Is California’s Cottage Cannabis Industry About to Go Up in Smoke?

From out-of-work loggers to struggling students, thousands of Golden State growers eke out a living on small marijuana farms. But full legalization may bring the hardest hit yet.

Is California’s Cottage Cannabis Industry About to Go Up in Smoke?

This is the second story in the series, Cannabis Country: The New Normal, proudly produced in collaboration with Cannabis Wire – a unique publication exploring issues of regulation, technology, law, criminal justice, and individual liberties at the intersection of this booming billion-dollar industry. Stay tuned to Narratively this month for more untold cannabis tales.

Dan is a jovial and twinkly-eyed man. He smiles and talks amiably as he unloads hay to feed a solitary cow and a few pack mules. Moving around his farm, he is enveloped by expansive grasses and sky that protect him from any evidence of neighbors or civilization.

A fifty-year-old out-of-work logger, Dan was born and raised in Hayfork, a small Northern California town tucked away in the mountains of Trinity County. Hayfork is a rural, isolated place — chain grocery stores, big banks and hospitals are at least a two-hour drive in any direction. Dan has lived in these mountains the majority of his life and he has a rural skillset — he knows how to hunt, farm and can. He fells trees and raises livestock. He is also a third generation cannabis farmer.

“It’s just kind of in the blood from being a kid,” he says. Dan grew up in a household where cannabis farming was an ordinary part of life. His father and grandfather, also loggers, farmed small amounts of cannabis for personal use. He can remember buds hanging in his bedroom as a kid, curing (drying out) until they were ready for consumption. In high school, he trimmed cannabis plants at farms in town for extra cash. Decades later, when he was laid off from his logging job, Dan turned to cannabis farming to make ends meet; it’s since become his primary source of income.

An aerial photograph of Trinity Pines, a subdivision of Hayfork.
An aerial photograph of Trinity Pines, a subdivision of Hayfork.

Like most cannabis farmers in Trinity County, Dan has an outdoor grow. This set-up typically means there is one large annual crop that is planted around May and harvested in the fall. Garden sizes can vary from eight or ten plants to thousands, depending on who is farming. The Trinity County sheriff’s office says that the average garden size for Trinity County is one hundred to 150 plants. The yield per plant varies as well, but a typical range is two to four pounds per plant.

Also like many cannabis farmers, Dan straddles legal and illegal activity. A lot of cannabis farmers in California sell in part, if not entirely, through the black market. This usually means that product is sold in bulk at wholesale prices and transported elsewhere by middlemen who vend to others down the supply chain.

California is full of people like Dan, people who have found the cannabis trade to be their best financial option and are operating amid convoluted and changing regulations. When Proposition 215 passed in 1996, it legalized medical cannabis, allowing patients to grow cannabis for their own use, or to have a caregiver grow for them. But the voter initiative did not outline, nor was it followed by, a regulatory system. While medical cannabis regulations today can easily exceed one hundred pages, this proposition was a single page. There were no clear guidelines for garden size or production limits, no framework for what qualified someone to be a medical cannabis patient in the first place, no licensing scheme for producers, no quality control standards – nothing. Further, cannabis has remained federally illegal, hampering the state’s ability to effectively regulate it, and so California’s few rules have remained vague and mostly unenforceable for two decades. In the resulting legal gray area, a thriving cannabis farming community was born.

In the absence of state or federal guidelines, regulations have varied from county to county. Some have banned cannabis and others have tried to regulate the shops that have cropped up – sometimes by the hundreds in places like Los Angeles County. People in the industry generally have fallen into two main groups: thouse who take advantage of loose laws to produce cannabis for the black market, and those trying their best to comply in a state where compliance hadn’t been defined. Over time, the line between these two groups has gotten very blurred.

Long before Prop 215, northern California, with its favorable growing conditions and affordable land, illegally supplied cannabis to much of the state and, sometimes, the country. Following Prop 215, cannabis production began steadily rising until it became rampant. In Hayfork alone, a town with a population of 2,368 according to the most recent census, the Trinity County sheriff’s department estimates there are two thousand cannabis farms, operated by long-term residents as well as new arrivals. Throughout California, production is endemic. It would take an army of farmers to support California’s estimated billion-dollar cannabis trade, and that army now exists.

So who are the men and women supporting California’s cannabis trade? They are retirees, college graduates, single parents, and often people with legitimate jobs seeking another avenue for income. And they all rely on the cannabis industry, to varying degrees, to maintain their lives.

After decades of growth, California’s cannabis cultivation industry is entering a period of rapid change, and the livelihoods of many individuals are tied to the form it takes. New regulations to shape the future of the industry will have a significant role in determining who will become –and who can remain – a cannabis farmer.

