New law puts 3,000 Sonoma County cannabis cultivators in jeopardy

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Cannabis tax workshop

Sonoma County officials will discuss the county’s proposed cannabis business tax and Santa Rosa officials will report on the development of a city tax at a community workshop from 6 p.m. to 8 p.m. Tuesday at the Glaser Center, 547 Mendocino Ave., Santa Rosa.

The county tax is set for a vote in a special election March 7, while Santa Rosa is preparing a tax measure that will be voted on in June.

The fate of several thousand Sonoma County marijuana growers hangs in the balance this year, their businesses caught between an emergent industry sanctioned by state voters at the ballot box in 2016 and a new local law that bans commercial cultivation in large swaths outside city limits.

The conflict has shaken pot growers, who face a stark choice: Move out of the affected residential zones under county control or hunker down in place and hope authorities don’t catch up with them.

The legal shift — approved in December by the Board of Supervisors and favored by many rural residents but strongly opposed by cannabis growers — could confound the county’s attempts to bring the once-outlaw industry into compliance.

At stake are thousands of jobs, millions of dollars in tax revenue and the success of regulations meant to ensure public safety, safeguard the environment and shield rural neighborhoods that county officials say aren’t suited to pot cultivation for profit.

Advocates say the growers, many of them small “mom and pop” operators who are not wealthy, have few options, with the escalating cost of local land a barrier to relocation.

“There’s no path forward for them,” said Erin Carlstrom, a Santa Rosa attorney and former city councilwoman whose firm represents about 50 cultivators. “This is causing a lot of anxiety.”

County code enforcement efforts have already begun against medical pot cultivators whose operations do not conform with the zoning law that took effect last month.

“They know, they know,” said Tennis Wick, the county planning director whose department handles code enforcement. “We are pursuing complaints now.”

The initial enforcement action stems from complaints against 15 to 20 commercial growing operations in single-family homes. They are illegal throughout the county’s jurisdiction and “tend to have the greatest community impact,” Wick said.

Wick declined to elaborate on the county’s strategy, but said enforcement will include unauthorized outdoor pot gardens after planting season arrives.

“We don’t want to tell the bad guys when we’re coming,” he said.

The new zoning rules amounted to a homegrown prohibition for an estimated 3,000 growers in rural neighborhoods surrounding the county’s nine cities, who were effectively outlawed under the county’s Medical Cannabis Land Use Ordinance on Jan. 19.

Some of those growers may be able to operate until the end of the year, but the zoning law limits cultivation to the county’s agricultural, industrial and resources zones, excluding the 31,383 land parcels in the county’s two rural residential zones.

The law took shape through heavy input from the industry, but the Board of Supervisors sided with many rural residents who have decried the impact of pot operations on their neighborhoods.

Bennett Valley homeowners Nancy and Brantly Richardson said they have seen at least three homes in their subdivision converted to pot growing operations behind tall fences. Their neighborhood was a magnet for indoor marijuana cultivation, they said, with homes on an acre or less with detached garages or outbuildings.

The result was “heartbreaking,” said Nancy Richardson.

But Craig Litwin, a consultant to cannabis organizations and former Sebastopol councilman, said that while he appreciates the county’s move to bring the marijuana industry under the law, “they have thrown the small grower under the bus.”

Cannabis tax workshop

Sonoma County officials will discuss the county’s proposed cannabis business tax and Santa Rosa officials will report on the development of a city tax at a community workshop from 6 p.m. to 8 p.m. Tuesday at the Glaser Center, 547 Mendocino Ave., Santa Rosa.

The county tax is set for a vote in a special election March 7, while Santa Rosa is preparing a tax measure that will be voted on in June.

“I’ve talked to many of them,” Litwin said. “There’s a real fear for their families; how they’re going to put food on the table.”

Cultivators who can’t obtain a county permit “will be stuck in the black market,” he said.

Growers themselves are laying low at this point, fearful of being raided by law enforcement at a time when they are still in a legally tenuous position, said Tawnie Logan, executive director of the 260-member Sonoma County Growers Alliance. None would step forward last week to speak about the quandary they face.

