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Joint Venture: When Wine & Pot Merge

You’d have to be nearly blind, seriously drunk or very stoned to miss the connections.

Earlier this month we noticed a Press Democrat article: “Sonoma County wineries ponder possibility of pairing with cannabis industry.”

The “pairing” in that context had more to do with tourism overlaps in wine-pot areas — putting pot dispensaries on the wine tour itinerary, co-existence and the mutual benefits from their proximity to each other — than genuine mergers, at least for now.

That’s because many conventional vintners are nervous about jeopardizing their federal booze licenses by directly engaging in pot growing and sales, still a federal felony.

But that hasn’t stopped some of the more adventurous well-heeled wine people from making some overtures to their less legal pot counterparts.

Apart from that nagging “federal felony” problem, the industries have a lot in common.

Consider how difficult it is for the small pot growers in the Emerald triangle trying to get legal under California and local county amorphous yet expanding new rules.

According to Mendo pot advocate Julia Carrera of the fractious Small Farmers Association, “To be fully regulated in 2016, it costs the Mendocino County Small Farmer on average a total of $83,325 for an outdoor and $109,825 for greenhouse.”

This seems kind of low, actually, presuming that the mom-and-pop pot pharm is already in existence and will continue as such. Under legalization, however, there will be much more to factor in before becoming truly as mainstream as wine.

Ms. Carrera bases her cost estimates on: Application fee, pre-inspection consultant, zipties, scale certification, legal counsel, soil prep, capital improvements (greenhouse, drying, trimming, greenhouse equipment, fencing, security), and plant care.

Plus, water board compliance: Application fee, pre-inspection consultant, water protection plan, road improvements, silt mitigation, property improvements, movement of garden from erosion-prone problem area (if needed).

“Never before have the small farmers that include cannabis in their crop rotations experienced this kind of expense in one year,” said Carrera. “This money was profit just the year before. It is a shocking financial reality that many will not be able to survive. And if all your eggs are in one cannabis basket, the shock is that much more fierce.”

Marijuana attorney Omar Figueroa who represents marijuana dispensaries and venture capitalists said, "I'm a little wistful. There was romanticism in the peaceful cannabis growers rebelling against conformity. Now the suits are coming in and taking over.”

There’s plenty of money to be made and lots of potential ways to cut costs by merging the wine industry with the, ahem, budding legalized pot industry.

Add to that the welcoming, not to say lax, regulatory structure that is emerging in Mendocino and California at large. Local governments are looking greedily at all the potential revenue they can take in if pot can be formally taxed and fees can be charged. Just like with the wine industry, they’re not likely to put major obstacles in such a revenue stream. In fact, they’re poised to actively help — especially since conventional property and sales taxes are very hard to increase under existing law.

Close observers say that at a minimum — if the County were to take in just the low-hanging fruit of self-reporters and minimum taxes — pot could pump at least $2.5 million into the county coffers. Maybe a lot more.

Plus there’s the market hedge. If the wine business drops off, as it regularly does, the newly merged grower would have an alternative: switch the predominant crop to pot and adjust production to market demand as needed.

Think about this: The wine people already have the land, the water rights, the water storage and delivery infrastructure, some of the processing facilities, the financing, the accounting and tax avoidance procedures, a somewhat common labor force, delivery, marketing, sales outlets, computer presence…

All they need is some specific cannabis expertise and start up assistance from the struggling small farmers Ms. Carrera says she represents.

Step right in ladies and gents: Take a sip and a toke! It all comes from right out there in our vineyard/pot pharm.

Just make sure you have a designated driver.

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