In California, new cannabis businesses face years-long queues.Lawmakers consider reducing wait times

In the new year, California lawmakers will consider whether to streamline the process for obtaining permits to grow and sell cannabis in the state in an effort to boost small businesses.

Their deliberations have reached a critical juncture, as California’s widespread lax “temporary license” system for cannabis cultivation and retail is set to expire in 2026 in favor of stricter annual licenses. And for many, the wait for permits has already been going on for years.

“Many of these farmers probably entered the system trying to get permits in early 2018,” Sara Duquette, cannabis policy director for the California Rural County Representatives Group, told The Hill. Ta.

“There are a lot of people in line,” Duquette continued. “We hope to be able to issue annual licenses as soon as possible.”

The upcoming bill, SB-508, seeks to speed up permitting by consolidating the required environmental review process. Currently, all cannabis businesses in California must comply with the state’s environmental laws mandated by 2016’s Proposition 64.

Supporters of the bill say it would reduce excessive oversight that can burden small business owners. But opponents fear the proposal will fail to achieve this goal and harm natural resources.

State Sen. John Laird (D), who introduced SB-508 in February 2023, said in his statement of purpose that the measure would facilitate “cannabis license approvals by eliminating redundant reviews” that would be hard-fought. He said it would help strengthen legal cannabis. market.

The bill would accomplish this by minimizing state oversight of environmental reviews and shifting some responsibility to local governments.

Under the California Environmental Equity Act (CEQA) of the 1970s, so-called “lead agencies” (usually local jurisdictions such as counties or cities) have primary responsibility for overseeing the preparation of environmental impact assessments, such as reviews. Required for cannabis permit.

This lead agency has a state-level “responsible agency” attached to it (in this case, the state’s cannabis control agency), which also has some degree of discretion over the project.

If SB-508 becomes law, local governments would be able to act as lead agencies without state-level oversight and be solely responsible for submitting compliance documents to the branch of the governor’s office that handles CEQA.

In the case of commercial cannabis cultivation, the city or county must indicate that it has prepared an environmental impact statement or a “mitigated negative declaration” (indicating how modifications to the project will avoid certain worrisome impacts). notification) must be issued.

Retail cannabis projects, on the other hand, will be required to submit a “Notice of Exemption” stating why the project is exempt from CEQA.

SB-508 passed the California Senate floor in late May and was approved by the state Assembly’s Business, Professions, and Natural Resources Committee this summer. Are you okay!

A September hearing in the Assembly Appropriations Committee was ultimately postponed, but that session could be held in early 2024, according to people familiar with the bill.

Asked to confirm when the next hearing will be held, Mr. Laird’s press secretary, Justin Tran, said he did not want to speculate on the exact date.

“The senators look forward to working with stakeholders throughout the legislative process next year to ensure support for small-scale cannabis growers,” Tran said in an emailed statement.

Duquette, who heads an organization that supports California’s rural communities, expressed support for the bill, which he believes will “shorten the time” it takes for businesses to obtain annual licenses.

“This is really important for stabilizing regulations and keeping businesses running,” she said.

Duquette argued that the bill would not actually relax CEQA requirements, only that the review would be done through local governments with less state involvement.

Already today, she explained, counties and cities are “actually doing site-by-site CEQA audits on the ground.”

Following a “robust local process” that could take up to a year to complete, the state will evaluate the findings, make comments and request various conditions, Duquette said.

“This takes one less step and basically allows us to issue annual permits more quickly,” she said.

“And in many ways this is a redundant step because CEQA is still being done. It’s done by local jurisdictions,” Duquette added.

But environmental groups say the measure “contradicts the intent of voters when they passed Prop. 64,” according to an August analysis by the state House Appropriations Committee.

If opponents of the bill file a lawsuit over its passage, the state could stand to lose hundreds of thousands of dollars in general fund spending, the documents say.

Another analysis released by the Assembly Natural Resources Committee in July expressed concern that “CEQA procedures for cannabis projects vary widely by county,” while state-level reviews are “burdensome or duplicative.” ” casts doubt on the idea.

The document concludes that “unconditional reliance on local CEQA reviews, which are known to be inconsistent, does not appear to be consistent with the lofty promise of Prop. 64.”

Rosalie Pacula, a professor at the University of Southern California’s Price School of Public Policy, said she doesn’t think relaxing these environmental requirements will help small business owners.

She argued that any steps taken to make cannabis production cheaper would benefit large-scale producers because “they can already produce more economically than small-scale producers.”

“Changing regulations that apply across the board to large and small producers doesn’t help small companies at all,” said Pacula, who is also a senior fellow at the University of Southern California’s Schaefer Center for Health Policy and Economics.

“This is an agricultural product and it can always be produced more cheaply on a larger scale,” she added.

Duquette agreed that regardless of potential changes in environmental review practices, small cannabis growers and retailers will face challenges to larger companies.

“It’s hard to compete right now, there’s no question about it,” she said, but noted that that’s why the licensing process needs to be streamlined.

Implementing such “minor changes” is low risk in terms of ecological impact and would help steer people away from the illegal cannabis market, which she believes is responsible for most of the environmental damage. It’s possible, she explained.

Duquette said illegal cannabis cultivation typically occurs on hillsides and other remote areas, and growers end up clearing forests and using banned pesticides. It is said to become.

She emphasized that such activities could contaminate Northern California streams that serve as tributaries to the rest of the state’s drinking water supply and cause long-term damage to the land.

“We need to take a hard look at where the real environmental degradation is happening, and the worst of the worst is not in the legal market,” Duquette said.

“It’s important, both from a local perspective and a state perspective, to make sure the system works and people can get their licenses,” she added.

But Pacula argued that the changes would make the system unworkable and that supporting small businesses would encourage “inefficient cannabis cultivation.”

For example, one way to level costs is to make loans cheaper by giving more favorable interest rates, Pacula explained.

“It’s the best thing we can do for this little boy,” she added.

But Pacula also said he doesn’t agree with the whole premise of encouraging more cannabis growers in California right now because the state already has an oversupply.

She argued that California should not increase cannabis cultivation until the state is legally allowed to export cannabis products.

“We’ve been overproducing for the market, so all you’re going to do is drive prices down even further and drive more people out of business,” Pacula added.