Business / Economy

Recreational marijuana continues its long, twisting road through county politics

Board of supervisors struggle to develop a cultivation ordinance for recreational marijuana; consultant estimates there are 200 to 300 illegal cultivation operations in the county

No one could be blamed for not understanding where San Benito County stands as far as marijuana—medical or recreational—is concerned. Even the Board of Supervisors seemed confused at its March 28 meeting, when it approved the interim urgency and development marijuana cultivation ordinance. So, when the topic came up for discussion, it was understandable that the board didn’t exactly know what the interim ordinance allowed, or where they were headed in an attempt to come up with a more comprehensive piece of local legislation.

Leading off the discussion, Barbara Thompson, the interim county counsel, addressed issues of federal legislation, as well as those covered under the current county ordinance. From her research into federal marijuana enforcement laws as they apply to the state, she found that enforcement has been limited due to budget rider limitations that prevent expenditures to enforce the Controlled Substances Act (CSA) when cultivators were in compliance with state law.

Thompson said that each year, multiple bills have been introduced to Congress to address the year-by-year approach. She said there are presently five bills pending and that there have been efforts to remove marijuana from the CSA. After reviewing the five bills, she said one in particular (HR975) does not address marijuana as a Schedule One substance, but respects state rights.

She went on to discuss the current ordinance and pointed out there are presently 25 applications to cultivate marijuana in the county.

“Under the current ordinance, the cultivators (applicants) could file an application for an extended amortization period, and that needs to be set before the board for a notice of public hearing,” she said.  “The board has to take action on those. It cannot be delegated to staff.”

The majority of the applications, she said, were completed in November and December 2016, so the earliest the hearing could be scheduled would be in April. She said the applications still need to be reviewed to determine whether they can be scheduled for the hearing and if additional information needs to be added. At present, she said, no notice has been sent to the cultivators to tell them their applications have been accepted or rejected, which will be done once the board schedules the hearing.

While people who are cultivating marijuana for their personal use are exempt from the ordinance, large growers were required to file applications for the extended amortization period as the county declared a moratorium in an attempt to stop any new cultivation sites. Meanwhile, the marijuana ad hoc committee, made up of Supervisors Robert Rivas and Mark Medina, is attempting to draft a new ordinance, which former Hollister City Councilman Victor Gomez was hired as a consultant to facilitate.

Supervisor Anthony Botelho said, as he understood the interim ordinance that the board had already passed, individuals could grow six plants on a parcel of land, but any large-scale operation of more than six plants is currently forbidden. Thompson answered that there is a provision that states no new large-scale cultivators can begin operating before the new hearings take place and that there can be no county code enforcement taken against the 25 applicants as their applications are pending. She added, though, that federal or state laws can still be enforced.

Medina took several opportunities during the almost two-hour discussion to “clarify” what was being said. In the first instance, he said, “We have 25 applicants and because we have not voted on anything they can legally cultivate marijuana on a large scale?”

Thompson confirmed his understanding of the conversation. Then he asked from a law enforcement perspective, how does the county know who the applicants are and where they’re located. She said their addresses are on the applications. He asked if the sheriff has those addresses and she responded that she thought so and explained further that the addresses are kept confidential in order to protect the cultivators. Medina wanted to know if after 180 days the locations could be published. She said perhaps a general description of total acres could possibly be published, but reiterated the county was protecting the applicants from thefts.

Rivas wondered if the board was able to draft a new ordinance in 60 to 90 days should the applications be processed or should they wait until the new ordinance is approved in order to avoid a duplication of effort if the applicants are required to file again. Thompson said the county wouldn’t have to process all 25 applications, and that it might be possible to move forward on some while holding off on others.

Supervisor Jaime De La Cruz asked Thompson if the board could decide immediately that the moratorium would remain in place and there would be no amnesty for the 25 applicants. She told him they would have to wait until a public notice had been given to the public and property owners around the proposed marijuana locations.

