California Weed

SLO County’s largest marijuana farm fights to overturn new pot rules

The largest marijuana farm in San Luis Obispo County is behind a campaign to overturn the county’s new cannabis rules, a move that others in the industry flatly oppose.

Calling the county’s ordinance irresponsible, political consultant Sean Donahoe is gathering signatures for a referendum on behalf of CFAM Management Group. It runs a greenhouse operation in Nipomo that employes 75 people to cultivate 49,000 plants and is one of many medical growing operations that could shut down as a result of the rules, which go into effect Dec. 31.

“The way that the ordinance was passed, we are deeply concerned about our inability to get a state license,” Donahoe said.

The group has until Dec. 29 to collect 8,580 valid signatures from county voters to temporarily stop the ordinance from going into effect. If the effort is successful, the Board of Supervisors could set aside the ordinance — and the county’s temporary urgency ordinance would remain in place — or put it to public vote in June or November.

If the referendum succeeds, it’s unclear what would then happen when the emergency ordinance expires in September 2018.

“It’s possible we put an initiative on the ballot,” Donahoe said.

Other industry representatives oppose a referendum, including Jason Kallen with SLO NORML.

“I’ve been working against that referendum since I found out about it,” Kallen said.

He said the county ordinance is one of the most progressive in the state because it doesn’t ban all commercial cannabis operations as happened in Kings and Kern counties. The problems it does have are all workable, he said, if the industry maintains a productive relationship with the county, because supervisors plan to regularly revisit the rules.

Marie Roth, who directs the SLO County Cannabis Business Association, echoed that opinion. “I haven’t come across anybody who is willing to support the referendum,” she said.

Still, Donahoe has faith in the effort: “I believe people will support it once people understand the consequences of the ordinance.”

He repeatedly told The Tribune that a referendum is not his preferred stop, but that he feels “we’ve been put in a position that this is the only responsible way forward.”

The ordinance allows some businesses

The county cannabis ordinance in question was passed in a 3-2 vote by the county Board of Supervisors in November. If it goes into effect, it will allow for cannabis businesses, like testing labs, manufacturers, distributors and 141 cultivators to apply for land-use permits from the county.

San Luis Obispo County Board of Supervisors Lynn Compton, left, John Peschong, and Debbie Arnold discuss details of the county wide marijuana ordinance with county code enforcement supervisor Art Trinidade on Oct. 20, 2017. Joe Johnston

With local authorization, those businesses are able go on to apply for a state license and participate in the legal state system.

There is plenty in the ordinance for pro-cannabis advocates to dislike. It bans storefront dispensaries, forces all personal grows of less than six plants to be indoors and creates strict zoning and land-use restrictions for which current operations would not be able to comply.

That means many existing cultivators would be subject to enforcement by the county unless they close.

Many of the 141 who are allowed to apply to cultivate, because they registered with the county last year, will need to find land that meets the requirements, a costly task, or significantly downsize their operations.

“There never was a study by county staff that said out of 141 (who can apply for county cultivation permits), how many of them will have a path to licensure based on parcel size and setbacks? There was never a consideration of what that meant for existing businesses,” Donahoe said.

But that’s not the biggest problem the ordinance creates for the industry, he said.

There’s a licensing gap

Industry representatives all agree that the county is putting existing operators at risk of state and federal intervention because the ordinance does not include a statement that shows current operations are in good standing with the county until they can obtain a permit.

“The state has said you need a license come Jan. 1,” Donahoe said.

And businesses can’t apply for a state license without a local permit, which the county has said will take multiple months.

Other counties and cities have addressed the gap with a certificate of good standing that businesses can show to the state to apply for a temporary state license.

“I acknowledge (the ordinance) is a structure that could lead to regulation, that could lead to licensing. But it won’t function for a period of time. It leaves us in a gap from four to six months of unregulated activity and of law-breaking,” Donahoe said.

Others say there is an easier fix than a referendum.

“The ordinance is not perfect. It’s a good start,” said Jamie Jones, who represents a handful of clients who all have a path to receive a state license under the ordinance.

She said all operators need is a letter from the county that says they’re in good standing.

“We have a meeting set with county counsel next week to continue the conversation, to see what options and opportunities are available,” Jones said.

Donahoe said he too is working with the county, while also pushing for the referendum.

“We’re talking to the county. We’re throwing everything against the wall,” Donahoe said.

If enough people sign

If Donahoe’s campaign gathers enough valid signatures to block the ordinance, the county cannabis policy reverts back to the urgency ordinance the county adopted last year that would remain in effect until 2018.

That ordinance allows growers currently registered with the county, including controversial grows in California Valley, to continue. It does not allow any new cultivation and does not allow for manufacturing, distribution or any activity outside of cultivation.

That is not appealing to Kallen or Jones.

“No one can get new business, no one can expand and no one can set up shop,” Kallen said.

Jones is also concerned about a potential void in county regulations if the referendum is successful.

If Donahoe is able to get an initiative on the ballot, a vote likely wouldn’t happen until November.

“When the urgency ordinance expires in (September) 2018, we’re left with nothing,” Jones said. “Then everybody right in the middle of harvest is out of compliance.”

Correction: An earlier version of this story misstated Jason Kallen’s name.

Monica Vaughan: 805-781-7930, @MonicaLVaughan

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