Red Lights To Cannabis Biz Still Abound On 101 Corridor

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By James Dunn

Drive from the Golden Gate to Windsor along Highway 101, and you detect bewildering juxtapositions of cities that red-light newly legal cannabis next to those that green-light the green product.

Several towns idle hesitantly in a middling yellow light. They wait and watch other cities, eagerly eyeing potential tax revenue yet wary of a swelling cannabis industry that attracts crime including ripoffs and murder.

With the passage of California’s Prop. 64 that legalized recreational cannabis just 12 weeks in the rear-view mirror, most city and county leaders in the North Bay gateway to the Emerald Triangle haven’t yet adopted pot policy, much less final ordinances. There’s uncertainty around federal enforcement of cannabis laws, which classify pot as illegal, with newly elected President Donald Trump and likely confirmation of his pick for attorney general, conservative Alabama Senator Jeff Sessions. 

Even under Barack Obama’s administration, federal enforcement swooped intermittently into Sonoma County. In June 2016, more than 100 law-enforcement officers with agents from the Drug Enforcement Agency raided five properties including a cannabis-processing business founded in 2014 as CBD Guild.

It’s now one of several businesses including Sonoma Lab Works managed under the name CannaCraft. Co-founder Dennis Hunter was arrested and held on $5 million bail, later released without charges. CannaCraft reopened in December and has 150 employees.

Santa Rosa: Green

Santa Rosa, the biggest city in the North Bay with some 175,000 people, now gives cannabis business of all kinds a bright-green go signal. A Medical Cannabis Policy Subcommittee meets monthly to map policy.

On June 6, Santa Rosa will ask voting residents for an ordinance to impose business taxes on the burgeoning weed industry. On Feb. 16, the committee reviews a draft comprehensive pot policy including cultivation, manufacturing, distribution and sale, scheduled for adoption by May. Cannabis policy is one of the city’s top five goals.

Santa Rosa flashed green to commercial cultivation in March 2016; growers must apply for conditional-use permits. Licensed dispensaries have been legal for medicinal pot since 2005.

Former Santa Rosa mayor John Sawyer is a member of the cannabis subcommittee. Regarding federal law enforcement, “our attitude is to move forward,” Sawyer said, “and to respond accordingly if they do something” that requires a local response. “There’s a lot of fear out there about what they may do.” 

Federal laws that keep pot illegal continue to chill banking support for cannabis businesses. “We are going to have to help the industry,” Sawyer said. “What do you do with all this cash? There are plants to be stolen and money to be found.”

Sawyer ponders what the cannabis industry will do to Santa Rosa. “What impacts will it have?” he said, including planning and law enforcement. “These are unknowns.” He does not favor large growing operations in residential areas, where “people turn their garage into a grow-house” and go above the six-plant limit set by Prop. 64.

“People complain about odor,” he said. “One of the big concerns for me is quality-of-life. It can diminish your ability to peacefully enjoy your backyard. How many calls are we going to get? There is still going to be a black market.”

The proposed sales tax of 5 percent to 10 percent on cannabis products is needed to provide revenue for staff to support investigation of cannabis-related issues.

“I think our residents will understand the need” for the tax, he said.“We don’t want to push people back into the shadows and force them into an underground industry” with a tax that’s too high including local and state taxes, he said.

 “We want people to do this in a respectable and legal manner. We are not under the mistaken assumption that this is going to be the fundraiser for every program known to man,” he said. “We need to cover our costs without impacting our other budget.” 

Rohnert Park: Red

In December, Jake MacKenzie entered his fifth term as mayor of Rohnert Park, located eight miles south of Santa Rosa. “Last year we adopted a very restrictive ordinance” governing cannabis, banning any kind of pot business within city limits, MacKenzie said.

Rohnert Park has no dispensaries. “That’s a policy we have had in place for a number of years. There has never been enthusiasm for concentrated growing to produce cannabis,” he said.

Rohnert Park residents who want or need medical cannabis can travel south to Cotati or north to Santa Rosa to buy it, MacKenzie said. He suggests that the city might revisit policy to allow delivery of cannabis to residents who are very sick and cannot travel.

“I don’t know what I would say about 2017,” MacKenzie said. “Clearly the landscape changed dramatically with the passage of Prop. 64. It’s on our collective minds but not on any agenda. With the Donald Trump presidency, we’ll see what they do,” he said.

