California Weed

This farm employs 75 people — but SLO County regulations could put it out of business

Dozens of employees who once tended flowers at the former Clearwater Nursery in Nipomo found work in the same greenhouses growing marijuana in the largest cultivation operation in San Luis Obispo County.

Now, their jobs are again at risk.

This time it isn’t the market forcing their employer into bankruptcy. Nor is it a federal bust in a criminal investigation.

Rather, it’s county regulations that require the operation to downsize by 90 percent, said representatives of CFAM Management Group, which runs the site on Mesa Road. It set up shop as a medical marijuana collective in May 2016 before the county had any cannabis-specific rules.

“We’ve had a lot of people that have been there for quite awhile. Some of the managers have been (working in these greenhouses) for 30 years. It’s awful to think that they might not have jobs, or we might have to cut back,” said Karen Luce, director of operations for CFAM.

CFAM employs at least 75 people to cultivate 49,000 marijuana plants with a payroll somewhere between $3 million and $4 million, according to managers and consultants. The plants create a canopy size between 260,000 and 299,000 square feet. However, the county cannabis ordinance passed 3-2 last month by the Board of Supervisors — including by Nipomo’s Supervisor Lynn Compton — caps indoor cultivation at 22,000 square feet, which would cut production at CFAM’s facility by at least 90 percent.

The entire operation is at risk of shutting down as a result of the ordinance, said Sean Donahoe, who works as a consultant to CFAM and is leading an effort to overturn the ordinance.

Managers are already working to slash expenses. On Monday, Donahoe said they’ll soon lay off at least 35 employees.

In response to the news, Compton said that the county told future applicants that the future was unclear.

“During the entire hearing process on cannabis, applicants were told, in no uncertain terms, there was no ‘grandfathering in.’ This was stated and restated numerous times and is part of the urgency ordinance. ... Any business decisions that individual growers made were done, I would assume, based on their own business and profitability models.”

Greenhouses turned to cannabis

Greenhouses across California have been emptied in recent years, in large part due to the increasing inability of the cut flower industry to compete globally. Clearwater Nursery filed bankruptcy paperwork in early 2015.

By May 2016, the marijuana plants moved in. So did the jobs.

“There was already conventional agriculture there that went bankrupt. This facility, due to the market, can’t be used for anything other than cannabis,” said Donahoe, who has worked with CFAM since its founding.

A similar transformation took place in other greenhouses, including in the Salinas Valley.

By forcing the growers to downsize and possibly close, Donahoe said, San Luis Obispo County is missing out on tax revenue generated at the facility and other large cannabis cultivations in the area, where substantial investments on the properties were already made.

Compton said some marijuana operators cultivating in greenhouses are happy with the ordinance, but the people she represents don’t support transitioning those ag facilities to cannabis.

“I don’t believe most of the constituents in my district want Nipomo — with all the greenhouses — to be known as the cannabis capital of the coast,” Compton said.

Who is CFAM?

CFAM Management Group is largely unknown in the community. Donahoe said the group was formed in a partnership between people involved with two large players in the cannabis industry: Cannacraft and Cookie Fam.

He described Cannacraft as a fully vertical integrated distributor and manufacturer based in Santa Rosa and Cookie Fam as a breeder and cultivator of a unique line of cannabis strains.

LEAD Cannibis ordinance opposition01528
Sean Donahoe, a cannabis industry consultant. David Middlecamp

They’re known for the cannabis strain GSC, or Girl Scout Cookies, which calls a cultural phenomenon with “popularity rivaling other well-known American cannabis varieties such as OG Kush and Granddaddy Purple.”

Currently, he said, CFAM sells marijuana flowers through client networks to other collectives and cooperatives, including manufacturers and dispensaries that are locally permitted in Northern and Southern California.

Donahoe said business activities would be hurt by the ordinance in multiple ways. In addition to the severe cut to producing greenhouse space, the ordinance also limits CFAM’s ability to diversify its marijuana business. For example, the property’s current zoning doesn’t allow for processing, distribution or manufacturing on-site, he said.

Further, Donahoe and other industry representatives are concerned that the county hasn’t provided a letter of good standing or a temporary permit that would allow the business to apply for a temporary state license. That puts them at risk of violating state requirements beginning on Jan. 1.

CFAM has existing relationships with vendors that plan to be licensed with the state. Come January, the state won’t allow vendors to work with unlicensed businesses, so CFAM could lose out on contracts just as the legal recreational marijuana industry is taking shape.

Monica Vaughan: 805-781-7930, @MonicaLVaughan

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