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County supervisors are setting the stage for a potentially massive change to the county’s agricultural landscape. But San Diego farmers looking to cultivate cannabis face steep challenges in entering the state’s legal market.
This fall, the San Diego County Board of Supervisors is expected to finalize an ordinance that allows cannabis retail sales, manufacturing and cultivation in the unincorporated areas of the county.
For those thinking, “Wait, isn’t cannabis legal in California? Isn’t this already allowed?” The answers are “yes” and “it depends.” A provision in Proposition 64 — which in 2016 legalized cannabis cultivation, sales and consumption for adults in California — allows for individual municipalities, like counties and cities, to retain local control. In this case, local control means localities can levy their own taxes, as well as ban any part of the legal cannabis industry from operating within their jurisdictions.
Opponents of local control feel that limiting access to legal cannabis operations is anti-democratic, seeing how the people of California already voted “yes” on the question of weed back in 2016. They also claim, with a lot of strong evidence to back it up, that reduced access bolsters the state’s unlicensed market. This includes illegal grow operations, which drain natural resources, invite organized crime into communities and create environmental hazards, often through the use of illegal and highly toxic pesticides that linger long after the grows either get busted or run their course, whichever happens first.
The task of busting up an illegal grow falls on various law enforcement agencies, but some aren’t getting the benefit of tax revenue from legal cannabis. The unincorporated areas of San Diego County are where most of the region’s agricultural centers reside, but sales, distribution, manufacturing and cultivation of cannabis are currently banned.
According to a cannabis industry report compiled by CSU San Marcos this year, “The San Diego County Sheriff’s Department has recorded 83 unlicensed cannabis dispensary cases since 2018. The cost in dollars for the number of hours committed to unlicensed dispensaries totaled $140,808 in 2018, $54,372 in 2019, and costs from January to August in 2020 totaled $18,876. Hours spent on regulation by the sheriff’s department were not provided.”
All of this is about to change. In January, the board voted 4-1 to effectively overturn the ban and since then has been working to finalize the finer points of an ordinance. Specifically, one of those finer points includes “agricultural, farming, retail, manufacturing business expansion.” So, elected officials are setting the stage for a potentially massive change to the county’s agricultural landscape.
Legality is merely one part of the equation. In the parts of the county where cultivation is allowed, like the city of San Diego, cultivation exists, but is not easy to come by. Bret Peace, partner and general counsel at the San Diego-based dispensary chain March & Ash, said that his company “has a small cultivation operation in the city of Imperial because the cost is too high locally.”
Peace, who said the company tried to locate suitable growing sites within San Diego County, cited the exorbitant costs of utilities and real estate as significant barriers to growing weed locally. In addition to water, indoor cannabis cultivation also creates significant demand for electricity, which trades at a premium, to power greenhouse lights.
There are other issues, too, that prove tricky to navigate for would-be cannabis cultivators, said Charles Pyfrom, CMO of San Diego-based CannGen Insurance Services.
“CannGen actually insures a significant amount of cannabis cultivators in San Diego, but there may be a shortage of them here compared to other cities due to San Diego’s zoning and licensing requirements, the availability of commercial properties and an overall lag in the supply chain in California,” Pyfrom said. “San Diego experiences a nearly year-round wildfire season and while many insurance carriers will underwrite for the peril of fire, the chaotic nature of wildfires and changing environmental factors can influence the viability of insurance options, and ultimately, the type of operators that decide to ‘open shop’ in a given geography.”
Difficult though these problems may be to solve, they are not entirely prohibitive, said Hannah Gbeh, executive director of the San Diego County Farm Bureau.
“The San Diego agricultural community is known as the specialty crop community,” Gbeh said, noting that cannabis would count in that designation once it is allowed. “Our farmers constantly do more with less, from the high cost of land and water to complex regulatory frameworks and the extreme labor shortage we are enduring.”
