ICYMI: California Cannabis Provisional Licenses Are Given New Life

On July 1, Governor Newsom signed into law AB 97 and SB 97, which combined, extend the life and power of provisional cannabis licenses, giving much needed relief to licensees sitting on temporary licenses that were about to expire and/or that are awaiting their provisional licenses to issue in the face of massive red tape at the state licensing level. These two bills also support increased and more aggressive enforcement against illegal operators and against non-licensees that support or assist illegal activity that violates the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”).

Here are the major highlights (in my opinion) from these bills:

More enforcement options.  Remember when the Bureau of Cannabis Control (“BCC”) tried to go after Weedmaps for its alleged illegal advertising assistance to non-licensees? Well, the BCC will now have a blank check to pursue unlicensed companies that help people violate MAUCRSA. Specifically, the new bills state that:

“A licensing authority may issue a citation to a licensee or unlicensed person for any act or omission that violates or has violated any provision of [MAUCRSA or its regulations].” In addition,  regulators may “assess an administrative fine (per citation) not to exceed . . . thirty thousand dollars ($30,000) per violation by an unlicensed person . . . In assessing a fine, a licensing authority shall give due consideration to the appropriateness of the amount of the fine with respect to factors the licensing authority determines to be relevant, including the following:

(1) The gravity of the violation by the licensee or person.

(2) The good faith of the licensee or person.

(3) The history of previous violations.

(b) [These] sanctions . . . shall be separate from, and in addition to, all other administrative, civil, or criminal remedies.”

Whether this bill was a direct result of the BCC’s enforcement efforts against Weedmaps is anyone’s guess. In any event, unlicensed aiders and abettors beware.

Licensing simplification.  You no longer need to have or have held a temporary license to get a provisional license. You now only need to have filed a completed annual license application with the state and also demonstrate proof of California Environmental Quality Act (CEQA) compliance (which is painstaking and time-consuming for most cultivation licensees) and local authorization from your city or county (or demonstrate efforts to show that such approvals are underway) and you’ll be qualified to receive a provisional license.

Provisional license renewals.  Provisional licenses will still be good for up to a year, but they can now be renewed for additional year-long terms until January 1, 2022.

Organic cannabis certification.  We’re getting an organic cannabis certification program (similar to organic certification for products that already exists under California and federal law) by 2021 for cultivated and manufactured products, and you basically cannot label your products as “organic” until that program is up and running (since you can’t get certified organic status for your cannabis products from the Feds).

Social equity boost.  The state added more meat on the bones to its own social equity technical assistance program for participating local jurisdictions, which is much needed as cities have struggled significantly to get social equity sustainably off the ground.

Overall, the biggest boon from these bills is probably the fact that provisionals are the new temporary license, and that will be the case until 2022. This will likely lead to longer issuance times for annuals across all state agencies, but it will allow more people to enter the licensed system without having to wait months and months for any kind of licensure. And in order to get that provisional, you’ll still need to comply with CEQA, secure local authorization, and get your ducks in a row on some fairly involved annual license applications that include real property information and the submission of structured standard operating procedures. So, prepare now accordingly!