Referendum to overturn Graham County BOS approval of cannabis cultivation at NatureSweet site signatures verified to be on November 2022 ballot

A referendum to overturn a BOS vote on a zoning change to allow cannabis cultivation at a NatureSweet greenhouse has enough signature to appear on the 2022 November General Election Ballot. However, an attorney for the group looking to cultivate cannabis advises a complaint challenging the signatures will be filed today.

By Jon Johnson

SAFFORD – A referendum to allow the voters of Graham County to decide if a cannabis cultivation site will be allowed at a NatureSweet greenhouse in Bonita has turned in enough signatures to be placed before the voters countywide in the November 2022 General Election.

However, Bayacan Inc. attorney Heather Dukes advised that a complaint to the petition signatures will be filed today to throw them out so the referendum doesn’t make it to the ballot.

“There’s a lot of issues with the signatures, a ton,” Dukes said.  

A group called “Respect The Will Of The People: Graham County Voters & The Arizona Public Integrity Alliance Encourages A No Vote On Massive Marijuana Expansion In Our Area,” sought signatures for a referendum on a decision by the Graham County Board of Supervisors (BOS) to rezone greenhouses at the NatureSweet site in Bonita to allow for the cultivation of cannabis. The group beat an Aug. 5 deadline and turned in 2,288 signatures, according to Graham County Elections Director, Hannah Duderstadt.

“The people of Graham County continue to sent the same message to their elected leaders,” said George Khalaf, the chairman of the PAC leading the referendum effort. “They opposed recreational marijuana in 2020 and they do not want a giant marijuana grow operation in Bonita. The referendum is indeed a milestone as residents stand up to pro-pot special interests.”

Khalaf requested the BOS rescind its previous approval to “avoid a contentious election.”

“The people have spoken,” Khalaf said. “It’s up to the Board of Supervisors to listen. Rescinding the approval is not only legal but also the right thing to do at this point.”  

No matter if the cultivation is allowed or not, recreational cannabis will still be sold in Safford and be legal for adults to use.

A random sample of 113 signatures turned in showed 23 to not be qualified electors for a roughly 20 percent failure rate. However, since the group turned in more than twice the required 1,064 signatures, Graham County Recorder Wendy John certified the signatures Aug. 23 and Duderstadt acknowledged a final receipt of the valid signatures, allowing the referendum to be placed on the November 2022 General Election Ballot. More than 13,650 people voted in Graham County in the November 2020 General Election.  

“The number of valid signatures filed with this petition, based on the random sample, appears to be at least 100 percent of the minimum required or through examination of each signature has been certified to be greater than the minimum required by the constitution,” Duderstadt wrote in her receipt of valid signatures. 

The “Respect The Will Of The People” group was reportedly hired by residents in Bonita who opposed allowing the cultivation of cannabis in a former NatureSweet greenhouse. The Graham County Board of Supervisors voted 2-1 at its June 22 meeting to approve a resolution to rezone two greenhouses at NatureSweet’s facility in Bonita to allow commercial cannabis cultivation. BOS Chairman Danny Smith, whose district includes the Bonita facility, cast the lone dissenting vote. 

Bayacan, LLC, filed the rezoning application to change it from General Land Use Certification to Unlimited Manufacturing to allow it to grow medical-grade cannabis in accordance with Graham County.

The ruling allowed NatureSweet to move forward with the sale of its greenhouse Site 6 to Bayacan Inc., which plans to utilize the site to grow medical-grade cannabis. The operation would only include the cultivation of the plant and harvesting of its fruit, with no processing or sales taking place at the site. A second greenhouse, Site 5, was also included in the rezoning, and Bayacan may purchase that at a later date to expand its operations. 

For its part, the diversification of the greenhouses will allow NatureSweet to create a world-class research and development facility at its greenhouse Site 1 with a possible later expansion into Site 2. NatureSweet’s greenhouses at Site 3 and Site 4 will still be utilized for tomato cultivation, along with possible other agriculture products.

The rezoning received strong support from the business and education community, with the Graham County Chamber of Commerce and Eastern Arizona College endorsing it. During a two-hour BOS meeting on the subject, some major business leaders who also spoke in favor included Kempton Chevrolet co-owner Kip Kempton, III Counties Distributing owner Tim Linden, Shane’s Place bar owner Shane Jones, Double R Entertainment owner Reed Richins, and real estate developer and five-generation farmer Ted Prina, who said there should be no question to the zoning’s approval. 

“If this were about putting corn in a greenhouse no one would be in this room,” Prina said. “And I don’t think the state has a right to tell us what we can plant on our personal property. This is a win-win. I don’t see how you guys (the BOS) can not approve of this.”

Jon Johnson Photo/Gila Herald: BOS Chairman Danny Smith cast the lone dissenting vote against the NatureSweet zoning change because he felt the companies haven’t done enough to alleviate residents’ concerns.

The BOS unanimously approved Graham Mountain Flowers’ application to change zoning to M-X Unlimited Manufacturing Land Use Classification to grow cannabis in the Eden area. One of the growers, Clint Colvin, has previously harvested a 100-acre hemp farm the past two years in the same area. 

