Cannabis cultivation applicants facing number of barriers

A hallway leading to the county's cannabis control office is pictured.

It’s not the green rush the county saw in 2016, but a mix of out-of-towners and locals are buying up rights to apply from formerly registered growers in hopes of cultivating commercial cannabis in Calaveras County. Others interested in buying back in are awaiting the results of an upcoming court hearing that could temporarily restrict the county from continuing its regulatory program.

In October of 2019, the Calaveras County Board of Supervisors legalized cultivation for approximately 190 formerly registered farmers that were in good standing under the county’s 2016 Urgency Ordinance (UO).

Since two ordinances for cultivation and background checks took effect in December, the county has received 86 pre-applications, according to officials at the Division of Cannabis Control office. Twenty of those applicants have been issued letters of conditional authorization and submitted $251,220 in registration fees that still cannot be spent without authorization from four of five county supervisors.

For some farmers, policy uncertainty and the glut in legal canopy around the state kept them from putting their hat back in the ring.

Mokelumne Hill resident Scott Martin is currently in the process of selling his right to apply.

The El Dorado County native was one of hundreds of people that moved to the area when Calaveras County became one of the first in the state to establish a regulatory program.

With a business partner, Martin oversaw an operation that employed about 65 people during harvest. He had dreams of opening up a restaurant, donating to the local elementary school and helping drug addicts get treatment before the ban. Now he commutes from Mokelumne Hill to his horticulture store in El Dorado County, where he’s in the process of obtaining a microbusiness license.

“I knew a lot of the actors in the game, and there were many like (my business partner) and I, who wanted to follow the rules,” Martin said of his dealings in Calaveras County. “We didn’t want to cheat, we showed respect to our locals, all our neighbors liked us, no one saw or (could smell) our stuff, we didn’t bother a single person … I moved my whole family down here. We wanted to be part of this community.”

The ordinance that the county adopted after the UO expired in 2017, according to Martin, allowed too much canopy on too small of acreage – leaving retirees “scared to death” of new pungent odors in their neighborhoods.

“That’s where the failure of the new supervisors was – to not find a way to remove it from the smaller acres and reduce canopy size,” Martin said of the events that led to the 2018 cultivation ban.

Although the new ordinance addresses many of those issues, it came “a day late and a dollar short,” Martin said.

Martin worries that by now, an ongoing glut across the state will force local growers to backdoor their crop.

In early 2019, there were 1,142 permitted farms in California able to produce 9 million pounds of cannabis every year, but the legal wholesale market was only able to support about 2 million pounds, the Sacramento Bee reported in March of 2019.

“I would’ve gladly worked with all the prohibitionists and the county to remove the bad actors,” Martin said. “We would’ve been at the forefront of this green wave that was coming, and now they’re so far behind it’s probably not feasible to continue. That industry has far too much canopy for the retail space available, so a significant amount of it is still going to the traditional market, and I don’t want to be part of that. I can’t say these guys are going to have to backdoor stuff, but to survive, many have.”

Those with the wherewithal to wait out the glut could turn their crop into a concentrate, since flower has a much shorter shelf life, but that’s a big investment with little foresight on when the market will change, Martin said.

Although federal legalization would put Calaveras County “back in the game,” many growers still reeling from the local ban aren’t ready to take another gamble, Martin said.

“That’s why we’re not going forward: the bad taste in our mouth and that we don’t see a way to sell the cannabis (legally),” Martin said, adding that he’s still struggling to make ends meet. “Now the new regulations are going to cause new costs, and there’s just not enough to make it make sense. Most of the people I know don’t want to be back in the game here.”

Some local applicants are as excited as they are hesitant, given the unpredictability of county supervisors on the issue over the past four years.

Conrad Bonet, owner of Blue Mountain Collective, a dispensary in San Andreas, put in an application, but he’s worried about the prospect of another ban down the road.

Bonet said he knew people that moved to the area to grow, then had to foreclose on their houses after losing their source of income.

That’s left a lot of people uneasy and unwilling to reapply, Bonet said.

“What if they take our money, and a year from now there’s another ban?” Bonet said.

