How a Cannabis Ban Turned One California County Into ‘Ground Zero for Chaos’

On Jan. 10, supervisors in this historic county—where Gold Rush mining camps flourished in 1850—voted to kill off the Green Rush that exploded here in 2016. By a 3–2 tally, the Calaveras County Board of Supervisors declared all commercial cannabis farms illegal. The county planning department estimated that as many as 1,600 commercial cannabis growers were operating in the region in mid-2017. Many of them were licensed by the county. Now, the move to ban cannabis businesses means every one of those growers must cease operations by May 1. Millions of dollars in tax money will vanish from the economically beleaguered county of 45,000 residents.

In the vote’s aftermath, protests have stirred amid fears over devastating cuts to the county workforce. Lawsuits appear certain.

“It is just ground zero for chaos,” says Paul Smith, vice president of governmental affairs for the Rural County Representatives of California, an organization focusing on the Golden State’s sparsely populated inland and northern coastal counties.

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Calaveras has long been known for its dysfunctional politics. Even before its explosion of cannabis farming, there were frictions between a local “hippie culture and strong pockets of old ranchers and their constituency groups,” Smith said. Against that backdrop, the county’s move to regulate commercial cannabis production in 2016 was sure to strike a raw nerve.

“You have to go through wars in these types of communities before you reach consensus,” Smith said. “Calaveras is kind of on steroids on this.”

Prapanna Smith, a former school administrator, tends to his cannabis plants during what’s likely to be his last permitted growing cycle in Calaveras County. (Peter Hecht for Leafly)

In the late summer of 2015, Calaveras, nestled in the Sierra Nevada foothills 70 miles east of Sacramento, suffered a devastating blaze—the Butte Fire. The following spring, unauthorized marijuana farms bloomed beneath scorched oaks and pines as cannabis speculators snatched up cheap properties devalued by the fire that had destroyed 860 homes.

“You’re talking about losing hundreds of farm families and layoffs this county has never seen. It’s mind-numbing.”

Mark Bolger, cannabis farmer

Urged on by local medical marijuana advocates, supervisors in the conservative county passed an ordinance to regulate the local cannabis industry. It promised strict rules for licensees, enforcement resources to drive out unwanted criminal growers, and some decidedly liberal cultivation rules: The county allowed commercial cannabis farming on parcels as small as two acres and gardens of up to a half-acre on parcels of five acres or larger.

In June 2016, Calaveras collected $3.7 million in $5,000-per-farm registration fees from more than 700 cannabis cultivators. Five months later, voters heartily approved an initiative, Measure C, to impose cultivation taxes of $2 per square foot on outdoor farms and $5 per square foot on indoor gardens.

Yet the election also revealed a significant portion of the local citizenry that hated cannabis liberalization. Another initiative, Measure D, which would’ve further sweetened cultivation rules and permitted cannabis concentrate manufacturing, was defeated. Although California’s Nov. 2016 adult-use measure, Proposition 64, passed easily statewide, 53% of Calaveras County voters cast ballots against it.

Two supervisors who backed the cultivation ordinance were due to retire after the Nov. 2016 election. Two others were drummed out by voters. In their place, voters chose a new board majority openly hostile to cannabis farms.

“This county has repeatedly spoken out against this,” said Dennis Mills, who won a seat on the board after championing a cultivation ban, Measure B, that was blocked from the ballot by legal challenges. “My district solidly voted down Proposition 64. They solidly voted down Measure D. They wanted an initiative to ban.”

“I won my seat in a landslide, sir,” Mills told me recently. “Marijuana was one of the issues. People asked me how I felt about it. And I told them outright.”

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Mills, a former member of the Calaveras County Water District, saw cannabis farming as both an affront to the county’s character and, worse, an environmental disaster that fouled streams and water supplies with illicit dams, sediment, fertilizers. and pesticides. He made little distinction between permitted growers and criminal cultivators.

After his proposed ban failed in October, Mills pushed through a new ban this month with the backing of two other recently elected supervisors, Gary Tofanelli and Clyde Clapp.

