California Cannabis Provisional Licensing is Winding Down

16 Mar California Cannabis Provisional Licensing is Winding Down

California Cannabis provisional licensing is beginning its wind down process at the end of this month. Here is what’s happening:

1. Until June 30, 2022, with certain exceptions, the Department of Cannabis Control (“DCC”) may issue provisional licenses only if applicants submit a complete annual cannabis license application with the corresponding fee on or before March 31, 2022.
2. From June 30, 2022, and until September 30, 2022, the DCC may issue provisoinal licenses to outdoor growers with less than 20,000 square feet of canopy if they properly apply for provisional licensing before June 30, 2022.
3. After June 30, 2022, and until June 30, 2023, the DCC may issue provisional licenses to local equity applicants so long as they are eligible and properly apply for licensing before March 31, 2023.
4. California cannabis provisional licenses will not be effective as of January 1, 2026.

Cannabis provisional licensing is currently controlled by Section 15001 of the California Code of Regulations that govern commercial cannabis activity. Cannabis provisional licenses are a means to end for operation, while licensees pursue an annual cannabis license from the state.

The same regulations that apply to annual cannabis licenses also apply to cannabis provisional licensing. Just because you receive a cannabis provisional license doesn’t mean you’re guaranteed to get an annual cannabis license. To continue to hold and renew a provisional until 2026,  you must “actively and diligently” pursue an annual license.

If you’re neither a smaller outdoor cultivator nor an equity applicant, what do you need to do before the end of this month to ensure that you get your provisional license? Number one is to fill out and submit an annual license application to the DCC along with the required licensing fee. The required annual license application information can be found at Section 15002 of the California cannabis regulations. All applications will be submitted online via the state’s licensing portal. The annual application, itself, requires a lot of information about the business, including a complete list of financial interest holders, the company’s SEIN, certain corporate documentation, evidence of compliance with CEQA (or exemption therefrom), proof of right to real property, a premises diagram, and much more.

If you’re a cultivation provisional license applicant, life is a little harder. In addition to all of the information required by 15002, cultivation applicants must provide the DCC with:

A final streambed alteration agreement; or a draft streambed alteration agreement provided by the Department of Fish and Wildlife and signed and returned to the Department of Fish and Wildlife; or Written verification by the Department of Fish and Wildlife that a streambed alteration agreement is not needed; or Written verification by the Department of Fish and Wildlife that the applicant submitted a notification described in section 1602 of the Fish and Game Code, submitted payment of applicable fees pursuant to section 1609 of the Fish and Game Code, and is responsive to the Department of Fish and Wildlife as prescribed in section 26050.2 of the Business and Professions Code.

Further, now that we’re passed January 1, 2022, if any provisional license issuance would cause a cultivation applicant to “hold multiple cultivation licenses on contiguous premises to exceed one acre of total canopy for outdoor cultivation, or 22,000 square feet for mixed-light or indoor cultivation,” the provisional license application will be rejected.

The main issue with the full pursuit of the annual license (not just filling out the application completely and paying the fee) is traversing CEQA–a provisional license is meant to keep you operational while you go through the headache of CEQA in pursuit of your annual license. We wrote about that here when provisional licenses were first introduced, and here again as the state debated what to do about the immense delay it was causing licensees.

The bottom line is that if you miss this March 31 deadline, the only path forward to licensing is the annual license application itself, which requires proof of full compliance with or exemption from CEQA. That could take many months to accomplish, significantly delaying operations. So, don’t wait until the last minute to get all your ducks in a row for your provisional license!