Small Marijuana Farmers Take State Department to Court

Fledgling marijuana businesses in California face significant challenges following the Jan. 1 passage of the Adult Use of Marijuana Act (known as Proposition 64) . That measure made recreational cannabis legal in the state, but subject to a laundry list of stringent regulations businesses must abide. In addition, many local governments have set their own rules, and this is all heaped on to existing barriers under the federal Controlled Substances Act, 21 U.S.C. Section 812.

Good marijuana business attorneys recognize that even once a client clears all those hurdles, small operations often have an even bigger mountain to climb: Competition from cannabis mega-corporations. This has spurred a number of marijuana lawsuits against the state for failure to keep these bigger firms in check with sufficient regulation.

Specifically, some farmers are taking aim at the fact the law does not fully restrict acreage permitted per grower for marijuana.

In one example, California Growers Association, a nonprofit, mutual benefit corporation, has filed a lawsuit in Sacramento County Superior Court against the state’s agriculture department, challenging the lack of such a stipulation.

The farmers argue that without such a limit, they are positioned to lose their standing to large agribusinesses, which have resources to convert massive expanses of land, according to San Francisco Chronicle. This conflicts with provisions built into Proposition 64 to protect owners of small- and medium-sized marijuana cultivation operations.

California Growers Association v. California Department of Food and Agriculture states that Proposition 64 prohibits licenses for large-scale operations in the first five years of legalization and that the Food and Agriculture Department “has promulgated a regulatory loophole that eviscerates the statutory five-year prohibition overwhelmingly approved by California voters.”

Medical and Adult-Use Cannabis Regulation and Safety Act passed in June 2017 by the California Senate was supposed to reconcile Medical Cannabis Regulation and Safety Act with recreational legalization. But farmers say it created an inconsistency that they fear will be exploited.

According to the lawsuit, the state regulations do put a limit of one acre per license for “medium” farms, with one such license allowed per grower. A “small” license is meant for operations of up to one-quarter acre. But there is not a cap on the number of small marijuana cultivator licenses one grower can have, the lawsuit alleges. As such, larger corporations could use their extensive resources to buy as many small licenses as they want, edging out smaller farms and their ability to compete. The growers association said the counties most vulnerable are Humboldt, Trinity, and Mendocino counties in northern California, home of the Green Triangle, where it is estimated most marijuana in the United States is grown.

The lawsuit said that paving the way to agribusinesses would not only hurt local farmers, but it also could cause prices to drop so dramatically that businesses will opt to sell illegally and remove themselves from the burdensome restrictions.

Our Orange County marijuana legalization attorneys hope the state sees the potential harm lack of oversight could have to California business owners. It is our aim to make sure as many businesses as possible are compliant with local and state laws and support any measures that make that easier for entrepreneurs looking to get into the cannabis industry.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients, defendants, workers and those facing criminal marijuana charges. Call us at 949-375-4734.

Additional Resources:

Marijuana Growers Sue California Over Lack of Limits on Big Farms, Jan. 24, 2108, Peter Fimrite, San Francisco Chronicle

More Blog Entries:

Small Marijuana Growers Fear Corporate Takeover in California, May 13, 2016, Orange County Marijuana Legalization Attorneys Blog