Petaluma: Red for now

Petaluma, 11 miles further south, aligns with Rohnert Park in banning the cannabis industry inside city limits. It has no dispensaries, according to David Glass, mayor. The city passed an ordinance about nine months ago that sunsets in another nine months.

That ordinance allowed legal outdoor growing of three plants by medical cannabis patients. The day before the November election including Prop. 64, Petaluma’s city council had the opportunity to vote on an ordinance keeping the ban in place but declined to take action, instead deciding to wait for results of the election.

Among Petaluma voters who weighed in on Prop. 64 in November, 64 percent (coincidentally) voted yes, Glass said, even higher than the yes-vote rate of voters in unincorporated Sonoma County, at 59 percent. “We were above the county in terms of sentiment for it. I will realign my position to whatever Prop. 64 says. That’s what the people of Petaluma have said. We will be revisiting this issue,” Glass said. 

“Personally I’m not favorable toward a dispensary,” he said. “Police have expressed concerns about dispensaries. You have the federal government with a completely different twist. What happens when a state jurisdiction is outside the boundaries of federal law.

“If Sessions becomes the attorney general and we wind up with a Gestapo federal government, which I think we’re on the brink of, that’s a concern for me. I’m not in favor of anything that endangers our federal funding, our block grants. Those are funds we use to feed the foodless, house the homeless.”

San Rafael: Yellow

Trek another 22 miles south along Highway 101 and cannabis policy shifts to yellow. The city of nearly 60,000 people held a special cannabis workshop on Jan. 17.

“It was our first opportunity to hear from our economic-development person,” plus the chief of police, planning department, and city manager on cannabis, said Gary Phillips, mayor. A potential cannabis retailer attended the meeting along with attorneys who work in the industry and a representative from the chamber of commerce, he said.

“We are gathering information” about medical as well as recreational pot, Phillips said. “Are we talking about manufacturing candy or joints? What’s the impact of retail establishments on our downtown? What are other cities in Marin County doing? It’s trotted (out) as a new revenue source. It’s hard to estimate.”

Potential revenue from cannabis taxes could be offset by additional expenses for law enforcement, Phillips said. “We’re trying to sort out what that impact might be and make some decisions” about San Rafael’s cannabis policy, he said. “I like to think we’re ahead of all” the other cities in the county, he said.

San Rafael hired Danielle O’Leary in July 2016 as its new economic development director. O’Leary served 7.5 years as Santa Rosa’s economic development manager, and Phillips noted that her experience in exploring the cannabis industry in Santa Rosa will benefit San Rafael’s inquiry into potential pot business and taxation. “She has some background and experience,” he said.

Mill Valley: Yellow

In her third year on the city council of Mill Valley, Jessica Sloan took the reins as mayor in December.

“So far we have not permitted dispensaries in town,” Sloan said. “That came up again right after Prop. 64 passed. What does this mean for us? Do we want to have a dispensary in town?”

Sloan finds the new law complicated, with “18 different licensing categories” plus numerous regulatory levels and state offices that bear on cannabis business.

Before the election, she opposed Prop. 64 because she found its drafting flawed even though she favored legalization of cannabis. “Enforcement is going to be difficult,” she said. “Do we want people to be able to grow outdoors up to six plants?”

The city has about 14,000 residents with three sworn police officers on the streets at any time. “We’re not going to be sending them out to count the number of plants at houses,” she said. “It’s crazy.”

Mill Valley had problems with teens abusing drugs and a couple of drug-related deaths recently.

“I’m worried about increased access to drugs. Say edibles are in stores and attractive for kids,” Sloan said, or “people are growing outside. This is the kind of community where people like to leave their front doors unlocked — kids running around in their backyards. What if a teenager notices someone growing pot and has easy access to pick it up?”


Indoor growing requires less regulation, she said but has fire risks. “There is so much uncharted territory,” Sloan said. “We have to wait and see how the state is going to handle regulations controlling licensing, processing, distribution. It’s a confusing time. Mill Valley is in line with other cities that have enacted a ban” then will wait to further regulate pot.

Unincorporated Marin County: Green and red

Marin County, with a total population of about 260,000, has large tracts of unincorporated land, particular in its western region, where roughly 150,000 people live. The county’s five-member board of supervisors passed a law to allow four dispensaries — two along the Highway 101 corridor and up to two in west Marin, said board president Judy Arnold, now in her third term.