Gomez made the point that he understood that the board’s original intent when it approved the interim ordinance was to bring people into compliance and bring them “out of the shadows.” He said the 25 applicants would most likely want to be included in the new cultivation-only ordinance and that the county would transition into an ordinance for manufacturing in late summer. He also said there are most likely 200 to 300 illegal cultivation operations in the county.

“There’s no reason you (ad hoc committee) can’t come before the board with at least a draft ordinance on cultivation within the next 60 to 90 days for your review and public vetting,” he said.

Gomez explained that federal law enforcement was limited to act against cultivators unless there were some elements of organized crime involved. He said he did not anticipate any change, particularly because United States Attorney General Jeff Sessions had expressed his displeasure about recreation marijuana.

“The state and San Benito County do not allow recreational cannabis to be sold, so enforcement coming from the federal government really would not happen because the licensing structure hasn’t been adopted, and won’t be until 2018,” he said. “With medical cannabis, what we’ve heard from the administration is sympathy, and ‘we’ll allow states to move forward with their individual states’ rights on medical cannabis.’”

Gomez has been working with the ad hoc committee for about five weeks and said that he, along with the county agricultural commissioner, sheriff, district attorney, and probation chief toured cannabis facilities in San Jose. He said those facilities don’t have the ability to cultivate on-site — therefore, they would most likely be the end users of any marijuana grown in San Benito County. He said this is important to know because even though dispensing will not take place on a county level, it’s vital to understand where the product will be sold.

Gomez told the board that the ad hoc committee met March 6 to discuss land use, along with cultivation sizes, greenhouse structures, taxing, cost recovery for staff and enforcement, setbacks on parcels from youth facilities, churches, and bus stops. He said the committee was recommending to not allow growing operations on open land, limiting cultivation operations to greenhouses or warehouses.

Supervisor Anthony Botelho wondered if Gomez was recommending that the 25 applicants be allowed to cultivate while the ordinance was moving forward, or should the ordinance be in place first and then go back and review the applications with the possibility that some might be denied. Gomez responded that he was concerned that the applicants came into the light and cooperated by filling out applications and now the county might penalize them in some fashion. Botelho said he appreciated the fact that 25 people filled out applications, but he did not want to impede the sheriff from going after the hundreds of illegal operations.

Supervisor Jerry Muenzer commented that he was asked why the board was drafting a new ordinance when nothing is being done to enforce the one the county already has.

“If we set the public hearings now, then when the new ordinance comes back and we reject someone’s application, what I’m hearing is they can re-apply under the new ordinance?” he asked. “So, we’re not dragging our feet and not enforcing our current ordinance, we’re trying to tie the current ordinance with the new ordinance and make it clear what we’re trying to do?”

Thompson agreed with his assessment and added, “The old ordinance was adopted Sept. 27, and with the appointment of the new ad hoc committee, that’s when it became apparent that there may be a change in direction to allow cultivation.”

Botelho asked Thompson if the illegal growers would be able to submit applications after the new ordinance is in effect. She told him that under a new ordinance, anyone would be able to submit an application. Botelho wanted to be sure that the new ordinance would supersede the current ordinance, which Thompson said it would. De La Cruz wanted to know if that meant that the current 25 applicants would be bundled together with any new applicants under the new ordinance. Thompson said the new ordinance would have new, in-depth regulations.

“Our existing ordinance was just to stop additional cultivation in the county and to lay down a status quo situation,” she said.

Gomez said other counties have required people to submit new applications under new ordinances and the original applicants would most likely be considered first. Medina said he did not want to penalize business partners of the 25 applicants and that the sheriff’s office should go after all other growers. He then said if there is a 180-day delay, the applicants need to understand that, ultimately, they may be denied a license to cultivate under the new permitting process. Gomez agreed that was possible.

“It’s possible that some of these applicants might have open grows right now and it’s clear that is not the direction this board wants to go,” Gomez said.

Muenzer asked that if some of the 25 applicants were approved, would they be considered in good standing, or grandfathered in, under the new ordinance. Thompson said they would not because the county does not have a cultivation ordinance.

