california Archives - Page 3 of 4 - Green Market Report

William SumnerApril 24, 2018
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3min29750

The world of mergers and acquisitions is heating up in the state of California as two cannabis companies today announced a pair of high priced acquisitions.

First, Golden Leaf Holdings (GLH) announced that is has signed a letter of intent (LOI) to acquire a cannabis dispensary in northern California. Included in this transaction are all of the dispensary’s assets; such as licenses and permits for cannabis cultivation, production, manufacturing, distribution, and retail. Under the agreement, Golden Leaf will pay $1.25 USD million upfront in cash, an additional $500,000 in stock, and earn-out payments of up to $8 million based on future revenue thresholds. This transaction will mark Golden Leaf’s first entry into the U.S. market.

“Signing this LOI is another key strategic step forward for Golden Leaf, as we continue to execute on our plan to introduce our retail brand-focused model to the largest growth markets, both in the U.S. and internationally,” commented William Simpson, CEO of Golden Leaf, in a statement.

Also announcing a major acquisition today is Cannabis Strategic Ventures, Inc., which just completed the definitive agreement to acquire Worldwide Staffing Group, Inc. The company will acquire 100% of Worldwide’s issued and authorized shares and begin recognizing Worldwide’s revenue, which reached $1.5 million in 2017, upon the closing of the transaction.

Worldwide will continue to operate as an independent wholly owned subsidiary, providing employment and staffing services that are not related to the cannabis industry. However, the company will use Worldwide’s experience to eventually expand into cannabis industry staffing, particularly in the California market.

“The job demands in the Cannabis Sector are expanding into other job functions beyond the traditional Bud Trimmers and Bud Tenders. This acquisition better prepares us to meet the growth we are expecting through the end of this year, into next, and beyond,” stated Simon Yu, CEO of Cannabis Strategic Ventures. “We welcome Worldwide Staffing into the Cannabis Strategic portfolio.”


Peggi CloughApril 18, 2018
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5min27110

Of the nearly 5,000 people surveyed by legal cannabis delivery service company Eaze, more than half report they’ll be openly celebrating 4/20 this year.

Eaze asked their customers questions about their consumption openness when discussing their use and thoughts on celebrating their first legal 4/20 holiday in California.

Seventy-three percent surveyed reported the reason they’re celebrating 4/20 for the first time is that cannabis is now legal. About a quarter of Baby Boomers will be first-time celebrants. Sixteen percent of Gen Xers, 10 percent of Millennials and 12 percent of Gen Z adults will be partaking in celebrations for the first time this year.

Gen Z adults are most likely to post about it on social media, at 52 percent, and more surprisingly, Gen Xers are more likely to share on social media than Millennials, at 46 percent and 42 percent, respectively. Forty-seven percent of women report they’ll probably share about their 4/20 plans on social media, while only 42 percent of men will.

The trend of women being more forthcoming about their cannabis use also held true where their family and friends are concerned. They’re a bit more open than men when speaking about cannabis consumption, at 96 percent versus 95 percent. Almost all of the adults surveyed—99 percent—have shared about their use with friends, but they’re not as open with family members. Forty-seven percent of parents have told their children, with mothers being more likely to tell them than fathers, 61 percent to fathers’ 37 percent.

Seventy-two percent of adults reported that they’ve told their parents about their cannabis use. Baby Boomers are most likely to tell their parents, at 79 percent. The numbers went down with age: 75 percent of Gen Xers, 72 percent of Millennials and 67 percent of Gen Z adults have been open about their cannabis use with their parents. A quarter of people surveyed reported that they’ve used cannabis with a family member for the first time since its legalization.

Legalization has made it easier to talk to others about their cannabis consumption, according to 52 percent of respondents. Thirty-eight percent of women cited family concerns as the reason they’re not open about their use, 35 percent said career concerns and 32 percent stated medical privacy. Family concerns were the reason 62 percent of men are hesitant to speak about their use, and 68 percent said medical privacy.

