Traditional Ag – Sleeping Giant

For thousands of relatively conservative towns across the United States, agriculture is the backbone of the local economy.

But many of these traditional ag hubs, particularly in California’s Central Valley, face a bleak financial future if dwindling revenue streams and tax bases can’t be replaced.

The town of Coalinga, California, was built on agriculture and oil, the latter of which is in a protracted bear market. At one point, city planners thought prisons might be an answer, but that too has fallen short of expected revenue.

At the current pace, Coalinga will run out of money in three years, according to City Council member Nathan Vosburg. Many neighboring cities face a similar predicament.

In January, the Coalinga City Council shocked locals by approving commercial cannabis operations. The move initially prompted backlash from local clergy and other longtime residents.

The mood seems to have calmed down as residents have heard from proposed operators such as Ocean Grown Extracts, which addressed the council at its meeting in March. The company has proposed to buy the vacant Claremont Custody Center from the city, and turn it into a 77,000-square-foot grow facility. The professional team from Ocean Grown Extracts gave a detailed presentation addressing how the company would add 55 local jobs and boost local tax revenue once operations started. The City Council voted 4-1 in favor of the sale, but there’s still a sense of urgency regarding the subject of cannabis. This fall, state residents will vote on an initiative that would legalize recreational marijuana for all adults.

“I don’t want us to wait until November on this,” Coalinga Mayor Ron Ramsey said. “There are a lot of towns hurting, and they too will be looking into this.”

The push for cannabis cultivation in Coalinga is sure to make waves in the Central Valley — and not just among the active cannabis community.

Multi-generational farm operators, especially those with forward-thinking enterprises, are beginning to ask themselves: “Why aren’t we going in this direction?”

Traditional Farm Plans Entry

Bowles Farming Company is a sixth-generation family farming outfit based in Merced County, California. It grows annual crops like tomatoes, melons and carrots on 11,000 acres. Company president Cannon Michael keeps a close eye on cannabis developments and could begin his own operation by spring of 2017.

To Michael, “It’s just another crop, and the customer is always right.”

He sees many advantages for large farmers in cannabis cultivation. Small growers may struggle with new state regulations that have long been enforced for traditional farmers. Pesticide usage is one example.

In order to “get a seat at the table,” as Michael put it, he has been talking to local dispensaries and county supervisors. If it is legal and profitable, his company will do it. He thinks many of his fellow farmers will follow his lead, depending upon the age of those running the operations. If the younger generation is in control, they will move more quickly.

Legacy Growers

At a recent Central Coast Greenhouse Growers Association mixer, some attendees said they were either already growing cannabis or planning to. The potential revenue is just too good to ignore, they said. Plus, with vast experience running commercial greenhouses, they already have many of the necessary skills.

Adrian Sedlin, CEO of Canndescent, a Santa Barbara-based craft cultivator, confirmed this rising interest.

“I got a call last month from an old-line, large Carpinteria flower grower who wanted us to partner with him on growing (cannabis),” Sedlin said. “Unfortunately, I had to tell him that it was currently illegal to grow in his town.”

However, the flower industry has a lot of influence in the city of Carpinteria. Time will tell whether laws will shift in favor of allowing marijuana cultivation.

Likewise, many facets of the cannabis industry seem to be a perfect fit with the wine business. The various strains are reviewed similarly to fine wines, and there are marketing parallels between the two products.

The skills needed to grow grapes could be honed for cannabis cultivation, and the regions where grapes thrive also fit nicely with cannabis.

So when will the wine industry enter the market? Not anytime soon, says one expert.

“The O2 license granted to winemakers is approved by the Department of Alcoholic Beverage Control,” said Mary Hitchcock, who has more than 20 years of experience in the wine business. This license requires both state and federal approval, so until federal approval, wineries in California will not be directly involved in the cannabis industry, Hitchcock says.

But grape growers, separate from the wine industry, could potentially be looking to convert some of their acreage into cannabis operations. The impact of traditional agriculture on the cannabis industry is likely to be far greater in California than any other state that has legalized marijuana.

This leads Michael to ponder: “Will there be too much cannabis produced in the years ahead?”

2019-03-14T07:07:56+08:00August 17th, 2016|