Marijuana farm fights to overturn SLO County’s new pot rules
To view the revolution taking place in California's commercial cannabis industry, head to the Central Coast.
Turn off Highway 101 in the Salinas Valley. Look for the clusters of greenhouses protected by fences with razor wire, security cameras and guards. There you will find some of the largest marijuana grows in the state.
Inside, removable curtains are used to periodically block sunlight and trick the plants into flowering sooner than normal. Fabric tunnels send in cool air, while rubber tubes deliver water and other nutrients to the marijuana.
"It's a marriage of old-school growing with 'Big Ag' technique," said Gavin Kogan, co-founder of Grupo Flor, which operates a 6-acre farm in Salinas.
Pot grows in California historically have been small scale, a result of prohibition as much as the cultivation demands of the plant. California's outlaw growers operated in rugged and hard-to-reach locations like Big Sur and Humboldt County's Mattole Valley.
The tradition of modest grows was expected to continue for at least five years under California's system of legalization approved by voters in 2016. The law contained protections for small farmers worried they would be crushed by big agricultural interests. But in an unexpected move, the California Department of Food and Agriculture scrapped a planned 1-acre cap on cannabis farms in November.
No place has benefited more from that change than the Central Coast, which covers Santa Barbara, San Luis Obispo, Monterey and Santa Cruz counties. The region is now challenging the Emerald Triangle — long the epicenter of cannabis cultivation in California — as the state's capital of commercial weed..
State records show that the Central Coast had 1,065 cultivation licenses as of March 28, compared to 1,159 in the Emerald Triangle, which is made up of Humboldt, Mendocino and Trinity counties and is about the same size as the Central Coast. The two regions account for more than two-thirds of all the cultivation licenses in the state, with Los Angeles, Sacramento and other urban counties taking up most of the other licenses for indoor grows.
"The supply chain in California is changing," said Andrew DeAngelo, co-founder of the Bay Area’s Harborside Health Center dispensary and operator of a 4-acre farm in Salinas. "These are seismic changes."
The Emerald Triangle produces more marijuana than the Central Coast, but most of that pot comes from smaller farms. The Central Coast leads the state with multi-acre grows.
The Department of Food and Agriculture will not approve a single license for a farm over an acre, but large farms are getting approved by obtaining multiple licenses for a single property. On the Central Coast, each grower has an average of 5.75 licenses, almost four times the average of 1.62 in the Emerald Triangle.
In the most extreme case, a grower in Santa Barbara County has received 89 licenses for a 20-acre farm.
The Central Coast has great advantages for big growers: a well-established agricultural community with an extensive labor pool, flat land and an abundance of greenhouses. Local government also has been more tolerant of cannabis on the Central Coast than in other farming regions in the state. Cannabis farms must receive state and local approval.
Supporters say the growth of commercial cannabis on the Central Coast has brought increased tax revenue and jobs. But critics say its large cannabis farms are undermining the will of voters and keeping thousands of small farmers in the black market, thus threatening the future of legalization.
Such arguments have gotten increasingly personal.
"I want to be careful what I say because this is the kind of thing that can get you punched," said Kogan, standing in front of his Salinas facility. He acknowledges that Grupo Flor, a "vertically integrated" company that grows, manufactures and sells retail cannabis, could not operate the whole farm under a 1-acre cap. If the state chose to implement the cap, he says, Grupo Flor would operate 1 acre and lease the remaining space to other growers.
"It's elitist," Kogan said of the policy. "It says there is only one way to grow — small boutique grows."
Hezekiah Allen, executive director of the California Growers Association, takes issue with Kogan's argument and his choice of words.
"The broke farmers that are working hard to obtain a single license to sustain and transition their family business are the 'elite'?" he said. "License stacking is a privilege only accessible to the select few. I understand folks disagreeing with the policy, but to hear the policy described as 'elitist' is laughable. It has the same ring as 'let them eat cake.' "
Protecting small growers, particularly in the Emerald Triangle, was an issue for Allen and other supporters of Proposition 64, the 2016 ballot initiative that legalized cannabis. Small growers had helped defeat a previous legalization initiative because they worried it would invite big companies that would put them out of business.
Proposition 64, also known as the Adult Use of Marijuana Act, promised that the "marijuana industry in California will be built around small- and medium-sized businesses by prohibiting large-scale cultivation licenses for the first five years." The law would limit the number of licenses growers could receive and said individual licenses for farms over an acre would not be available until 2023.
