California Allows Cannabis Cultivators to Reduce License Sizes

The California Department of Cannabis Control (DCC) just published some new guidelines for cannabis cultivators following the passage of SB-833. Among other things, California will let cannabis cultivators reduce their canopy size and thereby reduce license costs. This will be a huge benefit. I write a lot about the woes that California’s cannabis industry faces – often due to overly burdensome regulation – but in this case, I think the DCC’s guidelines will have a positive impact on certain cannabis cultivators in the Golden State.

California has about a zillion different types of licenses for cannabis cultivators. They are based on size (specialty cottage, specialty, small, medium, and the relatively new large) and type (indoor, outdoor, or mixed-light). And there are separate licenses for nurseries and processors (you might think processing is manufacturing, because that would make sense, but you’d be wrong!).

Having more than a dozen different types of licenses guaranteed problems. One of those problems is that the state did not create a mechanism to easily change between license size. With the opening of large licensing in 2023, the state made it possible to go “up” in size, but not down. This was a big problem for a lot of folks in the industry.

Here’s an example: imagine a cultivator got a medium indoor license (which allowed for between 10,001 and 22,000 square feet of canopy). At the time of licensure the cultivator had enough built-out capacity to have 7,500 square feet of canopy, but expected to build out another room a few months down the line. For whatever reason, the cultivator didn’t have the means to complete the buildout and was stuck paying the medium indoor fee of $77,905 as opposed to the small indoor fee of $35,410.

Until recently, the cultivator’s only option would be to continue to pay double the annual licensing fee, or to submit a completely new application for the smaller license. This could be a cumbersome and costly process, even if it would lead to a better cost savings over time.

According to DCC’s new guidelines, cannabis cultivators will be able to request a reduced-size cultivation license either upon renewal or if they make a one-time change to their expiration date outside the renewal process. While we don’t have much data on how many licensees this will affect, it will hopefully help affected cannabis cultivators and reduce regulatory red tape.

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