In early July, Governor Gavin Newsom signed Assembly Bill 97 and Senate Bill 97 into law, modifying various aspects of California’s commercial cannabis landscape. According to a bulletin issued by the state Bureau of Cannabis Control (BCC) last week, “the requirements to obtain a provisional commercial cannabis license in California have changed,” as a result of the new legislation. Now, “An applicant is no longer required to hold or have held a temporary license to obtain a provisional license.”
The BCC’s bulletin goes on to note that an individual or entity hoping to enter California’s regulated cannabis market must submit a completed annual license application, in addition to providing evidence that compliance with both the California Environmental Quality Act (CEQA) and local ordinances is either completed or underway. The same requirements were in place previously for those seeking a provisional license, on top of the mandate that a provisional license could only be issued to the holder of a temporary license for the same commercial activity at the same premises.
The removal of the requirement that businesses must have previously held a temporary license to obtain a provisional one could allow those who have seen their temporary permits expire re-enter the market more quickly. Prior to the passage of the above-noted legislation, such entities would have been required to undertake the sometimes months-long process of obtaining an annual license outright. Additionally, new entrants to California’s licensed cannabis system should be able to get up and running more quickly now that they do not have to wait for their annual license applications to be processed in full.
Finally, AB 97 and SB 97 contain provisions that allow provisional licenses to be extended. Previously, provisional licenses were valid for a year after issuance and could not be renewed. Now, they may be extended for additional 12-month terms through the end of 2021. As a result, provisional licensees can theoretically operate without annual licenses until some time in 2022, depending upon when they first obtain their permit, rather than at some point in 2020. This will prevent operators from being pushed out of the regulated market, as hundreds of cultivation businesses have been this year upon the expiration of their temporary permits.
Overall, the passage of AB 97 and SB 97 should help stabilize and expand the number of businesses able to participate in California’s licensed system.