Characteristics of farms applying for cannabis cultivation permits
Schwab, B., Wartenberg, A. & Butsic, V.
Are California’s cannabis regulations leading to industry consolidation and larger farms?
With legalization, cannabis producers in California can now participate in a regulated supply chain. Information about which growers seek legal status, and why, can help policy makers understand the impacts of legalization on cannabis production in California. Proposition 64, in particular, encouraged small farms to remain part of the industry. Has this policy had the intended effect? To answer, we analyze data on the location and characteristics of cannabis farms in 2012 and 2016 with applications for cultivation permits from 2018. With this data, we investigate farm characteristics associated with cannabis formalization in Humboldt County. We find strong evidence that the farms most likely to start the permit process are larger and existed in 2012, prior to the start of the “green rush”. These farms also expanded at greater rates between 2012 and 2016. This evidence supports concerns that regulation of the cannabis industry may lead to industry consolidation. To sustain small farms in the legal market, California needs stronger, targeted policy solutions.