 My name is Hekia Bodwich, and I'm a postdoctoral researcher with the UC Berkeley Cannabis Research Center. And today I'm going to be talking about barriers to compliance in cannabis production. I've worked on this project with Michael Poulsen and Van Botzig. 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 non-organic amendments, must plan on certain angle slopes, recently must track and trace all their product 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 periods. 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 illicit cultivation practices have been attributed to increased 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 non-point source aspect of 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. Well, the exact number of growers in the state of California is difficult to determine, depending on the clandestine nature of cultivation practices that many farmers assume. Industry estimates that 50,000 growers were cultivating in 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 thousands 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 has 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 I 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 in 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 firm 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 in other industries, or perhaps is a reflection of growers' desire to remain illicit. Rest in part in 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. Normative motivations include those related to whether or not an individual thinks a 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 in 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 an 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 regards 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 a 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 from 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 Interstitutional Review Board approval from UC Berkeley for 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. We looked at the data that was qualitative in nature, which was written in data 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 did not apply. The majority of farmers who did not apply for permits produced less than 100 pounds in 2018. Outdoor cultivation was the 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. 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 and unpermitted were similar. So this is for greenhouses. We see that 20% of greenhouses were permitted, but 43% of the area that 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. 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 permit statuses reported that they planted away from streams, which is 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 the sentiment echoed in a comment that a humble county grower gave who explained, due to humble 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 are not able to keep up with clothing 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, cost 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 opportunity than regulated market and there was few county incentives to comply. Similarly, 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 weighted heavier with regards to costs to come into compliance as opposed to costs associated with permits and fees. Costs to come into compliance include those associated with getting your land up to code, so licensing your roads, getting your culverts intact and in former forested landscapes, the roads and 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 and Medicino County explains, we have a large rancid over 1,000 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 costs to remediate 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's been intact for 40 years and looks fine. We aren't using it for cultivation. We are still in the process and will 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 the challenges associated with a lack of banking and no access to reasonable loans as severely impeding his ability to keep the farm profitable while trying to also understand and comply with all regulations and conditions of compliance. As the scorer explains, our local building and planning department decided that no building or grading permits would 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-permice status types indicated that a lack of clear, accurate information on regulations has hindered my ability to comply. As this scorer explains, this information was confusing due to changing of rules mid-game. I was faced with the 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 dollars 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 believed 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 water board, and those who did not 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 a 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 in 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, you know, former forested regions which have a history of being, you know, areas in which ecological fragility 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, you know, pretty incredible for attempts to govern and work together in ways that can better prepare us for drought futures. For this to happen, you know, 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 as operating on public lands with little regards 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 access and information sharing initiatives, the advancement of innovative forms of outreach, and the reduction of compliance costs. Institutional support for collaborative market access arrangements 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 shown to correspond to increased 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 information sharing source as farmers navigated quasi-legal markets on their own terms. 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 U.S. and other nations, especially Asian nations rework treaty terms as well as interstate commerce. Innovative forms of outreach to growers that might be explored include peer-to-peer education, which has been shown as a way knowledge has been disseminated in agroecological contexts 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. Outreach to county organizations and local municipalities for bringing their processes or implementing standard mechanisms to 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 U.S. 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 in communities and environments in which it is cultivated. I want to thank the Campbell Foundation and the UC Berkeley social science matrix for supporting this work. And if there's folks who want to engage further or have additional questions or would like copies of these slides, please email me at heckyabottwitch at Berkeley.edu. Thank you.