The state has yet to approve a single company that can legally manufacture cannabis products. Research suggests that with legalization comes the potential for increased use of CBD, but without licensed companies, consumers are left in limbo about what they can buy and where it came from.
“How many dispensaries in California by 2021” is a question that has been asked before. The answer to the question is 3 out of 4 cannabis companies are not licensed. This means they are not able to sell their products legally. To help these companies, $100 million might be allocated for licensing fees and other costs. Read more in detail here: how many dispensaries in california 2021.
Three out of four cannabis firms in California are still operating on temporary licenses almost four years after the state began regulating the sector.
75 percent of the state’s cannabis sector is operating under interim licenses, which means they lack the protections and benefits that come with permanent licenses, which concerns some in the industry. Those interim operators have also failed to pass the thorough environmental studies that are necessary for full license, which is a source of worry for environmentalists.
Cannabis licensing is sluggish for a variety of reasons, including the often befuddling complexity of California’s environmental requirements, inconsistent terminology between state and municipal cannabis legislation, hefty permission charges, and a lack of government staff to complete the paperwork.
The cannabis licensing snafu isn’t new either. State politicians have been extending the permission procedure for many years in order to prevent thousands of firms from becoming unlicensed overnight.
California, on the other hand, is currently attempting to alter the situation. The state has put aside $100 million to assist 17 towns and counties in transitioning from temporary to full licensee status for their cannabis enterprises. Los Angeles is in the race for $22.3 million, while five other Southern California communities — Long Beach, San Diego, Commerce, Adelanto, and Desert Hot Springs — are competing for $6.9 million. The deadline for applications is November 15th.
The money will be used to recruit people and, in certain situations, to provide direct assistance to enterprises by eligible localities. They’re optimistic that in the next months, they’ll be able to make a substantial dent in the issue.
“I know it will help,” said Edgar Cisneros, Commerce’s city manager, whose community has seven fully licensed cannabis companies and another 12 awaiting approval.
“There is an urgent need for employees and advisors… to expedite the process of converting these permits to permanent licenses.”
Despite the fact that company owners and others appreciate the one-time state assistance, they believe it is insufficient. Many towns and counties are still not included in the application pool, and there is no statewide strategy in place to address the commercial challenges that generated the backlog in the first place.
“No amount of money will alter the huge amount of time it takes to get up to speed for municipal clearance,” Hilary Bricken, a cannabis industry attorney in Los Angeles, said.
Delays are caused by obstacles.
Cannabis firms must follow a plethora of environmental protection requirements, including the state’s broad California Environmental Quality Act, or CEQA, under a voter-approved legislation established in 2016.
This was a political need to get support from environmental organizations that had previously voiced concerns about the effects that illegal, uncontrolled marijuana farms had caused to California’s natural resources. Rogue cannabis producers, among other things, divert streams or poison them with chemicals.
However, in 2018, officials devised a mechanism to let operators with temporary licenses to stay in compliance with state law while they work toward obtaining a full license, realizing that CEQA compliance may be a lengthy process.
That program was supposed to end in January of 2019. However, since most firms were unable to fulfill the deadline, it was extended to January 2020 and then to January 2022. Despite opposition from environmental organizations like the Sierra Club, lawmakers approved last summer to allow the state to award new temporary licenses until June 30, 2022, and to extend current provisional licenses until 2025.
Just over 3,000 of the state’s 12,000 active cannabis licenses had full yearly permits as of Friday, Oct. 15.
Many in the sector are unconcerned about the approaching deadline, sure that the state would not allow a new, expanding industry to come to an end. While the recent extensions provide breathing space for firms, operators say the difficulties to obtaining a complete license have not altered.
There are various instances when state law and municipal ordinances clash. Instead of requiring cannabis firms to go through long and costly environmental evaluations for each location, the city of Long Beach decided to perform environmental reviews that would encompass all possible operators interested in doing certain operations in defined municipal zones. According to Emily Armstrong of Long Beach’s Office of Cannabis Oversight, the objective was to make the application process for cannabis companies as simple as it is for practically all other businesses.
