Friday, August 19, 2022
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While Cultivators Struggle in the Legal Market, Mendocino County’s Cannabis Grant Funding is Caught in Red Tape

Cannabis garden [Picture provided by CDFW]

In the wake of a Mendocino County Grand Jury report that found layers of delay in distributing a grant, a policy manual has been updated, an affidavit is being drafted, and legal review will start up again next week.

In 2020, the County received $2.2 million from the state, to administer individual grants to applicants who are eligible to run a cannabis business in the unincorporated areas of Mendocino County; and who can demonstrate that they have been harmed by the war on drugs. The Board of Supervisors also put up $100,000 as a grant match for the program.

But most of that money is held up in legal review. Out of 52 applications, five grants have been awarded. The other 47 approved grant applications are waiting for County Counsel to determine that they won’t run afoul of the state’s policy about misuse of funds. The county hired a contractor, Elevate Impact, to administer the grant for no more than 10% of the award.

The Local Equity Entrepreneur Program, or LEEP, is supposed to allocate direct assistance awards to individuals, which puts the county in the position of vouching for the recipients.  If the county were to award a grant that doesn’t meet the state’s strict requirements, the county would have to collect the misused funds as it would any other debt, possibly becoming ineligible to receive further grants.

But if the money is not awarded by the end of August, the state could take it back. And if 80% of the first few rounds of money have not been spent by November, the county will not be eligible to apply for the next round.

The Grand Jury report says that after receiving notifications of their awards from Elevate Impact, in late 2021, applicants learned about a secondary review process called Cobblestone, which involves multiple county departments. But they didn’t learn about further reporting requirements until the monthly LEEP meeting in April. The report did note improvements in community outreach, with the regular LEEP meetings as well as weekly cannabis department meetings that include question and answer sessions. 

Michael Katz, the Executive Director of the Mendocino Cannabis Alliance, an industry advocacy group, noted that the Grand Jury report aligns closely with complaints and policy proposals that the MCA has been making for a while. In addition to findings about delays and poor staffing, the report recommends that the Board of Supervisors create a standing committee to address the issue, rather than the temporary ad hoc committee that’s working on it now. This is something the MCA has long called for, but only Supervisor John Haschak has expressed a willingness to take it on. He and Supervisor Glenn McGourty currently serve on the ad hoc.

The report’s first finding is that “There was no process developed for the distribution of grant funds to individuals prior to applications being received. This has resulted in extended delays at every step from eligibility to application to communication to contract negotiation,” which prevents the timely distribution of funds.

“The results of that, unfortunately, have been that some operators have been in this application process since February of last year, counting on these funds to help them move forward in this incredibly challenging business at this incredibly challenging time,” Katz said last week.

Kristin Nevedal, the Mendocino County Cannabis Department Manager, uses similar language for what she’s faced in her role. Asked about the same finding at July’s LEEP meeting, she said, “I think that’s absolutely correct. I think the program has been incredibly challenged by changes and lack of leadership, frankly, in the cannabis program as a whole.” Shortly after the county received the first round of funding in February 2021, Megan Dukett, the cannabis program manager at the time, left her position. She had been on the job for just over a year. Her predecessor lasted ten months, and the first cannabis program manager quit after four months to walk across the desert to Mexico. During Dukett’s tenure, the county had hired Elevate Impact, but Nevedal said, “It is completely unfair to expect a contract administrator to develop a program for any local jurisdiction solely on their own.”

She said she found out about the Cobblestone portion of the program at the end of 2021, when she had one part-time helper and had been on the job herself for nine months.  “So I had no clue how underdeveloped the program was until we started getting into the review of applications and then how we would essentially issue checks,” she acknowledged. “You don’t know what you don’t know,” she added, explaining that many applicants plan to use the funds for capital improvement projects that are not always easy to reconcile with the nuances of the county’s permitting system. Elevate Impact does not have a team of planners on staff, and Nevedal said she doesn’t think the county knew enough about the applications in advance “to have the foresight to understand that we needed planner time available to also conduct these reviews.”

The Grand Jury also found that “the county did not ask the state for requirements on record keeping…until May 2022,” and that this should have been done much earlier in the process. Haschak said that in mid-June, he was in a meeting with a Department of Cannabis Control representative who clarified the state’s policy about misuse of funds. County Counsel then began reviewing the applications to make sure the funds would not be misused.

