Navigating The New Pot Rules

The California Growers Association held a free community workshop Saturday, Oct. 24, to explain the complex web of permits, licenses and regulations in the state’s new Medical Marijuana Regulation and Safety Act, signed into law by Gov. Jerry Brown earlier this month.

Although California legalized medical marijuana in 1996, when voters passed the Compassionate Use Act (Proposition 215), the Legislature had never written comprehensive laws to regulate medical cannabis legalization.

More than 100 packed Harwood Hall in Laytonville for “Navigating Cannabis Compliance,” led by Hezekiah Allen, CGA’s executive director. He talked about each of the 17-plus license types the new law creates, particularly cultivation categories that relate to the county’s many small medical cannabis farmers.

The law delineates 10 different cultivator licenses, based on size of farm and whether they are indoor, outdoor or mixed light (Types 1 to 3). Type 4 is the nursery license.

There are two types of manufacturing licenses; one that does not include volatile solvents (Type 6) and one that will be offered on a very limited basis does (Type 7).

A testing license, (Type 8) is a stand alone for labs. Testers cannot cultivate or manufacture.

One of two dispensary licenses (10A) permits no more than three retail sites. Distribution licenses (Type 11) allow distributors to test cannabis, manage sales and pay taxes.

Type 12 is a transporter license.

Allen urged the group to get familiar with the county’s zoning codes, which will provide guidance on what commercial activity is appropriate on their property.

The licenses are designed to prohibit a “verticle” supply chain in which a cultivator, tester, distributor or manufacturer can dominate all aspects of the industry. Allen said the CGA worked hard to protect small farmers, but he said that fairly soon a Type 5 cultivator’s license for large farms will be created, and that will have a profound effect on the small cannabis farmers if they haven’t banded together in cooperatives and branded their products.

Allen urged members to come up with a strategy for working with local government as partners in creating ordinances and permits quickly. “We need permits to apply for licenses,” Allen said. If county or city governments do not have their ordnances and regulations in place by March 1, 2016, the law says the state will be the default cannabis regulator in that county.

One of the best ways to get the county government moving and responsive to farmers’ needs is to talk about the tax revenues government will receive from permits, sales and licensing fees, according to Allen.

He urged farmers to be clear on their goals, get compliant with the new regulations and work on branding their products. “We already produce the best cannabis in the world,” he said, “but the world doesn’t know it.”

One audience member asked if the federal government will prosecute cultivators now that the state has created specific regulations.

“The feds haven't weighed in on this,” Allen said. “But the governor of California is taking the lead. He’s told the federal government to leave us alone. Now the state of California is on our side.”

The new law goes into effect on January 1, 2016, but the real crunch won’t come until Jan.1, 2018, when farmers must have their permits and licenses in place. Those in compliance and operating before 2016 will have their applications processed first, Allen said.

After a break, CGA members talked about forming farmer cooperatives, a specific legal entity under agricultural law that will now be available to cannabis farmers, with some restrictions. Although farmers’ coops can’t set prices, Allen said they can suggest prices and work with member farmers to increase the value of their product. Coops can also help build market connections, assist with branding and packaging, and showcase individual farmers.

He urged local farmers to create cooperatives or join existing ones so they can work together and have more business clout.

A representative from Humboldt Sungrowers Guild talked about her coop, which already sells plant medicine to dispensaries. She showed her coop’s well-designed and streamlined packaging and marketing materials. Will Porter of the emerging Emerald Grown cooperative talked about his group’s plans, and Tara Bluecloud described Mendocino Medicinals, a coop focused on high-CBD plants and medicine.

Several businesses interested in partnering with coops made presentations to the group: FlowKana and Meadow are both farm-to-customer distribution networks; Sacramento attorney Melissa Sanchez helps cannabis businesses comply with regulations, and Dragonfly Earth Medicine will give farmers who meet their green standards a “Pure” certification at no charge.

During a potluck dinner, the group planned to elect a steering committee to run the new Mendocino Chapter of the California Growers Association.