Carson City sued for $15 million after it refuses to allow hemp-production in Buzzys Ranch area

Carson City is at the center of a legal dispute following its refusal to allow hemp to be grown on property in the Buzzys Ranch area in East Carson City. Tahoe Hemp is suing for $15 million in damages citing the city broke its agreement with the Jarrard Family Trust, which gives rights to the family to use the property for agricultural purposes.

The City states that allowing hemp to be grown in the Buzzys Ranch plain would jeopardize the grant funding Carson City received to purchase the property from the Jarrard Trust, and it would also cause a negative impact on the aesthetics on the open space property, as well as become a liability issue for people who may mistake the hemp for its close-cousin, cannabis.

However, Tahoe Hemp and the Jarrard Trust are arguing that when the Jarrards sold the property to the City, there was a clear agreement that the Jarrard be able to use a portion of the space for agricultural and ranching uses.

The Jarrard Trust leased the property to Tahoe Hemp on June 6, 2019, which they argue is perfectly legal within the bounds of the agreement between the trust and the city, and therefore the city is now interfering with the rights of the Jarrards as agreed upon by the purchase and sale agreement.

The city is arguing that because hemp was only legalized in 2015 for production and cultivation, it was not a valid crop under agricultural standards when Carson City received the grant in 2010, and therefore is not an authorized use of the space.

In a letter to Tahoe Hemp from Ben Johnson of the Carson City District Attorney’s Office, he states:

In 2010, Carson City applied for and received a Conservation and Resource Protection Grant from the Nevada Division of Lands to help fund the purchase of the property. Pursuant to the grant, the State contributed 75 percent of the total project cost ($2,793,000) with remaining 25 percent ($931,048) paid from the Carson City Open Space funds. The funding agreement required the City to enter into a Nonrevocable Agreement to Restrict Property that was recorded and runs with the property in perpetuity.

The authorized uses for the property are defined as follows:

The Property will be used only for open space purposes that are consistent with the objectives for which the Property is acquired and the local jurisdictions’ adopted open space plan. The Grantee further agrees that the property will be used for ranching and purposes that are consistent with the protection or enhancement of wildlife habitat, protection of sensitive or unique vegetation, protection of historic or cultural resources, protection of riparian corridors, floodplains, or wetlands and/or to protect or preserve the benefits of the Property or natural resources within the State for the public.

Carson City, through its Open Space Advisory Committee and Department of Parks, Recreation and Open Space identified the Jarrard property as one of the most environmentally sensitive open space projects in the City due to its large presence of wetlands along the western edge as well as the riparian zones along the Carson River. Open Space identified preservation of the scenic pastoral landscape as a break from the urban development as a primary goal of the acquisition. The active ranching operation was also cited as having historic and cultural significance as it is one of the few remaining operations in the area.

Open Space believes that the proposed 100-acre hemp project would directly interfere with the City’s planned use of the property, the goals identified in the grant application, and the intent in which the land was acquired. The hemp project would fundamentally alter the nature and landscape of the property by converting 65 acres of pasture utilized for grazing and 35 acres of alfalfa to hemp. This would profoundly change the scenic views currently available while negatively impacting wildlife on the property.

However, Tahoe Hemp and the Jarrard Trust argue that it is not up to the city or the grant to determine which crops are and are not allowed on the property, because they agreed that the Jarrard Trust could use a portion of the space for agricultural purposes, and there were no exemptions written in.

In a response to Johnson from attorney Severin A. Carlson of Kaempfer Crowell, it states:

As a condition of the sale of the property to Carson City, the Jarrard Trust required that it be granted a reservation of use of the property for agricultural purposes, a condition Carson City agreed to upon purchasing the property. Specifically the Purchase and Sale Agreement grants to the Jarrard Trust retention of “the right to the use of the Property for grazing livestock, ranching, and other agricultural purposes.

Nowhere in the terms and conditions provided does the Agreement in any way exempt hemp from the agricultural uses retained by the Jarrard Trust, nor does it identify hemp production an unauthorized use, as your correspondence implies. In fact, the terms and conditions under which the Jarrard Trust retained agricultural use of the property explicitly provide that the Jarrard Trust “shall have have full access to the Property” including “over, across, and under any adjoining lands” owned by Carson City in order to fully utilize its retained agricultural rights. The conditions further prohibit Carson City from interfering with or impairing the Jarrard Trusts’ right to the property. Thus, the threat that any further site clearing or preparation may be treated as an unlawful trespass is wholly in opposition to the terms to which Carson City agreed to under the Agreement.

The city is also arguing that they have spent time and money developing a trail plan for the property the city controls, and a hemp crop would interfere with those plans.

“Open Space has also made a significant staff resource and financial investment in developing a trail alignment on the property parallel to the Carson River,” Johnson states in the letter. “Staff has returned comments on the 30 percent design of the Carson River Trail System and construction is expected between Summer — Fall 2020. The trail was designed according to existing field conditions with great attention placed on current flood irrigation practices, irrigation ditches, jurisdictional wetlands, floodplain and public input. Any topographic and hydrologic changes to the landscape, such as those required by the proposed hemp project, would significantly affect the trail design.”

Finally, the city is arguing that because people may confuse the hemp plant from its THC-containing cousin, cannabis or marijuana, people will injure themselves trying to investigate the crop, which would make the property a liability.

“It is our understanding that the plant itself is visibly indistinguishable from marijuana,” states Johnson in the letter. “The proposed trail system through the property would increase the foot traffic and necessitate the need for extensive fencing. We believe that this would create an attractive nuisance on the property, drawing unwanted visitors who believe the plant to be regular marijuana and not hemp. This would increase the risk of liability of someone being injured on the property and would have an impact on the Carson City Sheriff’s Office.”

Tahoe Hemp and the Jarrard Trust found that while there are stipulations limiting agricultural use, hemp production is not included and therefore the city cannot impose its decision without breaking the agreement.

“Some limitations (are imposed on agriculture uses), but those limitations only relate to not grazing more than 1,125 cow/calf A.U.M.s, or other livestock equivalent,” said Carlson. “Those specific limitations cannot be read to preclude hemp production.”

According to Carlson, the city needs to allow the Jarrards and Tahoe Hemp to grow their hemp crop or risk breaking the contract the city agreed to.

“If it is City’s intent not to interfere with valid rights under the terms of the Purchase and Sale Agreement, then the City is required to allow the Jarrard Trust agricultural use of the property, including hemp production,” said Carlson. “This requires that the City sign off on the Department of Agriculture’s permit application to allow hemp farming on the property; anything less would be a breach of the Purchase and Sale Agreement. The City owns the property in large part because of the rights it agreed the Jarrard Trust would retain in selling the property to Carson City. The Jarrard Trust expects Carson City to abide by that agreement. As such, the Jarrard Trust and Tahoe Hemp request that the City sign off on then Department of Agriculture’s permit application by no later than January 15, 2020.”

The city, it appears, did not sign off on the application because the suit was filed on Jan. 15 in the First Judicial District Court following Carson City’s refusal.

Tahoe Hemp is seeking $15 million from Carson City in damages and legal fees.

This is a developing story.