Bridging the Gap: Provisional Cannabis Licenses

October 11, 2018

By Lauren Mendelsohn

Cannabis operators in California who are currently operating under a temporary state license but who have not yet received their annual state license will get some reprieve next year thanks to Senate Bill 1459, which was recently signed into law by Governor Brown. SB 1459 allows the state’s cannabis licensing agencies – the Bureau of Cannabis Control, the Department of Food and Agriculture, and the Department of Public Health – to issue “provisional licenses” to qualifying applicants until January 1, 2020. The bill has an urgency clause, meaning it is effective immediately.

Provisional licenses are a new type of license that was created by the California state legislature to address the problem of backlogs in processing applications at the local and state levels, and the licensing agencies not being able to issue or renew temporary licenses beyond January 1, 2019. These provisional licenses will be valid for 12 months from the date issued, and they cannot be renewed. Provisional licenses will only be issued until January 1, 2020 but a particular provisional license might expire beyond that date, based on the date it was issued. As is the case with temporary state cannabis licenses, applicants cannot appeal an agency’s refusal to issue a provisional license. Provisional licensees must comply with the state-mandated track and trace system, METRC, which is not required of temporary licensees.

You may be wondering what the process is to apply for these new provisional cannabis licenses. In fact, there is no separate application for provisional licensure. Rather, applicants are eligible to be considered for a provisional license if (1) they currently hold, or have held, a temporary state license for the same premises and same type of commercial cannabis activity that they are seeking to do on an annual basis and (2) they have completed an annual license application for that premises, including evidence that compliance with CEQA is underway and payment of the applicable application fee.

As of the time of writing this post, none of the state cannabis licensing agencies have issued any annual licenses, although rumor has it that the first might be issued later this month. Additionally, many businesses who are operating under a temporary state license are still waiting for full local approval, a process which may not be finished by January.

Read the full text of SB 1459 below:

SECTION 1. Section 26050.2 is added to the Business and Professions Code, to read:

26050.2. (a) A licensing authority may, in its sole discretion, issue a provisional license to an applicant if the following conditions are met:

(1) The applicant holds or held a temporary license for the same premises and the same commercial cannabis activity for which the license may be issued pursuant to this section.

(2) The applicant has submitted a completed license application to the licensing authority, including evidence that compliance with the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code) is underway.

(b) A provisional license issued pursuant to this section shall be valid for 12 months from the date issued and shall not be renewed. Except as specified in this section, the provisions of this division shall apply to a provisional license in the same manner as to an annual license.

(c) Without limiting any other statutory exemption or categorical exemption, Division 13 (commencing with Section 21000) of the Public Resources Code does not apply to the issuance of a license pursuant to this section by the licensing authority.

(d) Refusal by the licensing authority to issue a license pursuant to this section or revocation or suspension by the licensing authority of a license issued pursuant to this section shall not entitle the applicant or licensee to a hearing or an appeal of the decision. Chapter 2 (commencing with Section 480) of Division 1.5 and Chapter 4 (commencing with Section 26040) of this division shall not apply to licenses issued pursuant to this section.

(e) This section shall remain in effect only until January 1, 2020, and as of that date is repealed.

SEC. 2. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

SEC. 3. The Legislature finds and declares that Section 1 of this act adding Section 26050.2 to the Business and Professions Code furthers the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act of 2016.

SEC. 4. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:
The significant number of cultivation license applications pending with local authorities that do not have adequate resources to process these applications before the applicants’ temporary licenses expire on January 1, 2019, threatens to create a major disruption in the commercial cannabis marketplace.

CDFA has also published this fact sheet about provisional licenses.

This information is provided for educational purposes only and is not intended as legal advice. For specific questions related to California’s cannabis laws, including how to obtain a license for commercial cannabis activity, contact the Law Offices of Omar Figueroa at (707) 829-0215 or info@omarfigueroa.com to schedule a confidential legal consultation.