Hum CO. Supervisors Approve Changes to Cannabis Equity Grants, Express Concerns About Possible Funding for Non-County Recipients

Galactic Farms during Tropical Storm Hillary, with smoke filled skies from one of many nearby fires, [Photo by Indy Riggs]

Humboldt County Growers Alliance (HCGA) wrote in a response to the County’s staff report on the program, “Since 2019, Humboldt County has secured over $9 million in state funds to support local equity operators who have been negatively impacted by cannabis criminalization,” adding, “Humboldt’s effectiveness in distributing these funds stands as a testament to the commitment by your Board and staff to local equity operators, and these resources have been instrumental in enabling many cannabis operators to stay afloat in the face of collapsing wholesale prices for cannabis.”

Indy Riggs owner of Galactic Farms agreed stating, “Trellis has been invaluable to myself and numerous other farmers. It has helped me develop my farm, my brand, and products.”

What’s Changed and Why?

Local micro cannabis farm, Galactic Farms, during Tropical Storm Hillary, with smoke filled skies from one of many nearby fires. [Photo by Indy Riggs]

Peggy Murphy, Economic Development Coordinator for the County’s Economic Development Team explained that approving the changes to the grant program is required for the County to remain eligible for state equity funding, and to secure Trellis Grant award money that is already set to be distributed to local cannabis business owners. 

Murphy said at the Board of Supervisor’s Meeting Tuesday, “If the Board did not accept the state mandated changes, we would not be able to accept the 1.2 million.”

Murphy detailed there were not only challenges for rural communities in implementing the new policy, but also stated in the board meeting, “It’s a one size fits all program that’s more suited for urban areas.”

For example, it may make sense to encourage a cannabis business owner from Oakland to obtain equity grants to help to open up shop in San Francisco. However, Murphy warned of potential issues locally with the removal of residency for eligibility. 

In order to qualify one has to live in the county for five years during the height of the war on drugs from 1971-2016, but the new policy does not require them to currently reside here.

If we no longer require one to currently live in the county, Murphy told the Board, “We could be funding somebody from another county or state that’s just an owner here…. Which did not seem to be the intent of the Board.”

Murphy also told the Board she also wanted clarity with the state that businesses would also need to be located in Humboldt, as the language was unclear.

“I think the reality of the program for us at the local and state level is that they are building the ship as they sail it,” Murphy told us, adding, “It was a hard decision [for the board] regardless…We do what we can with what we have and it’s better to accept the funding. In the long run I think the decision was the best one the Board could have made.”

Murphy explained that before Measure S taxes were put on hold by the Board, the County was providing significant funding for the program initially from Measure S cannabis taxes. 

Supervisor Rex Bohn stated at the meeting, “We brought in close to $58 million in local taxes, which was a great balancing act for our budget.”

However, an important fiscal change to the Trellis program is a 1-1 match for over $500,000 of county funding to state funding. So for example if $1,000,000 in grants were distributed one round, $250,000 would need to be paid by the county.

Murphy said, “Fifteen million was in the state budget for annual allocation for equity at first. We were one of the first programs to have equity assessments to give out money.” 

However now grant funding comes primarily from the state, and with more jurisdictions requesting equity funding, those state funds are stretched thin.

This 1-1 match in funding is not just an increase if grants exceed $500,000, but increases staff costs and resources to administer the program beyond what is currently provided by the state, which Scott Adair expressed was already insufficient for the current workload.

These changes will increase cost burdens for the county, which District …Board of Supervisor Mike Wilson expressed concern for, and he requested an administrative costs analysis.

Peggy Murphy illustrated it would “cause a significant impact, having to review the applications again to see if they still qualify.”

Adair said the match in county funding comes into effect for the next round and the fee their office receives does not cover the current staff costs, elaborating, “We get a small fee for administering it and we are presently being audited for all equity payments.”

Adair said considerations should also be made for 1-1 funding modifications “which will be needed to sustain and request the funding in light of the budget crisis we face.”

While local cannabis industry conditions have slowed with permit applications to a virtual halt, Murphy added this is not true for the state, noting, “Across the state the number of Applicants is increasing each year.” 

Industry Stakeholders Take:

The state made these changes as an effort to iron out lingering issues with equity distribution in urban markets statewide.

Image of local micro cannabis farm, Galactic Farms by Indy Riggs

Humboldt County Growers Alliance (HCGA) Policy Director Ross Gordon said that the county’s deliberation reflects a continued lack of clarity on what it means to be an equity operator in California. 

“The county and the state aren’t on the same page about what the definition of an equity cannabis business is” Gordon said. “And that’s understandable, because the impacts of cannabis prohibition have been so diverse and so widespread that it’s not easy to put a box around who’s in and who’s out.”

HCGA wrote in a letter to the Board, “While we have concerns regarding the new conditions imposed by GoBiz on Humboldt’s equity eligibility criteria, our understanding is that these conditions are beyond the county’s immediate control, and that today’s agenda item essentially focuses on whether Humboldt’s local equity program should continue in light of these restrictions. We believe it is critical that the answer to this question is “YES.” 

HCGA encouraged the Board to Adopt Option One.

Gordon said, “We don’t want people to question the equity program entirely because people may get the wrong Idea that the funding will go outside the county.” Gordon suggested, “Let’s look at who got the funds and see if out of towners got the funds. I think we will find the vast majority are going to local entrepreneurs.”

County Exceptions, Over Policy Modifications

During the Trellis discussion the Supervisors discussed how aspects that work for the state, may not work for our county. 

Madrone said during Tuesday’s Board meeting it seems the Board had no choice but to accept the program alterations, stating ”If we don’t accept the changes, it seems we can’t finalize our current awards, so that seems critical. But we can push back with the letter…stating what doesn’t work for our rural community and we would like them to consider modifications in the future.”

Second District Supervisor Michelle Bushnell agreed a letter should be drafted for the Governors office. However, she clarified, “Exceptions are better suited for our county, instead of modifications.” 

Supervisor Bushnell suggested  that an important exception would be to  “allow…our economic development team to make the conclusion themselves …allowing for them to determine that people in Humboldt County qualify.

Bushnell later made a motion to first adopt the Staff recommendation to, “Approve, and authorize” the continued participation in the Project Trellis Local Equity Program in the amount of $300,000 for the period of Jan. 1, 2023, through June 30, 2024.” (Full staff recommendation and report here.)

Additionally, Supervisor Bushnell requested staff draft the letter mentioned to send to the state to request considerations be made for our unique county, to better ensure resources are distributed equitably.

HCGA’s Ross Gordon told us there are legal matters surrounding the new policy that may be challenged in court, but said, “The County pushing back against the state is a positive outcome.”

Indy Riggs expressed his heart was warmed by the Board and staff’s advocacy Tuesday saying, “As a small local farmer, I’m very grateful to have the support of our county government and greatly appreciate their vote on Tuesday. The continuation of the Trellis program is vital to equity applicants in Humboldt County. As the market continues to evolve and change, it is vital to have a functional local equity program which will continue to support our community through these shifting times. Our farmers will need support and in the long term this support will come back to our communities tenfold.”

Peggy Murphy said she understands some people felt it was overwhelming to apply for fee waivers through the Department of Cannabis Control, but wants to remind the community that the Trellis Grant application process is different. Murphy said, “When we do reopen applications, we encourage all of the cannabis community to apply even if you don’t think you will qualify, it is worth it to try.”

Watch the full Board of Supervisors meeting discussion on the matter featured at the August 22, 2023 meeting here.

Note: The publisher of Redheaded Blackbelt and her son received a Trellis grant for state fee waivers this last year.