After 4 p.m. Thursday, there will be two kinds of cannabis cultivators in Calaveras County: Those registered with the county government and those operating outside the law.
That clear line will be the result of an urgency ordinance county supervisors approved in May. The ordinance gives growers until the close of business Thursday to get to the counter in the Calaveras County Planning Department to register and pay hefty fees.
It ends decades in which medical marijuana growers existed in a gray area – tolerated but neither regulated nor fully integrated into the legal economy. Those in the industry also expect it to begin a shakeout in which smaller, weaker, less sophisticated operations will be gradually squeezed out by a combination of regulation and economics. The only question, they say, is whether that takes months or years.
Those growers who don’t register with the county will be unable to get state permits. By 2018, that means they won’t have access to a system under which bar-coded, tested cannabis products will be tracked from field to store by state regulators.
At one second past 4 p.m., those who are not registered will be illegal and subject to enforcement and crop eradication. On Monday morning, a Planning Department staff member said that 250 commercial farms had registered so far. One industry insider estimates that as many as 500 will line up to register before the deadline. Even so, estimates are that roughly as many other farms won’t register by the deadline.
That means those unregistered farms will be at risk to be among the first to vanish in an industry shakeout that is just the latest twist for the industry since medical marijuana was made legal in California in 1996.
Anticipating the last-minute rush, staff members say they may move the counter for receiving registrations from the small Planning Department headquarters to the old courthouse, several yards away at the county government campus on Mountain Ranch Road in San Andreas.
A Planning Department spokeswoman told the Board of Supervisors that the final acceptance process will include collecting as much paperwork as possible – even from those in line – in the last few minutes before 4 p.m. in Thursday.
“Planning closes their door at 4 p.m. and we’ll be there to make sure everything goes smoothly,” said Sheriff Rick DeBasilio at Tuesday’s board of supervisors’ meeting. “But make no mistake, we will keep order.”
After the deadline, registered commercial growers will have the protection of legitimacy that comes from the $5,000 fee each has paid to the Planning Department, and the potential obligation – if a tax measure approved by the Board of Supervisors last week passes in November – to support the county general fund each year with an estimated $6 million in taxes on their crops.
The remaining legitimate farmers can begin the process of building a viable cannabis agriculture industry in Calaveras County. According to Calaveras Cannabis Alliance Executive Director Caslin Tomaszewski, 31, of Mountain Ranch, those who are in business three years from now will be careful business executives who are keenly serious about cutting-edge agriculture and profitable production.
“The mom-and-pop operators will mostly be gone,” he said on Friday.
Fellow CCA director Mark Bolger, 28, also of Mountain Ranch, is a cannabis farmer who meets Tomaszewski’s definition of the future: he knows his industry, knows where his farm’s production and potential profit lies at any moment and is committed to agriculture based on advanced science.
“There will be a number of people who can’t weather the storm of (the Medical Marijuana Regulation and Safety Act of 2015) and regulation,” he said. “I really wish everyone could keep going, but there will be folks who have to shut down.”
The state regulations that formally establish the medical cannabis industry in California go into effect in 2018 and those who are not registered with local jurisdictions cannot take part.
Bolger said challenges face Calaveras County cannabis farmers over the next three years, not the least of which is the pending November vote on a state initiative that could legalize recreational cannabis.
“Here in Calaveras County we have a boutique industry, and our product is most similar to, say, cherries or avocados,” he said. “No matter what happens statewide, I think we’ll be positioned to build our businesses.”
“I think in the next three years we’re going to find that cannabis farming is no different than any other kind of ag,” he said. He said the cost of getting product to market includes approximately 50 percent or more in production costs, 20 percent brokerage fees and other cost such as transportation.
He agreed that careful transportation is critical: “If a transporter is pulled over for a traffic issue on the way to LA, and there’s 50 pounds of cannabis in the vehicle, you can expect that product will be impounded.”
“Generally, it is obvious that there is a good margin to be made, but we don’t have the windfall profits that some suggest,” he said. “There’s a gap being closed. Every year, we’re becoming more and more sophisticated and that requires knowledge and investment.”
A Planning Department spokeswoman said Monday that approximately 250 individual and group commercial applications were filed by the close of business on June 23. That is 50 more than predicted by Tomaszewski during deliberations by the Board of Supervisors in May, and halfway to a final registration number of more than 400 he predicted on Friday.
Commercial cannabis commerce could contribute between 15 and 30 percent of Calaveras County’s tax base within three years, said Tomaszewski.
So far, registration fees have brought the county $1,250,000 and Tomaszewski expects 300 to 500 growers will register by the deadline. The registration fees from 400 growers would mean a $2,000,000 addition to the county.
The Calaveras Cannabis Alliance presented five workshops on filing to register under the urgency ordinance. The last workshop was held June 22 at the San Andreas Town Hall. More than 30 people were on hand to hear Tomaszewski guide them through the process.
The registration funds are restricted to the cost of administering and enforcing the urgency ordinance and cannot be moved into the general fund. The money can be used to manage registrant information and support law enforcement and code compliance.
Additionally, the tax measure on the November ballot would levy commercial outdoor growers – the majority in Calaveras County – at the rate of $2 per square foot of canopy area. Income from the proposed tax would go into the general fund and could be spent at the pleasure of the Board of Supervisors.
Bolger estimated tax income between $5 million and $10 million earlier in the week, when the board passed the ballot measure. Bolger and Tomaszewski tapped their keyboards during a Friday interview and agreed that a base, and conservative, annual figure would be $6 million.
“I would not be surprised if we got 500 growers registered,” he said.
Tomaszewski said he hopes the tax income for the first year, maybe two, would be directed to the Sheriff’s Office for aggressive enforcement. “It is in our best interest to see the bad actors removed.”
“That’s why we support the urgency ordinance,” he said. “We know people are being compromised and we know the problems are real. If people who oppose us see what regulation is going to do for them, they would be for the ordinance.”
“That would be wonderful,” said DiBasilio about the potential tax income. “But the bottom line is that growers have to honest with reporting what they produce.”
He added that registered growers could also be additional eyes and ears in the field, reporting illegal grows the Sheriff’s Office.