Last week, the California Growers Association (the “CGA”) filed a lawsuit against the California Department of Food and Agriculture (the “CDFA”), which has the potential to have a sweeping impact for all California cannabis cultivators. The lawsuit arose as a response by the CGA to the emergency regulations issued by the CDFA, the regulatory body that oversees cultivation businesses in California. The crux of the issue centers around the expressed intent of legislators and voters to limit the size of cultivation operations at the inception of the state legal program in order to provide protection for small and mid-sized cultivators. However, the current emergency regulations issued by the CDFA do not limit the aggregation of cannabis cultivation licenses, and thereby provide a loophole around the expressed intent of the voters and legislators to limit the size of cannabis cultivation operations at the outset of the regulated industry.
The CGA argues that the Medicinal Cannabis Regulatory and Safety Act (“MCRSA”) established by the legislature in 2015, the Adult Use of Marijuana Act ( “AUMA”) established by California voters in 2016, and the Medicinal and Adult-Use Regulatory Safety Act (“MAUCRSA”) established by the legislature in 2017 to unify both the requirements of the MCRSA and AUMA, all state the intent of the people and the legislature to limit the size of cannabis cultivation operations in California. That is, the CGA argues that the MCRSA limited cultivation licenses to a maximum of one acre for outdoor cultivation, AUMA limited cultivation licenses to a maximum of one acre for outdoor cultivation (22,000 square feet for indoor and mixed light) until January 1, 2023, and that MAUCRSA limited the size of cultivation operations in the same manner as AUMA. The CGA further argues, that while the emergency regulations issued by the CDFA do prohibit cultivators from holding more than one “medium” cultivation license (up to 1 acre outdoors and 22,000 square feet for indoor and mixed light per licensee) in a manner consistent with the intent of the MAUCRSA, they do not prevent a cultivation business from holding numerous “small” cultivation licenses in an aggregate amount that is greater than the caps set forth in the MCRSA, AUMA, and MAUCRSA. The CGA argues that the lack of a regulatory prohibition against the aggregation of smaller cultivation licenses to exceed the cultivation maximums set forth in the statutes violates the intent of California’s cannabis laws, and effectively removes all of the protections put in place to support California’s small and medium-sized cannabis farmers.
If successful, this lawsuit will have a huge impact on California cultivators as the CGA is seeking an injunction that would prevent the CDFA from issuing licenses in the aggregate that would exceed the acreage caps under the MAUCRSA. This will effectively limit the largest scale operators to 1 acre of outdoor canopy or 22,000 square feet of indoor and mixed light canopy until the prohibition against “large” cultivation licenses is lifted on January 1, 2023. Therefore, if successful, your business may be prohibited from cultivating a space in excess of one acre outdoors and 22,000 square feet indoors or in mixed light facilities until January 1, 2023. For more information on this lawsuit and how it could potentially impact your business operations and plans to cultivate in California, please contact McAllister Garfield, P.C. for a consultation.