Sixty-five percent of men reported career concerns prevent them from speaking freely about their cannabis use, yet they’re more open about their use with their colleagues and their supervisors than women tend to be. Baby Boomers are less likely than Gen Z adults to share their cannabis consumption with their boss, but only by a small margin, 31 percent versus 33 percent. Gen Xers were most likely at 40 percent, and Millennials were at 39 percent.

On the medical front, 70 percent of those surveyed have a friend or family member who’s benefitted from medical cannabis. This has helped 96 percent of them become more open with others about their own personal use.

 


StaffApril 9, 2018
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3min55330

Palo Alto-based cannabis-infused edibles brand Plus Products closed an approximately $6M in Series B financing to expand its operations. The financing was led by Serruya Private Equity Partners (SPE) and Navy Capital Green Fund LP. The money from the capital raise will be used to fund rapid production capacity expansion, factory automation, working capital, and new product development.

“We are extremely proud of the products PLUS has brought to market,” said Jake Heimark, CEO, and co-founder. “We’ve quickly grown into one of the leading edible brands in California. With the proceeds of this round, we will continue to further our mission: to make cannabis safe and approachable for all types of consumers.”

Edibles have proven to be big winners among the recreational consumer in California. According to BDS Analytics, edible products have accounted for 18% of marijuana retail sales in February 2018 across licensed retailers in California. One of the biggest drawbacks with edibles is that consumers typically wait at least for a half hour for a response after ingestion. PLUS products are known for its rapid reaction. BDS Analytics also noted that PLUS ranked in the top ten sales for edible brands in California.

All of the PLUS products are produced in the company’s dedicated food-safe cannabis manufacturing facility in Adelanto, California. According to a company statement, the 12,000 square foot facility was outfitted for scalable food production with funds raised in 2017’s Series A round, led by The Green Organic Fund and Verde Mountain Fund.

“2018 is a historic year for California’s cannabis industry with the official launch of legalized adult use,” said John T. Kaden, Manager and Chief Investment Officer of the Navy Capital Green Fund. “PLUS is establishing a leading position in California and has assembled the right management team to execute and succeed in this complex regulated environment.”

In addition to its established lines, Plus Products has already begun launching limited edition products that capitalize on holidays like its Valentine’s day themed Rose & Vanilla gummies, which were available at select locations and through delivery services.


Debra BorchardtMarch 21, 2018
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6min31070

A new report suggests that the California cannabis market growth may be slowed due to heavy taxes and restrictive regulations. “California: The Golden Opportunity” written by Arcview Market Research in partnership with BDS Analytics writes that even the state’s revenue gains could be affected by the onerous tax and regulatory burdens that will drive consumers to the black market – exactly the opposite of what authorities wanted.

The report stated that the taxes and regulations amount to a 77% handicap versus the prices in the illicit market. California already had high sales taxes and now that is compounded by new cultivation and excise taxes. In addition to that, cannabis businesses are subject to the costs of navigating 40+ different types of state licenses. All of these costs ultimately trickle down to the consumer.

“While California cannabis companies are thrilled with the traffic increase they’ve seen since January 1 they can’t help but worry that regulations and taxes are going to handicap the legal market in the long term,” said Troy Dayton, CEO of the Arcview Group. “It’s clear that every additional penny of a price increase on legal cannabis products only serves to boost the attractiveness of purchasing from the illicit market which has flourished in the state for decades.”

To get an idea of how pervasive the black market is in California, the State Department of Food and Agriculture reported that cannabis cultivators (both legal & illegal) grew 13.5 million pounds of flower in 2016. However, residents only consumed 2.5 million and the rest was diverted to the black market. The bad players have little incentive to abide by the law because as part of the legalization process, punishment for breaking drugs laws have been lightened.

The report said that long-time illicit market customers were shocked when they saw the prices in legal dispensaries. Around 50% of California consumers surveyed in BDS Analytics’ “Public Attitudes and Actions Toward Legal Cannabis” reported buying cannabis from a friend, family member, or acquaintance. This market is big and very much ingrained in the state. Meaning there will be stiff competition between the legal and illegal businesses.

