By Emily Earlenbaugh
The regulated cannabis industry in California has a new, highly regulated system for cultivating, processing and selling cannabis. These regulatory changes have provided new legal avenues for cannabis entrepreneurs to operate and grow their businesses, but what impact does this have on California’s wine growing regions?
This article is the third in our three-part series looking at the impact cannabis is having on the major wine production and tourism counties: San Luis Obispo, Monterey, and Santa Barbara. This piece, focused specifically on Santa Barbara, will give you a peek into the potential impacts the new cannabis laws are having on the wine industry in this area.
Business-Friendly Policies for Cannabis in Santa Barbara
Cannabis law in Santa Barbara, like in the other counties we’ve discussed, is a complicated situation. Still, there is a lot for cannabis advocates to be happy about.
“Santa Barbara County was pretty smart,” says Sean Donahoe, President of Operative Campaigns, a company focused on providing help and advice for cannabis businesses, “They did a full environmental impact report, a full economic impact report, and they’ve got a business-friendly set of policies for outdoor and greenhouse.”
According to Donahoe, Santa Barbara is seeing a huge increase in licensed activity. “Santa Barbara is opening the door to an industry that was already there, acknowledging them and providing a pathway to becoming licensed,” he says, “I think this is important, because a lot of these folks were up in the canyons or hidden in corners of greenhouses.”
Wine Industry Worries Over Skyrocketing Warehouse Prices
Santa Barbara County has a fairly friendly stance on cannabis, but what impact does this have on the wine industry? Unfortunately, some wine industry folks are already beginning to feel the effects. The biggest area of concern? Many are worried about the rising real estate prices.
“It looks as though the commercial and industrial real estate market is really tight right now and the prices are going up because of the high demand of the cannabis industry,” says Kate Griffith, a board member on the Santa Barbara County Vintners Association, “We’re just hearing that it’s really hard to find a place and the prices are going up.”
This is most problematic in the city of Lompoc.
“A lot of the vintners moved into more industrial warehouse districts within Lompoc and started making a ton of wine there,” explains Matt Kettmann, Senior Editor for The Santa Barbara Independent, “Now I’m hearing that a lot of bigger facilities, where wineries were making their wine for a decade or so, are being sold to cannabis processors for double, triple the price.”
Unfortunately, this means some vintners are being squeezed out of the town they have been working in for years.
Peter Work is a great example. This winemaker started Ampelos Cellars, the first US vineyard to be certified organic, biodynamic and sustainable, and has been using these practices for over a decade. But now Lompoc’s cannabis regulations are threatening his business.
“We have a nice production facility in Lompoc that we’ve been renting for the last 12 years,” Work explains, “But with the new policies, rates have gone up drastically. We’ve been asked to leave,” he says bluntly. “Our landlord’s a nice guy. I understand he cannot turn a good offer down, and he’s got a good offer.”
Work’s issue isn’t with cannabis, “I have no problem with people who are smoking a joint, people do what they want to do,” Work explains, adding, “As a citizen, I do understand that is a potential source of income for the city.”
Still, Work says, “I wish that the city spent a little bit more time on analyzing all the consequences. It’s really hard when you are a winery and you are suddenly homeless. I’m just scrambling, trying to find a place we can move to before harvest.”
While Work is looking for a new facility, the prices are making it difficult and threaten the viability of his conscious farming methods. “We may not be able to financially get ends to meet,” he explains. “It’s going to make it very hard for us to continue to farm the way that we do things now,” he says, leaving me with an open question.
“Will we get to that point where we have to close down our organic biodynamic farm and go back to conventional farming?”
Hopes for the Future of Wine and Weed
While the picture looks bleak right now for Santa Barbara wine makers like Peter Work, there are hopes that these issues can be resolved legislatively, and talk is still friendly. “The winemakers are politically and lifestyle wise in line with the cannabis guys,” says Kettmann, “So it’s not like a good guy, bad guy situation. It’s more like new neighbors learning to live with each other.”
Amanda Ostrowitz, Chief Executive Officer & Founder of CannaRegs, a website that educates about cannabis regulations, also points out that in Santa Barbara the wine industry dwarfs the cannabis industry with “20 times more land being used for wine than for cannabis.” While cannabis is unlikely to squeeze out the big players, it’s more likely to affect small vineyards like Ampelos Cellars.
Still, Ostrowitz says, “What is interesting is that the profitability per acre on cannabis is suggested to be far higher than wine. What will be interesting to see is if any of these grape growers, over time, transition from growing grapes to cannabis.”
While the future is uncertain, there is definitely an effort to find a solution to this clash of industries.
“There’s definitely pressures that are building,” says Kettmann, “Meanwhile the governments are trying to figure out how they’re going to deal with it all… and everyone else is just kind of in the middle of it right now.”