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Temporary Local Permits Update

As you likely know, temporary permits for the 2018 cultivation season were finalized this week and it’s not great. Some of the provisions are purposefully restrictive. The language is unclear, contradictory, and messy. The ordinance, at its best, evidences a lack of familiarity with basic provisions of state law and regulations. However, this is the only pathway to the regulated market for farmers this season. Here’s a breakdown:

  • The former rule prohibiting commercial cultivation was stricken and replaced with about 50 new provisions relating to the short-term cultivation for legal sale in the regulated market until our permanent ordinance is enacted next year. They did not touch the sections relating to (1) parcel size, (2) plant count and square footage, (3) setbacks, and (4) zoning, except to delete RA and TPZ. Since those are the same as before and have been subject to much debate, I won’t go into them further here.
  • All existing Code violations must be corrected within 60 days. However, any violations related to commercial cultivation (like unpermitted greenhouses for cannabis cultivation) must be permitted before receiving a temp permit. No exceptions. If farmers are intending to enroll in this program, they may want to file that greenhouse permit like yesterday.
  • The temp permits will be for medical production only. ***The updated emergency regulations allow a medical-only cultivator to sell their flower to an adult-use manufacturer, distributor, or retailer, so the M-only designation is not as detrimental, thanks to the state agencies.
  • Sean Powers, the Director of the Nevada County’s Community Development Agency, or his “designee” will be in charge of issuing the permits. Farmers should expect the rules to be interpreted strictly and for violations to be enforced to the fullest, so please know this program has the power to ruin permitees who divert cannabis outside the program with fines, fees, preclusion from permits for 2 years, and discretionary reporting to the state and even the feds.
  • Self-distribution is allowed, but not mandated, so farmers can drive their cannabis (flower, leaf, pre-rolls) off site to a distribution center, but they will have to get a self-distribution license from the Bureau of Cannabis Control (in addition to a cultivation license from the CDFA) to do so. That may be a costly decision with another set of stringent state regulatory requirements, so please talk to your counsel about the implications of self-distribution this season.
  • Mixed light is allowed, so farmers who time their runs strategically may be able to have two light deprivation harvests in compliance with the program this season.
  • The County will not give an additional 6 or 12 plants for personal use this season (although cultivators will be able to have personal in addition to commercial next season). However, the state does not let cultivators divert from their commercial grow for personal use, even though the County says commercial growers can’t have a personal garden this season.  If a farmer plans on consuming the cannabis she or he produces, please talk to your counsel about how that can be done legally.
  • Cultivators must have a state license before the County will authorize them to conduct commercial cannabis activities, but they are also allowed to have a personal or collective garden of the exact same size until they obtain a state license.  It is a complicated concept, but in essence the requirement to obtain a state license prior to flipping the intent and purpose of a garden from personal/collective to commercial should not hold anything up.
  • In light of the state’s recent update to their emergency regulations, cultivators will need  (1) to submit a cultivation plan, and (2) to have already filed with the state water board, as well as a few other things, in order to even file for a temporary license. If a farmer intends to enroll in the County’s temporary permit program, they may want to start these now or risk delaying state license.
  • Folks with a prior marijuana felony best be getting their Prop 64 re-sentencing petition filed ASAP.

The program looks like it will generally go down like this:

  1. A cultivator can turn in an application on or around June 20th.
  2. There will be a brief review period and then she or he will be conditionally approved.
  3. The farmer will upload the County’s conditional approval into the state’s online permitting system. (My clients will have this ready to go well in advance of getting their hands on the conditional approval.)
  4. The farmer will then receive a temporary permit from the state after 10+ days.
  5. Once that state temp permit is issued, the cultivator is authorized to conduct commercial cannabis activity on site.
  6. Within 30 days, and hopefully after a state license is issued, Sean Powers’ office will come do an inspection to confirm compliance with Nevada County Code, and state law to some degree.
  7. Prior to his inspection, our office will have already performed internal (and confidential attorney-client privileged) inspections of our clients’ site to confirm strict compliance with state and local law, so our clients should not have any surprises at their inspection and can feel good about being in strict compliance.

After all that, cultivators will be good to go for 120 days, although they should expect either or both local and state regulatory bumps to arise immediately.  Our office calls it the “hamster wheel,” and permittees will be officially on it.[1]
Is This Program Right For You?
As attorneys, we’re required to advise our clients to enter the regulated market, but I personally believe that is the wiser choice even if I wasn’t required to. Farmers who enroll and strictly comply will be the first in the County to obtain coveted contracts with retailers or distributors, will be able to legally brand and trademark their products, and–most importantly–will likely develop the relationships with the County and state regulators that will put them in the front of the line for expansion to 10,000 square foot of outdoor, mixed-light, or possibly indoor next year.

Remember Conditional Use Permits (“CUP”) can take 6 months. While farmers who aren’t in the front of the line may be able to apply early next year, but they won’t be able to commence their commercial activities until BOTH the CUP and the state annual license are granted some 6 months later. That could easily take until the end of next summer, and those farmers will not be allowed to have current cultivation on site next year (because both the local and state temporary licenses will be unavailable to them by then). However, those who do enroll and comply in this program will likely be able to continue to engage in limited commercial cannabis activity during the pendency of their CUP next year.

I know this is a personal decision and I don’t pretend it is an easy one, but I strongly encourage folks to think about how not getting in this program will affect their 2019 season, as well as the overwhelming protection from state and federal law enforcement that only strict compliance with the local law will afford.

In any event, my office will continue to work with the County to amend this frustrating temporary permit program, as well as the coming permanent ordinance. For example, it is important we get Res-Ag allotments back, as well as additional license types such as manufacturing and micro-businesses, among other issues.

We appreciate hearing from the community about how we can better help, so please feel free to reach out. We’re in this with you.

Much Respect, Heather Burke and Sarah Smale
#protectourfarmers

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