Economics 101 teaches us that carrots are more effective than sticks in encouraging compliance by any industry. So what are the incentives for the cannabis industry? Why is cannabis being regulated more intensely than grapes, cattle or any other agricultural endeavor? And why do we continue to deal with one problem in a piecemeal fashion rather than looking at comprehensive regulations.
Imagine a vibrant and effective set of financial incentives that would be so effective that enforcement would become a smaller, but enforceable program. What would that look like? Does the creation of more laws that we do not enforce make sense?
Currently, the incentives for cannabis growing are, "become compliant and you get to grow legally". That's it. These new regulatory compliance requirements make the growing more expensive while the revenues continue to drop. This lack of financial incentives is reflected in the applications to date for compliance. There have been 2,337 applications so far and many are "grossly incomplete," according to John Ford, Humboldt County Planning director. It is estimated that there are more than 10,000 grows in Humboldt County. The enforcement agencies talk tough about increasing enforcement but a lack of funding and personnel make that difficult. So most of the grows stay uncompliant and the environmental damage continues to mount.
Even if enforcement were to quadruple, most of the grows would still go un-regulated. As long as that is the case, compliance will fall way short of what is needed for the industry to evolve and come out of the shadows. So how do we increase compliance and make limited law enforcement more effective? We do it through financial incentives for good land stewardship and rewards for being compliant and investing in protecting the land and water. The better the incentives, the more that come into compliance and the less enforcement is needed. It is a simple formula.
Perhaps we can learn from previous incentive programs like solar credits. Once the credits became significant and a write off on your income taxes became possible, hundreds of thousands of homes went solar. It is not complicated. Something about horses, water and carrots.
One of the biggest problems with current cannabis legislation is the focus on just one plant, just one industry. Such narrow regulatory approaches rarely succeed. A more effective approach would be to develop regulation that is focused on how you grow rather than what you grow. If it is legal to grow it, then let's focus on the land use practices, not the plant. Some of this focus comes from cannabis being illegal to grow until recently. Yes, there are many bad land use practices still happening, so it is an easy target and should be regulated. But are we being effective? The industry is being blamed for many damages, rightfully so, but, for issues like low flows in our streams, it is not the only culprit. But that's a topic of another article. Let's just say that North Coast hydrology and base flows in our streams and rivers is more complicated than just the growers.
One way to approach cannabis regulation, and for that matter most agricultural activities, would be to develop a compliance program focused on land uses. Those landowners practicing good stewardship would be eligible for financial tax and permit incentives. The program would be results-oriented and involve audits of land-use activities every one to three years depending on the activity and its intensity. The new regulation encompassing these incentives could be part of a Stewardship Act that would involve county, state and federal legislation to enact.
The effort would start at the county level. Counties update their general plans and zoning ordinances every 10 years or so. They could add a new category called a Stewardship Overlay Zone (SOZ), while maintaining the underlying zoning, be it residential, agricultural, industrial, agricultural or Timber Production Zone (TPZ). To qualify for the SOZ, you would agree to a land-use inspection every one to three years by a team of land-use experts. In rural areas, this team might include a representative from Natural Resources Conservation Service (NRCS), the local Resource Conservation District (RCD) and a member of the local watershed council. In urban areas, the inspection team might include a public works employee, drainage expert and a planner. Team make up could be determined at the local level.
The point is, as a landowner, you get an inspection and if you are 80 percent or better on implementing Best Management Practices (BMP) than you qualify for significant tax and permit incentives. The BMPs would be spelled out in handouts from NRCS, RCDs and the state Department of Fish and Wildlife. Workshops and technical assistance would be offered to landowners. It would seem that for cannabis farmers, timber harvesting and many other agricultural activities, there is already an audit requirement so this would be nothing new. What would be new is that once qualifying for the SOZ, you would qualify for significant financial incentives.
Incentives could include tax credits against your income tax liability. These tax credits could include all expenses made by the landowner to protect public trust values of water, soil and wildlife. Efforts to control erosion, protect streams, store winter rain water and protect wildlife could be tax write-offs, thereby encouraging damage-preventing land use practices. Once qualified as a Stewardship landowner, you could be placed in a streamlined permit path because we know you already practice sound land use. Local, state and federal governments would need to enact tax and permit incentives to tie into the Stewardship Act and SOZ. Landowners not wanting to do an audit would not get the overlay and would instead go through the standard permitting process and receive no tax write offs.
Stewardship landowners would get write offs and streamlined permitting, which would significantly increase the number of landowners practicing sound land use. These landowners would include cannabis farmers and many other agricultural producers. It would provide incentives in areas both rural and urban. In rural areas, it would help reduce erosion and sedimentation, and protect water and wildlife resources. In urban areas, it might include storm water management, where any impervious surface runoff would be captured on site in rain barrels and rain gardens, reducing water withdrawals.
The point is, with effective incentives (carrots) most landowners would comply simply because it makes financial sense. We would be dealing with multiple types of land use in both rural and urban areas. We would be supporting prevention of damaging land use, which is much cheaper than repair. Remember the Humpty Dumpty story ... cheaper to keep him on the wall, or an once of prevention is worth a pound of repair.
Perhaps most importantly, we would set up a financial reward system that benefits good land stewardship. A well integrated local, state and federal incentive program for protecting the land, the water and the wildlife would dramatically expand the available resources for watershed and fisheries restoration. Current grant programs cannot deal with all the damaged watersheds. Only effective prevention of more damage and repair of existing damage can repair the health and wealth of our natural resource base.
Stephen Sungnome Madrone is a professor of forestry and watershed management at Humboldt State University and executive director for the Mattole Salmon Group. He lives in Trinidad.
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