So far there are no dispensaries. To gain input on half a dozen medical cannabis dispensary applications received, public meetings are scheduled for Jan. 31, and on Feb. 7 and 16. Dispensaries have to be 800 feet or more from schools, and neighborhood residents may object, she said. 

Surprisingly, the “people most up in arms” are in San Geronimo Valley, tiny hamlets including Woodacre, San Geronimo, Forest Knolls and Lagunitas, west of Fairfax, Arnold said. “Can you believe it? Marshall would be happy — way out on the coast. There is one proposed there.” 

Adult-use pot is another matter. “We’re going to consider an ordinance on Jan. 31 prohibiting non-medical cannabis businesses,” she said, including cultivation, processing, manufacturing, storage, distribution, testing, transportation and sale of cannabis and cannabis products. But curbing cannabis may relax, she predicts. “You can’t deny the fact that it’s a huge tax base,” she said.

The proposed prohibition does not apply to indoor cultivation for personal use under Prop. 64. “Outdoor growing is a no right now,” she said. “For this next year, we want to just deal with medical cannabis and see how that goes. We visited cannabis facilities in Santa Rosa and were very impressed. We took a lot from the Santa Rosa ordinance for ours.”

Unincorporated Sonoma County: Mostly green

Sonoma County’s unincorporated area includes huge agricultural and industrial areas as well as many places zoned for rural-residential use. In December, the board of supervisors banned cannabis cultivation in areas zoned rural residential.

The board set a special election for March 7 on a cannabis-cultivation tax. The board largely supports cannabis cultivation in appropriate areas, though supervisors see problems that can arise with such business, including related crime.

“It’s amazing how many people are growing. Marijuana grows are more in the unincorporated” areas of Sonoma County, said Shirlee Zane, District 3 supervisor and chair of the board. “It’s land use,” she said.

Current growers in rural-residential areas, where that activity is now illegal, could lease land in agricultural areas.

“A lot of farmers will rent them an acre,” Zane said. “That’s where it should be.”

“There are a lot of issues at stake. We’re paying attention to the complexity.” She fully supports the use of cannabis for medicinal purposes, such as pain management. “I think it’s great,” she said.

“I am in favor of legalization, taxation, regulation,” she said. Prop. 64 came a bit too soon, she said, and would have been better timed if it had come in a couple of years. 

She notes that Sonoma County spends millions of dollars a year to prosecute people who come here from other states and allegedly commit crimes relating to cannabis or the cash it generates. “It’s all pot money,” she said. “I still remain deeply concerned when it comes to the criminal element.” Legalization and regulation do not make cannabis less attractive to criminals, she said.

The tax revenue, estimated at $6 million a year once it’s fully established, will help to fund law enforcement, Zane said, as well as environmental protection.

About five years ago she went on a cannabis-cultivation flyover in Sonoma County, including police raids, and learned that many growers use pesticides and herbicides that can pollute water and soil.

“It was awful, like flying over a dump. It was ugly. There was drying and hash oil,” she said, “with gallons and gallons of pesticides. Those are going into our groundwater.”

Zane prefers that cannabis processing facilities be situated inside cities such as Santa Rosa rather than in unincorporated areas.

“This is evolving, cutting-edge policy-making,” Zane said of cannabis regulation in Sonoma County. “Nobody has done it before. We’re in the frontier. We have to tweak things.”

Windsor: Red

Debora Fudge, mayor of Windsor and serving her sixth council term, said the town imposed a moratorium on growing of cannabis inside city limits. Located 10 miles north of Santa Rosa, Windsor has yet to decide how to reckon with cannabis commerce. It’s one of the council’s goals for 2017, she said. 

“We have not given any direction about anything yet” relating to cannabis, Fudge said. “We have never had a dispensary proposed.” Some discussion has occurred over potential use of industrial areas for cannabis processing.

In about 2006, she fought off cancer.

“We talked about, would we allow a dispensary,” Fudge said. “It was a split vote 3-2, no. I was on the side for yes because I was in the middle of chemotherapy treatment.”

Severe nausea as a side effect made her consider medical cannabis.

“No medication cut the nausea, nothing,” she said. “I white-knuckled it.”

She had no access to medical cannabis then and did not use it.

“When you’re that sick, you can’t go find it,” she said. “The final night of my chemo, I would have done anything. They stopped my chemo two sessions early because my liver wasn’t handling it.”

This story originally appeared in the North Bay Business Journal.
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