I have many San Pedro, some much larger and in much smaller pots so I dont think planting it in the ground is the issue. Suggest you use what we call in the UK John Innes type compost. This has sand and is low in humus content. It drains quickly which is key with cacti. As for the brown scar I suspect others are correct when they say is is sunburn. I have it on some of my plants alos- I think we sometimes overestimates cacti love of sunshine. As for the rock in your garden- these plant typically thrive in denuded soil but by the look of the soil you have used I would suggest repotting with sharp sand mixed in for added drainage. Of course a little cacti fertiliser that is low in nitogen would help. Good luck! As for cutting the tip off and starting again- that way you can avoid the scarring and the base will srout new clean shoot also. Just remember to let the section you cut off scar (callous) for a week or two before you place it in soil- refrain from watering the cutting until roots appear. I could send you a link to my site but understand that it is forbidden on here- there is information on soil mixes there. Good Luck!

Thanks for your response. Well, then I have to enjoy it the way it is. lol But, I'd like to do more propagation from cuttings, if I know what cause skinny stems, or how grow healthy and fat stems that will be great. Happy gardening.

If you have any of these Cacti seeds available please let me know............ Thanks

Soil designated for cacti is probably not well enough draining. Pls. get at least some perlite to add to it., and mix at least 50/50. It needs have very good drainage. Many of us grow them in inorganic mixes. If the plant is cut, it should be left out of mix to callus. Bigger the cut, bigger chance of infection if stuck in the soil. And if kept wet, even more so. Plastic pot is ok - I have almost 200 succulents in cheep plastic pots that are recycled. Or get terracotta if you prefer. Once you take it out, all old soil should be taken off the roots. But, if it is rotting, I would really return it. It is not fair to charge money for rotting plant...JMO!