Updates on local licensing from two of California’s cultivation hubs reveal both the large amount of potential new supply that could enter the market over the course of this year, as well as the possibility that some operators could miss deadlines that cause them to lose their legal status.
A report from the Ukiah Daily Journal calls attention to the torpid pace of Mendocino County’s local licensing process. According to the Journal, the county received almost 1,200 applications for local cultivation permits as of the end of November 2018, but to this point has only given out 200. A recent report from the California Department of Food and Agriculture (CDFA), which licenses cannabis cultivators, states that there were 691 active temporary cultivation licenses issued by the state to Mendocino County growers as of the end of 2018. Those licenses encompass a smaller number of distinct businesses, as some hold multiple permits. CDFA’s figures also include businesses located in incorporated cities within Mendocino County that may have their own local licensing process. Of the 691 active temporary licenses issued to cultivators in Mendocino County, 301 are for operations in unincorporated areas.
The figures above indicate that county officials have attested to state regulators that several applicants that have not yet received local permits nevertheless have enough local authorization to receive a temporary state license and operate in the regulated commercial market. Depending on when they were issued or renewed, temporary licenses will begin expiring at some point early this year, with all invalid by the end of Q1 2019 at the latest. After that, businesses will have to qualify for either a provisional or an annual state license.
Given the large number of cultivation license applicants in Mendocino County that have not yet received municipal approval or a temporary state license, it appears that there is a significant amount of production capacity that could yet come online over the course of this year. However, given the slow progress of local licensing, along with upcoming deadlines on the state level, it is possible that some operators could be compelled to drop out of the regulated market, at least for a time, if the proper approvals are unable to be secured. Those without temporary state licenses as of the end of 2018 will have to gain an annual license outright, which comes with more stringent requirements and could be a lengthy process.
A similar situation is unfolding in Santa Barbara County, which emerged as a new cannabis cultivation hub with the advent of the state’s licensed system last year. The Lompoc Record recently interviewed Dennis Bozanich, the deputy executive officer for the county, who provided insight on the state of local licensing of cultivation operations. Bozanich stated to the Record that there were 76 cannabis farmers in Santa Barbara County with active temporary cultivation licenses from the state, whose parcels cumulatively encompass between 150 and 200 acres.
He also pointed out that for those growers to gain an annual license they must first obtain a land use permit from the county. To this point, only four have done so, according to Bozanich’s statements to the Record. However, he also said that some operators may be eligible for a provisional license but did not specify a number. Overall, Bozanich emphasized that Santa Barbara County cannabis farmers should move expeditiously to gain their formal local approvals prior to the lapse of their temporary state licenses.