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Hazy days for Calaveras cannabis farms
By Buzz Eggleston
Calaveras County Seal
Cannabis farmers in Calaveras County face an uncertain future. County planning commissioners, directed by the Board of Supervisors, are drafting an ordinance that would severely tighten regulations the growers have worked under for the past year.

“They’ll lose over 90 percent of the farms,” Tom Liberty, a cannabis industry advocate, said of the proposed ordinance. It would also deprive the county government of millions of dollars in annual tax revenue the farms bring in.

About 740 growers sought commercial permits when the county briefly opened the regulatory door in June 2016, each putting up a $5,000 application fee. The response overwhelmed the system, far exceeding anyone’s estimates. Another 181 people paid $100 each for permits to grow cannabis for personal use, and 74 paid $200 to register for caregiver permits. Those fees put $3.7 million into county coffers. The fees are due annually on the date a permit is approved.

As of November 20, the county had given permits to 191 cannabis farms, 310 were still pending, 54 had been withdrawn and 183 denied.

The “urgency ordinance” which has been in place to date requires rigid compliance inspections by the county before a grow can be permitted. However, growers have been allowed to farm while their applications are processed. The urgency ordinance was drafted in response to an influx of growers who bought mountain properties burned in the disastrous 2015 Butte Fire, which scarred 71,000 acres and destroyed nearly 500 homes in the rugged foothills. The buyers offered irresistible prices for land, often paying cash.

At the same time as this land rush, California was swiftly moving toward legalization of recreational marijuana, which state voters affirmed in November 2016. Local officials feared the state would take major decisions about regulation out of their hands.

While Calaveras County moved to regulate commercial grows, its mountain neighbors, Amador and Tuolumne counties, favored bans. Tuolumne County is now revisiting the issue.

In November 2016, on top of the application fees that were already in place, Calaveras County voters approved Measure C. It levied a $2 per-square-foot canopy tax for outdoor farms -- $5 per square foot for indoor grows -- plus a 7 percent tax on retail sales by designated storefronts, collectives and dispensaries. All those new taxes generated about $7 million in county revenue in the first round of tax collecting beginning in May 2017 and about the same was expected to be paid by growers and retailers in the second round of tax payments due now. However, new regulations that severely lead growers to leave might mean collecting that money will be very difficult, if not impossible.

Money from the fees and taxes has been used to beef up the ranks of law enforcement, code compliance, planning, and environmental health agencies run by the county.

Liberty, a cannabis grower who lives in Mountain Ranch, said the tax money has paid for law enforcement costs incurred in raids on illegal grows this year. Despite the risk of being raided, illegal, unpermitted farms still flout the law and continue to operate in the county. It also has paid for government oversight of grows shut down when permits were denied.

In past years, largely due to lack of money, the county routinely raided a limited number of illegal grows, usually mid-to-late in the season, and focused on those grows that were on public lands where federal or state agencies would help share costs. This year all the numbers are up.

According to the Sheriff’s Office, deputies did 14 raids on illegal farms between January 1 and mid-November 2017. The county also ordered 35 grows to shut down, and 213 growers denied permits voluntarily shut down. The sheriff seized 220 pounds of processed cannabis, ripped out 21,491 plants, and oversaw the voluntary uprooting of another 23,802 plants. Raids resulted in $573,000 in fines, according to Sgt. Rachelle Whiting, the sheriff’s public information officer.

Questions remain about whether the county can afford to enforce a ban, or even a partial ban, without money from the cannabis taxes, and a heated debate continues over that and other cannabis issues.

Among those are concerns for the environment. The Sheriff’s Office routinely finds hazardous materials at illegal grows, including toxic pesticides. Trash and human waste have polluted drainages. Illegal grading has scarred hillsides and left them vulnerable to erosion. Native trees and plants have been scraped away. Members of the public have said at hearings that regulated cannabis farms allow some control over environmental impacts that is not present when farms are illegal and unregulated.

Proponents of banning marijuana in Calaveras County twice tried and failed to put measures on the ballot to outlaw commercial cannabis grows. Proponents of a permanent regulation ordinance backed by growers did get a detailed measure on the ballot in 2016, but it failed. Two supervisors who supported regulation lost their seats in November 2016 elections and two others who also supported it decided not to seek re-election. They were replaced by one candidate who supports regulation, two candidates who favor a complete ban, and one, Gary Tofanelli, who leans heavily in their direction. The fifth supervisor, Michael Oliveira, has sided with Tofanelli.

On October 24 of this year, Tofanelli laid out a plan for a strict new ordinance that would, among other things, ban commercial grows from residential zones in the county, limit the grows to properties that would accommodate 500-foot setbacks from property lines, restrict them to no more than 22,000 square feet, and require soil and water testing for chemical contaminants. Indoor grows would also face new regulations, including water testing and air filtration, and would be limited to industrial and business park zones; and outdoor covered grows would be required to curb light pollution and generator noise. Tofanelli estimated it would mean instead of hundreds of permits being issued that only 60 or 70 could qualify. That number could be more easily inspected and monitored. He also agreed that under his plan tax revenues would fall sharply.

The board voted 3-2 to direct the Planning Commission to draft an ordinance as outlined by Tofanelli. That process is underway.

Growers were dumbfounded.

“For people like me there’s a feeling of a real bait and switch,” Liberty said.

Growers, many of them longtime county residents who make a living from the cannabis industry, feel the proposed ordinance will drive them out while encouraging larger, industrial-size farms to come in. The small-scale farmers sought to become legitimate, Liberty said, partly out of a desire not to wear the criminal label but also to be able to comply with state laws.

“Because of the local control thing, if there’s a ban in your county you can’t get a state license,” Liberty said. Without a state license, the growers won’t have a legal market for their crop.

Liberty considers Tofanelli’s plan as nothing more than a de facto ban. He predicts that if it is enacted it will lead to a flood of lawsuits by growers who feel they have been betrayed, lawsuits alleging false representations by the county, misbehavior by public officials, and challenging the county over its land-use policies. He also predicts advocates at some point will produce another ballot measure seeking to replace the county ordinance.

“The main point of the lawsuits is there’s just going to be so many of them,” Liberty said.

Meantime, some growers are opting to move out of Calaveras County to farm in more welcoming places such as the north coast’s Emerald Triangle, Yolo, Sacramento and other counties, even out of state, Liberty said.

The price of outdoor-grown marijuana fluctuates, but continues to drop, Liberty noted. He cited prices as low as $800 a pound this fall. Wholesale prices for prime outdoor cannabis were down to $1,532 a pound in mid-year 2017, according to “Cannabis Benchmarks,” an industry publication, compared to $1,682 at their peak in 2016. They were as high as $2,600 a few years ago.

Prices are expected to continue to be unstable as the regulatory landscape changes, which it is assured to do.

Calaveras, while grappling with the issues cannabis presents, isn’t alone. In recent months state agencies have introduced volumes of detailed new regulations that permit large industrial-size cannabis farms, describe how and where marijuana can be grown, processed, packaged and transported, how it can be served and what it can be mixed with, how the environment must be protected, and far more.

California is changing. It is fast moving to embrace a major cannabis economy, and cities and counties throughout the state are attempting to adjust to that new reality.

Buzz Eggleston is a former editor of the Calaveras Enterprise. He resides in San Andreas. You can contact him by e-mail.

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