Sitting on opposite sides of an L-shaped dark brown leather couch inside the circular comfort of a yurt in South SLO County, Aaron Wright and Austen Connella are having a hard time reaching consensus.
Each question that’s asked is answered in a sort of round robin. One speaks, and the other counters. A discussion ensues—like a Ping-Pong match without a ball. Wright is stretched out with one arm behind his head, work boots up on the coffee table. Connella leans against the couch arm he’s tucked into, flip-flops on the floor.
Just outside the open door, the hill we’re halfway up shows off homes on surrounding summits, a wooden outhouse, and two hoop houses. One’s empty. The other is full, green leaves reaching toward an opaque plastic ceiling and the sweet, dank smell of 20 to 30 varieties of flowering bud.
Wright and Connella have both been growing, not necessarily always legally, since they were old enough to know what marijuana tasted like. Both have grown medical cannabis, legally, for about a decade (more or less). And both grow, legally, in this forest of oak trees, rural homes, and acres of seeming open space—on their own plots of land, next to neighbors they have pretty good relationships with. They only met a couple of years ago, after buying their respective pieces of land on opposite sides of a hill. Wright grew up in Orcutt, and Connella’s from Templeton.
One thing is very clear. They’re professionals who know what they’re doing when it comes to growing medical marijuana and how it can change the lives of terminally ill patients. What they can’t seem to agree on is how Proposition 64, which voters passed in November to legalize the recreational use of marijuana in California, is going to affect them, the patients they serve, and the medical cannabis industry in general.
The proposition allows adults 21 and older to possess up to an ounce of weed and grow up to six plants in their homes. Regulations for the law are supposed to go into effect in 2018 and be created over the next year. The Medical Cannabis Regulation and Safety Act that passed in 2015 was finally going to put regulations in place for an industry that California voters legalized in 1996, but those laws are still in the process of being created, according to Laurel Goddard with the Department of Consumer Affairs (which oversees the Bureau of Medical Cannabis Regulation), and the way things will roll out with Proposition 64 is still being assessed.
“Colorado and Washington really kind of changed a lot,” Connella says. “It’s an ever-changing landscape, especially right now; I’ve never seen things change so much.”
In Washington, especially, things changed dramatically after recreational pot became legal, but the laws governing medical cannabis—which Washington legalized in 1998—were grayer than black or white. Dispensaries weren’t strictly legal, but they weren’t necessarily illegal either (at least at the state level). And the initiative that legalized recreational pot in 2012 didn’t address the medical industry—at all. So legislators did what they could to address the issues that followed, and as of July 2016, medical cannabis was essentially incorporated into Washington’s recreational cannabis industry.
The big concern is that a similar fate awaits medical cannabis in California—whether it’s because of local regulations at the city and county levels, the eventual passage of new state laws, what happens at the federal level, or because commercial pot will overwhelm smaller medical growers. This lack of clarity about the future of an industry that’s been plagued by uncertainty for the past 20 years leaves local medical marijuana growers like Connella and Wright uneasy.
“I’m really worried that they are going to tighten the noose on medical; I’m terrified … because I don’t want even one patient to go without cannabis, without having to grow their own. To have easy, cheap, inexpensive access to safe medicine,” Wright says. “There isn’t any consensus. You can’t tell what’s going to happen.”
Trial and error
Taxation is something that’s definitely going to happen. In fact, it was a big talking point for the yes side of Proposition 64.
“By collecting unpaid taxes from marijuana, it will bring in over $1 billion of revenue every year to help California,” according to the Official Voter Information Guide from the Secretary of State.
Goddard with the Department of Consumer Affairs told New Times that certain sales of medical marijuana are now exempt from sales and use tax, at least at the state level. But on Jan. 1, 2018, a 15 percent excise tax will be imposed on purchasers of all marijuana and marijuana products, according to the state Board of Equalization’s tax guide for medical cannabis businesses. In addition, cultivators will be taxed $9.25 per ounce of marijuana flowers and $2.75 per ounce of leaves. And counties such as SLO are planning to tax marijuana as well.
