Will The Golden State Do Cannabis ‘The California Way?’

Jul 20, 2016

As legalization of marijuana has spread, so have fears of large corporate ownership of the emerging cannabis industry. The sponsors of legalization initiatives have sought to prevent “Big Marijuana” from getting monopoly control and driving out small growers.

Californians will likely be voting on a legalization ballot measure this fall,  efforts are afoot to make sure the legacy growers in the state’s fabled Emerald Triangle remain a core part of the market.

Credit John Rosman / OPB

The video features soothing images of kindly, salt-of-the earth folks lovingly tending their 12-foot-tall marijuana trees, which glisten in the sun and gently sway in the warm California breeze …
TCW CUT1: In California, there’s so much care and love that goes into what people do … Cannabis has been part of this state for generations … The embrace of the land and the embrace of the cannabis and the embrace of community. That’s really what the California way is all about …

The takeaway message?
That’s cannabis, the California Way …
This video is part of an ad campaign by Flow Kana, a Bay Area medical marijuana company. Flow Kana co-founder Adam Steinberg says the California Way campaign is more than just advertising for his company …
STEINBERG: As legalization is going to be on the ballot, it’s on the horizon we felt it was very important to point out that California is much different than all these other states that have legalized cannabis so far.

Steinberg notes the estimated 50-thousand growers in the state’s northern counties are the founders of a deeply-rooted cannabis culture. He says the campaign is a way to urge consumers to support those values.
STEINBERG: These small farmers, they were the ones that really built this industry. We would not be where we are today if it were not for these small farmers, so we believe they deserve to have a place in this industry for years to come, and not just a place, a leading voice.

In Steinberg’s vision, the organic, artisanal family growers, rather than large, corporate commercial producers, would be the model for California’s marijuana industry … Amanda Reiman (RYE-man) says the folks behind the upcoming legalization ballot measure largely share that vision …
REIMAN: We do have a huge number of small operators in the state. And we also have a culture in this state that really values small-batch, local, sustainable produced products in general.

Reiman is with the Drug Policy Alliance, one of several groups running the initiative campaign for what they’re calling the Adult Use of Marijuana Act.
Reiman says the initiative would give small, local companies a leg-up in competing against big, out-of-state outfits. For instance, small growers would be allowed to process and sell marijuana, a privilege denied larger companies. In fact, licenses for large cultivators wouldn’t even be available for five years after legalization takes effect.
REIMAN: This is an opportunity for smaller individuals to get their businesses up and running, their brands being recognized by people in California before the large players come in.

There’s also a five-year residency requirement, and licenses that would create a monopoly could be denied ... Other states that have legalized weed incorporated similar restrictions meant to protect the small pot farmer. In Washington, limits on the size of grow operations and a prohibition on out-of-state ownership has tended to keep the threat of Big Marijuana at bay. Lawmakers added similar residency requirements to Oregon’s legalization measure after it passed ... But at the request of an industry trade group, the legislature removed those limits. Amy Margolis , with the Oregon Cannabis Association, says the rules were keeping small businesses from accessing badly-needed capital.
MARGOLIS And if you limit people’s ability to negotiate a deal, you are, in the end, hurting those small farmers and small business members.

In fact, John Hudak  says such rules are likely to backfire.
HUDAK: A market functions in somewhat predictable ways, and if a business is not willing to adjust to market realities, it’s not going to be a successful business.

Hudak is a senior fellow at the Washington D-C-based Brookings Institution. He co-authored a recent paper that argues the fear of Big Marijuana taking over the new industry is overblown. He says trying to structure the market to protect small enterprises is the wrong approach.
HUDAK: Maybe what should happen is have a commitment to an information campaign that helps smaller farmers be agile enough to succeed in the market.

So far, at least, the California legalization effort doesn’t seem ready to buy that laissez-faire approach. But if marijuana legalization comes to a state that is essentially the world’s eight-largest economy, it may require all the innovation California is famous for to maintain a place for the Emerald Triangle’s mom-and-pop pot farmers.

Copyright 2016 JPR