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Potters nipped in the bud by Bureaucratic Bungle

The biggest bureaucratic blunder of the legal marijuana era in California has left farmers across the state suddenly without permits and unable to grow weed.

At the beginning of this year there were nearly 6,000 legal and licensed marijuana growers in the state of California. At the moment there are less than 1,000.

About 85 percent of California cannabis growers have seen their legal status go up in smoke thanks to a bureaucratic backlog of state license renewals.

Just as a pharmacy needs a specific license to legally sell marijuana, growers need a specific license to grow the plant. Since the inception of recreational cannabis, California regulators have issued six to 12 months of “temporary” licenses to explore this fledgling new industry, promising to issue more permanent “annual” licenses to operators showing they can play by these new legal regulations.

But for cannabis farmers, the state has choked on issuing annual cannabis licenses. Almost every day, nearly 400 farmers saw their temporary permits expire, leaving them with the very difficult choice of whether to operate illegally or to quit.

Most state marijuana licenses are handled by the California Bureau of Cannabis Control. But since growers grow plants, their licenses are instead issued by the California Department of Food and Agriculture (CDFA). And the CDFAs CalCannabis Cultivation Licensing System is struggling through a months-long backlog, leaving temporary permit extensions high and dry.

SF Evergreen has received emails from CDFA officials acknowledging growers that the agency’s own internal software problems have held up permit applications filed on time.

“It appears that your applications have caused a glitch in our system and were never handed over to my manager,” says an email from CDFA staff. “Because our system is new, we keep encountering ‘nice’ failures.”

Other emails confirm that applications have been removed from the regulatory process “due to a recent system change”. Industry proponents note that the vast majority of these applications were submitted on time.

“Many of these licensees filed full annual applications more than six months ago and have never received any reports from this agency,” says cannabis consultant Jacqueline McGowan of K Street Consulting. “Through no fault of their own, their ability to operate in the legal market is now gone.”

McGowan notes that there are currently only 235 acres of legal cannabis cultivation in the state, which is about one-fifth of what the market needs. This will inevitably lead to supply shortages and price spikes.

“We will see a wave of manufacturers, distributors and retailers suffer once the effects of this shortage begin to show signs of a price hike,” she predicts. “This will ultimately affect the price consumers pay at the retail level, which will then lead to lower-than-expected tax revenues for the state.”

Some growers tell us they have received verbal assurances from the CDFA that the agency will delay any enforcement. But that’s little consolation to growers who receive annoying letters from that same CDFA saying that their temporary license has expired and that they must immediately cease operations.

“There is an automatic letter that will be sent on the day your license expires stating that you must cease all activity at that time or else you will be fined,” says Aaron Flynn, former co-chair of the SF division of the California Growers Association, and current member of the leadership team of the San Francisco Cannabis Coalition. “It’s really disheartening to receive a letter telling you to stop all your activities and then just live in this kind of fuzzy, gray, ambiguous space.”

Flynn is one of many annoyed by the lack of guidance from state regulators.

“Emailing CDFA doesn’t work right now,” he says. “There used to be a phone number where you could get someone, now it points you to a few different voicemails, and one voicemail is so full it just ends the call. It just hangs up.”

A grower cannot just keep selling his crop in the hope of one day getting the permit.

“You can’t sell any product without an up-to-date license,” Flynn says. “A distributor needs an up-to-date license. People are already in a position where they can’t sell the product and it’s starting to degrade on the shelves.”

The whole snafu is already costing growers thousands, if not tens of thousands of dollars, although industry observers believe most permits will eventually be renewed.

“The sense is that CDFA will eventually issue provisional licenses,” Flynn said. “Will they be 30 to 45 days late? Yes. But they will eventually get them out.”

Still, serious damage has been done to Californian growers.

“The industry was urged to come out of the shadows and into the light, and thousands of them did just that,” McGowan says. “And now each of them has been betrayed. The state has failed to keep their promise.”

The cannabis industry has faced some crazy curveballs in the legal era, but this is probably the most dangerous. You simply cannot have a cannabis industry without growers. And with endless legal licensing delays, many California marijuana farms will be sacked.



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