March 7, 2023
Several local Mendocino papers have recently published a letter from Jim Shields titled ‘Outside Media Gets Mendo Weed Woes Wrong (As Usual).’ Unfortunately neither Mr. Shields nor the papers reached out to either Michael Katz or Hannah Nelson who were both mentioned in the letter to verify the statements made, and several inaccuracies were included. MCA is choosing to respond to Mr. Shields’ letter in order to correct those inaccuracies and provide some additional information for the public, especially at this critical time for our locally licensed cannabis operators. Recent articles in the Lost Coast Outpost, Cal Matters and the Ukiah Daily Journal clearly illustrate the socioeconomic decline that is impacting our rural community. These fact based articles point to the need to act fast to minimize the damage and reverse this decline before it is too late.
First, Michael Katz is not a ‘paid lobbyist’ for the Mendocino Cannabis Alliance (MCA). A lobbyist in California is defined by the Fair Political Practices Commission as ‘an individual who is compensated to communicate directly with any state, legislative or agency official to influence legislative or administrative action on behalf of his or her employer or client.’ The term ‘lobbyist’ is almost certainly being used by Mr. Shields in a derogatory fashion, but Katz is in fact the Executive Director of MCA; hired to support this trade association with over 120 members advocating for the fair treatment of small cannabis businesses in Mendocino County. The mission of MCA is to serve and promote Mendocino County’s world-renowned cannabis cultivators and businesses through sustainable economic development, education and public policy initiatives.
Mr. Shields further incorrectly identified Hannah Nelson as MCA’s lawyer. Ms. Nelson has an impressive 30 plus years’ history of advocacy and litigation concerning cannabis issues, including having previously served on the MCA Board, Policy Committee and as Senior Policy Advisor. However she does not currently, and has not in the past, provided either pro bono or paid legal services to the organization.
Independently, Ms. Nelson has written a series of memos dealing with the legal and practical implications of the Mendocino Cannabis Department’s (MCD) sudden and unjust Vegetation Modification letters. In each memo, and in working with the Ad Hoc and Staff through the summer of 2022, she provided clear analysis and proposed practical ways to deal with issues of proof and standards of evidence for new allegations of prohibited tree removal that suddenly surfaced so many years after the ordinance was enacted and applications were submitted. More recently, she collaborated with Ellen Drell and the Willits Environmental Center (WEC) to ensure both due process and common sense were adhered to in dealing with Vegetation Modification issues. This letter clearly demonstrates that both the environmental community and cannabis business advocates believe that the way MCD dealt with this issue was unreasonable, and provides a concrete and legally defensible method, supported by WEC and Ms. Nelson, for the County to move our locally licensed operators stuck in this purgatorial program forward.
As to Mr. Shields’ claim that we have been ‘actively engaged..with the development of the unworkable ordinance’ – it is technically false and substantively does not tell the whole story. Members of MCA, prior to our formation in 2019, and the organization since then, have been quite vocal in the public sphere providing practical solutions to the challenges of developing and implementing local cannabis policy. These recommendations have included everything from file management systems to the structure of the Local Equity Program, and even a line-by-line proposal for ordinance revisions to better align with state law. We firmly believe that if these and many more of our recommendations had been adopted and implemented over the last several years we as a community would be in a much better position today.
The most recent of the ‘working groups’ Mr. Shields refers to, and yes there have been several, occurred throughout the course of 2022 in an attempt to address the significant challenges reported by applicants with the management of the Department’s permit review and grant programs. This group included the Cannabis Ad Hoc committee (at the time Supervisors Haschak and McGourty), several members of the local stakeholder and consultant community including MCA, Hannah Nelson, the MCD, the CEO’s office, County Counsel’s office and State agencies. After many months of meetings, the Ad Hoc brought a list of 12 recommendations to the full Board in October 2022 which MCA fully supported. Most significant procedural and operational recommendations related to the management and oversight of MCD were rejected by the full Board.
Conditions have become so dire on the ground that MCA recently sent a letter to the Governor and the Director of the Department of Cannabis Control (DCC) calling for state intervention to provide support. MCA is currently working with our State and Federal advocacy organization Origins Council in engaging the DCC, the Legislature and the Governor’s Office regarding this licensing crisis.
