SB 67 Cannabis Licenses Fact Sheet

By February 21, 2019 Government
1 Degree Consulting

Senator McGuire and Assemblymember Wood have introduced SB 67 as a short term solution to alleviate the significant backlog of annual license applications. The following SB 67 (McGuire) fact sheet was provided by Christopher Nielsen, Legislative Director.

Summary
Cannabis licensing authorities (State Depts., for example)
were authorized to issue temporary licenses until January 1,
2019, that are valid for 120 days and may be extended for
additional 90-day periods at the discretion of the licensing
authority. Due to the processing time for annual licenses
being much longer than expected, thousands of temporary
licenses are set to expire in the coming months before their
annual licenses are considered and/or processed. SB 67 will
provide licensing authorities the ability to grant extensions
until they process the annual application backlog for the
estimated 10,000 temporary licenses.


Background
The state’s licensing authorities, the Department of Food
and Agriculture (CDFA), Dept. of Public Health (DPH),
and the Bureau of Cannabis Control (BCC) were able to
issue four-month temporary licenses to applicants, with
opportunities for 90 – day extensions. The temporary
licenses required proof of local authorization and entitled
the holders to engage in commercial cannabis activity
without completing the annual licensing application
requirements, including CEQA review.
At the end of last year’s session, the legislature was made
aware the local CEQA review was going to hold up the
issuance of annual licenses going forward. To buy more
time for the locals to conduct CEQA reviews, the
legislature passed SB 1459, which authorized a licensing
authority to issue a provisional license to an applicant if theapplicant holds or held a temporary license, demonstrated
substantial compliance with CEQA while local review was
still occurring, and the applicant completed all other
portions of the application. This provisional license
authority sunsets on January 1, 2020.


Problem
The temporary license was intended as an intermediary step
while the state and local jurisdictions managed their own
efforts to come into compliance with the cannabis
regulatory structure. However, due to the significant
amount of annual license applications that came in during
the fall of 2018 after the legislature adjourned, there are
over 10,000 temporarily licenses currently in the system
that will be eligible for a provisional license.
This massive volume of temporary licenses creates the real
risk that not all provisional annual license applications can
be processed prior to temporary licenses expire. CDFA,
DPH, and BCC have been working diligently to address the
sheer volume of licenses that came in prior to the
temporary license authority was lost, but there is no
guarantee they will process all the applications prior to
temporary licenses expiring. For example, over 1000
temporary licenses issued by CDFA are set to expire in the
month of March 2019 alone, with thousands more over the
following months.
In a time where the golden state is working overtime to
bring the cannabis industry out of the black market and into
the light of a legal regulatory environment, 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 in time due to the sheer number of
applications.


Solution
SB 67 allows CDFA, DPH, and BCC to extend temporary
licenses held by licensees while their annual application is
being processed so long as the annual application was in
before the temporary expired and one of the following
applies: The application is being held up by the local
authorization. The application is delayed by the lake and streambed alteration review process. The application is within its period where applicants are provided 90 days to correct incomplete applications.
Further, SB 67 requires any licensing authority who uses
the extension authority to provide certain metrics to the
legislature about how the provisional annual applications
are being processed. SB 67 creates a short-term solution do
avoid an impending crisis, and this reporting will allow the
Legislature to have a fuller conversation about licensing
through the 2019 legislative session, as SB 67’s authority
expires January 1, 2020. Additional discussions – about a
longer term fix to the backlog – will be advancing in a
parallel effort in the coming weeks and months.

Senator McGuire and Assemblymember Wood have introduced SB-67