Governor Newsom Vetoes “Cannabis Famers Market” Bill, But Holds Out Hope for Home Growers

By Jeffrey C. O’Brien, Husch Blackwell LLP

California Governor Gavin Newsom recently vetoed a proposal from the Assembly which would have created a “small producer event sales license”, which would have allowed cannabis producers to sell their products at state temporary events for up to 32
days per calendar year, with the requirement that all products be cultivated by the licensee.

The proposal, contained in Assembly Bill 1111, would have paved the way for “cannabis farmers markets”, long sought by home growers as a means of selling their homegrown cannabis direct to the public.

In vetoing AB 1111, Governor Newsom wrote that:

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.

In vetoing the measure, the Governor did not, however, foreclose the idea of signing a narrower bill in the future:

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.

The issue of what home growers of cannabis should be legally allowed to do with their plants is an ongoing debate, one that encompasses issues of the states’ ability to regulate and control the quality of products, as well as fostering the health of the
broader retail market. Thirteen states legally permit cannabis home growing. However, the legal permissions extend only to growing for personal consumption or, in some cases, giving away the products from home grown plants to others for no remuneration. At present, no state legally permits the direct sale of homegrown cannabis to the public without a license, although Minnesota, the most recent state to legalize adult use cannabis and which is yet finalizing its proposed rules and licensing process, has a provision in its state constitution which states that “[a]ny person may sell or peddle the products of the farm or garden occupied and cultivated by him without obtaining a license therefor”. This provision was cited in a 1998 Minnesota Court of Appeals case, State v. Wright, as the basis to allow a home grower to grow and sell their homegrown cannabis without a license, but given the possession and sale of cannabis was then illegal under Minnesota law, the Court never reached the issue of the constitutional provision.

It seems unlikely that any state would allow for the legal sale of cannabis by anyone without a license, as the licensing process gives the state the opportunity to set standards for cultivation, testing, advertising and other issues. Further, given that some
marijuana companies and trade groups are currently pushing Congress to close a loophole that allows the production and sale of intoxicating substances derived from legal hemp, it would be reasonable to assume that any attempt(s) at the state level to legally permit unlicensed sales of homegrown cannabis would face even greater opposition from those same groups.

If the cannabis farmers market concept has a future, AB 1111 and Governor Newsom’s comments upon vetoing the bill provides the likely framework; i.e., a license requirement, sales being permitted at state-run events only, and a “rigid monitoring and
compliance framework.” The latter requirement suggests that some level of testing would have to take place so as to avoid causing harm to consumers, and likely poses the greatest obstacle to the farmers market concept garnering government approval.

Nonetheless, that the concept advanced through the Assembly and wound up on the Governor’s desk will be cited by some in the homegrown cannabis market as a victory in and of itself.