Los Angeles Times 14 June 2021
The California Legislature on Monday approved a $100-million plan to bolster California’s legal marijuana industry, which continues to struggle to compete with the large illicit pot market nearly five years after voters approved sales for recreational use.
Los Angeles will be the biggest beneficiary of the money, which was proposed by Gov. Gavin Newsom to be provided as grants to cities and counties to help cannabis businesses transition from provisional to regular licenses.
“California voters approved Proposition 64 five years ago and entrusted the Legislature with creating a legal, well-regulated cannabis market,” said Assemblyman Phil Ting (D-San Francisco), the chairman of the Assembly Budget Committee. “We have yet to reach that goal.”
Many cannabis growers, retailers and manufacturers have struggled to make the transition from a provisional, temporary license to a permanent one renewed on an annual basis — a process that requires a costly, complicated and time-consuming review of the negative environmental effects involved in a business and a plan for reducing those harms.
As a result, about 82% of the state’s cannabis licensees still held provisional licenses as of April, according to the governor’s office.
The funds, including $22 million earmarked for L.A., would help cities hire experts and staff to assist businesses in completing the environmental studies and transitioning the licenses to “help legitimate businesses succeed,” Ting said.
The grant program is endorsed by Los Angeles Mayor Eric Garcetti, who said in a letter to legislators that the money is “essential in supporting a well-regulated, equitable, and sustainable cannabis market.”
Separately, the governor wants to give cannabis businesses a six-month extension beyond a Jan. 1 deadline to transition from provisional licenses by complying with mandates of the California Environmental Quality Act. That extension, which faces opposition for delaying promised environmental safeguards, was not included in the state budget bill approved Monday and is still being negotiated with lawmakers.
The governor’s proposal to extend provisional licenses has drawn objections from a coalition of seven environmental groups including Sierra Club California, Defenders of Wildlife and the Nature Conservancy.
They said in a letter to Newsom that the proposal allowing the extension of provisional licenses and interim alternatives to CEQA rules goes against what voters were promised and is “wholly inadequate to protect local communities and the environment.”
At the same time, industry officials say the governor’s proposals do not go far enough in helping businesses struggling to stay open with provisional licenses while meeting what they see as burdensome rules under the state’s environmental regulations.
“It is a significant amount of money, but I don’t know that it actually answers the problem of provisional licenses making it through CEQA analysis in a timely manner to get an annual license,” said Jerred Kiloh, president of the United Cannabis Business Assn.
He said delays in cities adopting rules, their limited staffing and lack of resources by cannabis firms mean some face two to four years to get through the licensing process. Many would face the prospect of shutting down, at least temporarily, if they don’t get a regular license by current state deadlines, Kiloh said.
California voters paved the way for state licensing of cannabis stores, farms, distributors and testing when they approved Proposition 64 in 2016. State officials initially expected to license as many as 6,000 cannabis shops in the first few years, but permits have been issued only for 1,086 retail and delivery firms.
In 2019, industry officials estimated there were nearly three times as many unlicensed businesses as ones with state permits. Although some industry leaders believe enforcement has reduced the number of illegal pot shops, a study in September by USC researchers estimated unlicensed retailers still outnumbered those that were licensed.
Supporters of legalization blame the discrepancy on problems that they say include high taxes on licensed businesses, burdensome regulations and the decision of about three-quarters of cities in California not to allow cannabis retailers in their jurisdictions.
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