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What the 2019 CA cannabis trailer bill AB 97 means for your cannabis business

New cannabis regulations took effect immediately in California on July 1, 2019, following Governor Gavin Newsom’s signing of the cannabis trailer bill, AB 97.

While reviewing this info, it’s important to remember that provisional licensees are required to comply with track-and-trace regulations, meaning you’ll need to get on board with METRC if you haven’t already. (That’s something we can help you do with training from our experts.)

Big news from the approved trailer bill is that the legislature created a 12-month provisional license and did away with the temporary license prerequisite. Now, any applicant qualifies for a provisional license, and that license can be extended beyond 12 months at the state’s discretion.

The expanded provisional license program should solve the problem of creating more temporary licenses that could expire while the state works through its backlog of annual license applications.

These developments still do not help holders of temporary licenses that will expire before annual licenses can be approved by the state this year – unless they submit a complete annual application to apply for a provisional license.

According to analysis by MJBizDaily, there are 137 cultivation licenses set to expire in California the week of July 8 alone with more expiring in the coming weeks and many more already expired.

California Senate Bill 67 promises to help those license holders by revalidating expired temp licenses, provided that the license holder has applied for an annual cannabis license. But the bill is still stalled awaiting approval.

Top takeaways from the new regulations in the AB 97 CA trailer bill:

  • The provisional cannabis license replaces the temporary license, and more businesses qualify for provisional licenses

  • Temporary licenses are still expiring and leaving businesses in limbo

  • The state gave teeth to the fight against the black market with stiff daily fines for unlicensed operators

  • State grants will be available for local jurisdictions to create social equity programs, and the Governor’s Office of Business and Economic Development will handle the process

  • Provisional licensees should get ready for compliance with METRC

Below is the June 26 Assembly analysis of the trailer bill AB 97, pulled directly from the California Legislative Info siteemphasis in bold is ours:

“This bill is the Cannabis trailer bill for 2019-20. It contains the necessary changes related to the 2019 Budget Act.

1) Includes findings and declarations;

2) Authorizes a licensing authority to issue a citation to a licensee or unlicensed person for any violations of existing law or regulations related to Control, Regulate and Tax Adult Use of Marijuana Act of 2016.

3) Authorizes licensing authorities to assess administrative fines not to exceed $5,000 per violation for licensees and $30,000 per violation for an unlicensed person, per day, with due considerations to the appropriateness of the amount, as specified.

4) Requires proceeds from citations to be used for the recovery of investigation and enforcement costs and be deposited into the Cannabis Control Fund, and the remaining proceeds to be deposited directly into the Cannabis Fines and Penalties Account, and be available upon appropriation by the Legislature.

5) Clarifies that the Cannabis Control Appeals Panel is established in the Business, Consumer Services, and Housing Agency and authorizes the panel to hold a closed session for the purpose of holding a deliberative conference, as specified.

6) Extends the repeal date for the provisional license provisions to January 1, 2022, and modifies the applicant requirements to provide evidence of compliance with local ordinances, as specified.

7) Requires provisional license to be valid for no more than 12 months from the date it was issued.

8) Authorizes a licensing authority, in its sole discretion, to renew the provisional license annually until the licensing authority issues or denies the provisional license. If the licensing authority renews a provisional license, requires the licensing authority to include the outstanding items needed to qualify for an annual license.

9) Authorizes a licensing authority, in its sole discretion, to revoke or suspend a provisional license if the licensing authority determines the licensee failed to actively and diligently pursue requirements for an annual license. Requires a licensing authority to cancel a provisional license upon issuance of an annual license, denial of an annual license, abandonment of an application for licensure, or withdrawal of an application for licensure.

10) Removes the requirement that the Department of Food and Agriculture be the sole determiner of designation and certification.

11) Requires that not later than July 1, 2021, the State Department of Public Health establish a certification program for manufactured cannabis products that is comparable to the National Organic Program and the California Organic Food and Farming Act. Exempts the State Department of Public Health from the Administrative Procedures Act for purposes of administering the section.

12) Extends the repeal date from July 1, 2019 to July 1, 2021, for provisions that provides that the California Environmental Quality Act does not apply to the adoption of an ordinance, rule, or regulation by a local jurisdiction that requires discretionary review and approval of permits, licenses, or other authorizations to engage in commercial cannabis activity.

13) Authorizes the Governor's Office of Business and Economic Development to administer on behalf of the bureau, the provisions related to the review and granting of funding for cannabis equity programs. Requires an annual report by the bureau to the Legislature regarding the progress of local equity programs funded by these grants and to include a copy of the equity assessment, as defined, and equity program descriptions of each local jurisdiction that applies for grant funding.

14) Exempts contracts entered into or amended by the State Department of Health Care Services from specified provisions of law governing public contracting for programs for youth that are designed to educate about and to prevent substance use disorders and to prevent harm from substance use funded from the Youth Education, Prevention, Early Intervention and Treatment Account.

15) Includes an urgency clause.”

Check in with us at Highroad to see how the new regulations may affect your cannabis business.

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