As local governments scramble to enact ordinances to provide for licensed commercial cannabis activities, and with the upcoming November election fast approaching, California had no choice but to address the fact that temporary licenses are only authorized through December 31, 2018. Currently, under Business & Professions Code §26050.1, the last day for any of the three licensing agencies will be December 31, 2018 to issue or extend a temporary license. Given that the temporary licenses are only valid for 120 days, come April 2019, California was looking at a serious problem. Some of our clients submitted annual applications as early as May or June 2018, which have still not been issued; in fact, we have heard nothing from the licensing authorities on the annual applications we have filed other than a notification (sometimes, sometimes we need to log in and check) that the temporary license was extended.
SB 1459 was signed into law on September 27, 2018 which added Business & Professions Code §26050.2, which will allow the three agencies to issue “Provisional Licenses” to cannabis businesses through 2019. However, there are significant constraints on the agencies’ ability to issue these provisional licenses:
1. The applicant must already hold a temporary license (issued prior to December 31, 2018).
2. The provisional license sought must be for the SAME activity on the SAME premises as authorized by the temporary license.
3. The applicant must have submitted a complete annual application, including evidence of CEQA compliance or evidence that CEQA compliance is underway.
It is also worth noting that there is no appellate procedure for the provisional license, so the agency decision is discretionary and final with regard to whether to issue the provisional license or not.
The take away: encourage your local authorities to act with deliberate speed in issuing a local authorization so applicants have the ability to secure a temporary license before December 31, 2018. We have seen some cities, like San Diego, issue a local approval letter, but condition actual operations on the city issuing a Certificate of Occupancy, which we think makes all the sense in the world. This allows local jurisdictions to maintain control, but at the same time ensure that the process proceeds without having to wait on annual licenses being issued. Without temporary licenses secured, provisional licenses are meaningless for those caught in the local processing backlog.