Emergency Regulations for Cultivation License Fallowing Proposed
By Lauren Mendelsohn
On February 5, 2024, the California Department of Cannabis Control (“DCC”) filed emergency regulations regarding cultivation license fallowing with the Office of Administrative Law. Comments are due by Monday, February 12.
The emergency regulations were prompted by the passage of SB833 in 2023 (now codified in Business & Professions Code §26061.5), which requires the DCC to allow cultivation licensees to make changes to their license at the time of renewal, including changing the size of a cultivation license, placing a cultivation license in limited operation status, and making a one-time change to cultivation license’s renewal date.
You can view the text of the proposed regulations and supporting documentation below.
The most anticipated provision has to do with “Limited Operations Status,” otherwise known as fallowing. Cultivation licenses that are placed in Limited Operations Status would only have to pay 20% of the annual license fee, but would be limited to the following activities:
- Engaging in the drying, curing, grading, trimming, packaging, and sale of cannabis harvested before the date the license was placed in Limited Operations Status; and
- Possessing and maintaining seeds and immature plants used solely for propagation to preserve the genetic lineage of the cultivation licensee’s cannabis plants.
Notably, the proposed emergency regulations would not allow Nursery or Processor licenses to qualify for limited operation status (i.e. fallowing). Their rationale for doing so is questionable:
“Proposed subsection (f) clarifies that the section does not apply to certain licenses, including nursery licenses, processor licenses, and licenses that are changed to a Reduced-Size License pursuant to section 15020.2. The Department determined it was necessary to clarify that nursery and processor licenses do not qualify for Limited Operations Status under this section because the application of a Limited Operations
Status to such licenses would have no effect on licensed activities; these licenses are already limited to activities allowable under Limited Operations Status…”(Finding of Emergency, page 6.)
However, a nursery simply being able to maintain its genetics versus actually being able to engage in seed and immature plant sales to other licensees are quite different. Similarly, a processor only being able to process and sell cannabis from before a certain date is not the same as allowing a processor to continue processing and selling cannabis for another year. Thus, denying these types of licensees the ability to fallow their license and pay only 20% of the annual license fee does not seem rational or fair. Furthermore, the underlying statute is not limited to certain types of cultivation licenses. We intend to submit a comment regarding this.
This is a developing story — stay tuned for more updates on license fallowing.
This information is provided as a public educational service, and is not intended nor should be construed as legal advice. For more information about cannabis laws and regulations in California, including how to challenge proposed or adopted regulations, contact the Law Offices of Omar Figueroa at 707-829-0215 or info@omarfigueroa.com to schedule a confidential legal consultation.