Publication

Final Report to DCC – Transformation of Unregulated Cannabis Cultivation Under Proposition 64
2024
Polson, M., Laudati, A., Sayre, N.
An oversupply of cannabis and high regulatory costs results in an unlicensed market. Based on over 150 extended interviews with people involved with cannabis cultivation in three regions of California, this report documents and interprets the persistence and transformation of unlicensed cultivation since legalization.
Download Paper (pdf)
Summary

Researchers at the Berkeley Cannabis Research Center found that the unlicensed market continues to provide important livelihood opportunities for many Californians, including low-income, immigrant, and differently-abled people and people of color across urban and rural environments. Informal social norms and customs formed under prohibition have been disrupted and displaced by adversarial regulatory relationships and stringent market competition. The costs and complexity of licensure, compounded by dysfunctional and capricious local administration and enforcement, deter small-scale and legacy growers from entering the regulated sector.

 

For both licensed and unlicensed cultivators, excess supply and high regulatory costs strongly motivate cannabis sales outside of licensed channels, including out-of-state. The licensed market has come to depend on the unlicensed market to navigate the double squeeze of plummeting prices and high regulatory costs. During our research, many licensed and unlicensed cultivators sold their products below the cost of production, if they could sell at all. For an agricultural sector with limited or no access to credit, these losses were unsustainable, resulting in widespread attrition. With no stabilizing agricultural policy toward cannabis forthcoming, these trends will likely continue until the market does what the government has not, namely, calibrate cultivated areas to state consumer demand.

 

In this report, we first give a historical overview of the unlicensed market from its first prohibition in 1913 until 2021, just before the inauguration of this research. We then review our methodological approach, detail 33 findings, and present an interpretive discussion of these findings. Finally, we advance a number of recommendations that:

 

  • Reform Enforcement Approaches to an Altered Cultivation Sector;
  • Place Limits on Local Control;
  • Address Fallout from Wholesale Cannabis Price Crash on Affected Cultivators and Communities;
  • Widen Pathways to Licensure through Fair, Accessible Licensing and Permitting Systems; and
  • Create Consistent Agricultural Policy toward Cannabis to Stabilize Markets and Prices.