Cannabis Cooperative Associations Intro

AUTHORED BY: JORDAN ZOOT

Cannabis Cooperative Associations Intro marks our effort to introduce our clients and friends in the cannabis industry in California to a newly created form of business entity. CCA’s are an excellent vehicle for small, craft-oriented California cannabis cultivators [CalCannabis Cultivation Type 1A, 1B, 2A or 2B] to increase their operating efficiency and lower the cost of doing business.

• CCA’s are an organization that is owned and controlled by licensed cultivators to grow, harvest and move cannabis products into the marketplace. Cannabis cooperatives share in the common purpose of supporting growers to meet their objectives of having thriving and sustainable businesses that are resilient and can adapt to member’s changing needs. Self-reliance and self-help are the features of cooperatives. 
• Changes in California law in 2018 relating to cannabis allow small outdoor growers to organize Cannabis Cooperative Associations (CCAs”).

1. CCAs are a special form of California corporation that is similar to a farmers’ agricultural cooperative.

• The new statute specifies that certain license types may pool their resources for cannabis farming of no more than four acres total and all Members of the Association must be disclosed to the licensing agencies.
• Specifically, the cooperatives must include three or more Members (that have not been licensed to operate a cannabis business in another state or country) and form an Association for the purpose of:

i) The cultivation, marketing, or selling of the cannabis products of its Members.

ii) The growing, harvesting, curing, drying, trimming, packing, grading, storing, or handling of any product of its Members.

iii) The manufacturing, selling, or supplying to its Members of machinery, equipment, or supplies.

• CCAs can engage in all of the functions that take place in the movement of cannabis from the cultivator to consumer – processing, extracting, packaging, transportation, etc.
• A CCA that engages in other functions must have licenses for such businesses, but if such business is conducted through entities that are wholly owned by the CCA, all of the business is deemed conducted by the cooperative association.
• The special treatment of CCAs impacts regulation of cannabis businesses at both the local level and at the California level.
• Local jurisdictions can regulate cannabis businesses conducted through CCAs only with respect to land use and public health and safety issues.
• California law specifically authorizes CCAs to engage in distributor and manufacturer functions through wholly owned.
• At the California level, all of the business activities are considered to be conducted by the cooperative association under a single umbrella of cultivators and the cultivator owned and operated businesses.
• For example, a CCA that engages in processing as a wholly owned incorporated distributor is treated as if the grower/owners of the CCA are directly engaged in the business activity collectively.
• California specific authorization of a CCA ’s business activities preempts local regulatory requirements regarding the operation of cannabis businesses except for land use and public health and safety.

If you would like information about the mechanics of organizing a CCA, we recommend you check out Emerald Grown which is a run by the former Executive Director of the California Grower’s Association, Hezekiah Allen who played a significant role in the development of CCA’s. 

CCA’s help

• Consumers enjoy affordable access to premium-quality, farm-fresh cannabis products.
• Retailers forge deep supplier connections and have consistent access to quality inventory.
• Farmers benefit from supply chain efficiencies, bulk purchasing, and shared marketing services.
• Communities build local living economies based on thriving small farms and ancillary businesses.

Cannabis Cooperative Associations Intro