Southern Humboldt company researching potential uses, feasibility for converting location into cannabis central
2/3/15
After a decision by the Humboldt Bay Harbor, Recreation and Conservation District Board of Commissioners last week, a Southern Humboldt company and cannabis nursery will begin looking into whether property at the Samoa pulp mill site could become a center for all things cannabis.
“Is it possible? That’s really the question,” said Kevin Jodrey, CEO of VEK Industries Inc. and owner of the Wonderland Nursery in Garberville. “You have to ask the question, with legality coming up so quickly, how do we as a region compete? ... The scope of the operations that are going to increase in the state around us is going to be ungodly and hard to compete with if we’re not intelligent.”
Last Friday at a special meeting, the harbor district voted 3-0 — with Commissioner Richard Marks abstaining due to a conflict of interest and Commissioner Greg Dale absent — to approve a request from law firm Nossaman LLP that would allow it to work with VEK Industries to assess the feasibility of acquiring pulp mill property for cannabisrelated uses. Due to Nossaman LLP also representing the harbor district for its own feasibility research for the pulp mill, it created a conflict of interest. The law firm requested in a Jan. 22 letter for the district to waive the conflict of interest, which the commission approved on Jan. 29.
“This means that if the harbor district waives the conflict we will, of course, represent VEK Industries zealously in the matter for which it seeks to retain us,” the letter reads. “At the same time, you can rest assured that we will not compromise our representation of the harbor district in order to preserve our relationship with VEK Industries which would be in violation of our ethical duty to represent the harbor district with ‘total loyalty.’” Harbor district Chief Executive Officer Jack Crider said the district is also working with the law firm for a similar function — to determine whether its own interests for the mill property fall under the historical and allowable uses under the area’s Local Coastal Plan, as approved by the California Coastal Commission.
“It’s really hard for us to market the facility without really knowing that for sure,” he said. “So that’s the whole purpose, ... we’re tired of that whole question continually coming up.”
The harbor district has owned 72 acres of the pulp mill site since August 2013, seeking to restore the existing infrastructure and draw in new businesses to utilize it. Along with a massive federal emergency cleanup of the leftover pulp-creating liquors, the harbor district has received $12 million in federal new market tax credits, which can be used to improve the facilities at the site.
The abandoned machine shops and warehouses have already drawn interest from two companies — Taylor Shellfish Farms Inc. and Coast Seafoods Company — but Crider said they will need more tenants in the 130,000-square-foot area in order to receive the amount required to do renovations and possibly acquire more pulp mill land still owned by Freshwater Tissue Co. In order to obtain the credits, Crider said the district needs to “leverage” the feds by having funds to cover a debt service. The more tenants the district has in the mill, the more money it can use from the leases to cover that debt service and obtain more tax credits, Crider said.
The district’s current goal is to get $6 million worth of credits to buy 80 acres of mill property from Freshwater Tissue Co. and do infrastructure repairs on the facilities. This would require $3 million in lease payments to cover the debt service. With its two tenants, the district only has yet to reach the $1 million mark, which would leverage $3 million in tax credits.
“This is a federal program that is overseen by the IRS. They have to follow IRS rules,” Crider said. “The last thing they want to do is invest into a project and not get their tax credits. That’s why it’s expensive to go through this process. All the t’s have to be crossed and the i’s dotted. It takes seven years for these companies to get their tax credits fully realized.”
Crider said the district spent about $100,000 gathering the necessary information to obtain the credits, and will need to pay more if it does not have enough money to acquire the credits by July.
The harbor district has been reaching out to prospective businesses that could use the mill site, with Jodrey receiving an offer last year to look at the area. After touring the site, Jodrey said it could not only serve as a place to put more greenhouses, but as a cannabis hub to serve other functions such as housing laboratory facilities for Humboldt State University’s Institute for Interdisciplinary Marijuana Research.
“The project at the mill could be many things,” he said.
With aquaculture and aquaponics also proposed for the mill, Jodrey said that the project is a way to find new environmental and agricultural opportunities in buildings where opportunity had long since faded.
“It’s whatever you can use it for that allows it not be just a waste,” he said. “That’s the whole problem with our region. The only money coming into Humboldt is cannabis money. What do you do with the infrastructure that remains from the fishing and logging era? You have all these resources designed to do agricultural work. Why not use the mills?”
Six years earlier, Jodrey had attempted to do a similar type of project in Arcata while he was still with the Humboldt Patient Resources Center by leasing the Britt Lumber Co. mill from Figas Construction.
“What happened was the feds came in because the scope of the project was 20,000 square feet,” he said. “They hammered on the city, saying, ‘If you permit this we’ll arrest you.’” Jodrey said they backed off the project afterward to keep good relations with the city. With a potential recreational cannabis legalization ballot measure poised for 2016, Jodrey said it is important to think ahead before larger companies take over what will be a large economic opportunity for the local community.
“I’m not trying to become a monopoly, I just want to participate at the same level,” he said.
As to whether Jodrey’s vision would fall under the coastal commission’s scope of historic or allowed uses for the site is up to the commission and the county.
“I don’t think I ever saw that on the principally permitted uses,” Crider said about the cannabis option.
With offers falling through and time ticking toward a July deadline, Crider said it would not be an issue if cannabis greenhouses joined the two seafood companies in the warehouses.
“I’m looking for tenants,” Crider said.
