California’s Small Cannabis Farmers Have Been Left High and Dry

For Ross Gordon, a policy analyst with the Origins Council, a nonprofit organization “dedicated to sustainable rural economic development within cannabis producing regions,” congressional legislation could avoid further corporate consolidation in the industry. “It is going to be necessary over a period of time to educate Congress that small cannabis farmers exist,” he said, “not just in California, but across the country.”

At the end of July, US Representative Jared Huffman, whose district includes Humboldt, introduced the SHIP ACT, which allows small cannabis producers to ship directly to consumers. Equal access to markets is a huge issue for mom-and-pop cannabis farmers, and even more so for Humboldt growers who feel isolated by their geographic remoteness; interstate highways don’t go through the region, and most farms are tucked hours down dirt roads. Even though Huffman’s bill has slim chances of passing in the current Congress, it lays the groundwork for if federal legalization—or at very least, reclassification of cannabis—occurs.

Cannabis is currently a Schedule I drug under federal law, meaning regulators see it as having a high potential for abuse and no medical use, listed alongside drugs like heroin and LSD. Advocates for cannabis want it changed to Schedule III, joining Tylenol, codeine, ketamine, and others, which would make pot highly regulated but distributable.

Both marijuana advocates and opponents have been watching the Drug Enforcement Administration (DEA) for possible rescheduling, which was ordered under Biden. A planned hearing for last January was delayed, then, in the last week of July, the judge overseeing the rescheduling suddenly retired, returning the matter to DEA administrator Terrence Cole, who was freshly confirmed by the Senate. Cannabis advocates were hopeful. During his confirmation hearing, Cole assured senators that examining the proposed rescheduling would be “one of my first priorities.” But those hopes were deflated just days later when he published a list of his priorities: cannabis reclassification was nowhere to be found.

In 2024, Governor Newsom had a chance to encourage a broader legal market for small producers. Assembly Bill 1111 was created to offer a new license to permit sales directly to customers at pop-up events, such as festivals or farmer’s markets. The bill passed the state assembly and went to Newsom’s desk, but he declined to sign it, saying the legislation would “undermine the existing retail licensing framework.”

Proposition 64, which legalized adult commercial use of marijuana in California by ballot-measure in 2016, ostensibly included a cap for farms at one-acre of cultivation. However, the supposed cap was a false promise for small farmers, according to Hannah Whyte, board chair and policy chair for Humboldt County Growers Association. People—and corporations—were allowed to accumulate as many one-acre cultivation licenses as they wanted.

This practice, called “license stacking,” allows for massive farms in counties like Santa Barbara and Monterey, neither of which have been historically known for cannabis cultivation. But they had heaps of fallow greenhouses left over from a flower market that has largely moved to South America. And both counties are close to population centers, like the Bay or Los Angeles, and therefore have more access to labor and markets.

The biggest of these farms is Glass House, which has licenses for more cultivation than all of the permitted grows in Humboldt County combined, according to Humboldt County Planning Commissioner John Ford. Immigration and Customs Enforcement, or ICE, recently raided Glass House revealing a host of purported labor violations—including child labor—when they arrested 361 people, including at least 14 migrant children.

Small farmers in Humboldt, who have had whole crops destroyed or embargoed by the DCC, point to the case in disbelief. Craig Nejedly, a Humboldt small-scale cultivator and retail cannabis seller, was recently hit with a $30,000 fine by DCC, including some $9,000 for improperly directed cameras on their operation, and a $3,000 fine for not displaying their permit on the door—even though the permit was posted on the glass door at knee-level. He’s fighting the fines, but it takes time and energy.

“Cannabis is not regulated as agriculture, and it’s regulated under the Department of Cannabis Control, and the department does what the name says it does,” said Gordon. “Its goal is to control cannabis,” he said, rather than supporting and promoting the farms.

Even though his wholesale price collapsed in 2021 to less than the cost of producing a pound— around $300—Golden has managed to keep his farm solvent and pay his mortgage. But margins are thin, which makes it hard to overcome these bureaucratic hiccups. Golden’s farm is required to have two water sources. It already had a spring, so the farm drilled a well for the second source. It cost around $30,000. But the following year, the county told them that it couldn’t be used as a second source, as there were concerns about it affecting the water table.

Golden grows good ganja—Lemon Cherry Gelato and RuntzXSkittlz strains this year—and has developed an efficient operation. He used to run a crew of five or six to operate his farm, but as money has grown tighter, he now keeps just two on staff. He works 10 hours a day, seven days a week during the growing season. Then, last year, tragedy struck.