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In 2015, Senate Bill 643 and Assembly Bills 243 and 266 established a comprehensive statewide regulatory framework for medical cannabis production and sales. These bills created seventeen different cannabis business licenses, more than any other state. There will be ten licensing and fee tiers for cultivation, one for laboratory testing, two for manufacturing, two for retail sales and one each for transportation and distribution. This new regulatory setup will pave the way to legitimizing the industry, giving local and state governments an apparatus for management and access to tax revenue. Some estimates put the state’s medical cannabis sales in the billions, but California only collected $49.5 million from $570 million in taxable income in 2014. While 1,623 dispensaries are registered with the Board of Equalization, nobody knows the exact number of shops that have come and gone, or their actual sales over the years.

Inside this framework, the place for small-scale cultivators in the legitimate industry is unclear. Accessibility will depend on many factors, but the costs of licenses, permits and distribution will be a key barrier to access for some. These particulars are still being determined. California’s cannabis industry, which continues to grow in the nation’s most populous state, is attracting deep-pocketed investors from around the country. Now, as cannabis is slowly lifted out of an era of amorphous law, the future for farmers like Dan is uncertain.

Tom, Dan’s father, is 74. (Both men’s names have been changed at their request.) He is retired, lives off of Social Security, and supplements his income with earnings from his son’s cannabis operation. “I grew in the ’70s,” says Tom, who often struggled to support his four sons on seasonal work and low wages. “I grew it right there in my garden. I smoked most of it them years and I got to selling it if I needed something, like a car. I sure as hell didn’t have enough to buy a car or anything. In them days it was worth $3,400 to $4,000 a pound.”

Trinity, Mendocino and Humboldt counties became early hubs of farming following Prop 215, giving rise to the “Emerald Triangle,” an area now thick with cannabis production. There are so many people farming in the Emerald Triangle, and throughout California, that a glut of production has dropped prices – the going rate for a pound is $1,000 to $1,200.

These days Tom makes ends meet for himself and his wife, who is also retired, by working with his son. He usually helps with de-leafing and “bucking down,” parts of production in which he removes bigger leaves and stems from buds to prep them for curing. This task suits Tom because he recently had a pacemaker installed and can only do work while sitting down. The income Dan pays Tom allows him to afford medicine and small comforts, like going out to dinner from time to time.

“I’d be lucky to get another job at 74,” comments Tom. “I wouldn’t have nothing if it wasn’t for weed.”

(L to R) Tom at work de-leafing marijuana buds; Tom with a small amount of marijuana he will use for medicinal purposes to help alleviate body pain and suppress nausea, a side effect from his heart medication; Farm hands de-leafing and "bucking down" harvested marijuana plants to prepare them for curing.
(L to R) Tom at work de-leafing marijuana buds; Tom with a small amount of marijuana he will use for medicinal purposes to help alleviate body pain and suppress nausea, a side effect from his heart medication; Farm hands de-leafing and “bucking down” harvested marijuana plants to prepare them for curing.

Dan, like his father, has dabbled in the underground cannabis industry for most of his life. Even when he was employed in the logging industry, making ends meet was difficult.

“When I’ve worked, it was a decent wage, but it was seasonal,” Dan explains. “And you get unemployment, but unemployment times are always leaner than employment times. And [cannabis income] was always a nice thing to have. That made things more secure.”

In recent years, after being laid off from forest work, he has turned to cannabis as a primary source of income. His modest farm pays his bills and gives him a little extra, while allowing him to employ his father, a few farmhands, and a crew of six retirees who work during harvest.

Hayfork was primarily a logging town during the ’70s and ’80s, with two active mills. Then, in the mid ’80s, increasing attention to public forest management and a host of new environmental regulations began slowly clamping down on the industry. In 1991, Hayfork’s last remaining sawmill closed and 180 people lost their jobs. Much of the population was plunged into poverty and unemployment. More than a dozen long-time Hayforkers confirmed in interviews that residents had already been illegally farming cannabis in the mountains of Trinity County for decades. But in the economic devastation that followed the collapse of their timber industry, many more loggers began growing and selling to help support their livelihood.

Top: A farmer during harvest with an armload of recently cut marijuana branches that will be processed for curing. Bottom: Recently harvested marijuana waits to be de-leafed and cut apart into smaller stems for hanging. Then, it will be hung and dried until it is ready for consumption. This process is referred to as curing.
Top: A farmer during harvest with an armload of recently cut marijuana branches that will be processed for curing. Bottom: Recently harvested marijuana waits to be de-leafed and cut apart into smaller stems for hanging. Then, it will be hung and dried until it is ready for consumption. This process is referred to as curing.

“At our best estimate there are 40,000 independently owned marijuana [farms] in California,” says Hezekiah Allen, executive director of the pro-cannabis lobbyist group the California Growers Association, “creating about 250,000 good, paying jobs and many of those are jobs created in rural, poor, underserved communities.”

Characterizing the average incomes of cannabis farmers is difficult, because profitability depends on many factors – garden size, yield, market, environmental factors, and labor costs. It can vary from what amounts to part-time minimum-wage earnings to hundreds of thousands of dollars a year.