We understand that there are likely thousands of unregulated cultivation sites operating in Mendocino. Estimates have ranged anywhere from 6,000 – 10,000. However, those unregulated cultivation sites have not been working with the County and State for the last 6 years to achieve regulatory compliance. They are not subject to the regulations that have still not resulted in the issuance of Annual Licenses required to keep Mendocino County farmers in the regulated legal marketplace.
The February 18, 2023 SF Gate article by Lester Black, referenced by Mr. Shields, accurately describes the situation for licensees remaining in the regulated program who are in danger of being statutorily removed from California’s legal cannabis market through no fault of their own, in stark contrast to the promises made to them when they agreed to participate. The number of licensed farmers in Mendocino County mentioned in the article refers to those that stepped forward to enter the regulated cannabis program, and who still remain. As of 2020 there were about 1200 active permit applications operating in Mendocino. Per recent data from MCD as of December there were around 850. In a document provided to the Board of Supervisors on December 13, 2022, MCD stated that “the cannabis department estimates there will be approximately 200-300 farms that make it to annual licensing at the state level.’ That’s only 25% of the farmers who began this process in good faith.
The Vegetation Modification debacle that Mr. Shields refers to is in fact a new issue despite its inclusion in the ordinance. The ordinance contains an exception to the Tree Removal prohibition for ‘disease and safety concerns’ under which operators could remove trees. However MCD refused to give meaningful life to those important exceptions. In conjunction with County Counsel, they instead threatened applicants with permit denial and demanded unreasonable standards of proof never conceived in the ordinance or communicated over the last 6+ years. Some applicants who received Vegetation Modification letters threatening denial of their permits had even previously been inspected.
Many of these applicants had in fact been following instructions from CalFire when addressing safety concerns, but the County has been trying to disregard the intent of the exception quoted above to remove applicants from the program. Once this became clear, the advocacy community jumped into action and objected on due process grounds with a letter to MCD Director Kristin Nevedal, which led to a halt in the planned denials. We are grateful to the Willits Environmental Center and Hannah Nelson for coming together to address this important issue which still remains unresolved.
Today, more than ever, we as a community must come together and support the stability, survival and equal treatment of our small licensed cannabis farmers. Our rural community is a delicate ecosystem that has historically relied on the financial contributions of the cannabis community. This reliance continues to this day, and as of May 2022 the county reported that the regulated cannabis program brought in $8 million more than projected in tax revenue. Additionally, according to the 2020 County Crop Report Cannabis Addendum, licensed Mendocino County cannabis generated $131 Million of economic activity on 290 acres of canopy. Compare that to $81 Million in economic activity generated from wine grapes on 16,000 acres. What we see is that cannabis can create an incredible amount of value on a miniscule scale. Local cannabis businesses also spend money locally on goods and services which in turn supports other local businesses. With a stable regulatory environment in Mendocino County providing a foundation from which our licensed craft cannabis farmers can grow, we can get back there again.
The good news is that Mendocino cannabis is still recognized as some of the best craft product available anywhere, bringing home 11 awards at last years California State Fair, and appreciated around the world as a true craft product of place. With our reputation for quality already secure, we must stabilize the licensed cultivators who helped establish that reputation so their businesses can thrive and they can continue contributing to our local economy.
There are some glimmers of hope on the horizon for our local licensees in the form of Tax Reform recommendations from the General Government Committee of Supervisors Haschak and Mulheren, but it will fall on the full Board to move those proposals forward. In the context of the extortive taxes and fees to operate in the regulated cannabis market at the local and State levels in California, IRS Code 280e at the Federal level, which prohibits cannabis businesses from writing off all business expenses except Cost of Goods Sold (COGS), and the major regulated cannabis market crash, this tax reform will be essential to keeping as many of our locally licensed operators in the regulated market as possible. Doing this ultimately benefits our local community in numerous ways from adherence to environmental compliance to the generation of future tax revenue.
While many of the challenges our locally licensed cannabis businesses face exist due to regulations on the state level, there is still plenty that can be done locally by the Board of Supervisors, County Counsel and MCD to help move the process along rather than putting up roadblocks. We hope everyone reading this, including Mr. Shields, will join us in urging the Board of Supervisors to act swiftly in conjunction with the stakeholder community to protect this invaluable economic resource. The full Board can be reached via email at bos@mendocinocounty.org.
We encourage anyone reading this who supports a sustainable future for Mendocino County’s licensed legacy cannabis cultivators to reach out to us for information on how they can help. Learn more about MCA at our website www.MendoCannabis.com.
