- My name is Hekia Bodwitch,
and I'm a Postdoctoral Researcher
with the UC Berkeley
Cannabis Research Center.
And today I'm gonna be talking about
Barriers to Compliance
in Cannabis Production.
I've worked on this project
with Michael Polson and Van Butsic.
In 2018, the State of California
legalized cannabis for recreational use.
The state, in doing so,
made farmers access to legal markets,
contingent on their adherence to a suite
of environmental practices
and reporting requirements.
To sell cannabis legally
in the State of California,
growers must refrain from
using nonorganic amendments,
must plant on certain angles slopes,
recently most track and
trace all their products
from clone to sale.
And in certain areas, if not located
or hooked up to municipal water sources,
farmers must report all their water use
in a diverting engaged forbearance period.
The goal of this multi-agency
environmental initiative
was to mitigate the effects
or perceived effects
of unregulated cultivation
on fragile ecosystems in
California's North Coast.
Northern California is home
to some of the best hope
from salmon run recovery,
and unlisted or illicit
cultivation practices
have been attributed to increase
use risks of eutrophication
or warming water temperatures,
and corresponding to algal blooms,
toxic to fish and humans.
California's licensing initiative
is also poised to set a new standard
for agricultural crop
production more broadly.
Agriculture is an industry
that has been historically
difficult to monitor
for environmental outcomes
due to the diffuse
nature of farm locations,
and nonpoint source
aspect of a farm runoff.
Governments have also faced challenges
in regulating agriculture
for environmental outcomes
due to the political effectiveness
of industry organizations.
The outcomes of this
legalization initiative, however,
have been called into question
by what perceives to be or appears to be
high rates of non-compliance
throughout the state.
While the exact number of growers
in the State of California
is difficult to determine
the clandestine nature
of cultivation practices
that many farmers assume.
Industry estimates that 50,000 growers
were cultivating the State
of California around 2017,
coupled with ideas that this crop
has been the state's most lucrative
for at least several years now.
The 50,000 growers estimated
as cultivating in the state
is orders of magnitude lower
than the several thousand
who've applied for permits.
The proliferation of growers
throughout the State of California
has been tied to the
legalization of cannabis
for medical use starting in 1996.
In 1996, the State of
California authorized counties
to determine the maximum number of plants
individuals could cultivate
if they had a medical card
provided it did not exceed a Cap of '99.
Counties where back to the landers
had begun cultivating in the early '60s
permitted individuals to grow
up to the state's maximum.
The contributions these farmers
made to rural communities
have been identified as
significant or at least notable
in part due to the way in which cannabis
has been traded with cash
still listed as a schedule one substance
under federal regulations.
Cannabis farmers are not able
to bank income from cannabis.
Cash is more likely
than other forms of income
to be reinvested locally.
The majority of these farms
likely to avoid detection
have been identified as small scale
as GIS images,
at least from GIS images.
Legalization, however,
may be poised to change
this characterization of small farms
contributing to rural economies.
Formalization initiatives
and other contexts
where governments have legalized
or authorized previously
informal practices of exchange
have been identified as
corresponding to trends
towards industry consolidation
as governments legalized
larger firms sizes
and increased market competition
for smaller operations.
Understanding the extent
to which non-compliance
in cannabis agriculture
in California reflects
structural forms of exclusion
seen under other industries
or perhaps is a reflection
of grower's desire
to remain illicit.
Rests in part on an understanding
of farmers motivations for compliance.
Studies of compliance in other sectors
agricultural in particular
have identified social normative
and calculated motivations
for why farmers choose to comply
with environmental regulations or not.
Calculated motivations include
those related to threat
of enforcement or cost.
Social motivations can include
those related to how an
individual thinks others think
he or she ought to behave.
And normative motivations include
those related to whether
or not an individual thinks
the regulation is just or effective.
The effect of motivations on
an individual's decision-making
is influenced in part by the extent
to which an individual is able to comply.
An ability is often
considered to be a reflection
of the total transaction costs
an individual must assume
to participate in a particular
governing initiative.
Transaction costs can include
factors that are not easily
registered as financial,
such as the costs associated
with increased paperwork
to participate in a new
regulatory initiative,
or the costs assumed when
an individual decides
to engage at a regulatory practice
that goes against the
interests of their neighbors
who might otherwise have been
an important form of support.