That competition isn’t helped when the legal operators are forking over higher taxes than in Colorado and Oregon with local municipalities adding their own taxes on top. A hypothetical $1,400 pound of cannabis effectively ends up costing $4,054 at retail and puts cannabis businesses at a serious disadvantage to the illicit players who have little overhead costs.

Ultimately the state could be cutting off its nose to spite its face with the extra regulatory and tax burdens. States have mostly legalized recreational marijuana so that they can reap the benefits of huge tax receipts. Cannabis sales in California are expected to hit $3 billion in 2018 larger than the states of Colorado, Oregon and Washington combined. The tax revenue is expected to exceed $649 million in 2018, so this is a significant source of income that the state will want to protect and grow.

While the numbers seem generous, they could be even bigger. The report notes that its forecast puts sales at $7.7 billion by 2021. “That sounds like a lot of growth, and it is, but the forecast is conservative compared to the post-adult-use legalization growth seen in other states. During the first three years (from 2017 through 2020), California’s market will increase at a compound annual growth rate (CAGR) of just under 29%—versus the 84% seen in Washington, 57% in Oregon, and 56% in Colorado during the first three years of adult-use in those states.” Still, the authors believe the politicians will be willing to make adjustments to ensure the success of the program.

“Rarely does a 20-year-old market undergo as radical a transformation in as short a time as California’s cannabis market did on January 1st of this year,” said Tom Adams, Editor-in-Chief at Arcview Market Research and Principal Analyst at BDS Analytics. “Suddenly, 29 million adults had access to the cornucopia of the modern cannabis store but were also suffering sticker shock from the state-imposed costs of going legal.”

On a positive note, the authors of the report believe that medical patients will be excited to see a new range of products available to them in the legal market. They also think that long-time black market consumers will find that the quality of the legal products is better and the options in the legal dispensaries more plentiful. Plus, there will be many consumers who did not want to engage in the illegal market, but now will be comfortable entering a legal dispensary.

In addition to the analysis of the illegal market, the report does a deep dive into all of the complicated regulations affecting the businesses, plus an exhaustive review of the various regions and counties.  It delves into the conflict of the inner state areas not wanting to be a part of the cannabis industry versus the coastal areas that seem to be all in.

 


William SumnerFebruary 27, 2018
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4min31700

Part Four of a Four-part Series

The California Growers Association (CGA) believes that the California cannabis market is on the verge of a crisis. In a recently released report, the organization, which represents more than 1,100 small and independent cannabis businesses, details a litany of issues facing the California market; including the sobering statistic that less than 1% of the state’s cannabis cultivators are licensed.

So where do we go from here? How does California help stem the tide of this emerging crisis? In the fourth and final part of our four-part series, Green Marker Report will take you through the 36-page CGA report and break down some of the solutions it puts forward to fix California’s cannabis market.

If you missed the previous part, you can click here to view Part One, Part Two, and Part Three.

Of the many suggestions put forward in the report, the first and foremost is to eliminate emergency regulations passed by the state Department of Food and Agriculture which allows the unlimited stacking of 1-acre cannabis cultivation licenses. Opponents of the emergency regulation say that the rule violates the spirit and the letter of Proposition 64, which places a five year moratorium on large-scale cultivation, by allowing well-funded cannabis operations to essentially create mega-grows using a combination of small-scale cultivation licenses.

In addition to eliminating loopholes that favor large cannabis businesses, the CGA also suggests a total of 51 policy changes on the state and local; including the following

  • Allow smaller cannabis businesses to adjust to new regulation by creating tiered timelines for compliance.
  • Establish a temporary sales license enabling cannabis cultivators to sell directly to consumer through special event like Farmers’ Markets.
  • Remove premise requirements for cannabis transportation businesses.
  • Allow transportation businesses to reside at the same premises of another cannabis business
  • Reduce testing costs by allowing the compositing of multiple cannabis strains into a single testing batch and by reducing the number of batches required for testing.
  • Allow microbusiness license holders to operate at multiple premises for various purposes
  • Create a revolving loan fund for small cannabis businesses
  • Lower the excise tax rate
  • Streamline the cannabis tax collection process
  • Make compassionate use donations tax exempt.
  • Replace the cottage outdoor cultivation grow limit of 25 plants with a cultivation space limitation of 2,500 square feet.