The Department of Food and Agriculture signaled its support of the law right before it issued emergency regulations in November, stating in an environmental impact report that cannabis farms would "not exceed the total acreage cap of 1 acre established by CDFA." Emergency regulations were issued so growers could start cultivation while the state prepares final regulations.
But, inexplicably, emergency regulations were released that effectively eliminated the planned cap. At the time, a Department of Food and Agriculture spokesman said it was a last-minute decision but gave no reason for the change. Since then, the department has declined to discuss the decision, citing a pending lawsuit by the California Growers Association that seeks to have the cap reinstated. The lawsuit in Sacramento Superior Court appears to be on hold until the department decides whether to include a cap in its final regulations due later this year.
Adding to the mystery of the department's decision, Amber Morris, branch chief of the division responsible for the regulations, resigned just weeks after they were released. Allen and others said they believe her resignation was due to the removal of the cultivation cap. A department spokesman has declined to say why Morris left. Morris declined to comment when she was reached by phone and later did not respond to specific questions sent to her personal email account.
The decision paved the way for some unprecedented grows. For instance, Central Coast Farmer's Market Management has 89 licenses for a grow in Santa Barbara County, enabling the company to grow more than 20 acres of marijuana. The company did not respond to requests for an interview.
Santa Barbara County, which has been known for its strawberries but not for marijuana, now has more cannabis cultivation permits than any other county — 737 as of late March. Like Monterey County, Santa Barbara County has an abundance of greenhouses. It also is close to the biggest cannabis market in the world, Los Angeles.
Grupo Flor's Kogan and DeAngelo of Harborside offer similar critiques of cultivation limits, saying the market and not government should resolve the concerns raised by Allen and small growers in the Emerald Triangle.
"We have to be more creative and not take something out of Lenin's playbook," DeAngelo said, referring to the former head of the Soviet Union.
Kogan and DeAngelo say large farms don't have to mean the end for small farmers. They can thrive by providing different products than big growers. High-end cannabis demands more attention than large farms can give, they acknowledge. Small farmers can serve more discriminating customers while big farms provide product for more cost-conscious consumers, Kogan and DeAngelo say.
Kogan says the differences between each region's cannabis were summarized by Steve DeAngelo, Andrew's brother. "We're going to be the Mondavi of weed," said Kogan, referring to the popular wine maker and paraphrasing DeAngelo. "They can be the Champagne of weed." Grupo Flor, Kogan adds, is shooting for something more like Opus One, a higher quality wine co-created by Robert Mondavi.
Inside one of his Salinas greenhouses, Kogan repeatedly raises the importance of bringing efficiency to cannabis cultivation, with the goal of lowering costs. The greenhouses are jointly owned by a cut-flower farmer, who has helped Grupo Flor incorporate large-scale farming techniques into cannabis cultivation, Kogan said.
Grupo Flor has 19 full-time cultivation employees, most of whom are Latino, reflecting hiring practices for agriculture generally.
Tod Williamson, who manages the facility, said Emerald Triangle growers went to extremes to carry gear to remote locations not easily detected by authorities. But with legalization, cannabis cultivation needs to come out into the open, he said.
"If you're going to serve California, you can't do it with guys and their backpacks," he said. "Those days are over."
Still, some areas are trying to protect smaller farmers, including San Luis Obispo County, just south of Monterey County. The state's decision to remove cultivation caps does not prevent local and county government from approving their own limits on the size of grows. County supervisors in San Luis Obispo set a limit of a half-acre on indoor operations and 3 acres for outdoor.
Industry consultant Sean Donahoe said the local policy means San Luis Obispo County is falling behind other Central Coast counties. In December, Donahoe started a signature-gathering campaign to overturn the policy, which prevented growers from applying for temporary licenses. It also required the largest grower in the county, CFAM Management Group, to reduce its greenhouse operation by 90 percent.
Others in the industry opposed the referendum, and the debate grew testy at times. Donahoe pulled the proposal days after starting it, saying he had reached an agreement that satisfied some of the company's concerns, although the size cap remains in place.
Supervisors specifically said they wanted a "slow roll-out" of commercial grows. The county would allow only operators who previously registered with the county in 2016 to apply for local licenses in 2018, which had the effect of giving local, smaller-scale operators a leg up.
The county has limited applications to about 160 growers; about 110 are in the local application process. Only a handful have been approved by the state.
Jason Kallen, executive director of SLO NORML, an advocacy group, and president of City Boy Farms, supports the county's approach.
"It guaranteed they got local operators and not outside corporate interests,” he said.