California Proposed Williamson Act Changes Could Expand Availability of Cannabis and Hemp Farmland

California legislators have so far proposed more than 40 new cannabis laws for the 2019 session, ranging from cannabis tax reductions to banking reforms to party buses. But one bill stands out as a potentially important change to cannabis and hemp cultivation throughout the state: SB-527 would add language to a California law known as the Williamson Act clarifying that cannabis and hemp cultivation count as “agricultural” or “compatible uses” under agricultural land conservation contracts made pursuant to the Williamson Act, thereby making cannabis and hemp cultivation presumptively permissible activities under such contracts.

The Williamson Act—officially known as the California Land Conservation Act of 1965—creates a framework by which a city or county can enter into a private contract with a landowner, whereby the local government agrees to provide a reduction in property taxes in exchange for the landowner agreeing to restrict development on and limit the use of his or her land to activities that are keeping or compatible with agricultural use of the land. In turn, the state historically would provide funding to the local government to make up for the resulting losses in property tax revenue, although those payments have ceased following the state’s budget fiasco in 2009. The law’s goal is to give local governments a streamlined tool for preserving agricultural land and open spaces.

While the Williamson Act currently does not specify what land uses qualify as “compatible” with agriculture, it gives local governments ample discretion in making that determination, and also provides some examples of development activities that presumptively qualify as agricultural-esque, such as “the erection, construction, alteration, or maintenance of gas, electric, water, communication, or agricultural laborer housing facilities.” Notwithstanding the passage of Prop. 64 in 2016 legalizing cannabis and establishing a seed-to-sale regulatory regime for commercial cannabis, Williamson Act contracts have in many localities remained a source of uncertainty and therefore an impediment on the proliferation of licensed cannabis cultivation. Relatedly, the existence of a Williamson Act contract has created a red flag for parties seeking to lease or purchase land for cannabis uses.

What SB-527 would essentially do is expand the enumerated examples of “compatible uses” to include “commercial cultivation of cannabis … or industrial hemp … either alone or in conjunction with other uses consistent with” the Williamson Act. What SB-527 would not do, however, is limit county and city governments’ ability to restrict or prohibit commercial cannabis and hemp; existing state cannabis laws preserve their ability to do so (although the extent of that authority when it comes to preventing cannabis delivery is currently up for debate), and of course local governments retain the ability to prohibit or regulate all commercial cannabis uses through zoning laws.

Rather, the net result of SB-527, if passed, is twofold: (1) it could increase the supply of potential cannabis and hemp farmland by removing uncertainty about use restrictions under existing and future lands encumbered by Williamson Act contracts; and (2) would force local governments to take an extra legislative step if they seek to prohibit cannabis or hemp uses on Williamson Act-enrolled lands, rather than simply relying on ambiguity in existing Williamson Act contracts.

The proposed changes to the Williamson Act could also be seen as a legislative clarification and codification of prior agency guidance: even prior to the passage of Prop. 64 in 2016, the California Department of Conservation—the agency charged with administering the Williamson Act at the state level—issued a statement that “nothing in the Williamson Act prohibits the growth of medical marijuana on land enrolled in the Williamson Act.” Indeed, SB-527 states that it is not actually changing existing law, but instead is merely declarative.

Interestingly, SB-527 does not differentiate between outdoor cultivation and indoor cultivation, so it is unclear whether construction of indoor or mixed light structures such as greenhouses would now qualify as agricultural “compatible uses” under the Williamson Act.

Time will tell whether SB-527 becomes law, but it does stand at least a fighting chance, having passed in committee 5-1 on the initial reading.