Septoria leaf spot, a pernicious fungus, swept through his crop, devastating the harvest. And because of the inordinate amount of up-front fees associated with cannabis cultivation, he didn’t just lose the crop but tens of thousands of dollars already invested in the farm that year. He had to replace thousands of pounds of soil on his property—perhaps not an awful task when you live in flat land near a store, but much more arduous when the nursery is three hours away down winding, vertiginous roads.

Larger corporations are built to withstand year-on-year losses, but small businesses, especially stridently regulated ones, have a harder time weathering fiscal calamities. Golden has now gone over a year without making a payment on his mortgage. Luckily, not only has his private lender not foreclosed on him, but they’ve also agreed to finance his cultivation this year. Lenders aren’t usually in the business of funding a harvest, but because of the bust of the local cannabis industry, real estate prices for farms have plummeted. Four years ago, Golden’s farm was worth $1.25 million; last year, it was appraised at $350,000. There’s a glut of farms for sale, and the lender doesn’t want to end up with a piece of property they can’t even sell.

California is not known for cheap real estate, especially fertile forest near the coast just a few hours north of San Francisco Bay. But economic uncertainty pervades the region, a place with few high-paying jobs and dotted with farms left in a jumble of pollution, plastics, and dirt. The appraisal for Golden’s property is on par with other local farming real estate, according to Joe Morf, a longtime Humboldt resident and California real estate agent that specializes in cannabis farms. “The owner told me two or three years ago he was offered $500,000 for it,” he said, describing another former farm he sold in July. “It went into escrow for $150 [thousand].”

As the majority of cannabis production leaves Humboldt County, the entire community suffers. Cash flow—from the farmers to the local businesses—has dried up.

Nancy Olson, president of the Greater Eureka Chamber of Commerce, recently spearheaded a survey of the county’s businesses. Of the more than 200 that responded, 36.5 percent said they were “struggling” while 6.5 percent said they were “at risk of closing.”

Sue McIntyre, owner of the women’s clothing business Belle Starr, which has been around for 40 years, described the cannabis boom days before commercial legalization when she would make several cash deposits to the bank in a single week. “The changes that we’ve had since legalization have been pretty dramatic for the greater business community.”

The loss of farming jobs affects schools too. In the quaint village of Petrolia, tucked between ancient redwoods and the coast, middle school teacher Kevin Viselle thought he found his dream job when he moved there in 2017. Yet, as farmers were squeezed out, he watched more and more families move away. Eventually, the village merged the middle school with the high school and his job went up in smoke.

In California, there are now more inactive or surrendered cannabis licenses than there are active ones. Some advocates say this was due to greed from both the county and compliance consultants—both of whom were happy to get their cut when, in reality, a lot of the properties were not permissible because of problems like the steepness of slopes, closeness to headwater areas, threatened or endangered special status species, and other violations of the California Environmental Quality Act, or CEQA, which all farms must oblige.

Humboldt County created a cannabis tax in 2016 called Measure S, which originally taxed farms whether they were actively cultivating or not. The tax was seen as so onerous that many didn’t—or couldn’t—pay. Golden was part of a successful lawsuit against the county over the tax, resulting in a rewriting of Measure S and a return of more than $100,000 of previously paid county taxes to Golden. But the county kicked the can down the road on rescinding permits. As of March, 415 cultivation permit holders had entered into payment plans for back payments owed; 378 of those still owe approximately $5.1 million; 222 of those permit holders did not enter into a payment plan and collectively owe about $3.7 million.

The upfront fees farmers face also include the compliance regulations that must be met to be eligible for a license, as well as consultant fees for the farms to be up to code with the multiple California agencies required for approval—like Fish & Game, the Water Resources Control Board, Food & Ag, and more. Some farmers try to stay compliant themselves, but most farmers admit that they need to hire consultants, have a full-time office manager, or both. Unfortunately, since the wholesale market crash of 2021, few farmers have the margins to do so.

Golden says that almost all of his profits will go towards his defaulted mortgage this year, and with any luck—that is, if wholesale prices hold—he won’t have to get a second job in the winter. But that’s not his only worry. After a black bear broke into the kitchen shack on Golden’s farm multiple nights in a row, he and the workers covered the window’s shattered glass with a piece of plywood, nails sticking out. Nevertheless, Golden can’t imagine any other life. “I’d love to do this for another 10 to 15 years,” Golden said. “I don’t want to do anything else.”