Part One of a Four-part series.
Is California’s cannabis market on the verge of a crisis? If you ask the California Growers Association (CGA), the answer is yes. On Feb. 19, 2018, the group, which represents more than 1,100 small and independent cannabis businesses, released a 36-page report dubbed “An Emerging Crisis: Barriers to Entry in California Cannabis.”
The report details the structural, political, financial and cultural barriers that are preventing thousands of small to mid-size cannabis cultivators from participating in the state’s newly legal, and regulated, cannabis market.Of the state’s estimated 68,150 cannabis cultivators, only 534 are actually licensed to cultivate cannabis; which averages out to less that one percent (0.78%).
So why aren’t California’s cannabis cultivators entering the market?
In this four-part series, Green Market Report will take a look at the CGA’s report and walk you through the concerns it raises, the solutions it recommends, and why it matters to you. For Part One, we’ll take a look at why this report matters at all.
In order to understand why any of this matters, one first must look at the two laws which serve as the linchpin of California’s cannabis market: Proposition 64, which legalized recreational cannabis in the state, and the 2017 Medical and Adult Use Cannabis Regulation and Safety Act (MAUCRSA), which attempted to harmonize the medical and recreational market.
The CGA report claims that the role of small to midsize cannabis businesses was central to the conversation surrounding Proposition 64 and MAUCRSA; citing several passages in Proposition 64 aimed at “ensuring… the industry in California will be built around small and medium-sized businesses.,” and notes that MAUCRSA contains similar language.
After establishing the spirit of these two laws, the CGA report examines how the laws’ implementation fails to live up to the spirit; noting several issues which will be covered in more detailed in subsequent issues of this series.
The result of these barriers has had a deleterious effect on market participation from small to midsize cultivators, leading to market consolidation from larger operators. This consolidation leads to four primary issues which concern the CGA:
Biodiversity: Most large-scale businesses rely on standardization and reliability. A consolidated cannabis market would result in fewer strain choices for consumers and could limit the discovery of new strains
Overproduction: The CGA estimates that although the state produces 15 million pounds of cannabis a year, the state only consumes three million pounds. Given that the state already produces more than enough cannabis to meet demand, an increase of large-scale is not needed and could lead to overproduction, which is already an issue in states like Oregon.
Increased Use of Pesticides: A hallmark of industrial agriculture is the reliance on pesticides in cultivation, and this is true of large-scale cannabis grows. Small-scale grows, on the other hand, can be managed without the use of pesticides because of their size. More large-scale growers mean more pesticides.
Economic Collapse: The CGA estimates that there are approximately 68,000 small cannabis farms in California. With an average of 3.6 employees per farm, the number of people employed by those farms totals to 258,000. Thousands of people and the communities they live in have built their livelihoods around those farms and current regulations threaten to destabilize that status quo. If this issue is not addressed, the economic fallout could be dire.
Stay Tuned for Part Two
So what is standing in the way between small to midsize cannabis cultivators and becoming licensed by the state? In part two of our series, we’ll take a look at the state and local policies that prevent cannabis cultivators from entering the California market.