Legalization of recreational cannabis in 2016 ushered in a wave of social and economic optimism. Trepidation from legacy cannabis businesses was allayed by protections that were built into Proposition 64. These were designed to delay the ability of “Big Cannabis” companies to monopolize the industry and drive small growers and manufacturers out of business.
The path to licensing under new regulations is complex and requires capital investment. Therefore, the five-year cap on cultivation acreage was built in to keep the playing field even initially and give small cultivators time to become regulated before larger growers entered the market.
Then on the eve of legalization in 2018, the California Department of Food and Agriculture quietly issued a surprise change in the regulation allowing unlimited small cultivation licenses for individual companies. The consequences of this are that well-resourced companies can purchase or “stack” unlimited small cultivator licenses. This unexpected change effectively removed protections for small growers trying to compete against large industrial players who are positioning themselves to dominate the market.