Big Money and Bigger Risks - June 29, 2016 - SF Weekly
SF Weekly

Big Money and Bigger Risks

Mendocino County is back in the marijuana business.

Not that its citizens ever stopped growing, and not that the Emerald Triangle's cash-rich economy found another cash crop. But after a few years' hiatus, Mendocino is again using cannabis as a funding source — for law enforcement, with the county sheriff taking in $150,000 from marijuana in a single day, and all of it willingly paid.

Tired of receiving 911 calls from neighbors complaining about the pot garden next door, only to send a deputy out to investigate what turned out to be a legal grow — wasting an hour's worth of time in the process — Mendocino County Sheriff Tom Allman came up with a novel plan in 2010. His office would inspect and license legitimate grows, and charge the growers for the privilege.

The so-called “9.31 program” or “zip-tie” program — named for the section of county law allowing it, or for the rings of plastic that, for $25 each up to a 99-plant limit, marked a certified legal cannabis plant — brought in $600,000 in fees during a time of recession, enough to save several deputies' jobs. It received national praise as a resounding and innovative success — until the federal government got involved.

Federal agents raided a grower who had been the poster child for 9.31 on harvest day in 2011. Former U.S. Attorney Melinda Haag never charged him with a crime, but she took a bold step: She threatened Mendocino County with a civil action over the 9.31 program. Rather than take on the federal government, Mendocino abandoned 9.31 after only two seasons.

But it's back, baby — and in a big way. With legalization in the air again and the federal Justice Department prohibited by Congress from interfering with state-legal cannabis, county officials restored 9.31. Up to 99 plants are allowed on a 10-acre parcel, and 50 plants on a 5-acre parcel — for a $1,500 permit fee no matter the size.

The county received 150 applications in one day, according to cannabis attorney Omar Figueroa. As of last week, it had received some 250 in total — or $375,000.

Now add a few dollars more for the zip-ties, and we're talking real money.

Not everyone is thrilled: Last week, a nonprofit that lobbies on behalf of the local black-tailed deer sued to stop the party, claiming the county rushed back into the weed permitting business without the requisite environmental review.

Whatever the result of the lawsuit, the message — carried by the crowd of growers eager to sign up — is clear: After a four-year hiatus, 9.31 is back and unlikely to go away again.

With Humboldt County also permitting large-scale cannabis cultivation, it's near-open season in the Emerald Triangle for growers. For cannabis extraction labs back in civilization, law enforcement is on the prowl.

On June 15, Santa Rosa police and DEA agents raided the production lab and offices of CBD Guild, which produces CO2 cartridges, oils, and other tinctures. Police said they were looking for a butane hash oil lab. Despite the fact that CBD Guild uses no butane, its cash, product, and equipment were seized. Nobody has been charged with a crime, but the incident seriously disrupted the outfit.

Then just before midnight on June 19, it happened in Livermore.

On his way home from the High Times Cannabis Cup at the Cow Palace, Joseph Phillips, one of the employees of cannabis concentrates outfit Dabbenport Extracts, was pulled over by Livermore police — allegedly because his vehicle's air freshener was blocking the rearview mirror, according to another Dabbenport employee who stayed in the Bay Area overnight after the Cup.

A search turned up more than 1,000 grams of cannabis concentrates in individually wrapped gram packages — no small amount, but a tiny fraction of what was being bought and sold at the Cup just an hour's drive away.

Phillips and his brother Chris, along with Dabbenport's CEO and two others, were all arrested and charged with felonies. After more than a week, Chris Phillips was still in custody on $250,000 bail as of Tuesday evening, according to jail records.

Chris Phillips is known to local cops: He's had several run-ins over cannabis, including a raid on his home for an illegal delivery service, according to the East Bay Times. He's also made himself known at the Livermore City Council meetings, calling out elected officials for failing to back up local cannabis producers, Dabbenport employee Cody Morgan told me.

The message to the cannabis industry is loud and clear: Concentrates are full of risk right now.

Keep in mind that even though California passed a law last year explicitly allowing commercial cannabis activity, that's pretty much all the Medical Marijuana Regulation and Safety Act says. It says you can have an extraction lab — a big deal in and of itself, considering laws outlawing the use of a solvent in manufacturing drugs are still on the books — but it does not say how big an operation can be or how much product you can carry.

That all will have to wait until the state starts issuing actual permits — and no statewide permits of any kind will be issued until 2018.

“There is no clarity as to what is legal and what is not,” says East Bay cannabis activist and entrepreneur Mickey Martin. “The new state laws authorize extractions but there is no guidance on if they are legal or not until licensing becomes available. It is nuts.”