California Temporary License Update

On September 22, 2017, the California Bureau of Cannabis Control (the “Bureau”) issued its guidelines and requirements to obtain a temporary commercial cannabis license from the State of California. The temporary licensure procedure set forth by the Bureau, which is provided for in California Bus. & Prof. Code section 26050.1, is currently only applicable to distributors, retail stores, microbusinesses, and testing laboratories. However, we anticipate that the California Department of Public Health (manufacturing) and the California Department of Food and Agriculture (cultivation) will set forth similar procedures for temporary licensure of the commercial cannabis businesses operating under their licensure schemes in the coming months.

The temporary license applications will likely be available from the Bureau sometime in early December 2017, with an effective date of January 1, 2018. The temporary licenses will be effective for 120 days from the date of issuance, which may be extended by the Bureau for additional 90 day increments, if necessary, to account for any delays in issuing permanent licenses. It is important to note, however, that businesses issued a temporary license by the Bureau and other regulatory bodies may only conduct business with others who have received temporary or permanent licenses from the State. Therefore, it is important for businesses to ensure that their commercial customers and suppliers have received temporary licenses before continuing business. Furthermore, there is no appeals process for the denial of a temporary license, so it is important to ensure compliance with all of the Bureau’s temporary license requirements prior to submitting an application.

The Bureau has outlined the following requirements to obtain a temporary license:

  1. Local Authorization: The most important requirement for temporary licensure by the Bureau is proof of local approval from the city or county in the jurisdiction in which the business will operate. This local approval requirement depends on the jurisdiction, but can be demonstrated through a license, permit, or other affirmative authorization for the business to conduct commercial cannabis activity at the location where the business is seeking a state issued temporary license. It is imperative that businesses seeking a state temporary license continue to comply with their local ordinances (including remaining in a non-profit business structure if the local ordinance requires) in order to receive and maintain a temporary license from the Bureau.
  2. Name: The Bureau will require the name of the business entity or individual applying for the temporary license.
  3. License Type requested: The Bureau is responsible for issuing licenses to distributors, retailers, microbusinesses, and testing laboratories. The applicant must specify which of the above four licenses types the applicant is requesting temporary licensure for. Temporary licenses for manufacturers and cultivators will not be available through the Bureau and must be applied for through the applicable regulatory bodies for these license types.
  4. License Designation: SB 94 a.k.a. the Medical and Adult-Use Cannabis Regulatory and Safety Act (“MAUCRSA”) provides for separate licenses for businesses operating Medicinal (M License) and Adult-Use (A License) businesses. The temporary license application requires the applicant to designate whether they are seeking an A License, an M License or both.
  5. Contact Information: The Bureau requires basic contact information (name, title, address, phone number(s) and email address(es)) for the individuals or entities applying for temporary licenses.
  6. Disclosure of Owners: Businesses applying for temporary licenses must disclose every owner as defined by Bus. & Prof. Code section 26001(al). The Bureau is asking for each owner’s name, mailing address and email address(es).
  7. Physical Address: The Bureau is requiring disclosure of the physical address or location of the premises for which a temporary license is being sought.
  8. Authorization to Use Location: The Bureau will require a copy of a deed or title document for businesses who own the premises in which they will operate. For businesses who lease the premises they operate in, the Bureau will require a document from the landowner acknowledging the business’ right to occupy the building and stating that commercial cannabis activity is a permitted use of the leased premises.
  9. Premises Diagram: Applicants will be required to submit a diagram of the business’ layout at the proposed premises.

As you know, McAllister Garfield, P.C. has expanded into California in the past year in order to prepare for full regulation in the largest cannabis market in the U.S. and founding lawyer Sean McAllister personally became licensed as a California lawyer. The Firm has lawyers in San Diego, Los Angeles, and San Francisco and works with clients throughout the state. If you are interested in the California market, or have questions about the temporary licensing process, do not hesitate to contact us.