$10M Cali Dispensary Hemorrhages Money as City Delays Opening

After funneling over $10 million into the renovation of a WWII-era building in city of Costa Mesa, CA, aiming to transform it into a top-tier dispensary, High Seas, a cannabis retail boutique, isn’t doing much of anything except paying more bills.

Despite this substantial financial investment, their efforts are now in jeopardy due to a legal standoff with Costa Mesa the over the delay in granting a cannabis business permit. These expenditures included not only the purchase and refurbishment of the building but also the costs of navigating a rigorous two-year application process, securing a state cannabis license, a city business license, and successfully completing various city inspections. However, the final permit required to commence operations has yet to be issued.

“Despite High Seas’ multiple attempts to open a line of communication to try and resolve this situation, the city of Costa Mesa has unfairly and capriciously withheld the issuance of this final permit without justifiable cause,” said High Seas co-founder Rachel Xin in a press release.

The renovation process, initially scheduled for completion in July 2023, encountered a significant hurdle with the discovery and removal of an abandoned oil drum, adding over $80,000 to the costs. This delay is proving costly for High Seas, incurring over $110,000 per month in expenses.

“These delays are costing us exorbitant monthly fees as we work to retain our highly trained employees and pay mortgage rates with no income—not to mention the lost tax revenues the city isn’t collecting,” Xin added.

Even the police would rather have dispensaries than derelict buildings.

“What we’ve learned is actually these businesses improved the neighborhoods in a lot of circumstances,” Costa Mesa Police Chief Ron Lawrence, told the city’s planning commission last year. “Often, you have properties that are dilapidated, run-down, and attract nuisance, and businesses like these build them up, fix them, and make them better, and they become much more secure and a better area of the neighborhood.”

High Seas has recently escalated their dispute by resorting to legal action, initiating a lawsuit in the Orange County Superior Court. The suit seeks judicial intervention to compel the city of Costa Mesa to grant the company’s pending final cannabis business permit.