CA Will Issue Temporary Cannabis Licenses to Foster Retail Sales Early in 2018Ah, autumn: there’s a certain crispness in the air, a changing of the light, a wistful shortening of the days. And for retailers, autumn means gearing up for the holiday shopping season.

The fruits of last November’s election — California Prop 64 — are ready to be harvested, which means there’s a different sort of retail anticipation in the air this year … the unmistakable whiff of cannabis. And the state is gearing up for the regulation that comes with implementation of the Adult Use of Marijuana Act.

California Cannabis Business Conference chock full of information

Last month California’s Bureau of Cannabis Control (BCC), headed by Lori Ajax, released information about a program that would issue businesses temporary state cannabis licenses prior to the finalization of rules, regulations, and permanent licenses. Ajax spoke at the California Cannabis Business Conference in Anaheim. “It’s of course a huge challenge, it’s intense,” she said, “but we will be issuing licenses on January 1, 2018.”

Ajax told conference attendees that applications for temporary licenses should be available by the first part of December, following the implementation of “emergency regulations.” She said there is not enough time for the BCC “to do regular rulemaking” (which will occur in 2018).

Ajax doesn’t foresee cannabis business owners needing a great deal of time to complete the application for temporary licenses; rather, she said the BCC will only be asking for “pretty basic information” at this stage. Despite the relative slimness of the requisite paperwork, however, the Bureau is anticipating a deluge of applications, and is boosting its staff numbers accordingly.

And despite how relatively simple and straightforward these state applications for temporary licenses will be, there is one potentially knotty issue over which Ajax has no control and which can impede issuance of these temporary licenses: approval at the local level.

Local approval cannot be circumvented, prerequisite for temp state license

“The biggest thing is that they [operators seeking state licenses] will have to have local approval for conducting commercial cannabis activity,” Ajax said. “They will need that before the state can issue a temporary license.”

Cannabis operators must be licensed at both the state and local levels. And because state law allows local municipalities to just say no to cannabis businesses, there are no guarantees ganjapreneurs will get that local nod. (For instance, cannabis is currently prohibited in unincorporated areas of Los Angeles County.)

That broader potential issue aside, in the absence of required uniformity, there is a great deal of confusion over what local approval will actually look like, at least the kind that will satisfy the state’s temporary license requirements. Ajax reminded the conference audience that there are around 500 cities in The Golden State. Rather than expect the same brand of evidence from every municipality, the BCC will allow authorities at the micro level to decide what passes for approval.

“We’re really relying on the locals to specify what that local authorization is,” Ajax said, noting what her office needs to do is to “confirm with the locals that that applicant is authorized by the locals to conduct commercial cannabis activity for that specified jurisdiction.”

Cannabis business owners shouldn’t scour their inboxes for licenses before the new year

No licenses will be issued prior to January 1st, when the new recreational use for adults law goes into effect. Ajax indicated that approvals will be emailed to business owners. “You’re just going to print out your license,” she said.

The temporary licenses will be good for four months, with three-month extensions possible.  And since the BCC doesn’t know exactly when state rules and regulations will be finalized and therefore when permanent licenses will be available, Ajax addressed the question of what happens if the Bureau still doesn’t have everything in place at the end of that seven-month period. “If it’s on us, we will continue to give extensions so you can keep operating,” she assured conference attendees.

Commissioner provides insurers with cannabis education

California Insurance Commissioner Dave Jones also spoke at the conference last month. “My mission as insurance commissioner is insurance protection for all Californians, and that includes the cannabis industry,” he said.

Although at the present time there are some “surplus-lines” insurers with policies that cover partial workings of cannabis businesses, the products are often costly and incomplete. Jones expressed his goal of incentivizing major companies to enter the field of California cannabis, thereby allowing competition to improve the insurance market.

“We’re very aggressively sitting down with senior executives of these companies and educating them about the cannabis industry,” Jones said. “I’m calling the CEOs of major commercial insurance companies personally as the regulator of the largest market in the United States.”

This blog post is provided for educational purposes only and is not offered as, and should not be relied on as, legal advice. Any individual or entity reading this information should consult an attorney for their particular situation. For more information/questions regarding any legal matters, please email or call 310.203.2800.