Chart: Handful of growers hold hundreds of cultivation licenses in California’s legal marijuana market

Large-scale cultivation operations are beginning to emerge in California’s newly legal marijuana industry, despite regulations meant to curtail their presence.

A Marijuana Business Daily analysis of the latest licensing data from the state shows that 20% of cultivation licenses are held by just 12 licensees – or 0.7% of licensed cultivation businesses in California.

The data reinforce the fear among many smaller growers in the state that large, well-capitalized and more efficient growers will eventually come to monopolize the cultivation landscape.

Though California will not issue licenses for large-scale cultivation operations until 2023, some businesses are acquiring dozens of licenses for small grow sites, which they use in a single cultivation area.

That ultimately allows big cultivators to amass hundreds of thousands – or even millions – of square feet of canopy space.

The practice – known as “stacking” – is the target of a lawsuit filed by the California Growers Association against the California Department of Food and Agriculture (CDFA), the state agency responsible for issuing cultivation licenses.

Currently, growers can hold one medium cultivation license that allows for up to 22,000 square feet of grow space plus an unlimited number of small cultivation licenses that each allows for up to 10,000 square feet of grow space.

The lawsuit alleges the original intent of Proposition 64 – the 2016 initiative voters approved legalizing adult-use cannabis – was to prioritize small- and medium-sized businesses by giving them five years to establish operations before the state began licensing large-scale cultivators.

But by allowing individuals or companies to hold an unlimited number of small cultivation licenses, the CDFA is effectively violating the initial five-year prohibition on large cultivations, according to the lawsuit.

Here’s a closer look at the situation:

  • As of June 8, 3,535 cultivation licenses had been issued to 1,607 unique license holders, meaning that the average licensee holds approximately two licenses apiece. The top 10 license holders in the state control 646 licenses – or an average of 65 each.
  • With 147 cultivation licenses – over 4% of all cultivation licenses issued in California – Organic Green Farms is the largest license holder in the state. Its licenses allow for nearly 1.5 million square feet of total canopy. By comparison, the average grower in the state is authorized for about 24,000 square feet of cultivation space.
  • Based on the current number of licenses issued, annual license and application fees for the average cultivation business in the state is just over $35,000. Annual license and application fees for the top 10 license holders in California is approximately $657,000; fees for Organic Green Farms’ 147 licenses is nearly $2 million.

Eli McVey can be reached at [email protected]

27 comments on “Chart: Handful of growers hold hundreds of cultivation licenses in California’s legal marijuana market
  1. Andre Tate on

    Well here we go…Just like in Colorado…The authorities don’t give a dam about the small growers…Give us that money…
    In 5 years only the VC/ Angel Fund White men will be in controlling the market

    Reply
  2. Erik on

    I really really hope this lawsuit goes through. The state is doing EXACTLY what they promised they WOULD NOT do. They are allowing a select few who are far more privileged than the rest of us to form a monopoly on the market

    Reply
    • d on

      Promises by the STATE (government)…REALLY NOW….past practices have shown that NO GOVERNMENT can be TRUSTED,,,,,surprise surprise….imo

      Reply
    • R on

      I don’t see monopolization as the problem. . .What I see as the problem is too many acres of cultivation driving the price down at the wholesale level. . . .Whether these farms are owned by one firm, or a bunch of smaller companies, the total output acreage is still what was planned at the state level.

      Interestingly enough, when we go to a dispensary today, the price for an 1/8 is still too high, even in the face of flower flooding the market.. . . .. Which tells you who is making the money. . . .Because it’s not the growers.

      The Cultivators are getting killed at the wholesale level and that low price is not being reflected at the retail counter. The Dispensary is getting a fat margin on flower. And part of that is because of the lack of dispensaries competing against each other due to cities and counties not allowing dispensaries in their jurisdiction. . . .Dispensaries are simply limited in numbers right now they can charge whatever they want.

      Reply
      • Stef on

        Couldn’t have said it better myself ? It’s so difficult for the small farmer, many of whom built the industry, to ease into the legal market. Between the high taxation by the state and counties, annual application & license fees, land use permit fees, conditional use permit fees, security, odor mitigation, attorney fees and planning consultant fees…it’s very difficult when you were once operating as a non profit. If you need a loan of some kind or you want to finance equipment such as greenhouses, they ask for bank statements even though people in this industry cannot bank like a normal business. Moral of the story is they have made it extremely difficult and most of these mega growers can’t grow to save their lives. Thanks for flooding the market with hay.

        Reply
      • T Bag on

        The CDFA is just too dumb to realize it that they are encouraging a black market.

        The people wanted something and they won it at the polls. Unfortunately, oversight was turned over to a corrupt state entity. This will become another LBAM fiasco.

        Reply
  3. John Phillips on

    Okay, this is a major issue!!! Currently in Mendocino County, the maximum square feet growers are allowed to cultivate is 22,000, period! Which consists of, one permit for 10,000 square feet of flowering canopy, and one nursery permit, intended for 22,000 square feet.
    Even if you get both permits, you can’t go over 22,000, and you’re stuck having to use 12,000 square feet as a nursery.
    That being said, Mendocino does not intend to match the state regulations. Mendocino farmers are limited to 10,000 square feet of flower canopy, and a maximum of two different permits per person.
    Also, a minimum of 10 acres is required to apply for the 22,000 square feet nursery-flower combination. Lots of wasted space there….

