(This is a developing story, so check back for updates.)
California Gov. Gavin Newsom vetoed a bill that would have allowed small farmers to sell their cannabis products directly to consumers, delivering another blow to operators struggling to survive in the world’s largest regulated marijuana market.
Assembly Member Gail Pellerin of Santa Cruz introduced the legislation to create a new license that would have permitted small cannabis producers to sell state-regulated marijuana products at temporary, municipality-approved events and venues.
In a statement announcing the veto, Newsom wrote on Sunday that, “while I appreciate the author’s intent to support small and equity cannabis cultivators, I am concerned that the bill’s broad eligibility, which extends to the vast majority of licensed cultivators, would undermine the existing retail licensing framework and place significant strain on the Department of Cannabis Control’s ability to regulate and enforce compliance.”
Newsom had until Monday to veto or sign the legislation, which would have allowed small cannabis producers to sell up to $175,000 worth of marijuana products at approved venues beginning Jan. 1, 2026.
Cannabis sales events
Assembly Bill 1111 would have allowed farmers to obtain a license to sell marijuana products directly to consumers at licensed cannabis events in government-sanctioned jurisdictions, expanding on legislation that allowed marijuana retailers and brands to sell products at the California State Fair in Sacramento for the first time this year.
For the past few weeks, cannabis advocates and industry trade groups, including The Origins Council, Supernova Women and the Equity Trade Network, initiated online, in-person and letter-writing campaigns urging Newsom to sign the legislation into law.
AB 1111 and a separate bill, which was sent to Newsom and would legalize cannabis cafes akin to those in the Netherlands, might be the only relief California operators get from the state for some time.
Newsom’s initial $291 billion budget proposal for the 2024-25 fiscal year does not include any cuts in taxes or fees as the state faces a $38 billion budget deficit.
“I remain open to considering a more flexible and narrowly focused version of this bill next year that can better respond to market dynamics, without imposing a rigid monitoring and compliance framework,” Newsom wrote in his veto message.
“Such policies must be considered within the broader context of efforts that are necessary to address the fundamental issues straining the legal cannabis market, such as competition from unregulated sources and improving access to regulated products.
“It is essential that we prioritize solutions that strengthen, rather than further burden, the existing regulated market.”
‘Industry needs relief’
Coastal Sun Farms executive Darren Story told MJBizDaily he feared Newsom would veto the bill.
“I really hope he doesn’t screw this one up,” Story, chief financial officer of the Santa Cruz-based cultivator and brand, said ahead of the veto.
“The industry needs any relief they can get right now – especially with the illicit market and all these psychoactive hemp shops.”
Emergency regulations issued by Newsom a few weeks ago limiting the sale and production of intoxicating hemp products went into effect Sept. 23.
Naia Hall, operations manager for DenCob Farms in Northern California, had called AB 1111 important to the survival of small growers.
“Right now, all of our prices are controlled by what the dispensaries want to pay us, and it’s never enough for us to break even on our grows,” she said.
Chris Casacchia can be reached at chris.casacchia@mjbizdaily.com.