“I don’t need to paint a target on my back,” Logan quoted a grower as saying.

Small growers have little chance to buy land in a competitive, all-cash market short on land where cultivation is allowed, said Timothy Hedges, a Santa Rosa real estate broker.

Hedges said he helped one group buy a 5,000-square-foot warehouse in Santa Rosa that cost more than $1.1 million. With cheaper land in rural neighborhoods off limits, the outlook for small pot growers “is not good,” he said.

Former County Supervisor Efren Carrillo, the lone board member last year who clearly supported cultivation in residential zones, called the decision to ban pot growing in those areas a mistake. Carrillo, who left the board in December, initially saw the county’s regulatory effort as an open door.

“We’re all here this morning because we believe there’s a bright future for cannabis in our community,” Carrillo told a crowd of about 300 cannabis industry members at a conference in September at a Santa Rosa hotel.

In November, the county Planning Commission adopted a planning staff recommendation to allow so-called “cottage grows” with up to 25 outdoor plants on parcels of at least two acres in the rural residential areas.

“There’s thousands of these already,” Commissioner Komron Shahhosseini said at the time.

But a month later, the supervisors — in the wake of a widespread outcry by rural residents opposed to pot farms — scrapped that provision, winning kudos from residents and condemnation by growers.

“People are going to head right back into the hills, the national forests,” Forestville grower Joe Munson told the board.

In the end, it may have been a mismatch in the court of public opinion between the estimated 81,000 rural residents and growers, outnumbered by almost 30 to 1. Countywide, there are an estimated 5,000 growers, according to the growers alliance.

Supervisor James Gore, who was outspoken in his opposition to cultivation in rural neighborhoods, disputed the idea that the board had erred.

“Why should one industry be allowed to be grandfathered?” he said, noting that no other commercial operations are allowed in residential areas.

Pot growers aren’t “bad people,” Gore said, but their businesses run on cash and their crops are “easily liquidated,” making their homes susceptible to violent crime, including robbery and homicide.

“Most growers are good folks who from their perspective have ended up on the wrong side of this process,” said Wick, the county planning chief. “I’d say this is a new commercial and regulatory regime for everybody.”

Nevertheless, code enforcement will be limited, he said, if voters countywide reject a cannabis business tax placed by the supervisors on a March 7 special election ballot.

The county maintains a steady load of about 3,700 code enforcement cases, resolving about 1,000 a year while 1,000 new cases crop up, Wick said. Adding several thousand pot growers to the ranks of code violators would double the workload on a staff of six code enforcement officers, he said.

A county analysis of the staffing needed to implement cannabis regulations estimated $700,000 to $1.2 million would be needed to hire four to eight code enforcement officers, a manager and support staff. Added personnel for other departments could cost up to $4.4 million, according to the analysis.

The proposed tax on the gross receipts of cultivators and other marijuana businesses would raise $6.3 million a year to start and could be boosted by the supervisors to $15.6 million, a level the local marijuana industry considers excessive.

County officials have steadfastly said that without the tax revenue they cannot begin accepting permit applications from cannabis operators, thereby delaying the businesses’ bids for state licenses that are supposed to be available Jan. 1, 2018.

Despite that prospect, the growers alliance last week announced that it is opposed to the tax, Measure A, and will urge voters to turn it down. The top tax rate of 10 percent of gross business receipts “would exceed profitability,” the group said.

If the tax passes and code enforcement gets the added personnel, their oversight will become “more robust,” Wick said.

Enforcement will be driven by complaints from the public, with priorities based on urgency, he said. A serious violation threatening public safety or health would prompt immediate action, Wick said.

Code enforcement is a civil process, but his officers will request assistance from sheriff’s deputies when needed, he said.

Wick said there are “many opportunities” for growers to find an authorized location to continue their enterprises, but advocates say the economics make that infeasible for many growers.

The growers alliance is working with developers and investors on an idea to acquire land zoned for agriculture and sub-lease it to groups of cottage farmers who could share resources and overhead costs, Logan said.

The county should support efforts like that to give pot operators a “pathway to success,” she said.

“They are part of our culture and part of our community,” Logan said, adding that their loss would be a blow to the county economy.

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

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