Editor’s note: this article has been corrected to reflect proper titles of the members of the Cannabis Alliance and the L.C. Cannabis task force.
LAKEPORT >> Since the start of the pandemic, numerous small-family licensed cannabis farmers are just scraping by owing to market vulnerability and many cannot afford to put plants in the ground or harvest a product that won’t make a profit.
Yet, growers are required to pay full price for their state cultivation license; up to tens of thousands of dollars annually, whether they plant or do not during the year. This jarring economic climate requires paying for a license they may not use and can drive instability into the market. For this reason, State Senator Mike McGuire (D-Healdsburg) advanced SB 833, the Cannabis Licensing Reform Act, this year, according to his office staff.
McGuire’s legislation allows cannabis farmers to either pause their license fee but maintain an inactive license or reduce their license size based on crop size, saving the farmer substantially. “SB 833 is all about common sense,” McGuire said. “Just like with other crops, cannabis farmers shouldn’t go under from one bad season, whether it’s from a tough market, drought, or even a wildfire. Right now, cannabis farmers must pay their state license fees regardless; or forfeit them all together. This is why we advanced this bill. Farmers need flexibility in an erratic market and if they grow less, they should pay less. It’s that simple.” SB 833 was signed into law by Governor Gavin Newsom and will go into effect Jan. 1, 2024.
Erin McCarrick, Vice President of the Lake County Cannabis Alliance called McGuire’s Legislation a good bill but there is still a lot of work needed in cannabis legislation she explained. “It only addresses cultivation but not other types of licenses,” she said. “Overall, it’s a really good step to help cultivators if you had a bad year (from weather). But if a farmer needs to expand his garden and not plant to take care of expansion plans, he does not want to spend $10,000 on taxes without harvesting a crop.” She also pointed out that no one bill will amend all legislative problems. Yet McGuire’s initiative allows a grower to take a year off to focus on other business and not lose their license when they returned to cultivation. And it allows a farmer to decrease the original plot, for example, from 10,000 square feet to 5,000 if that is more efficient and return to the original canopy size the following year.
But one thing needed by farmers is a resource to resolve conflicts. For example, if a farmer falls in arears for farm related bills, they can lose their license. But it is different with the alcohol industry, where there is an ability to resolve debt without automatically losing a license to operate. McCarrick advocates for doing the same for cannabis.
Nara Dahlbacka, is a Lake County resident and is VP of policy with LCCA and a member of the Cannabis Task Force. “It was ridiculous not to allow farmers to fallow,” she said. “And a lot of distributors are hurting now. This bill could have included other license holders without a license forfeiture. But it’s too late in the legislative calendar to amend it, so it’ll be a good next step next year, but this bill is totally important.”
There are other stresses working against farmers explained Tiffany Devitt, chief of governmental affairs for CannaCraft. It is a company that collaborates with leading cannabis researchers and incorporating the latest manufacturing equipment and techniques from pharmaceutical, beauty, and food and beverage industries, CannaCraft created markets for some of the more popular cannabis products such as 100% cannabis oil vape pens, microdosed edibles, and CBD:THC ratio products. She noted the market for cannabis is small in California since local jurisdictions had the option to ban cannabis so, in two thirds of the state residents are not allowed to possess it. Also, numerous mom and pop operators have failed, through no fault of their own, because in some areas a cannabis product can have four different taxes added to the final cost of a product.
Devitt applauds McGuire’s bill as common sense. “But the economic system needed is one that supports setting up a business but also maintains the cost of production for that business,” she said. “What the state should take notice of is, the last two years, cannabis revenues have been going down. Why are wholesale prices are dropping? … oversupply. Last year was an oversupply. But this year we don’t have it, because a lot of cultivators exited the legal market.”
Also, laws can vary from one town to another. “For local jurisdiction to be successful, they need to provide a reasonable pathway to local licensing and get serious about closing down illegal operations,” Devitt said. “For some it’s a matter of priorities but they must raise adequate revenue to put an effective plan in place, to entice compliance with legal grows and a forceful penalty for persistence in illegal grows. We need an effective penalty for illegal operations. But I don’t want to see people going back to jail but impose meaningful administrative fines; provide many mechanisms for fining illegal operations.”
She added that nobody in the legal industry wants to see people arrested but just want to have a level playing field.
“McGuire’s bill is appreciated but it doesn’t go far enough, ” she said. “It fixes a symptom rather than the systemic problem.”
