*This article first appeared on SFGate.com
In the late spring of 2015, Gavin Newsom traveled north to Humboldt County to rally support for legalizing cannabis. Pot farmers in the historic cannabis growing region were deeply skeptical of legalization, fearing that big corporations would wipe out their small family farms. Newsom, then a lieutenant governor, came with both a warning and a promise. He confirmed that big money interests were already lobbying in Sacramento, but Newsom said he would stand in their way.
“With respect,” Newsom told a standing-room-only crowd at a Garberville theater, according to the North Coast Journal, “they’re writing a lot of you guys out and we cannot let that happen.” The audience appeared wooed by the savvy politician, and proceeded to take selfies with the rising star. One cannabis advocate told the local newspaper that “I think when they said they’re here to defend small farms I think they meant it.”
Nearly 10 years later, cannabis is legal in California, Newsom got a promotion to governor, and small cannabis farms have been decimated. Legalization has shuttered thousands of pot farms across Northern California, destroying multi-generational cannabis businesses and leaving rural towns boarded up.
Farmers see a trail of broken promises and betrayal from the state government. Few people blame Newsom entirely, but his long involvement in state government when decisions were made that they say hurt the industry have made him the focus of particular ire. That includes a decision seven years ago to allow massive farms in the state and his recent veto of a bill that would give farmers more access to sell their pot.
Newsom, through a spokesperson, declined to be interviewed for this story or answer a list of questions; instead, his office directed SFGATE to the Department of Cannabis Control, which shared a lengthy statement saying, in part, that the state “continues to stand by his early commitment to protect small farms.” The spokesperson pointed to $40 million in grants the state has given to support small farms, the DCC helping farmers get licenses in Mendocino, and Newsom signing a law that eliminated a cultivation tax.
However, the carnage at legal pot farms has left some people in the industry asking whether the state’s plan all along included putting the small farms of the Emerald Triangle out of business.
“California is strangling the golden goose right now,” said Jason Matthys, a cannabis breeder and activist in Mendocino County. “I have seen 99% of everyone exit the industry. And maybe that’s what they want? Maybe there are some fat cats that are whispering in the governor’s ear, ‘Let’s get these hippies out of here.’”
Chris Anderson, the owner of Redwood Roots distribution in Humboldt County, can pinpoint the exact moment California’s small farmers were first betrayed. It was in November 2017, two months before legal sales were to begin, and the California Department of Food and Agriculture released rules that shocked the farming community: The state would allow legal pot farms to grow as large as they want.
“That was a monstrous problem,” Anderson told SFGATE. “That is where the collapse of the marketplace and oversupply came from.”
Keeping legal pot farms small was a key promise made to Northern California’s legacy farmers. Proposition 64, the initiative that legalized cannabis, blocked any farm from growing larger than 1 acre for the first five years of legalization. California’s pioneering pot farmers use small plots of land, and were worried they couldn’t compete against mega farms. They wanted five years to get a running start before large farms were legal, but suddenly that head start was taken away.
It’s still unclear why the state erased the 1-acre cap. Large farming interests in the Salinas Valley and Santa Barbara appear to have lobbied for the effort, according to reporting by Leafly News in 2017. A spokesperson for the state’s Department of Food and Agriculture said they changed the rule based on input from unnamed stakeholders.
The DCC said in a statement to SFGATE that Newsom, who was lieutenant governor in 2017, did not have authority over the decision nor did he endorse the change. But Newsom also declined to argue against it when asked by the San Francisco Chronicle at the time. (The Chronicle and SFGATE are both owned by Hearst but have separate newsrooms.)
Judi Nelson, the owner of Sol Spirit Farm in Trinity County, said she supported the law largely because of the acreage cap, and can still remember Newsom making that promise when he visited Humboldt County.
“Newsom came up and stood there with us and said to our faces there was going to be this 1 acre cap,” Nelson said.
With the restriction lifted, major corporations immediately started investing in massive farms and growing cannabis at a scale never before seen in the state. The small family farms in the Emerald Triangle were left competing against million-square-foot greenhouses filled with robots. As of now, the industrial farms appear to be winning.
California’s legacy pot growers say they have almost no way to compete against the mega farms. The average farm size in Humboldt County is under 10,000 square feet, according to a 2021 study, while farms in Santa Barbara County can be as large as 4.1 million square feet. These larger facilities can produce huge amounts of cannabis at a fraction of the cost of a small family farm.
For example, Glass House Farms, one of the state’s biggest cultivators, grows cannabis in a 2 million-square-foot greenhouse facility that was financed by a $100 million loan. They announced last week that they had harvested 232,000 pounds of cannabis in the previous quarter. Humboldt County produced 220,000 pounds of pot during the same time period, according to DCC data, meaning this single mega farm in Southern California grew more than every farm in Humboldt County combined.
This enormous supply of cannabis has sent wholesale prices into a free fall. A pound of cannabis could sell for $2,000 prior to legalization; now it can go for as little as $100. Dropping prices have subsequently put family farms across Northern California out of business. In 2016, about 2,000 farmers applied for cultivation licenses in Humboldt. Only about 1,000 remain today.
This price compression and widespread failures of farms would have likely happened in any legalization scenario, even if California maintained its ban on large farms. Almost every state that has legalized cannabis has seen prices fall and small businesses fail. But California’s early green light on mega farms hastened this trend and left “these small farms having no way to compete,” according to Brad Rowe, a researcher at UCLA.
“It’s really dire. Half of the people who had [farming] licenses in California last year didn’t renew them. They’re throwing in the towel,” Rowe said.
Newsom put himself back in the angry spotlight of cannabis farmers this fall when he vetoed a law that would have given small farms the right to sell some of their cannabis directly to consumers at farmers markets. The governor said the law would put “significant strain” on the state government and “further burden” the cannabis industry, although he did say he was open to other ways to legalize direct sales to consumers in the future.
Farmers markets may seem like a small request, but cannabis growers see these types of direct sales as one of the few things that could save the remaining small farms in California. Selling directly to a customer gives more money straight to the cultivator, the same way a produce farmers market or a brew pub helps support those industries.
Unfortunately for the farmers, that’s illegal in California. Currently, cannabis growers are required to sell their pot to distributors and retailers before it gets to customers, reducing profit margins and making it harder for them to tell their story.
Matthys, the cannabis breeder and activist in Mendocino, says California’s requirement that farmers work with distributors has put farmers “in the back seat” and unable to turn a profit because “there’s too many people in the way.”
Nelson, the farmer in Trinity County, said she’s still hoping that lawmakers will approve a law that allows her to sell cannabis directly to consumers. She said that would be a “game changer” for her that “would allow more farms to survive in the Emerald Triangle.”
For now, she said she has no way to connect with her customers in the current retail model. “We never get to tell our story, we never get to introduce what makes our product different from mass-produced products,” she said. That’s left her family farm hanging by a thread.
“I feel like we’re still fighting to stay alive every day,” Nelson said.
