In the future, if a reply deals with recycling only, please reply directly to the person who asked the question, not to the list. This listserv focuses on reduction and reuse only, not recycling. Seems like maybe a closet freshener product-maker might be interested in this material. To the extent that I'm suggesting a strategy here, it is to focus on what is unique and useful about the available material that might add value to someone else.
Horse breeders prefer wood sawdust and shavings to other materials if it's reasonably dry.
Maybe it's not in a nice looking form or something else, but that stuff is gold out here on the East Coast, maybe in California, too. Sounds like they could make more money doing something else with it, though. Those folks would probably know what other mills are doing with similar waste and could help find an alternative use. JTR Net is a list serve maintained by U.S. EPA and used by recycling market development professionals, among others. Hope this helps.