Cannabis - How Did We Get Here?

By Alexa Rae Wall

The cannabis story in Sonoma County is a hot ticket item. Communities are being divided, and information - true and false - is spreading through our neighborhoods. So how did we get here? As a cannabis cultivator, advocate, and community member; I’d like to offer my perspective.

Three Markets

First, it’s very important to make a few key distinctions when it comes to the different cannabis markets. “Black market” operators grow illegally and ship their cannabis outside of California, to states where prices are three to four times higher than in California.

Although many families have supported themselves for years in the black market, over time it has also become responsible for the negative aspects of the industry, for example, crime, high water use, and high pesticide use and abuse. Many of these operators have no intention of joining the state licensed marketplace.

Then we have the “grey market,” comprised of self-regulated operators who don’t have a permit, but operate like any other legitimate, tax-paying business. And now, as of January 1, 2018, we have the regulated market. The regulations aim to eliminate black market problems, bring operators into the regulated market, and as a result, increase public safety and economic gains for municipalities and the State.

Economic History - Regulate and Tax - We Win and Lose

No one can deny that cannabis is intricately woven into the fabric of our community. It has been growing in the shadows of Sonoma County for decades. From these shadows came a rush of jobs, cash flow, and culture that has provided not only an economic boost, but longer-term economic stability in our County.

Cannabis brought positive impacts to Sonoma County and the State, but there were consequences to having an all-cash, self-regulated industry mixed deeply into our communities.

Sonoma County was at a crossroads. It could continue to let the sheriff and code enforcement try to keep black market operations in check, using taxpayer money, or, it could create a heavily regulated system, tax it, and let the bad actors eliminate themselves. Sonoma chose the latter.

Where are the growers?

We keep hearing that there are 5,000+ cultivators in Sonoma County, but with only 150 applications submitted you can’t help but wonder, where are the growers? How are they surviving and paying their bills?

The answer is that they are right up the street from you. They are the family that grew a small indoor cultivation in their garage, or the nice young couple around the corner that grew alongside their food garden. Or they are the man that kept to himself that lived at the end of the block. They are your neighbors.

For decades, most of our County’s cannabis has been grown in Rural Residential (RR) and Agriculture Residential (AR) land zones, where many homes are. Growers had small gardens abundantly scattered across the county, and oftentimes cannabis served as that second job, that brought in additional income for these folks during economic hardship, a housing crisis, their child’s need for braces, or a better school.

Of course, there were, and still are, bigger farms in this county. But what has truly made Sonoma county special is the craft, family cannabis farmers that produced high-quality medicine for local dispensaries and greater California. Sonoma had something very special. Keyword: had.

However, all of this came to a halt in December of 2016. The Board of Supervisors, with pressure from a surprisingly few neighborhood representatives, decided to remove RR/AR zones from the zoning that would allow very small cottage gardens. This went against the months of work and recommendations of staff and the Planning Commission to allow these very small cultivations in RR/AR. Cottage cultivation is 500 sf, or 25 plants.

In one fell swoop, the vast majority of growers were disqualified from any chance to participate in the regulated market. For many, this was a sudden loss of their livelihoods. Farms all over the County, some that had sustained families for generations, became worthless overnight. All of the excitement about joining the regulated market turned to devastation and fear.

What Options Did Growers Have?

Some growers began to scramble. Some sold is their property to move somewhere with the right zoning. Some sold their company. Some merged with other growers, and many had to take outside investment money.

They did not have the option of going to a bank and getting a loan. There is no financial banking support for this industry. So most people were left with a bad choice: but to shut down entirely, or to take money from outside investors, with all the pressures and greatly lowered cash flow that results. Large agricultural properties are very expensive. Industrial properties are not only very limited, they became extremely costly almost overnight - now up to $6.00 per square foot in the county! The permitting process costs tens of thousands of dollars in Sonoma County. Many cultivators took the leap and moved to Diverse Ag (DA) zoned properties, as those were the most flexible and appropriate for cultivation.

Today, we have hundreds, if not thousands, of cultivators on RR/AR who have been disqualified from participating in the market. We have a few hundred who survived this past year under the County’s “Penalty Relief Program,” but who cannot find, let alone afford, compliant properties, and are on the fence about whether to jump into the permitting madness. Then there are those that took the leap of faith, moved to new parcels, followed all the rules and applied for permits, only to find it may not have been worth it after all with the threat of program failure and high costs looming over applicants.

Neighborhood Groups Voice their Concerns

Neighborhood opposition groups have sprung up in the past few months, and some members are running a fairly sophisticated and well-funded anti-”pot” campaign that includes TV, paper and Facebook advertising, and even direct mail flyers with emotionally charged images, scary soundbites, and flat-out scare tactics. It’s hard to tell if the misrepresentations are due to simple lack of information on the part of the group organizers, or whether it’s because spinning the facts serves their purpose; they know that by making certain claims, more people will get angry and scared. Regardless of the motivation, this campaign to demonize the legal outdoor cannabis growers is causing a divide in our County that has never before existed.

Environmental Policies Provide Protection

Many folks who oppose cannabis cultivation are unaware that, to meet the ordinance standards and receive a county permit, cultivators must meet a strict set of regulations. There are size limits, security plans and environmental standards in place. By creating this regulatory framework, the county now has a pathway to control water, energy, safety, and more all while generating much-needed tax dollars for our economy.

They are wary of commercial-sized farms, but don’t know that the laws prohibit any more than a 10,000 sf greenhouse in Ag zones, or that the cap for cultivation on all parcels is one acre. They are concerned about electricity use without even realizing cannabis operations have to be run on 100% renewable energy. They are worried about environmental damage without knowing that we have to submit a plethora of technical reports and have site visits and receive permits from California Department of Fish and Wildlife and other agencies. Water use is of huge concern but they are unaware that our wells have to be metered and we must report water usage to the county and State Water Control Board every year and if we go over our allotted water use our project goes up for review.

Legal Business vs. Black Market

Ultimately, the neighborhood opposition is pointing fingers at the wrong target when they attack farms that are in the permitting process. It’s the bad actors and black market operators that bring crime and are a risk to public safety. Those who have come forward for a permit want to do things the right way; safely, and privately. These are many good operators. We should be supporting them in order to bring this industry into compliance with other legal businesses.

What Happens Now?

Meanwhile, cannabis businesses that economically prop up our communities are moving out of Sonoma County. Businesses that relied on the cannabis industry overtly, such as hardware stores and hydroponic stores, are reporting record declines in sales. Many other businesses that thrived because of the industry - from bookkeepers to accountants to printers to Waldorf schools to local clothing and specialty food shops and restaurants - are losing business, money, and jobs as the cannabis industry slowly unwinds and fades away.

Even if the Supervisors push on with the cannabis plan over the next 6-12 months, the reality is that our program has so far failed Sonoma county farmers. The participation rate is low and I’m not sure this will change if the incentives are not there. Tax dollars aren’t coming in because the county won’t issue permits due to public controversy -- although not even a single public hearing has been scheduled for a project.

Sonoma County needs an economic boost more than ever since the fires, and we are pushing away our primary local cash generator, something that we should be holding dear. Our morale has already taken a hit, with so many residents now angry and misinformed about their cannabis-cultivating neighbors. But now our communities will suffer the consequences as the economy declines and more and more local and cash-supported businesses shut their doors. I wonder how safe we will feel then?

Alexa Rae Wall, CEO Luma California, Chair of Board, Sonoma County Growers Alliance