The Los Angeles Times reported that “Costa Mesa police and city employees trucked more than 100 pounds of cannabis flower, boxes of oil cartridges and vaporizers along with documents, devices and security equipment held in police storage” to the owners of Se7enleaf, Michael Moussalli and Matteo Tabib, reached a settlement agreement with the city of Costa Mesa, California.

According to the Times, Costa Mesa attorneys “had been mounting an offense against what they believed was illegal commerce taking place at the site.”

“They didn’t like that they had to return the stuff,” Tabib told the Los Angeles Times. “They didn’t like that they were wrong, and they didn’t like that they were embarrassed and that nobody was charged. They gave no consideration that me and Michael and our employees’ lives are not in a good place right now.”

As the newspaper noted, officials in the city are currently “undergoing a review of the city’s retail cannabis ordinance, considering amendments that would establish a buffer between dispensaries and residential properties and cut back on costly employee badge requirements.”

Earlier this month, the Costa Mesa city council held an hours-long meeting where they considered possible changes to local laws regarding retail cannabis dispensaries. 

As the Voice of OC reported at the time, the council is “looking to limit the number of retail cannabis shops to 35 after city officials began questioning just how many should operate within the city,” in addition to considering “how close the shops should sit next to homes, youth centers and other cannabis storefronts.”

The Los Angeles Times reported that the members of the Costa Mesa city council “generally supported establishing a separation requirement of 250 feet between any new cannabis dispensaries and residentially zoned properties and 1,000 feet between storefronts and youth centers where children recreate.”

“If passed, such a rule would make any already-approved shops inside that red zone ‘legal, nonconforming’ businesses. Although they may continue to operate in violation of the new rules, it’s not clear whether that status could hamper a property or business in the future,” the Times reported earlier this month. “The panel also agreed to process up to 35 cannabis business permits, to allow would-be operators who’ve already passed a pre-application stage to continue the process. After that, through attrition, a new citywide cap of 10 dispensaries could be instituted upon final approval. But because a cannabis business permit runs with an individual operator and may not be transferred if a dispensary is sold, it is unclear whether another owner would be able to apply for a new permit or be shut out by the cap.”

Costa Mesa voters have twice passed ballot measures that have re-shaped the legal cannabis market in the city.

Per Costa Mesa’s official website: “In 2016, Costa Mesa voters approved Measure X, known as the City of Costa Mesa Medical Marijuana Measure, which allows certain non-retail cannabis-uses (i.e. manufacturing, distribution, processing, transportation, research and development laboratories, and testing laboratories) in one industrial area of the City, commonly known as the “Green Zone.” In 2020, Costa Mesa voters approved Measure Q, the Costa Mesa Retail Cannabis Tax and Regulation Measure. This measure allows the City to adopt rules permitting retail cannabis uses within the City, including storefronts (dispensaries) and non-storefront uses (delivery only).”

Those two measures figured prominently in the dispute between the city and Moussalli and Tabib, who are majority owners of High Seas Cannabis, a boutique dispensary in Costa Mesa.

“Store owners had been waiting for a cannabis business permit, a final step delayed as city prosecutors and police processed the aftermath of the raid and an earlier inspection that discovered High Seas-branded product at a local cannabis delivery that had been co-packaged by Se7enleaf,” the Los Angeles Times explained last week. “Moussalli maintains the company was testing the marketplace ahead of the dispensary’s opening and not doing anything illegal. Since it opened in Costa Mesa after voters approved Measure X in 2016, Se7enleaf has engaged with the city’s chamber of commerce and even helped inform the 2020 retail cannabis ballot initiative Measure Q.”

Moussalli told the newspaper that he and his partner are “still treated as the stepchildren of businesses in the city.”

 “We just want the same basic opportunities and rights as businesses that are regulated in the same ways as ours, like liquor stores,” he said.

“I’m concerned they’re going to impose more regulations on us that they don’t understand the consequences of,” he continued. “I just implore them to engage in more conversations with the industry, so we can avoid situations like the Se7enleaf/High Seas fiasco.”

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