If you use Washington as a guide for potential tax revenue, recreational marijuana definitely brings in money. Fiscal year 2014-2015 brought
$64.9 million to the state, according to fact sheets from the Washington State Liquor and Cannabis Board, the agency responsible for the industry. That was tax collected from $259.5 million in recreational marijuana sales.
The state tracks everything from harvest to edibles. Starting with harvest—from which everything else in the industry is derived—the recreational marijuana industry grew tremendously in its fledgling years. The first legal pot shop opened its doors in 2014, and in 2014-2015, 59,394 pounds of marijuana was harvested. That number grew to 226,513 pounds for fiscal year 2015-2016, but the tax data isn’t available yet. And although recreational marijuana was taxed for both of those years, medical marijuana wasn’t. But that changed in July. And so did the state’s tax structure for the industry.
In addition to pulling medical marijuana under the roofs of recreational retail stores, there is now a 37 percent excise tax on the retail end of things, plus sales tax. Under the law passed in 2012, there was a 25 percent tax on every level of the system—from grower to distributor, distributor to retail outlet, retail outlet to customer. It was something Brian Smith, a spokesperson for the Liquor and Cannabis Board, called “a totally inefficient way of taxing something.”
Essentially, the taxes were still considered to be revenue at the federal level—and, according to some news reports, resulted in marijuana retail storefronts essentially breaking even. Plus, medical cannabis wasn’t taxed at all. And although it’s now taxed at that same 37 percent level on the retail end, medical marijuana patients don’t have to pay the retail sales tax. It’s steep, Smith admits, but the state taxes and treats cannabis in a similar way to alcohol and tobacco.
“Washington doesn’t have an income tax, so we tend to tax those things higher,” Smith said.
The weed market is definitely more regulated than the other two, though. Smith said the state’s history with marijuana is long and complicated, and since recreational came around, that history has stayed the course.
“It’s been a firestorm these last four years,” he said.
The way he explains it, before July there were three pot markets: legal, illicit, and gray—medical marijuana. It’s sort of complicated, but the short version is that state law allowed for medical cannabis collectives or gardens, but not for dispensaries or retail stores.
“They were really acting as retail stores because medical cards were really easy to get,” Smith said. “The idea was to give the patients access to medical marijuana. … It ended the charade of these backyard gardens.”
Now, if a medical cannabis patient needs medicine, they can walk into one of 161 dispensaries (as of Dec. 9) in the state to obtain it. About 88 percent of the dispensaries in the state are endorsed to sell medical cannabis, and actually have a certified expert on staff to help get patients what they need.
But hundreds of storefronts where medical marijuana was once sold closed their doors in July, limiting access for patients across the state, according to Mike Lifzewski, the government affairs director for Washington’s chapter of Americans for Safe Access (ASA), a medical cannabis advocacy group.
“One of the sad things is that they had a really great program,” Lifzewski said of the way things were before July. “There’s still some semblance of medical in Washington, but it’s not like it was.”
ASA is receiving reports from patients who are having issues finding what they need to treat their illnesses. Medical marijuana and recreational marijuana serve very different purposes, therefore the product offerings should be different, he said. But it’s still too early to say how things could continue to morph so patients are better served.
“We’re trying to assess the situation right now,” he said. “There was a tremendous amount of access, affordability seemed to be pretty decent compared to other places. … What’s happened since [July] has seemed to leave patients less satisfied.”
Not for recreation
The leaves are soft to the touch, and the cannabis in Wright’s South County greenhouse is just starting to bud with delicate white hairs. Looking up from the tiny flower, a canopy of marijuana extends back. Each set of black plastic pots contains a different strain. This one at the entrance is called Jane Doe.
“This is my favorite CBD strain,” Wright says.
It contains only 0.5 percent THC, tetrahydrocannabinol—almost the lowest a strain can get without being considered hemp (0.3 percent THC). The CBD, cannabidiol, is what makes Jane Doe a favorite. Wright’s company, Dominatrix, uses genetics to get cannabis strains with the right ratio of CBD, lauded by some for its healing benefits, to THC, lauded by some for its ability to get people high (but also for getting cancer patients suffering from nausea to gain back their appetites), to fit a patient’s needs.
