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Inside the push for recreational cannabis in North County

OCEANSIDE — Deep in the city’s industrial area sits a brand new business that hopes to expand its customer base, improve public perception and give back to the community: a cannabis delivery service.

MedLeaf Delivery is Oceanside’s very first and currently only legal cannabis retail business. After a two-year licensing process, MedLeaf opened for business back in July.

In 2016, California voters passed Proposition 64, which legalized recreational or “adult-use” cannabis for personal use and cultivation. Under this law, cities cannot ban indoor cultivation of cannabis for personal use but they can still choose to regulate or ban all other cultivation purposes and recreational businesses.

Currently, Oceanside only allows licensed cannabis retailers to sell to the medical market. Licensed cultivators are now allowed access to the recreational market in the city, and MedLeaf leaders Gracie Morgan and Karen Tomlinson are hoping the same can happen for retailers.

Because Oceanside’s cannabis regulations only allow for non-storefront delivery services, MedLeaf does not have an actual storefront where people can enter. Instead, MedLeaf employs drivers who take cannabis products right to customers’ doors with its own fleet of vehicles.

Morgan, MedLeaf’s director of operations and business development, asked the Oceanside City Council to consider opening cannabis retailers to recreational at its Dec. 16 meeting, but the council didn’t act on that request.

Listen to the latest North County Beat podcast episode accompanying this article.

At the same meeting, council approved a 4% tax for retailers after voters passed Measure M in November, which allowed the city to be able to tax its cannabis operations. The tax will go into effect on Jan. 1.

MedLeaf welcomed the tax with open arms as it provides a means for the business to give back to its community by generating revenue for the city.

“If our tax dollars can be streamlined back to the community, that’s where we can make the bigger difference,” said Tomlinson, MedLeaf co-owner and director of community relations.

Both Morgan and Tomlinson hope to see the cannabis tax revenue used to combat the city’s homeless crisis as well as the cannabis black market. They believe that by restricting retailers’ access to the recreational market, the city is not only missing out on an opportunity for higher tax revenue but is also enabling conditions for the black market to thrive.

MedLeaf Delivery
Gracie Morgan and Karen Tomlinson, who head MedLeaf Delivery in Oceanside, want the city to open cannabis retailers to the recreational market. Photo by Samantha Nelson

“The things that the city is most worried about coming from us — lack of insurance and background checks, untested products, serving underage people — are actively happening at higher rates than we could have ever imagined just because we don’t have the ability to deliver to those who want to go outside medical,” Morgan said.

To purchase medical cannabis, patients must first acquire a doctor’s recommendation. Though MedLeaf offers to pay the upfront cost of getting a recommendation for patients, many don’t want to go that route.

According to Morgan, such patients often feel bad about becoming medical patients when they believe their needs aren’t medical, so they prefer to buy adult-use cannabis instead. She explained that because many recreational delivery businesses from San Diego or farther like Santa Ana will deliver to the area, and because the black market is available, Oceanside will fall short of what it can collect without adult-use.

Currently, Oceanside and Vista are the only two cities in North County that have legal cannabis retailers. They are also the only two North County cities regulating cannabis businesses. Voters in Encinitas also recently passed Measure H, which allows the city to now regulate cannabis retail, cultivation, product manufacturing and distribution.

Although both Vista and Oceanside only allow retailers to sell to the medical cannabis market, each city regulates its retailers a bit differently. While Oceanside only allows for “non-storefront” delivery businesses, Vista has 11 storefronts.

Originally MedLeaf was supposed to be the first cannabis delivery service in North County, as Vista did not allow for cannabis delivery services, but that changed when the COVID-19 pandemic started. Vista’s retailers are now able to provide storefront and delivery services, putting them in direct competition with Oceanside.

Fortunately for Oceanside cannabis retailers, the tax is currently only 4% compared to Vista’s 11% tax, though that could change in the future. Council and city staff aimed to not overburden its cannabis businesses with high tax rates at first, though Morgan wouldn’t mind a higher rate if it meant the adult-use market was allowed.

“You could set the tax at 10% if you give us adult-use,” she said.

MedLeaf — a veteran-owned, minority-owned and women-led business — also wants the city to recognize it as a legitimate business within the community.

In October, MedLeaf held a ribbon-cutting ceremony on the Oceanside Pier and invited council members to attend, but none of them showed up.

“It was a historical moment and we didn’t have Council support,” Morgan said. “That was really devastating.”

MedLeaf aims to set a positive precedent for legal cannabis retailers in Oceanside.

“We’re here and we’re doing it legally,” Tomlinson said. “We went the legal route and did anything the state and city have asked of us, and we’ve exceeded expectations.”

MedLeaf wants to have the relationship that so many other businesses in Oceanside have with city leaders and staff.

“Be a partner with us,” Tomlinson said. “We’re like any other business in the city of Oceanside.”