California’s Cannabis Regulations for Cultivators

We turn now to the businesses who plant, grow, harvest, dry, cure, and trim the pot.

Your regulations come from the Department of Food and Agriculture, but they resemble those of the Bureau of Cannabis Control, so a lot of the same or similar rules apply. You must show and tell a lot about yourself to get a license in the first place. You must abide by environmental laws and regulations. You must tag and report your inventory in the track-and-trace system. You must issue proper invoices and receipts for each sale or transfer. You must keep books and records for at least seven years, and you must report material events within hours or days. You must pay an annual fee that runs from $1,205 for a tiny outdoor grow to $77,905 for a large indoor grow. And you’re subject to audit, inspection, and investigation at will.

Cultivators have their own rules too, of course. You can’t move any pot off your premises, for example; all transfers must be done by a distributor. You must submit a cultivation plan that shows how you will manage things like space, waste, water, lighting, and pesticides. Your weighing devices must be tested, approved, and registered per code. If you’re an indoor grow, you must let your local fire department know. Starting in 2022, you must report your total electricity from each power source as well as your greenhouse gas emissions. And starting in 2023, you may be subject to certain renewable-energy standards.

For enforcement, the department can issue a notice of violation and assess fines of up to $5,000 depending on whether a violation is minor, moderate, or severe. A minor violation is one that’s not likely to adversely affect public safety or environmental health. A moderate violation, on the other hand, is likely to do so, or it can be a second minor violation in two years if the last one led to a fine. A serious violation is one that risks significant public or environmental harm or repeats a moderate violation within two years if the last one led to a fine. All serious violations expose you to license suspension or revocation as well.

You have thirty days from the day you receive the notice to request an informal hearing. Then the department will schedule the hearing within 45 days and decide the case on its own. You can appeal its decision to the Cannabis Control Appeals Panel or, perhaps, the superior court.

One exception is that if you don’t keep good books and records, you may be subject to fines as high as $30,000 per violation depending on whether it’s minor, moderate, or severe. Here, a minor violation is one that’s not likely to undermine an audit of your records. A moderate violation, on the other hand, is likely to do that, or it can be a second minor one in two years. A serious violation is either a moderate one that you did knowingly or purposely to impede an audit or examination or a second moderate one in two years. All serious violations expose you to suspension or revocation as well.

Beyond the fines, the department can move to revoke your license, suspend it, put you on probation, or put an administrative hold on your product. Generally, to revoke you, suspend you, or deny you renewal, it must file a formal case against you in the administrative courts. There, you’re entitled to a hearing, discovery, and other rights. But if the department thinks you’re an immediate danger to public health, safety, or welfare, it can issue an emergency order to restrict your license or freeze your inventory before that process plays out. It may even do it without prior notice to you. Afterward, you have three business days to request an informal hearing, and the hearing takes place within five business days of your request. But you’re not entitled to discovery or cross-examination yet. The department will make a decision within five business days of the hearing, and it must file a formal case within ten days of that. If you lose there, you can appeal to the Cannabis Control Appeals Panel or sue in the superior court. Or, sometimes, you can bypass that process altogether and go straight to court.