New Bill Attempts to Forestall Thousands of Temporary State Cannabis Licenses Expiring

Press release from the office of Senator Mike McGuire:

Currently, there are over 10,000 temporary state cannabis licenses in the state system that will be expiring between now and the month of July 2019. In March alone, over 1,000 temporary growing licenses issued by the California Department of Food and Agriculture are set to expire.

The State – under current law – has no ability to extend a temporary license, despite the fact thousands are set to expire. To make matters worse, thousands of applicants who wanted to comply with the law and applied for a temporary license did so in the last quarter of 2018, leaving a massive backlog for the state regulating agencies.

As the temporary licenses come due, if the state can’t approve or deny an annual license prior to the temporary license expiring, the license holder – for example, the grower, farm, distributor or retailer – will no longer be operating legally and will be kicked into the black market.

“Bottom line is this: This bill will protect thousands of cannabis farmers, in particular, who did the right thing and applied for and secured a state license. But because their temporary license is about to expire, and because of the inability to extend their license due to existing state law, they could be forced into the black market. Obviously, this can’t stand which is why we’re moving quickly to keep a legal, regulated market here in California from collapsing,” Senator McGuire said.

“We have many folks in the cannabis industry who have worked hard to comply with new rules and requirements, and we have, from the start, experienced some growing pains as state and local governments have also worked hard to get their processes running smoothly,” said co-author Assemblymember Jim Wood. “This bill will provide some short-term relief to those who have submitted their annual license applications on time and allow the various state agencies to catch up with the volume of applications that have been submitted.”

This massive volume of temporary licenses creates the real risk that not all provisional annual license applications can be processed prior to temporary licenses expiring. There are an estimated 10,000 temporary licenses expiring in 2019 – 23 today alone will go from legal to illicit, at no fault of their own. This is the worst way to transition a multi-billion dollar agricultural market – which employs tens of thousands of Californians. Without legal licenses, there isn’t a legal, regulated market in California.

“We can’t afford to let good actors who want to comply with state law fall out of our regulated market just because timelines are too short and departments have been unable to process applications. Without legal licenses, there isn’t a legal, regulated market here in the Golden State,” Senator McGuire said.

SB 67 will fix this. The bill allows the state to extend temporary licenses held by licensees while their annual application is being processed, so long as the annual application was submitted before the temporary license expired.

SB 67 will also improve the provisional annual license process in the state. It allows licensing authorities to do all in their power to convert temporary licenses to provisional annuals. SB 67 allows licensing authorities to grant provisional annuals to those without temporary licenses once the backlog of applications for those with temporary licenses is resolved. It also extends provisional licenses to July 1, 2020.

SB 67 creates a short-term solution to avoid an impending crisis. It requires any licensing authority who uses the extension authority to provide certain metrics – how many temporary licensees have submitted annual applications, how many have not, and how many temporary licenses have expired – to the legislature about how the provisional annual applications are being processed. This reporting will allow the Legislature to continue the conversation about licensing through the 2019 legislative session.

SB 67 was approved in its first Senate committee today with an 8 to 0 vote in the Senate Business and Professions Committee.