Council adopts permit, penalties and private‑enforcement tool for out‑of‑city cannabis delivery; equity concerns persist

San Diego’s City Council on June 22 approved an ordinance to regulate commercial cannabis delivery services that enter the city from outside its boundaries, increase civil penalties for noncompliance and create a limited private right of action for specified eligible entities to pursue enforcement.

What passed: the ordinance establishes a city registration/permit category for out‑of‑city delivery services (not a new land use or in‑city delivery‑only retail), elevates maximum court‑imposed civil penalties up to $20,000 per day and administrative civil penalties to the same cap (with administrative abatement penalties listed up to $10,000 per violation), and creates a private right of action that allows qualified parties — primarily lawfully licensed city businesses and labor organizations representing cannabis workers — to file civil enforcement actions when a violation occurs within city limits. The ordinance as drafted directs the City Treasurer’s Office to administer the registration and directs staff to return with a fee study to set an appropriate charge to recover implementation costs.

Support and motive: proponents including labor and licensed retail operators argued the measure protects legally operating local businesses and workers from illicit or out‑of‑county delivery services that skirt taxes and safety requirements. "The unpermitted cannabis delivery services are taking business away from those licensed retailers who are paying taxes," Grant Tom of UFCW Local 135 said. City Treasurer staff confirmed there are currently a handful of compliant out‑of‑city businesses that the new registration would capture and that the Treasurer will conduct a fee study before final implementation.

Equity concerns and implementation caveats: several social equity advocates and county program representatives warned the private right of action and fee design could be used to push small equity applicants out of the market if not carefully structured. Speakers urged carve‑outs, waivers or a low registration fee for county social‑equity participants, and asked staff to coordinate with the County’s equity program. Councilmembers asked staff to return with an implementation plan and a clear schedule: the city will not make the registration effective before the Treasurer completes the fee study and staff coordinates outreach and administrative processes. Council Member Campillo said this step will be paired with staff‑led coordination so county equity applicants can register without new barriers.

Why it matters: delivery is mobile and difficult to police under existing city code; the council endorsed a combination of city registration plus private enforcement to create financial and legal incentives for out‑of‑city operators to comply with local taxes and consumer/worker protections. The ordinance passed on council motion and roll call; staff will bring a fee study and additional implementation details prior to the registration becoming effective.

Next steps: City Treasurer will run a fee study to set a recoverable permit fee (staff suggested a likely modest fee but the study will determine the exact amount and consider waivers), staff will coordinate outreach with County equity staff, and the city attorney's office will advise on implementation wording to reduce unintended litigation or barriers for equity applicants.