How much marijuana can I grow?: Part 3 – THE DANGEROUS LAWSUIT

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.  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.  The Type 5 license which would allow one to grow more than 22,000 square will not be issued before January 1, 2023.  Therefore one would think that the largest cultivation allowed would be 22,000 square feet.  At this point, the medium type 3 license is the largest license that you can apply for.  And one can only apply for one type 3 licenses.

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 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 my multiple licenses is called stacking and the state has allowed some growers to stack as much as thirty type two licenses. This is how the big growers can cultivate multiple acres for cannabis at this time.

Obviously these licensing regulations have the odor of duplicity and deception.  Why even have medium acre grows, or type 3 licenses if one can just stack type 2 licenses.  And why would they postpone the type 5 licenses until 2023? You would think that they were postponing the type 5 licenses to give the small growers time to establish themselves before the big cultivators started to operate.  However, the postponed 2023 licensing is deceptive because right now large corporation can cultivate multiple acres by stacking type two licenses.  So no one needs to wait until 2023 to cultivate more than ½ acre.

This loop hole of stacking type 2 licenses really makes the medium type 3 licenses and the large type 5 licenses superfluous.  With stacking type two licenses large cultivator have no need of type 3 for type 5 licenses.

As I stated, since January 1, 2018 many grows have stacked licenses to at least ten acres, and probably more.  Therefore now all these large growers have nothing to worry about.  However, some people saw the misdirection and hypocrisy of the cultivation licenses limits and started a lawsuit claiming that the current regulations do not follow the intent of the of Proposition 64 which was to protect small growers and give them time to establish themselves before the large corporate cultivators move in.

California’s largest cannabis farmer organization has filed a lawsuit against the California Department of Food and Agriculture’s decision to not limit marijuana farmers to 1 acre.

The California Growers Association’s civil litigation filed in the Sacramento County Superior Court on January 20, 20018 claims the state’s cannabis laws clearly spell 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.

The association’s executive director Hezekiah Allen said Wednesday that they have exhausted every other option including meeting with state regulators and staff from Gov. Jerry Brown’s office during the past few months.

“Our government has checks and balances for a reason,” Allen said, “and it is an appropriate time for the judicial branch to weigh in and provide an interpretation of state law.”

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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.  It may be the court will grandfather in all the large grows that were created while stacking was legal.  But just as easily 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 a ¼ acre lot.

The fact that California’s new rules 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.

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 persuasive argument.  It is a very cogent and logical argument that small farmers will be protected by quarter acre and half acre lots and won’t have to deal with 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?  And the 1/4 loophole  of stacking licenses completely defeats the purpose of have to making people wait until 2023 to apply for large licenses, when they can get all the acres they need with stacking type 2 licenses.

Their argument is compelling but practically the success of this lawsuit would throw the whole cannabis cultivation sector in California into utter chaos.  Corporations hate uncertainty and try to avoid risk.  But right now many cannabis corporations that have already stacked licenses are taking a huge risk and are facing disaster if this lawsuit is successful.  And many corporations are waiting to jump into the cultivation sector until this huge uncertainty, the stacking of license, is ended.

This lawsuit is compelling but if successful it will seriously damage the cannabis cultivation sector in California.  Trying to protect small farmers is a laudable goal but only if one doesn’t understand basic economic theory.  If successful, this lawsuit will seriously reduce the amount of legal cannabis available to the California market, which would drastically the raise the price of raw cannabis, and therefore create a huge opportunity for black market cannabis.  The goal of Proposition 64 was to make all the operators in the cannabis market to become legal, therefore ending the black market and bring in an exorbitant amount of tax revenue.  However, the success of this lawsuit would just create the black-market they were trying to destroy through legalization.  The road to hell is paved with good intention and this lawsuit is a perfect example of this age old saying.

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