What is AB2606?

AB 2606 sets in motion the process to enlist growers and conduct a vote for the establishment of the California Agave Commission, an agency authorized to regulate the agave industry in California. There are two potential outcomes:

• If voted in favor, the commission will have the authority to levy assessments and impose penalties on growers and processors to fund activities of research, education and marketing, provide regulatory oversight and enforcement, establish bureaucracy and administration, and marketing promotion (Article 1 – 79915), with a specific focus on agave cultivation for alcoholic beverages (Article 2 – 79922(a)). All current and future agave growers and processors will be required to register and pay assessment fees as determined by the commission's regulations (Article 6 – 79971).

• If voted against, the California Agave Commission will not be established (Article 5 – 79966), meaning no regulation or assessment fees will be imposed on agave growers or processors.

REFERENCE: FACT SHEET

Who is Affected by AB 2606?

Directly Affected:

• All Agave Growers and Processors: Both small and large-scale producers will be subject to mandatory fees and regulatory oversight.

• Distilleries and Agave-Based Beverage Producers: Those involved in alcohol production will also face assessments, mandatory fees and regulatory changes, likely impacting their business models.

Indirectly Affected:

• Diversified and Small-Scale Farmers: Particularly those who grow agave for non-alcoholic purposes, such as fiber, biofuels, nutritional products, or culinary uses, may see ripple effects from the commission’s focus on alcohol production.

• Farmers from Marginalized Lands: Farmers have chosen to grow agave due to the scarcity and high cost of water, or because the soil on their land is unsuitable for other crops. Agave has become a strategy for restoring and utilizing ecologically marginalized land.

• Indigenous and Latin-American Communities: The bill overlooks the cultural significance of agave, impacting those who view the plant as part of their cultural heritage.

REFERENCE: FACT SHEET

If Approved, What Are the Main Activities of the California Agave Commission?

• Levying Assessments: The commission will have the authority to determine and impose fees on agave growers and processors on criteria such as acreage or tonnage (Article 6 – 79971). These assessments will be used to fund the commission’s operations and activities, including bureaucracy and administration, regulatory oversight and enforcement, research, education and marketing. Growers and processors who do not register or pay their fees will face penalties (Article 7 – 79981 & 79982).

• Regulatory Oversight and Enforcement: The commission will have broad powers to enforce all aspects of AB 2606 (Article 4 – 79956(b)). This includes registering and keeping records of every agave grower and processor in California (Name, address, acreage and production) (Article 4 – 79956(h)), and prosecute civil violations to agave growers and producers if needed (Article 4 – 79956(p)).

• Bureaucracy and Administration: With the fees collected from growers and producer, the commission will have the authority to hire a chief executive officer (CEO), compensate employees, establish offices, and set policies that guide the industry’s development (Article 4 – 79956(a)(d)(e)(g)). Also, the commission will have the authority to appoint members of the commission board of directors (Article 4 – 79956(c)).

• Research, Education and Outreach: The commission will be to promote research, education and outreach on agave cultivation and production, that may include research on best practices for agave farming, pest control, environmental impacts, and agave processing techniques (Article 4 – §79956(k), (l) (s)).

• Marketing and Promotion: The commission will conduct activities of marketing to promote agave and agave products (Article 4 – §79956(s)).

REFERENCE: FACT SHEET

What is the Timeline?

The bill will come into effect on January 1st, 2025. From this date, the proponents of the bill (The California Agave Council) can request at any time to the California Secretary of Food and Agriculture to start the process to establish the California Agave Commission (Article 5 - 79961).

Enlisting Process: The enlisting process will start on the date when the proponents request the enforcement of AB 2606 (still unknown) and will last up to 90 days (Article 5 - 79961).

The California Secretary of Food and Agriculture will send a public announcement to request:

• Agave growers to enlist by submitting their name, mailing address, planted acreage; and

• Agave producers to enlist by submitting their name, mailing address, names and addresses from whom agave has been received for processing, the paid weight to the agave growers in the previous growing season.

Referendum Voting Process: Once the enlisting process has ended, the California Secretary of Food and Agriculture will determine the period for the referendum voting process. The California Secretary of Food and Agriculture will use the information collected in the list to send ballots for voting in favor or against the creation of the California Agave Commission. The agave growers will receive their ballots and execute their formal vote to create or not the commission (Article 5 – §79961 to §79966). The voting process cannot be less than 10 days and longer than 60 days. (Article 5 - 79963).

Counting Process: The California Secretary of Food and Agriculture will count the votes and determine if the California Agave Commission was approved by the growers and producers to be established or not, according to the voting rules (Article 5 - 79962)

• If voted against, the process will end, and no commission will be established, meaning growers and processors will not be required to pay assessments or adhere to the proposed regulations (Article 5 – §79966)

• If voted in favor, the commission will be established (Article 5 – §79965), and all growers and processors will be required to register and pay assessments (Article 6 – §79971). The commission will likely begin operating and collecting fees sometime after the voting verdict, once the formalities of establishing the commission are completed.

REFERENCE: FACT SHEET

What Are the Voting Rules to Establish (or Not) the California Agave Commission?

[Coming soon]

Why Should I Care About It?

1. Disproportionate Burden on Small Growers and Processors

AB 2606 authorizes the California Agave Commission to levy assessments on growers and processors up to $50,000 annually based on acreage or tonnage processed (Article 6 - 79971). Given the long growth cycle of agave—anywhere from six to thirty five years—this fee structure imposes an undue financial burden on small growers who may not see returns for years. Large corporations, with greater financial resources, would easily absorb these additional costs, further consolidating market power. In addition, the levy structure disproportionately favors monoculture cropping of early-maturing, high-sugar agave cultivars to offset costs. It disadvantages farming models that encourage diversity in native, endangered species and seek to cultivate agave with the least use of agrochemicals and pesticides, thus extending the ripening cycle. Further, those seeking to integrate vertically by establishing a distillery may find the risk of being double taxed for the same raw material prohibitive.

