Doing business as a cannabis dispensary in Calaveras County isn’t good at the moment, but it may be getting a little better soon.

Upcoming regulations to legalize adult-use sales could help struggling retailers rebound.

A proposed retail ordinance for Calaveras County cannabis dispensaries is up for public comment on the county's cannabis website, along with an initial study and negative declaration. Planning Director Peter Maurer told the Enterprise on Feb. 4 that a Planning Commission hearing could be scheduled for late March at the earliest.

Ethan Turner, interim director of the Division of Cannabis Control, said the update won’t increase the number of available permits, since there is a limited amount of land in the county zoned for professional office spaces. Other than that, it includes extra enforcement measures and tougher penalties for illegal stores, Turner said.

The ordinance, Chapter 17.91 of Calaveras County Code, was adopted in 2005 to allow dispensaries to operate in the county. It prohibits manufacturing, distribution and the sale of nonmedicinal cannabis.

For the three dispensaries in Calaveras County, the update can’t come soon enough.

Dispensary tax revenues for 2019 shrunk to $253,614 – down 21% from prior years.

Owners blame statewide legalization of recreational use in 2018, the county’s 2018 cultivation ban and local licensing restrictions for the steady decline in business, all of which may have opened the door for out-of-county black market vendors.

Jeremy Carlson and Lara Grant, co-owners of Arnold-based Calaveras Little Trees, have had to lay off five people – almost half of their retail staff – over the past two weeks.

After recreational use was legalized in 2018, many customers stopped renewing their medical cards, Carlson said.

That’s been especially true of vacationers and second home owners from the Bay Area, who now have an array of options, according to Carlson.

“Tourism used to be big for us,” Carlson said. “For years we had people that were seasonal customers, Bay Area folks coming out to visit in the summer, but they let their cards expire and do their shopping in the Bay Area.”

Others will travel as far as Oakdale or Modesto to hit pot shops, Carlson said.

For many, $40 and the five minutes it takes to fill out an application for a medical card is just too inconvenient for marijuana.

“It’s easy to get a card online, but we’ve had to turn so many people away,” Grant said. “We know it’s not us, because we had great business before (legalization). It’s the fact that our customers can no longer come to us. They have to spend an extra fee just to get the same products. It’s a really obvious decline … Imagine if you had to go out-of-county to get a six pack of beer or you could spend $40 to get a special license to go to a Calaveras store. It’s just ridiculous.”

In San Andreas, Blue Mountain Collective has dealt with the same issue, with potential customers making pot stops on their way up to Tahoe and other areas only to be turned away at the door, according to Conrad Bonet, co-owner.

Bonet added that the dispensary never recovered from the drop in clientele after the county’s cannabis ban went into effect in 2018.

“Ever since the cannabis ban, we’re barely staying afloat,” Bonet said.

On top of lost sales, having to outsource distribution has presented ongoing, inefficient expenses for the businesses.

For Calaveras Little Trees, that means cultivating their 200 some-odd plants, selling them to a licensed distributor in Shasta County to pick them up for lab testing and then buying them back. Factoring in shipment orders of wholesale products not grown at its site in Arnold and a 27% state wholesale tax tacked onto purchases, the company ends up paying thousands of dollars a month in transport costs alone, Carlson said.

For Blue Mountain Collective, fluctuations in demand for certain products make purchasing decisions difficult, especially with little cash on hand.

“Sometimes I’ll order gummy bears and sell out of (cannabidiol, or CBD) tinctures,” Bonet said. “But I’ll need them because patients coming in ask for them.”

With a distribution license, Carlson argues, dispensaries would be able to bring prices down and keep business local, especially considering the prospective growers currently registering with the county.

It could also slow down regular “unwanted” traffic in the county from licensed distributors coming from Los Angeles and San Francisco, among other areas, according to Bonet.

It remains to be seen whether distribution licenses, or those for manufacturing or lab testing, will be allowed in future updates to county code, Turner said.

District 3 Supervisor Merita Callaway said the decision to not allow the other license types was a negotiation among board members.

“We mutually agreed on several aspects, but we didn’t all get what we wanted in the ordinance,” Callaway said. “I would like (distribution licenses) in. I’m not sure where the other board members would be.”

In addition to the decline in sales and costly distribution services, dispensaries have to factor into their budgets a 7.25% sales tax and a 7% income tax to the county.

Carlson and Grant, now the only full-time employees at Little Trees, said they work more than 60 hours a week to keep the doors open.

“We had to take all the money we gave to our employees and give it to the county,” Carlson said, adding that they lost a consultant grow manager, retail staff and a part-time driver. “We were able to expand to seven days a week, and now we’re just working a crazy amount of hours to keep those hours.”

Competition from a thriving illicit market and legal out-of-county delivery services make the uphill battle to stay in business an even steeper incline, according to the owners.

Many delivery services target areas that only permit medical use or have banned retail, Carlson said.

Aside from the legal deliveries, Carlson said there are a number of illicit businesses that openly advertise in public places, like right outside of Big Trees Market.

Carlson thinks it’s a public health issue, given the outbreak of vaping-related lung illnesses and deaths in 2019. He said multiple counterfeit vaping cartridges he picked up on the street failed lab testing for pesticides and other chemicals.

“This is what people are buying on the streets, and they have no idea,” Carlson said, adding that the full-gram cartridges can be found for as low as $10, five times lower than what Little Trees can offer for what’s being advertised as the same product. “If you’re a consumer and there’s a certain part of you that doesn’t want to know, you’re like, ‘OK, I could get this full gram for 10 bucks, I just can’t afford this other one.’”

Carlson and Grant said they feel that the update on the dispensary ordinance has been put on the back burner by the county for years.

“We feel like we’re kind of handcuffed, and until they let us go and just do our business, we’re going to struggle,” Carlson said. “We tend to get lost in the noise when people start talking about cultivation. When it comes up, we’re like, what about us guys? We’re still here, we’ve been paying our taxes for the last three years.”

This story was updated on Feb. 7 to include a link to the proposed retail ordinance.

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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.

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