Government
California marijuana licensing set to slow with end of provisional program
California’s cannabis program is entering a new chapter.
In a last-minute push that ended in June, hundreds of California marijuana businesses were issued the final significant batch of provisional licenses the state will ever grant.
The end of the provisional license program is expected to raise the barriers to entry into the state’s cannabis market, particularly for newcomers, because annual licenses will be harder to obtain than the provisional permits were.
Provisional licenses essentially provided a path for businesses to continue operations and maintain state compliance while they applied for more permanent annual permits.
The California Department of Cannabis Control (DCC) in June approved 529 provisional licenses covering retailers, distributors, manufacturers, delivery operators and most cultivators.
The tally represents about a quarter of the nearly 2,300 provisional licenses the DCC issued during the entire fiscal year, which ended June 30.
The June approval deadline, among several enacted by the agency since it underwent a major restructuring about a year ago, are part of state efforts to gradually phase out provisional permits altogether.
Looking ahead, state regulators must now transition nearly 8,300 provisional licensees into annual permit holders by January 2026.
According to state data, the June bump accounts for more than 6% of the total active provisional licenses granted since early 2019, when the provision system debuted.
State authorities had until June 30 to issue most of those final permits, with exceptions for social equity licensees and smaller cultivators.
“We have seen a fluctuation in application submissions that often coincide with statutory deadlines, impacting the total number of provisional and annual licenses we have issued,” DCC communications director Maria Luisa Cesar confirmed.
The numbers back that up.
From March through June, the DCC issued 1,574 total licenses, including both provisional and annual permits – an 89% jump from the previous four months.
June also provided a notable increase in annual license approvals – the final stamp for state compliance – with 306, or 21% of the entire fiscal year’s total of 1,465.
Dual licensing dilemmas
Santa Barbara-based Autumn Brands is one of thousands of California cannabis companies that has been operating under provisional permits for years while simultaneously trying to obtain annual licenses.
It took the company nearly four years to secure a county land-use permit and then another year to secure a county business license – requirements before applying to transition its provisional permits into annual licenses, which the company filed to do on June 15.
But Autumn Brands is stuck in the waiting game.
“We have yet to receive any communication from the DCC to finalize that transition,” owner Autumn Shelton said.
Dual local and state licensing requirements have caused plenty of headaches for cannabis operators such as Autumn Brands since California implemented new regulations for its medical and adult-use markets in 2018.
The dual licensing also has slowed licensing approvals in the world’s largest marijuana market.
Still, the DCC encourages most applicants to obtain full local compliance before applying.
“If they are not, then DCC is not able to move forward until the local requirements are met,” Cesar said, adding that social equity applicants have a slightly different timeline.
State lawmakers last year approved a one-time $100 million grant to help 17 cities and counties streamline applications, meet environmental compliance and transition provisional permits into annual licenses.
The DCC has dispersed about 80% of that funding.
The remaining 20% will be allocated “after the local jurisdictions have substantially met the goal and the intended outcomes” set in their annual plans, Cesar said.
The waiting game
After the DCC combined three state departments into one agency, it enacted several rule changes to simplify applications, improve licensing and ease compliance requirements.
Industry insiders applauded those overhauls but signaled that the priority placed on licensing might create other delays.
“As the DCC has ramped up efforts around licensing, we have anecdotally noticed a slowdown in the processing of other important items like business modifications and science amendments (required for cultivation licenses),” said Conrad Gregory, senior director of compliance and corporate affairs at Oakland-based StateHouse Holdings, formerly known as Harborside.
“These slowdowns can have an impact on overall operations, like planned operational changes, but we hope it is short-lived while the DCC focuses on licensing,” Gregory said.
Chula Vista-based vape cartridge maker Helmand Valley Growers Co. is still operating under a provisional license and hopes to have its annual license approved in the next month or so, according to CEO Bryan Buckley.
The company completed paperwork for its annual license about five months ago.
“Overall,” Buckley said, “it seems that things with the DCC have become more streamlined … and things are moving more efficiently than before.”
Source: https://mjbizdaily.com/california-marijuana-licensing-set-to-slow-with-end-of-provisional-program/
New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.
The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.
Golden Roots operates the The Cannabis Revolution Dispensary.
The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.
The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.
Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.
After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.
In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.
The company requested a hearing, which the regulator scheduled for Sept. 1.
At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.
Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.
Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.
The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.
Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/
Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.
According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”
Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.
The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”
The companies want the case to go before the U.S. Supreme Court.
They hired prominent law firm Boies Schiller Flexner to represent them.
The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.
Similar challenges to the federal Controlled Substances Act (CSA) have failed.
One such challenge led to a landmark Supreme Court decision in 2005.
In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.
In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.
Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.
“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.
“Moreover, the facts on which those precedents are based are no longer true.”
Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”
While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”
Alabama regulators are targeting Dec. 1 to award the first batch of medical cannabis business licenses after the agency’s first two attempts were scrapped because of scoring errors and litigation.
The first licenses will be awarded to individual cultivators, delivery providers, processors, dispensaries and state testing labs, according to the Alabama Medical Cannabis Commission (AMCC).
Then, on Dec. 12, the AMCC will award licenses for vertically integrated operations, a designation set primarily for multistate operators.
Licenses are expected to be handed out 28 days after they have been awarded, so MMJ production could begin in early January, according to the Alabama Daily News.
That means MMJ products could be available for patients around early March, an AMCC spokesperson told the media outlet.
Regulators initially awarded 21 business licenses in June, only to void them after applicants alleged inconsistencies with how the applications were scored.
Then, in August, the state awarded 24 different licenses – 19 went to June recipients – only to reverse themselves again and scratch those licenses after spurned applicants filed lawsuits.
A state judge dismissed a lawsuit filed by Chicago-based MSO Verano Holdings Corp., but another lawsuit is pending.
Source: https://mjbizdaily.com/alabama-plans-to-award-medical-cannabis-licenses-dec-1/
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