Direct to Consumer Small Farm Initiative Advances in Cali

Assembly Bill 2691 includes amendments to cannabis legislation that would allow the sale of cannabis direct to consumers by licensed cannabis cultivators with less than one acre of farmland. The sale would be permitted at farmer’s markets and other cannabis events, with the use of a “temporary cultivator event retail license.” California’s craft cannabis growers gathered in Sacramento on Tuesday, April 26, 2022, supporting this proposed legislation. 

Details of Assembly Bill 2691

A cannabis cultivator who meets all of the requirements for a temporary cultivator event retail license may apply for this license at the Department of Cannabis Control (DCC), and the requirements are as follows:

  • The applicant holds a valid state cultivation license.
  • The applicant has a valid license, permit, or other authorization from a local government that allows them to cultivate cannabis.
  • The applicant grows no more than one acre of cannabis across all licensed facilities. Each licensed cultivator receives a maximum of eight (reduced from twelve) temporary cultivator event retail permits each calendar year.

Additional amendments to the bill would also bar the DCC from necessitating that applicants resubmit information already supplied for their state cultivation license, as well as forms requiring an applicant to submit to background checks or other inspections already completed for their state cultivation license approval. It would also require establishing a process by the DCC to establish a process to make application submissions easier. Additionally, each temporary cultivator event retail license is only applicable for the cannabis event for which it was issued.

Purpose of Assembly Bill 2691

Licensed cannabis businesses continue to struggle to compete with illicit cannabis businesses’ products that have the capabilities to cultivate, produce, market, and sell their cannabis items at a considerably cheaper cost. Ethical, small cannabis businesses that are attempting to make ends meet by following the laws will continue to suffer if there are no feasible avenues to compliance and access to lawful markets. Cannabis farmers are now barred from selling directly to customers unless they own and run a fully regulated retail location. Small cannabis producers lack the financial resources to integrate or sustain substantial advertising budgets or sales teams vertically, making this impossible for them, dramatically impacting their ability to do business in the legal cannabis market. Additionally, small farmers are forced to rely on wholesalers and merchants to sell their products and establish new client ties.

The amendments to Assembly Bill 2691 will give small cannabis producers a real chance to develop demand for their small-scale products by allowing them to build relationships with customers and retailers.

Support for Assembly Bill 2691 

Several comments in support of the bill were filed in person and over the phone, on top of the support received at the hearing before the Assembly Committee on Business and Professions. Representatives of the Origins Council, a group of regional trade associations, delivered impassioned petitions for legislative relief, as did members of Axis of Love, a San Francisco-based organization.

Operation EVAC, Veterans for Medical Cannabis Access, The Emerald Cup, This Is Jane, Operation Iraqi Freedom Army Veteran Veterans Cannabis Group, Covelo Cannabis Advocacy Group, Veterans Walk and Talk Bay Area Chapter, Global Cannabinoid Research Center, California Certified Organic Farmers, Weed For Warriors, Mendocino Producers Guild, Cannabis Travel Association International, Dear Cannabis, Medical Cannabis Resource Events, Green Centaur, LeafWorks, Sweetleaf Collective, Bay Area Latino Cannabis Alliance, Hessel Farmers Grange, Aunt Zelda’s, Oaksterdam University, Equity Trade Certification Sanctuary Farms, San Jose Cannabis Equity Working Group, Sonoma County Growers Alliance, Trinity County Agricultural Alliance, Mendocino Cannabis Alliance, Nevada County Cannabis Alliance, Big Sur Farmers Association, Humboldt County Growers Alliance, and Origins Council wrote in support of the bill together:

Small-scale craft cannabis product creators lose out on many opportunities to communicate directly with customers within the legal, commercial cannabis industry. Nearly all independent small urban and rural producers cannot afford vertical integration, and land use regulations limit the ability to sell straight from the farm. As a result, legacy producers have been denied access to both their long-standing and devoted medical cannabis customer base and the booming recreational cannabis market. This impacts the consumers by essentially restricting their access to farm-fresh cannabis products, which contributes to the consistent downward spiral in the biodiversity of cannabis products in the legal market. 

“AB 2691 would provide a pathway for small producers to re-establish these consumer relationships, and in turn, would help build a niche market for craft cannabis produced by California’s world-renowned cannabis producers.”

In addition, the law would allow rural localities to use producer event sales as part of tourist and destination marketing activities. Craft cannabis enterprises would be able to create and build a regional reputation if consumers could interact directly with producers in their communities.

There needs to be equitable access to marketing and educational opportunities for all people and businesses involved in the cannabis industry. This bill would open up a slew of new prospects for craft operators while preserving and enhancing California’s world-renowned reputation for craft cannabis production in expanding worldwide markets.

Opposition to Assembly Bill 2691

Unsurprisingly, there has been opposition to the proposed amendments to Assembly Bill 2691. Many of them have retail dispensaries donating money to their groups, primarily to stifle any competition in their retail sales monopoly. Among those opposed are the United Cannabis Business Association, Social Equity LA, Orange County Advocacy Alliance, Long Beach Collective Association, California Minority Alliance, Silicon Valley Cannabis Alliance, Coachella Valley Cannabis Alliance, Social Equity Operators and Workers Association, Angeles Emeralds, and the San Francisco Cannabis Retailers Alliance.

Reasons for opposition include the fact that licensees (who are not retailers) may “participate” in temporary cannabis events. However, their products may be inspected and shown for educational purposes, not for sale. Another reason stated is the violation of Proposition 64. They also noted that the bill would not grow the market, only undermine established retailers… It sounds to us like the opposition is trying to stifle competitors. Another factor brought up was the still-present illegal cannabis market. The opposition mentioned that by allowing small-scale businesses to have a place in the legal market, their competitors would increase to include the illicit market and the craft cannabis market. Again, that seems like stifling the competition rather than growing the legal market, which we all want.

 


 

Luckily, Assembly Bill 2691 made it through the committee. While we still have a ways to go in ensuring equity for all cannabis growers, producers, and sellers, this bill is a step in the right direction. 

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