How Can California's New Legal Marijuana Market Move Forward?

How Can California's New Legal Marijuana Market Move Forward?

Legalization has divided small legacy farmers and sprawling agribusiness in the state, with concerns that many cannabis farmers will not end up licensed in the legal market.

April 9, 2018

This article originally appeared in the April 2018 print issue of Cannabis Business Times. To subscribe, click here.

Years ago, long before big business and politics changed the California cannabis landscape forever, Casey O’Neill and his family began tilling the earth in northern Mendocino County.

It was simple and good work, but it wasn’t easy. With time and sweat, the family took 20 acres of marginal land on a sloping grade and turned their home into three small sustainable grows, called HappyDay Farms.

“We’ve had to fight for every garden bed we’ve got,” O’Neill says. “We started with rock and clay, and we subtracted the rock very laboriously through hand labor. And we’ve slowly, but surely been working toward building soil with compost. Our soil has become pretty rich and nice at this point. We’re really happy about that, but it’s been a very difficult process. I don’t really have the ability to scale up, and I also don’t want to.”

Only in the past year has O’Neill felt the sudden, pressing need to scale up at all. In 2016, Proposition 64 teed up a taxed and regulated marketplace for cannabis cultivation and distribution in California. As with most things in the state’s cultural and political history, the story is complicated.

O’Neill says the costs and structure of state and local regulations have pushed him—and tens of thousands of other small cannabis farmers—onto a learning curve far steeper than the rolling hills of Mendocino County.

He’s been watching the legalization process closely, serving since 2015 as a vice chair of the California Growers Association (CGA). With an estimated 68,150 cannabis farmers working in California today, the CGA is concerned with the open question of how many of them will end up licensed in the legal market.

“Essentially every step of the process is just thousands and thousands of dollars on businesses that have been for the most part operating at a subsistence level,” O’Neill says. “I’ve been able to spread it over the last three years because I’ve been working on it for a long time, but for a lot of people who are just getting involved, these costs are being assessed right now. It’s a massive burden. And we can’t get bank accounts, we can’t get financing; the only money we can get is either growth-oriented venture capital, which comes with a whole set of dangers, or really high-interest hard money loans. People are being asked to do things [that] are pushing them into bad situations with really little recourse.”

To read the full article in Cannabis Business Times'  April 2018 issue, click here.

Top photo courtesy of Black Label Images