Rebooting Cannabis In California

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AUTHOR:  aBIZinaBOX Inc. CPAs – Jordan S. Zoot, CPA
PUBLISHER:  CANNABIS LAW REPORT

The Santa Barbara County Grand Jury issued its 2019-2020 Final Report on June 30, 2020. The last section of this report is devoted to the County’s actions relating to the cannabis industry. This last section of the Report is a scathing indictment of the manner in which greed for money and power influenced the governance of Santa Barbara County in its adoption of ordinances relating to cannabis.

The following is an introductory summary of the Report.

“The action taken by the Santa Barbara County Board of Supervisors to certify the development of a robust cannabis industry as the primary objective of the cannabis ordinances has altered the quality of life in Santa Barbara County, perhaps forever.

 “The fulfillment of that objective dictated the actions taken by the Board from the excessive allowance of licenses and acreage, creation of an unverified affidavit system, ignoring widespread odor complaints, not acknowledging the conflict between cannabis cultivation and traditional agriculture, to rejecting the environmentally superior alternatives of limited cannabis development.

 “Instead of a balanced approach carefully evaluating how the cannabis industry would be compatible, both as to amount of acreage and location, the Board simply opened the floodgates. These ordinances must be amended.”

This is the report of a civil grand jury. It is clear, however, that some of the matters discussed in this 26-page Report could well be the subject matter of a criminal grand jury investigation if these same matters were viewed a little differently. In fact, some of the matters described in this Report may well be under consideration by a criminal grand jury.

We are not writing about this Report because we have any particular interest in Santa Barbara County, or because some of the activities described in the Report may be criminal. We are writing about this Report because this Report should be mandatory reading for every member of every Board of Supervisors, City Council, Planning Commission, and Administrative Office that is involved in the considerations of that member’s governed community relating to the involvement of the community with the cannabis industry. This Report should also be mandatory reading for every California legislator and for every executive-level Administrator in any Administrative Department or Agency that has significant involvement with the cannabis industry.

California legalized medical cannabis in 1996 in Proposition 215. California legalized adult-use cannabis almost 20 years later in Proposition 64 – an initiative amendment to the California Constitution. Proposition 64 was ill-conceived and poorly drafted. See Keeping Proposition 215’s Promise. The California Legislature compounded the problems created by Proposition 64 with its attempt to impose regulation and taxation on a well-established industry by force of will. See, See Implementing Proposition 64. The most grievous error of the Legislature, however, is likely its creation of an administrative agency structure filled with intelligent and skilled administrators who were wholly lacking in an understanding of the existing industry as well as in the vision required to guide the conversion of the existing underground industry into a regulated industry. See Background California Cannabis Regulation.

The foundation for the chaos created by the people of California in Proposition 64 and the Legislature was passed on to the Cities and Counties of California much like a dangerous virus. Every City and County received some measure of encouragement, or pressure, from advocates, promoters, advisers, consultants, experts, and voters as well as a host of opportunists. Each had an opinion. Each had an agenda.

None of these individuals had a comprehensive and workable plan for how a particular locality could best fit into California’s regulated cannabis industry. The Legislature failed to design a comprehensive and workable plan for California’s regulated cannabis industry let alone explain how the well-established underground cannabis industry would transition into a regulated industry. As a consequence, most California Cities and Counties have some local version of the chaos that prevails throughout California in its cannabis industry.

Santa Barbara County is different from all other Counties. No other County is likely to have made the same errors as Santa Barbara. Most Cities and Counties, however, have succumbed to a greater or lesser degree to the encouragement, or pressure, that led Santa Barbara County to error so grievously. We recommend those individuals we describe above at least consider those paragraphs of the closing of the Report that follows and how the thoughts of the Santa Barbara County Grand Jury may apply in the locality with which they are involved.

“A more sobering realization for the Jury was that the governance in this matter took the form of some Supervisors aggressively pushing through their own agendas while other Supervisors meekly followed or resigned themselves to the inevitable.

 “Some senior staff in the office of the Santa Barbara County Chief Executive Office and the Santa Barbara County Planning and Development Department became cannabis advocates, losing their objectivity to the point of interfering in the responsibilities of independent agencies and elected officials.”

  “The Board of Supervisors rushed through the cannabis ordinances, ignoring the Santa Barbara County Planning Commission and staff recommendations on verification of applicants claiming eligibility to grow cannabis, to buffer distances for odor, and to not establishing cannabis as a compatible use that would allow for an analysis of compatibility with traditional agriculture. The actions of the Board resulted in the picking of winners and losers.

 “The Board of Supervisors used the mechanism of an Ad Hoc Sub Committee to craft the cannabis ordinances out of public view. These ordinances are now the cautionary tale for other counties in the State of California on what not to do.

 “The Ralph M. Brown Act codified as California Government Code 54950 et seq., declares as follows: 

‘In enacting this chapter, the Legislature finds and declares that the public commissions, boards, and councils and the other public agencies in this State exist to aid in the conduct of the people’s business. It is the intent of the law that their actions be taken openly and that their deliberations be conducted openly.’

The people of this state do not yield their sovereignty to the agencies which serve them. The people in delegating authority, do not give their public servants the right to decide what is good for the people to know and what is not good for them to know. The people insist on remaining informed so that they may retain control over the instruments they have created.’

“The Jury believes the Board of Supervisors, in their hubris, failed the people of Santa Barbara County. Now they must amend the cannabis ordinances to regain the people’s trust.” [Bold added.]

All of the tools exist under the existing laws of the State of California to create a legal cannabis industry that encompasses both medical and adult-use cannabis in which all businesses are in complete compliance with all applicable tax and regulatory responsibilities. The State of California, working with the purported leaders of the cannabis industry, has forcefully demonstrated that it does not know how to produce such a result. This result, if it is to be achieved, will be produced by the thoughtful efforts of the governance of California’s Cities and Counties.

The lesson all local leaders must take from Santa Barbara County is that the decisions each locality makes relating to cannabis must be based on a comprehensive understanding of the interests of the entire community with respect to California’s cannabis industry. Every resident of California is impacted to some degree by California’s cannabis industry. As a consequence, every resident has some interest in California’s cannabis industry. Responsible governance of each locality demands informed and thoughtful compromises relating to the best interests of the entire community in all things, including cannabis.

Cannabis is just another agricultural commodity. As California agricultural commodities go, it is not particularly important from a financial standpoint. As a consequence of greed, this agricultural commodity has received far more attention in recent years than can be justified. For political reasons, this agricultural commodity has long caused injuries to far more California residents than were justified. The legalization of adult-use cannabis in California has raised the financial stakes and imposed a far greater burden on knowledgeable and thoughtful local governance.

The story told in the Report illustrates how difficult it is for local governance to rise to the occasion in view lack of adequate support and guidance from the State. In this regard, some may see a parallel with the States and national leadership in connection with the COVID-19 crisis.

 

Sean Hocking

Sean Hocking


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