Cannabis Law Prof Blog

Editor: Franklin G. Snyder
Texas A&M University
School of Law

Saturday, September 16, 2017

Legal Marijuana Is Almost Here. If Only Pot Farmers Were on Board.

In November 2016, Californians voted to legalize marijuana for adult use by passing Proposition 64, potentially laying the ground work for the state to open the largest legalized marijuana market in the country. Although licenses to grow the crop will not be handed out until January 2018, the state has been encouraging potential licensees to apply for months. Conveniently, the state also happens to be the l Cali argest producer of marijuana in the United States. In fact, the counties of Mendocino, Humboldt, and Trinity make up the famed Northern Californian region known as The Emerald Triangle, named due to its reputation as being the largest cannabis producing region in the United States.

Then how is it that Californians are facing the very real possibility that there may not be enough regulated marijuana to serve the new legalized market?

Writing for the New York Times, Thomas Fuller reports that marijuana farmers in the Emerald Triangle are simply having a hard time seeing the benefits of entering the legal marketplace:

“I know that the numbers don’t look great; there are a lot of folks that aren’t coming in,” said Hezekiah Allen, the executive director of the California Growers Association, a marijuana advocacy group. “People are losing faith in this process.”

Based on data from various state and county agencies, Mr. Allen, of the growers association, estimates that about 11 percent of growers — about 3,500 of 32,000 farmers in the Emerald Triangle, which covers Mendocino, Humboldt and Trinity counties — have applied for permits. Most have been deterred by the voluminous paperwork to obtain a permit, the fees and the taxes, he said.

Proposition 64 decriminalized the possession of small amounts of marijuana, allowed individuals to grow six plants at home and set rules for the sale and cultivation of regulated plants, seeking to end what had been two decades of a freewheeling and largely unregulated medical cannabis system. The punishment for growing or possessing large amounts of unregulated marijuana was downgraded to a misdemeanor from a felony (emphasis added).

And therein lies the rub. By reducing potential penalties for large scale growers, Proposition 64 could be severely curtailing the legalized market it hoped to create.

“You could have 1,000 pounds in your hotel room right now and you might be charged with just a misdemeanor,” Thomas D. Allman, the sheriff of Mendocino County, said. In a small number of cases, traffickers can be charged with conspiracy, which is a felony.

California took a different path from Colorado, the first state to legalize marijuana, where possession of large amounts of unregulated cannabis remains a felony and where the black market is significantly smaller, according to Sean McAllister, a lawyer who specializes in cannabis cases in both states.

In addition, Fuller writes that growers view the new legalization process as much more burdensome than what they are accustomed to:

For the last two decades growers operated under a lightly regulated system of medical cannabis collectives. Legalization now brings a deluge of rules passed by towns, counties and the state.

While increased regulation has predictably deterred some growers from applying for a state license, another hurdle remains in that California growers can simply make more money by selling their crop -illegally- across states lines.

California, which by one estimate produces seven times more marijuana than it consumes, will probably continue to be a major exporter — illegally — to other states. In part, that is because of the huge incentive to stay in the black market: marijuana on the East Coast sells for several times more than in California.

By submitting their growing operations to state inspection, it seems likely that growers would also be cutting into their profits. As of right now, it appears that growers in California are not willing to hurt their bottom line in exchange for the opportunity to come out of the shadows and operate openly. Consequently, the situation cast serious doubt on California’s ability to smoothly transition over to a regulated market with the potential to raise billions in tax revenue.

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