Exorbitant Costs Could Drive California’s Pot Growers Underground

Pot Growers

The high cost of complying with California’s new marijuana regulations is pushing the bulk of the state’s growers off the grid and could entrench an illegal underground supply chain.

One such small farmer, Lisa Austin of Willits, told The Californian that corporate takeovers and mono-cropping is breaking her heart and costing rural towns loss of income.

Small farmers built the industry, the strains, and the business,” she points out and advocates the cooping of farms and lowering entry-level costs into the mainstream industry as key elements for small cottage growers. Austin also calls for more incentives and an open-mind approach to their dilemma.

Licensing Compliance Regulations are too costly

A Salinas Valley consultant says it costs in the region of $750,000 annually to rent a greenhouse, cover taxes and implement steps necessary to comply with the new regulations.

These exorbitant overheads have translated into less than one percent of California’s 68,120 marijuana growers obtaining licenses to operate legally and poses a serious threat to the state’s expected tax windfall of more than one billion dollars.

A report published by the California Growers Association (CGA) warns that growers cannot meet the costs involved with compliance to the regulations, or are not allowed to continue their operations because of land-use policies imposed in the various counties.

Broad-based participation must be encouraged

Comparing these drawbacks to prohibition, the CGA says that illicit growing will be the outcome if broad-based participation in the marijuana farming industry isn’t encouraged. Goals in the current system will not be reached unless structural and fundamental changes are made to allow independent and small business owners to become compliant with the new licensing regulations, says the CGA.

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Marijuana is generally grown on small plots of land measuring about one-twentieth of an acre, but in Monterey County licenses are not being issued to these traditional small farming operations that are mostly situated in the remote areas of Big Sur and Carmel Valley.

High-tech companies are taking over

Instead, it’s the high-tech outsider companies, operating from greenhouses on the urban edge of Salinas, who are being awarded licenses to grow marijuana.

A Santa Cruz County manufacturing and cultivation business owner says it’s all about money. Kaiya Bercow says it has cost his business hundreds of thousands of dollars to meet compliance regulations.

Marijuana outlaws are a dying breed

Tim Blake, the founder of The Emerald Cup California cannabis competition, says losing some “old school” farmers is part and parcel of the regulatory process. Accusing some small farming operators of being long-term marijuana outlaws, Blake says they are a dying breed and that it is time to eradicate the illegal cannabis market.

He goes on to assert that some small-time growers have been operating for 30 years and that now is the time for these “outlaws” to move into the regulated market.

The financial problems being faced by small growers is that they have limited access to bank funding and are finding it difficult to obtain investors because of financial and legal risks.

This is compounded by a statement made by a farmer who says that he is looking to reinvent himself after a 20-year career growing cannabis. He is calling for a more lenient approach to small-time farmers by allowing them to undertake outdoor farms on their own properties and for the state to impose taxes that are more equitable to the small operators.

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Facts and figures

—-> Only 534 California marijuana growers, representing 0.78 percent of the state’s farming industry, were licensed to operate by February 7, 2018.

—-> Only 13 of the state’s 58 counties have approved an ordinance to regulate the cannabis industry. In addition, six counties are expected to approve an ordinance soon, while 14 counties are still investigating the matter and expect to make a final decision sometime this year.

—-> Commercial cannabis activity has been banned in 25 counties, with no indication that this decision will be re-evaluated in the future.

—-> A ban by Sonoma County on rural residential zones excludes 3,000 farmers from participating in the newly-legalized market.


A report by the University of California Agricultural Issues Centre says that by bringing the underground farming community into the regulated market there will be more “product” available, with more customers, and more money generated.

This sentiment is endorsed by the Monterey County Cannabis Industry’s Dave Potter who says that Monterey is focussing on bringing businesses into the legalized system.

The county has put together a team which focuses on agriculture, health, planning and public safety issues surrounding compliance regulations with the sole purpose of bringing small industry players into the legalized cannabis mainstream.

Potter points out that owners of small enterprises need help to join the mainstream of the legal cannabis industry.

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