Cannabis companies seek business-friendly rules in Sonoma County

On a cold night in November, local cannabis entrepreneurs filled the Sonoma County Board of Supervisors’ meeting hall for a public reckoning about a legal marketplace struggling to meet the county’s demands.

Steep taxes, expensive environmental studies, security plans, a changing set of rules and punishing penalty fines have burdened the new legal cannabis industry to the point of putting many out of business, these entrepreneurs told county staff.

“The process is Kafkaesque,” Santa Rosa cannabis attorney Joe Rogoway said at the meeting. “There’s really no way to be successful.”

One month later, county supervisors signaled they will make significant changes to local policies to align rules governing cannabis businesses closer to those with other industries, such as traditional agricultural and manufacturing.

It was a major win years in the making, one pushed by a stalwart group of local industry leaders that have been working to get rid of stigmas against cannabis so that their business dreams may become reality.

Collaborating under the mantel of a new trade group, the Cannabis Business Association of Sonoma County, they aim to get Sonoma County and its nine cities to adopt business-friendly policies and improve what has been a rocky start to legalization in California.

At stake is the ability of a local legal industry to generate revenue, create jobs and capitalize on Sonoma County’s allure as a destination for recreation, food and wine. They envision a future when tourists can try cannabis products at the bucolic Sonoma County farm where it’s grown, just as visitors sip wine amid the vineyards. They want to put the black market out of business.

“People already come here for wine, they come here for agriculture, and now they’re going to come for cannabis - it’s beautiful,” said Alexa Wall, a founding board member of the business association and board chairwoman of the Sonoma County Growers Alliance.

When cannabis was first legalized by California voters in 2016, the main voice representing the cannabis industry in this area was the Sonoma County Growers Alliance, a group that played a pivotal role shaping early policies for the new industry and gave a voice for what up until then was the heart of the local industry: small-scale cultivators.

This new organization is evidence of how the local cannabis sector has matured. Santa Rosa is now headquarters for a diverse variety of companies that compete for customers statewide, such as CannaCraft, which manufactures cannabis products, HERBL Distribution Solutions and Floracal Farms.

“That’s the goal of this trade association: To lower the barrier to entry in Sonoma County so that we have businesses that can compete on a state level,” said Erich Pearson, CEO of SPARC, which operates the largest outdoor cannabis farm in Sonoma County and five dispensaries here and in San Francisco.

In addition to Wall and Pearson, the cannabis business association’s board members include Erin Gore, CEO of Garden Society, a women-focused cannabis company; Dennis Hunter, founder of CannaCraft; and Ron Ferraro, CEO of Elyon, a cannabis cultivator and producer. Rogoway’s law firm provides the group with pro bono counsel.

Members must have a legal business.

The group’s members have already provided invaluable expertise to Sonoma County policymakers trying to balance community concerns about cannabis - from pungent harvest-time odors to the threat of crime - with the county’s goal of helping the legal industry succeed, said Niki Berrocal, Sonoma County deputy county administrator.

One of the group’s first missions has been to encourage the county to lift its moratorium against commercial hemp cultivation. It urged county officials to allow farmers to plant hemp - a variety of cannabis that is not considered a drug and is legal federally - just like any other type of agriculture. County supervisors in January voted to take a step toward approving those rules.

“It’s a new burgeoning industry that faces a lot of bias, so absolutely they need to be organized and have that professional face that they can add to the conversation,” Berrocal said.

Across the state, tax revenues from the new cannabis industry have failed to meet expectations. Many in the industry say the disappointing tax revenues are a sign state and local government officials overestimated how much revenue could be generated by an industry hit with some of the most stringent regulations and highest business tax rates in the state.

Some of the largest cannabis companies in Sonoma County and across the country have been forced to reduce their operations, lay off workers and adjust business plans for slower growth than hoped.

Wall knows those challenges firsthand. She and her husband hope to plant their first crop of cannabis at a Penngrove property in 2021 - four years after they applied for local permission to do so.

“I do think we’ll continue to see businesses struggle, businesses in distress,” said Wall. “But there are some things that could happen this year to help the industry.”

You can reach Staff Writer Julie Johnson at 707-521-5220 or julie.johnson@pressdemocrat.com. On Twitter @jjpressdem.