The Trouble in Tahoe: Local Politics

After a year of debate, the South Lake Tahoe City Council finally approved an ordinance that would allow local businesses in the California town to apply for an adult-use cannabis license. The approval came in February and applications will be accepted starting today.

The lake itself, Tahoe, is a tourist hub in the Sierra Nevada Mountains that splits California and Nevada. And just as the two states are split by the beautiful lake, they are divided in their approach to cannabis. Nevada is somewhat lenient, while in California, local ordinances have prevented adult use cannabis from really taking off. And some cannabis entrepreneurs are frustrated.

The year-round population of the towns around the lake is just over 50,000, but roughly 3 million visitors head here for lakefront beaches and ski resorts each year. By late October, Lake Tahoe towns empty of tourists. Traffic dissipates on the two lane highway that encircles the perimeter of the deep, blue water on both its California and Nevada sides. Instead of long days with a hot, dry sun, they’re warm and followed by cool, quiet nights. Local businesses enter the shoulder season and ski bums start hoping for days when “it’ll dump.”

But Cody Bass, the owner of a medical cannabis dispensary, Tahoe Wellness Cooperative, had been crazy busy in the fall, as if it were still July Fourth in South Lake Tahoe. Bass spent the autumn months bouncing between barbeque fundraisers and City Council meetings—all in service of his political campaign. Bass decided to run for a seat on South Lake Tahoe’s City Council, something the thirty-eight-year-old never had in mind. And he won.

“This has been more of a calling than a plan,” Bass told Cannabis Wire. “City government has come against me at every level.”

Bass stands over six feet tall and is never without a leather Fedora or straw cowboy hat over his long hair. He has been operating Tahoe Wellness Co-op for 10 years—the only dispensary on the California side of Tahoe after two others were raided and closed prior to 2009. Since legalization has come to California, Bass wants to go beyond a medical license and sell adult-use cannabis as well. But he has struggled to obtain licensing due to zoning laws where his Co-op sits and subsequent legal battles with the city. South Lake Tahoe residents are divided on whether Bass should get the full licensing. Critics of Bass say he has always hoped to be grandfathered in and allowed to expand his building. (Meanwhile, Bass faces indictment charges of tax evasion, filed by the El Dorado County Grand Jury. Bass pled not guilty to the charges last fall and will go to trial this April.)

On grandfathering, “There’s no wrong or right answer,” Austin Sass, a former City Council member, told Cannabis Wire. “Some cities have taken medicinal dispensaries and have given them adult use, and others have said you need to wait in line like everyone else. The City Council didn’t think Bass should go to the front of the line.”

Bass indeed sees himself as a cannabis trailblazer, perhaps as one who should thus be first in line. But no regulation set forth so far seems to please him. When South Lake Tahoe’s City Council passed an ordinance to license six new businesses last summer, Bass didn’t agree with the application process, claiming it favored people with deep pockets. He put forward a referendum in late August and gathered sufficient signatures. Then he ran for his own seat.

“To hand this much power to such a small city council allows them to pick the winners and losers,” Bass said at the time. “I have to throw my hat in the ring.” In early November, three new City Council members were elected, and Bass was among them, earning 16 percent of the vote. Voter turnout in the City of South Lake Tahoe was 42 percent.

“Pioneers Take the Arrows; Settlers Take the Land”

Political squabbles and battles like South Lake Tahoe’s are playing out in small towns across California. Since adult use sales became legal statewide on January 1, 2018, following voters’ passage of the adult use ballot measure in 2016, local governments have been slow to issue licenses. A majority of the state’s municipalities and counties still ban cannabis businesses from opening in their jurisdictions. Some industry experts argue that this is where Prop 64 went wrong—allowing local governments to set regulations means 482 municipalities and 58 counties will determine who makes up the next generation of the state’s marijuana cottage industry.

“It’s a ‘pioneers take the arrows, settlers take the land’ situation,” Maximillian Mikalonis, a lobbyist with K Street Consulting and former legislative aide who co-wrote medical cannabis regulations in California, told Cannabis Wire. The state was the first to legalize medical use in 1996 and the fifth to legalize recreational use, making for a messy transition. “Cannabis business owners and operators have come from having an adversarial relationship with governments to having a crash course in local government because all of their licensing is tied up in local politics.”

The narrative is similar in neighboring Truckee, California, a town of 16,000 marked by another alpine lake nestled in the pines. After a two-year discussion involving pro and anti-cannabis groups, the town council in Truckee granted licenses for delivery only. Lake Tahoe’s local governments have opted to tighten the reins unlike other cities—like neighboring Reno, Nevada.

Adult Use Just Down the Hill

In 1960, while Tahoe hosted the Squaw Valley Olympics and became an international travel destination, Reno gained notoriety for gaming, divorce, and being the set in The Misfits, the famous Clark Gable and Marilyn Monroe film. Natural beauty and outdoor-play lure tourists to the Sierra Nevada Mountains; crowds travel to The Biggest Little City for events like the Rib Cook Off, Hot August Nights, or to stock up on granola and water on the way to Burning Man. Cannabis entrepreneurs around the lake eye Reno’s scene with envy.

“Nevada did things right,” Bass said. “California watched us burn.”

Oliver Starr, a local entrepreneur, invested in the industry in South Lake Tahoe one year ago and says the process has been a mess, marked by Bass’s moves to thwart regulations that don’t work in his best interest. “What may end up happening,” Starr told Cannabis Wire, “is that Tahoe makes it so expensive that the black market will thrive. We’ve tried to work with the city so they know that operators need it fairly priced. Who wants to work this hard, only to have the business go to people who are selling it illegally and for half the price?”

Many counties within the Silver State have fully embraced the cannabis industry, setting policies cannabis activists call “a gold standard.” Last summer, for example, then Nevada Governor Brian Sandoval issued a “statement of emergency” (some confused this for a state of emergency) when demand zoomed past initial estimates. This allowed the Department of Taxation to expand the pool of distributors that shops could work with. Nevada’s tax revenue last year from cannabis sales totaled $70 million, exceeding projections.

On the drive from San Francisco east to Auburn, a billboard advertising a Reno dispensary seems to mark every mile. The Biggest Little City, with a population of 250,000, is home to nine cannabis shops and the town next door, Sparks, houses MedMen’s $15 million growing facility.

By comparison, for example, on the California side of Lake Tahoe recreational cannabis users would have to drive twenty-seven miles from South Lake to the nearest adult-use dispensary—in Incline Village, Nevada. And driving across state lines with cannabis is a felony, though it doesn’t seem a priority for law enforcement agencies. “An officer would take action, but is it something we’re running into regularly? No,” said California Highway Patrol officer Pete Mann.

Given the ease of obtaining a medical card online, it’s more likely that those Californians will go that route, which takes $20 and 10 minutes, to order delivery rather than make the drive to Incline Village or Reno.

As other cannabis businesses start opening shop later this year, it’s unclear if Bass and Tahoe Wellness Cooperative will be able to expand their footprint as they’d hoped. An attorney for Bass told Cannabis Wire that the ordinance that allows for new businesses also allows Tahoe Wellness to operate in its current location as an adult-use microbusiness for three more years. Bass now owns the building, making it difficult to justify operating out of any other location in an area with steep rents. Come 2022, however, it likely will be back to square one for Bass and Tahoe Wellness Cooperative.

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Cannabis Wire
Cannabis Wire
Cannabis is rich territory for serious journalism. Legalization raises urgent questions about regulation and law, technology and taxation, science and business, criminal justice and individual liberties. It stands at the intersection of a booming billion-dollar industry and promising advances in medicine, all while remaining federally illegal.

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