Marijuana Growers in California: After Proposition 64

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The state of California has a long history with marijuana, including both legal and illegal production. Let’s look at the history of legislation and the most recent proposition passed regarding the legalization of marijuana in California.

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California became the first state in the United States of American to legalize marijuana in any capacity. Proposition 215 was passed in 1996 and paved the way for the legislation that followed. This proposition allowed the use and sale of marijuana for medicinal purposes, allowing some growers to come out of the underground of illegal marijuana sales into a legal operation. In 2004, the Medical Marijuana Program Act (MMP), also known as Senate Bill 240 (SB240) was passed and allows each patient to possess a certain amount of dried marijuana, immature plants and mature plants.

The MMP also allowed collectives to form and grow more than 99 plants if they incorporated as a non-profit mutual benefit corporation. In October 2015, the Medical Cannabis Regulation and Safety Act (MCRSA) finally gave clear instructions on how a medical cannabis business could legally operate. In 2016, the Adult Use of Marijuana Act (AUMA or Proposition 64) legalized recreational marijuana use for those over 21 years of age in addition to the previous medical use. Finally, in 2017 the Medical and Adult Use of Cannabis Regulation and Safety Act (MAUCRSA) pulled both medicinal and recreational use marijuana into the same structure.

Underground recreational marijuana growing has been a huge industry in California for many years. As Proposition 215 came into law, a legal structure for marijuana production began to be available. It was still largely unregulated and had issues with maintaining legality in all areas of business, but it was a start. All additional legislation built upon the system put forth in Proposition 215.  

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The next big legislation regarding marijuana was the MAUCRSA

The MAUCRSA provided a definitive legal structure for both medical and recreational marijuana cultivation and distribution. With the legalization of recreational marijuana comes regulations and cost increases for the growers. While previously unregulated, due to recreational marijuana being illegal, growers had no fees to pay and were able to charge whatever costs the market would bear. Legalization with MMP added structure as well as some taxation. Finally, with full recreational legalization, for some underground marijuana farms, the additional costs of regulation have become prohibitive. There are also additional texting and taxes added to the process, making sale and distribution more difficult.  

Along with increasing costs that come with legislation, the legalization of recreational marijuana has caused profits to drop. Now that growers are being taxed on their products, having to pay licensing fees, and even potentially having the sale price regulated, growers are seeing a large reduction in profits. On the other hand, if a grower chooses not to become regulated, there can be tens of thousands of dollars in fines as well as criminal prosecution.

Most marijuana cultivation until recent times has been underground and illegal. Although now both medical and recreational marijuana is legal, the additional legislation placed on growers of recreational marijuana may make producing and selling recreational marijuana prohibitive, leaving medical marijuana as the more attractive business option.

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Growing medical marijuana under a collective is still allowable under Proposition 215 and maybe the better and more profitable choice for any previously underground marijuana cultivators that are not ready to embrace full recreational cultivation. Medical marijuana patients are also able to purchase products without all the taxes placed on recreational marijuana. Cultivating medical marijuana still provides a valuable service and maybe more profitable, even as legalization legislation is increasing.

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