However, residents in the Bonita area opposed the greenhouse being used in such a manner, believing it would lessen their property values and leave a “dead skunk” smell lingering throughout the area. 

One of the main families against the zoning is the Fleming family, who breed horses at their Fleming Thoroughbred Farm, which is the closest facility to Site 6. The Flemings believe that cannabis cultivation will be detrimental to their business due to the horses being able to smell the cannabis. They and others also were concerned that residential property values would be lowered and suggested that Bayacan instead build a new facility closer to the Safford area or somewhere “out in the middle of nowhere”. However, the Bonita area is an agricultural area and a similar crop has been historically grown at the greenhouses for nearly 30 years.

The board also previously approved rezoning an area in Eden for a commercial cannabis cultivation operation headed up by Colvin Farms, which was also brought up by Keith Alexander, Eastern Arizona College’s special assistant to the president for community and government relations. Alexander said he would not want to see a precedent where one entity gets approved while another similar operation is not.

Jon Johnson Photo/Gila Herald: Kempton Chevrolet co-owner Kip Kempton spoke in favor of the zoning change at the BOS’ June meeting.

Not allowing the cultivation site would also adversely affect residents of Graham County tax-wise. At the June BOS meeting, Kip Kempton said the possibility of losing the NatureSweet tax base would put the county in a tax crisis and cause every other business and residential property taxes to increase as NatureSweet currently accounts for 20% of the county’s property taxes. However, if the cultivation site is allowed, Bayacan and NatureSweet together would then represent 23% of the county’s property taxes.

With the vote not taking place until November 2022 – more than a year away – Bayacan Inc. could already have grown and harvested multiple crops before the vote takes place should it decide to move forward. Dukes said a press release responding to Khalaf’s statements will be released tomorrow.  

Cannabis Cultivation Tax Initiative

While the referendum to vote on the resolution to rezone the two greenhouses won’t affect Graham Mountain Flowers, a possible tax initiative being pushed by a group called “Protect Graham County, No to Drugs” would essentially force both cultivation sites to cease business. 

The group’s treasurer, Timothy Sifert, president of the American Campaign Finance Foundation in Scottsdale, filed an initiative application on June 30 that would amend the code of Graham County to impose a $1,000 occupational permit fee to cultivate cannabis, with an additional tax of $1,000 per pound of cannabis or cannabis byproduct sold. The referendum was filed at the July 6 BOS meeting in an effort to place the board’s decision to all of the county’s voters.

Photo Courtesy Bayacan: This aerial photograph shows the agricultural area surrounding NatureSweet’s greenhouses and the area for the proposed zoning change to allow cannabis cultivation.

Siefert was reportedly paid to file the applications, and the chairman of the group is identified as Kenneth Daniel Krieger, a retired chiropractor.  

While the $1,000 tax on cannabis would double the current sale price in some cases – depending on the quality and variety – the “byproduct” wording would mean any other part of the plant would also be taxed at $1,000 per pound, including leaf trimmings which currently are sold at about $300-$500 per pound, according to a previous interview with Dukes, an attorney for Bayacan Inc.  

The tax is being sold to the public as benefitting public safety and drug abuse prevention with tax revenue generated being used for that purpose, however, since it would effectively end all cultivation there would be no tax collected to go toward such things. 

Dukes said the sale of trimmings is a big part of any cultivation facility’s operation and that such a tax would be up to 300 percent of what they are currently sold for, effectively stopping that business in Graham County.

“The trimmings, which are like some of the leaves, that is sent off to the extraction facilities where they extract the oils from the plant – that’s sold at $300 to $500 per pound, and so a tax at $1,000 per pound off of something that’s being sold at $300 to $500 per pound – that’s where you get possibly a 300 percent tax.” 

File Photo By Brian Fore/Cronkite News: A cannabis grower trims the leaf from the bud.

Conversely, there is a 16 percent excise tax on the sale of recreational marijuana (cannabis) on top of state and local sales taxes. Medical marijuana users only pay sales tax – about 5.6 percent for the state – and any county or city sales tax. The proposed initiative would not affect the sale of cannabis in any way, shape, or form, in Graham County, only farms’ ability to grow it here. 

Graham Mountain Flowers’ CFO Lisa Edwards previously told the Gila Herald that the initiative would definitely affect their business. 

“I think it would cause any company like ours to not be able to afford to do business in Graham County,” Edwards said.

In his news release, Khalaf said his organization supports the tax initiative and is “strongly considering launching its own petition drive in support of the idea and would almost assuredly do so if opponents of the Bonita referendum successfully sue to keep the referendum off the ballot. The tax initiative would require 1,596 signatures to be placed on the next election ballot. The group has until July 8, 2022, to turn in the qualifying signatures to make it onto the Nov. 8, 2022 election.  

Graham Mountain Flowers has been busy hiring employees and constructing its facilities in Eden. The business advises it will initially contain 100,000 square feet of greenhouses to grow cannabis at its site.

No matter if either or both efforts to thwart cannabis cultivation succeed, recreational cannabis will still be sold locally and still be legal for adults to use.  

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