November 7, 2017

New Environmental Standards Imposed as California's Commercial Cannabis Cultivation Industry Takes Root

4 min

The California State Water Resources Control Board (SWRCB) recently approved a suite of regulations aimed at controlling the impacts of the state's booming cannabis cultivation industry on water resources. The new regulations are the latest step the state has taken toward building a framework for regulating the estimated multi-billion-dollar cannabis industry in advance of January 1, 2018, when the marketplace for recreational adult use of cannabis officially opens in California.

Called the Cannabis Cultivation Policy, SWRCB's new rules apply to commercial cultivation of cannabis throughout California, replacing pilot permitting programs that have covered many growers on the North Coast and in the Central Valley. Growers covered by the pilot programs will have until July 2019 to transition to the new rules. The rules do not apply to non-commercial cannabis cultivation (of no more than six plants) for personal use.

The Cannabis Cultivation Policy will be implemented through several state permitting programs, including cannabis cultivation licenses issued by the California Department of Food and Agriculture (CDFA), and water rights and water quality permits issued by SWRCB. SWRCB developed the policy in consultation with the California Department of Fish and Wildlife and CDFA. California law requires CDFA to issue licenses to commercial cannabis cultivators and establish a track-and-trace program that tracks commercial cannabis from seed or clone through cultivation, harvest, transport, manufacture, distribution, and sale to the end user. CDFA launched an emergency rulemaking process to develop regulations guiding its licensing program for cannabis cultivation. Those emergency regulations are expected to be published this month.

SWRCB's Cannabis Cultivation Policy stakes out five major areas of regulation:

Section 1: General Requirements and Prohibitions, and Cannabis General Water Quality Certifications
Section 2: Water Diversion and Waste Discharge Requirements
Section 3: Numeric and Narrative Instream Flow Requirements
Section 4: Watershed Compliance Gage Assignments
Section 5: Planning and Reporting

Section 1 applies existing SWRCB authorities to cannabis cultivation activities. For example, state and local permit compliance, discharge prohibitions, riparian setbacks, and SWRCB's inspection rights are all laid out here.

Section 2 describes twelve treatment or control categories for water diversions and waste discharges. Requirements for irrigation runoff, erosion control, soil disposal, fertilizer and pesticide use, refuse, and winterization are addressed in this section.

Section 3 details instream flow requirements. Three key flow requirements are established here: (1) dry season forbearance periods; (2) numeric flow requirements during the wet season; and (3) narrative flow requirements. The surface water forbearance period and flow requirements are designed to ensure minimum flow levels throughout California for threatened and endangered species, including salmonids. Forbearance periods may also be required in certain groundwater diversion areas.

Section 4 consists of tables establishing numeric flow requirements by region and gage. SWRCB is creating an online mapping tool that growers will be required to check prior to diverting water to ensure water is available to divert at the appropriate gage.

Section 5 addresses several technical reports that specified classes of cannabis cultivators must submit to the appropriate Regional Water Quality Control Board, including site management plans, site erosion and sediment control plans, disturbed area stabilization plans, nitrogen management plans, and site closure plans.

Discharges associated with cultivation will be regulated under a tiered approach, with requirements depending on the scale of a given cannabis operation. Under the tiered approach, certain indoor operations, some small-scale operations, and qualifying operations cultivating cannabis for personal use will be exempt from cannabis-specific waste discharge requirements. The requirements applicable to tier 1 and tier 2 cultivators further depend on the "risk designation" of a cultivator's operations as determined by the slope of the operation's disturbed area and the proximity of surface water bodies. Tier 1 cultivators are those with operations involving a disturbed area smaller than an acre but larger than 2,000 square feet. Tier 2 cultivators are those with operations involving a disturbed area of 1 acre or more.

California heavily regulates its water resources, and the cannabis industry will not be an exception. Any business looking to engage in cannabis cultivation in this state will need to be prepared for the host of requirements that the state imposes. SWRCB's new Cannabis Cultivation Policy establishes a helpful framework for navigating this complex regulatory space, but the implementation of this policy is still untested. Venable has attorneys experienced in California water law who are prepared to assist clients with the challenges presented by licensing and permitting. Our firm will also continue to monitor developments as this new industry takes root in California.