Access to information can
increase transaction costs
or affect transaction costs,
and not surprisingly,
administrative complexity
has been shown to exhibit
inverse correlations to compliance.
Understanding the motivations
that influence decision-making
can help identify the
types of interventions
that will most likely
address non-compliance
in an equitable way.
Traditionally, regulation has looked
at influencing individuals
calculated motivations
for decision-making, but more recently,
governments and development organizations
have encouraged participatory forms
of regulatory approaches
to environmental governance
in particular in part...
In reflection of the complexities
adhering to, and the
disincentives industries face
to adhere to environmental standards.
The idea of regulatory capture
has been hypothesized as
being less likely to occur
with a diverse range of
industry representatives.
In this project, we sought to understand
how industry representatives,
state officials, researchers,
and environmental organizations
could work together
to support equitable legal industry.
And to do so, we asked
why it is that farmers
are applying for permits or not.
In particular, we sought to understand
the characteristics of
those who are complying,
what motivates farmers to comply,
and whether there are barriers
that can be removed to make entrance
to the legal market easier.
Our study site included
the State of California
within which considerable
differentiation exists
with regard to how farmers
experience the licensing initiative.
As with medical regulations,
the state left it up to
counties to decide how
they would implement the
state's licensing process,
counties were available and have employed
of diverse range of approaches to doing so
with some implementing
bans, permanent or temporary
on areas in which cultivation
was previously permitted.
In developing the survey,
we asked characteristics of farm sites
related to whether or not they
were in an area with a ban
as well as characteristics of
production-related to amount
and demographic aspects of farmers
and as well as farmers for
environmental practices,
we asked about motivational factors
related to social normative
and calculated motivations.
And we explored barriers
by asking questions about
how farmers have experienced
the regulatory process.
We received IRB, Institutional
Review Board approval
from UC Berkeley for humans
research with human subjects.
We piloted the survey with
cultivators throughout the state,
both compliant and non-compliant.
And the survey went online from
June through August of 2019.
We helped farmers, or we worked
with farmer organizations
to help distribute the survey.
And we also distributed the
survey to email addresses
of those who've engaged
in the licensing process
with the state, which we
obtained through PRA requests
from the various state agencies
who are part of the licensing process.
We also distributed hard copies
of the survey to grow stores
and made hard copies
available to those who wished.
We analyzed our results
using statistical methods
to identify trends between compliance
and particular survey responses.
And we looked at the data that
was qualitative in nature,
which was written in data inductively
by inductively coding
for trends in that data.
Over 350 farmers completed the full survey
making it the largest
survey of cannabis farmers
in California to date.
Respondents were married, white, educated,
male, and middle-aged.
The majority of respondents
had been growing cannabis
for at least 10 years.
Humboldt, Mendocino, Trinity, and Nevada
were the most commonly reported
zip codes in our sample.
Approximately one-third of
respondents received permits.
One-third were pending approval.
And one-third didn't apply.
The majority of farmers who
did not apply for permits
produce less than 100 pounds in 2018.
Outdoor cultivation was most
common production method
across all permit statuses.
This idea that
those who are not applying for permits
are producing less
and cultivating outdoors
and in greenhouses,
has been reinforced by
research that looks at
farmed sites on Google Earth
against permit addresses.
So analysis of randomly selected
cannabis growing regions
in Humboldt County found that
the number of permitted farms
was far less than the
number of unpermitted farms.
But the percentage of area
of permanent on permitted were similar.
So this is for greenhouses.
We see that 20% of
greenhouses were permitted,
but 43% of the area
the greenhouses in the region
covered were permitted.
Again with outdoor, we
saw about 20% permitted,
but that represented
33% of the total area.
In our survey sample, we found
that all farmers reported
engaging in environmental practices.
There was not whether someone responded
in a particular way to
questions about if they engaged
in particular environmental
practices or not,
did not necessarily
influence the likelihood
that they would respond to whether or not
they complied in a particular way.
Farmers across all permanent statuses
reported that they
planted away from streams,
just an aspect of the
regulatory initiative.
Over 40% of those who
did not apply, however,
are not zoned for cannabis.
So local zoning had a strong effect
on whether or not someone
was likely to also be someone
who applied for a permit.
A majority of farmers who
did not apply for permits
reported 50% or more of their income
is coming from non-cannabis sources.
Another way to think about this is that
the farmers who are not applying
are using cannabis as a way to support
income coming in from elsewhere.
