The Mad River Union ( yes it really is called that) reports
HUMBOLDT – Humboldt County’s homestead style tradition of cannabis growing is a handicap in the post-legalization era and many farmers are on the verge of insolvency.
With cannabis prices dropping below what it costs to produce it locally, the Board of Supervisors has approved $1 million for an emergency grant program to help cultivators.
Supervisors responded to the long-feared economic fallout of cannabis legalization at their September 21 meeting.
According to a written staff report, wholesale cannabis prices have dropped from $1,100 a pound to $400 a pound.
Economic Development Director Scott Adair said the county’s cannabis farmers are in a market emergency and his office has been “inundated” with “urgent, perhaps even desperate” requests for assistance.
“These pleas for aid and relief stem from the recent bottoming of the cannabis market where the price per pound is now less than the cost to cultivate, process and distribute that product,” he continued.
A series of recommendations to respond to the emergency included funding an emergency grant program and a short term marketing effort.
But supervisors would decide to focus all of the money on a program that will offer grants of up to $10,000 for individual farm operations and $50,000 for collaborative efforts.
The aid will be available to cannabis cultivators for “issues beyond their control,” Adair told supervisors.
With legalization, overall production bulk has vaulted and now Humboldt farmers are at a severe competitive disadvantage.
Drought and wildfires are affecting production, and fire protection measures like expanding defensible space add to costs.
Transportation, regulatory compliance and access to irrigation supply are all cheaper and easier to carry out in open, flat areas in other parts of the state that also have good growing climates.
All those factors are “affecting solvency,” said Adair. But the county can only do so much to bridge the delta between costs and income.
“Typically, we don’t replace lost revenue but we will support activities and expenditures which are designed to help increase revenue for the applicants or to reduce other costs so that the margin of revenue increases,” he said.
The emergency grants will be an addition to the county’s Project Trellis cannabis business assistance program.
Project Trellis is funded through a 10 percent share of county Measure S cannabis excise tax revenue. And that revenue is expected to drop sharply.
According to a written staff report, a majority of 50 cannabis farmers surveyed said they won’t be able to pay their October excise tax payments. In the works is a plan to extend tax payments.
Further assistance with compliance costs is also being developed through collaboration between the county’s Planning and Building and Economic Development departments.
Supervisor Rex Bohn said that due to the seriousness of the situation, the county should take its grant application guidance directly to affected communities.
He noted that Humboldt has 20 percent of the state’s commercial cannabis licenses but areas like Santa Barbara County, which has approved individual outdoor cultivation permits for as much as 87 acres, are “killing us on scale.”
Supervisors were told by staff that “a bit of a roadshow” to various areas of the county is indeed being planned.
Supervisors approved the $1 million in emergency grant funding. They also directed staff to request an additional position for Project Trellis. The request will be made and likely approved at the next board meeting, on Oct. 5.
The process of determining the details of the emergency program will begin at the October 6 Project Trellis Advisory Committee meeting.