The Oceanside City Council denied an appeal Wednesday filed by an applicant who landed in sixth place for one of the city’s two available retail cannabis licenses.
The applicant, TAT Oceanside doing business as The Artist Tree, alleged that the city’s application process is flawed and the removal of the Oceanside police chief from an applicant interview panel created a bias.
“The city corrupted the outcome of the results,” said Lauren Fontein, a co-owner and compliance officer for TAT, at an Oceanside City Council meeting Wednesday.
The interview panel consists of the city manager, assistant city manager, deputy city manager, finance director and police chief.
Police Chief Taurino Valdovinos asked to be excused from the panel to avoid a possible conflict of interest after learning that one of the applicants, TAT Oceanside, is co-owned by the wife of an Oceanside police officer. The Artist Tree has dispensaries in Los Angeles, Orange and several other California counties.
“The selection process is common for interviews of this sort,” said Senior Planner Dane Thompson. “The removal of chief was fair and did not prejudice the applicant.”
The council voted 4-0 for the denial with Councilmember Peter Weiss absent.
Last year the City Council created Oceanside’s first four in-store retail cannabis sales licenses and procedures for awarding them. Two of the licenses were prioritized for cannabis businesses already operating in the city with licenses other than in-store retail, such as delivery only, if they can qualify.
Nine operators applied for the remaining two in-store retail licenses. An applicant called March and Ash, which already has several cannabis dispensaries in San Diego County, was ranked No.1 in the selection process.
Three other applicants — Embarc, Green Venture Farms and Oceanside Retail OPCO — tied in the rankings for the second license, according to a city report. All other applications, including the one from TAT, were considered denied.
The City Council is scheduled to discuss ways to resolve the three-way tie at its meeting Aug. 19, Thompson said.
Oceanside legalized medical marijuana in 2018. Since then it has gradually expanded its licensing program. In 2020, the City Council approved the first delivery-only retail sales. Also that year, it agreed to allow recreational cannabis businesses.
The city has issued about 20 licenses for a variety of cannabis-related businesses, from cultivation and manufacturing to off-site distribution. Only a handful of the licenses so far are active.
City officials have said that in a few years retail cannabis sales could bring more than $1.3 million in annual tax revenue.
Oceanside’s neighbor to the east, Vista, has 10 cannabis retailers. Elsewhere in North County, Escondido, Carlsbad, San Marcos and Poway prohibit cannabis businesses.
San Diego, Chula Vista, Imperial Beach, Lemon Grove and National City all allow retail cannabis sales.
San Diego County and several other cities in the county, including Encinitas, allow limited commercial cannabis activities.