Governor Newsom’s California Comeback Plan to Ease Cannabis Provisional License ‘Logjam’

June 2, 2021 Cannabis Business, Entrepreneurs, Legalization

As California’s governor, Gavin Newsom has made it his mission to make the state a “world leader on cannabis.” And now he’s taken an important step in that direction by announcing what he calls the “California Comeback Plan.”

What does the California Comeback Plan mean for cannabusinesses? And what about everyone else? In this article, we’re covering the plan, how your cannabis operation will benefit, and who else it covers.

Need help navigating Cali’s cannabis sector? GET EXPERT ASSISTANCE to structure and scale your cannacompany now.

Governor Newsom's California Comeback Plan to Ease Cannabis Provisional License 'Logjam'

Newsom’s Comeback Plan & What to Expect Operating in Cannabis

The California Comeback Plan includes $100 million in grants and other funding for local governments to tackle their own regulatory challenges. But one of the most pressing issues is how to ease the bureaucratic logjam that has thousands of cannabis companies worried over provisional business licenses expiring.

Governor Newsom will also introduce a trailer bill to provide marijuana cultivators, retailers, and other operations in the space some peace of mind. This bill will let regulators issue provisional cannabis business permits for an additional six months.

These moves focus on the issues surrounding provisional licenses.

Problems with Provisional Cannabis Licenses in California

At this point, we’ve waited years for this progress. Between red tape, complex environmental regulations, and local industry ordinances, the provisional license update has been put off for far too long.

With more than 80 percent of Cali’s cannabis business licenses expiring in 2022, there’s a lot of concern over the provisional licenses. Without the right action, the provisional licensing issue could result in these operations temporarily closing their doors.

Without the legal power to extend provisional licenses after December 31, cannabis business operators are concerned. However, the $100 million grant will help local officials process the backlog of provisional licenses, ensuring these operations get approval to secure mandatory annual permits.

The Newsom administration says that the money will go to “jurisdictions with high numbers of provisional licenses across the supply chain,” ensuring the most significant impact possible for the cannabis sector.

In March, there were 9,950 active cannabis licenses. But around 83 percent of them were operating with provisional licenses. The delays in transferring provisionally licensed companies to annual permits have primarily been the result of the California Environmental Quality Act (CEQA).

The California Quality Act (CEQA) Causing Trouble for Cannabusiness Operators

The California Quality Act (CEQA) Causing Trouble for Cannabusiness Operators

The CEQA has made this process time-intensive for city and county authorities. Processing applications and checking that they meet all of the requirements is overly tedious, which makes it a slow process.

“This grant funding aims to serve local governments and a significant portion of the provisional license population, including a number of small businesses and equity operators,” Nicole Elliott, the governor’s senior adviser on cannabis, explained in a statement.

“We are committed to maintaining stability across the cannabis supply chain, supporting our local partners, and transitioning provisional licenses into annual licensure more swiftly, without sacrificing California’s environmental commitments.”

Here’s how the funds will be divided among local governments:

  • $250,000 will go to the top eight jurisdictions that have the most provisionally licensed cultivation permits.
  • $250,000 will go to the top eight jurisdictions that have the most provisionally licensed manufacturers, testing labs, microbusinesses, retailers, and testing labs.
  • $500,000 of these funds will go to the top eight jurisdictions that have the most provisionally licensed businesses that have been given state grant money to support social equity programs.

This plan is being implemented with the consolidation of Cali’s three marijuana regulatory agencies into one new oversight bureaucracy called the Department of Cannabis Control (DCC). This agency will launch on July 1 and will be responsible for overseeing how this money is dispersed and used.

Provisional Licensing Conditions to Consider

Local governments will need to use the $100 million in grant money to process marijuana business licenses, offer technical support to license applicants, put environmental mitigation measures in place – mainly, towards water conservation – or “other uses that further the intent of the program as determined by the DCC,” a Newsome administration official told MJBizDaily in a recent email.

“This distribution method will result in over 60% of provisional licensees and the cities and counties that permit them being served by these grant dollars,” the email further explained.

Provisional Cannabis Licensing Conditions

Here are the conditions for Cali marijuana regulators providing provisional licensing extensions as outlined under the terms of the trailer bill:

  • Guarantee compliance with certain environmental rules
  • Specify the progress companies need to make to get an annual permit to maintain an active provisional license
  • Remove the provisional expiration date for applicants “making measurable progress toward achieving annual licensure.”

Cities & Counties Most Likely to Receive Grant Capital

The recent budget analysis shared with the CCIA by the Newsom administration claims these are the cities and counties most likely to receive grant monies:

  • Adelanto
  • Commerce
  • Desert Hot Springs
  • Humboldt County
  • Lake County
  • Long Beach
  • Los Angeles
  • Mendocino County
  • Monterey County
  • Nevada County
  • Oakland
  • Sacramento
  • San Diego
  • San Francisco
  • Santa Rosa
  • Sonoma County
  • Trinity County

The analysis also highlights how the budget proposal calls to hire a state deputy director of equity and inclusion as part of the DCC staff. This job will be “tasked with assessing and developing best practices and work programs that achieve social equity.”

Newsom’s Comeback Plan Beyond Cannabis

Governor Newsom presents a $100 billion California Comeback Plan that aims to take Cali’s most persistent challenges head-on. Through this plan, immediate relief will be provided to two-thirds of Californians with Golden State Stimulus checks, which will support small business operations throughout the state.

The California Comeback Plan also proposes major new initiatives and investments to allocate efforts towards. Homelessness and housing affordability, disparities in education, aging infrastructure, and wildfires and climate change are all part of this proposal.

This $100 billion California Comeback plan is the largest economic recovery package in the state’s history. The plan offers comprehensive strategies and outlines significant investments in some of California’s most impacted areas to ensure the state recovers without hesitation from the pandemic’s economic damage.

Here is how this plan will tackle some of Cali’s most significant challenges:

  • Giving immediate relief to the people who’ve felt the most impacts from the COVID-19 pandemic.
  • Taking action regarding the state’s homelessness and housing affordability crisis.
  • Improving public schools to ensure they promote opportunity.
  • Building infrastructure to support growth within the state.
  • Confronting wildfires and climate change.

“Every Californian has been impacted by this pandemic, and the sacrifices we’ve all made this past year have resulted in a historic surplus – I’m here to announce that we’re investing it in you,” explained Governor Newsom. “California’s economic recovery will leave nobody behind, that’s why we’re implementing the nation’s largest state tax rebate and small business relief programs in history, on top of unprecedented investments we’re making to address California’s most persistent challenges. This is a jumpstart for our local economies, and it’s how we’ll bring California roaring back.”

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