In a sign of the economic times, four growers who had obtained zoning permit approvals to plant 163 acres of outdoor cannabis in the North County recently withdrew their applications for business licenses, effectively abandoning their operations, county officials said.

Supervisor Steve Lavagnino of Santa Maria brought up the withdrawals at an April 21 budget hearing as the board wrestled with the ongoing decline in cannabis tax revenues.

The supervisors discussed various formulas that might shore up revenues, even as they acknowledged that higher taxes could force out more growers.

“I want to see us come up with something that’s fair, just and predictable, as much as we can,” said Lavagnino, a chief architect of the county’s 2018 cannabis ordinance. “We’re in a downturn, no doubt, and we’ve got to weather it.”

The prices for wholesale cannabis flower in California have plunged by half from their peak of $1,400 in 2020 to about $660 per pound now.

The state is believed to be producing three times as much pot as residents can consume — much of it grown in Santa Barbara County — effectively fueling the black market where, by most estimates, two-thirds of the sales are taking place.

Statewide, county officials said, the number of active cannabis cultivation licenses has fallen by 20% since early 2022, as a host of provisional licenses expired and were not renewed.

The largest of the cannabis withdrawals in Santa Barbara County in April was submitted by SFS Farms OPCo l at 4874 Hapgood Rd., on a ranch owned by Bob Campbell at the western end of the Sta. Rita Hills wine region, west of Buellton, county officials said. The original owners, investors in Colorado and Manhattan Beach, had proposed to plant 87 acres of cannabis there.

Back in early 2021, representatives of the Melville, Gainey, Zotovich and other vineyards, joined by a group of neighbors on Highway 246, had turned out in bitter opposition to the SFS project.

At a public hearing, they were dismissed as “misinformed,” “biased” and “fear-mongering” by an SFS attorney as they argued that the massive size of the proposed grow — about 65 football fields’ worth of marijuana — would overwhelm nearby homes and tasting rooms with the skunky smell of pot and blow it into Buellton on the prevailing winds.

The Board of Supervisors approved a zoning permit for SFS Farms, with Supervisor Joan Hartmann, who represents a portion of the Sta. Rita Hills, casting the only “no” vote. But the project never got off the ground.

SFS, a limited liability company that was set up in Nevada, has changed hands since the original project was approved, and representatives could not be reached for comment on their decision to withdraw.

But Al Wagner, a senior vice president of agriculture for Foley Family Farms, a wine grape and avocado operation next to SFS, said the family had been put to some expense and worry over the potential impacts of a cannabis operation next door. Foley Family Farms is located directly west of SFS on what used to be the Fess Parker Vineyard.

“The county ordinance is not effective at managing conflicts between cannabis and other agricultural activities such as vineyards, wineries and other crops,” Wagner said. “Foley Family Farms believes this project was not well sited and would cause significant impacts to surrounding agriculture. We are pleased to learn SFS has abandoned its cannabis operations.

“It’s been a very expensive road over the last three or four years,” Wagner said, There was the cost of preparing for public hearings, he said, and the concern that pesticide spray drift from avocados onto cannabis “could impact us from a legal standpoint.”

In addition to SFS, plans for 63 acres of cannabis at 3700 Telephone Rd. in the Santa Maria Valley were withdrawn by WTMCA LLC; plans for 9 acres at 3151 San Julian Road in the Lompoc Valley were withdrawn by JJPC Creekside; and plans for 4 acres at 365 N. Refugio Rd. in Santa Ynez were withdrawn by Elements 5.0 Corporation LLC, according to Sydney Pettaway, a business specialist with the County Executive Office.

Since the county started tracking withdrawals last fall, growers have walked away from about 285 acres of cannabis, she said.

“It’s unfortunate; we’ve lost a lot of operators who wanted to pursue their business licenses,” Pettaway said. “It’s been tough. You never want to see people fall out that way.”

Tapping the Waitlist

For other growers, the recent withdrawals may represent an opportunity. To replace those who walked away this month, two growers already on the eligibility list have been offered an expansion in acreage under the county’s 1,575-acre cap on outdoor cannabis, Pettaway said.

Anderson Development SB LLC would have the opportunity to expand by 82 acres for a total of 187 acres at 100 Salisbury Canyon in the Cuyama Valley, potentially becoming the largest cannabis operation in the county. In state filings, Micah Anderson of La Jolla is listed as the manager of Anderson Development; he is the founder and CEO of LEEF Holdings of La Jolla, one of the state’s largest vertically integrated cannabis companies.

In addition to Anderson, Pettaway said, Heavenly Green Inc. has been offered the chance to expand by 23 acres for a total of 60 acres at 4301 Dominion Rd. in the Santa Maria Valley.

Finally, six other cannabis operators on the waiting list can now apply for county business licenses under the acreage cap, Pettaway said, as follows: 25 acres at Z Farms, 6893 Foxen Cyn Rd. in Los Olivos; 17 acres at Cat Cyn Inc., 7050 Long Canyon Rd. in the Santa Maria Valley; 6 acres at Cuyama Greens, 501 Harvey Rd. in the Cuyama Valley; 4 acres at 92nd G25, 851 E. Hwy 246 in the Lompoc Valley; 3 acres at Calynx Inc., 6968 Cat Canyon Rd. in the Santa Maria Valley; and 2 acres at Stateside Greens, 3851 Telephone Rd. in the Santa Maria Valley.

If any of these growers are not ready to apply for a license, the county will offer a spot on the eligibility list to the next grower in line, Pettaway said.

In all, she said eight operators proposing 77 acres of cannabis remain on the waiting list; all have been approved for zoning permits.

In addition to the North County withdrawals, Yamaoka, a proposed 3-acre greenhouse operation at 1552 Casitas Pass Road, has been removed from the eligibility list. The operator had made no progress on the business license application and did not respond to the county’s requests for information, Pettaway said.

Melinda Burns is an investigative journalist with 40 years of experience covering immigration, water, science and the environment. As a community service, she offers her report to multiple publications in Santa Barbara County, at the same time, for free.