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California Cannabis Shortage?

Updated: Feb 24, 2020

Last week California was flooded with news about an impending cannabis shortage due to expiring temporary permits for cultivators. The agencies governing the cannabis licensing process in California continue to fall behind due to the massive amount of applications they’ve received since California’s recreational cannabis legalization. Given that temporary licenses are set to expire in the ensuing months, many California operators may be left without a license, if they have not obtained their annual or provisional license yet. Back in October we released SB 1459: California Provisional Cannabis Business License, which explains the provisional licensing requirements and process.

The imminent expiration of temporary cannabis licenses in California could lead to potential problems for cannabis businesses and the industry at large. If the agencies are not able to extend the temporary licenses, we may see hundreds of business fail, which would have a large effect on California’s cannabis supply chain. The State has been working on a solution, but it may be a little too late as it will take some time to implement.

In an attempt to solve the cannabis licensing problem in California and avoid any potential negative outcomes, the state introduced Senate Bill 67. SB 67 will give the state licensing agencies the ability to extend the expiration dates of the issued temporaries that are set to expire. Further, the bill will allow each agency to modify and improve their provisional licensing scheme by providing them the power to issue a provisional to entities that held or hold a temporary license and has submitted a license application with evidence showing compliance with CEQA is underway.

SB 67 also provides guidance on the processing of new applications for the agencies that are currently backlogged with temporary applications submitted before the new year. New applications will only be processed once the current backlog is managed. Instead of applying for temporary licenses, prospective cannabis licensees will need to submit a license application and show proof that CEQA compliance is ensuing. The bill will extend provisional licenses until July 2020, which should buy the state some time to process annual applications.

Unfortunately, the bill has some time before it is approved. Thus, individuals with expired temporary licenses will not be able to operate until it is approved, or a similar solution is constructed. As more information surrounding the SB 67 is released, we will provide you with updates on its status.


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