.Growers Apprehensive About Pending Pot Rules

Brenda, a medical cannabis grower, is in the process of showing me to her garage when she pauses and turns to discuss the evolving weed rules. “I appreciate where we are now,” she says. “But we won’t get to where we need to be unless we keep working.”

Brenda, who asked us to withhold her last name, has been networking locally and pushing for regulations that won’t punish small cultivators like herself, ever since the Cannabis Choice Cultivations Committee began meeting in 2015.

Inside Brenda’s garage, 50 small cannabis plants—all from hybrid strains she crossed herself—sit in plastic pots. Their leaves fidget and shimmy in a lush, aromatic breeze that blows around the room—from a fan up above, an air conditioning unit to the side and a cooling system in all four corners. “I’ve walled myself up in here because I don’t want anyone to smell it,” she says. “I don’t want it to bother anyone. I want it to be clean.”

Brenda grows for her own personal medical use to soothe her arthritis, but also sells to dispensaries. She says she does her best to follow every rule, but that’s a difficult challenge, given the sometimes conflicting positions from government officials. In a perfect world, she says, last year’s Proposition 64, which legalized cannabis for recreational use in California, might have taken some of the pressure off.

Instead, she worries that the resulting county regulations will have the opposite effect, barring her and hundreds of other local cultivators from legally growing for sale.

A draft county ordinance would ban grows from properties under five acres, as well as in traditional residential zones, regulating cannabis in a way similar to agricultural crops.

In an effort to bring growers to the table and legitimize themselves in a new system, county supervisors asked established growers to register last year, while a Santa Barbara group began work on an environmental impact report, which is expected to be released in mid-August.

Brenda signed up to enter into the county’s registry, paying her $500 fee, as did more than 750 other people.

Now she’s hoping that $500 doesn’t go to waste.

Don’t Get Burned

Many established growers who registered for cultivation licenses did so with assurances that they would be better off getting in line—even if their current location doesn’t meet zoning requirements right now. But as they await new information, the situation is creating a blazed-up version of musical chairs, with business owners like Brenda trying to figure out where they’re going to grow next year.

Cultivators are hoping to convince county officials to let them partner up and split parcels, sharing grows with multiple licenses per property. It’s something that’s allowed in Monterey County and in Oakland, but it isn’t in Santa Cruz County’s draft ordinance yet, and officials can’t yet say—as they await environmental documents—how keen they’ll be on such a setup.

But activists say the ordinance will need some adjustments if it’s going to accommodate everyone.

“As we all know, there’s a limited resource in Santa Cruz called land,” says Pat Malo, co-founder of Green Trade, a new association representing Santa Cruzans in the cannabis industry. “And there’s also an issue with the price of land. … Buying land is not really possible for most people, even in cannabis, where people think that owners have lots of money, but usually they’re just getting by like every other business.”

A recent Green Trade meeting gathered to discuss the murky regulatory framework for local cannabis. Jim Coffis, the group’s other co-founder, took a hand count to see how many people had registered for licenses with the county. “That’s pretty good,” he told the crowd, as about 30 hands slowly went up in the air at the May 31 gathering.

He followed up: “How many people own or lease land in the county that you believe to be compliant with the county’s ordinance?” Only about 10 hands went up.

Local cannabis attorney Ben Rice has been sending messages back and forth with subscribers to his email list, looking for cultivators who wouldn’t be allowed to grow under the county’s new ordinance, as well as people who have land they can share, and he’s organizing all of the information on a spreadsheet to try to connect them. So far, he’s heard from about 75 people looking for land, and only five with some to spare. He concedes his methods aren’t perfect, and says he’s started trying to reach out to possible interested landowners in other ways.

Malo’s running joke is that Green Trade should set up a “speed dating” night to make connections among weed entrepreneurs and landowners.

The County Board of Supervisors did ask staff to consider allowing multiple licenses per parcel, but only on properties 40 acres or more in size. Rice would additionally like to see Daniel Peterson, the county’s new pot licensing official, have some discretion to hear appeals from growers that nearly meet the requirements and have a case to make.

In some ways, the task at hand is a little bit like trying to settle the Wild West within a few short months—especially given the confusion that’s surrounded cannabis for years.

“There will be both an adjustment period and a paradigm shift for members of the cannabis community to transition into a regulated environment,” Peterson says via email.

Obviously, the challenge of a cannabis cultivator is greater than simply running one’s own business. He or she must also navigate an increasingly complex landscape of licenses, taxes, building permits, water permits, ag rules, and fire code standards.

For now, Malo urges weed entrepreneurs not to embark on any big business decisions. They probably shouldn’t buy or build anything yet, he says, because no one knows what the ordinance will or won’t allow.

Malo and Coffis worry that if the county passes overly stringent regulations, it will just send people to the black market, making the local pot supply unsafe for customers, and creating a mess for law enforcement. It would also leave a hole in potential tax revenue for both the county and state.

At the same time, District 1 County Supervisor John Leopold says the county can’t just turn a blind eye to environmental considerations or the concerns of neighbors. “This is pretty complicated stuff, because it’s a new area of land use,” he says. “And we’re going to do a really good environmental review, because if we’re not careful and someone doesn’t like it, they could sue us, and that isn’t in the best interest of cultivators or the community.”

The state’s Bureau of Medical Cannabis Regulation plans to start handing out state licenses to recreational growers in 2018, when recreational weed sale is supposed to begin. And regulators will prioritize cultivators who are in “good standing” with local officials. That would be straightforward if the county could finalize its ordinance by the end of the year, but things don’t look to be on that timeline.

Malo wants the county to promise “letters of good standing” to established cultivators following the rules—an idea to which planning staffers and the Board of Supervisors have been generally warm.

Cash Stash

Only nine months old, Green Trade is already having money problems.

Its members have been paying their dues, but Malo and Coffis haven’t been able to deposit any of their checks, because their chamber-type organization keeps getting kicked out of banks, asked to close their account, or turned away at the door.

Banks are federally insured, after all, and the feds still view weed as a Schedule 1 narcotic.

“Just the mention of cannabis scares people in banks right now,” says Malo, who believes it’s partly Green Trade’s fault for being so open about being a cannabis organization. If he and Coffis were more vague about it, they might get accepted, he says, but that isn’t how they want to do business.

The two men hope to open an account in the next few weeks. A growing field of legalization may bring a greater air of legitimacy to the business, but Rice says there isn’t a clear solution, and that many pot businesses in Colorado are struggling with the same issues and dealing in cash as a result. That creates headaches, and not just because the idea of having tens of thousands of dollars in cash lying around feels like an unsettling liability for a business owner. Cash also makes it harder for investigators to track unlawful activity, and makes it difficult for honest entrepreneurs to prove that they aren’t doing anything wrong. Rice says he’s had had roughly $200,000 returned to his clients by law enforcement this year after deputies confiscated it.

“If we had a system that would have been in place where those guys could have put it in banks, it would have been in banks,” Rice says. “But they didn’t feel it was safe. They didn’t trust that it would be left alone. And the fact that this cash is in the home—that’s symbolic in the police’s mind of unlawful activity. And in these cases, there wasn’t any signage evidence of anything, except there was a lot of cash there and cannabis. But these guys had relationships with dispensaries and all the other things that are the earmarks for the legal stuff. But law enforcement, that’s their training: if you see a lot of cash, that’s probably evidence of bad stuff.”