While COVID-19 has left the economy in a state of uncertainty, The Los Angeles Times reported the demand for cannabis actually surged in the immediate wake of state closures, with some . Gov. Gavin Newsom deemed cannabis businesses essential, and sales rose again.

Some theorize the uptick in sales has to do with people largely being stuck at home with not much else to do. Mounting anxiety likely also plays a role.

Whatever the reason, if you’re considering buying a cannabis farm, know that location is key (the last thing you want is a site that won’t be practical or productive) but there are ways you can mitigate your risk.

It’s important to discuss the specifics of your situation with a California cannabis farm lawyer. These are a few general guidelines to consider:

• Know the local rules. California gives cities and counties the authority to draw up local ordinances that are more stringent than state laws. You need to know the zoning laws of the site you’re considering because some cities and counties won’t allow you to operate within a certain distance of schools or parks. You’ll want to know if you can incorporate vertical integration, whether you have to process the plants offsite and whether you’ll need to factor logistics and transportation costs into your business model. If the community in which you’re looking to set roots has a cap on how much cannabis can be grown in a specific region, it will be important to find out how many cannabis farms there are now and roughly how many are waiting to have their application processed. Assess too how close the site is to residents and other businesses, which could increase the chances that you might face some local friction.
• Have an attorney verify all representations by the seller. Many have good intentions, but they may not understand the all the laws that apply. It’s not uncommon to come across sites that advertisements indicating the property has been approved by local and state agencies for a commercial cannabis business – when in fact, it is not. That might not be a deal-breaker, but it could cost you extra time to make the required improvements (lighting, fencing, screening, etc.) and secure permitting before you can break ground.
• Educate yourself on the water regulations. You cannot presume that that water supply regulations will be a simple matter. Access to water is mission critical to cannabis farms, but it’s too often overlooked when site scouting. You need to consider not just the local ordinance but California regulatory rules, input from hydrologists and the local politics.
• Investigate the quality of available soil. Cannabis crops are meticulously tested for pesticides and other contaminants before they can be sold. Prospective cannabis farmers must protect their investment by ensuring there are no potential contaminants in the water or soil – and no threat of them from the overs spray of nearby farms. Addressing the problem after the fact can be very expensive.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Boom times for cannabis businesses as Californians, in a pandemic fog, isolate indoors, April 18, 2020, By Susanne Rust, The Los Angeles Times

Proposition 64 authorized state regulatory agencies to grant marijuana businesses temporary licenses for operation until the state could issue permanent licenses. Problem is, the state never got around to issuing those licenses because of bureaucracy.

Now, Democratic state Sen. Mike McGuire is sponsoring SB 67 that would rectify this and extend those temporary licenses to cannabis farmers so they wouldn’t suddenly be out of compliance. McGuire explained in a hearing on the bill that the intention is to protect cannabis farmers who did their best to comply with the law by applying for a state license just after the passage of Prop. 64.

The state’s marijuana law allowed for a 120-day temporary license with a potential 90-day extension. Temporary license holders struggling to comply with the California Environmental Quality Act can apply for a provisional license good for 12 months. The whole point of this provisional license was to give California cannabis farmers the opportunity to continue operating while they worked toward obtaining their full annual license.

Unfortunately, what happened was the state handed out very few provisional or annual licenses. Of nearly 7,000 applications submitted to the state’s Farm and Agriculture department, the grand total issued by the state was just… four. In all, only 52 annual licenses were submitted by all state agencies. The temporary licenses, meanwhile, are already beginning to expire. The temporary license holders no longer have the option of applying for an extension, as the deadline to do so under existing law was the last day of 2018.

As our Orange County cannabis farmer lawyers can explain, that meas all of these thousands of temporary license holders will once again be illegal – selling on the black market (starting this month!) – unless some drastic changes are made to state law. SB 67 would give a full 12-month extension to the previous deadline, making it Dec. 31, 2019.

As McGuire noted, without legal licenses in the state, we have no regulated, legal market – which is not the way we want to transition a multi-billion-dollar agricultural crop that has put thousands of Californians to work.

Some state Democrats are also proposing a reduction of taxes too to help ease the burden on licensing. Making it retroactive will be essential also. Our Orange County marijuana business lawyers are eager to see this measure pass – sooner than later. Dozens of industry groups are also on board supporting this bill, and thus far there have been no groups that have registered opposition. We’re already aware of several farmers have already been pushed out of the industry because their temporary license expired before the state ever got around to issuing them a provisional license.

Doing nothing is not an option, and many industry insiders agree will lead to market collapse – something not even those skittish on legal marijuana are eager to see happen.

The governor’s office has assured lawmakers state agencies are making license issuing a priority. Still without this bill to offer protection, the market may be in dire trouble. The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734. Additional Resources: California’s marijuana industry needs an intervention to avoid an ‘extinction event’, March 11, 2019, By Andrew Sheeler, Sacramento Bee More Blog Entries: Marijuana Product Liability Lawsuits May Pick Up in 2019, Jan. 15, 2019, Orange County Cannabis Farmer Attorney Blog