California Eases Requirements to Obtain Provisional Commercial Cannabis Licenses

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California
Senate Bill 97 Eliminates the Need for Possessing a Temporary License Before a
Provisional License Can Be Secured

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.

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