March 2017

The Tortoise, the Hare, and the Ostrich: Legal Compliance in the 2017 Growing Season

I used to joke that many farmers act like ostriches by burying their heads in the sand when it comes to staying on top of the sweeping new laws relating to cannabis cultivation.  That approach is understandable in light of the volume and complexity of the new laws, but I recently realized the age-old story of “the tortoise and the hare” may provide significant insight for those trying to find a path forward, particularly here in Nevada County. That story taught us—as we all remember— that slow and steady wins the race.   This principle is applicable to growers in Nevada County’s current cannabis realm for three primary reasons:

1. Protect What You’ve Built in the Industry Thus Far.

Before thinking about the future, farmers should start by protecting what they’ve built so far.  For most, this means perfecting their legal compliance now, as one’s compliance with state law matters this season more than ever, especially in the ban counties such as Nevada County (yes, we are still under a ban).  It is critical to protect yourself from arrest this season, and from felony arrest in particular, as we are expecting the Sheriff’s Office to mount an aggressive anti-cultivation campaign. The County will get $100 per plant out of compliance, per day, which adds a unique financial incentive not previously in play.  Moreover, thanks to our “interim” ordinance, law enforcement can “summarily abate” (i.e. slash-and-burn) without a hearing wherever there is any violation of state law! Thus, even a misdemeanor violation of Prop 215 and/or the Collective/Cooperative rules could possibly get you immediately chopped, fined $100 per plant, perhaps arrested, and having to “lawyer up” for a criminal case.  Talk about insult to injury!

Additionally, although Prop. 64 (aka “AUMA”) downgraded illegal cultivation to a misdemeanor in most situations, it is still a felony where the plants are grown in a way that harms the environment.  Law enforcement will likely interpret the environmental crimes broadly, so unpermitted clear-cutting in an area close to the watersheds or irresponsible use of pesticides might get you arrested for harming the environment. Since you can be denied a state license under MCRSA for a felony conviction based on purposeful injury to our Mother Earth, you should not half-ass your legal or environmental compliance this year.

Finally, as Congress defunded the DEA and fed DOJ from investigating and prosecuting conduct that is in “strict compliance” with California’s medical cannabis laws, a half-assed informal Collective or a defunct Not-for-Profit Mutual Benefit Corporation [“MBC”] is probably not enough to protect you from the Feds if they come in. (P.S., #fdt.)

While our County’s ordinance status is imperfect, I am choosing to be grateful for this momentarily lull after a barrage of sweeping changes over the past 2 years, both locally and state-wide. Instead of acting like the braggadocios hare (who has a popular Instagram page, so he must be legal, right?) or the purposely ignorant ostrich, I am encouraging my clients to follow the wise tortoise’s lead and take this precious time to perfect their legal compliance, particularly as we are only beginning to methodically digest the deluge of new laws.  I strongly advocate a “safety first” approach, focusing on protecting what you built in this industry thus far as we inch towards the future with wisdom.

This simply is not the year to risk everything because we’re ticked off the County did not give us grow permits after Measure W. Complaining is self-defeating. Get over it, and bring your legal status into line while there is time to do so thoughtfully.

2. Prepare for the Future, But Do So Wisely.

You can be proactive during this short respite by taking small but significant steps to prepare for permitting, if and when it is available.  Should Nevada County allow you a mere few days to turn in your permit (recall what happened in Mendocino County), you may regret burying your head in your expensive pile of fancy dirt. There is much to do, now.

Firstly, we can look to the cultivation ordinances in Calaveras, Mendocino, and Humboldt, make educated guesses about the requirements of a future permitting ordinance here, and get working on it.

Secondly, as we move from collectives/cooperatives to small businesses, there are a LOT of corporate and tax rules that now may apply.  You could, for instance, get answers to the following questions now, instead of making critical decisions under a stressful timeframe:

  • Should you start a MBC? (Hint: beware of anyone selling you a MBC without assessing the cons as well as the pros.)
  • Was your MBC created in haste to get you “priority,” but you don’t really use it or have any idea what to do with it? How do you breathe life into an existing non-profit corporation?
  • Does your defunct MBC get you “priority” under MCRSA? (Hint: no.) If not, what does?
  • Does an MBC and a popular Instagram page equate to legal compliance?  (Hint: yikes!)
  • If you have a MBC, do you know if you will need to dissolve it or whether it can be morphed into a for-profit entity in the near future (should AB 64 pass or you get state licensing)? Should your bylaws be updated now, before you bind yourself to a non-transferable permit?
  • What Water Board tier are you? What can be done today to prepare if you may a higher tier? Does compliance with the Water Board BMPs even matter now, before you can submit a Notice of Intent?
  • Have you met with a CPA and started thinking about the process of tax compliance, even if you’re not ready to commit to paying taxes just yet? Is your CPA subject to the attorney-client privilege, or are you telling your most critical secrets to someone who is not bound by statutory confidentiality?

While the questions can go on ad infinitum, a knowledgeable lawyer can give you a fairly good overview of these issues so you that can take your first step at developing an Action Plan.  Don’t wait to make a game plan until the game is on.  While we have precious time to prepare and plan, prepare and plan for Goddess sake!

3. Intent Matters. A Lot.

An intention to operate lawfully actually has cognizable significance in the legal realm. I find that developing an intent to be lawful is often matter of self-perception, as cops and prosecutors told growers they were illegal for decades, even when the growers were trying to do it right. This unfortunate self-perception of illegitimacy is a result of that conditioning, and the time has come to stop playing into their narrative and to create your own story about your intention and understanding of your own legitimacy.

No, you still cannot talk to law enforcement about your new self-realization, but it is a hugely significant step forward if the only change you make this season is to alter your intention surrounding the lawfulness of your canna-business.  Like everything else in life, intent matters.


In closing, I note that the work of the tortoise is undoubtedly tedious and perhaps lacking in glamour, but it is methodical and wise. You will be better prepared than the ostrich who refuses to look up from his pile of dirt, and you will likely outlast the rabbit, who gained a reputation for folly.  As we alter our perception of our County’s currently undesirable status from an affront to a respite, we can change our perception of ourselves along the way, and create our own story.  Then we trod on slowly, but wisely, to the finish line.

#strongertogether #protectourfarmers #cali4life #setmypeoplefree ~hb

My musical meditation for this post is a live version of Bad Brains, The Meek Shall Inherit the Earth. You’re welcome.