“With those ratios we can then get strains that are specific for certain things. I know our Purple Witchcraft is good for stomach pains and things like that. … But a lot of strains are dependent on the person,” Wright says, adding that the medical cannabis community would know a lot more if federal dollars were allocated to research.
“It’s never been researched correctly,” he said. “If cannabis was discovered yesterday in the Amazon rainforest, it would be the biggest pharmaceutical find in the modern world.”
Wright’s neighbor on the hill, Connella, agrees.
“Eight years ago, no one knew what CBD was,” Connella says. “That fact that your average Joe knows what CBD is now means there’s a hunger for that kind of information.”
With that said, Connella is still worried about how Proposition 64 could affect him and his patients. For the last 20 years, even though medical marijuana was technically legal, law enforcement agencies and local governments didn’t necessarily see it that way. So it was a fight. Arrests and destruction of property were very real threats. Legitimizing the medical industry has taken 20 years and counting.
Since 1996, the medical marijuana industry has asked the state for regulations that would help make sales, growing, and the community more acceptable, more of a legal business than a gray area operation. That finally happened in 2015, the laws aren’t even finalized yet, and now recreational pot is legal.
“A lot of cities are banning it because they see a big flood coming,” Connella says. “It took us 20 years to even try to get a hang on the medical, and now you’re just opening it up.”
Hazy future
Clarity about the future of cannabis in SLO County isn’t something 2nd District Supervisor Bruce Gibson could give growers, dispensers, medical marijuana advocates, and other industry members at a recent meeting in the dimly lit basement of Novo Restaurant and Lounge.
He was standing near the stairs, between two sides of people eager to hear words in their favor: “We should embrace this,” he said of the county’s approach to marijuana.
“We’re in a gray area; we’re in a new world,” Gibson told the attendees of the last NORML (National Organization for the Reform of Marijuana Laws) meeting in November. “I think we are looking at the most significant social change in a generation.”
With that sweeping statement hanging, he added that all this transformation isn’t going to come without a few “bumps in the road.” That jostling will include the creation and refining of a marijuana ordinance that’s currently in the early stages of the county planning process. Rattling has been heard and will most likely continue to be heard from area law enforcement agencies, including the SLO County Sheriff’s Office, concerned with safety and inadequate staffing levels to deal with potential increases in marijuana-related crime.
A report released by the Colorado Department of Public Safety in March 2016 stated that the state had not seen an increase in marijuana-related crime since cannabis was legalized.
An urgency medical marijuana ordinance recently passed by county supervisors is only supposed to tide the county over until something more permanent can be put into place—and it only really deals with cultivation. NORML meeting attendees questioned Gibson about how the county is going to regulate other parts of the business, including dispensaries, places to make food products, distribution, and taxation. And the big question was whether the county would treat medical marijuana differently than recreational.
Gibson didn’t really have any concrete responses to the questions but did say that the county needs to make decisions about an industry it’s never known before. Everything is new.
“This is a solvable issue; this is not the most difficult issue we face,” he said. “It presents opportunity on one side and challenges on the other.”
Culling a cultivation rush in the remote California Valley is why an urgency ordinance even came up in the first place, according to 5th District Supervisor Debbie Arnold. In January 2016, the board was starting to craft a permanent ordinance, regulations that coincided with state laws passed in 2015 asking localities to put laws into place governing the medical marijuana industry unless they wanted to give the state jurisdiction.
“But before we had a chance to really discuss it,” Arnold said, “we had a huge influx of growers into the California Valley.”
Upwards of 200 grows sprang to life in a span of months. The urgency ordinance eventually passed by the Board of Supervisors placed a moratorium on any future grows and required that current growers register with the county and be subjected to inspection. South County growers Connella and Wright were among the hundreds who applied for a license with the county.
Unfortunately, there’s no guarantee that the medical marijuana growers who register under the urgency ordinance will get to keep their operations running under a permanent ordinance. But Arnold said that she’s not interested in putting laws into place that would put a legal business out of business.
“The good thing is the medical marijuana industry is starting to organize a lot of their lobbying,” Arnold said. “And because of that, I’m more informed.”
Editor Camillia Lanham can be reached at clanham@newtimesslo.com.
This article appears in Dec 15-22, 2016.