As a result, non-compliance
and the way in which folks
are able to participate
in markets going forward
may have an effect on rural
communities and rural economies.
We see this sentiment echoed in a comment
that Humboldt County grower gave
who explained due to
Humboldt's abatement policies,
people who are already barely getting by
are going to have to sell their land
or find another way to
support their remote living,
which is impossible.
I know plenty of families
who are unable to provide
enough food for their families.
They're not able to keep up
with clothing their growing children.
As a mother, it is hard to see
so many kids who are hungry,
wearing the same clothes day after day,
and hoping to find a way
to get to the nearest store
because the car registration is expired.
We are suffering in the hills.
Why folks aren't complying,
costs was a primary barrier.
When we asked those who have
not applied for permits,
why they didn't apply,
cost the main factor.
Other factors were the idea
that the unregulated market
had more opportunities
than regulated market.
And there were few County
incentives to comply.
Similarly, we asked, or we looked at
the way in which folks responded
to open-ended questions
about whether or not they complied,
cost was a primary factor.
What these costs were when we
look at those who did comply,
appear to be primarily or the
majority or weighed heavier
with regards to cost to
come into compliance,
as opposed to costs associated
with permits and fees.
And cost to come into compliance,
include those associated with
getting your land up to code.
So licensing your roads,
getting your culverts in intact,
and in formerly forested landscapes
the roads and the culverts that
you might be reconstructing
necessarily to get your
permit to grow cannabis
could have been put in place
by forestry organizations prior to you.
As this grower in
Mendocino County explains,
we have a large ranch
that's over 1000 acres
and 50,000 square feet
of cultivation space.
The Lake Stream Alteration Agreement
that we had to submit
required our consultants
to review the entire
property for violations.
Our final cost to mediate culverts
that have nothing to do with cannabis
are upwards of $50,000, possibly $100,000.
These culverts have been
in place for over 40 years.
Currently, they want us to
do a dam stability analysis.
We've had two consultants up,
and no one wants to take on the project
because the dam has been intact
for 40 years and looks fine.
We aren't using it for cultivation.
We are still in the process,
and we'll resolve these issues.
But these issues seem to be ancillary
to the actual cannabis
operation we were running
in our bureaucratic and financial burden.
This Humboldt County grower comments
on their challenges associated
with a lack of banking,
and no access to reasonable loans
have severely impeded
his ability to keep the farm profitable
while trying to also understand and comply
with all regulations and
conditions of compliance.
As this grower explains,
our local building and planning department
decided that no building
or grading permits
will be issued before the annual
cannabis permit was issued.
If our pond permit had been issued
after it was applied for
and approved in 2016,
our farm would have stayed profitable
because we would have been
able to cultivate at scale
for the past three years.
Unclear information has also
posed a barrier to compliance.
And this can be seen as
increasing the transaction costs
growers must assume to comply.
Growers from all permits status types
indicate that a lack of
clear, accurate information
on regulations has hindered
my ability to comply.
As this grower explains, this information
was confusing due to
changing of rules mid-game.
I was faced with a decision to install
a tank for water forbearance
or put in an agricultural well.
After 20 grand was spent on this deep
"hydrologically disconnected" well,
I was told the rules have changed,
and now they cannot deem a well
not hydrologically connected.
Now I'm faced with spending
another $30,000 plus on water tanks.
Farmers who applied for permits
were more likely to rate
government websites,
consultants, and business collaborators
as important sources of information.
Farmers who did not apply
were less likely to
have received outreach,
especially outreach from the water board,
which those who did apply
were more likely to have received.
When asked why folks didn't apply,
those who did not apply
did not feel community pressure to comply.
Non-compliant farmers believe
their practices were better
for the environment than
that regulated by government.
Those who did not apply
also indicated that
they were not terribly worried
about fines or arrests.
Farmers of all permit status types
reported little enforcement.
Those that applied found
that the fear of arrests,
the security for their family,
and the belief in the future value
influenced their decision to comply.
Like those who did not apply for permits.
Those who did apply felt little pressure
from community to apply,
and they also were not sold
that compliance would correspond
to a positive impact for the environment.
Those that applied found
that personal time,
consultants, community
members, and regulators
helped the process.
