Can SB 67 Save Cannabis Cultivators?

Golden State Government Relations
04.10.19 09:16 AM Comment(s)

SB 67, the short term solution for the California Department of Food and Agriculture’s (CDFA) backlog of temporary licenses, has finally passed through the Senate. The bill introduces new language to Section 26050.3 of the Business and Professions Code that will allow the agency to extend temp license lifespans. Right now they are expiring at an accelerating rate - much faster than the CDFA can issue annual and provisional licenses.

Cultivators who lose their temp license before the CDFA can approve or deny their application would be forced to either halt production or fall into the black market. Either way, it spells crisis for the legal cannabis supply chain.

Temp license breakdown

Temp licenses were introduced to bide time for businesses waiting on provisional or annual approval. As one of the top three cannabis regulating agencies, the CDFA maintained authority to issue and renew temps for cannabis cultivators until January 1st, 2019. Originally, the Medicinal and Adult Use Cannabis Regulation and Safety Act (MAUCRSA)  gave temp licenses a 120 day lifespan, with an option for CDFA approved 90-day renewal.

Unfortunately, thousands of farmers face lengthy application requirements that vary from local approval, sign offs from the Department of Fish & Wildlife, and CEQA mandated Environmental Reviews. Licenses can take months or even years to reach approval. In the meantime, temps are expiring by the day.

Licenses in crisis

Currently, there are 6,924 temporary farm licensees on file with the CDFA. Thirty-nine of those annual licenses have been approved pending fee payment. Of the rest, nine farms have annual licenses. In April, around 4,000 temporary licenses will expire. Others will expire from May through July.

At the CDFA’s current pace of 48 annual licenses approved since January 1st, 2019, regulators are on track to license maybe double that number (144 total) by July. Californians consume an estimated 640 metric tons of cannabis per year. That’s about 1.4 million pounds.  

How can SB 67 help?

SB 67 will grant the CDFA the ability to renew expired or nearly expired temp licenses for cultivators who submitted their annual state license application and fees for the same premises and commercial cannabis activity prior to their temp license expiration date.

The temporary license would remain valid until:

➔ the department issues an annual license or provisional license;

➔ 30 days after the department denies or disqualifies, or the licensee abandons the application for an annual license; or

➔ the department notifies the temporary licensee that the licensee is eligible for an annual or

provisional license.

This will only help cultivators who have submitted their completed applications (pending CEQA approval in many instances) before their temp license expires. The license will remain valid until the CDFA issues the operant their provisional or annual license (or the business is denied for lack of compliance or other factors). The businesses will then have access to commercial cannabis compliance systems such as the California Cannabis Track and Trace (CCTT), currently not issued to temp licensees.

What it won’t do

Sb 67’s introduction to the Assembly focuses on changing key language in the current law to prevent total industry collapse. It is not, however, a catch all resolution to the greater structural concerns for the industry as a whole. Here is what businesses should not expect from SB 67 should it pass through the Assembly and reach the Governor’s desk:

➔ The bill would not benefit farmers whose temporary license expired before they were able to submit an application that meets all necessary requirements.

➔ The bill would not entitle the applicant or licensee to a hearing or an appeal should the CDFA refuse to extend, revoke, or suspend a temporary license.

➔ The bill would specify, among other things, that a temporary license does not obligate the department to issue that licensee an annual or provisional license.

What about provisional licenses?

In 2018, SB 1459 brought mild reprieve in 2018 by introducing provisional licenses. These were meant to act as a bridge between temp and annual licenses. Since temps were no longer going to be issued following January 1st 2019, provisionals were supposed to fill the gap as temps expired. Unfortunately, even provisional licenses are not being issued in time.

SB 67 is the glue that will hold businesses together long enough for the CDFA to convert temporary licenses into provisional ones.

Want to see SB 67 turn into law? Contact your local legislator!

Have more questions about SB 67? Reach out to the Golden State team. 

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