'Crawling in the Right Direction'

A look at the state of the local cannabis industry from bookending perspectives


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Late last year, Sheriff William Honsal walked into a community meeting his staff had set up in Willow Creek to hear from cannabis farmers who'd become increasingly concerned about a rash of sophisticated robberies at grow scenes in the area. Gangs of armed men had held up a number of farmers at gunpoint after scouting the operations with drones. Now cultivators were feeling at risk, with state registration and the marketing tools they were being told are crucial to building a brand — like those Instagram photos of fresh harvests — leaving them feeling exposed and vulnerable.

But when Honsal entered the meeting room, he saw it had been set up with a lectern placed in front of rows of chairs and immediately asked that it be reshuffled, with the chairs placed in a circle. After all, he explained, this was a community meeting designed to find community solutions.

"It was kind of like a moment of community therapy," says Terra Carver, executive director of the Humboldt County Growers Alliance.

In many ways, Carver says the meeting can be seen as a kind of microcosm of the nascent legal recreational industry. A little more than two years after California began recreational sales, there are success and challenges, fears and hopes, lofty dreams and some bitter realities, too. And it's all happening out in the open.

"The state of the industry is tough but good," Carver says. "We're crawling in the right direction and hopefully we're going to stand up soon. We're going to run one day. I know it."

But for most in the local industry, running seems a long way off. Trying to get a sense of the state of the industry for our annual cannabis issue, the Journal caught up with Carver, a voice for local growers, and Bryan Willkomm, general manager of the Humboldt Patient Resource Center, a dispensary that has operated in Arcata for more than 20 years and recently opened a Eureka location.

While the Journal had hoped to gather more perspectives for this article until a declaration of a local health emergency in the face of the COVID-19 virus necessitated shifting resources elsewhere, Willkomm and Carver's perspectives bookend the industry from proverbial seed to sale.

While both see plenty of reason for optimism and excitement, they also point to real challenges that press both farmers and retailers. Most notable among those are taxes and issues with distributors.

While prior to regulation some saw distribution as the sweet spot in the supply chain where all the money would be made, it's proven a daunting business for many. After all, under state regulations, it's distributors who are responsible for picking up products in bulk, quarantining them while getting them lab tested, packaging and labeling them before, finally, distributing them to retailers. Any hiccup in that process — whether it's a failed lab test or a label that doesn't meet state regulations — can cause costly delays. And Humboldt County's location near the northern tip of California's supply chain further complicates things. But dispensaries, manufacturers and cultivators are all entirely dependent on them. As an example, Willkomm recalls a time recently when HPRC sold out of a locally produced edible. Even though the manufacturer is located just minutes away, it took days to restock. He also has to regularly reject products because they don't meet the state's rigorous labeling requirements.

"It can happen weekly," he says.

On the cultivator side, Carver says the frustrations are similar, with farmers sometimes facing lengthy delays in getting their harvests to market or payments after they do. Both Willkomm and Carver concede the distributors themselves are struggling to make ends meet, which poses its own problems, as Carver says some have gone out of business while holding large amounts of local product that hasn't been paid for or with payments still owed to local farmers and manufacturers.

Both also say that the bump in taxes that went into effect this year has caused frustrations, further squeezing everything from cultivation to retail. Carver says "tax relief" remains the industry's focal point legislatively, and Willkomm says the tax bumps ultimately exacerbate a price-point problem on the retail side.

Asked what the average consumer wants, Willkomm says that while there are lots of knowledgeable consumers out there seeking top-shelf products, many are either less sophisticated or just cash-strapped, wanting to buy an eighth of an ounce of cannabis with a high THC content and a $20 price tag.

In addition to potentially getting some tax breaks that would bring across-the-board prices into better competition with the unregulated market, Willkomm and Carver say consumer education is ultimately going to be crucial for the industry. And that remains a challenge.

Carver says she's hopeful marketing funds made available through Humboldt County's Project Trellis, which took a portion of local cannabis tax revenue and reinvested it into the industry via small business loans and a marketing campaign, will help educate consumers throughout the state on things like the entourage effect, or the idea that a plant's full terpene profile has as much to do with its psychoactive effects as its THC content. There's also movement at the state level toward creating appellations, which would tie specific strains to specific regions and growing methods, creating, she believes, terrific branding and educational opportunities.

"That's where the whole game is going to change," Carver says. "It's going to be fun."

And locally, Willkomm says HPRC's mission is to empower consumers through education, which is why all the dispensaries' budtenders get specialized training and are prepared to, say, answer which strains with what THC content and terpene profiles are best poised to deliver an uplifting, invigorating high. It's ultimately about helping consumers discover how to get the most out of cannabis.

"I'll say to a customer, 'Hey, you're dabbing a gram a day. Let's get you some information on desensitizing to THC," he says, adding that it hits on HCGA's "triple bottom line" of "planet, people, prosperity." "It's the full triple play. It's the coolest piece."

Despite challenges, both Carver and Willkomm talk excitedly about the future of the industry. Willkomm talks excitedly about the possibilities of cannabis tourism bringing people out of urban areas for a carefully tailored experience. He sees them being picked up from the airport and taken to an Airbnb, where a basket of locally grown cannabis flowers awaits, and throughout their stay they are toted from local dispensaries and farms to the area's bevy of natural attractions and local food producers, maybe stopping at a local smoking lounge along the way.

Pointing to the fact that Humboldt County already has more state cultivation licenses than anywhere else in California and more independent farms, Carver says the foundation is already in place. She says the county's abatement and enforcement efforts are having an impact on the illicit market and both its impacts on the legal industry and neighborhoods.

"Abatement is working," she says. "Hills are quieter, traffic is quieter and neighborhoods are quieter. Communities are seeing impacts go down."

Honsal, for his part, agrees that abatement and other enforcement efforts are working. He says the that based on flyovers, he estimates the number of illegal growing operations in the county to be less than 4,000, down from a pre-legalization peak of more than 10,000. And he said calls for service numbers support the idea that the "hills are quieter," noting that the unincorporated areas of Humboldt County recorded just one homicide last year, down from seven in 2018.

And with Project Trellis coming online to provide small loans just as cultivators are facing two-year compliance agreements that come with hefty price tags and no bank financing, and a coordinated approach to marketing the industry, Carver says the local industry may soon go from a crawl to a stand.

"We've gone from prohibited to regulated to supported," Carver says. "We're the only area that has gotten to that third phase. That's not being done anywhere else."

Thadeus Greenson is the Journal's news editor and prefers he/him pronouns. Reach him at 442-1400, extension 321, or Follow him on Twitter @thadeusgreenson.


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