What if, instead of an obligatory trip to the dispensary to replenish your stash, you could visit a local cannabis farm and, in the tradition of a winery or brewery, tour the crops, learn about the cultivation process and sample different strains?
Or let’s say you prefer a trip to the dispensary, but instead of purchasing cannabis and lighting up at home, you want a change of scenery and decide to meet friends for a joint in a smokers lounge, Amsterdam style?
No cities or counties in California offer the first option, and few claim the latter. The local cannabis industry wants Santa Cruz County to host both, and the idea spurred one of the more lively debates the county board of supervisors has had this year, leading supervisors to a unanimous maybe.
The ideas were stuffed inside an omnibus-style change of the county’s cannabis policies. Proposed to the board Tuesday by Manu Koenig and Felipe Hernandez, District 1 and District 4 supervisors, respectively, the changes aimed to relieve some of the industry’s growing ailments that have led more and more cultivators to call it quits. Since the 2019-20 growing season, the roster of licensed cannabis growers in Santa Cruz County has dropped 38%, to 43 legal cultivation sites. According to a report submitted by Koenig and Hernandez, the county received just 24% of the cannabis business tax revenue it projected for 2022-23.
But those ailments, felt across the state to varying degrees, include the cultural as well as the technical: A tight regulatory environment has created a landscape in which larger corporations, better suited to endure the high taxes and strict rules of play, are able to stomp out smaller mom-and-pop shops and boutique growers. A number of local growers who spoke to the board of supervisors Tuesday emphasized this reality, regularly referring to “those of us who are left.”
California Attorney General Rob Bonta even recently blamed high taxes as a driver to the booming illicit cannabis market. In an August news conference, Bonta said the barriers to entry and the cost of maintaining a cannabis operation were “too high” and urged the state to lower its cannabis-related taxes, which include a 15% excise tax and a 7.25% sales tax.
Koenig and Hernandez wanted to expand the playing field for the local industry. In some ways they meant that literally, suggesting that compliant growers be eligible for an annual 2% canopy footprint increase (“canopy” refers to the total square footage on which growers can cultivate mature cannabis plants). In other ways, however, the ambitions were larger. Instead of Napa and wine country, think Santa Cruz County and cannabis country — a first of its kind destination in pot-friendly California. And instead of maintaining the industry’s curtained silos, in which growers grow and retailers sell to consumers, why not allow growers to interact with consumers as well?
Yet, Koenig and Hernandez said they consulted only industry stakeholders in crafting the changes, and had not brought the public to the table.
District 2 Supervisor Zach Friend, who, with District 5 Supervisor Bruce McPherson, sat on the board of supervisors between 2016 and 2018 as the county drafted its recreational cannabis policies, said he would not support the changes without a deeper exploration. He said the existing program is the product of years of public dialogue and the changes proposed by Koenig and Hernandez were too great to skip the public process.
“I just feel like there’s a lot of folks in Corralitos, there’s a lot of folks in La Selva that would take umbrage to this item and the significant shifts it would propose,” Friend said, highlighting two South County communities close to cannabis cultivation zones. “We had pretty significant discussions on this board and the community, over years, over trying to land on a place that met everybody’s needs.”
McPherson said he’s been open to recreational cannabis, as well as the agricultural industry, but he could not support smoking lounges or allowing consumption at farms.
“It’s being represented here as similar to wine tasting but it’s not the same in my mind,” McPherson said. Society has figured out a threshold for how much a person can drink alcohol and safely drive, he said; cannabis is an unknown entity. “Those standards can be enforced if you drink too much. But we really don’t have the forcible-impairment standards regarding the consumption of cannabis, and that bothers me.”
However, the county’s policies around recreational cannabis — how it’s grown, its taxes, what kind of businesses and consumption venues are allowed — are far from ironclad. Sam LoForti, the county’s cannabis licensing manager, said the board of supervisors has made changes to the recreational possession, sale and cultivation policies each year since 2018, when the rules were approved. The county’s elected leaders, he said, have always treated it as a living program.
Koenig and Hernandez’s proposal also included some technical amendments they wanted to push through right away. Current law allows multiple companies to co-locate their growing operations on a single property. If two companies are on the same property, the county allows a larger canopy limit for the property. If one company stops operating, the canopy size then becomes illegal for the other company, leaving them vulnerable to penalty. Koenig and Hernandez wanted to eliminate the co-location option and increase the maximum canopy size for all growers to what was allowed for multigrower operations under the co-location option.
Pat Malo, founder of the since-disbanded local cannabis advocacy group GreenTrade, said the previous board of supervisors toyed with similar changes, but ultimately decided to wait until the new board was elected in 2022. This kind of major overhaul of the county’s cannabis regulations is overdue, he said, wondering aloud whether the industry needed to wait out Friend and McPherson’s terms (they both retire at the end of 2024) before more significant changes could be made.
“Those of us who are left — there used to be thousands and thousands and thousands of normal people making a living off this plant that helps people — all of us were willing to do whatever it took to … make this work and there’s very few of us left,” Malo told the board. “This is us begging you for just small adjustments to make this work.”
Jacob Ferrara, a certified public accountant and entrepreneur working within the local pot industry, urged the board to make the changes, saying the idea of cannabis-focused agritourism could “reshape outdated perceptions” of the plant.
“These destinations would promote responsible consumption and this contributes to the ongoing [de-stigmatization] of cannabis, fostering a more informed and progressive society,” Ferrara said.
District 3 Supervisor Justin Cummings said he has always wanted to see a thriving industry; however, pushing through such substantial changes on policies that were as community-led as the county’s cannabis program could deteriorate the public’s trust in government.
“How do we keep people comfortable with the industry as it continues to roll out in the state?” Cummings said. “For some of the people who live near these sites, this is the first time they’re hearing about this. If we move in this direction today I feel like a lot of people will feel caught off guard and that we haven’t been transparent.”
Cummings offered a compromise. Instead of directing staff to draft ordinance proposals, he said supervisors could mandate a community and stakeholder engagement process over the next six months so that the county can gauge, in a more global sense, how ideas such as cannabis agritourism and smoking lounges would be received. Cummings urged Koenig and Hernandez to be part of those conversations.
The board unanimously supported the amended proposal, with Friend saying it was easier to get behind an exploration of substantial changes to the cannabis policy rather than directing staff to come up with new ordinances. McPherson, although he supported it, said he remains skeptical that county staff and a public engagement process can come up with a policy that mitigates the existing obstacles to measuring safe levels of pot smoking and driving.
Staff will come back with a report in June.
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