The Big (Messy) Data of California's Large Cannabis Licenses

Beginning in 2023, California now allows Large type cannabis licenses. These licenses allow cultivation with no upper limit on total square footage. Large licenses can be either created on their own, or created by combining existing licensed cultivation of the same kind. Licenses that are combined in this way are canceled or allowed to expire, and their square footage is transferred to the new Large license. This ability to combine licenses is a boon for large farms that have multiple smaller licenses in one area, and have to pay licensing fees and process paperwork for them all individually, even if they are all just sections of the same growing area. With Large licenses, they only have to keep track of one license and pay one fee, which can save time, money, and bureaucratic headaches.

Why this is needs special attention

So why do we need to report on Large licenses specifically? Well, as an organization that spends a lot of time tracking the trends in licenses and legal cannabis canopy in California, Large licenses are their special brand of headache for the following reasons:

Large licenses have no upper cap on how much area they can grow, and their legal definitions are simply “Anything larger than X ft²” depending on their type. This means that when we track how much legal area is licensed, we actually don’t know how big the Large farms are. This throws off our numbers.
Figuring out which licenses were combined into Large licenses is difficult. The way that licenses are recorded in the State records are with a status, a start date, an expiration date, and a status date. The status indicates if the license is active, canceled, expired, not in operation, etc. The start date is self explanatory- the date the license was initially created. The expiration date is the current date of expiration on file, from the last time it was extended. The status date is… well we still aren’t 100% sure because there are inconsistencies, but in most cases we assume that was the last date that some kind of bureaucratically significant filing was recorded regarding that license. So with this information, we can look at all the licenses associated with a certain business and with some educated guessing and matching of dates, come up with a fairly good estimate of which cultivation licenses were combined.
Once we know how many licenses were combined to make the Large license, we can logically assume that the license holder is probably going to cultivate at least the same amount of square footage as they combined- or else they wouldn’t have bothered to convert all those licenses. This gives us an estimated lower bound of the Large license area, but still no upper bound.
When looking at overall cultivation area trends and querying state data, we now have to control for these converted licenses: if we simply query “all active licenses”, apply the proper square footage, and sum, we get an inaccurate number. Sure, all those licenses aren’t active, but their square footage still exists, just under a Large license. Failing to control for this results in an error where square footage is falsely claimed as gone from the market, which makes any downward trends look worse than they already are.
Also, failure to control for Large license consolidation may make it look like certain businesses are failing when in fact they are fine. If a business has a lot of licenses, then suddenly all but one are active, an untrained eye may assume that they failed terribly (not the most unrealistic assumption in this industry, to be fair), when in fact they’re still growing the same amount if not more under a consolidated license.

So what’s our take? Simply put: If the State is going to worry so much about square footage for their license structure, they should require Large licenses to report their total cultivated area annually. From a market perspective, it further complicates any trend analysis when a Large license could be 1 acre or 5 acres and there’s no way of easily knowing. This requirement wouldn't be a major burden for large license holders, since their maximum square footage has already been determined when they filed their local applications.

Charting

So now that we have a more reasonable estimate of the lower bound of cultivated Large licenses, we can use this to adjust our charting of State cultivation trends.

Let’s start with our standard, unadjusted trends to date for comparison:

Now, let’s update these to reflect Large licenses with our newly estimated minimums:

As we can see in the updated charts, there was a significant correction in the decline of outdoor licenses at this time, where canopy that would have otherwise been reported as inactive was actually converted to Large licensing. Likewise, the growth of Large licenses is clearly visible now. There does not appear to be a serious impact on the overall trends for Indoor and Outdoor.

Finally, let’s look at some breakdowns of the Large licenses across the state

As usual, Santa Barbara county makes up the vast majority of Large licenses, as expected given that county’s concentration of large scale cannabis operators. Likewise, Lake county is also on trend for large operations. There are currently only 10 counties with Large licenses.

We can now see the chunk of the market that large licenses have claimed. Keep in mind that this is only an estimate based on what we could determine by license consolidation, so large licenses may make up more of the market than can be accurately measured.

Large License Holders as of 9/3/23

Name/DBA

Large License Type

County

Converted Licenses

Estimated Min SqFt.

Corporate Info

All Good Properties, Inc.

Outdoor

Lake

43,560

https://opencorporates.com/companies/us_ca/201811610528