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California pot shops about to be on the hook for steep state fees, background checks

California sought to jump-start its marijuana industry in January by giving businesses temporary, 120-day permits that briefly waived big fees and other costly requirements, but that grace period is ending and many say the expense and red tape of getting a regular license is a headache.

Some pot shops face fees of $73,000 before they can get a regular annual license from the state Bureau of Cannabis Control. Costly upgrades to security and product testing also kick in soon, and sellers and growers will have to pass a background check that could disqualify anyone with serious criminal records.

Although the grace period technically ends Tuesday for those who received temporary licenses Jan. 1, the state bureau is allowing businesses that apply for annual licenses to continue operating with 90-day extensions while their applications are being processed.

“It’s all a bit of a hardship right now,” said Nicole Neubert, a San Francisco attorney who represents state-licensed cannabis businesses. “All of these costs of becoming regulated are hard for these businesses to incur, especially at a time when the market is so strange.”

The state began licensing the growing, testing, transportation and retail sale of marijuana for medical and recreational use on Jan. 1. Voters approved Proposition 64 in 2016.

The bureau decided to issue temporary permits without fees and other costly requirements to allow cannabis businesses to get established and reduce the amount of marijuana being purchased on the illicit market.

So far, the bureau has issued just over 1,100 temporary licenses to sellers, distributors and testers, while there have been more than 120 applications for annual licenses for those operations. The state agriculture agency has separately issued 3,412 temporary licenses and has so far received more than two dozen requests for annual permits.

Some firms received temporary licenses after Jan. 1 so their temporary permits are not expiring this week.

“As long as their application is being processed, they may receive an extension of the temporary license,” said Alex Traverso, a spokesman for the bureau.

Holders of temporary licenses have not been required to prepackage and label their product and buy it from a licensed distributor. Those are mandates for annual license holders and kick in on July 1.

Another big change is a requirement for license applicants to go through background checks that could disqualify some people if they have serious criminal records.

In addition, cities and counties have been slower to give the required local permission for cannabis businesses, which can result in the state delaying approval of annual permits, said Hezekiah Allen, director of the California Growers Assn.

To Read The Rest Of This Article By Patrick McGreevy in the Los Angeles Times

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Published: April 30, 2018

Founder & Interim Editor of L.A. Cannabis News

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