The California Department of Food and Agriculture (“CDFA”), by January 1, 2021, is required to create a program for cultivation licensees to establish cannabis appellations of origin. The draft rules for the Cannabis Appellations Program are available here (“Draft Rules”).

Public comments are now due on May 6, 2020. 

We understand many are stretched thin responding to COVID-19. Nonetheless, the development of cannabis appellations will drastically change the cannabis industry, and we encourage stakeholders to participate in the rule-making process.

What is Cannabis Appellation of Origin?

A cannabis appellation of origin is a protected designation that provides consumers with information regarding the origin of the cannabis and associated production requirements. Broadly speaking, under the Draft Rules, a cannabis appellation of origin must involve:

  • Name of appellation, based on evidence of historic name usage;
  • A defined geographic area;
  • At least one cultivation standard;
  • At least one cultivation practice;
  • At least one cultivar requirement;
  • A detailed description (and evidence) of each geographic feature affecting cannabis cultivation in the proposed appellation area, in such detail as required by additional draft rules–as well as evidence that the proposed appellation area is distinct from outside the proposed boundary and other cannabis-producing areas; 
  • Evidence of the historic or economic importance of cannabis cultivation to the area; and
  • A list of cultivator license types (such as Indoor, Mixed-light Tier 1, Mixed-light Tier 2, or Outdoor) which are prohibited from using the proposed appellation of origin.

The draft regulations suggest appellation petitioners will need to meet a high evidentiary burden, submitting robust environmental, mapping, and cultural documentation.

Why Are Cannabis Appellations Important?

The CDFA Cannabis Appellation Program will create a new class of cannabis goods, arming cultivators with a powerful tool to promote their cannabis farming traditions and region-specific standards, practices, and cultivars. Much like protected wine designations (think wine from the Napa Valley AVA, or Champagne), cannabis appellations are expected to create market segmentation and signal to consumers that origin-designated cannabis is a prestige specialty craft product—and should command a higher purchase price.

Appellations of origin also create greater differentiation between products purchased on the legal and illicit market. We also expect certain appellations to become travel destinations for cannabis connoisseurs, much like Sonoma or Paso Robles have grown from sleepy farming towns to international wine destinations.

Could Indoor and/or Mixed-Light Growers Use a Cannabis Appellation of Origin?

The proposed rules do not explicitly exclude Indoor or Mixed-Light licensees from participating in a cannabis appellation. Appellation petitioners, however, can elect to exclude certain license types from being able to claim an appellation. The draft rules also seem geared toward Outdoor licensees.
 

Is the CDFA on the Right Track with These Draft Rules?

While we applaud the direction and intent of the Draft Rules and program, certain changes would make the program more accessible and streamlined. For one, the cost to submit an appellation petition ($20,880) or amend an appellation ($10,440) is prohibitively high, discouraging broad participation by the cultivation community.
 
There is also no timeframe for the CDFA to approve or disapprove an appellation petition; a petition could theoretically linger for years.

Why Should Cannabis Licensees Participate in the Rulemaking Process?

The Cannabis Appellations Program represents a significant opportunity for cultivators to shape the cannabis marketplace and boost the value of longstanding cultivation regions and traditions. Cultivator licensees should give serious thought to how petitioning for an appellation, or failing to participate in the finalized appellation petition process, will impact long-term business goals.
 
Many cultivators have honed their craft outside of the spotlight for generations; now is the time to participate and ensure these regulations function as intended. As the industry matures, appellations provide an opportunity to distinguish between cannabis as a commodity crop and a true craft or heirloom product. Craft cannabis should get the same market boost as craft beer or small-batch specialty goods. 

WHAT YOU CAN DO:  

Submit Comments: Written comments on the Draft Regulations may only be submitted until Wednesday, May 6, 2020. That gives you a little over two weeks to submit your comments!
Via Email :
CDFA.CalCannabis_Appellations@cdfa.ca.gov 
 
By Mail :
California Department of Food and Agriculture
Attention: Kristi Armstrong
CalCannabis Cultivation Licensing
Proposed Appellations Regulations
P.O. Box 942871
Sacramento, CA 94271

At the CDFA’s Online Public Hearing:

The CDFA will host an online public hearing on its draft appellations rules on May 6 from 1-3pm.
Registration is required. Registration and comment instructions can be found here.
 
Please also note that the CDFA has rescheduled the public hearing for receiving comments on the proposed regulations for cannabis appellations of origin to Wednesday, May 6, 2020, from 1pm to 3pm. The hearing will be accessible online only, and registration is now open:
 
We’re happy to help you draft your public comments or consult as to whether petitioning for a cannabis appellation may be right for you. Please reach out. 

CLARK HOWELL WILL HOST A WEBINAR ON APPELLATIONS ON FRIDAY, MAY 1st, AT 11 AM PST.

Please block off your calendar and plan join us for an open discussion on these draft rules. Details to come…

If you have any questions about how the above or would like to discuss how it could impact your business, please contact your attorney directly or call our main line at 877-257-2442.

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