The cannabis industry in California is steadily evolving into mainstream viability even with the banking and other challenges they have faced. The state legislature is assuredly establishing the cannabis industry with an incremental approach by only allowing temporary licensing for the first few years until they move into annual licensing protocol. The next official step for outlets that want permanent licensing is qualifying through compliance with the California Environmental Quality Act. The newest requirement for cannabis business operators became effective on April 1, 2022, and it is vital for all industry participants to understand this law.
What is CEQA?
CEQA is the acronym for the California Environmental Quality Act of 1970. It sets operational standards for most licensed businesses in California, including the cannabis industry. It is not an industry-specific cannabis law. The basic purpose of the law is seemingly simple, but qualifying as a business is anything but that. And this especially applies for cannabis businesses that are still in the temporary stage of building their brand. It essentially allows the state government to inspect any element of an industry before issuing a permanent business license.
What CEQA compliance means for the cannabis industry is full government inspection of any business operation for potential environmental damage issues. In order to comply under cannabis industry regulations, the applicant for permanent licensing must remain in business as first established and ensure they will be conducting permanent business in the same capacity as when they were temporarily authorized. They must then hold the temporary license throughout until the permanent authorization.
Cannabis industry investors in California will all be interested in how this law will impact their endeavors. While compliance could be legally problematic for short-term growth for some businesses in the industry, long-term projections for an eventual stable business model are very good.