“All we have is a temporary moratorium that expires if the board does not extend it,” she said.

Muenzer asked, “If we had a meeting next month, we would not be accomplishing anything until the new ordinance?”

Thompson responded that it’s up to the board. Muenzer asked if someone could reapply under the new ordinance if they were denied now, which she said they could. Then he asked if someone was approved now if they would have any assurances they were still OK under the new ordinance. She said they would also have to reapply.

De La Cruz wondered out loud, “who sets the rules?”

Gomez chuckled and responded the board approves the process, including at what level of government actually handles the permitting and other processes. He added that each applicant would be reviewed by a stakeholder group, “which is approved by you.”

Botelho said he hadn’t heard any reference to involving the county Planning Commission in the process. Thompson said it would most likely get involved if zoning became an issue. Medina said he wanted the vetting to be based on specific decision-making process and not “who you know.”

Rivas asked if the 25 applicants were being permitted to expand their growing operations and why the sheriff or county couldn't shut them down.

“Because there’s no enforcement of the ordinance, so by default they are expanding,” Thompson responded. “To stop the expansion, you have the hearings. That’s one benefit of holding the hearings and the other is law enforcement wants them so they can clear up the ambiguity if there’s criminal prosecution.”

She said that during the hearings, the board could grant, deny or conditionally approve extended amortization periods and plant numbers.

“You can say, ‘you can continue to exist, but you have to exist at 100 plants,’ for example,” Thompson said.

De La Cruz asked Gomez when will conversations concerning tax revenues will begin once the cultivation issue is ironed out. Gomez said that no matter when those conversations begin, the county will have to go through the Prop. 218 process for voter approval. De La Cruz wondered if during the approval process the county could add a monetary condition to the approvals. Thompson said they would need to have discussions with the applicants to see who would agree to such a condition and confirmed Gomez’s statement about going to the voters for approval of any taxes. Gomez told them other jurisdictions that have already gone through the process have successfully adopted temporary development fees that were then added to the ballot put before the voters. After approval, the development fees would disappear, to be replaced by the tax.

Gomez added that the cultivators will be “rolling the dice” in that if they invest in facilities and pay development fees, then the tax is not passed, and they would have to shut down. He added, though, in recent votes he has not seen one fail, and some passed at “astronomical rates” in votes. Monterey County, in particular, he said, passed by 75 percent.

Muenzer commented that he did not see any benefit to having a hearing date any sooner than 180 days and that the county could set the size of the grows until the new ordinance is in place. Additionally, he said, law enforcement could “go after the ones that did not apply.” Thompson told him that the board would set the conditions during the hearings, thus there was a benefit to holding them sooner than later.

Rivas said he was concerned that cultivators who had applications on file were using their status as a “cover” to continue expanding the size of their operations. He wondered if the county had any ability to work with law enforcement to “pick and choose” which operations were of concern. Thompson said it was possible for staff to begin making determinations for the board on the acceptability of individual applicants. Rivas said he did not want to penalize applicants who were trying to “be good partners with the county,” but he did want to “target the bad apples” who are taking advantage of the temporary ordinance. Thompson said she would have to talk to the sheriff’s office to see if it is interested in identifying the top 10 applicants that it would like to see come before the board first. She said it is possible to not treat all applicants equally.

Medina said the county does not have any parameters for deciding which applicant is acceptable. He wondered if the county had ever asked them to try to negotiate with the county. Thompson said they had not. Medina said that would be a good first step, and then the county could “ask them not to expand their operations until we have an ordinance.”

Botelho commented that he thought once the board had approved the interim ordinance, it had placed a moratorium on commercial or co-op growing.

“This is a period of time when there shouldn’t be anything in the ground on these co-ops,” he said. “If that was the case, then we could wait for the second ordinance. But if there are operations out there, that are replanting and distributing, it complicates things. Some of them are in places that should not be approved. If they’re outdoors that’s problematic. Greenhouses are not permanent structures and need to be looked at. I don’t see how we can allow this activity until we have the ordinance in place.”

