For many in the cannabis industry, April 1, 2022 is seen as a day of reckoning following the July 2021 passage of Assembly Bill 141 and Senate Bill 160 , a complex statewide policy of environmental protection fraught with potential traps for those unversed in the law, before an operator is eligible to be awarded a cannabis state license.
At the onset of statewide cannabis legalization, California’s Bureau of Cannabis Control, now part of the Department of Cannabis Control , rolled out a program that would issue cannabis operators a “temporary license” starting January 1, 2018.
Nearing the end of 2018, California established its provisional licensing program as a stopgap measure to give operators more time to transition from the temporary licenses to “annual” licenses.
Under the Cannabis Trailer Bill, March 31, 2022 was the last day to submit applications for provisional licenses with few exceptions.
In order to obtain a state-issued annual license, a cannabis operator must demonstrate full compliance with CEQA – a law that has been a leading cause for bottlenecking the cannabis licensure process and delaying the transition to annual licenses.
Applications for provisional license renewal submitted after June 30, 2022, will “require evidence demonstrating that the local jurisdiction has achieved one or more of the benchmarks specified in the regulations of effort towards completion of the environmental review process and compliance with CEQA.” After July 1, 2023, all provisional license renewals will require a demonstration of CEQA compliance.
CEQA is triggered whenever a public agency issues a discretionary approval for projects – cannabis-related or not – that have a potential to result in “physical change in the environment.” Once triggered, compliance with the law is not a “one size fits all” endeavor.
If the project will result in impacts above a certain level of significance in any environmental category, CEQA review and compliance also requires the implementation of mitigation measures.
Under CEQA, local jurisdictions are required to inform the DCC about the potential environmental impacts of any proposed cannabis operations.
A local jurisdiction would be the lead agency responsible for CEQA compliance on a project-by-project basis.
Applicants are required to submit a complete description of the proposed project, including information about the project site, existing conditions and facilities, proposed facilities and improvements and the construction methods and operation’s practices.
If the local government does not comply with CEQA concurrently with the adoption of a jurisdiction-wide cannabis ordinance, then CEQA compliance is handled on a project-by-project basis – whether the local government or the DCC is the lead agency.
While CEQA compliance was always required in order for cannabis operators to obtain an annual license, the provisional license program allowed applicants to run operations while local governments and operators kicked the CEQA can down the road.
While there are clearly cost and delay implications related to the implementation of the Cannabis Trailer Bill, there may remain silver linings to these significant changes.
Certain outdoor cultivators may apply for provisional licenses through June 30, 2022.
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