Proposition 64: The Adult Use of Marijuana Act

We have a strong consensus on regulated adult use: Prohibition has been a costly failure. However, there are significant concerns over “how” and “when” adult use is regulated. We support regulation for cannabis farms and businesses that protects natural resources and public safety while creating local economic opportunity for independently owned farms and businesses.

Cal Growers divided on Proposition 64

Our membership is divided on Proposition 64, though it is my sense that there is a majority of our board members that would vote to oppose this initiative. However, I remain concerned about such a course of action. This is a complicated subject matter and I think that more deliberation is required before we can reach a “strong majority” opinion. And, while the electoral process is inherently divisive, I remain committed to minimizing the destructive impact Proposition 64 will have on our community.

Highlights of the initiative

Proposition 64 features several of our policy priorities:

  • Multi-agency framework that regulates cultivation as agriculture
  • Tiered licensing for cultivation
  • Microbusiness: complete vertical integration for specialty and small growers
  • Five-year sunrise on the Type 5 “unlimited” cultivation license
  • Reductions of penalties and crimes, clean records
  • Provisions for the establishment of appellations 4.

We have significant concerns, including:

  • It’s about a smooth transition. After 20 years of uncertainty, California finally has a statewide regulatory framework for its cannabis industry and we are still in the process of getting it up and running. We don’t know yet what works and what doesn’t work about the MMRSA.
  • How will medical fare? Many of our members are concerned that medical will be subsumed by adult use. Patients are concerned that their interests will be lost and overlooked as the “gold rush” mentality takes over.
  • What about local licenses? Many of our members have not even had time to carefully consider the AUMA. They have been focused on local permitting, the first step on the journey toward regulation. For many in these communities AUMA is too much too fast: they explain that it would be beneficial to their communities to have time to develop local policies before the market is scaled up.
  • Concessions were made to big marijuana businesses. Rather than adopting the regulatory framework established by the state legislature, Proposition 64 makes important modifications to industry regulations. Current law limits the size of grows and restricts vertical integration, creating ample opportunity for small growers. Currently proposed taxes are less than 5 percent and have lower rates for smaller businesses. Proposition 64 (AUMA) does not include limits on cross licensure and multiple licenses and will allow for unrestricted vertical and horizontal integration and removes the cap on the size of grows in 5 years, allowing for unlimited scale grows. Taxes are flat rate, disproportionately impacting small businesses; and they are over 20 percent.
  • We think there should be a cap on the square footage any licensee can cultivate. If Proposition 64 passes it will likely result in significant consolidation of the cannabis industry; small businesses will be displaced by the creation of large conglomerates that–after just five years–can cultivate unlimited acreage. Businesses owners will lose their livelihood. Jobs will be cut and wages will be reduced as conglomerates seek greater efficiencies and profits. Consolidation will also drive a “race to the bottom” where competitive advantage is gained through lower prices rather than better products and greater social benefit. Ultimately, many feel that the passage of the AUMA will enact concessions made to big marijuana businesses at the expense of consumers, small businesses and the public interest. The electoral process puts political and financial considerations ahead of the public interest, and the AUMA is a perfect example of this monetization of public policy. We feel that the legislature is a better forum to develop a regulatory framework for adult use cannabis.
  • California has already made tremendous progress toward ending the war. In 2014 there were 13,300 felony arrests and 6,411 misdemeanor arrests for cannabis. In 2008 there were 17,126 felony arrests and 61,388 misdemeanor arrests for cannabis. There is still much more work to do to ensure that no one ever spends another night in jail for cannabis. However, there have been concerns expressed that the economic impacts of Proposition 64 will actually increase crime in communities where cannabis is prevalent. There is significant evidence that socio-economic conditions are related to crime. Simply put: less jobs to leads to more crime. Consolidating the cannabis industry will result in a catastrophic economic collapse for huge swaths of California and the impacts will be especially acute in communities where cannabis is prevalent.
  • Cannabis is about more than just making money. There is no doubt the Proposition 64 would increase the size of the regulated marketplace in California and that some cannabis businesses would increase their profits. All the data from states that have legalized tells us that much. Many of our members feel that this is not the most important element of regulation. To many in our community the issue is also about what is good policy for the State of California. We want to see a diverse marketplace that turns injustice to opportunity for the communities most impacted by prohibition. We want to see a sustainable marketplace composed of business that are guided by a stewardship ethic not a simple profit motive. Many do not think Proposition 64 will create the world we envision.
  • It’s about timing. California needs to give the newly passed medical regulatory system a chance to work before we regulate adult use. This will reduce challenges and help ensure a smooth transition for tens of thousands of businesses, hundreds of thousands of workers and millions of consumers. 5.

We continue to explore other opportunities and pathways to regulated adult use. Generally, these would include a legislative option or a 2018 ballot initiative. It does not seem as though there is a viable pathway for regulating adult use prior to this Novembers vote. If the initiative is unsuccessful I am confident there will be a move to regulate adult use within the legislature. It’s hard to speculate what the specific details would be but it seems certain that the MMRSA would be the starting point.