Sheriff Darren Thompson explained that the issue of ambiguity has made it difficult for his department, as well as the community. He said the department receives numerous calls from residents concerning marijuana grows near their properties, as well as calls from those in the industry inquiring about their existence in the county. He said his office also hears from landowners asking if they should cooperate with marijuana operations wanting to lease their lands. He said that on some land where marijuana is already being grown, the names on the leases will invariably be one of the 25 applicants.

Thompson told the board that his office had already looked at the applications and determined that many of them “weren’t even close to meeting the expectations outlined by this board for compliance.” He went on to say that there has been significant activity at some of the sites.

“We routinely see additional structures, greenhouses, water sources, water development going in to what were small, postage-stamp size places last fall, and are now expanding their borders significantly,” he said. “It’s the understanding of some of the landowners that the county has permitted these things and they are entering into land-use agreements to further expand these operations.”

Thompson said he is in a difficult position because he was elected to maintain the rights of the people and follow the law. He said the ordinance the board adopted has created hardships and that iit would benefit his office and residents if the hearings were held immediately to determine which operations would be permitted to continue, even if only temporarily, and shut down all others.

During public comments, Matthew Wooly, one of the 25 registered applicants, said his operation complies with state laws and he looks forward to working with the county. He said by moving forward, a significant amount of taxes would be provided to the city and county. Tony LoBue advised the board to piggyback on the city’s ordinance to create its ordinance to benefit those in need of medical marijuana, while generating funds the community needs for police and fire protection, as well as fixing potholes.

Local organic farmer Michael Halperin, who has been approached by marijuana interests to buy his land, came at the discussion from a different point of view. He said he has been supporting the marijuana industry for several years, but in an unexpected way.

“After many of my workers work for me, they go to work for operations that pay cash and they’re not covered by workers’ comp,” he said. “We’ve seen a rise in workers’ comp claims that we attribute to workers working at those cash operations, and then report the next day and they’ve got a back injury, and it’s hard for me to prove (where they were injured). I think the ordinance should have strong language on workers’ comp and payroll taxes.”

Halperin said he believes the marijuana industry is actually more prominent than agriculture in the county and added, “They’re paying higher wages than we are. I suspect many are not in compliance.”

After public comments, De La Cruz asked Rivas, as a member of the ad hoc committee, what sort of direction he was looking for from the board. Rivas asked again if there was a way to target non-compliant applicants. Medina said he would like to give the 25 applicants an additional 180 days or until the ordinance is passed, after which they would be re-evaluated.

“Law enforcement would be able to go after anyone who does not have an application,” Medina said, and added, “The only problem I have with the application process is there’s no prerequisites. How are we going to rate these people? We don’t have any criteria set."

“Welcome to San Benito County,” Rivas joked.

Muenzer made the motion that staff set a public hearing within 180 days, which would allow law enforcement to prosecute all growers who had not filed an application, as the ad hoc committee developed the new ordinance. Botelho concurred that as they move forward, law enforcement should be able to “go after bad neighbors” and that he supported the sheriff.

De La Cruz reminded everyone that the board cannot tell the sheriff how to enforce the law.

“I commend him for the work he does,” he said. “It’s just an issue of developing a policy for recreational marijuana is what’s at stake here.”

John Chadwell

John Chadwell is a BenitoLink reporter and an author. He has many years' experience as a freelance photojournalist, copywriter, ghostwriter, scriptwriter, and novelist. He is a former U.S. Navy Combat Photojournalist and is an award-winning writer who has worked for magazine, newspapers, radio and television. He has a BA in Journalism and Mass Communications from Chapman University and underwent graduate studies at USC Cinema School. John has worked as a script doctor and his own script, God's Club, was released as a motion picture in 2016. He has also written eight novels, ranging from science fiction to true crime, which are sold on Amazon. To contact John Chadwell, send an email to: [email protected]