What Happened To The Miracle Money?

Legal Notice 428-11, Ukiah Daily Journal, May 31, 2011

Ordinance No. 4275, Ordinance Amending Chapter 9.31 of Title 9 of the Mendocino County Code Entitled ‘Medical Marijuana Cultivation Regulation’ — Passed and adopted by the Board of Supervisors of the County of Mendocino, State of California, on this 17th day of May, 2011, by the following vote: Ayes: Supervisors Brown, McCowen, Pinches, Smith and Hamburg. Noes: None. Absent: None. A complete copy of the ordinance is on file with the Clerk of the Board of Supervisors and is available for inspection and copying as a public record.

— Carmel J. Angelo, Clerk of the Board

* * *

We’re having trouble reconciling marijuana dispensary fees with the just announced layoffs of six Sheriff's Department patrol deputies, among them Anderson Valley's popular resident deputy, Craig Walker.

In December of last year, former KZYX Trading Time hostess cum acupuncturist cum Mendocino County's Medical Marijuana compliance inspector Julia Carrera, told the Board of Supervisors that pot could well be a “miracle” solution to the County’s budget problems.

“We would like to deliver a proposal that could save all the deputy jobs,” said Ms. Carrera. “Other counties are looking at marijuana to balance their budgets. Just allow us to present it to you intelligently, with backup, with legitimate forecasts. This would be a whole ’nother meeting if you did. People want to do this. This is a beautiful thing, not a bunch of criminals trying to kick someone. People believe in the program and want to contribute to this. I was an acupuncturist, but now they call me a pot whisperer. I find it fascinating. I’m just an inspector. [Pot] people are providing transparency to the Sheriff and inspectors. I have some general numbers that could generate at minimum $600k to $700k in one year. That’s the very minimum. None of us know the maximum. Allow the process. There could be from 100 to 500 new permit applications next year [i.e., this spring]. And more the year after that when people realize that the biggest growers are safe.”

Back in March Sheriff Allman, not a pot whisperer, predicted, “I’ll know how much the marijuana dispensary permit program will bring in by April or May,” adding, “I have said we’re going to get between $400 and $500k. That’s four or five deputies. You have to put some trust in your 9.31 [the marijuana dispensary] ordinance. If we lay off six people we can’t provide the 9.31 service to the permit applicants.”

Also in March, and also not a pot whisperer, Supervisor McCowen, primary author of the County's marijuana dispensary ordinance, remarked, “Some are doubtful that 9.31 will result in significant revenue. The Sheriff says $400-$500k. I believe that’s an understatement. We’ll know in a couple months. There’s a growing cycle. They have to come in early and apply. 130-140 applicants will eliminate the deficit this year.”

Both McCowen and Allman were clearly optimistic that the pot dispensary revenue, however much it might be, would save patrol deputy positions.

One month later, in April, when asked by Supervisor Hamburg about the marijuana permit sales, Allman replied that 46 people had signed up, translating to $296k if all 46 paid the $1,500 application fee and $50 each for 99 zip-ties. However, Allman noted, they had not all paid up; some of the 46 had applied for the permit, but there was no guarantee they’d go through the full permit application routine and pay upwards of $6,450 each, plus another $1,500 or so for the pot whisperer's third party inspections.

As of last week, the account that holds “the money” showed that the program had brought in a total of $300,325 and, Sheriff Allman said, “three more permit-seekers were on their way in [last] Friday, adding $4,500 to the total.”

A permit application fee is $1,500. The zip-tie fee is $50 per plant. If a dispensary applicant purchases the max of 99 zip-ties, the package is worth $6,450 to the County. The application fee includes the first inspection. Inspections are conducted by the third party inspectors paid directly by the applicant; none of that money goes to the Sheriff.

Does it even need saying that there's no program like it in all of America?

In response to interest from the smaller growers, the ordinance was amended recently to allow the 25 (or fewer) plant growers to apply for the Sheriff's green light which, of course, 25 authorized plants or 99 "legal" plants can be trumped at any time by the DEA's big red light or co-opted by the DA's program that allows the busted to pay the DA their pot fine (or "eradication fee") and go home with a misdemeanor, thus avoiding a long courtroom legal dance.

And there’s also a little bit more county revenue coming from third party inspectors who pay $1500 to become qualified.

The permit process requires three inspections for returning applicants, but four inspections for new applicants, with the first inspection included in the application fee.

Last year the third party inspectors charged $500 per inspection.

A 99-plant grower would end up being out of pocket by around $8,000 by trim time.

