| For better or worse, California has a notorious relationship with cannabis.
The Emerald Triangle not only is one of the largest cannabis-producing regions in the U.S., but its legacy farmers have crafted world-class harvests that represent a prototype for the present-day industry.
During the Summer of Love in 1967, when upward of 100,000 people converged in San Francisco’s neighborhood of Haight-Ashbury, sex, drugs and music triggered a rippling social scene up and down the West Coast and across the U.S., stamping a chapter in history. But Californians and their cannabis communities were dubbed rebellious even before that social phenomenon attracted world attention.
Old habits die hard.
While California was the country’s pioneer in the passage of Proposition 215—its 1996 voter-approved ballot measure to legalize medical cannabis—four other states beat California to the punch with adult-use legalization, including Pacific Coast sister states Washington (2012) and Oregon (2014). California voters passed their adult-use measure, Prop. 64, in 2016.
Nearly five years later, the legal market is still struggling to catch fire, which, in part, is because of a complicated regulatory framework, licensing hurdles and a heavy tax burden. The Legislative Analyst’s Office (LAO)—a nonpartisan fiscal and policy research institute for California’s Legislature—estimates that adult-use cannabis businesses operate in less than one-third of jurisdictions statewide.
Meanwhile, the illicit market continues to bloom. On July 7, the Los Angeles County Sheriff’s Department announced the results of a 10-day sting operation that involved more than 400 law enforcement personnel, who seized $1.2 billion of illegal cannabis last month in Southern California and arrested 131 Mexican, Chinese and Armenian cartel members.
Investigators said that the operation accounted for only 40% of the illegal outdoor grows in the county, where up to four harvests per year can materialize. If those illicit grows went uninterrupted by law enforcement, Los Angeles County alone would have shadowed the state-legal market, which brought in $4.4 billion of retail sales in 2020.
In February, state Sen. Nancy Skinner introduced legislation to loosen some of the licensing and regulation constraints by expanding resources to help city and county governments that don’t have the wherewithal to oversee legal cannabis operations access a state program that would manage certain bureaucratic functions for them. That legislation passed the Senate Appropriations Committee May 3.
Last month, the California Legislature approved a plan to funnel $100 million toward its cannabis industry in an attempt to boost the legal market by helping businesses transition to more permanent licenses. According to Gov. Gavin Newsom’s May budget summary, approximately 82% of California’s cannabis licensees held provisional, or temporary, licenses as of April 2021.
The $100 million in grant funding aims to help cities and counties assist cannabis businesses in completing time-consuming and complicated environmental studies around the impacts of their operations and how they can reduce potential harms—a required step toward securing a more formal annual license.
A mandate to move all businesses from temporary licenses to formal ones was meant to occur in 2019, but the deadline has since been bumped (twice) to Jan. 1, 2022. Newsom is now pushing for that deadline to be extended another six months.
Although the proposed extension has drawn opposition from various environmental groups, the absence of an extension could result in several licensees falling out of the legal cannabis system, curtailing the state’s efforts to eradicate the illicit market.
But the environmental impacts associated with unregulated growers using banned pesticides, fertilizers and stolen water for their illegal crops are far worse.
-Tony Lange, Associate Editor | 