San Leandro Council expands cannabis program to four permits, awards fourth to NUG amid protests

The San Leandro City Council voted on May 19 to increase the cap on retail cannabis operating permits from three to four and to grant the newly authorized permit to NUG Wellness for a satellite/express location at the Fairway Drive site formerly occupied by Bloom San Leandro.

Deputy City Manager Eric Engelbart reviewed the city’s regulatory history and said the fourth permit request arose because Bloom ceased operations at Fairway Drive late last year and NUG had secured a lease for that site. Engelbart told the council the proposal would restore the city’s prior status of three active retail locations by returning the Fairway site to operation while bringing the operator under local tax rules and permitting conditions.

Public reaction: The item drew dozens of public commenters over several hours. Opponents including representatives of existing operators Harborside and Premier urged the council to pause and run a transparent, competitive process (an RFP) before expanding permits. Ed Hernandez and others argued that unilaterally approving a fourth permit would give “an unfair and unearned advantage” to a single operator and risk market consolidation. Harborside’s CEO, Jim Scott, warned of potential legal remedies if the city proceeded without transparent procedures. Supporters — including NUG employees and customers — said the operator provides jobs, community contributions and consistent tax payments.

Council action and conditions: Council member Aguilar moved to allow the fourth permit and to award it to NUG while directing staff to return to the Rules Committee with options to formalize permit expansion and selection processes. The motion specified that future applicants should be treated comparably and that staff should report back with guidance about whether to expand the total number of operating permits and by what process. The motion passed 4-1 with Council member Bolt voting no and two members absent.

What the record shows: Staff said Bloom’s conditional use permit (CUP) remains technically valid but that a long cessation of operations (180 days) can trigger eligibility for revocation; staff noted that both operating and conditional-use permits could become “at risk” after June 30 if activity does not resume. Engelbart said the city had not used an RFP process for the second and third permits and that the original RFP process occurred nearly a decade ago.

Why council approved: Supporters argued the approval restores a previously entitled site to productive use, protects a local lease arrangement and restores tax revenue associated with three operating locations. Critics said the packet and process lacked specificity about economic impacts, and several requested a competitive selection or vetting of any new operator.

Next steps: The ordinance change requires the usual second reading to become final; the council’s action included direction to staff to return with formal rules for any future expansion and to ensure comparability for future applicants. Staff also noted state-level licensing and Department of Cannabis Control processes apply independently to any operator change.