On Wednesday, the Williams City Council unanimously passed a resolution establishing conditional use permit fees for commercial cannabis businesses, greatly increasing the city’s anticipated revenues from the commercial cannabis real estate development proposed by Canna-Hub.
“If we can remember back to, maybe to April, when Canna-Hub first approached city council, their initial fee – for what would be the city benefit fees on an annual basis – was $1,040,000 (at full build-out),” Kennedy said. “Through research and help from (City Attorney) Ann (Siprelle) and her office, it became pretty clear that that wasn’t going to be enough for what they were asking to build. Through negotiations and research, we have increased that.”
Kennedy said that the city’s estimated annual revenues from the Canna-Hub project had jumped to about $1.62 million for Phase 1 of the development, and $3.2 million at full build-out. He attributed the jump in revenue to the sliding fee schedule.
The Williams City Council approved an 80 acre overlay zone for Commercial Cannabis Businesses, which allows for cannabis cultivation, manufacturing, transportation, distribution and testing earlier this year. Canna-Hub will essentially serve as the developer for the project, providing the space for individual growers, manufacturers, testing laboratories, and distributors to operate. At full build-out, Kennedy said he expects between 110 to 115 different businesses to call the overlay zone home. The city will require each individual commercial cannabis business to obtain an annual Conditional Use Permit to operate within it. The resolution passed last week sets the fees for those conditional use permits.
The fee schedule adopted by the council on Wednesday is different for each type of permitted use, and is based on the income potential for those uses. The higher the income potential, the higher the fee, city staff said, in the agenda report provided to the council. Fees will be applied to all square footage within the complex, and not just the production areas. Kennedy said that staff decided to apply the fees to all square footage, rather than production areas, because it would cut down on staff time and administrative costs.
“These fees are in the reasonable range,” Kennedy told the council. “In some of my recent research, there are organizations that are getting $15 to $20 per sq. ft. for cultivation, based on what they call flower rooms. I didn’t want to have to go through and figure out how much square footage was in growing and cultivation – that’s a logistics nightmare, going out on a monthly or quarterly basis to figure out what they’re doing. This encompasses every square foot.”
As proposed, manufacturing and testing uses will have the highest annual fee rate, at $3.50 per sq. ft. Next highest, at $3 per sq. ft., is the “other” category, which Kennedy said included all uses that do not require a license, such as office space, a restaurant, or supplier of materials and/or machinery located in the overlay zone. A $2.75 per sq. ft. conditional use permit fee will be applied to cultivation businesses, and a $2.50 per sq. ft. fee will be applied to both transportation and distribution uses. The fees established in the resolution will be in place for a period of five years, from the date the first conditional use permit is issued.
“I think it’s an extremely well thought-out plan,” said Finance Director Rex Greenbaum. “I think it’s very comprehensive, and I don’t really see a risk for the city. It’s beneficial, looking forward, and we always have flexibility later, in five years, to modify it.” ■