April 30, 2019

Over 600 Annual or Provisional Cultivation Permits Issued by State


As of the beginning of this month, licensed cannabis cultivators with water rights are enjoined from diverting surface water for the irrigation of their crops. According to the California Water Resources Control Board (WRCB), “The Cannabis Policy requires cannabis cultivators to forbear (or cease) from diverting surface water during the dry season, which starts April 1 and ends October 31 of each calendar year. This means that water must be diverted during the wet season and stored for use during the dry season. Water is required to be stored off-stream.”

With the advent of the dry season, as defined by the WRCB, cannabis farmers that have not completed a Cannabis Small Irrigation Use Registration (SIUR) that allows them to divert and store surface water will have to turn to other sources of water for irrigation if they are to remain compliant with the Water Board’s Cannabis Cultivation Policy. This could mean extra expenses for growers that do not have an authorized water source or storage on their property, particularly once crops are planted outdoors in the summer and plants grow to sizes that require larger amounts of irrigation.

In Monterey County, the Weekly reports that the amount of canopy licensed in the jurisdiction roughly tripled compared to a year ago. According to the Weekly’s report, county officials stated recently that licensed canopy area in Monterey increased from about 800,000 to around 2.4 million square feet. How much of that canopy is active at the moment was not stated.

The report attributes the increase to a decision made last year by the Monterey County Board of Supervisors to lower the municipal cultivation tax from $15 per square foot to $5 per square foot on greenhouse operations and $8 per square foot on indoor facilities, which may have motivated existing, but unlicensed, growers to enter the regulated market.

As implied above, only indoor and greenhouse cultivation are currently permitted in Monterey County. However, the Weekly’s report notes that an outdoor cultivation pilot program is to be up for consideration by the county’s Board of Supervisors.

Finally, a review of the California Department of Food and Agriculture’s (CDFA’s) weekly cannabis cultivation licensing information shows that, as of April 5th, about 620 annual or provisional cultivation permits had been issued by the state, up by around 180 from the previous report, which was published on March 29th. The rate at which such permits are being given out is increasing, as only about 120 were issued between March 22nd and 29th.

Also, as of April 5th, almost 1,350 temporary cultivation licenses were listed as “active” by CDFA, while 3,674 were designated as “about to expire,” meaning that they will no longer be valid within 30 days of the issuance of the report. The number of licenses listed as about to expire increased from 3,514 as of March 29th.

Finally, CDFA’s cultivation licensing information from April 5th also showed that nearly 400 temporary cultivation licenses ceased being active between March 29th and April 5th. A request for clarification from CDFA as to whether the almost 400 new inactive temporary licenses listed as of April 5th encompass the 180 new annual and provisional licenses issued in the same span was not returned prior to our publication deadline. We will provide updates on this topic in future reports if pertinent information is forthcoming.

In any case, it appears that, despite the uptick in the pace at which annual and provisional cultivation licenses are being given out by CDFA, the rate at which temporary licenses are expiring is greater at the moment. Whether enough licensed growers will be excluded from the commercial market to impact available supply and statewide wholesale price assessments remains to be seen.