Gbeh said there is a “steep decline” in agriculture acreage happening in the county — some 70,000 lost acres of crop over the last 10 years. Combined with the other problems, she said, farmers are driven to the highest value commodity crops available. Cannabis is one of them, but farmers haven’t been allowed to touch it.
According to the bureau, San Diego County boasts the 19th largest farm economy among more than 3,000 counties across the United States. The county is No. 1 in the country for nursery crops (which include the cut flower industry), as well as avocados, and is the No. 2 producer of guavas, pomegranates, limes and macadamias. San Diego also boasts the highest concentration of small farms, which are less than 10 acres, in the country. Add in year-round pulsating sunshine, and it’s not hard to see how cannabis cultivation may be able to work.
Additionally, Gbeh said that environmental concerns of farming cannabis — electricity and water woes, smells, use of pesticides, etc. — have already been thoroughly addressed at the state level vis-a-vis a rigorous, three volume-large statewide environmental impact report (which is now only available through a public records request).
“We are arguably the most regulated agricultural community in the world,” Gbeh said of San Diego’s farm economy. “State law has regulated us into being the best environmental producers in the nation with the highest quality conditions for our workforce. If there’s anything good about a complex, difficult regulatory environment, it’s that we all can confidently say that buying California agricultural products is the most environmentally friendly option available.”
Overall, based on the statewide environmental impact report, which Gbeh said mirrors the situation on the local level, the impact of cannabis farming is negligible, and in some cases even additive. So, already, there exists a good idea of what to expect from cultivation once it becomes a reality as far as environmental impact is concerned. Elsewhere in the state, independent cannabis companies, particularly those who only cultivate outdoor cannabis, have commissioned their own environmental sustainability reports.
Plus, while it may seem to the untrained eye that growing weed in San Diego County is uncharted territory, the truth is that San Diego has a storied cannabis growing pedigree. For decades, Fallbrook has been one of the epicenters of underground cannabis growing in California. There is even a specific cultivar named for the area named Fallbrook Red because of the color of its pistils. It was once one of the most highly sought after and potent buds around, particularly during the 1970s.
In more recent years, others in the county’s unincorporated areas have found ways around the county regulations. There are currently multiple grow operations on Palomar Mountain, thanks to the Iipay Nation of Santa Ysabel, a local tribe that needed economic relief and decided cannabis was it. They have been sparring with the state, which will not let tribal nations into California’s legal cannabis economy, saying that since they operate on sovereign land, it’s their right to cultivate, process and sell cannabis. Other San Diego County tribes are exploring their cannabis options, too — the Pauma Band of Luiseño Indians voted last November to allow cannabis operations on their land, though no significant projects have materialized at this point.
Apart from the ability of San Diego farmers to navigate the complicated world of high-value cash crops in a physically and environmentally pressed locale, they also genuinely want to do it. “Many are looking to convert to cannabis,” Gbeh said. “They would like to do it under a legal framework, which this ordinance provides. This is a commodity they would like access to. There is a future for it. We are excited to see the ordinance come to fruition, and we hope as cultivators it mimics the state without significant additional regulations added on the local level that will make it economically prohibitive.”
At the end of the day, San Diego farmers face steep challenges in entering the state’s legal cannabis market. Apart from local issues, this also includes the fact that there’s a surplus of the cash crop in the state, partly owing to local control, which artificially suppresses the market by limiting the availability of licenses. Gbeh said any start-up crop would be tough for a farmer, especially in San Diego. So, it remains to be seen whether cannabis will prove to be viable for the county’s farmers. But they are finally getting the opportunity to find out.
As you’ve probably figured out by now, I’m filling in this week for MacKenzie Elmer on the Environment Report. My name is Jackie Bryant and I’m a local freelance journalist who contributes to Voice of San Diego and many other outlets. If you like what you’ve read here, I also write a newsletter about cannabis culture, called Cannabitch, and host a podcast by the same name.
Correction: An earlier version of this post misidentified Charles Pyfrom. He is the chief marketing officer for CannGen Insurance Services.