- Posted by Laura Croft, Esq
- On December 7, 2016
- big business, breaking, cannabis, Medical Marijuana, Micro-business, protecting farmers, recreational use of marijuana, regulation, taxes
The market potential of cannabis exploded on November 8, 2016, when the election brought a coast-to-coast landslide for cannabis, with California, Maine, Massachusetts and Nevada voting to legalize recreational marijuana, while Arkansas, Florida and North Dakota approved medical cannabis initiatives.
The multi-billion dollar projections of the industry and the evident “high net worth” of cannabis-related business is attracting venture capitalists and prominent deep-pockets from a breadth of industries. Those looking to cash in on the promising new market of legal recreational marijuana have the backing and resources to do so.
But at what cost? Who is getting squeezed out of the market? Who will feel the impact of the regulations, inspections and compliance requirements the greatest? What measures are in place to protect those that have paved the way for legalization with personal sacrifice, risking their livelihood, and often times their freedom?
Family farms, micro-businesses, artisanal growers and medical cannabis patients express grave concerns regarding how Prop 64 will impact their businesses and the cannabis industry as a whole. Although the State only added the adult recreational use of marijuana to a regulatory system that was already implemented by the legislature and governor, there is a legitimate concern that red tape and burdensome oversight, in conjunction with an onslaught of big business competition and the heightened costs of operation, will quickly drive smaller operations out of business.
Provisions were included in Prop 64 to protect micro-businesses. Critically, the measure does not allow the state to issue cultivation licenses for crops sizes greater than 1 acre for the first five years, a provision that was hard fought for and was not included in the original draft. Non-California residents or businesses would also be prohibited from obtaining marijuana business licenses for the first two years. The language of Prop 64 is intended to give micro businesses and in-state residents a chance to compete head-on with big business for the first 5 years of its implementation.
Many counties have passed urgency ordinances and moratoriums on permitting commercial marijuana related activity, in anticipation of big business moving in. As Executive Director of California Growers Association explained we do not want to “replace a criminal injustice with an economic injustice.”
Many of the measures that counties are passing focus on supporting their communities and protecting locals from land grabs by real estate moguls. Calaveras County enacted an urgency ordinance that restricted new cultivations in response to concerns that marijuana speculators are narrowing in on fire-scorched properties and taking advantage of vulnerable victims who were uninsured or underinsured and lost everything in the 2015 Butte fire. Sacramento Bee. The ordinance seeks to create a program to register established local growers and halt the land rush by outsiders.
Mendocino is taking another approach with the Mendocino Appellations Project, which proposes eleven regional appellations for cannabis cultivation within Mendocino County. The Project establishes county branding in the cannabis industry, and offers some level of protection to the unique strains grown in the region.
The City of Oakland has also taken specific measures to protect the local cannabis community through permitting measures and the Equity Permit Program Criteria that is geared towards tailoring business opportunities to Oakland residents and supporting those disproportionately impacted or previously incarcerated for marijuana-related offenses in Oakland.
The most important reminder is that Proposition 64 allows the California Legislature to modify and amend the provisions of the measure by a majority vote. The structure of the law as it stands is not etched in stone. A state and national conversation is underway and the cannabis community will have to wait to see how the landscape post-Proposition 64 shifts and settles.
We invite you to contact CannaBusinessLaw for expert assistance in compliance with cannabis licensing, permitting, the application process and with any additional concerns and questions relating to commercial cannabis in California.