The $300k total also includes at least $45,450 in eradication fees that DA Eyster now charges for pot growers who plead out to misdemeanors. This amount was not included in Ms. Carrera’s, Mr. McCowen’s or the Sheriff’s forecasts because Eyster's approach to clearing his desk of small-time pot people became the DA's policy after the Sheriff had announced his approach to Mendocino County's lead cash crop.

But the amount the DA is contributing is probably substantially more than the $45,450 amassed amount as of April 20.

According to the DA’s suavely forthcoming press officer, Mike Geniella, as of May 27, a total of $149,500 has been turned over to the Sheriff’s Office through the DA's marijuana eradication recovery program.

“I believe there’s another $33,000 in commitments in the pipeline,” said the DA. “This is ‘new’ money being paid to partially fund law enforcement efforts by those who have violated law instead of county taxpayers.”

Sheriff Allman’s budget expert, Norm Thurston, told the Ukiah Daily Journal’s Tiffany Revelle last week that money received since April 20 “hasn't yet been broken down into zip-tie revenue and permit revenue, but it has more than met Allman's expectations.”

No it hasn’t.

The optimistic revenue predictions haven't come true and six patrol deputies, unless the numbers save them, will soon be gone.

Even though the forecast of increased fees for pot garden registration were made in March, CEO Angelo, continued to say that a certain number of deputies would have to go.

At the end of Ms. Revelle’s report she asks the Sheriff about Supervisor Kendall Smith’s remark last March that the pot dispensary revenue is just “funny money.” Allman replied, “You can call it whatever you want, but if it keeps deputy sheriffs on the streets there's nothing funny about it.”

Whatever the pot revenue is, it’s obviously not keeping deputies on the street. The board’s 3-2 vote to lay off six deputies last week seemed to assume that the pot income wasn't going to save anybody or anything.

Sheriff Allman, D.A. Eyster and Chief Probation Officer Jim Brown all asked for the Board to hold off until the fate of COPs /VLF funding was decided, a courtesy one might reasonably expect to be extended to two elected department heads who are constitutional officers of the state and a Chief Probation Officer who is appointed by the Superior Court.

Eyster had said, with proportionate emphasis, in effect, Don't tell me how to allocate the cuts; tell me the amount of savings you need and I will move bodies around to achieve the necessary savings. I can shift some of these positions into grant-funded programs. The CEO is reported to have stayed the layoffs for the DA contingent on his assurances that the necessary savings will be realized (in stark contrast to her position regarding the Sheriff’s budget).

The CEO continues to project a $400,000 cost overrun in the DA’s budget. Eyster insists that the CEO show this to him in writing. He maintains he is not over budget and that the CEO is working on faulty numbers. The CEO says the numbers came from the DA (probably from the former DA). Assuming the DA may have put out different numbers previously, the CEO needs to go with the current numbers from the DA, and if the CEO thinks those numbers are wrong, she needs to document it in writing as Eyster insists.

As the joint goes round the room, so to speak, the issue gets hazier.

The Sheriff’s staff layoff vote apparently puts a contingency plan in place which assumes the loss of state grant funding that brings about $1.2 million into the County, some $700,000 of which is devoted to the Sheriff. The layoff of six deputies and a sheriff’s evidence technician is intended to cover that potential shortfall for next fiscal year.

Defenders of the pot dispensary program say that the $300k they’ve received so far has already been absorbed in the Sheriff’s Department, reducing his projected deficit for this year from about $800k to $500k and, if you expect (as they do) that another $300k-$400k in pot permit money will arrive before the end of the fiscal year, like dudes, why announce layoffs now?

Of course all of this is occurring in the context of ballooning retirement system costs, declining overall revenues and a bunch of related budget unknowns from the state.

For his part, Supervisor Dan Hamburg says he hopes the layoffs will be rescinded.

“We expect that the legislature will come to an agreement on vehicle license fees (VLF) before the June 30 expiration date.  Both Democrats and Republicans favor an extension but the Republicans are trying to leverage their support for the VLF extension to get cuts in other areas of the state budget. If the Board had chosen to delay (as McCowen and Brown favored) we would have risked having to ‘backfill’ funding for those positions (in the Sheriff’s Department and Probation. The DA took care of it by backfilling with funds he already had in his budget) into the new fiscal year. Backfilling means coming up with general fund dollars that we clearly don't have. Given the month or so it takes to layoff county employees, my judgment was that we couldn't wait.  We can always ‘rescind’ — right up to June 30.”

Besides continuing the as-yet unrealized revenue optimism, this assumes that Deputy Walker and the Sheriff's Department's other new hires will wait around to see if they get a last minute reprieve.