Overall, the policy suggestions are aimed at reducing barriers for small, cottage, and specialty cannabis businesses; which the CGA characterizes as a “practical, economic, and moral imperative.” Noting that list of suggested policy changes was nowhere near comprehensive, the CGA hopes that it will serve as starting point for a wider discussion of cannabis regulation and encourages all concerned parties wishing to provide feedback to contact policy@cagrowers.org.


William SumnerFebruary 26, 2018
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7min22800

Part Three of a Four-part series.

California’s cannabis market is on the verge of a crisis, according to a new report released by the California Growers Association (CGA), which represents more than 1,100 small and independent cannabis businesses.

According to the report, less than one percent of California’s cannabis cultivators are licensed by the state; leading many to ask: Why? What is it that is keeping cannabis cultivators out of California’s legal cannabis market? In part three of this four-part series, Green Market Report will examine the cultural and financial barriers that are keeping cultivators out of the market, as outlined by the recent CGA report.

If you’ve missed the previous parts, you can click here to view Part One and Part Two and get caught up.

Financial

The cannabis industry’s lack of adequate banking services has been well reported on. But what has slipped through the cracks are the other financial barriers that keep small to midsize cannabis cultivators out of the legal market; such as the lack of small business loans.

The single greatest barrier keeping cultivators out of the legal market, according to a survey of CGA members, is taxation. Due to the federal status of cannabis, most cannabis businesses cannot take standard deductions for business expenses like other industries have.

In many cases, this has the effect of creating an unreasonable tax burden on small to midsize cultivators; with some paying an effective federal tax rate as high as 60%. Additionally, state and local taxes have also proved to be burdensome for small-scale operators.

Many local governments have passed “gross receipt taxes” which are assessed at each step in the supply chain. More often than naught, theses taxes compound each other; turning a modest 5% into a cumulative 25% by the time it reaches the supply chain.

The CGA estimates that the effective tax rate for cannabis cultivators in California can range between 40%-60%, compared to states like Oregon where the effective tax rate is 18%. While larger operators can bear the brunt of this tax rate, many small businesses cannot.

Additionally, inefficiencies in tax collection can incur more unnecessary costs. Once a harvest leaves the cannabis producer, the cultivation tax is required to follow the harvest throughout the supply chain. In situations where a cultivator is directly supplying a retailer, this is not a problem.

However, this is often not the reality. Typically a harvest will pass through multiple points in the supply chain before reaching retailers. If the cannabis industry was not a cash-only business, this would not be a problem, but it’s not. Because of federal, cannabis businesses must physically move the cultivation tax through each point in the supply chain; creating a logistical and security nightmare.

Furthermore, cannabis cultivators must pay taxes on their harvest as soon as it moves through the supply chain; without any consideration of whether it will actually reach the market. The end result is cannabis cultivators having to pay their taxes before the even receive that money that’s actually being taxed.

Another financial burden is the lack of access to small business loans. While large-scale operations with deep-pocketed investors can get by without access to business, small-scale cultivators cannot.

Culture

Another barrier contributing to the small number of licensed cannabis cultivators is the culture in California. Approximately 20% of CGA members have been growing for more than two decades and well before medical cannabis was legal in California. These former outlaws have a deep seeded mistrust of the state and federal government and are reluctant to embrace state regulations. Conversely, many in state and local governments operate under incorrect assumptions and stereotypes about cannabis and consequently legislate accordingly.

The CGA also estimates that approximately 30% of the state’s cannabis cultivators operated “off the grid,” where electricity and broadband access is limited. The end result is that many cannabis cultivators that want to come into compliance simply can’t because they lack these basic resources.

