They Voted No: The Uncertain Future of California Growers Under Prop 64

The originators fear being weeded out by fees, regulations, and Big Business.

“Legalize it!” said everyone, ever. From the Teva-clad baby boomers of NORML to the majority of California residents, legalization has been posited as the final frontier in marijuana’s battle against the War on Drugs. Now that Prop 64 has passed, granting the recreational use of marijuana to all California residents, things aren’t so simple: Opaque, undecided laws are confusing to growers and government officials alike, and the impending threat of Big Business takeovers looms across an industry of insiders, sending waves of apprehension through the community. 

The problem lies in the utter uncertainty surrounding the intricacies of the new law. While recreationally legal in California, marijuana is still federally illegal. Banks cannot accept money from pot businesses, and federal agencies can raid a grow at any time. State lawmakers are scrambling to untangle Prop 64's regulatory confusion and inherent contradictions before the law goes into effect January 1, 2018. While lawmakers spin, growers squirm, largely in the dark and unable to prepare for the future.

'The prop has basically been designed to force the small guy out.'

Nick, a veteran grower from Sonoma County, is feeling the brunt of the chaos. “I don’t know why the government would try to regulate thousands of people when they could just regulate a few companies,” he tells KINDLAND over the phone. “The prop has basically been designed to force the small guy out. A lot of people think that’s not the case, but all these permits, everything you need to get involved in doing this legally, it's a closed market kind of thing. It’s county to county, and each county is different. It’s hard for an investor or a farmer trying to move forward, sitting here in the dark and not knowing what the future holds. My fear is that by the time everything’s announced, it’s going to be companies that have been lobbying on the inside, and know what’s actually happening, who come out on top. In the meantime, the rest of us are paying high fees and retainers while being mislead."

The L.A. Times reported that some lawmakers have proposed delaying taxes and permits issued to growers, citing banking concerns that will force growers to personally transport large amounts of cash to the state in order to meet the new 15 percent tax and other fees imposed. At a February 16 hearing, California State Senator Holly Mitchell asked, “Do we have the authority to pause this process given its complexity, given the lack of clear sense of direction from the federal government at this point?”

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“What happens if they change [the jurisdiction] to state? Or federal?” asks Sonoma grower Nick. “Some of these permits seem like an oxymoron, because you need to prove you’ve been growing on your property for something like three years. At the same time, the background checks into the money from the IRS make it all illegal. It’s a contradiction. It’s confusing, is what it really is.”

Pete Pietrangeli, owner of Melrose Ave dispensary LA Confidential, is equally concerned. “It’s going to be hard for folks growing medicinally to scale with startups that have access to tons of capital and know how to lobby. People who’ve been making a living in the cannabis industry won’t be able to keep up with wealthy businesses looking for new opportunities,” he tells KINDLAND. “Sadly, the American dream no longer exists for the folks that came to California from nothing and made something for themselves and their families. There will no longer be that gray area of the Wild West helping people thrive and realize their dreams. Many growers are considering leaving California, as the cost of living is already so high, and going back to places like the Midwest.”

'I see small communities throughout Northern California trying to figure out where all the money went, and whole communities essentially disappearing.'

Small growers across Northern California are particularly worried. Many hold land investments in towns great for growing, but not much else. If the industry consolidates to big guys, as industries tend to do, land that growers paid bubble prices for will be rendered relatively worthless. Towns like Redding, California, are not on the map because the one Carl’s Jr. is just that good. Whole communities cater to the business brought by farms, from the trimmers to the laborers to the owners spending big bucks locally to keep things running.

“I see small communities throughout Northern California trying to figure out where all the money went, and whole communities essentially disappearing,” says Nick. “There’re so many towns in Northern California where this is the largest revenue source. Once these people are gone or don’t have a way to make their money anymore, what’s going to happen to these small towns and families, people who’ve purchased land with the intentions of growing, and now are unable to sell that land? There’s not really a market for it.”

H. Lee / Grassland

This fear is two-sided. Several deals involving “permitted” grows and facilities are in the works, effectively creating a new bubble for people to profit from in otherwise destitute rural areas of California. Local businesses and residents will profit, the lawyers and big businesses brokering these massive deals will profit, but small growers will flounder, and possibly evaporate.

Trixie Garcia, daughter of late, great Jerry Garcia, takes a more optimistic approach. “My angle is that it’s not perfect, but we all gotta just move forward and shape it later,” she said via email. “Don’t fuel the paranoia that growers already suffer from. We need to move on a somewhat united front. Quality product using boutique growers, a la micro brew, is possible. Small growers will need help to comply and participate, but there’s still room for them.”

Maybe things will shake up in favor of the consumers and the originating growers. Or maybe they won’t.

While the general consensus on Prop 64 is a big NO from the cannabis community, all admit the silver lining in removing the stigma surrounding medical use of marijuana. Now that cannabis has been medicinally available for years, people no longer have to feel subversive in taking advantage of the myriad benefits from this wonderful plant. Pharmaceutical companies are already shook: They see and fear pot's potential to replace the government-approved heroin they sling at astronomical prices. (We won't even start on the resulting opioid epidemic that’s claimed the lives of thousands of Americans.)

The world is moving fast. It’s up to all industries to evolve and grow in these wild times. While many small growers may be forced out, chaos breeds innovation. Maybe things will shake up in favor of the consumers and the originating growers. Or maybe they won’t, and Big Business will ruin our weed world like it ruins so much else.

LA Confidential's Pietrangeli concludes: “I could talk about the evil empire or the greedy businessman, but at the end of the day, I think most of us saw the writing on the wall this time around. All this should come as no surprise. It’s the same model of capitalism in every other industry; the rich just get richer.”