However, the legislation in Long Beach differs from that in California. The state will only award a complete license to a cannabis company that has passed an environmental study based on the precise location where that firm proposes to operate, according to updated laws.
Though Armstrong is optimistic that most cannabis companies that have been approved in Long Beach would not be subjected to full CEQA evaluations, she also believes it will take time — maybe months — for firms to assemble the evidence they’ll need to qualify for the exemption. She believes that cities should allocate people to assisting cannabis firms in jumping through the different hoops, or that businesses should hire their own, sometimes expensive, experts.
The laws are vital, according to Cisneros of Commerce, yet there might be problems even within a city.
For example, in Commerce, municipal personnel assists cannabis businesses with site inspections and other permit-related red tape. However, other regulatory agencies in other communities, including as fire and water departments, take longer to review cannabis company applications than they do for other sorts of enterprises.
Even when a cannabis company’s equipment or operation is essentially comparable to those of other enterprises, he added, this might happen. Some inspectors, according to Cisneros, relate the whole cannabis sector — even those who strive to follow all the laws — to the world of underground growers and extractors who don’t follow the rules and sometimes cause fires or explosions.
Cisneros said, “It just feels like not everyone has caught up to this sector.” “Hopefully, as we have a better grasp of the technology and equipment, we will be able to make this more normal.”
Then there are cannabis enterprises that claim they’ve cleared all the hurdles but have yet to get a complete license.
“I don’t see why we wouldn’t have our annuals by now,” said Rob Taft, co-owner of 420 Central in Santa Ana and CMX Distribution in Costa Mesa.
“We’ve completed all of the paperwork.” We’ve completed every task. “It’s not like the state expects us to do anything else,” Taft remarked.
He blames the backlog on a staffing deficit in the application processing department. However, he said that he sometimes views the issue in a sardonic manner.
“It just feels like the state is keeping everyone on a tight leash since yearly licenses give you more rights,” Taft said, adding that one of those rights is the ability to appeal a revoked license.
According to Los Angeles attorney Bricken, a corporation that does not have a complete license from California may have difficulty collecting funding, especially since cannabis is still illegal under federal law.
“Investors hate hearing that you’re operating on borrowed time.”
Grants will assist.
According to workers in cities eligible for financing, the $100 million incentive program should lessen the backlog of firms attempting to transfer to full licenses.
Long Beach may get up to $3.9 million, which Armstrong says would be used to recruit personnel and consultants who can assist firms with CEQA review standards. She said, however, that the city is awaiting confirmation from the state before deciding on the actual number of individuals to recruit.
According to Cat Packer, executive director of the city’s Department of Cannabis Regulation, the city is currently putting up an application that will detail how it plans to utilize its anticipated $22.3 in grant money.
Cisneros said they’ll use the $416,870 in grant money to pay for two full-time staffers and a consultant to assist handle license applications in Commerce. Cisneros said that they didn’t want to depend just on consultants since they’ll need staff who are focused on cannabis sector compliance inspections and new application processing long after the first surge in demand subsides.
He noted that after the grant money runs out, he expects Commerce will have enough tax income from cannabis firms to continue supporting those roles.
Areas (and companies in those cities) that did not qualify for the grant money have expressed dissatisfaction, claiming they are losing out on financing because they have done a better job of getting cannabis firms properly registered. Cities in Orange and Riverside counties, for example, did not qualify.
Despite the fact that the state money seems to be beneficial, industry insiders argue that such one-time projects are only Band-Aids for broader issues. Five years after California voters legalized legal recreational cannabis, illicit operators outnumber licensed operators by at least two to one, providing firms that don’t obey the regulations a continued, unfair financial edge.
“If the state wants to assist cities and cannabis companies prosper, they should decrease taxes, period,” said Kenny Morrison, president of the California Cannabis Manufacturers Association and founder of VCC Brands, a company that manufactures and sells cannabis-infused goods.
“Assisting cannabis firms in becoming ‘fully licensed’ isn’t really beneficial in the long term. The funds assist runners in getting off the ground, but they do little to alleviate the regulatory and financial burden that each runner bears.”
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