In a landmark study conducted by the Journal of Rural Studies, it was found that one-third of 362 California cannabis farmers had not applied for a producer’s license, pointing to crippling costs and an increasingly exclusive marketplace. 
“These non-compliant farmers were likely to be smaller cultivators who grew cannabis as part of a diversified livelihood strategy,” researchers noted.  In their introduction, researchers touted the study as the largest survey of cannabis farmers in the U.S, providing a never-seen look into the complicated facets of the industry.
The study cited multiple reasons for non-compliance among California farmers, including “not only financial barriers but also administrative and psychological ones, all of which disproportionately affect farmers with fewer resources.”
Though the prognosis is disheartening, researchers said that removing hurdles to compliance (including high costs), creating support networks, and promoting farmer collectives could boost small-scale cannabis farm participation.
The key motivation among farmers was cost. Non-applicants found incentives to be inadequate and generally believed they could earn more on the unregulated market while protecting the environment with their own methods. Those who did seek licenses were primarily motivated by the potential future value of the licenses as well as fear of law enforcement. Larger farms were more likely to have applied for licensure given the ability to meet the high costs associated with compliance. Beyond permits and fees, these included updating roads and buildings. 
Hemp farmers face another facet of high compliance costs in the form of hot hemp when a cannabis crop reaches beyond the 0.3% threshold for tetrahydrocannabinol (THC) per Drug Enforcement Agency guidelines. (The negligence threshold was increased, however, from 0.5% THC to 1.0% THC.) At various points throughout the manufacturing process for cannabidiol (CBD), to use an example, THC levels can reach above 0.3%, despite the end product passing inspection.
Such a tight threshold puts farmers, product manufacturers, and other industry stakeholders at risk. In 2019, analysis of hemp crops in 16 states revealed 4,309 acres worth of crops to be hot, out of a total of 179,000 acres. Of course, all 4,309 of those acres were destroyed.
In multiple instances, farmers are open to running afoul of federal regulation, particularly through hot hemp. To add insult to injury, rising compliance hurdles make entering the industry that much more difficult.
Only a concerted effort on the part of industry stakeholders can change the trajectory of state regulations in places like California.
- Bodwitch H, et al. Why comply? Farmer motivations and barriers in cannabis agriculture. Journal of Rural Studies. 2021;86:155–170. https://doi.org/10.1016/j.jrurstud.2021.05.006. [Impact Factor: 4.849; Times Cited: n/a]