Here's How Big Money Skirts Prop64

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When Prop64 was passed in California, it contained language that was intended to delay the inevitable rush of large-scale corporate cannabis cultivation and give small and medium-sized growers a five-year head start to establish themselves before the state started licensing the major players.

Instead what has been happening is a tactic referred to as “stacking” in which these deep-pocketed interests are each flexing their financial power to scoop up dozens – or in one case well over 100 – small grow site applications and then combining them to essentially skirt their 5-year waiting period.

The move is to acquire one medium cultivation license (since large ones are not available until 2023) which will give you 22,000 sq. ft. of canopy space. As the system is set up now, with enough money you can then obtain unlimited small cultivation licenses as well, each of which will give you another 10,000 sq. ft. of growth space.

License Stacking under Prop64

You "stack" your licenses together on one plot of land and suddenly a well-funded and supposedly “small to medium” sized grower is legally licensed to cultivate hundreds of thousands, or even millions, of square feet of cannabis.

This is exactly what actual small to medium sized craft cannabis growers in California were ringing the alarm bells about prior to the Prop64 vote in 2016. And now, two years later, they have unfortunately been proven right.

Leading the way through the loopholes is a group called Organic Green Farms who, as of June 8th anyway, has laid claim to 147 cultivation licenses…or 4% of all such licenses granted so far in the state of California. This “right” came at a cost of over $2,000,000 in licensing fees and gives them a legal growth canopy of over 1.5 million square feet.

Not sure if that makes them “Small” or “Medium” but compare that to the 24,000 sq. ft. that the average Prop64 cultivation license holder currently has to work with.

They are not alone though. In fact, according to some fantastic reporting by MJBizDaily, “The top 10 license holders in the state control 646 licenses – or an average of 65 each.”

The top 12 hold 20% of the total licenses.

The average annual license and application fees for just one small or medium cultivation site is about $35,000. That is a steep enough cost of entry into the legal side of the industry, but how can that grower possibly compete with these massive corporate operations? 

Is this the intent of Prop64?

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Apparently, the California Growers Association doesn't think so because earlier this year they filed a lawsuit against the California Department of Food & Agriculture, the agency responsible for issuing these licenses.

Instead of going after some lawyered up farms who may be exploiting the flawed set of rules, but don’t appear to be breaking them, the CGA is accusing the CDFA of violating the initial five-year ban on large-scale licensing by granting so many “stack”able licenses to so few people. They await their day in court.

If you are a grower or support your local grower or just like smoking properly grown weed, this will be an important story to keep your eye on as it develops.

And as rumors begin to percolate about the possibility of full-scale nationwide legalization of cannabis, keep California in mind and consider whether you would want cannabis to go the way of Home Depot or Starbucks as it could potentially be headed.