The Hidden Darkside of California’s Cannabis Market

California is home to the nation’s largest cannabis market, but most of it is still non-compliant.

The problem is not only with the enormous illicit market, but also with the state’s “provisional” licensing program, which lawmakers created as a stopgap measure to give growers time to transition to permanent “annual” licenses.

As of March 4 of this year, an eye-popping 83% of marijuana business licenses in California were provisional permits, while only 17% were annual licenses.

The permanent annual license application process is far more stringent than the provisional license, and requires prospective licensees to submit to background checks, provide surety bonds, detailed waste management plans, security and pesticide protocols; comply with State Water Resources Control Board (SWRCB), California Department of Fish and Wildlife (CDFW), and Department of Pesticide Regulation (DPR) requirements; plus all county and local regulations, including land use ordinances. Depending on farm location and cultivation practices, growers may also be required to obtain road development permits, water diversion permits, wastewater discharge permits and CDFW lake and streambed alteration agreements, as well as demonstrate compliance with the stringent California Environmental Quality Act (CEQA).

Clearly, becoming compliant with these requirements can be very challenging and costly. The CEQA regulations in particular can create large burdens on growers. And all of those provisional licenses expire this year.

In an attempt to remedy this situation, a bill was introduced last December in the California legislature by state senator Anna Calallero. SB 59 states that provisional licenses can be extended even for growers who do not comply with the California Environmental Quality Act, if the applicant demonstrates “evidence that compliance is underway.”

Most significantly, the bill extends the deadline for compliance all the way out to 2028, essentially giving growers a total of ten years to come into compliance with the environmental regulations.

Why is this important?

Permanent license holders say that extending the deadline for provisional license holders to comply with CEQA is patently unfair to those who invested significant resources to create complaint operations. But even more importantly, the bill creates serious potential consequences to the environment by allowing provisional cannabis farms to remain out of compliance with laws aimed at protecting our waterways, soil and air.

Environmental groups objected the last time that provisional licenses were extended and are expected to oppose SB 59 because they do not want these delays to eventually develop into an exemption for the industry.

The situation in California is worse than in other states. A research report published in BioScience stated the impacts of marijuana production in the state are significant and problematic.

“Marijuana production in California is centered in sensitive watersheds with high biodiversity,” the report stated. “The combination of limited water resources, a water-hungry crop, and cultivation in sensitive ecosystems means that marijuana cultivation can have environmental impacts that are disproportionately large given the area under production.”

Not surprisingly, there is heated debate on this issue. Amy Jenkins, the lead lobbyist for the California Cannabis Industry Association, said the group is in favor SB 59, despite the fact that environmentalists have “considerable concerns” that most of the marijuana industry has not complied with environmental protection laws.

Meanwhile, the NCIA (National Cannabis Industry Association) said in a lengthy report on environmental sustainability in the cannabis industry, that for decades cannabis growers failed to implement environmentally safe methods of production. “Whether this was the result of a lack of education, efforts for concealment, or a lack of access to mainstream agricultural and waste management resources,” the environmental damage was significant.

Moreover, the organization urged government officials to “create workable standards with supporting resources to set the cannabis industry apart as a leader in environmental sustainability.”

And unfortunately, that’s a pretty far cry from the reality of today.

While there are profound arguments on both sides of the issue, SB 59 is a poorly written piece of legislation that simply kicks the can down the road for another six years, potentially causing untold damage to our environment for decades to come.

We can and must do better.