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Year in Review: North Coast braces for change as marijuana industry stakes out legal future

Sarah Freidt of Santa Rosa looks at the display of the hundreds of entires in the Emerald Cup at the Sonoma County Fairgrounds in Santa Rosa on Friday, December 10, 2016. (John Burgess/The Press Democrat)

GUY KOVNER,

EDITOR’S NOTE: The Press Democrat is taking the last 10 days of the year to review the news stories that marked our lives and shaped our region in 2016. For a complete list of the stories, click here.

California was not first this time, but with a clear majority at the ballot box, Golden State voters in November opted to join the lead wave of states that have legalized recreational marijuana, setting in motion fundamental change for the growing cannabis industry that is likely to transform Sonoma County and the North Coast.

The approval of Proposition 64 —favored by 59 percent of Sonoma County voters and 57 percent statewide — punctuated a year marked by the clear emergence of cannabis commerce as a local economic force and industry advocates as key players in the contentious discussions shaping regulation of the once-illicit trade.

“It’s been a fantastic year of transformation and transition,” said Craig Litwin, a Sebastopol consultant to cannabis organizations. The industry is already worth billions of dollars, and Litwin said the California mandate reflects the drug’s wider acceptance, part of what he contends is a global shift in attitude.

Most people now “see marijuana as a substance they are comfortable with,” he said.

In Sonoma County, though, that point appears unsettled, as residents and local governments grappled with the industry’s emergence this year in contradictory ways.

Two months before Santa Rosa opened a wide swath of the city to cannabis processors, police officers helped shut the state’s largest legal cannabis manufacturing operation over a series of code violations. The firm, CannaCraft, operating out of a nondescript Circadian Way business park, re-opened last month with the city’s blessing just as a widening field of entrepreneurs eye Sonoma County — located between the famed Emerald Triangle growing region and millions of potential Bay Area customers — as an ideal place to set up shop as a cannabis business.

Yet the county, in a closely-watched vote last month by the Board of Supervisors, banned commercial cultivation of medical marijuana on rural parcels, siding with residents who said such activity despoiled their neighborhoods. The county’s nine cities have imposed their own limits on the cannabis trade, many of them prohibiting commercial cultivation. Only Santa Rosa, Sebastopol and Cotati allow medical marijuana dispensaries.

In Mendocino County, voters went even further this year, soundly rejecting a bid by the industry to set its own rules, which would have allowed cultivation on all rural lands and an unlimited number of licensed cannabis businesses.

Meanwhile, the specter of violence continued to shadow the marijuana industry, with two men fatally shot and a woman seriously wounded in the deadliest incident of the year, during a pot deal at a rural Sebastopol home in October. Since 2013, seven of the 26 people murdered in Sonoma County died during marijuana deals, a statistic that continues to make local law enforcement, elected officials and many residents wary of the loosely governed trade.

Sonoma County has struggled to bring the booming marijuana business — a “green rush” many liken to California’s original Gold Rush — into the civic mainstream, acknowledged Supervisor James Gore. A single pot crop can be worth hundreds of thousands of dollars, but due to federal law, that cash that can’t be deposited in banks, making marijuana a uniquely volatile commodity, Gore said.

“It’s a brave new world and in many ways it’s still the Wild West,” Gore said.

The passage of Proposition 64 was the thunderbolt that many will remember from 2016.

It gave about 28 million adults 21 years and older the right to possess up to an ounce of pot and cultivate up to six plants for personal use.

It laid the groundwork for a regulated, commercial pot industry that could be worth more than $6 billion by 2020, making weed one of California’s top agricultural products. State and local marijuana taxes authorized by the measure are expected to reap as much as $1 billion a year in revenue.

The measure came 20 years after Californians sanctioned medical marijuana use for adults, opening up a limited legal footing for a black-market crop that would nonetheless remain targeted by law enforcement raids and banned under federal law.

California twice before had rejected marijuana legalization, the last time in 2010. But consensus grew that de-facto prohibition wasn’t working, prompting cannabis advocates to band together with influential business and political leaders to make 2016 the year it would end.

“The time has come,” said North Coast Rep. Jared Huffman, D-San Rafael, in July, forecasting success of the ballot measure championed by Lt. Gov. Gavin Newsom, a front-runner in the 2018 governor’s race, and bankrolled by tech entrepreneur Sean Parker.

“What we’ve been doing for the last 40 years isn’t working,” Mendocino County Supervisor John McCowen said. “We need to grow up (and) recognize that millions of people want it.”

Critics of Proposition 64, including many pot growers, fear it will open the door to big business, trampling the small-scale family farms that have formed the backbone of the industry on the North Coast for generations. The measure sets no limit on the size of commercial pot gardens starting in 2023.

The 700-member California Growers Association, the state’s largest cannabis industry trade group, was so evenly divided over the legalization measure it remained neutral. Leaders of the 200-member Sonoma County Growers Alliance, a local organization, unanimously opposed the proposition. After the election, however, executive director Tawnie Logan said her organization was committed to the law’s orderly implementation.

Sonoma County, at a strategic crossroads between the pot-rich Emerald Triangle to the north and the metropolitan Bay Area to the south, has cautiously opened a door for the cannabis trade, recognizing it as a burgeoning business sector, though nagging questions remain about public health and safety.

The potential implications of that transformation were clear at the outset of 2016, when county officials set out to craft rules for commercial cannabis operations.

