Pubdate: Sun, 29 Nov 2015
Source: Los Angeles Times (CA)
Copyright: 2015 Los Angeles Times
Author: Jeremy B. White, White writes for the Sacramento Bee.


New 'Seed-To-Sale' Regulatory System Seen As a Boon, but Challenges Remain.

SACRAMENTO - An unmistakable scent, rotten-sweet and earthy, greets 
visitors to Basil McMahon's pine- and oak-sheltered Nevada County farm.

It wafts from cannabis plants growing in a murky legal terrain 
between acceptance and prohibition.

Over the next few years that will change, as a sweeping new package 
of laws will reverse years of state silence by regulating and 
licensing every stage of the medical marijuana industry.

For consumers, the shift will mean more assurance that their medicine 
won't be laden with pesticides and other impurities, but probably 
result in higher prices. For growers, the new regimen will recognize 
cannabis as an agricultural product, conferring legitimacy and 
imposing new rules on farmers accustomed to tending their plants 
without a stamp of approval from the state.

"It means I'll be able to do what I'm doing without fear of 
persecution for the first time in my life, for the first time in 
generations," McMahon said as workers trimmed buds from the fall 
harvest. "That's exciting, but it also presents a lot of questions 
and challenges."

While voters authorized medical marijuana in 1996, until this year 
the Legislature had failed to create a system for regulating it.

Marijuana farmers for years operated in a space with inconsistently 
enforced rules and scant oversight, with local officials tasked with 
monitoring what the state could or would not. Without a permitting 
process for legitimate operations, raids posed a constant threat. Bad 
actors could degrade the environment with few consequences. A lack of 
formal tracking allowed marijuana to flow freely to the black market 
for recreational, not medical, use.

Now, growers will need to obtain cultivation permits and abide by 
rules for water and pesticide use, with state agencies policing their 
environmental impact and vetting labs that will test for pesticides 
and other contaminants.

The California Department of Food and Agriculture will track medical 
pot's progress with a "seed-to-sale" monitoring system.

"It's such a paradigm shift in that for the last 30 to 40 years the 
standard procedure for a marijuana farmer was to throw away and burn 
all his paperwork," said Stephen Dillon, executive manager of the 
Humboldt Sun Growers Guild. "It was considered evidence to be used 
against you in a court of law."

Like McMahon, many marijuana farmers speak optimistically about the 
opportunity to operate free of the need for surreptitiousness and 
threat of raids.

"It was a low-scale war for a long time, and people are sick of it," 
McMahon said. "They would much rather be above board, do things right 
and not worry about law enforcement."

But they also warn that if permits are too costly and compliance too 
cumbersome, the new regimen could backfire and send farmers deeper 
into the woods.

"If you try to go zero to 100 all at once, you push people further 
underground," said Assemblyman James Wood (D-Healdsburg), an 
architect of the new framework. "They'll say, 'Hey, I never did that 
before, and I won't do it now.' "

Not all marijuana farmers have been growing exclusively for medicinal 
use. It's common knowledge that weed has far more value on the black 
market, and the financial motive proves irresistible to some.

"Most cannabis that comes from northern California is sold in the 
non-legal marketplace," said Casey O'Neill, a prominent voice for 
growers who runs HappyDay Farms in Mendocino County. "We know that."

For the new program to successfully divert cannabis from the black 
market to regulated dispensaries, farmers say, it will need to be 
worth the time and investment required to abide by the rules and 
obtain permits.

"If they set up too rigorous of a program then they will not get 
buy-in, and if they don't get buy-in nothing has changed," Dillon 
said. "We will continue to have one of the largest black market 
industries in the country."

Dillon's Humboldt Sun Growers Guild, which operates in a co-op-like 
system that pools contributions of individual farmers, has modeled 
the new reality ahead of schedule, imposing stringent rules on 
contributing farmers.

The cost of compliance means a higher price for their marijuana.

