‘Green rush’ in Salinas Valley turns fields from chrysanthemums to cannabis

SALINAS VALLEY — A beloved but beleaguered landscape is now sprouting new luxury greenhouses, fueled by a dream of marijuana riches that is changing the people and produce of this corner of Steinbeck Country.

Salinas Valley was once the heart of the nation’s flower-growing business. But now collapsing wood-and-plastic greenhouses are being replaced by tall and gleaming high-tech European structures guarded by gates, barbed wire and cameras.

Workers trim plants at a cannabis farm outside of Salinas, Calif., Tuesday, April 25, 2017. Many workers who were in the cut flower business, which has perished, are now in the cannabis business, which is growing. (Patrick Tehan/Bay Area News Group)

“We’re rehabbing it — with a new flower,” said Salinas attorney Gavin Kogan, owner of GrupoFLor real estate company, which leases 2.6 million square feet of Monterey County property to several dozen cannabis growers.

Last November’s legalization of marijuana in California means the crop is emerging from the remote, hidden and sometimes dangerous mountains of Humboldt, Mendocino and Trinity counties, the so-called Emerald Triangle of Northern California.

Now the plant is rooting here in a place famed for fine horticulture, just off Highway 101, with easy access to lucrative markets in the Bay Area and Los Angeles.

“The Salinas Valley is the Silicon Valley of agriculture,” said Mike Hackett of Monterey Cannabis Co., who is growing cannabis where he once grew chrysanthemums. “We have the finest grow techniques and plant scientists and fertilizing techniques of any place in the world.”

In anticipation of Jan. 1, when the state will start issuing licenses to grow marijuana for recreational use, 65 ventures have applied for local cultivation permits in Monterey County. Until then, only nonprofit medical marijuana “collectives” are allowed.

Officials predict that marijuana agriculture could contribute $10 million to $80 million annually in new tax revenues to Monterey County’s $1.3 billion annual budget, which means there’ll be more money for roads, the sheriff’s office and other services.

Property price spikes are fast and furious, offering financial security for struggling old-timers willing to trade petunias for pot. One farm, worth $1.25 million two years ago, just sold for $5.1 million. Rents have surged from 5-10 cents to $1 per square foot, said Chuck Allen, an agricultural land broker with Keller Williams Realty in Watsonville who has seen deals close on more than 20 major properties worth roughly $100 million.

 

Local contractors are booked, with a two- to three-month waiting list for greenhouse construction. And workers — some of them former seasonal laborers who stooped over fields — are learning new skills at year-round indoor jobs, such as cloning and trimming.

Critics warn that the cannabis boom will spike costs for those flower growers who managed to survive the flood of imported flowers from Latin America. It could invite crime. And new growers — typically young, white and educated “ganjapreneurs” — are changing this traditional and culturally conservative community, home to aging Japanese and Filipinos.

Indeed, the “green rush” might not last. These ambitious outsiders could leave as quickly as they came, skeptics warn. In Colorado, the first state to legalize recreational weed, the increasing supply of legal marijuana has caused prices to plunge, forcing growers to consolidate. So only the most efficient are succeeding.

But the roll of the dice doesn’t appear to be dimming the dreams of many longtime valley residents searching for change.

“I think this is the best opportunity to come into the Salinas Valley since the days of the boxcars that cooled vegetables with ice,” said Aaron Johnson, a local attorney and Salinas native.

‘Goldilocks Zone’

As drivers look out their car windows from Highway 101, the region — a five-by-three mile area stretching east from the highway to Old Stage Road, and south from Williams Road to Potter Road – might seem unremarkable.

Flat and dusty, it’s been home to waves of immigrants — first Chinese, then Japanese, then Filipinos. Dust Bowl migrants arrived during the Great Depression, and their labor battles were immortalized in John Steinbeck’s “In Dubious Battle” and his Pulitzer Prize-winning “Grapes of Wrath.”

But it’s a place where plants thrive, said real estate broker Allen. “It’s a God-given microclimate — not too hot, not too cold, with breezes in the afternoon.”

A farmworker trims leaves out of marijuana buds at Harborside Farms in the valley of Salinas, Calif., on Friday, May 5, 2017. Mike Hakett, owner of Harborside Farms, bought greenhouses and is now converting them for cannabis use. (Ray Chavez/Bay Area News Group)

Back in the 1950s through the 1980s when the flower business was blooming, there were about 130 working greenhouses here, supplying fresh flowers across the U.S.“It’s the Goldilocks Zone. … It’s ideal for cut flowers, and it’s ideal for cannabis,” said Jeff Brothers of Harborside Farms, which will invest $30 million in six greenhouses to supply its large and growing marijuana dispensaries in San Jose, Oakland and soon San Leandro.

But the farms fell victim to globalization and, ironically, the nation’s drug wars, pushing the local unemployment rate above 15 percent in the 1990s. To reduce the flow of cocaine into this country by encouraging farmers in Colombia to grow food instead of coca, the United States in the early 1990s allowed imported flowers to enter duty-free. Now, 80 percent of all cut flowers sold in the U.S. are imported from South America.

