By Nick Cahill, Courthouse News
Opportunistic cannabis corporations are taking advantage of a loophole in California’s new cultivation laws, “eviscerating” a framework meant to protect small growers in the state’s fledgling industry, a growers association claimed in state court Tuesday.
Under legislation passed in 2017, mom-and-pop farmers were supposed to get a head start on corporate interests through a provision that bans grows larger than one acre until 2023.
The freeze on large-scale farms was meant to give smaller growers, including those who have been growing illegally prior to 2018, an opportunity to gain standing in the legal pot marketplace.
But as claimed by the California Growers Association, rules approved by state regulators allow individuals to apply and receive an “unlimited” amount of smaller growing licenses.
The growers claim the loophole violates the spirit of Proposition 64 passed by voters in 2016 and could encourage marijuana growers to remain growing and selling on the black market.
“This swallows the entire spirit of the new rules,” said Patrick Soluri, attorney for the association. “It creates two completely different cannabis markets.”
The association, which represents small California marijuana farmers and businesses, wants a state judge to declare that the California Department of Food & Agriculture’s emergency regulations violate newly enacted cultivator licensing laws.
It’s also asking Sacramento County Superior Court for a stay prohibiting the state from issuing “small cultivation” licenses.
Soluri says the licensing-loophole is no secret in the growing industry and that some entities have already applied for up to 30 licenses. He warns that if corporate growers are allowed to gobble up licenses that permit up to one quarter-acre of pot cultivation, mom-and-pop operations will forgo registering or paying taxes.
“They are doing it out in the open,” Soluri said of the corporate growers.
While the association has participated in legislative hearings and attempted to shape regulatory licensing framework, it says the department of food and agriculture hasn’t given it much of a response regarding the licensing snafu. According to the lawsuit, the association submitted a letter to the department last November and another with the Office of Administrative Law last month.
The department of food and agriculture did not immediately respond to an email request for comment on the lawsuit.
The association warns that the current licensing guidelines could also have environmental implications.
“Incentivizing small and medium operators to stay in the illegal market due to overwhelming economic competition will harm the environment because these existing illegal operators will not notify regulatory agencies of their activities, much less voluntarily comply with environmental regulations, best practices and performance standards,” the nine-page complaint states.