Trailer Bill Update & Equity – Clark Howell LLP

In our last bulletin, we laid out the California budget and how it modifies the cannabis regulatory landscape for all licensees. Today we are continuing our deep dive into the trailer bills, focused specifically on the concerns of equity applicants and licensees.

In September of 2018, the California Cannabis Equity Act of 2018 became law. The sponsor, Senator Bradford (D-Gardena), described the law as providing funding to local governments “to help ensure California’s cannabis industry is fair, inclusive and diverse.” The bill authorized local jurisdictions with local cannabis equity programs to apply for funding from a budget appropriation. The following year, AB 97 expanded the allowable grant purposes to include, among other things, helping a local jurisdiction create an equity program and funding direct technical assistance to local equity applicants and licensees. A few months later, SB 595 was signed.

Find out more about the Cannabis Equity Grants Program for Local Jurisdictions here.

Find out which cities and counties were awarded funds in the 2020-2021 cycle here.

SB 595: Needs-Based Fee Deferrals and Waivers

SB 595 was approved by the Governor in October 2019 and went into effect January 1, 2020 (except for the required budget allocation – more on that in a moment). It required a state licensing authority to develop and implement a fee deferral or waiver program for need-based applicants’ and licensees’ fees (application, licensing, or renewal fees). At least 60% of the dollars allocated in each category — deferrals and waivers — must go to local equity applicants’ and licensees’ fees.

The program was supposed to be developed and implemented by January 1, 2021. However, last year’s budget did not include the required trigger — an allocation of funds in the budget — causing the Legislature’s statutory deadline to be missed. The Governor included an allocation in the 2021 budget. However, Department of Cannabis Control (DCC) staff have informed us that the appropriation has not yet happened and that the department does not have a firm implementation date. When the program is up and running, local equity applicants will finally receive help with licensing fees, so we hope the State appropriates funds and sets a concrete implementation date soon.

Provisional Licensing Deadlines for Equity Applicants

In case you missed our last bulletin on agency consolidation, provisional licensing, and application deadlines, here’s a recap specifically for equity applicants.

The Governor’s Budget and Trailer Bills made significant changes to the provisional licensing program, which was created to be a bridge between the temporary licenses (requiring minimal compliance in the first year of Proposition 64 implementation) and the annual license (which required maximal compliance and turned out to be much too high a hurdle for temporary licensees to clear in 12 months). The provisional licensing program sunset date has been extended little by little, each time with overly optimistic projections. Read below to find out the deadlines. Unfortunately, further extensions to accommodate the difficult California Environmental Quality Act (CEQA) compliance requirements are not expected. If you hold one or more provisional licenses, and/or you expect to add locations or activities that necessitate additional provisional licenses, knowing these deadlines is essential.

Why might you apply for a new provisional license?

You aren’t eligible for an annual license because you can’t yet satisfy the CEQA compliance requirements.
You’re adding new activities. (Ex: You have a manufacturing license and you want to be able to transport products under a distributor license.)
You’re expanding or adding a new location. (Ex: You have a delivery service in Los Angeles and you want to open a location in San Francisco.)

Do any of the above situations apply to you?

If so, you might need a provisional license. Here are the deadlines that local equity applicants need to know:

If you are a local equity applicant and your application will not include cultivation activities, you can be issued a new provisional license until June 30, 2022. Submit your application by March 31, 2022. (Note: this is the general deadline for all applicants, not just local equity applicants.)
If you are a local equity applicant and you are submitting a license application that includes cultivation activities, you may have until June 30, 2023 to be issued a provisional license.Here are the conditions to be eligible for the later deadline:
1. Evidence that compliance with CEQA and/or with local ordinances is complete or is underway.
2. Your premises does not exceed one acre for outdoor, or 22,000 square feet for mixed-light or indoor.
3. If you have other previously-existing licenses, the new license would not cause you to have, on contiguous premises, more than one acre for outdoor, or 22,000 square feet for mixed-light or indoor.
4. Compliance with Labor Peace Agreement requirements and CAL-OSHA training requirements.
5. A final streambed alteration agreement or other acceptable document.
6. Your application is submitted by March 31, 2023.
You can still get a new license after these deadlines, but you would have to meet the higher compliance threshold for an annual license (evidence of CEQA compliance).

UPCOMING EVENTS

Virtual Psychedelic Medicine Symposium – Aug 28, Sept 11 & 25, 2021 • 9am-1pm PST

If you’re interested in how psychedelic medicine can provide groundbreaking mental health solutions, join the Psychedelic Medicine Virtual Symposium. You will learn directly from some of the most prominent leaders about the most important topics in the field & develop a textured understanding of how psychedelic medicine may be a useful tool for you or your loved ones.

Clark Howell Bulletin subscribers: Use discount code CLARKHOWELL at the below link upon registration for 10% off the symposium cost.

If you have any questions about how the above or would like to discuss how it could impact your business, please contact your attorney directly or call our main line at 877-257-2442.

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