California marijuana farmers are facing a crisis. Currently, all 9,464 state issued temporary cannabis cultivation licenses, have expired. Meant to be replacing those, for businesses continuing to meet the required regulations, are either provisional or permanent annual cannabis business licenses.
The catch though, the California Department of Food and Agriculture (CDFA) is yet to show its ability to approve those provisional or permanent licenses, at the same pace applications are being lodged.
The backlog on approvals may be due to the complexity of the licensing application process itself. Tellingly, by mid July 2019, only 2,053 provisional licenses and 230 permanent licenses had been granted. As it stands, when applying for prospective licenses, cannabis farmers are expected to demonstrate compliance with the stringent California Environmental Quality Act (CEQA), as well as submit:
- Background checks;
- Surety bonds;
- Real property documents;
- Detailed site plans;
- Farm management practices;
- Waste management protocols;
- Security procedures; and
- Pesticide measures.
Obviously once these detailed applications are submitted, someone then needs to review them, which is also a lengthy process. The lag time evident in securing updated license approvals is leaving 7,181 cannabis farmers with a dire choice – either cease operating until a new license is approved, or continue growing and selling, and risk fines as high as $30,000 a day for trading without a license. For many growers, who are low on resources, this is a perilous predicament.
As the cannabis industry continues to grow in California, on July 1 Governor Newsom signed Assembly Bill 97 into law. Essentially, AB 97 helps make way for additional provisional licenses and removes a previous barrier, requiring a cannabis farmer to first hold a temporary license before applying for a provisional license. AB 97 not only opens the doors for a new wave of marijuana growers to join the legal cannabis landscape, but a second function of AB 97 also enables the renewal of provisional licenses for growers who have already obtained these. This particular change gives cannabis farmers more time and some leeway to meet the stringent compliance requirements of the CEQA, before securing a permanent annual license.
But AB 97 does not help temporary license holders. Under the current law, temporary licenses cannot be renewed or extended. To assist farmers with expired temporary licenses who are still waiting for their prospective or permanent licenses, Senator Mike McGuire sponsored Senate Bill 67. It sought to extend and reinstate a grower’s temporary license until September 15, 2019, to help farmers continue operating legally, while waiting for the CDFA to grant their subsequent license approvals. In order to benefit from SB 67, growers must have obtained their temporary licenses and applied for a provisional or permanent license prior to the expiration of their temporary license.
Unfortunately for those 7,181 temporary cannabis license holders now needing new licenses, SB 67 has stalled and shows little signs of progressing any further. Legislators appear to believe AB 97 adequately addresses the majority of cannabis business license issues, meaning farmers yet to receive their updated license approvals, must merely wait it out, no matter how long that takes.
Legal Implications Thus Far
State lawmakers are yet to offer any assurances of leeway for marijuana farmers now waiting on the CDFA to approval their provisional or permanent cannabis business license applications. Many will watch with interest to see whether examples are made by law enforcement in this area, amid city sanctioned crack downs and blitzes now in effect that target blatant black market cannabis business operations.
California Department of Food and Agriculture
Assembly Bill 97
Senate Bill 67