California’s new regulatory system is expected to be operational by 2018, and anyone participating in the cannabis industry will be required to have a license by then. Existing farmers and new businesses are gearing up for these changes, but the costs for business operations and licensure could be cost prohibitive for those without investment income to back them. A six-figure fee to grow and sell, for example, wouldn’t be unusual. In New York, where medical cannabis sales began in 2015, licensing to manufacture and sell costs $210,000, and that doesn’t include additional costs such as taxes, employee wages, insurance, product testing and distribution.

County fees and licenses will also be added on, and outdoor farmers in particular will face a host of regulations relating to land and water use, including new cannabis-specific regulations that are being developed in response to the significant toll widespread unregulated farming has taken on land and watersheds.

These new regulations will indeed help to alleviate ongoing negative environmental effects of rampant unregulated cultivation, while also benefitting consumers and public safety. But there are many livelihoods tied to the current gray-market system, and for them, viable access to the legitimate market is key.

Cumulatively, these costs may pave the way for corporate or big business takeovers of the market, in effect limiting participation for the tens of thousands of existing small-scale farms that pioneered the state industry.

Kristin Nevedal, director of the Patient Focused Certification Program at Americans for Safe Access, a patient advocacy nonprofit, says the regulations being unveiled will make operations costs unaffordable for most existing farmers.

“The costs that farmers are accustomed to today,” says Nevedal, “are going to exponentially increase simply because of regulation.”

Nevedal compares the new medicinal cannabis regulatory model to the post-prohibition system for regulating alcohol, in which cost and complexity prevented small-scale alcohol producers from being protected in the transition to a regulated industry.

“In the alcohol regulation model, after prohibition ended,” explains Nevedal, “the regulations were so onerous, and the activities involved in maintaining compliance were so expensive, that only the very largest corporations survived. A lot of the small brands got bought up by the large corporations that could afford the amount of money necessary to enter the regulated environment. So while you see craft breweries now, they took almost one hundred years to exist.”

For farmers like Dan, the ability to be legitimate could also be undone quickly if, for example, the local government doesn’t allow cultivation on land parcels the size of his – two acres – or in rural residential zones. These rules will be decided at a county level, and also become key in determining who will get to farm. Shasta County, Trinity’s neighbor to the east, has banned outdoor cultivation and adopted stringent policies limiting farming, while Humboldt County has developed considerably more lenient ordinances that support the economic growth of cannabis cultivation.

“It’s very important to provide an opportunity to those small businesses,” Hezekiah Allen says of the state and local governments. “With so many depending on this industry, and the size of the economy, with new policy they can’t really afford to get it wrong.”

These small farmers face yet another hurdle in the form of recreational legalization, which will legitimize the second component of the industry – the non-medical users who access cannabis through the medical system – and will define the players in the decades to come. The Adult Use of Marijuana Act (AUMA), a recreational use initiative, may be on the state ballot this November if it is able to garner enough signatures. The AUMA initiative has $2.25 million in backing so far, including $1 million from Sean Parker, former Facebook President and Napster co-founder. It has the support of the Drug Policy Alliance and the endorsement of Lieutenant Governor Gavin Newsom, among other big names and organizations.

An anonymous farmer watering his small garden of twenty plants.
An anonymous farmer watering his small garden of twenty plants.

According to Allen, the AUMA represents a significant shift in the protection currently offered to small farms.

“There’s a pretty firm consensus with policymakers,” reports Allen, “that the easiest way to limit big business in farming is to limit cultivation size. Current [farm size] regulations have a one-acre maximum. The AUMA doesn’t have that.”

Tom and Dan are far removed from the larger forces at play. Like many farmers, they are waiting to see what happens, and in the meantime growing while they still can. Seated in the worn building they use to cure cannabis, Dan, having worked a full day splitting firewood and caring for his farm and livestock, opens a beer and settles into a beat-up chair to rest momentarily. It’s getting dark outside and Tom sits down too, relaxing a minute before he goes home.

Dan, sitting next to his father, sips a Bud Light and muses about cannabis farming.

“I think it should be legal,” Dan says, “creating a market where you can market what you have made…like a farmers market selling tomatoes, would be a good thing.”

Dan is in favor of the benefits regulation could bring, but is also acutely aware of how easily regulation could strip away his livelihood, and his ability to provide for the man sitting beside him.

“I would show up and pay in advance,” he says, “Cash up to ten thousand bucks, for the right to just grow and be left alone, and know that I was legal.”

In the end, the chances of Dan’s ten thousand dollars buying his ability to farm legally are getting slimmer and slimmer. Louder voices are at the policy table, and one by one regulations are layering on costs. The future for Dan and his father is uncertain, and he doesn’t have a lot of say in the outcome.

“[I have] two employees that work forty hours a week,” Dan says. “So that contributes to the local economy and contributes to their well being…I just still after all this time cannot see the wrong in that. I can’t convince myself that what I’m doing is wrong.”