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The Provisional Licenses and the End of Temporary Licensing

by Roger Tower on November 20, 2018
The Provisional Licenses and the End of Temporary Licensing

 In the last few months – specifically, since California has issued its proposed Final Regulations on cannabis in July – much has been made of the end of the State issuing and extending Temporary Licenses. This decision to not issue any new Temporary Licenses nor issue any extensions after December 31, 2018, has drawn a great deal of concern from industry insiders, current business owners, and those looking to get started.

And rightfully so.

The Bureau of Cannabis Control has stated that those businesses seeking an initial Temporary License should apply by December 1, 2018, to give them time to process, and those seeking an extension should apply for an Annual by December 31, 2018. This gives businesses a small and rapidly closing window to solidify and submit their applications, let alone amend them as necessary in order to get their Temporary approvals or extensions. Significant public comments have gone to the State with concerns about this December 31, 2018 deadline.

In offering a possible circumventive alternative, the State has enacted Senate Bill 1459, which would allow for what is called a Provisional License. Although this option will benefit several businesses, it is not the stopgap many hoped it would be.

A Provisional License would be valid for a year and would supplant the required Annual Application. However, applicants pursuing a Provisional License must already have a valid Temporary License and must provide all the requirements of the Annual Application except for those pertaining to the State’s CEQA requirements. In other words, the Provisional License applicant must submit essentially all the same requirements as an Annual License in order to get approved for it; the only difference is that the documents pertaining to CEQA would not be required.

The State’s intention here was to give more time for the completion of some of the larger portions of CEQA requirements (exemptions, studies, etc.), and this is a benefit to cultivators mostly, as they face the largest CEQA application burden. Retailers and manufacturers are generally located in pre-existing buildings and are, in that case, largely exempt from the requirements of CEQA anyway. As a result, a Provisional License does little to quell the concerns many businesses had about Temporary License expiration, to begin with.

The State’s various regulatory agencies have not yet codified and enacted these Proposed Final Regulations that eliminate Temporary Licenses, and they are still subject to change. Yet, since they have not changed the Temporary License expiration provision after the first 45-day public comment period when they were released in July and the concerns began, they are very unlikely to change now.

Businesses should not count on Provisional Licenses buying them more time and should be fully prepared for the end of Temporary Licensing at the end of the year by applying as soon as possible.