California Water Board Could Leave Non-Compliant Emerald Triangle Cannabis Farmers High & Dry

On September 20, 2019, the California Water Board Division of Water Rights’ Cannabis Enforcement Section mailed 270 certified letters to various farmers in Trinity, Humboldt, and Mendocino Counties notifying them that they lack the appropriate permits for water use in commercial cannabis cultivation. Although the Water Board made clear that they are not, at this time, issuing notices of violation, the letters serve as a shot across the bow to an industry that is beginning to appreciate the importance of compliance with environmental regulations and portends more significant enforcement efforts in the near future.

In the last year alone, 2,300 cannabis cultivation licenses were issued in the three counties under the State Water Board’s Cannabis Cultivation Program. However, the letters make clear that not everyone is in compliance. For those entities, the Water Board has advised that their properties appear to be used for cannabis cultivation, but that no record exists of the property having enrolled in the State Water Board’s Cannabis Cultivation Program. The letters warn farmers in these counties that if they fail to come into compliance with Water Board regulations, they may face fines or the loss of cannabis cultivation licenses.

With the recent legalization of marijuana and industrial hemp in the Western United States, water rights and regulations have become an increasing concern for farmers and state regulatory boards. California approved the State Water Board’s Cannabis Cultivation Program in December 2017. In 2018, the State Water Boards sent out 2,826 letters in five watersheds informing them of the Program and 337 letters about direct enrollment requirements. The Program is intended to help address issues of both water quality and water quantity related to cannabis cultivation in California. The purpose of the Program and its requirements are to ensure that the use of water for cannabis cultivation does not negatively impact existing water quality, habitats, wetlands, and springs. The Program also seeks to protect instream flows throughout the State.

The California Water Board has requested that all residents in receipt of one of the cannabis cultivation letters respond through its Cannabis Compliance Portal. The Water Board also clarified on October 1 that any residents who received a letter but have already applied for coverage may disregard it.

Water issues, however, go well beyond regulatory compliance, as a non-compliant grower (or grower with no water rights) could face a lawsuit brought by a senior rights holder under the prior appropriation doctrine for using even de minimis quantities of water. Indeed, merely being situated near a river or stream does not automatically confer water rights on a farmer or business owner.

Complimentary Webinar - October 17, 2019

In an effort to keep the industry apprised of these recent developments, Beveridge & Diamond will offer a free webinar entitled, “California Water Rights and Liabilities: What Every Cannabis Grower Needs to Know” on Thursday, October 17, 2019, 10:00-11:00 am PDT. Click here to register for this webinar, and click here to sign up for our Industrial Hemp & Cannabis industry list to receive future news alerts and event invitations by email. 

Beveridge & Diamond's Industrial Hemp & Cannabis industry group assists cannabis-based businesses with state-level environmental compliance, product liability, project planning, environmental risk avoidance, and, when appropriate, litigation and defense against state-level environmental enforcement actions. For more information, please contact the authors.

Possession, use, distribution, and sale of cannabis may be a federal crime. This alert is not intended to provide any guidance or assistance in violating federal law, or in providing guidance or assistance in complying with federal law.