California weed growers seek wine-like brand, price protections

Large cannabis growers could soon see increased competition from smaller farmers because of state legislation that seeks to draw lines on the map linking grows to specific locations, or 'appellations.'

That is because of a law, Senate Bill 185, championed by North Bay state Sen. Mike McGuire, D-Healdsburg, and signed by Gov. Gavin Newsom this month that establishes appellation protections for cannabis for the first time, according to McGuire's office.

An appellation is a legally defined and protected geographical indication that identifies where something is made.

In a statement McGuire's office said the goal of the law is to expand protections for cannabis growers that stop other growers from using similar names or claiming to be from a region they are not.

'This law will prevent cannabis manufacturers from claiming, for example, their product is grown in the emerald triangle, when in fact it was grown in Sacramento. The law takes into account the critical ingredients to a successful appellation designation such as geographic location, soil types, farming techniques and microclimates,' McGuire said in a news release. 'Customers have come to expect truth in labeling in wine and this critical bill ensures manufacturers market products that meet similar appellation requirements with Cannabis.'

Providing appellation protections similar to those in place for wine growing regions could serve to protect smaller farmers whose 'craft' cannabis has been undercut by the rapid production rates of larger, indoor facilities, according to Josh Drayton, the communications and outreach director for the California Cannabis Industry Association, an industry group which supported the legislation.

Drayton said some indoor operations can produce up to six harvests per year, which "puts small craft farmers at a disadvantage' because they do not produce as much. The legislation 'seeks to give relief to small farmers by clarifying growing standards,' adding, 'As we're building the foundation for regulation of cannabis our members thought it was important to do what they could to support small craft farmers.'

Drayton said, 'As consumers become more educated on cannabis use and cultivation, they're going to start to recognize the difference between craft-grown cannabis versus mass produced … which gives cultivators the opportunity to grow more craft strains.'

He estimated that over a decade ago a pound of 'sun grown' cannabis could sell for around $4,000 per pound but mass production had undercut those margins.

'This year we're hearing some folks only getting $500 per pound,' he added. 'This is really an effort to help those small farmers in rural areas to make sure they're competitive and make sure we have a diversified market here in California.'

He admitted however that the details for the program that will be implemented are still under debate.

That debate could echo those that have raged in wine county over which wineries can lay a claim to which region and larger producers could lobby to be included in the appellation of a well known cannabis growing region like Mendocino or Humboldt counties.

Drayton said the legislation is more of a roadmap for creating the appellations through the California Department of Food and Agriculture, one of several state agencies that regulates cannabis since it became legal for adult recreational use last year.

'It's all theoretical at this point,' he said, noting the law, 'Gives the authority to create an appellation program and iron out the details of what it will look like.'

Drayton said the CDFA is hosting a working group to put lines on the map establishing cannabis appellations but said it has not published any information yet and is aiming to complete the project by 2022.

The state food and agriculture department did not respond to an emailed request for comment.

Legal expert Richard Mendelson is a sought-after expert when it comes to wine appellations and talked with the Business Journal in 2016 about the possible extension of that to cannabis.

'Appellations can be really powerful because they can be a means to protect everything from the intellectual property, to the labor force, to the culture and history," he said at the time. "They can be very rich vehicles for promotion, protection, and rural development.'

Staff Writer Chase DiFeliciantonio covers technology, banking, law, accounting, and the cannabis industry. Reach him at chase.d@busjrnl.com or 707-521-4257.