Sue Crews talks at her Mendocino Family Farms booth at the California State Fair on July 27, 2023. She says there is too much regulation, taxes and control by the state for small farms. BY RENÉE C. BYER

Mendocino Family Farms was on the verge of bankruptcy when an unexpected win at the 2022 California State Cannabis Competition sold out their entire strain, saving the farm. Phil Crews, the farm’s owner, said the state-sanctioned competition was a “game-changer” for his marketing in the cannabis industry.

“Farms like mine, we don’t have the money to promote,” Crews said. “It’s almost impossible.”

A steady decline in cannabis tax revenues over the past two years, even after state lawmakers lifted the cultivation tax in 2022, reflects a flagging industry for licensed cultivators. Only 39% of California cities and counties allow sale of retail cannabis within their jurisdiction, limiting the number of available licensed retailers to buy from cultivators in an over saturated market. “There’s not enough room to get those relationships with dispensaries,” Crews said.

To promote the legal weed market and “normalize” the cannabis industry, the State Fair worked with the Department of Cannabis Control to host its first-ever cannabis exhibit and state cannabis competition last year. James Leitz, the organizer of the CA State Cannabis Exhibit, said this was “a big deal” for the cannabis industry.

“The cannabis industry continues to go through a tough time. There’s a lot of farms that are extinct,” Leitz said.

CALIFORNIA STATE FAIR

“The State Fair gave us this amazing opportunity for cannabis to have a platform,” Leitz said. “We get to have a competition alongside wine, cheese, olive oil and craft beer, you know, like a crown jewel competition.”

The Department of Cannabis Control, a two-year-old government organization that regulates cannabis, joined the booths of cultivators this year at the exhibit. David Hafner, a DCC spokesperson, said it is crucial for consumers to understand the importance of supporting the legal market.

“Having something like this at the California State Fair helps remove the stigma of cannabis,” Hafner said. “Cannabis is legal in California, people should talk about it.”

The DCC Law Enforcement Division seized over $52 million worth of illegal cannabis at the start of 2023, a 39% increase from the previous quarter in 2022. Law enforcement also collected more than $95,000 in cash from illegal sellers, an 87% rise in seized cash from illegal cannabis profits in the previous quarter.

“The illegal market is still sizable in California,” Hafner said. “A large part of the state doesn’t have access to legal cannabis.

Illegal cannabis is dangerous for the public health due to being unregulated, Hafner said, and the DCC has recovered strains containing glass, illegal pesticides and hairspray. Large quantities of illegally grown cannabis over saturates the California weed market, said Bill Jones, deputy director of the DCC Law Enforcement Division, selling their product at a lower price that might entice cannabis users.

“(Legal operators) are having to compete with criminal organizations,” Jones said.

FEWER CANNABIS FARMS REFLECTED IN COMPETITION

There was an 18% decline in entries for the CA State Cannabis Competition this year, Leitz said, with 250 submissions compared to last year’s 307. Mike Harden, CEO of Sonoma Hills Farm, which won two silver medals in the sun-grown category this year, said some of the tax relief for cultivators, while appreciated, came “a little too late” for some farmers.

“We’ve seen many people definitely not make it,” Harden said. “We are seeing a danger, a threat to the California cannabis industry.”

Mendocino Family Farms, which sprawls across roughly 200 acres, is run by Crews and his wife with the help of their two college-aged daughters. Unable to afford employees, the work of cultivation, packaging and marketing their product falls on the farm owner and his partner.

“It’s almost impossible. We struggle with it all the time,”

The rate of renewed cultivator licenses since July 2021 went down by 25%, according to data provided by the DCC. However, intervening factors of varying license renewal periods, limited data and the introduction of larger licenses have impacted these numbers.

“Effective at the start of this year, DCC licensees with multiple cultivation licenses could convert them to a Medium or Large cultivation license, decreasing the overall number of cultivation licenses despite the fact that canopy size and business operations were likely to stay the same,” Hafner said in an email.

STATE EFFORTS TO EXPAND RETAIL MARKET

Crews said it was a “head shaking” moment when his cannabis was recognized by the state as an award-winning strain after decades of hiding this plant from authorities.

“I was in shock,” the farmer said. “The same people from the state were the people who put me in jail for the cannabis plant. And now I got a gold medal.”

Nearly everyone he knew in the 1980s went to jail, Crews said. He spent the past 40 years hiding his cannabis farm from authorities. When recreational cannabis was legalized in 2016, he had to start from scratch building a brand for Mendocino Family Farms.

The goal of opening a cannabis exhibit at the State Fair was to “normalize” the cannabis industry and promote the importance of buying legal weed, Leitz said. Other cannabis competitions have long existed, such as the Emerald Cup, a popular California cannabis competition which recently celebrated its 19th awards show in May, but never one that’s been state-sanctioned.

“You have ends of the spectrum coming together,” Leitz said. “That’s a big deal.”

Inside the cannabis exhibit was a “Where Do You Buy Your Weed?” wall which features dozens of sticky notes displaying the names of local dispensaries, an idea by the DCC to normalize talks of purchasing legal weed.

“We can talk to them about why it’s important to purchase from a licensed dispensary,” Hafner said. “We have seen in the illegal market that cannabis is being grown with fertilizers and pesticides that are banned in the United States.”

The DCC launched a Local Jurisdiction Retail Program last month to fund jurisdictions with high cannabis consumption but limited access to the legal weed market. Grants were awarded based on data collected by the Office of Policy and Research which surveyed local governments in need of resources.

“Through programs like the Local Jurisdiction Retail Access Grant, there is the potential for the number of retail licenses to increase in the future,” said Nicole Eliott, director of the DCC in an email.