More California Cannabis Companies Sue State Over Revoked Licenses

At least four marijuana companies have sued the state. As they stated, the regulators revoked their provisional licenses without allowing them an independent appeal process. 

Moreover, the Department of Cannabis Control (DCC), which was recently launched, is increasing the number of inspections. According to lawmakers, this can result in lawsuits growing as more companies will state that they were not granted due process after license withdrawal by the DCC. 

Consequently, two of the four cases have been resolved. Authorities restored the companies’ business permissions. The rest of the four are under review.  

Also, industry representatives and lawyers complain that regulators have been slow when giving full permissions on annual marijuana business as ¾ of licenses are still “provisional.”

Industry attorneys noted that the situation could be changed (due process restored) if more involved parties stood up on rules proposed by the DCC. 

Los Angeles attorney Dana Cisneros, a representative of one of the four companies suing the state, noted, “Each person should write and say that DCC has exceeded its scope of authority by enacting regulations that do not grant due process rights to our operators.”

What is the Situation?

As the DCC stated, as of September 15, there were 11,642 active cannabis business licenses in California. 2,929 of them were classified as “annual” licenses. The rest 8,713, were provisional licenses. There is a lower threshold for businesses to obtain such a license. Holders of provisional licenses are not afforded due process rights. Annual licenses, instead, have stricter requirements, including compliance with state environmental laws. 

Provisional license holders are vulnerable to the state law as it “permits provisional license revocation, suspension, and denial of renewal at the discretion of (regulators) at any time,” Deputy California Attorney General Patrick Boyne stated. 

What does the DCC say?

DCC spokesperson Christina Dempsey didn’t comment on the lawsuits but wrote an email to MJBizDaily. She noted that the agency is “committed to fair and equitable processes for all licenses.” 

She added, “DCC has filed proposed regulations to establish a process for notifying provisional licensees when their provisional license is at risk of suspension or revocation or their application is being considered for denial.”

According to her, the rules “provide the provisional licensee with the opportunity to provide additional information for consideration or to contest the proposed action.”

As she stated, the DCC “utilizes a progressive discipline model and routinely works closely with applicants and licensees to correct deficiencies, prior to taking further enforcement action, when the deficiencies do not threaten public health, public safety or the integrity of the marketplace.”

According to attorneys, this doesn’t protect the interests of provisional licenses holders.