“You could send product from Bogota to New York cheaper than from California to New York — and there are lower labors costs, lower environmental costs,” said Brothers, a former member of the California Coastal Commission who operated greenhouses for Monterey Bay Bouquets.  “We couldn’t compete. There was no margin left to care for facilities.”

Now fewer than a dozen farms are still growing flowers. And those properties are being snatched up. They’re valuable because they’re in short supply: You can’t erect a new greenhouse on open land.

Seeking to improve a decaying infrastructure and protect open space, Monterey County allows marijuana cultivation only in existing structures or in the “footprint” of former structures, Allen said.

“People will pay for a greenhouse in any condition — to rehab or replace,”  said land appraiser Kyle Brown of the Salinas-based Stephen Brown Associates. “Anyone buying a greenhouse now has to compete with a cannabis grower.”

Longtime farmers, many in their 80s and 90s, are cashing out for retirement or to help their kids, locals say. Others are leasing out property — making as much as 10 times what they made growing plants. A few, like Hackett, are converting to cannabis.

“You’re darn right I want to make money,” said Hackett, who prefers cocktails over cannabis.  “I struggled for many years to keep this things afloat, but I did it, paying property taxes and keeping things alive.”

High-tech greenhouses

The renovation frenzy is creating a shimmering skyline.

For such valuable crops, growers don’t want 10-foot-tall greenhouses with wood frames, dirt floors, high humidity, poor ventilation and old fiberglass roofs that block light.

Jennifer Rehm weighs product at a cannabis farm outside of Salinas, Calif., Tuesday, April 25, 2017. Many workers who were in the cut flower business, which has perished, are now in the cannabis business, which is growing. (Patrick Tehan/Bay Area News Group)

They’re building structures that are 15 feet tall, for better air flow. Shiny acrylic roofs, manufactured by Germany’s Evonik Industries, allow 100 percent UV light. Greenhouse design, frames and other materials also are imported, shipped by boat from the Netherlands-based Ammerlaan Construction.

The new greenhouses cost up to $150 a square foot, with construction costs soaring well over $1 million for a high-end structure.

“It’s been pretty crazy lately. The whole greenhouse industry is pretty slammed for materials,” said James Fryn of Watsonville’s System USA, which assembles the greenhouses and is backordered for supplies.

Before renovating, Hackett flew to Europe to study materials and construction. The greenhouses at his Riverview Farms have dual ridge vents, so mold-causing moisture can escape. Sensors control air temperature and direct two different types of fans. Automated shades can be rolled out or retracted, as needed. Drip irrigation software controls water to each plant.

“It’s exciting. There is energy. I’m smiling at work,” said Riverview greenhouse manager Martin Phillips, a 17-year veteran of a Gilroy-based flower company.

 

At Harborside Farms, which plans to harvest a stunning five crops a year, “we will become one of the most sophisticated greenhouse operations anywhere in California, harvesting every week, like an assembly line,” vowed CEO Steve DeAngelo.

The company is backed by investors like venture capitalist Roger McNamee, co-founder of the Silicon Valley firm Elevation Partners, and Richard Kimball, Jr., a former Goldman Sachs healthcare investment banker. Board members include Willie Brown, former speaker of the California Assembly and San Francisco mayor.

The local labor force is also undergoing dramatic changes.

Cannabis salaries are about $15 an hour, compared to $11.50 or $12 in the field picking crops such as strawberries and lettuce. The jobs are also year-round, providing greater stability for local families, said Johnson of Salinas-based Lombardo & Gilles law firm, who established the Coastal Growers Association trade organization.

The largely Latino workforce was initially apprehensive about cannabis, DeAngelo said.  “There were cultural issues — a lot of blood has been spilled at the border, involving gangs, over marijuana,” he said. “But they understand now….This workforce is very skilled, and they take their job very seriously. They will excel at it.”

Mike Hackett, owner of Harborside Farms, shows off one of the state of the art farm structures his building in the valley of Salinas, Calif., on Friday, May 5, 2017. Hackett bought greenhouses and is now converting them for cannabis use. (Ray Chavez/Bay Area News Group)

Hector Saldana, 46, worked in ivy topiaries before joining Harborside as a foreman.

“I had to learn from the beginning — and be trained in what I do,” he said. “We are all very excited about this new cannabis business and how it will help Salinas.”

Critics, however, warn that the change may blow ill winds into the valley’s traditional businesses and values.

“I have concerns about increased competition for agricultural labor,” said Teresa Matsui, who returned to Matsui Nursery with degrees from Harvard and Northwestern. “It’s becoming more difficult to come by — and expensive.

“And I worry about potential criminal element that cannabis growing might attract — and how that might be dealt with by grower and local enforcement,” said Matsui, whose family’s orchid-growing operation is one of the largest in the nation.

“We have over 200 employees come here every day to work,” she said. “My utmost concern is their safety and security.”

But others say marijuana represents a chance to restore life to a long-withering region.

“It’s not a bunch of dope dealers. It is professional industry,” said Dave Potter, a former five-term Monterey County supervisor who helped develop an ordinance to facilitate the boom.

“Converting from flowers to cannabis,” he added, “is nothing different than crop rotation.”

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‘Green rush’ in Salinas Valley turns fields from chrysanthemums to cannabis

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