The group of small and medium scaled cannabis dispensaries, farms and other smaller businesses are contesting the regulations set out by the state in November 2017.
This comes in an effort to protect their growing businesses against the large corporation and businesses. These large-scale investors could force the smaller farmers and entrepreneurs out of business.
On November 23 a lawsuit was filed against the state Department of Food and Agriculture for their failure to enforce limits on the total number of growing licenses that may be obtained by any individual or company. Thereby allowing the large-scale investors to operate huge companies and corporations, pushing out the local cannabis dispensaries, farmers, weed delivery services, and other small-scale, locally operated business.
The large-scale companies could take over the market if the state fails to enforce a limit on how many licenses can be obtained by any one company or individual. This failure by the state to protect the emerging market could have a potentially devastating effect on the small to medium scale farmer, the local entrepreneur and the locally owned cannabis dispensaries.
In 2016, voters who passed Proposition 64 held no clearly defined policies or mandates however they did put forward a five acre limit for each individual farm or business. This was to promote protection for the already present marijuana businesses. The proposed limit was suggested to be in place for the first five years. These initial five years are crucial to the existing farmer and local businesses to gain a stronghold in this fast emerging market. The five acre limit could protect the small-scale and locally owned businesses and farmers by putting a cap on the size and yield of the large-scale companies.
The Growers Association were counting on the five years as enough time to get them set up, running and a significant part of the local economy.
The California’s Growers Association’s Executive Director, Hezekiah Allen, said that the larger scale investor or business may be able to amass many licenses. This lack of limits on the number of licenses these businesses can obtain and the loophole created comes despite the Adult Use of Marijuana Act promoting provision for the protection of the small-scale farmers and businesses.
In November 2017, the newly released regulations dissolved the 2016 voter’s supported provision of five acres per individual entity. The new limit is set instead on no more than one acre of cannabis grow per license, leaving a loophole allowing large scale business free to stack licenses and obtain a significantly larger size of marijuana yield. The stacked licenses would give way for multiple acres to be obtained. These large yields will bring down running costs for the larger business and thereby reducing the price of the sold marijuana for recreational use. This threatens the smaller scale businesses.
The large-scale businesses and companies could potentially flood the market with their lower costs giving way to lower prices. This will regulate the economy and make the smaller scale businesses unable to compete in the market and be driven to the black market, causing the illegal market to grow once again.
Allen said that the main areas that will incur suffering from this and their affected businesses would include the Trinity, Humboldt, and Mendocino counties. These three counties are by some research and estimates believed to be the counties that produce just less than two-thirds of the marijuana that is consumed by the United States.
The definition of a large scale license is that of any one farm that is equivalent or greater than one acre. The regulations set out in November 2017 hold restrictions for these types of larger scale licenses for the first five years.
On the other side of the fence sits businessman Steve DeAngelo. DeAngelo is currently operating dispensaries on a large scale and a large agricultural site. DeAngelo argues that the lower costs and lower price of the product is a positive aspect for the market. He counters that these low prices will be welcome in the face of taxes and costs already increasing due to the recent Legalization. DeAngelo’s marijuana distribution company, FLRish holds a four acre site for growing and cultivation in the Salinas Valley. Steve DeAngelo is reported to have spent around $300,000 for the Californian Law firm, Californian Strategies.
The lawsuit was filed on January 23 at the Sacramento County Superior Court by the California’s Growers Association just over three weeks since the birth of recreational marijuana sales in the California state. January 1st saw the initial start of the experiment in the newly legalized recreational sales for recreational marijuana.
This lawsuit comes after long-held dread that marijuana agriculture would become under complete corporate reign.
The California Department of Food and Agriculture hold the responsibility of issuing the licenses and they have declined to comment on the lawsuit.