Santa Rosa cannabis manufacturer CannaCraft will pay $510,000 in civil penalties and contributions to local environmental programs, according to the terms of a tentative settlement with prosecutors reached Wednesday, marking the end of an investigation into the company dating back to 2016 when producing concentrated marijuana oil was an unregulated and largely unrecognized business.
Police seized about $500,000 in cash slated for payroll and took the company’s extraction equipment worth more than $2 million during the June 15, 2016 raid of its Circadian Way facility in southwest Santa Rosa. But since then, the case has transformed from a criminal investigation into a civil matter involving business and building code violations, such as inadequate ventilation and improper disposal of cannabis byproducts.
Sonoma County District Attorney’s officials said no criminal charges will be filed against Dennis Hunter, the company’s co-founder, who after the raid was jailed on $5 million bail on suspicion of felony drug manufacturing but released within a day.
Chief Deputy District Attorney Scott Jamar said the settlement agreement, which will be final once signed by a judge, is emblematic of the significant shift in marijuana laws between 2016 and today, including the November 2016 California vote legalizing recreational marijuana. It is also indicative of the learning curve for cannabis businesses operating in the open for the first time, he said.
“We want to hear the voices of the voters, and we want to look at this from the standpoint of a legal industry,” Jamar said. “Clearly there were public safety violations here, and we’re looking for a commitment from the marijuana business community to accept the rules.”
Hunter’s arrest and the high-profile raid by heavily armed law enforcement officers and hazmat crews of the company’s main facility plus five other properties in Sonoma County sparked an outcry from local marijuana advocates and business leaders, who gathered the next day in protest outside Sonoma County Superior Court in Santa Rosa.
It also raised questions about the safety of extracting cannabis oil, a little-known process most visible when fires erupt from makeshift hash oil labs using volatile butane gas, a problem fire officials said had become dangerously prevalent.
But Hunter said his facility was designed to be a safer and more professional facility than the type of clandestine workshops where people have made concentrated cannabis oil for decades. Hunter admits they had failed to meet some requirements, and the police investigation led them to quickly get the facility up to standards. The investigation started when a former employee contacted state Department Occupational Safety and Health investigators, and that agency contacted Santa Rosa police.
“I had a lot at risk. It was a scary time for me personally and for the company,” Hunter said. “I think what really made the difference is we were really trying to be transparent beforehand, we were really trying to work with local and state officials.”
Since that time, Santa Rosa city officials have codified local rules allowing the type of manufacturing being done at CannaCraft at the time of the raid — extraction using high-pressured carbon dioxide compressors. And since state rules went into effect Jan. 1, 595 cannabis manufacturers are licensed to operate, including 18 in Sonoma County.