Recommendation: There are many alternatives to address this, for instance waiving the fees to small growers until they have their first harvest, so they can be in batter financial position to pay for fees and analyze. Take our survey and share with us your ideas.

2. Mandatory Compliance

Unlike other agricultural or alcoholic beverages commissions in the state which are voluntary, adherence to the rules set by the California Agave Commission is mandatory to all growers and processors. Growers who have already begun cultivating agave without knowledge of the Commission risk penalties, both financial and legal. There is no opportunity to “opt-out”.

Recommendation: AB2606 can be modified to be a voluntary registration, so, as the commission is established, growers see the benefit of it and join on a voluntary basis.

3. Voting Disparity Based on Acreage

The Commission establishes a voting structure that ties voting power to the size of the grower's acreage (Article 5 – 79961, 79962), rather than adopting a “one grower, one vote” system. This approach favors larger growers, leaving small farmers with minimal influence in key decisions. It is crucial for the agave industry in California to be equitable and representative of all stakeholders, irrespective of farm size.

Recommendation: Do not include acreage in any of the bylaws or language for establishing the commission and for electing board of directors.

4. Narrow Focus on Agave for Alcoholic Beverages

The Agave Commission as it is defined in AB2606 narrowly focuses on agave cultivation for alcoholic beverages (Article 2 - 79922) and critically neglects the myriad of other uses for the plant including fiber, biofuels, livestock feed, culinary ingredients, medicinal products and other innovative applications. This narrow vision risks creating a one-size-fits-all regulatory framework that stifles innovation and growth into emerging sectors. Almost certainly it would result in unintended consequences and undue regulatory burdens on small, niche producers that do not fit the narrow scope of agave for alcohol-only production. Leading agave innovation, research and development in California with this limited vision would create a significant bias that could affect the potential for regenerative agriculture and the diversity of agave derived products.

Recommendation: The commission should also exclude agave growers that are producing cattle fed, food, nutritional products, biofuels, among others.

5. Cultural Significance of Agave

Agave has profound cultural and historical significance for indigenous communities in Latin America, and California. The bill overlooks this important heritage. This is a missed opportunity for a more inclusive approach that would recognize and honor agave’s cultural value, ensuring that it is not exploited solely for commercial purposes.

Recommendation: The bill can include in Article 1 some language to recognize the value of agave as part of the cultural identity of pre-Hispanic cultures of Mesoamerica.

6. Lack of Transparency in Board of Directors Selection

The process for selecting future members of the Board of Directors remains vague. The initial nine members of the Commission’s Board will be appointed by the Secretary of the California Department of Food and Agriculture, and this first group will establish the rules for subsequent board selections (Article 5 – §79967). Depending on who is selected for the initial board, they will determine the criteria for future appointments. This raises concerns about ensuring fair representation for small-scale farmers and non-traditional groups. Without safeguards in place, the board composition may become skewed, with larger players being overrepresented, leading to decisions that favor their interests at the expense of others—potentially creating a classic case of taxation without representation. Without fair representation, the commission could exacerbate market inequalities rather than fostering a diverse and competitive agave industry.

Recommendation: AB2606 can add language to define the procedures on how board of directors will be selected for the first time, describe the process and incentivize the participation of the broader community of agave growers and processors.

7. Potential Misuse of Power

The broad enforcement powers granted to the commission, including the ability to levy civil penalties and bring legal actions, raise concerns about potential misuse of authority. Small farmers are particularly vulnerable to punitive measures, which could be disproportionately applied or misused against those who lack the resources to navigate complex regulatory requirements. The bill, as it stands, does not address this concern nor list any reasonable

Safeguards.

Recommendation: From the get go, the commission should have clauses to have accountability from their board of directors, CEO, personnel and members.

8. Lack of Transparency by the California Agave Council (CAC)

An open and inclusive approach is vital for developing fair and effective policies for this emerging industry. Unfortunately, the California Agave Council, which advocated for and helped pass this legislation, did so without actively reaching out for input from the broader agave community. Even members of the CAC were unaware of the bill until it was already passed. This raises serious concerns about the transparency of the process and the intentions of the proponents.

Recommendation: The California Agave Council should reach out to their members to explain the process for lobbying the AB2606 bill, what was the rationale. It is never too late to provide explanations about the rationale for the AB2606.

9. Missed Opportunity for Climate-Smart Agriculture

Agave is uniquely suited for soil regeneration, fire mitigation and climate-smart agricultural practices, especially in water-scarce regions of California. However, AB2606 and the proposed commission fails to promote the environmental benefits of agave cultivation. Integrating provisions that encourage climate-smart practices would support the industry’s future as a critical cornerstone in sustainable agriculture in the state.

Recommendation: AB2606 can add language to highlight that agave is not only a response to water scarcity, but also that agave production can provide a gateway for climate smart agriculture practices that can help with climate mitigation and regenerative agriculture.

Conclusion

It is concerning that the Agave Council of California has pushed this bill through without prior consultation with its members. While not all agave growers in California are represented on the Agave Council, it has a crucial responsibility as the voice of an emerging agricultural sector in the state. The lack of transparency and participation in the legislative process raises legitimate concerns about representativeness and decision making within the commission. It also raises questions about possible special interests that may be influencing the management of an industry with so much economic and environmental potential.