Calif. Delays Pot Licensing Fees Amid Pandemic

By Diana Novak Jones
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Law360 (June 29, 2020, 7:00 PM EDT) -- California's marijuana regulators on Monday said they are extending a policy giving businesses with expiring licenses the opportunity to defer the cost of their renewal by 60 days, citing the industry's lack of access to coronavirus-pandemic-related financial assistance from banks or the federal government.

The three agencies overseeing California's legal marijuana industry — the Bureau of Cannabis Control, the California Department of Food and Agriculture and the California Department of Public Health — are currently accepting applications for the deferrals from businesses with licenses that are expiring through Aug. 31.

It is an extension of a policy the agencies initiated last month. The applications for fee deferrals were originally only available to businesses with licenses expiring by June 30.

The move is meant to soften the economic impact of the pandemic on California's marijuana businesses, which Gov. Gavin Newsom deemed "essential" and exempt from closure in an executive order addressing COVID-19 business shutdowns. But while they can keep their doors open, the businesses are largely cut off from loans through the Small Business Administration and financial institutions because of marijuana's federally illegal status.

And the license fees can be hefty, according to the regulations. The Bureau of Cannabis Control, which oversees licensing for retailers, distributors, labs, event organizers and more, charges fees based on a business' revenue.

Retailers with up to $500,000 in revenue owe $2,500 for their license, according to the regulations. But that goes up to $96,000 for a business making more than $7.5 million.

The California Department of Food and Agriculture, which licenses cultivators, charges between $135 to $8,655 for licenses depending on the type of grow. The California Department of Public Health, which licenses marijuana manufacturers, charges between $2,000 to $75,000, depending on revenue.

The deferrals are only available to those who haven't yet renewed their licenses, according to the announcement — so there won't be any refunds for businesses that have already paid. And there are no additional extensions for businesses that already got one.

In addition to the fee deferrals, the agencies are accepting disaster relief requests from licensees that can't comply with a regulatory requirement due to the pandemic, according to the announcement. It doesn't specify what regulations might be included.

--Editing by Stephen Berg.

For a reprint of this article, please contact reprints@law360.com.

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