HCGA Membership Opposes an Emerald-Triangle Sun-Grown Cannabis Agriculture Commission

On Monday, April 1, 2019 the HCGA Policy Committee voted unanimously to oppose AB 858, “Emerald Triangle Sun-Grown Commission” authored by Assemblymember Levine. The decision to oppose the bill came after a month of deliberation and due diligence, and the reasons for opposition are listed below.


Efforts to understand the bill included a presentation from proponents of the bill, multiple robust discussions with HCGA membership analyzing the policy, significant outreach to stakeholders in the Emerald Triangle and across the state as well as consultation with other industry agricultural commissions to better understand how they function and their scope of work.


Shortly after the Policy Committee took a position on the bill, HCGA staff engaged with Assemblymember Levine’s office and voiced our members’ concerns and HCGA’s position. Assemblymember Levine heard the concerns of HCGA’s membership, and as of April 3, 2019, has removed the language that would develop an “Emerald Triangle Sun-Grown Commission” from AB 858.


HCGA applauds the author for the decision to remove the language concerning the commission, and look forward to engaging in future cannabis related policy with his office. In addition, we would like to thank our membership and policy committee for carefully analyzing AB 858 and its impact.


We look forward to further dialogue with all sectors of the cannabis industry in Humboldt, and the tri-county area as we move forward.


Sincerely,

HCGA Staff and Board of Directors


Timing

A regulated industry needs to mature before establishing or imposing additional mandates such as an agricultural commission. California’s regulated commercial cannabis industry recently launched on Jan. 1, 2018—the industry is still navigating and implementing many of the new regulatory mandates. Developing policies with far-reaching, mandatory and legally binding implications, such as a commission to promote cannabis marketing and production, ought to be considered by the regulated industry only after the industry has fully transitioned—not thrust upon a relatively small segment of an industry that is working toward annual licensure.


Lack of Community and Industry Support

HCGA shares concerns, along with many other stakeholder groups in the state. The Emerald-Triangle Sun-Grown Cannabis Agriculture Commission, as written in Feb. 20, 2019 version of AB 858, was being promoted without the support of many Humboldt County, Trinity and Mendocino Counties cannabis businesses. Forming an agricultural commission, and ultimately passage of a referendum by the industry, requires significant community consensus and coalition building through robust engagement with the participating community in advance of running active legislation.


HCGA believes that in building coalition with a diverse interest groups, such as the cannabis industry across a tri-county area, stakeholders need to come together to find common ground, identify issues and collectively work together to implement solutions. We suggest this type of coalition building needs to be facilitated by a neutral third-party with a high level of participation by all members impacted, especially when the outcome may mean mandatory and legally binding participation.


Over-Taxation

The Emerald-Triangle Sun-Grown Cannabis Agriculture Commission, as written in Feb. 20, 2019 version of AB 858 would have created self-imposed fees upon licensees who are under an already immense financial pressure. The cannabis farmers in the Emerald Triangle, and across the state, are currently struggling under the burden of the state’s hefty cultivation tax, licensing fees, regulatory fees, and the downstream impacts of the state excise tax. Under this bill the commission has the ability to levy multiple additional assessments on cultivators in the Emerald Triangle, thereby compounding the financial burden.


Commissions Require Resources to be Effective

A commission that proposes research, advocacy and marketing, must also have adequate staff and funding for enforcement of the commission’s endeavors. The assessment fees imposed upon the cultivators are set based on the costs of operating the commission and its programs. Our research shows the annual budget for typical agricultural commissions, including staff and programmatic work, ranges from $4 million to $12 million a year. There are an estimated 2,000 outdoor and Mixed-Light Tier 1 cultivators in the Emerald Triangle. Since the costs of the commission would be borne by the industry, we believe the assessments each year could average between $2,000 and $6,000 for each licensee (or by each license) to fulfill the scope of work this bill sought to move forward. HCGA and its membership believe by advancing the Emerald-Triangle Sun-Grown Cannabis Agriculture Commission, as written in Feb. 20, 2019 version of AB 858, would have financially strained the very farmers it sought to empower by adding onto an already staggering tax burden.