Already, they have inflated the value of local property, including prized warehouse space. In the years to come, the new industry is likely to “change the land use, rural aesthetic, economic and environmental fabric of Sonoma County,” a county planning staff report said.

The marquee dispute came over limits that would allow commercial pot growing outside cities, in places where more than 81,000 people live. Cannabis advocates, representing an estimated 3,000 growers, pressed for permission to use rural properties, but many residents pushed back.

“This would destroy our neighborhood,” Joe Tembrock, who lives near Santa Rosa, told the Board of Supervisors in December. “Putting (growers) in a residential neighborhood isn’t safe for anyone.”

After a lengthy series of workshops and public hearings, the board voted a week later to limit pot farms, both indoors and outdoors, to agricultural and industrial land countywide. Industry players angered by the decision said it would force many cultivators to remain outside the law.

“People are going to head right back into the hills, the national forests,” said Joe Munson, a Forestville grower who sells his crop to cannabis dispensaries.

Other municipalities took advantage of their right to allow or ban cannabis commerce under Proposition 64.

Santa Rosa rolled out the welcome mat for the marijuana business in industrial zones, approving plans in August for a Seattle investment firm, Privateer Holdings, to become the city’s first pot processor licensed under new city rules. The firm’s products, already sold in California dispensaries, are marketed under a brand affiliated with Bob Marley, the late, famed Jamaican reggae singer and cannabis user.

“This is kind of historic,” David Guhin, director of the city’s Permit and Economic Development department, said at the time.

A month later, the city’s Planning Commission allowed Aim High Cultivation to set up a medical marijuana cultivation and processing plant in a northwest Santa Rosa building that was housing a tile company.

Other events pointed to a growing acceptance of marijuana.

In December, city and county officials toured the newly reopened Circadian Way cannabis extraction and manufacturing plant in Santa Rosa. In June, the CannaCraft facility, was raided by local and federal law enforcement, who halted production, hauled away pricey equipment and seized $500,000 in cash.

Dennis Hunter, one of the company’s founders, was also briefly jailed. But no charges have been filed against him, and the company, which produces cannabis-infused oils and sprays marketed for a range of medicinal purposes, is now back in business.

“We want to be the company that tears down the stigmas for cannabis,” Hunter told his visitors over a catered lunch.

“It’s a sign of how the times have changed when we have local governments in support of manufacturing,” said Nate Bradley, executive director of the California Cannabis Industry Association, a Sacramento trade group. “Santa Rosa is leading the way in the state.”

Sebastopol’s City Council approved a permit for the city’s second medical cannabis dispensary, scheduled to open early this year at the south end of town.

Voters in Mendocino and Lake counties and the cities of Cloverdale and Point Arena approved marijuana taxes on the November ballot, signaling a desire to tap the marijuana revenue rush.

Some signs pointed to cannabis also gaining broader recognition for its medicinal benefits, though largely for adults. Strong medical consensus exists about the drug’s risks to children and adolescents.

Dr. Phillip Grob, a Santa Rosa geriatric psychiatrist, said he has recommended marijuana to ease symptoms like extreme agitation for 50 to 100 elderly dementia patients since 2003. In appropriate dosage, typically using edibles and tinctures, cannabis can have a “robust therapeutic effect,” he said.

Golden State Warriors coach Steve Kerr set off ripples by admitting he had tried medical marijuana to relieve his chronic back pain. It didn’t help treat his condition, he said, but it beat the pharmaceutical alternative. “Vicodin is not good for you,” Kerr said. “It’s way worse for you than pot.”

But the prospect of tight local controls, as well as the taxes — including the 15 percent statewide tax on all marijuana retail sales, plus a cultivation tax of $9.25 per ounce for flowers or $2.75 for leaves, both built into Proposition 64 — has marijuana industry advocates worried that a substantial pot black market will continue, with the attendant woes including crime.

The year’s deadliest spate of violence — the double murder near Sebastopol — echoed a grisly 2013 execution of three men in Forestville, with the assailants making off with 100 pounds of pot. The convicted trigger man in that crime was sentenced in May to life in prison without the possibility of parole.

In November, a Mendocino County pot grower was slain as he slept in a shed holding his crop by people who worked for him as trimmers on a remote property north of Laytonville. Three of the seven suspects in the crime have been jailed.

The Sonoma County Sheriff’s Office said 774 crimes between July 2013 and July 2016, including all reported home-invasion robberies, have been associated with the sale or distribution of marijuana.

Huffman, whose North Coast district produces 60 percent of the state’s marijuana, maintained that legalization and regulation are the best means of curbing the crime and environmental damage related to unauthorized and careless pot cultivation.

He also said California’s approval of Proposition 64, bringing the number of people living in states where marijuana is legal to nearly 69 million — 22 percent of the U.S. population — may prove to be a “tipping point” toward reform of federal laws.

“There is a growing consensus that the status quo is dysfunctional,” he said in July.

But just a month later, the Drug Enforcement Administration reaffirmed its position that marijuana belongs on a list of the most dangerous drugs that have a “high potential for abuse” and “no accepted medical use.”

And President-elect Donald Trump’s nomination in November of Alabama Sen. Jeff Sessions as his choice for attorney general further rattled Cannabis Country.

Sessions is a hardliner on marijuana enforcement, rekindling fears in the region of a return to raids and federal prosecution.

“It definitely makes cannabis legalization bittersweet,” Sebastopol attorney Omar Figueroa said.

You can reach Staff Writer Guy Kovner at 707-521-5457 or guy.kovner@pressdemocrat.com. On Twitter @guykovner.