As stated earlier in my blog posts, there are three types of cultivation licenses that allow one different size lots on which one can cultivate cannabis. The small license is a (Type 2) license that allows one to grow up to 10,000 square feet (close to a quarter acre). That license is the smallest license. The next sized license (or type 3 license), also known as a medium license, allows you to grow up to 22,000 square feet (around a half acre). The Type 5 license which would allow one to grow more than 22,000 square will not be issued before January 1, 2023.
However, as I explained before, the loop hole (which is so large you could drive a Mack Truck through it) is there is a limit to the amount of type three licenses you can obtain; (only) one. However, there is no stated limit in the regulations for the amount of type 2 two licenses one can apply for. Therefore, if you apply for ten small (Type 2) licenses, you could theoretically develop 100,000 square feet of Cannabis. This acquiring of multiple Type 2 licenses is called stacking and the state has allowed some growers to stack as much as thirty type two licenses. This stacking system is how the big growers can cultivate multiple acres for cannabis at this time.
The California Growers Association’s civil litigation filed in the Sacramento County Superior Court on January 20, 20018 claims that Proposition 94 clearly spells out the intention to limit the regulated pot market to small- and medium-sized farms — which the group claims are grows of 1 acre or smaller — until 2023.
If this lawsuit is successful all of a sudden these stacked licenses will be illegal and these large growers will be in a nightmare situation. The court could say that all stacked licenses are now invalid and these people are only entitled to one type 2 licenses which would leave them with the ability of cultivation only a ¼ acre lot.
The fact that California’s new regulations issued by the CDFA CalCannabis Cultivation Licensing Department by allowing marijuana cultivation to favor large corporate farms despite a promise in Proposition 64 that small growers would be protected, makes a strong argument for closing the loophole that allows the stacking of type 2 licenses.
THE PROBABLE VERDICT
I have been a lawyer for twenty five years, and it is my opinion that the Court will rule in favor of The California Growers Association and close the loop hole so grows will be limited to one half acre licenses until 2023.
Their argument that the founders intent was to limit large grows so as to allow the small farmers to compete and adapt is a very compelling argument. It is very clear in the language of Proposition 94 that its intent was to protect small cannabis farmers. The CDFA CalCannabis Cultivation Licensing Department when issuing its regulations was clearly supposed to conform their regulations to Proposition 94 in that their regulations were supposed to help protect the family farm CalCannabis seemed to be setting up a regime that on its face limited massive cultivations because that regime created licenses for quarter acre and half acre lots and won’t allow grows that are larger than twenty two thousand square feet until 2023. Why else would they have structured the law this way if not to protect the small farmer? However, the 1/4 loophole of stacking licenses completely defeats the purpose of making people wait until 2023 to apply for large licenses, when they can get all the cultivation acres they need with stacking type 2 licenses.
THE POSSIBLE CATASTROPHE
It is clear that the CDFA CalCannabis Cultivation Licensing Department was attempting to look like they would protect small farmers when in fact; through the ¼ loophole they were doing just the opposite. If the California Courts rule against the California Growers Association they will have to go through some serious legal calisthenics to justify their ruling. The obvious ruling would be to agree with the California Growers Association and close the stacking loophole but the practical effect would be catastrophic. All the large multiple grows that exist or are being planned would immediately become illegal. That would obviously create a lot of law breaking cultivators in one stroke and seriously reduce and hamper the availability of legal Cannabis in California.
THERE IS STILL HOPE
However, there is hope for the large cultivator. In my opinion, if the court rules in favor of closing the loophole, they will grandfather in all the grows that are larger than a ½ acre that were licensed before the court’s ruling. Why would The Court do this? Because when these growers applied for the stacked licenses such licenses were legal. There is a strong precedence for this type of court ruling. California used to use what was called the blanket primary. I won’t go into to the details but basically the blanket primary put all the candidates, Republican, Democratic or other party candidates on the same primary ballot (this blanked primary system is actually different than an open primary, and if you are interested in the details of why please contact me). Many candidates, who would not have been elected under the old election system in California, won their seats because of the blanket primary. In other words, if not for the open primary, they would have not won their seats. California used the blanket primary in a few election cycles before the U.S. Supreme Court struck down the open primary system as Unconstitutional in the year 2000 in California Democratic Party v. Jones which was a 7-2 opinion.
IT’S GOOD TO BE A GRANDFATHER
After the Supreme Court reached this decision the big question was: what to do with the candidates who would have lost their elections but only won because of the blanket primary system that was in place until the Supreme Court stated it was Unconstitutional. The court decided to let the candidates who won under the now illegal open primary system retain their seats, instead of giving their seats to the candidates that would have won if the primary system was not in place. In other words, the Supreme Court ruled that the candidates that won in a blanket primary system that would have otherwise lost in a normal system could keep their seats. The court’s reasoning was that the candidates that won before the US Supreme Court declared the blanked primary unconstitutional could keep their seats because the blanket primary was the valid law of the land before the US Supreme Court declared the system unconstitutional. The court realized that going back and kicking candidates out of their seats was completely unpractical and would lead to too much chaos and uncertainty.
THE PROBABLE OUTCOME
Following this precedent, it is my strong opinion that if the courts rule that the stacking loophole violates the parameters set down by Proposition 94 the courts will rule just like they did with the open primary. In other words, the cultivators that received stacked licenses before the court decision to close the stacking loophole would get to keep their licenses but courts would not allow future stacking licenses to be issued in the future.
Like the Supreme Court when faced with the chaos of declaring the blanket primary unconstitutional, and to avoid such chaos, the California courts should grandfather in the stacked licenses in existing. The courts could choose to do noting and keep the status quo. The court could completely close the stacking loophole and then everyone that has either a licensed large grow or planning on cultivating and a large grow is screwed. But if the court chooses the third path and closes the loophole but lets the people who currently have stacked licenses keep them that will give the people or organization with existing stacked licenses a huge advantage.
BOTTOM LINE: APPLY FOR AND STACK YOUR LICENSES BEFORE THE CALIFORNIA COURTS CLOSE THE STACKING LOOPHOLE.