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Small-Scale California Cannabis Growers Say They're Barely Hanging On

SANTA ROSA (KPIX) -- When, in 2016, voters approved Prop 64 legalizing recreational marijuana, those who produce the product thought their ship had come in.

It hasn't quite worked out that way.

This weekend, the Emerald Cup Harvest Ball returned to Santa Rosa after a year off for the pandemic. Thirty thousand cannabis fans were expected at the Sonoma County Fairgrounds, each seeking a favorite "craft" brand of bud. This year, organizers offered a free area to long-established growers who, in the current market, couldn't even afford to rent display space.

"In 2021, to see legacy brands not be able to afford to come to Emerald Cup if we didn't give them this free space, I think it's really heartbreaking and is a real indicator of where we are in the industry as a whole," said event associate producer Taylor Blake.

For the industry, this was supposed to be a golden age for cannabis, accepted by the public and officially sanctioned by state government. Instead, many growers are on the verge of economic collapse, left wondering what Prop 64 was all about.

"It absolutely was not legalized," said Michael Katz, executive director of the Mendocino Cannabis Alliance. "We are in a regulated environment. We are not in a legal environment. There is nothing "free" about the cannabis market."

Prop 64 limited cultivation to one acre to favor small farmers but the state made a change to accommodate large corporate farming interests.

"They were only allowed one acre but they could get an unlimited amount of one-acre licenses," said Mendocino County grower Blaire Auclair.

Auclair grows cannabis under the "Radicle Herbs" brand. Her product used to fetch $1,600 a pound but, because of overproduction by large farms, it now sells for about $300 a pound. The state's cultivation tax stays the same no matter the price so, now, almost half of Auclair's revenue is going to pay tax.

"There's county taxes, there's city taxes, it's like, every chance somebody gets and it's not a little bit -- it's a lot!" she said.

Then there's the regulation. Farmers can't sell their product directly to consumers. They must sell through a licensed retailer and the product can't be transported except by a licensed hauler, adding costs.

"All of these things are combining to create what's really an existential crisis and another in a series of extinction events for these small cannabis operators," Katz said.

Legalization was supposed to cut crime by eliminating the illegal market for cannabis but, with the added expense of regulations and taxes, illicit sales are booming. It's estimated that 2/3 of cannabis sales are happening outside the legal marketplace.

Some in the industry suspect the system has been engineered to eliminate small operators who cannot afford to hang on. Katz says that, of the 10,000 growers in operation when Prop 64 was passed, only 2,000 remain.

Kila Peterson has a small farm in Guerneville and says Sonoma County is even more regulated than the more northern counties because it has a higher urban population.

"A lot of people have a voice," she said, "and cannabis is still ... a lot of people are afraid of cannabis and what it brings to the area."

That may be the heart of the problem. The cannabis industry is still trying to overcome a negative image held by some who may not want it to prosper anyway.

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