Author: John

The Visalia City Council is expected to approve a plan to put a proposed measure to tax cannabis business in Visalia on the November ballot this week. The results of a March survey indicated that 2/3 of Visalians would approve of retail sales of cannabis in the city limits with a 10% tax to fund city services.

The consultant firm FM3 Research concluded that a proposed measure to tax cannabis businesses in Visalia”appears viable” for November 2024. The measure receives broad and consistent support among the electorate, regardless of whether or not a state mandate is mentioned in the ballot language, says the researcher group.

FM3 Research was hired to conduct a public opinion survey of Visalia registered voters to assess voter attitude towards a potential measure to tax cannabis businesses, if such businesses were allowed to operate within Visalia’s jurisdiction.  

Selling marijuana in a retail store is not allowed in Visalia, although a state law allows delivery as of 2024.  A city staff report says Senate Bill (SB) 1186, the “Medicinal Cannabis Patients’ Right of Access Act” was signed into law in late 2022. This state law, which became effective on January 1, 2024, prohibits local agencies from enforcing any local regulations that prohibit the retail sale by delivery of medicinal cannabis. After this date, “delivery only” (i.e., delivery of medicinal cannabis) businesses can be permitted, subject to reasonable zoning regulations for public health and safety, within the City of Visalia. This means that warehouse-based businesses could legally operate in the City of Visalia as long as they sold medicinal cannabis via delivery only.

Simple majority referendum

The Visalia survey showed many people are uncertain about whether it is legal or not to sell cannabis in Visalia, but majorities support allowing cannabis business activity. Additionally, nearly three-quarters perceive a need for funding for city services. In that context, nearly two-thirds support what could be the proposed simple majority measure initially.

Even if the city referendum  in November indicates a large majority would support selling marijuana in Visalia, the council has the final word over whether to allow retail sales, likely in 2 to 3 outlets in town. City staff has received numerous inquiries from business operators seeking to operate storefront retail cannabis businesses, which are not permitted to operate in Visalia under the current municipal code regulations.  

The wording of the ballot measure only mentions allowing marijuana businesses, leaving it up to the council on what types of businesses will be allowed.

The measure is expected to read  Shall the measure to fund, for general governmental uses, services such as:maintaining emergency response times; supporting youth programs; helping attract businesses; cleaning public areas; addressing homelessness; by taxing cannabis businesses’ gross receipts not exceeding 10% on retail, delivery, manufacturing/testing raising approximately $1,000,000 annually, requiring spending disclosures, and whichwould only be levied if state law imposes mandates or the city approves an ordinance allowing such businesses, lasting until ended by voters, be adopted? Other conclusions from the survey:
• Voters place the greatest priority on addressing homelessness, maintaining emergency response times, keeping public areas safe and clean, and preventing property crime.
• Support fluctuates with messaging, but remains well-above the 50% threshold for passage throughout the survey.

The question of pot sales has surfaced a number of times at city council meetings over the years and has gained traction in the past several years although that last discussion, council majority was cool to the retail sales idea.

Other nearby communities, including Woodlake Farmersville, Hanford and Lemoore, allow retail sales with some allowing manufacturing and growing of marijuana with several reporting they have enjoyed tax revenues of over $1 million a year from the special sales tax.

All cities depend on sales tax revenue to back their general fund.

Some here are worried that the lower price of pot by weight across the state will mean less  tax revenue than anticipated and that expanding the store count in Tulare County could mean less for each community. Other critics argue that smoking marijuana is problematic, and should not be encouraged even though it is legal in California.

Nationwide, support is building to legalize marijuana. Recently, President Biden announced he backed the idea.

Gallup, in a survey released in November, said public support for legalization hit a record 70% “after holding steady at 68%” for the three previous years. The younger you are, the more likely you support it. The survey found 79% support from people ages 18-34, 71% for respondents ages 35-54, and 64% for those 55 or older.

If retail sales are approved, the council will likely restrict their location away from homes and  schools similar to restricted zoning for bars. One district that has been discussed, would be to allow a restricted number of retail stores in the microbrew area east of Santa Fe in Downtown.

Local dairy industry expresses concern

Central Valley Meat (CVM) Holding Company, who already owns four different facilities; Central Valley Meat in Hanford, Harris Ranch Beef Company, Harris Ranch Feeding and CLW Foods, will be California’s largest beef producer in a deal with Kansas-based Cargill. The Hanford beef processor has entered an agreement to purchase the Cargill Meat Solutions beef processing facility in Fresno, California. This move marks a significant expansion in Central Valley Meat’s operational capacity. Already CVM employs more than 2000 people.

In a news release May 7, CVM says this will strengthen their processing capabilities, enhancing their ability to meet market demands while reinforcing their commitment to supporting the cattle and dairy industry in California and the western region. “Our decision to acquire the Cargill Meat Solutions beef processing facility in Fresno, California aligns with our long-term vision of strengthening our offerings to better serve the needs of our customers,” said Brian Coelho, CEO and Owner of Central Valley Meat. We’re excited to work alongside cattle producers in the state.”

Both companies say they are committed to retaining as many employees as possible and retaining beef processing capacity for producers. Cargill has almost 1,000 employees at their Fresno beef plant.

”Cargill will continue to operate its neighboring ground beef and hamburger patty facility in Fresno. The additional capacity gained through acquiring the beef processing facility will enable Central Valley Meat to be more adaptable, ensuring that they remain agile in meeting evolving industry trends.”

