Sarah Bell Partner Farella, Braun + Martell
*This story originally ran in the Fall 2017 issue of SunGrower and Greenhouse – on sale now.
Although five years of extreme drought in California officially ended in the spring of 2017, the subject of water usage remains a hot-button issue in the Golden State, particularly as entrepreneurs eye the state’s fertile farmland for opportunities in the newly legal cannabis industry.
In addition to the required state and local licenses, commercial cultivators will have to comply with wide-ranging environmental regulations that impact pesticide and fertilizer use, waste disposal and water-quality concerns.
Two subjects in particular — water and pesticides — will likely be a shock to growers in California who have largely been able to operate without strict statewide regulations. If news headlines from Washington and Colorado’s recreational cannabis markets are any indication, illegal pesticide use could be significant — and the industry’s bad actors could face fines, product recalls or worse.
“The failure to secure and operate under these permits could have significant consequences, not just financial, but even the legal ability to operate,” says Sarah Bell, an environmental attorney with the San Francisco office of Farella, Braun + Martell.
SunGrower & Greenhouse recently spoke with Bell to address some of the complex issues licensees will face with the upcoming regulations.
Bell advises clients on regulatory compliance and project development, including representation in permit proceedings. She has experience in counseling, litigation and alternative dispute resolution under major federal and state environmental statutes, including the Clean Water Act and the California Environmental Quality Act.
SunGrower: How close is California to finalizing environmental regulations for commercial marijuana growers?
Sarah Bell: They’ve made a lot of progress in the last six months. The State Water Control Resources Board is currently developing a statewide water quality permit and a water rights permit. The expectations and requirements are available online, and the comment period is open right now. The comment deadline is Sept. 6 and the hearing on the adoption of these two permits is Oct. 17. So this is happening quickly.
To the extent that these two permits are approved, we expect that they could go into effect as early as November.
SG: Aside from familiarizing themselves with the proposed regulations and submitting comments, what steps would you suggest for growers to prepare themselves for the upcoming regulations?
Bell: Figure out their water. Secure the legal right to use whatever water source he or she is using. Ensure their grow operation and their use of pesticides and fertilizers will adequately protect water quality.
Legal rights, water diversion and water quality will continue to be the focus in California in terms of environmental issues that will be regulated in connection with cannabis. I think for people who are unfamiliar with the State Water Board’s permit process, engaging a professional consultant or attorney could be extremely helpful to navigate the process. There are going to be reporting requirements; there are going to be judgement calls to be made when signing up for one of the permits when you’re determining the size of your grow operation, the slope and other factors.
SG: Is that same advice applicable for somebody buying a property? Would you say reviewing water rights is step one in evaluating real estate for commercial cannabis production?
Bell: For a developer or an owner looking to break into a commercial market, I would certainly recommend consulting with a professional before buying property. Engaging an adviser, consultant or lawyer to review the property to look at some of these issues before putting money into it is a great idea.
I think for someone looking at a piece of real property, some of the factors you’d want to consider would be: What’s the legal source of water? What’s the slope on the property, because slope is going to figure into some of the State Water Board requirements. What’s the distance to the nearest water source, stream, river, lake? That’s going to factor into storm water runoff and sediment issues. What size of a grow area does the proposed owner intend to develop? Are there nearby tribal lands or significant cultural resources that might impact one’s ability to develop a cannabis grow area? There can be a lot of nuances that weigh into a business person’s ability to develop a cannabis operation.
SG: Considering the recent years of drought the state has experienced, is it safe to say there’s an elevated importance on everything water-related in California?
Bell: Yes, that’s absolutely true. This year, we’ve had a really wet year, which has been wonderful, but the history of the drought before this year is seared into people’s minds — regulators, farmers, anybody who makes their living off the land, but also anybody who lives here who has been subject to water restrictions.
The drought has really heightened everybody’s focus on water and water quality and how much water is available for all the industries that need it.
SG: For current producers, are there specific aspects of the regulations that you foresee being the most significant or challenging to comply with?
Bell: Probably just the shift from an unregulated industry into a regulated industry. I think that is going to be a big change for existing growers — particularly growers who don’t have a background in agriculture or other industries that are regulated by the State Water Board.
SG: Is there anything else worth noting about how growers can set themselves up for success this fall and looking forward into 2018?
Bell: We say the State Water Board is going to be focused on water quality and water rights all the time with these two permits, but that covers an enormous amount of information.
Think about streambed alterations; think about unauthorized diversions of water; think about how you’re storing water; waste discharges to surface and ground water; increased sediment in storm water runoff that can result from grading or erosion; think about how you’re making roads to access your grow; how you’re developing your site; how you’re storing and using pesticides and fertilizer; think about human waste — including trash. Particularly if you’re looking at Northern California, think about timber conversion and clearing.
All these environmental issues fit with the bigger picture of water quality and water rights. We use these two phrases as environmental buzzwords, but there’s a lot that goes into them.
SG: That’s a good point. A lot of people think the conversation about water rights begins and ends with what comes out of their hose or what comes out of their sprinklers. But it’s more about considering the full ecosystem when we’re talking about water regulations for cannabis cultivators in California.
Bell: Absolutely. And there are dry season and wet season considerations that play into all of this. It is a complex regulatory framework.
This interview has been edited for length and clarity.