"They're competing with a thriving black market," said manager 
Chrystal Ortiz. "It's not fair that we have to compete with these 
people who can buy a bunch of cartel-grown cannabis and they're not 
paying taxes. They're not paying their employees. They didn't get 
their water permitted."

Competition with black market prices is not the only consideration. 
Many farmers worry that the new rules will benefit large-scale 
enterprises that have the resources to comply, pushing out smaller growers.

"Very small, local mom-and-pop growers who are naturally 
environmentally conscious, who never produced big gardens," have 
already had to contend with "a huge green rush" that descended, said 
Robert Sutherland, founder of the Humboldt Mendocino Marijuana 
Advocacy Project.

Given the market's precarious legal position, "the sky has always 
been falling on the cannabis industry," O'Neill said. But now the 
fears are different.

"We're afraid of big business," he said. "We see these huge 
capitalist enterprises looking to overtake everything we've been 
working at this whole time, to gobble up our way of life and turn it 
into something to make money."

Staying afloat could come down to quality. Stricter testing and 
labeling standards mean cannabis consumers will get more information 
about what they're purchasing.

"One of the things we hope to see is the value travel back up the 
supply chain," said Emerald Growers Assn. Executive Director Hezekiah 
Allen. "If you're producing a good, organic, clean product today it 
doesn't matter, because it disappears into the void that is the 
unregulated marketplace."

The state of weed sent to dispensaries and manufacturers can vary 
widely. One cannabis-oil maker described rejecting weed that smelled 
of rotten egg because of the spray it was treated with. The new 
system will bar that kind of tainted herb.

"You can't get away with it anymore. Organic-certified pesticides are 
showing up, bad pesticides are showing up," Ortiz said. "I'm having 
to deny cannabis left and right."

Then there's the matter of marketing. The Humboldt Sun Growers Guild 
already has a product name, True Humboldt, with a slogan ("Since the 
beginning") and a sleek website trumpeting its virtues.

"We believe the Humboldt name and history is a big brand," Dillon said.

The hope is that highlighting the origins, akin to Napa County wines 
or microbrews, will boost the value of the product and help smaller 
farmers compete with larger operations.

"Do Doritos sell more than Kettle Chips?" Ortiz mused. "I do think it 
will demand a premium price, and as soon as it's mandated for the 
dispensaries, we'll be good."

Recognized brand or no, growers will need to navigate a new 
distribution system with new gatekeepers.

The laws prohibit growers from getting licenses to transport their 
product and distribute it to dispensaries. The multi-tiered system is 
intended to prevent large monopolies and to impose another layer of 
accountability, tasking the distributor middlemen with ensuring the 
product stays in legitimate channels.

Some growers believe it will give them a reliable pathway to market. 
The current system, Allen said, "is very disorganized, very 
decentralized and totally inefficient."

"I don't want to drive all over the state delivering medicine," Allen 
said. "I want to farm."

Others worry about ceding too much control to distributors, which 
could dissolve the relationships they've already built with 
dispensaries and let larger growers occupy more shelf space.

"It doesn't matter if you have a 15-year relationship with a 
dispensary where your cannabis has been going, you now have to give 
that to a distributor," Ortiz said, but handing oversight to 
distributors could mean "small-batch, craft cannabis" could "go in a 
catalog with all the other ones and just become a number."

And a crop often seen as a menace will join grapes, rice and 
strawberries in the pantheon of legitimate California crops. Ortiz 
has already met with the Humboldt County agricultural commissioner, 
the type of contact she said would have been impossible before.

"Some folks involved in other kinds of agriculture aren't 
particularly thrilled this is going to be considered an agriculture 
product," Assemblyman Wood said. "Certainly in my district there are 
folks who cultivate cannabis and want to join the farm bureau at some 
point. They might ruffle some feathers."

Such legitimacy gives growers hope that they can step into the 
mainstream and thrive. But they also worry about what could be lost. 
"I look forward to being able to continue to grow more or less on 
this scope," McMahon said. "I don't look forward to a future where 
the economy is built around growing this plant the way almonds are grown."
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MAP posted-by: Jay Bergstrom