Transition Guide For Growers
By: Kimberly Cargile
June 24, 2016, 6:30 am
With the passage of legislature providing California regulations for the medical marijuana industry, growers are facing a fork in the road.
Choosing if, how, and when to move into the highly regulated and taxed cannabis industry is a decision currently facing thousands of cultivators. “Certainly 2015 marks a historic year in the policy narrative of cannabis in California, particularly in regards to cultivation. However, there are a lot of unknowns, a lot of uncertainty, and a lot of unanswered questions,” said Hezekiah Allen of the California Growers Association. With cannabis now being categorized as an agricultural product, growers are standing up with pride and looking toward a hazy yet hopeful future.
There are five big steps on the road to effectively moving into the regulated market. Each of these steps is integral to a grower’s long term success:
Experience and Education: This is the easy part for most growers in California and the hardest part for newbies looking to enter the industry. In order to grow a good product, you must know what you are doing. This is not knowledge that can be learned in a book or on the internet. It takes years of trial and error to hone your skills as a grower.
Business, Legal, and Environmental Compliance: Growers are at the point where they need to form business entities, apply for seller’s permits and water board permits, and start maintaining their books. This is going to require some business experience and possibly the aid of a lawyer. “This may involve bookkeepers, accountants, engineers, and other professional consultants,” said Melissa Sanchez, a leading cannabis licensing and compliance lawyer.
Capitol: Stepping into the light is turning out to be extremely expensive. Everything in the budget of a licensed cultivation site is at a premium these days. Companies are currently charging top dollar for rent, insurance, equipment, and so on. As soon as you say the word cannabis, expect the price to go up—no matter what you are talking about. Taking into account all the costs of starting off, most growers need investors or partners to join in.
Real Estate: Finding a building in which a landlord will allow you to grow cannabis is no small feat. Landlords are hesitant because they either don’t believe in cannabis as a medicine or they are afraid they will get into legal trouble or have their property seized by the government for doing so. The MMRSA regulations did address this issue at least, with protections for landlords provided in the new laws. Still the federal government is a threat with cannabis remaining on their list of Schedule I drugs.
Permitting: Each cultivator must first obtain a local (city or county) permit in order to apply for a state permit. This is somewhat of a problem right now since very few cities and counties are providing them. In order to secure a permit, cultivators need to organize locally and start positive conversations with local governments. These conversations may take years of active, respectful, and educational interactions before local governments budge, but in the long term they will pay off. “Before all of our medical cannabis activities were sanctioned under an affirmative defense. Now an actual permit and license to cultivate provides a much safer position for growers. They will have peace of mind after coming into compliance,” Sanchez stated.
As growers make the transition from the Senate Bill 420 collective cultivation model of the past and into the Medical Marijuana Regulation and Safety Act model of the future they face two major problems. First, where will they sell their product? Second, how will they get a local permit? At this point, California has an abundance of growers providing an abundance of product, but a lack of local permits for dispensaries and cultivation sites being provided. This imbalance in the system is cause for major concern. Without a market for growers to bring their product to, they face a financially unsustainable future. If you can’t make money in the new system, why join?
The only cure for both these problems lies in the hands of local governments. “Come what may, the thing that is going to matter to every single grower in the state is local government. Local permits are the foundation of a regulated future,” responded Allen. With a strong regulatory framework provided by the state, it is only natural for local governments to come into line, but this hasn’t been the case. Since Governor Brown signed MMRSA into law in October of 2015, “55 percent of the cities and 37 percent of the counties have enacted bans on cannabis businesses,” per Jackie McGowan, director of lobbying for Monterey County NORML and lead activist investigator on this subject.
Risk has always been the name of the game for cannabis growers in California. The risks are ever-changing, “Historically, the key to success for growers was to keep a low profile—stay under the radar, and compliance is exactly the opposite of that. It is the antithesis of what has allowed us to be successful in the past. The pro is we are winning this, but it won’t end in a way that includes us unless we carry it across the line,” said Allen.
Now is the time for growers to weigh these risks and make the necessary changes for a sustainable future. Everyone wants a chance at the “American Dream,” to do what they love every day and make a living doing it. It won’t be easy for California growers to step out of the shadows and into the light, and to do so we are going to need to team up. If it takes a village to raise a child, it is going to take our entire state to raise this industry.