Nevada County staff recently reminded us what farmers in other areas have known for a couple years: land use issues are the most expensive piece of coming into the regulated system. While many requirements apply across the board, outdoor farmers generally have lower permitting and operational startup costs than greenhouse farmers, sometimes by hundreds of thousands of dollars. As such, farmers who want to ease into regulation may want to consider outdoor licenses this season (and scaling up to mixed-light later if desired). Here’s a nonexclusive list of the cost differences between the license types:
- Commercial Greenhouses are Structures Which Require Permits.
In addition to permitting the greenhouses (a process which requires engineered plans for the greenhouse and a site plan), the pads for the greenhouses themselves may need to be graded, requiring yet another permit.
Additionally, fire trucks must be able to access all structures, meaning fire-safe roads must go all the way to the GH and allow a fire truck can turn around. Since outdoor gardens are not structures, roads are not needed to the same degree.
2. Commercial Greenhouses Have Greater Disability Access Requirements.
Greenhouses are structures which must be compliant with the Americans for Disabilities Act [“ADA”], so the greenhouses themselves need to be wheelchair accessible, as do the pathways pathways to the greenhouses.
Farmers expecting multiple runs per year will also likely require more employees than an outdoor farm of the same size, which means they’re more likely to need an ADA compliant bathroom on the farm. As bathrooms can’t be in a private residence, they may require a new septic and yet another permit.
3. Commercial Greenhouses Require Additional Operational Costs.
A greenhouse can be expensive to purchase and install, so some mixed light farmers expect to incur an additional $100,000 in operational startup costs per greenhouse, an expense not incurred by outdoor. Of course, greenhouses also have monthly energy bills, which ain’t cheap.
4. Commercial Greenhouses Need Power.
In addition to the power requirements to run the greenhouse (and btw, generators are NOT allowed as the primary power source for greenhouses), farms may need a power upgrade for the type of power that will be required to run the greenhouse. Considering that PG&E just declared bankruptcy, and that they are taking months longer than expected to get power installed or upgraded, power upgrades are a potential holdup for the 2019 season.
Importantly, state regulations require Mixed-Light 2 (i.e. 7-25 watts per square foot of canopy) meet certain energy requirements by January 1st, 2023, or purchase carbon offsets. I have no idea how much the “offsets” cost, but keep in mind it is another steep cost in addition to power not applicable to outdoor (or Mixed Light-1, which is light deprivation/light-assist up to 6 watts per square foot of canopy).
Finally, I just heard the County’s draft Environmental Impact Report may not adequately address the power-source impacts of converting outdoor to mixed-light, which means there could be additional environmental requirements (and more uncertainty) for mixed-light farmers in the future.
5. Awesome Policy Organizations are Working to Support Sungrowers in the Marketplace.
Organizations like the Mendocino Appellations Project [MAP], the International Cannabis Farmers Association [ICFA], and the California Growers Association are dedicating insane hours to programs devoted to help sungrowers be successful in the marketplace, such as cannabis appellations, the Sungrown Agricultural Commissions, moving light-deprivation back into the outdoor tier, and consumer education campaigns. So stay tuned for that very exciting news.
6. State Regulatory Fees Can Vary up to $17,000.
In addition to the engineering, permitting, and power cost differences, here are the state’s regulatory fees for the 3 different license types:
Outdoor (10k): $535 (application fee) + $4,820 (license fee) = $5,355 to CDFA
Mixed-Light 1 (10k): $1,310 (application fee) + $11,800 (license fee) = $13,110 to CDFA
Mixed-Light 2 (10k): $2,250 (application fee) + $20,235 (license fee) = $22,485 to CDFA
That’s more than a $17,000 difference in state regulatory fees for the 2019 season alone!
*Those fees need to be paid in full before cultivation can begin, with the exception of provisional licensees who will likely be paying those fees sometime in the early to mid-summer.
While the numbers will surely make sense for some folks based on their estimated yield, their relationships with buyers, and their emergency reserves, the numbers may be impossible for the average small farm. Rather than mimic what happened in Humboldt and Mendo (where the land use struggles proved to be an extinction event for many farms), I’m suggesting folks think critically about the cost differences between outdoor and mixed-light before jumping in this season, even if the ultimate goal is to scale up later this year or next.
We support all cannabis operators of every license type and we are hyper aware that everyone in the industry needs protection from over-regulation. However, it is particularly critical to our region’s success that mom-and-pop farms survive the onslaught of land use costs. Reducing those costs by starting with outdoor is just one of several ways farmers can do that. Whatever you choose, we support you!
Heather and Sarah