California lawmakers on Monday approved a $ 100 million plan to boost California’s legal marijuana industry, which continues to struggle to compete with the large illegal cannabis market nearly five years after voters approved recreational use .
Los Angeles will be the largest recipient of the money proposed by Governor Gavin Newsom as a city and county grant to help cannabis companies transition from temporary to regular licenses.
“California voters approved proposal 64 five years ago and tasked the legislature with creating a legal, well-regulated cannabis market,” said Rep Phil Ting (D-San Francisco), chairman of the congregation’s budget committee. “We have not yet achieved this goal.”
Many cannabis growers, retailers, and manufacturers have struggled to make the transition from a temporary, limited-term license to an annually renewed permanent license – a process that requires a costly, complicated, and time-consuming review of an A company’s negative environmental impact and a plan to reduce it Damage.
As a result, as of April, about 82% of the state’s cannabis licensees were still holding provisional licenses, according to the governor’s office.
The funds, including $ 22 million for LA, would help cities hire experts and staff to help companies complete environmental studies and transition licenses to “help legitimate businesses thrive,” Ting said.
The grant program is endorsed by Los Angeles Mayor Eric Garcetti, who said in a letter to lawmakers that the money was “essential to supporting a well-regulated, equitable and sustainable cannabis market”.
Regardless, the governor would like to give cannabis companies a six-month extension beyond a January 1 deadline to transition temporary licenses by complying with the mandates of California’s Environmental Quality Act. This extension, which is met with resistance because of the delay in promised environmental protection measures, was not included in the draft state budget approved on Monday and is still being negotiated with the legislature.
The governor’s proposal to renew temporary licenses has drawn objections from a coalition of seven environmental groups, including the Sierra Club California, Defenders of Wildlife, and the Nature Conservancy.
They said in a letter to Newsom that the proposal allowing the renewal of provisional licenses and provisional alternatives to the CEQA rules goes against what voters have been promised and “is utterly inadequate to benefit local communities and the environment protect”.
At the same time, industry officials say the governor’s proposals don’t go far enough to help companies struggling to stay open with provisional licenses while complying with what they see as onerous rules of state environmental regulations.
“It’s a significant amount of money, but I don’t know if it actually solves the provisional licensing problem by doing the CEQA analysis in time to get an annual license,” said Jerred Kiloh, President of the United Cannabis Business Assn.
He said delays in passing rules in cities, their limited staffing and lack of resources by cannabis companies mean that some have two to four years to go through the licensing process. Many would face the prospect of, at least temporarily, closure if they fail to obtain a regular license within current state deadlines, Kiloh said.
California voters paved the way for state licensing of cannabis businesses, farms, dealers and testing when they approved Proposition 64 in 2016. State officials originally expected to license up to 6,000 cannabis stores in the early years, but permits were only granted to 1,086 trading and delivery companies.
In 2019, industry officials estimated that there were almost three times as many unlicensed companies as there were government-approved companies. Although some industry leaders believe that enforcement has reduced the number of illegal pot shops, a study by USC researchers in September estimated that the number of unlicensed retailers is still higher than the licensed ones.
Proponents of legalization attribute the discrepancy to issues they say include high taxes on licensed businesses, onerous regulations, and the decision by about three-quarters of California’s cities not to allow cannabis retailers in their jurisdictions.
The bill, approved by legislature on Monday, is worth $ 100 million and identifies 17 cities and counties earmarked for grants, including Los Angeles, which would receive the largest grant. Other cities that receive grants are Long Beach, San Francisco, Oakland, Commerce, Adelanto, and Desert Hot Springs.
Originally, cannabis companies were supposed to switch from temporary licenses to regular annual licenses by 2019, but many companies were unable to do so in time, so the state allowed provisional licenses until January 1, 2020 and then extended the deadline again to January 1, 2020. 1, 2022.
An important requirement for converting a temporary license is to conduct a CEQA review to identify how cannabis farms and other cannabis businesses are affecting the surrounding water, air, plants and wildlife and to suggest ways to mitigate any damage.
However, Kiloh said some cities are only issuing ordinances and personnel to process licenses, which means many companies are unable to meet the looming deadline.
Every cannabis grower must demonstrate that they meet the requirements for the environmental assessment. If their city and county fail to provide the required document, applicants must prepare one, which often means hiring environmental consultants.
A bill by Senator Anna Caballero (D-Salinas) would have allowed the state to extend provisional licenses for six years until 2028, but she put it on hold after it was rejected by the coalition of environmental groups.
The groups sent a letter to lawmakers saying that the bill “does not provide adequate environmental protection”.
The governor’s proposal, under scrutiny by law, would allow existing provisional licenses to be extended by six months.
Environmentalists are still hoping the budget trailer law can be changed to address their concerns, according to Pamela Flick, California program director for Defenders of Wildlife.
The group “opposes the proposed wording of the Trailer Act because it needs stronger environmental protection in line with the original pledges in Proposition 64, in which voters intended meaningful and timely compliance with environmental laws,” said Flick.
The Newsom administration warns of dire consequences if cannabis companies are not given more time to obtain a regular license.
“Without this extension, it is possible that a significant number of these licensees could fall out of the legal cannabis system, severely limiting efforts by the state to facilitate the transition to a legal and well-regulated market,” the government warned in its budget proposal.
The $ 100 million would go to local agencies with the most tentative licenses for cultivation, manufacturing, distribution, testing and retailing. Some of the money can be used by cities that offer equity financing to cannabis companies owned by people of color.
Lawmakers welcomed Newsom’s budget proposal, who has an interest in the legal market succeeding as it was a leading proponent of Proposition 64.
“Reg. Newsom is committed to the success of California’s legal cannabis industry, ”said Nicole Elliott, senior advisor to the governor, cannabis. “The purpose of this one-time $ 100 million grant funding is to help locals and temporary licensees, many of whom are small businesses, legacy operators, and equity applicants, migrate to annual licensing faster.”
Garcetti said in his letter that it will help Los Angeles “put in place a robust CEQA compliance program and comprehensive utility programs to help licensees meet annual licensing requirements.”
However, industry officials note that the money will go to a small fraction of California’s cities and only those who have already decided to allow cannabis companies.
“There is no incentive for places that have cannabis bans to enforce their ordinances,” said Kiloh, owner of the Higher Path cannabis store in Sherman Oaks.
“The real problem is that the CEQA analysis is a very tedious process,” he added. “I think it would be good to reform the licensing system more instead of just investing money in it.”