Provisional Licensing Deadline Passes
The California Department of Cannabis Control’s Provisional License Timeline marked March 31st as the last day that local cannabis companies can apply for a license.
This deadline for submission of applications to be considered for provisional licenses is iron-clad.
Now that this date has come and gone, in order to be compliant with the current state laws surrounding licensing, legal marijuana operations in California will be required to have either provisional or annual licenses all ready to go.
The deadline is the first of several for California’s legal marijuana sector as “provisional” licenses are phased out over the next few years.
Phasing Out Provisional Licenses
The Golden Age of the legal marijuana trade in California has come to an end.
With the expiration of the state’s provisional licensing program, insiders say the change spells a significant change in terms of accessibility to the market.
It will raise more obstacles for newcomers looking to get their foot in the door.
The lack of assistance from state regulatory agencies only compounds this increase in difficulties on the road to licensing, especially for craft growers and smaller operations.
When the temporary permit system expires on June 30, companies keen on entering California’s legal marijuana sector will have two options:
- Obtain a state license on an annual basis — a procedure that might take months, if not years, before operations can begin.
- Purchase an already licensed company, a faster option that could increase merger and acquisition activity.
Why This Is a Problem
According to the state Department of Cannabis Control (DCC), just 3,378 of the state’s active 12,221 marijuana company licenses are full annual permits as of mid-January.
Provisional licenses are used by a little more than 72 percent of the legal market, or 8,843 permits.
Unlike yearly permits, provisional licenses for California marijuana businesses have been relatively straightforward to get in recent years.
They’ve been an extension of the “temporary” permits issued by the state to existing medical marijuana firms in 2017 as regulators prepared for the industry’s transition to a new statewide regulatory framework, which went into effect in January 2018.
Provisional licenses allowed enterprises to continue full operations while they applied for and met the requirements for full annual permits.
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Whom Provisional Licensing Affects, and How
The deadline of Thursday, March 31st applied to retailers, distributors, manufacturers, delivery services, and the majority of cultivators. Small-scale farmers with less than 22,000 square feet of canopy and some social justice licensees are exempt.
However, the change is anticipated to have significant ramifications, particularly for operations that aren’t yet running, owing to the fact that conditions for yearly licences are far more stringent than those for provisional permits.
What’s Next for California Cannabis?
The last day for state authorities to issue most provisional licenses will be June 30, and all provisional licensees will be required to switch to yearly licenses by January 2026.
As the California cannabis industry rushed to get in their provisional licensing applications in time for this latest deadline, every small grower and craft operation is now gearing up for a fight – a fight to keep their share of the market, which has now become significantly more difficult for them to gain ground on.
MSOs still have the advantage, and the gap in opportunity will continue to grow leading up to the January 2026 final step in the timeline. Without the proper support from regulatory bodies, the minority cannabis operators will likely continue to struggle in their quest to grow their business and increase market share.