Sebastopol to push for rules governing marijuana grows

Sebastopol’s City Council is scheduled to consider at Tuesday’s meeting a resolution urging the Sonoma County Board of Supervisors and eight other city councils to adopt medical cannabis regulations intended to protect a shadow industry that accounts for more than $30 million a year in sales at local dispensaries.

The discussion comes at the behest of Sebastopol Councilman Robert Jacob, who owns dispensaries in the west county town as well as Santa Rosa. Marijuana supporters as well as opponents are pressuring cities and counties to introduce local rules governing cultivation ahead of a March 1 cutoff imposed by the state.

The financial implications for state and local governments could be massive.

The State Board of Equalization, which collects retail sales, said that 18 dispensaries in the county paid $2.6 million in taxes on nearly $31 million in retail sales of cannabis-related products in 2014. Ten Santa Rosa area dispensaries reported the lion’s share of sales at nearly $21 million, according to figures released by board member Fiona Ma.

Statewide, the board collected $44 million in sales taxes from about 25 percent of cannabis dispensaries, and Ma said taxes would have totaled about $111 million if all dispensaries were complying with the law. At an average sales tax rate of 8 percent, that would come to about $1.4 billion in medical cannabis sales by an industry that has gone largely unregulated since voters approved Proposition 215 in 1996.

That changed in October when Gov. Jerry Brown signed the Medical Marijuana Regulation and Safety Act, which calls for state licensing of cannabis cultivators, manufacturers and dispensaries through a regulatory system that could cost as much as $50 million a year to operate and will take two years to establish.

The law gave cities and counties control over cannabis cultivation permits, but only if they enact local regulations by March 1, a deadline that has triggered a statewide scramble by city and county officials to determine what steps they must take to retain jurisdiction over an industry they could tax as well as regulate, or even ban.

Absent local rules, control over medical cannabis cultivation will default to the state, but the March 1 deadline itself is cloaked in uncertainty.

“It’s time to bring local (cannabis) farmers in from the cold in Sonoma County,” said Sebastopol Councilman Robert Jacob, referring to the resolution he will introduce at Tuesday night’s meeting.

Jacob, who owns the Peace in Medicine dispensaries in Santa Rosa and Sebastopol, said the county and cities need to act to maintain local control and “avert an economic crisis.”

The medical cannabis industry provides “tens of thousands” of local jobs that support families and local businesses, such as grocery and hardware stores, Jacob said. He based the jobs estimate on the fact that Peace in Medicine employs more than 200 people and has more than 1,700 suppliers of cannabis-related products, about three-fourths of them located in Sonoma County.

“These are people we see every day who don’t talk about what they are doing in the barn,” said Jacob, who opened his Sebastopol dispensary in 2007 and was elected to the council in 2012. Time magazine dubbed him the “first ganjapreneur turned mayor” the following year.

Jacob said his Sebastopol dispensary is probably one of the top 10 sales tax producers in town and that medical cannabis is either the No. 1 or No. 2 cash crop in the county, either ahead of or right behind wine grapes.

Local control is important, Jacob said, so officials “can shape the economic future our community wants, not just whatever the state wants.” Issuing cultivation permits locally “can dramatically affect the cannabis economy,” he said

Owing to conflict of interest rules, Jacob can’t talk about marijuana regulations at City Hall but he is free to advocate the resolution, which would be sent to the supervisors and other city councils but is not binding on any of them, he said.

City Manager Larry McLaughlin said the resolution doesn’t apply to Sebastopol because city codes already cover cannabis cultivation and dispensaries thoroughly enough to preserve the city’s right to maintain local control. It would be difficult for a city to draft and enact a fresh ordinance by March 1, unless it was handled as an emergency measure, said McLaughlin, who doubles as the city’s attorney.

There is “a lot of confusion” among city attorneys around the state over the impacts of the law, he said.

Santa Rosa officials advised the council last week that there wasn’t enough time to craft a new ordinance by the deadline, given the city’s other initiatives. Staffers proposed a ban on commercial marijuana cultivation beginning March 1, then developing an ordinance over the summer.

Council members expressed confusion over the urgency surrounding the issue and questioned whether a ban was necessary in view of indications the deadline was a mistake soon to be rectified by the Legislature.

Assemblyman Jim Wood, D-Healdsburg, one of the authors of the state law, said Monday the deadline was “inadvertently included” in the massive bill as it was shuttled between lawmakers and the governor’s office.

“It was never meant to be,” Wood said, acknowledging the deadline has “created a lot of angst among cities and counties.”

Wood said he intends to file a bill on the Legislature’s opening day, Jan. 4, erasing the March 1 deadline. The bill is likely to be approved, but not before March 1, he said. Local governments need not worry about losing control immediately, he said, because there will be no state regulatory structure in place at that time.

In the heart of California’s Emerald Triangle, Humboldt County officials are considering a medical marijuana commercial cultivation ordinance that allows up to one acre of outdoor cultivation, one-half acre of indoor cultivation on certain zones and creation of a “Humboldt Artisanal Branding Program.”

Tawnie Logan, executive director of the 300-member Sonoma County Growers Alliance, said she and others will urge the Sebastopol council to pass Jacob’s resolution.

“Hopefully this will open up more conversation,” she said, adding that local governments ideally would be allowed to adopt regulations “at their own pace” rather than by an arbitrary deadline.

Cannabis growers are concerned that cities may ban cultivation in order to maintain local control, making crop planting “illegal overnight,” Logan said.

You can reach Staff Writer Guy Kovner at 521-5457 or guy.kovner@pressdemocrat.com. On Twitter @guykovner.