Extraction Alley?

Businesses on Eureka's West Fourth Street might get a shake up



A strange quirk in city zoning could mean an upheaval for business owners on Eureka's West Fourth Street. The city's medical marijuana ordinance, passed in September of 2016, only allows cannabis manufacturing in areas zoned for industrial and light industrial uses. And, according to Rob Holmlund, the city's community development director, there is only one industrially-zoned area in the city that is also exempt from onerous California Coastal Zone restrictions: a tiny stretch of West Fourth Street just east of Broadway and west of A Street.

This leaves some current business owners concerned that they will be displaced by cannabis extraction businesses that can offer top dollar for commercial realty in the area.

"It's not that the city council wanted that to be a manufacturing district," Holmlund told the Journal last week. "Because that's in our light manufacturing zone, it allows for non-volatile extraction."

Holmlund said the Coastal Commission might take months to certify the city's cannabis ordinance within the Coastal Zone, and that there would undoubtedly be a lot of back-and-forth.

"They almost always want us to change what we've submitted," said Holmlund. Potential cannabis investors hoping to get a jump on the burgeoning market would want to avoid this delay.

Although speculation has run rampant in the tiny district, Holmlund said fears by business owners that that the area might explode — fiscally and literally — are largely overblown. No permits for extraction businesses have been filed with the city to date, although the full complement of California cannabis laws will not go into effect until 2018. Also, the "non-volatile extraction" he refers to would not be the controversial butane-based extraction process that the city recently limited under its butane ordinance, but water or CO2-based extraction.

Eric Bondi, who manages Bhogart, an industrial supply company for the cannabis extraction industry, says public perception of the extraction business has been marred by explosions in amateur "garage" operations.

"If you put the word cannabis in front of something, people say it's crazy," said Bondi. "But it's very sophisticated and professional. These people who are blasting in their garage, I absolutely feel like they need to be stopped. My opinion is professionals are not posing a public threat."

This hasn't stopped business owners in the area from bringing concerns about public safety and displacement to City Councilmember Marian Brady, who represents Ward 1, where the extraction alley might go in.

"It is a concern, people are very worried about their leases," said Brady, adding that she and former Councilmember Melinda Ciarabellini dissented in the 3-2 vote to pass the medical marijuana ordinance. Some of the business owners who have called do not have leases, Brady said, but have been operating on handshake agreements with the landlords for years.

"It's frustrating," she said, adding that she didn't believe the money projected to be brought in by cannabis permitting would outweigh the costs to the city and small businesses. "It feels like nobody's watching, nobody's protecting our businesses."

Dave Long, owner of Sports World, a screenprinting and trophy shop, said he grew concerned when he found some strange men measuring the building where he has operated his business for the last 15 years, at 30 West Fourth St. The men told him they were thinking of buying the building because of its zoning, and that he may have to move in "two days or two months." Long's landlord, Kelly Martin, declined to tell the Journal whether or not he intended to sell. Other Martin tenants did not want to speak on the record about the potential change in ownership, although Brady stated she has received many concerned calls, with rumors flying about potential buyers coming from out of state. Long stressed that he had not officially been asked to move, although he has begun trying to find commercial property that fits his needs.

"If I get the call I have to move, I don't like the idea of being ousted by the cannabis industry," he said.

Dave Mulhern, who owns two buildings on the block, said he is "very happy" about the possibilities in the real estate market.

"It was a liability for me when I purchased it, because I preferred retail businesses," he said, referring to his buildings at 4 and 12 West Fourth St., which currently house Dick Taylor Craft Chocolate and Rita's Mexican Food, respectively.

According to Mulhern, Dick Taylor is already "busting at the seams" and would have to move soon anyway, but he intends to honor the two and a half years left on the company's current lease. (Dustin Taylor, co-owner of Dick Taylor, said that Mulhern is a "fantastic" landlord, and that the company is being proactive about looking for a new location.) The 30 W. Fourth St. property, currently home of the Rita's wholesale business, has been on and off the market for the last few years, since Mulhern decided to semi-retire and liquidate some of his holdings. Mulhern said he got a phone call from his realtor, David Wells, asking if he wanted to put it back on the market. Within a few days he had an offer and, yes, it was from an extraction business. Mulhern declined to say what the offer was, but the property is currently listed on Wells' website for $560,000.

"I made it clear if I sold I would only allow CO2 extraction," said Mulhern, acknowledging the fears of some neighboring businesses. "I don't really have a way to make sure about that, but that's what I said."

Wells said interest in commercial real estate has been brisk as different cities and counties pass their own cannabis ordinances.

"About six months ago I got a revolving wave of phone calls, as first Arcata, then Eureka passed regulations," he said. "It's starting to taper off right now. Two months ago I was probably getting 20 to 30 phone calls a day."

He adds that he has also received a few phone calls from people who might be displaced by cannabis businesses.

"I feel badly for anybody who's in that situation," he said. "For the people who are in that spot, I'm trying to find spots that are in the coastal zone."


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