Cultivation Cap Heads to Court

The California Grower’s Association, the largest cannabis trade group in the state, has filed a lawsuit challenging emergency state regulations that went into effect late last year and allow a single person or business to cultivate an unlimited amount of marijuana.

A pledge to protect California’s small cannabis farmers from an influx of large corporations was a major selling point of Proposition 64, which passed overwhelmingly in 2016 and legalized marijuana for recreational use. In fact, it was in the proposition’s findings and declarations: “The Adult Use of Marijuana Act ensures that the nonmedical marijuana industry in California will be built around small and medium sized businesses by prohibiting large-scale cultivation licenses for the first five years.”

So it was with some considerable shock and awe that farmers combed through the California Department of Food and Agriculture’s emergency guidelines to find that, while the department does prohibit the issuance of large-scale cultivation licenses, it left an apparent loophole that some fear will open the flood gates to the cannabis Monsantos of the world. Specifically, the department put no cap on the number of small-scale cultivation licenses a person or business can hold, effectively allowing them to stack licenses to cultivate acres upon acres of marijuana.

While some initially thought the loophole was an oversight, the department has stood by its emergency regulations, saying they were finalized after input from a diverse group of stakeholders. A host of lawmakers, including the North Coast’s own Assemblymember Jim Wood and state Sen. Mike McGuire, have decried the “last minute revision that rolls out the red carpet for large corporations to crush the livelihood of small family farmers” in a letter to the department.

But the department hasn’t blinked, spurring the California Grower’s Association to take its fight to the courts. On Jan. 23, the association filed a lawsuit in Sacramento County Superior Court asking a judge to find the regulations inconsistent with Proposition 64 and to block the department from issuing licenses inconsistent with the ballot measure.

Because Proposition 64 explicitly allows itself to be amended by the Legislature, the association could have looked to lawmakers to overturn the emergency regulations, but association Executive Director Hezekiah Allen said it worried that would take too long.

University of California Hastings School of Law professor David Levine says it appears the association is making a reasonable argument that may force the Department of Food and Agriculture to offer some rationale for the apparent departure from Proposition 64. While the letter of the proposition does not prohibit stacking small-scale cultivation licenses, its intent is explicit.

The issue has already caused some divisions within the industry. The California Cannabis Industry Association, for example, penned a letter to the department urging it to keep the regulations as is, arguing that a hard cap on how much land someone can cultivate marijuana on would disadvantage small growers. The group argues that because outdoor cultivation is limited to one harvest per year — compared to as many as six annual harvests for indoor or mixed-light grows — the cap “would severely compromise seasonal cultivators.”

But Allen and others argue that’s nonsense and the lack of a cap will allow large companies to cultivate huge swaths of land with economies of scale that will leave small farms unable to compete.

The Department of Food and Agriculture hasn’t filed a response to the lawsuit yet and didn’t respond to Journal inquiries.

For his part, speaking before the lawsuit was filed, Allen said the cap question looms large over whether his organization’s 1,000 or so members and other small farmers will have a place in the state’s new multi-billion-dollar industry.

“The way this plays out is probably going to be the most important aspect of this transition so hopefully we get it right,” he said.

Allen pointed back to a meeting of the state’s Blue Ribbon Commission on Marijuana Policy back in 2015, when Lt. Gov. Gavin Newsom rolled into Garberville with much fanfare on a fact-finding mission aimed at helping the state set new marijuana rules. Newsom warned a packed audience that big money influences were already circling Sacramento looking to cash in on the state’s burgeoning cannabis industry. “With respect,” Newsome told the crowd, “they’re writing a lot of you guys out and we cannot let that happen.”

“Well,” Allen said just a few years later, “this sure feels like being written out.”

Thadeus Greenson is the Journal‘s news editor. Reach him at 442-1400, extension 321, or thad@northcoastjournal.com. Follow him on Twitter @thadeusgreenson.

This article appears in The Humboldt 35.