Assembly Bill (AB) 141 and Senate Bill (SB) 160, which passed in 2021, will bring an end to provisional cannabis licenses and change the requirements for renewing provisional licenses issued by California’s Department of Cannabis Control (DCC). These changes have substantial implications for compliance with one of California’s most consequential environmental laws, the California Environmental Quality Act (CEQA).
With a few exceptions that are outlined in the below table, provisional license applications must be submitted by March 31, 2022, and provisional licenses will only be issued until June 30, 2022. This means that after June 30, 2022, a majority of cannabis businesses must obtain an annual license prior to commencing operations, which requires complete CEQA compliance. Complying with CEQA can be a time-consuming and convoluted process and is also used as a tool for litigious NIMBYs (Not-in-My-Back-Yard-ers) to challenge and delay projects. In certain regions, cannabis projects are controversial because of potential or perceived odor and traffic impacts.
These bills also changed the criteria for renewing provisional licenses, which now involves showing more stringent progress toward complying with CEQA than was previously required for provisional licenses. In the past, an applicant only had to show evidence of CEQA compliance being “underway.” So whether applying for an annual license or renewing a provisional license, CEQA compliance will be important for all cannabis license holders as of July 1, 2022.
Important Phase-Out Dates by License Type for Provisional Licenses
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Provisional License Type
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Last day to apply for a provisional license
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Last day provisional licenses are issued
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Last day provisional licenses can be renewed
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Last day provisional licenses can be in effect
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Cultivation licenses on contiguous premises that exceed one acre of total canopy for outdoor cultivation or 22,000 sq. ft. of total canopy for mixed-light or indoor cultivation. (Including local equity applicants.)
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Dec. 31, 2021
(CCR§15001.1.a.3.)
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June 30, 2022
(CCR§15001.1.a.)
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Jan. 1, 2023
(CCR§15001.2.d.3)
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Jan. 1, 2024
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Licenses for outdoor cultivation at or less than one acre of contiguous premises and mixed-light and indoor cultivation at or less than 22,000 sq. ft. of contiguous premises. (Does not apply to local equity applicants.)
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June 30, 2022
(CCR§15001.1.b.4.)
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Sept. 30, 2022
(CCR§15001.1.b.4.)
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Jan. 1, 2025
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Jan. 1, 2026
(CCR§15001.f.)
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Local Equity Applicants
(other than those that would result in cultivation licenses for more than one acre of total canopy for outdoor cultivation or 22,000 sq. ft. of total canopy for mixed-light or indoor cultivation on contiguous premises.)
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March 31, 2023
(CCR§15001.1.c.1.)
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June 30, 2023
(CCR§15001.1.c.)
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Jan. 1, 2025
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Jan. 1, 2026
(CCR§15001.f.)
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All Other License Types
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March 31, 2022
(CCR§15001.1.a.1)
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June 30, 2022
(CCR§15001.1.a.)
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Jan. 1, 2025
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Jan. 1, 2026
(CCR§15001.f.)
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So What Is CEQA?
CEQA applies to discretionary public agency decisions to approve projects that could adversely impact the environment. While CEQA does not prohibit agencies from approving projects with adverse environmental effects, it mandates informed decision making—requiring public agencies to look before they leap and consider the environmental consequences of their actions.
Generally speaking, CEQA is triggered only when public agencies in California undertake certain activities, or “projects” in CEQA’s terminology, that have the potential to result in a “physical change in the environment.”1 A “project” can involve an activity taken directly by a public agency or approval by a public agency of a private activity.2 Historically, CEQA has not been triggered by traditional farming activities or changes in crops on agriculturally zoned land. But cannabis, unlike avocados or lemons, is more stringently regulated, and is often treated like development, which triggers CEQA review.
And this is where CEQA comes into play—since a public agency is making a decision about licensing a cannabis activity, the potential environmental impacts of that project must be reviewed under CEQA’s complex statutory framework. CEQA review is carried out by the “lead agency” or the agency with principal responsibility for approving a project. For cannabis permitting and licensing, the lead agency may be either the local jurisdiction (e.g., city or county where you operate) or the DCC. If a project is subject to CEQA and does not fall within one of the many statutory or categorical exemptions, the lead agency will prepare an initial study to determine what level of environmental review is required, and then proceed with preparing a negative or mitigated negative declaration, or an environmental impact report. During the review process, the lead agency will analyze the project’s impacts on air quality and biological, cultural and water resources, and determine whether the project will generate significant greenhouse gas emissions or noise, create a hazard to the public, or adversely impact scenic vistas.
CEQA compliance when the local jurisdiction is the lead agency
If your local jurisdiction (e.g., city or county) has developed or is in the process of developing an environmental review document for its cannabis ordinance (e.g., Santa Barbara County’s 2018 programmatic level environmental impact report for its cannabis ordinance), then the local jurisdiction is the lead agency. Such a document means that the local jurisdiction has considered the potential environmental effects of its cannabis ordinance and projects permitted under its ordinance. (Calaveras, Humboldt, Trinity and Yolo counties have also developed environmental review documents along with the City of Fresno. The County of San Diego is in the process of developing such a document.)
Thereafter, the local jurisdiction can undertake a streamlined CEQA review of individual cannabis projects using its already completed environmental document. Alternatively, some jurisdictions have conducted environmental review for individual projects and prepared environmental documents on a project-specific basis. This tends to be a more lengthy process and all costs are passed along to the private applicant.
CEQA compliance when the DCC is the lead agency
If a local environmental review document does not exist or is not being prepared, then the DCC is the lead agency under CEQA and applicants are required to submit additional information so that the DCC can make a determination of CEQA compliance. The DCC will also be the lead agency if a local agency has determined that project approval is a ministerial action versus a discretionary one (e.g., Ventura County).
In order to determine if a project complies with CEQA, the DCC requires submission of a complete description of the proposed project, including information about the project site, existing conditions and facilities, proposed facilities and improvements, and the construction methods and operation’s practices of the proposed project.
CEQA exemptions for cannabis projects
Certain cannabis projects may fall under what is called a “categorical exemption,” meaning they are exempt from further environmental review because they fall within a project type that does not have a significant impact on the environment. Common CEQA exemptions that may apply to cannabis projects include:
- Existing Facilities
- Replacement or Reconstruction
- New Construction or Conversion of Small Structures
- Minor Alterations to Land
- Minor Alterations in Land Use Limitations
- Minor Land Divisions
- In-Fill Development Projects
If there is a case to be made that a project is exempt from further CEQA review based on one of the above categories, applicants must submit a CEQA Exemption Petition Form along with a completed Project-Specific Information Form. Ideally, the applicant should site their project to avoid impacting sensitive plant or animal species, and incorporate environmentally friendly design features into the project, like energy saving and water conservation measures. A strong odor abatement plan can also reduce environmental review and help avoid neighbor disputes.
If you are building a new cannabis facility, significantly expanding an existing building or greenhouse, or your project has the potential to impact threatened animal or plant species, your project is unlikely to be exempt and will likely have to undergo CEQA review. Even if the DCC conducts CEQA review, all costs will be passed on to the applicant. Successfully navigating this process will require hiring environmental consultants and potentially legal counsel.
This document is intended to provide you with general information regarding provisional cannabis licenses in California. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.
1 CEQA Guidelines § 15378(a).
2Id.