Cannabis and Corruption: The Financial Tragedy of Calaveras County

The rollout of legal cannabis in California has been anything but smooth. Between the complicated laws throwing the industry into a tizzy, the high application expenses to run a legitimate cannabis business and the lack of financial services, the cannabis industry in California isn’t just experiencing growing pains—it’s going through a transformation. But there’s a rural county in Northern California that’s made this chaotic time substantially messier. After passing laws in 2016 for commercial cannabis cultivation, Calaveras County Board of Supervisors reversed its decision on Jan. 10, 2018—after taking more than $5,000 from more than 700 applicants.

 

A whole new set of officials replaced the previous Board of Supervisors who put Measure C—the ordinance to regulate commercial cannabis—on the ballot. Two members of the previous board retired, and the other three didn't receive enough votes to be elected back into office. Little did residents know how badly the changing of the guard would affect the local cannabis community.

 

According to reports across news outlets, such as the SacBee, Leafly, Calaveras Enterprise and Mercury News, the current Board of Supervisors isn’t planning to return the $7.5 million acquired in registration fees to the applicants. The ordinance reversal doesn’t just effect cultivators, either. While the previous Board of Supervisors was in office, the county hired additional police and staff with the expectation of additional cannabis tax revenues.

 

Considering Calaveras County is a rural, agriculture-oriented community with a population of 45,515, this financial blow is beyond devastating. Most applicants already invested and began building-out their cultivations sites. Residents who applied aren’t only worried about what their next move is—they’re trying to figure out how to survive.

 

Calaveras resident Burch Shufeldt dropped out of school in 2006 to grow in the rural Northern California community to supply a Santa Cruz dispensary. After Measure C passed in 2016, he invested $1 million for two properties at a total of 220 acres, while the landowner financed the location, according to Leafly. Shufeldt paid $88,000 in cultivation taxes, $15,000 in fees in 2016 and 2017 for two permitted outdoor sites, with one renewal permit fee. He’s not getting any of that money back and is struggling to find ways to avoid living in poverty.

 

“[The Board of Supervisors] pulled a bait and switch,” says Jina Kim, a Santa Ana-based cannabis attorney who represents several clients in Calaveras County. “People have cumulatively spent millions of dollars on their cultivation sites. Their livelihoods are now on the line because of the Board of Supervisors’ blatant corruption.”

 

The county planning department estimated that nearly 1,600 commercial cannabis growers were operating in the region by mid-2017—most of who were already licensed by the county thanks to the voter-approved Measure C, an ordinance passed in Nov. 2016 allowing for commercial cultivation. The move to ban cannabis businesses means every grower must halt all operations by May 1.

 

 

Kim explains that families of cannabis growers live in Calaveras County. In other words, generations of cannabis cultivators have made their living from this for decades. Commercial cultivation is what tons of residents dreamed of for years. The ordinance reversal, Kim explains, makes these people criminals in the eyes of the law.

 

“These peoples are not criminals,” she contends. “They have families and work just like you and me to provide for them… What this does is create space for the black market to grow.”

 

Most longtime Calaveras resident cultivators have only grown black market cannabis because, until Jan. 1, 2018, that’s what the cannabis landscape was. Thus, it’s likely many will do that again when and if finances allow; with the hope of not getting shut down by law enforcement.

 

In the late summer of 2015, Calaveras suffered the wrath of the Butte Fire, which destroyed over 850 homes. It’s considered the most significant natural disaster in the county’s history. But it’s what lead to the county’s cultivation boom. The following spring, marijuana farms began to bloom throughout the hills and among the scorched trees, as cannabis speculators saw the charred land an opportunity to purchase cheap properties devalued by the fire.

 

Calaveras still isn’t fully recovered from the devastation. But the income commercial cannabis would have brought to the region was a means of lifting the community out of economic anguish. Nearly 2,000 cultivators are now dealing with an entirely different tragedy—one that’s affecting a significant portion of the 45,000 person population.

 

“People are moving out of Calaveras, the county is going to be in debt, and they’re going to get sued,” says Kim. “This all could’ve been avoided.”