SANTA CRUZ — For years, Utopia Farms and other marijuana growers in Santa Cruz County have worked in the shadows, building brands they could lose at any moment.
Months before California voters approved Proposition 64 to legalize recreational marijuana, Santa Cruz County embarked on a bold strategy, instructing all pot farmers to reveal themselves and come to the fold. And in a narrow three-month window that closed two days before the Nov. 8 election, more than 950 growers applied for licenses to get permits under a proposed ordinance that’s now in line with state law.
As a result, long-illicit businesses are quickly being converted into legal contributors to the California economy through a new regulatory system designed to support small cultivators, bust illegal marijuana operations and turn the coastal county into a powerhouse of high-end, hand-crafted products. And what’s happening in Santa Cruz County is providing an early glimpse into how the business of cannabis — Pot Inc., if you will — will look in many parts of California a couple of years down the road.
“Regulation offers protection because there are clear guidelines for how to operate,” said Kaiya Bercow, 26, co-founder of Utopia Farms, which keeps its location secret from the public but has applied for a license and welcomes government oversight.
Other Bay Area counties — including Santa Clara, Alameda, San Mateo and Contra Costa — are taking a more cautious approach to marijuana legalization, saying they won’t even begin studying the issue until next year. But Santa Cruz County officials believe their aggressive approach will position the county to compete in a fiercely competitive state marketplace when recreational pot sales become legal on Jan. 1, 2018.
For years, marijuana has been clandestinely grown in Santa Cruz County’s warehouses, greenhouses and farms for both recreational and medicinal purposes. Known for its low-volume, high-value yields, the county is the Philz Coffee of cannabis — not the Folgers.
Under Proposition 64 and the Medical Marijuana Regulation and Safety Act passed by the Legislature in 2015, growers can operate legally only if they are licensed at the local level.
“People are willing to invest in your infrastructure so you can grow. You have the money and time to create niche products,” Bercow said. Until now, “we’ve been regulating ourselves, feeling around in the dark.”
Many of Santa Cruz County’s growers create little or no impact on their community and environment. But others are polluting streams, cutting down trees and spilling dangerous pesticides, said Daniel W. Peterson, the county’s cannabis licensing manager.
The county’s draft cultivation ordinance changes that — creating order out of chaos by providing a licensing scheme that regulates the cultivation of cannabis in its unincorporated area. Once they’re legal, growers may be able to get loans and even crop insurance.
The final ordinance won’t be adopted by the county Board of Supervisors until a 10-month environmental impact review is completed. Peterson will then do on-site inspections and background checks before issuing licenses.
“It’ll help the good actors who want to follow the rules,” Peterson said. “And it creates enforcement for those bad actors who do not follow the rules … and have an unfair business advantage,” he added, vowing to alert the sheriff’s department when he spots illegal grows.
“I’m thrilled by the response,” Peterson said. “It demonstrates that most of the cultivators in Santa Cruz County want to be recognized as good stewards of the land and legitimate business people.”
The county’s four cities will have to create their own legal structures. Watsonville is the furthest along, with a cultivation and dispensary ordinance already in place and a manufacturing ordinance in development.
At Utopia Farms — founded three years ago by a team of transplanted New Yorkers, ranging in age from 26 to 34, with degrees from Brandeis, Tufts and the State University of New York — the products are guaranteed to be free from pesticides, mold, mildew and solvents.
Every package is marked with a code, like food or pharmaceuticals. Using the code, consumers can look up certified chemical analyses from SC Labs, a cannabis analytic testing facility in Santa Cruz. And if there is ever a problem with a product, it can be traced back to the source. “We know what room it came from, what day it was harvested, and who was working in the room,” Bercow said.
Utopia Farms’ plants, selected through careful genetic analyses, are nurtured over their 57-day lifespan, with growing conditions and nutrients fine-tuned for each stage of development. Mold and mildew are combated by reducing humidity and increasing air flow. An ozone generator kills bacteria.
The plants start life as tiny clones off a mother plant, isolated in their own pot of peat, zipped up in a brightly lit and blanketed nursery. As they mature, they are moved from room to room, matched for each stage of their life cycle. Workers wear gowns and hats.
“Every plant gets seen and handled every day, so we can catch a problem before it spread — and we don’t have to use chemicals and pesticides,” said Sean Cashman, Utopia’s cultivation production manager.
Once they grow strong roots, the plants are transplanted into one-gallon bags and carried into a “vegetative room” to grow leaves. For four weeks, they get 18 hours of light and six hours of darkness, forming a bright green canopy.
Then the season shifts. Light is reduced to 12 hours, signaling autumn and triggering the plant to flower. Each bud sparkles with resin.
Finally, as leaves fade to a soft umber, it’s harvest time. Plants are chopped down at the base of their stalk and hung upside down on a “dry-line” to cure.
“When we feel it is ready — like pulling a steak off the grill when it’s medium rare — we pull it down,” Cashman said.
The finest flowers are trimmed, graded and sorted, then packed. Lesser flowers, leaves and trimmings are used for extracts.
The company donates 5 percent of its employee labor to local nonprofits, volunteering as a team for beach cleanups and places like Second Harvest Food Bank. It also has a program to give free products to those who can’t afford it.
Its carbon footprint is offset through the purchase of renewable energy credits. About 65 percent of its water is recycled. The base salaries of the roughly 20 employees are above the living wage, with competitive benefit packages. To boost loyalty, the company promotes from within.
“We want to be the best company out there, caring around consumers, the environment and the community,” Bercow said. “Ultimately, someone is going to purchase that jar, open it and say, ‘This is who Utopia is.’ We want them to respect that.”