Burch Shufeld, who bought up properties and secured two local licenses on a promise of participating in the legal cannabis economy, looks over vacant greenhouses that may stay that way (Peter Hecht for Leafly)

Calaveras County has so far collected $7.5 million in Measure C cultivation taxes in 2017, with more revenue due from tax bills that went out in November. The total two-year haul—including permit fees and renewals to cover costs of cannabis regulation, policing, and code enforcement—approaches $12 million. The county has a $63 million annual budget.

Since 2016, Calaveras has granted some 200 permits for commercial marijuana farms, with roughly 300 applications still pending and 200 denied or withdrawn.

One of those permittees was Burch Shufeldt, 34, an environmental studies major at University of California Santa Cruz who dropped out to grow in Calaveras for a Santa Cruz dispensary in 2006. At the time, with state and local rules ill-defined, he chose a secluded indoor growing location.

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After Calaveras embraced regulated cultivation, Shufeldt made a major investment: $1 million for two sprawling properties, a total of 220 acres, with the landowner providing financing for the purchase. Shufeldt paid $88,000 in cultivation taxes plus $15,000 in fees in 2016 and 2017 for two permitted outdoor sites, with one renewal permit fee due.

“It seemed like Calaveras had decided to stick to its conservative and libertarian ideas when it came to property rights— even if many of its people were older and didn’t like cannabis,” he said.

Now, in the face of ban, he is looking to get by on income from cattle grazing and growing kale. That is unlikely, he says, “to keep us out of poverty.”

When supervisors took up the vote on Jan. 10, locally-licensed cannabis farmer Mark Bolger had just paid his November tax bill, bringing his two-year cultivation payments to the county to $54,0o0.

“You’ve given people a privilege. You’ve taken their taxes and fees. And now you’re taking that privilege back.”

Khurshid Khoja, former CCIA general counsel

Bolger, 30, the son of an agricultural industry investment broker in the nearby San Joaquin Valley farming belt, invested in Calaveras cannabis on a forested 20-acre parcel he dubbed Rimrock Farms. He invited county officers, sheriff’s deputies, and state water officials for walking tours though lush plants that flowered on terraces framed by security fencing and rock beds, with netting and straw for erosion control.

On Jan. 10, Bolger was one of a number of licensed cannabis farmers seated before the Board of Supervisors, watching his investment drain away.

Supervisors had directed staff to draft two ordinances – one to regulate the industry and another to ban it. The staff proposal to regulate would have allowed commercial cultivation on certain properties over 20 acres, but Bolger’s site didn’t meet the specific zoning requirements. In recent months, Supervisor Tofanelli also advanced a plan to set the standard at 50 acres or more. He later pushed for a 100-acre minimum.

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Bolger had made an aggressive move to stay in business, buying 196 acres with plans to relocate his farm. A title company representative handling the last 80 acres of his purchase reached out as he was sitting in the supervisors’ boardroom.

“I got a text saying we just closed on the sale,” he said. “The title is transferred in my name. There is no turning back.”

Then he watched as supervisors banned his business.

The vote, effective next month, requires cannabis farms to cease operations within 90 days, meaning they will be out of business by May. For Bolger, it means no 2018 growing season.

“I’ve got six employees, people with young children, people from multigenerational families in this area,” Bolger said. “That tumultuous feeling I got in my stomach wasn’t just for our livelihoods—it was for the livelihood of our county.”

“When three people on the Board of Supervisors tank the economic driver of this county, you’re talking about losing hundreds of farm families and layoffs this county has never seen. It’s mind-numbing.”

Prapanna Smith, 56, a former school administrator in San Diego County who moved to Calaveras for its proximity to the Pacific Crest Trail and apparent amenability to cannabis, invested $300,000 in a county-permitted indoor cultivation business.

Smith, who recently also secured a state license to grow adult-use cannabis, paid Calaveras $10,000 in permit fees and $25,0o0 in cultivation taxes. He hopes to harvest a final indoor crop before May and, after that, seek retribution in a lawsuit over a breach of trust.

“If they succeed in shutting us down, they owe me for all my investment,” Smith said of the county. “They owe me for my loss of income. And they owe me for the cost of having to move, because what they’re doing is bullshit.”

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