In a last-minute decision that dashes the hopes of California’s remaining small-batch cannabis cultivators that a lifeline of revenue in the form of farmers markets might be in the offing after years of negotiation, Governor Newsom vetoed AB 1111 just before the Monday deadline. As disappointed as small cannabis cultivators will be with that decision, however, it is his written rationale for vetoing the bill that is adding fuel to the long-held suspicion that Governor Newsom has scant interest in supporting California’s legacy cannabis growers.
The bill would have required “the department to issue small producer event sales licenses that authorize the license holder to sell cannabis or cannabis products, containing cannabis cultivated by that licensee, at specified state temporary events licensed under the act,” per the Legislative Counsel’s Digest. But instead of signing it, Newsom sent the State Assembly a brief letter, dated Sunday, that explained his reasoning for inaction.
“I am returning Assembly Bill 1111 without my signature,” he wrote. “This bill would create a small producer event sales license, allowing cannabis producers to sell their products at state temporary events for up to 32 days per calendar year, with the requirement that all products sold must be cultivated by the licensee.
“While I appreciate the author’s intent to support small and equity cannabis cultivators,” he continued, “I am concerned that the bill’s broad eligibility, which extends to the vast majority of licensed cultivators, would undermine the existing retail licensing framework and place significant strain on the Department of Cannabis Control’s ability to regulate and enforce compliance.”
The letter’s final paragraph appears to leave room for a future compromise. “I remain open to considering a more flexible and narrowly focused version of this bill next year that can better respond to market dynamics, without imposing a rigid monitoring and compliance framework. Such policies must be considered within the broader context of efforts that are necessary to address the fundamental issues straining the legal cannabis market, such as competition from unregulated sources and improving access to regulated products. It is essential that we prioritize solutions that strengthen, rather than further burden, the existing regulated market.”
But as clear-cut as that explanation sounds, the response to it issued Tuesday by the Origins Council, a co-sponsor of the bill, expressed “profound disappointment” to the veto on behalf of the 800 small, independent cannabis businesses it represents, but was also quick to point out that Governor Newsom’s statement included “factual errors about the bill,” and that amended versions of AB 1111 agreed to by Origins Council had addressed the governor’s specific concerns.
“For over a year, we sought to work with the Department of Cannabis Control to address concerns raised regarding implementation and the scope of qualifying cultivators proposed in AB 1111,” explained Genine Coleman, Executive Director of Origins Council. “We accepted a number of amendments requested by the department to address these concerns. Confusingly, the Governor’s veto message contains factual errors about the bill, appearing to refer to the version of the bill in print prior to accepting the Department’s requested amendments nearly two months ago.”
Cannabis Business Executive followed up with some questions for the Origins Council. The responses below were provided by Ross Gordon, Policy Chair with Origins Council and Policy Director with Humboldt County Growers Alliance. CBE also sought comment from the DCC on the Origin Council public response and specific claims, but did not receive a reply by post time.
How will the veto impact small farmers this year?
AB 1111 wasn’t slated to be implemented until January 2026. But psychologically, right now, it’s a huge blow. The market for small farmers in California is an unmitigated disaster. Wholesale prices are dropping to historic lows and differentiating a craft product is the only path forward for most farmers to even start to recover their costs of production. Signing AB 1111 would have sent a signal to small farmers and legacy producing regions that the Governor understands the value of California’s legacy and craft farming community and wants to work towards solutions to support economic viability. Vetoing the bill sends the opposite message.
What is your response to the contention that the bill would “undermine the existing retail licensing framework and place significant strain on the Department of Cannabis Control’s ability to regulate and enforce compliance?”
The Governor is doing his own policy agenda a disservice by citing DCC resources as the reason for this veto. It’s a question of priorities, and the signal from the administration right now is that small farmers don’t rank. Last year, the administration’s priority was to integrate high-THC hemp products into the cannabis supply chain, a policy which would have severely undermined small cannabis cultivators and which according to the DCC’s own statements would “require significant time and resources” to implement. It didn’t pass, but next year the Governor has signaled that he wants to pursue the same policy. The implications of that prioritization, while vetoing policy designed to help small farmers, are crystal clear to small farmers right now.
As far as the idea that AB 1111 would undermine retailers, the Governor’s veto message is the first time we’d heard that concern from the administration. To us, it’s like claiming that farmer’s markets undermine grocery stores, or that craft breweries undermine liquor stores. A healthy market includes real options for producers and consumers.
The governor says he remains “open to considering a more flexible and narrowly focused version of this bill next year that can better respond to market dynamics, without imposing a rigid monitoring and compliance framework.” Any idea what that would look like? Is there room for compromise on a future version of the bill?
Last year, the DCC had requested amendments to the bill that would have decreased the scale of eligible cultivators by 90%, to the point where less than 10% of cultivators statewide would have qualified. There were a number of places where we’ve been able to reach compromises with the DCC, but watering the bill down to that degree was and is a non-starter for us. In over a year of discussions, we received no other indication from the Governor’s Office or DCC as to an alternative approach they would support. While we’re open to discussions on future legislation, any policy has to be a serious attempt to address conditions on the ground.
Was the governor heavily lobbied to veto AB 1111?
The bill had opposition from some retailers and from groups that generally oppose making cannabis more accessible, but unfortunately the strongest opposition appeared to be from the DCC itself.