California Growers Association Files Lawsuit Against State Over Large Cannabis Farms

The California Growers Association has filed a lawsuit against the state’s Department of Food and Agriculture claiming that allowing large-scale cannabis farms violates Proposition 64.

Recreational marijuana officially became legal in California on January 1, but details of the new program are already being challenged. The California Growers Association (CGA) has just filed a lawsuit against the state’s Department of Food and Agriculture claiming the state is not upholding the intent of Prop.64, the bill approved by voters to legalize recreational marijuana.

The debate is centering around whether or not California officials should allow large-scale grow operations for the first five years of recreational sales. Operations larger than one acre are considered to be large-scale.

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Hezekiah Allen, executive director of CGA, says the lawsuit was filed to protect small cultivators.  Prop. 64 was drafted to make sure “nonmedical marijuana industry in California will be built around small and medium-sized businesses,” Allen said in a statement.

According to a report by the Sacremento Bee, Steve DeAngelo, co-founder and CEO of Harborside Health, believes that large farms are necessary to keep prices down, especially with the high taxes consumers will now pay at dispensaries.

Officially, large-scale licenses are still not being issued for 5 years. But retail outlets are eligible to apply for and receive an unlimited amount of licenses. Multiple licenses can be lumped together and operators can then get approval from the state to run large-scale cannabis farms.

“Prop 64’s five-year ban on large cultivation licenses was included specifically to account for many Californians’ concerns that locally-owned and community-minded businesses would be replaced by a small number of powerful, consolidated corporations. Unfortunately, CDFA’s regulatory decision allows these interests to quickly corner the market, while tens of thousands of small and mid-sized businesses are still working to fight local bans, raise capital, or establish operations in compliance with new rules. We could not stand by while a single regulatory decision threatened the future of so many hardworking Californians,” Allen said in a statement.

Many members of the cannabis industry were surprised to learn in about the licensing loophole when emergency regulations were released in November.

Steve Lyle, spokesperson for the Department of Food and Agriculture has not commented publicly on the lawsuit. In November, he gave a vague reason as to why the department allowed growers to apply for multiple licenses. Lyle told the Press Democrat that the decision to allow unlimited licences was based on an “evaluation of the emergency regulations, including input from stakeholders, that went on right up until the regulations were finalized.”

Although CGA and Allen are concerned about the licensing issue, Allen still says he is optimistic about how the industry will move forward.

“Our government has checks and balances for a reason. We look forward to an opinion from the judicial branch to help settle this disagreement so we can move forward collaboratively and ensure as many businesses as possible are able to participate in the regulated cannabis market,” Allen said in a statement.

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