Murphys resident and applicant Jennifer Smith set up shop in Lake County after the ban, where she spent the past two years commuting and building relationships with distributors and retailers.

Forced to relocate due to new zoning mandates intended to keep cannabis out of neighborhoods, Smith bought 100 acres in Murphys and the rights to apply for three additional sites.

With a letter of conditional authorization issued from the county, Smith is starting the lengthy state licensing process, which will likely cut into this year’s outdoor season, she said.

Speaking on behalf of the “core group of honest, community-minded cannabis farmers that have worked hand-in-hand with the county to build sustainable and strict regulation policy,” Smith said she is happy with the ordinance and that the pre-application process has been smooth.

Smith, a former Mountain Ranch Community Club board member, said she plans on re-energizing her “philanthropic efforts throughout various communities in the county. We’re looking forward to putting people back to work and putting money back into our communities.”

Still, a Feb. 14 court date in a lawsuit filed against the county by Calaveras Residents Against Commercial Marijuana (CRACM) over the cultivation ordinance has some applicants concerned that they won’t get plants in the ground this year.

The group is asking the court to issue a preliminary injunction to restrict the county from validating commercial permits or granting approval for commercial operations until the merits of the case have been decided, according to court filings.

Due to an allegedly inadequate environmental impact report, cultivation activities would result in a number of impacts, according to CRACM, including “clearance of trees and vegetation, the generation of noise and foul odors and the application of pesticides and contamination of waterways and wildlife.”

County staff filed a number of declarations with the court defending environmental protection measures and detailing the economic impact of halting the program’s implementation.

County Counsel argues that the ordinance reduced environmental impacts, since it limited the number of applicants, restricted growing zones, increased minimum parcel size and increased setback distances from adjacent properties, among other measures.

If the program builds out to 152 cultivation sites, then approximately 2,880 new jobs will be created in the county, according to a declaration from County Administrative Officer Al Alt filed on Feb. 3. Estimations of 15 employees per operation and 608 total owners were based on the fee study for the background check ordinance and interviews with former registrees in the county.

“The increase in employment will have a ripple effect that will substantially benefit the county’s overall economy,” the declaration reads.

With a tax rate of $45 per pound of cannabis grown outdoors and $70 per pound for indoor cannabis, “millions of dollars” in tax revenues would be lost if the program were to be halted, according to a declaration from Tax Collector Barbara Sullivan.

If an injunction is issued, farmers would be delayed for at least another growing season.

But if the injunction is denied, “we’ll have a flood of applicants coming in and paying their fees,” Ethan Turner, interim director of the Division of Cannabis Control told the Enterprise on Feb. 10, adding that he’s been contacted by 12 interested businesses waiting on the ruling.

“If I hadn’t lost several hundred thousand (dollars) already, I wouldn’t care,” said former cultivation business owner Kevin Clay, of San Carlos, who is planning on farming properties in Mokelumne Hill that were damaged in the Butte Fire.

The retired real estate broker was diagnosed with Parkinson’s about 10 years ago, after which he turned to Cannabidiol (CBD), a cannabis extract, for treatment. That’s how he initially got involved in growing marijuana, but since then, hemp has taken over the CBD market, Clay said.

Now he’s aspiring to launch an off-the-grid, zero-waste cultivation business, but he’s waiting on the ruling before he cashes that check.

Although farmers are faced with an enormous upfront investment and the ever-changing tides of cannabis policy in Calaveras County, for Clay, “the risk makes all the sense in the world if we can get through state testing.”

7
1
1
2
2

Reporter

Davis graduated from UC Santa Cruz with a degree in Environmental Studies. He covers environmental issues, agriculture, fire and local government. Davis spends his free time playing guitar and hiking with his dog, Penny.

Comment Policy

Calaveras Enterprise does not actively monitor comments. However, staff does read through to assess reader interest. When abusive or foul language is used or directed toward other commenters, those comments will be deleted. If a commenter continues to use such language, that person will be blocked from commenting. We wish to foster a community of communication and a sharing of ideas, and we truly value readers' input.