Nationwide, consolidation in the beef, pork and chicken industry has raised concerns about lack of competition and high prices and locally this transaction has done the same in the San Joaquin Valley, a big beef and dairy production region.

Monopoly concerns

Weeks ago, local dairy industry representatives contacted the offices of Congressman Valadao and Congressman Costa about the rumors that this deal was about to happen – concerned that livestock owners here would have fewer buyers for their product similar to what is happening across the US.

Four giant companies Tyson, Cargill, and Brazil-based National Beef and JBS, now control 85% of the U.S. beef market. WH Group (Chinese), JBS, Hormel, and Tyson control about 67% of the pork market. Tyson and Pilgrims Pride control about 45% of the chicken market.

Ironically, Cargill might argue they are reducing their current competitive advantage by selling this division to a local beef company.Cargill Meat Solutions is a subsidiary of Cargill Inc—a family-owned agribusiness company said to be the largest privately held firm in the US.

With the merger with Harris Ranch in 2019, Central Valley Meat was said to be the 7th largest beef producer in the US.

Dairy industry view

Tulare County dairyman Tom Barcellos says” everyone in the dairy business has some degree of concern.”

“Brian is a good friend and I believe his heart is in the right place but as a producer when there’s less competition at the sales yard or at auction, there is cause for concern with fewer buyers.”

“We can only hope that Central Valley Meat works for the good of all concerned.”

The Barcellos dairy ships 6,500 gallons of milk each day to the Land O’Lakes plant in Tulare that produces 80 percent of the Land O’Lakes butter sold nationwide. These days Barcellos says the beef side of the business is more important than before, due to the rising price of beef and the opportunity to breed drop calves for beef.

Local dairy industry representative Cornell Kasbergen of Tulare says “we could be left with only one buyer. Our income from beef is pretty significant, and we may be paid less than producers in other areas.”

From the” consumer side, there’s the same concern.”

“I would hope the Justice Department would do a review of the transaction before it is finalized.”

Kasbergen is chairman of the Milk Producers Council Board of Directors.

Mr Coelho argues that “By building on Cargill’s expertise and resources, they are positioned to enhance efficiencies and drive innovation across their entire supply chain. Central Valley Meat remains committed to upholding the highest standards of quality, integrity, and customer service. As they embark on this new chapter of growth and expansion, they are confident that their strengthened capabilities will further solidify their position as a trusted partner in the beef industry.”

Biden weighs in

President Biden has weighed in on the issue connecting it to inflation as well in a statement a few years ago.

Four large meat-packing companies control 85 percent of the beef market. In poultry, the top four processing firms control 54 percent of the market. And in pork, the top four processing firms control about 70 percent of the market. The meatpackers and processors buy from farmers and sell to retailers like grocery stores, making them a key bottleneck in the food supply chain.

When dominant middlemen control so much of the supply chain, they can increase their own profits at the expense of both farmers—who make less—and consumers—who pay more. Most farmers now have little or no choice of buyer for their product and little leverage to negotiate, causing their share of every dollar spent on food to decline. Fifty years ago, ranchers got over 60 cents of every dollar a consumer spent on beef, compared to about 39 cents today. Similarly, hog farmers got 40 to 60 cents on each dollar spent 50 years ago, down to about 19 cents today.

Even as farmers’ share of profits have dwindled, American consumers are paying more—with meat and poultry prices now the single largest contributor to the rising cost of food people consume at home.

And, when too few companies control such a large portion of the market, our food supply chains are susceptible to shocks. When COVID-19 or other disasters such as fires or cyberattacks shutter a plant, many ranchers have no other place to take their animals. Our overreliance on just a handful of giant processors leaves us all vulnerable, with any disruptions at these bottlenecks rippling throughout our food system.

Hormel settlement

Last month Hormel Foods reached a settlement in a pork-price fixing case. The case involves allegations of price-fixing within the pork industry. The settlement, totaling millions of dollars, addresses claims made by three different classes of pork purchasers.

The settlement agreement involves a payment of $2.4 million to the commercial indirect purchaser class, $4.8 million to the class of direct pork purchasers, and $4.5 million to the consumer indirect purchaser class. These settlements come after a series of legal proceedings that began with the consolidation of 27 cases in December 2022, involving 146 parties.

The lawsuit revolves around accusations of collusion among pork processors, who collectively control over 80% of the wholesale pork market.

UC Berkeley’s Sierra Snow Lab near Tahoe reports May 5 a record day for snowfall.

“Did anyone have the snowiest day of the 2023/2024 season being in May on their winter bingo card?

This storm dropped 26.4″ (67 cm) in the last day, making May 5th the snowiest day of the season at the lab. It beat 2nd place (March 3rd) by 2.6″ (6.5 cm)!”

The lab reports another bump for this water year’s snow water equivalent: 157% of median SWE to-date!

The late season storm added precipitation to Shasta Dam’s water year with another 1.64 inches for May 4 and 5. For the water here, Shasta has received about 67 inches compared to 78 in the year before, the big AR year.

 On May 5 Yosemite saw .87 and Huntington Lake got 1.06 in. Pine Flat received .56 and Giant Forest 0.67.For the water year Giant Forest on the Kaweah received 35 inches,near the 43 inch average but well, below last years 92.5 in. Springville got .63 for there early May event.

On the Valley floor, things were less interesting with Fresno getting about one third of an inch.