Grand Jury Criticizes Santa Barbara County Supervisors for Cannabis Regulations

A civil Grand Jury report concluded that the Santa Barbara County Board of Supervisors made some “perplexing” decisions when crafting cannabis ordinances, and should make amendments to address odors, over-concentration of farms, taxation, and unpermitted operations.

The supervisors have amended the county’s land use and business license cannabis ordinances several times already, and most recently decided to ban cultivation within existing developed rural neighborhoods, and require processing and drying to be done indoors with odor control.

​Many of the changes have been in response to nuisance issues, including the skunky smell, caused by the cannabis cultivation industry growing in Santa Barbara County.

As of February, the county had 270 acres of cannabis cultivation, including 199 acres of “legal nonconforming” farms, which do not have county permits, but are allowed to continue operating, without odor control, while they apply for them.

“Without question, one of the most perplexing decisions made by the board was the utilization of an unverified affidavit system to qualify applicants who claimed to be existing medical cannabis growers, and thus eligible to apply for licenses to continue to grow cannabis,” the Grand Jury wrote in its report, which was very critical of the way the county developed the regulations.

“The major and obvious flaw of this affidavit system was the lack of any required verification as to the veracity of whether the applicant had indeed been growing cannabis as of January 19, 2016. This concern was noted by the Planning Commission that recommended a process that included a public hearing wherein the applicant could prove their affidavit was truthful.

“The Board’s disregard for potential abuse is incomprehensible,” the report said.

Click here to read the Grand Jury report.

The Grand Jury recommends that the county require “legal nonconforming” operators to prove their status to the Planning Commission when they apply for a permit, deny permits if they can’t prove it, and suspend all unpermitted operations until they prove they have odor control at their property boundaries.

These affidavits are going to be more of an enforcement target in the future, according to the county, and some operators have been accused of committing perjury to obtain county permits.

The Grand Jury members accused the Board of Supervisors of using a two-member ad hoc subcommittee “to craft the cannabis ordinances out of public view. These ordinances are now the cautionary tale for other counties in the state of California on what not to do.”

The supervisors gave “nearly unfettered access to cannabis growers and cannabis industry representatives during the creation of the ordinances,” the Grand Jury report said, and individual supervisors accepted campaign contributions from people who had matters pending a decision before the board.

“While the jury understands that sending emails to advocate positions favorable to the interests of their client is part of the job of a lobbyist, it was unnerving to the jury to see both the tone and timing of these emails. The tone of these emails appeared at times as if to direct specific actions to the board members, and gave the perception of an attempt to command instead of recommend,” the report said.

The report makes several findings and recommendations: create cannabis-related environmental impact reports for each region of the county; make ad hoc subcommittees open to the public and subject to open meeting laws; develop standards to disclose access to lobbying individuals; require conditional use permits for all cannabis projects (the Board of Supervisors considered and rejected this at the June 11 meeting); and change the taxation method.

“A more sobering realization for the jury was that the governance in this matter took the form of some supervisors aggressively pushing through their own agendas while other supervisors meekly followed or resigned themselves to the inevitable. Some senior staff in the office of the Santa Barbara County Chief Executive Office and the Santa Barbara County Planning and Development Department became cannabis advocates, losing their objectivity to the point of interfering in the responsibilities of independent agencies and elected officials,” the report said.

No specific staff members or actions were referenced in the report, but both supervisors on the ad hoc subcommittee — Das Williams and Steve Lavagnino — have come under attack politically for their role in developing the ordinances.

Cannabis became a major issue in Williams’ re-election bid, which he won against challenger Laura Capps in March.  

As Noozhawk staff writer Joshua Molina reported at the time, “Williams accepted $62,500 from the cannabis industry while serving on the county board that wrote the rules for regulating the industry.”

Taxing Cannabis

Santa Barbara County taxes cultivators based on gross receipts, which can be difficult to verify, while most counties use a square-footage-based tax, according to the Grand Jury report.

County officials reportedly told members of the Grand Jury that the gross receipts method could be more lucrative, but that hasn’t been the case, according to the report.

Santa Barbara County’s 217 acres of permitted cannabis cultivation produced tax revenues of $6.8 million in 2018-19, while Monterey County, which only has 62 acres of indoor grows, received $15.4 million in cannabis tax revenues in the same year, the report said.

(There are 43,560 square feet in an acre, so if Santa Barbara County’s 217 acres all paid taxes at Monterey County’s highest rate of $8 per square foot for indoor cultivation, it would have generated $75.6 million that year.)

The county is starting tax-related enforcement actions, including against operators who failed to file tax reports.

In the most recent quarter, 43 operators paid taxes, 48 operators reported zero gross receipts, and 15 operators did not submit reports.

Cannabis Odor Complaints

“Perhaps the most surprising discovery was the willingness of the board to justify subjecting Carpinteria, and the rest of the county, to a condition that affects the health and enjoyment of residents,” the report said on the subject of cannabis odors.

“This was not an unexpected result of the board’s actions in creating the cannabis ordinances. They knew about the quality-of-life concerns, and chose the revenue potential of cannabis instead.”

The Grand Jury and the county have received many complaints about cannabis odor, including from the city of Carpinteria and Carpinteria High School, which is located very close to multiple operating unpermitted cannabis farms.

When the school district asked for buffer zones of 1,000 feet or 1,500 feet between the high school and cannabis operations, the board approved buffers of 750 feet from cultivation and 600 feet from nursery operations, the Grand Jury report said, which ignored Planning Commission and staff recommendations.

“Carpinteria was not the only victim,” the Grand Jury wrote. “The Santa Ynez Valley, including Buellton, the Santa Rita Hills AVA wine tasting rooms, Cebada Canyon and Los Alamos residents, also voiced their complaints at board meetings and through emails.

There can be no doubt that the board knew the extent of the odor problem. So why would the board ignore this obvious concern?

“The decision to make the development of a robust cannabis industry the first primary objective of the cannabis ordinances project meant that known serious problems such as odor were not sufficiently important to derail their goal,” the report said.

The Board of Supervisors and other respondents have 90 days to file official responses to the findings and recommendations of the Grand Jury report.

— Noozhawk managing editor Giana Magnoli can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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