California cannabis industry moving to market where its product is grown

Cannabis farmers in California may soon have the opportunity to use appellations, like the wine industry, indicating where their product is grown.

That brings marketing advantages, for sure, but it’s also something more core to the industry.

“It kind of legitimizes cannabis in a new way. I think this is exciting and has a lot of potential,” said Michaela Reed, director of the Napa Wellness Collective in Napa. “There will be a huge market for appellations for craft cannabis. It will provide true protection for legacy growers. “

Reed believes with the appellation process, by delving into the details of the soil, fertilizer and other aspects of the grow the label, will help promote environmental practices of various farmers, and make the industry more sustainable.

The opportunity to do so draws a bit nearer now. By the end of the year farmers can expect to be able to begin the appellation application process. The bill was signed by the governor last year, with all the kinks being worked out since then.

Nuts and bolts of appellations

While many growers today tout the origin of their product, the appellation process goes deeper. The proposed cultivation licensing regulations are 28 pages long.

Not just any marijuana farmer will be able to apply for an appellation. Being a licensed cultivator is the first step.

“In the proposed regulations, a minimum of three licensed cultivators are needed in order to submit a petition to establish an appellation,” explained Georgia Henry with the CalCannabis Cultivation Licensing Division of the California Department of Food and Agriculture. “Any licensed and qualified farmer within the boundary of the appellation may use the appellation, even if they did not contribute to the one-time petition fee. However, the proposed regulations would require they first submit a notice of use form to the department.”

All of the product must be cultivated in the designated region in order for an appellation name to be used. The law also comes with penalties for those who use an appellation without approval as well for those who are licensed and misuse the designation.

“The reason to go through the process is to maintain some level of control. Once there is a formally established appellation, you can police the quality from the region. You can act to ensure you have criteria for how product is grown, whether it fits various terroir requirements,” explained Ashley Roybal-Reid, an attorney with Farella, Braun + Martell, which has an office in St. Helena. “There will be more of a benefit to limit the number of people who can use the appellation. It’s more of a benefit to those who want to control the product and labeling of products from their region.”

The enhanced labeling will work similarly to how the wine industry employs the American Viticulture Area, which designates appellations for grape growers.

A big difference is that the cannabis industry will be limited to using a city, county or both for the origin. The law will not allow for regionalization like wineries use such as Carneros or Alexander Valley.

Napa Valley Vintners and the California Wine Institute were instrumental in the final outcome of the state cannabis rules. They did not want the significance of wine appellations to be undermined by the cannabis industry.

“What does matter is if there is going to be an appellation system, it needs to be meaningful, it needs to be robust, it needs to have teeth and integrity. Otherwise it could erode all appellation systems. That is why we care,” Rex Stults, vice president of industry relations with the St. Helena-based vintners association, said. “One of the things we found absurd with the original draft legislation is you could use an appellation name on an indoor grow, which would have nothing to do with terroir of that region.

“It’s a reasonable likelihood the California model will become the national model if and when cannabis becomes legalized nationwide. That’s why it’s even more important to get it right,” Stults added.

Once the appellation program is live there will be more to the process than merely putting one’s town or county on the label. A formal application process administered by the state is designed to guarantee the product was grown where the farmer said it was, along with a slew of other requirements.

The next step for the California Department of Food and Agriculture’s CalCannabis Cultivation Licensing Appellations Program is to submit the program’s final rulemaking package to the Office of Administrative Law. When the package is approved, then the appellation program will be launched; this is expected to be in the fall.

When the first harvest will have an appellation tied to it remains to be seen.

“The amount of time it may take for a licensed commercial cannabis cultivator to apply for and establish an appellation is not available at this time, but will vary,” Henry said. “The California Department of Food and Agriculture will use panel recommendations and public input as part of their review for approval to establish an appellation, and they will make the decision to approve or deny each petition.”

What those in the cannabis industry think

Aaron Keefer, who grows seven strands of cannabis on the outskirts of Petaluma at Sonoma Hills Farm, believes the final outcome of the appellation regulations will be worth waiting for.

“They have definitely done a great job pushing this to the front and listening to everybody’s voice and tapping some experts in the wine appellation world,” Keefer said.

Sam Rodriguez, head of the International Cannabis Farmers Association that represents about 25 farmers with outdoor grows, has been integral in the process.

While it has taken longer to come to fruition than hoped for, he believes with the harvest having started this month, the delay gives farmers time to focus on their product instead of filing paperwork for appellations at the same time.

He also has his eye on what’s going on at the federal level with the reintroduction of the MORE Act in Congress on May 27. This would legalize cannabis in the country, and therefore allow for interstate commerce.

“In having a robust appellation program (in California), we would be the first one to market in the U.S. California cannabis has a tremendous opportunity to feed into those states that have a medical and adult use regulatory system,” Rodriguez said.

“At the end of the day it’s about branding and who has the most attractive product that consumers want,” Rodriguez said of the appellation program.

Lynnette Shaw, owner and founder of CBC Marin Alliance in Fairfax, believes the appellation program will have multiple benefits.

“It will be a great stabilization of the cannabis market. There has been lot of fraud,” Shaw said. This is because some growers tout their product is from a popular region and it really isn’t. Without an appellation program, this kind of deception goes unpunished.

“I think this will be a great financial boon to particular areas where appellations are; just like you want Napa and Sonoma wines,” Shaw added. “This is another step forward for the legitimacy of this industry.”

Even though Marin County does not allow commercial cannabis grows, plenty of people frequenting Shaw’s dispensary want to know where the merchandise came from. This is true as many pot shops.

“This will elevate the discussion of cannabis,” said Eli Melrod, CEO and founder of the Sebastopol dispensary.

Already Solful highlights a product’s origin and source. At the shop the various flowers have a map of where it was grown and a story about it.

“Our customer base really resonates with small batch cannabis. I think this will be another part of the story to separate small batch from large batch productions in the Central Valley,” Melrod said. “Famers are really looking for a way to compete with large scale capital production coming on.”

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