Supervisor Fennel on Cannabis and the Economy
With much of the marijuana farming community anxious and humming with concerns about Measure S and the changes to the cannabis economy, we met with Second District Supervisor Estelle Fennell.
Supervisor Fennel said, “on advice of counsel” she cannot discuss the particular issues of attorney Ed Denson’s recent concerns that the Board of Supervisors expanded the scope of the Measure S tax, increased the amount of the tax, and changed who is being taxed when they converted Measure S into Ordinance without putting these important changes in front of the voters. Fennel said she cannot answer these questions because Mr. Denson has been clear he may file legal action on the matter. The Independent published a report on his letter and the County Counsel’s response in last week’s edition.
However, Supervisor Fennel did say she still supports the overall Measure S model of taxing the opportunity to cultivate rather than the dollar value of the product.
Fennel said, “The model that we chose is actually beneficial to the farmer. The farmer gets a certain amount of ground that’s permitted and it’s up to the farmer to maximize their product.” She said that a good farmer will have an advantage over a “sloppy farmer.” In essence, she pointed out, those farmers that don’t maximize their yield per square foot won’t be as successful as those that do.
The County is not as concerned with what you produce but how you do it. Fennel said, “It’s a land use regulation, so we are just regulating the impact on the land. If you say you want to grow on a thousand square feet, all we want to know is ‘Are you going to have the water for that? Are you in the right zone?’ and those sort of things.”
She pointed out, “The County is not involved in the product itself. I know people have said ‘what if I don’t grow this year, or what if I had a pest?’ Well, that was talked about earlier on; that becomes the bailiwick of the, let’s say for instance, the Agricultural Commissioner when it comes to product taxation, but land use taxation is for the right to grow on that land, and if you don’t grow on it, you shouldn’t be getting a permit on it.”
When asked about circumstances beyond the farmer’s control such as health issues, Supervisor Fennel said she will look into the specifics of a landowner resuming cultivation after taking a year off once land has been approved for permitting.
With regard to the changes legalization is bringing to the cannabis economy and therefore the overall economy, Supervisor Fennel’s primary message is one of patience backed up by overall optimism. While Fennel acknowledges the current drop in main street business, she thinks the economy will eventually even out.
I can’t say exactly why the drop [in business revenue] is happening but I think some of the reasons that those drops are happening are people are being more careful with their spending practices right now because of the uncertainty about their financial futures; they’re spending their money on setting up businesses; or they are affected by the drop in black market prices; or they can’t find market for their product. But a real take away from this is that it’s proof that the Cannabis industry plays a role in Humboldt’s economy. so where do we go…. I think we’ll see less lavish spending than we’ve seen in the past decade or so during the Boom. The lavish part of it probably will fade away, but I also think that there’s a great opportunity for things to settle into a more solid and sustainable economy as the regulated industry takes hold and people find their way.
She sees that the industry is now splitting into various niches. Fennel listed “nursery, cultivation, processing, manufacture, testing, transporting, distribution, dispensary, retail, associations, co-ops, and tourism.” Fennel said she thinks some people may no longer grow because they don’t want to contend with all the regulatory changes, but that these niches will provide them the opportunity to continue to earn a living.
Speaking specifically to the perceived “collapse of the marijuana economy” as pound prices sink to $500/lb, Fennel differentiated between the black market and the legal economy. She said,
I see more of a [price] collapse in the black market and a correction of the regulated industry which I believe could be beneficial for Humboldt since we are positioned both with name recognition and preparation for the change. There is a current slump, but if the industry stays the course, it could very well be folded into a sustainable part of our economy along with tourism, dairy, ranching, logging and fisheries, clean energy, etc.
…I believe the rocky start is due to the state’s decision to allow dispensaries to sell “product in stock” It’s become very clear that many dispensaries stocked up prior to the January roll out, so some permitted farmers are having to wait until those dispensaries run out before they can sell their permitted product.
Some farmers thought further ahead and had their markets lined up. And I hear that packaged products are flying off the shelves, so anyone that planned that far ahead is doing quite well right now. So it’s a correction time, and there’s another component obviously which is that it’s a big changing perspective.
And she emphasized the idea that she has faith in the creative nature of the local culture.
The entrepreneurial spirit is very much alive right now and I think we will see all manner of businesses pop up and along with that all manner of ways for people to make a good solid living either as employees or owners of those local businesses. So this is a moment of opportunity as I see it. It’s up to people who see cannabis as a valuable commodity, as something they support, to seize the day.
Fennel does understand that the transition is a stressful time, but said, “My hope is that our regulations and code enforcement will drive the ‘green-rushers’ off.”
She added, “It takes a substantial investment of energy, time and money to get involved in this industry…fly-by-night operations are not going to make the cut.
The proliferation of environmental degradation has got to stop. And the violence assiciated with criminal behavior will hopefully diminish, too.”
And Fennel thinks, as things smooth out and small farmers know what the economy and the regulatory framework will really be like, they will submit applications under the county’s new permitting program. Now that the environmental lawsuit has been settled, and the Planning Commission has nearly finished their work, Fennel expects the County’s new application process to be open by summer if all goes well.
For small farmers, Fennel sees a co-op model being a viable framework for their success. “Traditionally the agricultural model goes with the co-op in one way or another because no one can do it alone,” she explained.
Fennel emphasized the name recognition Humboldt has in the marijuana world and said that’s why Humboldt County is maintaining a separate “track and trace” system, so all pounds cultivated in Humboldt can be verified.
Furthermore, the Board of Supervisors is working to form a Cannabis Advisory Committee to give guidance to the Board on the issues that impact cannabis businesses. People who work in cannabis businesses will definitely be on that committee, she said.