April 1, 2021
By Tiffany Devitt
Let’s talk about provisional licenses.
The regulated California cannabis industry is headed towards a crisis.
At issue is the upcoming expiration of the provisional license program. After December 31, 2021, the State will no longer be able to issue or renew provisional licenses.
Why does this matter? Currently, 4 out of 5 cannabis businesses are on a provisional license, including cultivators, retailers, and manufacturers. Absent urgent legislative action, over 8,000 cannabis businesses will have to shut their doors indefinitely before the year is out.
Licensed cannabis has strict limits on pesticide and water use.
Take a moment to process that: After years of struggle, we are on the brink of federal legalization. The end of the Drug War is in sight. Moreover, we’re one of the few industries generating new jobs during a worldwide pandemic and national economic crisis; our industry’s tax revenue is propping up the budgets of many California cities and counties. And yet: We’re needlessly facing a potentially industry-wide extinction event.
So, how did we get here? John Schroyer of Marijuana Business Daily wrote an excellent article summarizing the issue here. Here’s the short version:
- California created a one-year provisional license program at the end of 2018 to give entrepreneurs time to meet the steep requirements for annual licensing.
- This program was reauthorized in 2019 for another two years but is scheduled to expire this year.
- The main item preventing cannabis businesses from transitioning from a provisional license to an annual licenses is CEQA, the California Environmental Quality Act.
- Every cannabis company must show full CEQA compliance in order to win an annual license.
- But CEQA compliance takes months if not years. It’s also expensive, sometimes costing hundreds of thousands of dollars. And that’s in a good year. In the context of COVID, mega-fires, power outage, and the like, everyone’s resources are stretched to the breaking point. The State has a backlog of thousands of cannabis-related CEQA reviews.
- And it isn’t just a state issue, many businesses must meet local CEQA mandates as well. Adding to the confusion, some jurisdictions have local cannabis CEQA requirements that are at odds with the state requirements, an issue that must be resolved before businesses in those areas get their annual.
CannaCraft's cultivation staff headed to harvest.
So, what we can do? Fortunately, state Sen. Anna Caballero recently introduced Senate Bill 59. This legislation aims to fix the issue by extending the program for an additional six years. The bill is scheduled to be heard by the Senate Business, Professions and Economic Development Committee on April 5.
We need this to pass. Even the 15% who have Annual licenses need this to pass because no one will thrive if the supply chain collapses.
Between now and then, we need to make our voices heard by inundating the legislator with letters of support. You can find a sample letter of support for AB 59 here. It’s attached as a Word document so that you can edit it as you see fit. Send your letter to Sen. Caballero, your state assemblymember, and legislator, and copy Nicole Elliott (Senior Advisor on Cannabis) and Stuart Thompson (Chief Deputy Legislative Affairs) in Governor Newsom’s office.
Shopping in a licensed dispensary.
If you need help submitting your letter, no problem. Email us here and we’ll work with you to get it submitted.
This isn’t the first time that the California cannabis faced steep odds. We know from experience that if we stand together and stand firm, we can enact monumental change.