached out to the Sacramento County DA’s office to identify what was going on here.”

Drivon said the city has been provided with a contingency proposal in the unlikely event Huang becomes a subject of a potential investigation.