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California Senate Approves Fix For Pot Licensing Snag

Marijuana is displayed on a table inside of The Grove which is a medical disp...

Photo by Matt Hoffman

Above: Marijuana is displayed on a table inside of The Grove which is a medical dispensary in La Mesa, Oct. 18, 2018.

The California Senate on Thursday moved to close a licensing gap for state marijuana growers, the latest problem to bedevil the shaky legal marketplace.

Scores of cannabis cultivators have seen their temporary licenses expire before the state has been able to replace them. Companies caught in that backlog have been stranded in a legal lurch — technically unable to do business in the legal pot economy.

Voting 32-4 without debate, the Senate passed a bill that would allow the state to extend those temporary licenses until replacements are approved.

The bill now goes to the Assembly, where it is expected to pass.

The bill's sponsor, Democratic Sen. Mike McGuire of Healdsburg, warned that growers marooned without valid licenses could fall into the illicit market — through no fault of their own.

He says the proposal will create a short-term bridge "to avoid an impending crisis."

Meanwhile, state regulators have also taken steps to ease the problem, authorizing the issuance of provisional licenses in certain cases to close the gap.

The state's licensing process for the industry has been clunky from the start, in part because they were given so little time to create it.

Broad legal sales kicked off in January 2018, a little over a year after being authorized by voters. Regulators faced the daunting task of transforming California's longstanding illegal and medicinal marijuana markets into a unified, multibillion-dollar industry.

Initially, marijuana businesses were issued only temporary licenses. Those are now being replaced with annual licenses, but the transition has been slow and created bottlenecks that left some growers without valid licenses.

The state, meanwhile, has been sending menacing letters to businesses whose temporary licenses expire, warning them to cease activity "immediately."

Without a fix, McGuire said 6,900 temporary growing licenses would expire by July 2019. In March alone, over 1,000 of those licenses will expire, he said.

In a statement, Lindsay Robinson, executive director of the California Cannabis Industry Association, said the bill is "critical ... for stabilizing the regulated cannabis industry."

California's step into the legal marijuana economy has had mixed results.

The illicit market continues to flourish, undercutting legal sales. Businesses say hefty taxes that can approach 50 percent in some areas are driving consumers underground. And a promised state tax windfall has yet to arrive.

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