Medical marijuana extraction facility wins permit in Costa Mesa

A proposal to open the first medical marijuana extraction facility in Costa Mesa moved closer to reality Monday night as the city Planning Commission voted unanimously to grant a required permit.

With the conditional use permit in hand, officials with Shepard Investments Inc. can work to secure remaining city approvals necessary to open the facility at 3590 Cadillac Ave. in the northwest corner of the city.

The commission’s decision is final unless appealed to the City Council within seven days.

The extraction facility would be in a 7,315-square-foot tenant space and contain up to four rosin press machines that use pressure and heat to squeeze oil from marijuana plants.

The oil would be wrapped in parchment paper, packaged in envelopes and sold wholesale to retail dispensaries, according to the permit application.

Usable plant material remaining after the rosin press process would be sold to other companies that use different machinery or solvents to extract additional oil, said Chris Shepard of Shepard Investments.

The finished product would be transported by a separate approved business and monitored using a point-of-sale tracking system.

Along with the extraction operation, the facility would include offices, storage space and a conference room. Approved hours of operation are 7 a.m. to 5 p.m. Mondays through Fridays.

Extraction facilities are among the type of medical marijuana operations allowed in Costa Mesa under Measure X, which local voters approved last year.

The measure lets businesses that research, test, process and manufacture some medical marijuana products open in the area north of South Coast Drive, west of Harbor Boulevard, south of MacArthur Boulevard and east of the Santa Ana River, though not in South Coast Collection.

Retail sales of marijuana and marijuana products are still prohibited in the city.

Shepard’s proposal is the first that has gone before the Planning Commission since Measure X was passed. On Monday, commissioners said it’s important to make sure there’s sufficient city oversight of the operation and that the facility is properly secured.

“I don’t have a problem with medical marijuana; I just want to make sure the business operates securely and that they look at doing business in Costa Mesa as a partnership with us,” said commission Vice Chairman Byron de Arakal.

Shepard said the facility would have a rigorous security system, as well as air filters to prevent odors from escaping.

Several conditions are attached to the permit approval, including that people younger than 21 not be allowed on the site and that cannabis not be consumed there at any time in any form.

Signs for the business would be prohibited from including references to marijuana, and employees would be required to wear identification badges at all times.

Shepard still has to secure final fire prevention, finance and building safety approvals from the city to obtain a medical marijuana business permit and business license, both of which are necessary to open.

State approval also is needed for the facility to operate after Jan. 1.

Medical marijuana businesses that open in Costa Mesa must pay about $49,000 in city permit fees and a 6% annual tax on gross receipts.

luke.money@latimes.com

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