No Temporary State Cannabis License? No Problem for a Provisional After Passage of SB 97

The way California is issuing state cannabis licenses is getting a makeover. Slow processing times for applications have dogged state cannabis regulators from approving the majority of applicants for state cannabis cultivation, retail, distribution, and manufacturing licenses. The time it takes the State to process annual applications can leave applicants out of compliance if temporary licenses expire while applicant’s annual licenses are still being processed. This has been a huge issue if you are in the middle of a growing season when your state temporary license expires.

In response, the State Legislature enacted Senate Bill 97 on June 27, 2019. Under prior law, to be issued a provisional cannabis state license, an applicant would have had to hold a temporary license for the same activity on the same premises. SB 97 changes that, requiring only that a provisional license may be issued if an applicant has submitted a completed license application including demonstrating that compliance with the California Environmental Quality Act is under way and evidence that the applicant is in compliance with their local jurisdiction, or that compliance is underway.  

SB 97 goes further than just making it easier to obtain provisional licenses. The law also provides that a licensing authority has discretion to renew provisional licenses until the licensing authority issues or denies an applicant’s provisional license. Provisional licenses shall be valid for no more than 12 months from the date it was issued. If the licensing authority decides to renew a provisional license, it shall provide the applicant notification of the outstanding items needed to qualify for an annual license that is specific to the licensee.

But, as it seems with all cannabis laws, this cookie comes with a caveat. SB 97 has beefed up enforcement of non-compliant commercial cannabis activity and the penalties for failing to comply with the law. Under the law, a licensing authority may issue a citation to a licensee or unlicensed person for any act or omission that violates or has violated any provision of the Business and Professions Code or any regulation adopted pursuant thereto. As part of the citation, the licensing authorities may assess an administrative fine not to exceed five thousand dollars ($5,000) per violation by a licensee and thirty thousand dollars ($30,000) per violation by an unlicensed person. To those familiar with Humboldt County’s abatement process, this should come as no shock: the law provides that each day of a violation shall constitute a separate violation.

The bill also gives a nod for all those cannabis farmers waiting to get organic certification. By January 1, 2021, the Department of Food and Agriculture shall establish a program for cannabis that is comparable to the National Organic Program (Section 6517 of the federal Organic Foods Production Act of 1990, and the California Organic Food and Farming Act. In the meantime, a person shall not represent, sell, or offer for sale any cannabis or cannabis product as organic except in accordance with the National Organic Program, if applicable. A person shall not represent, sell, or offer for sale any cannabis or cannabis product with the designation or certification established by the Department of Food and Agriculture.

To this author, it would have seemed easier to leave the provisional licensing scheme in place and make temporary licenses valid through the end of the year. If you need help with state licensing, our office is happy to help you navigate the cannabis licensing process.