Characteristics of farms applying for cannabis cultivation permits

Abstract

Cannabis producers in California can now participate in a regulated supply chain — but little is known, despite considerable speculation, about which types of producers are likely to seek legal status. Growers' decisions about joining the legal market are central to questions about how formalization will transform cannabis production in California, and in particular whether small farms, which were encouraged under Proposition 64, can remain part of the industry. We combine data on the location and characteristics of cannabis farms in 2012 and 2016 with applications for cultivation permits from 2018 to investigate farm characteristics associated with cannabis formalization in Humboldt County. We find strong evidence that the farms most likely to start the permit process are larger, existed in 2012 prior to the start of the “green rush” and expanded at greater rates between 2012 and 2016. The evidence is consistent with concerns that formalization of the cannabis industry may lead to industry consolidation, as has been the trend in California's agricultural and timber industries more broadly.

Keywords

• Cannabis
• Proposition 64
• laws and regulations
• Humboldt County