It is one of the best places in the world to grow cannabis in Mendocino County. In the valleys of the county, moist air from the Pacific creates the perfect microclimate for growing pungent pot, resulting in the nickname “Mendo” becoming an international reference to high quality pot. However, the government of this historical cannabis county cannot seem to accomplish much when it comes to the legal cannabis market.

After six years of cannabis legalization, only 1% of the 832 active farms in the county have acquired annual licenses, as seen in an SFGATE examination of records from both the county and Department of Cannabis Control. This places it as one of the most dismal rates in the state; 49% of California’s cultivation licenses have been granted yearly status and more than 63% of Humboldt County's cultivators were given annual permits. The latter is a region also renowned for cannabis farming.

Cannabis farmers blame county government dysfunction for the threat of losing their temporary licenses.

The direness of the situation has driven the Mendocino Cannabis Alliance (MCA), a coalition of local cannabis businesses, to write an open letter to Governor Gavin Newsom and DCC Director Nicole Elliott. The letter expresses the potential collapse of the county’s cannabis industry due to neglect from the county’s government. Michael Katz, executive director for MCA, noted how said government has been blocking pot farmers from obtaining full licensing, in turn costing them thousands of dollars.

In Katz's view, the time is basically up and we don't have much more flexibility to get people through [the licensing process]. It is still unclear if these people will be able to get their permits to this day because they have no money left.

A spokesperson for Newsom’s office declined to confirm whether the governor received the letter or plans to take any action on the farmer’s behalf. According to DCC spokesperson David Hafner, the department received MCA's letter and is "currently evaluating all options" for responding to Mendocino County.

Kristin Nevedal, the director of Mendocino County's Cannabis Department, said delays caused by the county's cannabis ordinance are causing the backlog and defended the department's management. As a result, she said, the government plans to hire more than 16 new employees to speed up the application process.

In terms of licensing, Mendocino County supervisor John Haschak agreed that it is "way behind" other counties.

"With deadlines approaching quickly, I am concerned that the County's Cannabis Department will not be able to process the hundreds of cultivation applications we have," Haschak wrote. "We cannot afford any more delays."

Cannabis licenses could be revoked in Mendocino County

As a result of the legalization of cannabis in 2016, California has struggled to push cannabis businesses to become full-time “annual” license holders. Several temporary permits have been issued to pot businesses as the state transitions from an unregulated medical market to a fully regulated recreational market after legalization. Although the state hoped to have all pot businesses licensed by 2019, the legislature has repeatedly delayed licensing deadlines.

A deadline of July 1 has been set for California marijuana companies to get an annual license or meet a growing list of other requirements. As 99% of Mendocino County's pot farms still do not have annual licenses, Hannah Nelson, an attorney based in Mendocino County, says hundreds of holders could be prevented from renewing their provisional licenses.

It is clear from history, and even recent history, that the local cannabis department is not equipped to handle the number of applications that are expected.

Mendocino County Cannabis Department has repeatedly made mistakes processing applications, including losing files and misinterpreting county laws. Nelson said the county's handling of the applications has been "maddening."

According to Nelson, he has clients who have submitted three, four, and even five times, and the county keeps losing things, changing requirements, and failing to track its own steps.

The county cannabis department's Nevedal defended the agency's actions and said the delay was mostly caused by a disagreement between the state and county over how farms must comply with the California Environmental Quality Act. In July 2021, Nevedal says, the state and county clarified CEQA procedures, allowing the department to fully process license applications.

The Mendocino County Cannabis Department announced in January that it is prioritizing 256 of the remaining 832 applicants for renewal. Nevedal said the county is granting licenses according to their expiration date.

Katz, of the local trade organization, doubts even this limited workload can be handled.

There is still no word on how the county is going to deal with those 200 to 300 people, but Katz told SFGATE that the bigger issue is the 400 to 500 additional operators that have been deprioritized. Those folks are in danger of losing their provisional licenses because their permits aren't even being reviewed in this timeline. And that's a choice the county is making.

According to Nevedal, over 300 applications were deprioritized for not paying local cannabis taxes or not having a DCC license. Nevedal defended the deprioritization decisions after Katz and Nelson claimed that the county used incorrect information to deprioritize applicants.

Despite human error, there is no evidence that significant numbers of applicants or permit holders were wrongfully deprioritized by the department, Nevedal said.

Seeing the county mismanage the licensing process has been like watching a "slow-motion murder," said Nelson, and she may sue for due process violations.

In Nelson's view, he wanted to work together with the county to ensure these businesses survived and that their communities continued to thrive, rather than litigating against the county. Nevertheless, I am at a point where I cannot ignore litigation as a means of change anymore.

Concerned about licensing roadblocks' economic impact

It is a fact that marijuana companies across the state are going out of business, particularly small family-owned cannabis farms in northern California. In his opinion, Haschak's licensing difficulties could lead to financial difficulties for the entire county.

“I am concerned about the economic impact of not having a viable legal cannabis industry. This County relies on cannabis dollars to boost the economy,” Haschak said. We are known for our high quality cannabis. We need a legal industry to create opportunities for cannatourism, niche marketing, and Mendocino branding.

Some small towns in Northern California that have historically relied on the cannabis industry are already suffering from the closing of pot farms.

"If things continue as they are, there will only be a small handful of these small batch legacy cultivators." Katz said.