Birthplace of Fetzer’s Mendocino County wine empire makes way for cannabis economy

REDWOOD VALLEY - Dust covers the redwood bar inside the abandoned Big Dog Saloon on an 80-acre ranch north of Ukiah where a famous Mendocino County wine family long ago launched an empire.

Built in a meadow near Seward Creek with the help of friends trading sweat equity for food and wine, the Fetzer family's saloon was once the stage for epic tastings and freewheeling parties as Mendocino County built its fledgling wine industry.

That was nearly four decades ago, when deputy sheriffs in Chevy Impalas and Crown Vics raced down dirt roads past the rush of the grape harvest, plumes of dust marking their routes into the rugged hills. They'd return hauling illegal marijuana plants confiscated from remote back-to-the-land homesteads.

In 1999 the Fetzer family moved its winemaking operation to Hopland, and the warehouses and saloon have sat vacant since.

But heady days are returning to the Redwood Valley estate.

A Venezuelan entrepreneur with Silicon Valley connections and deep-pocket investors bought the property earlier this year to build a farm-to-table marijuana empire - part production hub and part cannabis tourism destination. Michael Steinmetz said he wants his San Francisco-based company Flow Kana to become “the Whole Foods of cannabis.”

In his vision, the old warehouses where wine stains still mark concrete floors will be filled with vast rows of drying marijuana plants bought wholesale from boutique Emerald Triangle marijuana farmers. Tourists will stay in the old homestead renovated into a bed, breakfast and spa, wander gardens, hear lectures on sustainability and sidle up to the Big Dog Saloon bar to taste the nation's best marijuana.

“We're not chasing dollar signs in the Central Valley,” Steinmetz said. “We're building a dream up here.”

Big ideas, big investments

The industrialization of marijuana production is well underway elsewhere in California while lawmakers are still drafting long-needed regulations for medical-use marijuana. They haven't even begun the rule-making for recreational pot, approved by voters in November.

Acres of Salinas Valley greenhouses once used for flowers are being transformed to grow thousands of marijuana plants, including a 47-acre farm run by Steve DeAngelo, founder of Oakland's massive Harborside cannabis dispensary, which made a reported $44 million in sales last year. Some struggling areas, such as Desert Hot Springs in Southern California, have seen entrepreneurs scoop up dilapidated warehouses and dusty parcels to build indoor pot production centers.

StarGreen Capital, a Beverly Hills-based investment firm, announced Friday it would invest $100 million over the next year in real estate and other business development for marijuana cultivators, manufacturers and retailers in the state. There are more than 800 marijuana startups listed on the website AngelList, where entrepreneurs can search for angel investors.

Flow Kana, too, has attracted big money with a cohort of investors from California, Florida, Massachusetts and an international investor from an undisclosed country. They facilitated the $3.5 million property purchase and remain involved in development of the site.

They have bought into Steinmetz's belief that money can be made by leveraging the environmental ethos and products of Northern California mountain marijuana farmers. The lead investor was Poseidon Asset Management, a San Francisco hedge fund founded in 2013 by siblings Morgan and Emily Paxhia and focused solely on cannabis.

“If you're to draw a simple graph of quality and quantity it's a complete inverse relationship,” Morgan Paxhia said. “All these guys trying to do huge operations are going to have low-quality product.”

Like Steinmetz, the Paxhias were attracted to the culture of off-the-grid, organic farming practices. Strains tailored over generations for microclimates of rumpled coastal hills hugged by a damp marine layer or the hot-and-dry areas of high inland elevations of northern Mendocino County have flourished. These farms were built out of necessity for a plant better suited to more temperate climates, but growers have become “master breeders,” Steinmetz said.

Network of farmers

On the Mendocino Coast, Albion Ridge farmer Justin Calvino is developing a plan for cannabis appellations to call out the plants' regional influences. Borrowing from viticultural designations, the Mendocino Appellation Project divides the 130-mile coastline into separate northern and southern appellations while identifying nine inland regions from Piercy to Hopland.

“The only principle that's going to survive is the micro brand,” Calvino said.