Sonoma County cannabis growers rack up fees and fines waiting years for permits, crippling some businesses
In 2017, Ron Ferraro, CEO and owner of Elyon Cannabis, entered into Sonoma County’s new Penalty Relief Program, a process set up after California legalized recreational marijuana to encourage growers to legitimize their operations by entering the legal regulated market.
The idea was to allow cannabis businesses in eligible locations that applied for full permits to operate without facing land-use fines while they went through the permitting process and awaited a final determination from the county.
Ferraro hired consultants and lawyers and submitted the extensive paperwork and environmental reports necessary for conditional use permit applications on three sites to be considered.
These permits have special constraints to ensure compatibility with the surrounding area and neighbors and can take some time.
But now, five years later, his permits are yet to be approved or denied, and Ferraro told me the long delays, mixed messages and fees and fines along the way have driven his farms to the brink of failure.
“It's this Catch-22 that we’re stuck in for all these years,” said Ferraro, who comes from the construction industry. “Who wants to run a business where you don't have electricity; you can't build anything?”
That’s because without an approved conditional use permit, business can’t get permits for almost anything else, like building simple structures or adding electrical.
In some cases, that prevents applicants stuck in limbo from legally setting up basic infrastructure necessary to run successful operations or easily complying with state rules that require, for instance, security cameras or secure places to store chemicals.
Those who forge ahead anyway can then face steep fines for violations from code inspection and enforcement through Permit Sonoma, the county's land use planning and development agency, or the Department of Agriculture.
Sometimes they move forward with clear violations, but at least in some instances, according to emails with code inspectors I reviewed, they get conflicting messages giving the impression they’re in the clear.
“They put you in a in a situation where it’s designed to fail,” Ferraro said. “Sometimes we call this the penalty relief vortex.”
Ferraro's frustrations were echoed by several other Sonoma County growers to whom I spoke.
Sonoma County Supervisor James Gore acknowledged that getting through the permitting system can be “difficult and expensive” and that “there needs to be a timeline” for penalty relief, in particular, so many years in.
He’s been adamant that permits need to be processed, he said, but, in the meantime, Gore noted, too, that there are cases where codes are clearly violated and Permit Sonoma is following its mandate to keep operations safe and legal.
It’s part of a larger problem that goes beyond just Permit Sonoma. “The cannabis program from the cultivation side has not been widely successful,” Gore said.
Tension between the two sides are mounting.
"That solid foundation that the industry was hoping for no longer being in the black market, well, now they have the worst of both worlds,“ said Nick Caston, who’s worked in the wine and weed industries as a policy, land use and compliance consultant in California and other states.
“They had all the regulatory compliance and tax requirements that come with being a legal industry and none of the certainty or ability to plan long-term that comes with the legal market to build their businesses," Caston said.
Jeremy Freitas, owner of Patriot Valley Farms in northern Sonoma County and Brothers Mark, a veteran-owned and operated cannabis brand, is also struggling to stay afloat in Sonoma County.
“We’re in a dying business because we can't get to the next phase of our project,” he said.
For one thing, Freitas said he got caught between conflicting local and state guidance on what kind of growing he could do where. He paid $30,000 for a state license for mixed-light growing (which happens in greenhouses or hoop houses), but Permit Sonoma told him he was only eligible for outdoor growing.
It meant Freitas had to move 1,400 plants.
“I was trying to get these plants that we spent so much money on to harvest, and it basically ruined us,” he told me.
Meanwhile, after already spending an estimated $90,000 just on required fees, Freitas said he goes months without updates on the status of his permit application. Still, his farm’s been inspected seven times by the county and three times by the state in 14 months.