Cannabis businesses throughout California had to file for an annual state license by March 31 to meet guidance from the Department of Cannabis Control (DCC). Those hoping to enter the industry during the start of this regulatory period and beyond are sure to face challenges.
The DCC originally invested $100 million into small California businesses that sell and cultivate cannabis products. The aim is to provide companies in 17 cities with resources to switch from temporary, or provisional licenses, to permanent annual state licenses.
The number of current dispensaries and cultivators in the state number in the thousands and this sweeping regulation could mean curtains for those that can’t afford to operate within the DCC’s rigid framework. In fact, only 3,378 of California’s 12,221 cannabis business licensees possess provisional marijuana permits, according to the DCC.
Those new to the industry face significant challenges, as the current regulatory framework isn’t designed to process new requests as of the March 31 deadline. Only 8,843 permits are under provisional licenses and the implications here are particularly damaging to those businesses that cannot afford to transition from their temporary status.
Application Backlog
Some shop owners who submitted applications ahead of the deadline are frustrated, as an application backlog has only stymied their efforts and made the market that much more difficult to navigate.
“There’s an enormous backlog,” said Dr. Dale Gieringer, state coordinator of California NORML. “It’s just more testimony to the burdensome bureaucracy that’s involved in getting licenses approved in California. I mean, there’s just a whole host of problems involved. There’s been a tremendous backlog of applications.”
He went on to say that unless there’s a change to the legislature, California Governor Gavin Newsom would have no way to properly mitigate the backlog issue and provide an adequate solution. “There’s not much he can do unless the law gets changed,” Gieringer said.
The last day for the DCC to issue provisional licenses for all license types is June 30, with experts claiming that prospective business owners may find themselves waiting months, if not years, to obtain their annual licenses.
California Cannabis Industry Association
The California Cannabis Industry Association (CCIA) promotes the continued growth of the cannabis sector for the state and in doing so, works to unite the thousands of cannabis-centric businesses in a concerted effort to maintain the legitimacy and efficacy of this industry’s large economic force.
Amy O’Gorman Jenkins, a former State Capitol employee who left her career to become a lobbyist in the fall of 2014, led legislative efforts to extend the provisional license program on behalf of the CCIA last year. Her knowledge of the cannabis space and her desire to emphasize product safety and clean energy financing led her to establish new safety standards for the legal cannabis industry.
The $100 million in assistance given to those businesses transitioning from provisional to state licenses by the DCC is of concern to Jenkins, who admits that limitations are present for some business owners wishing to make the switch. “If you are not a small farmer or an equity applicant or licensee, I think it is going to severely constrict or limit who is actually able to get licensed,” Jenkins told MJBizDaily.
Sharing this sentiment is the National Cannabis Industry Association (NCIA). Along with the CCIA, the NCIA is advocating ideals that seek to create a sustainable future for all facets of the cannabis industry. “As the largest and most established cannabis trade association, NCIA is proud to help other associations thrive and provide as much value as possible for their members,” said Bethany Moore, deputy director of communications for the Allied Associations Program (AAP).
Her group works in lockstep with the NCIA to provide APP member organizations with tools to navigate the cannabis space and all the red tape contained therein. In return, Allied Associations benefit NCIA’s national efforts by providing expertise and insights into industry sectors that will advance the industry’s broader policy goals.
“The ultimate goal of the AAP is to develop closer relationships between NCIA and other cannabis trade associations to harness our collective knowledge and work together to advance the cannabis industry,” Moore said.
Determination and Drive
With all the emphasis on regulation, of which there are many examples in California, it’s fair to say the willingness of businesses to operate within the state is a testament to their determination and drive.
Transitioning from provisional to annual licenses in the Golden State is a worrisome endeavor for businesses just entering the marketplace. However, the success of the many businesses that have already navigated the hurdles present in the state should offer resolve to new entrepreneurs entering the sector.
This article was first published in the spring 2022 issue of Cannabis & Tech Today. Read the full issue here.
