The usual crowd for a cannabis study session had to watch remotely Tuesday as the Calaveras County Board of Supervisors received an update on the commercial cultivation program and hashed out policy changes going forward.
Members of the public were given the option to email or call 754-6896 to comment on agenda items.
That was legal due to a Brown Act waiver included in Gov. Gavin Newsom’s executive order that mandated large public gatherings to be canceled to slow the spread of the novel coronavirus.
Staff came in one at a time to report to the board for various purposes. The room, according to Chair Merita Callaway, was “fully sanitized to medical standards.”
According to Ethan Turner, outgoing interim director of the county’s Division of Cannabis Control, to date, 101 pre-applications have been submitted for participation in the cannabis cultivation program, which supervisors voted to adopt in October of 2019.
Thirty-six of those have completed their premises diagrams and regulatory compliance questionnaires, submitted applications and paid fees.
The total amount in fees received to date is $452,196, which is still unspendable without support from four of five supervisors.
That number would have been higher by the end of the week, but several appointments were canceled due to the coronavirus, Turner told the board. Staff is trying to find ways to work around that, he added.
Based on the applications that have come in, the county is anticipating about 19 acres of outdoor cultivation, a quarter-of-an-acre of indoor cultivation and 3.8 acres of mixed light cultivation.
Depending on whether it’s taxed at $45 per pound or at $2 per square foot, tax revenues from the currently authorized sites would amount to $1 million to $1.6 million, respectively, based on Turner's presentation. Mixed light cultivation would generate between $303,000 (if taxed by square foot) to roughly $900,000 (if taxed per pound), and indoor cultivation would yield about $56,000, regardless of how it’s taxed.
“It is anyone’s guess how much tax revenue there will be this year,” Turner told the Enterprise in an email Wednesday. “It depends on how many growers get through the permit process, how many growers can get plants in the ground, and what the board eventually chooses as a tax rate. Even if the Board matches the lowest tax rates in the State – Humboldt and Lake – it will unquestionably be millions of dollars.”
A majority of the cultivation sites are east of Highway 49, but about 10 sites are west of the highway on the outskirts of the communities of Rancho Calaveras, Valley Springs and Wallace, based on a map created by department staff.
The Division of Cannabis Control consists of Turner, temporary administrative assistant Karen Osborn and Ben Diamond, a temporary department analyst from Planning who does the “lionshare” of the processing work, Turner said.
Turner is leaving the position March 31. That was supposed to be Osborn’s last day as well, but she’s staying a while longer before moving out of the area, according to Turner.
“I think our status can be fairly characterized as understaffed,” Turner told the board.
His proposed staffing levels included a director – a lawyer, preferably – assistant or deputy director, analyst and administrative assistant or office tech.
“I think with those four people, you could run this program,” Turner said. “It seems top-heavy, but it’s because many of the instrumentalities of this program are operated by the various other land use departments, Building, Planning Environmental Health and Ag.”
Turner walked the board through a number of potential policy changes for the program, ranging from a “symbolic” land use redesignation of cannabis cultivation as an “agricultural operation” to introducing new license types in the county.
On the latter issue, Turner argued that allowing people to apply for distribution, lab testing and manufacturing licenses for operations in the county would be a smart move “if we want to keep this industry.”
His reasoning was that as prospective growers and business owners look to set up shop across the state and country, they’ll be looking for places with the best infrastructure, facilities and access to transportation hubs. The county currently has a leg up, since many other jurisdictions still have bans in place, Turner added.
“Without having a vertically integrated industry, we’re not going to have these businesses take root here and keep the jobs here that would be created by this industry,” Turner said.
District 5 Supervisor Ben Stopper agreed.
“Bringing the entire supply chain to Calaveras County benefits the industry and provides a clear path to resiliency in the future,” he said.
District 1 Supervisor Gary Tofanelli and District 4 Supervisor Dennis Mills opposed expanding license types, but Callaway and District 2 Supervisor Jack Garamendi supported the move.
Garamendi said the discussion on policy changes couldn’t have come at a better time, citing the need for a long-term plan for the anticipated economic downturn associated with the coronavirus.
“With the COVID virus going around and the national economy shutting down, we have to get prepared for how we’re going to come out of this and have industry and jobs here in this county,” Garamendi said in the meeting. “We happen to be cued up to figure out how to do that at this very critical time. I’m happy that we’re doing this now, and I think what we do here is going to have an impact on what’s going to happen in this county over the next couple years, and we really are going to need good-paying jobs for our people.”
The board opted to make no local amendments to state rules requiring cannabis business with over 20 employees to enter labor peace agreements with unions. Garamendi advocated for tightening the requirement to include operations with 10 employees, starting no earlier than July of 2021, while other board members were hesitant due to resulting financial constraints that could be put on small business owners.
“Most of the capital from this is going to come out of So-Cal and the Bay Area,” Garamendi said. “I want as much of those profits to stay here with our local people as we can.”
Other topics the board discussed included updating administrative enforcement procedures on illegal marijuana grow sites and background check requirements for on-site business owners or shareholders.
They also unanimously supported taxing by canopy rather than by weight, with a rate yet to be decided.
All policy changes discussed in the study session will have to be taken up by the Planning Commission and then the Board of Supervisors again for a final decision.