While not necessarily an institutional barrier, some cannabis cultivators are simply not good at business. With a gossamer of state and local regulations, many small to midsize cannabis cultivators become overwhelmed by all of it and simply need more time to absorb the new rules.

The final and some would say most regrettable barrier to bringing cultivators into the market is that they simply don’t want to.

Some cultivators may be operating on public lands while others just have a general disrespect for the law. The side effect of this disregard for the law is that those that interested in becoming compliant are treated the same as those that don’t, and the CGA encourages the state to do all it can in provide a path to legality for cultivators acting in good faith.

Stay Tuned for Part 4

The greater question remains of how to address all of the other institutional, financial, and cultural barriers preventing cultivators from entering the market. Where do we go from here? What should be done? In the fourth and final part of our series, Green Market Report will examine the solutions put forward by the CGA to fix this emerging crisis.


Jack SmithFebruary 23, 2018
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5min28980

If you can’t beat ’em, join ’em. And if you can’t tax ’em, smoke ’em.

Just weeks after marijuana became legal for retail sale in the state of California, there has already been a tax cut, with the city of Berkeley cutting its tax to 5% from 10% of gross receipts. Credit rating firm Fitch said it’s due in part to high levels of both state and local taxes on cannabis, but also because illegal sales of cannabis are impacting legal sales, forcing legal dispensaries to compete on price.

The move comes after advocates in the Bay Area said taxes on marijuana were too high.

Steve DeAngelo, the co-founder, and CEO of Harborside in Oakland said in January that the tax rate for cannabis was nearly 35%, including state and local taxes, up from 15% prior. Included in that rate is the regular 6% sales tax, 3.25% sales tax for Alameda County, a 15% state tax on marijuana and a 10 percent Oakland tax on recreational marijuana.

“That is a huge hit. And it’s going to mean that a significant number of people, less affluent consumers, are going to turn to the lower prices of the underground market,” DeAngelo said in an interview with CBS SFBayArea.

DeAngelo added that people might turn to the black market because of the high taxes, but that his dispensary had a variety of different products, in addition to being tested.

“All of our medicine is tested in a laboratory,” DeAngelo said. “It’s evaluated both for safety, for things like pesticides and pathogenic molds, and it’s also evaluated for potency.”

Aside from the aforementioned tax rates in Oakland, tax rates throughout the state vary greatly and can add as much as 10% or 20% of the cost, just because of local taxes. There is also a $9.25 per ounce state tax on cultivation, as well as a 15% state excise tax and state and local sales taxes as high as 10.25%.

The added tax revenue was a factor in the state passing a law to allow recreational cannabis sales. A November 2017 Fortune article cited data that the state could generate as much as $1 billion in added tax revenue, but some people in the cannabis industry said the high tax rates could allow for illicit or black market sales to gain an unfair advantage.

Fitch estimates that tax collections have “far exceeded initial estimates” in both Colorado and Washington, which began collecting taxes on legal sales in 2014. The rating firm added that while it is still too early to know if California will generate the same levels of revenue that Colorado and Washington have, high taxes are going to be an issue.

“[C]omparatively high taxes on legal cannabis will likely continue to divert sales to illegal markets, reducing potential tax collections despite actions such as Berkeley’s,” the firm said in an email obtained by Green Market Report.

The way the legal and regulatory framework was set up in California, it allows local jurisdictions to ban sales of non-medical cannabis entirely. Despite that, illegal sales have continued, flooding the market and negatively impacting the sales potential for legal goods.

The city of Berkeley and mayor Jesse Arreguín hope that the tax cut will improve its competitive position; the tax cut may also be a sign of things to come in a state where 67 cities and counties have taxes on legal cannabis sales.


William SumnerFebruary 23, 2018
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6min90753

Part Two of a Four-Part Series

Why are less than one percent of California cannabis cultivators actually licensed to grow cannabis? That is the question on everyone’s mind in the wake of a 36-page report released by the California Growers Association, which represents more than 1,100 small and independent cannabis businesses.

