PARLIER – Tensions between Parlier’s leading council member and the city’s cannabis manufacturer are heating up, if not already smoking. At the heart of the matter is a 2017 city ordinance and development agreement, that short changes Parlier; at least according to the mayor.
Following the passage of Proposition 64, The Adult use of Marijuana Act, in 2016, cities were ready to seize the green rush. Among them was Parlier. As a result in 2017, the city adopted Ordinance 2017-03, setting rules for new cannabis businesses who were going to operate in the city. The first one through the door was Greenbrier Holdings, LLC.
In the same year, the city sold four vacant parcels of land in the city’s industrial park to Greenbrier for $1.3 million. Greenbrier had initial plans, according to a disposition and development agreement (DDA), to run an indoor cannabis cultivation operation.
According to current Parlier mayor, Alma Beltran, the provisions under the DDA are not inline with the intent of the ordinance, in particular when it comes to the city’s tax revenue.
Some members on the city council as well as the city manager defer to the DDA as the authoritative document. This difference of opinion has led to a rift between the mayor and Greenbrier, the city manager plus a few council members.
Both the ordinance and the DDA contained a revenue raising fee section. The fee contained two formulas to determine Greenbrier’s annual taxes for the “privilege of having the right to conduct a commercial cannabis operation in the city,” according to the DDA.
In the DDA, the first formula was based on a dollars-per-square-foot calculation. Greenbrier agreed to pay $10 per square foot for the first 5,000 square feet; $7 per square foot for the next 5,001 to 20,000 square feet; $5 per square foot for the next 20,001 to 40,000 square feet; and $2 per square foot for the next 40,001 square feet or more.
The second formula determined Greenbrier’s annual fee based on a percentage of gross receipts from commercial cannabis operations. Both the ordinance and the DDA are consistent in stating that a cannabis business – in this case Greenbrier – will pay the greater of the two formulas.
However, Mayor Beltran continues to argue that the city’s cannabis ordinance and their DDA with Greenbrier should be uniform. Of course, they are not.
An outside move
Greenbrier initially purchased four parcels of vacant land in the city’s industrial park with the intention of operating an indoor cultivation facility in 2017. But Greenbrier never potted a single plant indoors.
The company spent two years constructing a $15 million processing and distribution center at East Industrial Drive in the industrial park before erecting greenhouses. Then the world entered a global pandemic. Marc Garcia, CEO and chief compliance officer of Greenbrier, stated that downstream effects of COVID deeply hindered his operation.
“The cannabis industry took a hit,” Garcia said. He also cited supply-chain issues as well as a saturated market. But, unlike its competitors, Greenbrier refused to accept outside investors. To make a profit, Greenbrier realized it would have to grow outdoor cannabis.
In 2021, the city greenlighted Greenbrier’s request to grow outdoors at two locations. One grow was located at its East Industrial Drive site; the second was off Academy Avenue.
In light of Proposition 64, many cities avoided allowing outdoor cultivation for a number of reasons. Among the top were public safety and outdoor odors drifting to nearby businesses and houses. Mayor Beltran contends she was inundated with complaints from business owners on East Industrial Drive regarding the smell.
Jennifer Gonzalez, the chief financial officer of Custom Wood Products, which abuts Greenbrier’s grow on East Industrial Drive, said the odor from the grow was beyond pervasive.
“When I entered our building in the morning,” Gonzalez said, “it smelled like people had been smoking there all night.” Gonzalez also said that before Greenbrier installed an electrified fence, thieves routinely cut holes in the fence and carted off plants.
“They cut up plants in our parking lot using machetes,” she said. “We’d come to work and find parts of plants all over the place.”
In a show of good faith, Garcia said Greenbrier agreed to close the grow because it wanted to be a good neighbor and to remain on good terms with both the city and the community. Although that cleaved off a good portion of their outdoor cultivation, they still have over 21 acres under cultivation off Academy Avenue.
Under the two revenue raising formulas, Greenbrier has been assessed under the second – an annual fee based on 2% of gross receipts – amounting to $311,861 through May of this year. Parlier city manager Sonia Hall projects that Greenbrier will be assessed $420,000 by the end of June.
Rancor and dissent
In May 2023, Greenbrier and Parlier discussed amending the DDA to eliminate the square footage revenue raising formula. The reason? According to Greenbrier and Hall, the per-square-foot calculations pertained to indoor cultivation; outdoor cultivation made this provision moot.
Mayor Beltran disagreed. She fervently stated during a June 9 city council meeting that Greenbrier agreed to pay a per square foot, or a percentage of gross receipts assessment. She insisted that the ordinance is the governing document regardless of the DDA and that outdoor cultivation was granted on a trial basis, but this did not affect the terms of the ordinance.
Addressing Hall, Beltran said, “You could have negotiated all this. I kept pushing for 6% and for keeping the square footage. You guys eliminated all of that.” She added, “All they (Greenbrier) are going to pay for is just a percentage and they get to grow for free.”
Beltran conveyed that because the DDA doesn’t specifically mirror the 2017 ordinance, that the DDA is invalid. However, that isn’t true. Both the original DDA and the ordinance give the city the option of assessing a cannabis business on a square footage basis or a percentage of gross receipts, whichever is the highest amount of revenue.
Hall defended her negotiations and the amendment.
“I was with a lot of city managers today,” Hall said. “They’re all having a tough time collecting (revenue) from their cannabis growers and we aren’t. They (Greenbrier) pay on time.”
The amendment to the DDA was ultimately approved, albeit not without some strings. According to the amended DDA, Parlier will receive a higher percentage of all Greenbrier’s retail sales and a higher percentage of revenue generated by the company’s other businesses.
Where Parlier was originally receiving 2% of gross receipts from all cannabis operations, they will now receive 5% of retail sales from Cannable (their dispensary), 4% of wholesale cannabis to other dispensaries and 2% of distribution revenue. But in no event would Parlier receive less than $500,000 annually.
As of this year, if Hall’s projections hold up, Greenbrier will be on the hook for an additional $80,000 to fulfill their obligation under the amended DDA.
Of course this is a far cry from what Greenbrier may have paid in a square-footage assessment. According to a staff report that was delivered to the city council at its May 4 meeting, had the city kept the dollars-per-square-foot formula for outdoor grows and had this formula been applied to the total square footage of their cultivation, the city would be entitled to taxes in excess of $3 million.
Mayor Beltran contends that if the DDA had mirrored the city’s ordinance on cannabis, that Parlier would be entitled to the per-square-footage assessment of more than $3 million. And some members of the public offered their voice to agree.
During the public comment portion of the June 9 meeting, a few Parlier citizens expressed their disapproval with the amount of money the city is receiving from Greenbrier from gross receipts.
“Parlier is a poor community,” Santos Rodriguez said. “A company comes in, makes it sound good. You bend over backwards so they can put their business in and they promise they will do good by us. And now they are trying to wiggle out of it.” He added, “Now, it’s their (Greenbrier’s) turn to pay for it.”
Trinidad Pimentel, Parlier’s former pro tem mayor, argued that the city should be charging 6% across the board.
“The money is there,” he said. “If you charge 6%, this city will prosper.”
Beltran voted against the amendment but the council approved the change. The final vote was four in favor, one against.