When we looked at the
responses to all questions,
we found that farmers who
applied for permits were those
who were more likely to report
higher income from cannabis,
rate government websites, and consultants
as useful sources of information,
receive outreach from the Waterboard.
And those students do apply
were less likely to be zoned for cannabis
and less likely to
report a large farm size.
Another way of thinking about this is that
the transaction costs growers
must assume to participate
in the legal market
exceed what they're able to afford.
These transaction costs include
those associated with moving your farm
to a location where it
is zoned for cultivation
if you're in an area with either
permanent or temporary ban,
those costs might also
include those paying
for either your time or others
to deal with the administrative hurdles.
Those costs also include
the ways of which you have to
rework your landscape to come up to code.
The California's Cannabis
Licensing initiative
is a really unusual and
really incredible effort
to bring these landscapes,
former forested regions,
which have a history of being areas
in which ecological for agility is high.
The licensing initiative
creates an opportunity to
rework these landscapes
and incentivize those
who are in these places
to contribute to environmental
outcomes in these regions.
The idea of reporting
water use, in particular,
is pretty incredible for attempts
to govern and work together in ways
that can better prepare
us for drought futures.
For this to happen,
we need to be thinking through ways
to get these small scale farmers on board
with licensing initiatives.
The idea that those who are
not complying are small farms
who are supporting incomes
received from elsewhere
with their cannabis operation
is a sharp contrast to the idea of
the illicit cannabis farmer
is operating on public lands
with little regard for
environmental outcomes.
In the contrary, or to the contrary,
the farmers surveyed here indicate that
they perceive themselves
as environmental stewards.
And it's possible that
the fact that they felt
little community pressure to
comply reflects that idea.
The idea that people feel
little community pressure
to comply is a factor that might otherwise
indicate an increased transaction
cost in other contexts.
Strategies to address compliance
that are worthy of consideration
include institutional support
for collaborative market
could access and information
sharing initiatives,
the advancement of
innovative forms of outreach,
and the reduction of compliance costs.
Institutional support
for collaborative market
access arrangement includes
support for co-op formation.
Right now, there's a current Cap
on the total number of acres
that can be incorporated
into a farmer cannabis co-op.
This Cap was put in place
when there was also a
Cap on total farm size.
The Cap on farm size has been lifted.
And folks who initially advocated
for the Cap on cooperatives
are wondering if perhaps
that also needs to be lifted.
Cooperatives in developing
country contexts
where small scale producers
are navigating new markets
have been showing to
correspond to increase wealth
that individuals receive
from their farming operation.
Cooperatives are also a
mechanism to share information.
In the cannabis space,
cooperatives have previously
been primarily an
information-sharing source
or sorry, farmer organizations
in the form of trade groups
have been previously an
integration starting sources
as farmers navigated quasi-legal
markets on their own terms.
And coming together now
could create or help
increase the likelihood
that small scale farmers in California
will be well-positioned
to navigate changing markets
as the possibility of
international trade opens up
as the US and other nations,
especially Asian nations,
rework treaty terms as well
as, as interstate commerce.
Innovative forms of outreach to growers
that might be explored,
include peer to peer education,
which has been showing
as a way knowledge has been disseminated
in agro ecological concepts
as seen in other areas.
Outreach might also include
farmer to government forms of outreach
where farmers ideas about
environmental practices
which may be improving
upon that mandated by
the regulatory initiative
can be shared with
governing bodies as well.
And outreach to County organizations,
in local municipalities
for bringing their processes
or bringing implementing mechanisms
to get land or get farmers permitted,
might also facilitate permitting
in areas where bans currently exist.
The reduction of compliance costs
could be explored
through providing farmers
access to premium crop insurance,
which has been explored as a mechanism
to increase water conservation initiatives
for other agricultural
sectors throughout the US.
The small scale...
The high numbers of small scale farmers
throughout California in cannabis
is an aberration to the rest
of agricultural crop production
more broadly in the state,
which is primarily dominated
by corporately owned businesses.
The advancement of strategies
to support small farmers,
access to markets, and adherence
to the regulatory system
will increase the likelihood
that cannabis becomes a crop
that can benefit California communities
and environments in
which it is cultivated.
I wanna thank the Campbell Foundation
and the UC Berkeley Social Science Matrix
for supporting this work.
And if there's folks
who wanna engage further
or have additional questions
or would like copies of these slides,
please email me at
hekiabodwitch@berkeley.edu.
Thank you.