The report details many of the political, financial, and cultural barriers preventing small to midsize cannabis cultivators from entering the legal market. In part two of our four-part series, Green Market Report will take you through the report and lay out the state and local barriers standing in the way of cannabis cultivators.

Local Policy

Local cannabis regulations in California is, to say the least, a hodgepodge of conflicting rules passed by municipalities struggling to understand the legal cannabis market. As of February 2018, only 13 out of 58 California counties have passed laws allowing commercial cannabis activities

Six counties are likely to pass ordinances in the new future, while 14 more counties are currently studying the issue. Nearly half of California counties (25) have already passed bans on commercial cannabis activity.

Of those counties that have actually passed ordinances allowing cannabis activity, many have implemented caps on the number cannabis business permits available. For example, Trinity County only has 500 available cannabis business permits despite having more than 4,000 cultivators operating in the area.

Similarly, local zoning ordinances have made it increasingly difficult for cultivators. In Sonoma County, for example, a local ban on rural residential and agricultural residential areas have helped to exclude over 3000 cannabis cultivators from the market.

Likewise, in urban areas, many zoning ordinances have left cannabis businesses huddled in small business districts; which in turn have helped spike local real estate prices, thus further making it difficult for small-scale cannabis cultivators.

State Policy

Current state cannabis laws have also played a part in preventing small to midsize cannabis cultivators from entering the market. Under the 1976 Direct Marketing Act, California farmers are allowed to directly interact with consumers through Farmers’ Markets and Community Supported Agriculture.
However, current state law has not adapted to allow the privileges of cannabis cultivators. The state does offer cannabis event licenses, but these are strictly limited to retail cannabis businesses and exclude cannabis cultivators and manufacturers.

The CGA believes that this will have a negative effect on many small to midsize cultivators, many of whom were able to interact directly with patients under now-defunct state law.

Cannabis transportation has also proven to be a bottleneck for cultivators. Of the 192 licensed cannabis distributors, 133 (approximately 69%) hold at least one other license non-distribution licenses. Approximately 28% of distribution licenses are controlled by manufacturers, another 25% are owned by dispensaries, 9% belong to cannabis cultivators, 4% is controlled by businesses with multiple licenses in the supply chain, and 3% are controlled by delivery companies.

Only 31% (59) of the issued cannabis distribution licenses are actually owned by companies focused solely on distribution. What does this mean for cannabis cultivators? In essence, it means that not only are cannabis cultivators forced to rely on competitors for distribution but also that they have to rely on companies that simply not scaled to transport other licensees products.

Further complicating the distribution issue is cannabis testing. Not only are there too few licensed cannabis testing laboratories in the state (22 total), there are not enough distribution companies to meet the demand; which in turn drives up the price for both.

Also hurting cultivators is the soon-to-be distinction between medical and recreational cannabis on the production level. A six month grace period allowing medical and recreational licensees to transact with one another will soon expire, which will increase the start-up cost for prospective cannabis businesses.

For cultivators, this means having to get both a recreational and medicinal cultivation license in order to maintain market flexibility. Not only that, cultivators will have to decide which portion of their harvest will be dedicated to recreational and what portion will go towards the medicinal market.

The confluence of confusing state and local regulations has led to widespread confusion among the cannabis cultivators, which in and of itself is a barrier to licensing. In order to stay compliant with the law, licensees must be aware of regulations from the CDFA, BCC, MCSB, Water Board, CD FW, CDTFA, OSHA, as well as local building and fire code, and local regulatory and tax ordinances.

Stay Tuned for Part Three

According to a poll conducted by the CGA, 57% of its member cite regulatory confusion as a “significant” barrier to becoming licensed. But regulatory woes are not the only barriers towards becoming licensed cannabis cultivators. Indeed there is a litany of financial and even cultural considerations that keep many of the state’s cultivators from joining the legal market; and in part three of our four-part series, we will examine those issues. Stay tuned.


William SumnerFebruary 22, 2018
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5min80902

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:

A small cannabis farm in California. (Shutterstock)

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.


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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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