In a move that has disappointed many in the cannabis industry, California Governor Gavin Newsom this weekend vetoed AB 1111—a bill that could have provided a lifeline to small cannabis farmers struggling to survive in the world’s largest regulated marijuana market.
Introduced by Assembly Member Gail Pellerin of Santa Cruz, AB 1111, it aimed to create a new license allowing small cannabis producers to sell their products directly to consumers at temporary, municipality-approved events and venues. Newsom’s veto has raised questions about the rationale behind rejecting a bill that garnered significant legislative support and offered a sensible solution to a pressing issue.
Why Was AB 1111 Introduced?
The need for AB 1111 arose from the challenges small cannabis farmers face in California’s competitive market. These farmers have been grappling with steep regulatory costs, high taxes, and intense competition from larger, well-funded operations.
AB 1111 sought to level the playing field by offering these small farmers a direct-to-consumer sales channel, thereby increasing their profit margins and allowing them to build direct relationships with customers.
Key Features of AB 1111
- Direct Sales: Small cannabis growers could sell directly to consumers.
- On-Site Consumption: Adults could consume cannabis at approved events.
- State Temporary Events: Licenses would apply only to state-organized temporary events, not traditional farmers markets.
- Small Growers Definition: The bill applied to growers cultivating no more than one acre of cannabis or smaller areas under specific cultivation licenses.
These provisions could have been game-changers for small marijuana growers, providing them with much-needed market access and increasing their chances of survival in a heavily regulated industry.
AB 1111’s journey through the legislative process was remarkably smooth, garnering broad support in both the Assembly and the Senate. The bill passed almost effortlessly, signaling strong bipartisan recognition of the need to support small cannabis farmers.
However, Governor Newsom’s unexpected veto this weekend raises questions about the underlying issues or considerations that may have influenced his decision. This unexpected development has left many in the industry wondering about the factors that led to such a stark contrast between legislative support and executive rejection.
Governor Newsom’s Reasoning for the Veto
In his veto message, Governor Newsom acknowledged the bill’s intent to support small and equity cannabis cultivators. However, he expressed concerns about the bill’s broad eligibility, which he argued could undermine the existing retail licensing framework and place significant strain on the Department of Cannabis Control’s ability to regulate and enforce compliance.
It’s also worth noting that the legal cannabis industry in California contributes over $1 billion in taxes per year, making it confusing how much strain this small farmer initiative could impose on the DCC.
Newsom emphasized the need for policies that address the fundamental issues straining the legal cannabis market, such as competition from unregulated sources and improving access to regulated products. He stated, “It is essential that we prioritize solutions that strengthen, rather than further burden, the existing regulated market.”
“I remain open to considering a more flexible and narrowly focused version of this bill next year that can better respond to market dynamics, without imposing a rigid monitoring and compliance framework. Such policies must be considered within the broader context of efforts that are necessary to address the fundamental issues straining the legal cannabis market”
While Newsom says he remains open to considering a more flexible and narrowly focused version of the bill next year, his veto has left many small cannabis farmers feeling abandoned and uncertain about their future.
Impact on Small Cannabis Farmers
The veto of AB 1111 is a major setback for small cannabis farmers who were counting on the bill to provide them with a viable sales channel.
Without the ability to sell directly to consumers, small farmers are forced to continue relying on traditional retail channels, which often take a significant cut of their profits. This financial strain is particularly burdensome given the high costs associated with regulatory compliance and taxation in California.
The bill would have provided small farmers with a direct line to consumers, allowing them to showcase the quality and uniqueness of their products. This direct interaction could have helped build brand loyalty and customer trust, which are crucial for long-term success.
Larger cannabis operations, with their greater resources and established market presence, will still continue to dominate the industry. Small farmers, on the other hand, will still struggle to gain a foothold, making it increasingly difficult for them to compete.
What AB 1111 Could Have Achieved
The passage of AB 1111 would have been a significant step toward creating a more equitable cannabis market in California. By allowing small farmers to sell directly to consumers, AB 1111 would have empowered them economically, enabling them to retain a larger share of their profits and invest in their operations.
Consumers would have gained access to a wider variety of high-quality, locally-sourced cannabis products. The ability to purchase directly from growers would have ensured that consumers know exactly where their cannabis is coming from and could ask questions about cultivation practices and strain specifics.
The bill would have promoted the normalization of cannabis by fostering a sense of community between small farmers and consumers, creating opportunities for education and engagement around cannabis cultivation and consumption.
Governor Newsom’s veto of AB 1111 is a significant blow to small cannabis farmers in California, who were hoping for a lifeline in an increasingly competitive and challenging market. While the governor’s concerns about regulatory compliance are questionable, the veto leaves small farmers struggling to survive amid high costs and fierce competition.
The road ahead may be challenging, but it does not lack hope. Through ongoing advocacy with organizations like Origins Council and Supernova Women, who are at the forefront of the fight for cannabis rights, along with community support and thoughtful policy reform, we still have the opportunity to foster a more equitable and sustainable cannabis market in California. Small cannabis farmers deserve a fair chance to succeed, and it is our collective responsibility to ensure they receive it.