Segments Community by License Type

The Emerald-Triangle Sun-Grown Cannabis Agriculture Commission, as written in Feb. 20, 2019 version of AB 858, divided the producing community by license type. The bill defined “sun-grown cannabis” for purposes of the Emerald Triangle Sun-Grown Cannabis Commission to mean cannabis cultivated outdoors under a California-issued “Outdoor” or “Mixed-Light Tier 1” cannabis cultivation license. It pitted Outdoor and Mixed Light Tier 1 licensees against all other license types. Separating the plant, and how it is cultivated, from manufactured products and distribution fails to capture the full range and value of the Emerald Triangle “Sun-Grown” cannabis industry and its capacity for historic innovation and future economic growth.


Commodity vs. Value-added Products

Agricultural commissions are a system, usually designed for commodities goods such as rice, oranges, apples, and avocados. Assessments in such systems are based on a standardized commodity product, wherein one unit is interchangeable with another, and the commodity as a whole is marketed equally. A fundamental difficulty lies in that assessments based purely upon production volume, do not consider the difference in the qualitative value of the product produced. In AB 858 the term “commodity” is used in reference to “Sun-Grown Cannabis,” a single profile of the larger cannabis marketplace.


Due to unique environmental and geographic considerations of northwest California (the Emerald Triangle), large-scale industrial commodity-based cannabis production is not viable, nor is it of cultural interest to the membership of HCGA. We believe the best way for the Emerald Triangle cannabis industry to compete is through elevating value-added products. Similar to the Napa region, by emphasizing its history, reputation for high-quality production, and the individual brands of wines.


The focus of the Emerald-Triangle Sun-Grown Cannabis Agriculture Commission, as written in Feb. 20, 2019 version of AB 858, was to support commodity agriculture. Whereby, the individual brands are lost in a sea of generic interests, and the “voice of the industry” is funneled into a monolithic, mandatory channel of promotion and advocacy of a commodity.


Production Scale Differences Between Tri-Counties (Emerald Triangle)

Production scale differences between counties would have unfairly weighted the commission in favor of one county over the other. For example, Humboldt County over Mendocino or Trinity County. This could cause division and animosity among the tri-county farmers. Humboldt County has more licensed cultivators, and arguably produces more cannabis than Mendocino and Trinity Counties. Humboldt cultivators could impose the commission on Mendocino or Trinity County because it only needs 21% of license holders to vote in favor of the commission to be enacted. Large scale businesses and those businesses with multiple licenses would likely be able to cast more votes, and could further consolidate interests.


“Sun-Grown” Doesn’t Just Mean Emerald Triangle Farmers

The term “Sun-Grown” would have become legally defined and a protected term for all California cannabis, produced under the methodologies associated with outdoor and Mixed Light Tier 1 licenses per the language of the proposed commission, not just the Emerald Triangle’s product. This would allow other regions to appropriate the words “sun-grown” and broadly apply the term to all California outdoor and mixed-light 1 cannabis. This would have created an unfair situation where manufacturers, distributors and retailers would benefit from the marketing paid for by “Sun-Grown Emerald Triangle” cultivators, yet not have to contribute their dollars.


Research and Intellectual Property

The trade secrets, cultural knowledge and genetic resources of the Emerald Triangle warrant vigilance and an informed approach with respect to research engagement. Community Driven Research is both morally and effectively superior research methodology for researching cannabis in legacy producing regions. An Agricultural Commission seeks to hold the Intellectual Property of the commodity in common on a blanket scale. Emerald-Triangle Sun-Grown Cannabis Agriculture Commission as written in AB 858 would create a research contract with public universities with unknown IP implications. #End#





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