That portion of the process has led to several rounds of fine-tuning the Local Equity Program Manual. Katz is especially concerned that the county cannabis department is making requirements that are not demanded by the state. “There are certain things that are certainly not allowed to be covered, like penalties and fees related to delinquencies, those types of things,” he explained. “We know they’re to be used for startup and ongoing costs, and people who are equity designated as equity operators. But there are still barriers that are being placed on certain requests by the department that are not demanded by the state. So for example, solar. There are many folks who are working to create solar usage opportunities on their cultivation sites in various ways. And solar is desirable, obviously…but the cannabis department has been objecting to specific types of solar, being concerned with how much power the solar would provide, and really just putting what seem like unnecessary restrictions that are not demanded by the state on the uses that would benefit the operator. So if they actually revised the manual to allow anything that is not explicitly disallowed, there wouldn’t be the need to dig into every item and go back and forth on the minutiae that we’ve seen happening for applicants.”

Haschak said the ad hoc committee met with Nevedal on Thursday, the day after the July LEEP meeting. The next day, the cannabis program issued V5, the latest edition of the Local Equity Program Manual. In an email, Nevedal wrote that, “The program is still working on a form/affidavit for awardees to sign stating that they’ve read and understand the grant agreement,” as well as the much-edited manual. Nevedal added that “County Counsel plans to resume the review of approved grant applications next week.” However, the changes to the manual consist of several sets and subsets of requirements for documentation, and do not address what the money can and cannot be used for.

County Counsel did not immediately return a call requesting more information, but Katz said yesterday that he thinks that’s what County Counsel needs in order to complete its review.

“We hope it turns into money in people’s hands soon,” he said. He expects the next round of edits will include language expanding the allowable uses of the grant funds.  “We’re hoping to see V6 sometime next week,” he concluded.

“I think they understand that there is a sense of urgency,” Haschak added.

5 COMMENTS

  1. Bungling bumbling bureaucrats babble incoherently ad infinitum at the usual taxpayer expense as the funds finally fritter away to zero. County level political wastrels at their finest. Be sure to vote for your favorite financial flubberer and finageler when comes again the dreary election fiasco time. Remember: it’s your civic duty as an unempowered citizen creature to waste your meaningless vote on the sheep shearer of your choice! After all, it’s your money they’re wasting!

  2. Seems to me when it was illegal it was more beneficial to our communities & environment! It was worth more money & more money was being spent locally benefiting everyone. There wasn’t a mad rush of out of towners & illegal immigrants coming here & trashing up & poisoning our lands & sucking dry our water ways. Sure there were risks & crime but there still is with it being legal. Now that it is legal its killed off the mom & pop farmers whom helped our communities thrive.. Now you involve politics & bureaucracy & thats completely screwing up the compliant farmers….shit show!

  3. Hi Sarah Reith, can I get clarification on a couple things in your article?
    1. The State of California is giving marijuana growers money to grow?
    2. You stated that people who can prove they have been harmed by the “war on drugs”, will get a grant. Can you explain what the “war on drugs” is?
    3. Do you know why the state is giving more money to pot growers to grow their marijuana, when our town is hurting so desperately for things/places for kids to go? Why does Ukiah deem it necessary to have more cannabis stores then there are places for kids or teenagers to go to and do things? There is absolutely NOTHING in Ukiah for our youth to do besides get high.
    I’m I the a-hole here or do others see our town going to crap?

    • Jennifer
      You could probably get some answers on what the war on drugs is by doing a Google search…
      Also there are lots of places to buy alcohol in Ukiah, definitely way more then cannabis. I’m sure the wine industry gets plenty of grant money, with all the acres of grapes in production how is Ukiah still going to crap?

    • Are you aware of the amount of grants the Ukiah high school receives? Are you aware of the level of corruption and mismanagement in the heart of our country offices? Instead of blaming and shaming legal cannabis cultivators who have carried the economy in this county for the past 2 decades (until the legal market crushed us), look to your supervisors and county management to answer your question as to why there isn’t more for kids because I agree with you on that. The mega taxes the county collects from cultivators is SUPPOSED to be reinvested in services for kids. Ask them why it isn’t. Ask them why Willits High is falling apart. Ask them where all the cannabis tax money I’ve paid has gone. There you might find your answer. And FYI, there are only a few of us cultivators left. Wonder where the water is going? All the new vineyards that are owned by rich people who do not reinvest in our county at all. Quit blaming weed for the problems in this county and quit shaming us with your skewed opinion. Do your research before you slander cannabis and by all means enjoy the welfare county we become without the dollars from the cannabis industry flowing through the local economy. The taxes we pay the county are earmarked for kids. Why aren’t they spending it like they said they would? Look to your supervisors and ask THEM.

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Sarah Reith
Sarah Reith
Sarah Reith is a radio and print reporter working in Mendocino and Humboldt counties, focusing on local politics and environmental news.

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