Monterey County represents a lot of things to a lot of different people. For some, Monterey evokes visions of epic surf, world-class golf, and shamefully expensive car shows. For others, it’s all about the hedonistic pleasure of fine dining and lounging around their multi-million-dollar “cottages.” But for some, Monterey County and the Salinas Valley are all about cultivating legal cannabis and building a sustainable business model for California’s fast-growing marijuana industry.
First made famous by John Steinbeck in the early 1960s as the backdrop for such literary masterpieces as “The Grapes of Wrath” and “East of Eden,” Monterey County has deep roots in the agricultural world. At the heart of the nation’s most populous state, the Salinas Valley enjoys a moderate coastal influence, dark alluvial soil, and a central distribution hub in California for all things agricultural.
As a kid in the early 70s, I clearly remember a huge ‘Cannabis Row’ graffiti tag over what is now the Monterey Bay Aquarium. Painted on the wall near Doc Ricketts’ lab, it was meant as a 420-tribute to Steinbeck’s “Cannery Row.” That graffiti, as it turns out, was an omen of things to come for Monterey County and the Salinas Valley.
Long considered “America’s salad bowl” thanks to its highly productive, dark rich soil, the Salinas Valley is now on the precipice of becoming America’s Marijuana Garden.
(Full disclosure: First surfing together at Carmel Beach as kids, Gavin Kogan, Tod Williamson, and myself have known each other for nearly 40 years. While each traveled in our own unique direction over the past four decades, the center of our collective universe has remained – the legalization of this incredible plant.)
On the peninsula for a little rest and relaxation two weeks ago, I had the opportunity to catch up with my old friends Gavin Kogan and Tod Williamson. Collectively, the two have worked to advance the industry for nearly two decades. Gavin is a past cannabis attorney and co-founder of the Central Coast’s Indus Holdings and Grupo Flor, while Tod has methodically produced some of the best cannabis in Monterey County for the past 20 years. No longer confined to just medical grows, Tod is a now the primary cultivation consultant for Grupo.
Active within the central coast cannabis industry after the passage of Proposition 215 (a.k.a. California’s Compassionate Use Act of 1996), I was curious to know, and had asked them, “How is your business doing now that marijuana has been legalized?”
Quick to expand my restricted vision on what’s being accomplished, Gavin noted, “We’re not building a business, we’re building an industry.” No doubt; my bad. In an attempt to broaden my gaze on the topic, Tod invited me to take an abbreviated tour around one of their Salinas facilities and bring me up to speed.
Grupo Flor has created a unique ecosystem within Monterey County’s fast-growing marijuana industry. In addition to holding vast cannabis interests in real estate, equipment finance, and operations throughout the entire wholesale supply chain, the company is politically active and acts as a valuable conduit between industry upstarts and other vested stakeholders, helping them all remain in compliance with the rising mountain of state and county regulations. Centrally located and ready to facilitate real growth within the industry, Monterey’s largest cannabis conglomerate currently controls approximately 2.6 million square feet of property in Monterey County ideal for nursery, cultivation, extraction, manufacturing, packaging, distribution, and retail operations.
Kogan, an attorney by trade and co-founder of Grupo, noted, “we may not be a county of dispensaries, but we sure as hell are building out the infrastructure to be the central plumbing for the emerging California marketplace.” With a population of approximately 40 million people, that emerging California marijuana marketplace is going to be worth billions of dollars – and will require an extensive plumbing system to succeed.
Monterey County’s marijuana taxes are prohibitive
Other monetary obstacles aside, startup cultivation operations will be assessed a $15 per square foot tax, in addition to any rent! Seemingly punitive, and something that could seriously stunt the growth of this much-needed industry in Monterey County, the assessed tax on a 10,000 ft.² grow for flower would be $150,000 a year. Taxed at a significantly lower rate, the massive Grupo grow site I visited was primarily dedicated to the healthy propagation of clones and the maintenance of specific mother strains.
In speaking with several of the cultivators on-site, most viewed the $15 per square foot tax as potentially harmful to the local economy. Rather than making the tax cost prohibitive – potentially driving new industry startups into the arms of other counties – locals would like to see the Monterey County Board of Supervisors reduce their marijuana cultivation tax to $7 or $8 per square foot. While Monterey County Code allows supervisors to charge a maximum tax rate of $25 per square foot, that would a be cost prohibitive for start-ups and short-sighted – severely damaging the emergence of regulated cannabis in the Salinas Valley.
Kogan confirms, there is a lot of local political momentum to reverse the thoughtless tax, “I think it’s starting to dawn on our county’s regulators that the $15 tax is destructive to the economic promise they had envisioned.” Gavin explained, “it’s thoughtless because it’s based on illegal market economics, chases away valuable capital, and will likely result in many failed operations. We need hundreds of millions of dollars to convert this valley; this tax basically tells investors and growers to be on the lookout for the next best alternative. That’s sad for all the work we’ve put into creating this environment.”
New marijuana industry provides revitalization, jobs, and hope
Steinbeck’s works empathized with the underpaid agricultural worker and articulated how the worker is as valuable a part of the whole as the employer. Without Steinbeck’s influence, it’s likely we wouldn’t hear Wall Street or Silicon Valley executives say things like “our employees are our greatest asset.” As such, this is a perfect time for the Monterey County Board of Supervisors to comprehend that there is more at stake here than cannabis tax dollars. There are vast employment opportunities both within and serving this emerging cannabis industry.
If properly rolled out, this could be a “win-win” for the Salinas Valley; not only would long decaying greenhouses become renovated and filled with California’s newest agricultural product, the potential upside of the ancillary revenues generated would be nothing short of breathtaking. Recent statistics show that for every cannabis dollar earned, five dollars are earned supporting the industry. Kogan adds, “that translates to jobs and projects for all construction trades, lawyers, accountants, ag-equipment suppliers, and ultimately, more spending money in our communities … the implications are immense.”
Indeed, and thanks for everything to Grupo Flor, Gavin, and Tod. As Arnie once said, “I’ll be back.”
This is the first installment of a two-part series on Monterey County’s new “Cannabis Row.” Next up, we’ll take a look at Aram Stoney and John DeFloria’s newly licensed medical marijuana dispensary, Big Sur Cannabotanicals. Located in the Carmel Rancho Shopping Center, their dispensary is the first to receive a license to operate in unincorporated Monterey County, and is anticipated to be open by Labor Day 2017.
(Update: $15 per square foot tax is assessed annually, not monthly as originally published)