Cannabis businesses hoping to set up shop in National City, including an applicant proposing to operate what would be the county’s first consumption lounge, are moving into the final stage of the three-part permitting process.
In April, the city received 17 applications from interested companies, 16 of which were for storefronts and manufacturing and one for a lounge. Nine of the applicants are local residents.
The city’s cannabis ordinance, approved in May 2021, allows for up to six commercial cannabis licenses, including two that must be reserved for local ownership and one set aside for a consumption lounge. Retail is only allowed in industrial zones and the lounge is in the tourist commercial zone, located west of Interstate 5.
Phase two was recently completed, where applications were scored using a merit-based system that looks at a business’s plans for labor, safety and security, location, neighborhood compatibility and investment in the community.
“It was a very competitive process, just from the scores. If we’re talking about a test, everyone got an A-plus, but how good of an A-plus they got is really the question. It was a close race,” said Pedro Garcia, the city’s economic development manager who is overseeing cannabis permitting.
The most points an applicant can receive is 3,000, though they can earn more. Scores ranged from 3,150 to 1,290, but most of them earned 2,900 points, according to the city. The top-scoring applicants were Shryne National City and Off The Charts, each of whom earned 3,150 points. Sessions by the Bay was the sole consumption lounge applicant and earned 2,900.
Those three are moving into the final round, where they will each have to provide a $5,000 deposit to receive a permit and then negotiate a development agreement with the city. Council members would then consider approval and, if granted, allow the businesses to apply for a land-use permit and business license.
Though the city has authorized six cannabis permits, staff will begin with the initial three applicants before working with the remaining three, Garcia said.
“The reason for that is most cities have cannabis departments and teams. I’m the cannabis person so I have to handle this accordingly and the consumption lounge is going to be the trickiest,” he said.
Consumption lounges are the next big thing in the legal cannabis market and they’re expected to pick up momentum, according to industry experts, but several factors have hindered their takeoff, including the pandemic and rigorous permitting procedures.
“I think there are probably very few businesses to get into that are as complicated as cannabis and lounges are even more complicated,” said Alex Ayon, a San Diego resident who would co-operate Sessions by the Bay with his wife Pearl Ayon. “It’s primarily because it’s a new thing … and we don’t have other places that we can look at to see what works and what doesn’t.”
Consumption lounges are tied to numerous limitations, even more so than other types of marijuana businesses, said Ayon.
“One of the primary concerns the public has is driving under the influence and that’s a very real concern that we, as business owners, take very seriously,” he said, adding that their safety plans include having patrons sign a form acknowledging the lounge’s rules and regulations, offering shuttle services and having security and a rideshare drop-off site in front of the shop.
With a high score and as the only applicant, Sessions by the Bay is off to a promising start. Ayon, who formerly owned two dispensaries in San Diego and La Mesa and operates another in Lone Pine, said he has already invested “six figures” into bringing the lounge into fruition and projects investing $4 million total.
He signed a lease for a 13,000-square-foot building near the bayfront and estimates having upwards of 100 jobs. Under National City requirements, half of Sessions’ workforce must be city residents, though he said they plan to have as much as 75 percent. They also plan to give an unspecified percentage of their profits to local youth and substance abuse programs.
The building will consist of a storefront selling a variety of cannabis products and a lounge where patrons will be able to consume items from the dispensary or from a menu within the lounge. No alcohol will be sold, as it is prohibited, and food will be sold through third-party partnerships, such as food trucks, Ayon said.
The lounge itself is envisioned to be “an immersive experience” with a heavy music and art component, he added.
His hope is to open by next summer should the business successfully complete the permitting process and receive council approval.