California Gov. Gavin Newsom announced Friday his new state budget proposal – called the California Comeback Plan – will include $100 million to alleviate a bureaucratic logjam that has left thousands of marijuana companies with so-called “provisional” business licenses in danger of shuttering at least temporarily.
To give marijuana growers, retailers and other companies breathing room, Newsom also plans to introduce a trailer bill to allow regulators to issue provisional cannabis business permits for an added six months, until June 30, 2022.
The two moves take aim at a growing problem tied to the provisional licenses, which at some point must be converted to more permanent “annual” licenses.
That process has been delayed for years by red tape, complicated environmental regulations and a patchwork of differing local industry ordinances.
As a result, more than 80% of the state’s marijuana business licenses could be in jeopardy of closing in 2022 – at least temporarily – unless the provisional licensing issue is resolved.
State regulators currently lack the legal power to extend provisional licenses after Dec. 31.
The $100 million in grant monies would be doled out to cities and counties to help local officials process the backlog of provisional licenses awaiting approval to secure the mandatory annual permit.
According to the Newsom administration, the money would be divided among “jurisdictions with high numbers of provisional licenses across the supply chain” in order to deliver the biggest impact for the industry.
As of March, there were a total of 9,950 active cannabis licenses, and roughly 83% of those – or 8,280 – were operating on provisional licenses versus the annual permits.
A large part of the delays in getting provisionally licensed companies transferred to annual permits is the California Environmental Quality Act.
CEQA, as the law is known, has proved time-consuming for companies to comply with as well as for city and county authorities to process applications and ensure they’ve completed all necessary requirements.
“This grant funding aims to serve local governments and a significant portion of the provisional license population, including a number of small businesses and equity operators,” Nicole Elliott, the governor’s senior adviser on cannabis, said in a statement.
“We are committed to maintaining stability across the cannabis supply chain, supporting our local partners, and transitioning provisional licenses into annual licensure more swiftly, without sacrificing California’s environmental commitments.”
Published: May 15, 2021
Founder & Interim Editor of L.A. Cannabis News