    Reply
    • Daniel on

      Couldn’t agree more that this is a major issue. We have to stop the monopoly before it starts. Thinking this lawsuit will be a big step in that direction.

      On a different note I’m looking for trim from licensed organic growers. Do you have any contacts in Mendocino?

      Reply
      • John Phillips on

        Unfortunately, I don’t know of any licensed Organic Farms with trim… although, I will probably come across a few here pretty soon.

        It’s kind of chaotic right now. The Emerald Triangle is still very much the Wild West!!

        Check out what happens when I, (a legal medical grower) calls 911 for assistance while I’m being robbed on 10-16-17

        https://youtu.be/B5fxEzQ8Dwg

        Spoiler alert: After providing my legal documentation, the Sheriff allowed the suspects to leave with practically my entire crop.

        Reply
  4. Matthew Chatham on

    Interesting read! Thank you Eli for writing this piece.

    For those interested in more information about this topic, I’ve been putting together a live dashboard of California cannabis licenses. Check it out here!

    https://ca-cannabis-licenses.herokuapp.com.

    It currently only includes the most basic of bar charts, but I have an interactive explorer in the works.

    Reply
  5. Hastings RH on

    Cali is a regulated oligopoly (aka a rigged system) which gives consumers the worst quality service price. The 99% gets screwed as usual..

    Reply
  6. Old timer on

    The authorities have strengthened the black and grey markets so they can continue their war on drugs and keep the prison industrial complex profitable. All this while collecting exorbitant fees and taxes from legal businesses.
    What ever happened to licenses for those who had been justice affected? All talk, little action.
    I wonder how many non refundable millions have been collected for license applications that were denied.
    And since when does a live Scan cost 900.00? I guess since the municipal crooks got involved.
    California legalization has been a miserable failure.

    Reply
    • SMH on

      Amen Old timer,, anyone who read the original 17 page AUMA, who understands the nature of bureaucracies, saw this clusterf*ck coming. (RIP Jeff Clark, and thanks for the heads-up on this disaster.)

      And yes, clearly deals were cut with the prison industrial complex, to me, just because of how many *new felonies* they created… Like I think it’s a 2 year felony for blowing goo without a license? Notice CA LEO got new fed and state funding to “battle” their self-created black market?

      Reply
  7. JB on

    So much bad information to be gathered from the Temp license database.

    At one point California City had nearly 200 temps on the database, now they only have a handful (I know that town personally having been a recent resident).

    Buellton (listed as the #1 City currently) has now decided to prohibited commercial cannabis so hundreds of Temp licenses down the drain.

    Monterey County put out a very strongly worded letter to it’s Temp license holders a couple weeks ago explaining that with hundreds of Temps out, only 2 (yes TWO) fully compliant and 8 partially compliant applications had been received.

    Santa Barbara County announced that only around 15% of their Temps were able to meet their new land use designations and would have to find new approved locations or lose out.

    Don’t confuse the easy to comply (and free) Temps with the hard to comply (and expensive) Annuals. Countless Temps were handed out before local decisions and land use designations were finalized.

    We won’t know how this actually shakes out for some time.

    JB

    Reply
  8. Morgan Glenn on

    Organize and pass a law banning stacking a rescind current licenses. Gotta fight. Power concedes nothing without demand.

    Reply
  9. Michelle on

    Just like usual. Instead of having many small farmers make a living they rig it so a select few already rich people get richer. The voters were clearly duped on this. I hope that lawsuit wins! Everyone support your small farmers!

    Reply
  10. Carol Driscoll on

    The State should fix the quantity in percent, say 60:40; that a grower will have to sell the produce to medical cannabis dispensaries for medical use and to the licensed businesses for recreational use, irrespective of whether a person holds a single license or more. That would help keeping the prices of medical marijuana at a lower level. Low priced medical cannabis would encourage people, including recreational stoners, to use medical cannabis as a non-traditional medicine and a larger number of patients would be in a position to benefit from the expert consultations of licensed cannabis specialists like Online Medical Card.

    Reply
    • JB on

      As far as the state is concerned, there is effectively no longer a distinction between medical and recreational cannabis until at the cash register (these are the new rules implemented a few weeks ago).

      Reply
    • D-Bo on

      Medical already receives a discount and the medical market is insanely small. A large portion of past “medical” users were really just adult rec users gaming the system. The current medical market is essentially just the 18-21 year old market and then a very small portion of the 21+ crowd. The demand isn’t there to justify a 60-40 split.

      Reply
  11. Shona Gochenaur on

    I have so much bitter Sweet I told you so as the proponent of MCLR V3, which protected collective and co op model and compassion programs, as a person targeted for being a truth teller and saying out loud that prop 64 was a trick similar to treaty’s with tribes and promises never kept, I really wish we had the funds to get a fair law support, but CIA Facebook Sean Parker and drug policy alliance did quite the corporate bullying job, they tried to push me out of my city hall targeted my low income patients advocates network, such dirty hands, and I am still trying to re build our community, seriously this is burning the village and clear cutting of the land I am so glad that they filed a lawsuit and many more should there’s anti Monopoly and anti trust laws and come January with the sunset of collective so many more will suffer

    Reply
    • PATRICK EDWARD MURPHY on

      I was told at the Cannabis congress only a C corp can deduct the cost of goods sold. That is how they will put all the collectives(Non-profits) out of business.

      Reply

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