California approves bill to extend provisional permits, curtail illicit cannabis firms

The California Legislature on Thursday gave the final go-ahead to a budget trailer bill that will, among other things, extend the life span of provisional business licenses for cannabis companies until 2022.

The measure, Assembly Bill 97, was approved easily by the assembly on a 57-11 vote after it passed the Senate on Monday. The bill now heads to Gov. Gavin Newsom, who is expected to sign it.

Provisional licenses were created by the Legislature last year as a stopgap measure for marijuana businesses that encountered lengthy lag times in the awarding of full annual business permits. Every legal operator must eventually obtain a full annual permit.

Creation of the provisional licenses didn’t completely solve the problem, however, and the cannabis industry sounded the alarm earlier this year as temporary licenses began expiring and threatened to put much of the legal supply chain on hold.

Lindsay Robinson, executive director of the California Cannabis Industry Association (CCIA), hailed the passage of AB 97 as “critical” for marijuana companies trying to remain compliant with state law.

“Thousands of cannabis operators saw their temporary licenses fall into expiration due to extensive processing of annual licenses by state agencies,” Robinson wrote in an email to Marijuana Business Daily.

“CCIA encourages the Newsom administration to prioritize increased collaboration with the cannabis industry, the Legislature and the regulatory agencies in order to create a comprehensive plan that will streamline business operations, prioritize public safety and health and minimize the growing illicit market.”

The bill also includes a new $30,000-a-day administrative fine against unlicensed cannabis businesses, a move hailed by the Los Angeles-based United Cannabis Business Association, which represents licensed shops in L.A.

The fine can be levied by any of the three state licensing agencies – the Bureau of Cannabis Control, Department of Food and Agriculture and Department of Public Health.

“California understands the dangers (of the illicit market) by equipping the licensing authorities with better enforcement tools,” UCBA Executive Director Ruben Honig said in a statement.

Los Angeles has already authorized a separate $20,000-a-day fine under Proposition M, which was approved by voters in 2017 and is being used by the city attorney in a civil suit against one unlicensed shop.

John Schroyer can be reached at johns@mjbizdaily.com